UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21516
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UBS Multi-Strat Fund, L.L.C.
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(Exact name of registrant as specified in charter)
51W 52nd Street, 23rd Floor
New York, NY 10019
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(Address of principal executive offices) (Zip code)
Reba Beeson
c/o UBS Financial Services Inc.
51W 52nd Street, 23rd Floor
New York, NY 10019
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(Name and address of agent for service)
registrant's telephone number, including area code: 212-882-5638
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2007
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
UBS MULTI-STRAT FUND, L.L.C.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
YEAR ENDED
DECEMBER 31, 2007
UBS MULTI-STRAT FUND, L.L.C.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
YEAR ENDED
DECEMBER 31, 2007
CONTENTS
Report of Independent Registered Public Accounting Firm .................. 1
Statement of Assets, Liabilities and Members' Capital .................... 2
Statement of Operations .................................................. 3
Statements of Changes in Members' Capital ................................ 4
Statement of Cash Flows .................................................. 5
Notes to Financial Statements ............................................ 6
Schedule of Portfolio Investments ........................................ 13
[LOGO OMITTED]
ERNST & YOUNG [ ] Ernst & Young LLP [ ] Phone: (212) 773-3000
5 Times Square www.ey.com
New York, NY 10036-6530
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE MEMBERS AND BOARD OF DIRECTORS OF
UBS MULTI-STRAT FUND, L.L.C.
We have audited the accompanying statement of assets, liabilities and members'
capital of UBS Multi-Strat Fund, L.L.C. (the "Fund"), including the schedule of
portfolio investments, as of December 31, 2007, and the related statements of
operations and cash flows for the period then ended, the statements of changes
in members' capital for each of the two years in the period then ended and the
financial highlights for each of periods indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and the disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
investments in investment funds as of December 31, 2007, by correspondence with
management of the underlying investment funds and others. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of UBS
Multi-Strat Fund, L.L.C. at December 31, 2007, the results of its operations and
its cash flows for the period ended, the changes in its members' capital for
each of the two years in the period then ended, and the financial highlights for
each of the indicated periods, in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & Young LLP
February 22, 2008
A member firm of Ernst & Young Global Limited
1
UBS MULTI-STRAT FUND, L.L.C.
STATEMENT OF ASSETS, LIABILITIES AND MEMBERS' CAPITAL
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DECEMBER 31, 2007
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ASSETS
Investments in Investment Funds, at fair value
(cost $128,680,784) $165,221,995
Cash and cash equivalents 5,472,757
Receivables from Investment Funds 2,407,222
Interest receivable 10,183
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TOTAL ASSETS 173,112,157
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LIABILITIES
Payables:
Withdrawals payable 14,097,812
Advisory fee 185,087
Professional fees 103,500
Administrator fee 42,712
Administration fee 31,304
Other 16,696
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TOTAL LIABILITIES 14,477,111
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NET ASSETS $158,635,046
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MEMBERS' CAPITAL
Represented by:
Net capital contributions $122,093,835
Accumulated net unrealized appreciation on investments 36,541,211
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MEMBERS' CAPITAL $158,635,046
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The accompanying notes are an integral part of these financial statements.
2
UBS MULTI-STRAT FUND, L.L.C.
STATEMENT OF OPERATIONS
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YEAR ENDED DECEMBER 31, 2007
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INVESTMENT INCOME
Interest $ 118,358
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TOTAL INVESTMENT INCOME 118,358
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EXPENSES
Advisory fee 1,992,188
Administrator fee 459,736
Professional fees 341,854
Administration fee 149,626
Loan interest 106,192
Printing fee 99,411
Other 84,752
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TOTAL EXPENSES 3,233,759
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NET INVESTMENT LOSS (3,115,401)
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REALIZED AND UNREALIZED GAIN FROM INVESTMENTS
Net realized gain from investments 2,128,295
Change in net unrealized appreciation/depreciation from
investments 12,713,002
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NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS 14,841,297
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NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS $ 11,725,896
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The accompanying notes are an integral part of these financial statements.
3
UBS MULTI-STRAT FUND, L.L.C.
STATEMENT OF CHANGES IN MEMBERS' CAPITAL
YEARS ENDED DECEMBER 31, 2007 AND 2006
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UBS FUND
ADVISOR, L.L.C. MEMBERS TOTAL
- ---------------------------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT JANUARY 1, 2006 $103,027 $118,125,998 $118,229,025
INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment loss (1,883) (3,210,223) (3,212,106)
Net realized gain from investments 1,141 1,315,914 1,317,055
Change in net unrealized
appreciation/depreciation from investments 13,989 15,794,710 15,808,699
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NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 13,247 13,900,401 13,913,648
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MEMBERS' CAPITAL TRANSACTIONS
Proceeds from Members' subscriptions -- 14,672,686 14,672,686
Members' withdrawals -- (22,562,379) (22,562,379)
Offering costs (2) (2,543) (2,545)
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NET DECREASE IN MEMBERS' CAPITAL DERIVED
FROM CAPITAL TRANSACTIONS (2) (7,892,236) (7,892,238)
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MEMBERS' CAPITAL AT DECEMBER 31, 2006 $116,272 $124,134,163 $124,250,435
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INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment loss (897) (3,114,504) (3,115,401)
Net realized gain from investments 1,741 2,126,554 2,128,295
Change in net unrealized
appreciation/depreciation from investments 10,271 12,702,731 12,713,002
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NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 11,115 11,714,781 11,725,896
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MEMBERS' CAPITAL TRANSACTIONS
Proceeds from Members' subscriptions -- 45,553,309 45,553,309
Members' withdrawals -- (22,893,249) (22,893,249)
Offering costs -- (1,345) (1,345)
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NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS -- 22,658,715 22,658,715
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MEMBERS' CAPITAL AT DECEMBER 31, 2007 $ 127,387 $ 158,507,659 $ 158,635,046
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The accompanying notes are an integral part of these financial statements.
4
UBS MULTI-STRAT FUND, L.L.C.
STATEMENT OF CASH FLOWS
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YEAR ENDED DECEMBER 31, 2007
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CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in Members' capital derived from operations $ 11,725,896
Adjustments to reconcile net increase in Members' capital
derived from operations to net cash used in operating
activities:
Purchases of investments (47,500,000)
Proceeds from disposition of investments 18,419,924
Net realized gain from investments (2,128,295)
Change in net unrealized (appreciation)/depreciation
from investments (12,713,002)
Changes in assets and liabilities:
(Increase) decrease in assets:
Receivables from Investment Funds 10,711,405
Interest receivable 1,245
Other 519
Increase (decrease) in payables:
Advisory fee 44,876
Professional fees (28,640)
Administrator fee 10,356
Administration fee 7,810
Other (19,615)
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NET CASH USED IN OPERATING ACTIVITIES (21,467,521)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Members' subscriptions 45,553,309
Members' withdrawal (17,522,341)
Proceeds from loan 15,590,000
Principal payment of loan (24,750,000)
Loan interest (131,371)
Offering cost (1,345)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 18,738,252
Net decrease in cash and cash equivalents (2,729,269)
Cash and cash equivalents--beginning of year 8,202,026
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CASH AND CASH EQUIVALENTS--END OF YEAR 5,472,757
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Supplemental cash flows disclosure:
Interest paid $ 237,563
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The accompanying notes are an integral part of these financial statements.
5
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS
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DECEMBER 31, 2007
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1. ORGANIZATION
UBS Multi-Strat Fund, L.L.C. (the "Fund") was organized as a limited
liability company under the laws of Delaware on July 29, 2004. The Fund
is registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as a closed-end, non-diversified, management investment
company. The Fund's investment objective is to seek capital
appreciation over the long term. The Fund is a multi-manager fund that
seeks to achieve its objective by deploying its assets among a select
group of portfolio managers who over time have produced attractive
returns. Generally, such portfolio managers conduct their investment
programs through unregistered investment funds (collectively, the
"Investment Funds"), in which the Fund invests as a limited partner,
member or shareholder along with other investors. The Fund commenced
operations on October 1, 2004.
The Fund's Board of Directors (the "Directors") has overall
responsibility to manage and control the business affairs of the Fund,
including the exclusive authority to oversee and to establish policies
regarding the management, conduct and operation of the Fund's business.
The Directors have engaged UBS Fund Advisor, L.L.C. ("UBSFA", the
"Adviser" and, when providing services under the Administration
Agreement, the "Administrator"), a Delaware limited liability company,
to provide investment advice regarding the selection of Investment
Funds and to be responsible for the day-to-day management of the Fund.
The Adviser is a direct wholly owned subsidiary of UBS Americas, Inc.,
which is a wholly owned subsidiary of UBS AG, and is registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended.
Initial and additional applications for interests by eligible investors
may be accepted at such times as the Adviser may determine and are
generally accepted monthly. The Fund reserves the right to reject any
application for interests in the Fund.
The Fund from time to time may offer to repurchase interests pursuant
to written tenders to Members. These repurchases will be made at such
times and on such terms as may be determined by the Directors, in their
complete and exclusive discretion. The Manager expects that, generally
it will recommend to the Directors that the Fund offer to repurchase
interests from Members twice each year, near mid year and year end.
Members can only transfer or assign their membership interests, or a
portion thereof, (i) by operation of law pursuant to the death,
bankruptcy, insolvency or dissolution of a Member, or (ii) with the
written approval of the Directors, which may be withheld in their sole
and absolute discretion. Such transfers may be made even if the balance
of the capital account to such transferee is equal to or less than the
transferor's initial capital contribution.
2. SIGNIFICANT ACCOUNTING POLICIES
A. PORTFOLIO VALUATION
Net asset value of the Fund is determined by or at the direction of the
Adviser as of the close of business at the end of any fiscal period in
accordance with the valuation principles set forth below or as may be
6
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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DECEMBER 31, 2007
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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
determined from time to time pursuant to policies established by the
Directors. The Fund's investments in Investment Funds are subject to
the terms and conditions of the respective operating agreements and
offering memoranda, as appropriate. The Fund's investments in
Investment Funds are carried at fair value as determined by the Fund's
pro rata interest in the net assets of each Investment Fund. All
valuations utilize financial information supplied by each Investment
Fund and are net of management and performance incentive fees or
allocations payable to the Investment Funds' managers or pursuant to
the Investment Funds' agreements. The Fund's valuation procedures
require the Adviser to consider all relevant information available at
the time the Fund values its portfolio. The Adviser and/or the
Directors will consider such information and consider whether it is
appropriate, in light of all relevant circumstances, to value such a
position at its net asset value as reported or whether to adjust such
value. The underlying investments of each Investment Fund are accounted
for at fair value as described in each Investment Fund's financial
statements. (See Schedule of Portfolio Investments)
Distributions received or withdrawals from Investment Funds, whether in
the form of cash or securities, are first applied as a reduction of the
investment's cost.
B. INCOME RECOGNITION
Interest income is recorded on the accrual basis. Realized gains and
losses from Investment Fund transactions are calculated on the cost
recovery basis.
C. FUND COSTS
The Fund bears all expenses incurred in its business, including, but
not limited to, the following: all costs and expenses related to
portfolio transactions and positions for the Fund's account; legal
fees; accounting and auditing fees; custodial fees; costs of computing
the Fund's net asset value; costs of insurance; registration expenses;
certain offering and organization costs; due diligence, including
travel and related expenses; expenses of meetings of Directors and
Members; all costs with respect to communications to Members; and other
types of expenses approved by the Directors. Offering costs are charged
to capital as incurred.
D. INCOME TAXES
The Fund has reclassified $3,115,401 and $2,128,295 from accumulated
net investment loss and accumulated net realized gain from investments,
respectively, to net capital contributions during the year ended
December 31, 2007. The reclassification was to reflect, as an
adjustment to net capital contributions, the amount of taxable income
or loss that have been allocated to the Fund's Members and had no
effect on the net assets.
7
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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DECEMBER 31, 2007
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. INCOME TAXES (CONTINUED)
In June 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48 ("FIN 48"), "Accounting for Uncertainty in Income
Taxes". This standard defines the threshold for recognizing the
benefits of tax-return positions in the financial statements as
"more-likely-than-not" to be sustained by the taxing authority and
requires measurement of a tax position meeting the more-likely-than-not
criterion, based on the largest benefit that is more than 50 percent
likely to be realized. Management has analyzed the Fund's tax positions
taken on federal income tax returns for all open tax years (tax years
ended December 31, 2003-2006) for purposes of implementing FIN 48, and
has concluded that no provision for income tax is required in the
Fund's financial statements. The fund recognizes interest and
penalties, if any, related to unrecognized tax benefits as income tax
expense in the statement of operations. During the period, the fund did
not incur any interest or penalties.
Each Member is individually required to report on its own tax return
its distributive share of the Fund's taxable income or loss.
E. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of monies invested in a PNC Bank, NA
account that pays money market rates and are accounted for at cost plus
accrued interest, which is included in interest receivable on the
Statement of Assets, Liabilities and Members' Capital.
F. REPURCHASE AGREEMENTS
From time to time, the Fund may enter into repurchase agreements. In
connection with such transactions it is the Fund's policy that its
Custodian take possession of the underlying collateral securities, the
fair value of which exceeds the principal amount of the repurchase
transaction, including accrued interest, at all times. If the seller
defaults, and the fair value of the collateral declines, realization of
the collateral by the Fund may be delayed or limited. As of December
31, 2007, there were no outstanding repurchase agreements.
G. USE OF ESTIMATES
The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires the Manager to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. The Manager believes that
the estimates utilized in preparing the Fund's financial statements are
reasonable and prudent; however, actual results could differ from these
estimates.
8
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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DECEMBER 31, 2007
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3. RELATED PARTY TRANSACTIONS
The Adviser provides investment advisory services to the Fund pursuant
to an Investment Advisory Agreement. In consideration for such
services, the Fund pays the Adviser a monthly fee (the "Advisory Fee")
at an annual rate of 1.30% of the Fund's net assets, excluding assets
attributable to the Adviser's capital account. The Administrator
provides certain other administrative services to the Fund including,
among other things, providing office space and other support services.
In consideration for such services, the Fund pays the Administrator a
monthly fee (the "Administrator Fee") at an annual rate of 0.30% of the
Fund's net assets, excluding assets attributable to the Administrator's
and the Adviser's capital account. The Advisory Fee will be paid to the
Adviser out of the Fund's assets and debited against the Members'
capital accounts, excluding net assets attributable to the Adviser's
capital account. A portion of the Advisory Fee is paid by UBSFA to its
affiliates.
UBS Financial Services Inc. ("UBS FSI"), a wholly-owned subsidiary of
UBS Americas, Inc., acts as a placement agent for the Fund, without
special compensation from the Fund, and will bear its own costs
associated with its activities as placement agent. Placement fees, if
any, charged on contributions are debited against the contribution
amount to arrive at a net subscription amount. The placement fee does
not constitute assets of the Fund.
The net increase (or decrease) in Members' capital derived from
operations (net income or loss) is allocated to the capital accounts of
all Members on a pro-rata basis, other than the Advisory Fee and the
Administrator Fee which are similarly allocated to all Members other
than the Adviser or Administrator as described above.
Each Director of the Fund receives an annual retainer of $7,500 plus a
fee for each meeting attended. All Directors are reimbursed by the Fund
for all reasonable out of pocket expenses. Total amounts expensed by
the Fund related to Directors for the year ended December 31, 2007 were
$34,568, which is included in other expense.
Other investment partnerships sponsored by UBS Americas or its
affiliates may also maintain investment interests in the Investment
Funds owned by the Fund.
4. ADMINISTRATION AND CUSTODIAN FEES
PFPC Trust Company (an affiliate of PNC Bank, NA) serves as the
custodian (the "Custodian") of the Fund's assets and provides custodial
services for the Fund.
PFPC, Inc. (also an affiliate of PNC Bank, NA) serves as Accounting and
Investor Servicing Agent to the Fund and in that capacity provides
certain administrative, accounting, record keeping, tax and Member
related services. PFPC, Inc. receives a monthly fee primarily based
upon (i) the average net assets of the Fund subject to a minimum
monthly fee, and (ii) the aggregate net assets of the Fund and certain
other investment funds sponsored or advised by UBS Americas, Inc. or
its affiliates. Additionally, the Fund reimburses certain out of pocket
expenses incurred by PFPC, Inc.
9
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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DECEMBER 31, 2007
- --------------------------------------------------------------------------------
5. LOAN PAYABLE
Effective July 1, 2007 the Fund, along with other UBS sponsored funds,
renewed a $200,000,000 committed, unsecured revolving line of credit
with Bank of Montreal - Chicago Branch, which is the Illinois branch of
the parent to Harris Trust and Savings Bank. Under the most restrictive
arrangement, the Fund may borrow an amount that combined with the other
borrowings of the Fund would not exceed 20% of its net assets. The
Fund's borrowing capacity is also limited to the portion of the unused
line of credit at any point in time. The Fund is only liable under the
line of credit to the extent of its own borrowing there under. The
interest rate on the borrowing is based on the Federal Funds rate plus
150 basis points per annum. The committed facility also requires a fee
to be paid by the Fund, on a pro rata basis, based on the amount of the
aggregate commitment, which has not been utilized of 25 basis points
per annum. For the year ended December 31, 2007, the Fund's average
interest rate paid on borrowings was 6.64% per annum and the average
borrowings outstanding were $1,599,277. The Fund had no borrowings
outstanding at December 31, 2007. Interest expense for the year ended
December 31, 2007 was $106,192. The Fund has no interest payable at
December 31, 2007.
On December 21, 2007 and December 27, 2007, the Fund, along with other
UBS sponsored funds, entered into the ninth amendment and tenth
amendment respectively to the existing credit agreement. These two
amendments provided a temporary increase in the credit line from
$200,000,000 to $400,000,000 for the period commencing January 4, 2008,
through and including February 15, 2008. Commencing February 16, 2008,
the credit line reverts back to a $200,000,000 total unsecured facility
which terminates on July 29, 2008.
6. SECURITIES TRANSACTIONS
Aggregate purchases and proceeds from sales of Investment Funds for the
year ended December 31, 2007 amounted to $47,500,000 and $18,419,924,
respectively.
The cost of investments for Federal income tax purposes is adjusted for
items of taxable income allocated to the Fund from the Investment
Funds. The allocated taxable income is reported to the Fund by the
Investment Funds on Schedules K-1. The Fund has not yet received all
such schedule K-1's for the year ended December 31, 2007.
7. INVESTMENTS
As of December 31, 2007, the Fund had investments in Investment Funds,
none of which were related parties.
The agreements related to investments in Investment Funds provide for
compensation to the general partners/managers in the form of management
fees of between 0.5% and 2.5% (per annum) of net assets and performance
incentive fees or allocations ranging from 20% to 25% of net profits
earned.
10
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2007
- --------------------------------------------------------------------------------
8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Investment Funds in which the
Fund invests trade various financial instruments and enter into various
investment activities with off-balance sheet risk. These include, but
are not limited to, short selling activities, writing option contracts,
contracts for differences, and equity swaps. The Fund's risk of loss in
these Investment Funds is limited to the value of these investments as
reported by the Fund.
9. INDEMNIFICATION
In the ordinary course of business, the Fund may enter into contracts
or agreements that contain indemnifications or warranties. Future
events could occur that lead to the execution of these provisions
against the Fund. Based on its history and experience, management feels
that the likelihood of such an event is remote.
10. NEW ACCOUNTING PRONOUNCEMENTS
On September 20, 2006, the FASB released Statement of Financial
Accounting Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS
157 establishes an authoritative definition of fair value, sets out a
framework for measuring fair value, and requires additional disclosures
about fair-value measurements. The application of FAS 157 is required
for fiscal years beginning after November 15, 2007 and interim periods
within those fiscal years. Management believes that the application of
FAS 157 will not have a material impact on the Fund's financial
statements.
11
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2007
- --------------------------------------------------------------------------------
11. FINANCIAL HIGHLIGHTS
The following represents the ratios to average net assets and other
supplemental information for the periods indicated:
PERIOD OCTOBER 1,
2004 (COMMENCEMENT
OF OPERATIONS)
YEARS ENDED DECEMBER 31, THROUGH
2007 2006 2005 DECEMBER 31, 2004
---- ---- ---- -----------------
Ratio of net investment loss to (2.05)% (2.59)% (1.95)% (3.94%)(d)
average net assets (c)
Ratio of total expenses to average 2.13% 2.64% 2.18% 4.33%(d)
net assets (a,c)
Portfolio turnover rate 12.32% 14.81% 50.12% --
Total return (b) 8.15% 11.88% 0.38% 2.65%
Average debt ratio (c) 1.05% 10.50% -- --
Net asset value at end of year $158,635,046 $124,250,435 $118,229,025 $66,121,636
<FN>
(a) Ratio of total expenses to average net assets does not include the impact of expenses and incentive allocations or
incentive fees relating to the underlying investment funds.
(b) Total return assumes a purchase of an interest in the Fund at the beginning of the period and a sale of the Fund
interest on the last day of the period noted and does not reflect the deduction of placement fees, if any, incurred
when subscribing to the Fund. Total returns for a period of less than a full year are not annualized. An individual
member's ratios and return may vary from the above based on the timing of capital transactions.
(c) The average net assets used in the above ratios are calculated using pre-tender net assets.
(d) Annualized.
</FN>
12
UBS MULTI-STRAT FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
DECEMBER 31, 2007
- --------------------------------------------------------------------------------
REALIZED AND
UNREALIZED INITIAL
% OF MEMBERS' GAIN/(LOSS) FROM ACQUISITION
INVESTMENT FUND COST FAIR VALUE CAPITAL INVESTMENTS DATE
- ------------------------------------------- ------------ ------------ ------------- ---------------- ------------
Bay Pond Partners, LP $ 5,000,000 $ 5,748,432 3.62% $ 748,432 07/01/2007
Colbalt Partners, LP 7,000,000 7,302,197 4.60 302,197 07/01/2007
DunDonald Fund I LP 7,000,000 7,379,696 4.65 379,696 04/01/2007
East Side Capital, LP 2,750,000 4,712,319 2.97 678,379 01/01/2005
Eminence Partners, LP 5,000,000 8,240,453 5.19 1,423,824 01/01/2005
D. Jabro Partners, LP 5,000,000 6,398,226 4.03 932,020 01/01/2006
Wohl Capital Partners, LP 6,000,000 7,462,149 4.70 792,948 10/01/2005
------------ ------------ ------ -----------
LONG/SHORT EQUITY SUBTOTAL $ 37,750,000 $ 47,243,472 29.76% $ 5,257,496
Davidson Kempner Partners, LP 8,000,000 9,524,080 6.00 593,706 01/01/2006
DE Shaw Oculus Fund, LLC 4,239,322 9,187,211 5.79 2,060,299 11/01/2004
OZ Domestic Partners, LP 9,500,000 12,965,496 8.17 1,418,878 05/01/2005
Peleton Partners Multi-Strat Fund 6,000,000 6,680,706 4.21 680,706 06/01/2007
------------ ------------ ------ -----------
MULTI-STRATEGY SUBTOTAL $ 27,739,322 $ 38,357,493 24.17% $ 4,753,589
Aspen Partners, LP Series A 341,462 125,474 0.08 (109,525) 10/01/2004
Claren Road Credit Partners, LP 10,500,000 11,542,358 7.28 1,042,358 01/01/2007
Harbinger Capital Partners Fund I, LP 3,000,000 4,084,382 2.57 1,084,382 09/01/2007
Trilogy Financial Partners, LP 8,000,000 9,630,587 6.07 102,735 07/01/2005
------------ ------------ ------ -----------
DISTRESSED CREDIT SUBTOTAL $ 21,841,462 $ 25,382,801 16.0% $ 2,119,950
Amber Fund, LTD 4,300,000 7,498,600 4.73 1,096,227 02/01/2006
Brookdale International Partners, LP 6,250,000 9,227,548 5.82 1,468,163 08/01/2005
Seneca Capital, LP 3,700,000 7,173,632 4.52 889,114 10/01/2004
------------ ------------ ------ -----------
SPECIAL SITUATIONS SUBTOTAL $ 14,250,000 $ 23,899,780 15.07% $ 3,453,504
Kamunting Street, LP 5,300,000 6,671,949 4.21 222,892 10/01/2004
Waterstone Market Neutral Fund, LP 5,800,000 6,542,314 4.12 422,969 10/01/2004
------------ ------------ ------ -----------
CONVERTIBLE ARBITRAGE SUBTOTAL $ 11,100,000 $ 13,214,263 8.33% $ 645,861
CPIM Structured Credit Fund 1000, LP 5,000,000 3,491,375 2.20 (2,264,746) 11/01/2005
Marathon Structured Finance Fund, LP 6,500,000 8,060,204 5.08 177,348 04/01/2005
------------ ------------ ------ -----------
DIRECT LOANS/STRUCTURED FINANCE SUBTOTAL $ 11,500,000 $ 11,551,579 7.28% $(2,087,398)
Bridgewater Pure Alpha Trading Company, LTD 4,500,000 5,572,607 3.51 488,920 10/01/2004
------------ ------------ ------ -----------
GLOBAL MACRO SUBTOTAL $ 4,500,000 $ 5,572,607 3.51% $ 488,920
Redeemed Investment Funds -- -- -- 209,375
------------ ------------ ------ -----------
TOTAL $128,680,784 $165,221,995 104.12% $14,841,297
============ ============ ====== ===========
DOLLAR AMOUNT OF FAIR
FIRST AVAILABLE VALUE FOR FIRST
INVESTMENT FUND LIQUIDITY* REDEMPTION AVAILABLE REDEMPTION
- ------------------------------------------- ------------- --------------- ---------------------
Bay Pond Partners, LP Quarterly 06/30/2008 5,748,432
Colbalt Partners, LP Quarterly 06/30/2008 7,302,197
DunDonald Fund I LP Quarterly 03/31/2008 7,379,696
East Side Capital, LP Annually
Eminence Partners, LP Semi-Annually
D. Jabro Partners, LP Annually
Wohl Capital Partners, LP Quarterly
Davidson Kempner Partners, LP Annually
DE Shaw Oculus Fund, LLC Quarterly
OZ Domestic Partners, LP Annually
Peleton Partners Multi-Strat Fund Quarterly
Aspen Partners, LP Series A Annually
Claren Road Credit Partners, LP Quarterly
Harbinger Capital Partners Fund I, LP Quarterly 09/30/2008 4,084,382
Trilogy Financial Partners, LP Quarterly 03/31/2008** 1,982,516
Amber Fund, LTD Quarterly
Brookdale International Partners, LP Annually 03/31/2009** 1,170,129
Seneca Capital, LP Annually
Kamunting Street, LP Quarterly
Waterstone Market Neutral Fund, LP Quarterly
CPIM Structured Credit Fund 1000, LP Quarterly
Marathon Structured Finance Fund, LP Quarterly
Bridgewater Pure Alpha Trading Company, LTD Monthly
<FN>
* Available frequency of redemptions after initial lock up period.
** The dollar amount of fair value for first available redempion can be redeemed commencing on the
date listed. The remaining investment amount has no lock up or other redemption restrictions.
</FN>
The preceding notes are an integral part of these financial statements.
13
UBS MULTI-STRAT FUND, L.L.C. (UNAUDITED)
The Directors (including the Independent Directors) last evaluated the
Investment Advisory Agreement at a meeting on September 18, 2007. The Directors
met in an executive session during which they were advised by and had the
opportunity to discuss with independent legal counsel the approval of the
Investment Advisory Agreement. The Directors reviewed materials furnished by the
Adviser, including information regarding the Adviser, its affiliates and its
personnel, operations and financial condition. Tables indicating comparative fee
information, and comparative performance information, as well as a summary
financial analysis for the Fund, were also included in the meeting materials and
were reviewed and discussed. The Directors discussed with representatives of the
Adviser the Fund's operations and the Adviser's ability to provide advisory and
other services to the Fund.
The Directors reviewed, among other things, the nature of the advisory
services to be provided to the Fund by the Adviser, including its investment
process, and the experience of the investment advisory and other personnel
proposing to provide services to the Fund. The Directors discussed the ability
of the Adviser to manage the Fund's investments in accordance with the Fund's
stated investment objectives and policies, as well as the services to be
provided by the Adviser to the Fund, including administrative and compliance
services, oversight of Fund accounting, marketing services, assistance in
meeting legal and regulatory requirements and other services necessary for the
operation of the Fund. The Directors acknowledged the Adviser's employment of
highly skilled investment professionals, research analysts and administrative,
legal and compliance staff members to ensure that a high level of quality in
compliance and administrative services would be provided to the Fund. The
Directors also recognized the benefits which the Fund derives from the resources
available to the Adviser and the Adviser's affiliates, including UBS AG and UBS
Financial Services Inc. ("UBS Financial"). Accordingly, the Directors felt that
the quality of service offered by the Adviser to the Fund was appropriate, and
that the Adviser's personnel had sufficient expertise to manage the Fund.
The Directors reviewed the performance of the Fund and compared that
performance to the performance of other investment companies presented by UBS
Financial which had objectives and strategies similar to those of the Fund and
which are managed by other, third-party investment advisers ("Comparable
Funds"). The Directors noted that while the Fund's performance since inception
was below that of its Comparable Funds, the Fund's 2006 performance and
half-year 2007 performance was exceeded by only one of its five Comparable Funds
and three of its five Comparable Funds, respectively. The Directors
acknowledged, however, that UBS Multi-Strat was still relatively new at somewhat
more than two years old. The Directors also compared the volatility of the Fund
to that of its Comparable Funds. The Directors observed that the Fund's
volatility was within the range of that of its Comparable Funds although it was
higher than the median volatility of its Comparable Funds.
The Directors considered the fees being charged by the Adviser for its
services to the Fund as compared to those charged to the Comparable Funds, and
as compared to the fees charged by UBS Fund Advisor, L.L.C. ("UBSFA") and its
affiliates for other UBS alternative investment products. The information
presented to the Directors showed that the management fee being charged to the
Fund was higher than the management fee being charged to any of its Comparable
Funds, but that the Fund was not subject to any incentive fee. In comparing the
management fee being charged to the Fund to the fees being charged by UBSFA and
its affiliates for other UBS alternative investment products, the Directors
observed that although the combination of its management fee and administrative
services fee was the third highest being charged to an Alternative Investment
Group multi-manager Fund, the Fund was not subject to any incentive fee. In
light of the foregoing, the Directors felt that the management fee being charged
to the Fund was appropriate.
The Directors also considered the profitability of UBSFA both before
payment to brokers and after payment to brokers and concluded that the profits
to be realized by UBSFA and its affiliates under the Fund's Investment Advisory
Agreement and from other relationships between the Fund and UBSFA were within a
range the Directors considered reasonable and appropriate. The Directors also
discussed the fact that the Fund was not large enough at that time to support a
request for breakpoints due to economies of scale. The Directors determined that
the fees were reasonable. The Directors concluded that approval of the
Investment Advisory Agreement was in the best interests of the Fund and its
shareholders.
DIRECTORS AND OFFICERS (UNAUDITED)
Information pertaining to the Directors and officers of the Fund is set forth
below. The statement of additional information (SAI) includes additional
information about the Directors and is available without charge, upon request,
by calling UBS Financial Services Inc.'s, Alternative Investment Group at
800-580-2359.
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX OTHER TRUSTEESHIPS/
TERM OF OFFICE OVERSEEN DIRECTORSHIPS HELD BY
NAME, AGE, ADDRESS AND AND LENGTH OF PRINCIPAL OCCUPATION(S) BY DIRECTOR OUTSIDE FUND
POSITION(S) WITH FUNDS TIME SERVED(1) DURING PAST 5 YEARS DIRECTOR(2) COMPLEX
- ------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------
Meyer Feldberg (65)(3) Term -- Dean Emeritus and Professor of 42 Director of:
UBS Financial Services Inc. Indefinite Leadership and Ethics of the Primedia, Inc.,
1285 Avenue of the Americas Length--since Graduate School of Business, Macy's, Inc.,
New York, NY 10019 Commencement of Columbia University; Senior Revlon, Inc., NYC
Director Operations Advisor to Morgan Stanley Ballet and SAPPI Ltd.
Advisory Director of
Welsh Carson Anderson
& Stowe and President
of NYC Global Partners.
- ------------------------------------------------------------------------------------------------------------------------
George W. Gowen (78) Term -- Law partner of Dunnington, 13 None
UBS Financial Services Inc. Indefinite Bartholow & Miller
1285 Avenue of the Americas Length--since
New York, NY 10019 Commencement of
Director Operations
- ------------------------------------------------------------------------------------------------------------------------
Stephen H. Penman (61) Term -- Professor of Financial 13 None
UBS Financial Services Inc. Indefinite Accounting of Graduate School
1285 Avenue of the Americas Length--since of Business, Columbia University
New York, NY 10019 July 2004
Director
- ------------------------------------------------------------------------------------------------------------------------
OFFICER(S) WHO ARE NOT DIRECTORS
- ------------------------------------------------------------------------------------------------------------------------
Robert F. Aufenanger (54)
UBS Financial Services Inc. Term -- Executive Director of UBS
51 West 52nd Street Indefinite Alternative Investments US
New York, NY 10019 Length--since since April 2007 Prior to N/A N/A
Principal Accounting Officer May 1, 2007 April 2007, Chief Financial
Officer and Senior Vice
President of Alternative
Investments Group at U.S. Trust
Corporation from 2003 - 2007;
Consultant to private equity
funds from 2002 - 2003
- ------------------------------------------------------------------------------------------------------------------------
Frank Pluchino (48)
UBS Financial Services Inc. Term - Director of Compliance of UBS
1000 Harbor Boulevard Indefinite Financial Services Inc. since
Weehawken, NJ 07086 Length - since 2003 and Deputy Director of N/A N/A
Chief Compliance Officer July 19, 2005 Compliance UBS Financial
Services of Puerto Rico Inc.
since October 2006. Prior to
2003, Chief Compliance Officer
of LibertyView Capital
Management, Inc., an investment
adviser, and LibertyView
Alternative Asset Management,
Inc., an NASD broker-dealer.
- ------------------------------------------------------------------------------------------------------------------------
Douglas Lindgren (46)
UBS Financial Services Inc. Term - Managing Director of UBS
1285 Avenue of the Americas Indefinite Financial Services Inc. since
New York, NY 10019 Length - since June 2005. Prior to June 2005, N/A N/A
Principal Executive Officer July 19, 2005 Managing Director and Head of
Alternative Investments of
United States Trust Company,
N.A.
- ------------------------------------------------------------------------------------------------------------------------
<FN>
(1) For Directors, their terms are for the duration of the term of the Fund, unless his status as a Director shall be
sooner terminated by death, adjudicated incompetent, voluntarily withdraw, physically unable to perform duties, removed
either by vote or written consent of at two-thirds of the Directors or vote or written consent of Members holding not
less than two-thirds of the total number of votes eligible to the cast by all Members.
(2) Of the 42 funds/portfolios in the complex as of December 31, 2007, 29 are advised by an affiliate of UBS Financial
Services Inc. and 13 comprise UBS Financial Services' Alternative Investment Group of Funds.
(3) Mr. Feldberg is an "interested person" of the Fund because he is an affiliated person of a broker-dealer with which
the UBS Financial Services Alternative Investment Group of Funds does business. Mr. Feldberg is not an affiliated person
of UBS Financial Services or its affiliates.
</FN>
UBS FINANCIAL SERVICES INC. IS A SUBSIDIARY OF UBS AG
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at
HTTP://WWW.SEC.GOV and may be reviewed or copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
Proxy Voting
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available with out charge
upon request by calling the UBS Financial Services Inc.'s Alternative Investment
Group at 800-580-2359.
UBS FINANCIAL SERVICES INC. IS A SUBSIDIARY OF UBS AG
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party. The code of ethics may be obtained without charge by
calling 800-486-2608.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board had
determined that Professor Stephen Penman, a member of the audit committee of the
Board, is the audit committee financial expert and that he is "independent," as
defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
- ----------
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$66,615 in 2007 and $64,140 in 2006. Such audit fees include fees
associated with annual audits for providing a report in connection with
the registrant's report on form N-SAR.
Audit-Related Fees
- ------------------
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $15,000 in 2007 and $5,000 in 2006. Audit related fees
principally include fees associated with reviewing and providing
comments on semi-annual reports.
Tax Fees
- --------
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $104,500 in 2007 and
$78,000 in 2006. Tax fees include fees for tax compliance services and
assisting management in preparation of tax estimates.
All Other Fees
- --------------
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
in 2007 and $0 in 2006.
(e)(1) The registrant's audit committee pre-approves the principal
accountant's engagements for audit and non-audit services to the
registrant, and certain non-audit services to service Affiliates that
are required to be pre-approved, on a case-by-case basis. Pre-approval
considerations include whether the proposed services are compatible
with maintaining the principal accountant's independence.
(e)(2) There were no services described in each of paragraphs (b) through (d)
of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, because such
services were pre-approved.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $3.0 million for 2007 and $3.0 million for 2006.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are as follows:
UBS FUND ADVISOR, L.L.C.
PROXY-VOTING POLICIES AND PROCEDURES
A. INTRODUCTION
UBS Fund Advisor, L.L.C. (the "Adviser") votes proxies for each fund (each a
"Fund," collectively, the "Funds") for which it acts as the Adviser and as such,
has adopted these Proxy-Voting Policies and Procedures (these "Policies and
Procedures"). The Funds are funds of funds that invest primarily in unregistered
investment vehicles ("Investment Funds") which have investors other than the
Fund. Generally, each of the Funds may invest a majority of its assets in
non-voting securities of Investment Funds. The Investment Funds typically do not
submit matters to investors for vote; however, should a matter be submitted for
vote and provided the Fund holds voting interests in the Investment Fund, the
Adviser will vote proxies in what it views to be in the best interest of the
Fund and in accordance with these Policies and Procedures. The Board of
Directors (the "Board") of the Funds has adopted these Policies and Procedures
as the Funds'. The Adviser will notify the Board of any changes to the Adviser's
Policies and Procedures.
B. FIDUCIARY DUTY
Proxy-voting is an integral part of the Adviser's investment management
process. The Adviser is under a fiduciary duty to act in the best interest of
the Fund(s) and to vote in a manner it believes to be consistent with efforts to
maximize shareholder value. This authority carries with it a responsibility on
the Adviser's part to analyze the issues connected with the votes and to
evaluate the probable impact of its vote on the value of the investment.
C. VOTING PROCEDURES
Generally speaking, where the Adviser holds voting rights, it will vote
consistent with management's recommendations on routine matters, absent a
particular reason to the contrary. Non-routine matters will be voted on a
case-by-case basis taking into consideration the best interests of the Fund(s)
and the maximization of shareholder value.
D. CONFLICTS OF INTEREST
Any circumstance or relationship which would compromise a portfolio
manager's objectivity in voting proxies in the best interest of the Fund(s)
would constitute a conflict of interest. In such situations, the Adviser will
address any material conflicts before voting proxies on behalf of the Fund(s).
As a matter of policy, the Adviser will presume the existence of a conflict of
interest for proxy-voting purposes in situations where:
o A current investor of the Adviser is affiliated with an Investment Fund
soliciting proxies or has communicated its view to the Adviser on an
impending proxy vote;
o The portfolio manager responsible for proxy-voting has identified a
personal interest in the Investment Fund soliciting proxies or in the
outcome of a shareholder vote;
o Members of the portfolio management team, including the portfolio
manager responsible for proxy-voting, and/or members of senior
management, have a personal interest through investment in the
Investment Fund soliciting proxies;
o Members of the Investment Fund or a third party with an interest in the
outcome of a shareholder vote have attempted to influence either the
Adviser or the portfolio manager responsible for voting a proxy.
Employees of the Adviser should be aware of the potential for conflicts of
interest that may result, on the part of the Adviser, from employees' personal
relationships or special circumstances that may result as part of the Adviser's
normal course of business. Employees who become aware of any such conflicts of
interest are under obligation to bring them to the attention of the Chief
Compliance Officer or Legal who will work with appropriate personnel of the
Adviser to determine the materiality of the conflict.
ADDRESSING MATERIAL CONFLICTS OF INTEREST. A conflict of interest will be
considered material to the extent it is determined that such conflict has the
potential to influence the Adviser's decision-making in the proxy-voting process
and the determination will be based on an assessment of the particular facts and
circumstances.
If it is determined that a conflict of interest is not material, the Adviser
may vote proxies notwithstanding the existence of the conflict. The Adviser
shall maintain a written record of all conflicts of interest identified, the
materiality determination, and the method used to resolve the material conflict
of interest.
If it is determined that a conflict of interest is material, the Adviser's Chief
Compliance Officer or Legal will work with appropriate personnel of the Adviser
to determine a resolution before voting proxies affected by such conflict of
interest. Resolutions may include:
o Disclosing the conflict and obtaining consent before voting (which
consent in the case of the Fund(s) may be obtained from the Fund's
board of directors);
o Engaging another party on behalf of the Fund(s) to vote the proxy on
its behalf;
o Engaging a third party to recommend a vote with respect to the proxy
based on application of the policies set forth herein; or
o Such other method as is deemed appropriate under the circumstances
given the nature of the conflict.
E. ANNUAL FILING OF PROXY VOTING RECORD
The Adviser will file an annual report of each proxy voted with respect to
the Fund(s) during the preceding twelve-month period ended June 30 on Form N-PX,
no later than August 31st of the then year.
F. PROXY-VOTING DISCLOSURES
Where the Funds hold voting rights, the Funds shall include in their Form
N-CSR (Certified Shareholder Report) : (i) a description of these Policies and
Procedures; (ii) a statement that a description of these Policies and Procedures
is available without charge, upon request by taking the specified action; and
(iii) a statement that information regarding how the Adviser voted proxies
relating to the Funds during the most recent 12-month period, is available upon
request, without charge by taking the specified action.
G. CONTROL PROCESS
To ensure compliance with these Policies and Procedures, at the time of a fund's
investment in an Investment Fund, the subscription document will be reviewed to
ensure that voting rights have been waived, as is current practice. In the event
a fund does not waive voting rights, the Adviser will adhere to these Policies
and Procedures.
H. RECORD-KEEPING
The Adviser shall maintain the following records relating to proxy-voting in
an easily accessible place for a period of not less than six years from the end
of the fiscal year during which the last entry was made on such record, the
first two years on-site:
o A copy of the Adviser's current Proxy-Voting Policies and Procedures;
o A record of each vote cast by the Adviser on behalf of the Fund(s);
o A copy of each proxy solicitation (including proxy statements) and
related materials with regard to each vote;
o A copy of any document relating to the identification and resolution of
conflicts of interest;
o A copy of any document created by the Adviser that was material to a
proxy -voting decision or that memorialized the basis for that
decision; and
A copy of each written investor request for information on how the Adviser voted
proxies on behalf of the Fund(s), and a copy of any written response from the
Adviser to any (written or oral) investor request for information on how the
Adviser voted proxies on behalf of the Fund(s).
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
UBS MULTI-STRAT FUND, L.L.C.
PORTFOLIO MANAGER DISCLOSURE
The Fund is managed by a portfolio management team, each member of which (each,
a "Portfolio Manager" and together, the "Portfolio Managers") is responsible for
the day-to-day management of the Fund's portfolio. Norman E. Sienko, Jr., the
lead member of the portfolio management team, is primarily responsible for the
selection of the Fund's investments, and is jointly responsible for the
allocation of the Fund's assets among Investment Funds. Russell Sinder and
Joseph M. Sciortino, the other members of the portfolio management team, are
jointly and primarily responsible for the allocation of the Fund's investments.
Mr. Sienko has served as a Portfolio Manager of the Fund since its inception,
and as head of the Adviser's portfolio management group since 1998. He is also
currently an Executive Director of UBS Financial Services. Mr. Sinder has been a
Portfolio Manager of the Fund since its inception. Mr. Sinder has been
associated with the Adviser since 1998 and is also an Executive Director of UBS
Financial Services. Mr. Sciortino has been associated with the Fund since
December 2006 and joined the portfolio management team at that time. Mr.
Sciortino has been associated with the Adviser since 2006 and is also a Director
of UBS Financial Services. Previously, he served as Senior Analyst at Lake
Partners, Inc. from April 2001 though August 2006.
The Fund's Portfolio Managers manage multiple accounts for the Adviser,
including registered closed-end funds and private domestic and offshore pooled
investment vehicles.
Potential conflicts of interest may arise because of the Portfolio Managers'
management of the Fund and other accounts. For example, conflicts of interest
may arise with the allocation of investment transactions and allocation of
limited investment opportunities. Allocations of investment opportunities
generally could raise a potential conflict of interest to the extent that the
Portfolio Managers may have an incentive to allocate investments that are
expected to increase in value to preferred accounts. Conversely, a Portfolio
Manager could favor one account over another in the amount or the sequence in
which orders to redeem investments are placed. The Portfolio Managers may be
perceived to have a conflict of interest if there are a large number of other
accounts, in addition to the Fund, that they are managing on behalf of the
Adviser. In addition, each Portfolio Manager could be viewed as having a
conflict of interest to the extent that one or more Portfolio Managers have an
investment in accounts other than the Fund. The Adviser periodically reviews the
Portfolio Managers' overall responsibilities to ensure that they are able to
allocate the necessary time and resources to effectively manage the Fund.
Other accounts may have investment objectives, strategies and risks that differ
from those of the Fund. For these or other reasons, the Portfolio Managers may
purchase different investments for the Fund and the other accounts, and the
performance of investments purchased for the Fund may vary from the performance
of the investments purchased for other accounts. The Portfolio Managers may
place transactions on behalf of other accounts that are directly or indirectly
contrary to investment decisions made for the Fund, which could have the
potential to adversely impact the Fund, depending on market conditions.
A potential conflict of interest may be perceived if the Adviser receives a
performance-based advisory fee as to one account but not another, because a
Portfolio Manager may favor the account subject to the performance fee, whether
or not the performance of that account directly determines the Portfolio
Manager's compensation.
The Adviser's goal is to provide high quality investment services to all of its
clients, while meeting its fiduciary obligation to treat all clients fairly. The
Adviser has adopted and implemented policies and procedures, including brokerage
and trade allocation policies and procedures, that it believes address the
conflicts associated with managing multiple accounts for multiple clients. In
addition, the Adviser monitors a variety of areas, including compliance with
Fund guidelines. Furthermore, senior investment and business personnel at UBS
Financial Services periodically review the performance of the Portfolio
Managers.
The Portfolio Managers' compensation is comprised primarily of a fixed salary
and a discretionary bonus paid by UBS Financial Services or its affiliates and
not by the Fund. A portion of the discretionary bonus may be paid in shares of
stock or stock options of UBS AG, the ultimate parent company of the Adviser,
subject to certain vesting periods. The amount of a Portfolio Manager's
discretionary bonus, and the portion to be paid in shares or stock options of
UBS AG, is determined by senior officers of UBS Financial Services. In general,
the amount of the bonus will be based on a combination of factors, none of which
is necessarily weighted more than any other factor. These factors may include:
the overall performance of UBS Financial Services and its Alternative Investment
Group; the overall performance of UBS AG; the profitability to UBS Financial
Services derived from the management of the Fund and the other accounts managed
by the Alternative Investment Group; the absolute performance of the Fund and
such other accounts for the preceding year; contributions by the Portfolio
Manager to assisting in managing the Alternative Investment Group; participation
by the Portfolio Manager in training of personnel; and support by the Portfolio
Manager generally to colleagues. The bonus is not based on a precise formula,
benchmark or other metric.
The following table lists the number and types of other accounts advised by the
Fund's Portfolio Managers and approximate assets under management in those
accounts as of the end of the Fund's most recent fiscal year.
NORMAN E. SIENKO, JR.
REGISTERED INVESTMENT COMPANIES POOLED ACCOUNTS OTHER ACCOUNTS
Number of Number of Number of
Accounts(1) Assets Managed Accounts(2) Assets Managed Accounts Assets Managed
- ----------- -------------- ----------- -------------- -------- --------------
7 $3,029,840,034 4 $441,041,623 0 N/A
RUSSELL SINDER
REGISTERED INVESTMENT COMPANIES POOLED ACCOUNTS OTHER ACCOUNTS
Number of Number of Number of
Accounts(1) Assets Managed Accounts(2) Assets Managed Accounts Assets Managed
- ----------- -------------- ----------- -------------- -------- --------------
7 $3,029,840,034 4 $441,041,623 0 N/A
JOSEPH M. SCIORTINO
REGISTERED INVESTMENT COMPANIES POOLED ACCOUNTS OTHER ACCOUNTS
Number of Number of Number of
Accounts(1) Assets Managed Accounts(2) Assets Managed Accounts Assets Managed
- ----------- -------------- ----------- -------------- -------- --------------
7 $3,029,840,034 4 $441,041,623 0 N/A
(1) Of these accounts, 5 accounts with total assets of approximately
$1,360,954,398 charge performance-based advisory fees.
(2) Of these accounts, 3 accounts with total assets of approximately
$160,199,591 charge performance-based advisory fees.
None of the Fund's Portfolio Managers beneficially owns any interests in the
Fund.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) UBS Multi-Strat Fund, L.L.C.
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By (Signature and Title)* /s/ Douglas Lindgren
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Douglas Lindgren, Principal Executive Officer
Date March 5, 2008
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Douglas Lindgren
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Douglas Lindgren, Principal Executive Officer
Date March 5, 2008
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By (Signature and Title)* /s/ Robert Aufenanger
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Robert Aufenanger, Principal Financial Officer
Date March 5, 2008
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* Print the name and title of each signing officer under his or her signature.