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
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)
Steven S. Drachman
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: 212-882-5819
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Date of fiscal year end: December 31
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Date of reporting period: December 31, 2008
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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, 2008
UBS MULTI-STRAT FUND, L.L.C.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
YEAR ENDED
DECEMBER 31, 2008
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
Financial Highlights ....................................................... 6
Notes to Financial Statements................................................ 7
Schedule of Portfolio Investments............................................ 15
[LOGO OMITTED] ERNST & YOUNG LLP Ernst & Young LLP
5 Times Square
New York, New York 10036-6530
Tel: (212) 773-3000
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, 2008, and the related statements of
operations and cash flows for the year 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 the 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, 2008, 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, 2008, 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 23, 2009
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, 2008
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ASSETS
Investments in Investment Funds, at fair value
(cost $78,043,904) $ 83,243,922
Investments in Other Securities, at fair value
(cost $24,436) 6,627
Cash and cash equivalents 38,215,303
Receivable from Investment Funds 21,690,434
Interest receivable 4,392
Other assets 8,003
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TOTAL ASSETS 143,168,681
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LIABILITIES
Payables:
Withdrawals payable 35,536,517
Loan payable 4,000,000
Professional fees 226,487
Management Fee 151,458
Administrator fee 34,952
Administration fee 24,228
Loan interest payable 354
Other liabilities 38,854
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TOTAL LIABILITIES 40,012,850
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NET ASSETS $ 103,155,831
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MEMBERS' CAPITAL
Represented by:
Net capital contributions $ 97,973,622
Accumulated net unrealized appreciation/(depreciation)
on investment 5,182,209
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MEMBERS' CAPITAL $ 103,155,831
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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, 2008
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INVESTMENT INCOME
Interest $ 142,333
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TOTAL INVESTMENT INCOME 142,333
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EXPENSES
Management Fee 2,018,584
Administrator fee 465,827
Professional fees 388,658
Administration fee 146,866
Loan interest 33,694
Other expenses 225,598
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TOTAL EXPENSES 3,279,227
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NET INVESTMENT LOSS (3,136,894)
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NET REALIZED AND UNREALIZED GAIN/LOSS FROM INVESTMENTS
Net realized gain/(loss) from investments 7,786,108
Net change in unrealized appreciation/depreciation
from investments (28,132,677)
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NET REALIZED AND UNREALIZED GAIN/LOSS FROM INVESTMENTS (20,346,569)
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NET DECREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS $ (23,483,463)
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The accompanying notes are an integral part of these financial statements.
3
UBS MULTI-STRAT FUND, L.L.C.
STATEMENTS OF CHANGES IN MEMBERS' CAPITAL
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YEARS ENDED DECEMBER 31, 2007 AND 2008
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UBS FUND ADVISOR,
L.L.C. MEMBERS TOTAL
- ----------------------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT JANUARY 1, 2007 $ 116,272 $ 124,134,163 $ 124,250,435
INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment income/(loss) (897) (3,114,504) (3,115,401)
Net realized gain/(loss) from investments 1,741 3,490,005 3,491,746
Net change in unrealized
appreciation/depreciation from investments 10,271 11,339,280 11,349,551
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NET INCREASE (DECREASE) 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 (DECREASE) 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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INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment income/(loss) (880) (3,136,014) (3,136,894)
Net realized gain/(loss) from investments 4,306 7,781,802 7,786,108
Net change in unrealized
appreciation/depreciation from investments (20,723) (28,111,954) (28,132,677)
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NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS (17,297) (23,466,166) (23,483,463)
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MEMBERS' CAPITAL TRANSACTIONS
Proceeds from Members' subscriptions -- 16,000,890 16,000,890
Members' withdrawals -- (47,996,642) (47,996,642)
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NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS -- (31,995,752) (31,995,752)
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MEMBERS' CAPITAL AT DECEMBER 31, 2008 $ 110,090 $ 103,045,741 $ 103,155,831
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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, 2008
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CASH FLOWS FROM OPERATING ACTIVITIES
Net decrease in Members' capital derived from operations $ (23,483,463)
Adjustments to reconcile net decrease in Member's capital derived
from operations to net cash provided by operating activities:
Purchases of investments (2,019,466)
Proceeds from disposition of investments 63,644,343
Net realized (gain)/loss from investments (7,786,108)
Net change in unrealized appreciation/depreciation
from investments 28,132,677
Changes in assets and liabilities:
(Increase) decrease in assets:
Interest receivable 5,790
Receivables from Investment Funds (19,283,212)
Other assets (8,002)
Increase (decrease) in payables:
Administration fee (7,076)
Administrator fee (7,760)
Management Fee (33,629)
Professional fees 122,987
Other liabilities 22,157
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NET CASH PROVIDED BY OPERATING ACTIVITIES 39,299,238
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Members' subscriptions 16,000,890
Members' withdrawals (26,557,936)
Proceeds from loan 4,000,000
Loan interest 354
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NET CASH USED IN FINANCING ACTIVITIES (6,556,692)
Net increase in cash and cash equivalents 32,742,546
Cash and Cash Equivalents--Beginning of Year 5,472,757
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CASH AND CASH EQUIVALENTS--END OF YEAR $ 38,215,303
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SUPPLEMENTAL CASH FLOWS DISCLOSURE:
Interest paid $ 33,340
- ------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
5
UBS MULTI-STRAT FUND, L.L.C.
FINANCIAL HIGHLIGHTS
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DECEMBER 31, 2008
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The following represents the ratios to average net assets and other
supplemental information for the periods indicated:
PERIOD FROM
OCTOBER 1, 2004
(COMMENCEMENT OF
OPERATIONS)
YEARS ENDED DECEMBER 31, THROUGH
DECEMBER 31,
2008 2007 2006 2005 2004
---- ---- ---- ---- ----
Ratio of net investment
loss to average net assets(a) (2.04%) (2.05%) (2.59%) (1.95%) (3.94%)(b)
Ratio of total expenses to
average net assets(a),(c) 2.13% 2.13% 2.64% 2.18% 4.33%(b)
Portfolio turnover rate 1.51% 12.32% 14.81% 50.12% --
Total return(d) (14.71%) 8.15% 11.88% 0.38% 2.65%
Average debt ratio(a) 0.44% 1.05% 10.50% -- --
Net asset value at end of year $103,155,831 $158,635,046 $124,250,435 $118,229,025 $66,121,636
(a) The average net assets used in the above ratios are calculated using
pre-tender net assets.
(b) Annualized.
(c) Ratio of total expenses to average net assets does not include the
impact of expenses and Incentive Allocations or incentive fees related
to the underlying Investment Funds.
(d) 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 returns may vary from the above based
on the timing of capital transactions.
The accompanying notes are an integral part of these financial statements.
6
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS
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DECEMBER 31, 2008
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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 and commenced
operations on October 1, 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'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.
7
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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DECEMBER 31, 2008
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2. SIGNIFICANT ACCOUNTING POLICIES
A. PORTFOLIO VALUATION
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. Under FAS 157, fair value is the price that would
be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The
adoption of FAS 157 is required for fiscal years beginning after November
15, 2007 and interim periods within those fiscal years. FAS 157 was adopted
as of January 1, 2008 by the Fund.
Various inputs are used in determining the fair value of the Fund's
investments relating to FAS 157. These inputs are summarized in the three
broad levels listed below.
LEVEL 1--quoted prices in active markets for identical securities.
LEVEL 2--other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment spreads, credit risk, etc.)
LEVEL 3--significant unobservable inputs (including Fund's own assumptions
in determining the fair value of investments.)
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
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. 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 has
assessed factors including, but not limited to the individual Investment
Funds' compliance with FAS 157, price transparency and valuation procedures
in place, subscription and redemption activity, level of illiquid
securities held, and the existence or absence of certain redemption
restrictions. 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).
The following is a summary of the inputs used, as of December 31, 2008, in
valuing the Fund's investments at fair value. The inputs or methodology
used for valuing securities are not necessarily an indication of the risk
associated with investing in those securities.
8
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2008
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
----------------------------------------------------------------------------------------------
OTHER SECURITIES AND
VALUATION INPUTS OTHER FINANCIAL INSTRUMENTS *
----------------------------------------------------------------------------------------------
Level 1 - Quoted Prices $ 6,627
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Level 2 - Other Significant Observable Inputs --
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Level 3 - Other Significant Unobservable Inputs 83,243,922
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TOTAL $ 83,250,549
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* Other Financial Instruments include Investments in Investment Funds.
The following is a reconciliation of assets in which significant
unobservable inputs (Level 3) were used in determining fair value:
----------------------------------------------------------------------------------------------
OTHER FINANCIAL INSTRUMENTS*
----------------------------------------------------------------------------------------------
BALANCE AS OF DECEMBER 31, 2007 $165,221,995
----------------------------------------------------------------------------------------------
Accrued discounts/premiums --
----------------------------------------------------------------------------------------------
Realized gain/(loss) 7,786,108
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Change in unrealized appreciation/depreciation (28,114,868)
----------------------------------------------------------------------------------------------
Net purchases/(sales) (61,649,313)
----------------------------------------------------------------------------------------------
Transfers in and/or out of Level 3 --
----------------------------------------------------------------------------------------------
BALANCE AS OF DECEMBER 31, 2008 $ 83,243,922
----------------------------------------------------------------------------------------------
* Other Financial Instruments include Investments in Investment Funds.
The fair value of the Fund's assets and liabilities which qualify as
financial instruments under Statement of Financial Accounting Standards No.
107, "Disclosures about Fair Value of Financial Instruments," approximates
the carrying amounts presented in the Statement of Assets, Liabilities and
Members' Capital.
B. INVESTMENT TRANSACTIONS AND INCOME RECOGNITION
During the year, the Fund accounted for realized gains and losses from
Investment Fund transactions based on the pro-rata ratio of the market
value and cost of the underlying investment at the date of redemption.
Previously the Fund utilized the cost recovery method. Prior year net
realized gain/(loss) from investments and net change in unrealized
appreciation/depreciation from investments have been reclassified to
conform with the current year presentation in the Statement of Changes in
Members' Capital. Interest income is recorded on the accrual basis.
9
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2008
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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; 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.
D. INCOME TAXES
The Fund has reclassified $3,136,894 and $7,786,108 from accumulated net
investment loss and accumulated net realized gain on investments,
respectively, to net capital contributions during the year ended December
31, 2008. The reclassification was to reflect, as an adjustment to net
contributions, the amount of estimated taxable income or loss that have
been allocated to the Fund's Members as of December 31, 2008 and had no
effect on net assets.
The Fund is subject to the provisions of Financial Accounting Standards
Board (FASB) 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,
2004-2007) and the positions to be taken for the federal income tax return
to be filed for the tax year ended December 31, 2008 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 year ended December 31, 2008, 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 which 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.
10
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2008
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 PFPC Trust
Company (an affiliate of PNC Bank, NA), (the "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, 2008, 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.
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 "Management 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 Management 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
Management 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 bears its own costs associated with its
activities as placement agent. Placement fees, if any, charged on
contributions are debited against the contribution amounts, 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 Administrator Fee
11
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2008
- --------------------------------------------------------------------------------
3. RELATED PARTY TRANSACTIONS (CONTINUED)
and the Management 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. The Chairman of the Board of Directors and the
Chairman of the Audit Committee of the Board of Directors each receive an
additional annual retainer in the amounts of $10,000 and $15,000,
respectively. These additional annual retainer amounts are paid for by the
Fund on a pro-rata basis with eleven other UBS funds where UBS Fund Adviser
LLC is the investment adviser. 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, 2008 were $58,372
which is included in other expenses.
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
PNC Global Investment Servicing (U.S.), Inc. ("PNC"), formerly PFPC Inc., a
member of The PNC Financial Services Group, Inc., serves as Administrative
and Accounting Agent to the Fund, and in that capacity provides certain
administrative, accounting, record keeping, tax and Member related
services. PNC 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 PNC.
The Custodian of the Fund's assets provides custodial services for the
Fund.
5. LOAN PAYABLE
The Fund, along with other UBS sponsored funds maintained during 2008 a
$200,000,000 committed, unsecured revolving line of credit with Bank of
Montreal, a Canadian chartered bank acting through its Chicago branch. On
January 31, 2009, the Fund, along with other UBS sponsored funds, reduced
the $200,000,000 committed, unsecured, revolving line of credit with Bank
of Montreal to $75,000,000 through July 28, 2009, the remainder of its
term.
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
Total Eligible Asset Value as defined by the credit agreement. 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
12
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2008
- --------------------------------------------------------------------------------
5. LOAN PAYABLE (CONTINUED)
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, 2008 the Fund's average interest rate paid
on borrowings was 4.99% per annum and the average borrowings outstanding
were $674,590. Interest expense for the year ended December 31, 2008 was
$33,694, of which $354 is payable at December 31, 2008. The Fund had
$4,000,000 in borrowings outstanding at December 31, 2008.
6. INVESTMENTS
As of December 31, 2008, the Fund had investments in Investment Funds, none
of which were related parties.
Aggregate purchases and proceeds from sales of Investment Funds for the
year ended December 31, 2008, amounted to $2,019,466 and $63,644,343,
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 Schedule K-1. The Fund has not yet received all such Schedule
K-1's for the year ended December 31, 2008.
The agreements related to investments in Investment Funds provide for
compensation to the general partners/managers in the form of management
fees of between 0.50% and 2.50% (per annum) of net assets and performance
incentive fees or allocations ranging from 20.00% to 25.00% of net profits
earned.
7. 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.
13
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2008
- --------------------------------------------------------------------------------
8. 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.
9. SUBSEQUENT EVENT
As of December 31, 2008, the Fund had $35,536,517 of withdrawals payable.
On January 8, 2009 the fund paid $31,469,672. The remaining amount payable
of $4,066,845 is scheduled to be paid in accordance with the terms of the
Fund's June 30, 2008 and December 31, 2008 tender offers.
14
UBS MULTI-STRAT FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 2008
- ----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND
UNREALIZED
GAIN/(LOSS)
% OF MEMBERS' FROM
INVESTMENT FUND COST FAIR VALUE CAPITAL INVESTMENTS
- -------------------------------------------------------- ------------ ------------ ------------- ----------------
Waterstone Market Neutral Fund, L.P. $ 4,258,956 $ 5,340,837 5.18% $ 798,523
------------ ------------ ------- ------------
CONVERTIBLE ARBITRAGE SUBTOTAL $ 4,258,956 $ 5,340,837 5.18% $ 798,523
CPIM Structured Credit Fund, L.P. (liquidation) 5,000,000 1,278,732 1.24 (2,212,643)
Marathon Structured Finance Fund, L.P. 6,309,524 4,918,319 4.77 (2,951,409)
Marathon Structured Finance Fund, L.P. (side pocket) 190,476 894,474 0.86 703,998
------------ ------------ ------- ------------
DIRECT LOANS/STRUCTURED FINANCE SUBTOTAL $ 11,500,000 $ 7,091,525 6.87% $ (4,460,054)
Claren Road Credit Partners, L.P. 2,352,943 2,837,629 2.75 845,137
Claren Road Credit Partners, L.P. (L Interest) 1,549,866 231,358 0.22 (1,318,508)
Harbinger Capital Partners Fund I, L.P. 1,993,634 1,912,559 1.85 (1,203,056)
Harbinger Capital Partners Fund I, L.P., Class L 52,097 50,004 0.05 (2,093)
Harbinger Class PE Holdings (US) Trust 955,528 916,670 0.89 38,858
------------ ------------ ------- ------------
DISTRESSED CREDIT SUBTOTAL $ 6,904,068 $ 5,948,220 5.76% $ (1,639,662)
Bay Pond Partners, L.P. 5,000,000 4,552,539 4.41 (1,195,893)
Cobalt Partners, L.P. 7,000,000 6,829,359 6.62 (472,838)
D. Jabro Partners, L.P. 4,230,048 5,493,905 5.33 95,679
DunDonald Fund I, L.P. 6,146,612 7,202,601 6.98 822,906
Eminence Partners, L.P. 4,149,544 5,104,758 4.95 (1,635,695)
------------ ------------ ------- ------------
LONG/SHORT EQUITY SUBTOTAL $ 26,526,204 $ 29,183,162 28.29% $ (2,385,841)
D.E. Shaw Oculus Fund, L.L.C. 3,110,568 5,691,319 5.52 969,935
Davidson Kempner Partners, L.P. 5,781,888 6,250,312 6.06 (880,700)
Davidson Kempner Partners, L.P. (Special Investment) 393,068 304,245 0.29 (88,823)
OZ Domestic Partners, L.P. 5,928,397 6,437,981 6.24 (1,801,624)
OZ Domestic Partners, L.P. (side pocket) 1,933,207 2,687,488 2.61 (38,403)
------------ ------------ ------- ------------
MULTI-STRATEGY SUBTOTAL $ 17,147,128 $ 21,371,345 20.72% $ (1,839,615)
Amber Fund, L.P. (liquidation) 2,860,878 3,073,960 2.98 (2,483,415)
Brookdale International Partners, L.P. 6,250,000 9,336,896 9.05 109,348
Seneca Capital, L.P. (liquidation) 1,662,690 1,662,690 1.61 --
Seneca Capital, L.P. (Side pocket # 1) 477,699 114,336 0.11 (363,363)
Seneca Capital, L.P. (Side pocket # 2) 456,281 120,951 0.12 (335,329)
------------ ------------ ------- ------------
SPECIAL SITUATIONS SUBTOTAL $ 11,707,548 $ 14,308,833 13.87% $ (3,072,759)
Other Securities 24,436 6,627 0.01 (17,809)
Redeemed Investment Funds -- -- -- (7,729,352)
------------ ------------ ------- ------------
TOTAL $ 78,068,340 $ 83,250,549 80.70% $(20,346,569)
============ ============ ======= ============
INITIAL DOLLAR AMOUNT OF FAIR
ACQUISITION FIRST AVAILABLE VALUE FOR FIRST
INVESTMENT FUND DATE LIQUIDITY* REDEMPTION** AVAILABLE REDEMPTION
- -------------------------------------------------------- ----------- ---------- ---------------- ----------------------
Waterstone Market Neutral Fund, L.P. 10/1/2004 Quarterly
CONVERTIBLE ARBITRAGE SUBTOTAL
CPIM Structured Credit Fund, L.P. (liquidation) 11/1/2005 N/A
Marathon Structured Finance Fund, L.P. 4/1/2005 Every 18 Months 12/31/2009 4,918,319
Marathon Structured Finance Fund, L.P. (side pocket) 4/1/2005 N/A
DIRECT LOANS/STRUCTURED FINANCE SUBTOTAL
Claren Road Credit Partners, L.P. 1/1/2007 Quarterly
Claren Road Credit Partners, L.P. (L Interest) 1/1/2007 N/A
Harbinger Capital Partners Fund I, L.P. 9/1/2007 Quarterly
Harbinger Capital Partners Fund I, L.P., Class L 9/1/2007 N/A
Harbinger Class PE Holdings (US) Trust 9/1/2007 N/A
DISTRESSED CREDIT SUBTOTAL
Bay Pond Partners, L.P. 7/1/2007 Semi-Annually
Cobalt Partners, L.P. 7/1/2007 Semi-Annually 6/30/2009 6,829,359
D. Jabro Partners, L.P. 1/1/2006 Annually
DunDonald Fund I, L.P. 4/1/2007 Quarterly
Eminence Partners, L.P. 1/1/2005 Semi-Annually
LONG/SHORT EQUITY SUBTOTAL
D.E. Shaw Oculus Fund, L.L.C. 11/1/2004 N/A A
Davidson Kempner Partners, L.P. 1/1/2006 Annually
Davidson Kempner Partners, L.P. (Special Investment) 1/1/2006 N/A
OZ Domestic Partners, L.P. 5/1/2005 Annually
OZ Domestic Partners, L.P. (side pocket) 5/1/2005 N/A
MULTI-STRATEGY SUBTOTAL
Amber Fund, L.P. (liquidation) 2/1/2006 N/A
Brookdale International Partners, L.P. 8/1/2005 Quarterly 3/31/2009*** 1,183,995
Seneca Capital, L.P. (liquidation) 10/1/2004 N/A
Seneca Capital, L.P. (Side pocket # 1) 7/1/2004 N/A
Seneca Capital, L.P. (Side pocket # 2) 7/1/2004 N/A
SPECIAL SITUATIONS SUBTOTAL
Other Securities
Redeemed Investment Funds
TOTAL
* Available frequency of redemptions after initial lock up period.
** Investment Funds with no date provided can be redeemed in full.
*** The dollar amount of fair value for the first available redemption can be
redeemed commencing on the date listed. The remaining investment amount has
no lock up or other redemption restrictions.
A The Fund redeemed $6,657,146 of its investment and the remaining balance of
$5,691,319 is subject to a redemption restriction imposed.
The proceeding notes are an integral part of these financial statements.
15
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, 2008. 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 the Fund's performance was below that of its Comparable
Funds. The Directors also compared the volatility of the Fund to that of its
Comparable Funds. The Directors observed that the Fund's volatility was below
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.
UBS FINANCIAL SERVICES INC. IS A SUBSIDIARY OF UBS AG
DIRECTORS AND OFFICERS (UNAUDITED)
Information pertaining to the Directors and Officers of the Fund as of 12/31/08
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 OTHER TRUSTEESHIPS/
TERM OF OFFICE COMPLEX DIRECTORSHIPS HELD BY
NAME, AGE, ADDRESS AND AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN DIRECTOR OUTSIDE FUND
POSITION(S) WITH FUNDS TIME SERVED(1) DURING PAST 5 YEARS BY DIRECTOR COMPLEX
- ---------------------- -------------- ------------------- ----------- -------
- ---------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
- ---------------------------------------------------------------------------------------------------------------------------
Meyer Feldberg (66) (3) Term -- Dean and Professor of See Director of: Primedia,
UBS Financial Services Inc. Indefinite Management of the Graduate Footnote 2. Inc., Macy's, Inc., Revlon,
51 West 52nd Street Length -- since School of Business, Columbia Inc., NYC Ballet and
New York, NY 10019 Commencement of University; Senior Advisor to SAPPI Ltd. Advisory
Director Operations Morgan Stanley Director of Welsh
Carson Anderson & Stowe.
- ---------------------------------------------------------------------------------------------------------------------------
George W. Gowen (79) Term -- Law partner of Dunnington, 12 None
UBS Financial Services Inc. Indefinite Bartholow & Miller
51 West 52nd Street Length -- since
New York, NY 10019 Commencement of
Director Operations
- ---------------------------------------------------------------------------------------------------------------------------
Stephen H. Penman (62) Term -- Professor of Financial 12 None
UBS Financial Services Inc. Indefinite Accounting of Graduate School
51 West 52nd Street Length -- since of Business, Columbia University
New York, NY 10019 July 2004
Director
- ---------------------------------------------------------------------------------------------------------------------------
Virginia G. Breen (45) Term -- General Partner of Sienna 12 Director of: Modus
UBS Financial Services Inc. Indefinite Ventures and General Partner of Link, Inc; Excelsior
51 West 52nd Street Length -- since Blue Rock Capital Absolute Return Fund of
New York, NY 10019 May 2, 2008 Funds, L.L.C.;
Director Excelsior Buyout
Investors, L.L.C.;
Excelsior LaSalle
Property Fund Inc; UST
Global Private Markets
Fund L.L.C.
- ---------------------------------------------------------------------------------------------------------------------------
OFFICER(S) WHO ARE NOT DIRECTORS
- ---------------------------------------------------------------------------------------------------------------------------
Robert F. Aufenanger (55) Term -- Executive Director of UBS N/A N/A
UBS Financial Services Inc. Indefinite Alternative Investments US
51 West 52nd Street Length -- since since April 2007. Prior to
New York, NY 10019 May 1, 2007 April 2007, Chief Financial
Principal Accounting Officer Officer and Senior Vice
President of Alternative
Investments Group at U.S. Trust
Corporation from 2003 - 2007.
- ---------------------------------------------------------------------------------------------------------------------------
Frank Pluchino (49) Term -- Assistant Director of N/A N/A
UBS Financial Services Inc. Indefinite Compliance of UBS Financial
1000 Harbor Boulevard Length -- since Services Inc. since 2003 and
Weehawken, NJ 07086 July 19, 2005 Deputy Director of Compliance
Chief Compliance Officer 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.
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND OTHER TRUSTEESHIPS/
TERM OF OFFICE COMPLEX DIRECTORSHIPS HELD BY
NAME, AGE, ADDRESS AND AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN DIRECTOR OUTSIDE FUND
POSITION(S) WITH FUNDS TIME SERVED(1) DURING PAST 5 YEARS BY DIRECTOR COMPLEX
- ---------------------- -------------- ------------------- ----------- -------
- ---------------------------------------------------------------------------------------------------------------------------
Craig Goos (39) Term -- Managing Director UBS N/A N/A
UBS Financial Services Inc. Indefinite Alternative Investments US
51 West 52nd Street Length -- since since September 2008. Prior to
New York, NY 10019 September 18, September 2008, Managing
Principal Executive Officer Director of Bear Stearns
2008 Alternative Investment platform
from 2004 - 2008.
- ---------------------------------------------------------------------------------------------------------------------------
(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) Mr. Feldberg is a director or trustee of 29 investment companies
(consisting of 61 portfolios) for which UBS Fund Advisor or one of its
affiliates serves as investment advisor, sub-advisor or manager.
(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.
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.
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
$57,060 in 2008 and $66,615 in 2007. 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 $16,500 in 2008 and $15,000 in 2007. 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 $44,500 in 2008 and
$104,500 in 2007. 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 2008 and $0 in 2007.
(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 $2.240 million for 2008 and $3 million for 2007.
(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. INVESTMENTS.
(a) 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.
(b) Not applicable.
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:
> 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;
> 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;
> 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;
> 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:
> 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);
> Engaging another party on behalf of the Fund(s) to vote the proxy on
its behalf;
> Engaging a third party to recommend a vote with respect to the proxy
based on application of the policies set forth herein; or
> 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:
> A copy of the Adviser's current Proxy-Voting Policies and
Procedures;
> A record of each vote cast by the Adviser on behalf of the Fund(s);
> A copy of each proxy solicitation (including proxy statements) and
related materials with regard to each vote;
> A copy of any document relating to the identification and resolution
of conflicts of interest;
> 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 ASSETS NUMBER OF ASSETS NUMBER OF ASSETS
ACCOUNTS(1) MANAGED ACCOUNTS(2) MANAGED ACCOUNTS MANAGED
6 1,798,274,116 4 360,754,165
RUSSELL SINDER
REGISTERED INVESTMENT COMPANIES POOLED ACCOUNTS OTHER ACCOUNTS
NUMBER OF ASSETS NUMBER OF ASSETS NUMBER OF ASSETS
ACCOUNTS(1) MANAGED ACCOUNTS(2) MANAGED ACCOUNTS MANAGED
6 1,798,274,116 4 360,754,165
JOSEPH M. SCIORTINO
REGISTERED INVESTMENT COMPANIES POOLED ACCOUNTS OTHER ACCOUNTS
NUMBER OF ASSETS NUMBER OF ASSETS NUMBER OF ASSETS
ACCOUNTS(1) MANAGED ACCOUNTS(2) MANAGED ACCOUNTS MANAGED
6 1,798,274,116 4 360,754,165
(1) Of these accounts, 4 accounts with total assets of approximately
$720,554,109 charge performance-based advisory fees.
(2) Of these accounts, 3 accounts with total assets of approximately
$110,963,736 charge performance-based advisory fees.
None of the Fund's Portfolio Managers beneficially owns any interests in the
Fund.
(B) Not applicable.
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/ Craig Goos
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Craig Goos, Principal Executive Officer
Date 3/6/09
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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/ Craig Goos
-------------------------------------------------------
Craig Goos, Principal Executive Officer
Date 3/6/09
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By (Signature and Title)* /s/ Robert Aufenanger
-------------------------------------------------------
Robert Aufenanger, Principal Financial Officer
Date 3/6/09
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* Print the name and title of each signing officer under his or her signature.