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.
(Exact name of registrant as specified in charter)
299 Park Avenue, 29th Floor
New York, NY 10171
(Address of principal executive offices) (Zip code)
James M. Hnilo, Esq.
UBS Alternative and Quantitative Investments LLC
One North Wacker Drive, 32nd Floor
Chicago, Illinois 60606
(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 525-5000
Date of fiscal year end: December 31
Date of reporting period: December 31, 2010
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. Section 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, 2010
UBS MULTI-STRAT FUND, L.L.C.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
YEAR ENDED
DECEMBER 31, 2010
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 ........................................................... 17
(ERNST & YOUNG LOGO) 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, 2010, 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 five years in the period then ended. 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, 2010, by correspondence with
management of the underlying investment funds. 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, 2010, 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 five years in the period then ended, in conformity with U.S.
generally accepted accounting principles.
(ERNST & YOUNG LLP)
February 24, 2011
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, 2010
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ASSETS
Investments in Investment Funds, at fair value (cost $94,710,734) $ 115,677,349
Cash and cash equivalents 4,918,889
Receivable from Investment Funds 20,986,687
Advanced subscriptions in Investment Funds 5,000,000
Interest receivable 213
Other assets 24,549
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TOTAL ASSETS 146,607,687
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LIABILITIES
Withdrawals payable 13,115,061
Subscriptions received in advance 3,128,787
Loan payable 1,800,000
Professional fees payable 178,443
Management Fee payable 149,797
Administrator Fee payable 34,569
Administration fee payable 34,215
Custody fee payable 1,365
Loan interest payable 175
Other liabilities 32,843
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TOTAL LIABILITIES 18,475,255
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MEMBERS' CAPITAL $ 128,132,432
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MEMBERS' CAPITAL
Represented by:
Net capital contributions $ 107,165,817
Accumulated net unrealized appreciation/(depreciation) on investments in Investment Funds 20,966,615
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MEMBERS' CAPITAL $ 128,132,432
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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, 2010
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INVESTMENT INCOME
Interest $ 5,453
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TOTAL INVESTMENT INCOME 5,453
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EXPENSES
Management Fee 1,686,038
Administrator Fee 389,086
Professional fees 375,099
Administration fee 134,081
Directors' fees 54,273
Custody fee 10,370
Loan interest 175
Printing, insurance and other expenses 130,653
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TOTAL EXPENSES 2,779,775
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Administration and custody fees waived (3,267)
NET EXPENSES 2,776,508
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NET INVESTMENT LOSS (2,771,055)
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NET REALIZED AND UNREALIZED GAIN/(LOSS) FROM INVESTMENTS
Net realized gain/(loss) from investments in Investment Funds 7,210,392
Net change in unrealized appreciation/depreciation on investments in Investment Funds 1,818,870
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NET REALIZED AND UNREALIZED GAIN/(LOSS) FROM INVESTMENTS 9,029,262
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NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS $ 6,258,207
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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, 2009 AND 2010
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ADVISER MEMBERS TOTAL
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MEMBERS' CAPITAL AT JANUARY 1, 2009 $ 110,090 $ 103,045,741 $ 103,155,831
INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment income/(loss) (1,081) (2,586,349) (2,587,430)
Net realized gain/(loss) from investments in Investment
Funds 4,148 4,036,444 4,040,592
Net change in unrealized appreciation/depreciation on
investments in Investment Funds 14,450 13,951,086 13,965,536
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NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 17,517 15,401,181 15,418,698
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MEMBERS' CAPITAL TRANSACTIONS
Members' subscriptions -- 27,611,870 27,611,870
Members' withdrawals -- (31,494,447) (31,494,447)
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NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS -- (3,882,577) (3,882,577)
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MEMBERS' CAPITAL AT DECEMBER 31, 2009 $ 127,607 $ 114,564,345 $ 114,691,952
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INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment income/(loss) (1,094) (2,769,961) (2,771,055)
Net realized gain/(loss) from investments in Investment
Funds 7,089 7,203,303 7,210,392
Net change in unrealized appreciation/depreciation on
investments in Investment Funds 2,023 1,816,847 1,818,870
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NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 8,018 6,250,189 6,258,207
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MEMBERS' CAPITAL TRANSACTIONS
Members' subscriptions -- 29,559,541 29,559,541
Members' withdrawals -- (22,377,268) (22,377,268)
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NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS -- 7,182,273 7,182,273
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MEMBERS' CAPITAL AT DECEMBER 31, 2010 $ 135,625 $ 127,996,807 $ 128,132,432
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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, 2010
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CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in members' capital derived from operations $ 6,258,207
Adjustments to reconcile net increase in member's capital derived from operations
to net cash used in operating activities:
Purchases of investments in Investment Funds (39,177,279)
Proceeds from disposition of investments in Investment Funds 33,585,865
Net realized (gain)/loss from investments in Investment Funds (7,210,392)
Net change in unrealized appreciation/depreciation on investments in Investment Funds (1,818,870)
Changes in assets and liabilities:
(Increase) decrease in assets:
Advanced subscriptions in Investment Funds 5,000,000
Interest receivable 665
Receivable from Investment Funds (11,725,741)
Other assets (9,354)
Increase (decrease) in liabilities:
Administration fee payable 11,620
Administrator Fee payable 2,361
Custody fee payable (216)
Management Fee payable 10,231
Professional fees payable 36,957
Other liabilities 1,460
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NET CASH USED IN OPERATING ACTIVITIES (15,034,486)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Members' subscriptions, including change in subscriptions received in
advance 32,688,328
Payments on Members' withdrawals, including change in withdrawals payable (25,336,814)
Proceeds from loan 1,800,000
Loan interest 175
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NET CASH PROVIDED BY FINANCING ACTIVITIES 9,151,689
Net decrease in cash and cash equivalents (5,882,797)
Cash and cash equivalents--beginning of year 10,801,686
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CASH AND CASH EQUIVALENTS--END OF YEAR $ 4,918,889
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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, 2010
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The following represents the ratios to average members' capital and other supplemental
information for all Members, excluding the Adviser, for the periods indicated.
An individual Member's ratios and returns may vary from the below based on the timing of capital
transactions.
YEARS ENDED DECEMBER 31,
------------------------
2010 2009 2008 2007 2006
---- ---- ---- ---- ----
Ratio of net investment loss to
average members' capital (a), (b) (2.15%) (2.21%) (2.04%) (2.05%) (2.59%)
Ratio of gross expenses to
average members' capital (a), (b) 2.15% 0.00% 0.00% 0.00% 0.00%
Ratio of administration and
custody fees waived to average
members' capital (a), (b), (c) 0.00%(d) 0.00% 0.00% 0.00% 0.00%
Ratio of net expenses to
average members' capital (a), (b) 2.15% 2.22% 2.13% 2.13% 2.64%
Portfolio turnover rate 28.92% 32.28% 1.51% 12.32% 14.81%
Total return (e) 4.92% 14.43% (14.71%) 8.15% 11.88%
Average debt ratio (a) 0.01% 0.06% 0.44% 1.05% 10.50%
Members' capital at end of year
(including the Adviser) $128,132,432 $114,691,952 $103,155,831 $158,635,046 $124,250,435
(a) The average members' capital used in the above ratios is calculated using pre-tender members' capital,
excluding the Adviser.
(b) Ratios of net investment loss and gross/net expenses to average members' capital do not include the
impact of expenses and incentive allocations or incentive fees related to the underlying Investment
Funds.
(c) The administration and custody fees waiver was effective November 1, 2010. Therefore, the ratio of
administration and custody fees waived was not applicable for the years ended December 31, 2006 through
December 31, 2009.
(d) Less than 0.005%.
(e) 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.
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, 2010
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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") have 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.
As of September 30, 2010, pursuant to an Assignment and Assumption Agreement, the Directors have
engaged UBS Alternative and Quantitative Investments LLC ("UBS A&Q", 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. UBS A&Q is a wholly owned subsidiary of UBS AG and is
registered as an investment adviser under the Investment Advisers Act of 1940, as amended. In addition
to the assignment of responsibilities, the capital balance as of September 30, 2010 was transferred
from UBSFA (defined below) to UBS A&Q.
Prior to the Assignment and Assumption Agreement, the Directors had engaged UBS Fund Advisor, L.L.C.
("UBSFA"), a Delaware limited liability company, in the roles of Adviser and Administrator. UBSFA is a
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 Directors may determine and are generally accepted monthly. The Directors reserve 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
(the "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,
7
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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DECEMBER 31, 2010
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1. ORGANIZATION (CONTINUED)
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. NEW ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board ("FASB") issued Codification Accounting
Standards Update No. 2010-06, IMPROVING DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS ("ASU 2010-06"). ASU
2010-06 amends Topic 820, FAIR VALUE MEASUREMENTS AND DISCLOSURES to add new requirements for
disclosures about transfers into and out of Levels 1 and 2, and separate disclosures about purchases,
sales, issuances, and settlements relating to Level 3 measurements. This update also clarifies existing
fair value disclosures about the level of disaggregation for the classes of assets and liabilities and
the disclosures about the inputs and valuation techniques used to measure fair value. ASU 2010-06 is
effective for the interim and annual periods beginning after December 15, 2009 and for periods
beginning after December 15, 2010 for the new Level 3 disclosures. The adoption of ASU 2010-06 new
disclosures and clarification of existing disclosures did not have a material impact on the Fund's
financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES
A. PORTFOLIO VALUATION
The Fund values its investments at fair value, in accordance with U.S. generally accepted accounting
principles ("GAAP"), which 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.
Various inputs are used in determining the fair value of the Fund's investments which are summarized in
the three broad levels listed below.
LEVEL 1-- quoted prices in active markets for identical securities
LEVEL 2-- fair value of investments in Investment Funds with the ability to redeem at net asset value
as of the measurement date, or within one year of the measurement date
LEVEL 3-- fair value of investments in Investment Funds that do not have the ability to redeem at net
asset value within one year of the measurement date
The Fund recognizes transfers into and out of the levels indicated above at the end of the reporting
period. All transfers into and out of Level 3 can be found in the Level 3 reconciliation table within
the Schedule of Portfolio Investments.
8
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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DECEMBER 31, 2010
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3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
GAAP provides guidance in determining whether there has been a significant decrease in the volume and
level of activity for an asset or liability when compared with normal market activity for such asset or
liability (or similar assets or liabilities). GAAP also provides guidance on identifying circumstances
that indicate a transaction with regards to such an asset or liability is not orderly. In its
consideration, the Fund must consider inputs and valuation techniques used for each class of assets and
liabilities. Judgment is used to determine the appropriate classes of assets and liabilities for which
disclosures about fair value measurements are provided. Fair value measurement disclosures for each
class of assets and liabilities requires greater disaggregation than the Fund's line items in the
Statement of Assets, Liabilities and Members' Capital. The Fund determines the appropriate classes for
those disclosures on the basis of the nature and risks of the assets and liabilities and their
classification in the fair value hierarchy (i.e., Levels 1, 2, and 3).
For assets and liabilities measured at fair value on a recurring basis during the period, the Fund
provides quantitative disclosures about the fair value measurements separately for each class of assets
and liabilities, as well as a reconciliation of beginning and ending balances of Level 3 assets and
liabilities broken down by class.
The following is a summary of the investment strategy and any restrictions on the liquidity provisions
of the investments in Investment Funds held in the Fund as of December 31, 2010. Investment Funds with
no current redemption restrictions may be subject to future gates, lock-up provisions or other
restrictions, in accordance with their offering documents. The Fund had no unfunded capital commitments
as of December 31, 2010.
The Investment Fund in the convertible arbitrage category may simultaneously purchase or sell
convertible securities and either buy or short sale the same issuer's common stock while maintaining a
market neutral position. The Investment Fund within this strategy is generally subject to a 45 day
redemption notice period and can be redeemed with no restrictions as of the measurement date.
The Investment Funds in the direct loans/structured finance strategy invest primarily in asset-based
lending, real estate-structured finance transactions, distressed securities, subprime residential
mortgage market and special situation investments. Investment Funds within this strategy are side
pockets or liquidating trusts where the liquidation of assets is expected over the next 36 months.
The Investment Funds in the distressed/credit strategy invests primarily in securities of companies and
government entities that are either in distress, already in default or under bankruptcy protection.
Investment Funds within this strategy are generally subject to a 45 - 90 day redemption notice period.
Investment Funds representing approximately 8 percent of the fair value of the investments
9
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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DECEMBER 31, 2010
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3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
in this strategy are side pockets where the liquidation of assets is expected over the next 36 months.
The remaining approximately 92 percent of the Investment Funds have either initial redemption dates
commencing in the future (28 percent) or are available to be redeemed with no restrictions (64
percent), subject to the Investment Funds' liquidity terms, as of the measurement date. Three
Investment Funds, with a fair value of $13,315,517, transferred from Level 3 to Level 2 at the
measurement date.
The Investment Funds in the global macro strategy employ a discretionary top-down global approach to
investing across a broad range of financial products, including fixed income, commodity, currency and
global equity instruments, to exploit mis-pricings and market volatility by using a blend of relative
value and directional strategies. The Investment Funds within this strategy are generally subject to a
60 - 90 day redemption notice period and are available to be redeemed with no restrictions, subject to
the Investment Fund's liquidity terms, as of the measurement date.
The Investment Funds in the long/short equity strategy invest in both long and short equity strategies
that are primarily in common stocks. The management of these Investment Funds has the ability to shift
investments from value to growth strategies, from small to large capitalization common stocks, and from
a net long position to a net short position. Investment Funds within this strategy are generally
subject to a 45 - 60 day redemption notice period and are available to be redeemed with no
restrictions, subject to the Investment Funds' liquidity terms, as of the measurement date.
The Investment Funds in the multi-strategy strategy invest in both long and short, equity and debt
strategies that are primarily in US based securities. The management of these Investment Funds seek
arbitrage opportunities, distressed securities, corporate restructures and hedges established in
equities, convertible securities, options, warrants, rights, forward contracts, futures, trade claims,
credit default swaps and other derivatives, real estate and other financial instruments. Investment
Funds within this strategy are generally subject to a 45 - 65 day redemption notice period. An
Investment Fund representing approximately 23 percent of the fair value of the investments in this
strategy is in a side pocket where the liquidation of assets is expected over the next 36 months. The
remaining approximately 77 percent of the Investment Funds are available to be redeemed, subject to the
Investment Funds' liquidity terms, with no restrictions as of the measurement date. One Investment
Fund, with a fair value of $5,348,703, transferred from Level 3 to Level 2 at the measurement date.
The Investment Funds in the special situations strategy invest by diversifying across multiple
strategies, and diversifying within strategies and hedge the risk of individual positions and the risk
of
10
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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DECEMBER 31, 2010
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3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
the individual strategies as well as the residual risk of the entire portfolio. Investment Funds within
this strategy are generally subject to a 60 - 100 day redemption notice period. Investment Funds
representing approximately 4 percent of the fair value of the investments in this strategy are side
pockets or liquidating trusts where the liquidation of assets is expected over the next 36 months. The
remaining approximately 96 percent of the Investment Funds are available to be redeemed with no
restrictions, subject to the Investment Funds' liquidity terms, as of the measurement date. One
Investment Fund, with a fair value of $8,393,857, transferred from Level 2 to Level 3 at the
measurement date.
A detailed depiction of each investment in the portfolio by investment strategy, including any
additional liquidity terms and other restrictions, as well as a breakdown of the portfolio into the
fair value measurement levels, can be found in the tables within the Schedule of Portfolio 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 memorandums, 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 fair value measurements, price transparency and valuation procedures in place,
and subscription and redemption activity. 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 fair value relating to certain underlying investments of these Investment Funds, for which there is
no ready market, has been estimated by the respective Investment Funds' management and is based upon
available information in the absence of readily ascertainable fair values and does not necessarily
represent amounts that might ultimately be realized. Due to the inherent uncertainty of valuation,
those estimated fair values may differ significantly from the values that would have been used had a
ready market for the investments existed. These differences could be material.
11
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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DECEMBER 31, 2010
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3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
It is unknown on an aggregate basis whether the Investment Funds held any investments whereby the
Fund's proportionate share exceeded 5% of the Fund's net assets at December 31, 2010.
The fair value of the Fund's assets and liabilities which qualify as financial instruments approximates
the carrying amounts presented in the Statement of Assets, Liabilities and Members' Capital.
B. INVESTMENT TRANSACTIONS AND INCOME RECOGNITION
The Fund accounts for realized gains and losses from Investment Fund transactions based on the pro-rata
ratio of the fair value and cost of the underlying investment at the date of redemption. Interest
income and expenses are recorded on the accrual basis.
C. FUND EXPENSES
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; all costs with respect to communications to
Members; and other types of expenses approved by the Directors.
D. INCOME TAXES
The Fund has reclassified $2,771,055 and $7,210,392 from accumulated net investment loss and
accumulated net realized gain from investments in Investment Funds, respectively, to net capital
contributions during the year ended December 31, 2010. 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, 2010 and had no effect on members' capital.
The Fund files income tax returns in the U.S. federal jurisdiction and applicable states. Management
has analyzed the Fund's tax positions taken on its federal and state income tax returns for all open
tax years, and has concluded that no provision for federal or state income tax is required in the
Fund's financial statements. The Fund's federal and state income tax returns for tax years for which
the applicable statutes of limitations have not expired are subject to examination by the Internal
Revenue Service and state departments of revenue. The Fund recognizes interest and penalties, if any,
related to unrecognized tax benefits as income tax expense in the Statement of Operations. For the year
ended December 31, 2010, the Fund did not incur any interest or penalties.
12
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------------------------------------------------------------------------
DECEMBER 31, 2010
-----------------------------------------------------------------------------------------------------------
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. INCOME TAXES (CONTINUED)
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 PFPC Trust Company 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. Such cash, at times, may
exceed federally insured limits. The Fund has not experienced any losses in such accounts and does not
believe it is exposed to any significant credit risk on such accounts.
F. USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of increases
and decreases in members' capital from operations during the reporting period. Actual results could
differ from those estimates.
4. 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 members' capital, excluding the capital account
attributable to the Adviser.
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
members' capital, excluding the capital account attributable to the Administrator 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 the capital account attributable to the Adviser. A
portion of the Management Fee is paid by UBS A&Q to its affiliates.
13
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------------------------------------------------------------------------
DECEMBER 31, 2010
-----------------------------------------------------------------------------------------------------------
4. RELATED PARTY TRANSACTIONS (CONTINUED)
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
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 ten other UBS funds where UBS A&Q is the investment adviser. All Directors are reimbursed by the
Fund for all reasonable out of pocket expenses.
Other investment partnerships sponsored by UBS Americas or its affiliates may also maintain investment
interests in the Investment Funds owned by the Fund.
5. ADMINISTRATION AND CUSTODY FEES
PFPC Trust Company (the "Custodian"), which will be renamed BNY Mellon Investment Servicing Trust
Company effective July 1, 2011, provides custodial services for the Fund. The Custodian entered into a
service agreement whereby PFPC Trust provides securities clearance functions, as needed.
On July 1, 2010, the PNC Financial Services Group, Inc. sold the outstanding stock of PNC Global
Investment Servicing Inc. to the Bank of New York Mellon Corporation. At the closing of the sale, PNC
Global Investment Servicing (U.S.), Inc. changed its name to BNY Mellon Investment Servicing (US) Inc.
("BNY Mellon"). BNY Mellon 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.
BNY Mellon receives a monthly fee primarily based upon (i) the average members' capital of the Fund
subject to a minimum monthly fee, and (ii) the aggregate members' capital of the Fund and certain other
investment funds sponsored or advised by UBS AG, UBS Americas, Inc. or their affiliates. Additionally,
the Fund reimburses certain out of pocket expenses incurred by BNY Mellon.
14
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------------------------------------------------------------------------
DECEMBER 31, 2010
-----------------------------------------------------------------------------------------------------------
5. ADMINISTRATION AND CUSTODY FEES (CONTINUED)
Effective March 26, 2010, the Custodian and BNY Mellon have agreed to a fee reduction for reimbursement
of the Fund's line of credit commitment fees ("Fee Reduction") for a period of 364 days from November
1, 2010, the effective date of the Fund's line of credit agreement with State Street Bank and Trust
Company ("Initial Term"). Based on the methodology within the agreement, the Custodian and BNY Mellon
have agreed to waive $19,600 for the Fund over the Initial Term. For the period from November, 1, 2010
to December 31, 2010, the Custodian and BNY Mellon waived $1,200 and $2,067, respectively, which is
shown in aggregate as administration and custody fees waived on the Statement of Operations.
6. LOAN PAYABLE
Effective November 1, 2010, the Fund, along with other UBS sponsored funds, entered into a one year,
$250,000,000 committed, secured revolving line of credit with State Street Bank and Trust Company. The
Fund is limited to $19,600,000 (the "Borrower Sublimit Amount") of the secured revolving line of credit
with a maximum borrowing limit of 15% of the Fund's Members' Capital. The interest rate on the
borrowing is the higher of (a) 1.50% above the Overnight LIBOR Rate and (b) 1.50% above the Federal
Funds Rate, in each case as in effect from time to time. There is a commitment fee payable by the Fund,
calculated at 25 basis points per annum of the Borrower Sublimit Amount not utilized.
For the year ended December 31, 2010, the Fund's average interest rate paid on borrowings were 1.75%
per annum and the average borrowings outstanding were $10,000. The Fund had $1,800,000 of borrowings
outstanding at December 31, 2010. Interest expense for the year ended December 31, 2010 was $175 of
which $175 was payable at December 31, 2010.
7. INVESTMENTS
As of December 31, 2010, the Fund had investments in Investment Funds, none of which were related
parties.
Aggregate purchases and proceeds from sales of investment for the year ended December 31, 2010 amounted
to $39,177,279 and $33,585,865, 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, 2010; therefore, the tax basis of investments for 2010 will not be finalized by
the Fund until after the fiscal year end.
15
UBS MULTI-STRAT FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------------------------------------------------------------------------
DECEMBER 31, 2010
-----------------------------------------------------------------------------------------------------------
7. INVESTMENTS (CONTINUED)
The agreements related to investments in Investment Funds provide for compensation to the general
partners/managers in the form of management fees of 1.00% to 2.00% (per annum) of net assets and
performance incentive fees or allocations ranging from 20.00% to 25.00% of net profits earned. One or
more underlying fund investments have entered into a side pocket arrangement. Detailed information
about the Investment Funds' portfolios is not available.
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 fair
value of these investments.
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, the Fund believes that the likelihood
of such an event is remote.
10. SUBSEQUENT EVENTS
As of December 31, 2010, the Fund had $13,115,061 of withdrawals payable. On January 26, 2011, the Fund
paid $10,930,509. The remaining amount payable of $2,184,552 is scheduled to be paid in accordance with
the terms of the Fund's June 30, 2010 and December 31, 2010 tender offers.
16
UBS MULTI-STRAT FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS
-----------------------------------------------------------------------------------------------------------
DECEMBER 31, 2010
-----------------------------------------------------------------------------------------------------------
REALIZED
AND DOLLAR AMOUNT
UNREALIZED OF FAIR VALUE
% OF GAIN/(LOSS) INITIAL FIRST FOR FIRST
MEMBERS' FROM ACQUISITION AVAILABLE AVAILABLE
INVESTMENT FUND COST FAIR VALUE CAPITAL INVESTMENTS DATE LIQUIDITY (a) REDEMPTION (b) REDEMPTION (b)
------------------- ------------ ------------ -------- ----------- ----------- --------------- -------------- --------------
CONVERTIBLE ARBITRAGE
Waterstone Market
Neutral Fund, L.P.
(c) $ 3,136,852 $ 6,291,373 4.91 $ 446,232 10/1/2004 Quarterly
------------ ------------ -------- -----------
CONVERTIBLE
ARBITRAGE
SUBTOTAL $ 3,136,852 $ 6,291,373 4.91% $ 446,232
DIRECT LOANS/
STRUCTURED
FINANCE
CPIM Structured
Credit Fund, L.P.
(d) 1,807,487 355,381 0.28 (67,242) 11/1/2005 N/A
Marathon Structured
Finance Fund, L.P.
(d) 1,772,550 1,711,483 1.33 226,100 4/1/2005 N/A
Marathon Structured
Finance Fund, L.P.
(e) 190,476 790,208 0.62 34,812 4/1/2005 N/A
------------ ------------ -------- -----------
DIRECT LOANS/
STRUCTURED
FINANCE SUBTOTAL $ 3,770,513 $ 2,857,072 2.23% $ 193,670
DISTRESSED/CREDIT
Aurelius Capital
Partners, L.P. (c) 5,000,000 6,018,675 4.70 813,636 12/1/2009 Semi-Annually 12/31/2011 6,018,675
Brigade Leveraged
Capital Structures
Fund, L.P. (c) 6,141,472 7,153,493 5.58 582,507 7/1/2009 Quarterly
Claren Road Credit
Partners, L.P. L
Interest (e) 590,330 564,072 0.44 791,983 1/1/2007 N/A
Claren Road Credit
Partners, L.P., L
Interest Payable
(e) 316,820 616,921 0.48 288,954 1/1/2007 N/A
Gracie Credit
Opportunities
Fund, L.L.C. (c) 6,045,971 6,337,305 4.95 323,212 11/1/2009 Quarterly
Harbinger Capital
Partners Fund I,
L.P., Class L (e) 14,538 63,104 0.05 31,116 9/1/2007 N/A
Harbinger Class PE
Holdings (US)
Trust (e) 713,323 517,462 0.40 (129,249) 9/1/2007 N/A
------------ ------------ -------- -----------
DISTRESSED/CREDIT
SUBTOTAL $ 18,822,454 $ 21,271,032 16.60% $ 2,702,159
GLOBAL MACRO
Brevan Howard,
L.P. (c) 6,000,000 6,157,858 4.81 57,255 10/1/2009 Monthly
COMAC Global Macro
Fund L.P. (c) 5,000,000 4,624,607 3.61 (375,393) 5/1/2010 Monthly
------------ ------------ -------- -----------
GLOBAL MACRO
SUBTOTAL $ 11,000,000 $ 10,782,465 8.42% $ (318,138)
LONG/SHORT EQUITY
Anthion Partners,
L.P. (c) 7,000,000 7,385,956 5.76 385,956 4/1/2010 Quarterly
Bay Pond Partners,
L.P. (c) 3,474,664 6,402,179 5.00 1,269,407 7/1/2007 Semi-Annually
Cobalt Partners,
L.P. (c) 6,223,312 7,310,605 5.71 421,960 7/1/2007 Semi-Annually
D. Jabro Partners,
L.P. (c) 4,230,047 6,476,456 5.05 499,698 1/1/2006 Annually
Newland Fund, L.P.
(c) 7,000,000 7,264,691 5.67 264,691 11/1/2010 Quarterly
------------ ------------ -------- -----------
LONG/SHORT EQUITY
SUBTOTAL $ 27,928,023 $ 34,839,887 27.19% $ 2,841,712
MULTI-STRATEGY
Davidson Kempner
Partners, L.P. (c) 5,676,800 7,651,124 5.97 831,923 1/1/2006 Semi-Annually
OZ Domestic
Partners, L.P. (c) 3,556,046 5,348,703 4.18 434,216 5/1/2005 Annually
OZ Domestic
Partners, L.P. (e) 2,503,463 3,821,781 2.98 628,903 5/1/2005 N/A
------------ ------------ -------- -----------
MULTI-STRATEGY
SUBTOTAL $ 11,736,309 $ 16,821,608 13.13% $ 1,895,042
SPECIAL SITUATIONS
Brookdale
International
Partners, L.P. (f) 4,461,165 8,393,857 6.55 847,897 8/1/2005 Quarterly
Mason Capital,
L.P. (c) 6,000,000 6,606,314 5.16 606,314 1/1/2010 Annually
The preceding notes are an integral part of these financial statements.
17
UBS MULTI-STRAT FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
-----------------------------------------------------------------------------------------------------------
DECEMBER 31, 2010
-----------------------------------------------------------------------------------------------------------
DOLLAR AMOUNT
REALIZED OF
AND FAIR VALUE
UNREALIZED FIRST FOR FIRST
% OF GAIN/(LOSS) INITIAL AVAILABLE AVAILABLE
MEMBERS' FROM ACQUISITION LIQUIDITY REDEMPTION REDEMPTION
INVESTMENT FUND COST FAIR VALUE CAPITAL INVESTMENTS DATE (a) (b) (b)
------------------------------------------------------------------------------------------------------------------------------------
SPECIAL SITUATIONS (CONTINUED)
RoundKeep Global Fund, L.P. (c) $ 7,000,000 $ 6,974,310 5.44 $ (25,690) 12/1/2010 Quarterly
Seneca Capital, L.P., SLV (d) 855,418 839,431 0.65 48,422 10/1/2004 N/A
----------- ------------ -------- -----------
SPECIAL SITUATIONS SUBTOTAL 18,316,583 22,813,912 17.80% 1,476,943
Redeemed Investment Funds -- -- -- (208,358)
----------- ------------ -------- -----------
TOTAL $94,710,734 $115,677,349 90.28% $ 9,029,262
=========== ============ ======== ===========
(a) Available frequency of redemptions after the initial lock-up period, if any. Different tranches may have varying liquidity
terms.
(b) Investment Funds with no dates or amounts can be redeemed in full.
(c) Investment Funds categorized as Level 2 investments.
(d) The Investment Fund is in liquidation. In addition to any redemption proceeds that may have already been received, the Fund will
continue to receive proceeds periodically as the Investment Fund liquidates its underlying investments.
(e) A portion or all of the Fund's interests in the Investment Fund are held in side pockets which have restricted liquidity.
(f) The Fund has placed a redemption request with the Investment Fund which is subject to an investor level gate. The Investment
Fund's investment level gate allows for the Fund to receive 12.5% of its investment every quarter for 2 years. The Fund is
expected to be fully redeemed within 24 months.
Complete information about the Investment Funds' underlying investments is not readily available.
The following is a summary of the inputs used in valuing the Fund's investments at fair value. The inputs or methodology used for
valuing the Fund's investments are not necessarily an indication of the risk associated with investing in those investments. The
Fund's valuation procedures require evaluation of all relevant factors available at the time the Fund values its portfolio. These
relevant factors include the individual Investment Funds' compliance with fair value measurements, price transparency and valuation
procedures in place, and subscription and redemption activity.
The Fund's investments are categorized in three levels as disclosed below. Level 1 discloses the amount of investments where the
values of those investments are based upon quoted prices in active markets for identical securities. Level 2 discloses the amount of
investments where the Fund has the ability to redeem at net asset value as of the December 31, 2010 measurement date, or within one
year of the measurement date. Level 3 discloses the amount of investments where the Fund does not have the ability to redeem at net
asset value within one year of the December 31, 2010 measurement date. There were no transfers between Level 1 and Level 2 at
December 31, 2010.
The preceding notes are an integral part of these financial statements.
18
UBS MULTI-STRAT FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 2010
------------------------------------------------------------------------------------------------------------------------------------
ASSETS TABLE
------------------------------------------------------------------------------------------------------------------------------------
TOTAL FAIR VALUE
AT
DECEMBER 31, LEVEL 1 LEVEL 2 LEVEL 3
DESCRIPTION 2010
-----------------------------------------------------------------------------------------------------------------------------------
Convertible Arbitrage $ 6,291,373 $ -- $ 6,291,373 $ --
Direct Loans/Structured Finance 2,857,072 -- -- 2,857,072
Distressed/Credit 21,271,032 -- 19,509,473 1,761,559
Global Macro 10,782,465 -- 10,782,465 --
Long/Short Equity 34,839,887 -- 34,839,887 --
Multi-Strategy 16,821,608 -- 12,999,827 3,821,781
Special Situations 22,813,912 -- 13,580,624 9,233,288
-------------------------------------------------------------------
TOTAL ASSETS $ 115,677,349 $ -- $ 98,003,649 $ 17,673,700
-------------------------------------------------------------------
The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:
CHANGE IN NET TRANSFERS
UNREALIZED IN AND/OR
BALANCE AS OF REALIZED GAIN / APPRECIATION / NET PURCHASES / (OUT) BALANCE AS OF
DESCRIPTION DECEMBER 31, 2009 ** (LOSS) DEPRECIATION (SALES) OF LEVEL 3* DECEMBER 31, 2010
-----------------------------------------------------------------------------------------------------------------------------------
Direct Loans / Structured
Finance $3,954,109 $(1,297,119) $1,490,787 $(1,290,705) $-- $2,857,072
Distressed/Credit 13,272,999 (92,333) 2,211,985 (315,575) (13,315,517) 1,761,559
Multi-Strategy 13,397,872 2,279,362 (1,278,298) (5,228,452) (5,348,703) 3,821,781
Special Situations 1,489,715 (627,602) 784,210 (806,892) 8,393,857 9,233,288
-----------------------------------------------------------------------------------------------------------------------------------
Total $32,114,695 $262,308 $3,208,684 $(7,641,624) $(10,270,363) $17,673,700
-----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation/depreciation on Level 3 assets still held as of December 31, 2010 is $3,537,030.
* Net transfers in and/or (out) of Level 3 include transfers out of Investment Funds that were previously categorized as Level 3
investments.
** In the prior year, Investment Funds were categorized as Level 2 investments if the Fund had the ability to redeem at net asset
value as of the December 31, 2009 measurement date or within 90 days of such date.
The net transfers out of Level 3 investments in the amount of $9,310,826 are due to the liquidity of the underlying Investment Funds
in relation to the change in the measurement date from December 31, 2009 to December 31, 2010. The remaining transfer out of Level 3
investments in the amount of $959,537 is due to a transfer between side pocket and liquid holdings during the year ended December
31, 2010.
The preceding notes are an integral part of these financial statements.
19
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 16, 2010. 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 UBS Fund Advisor, L.L.C. (the "Adviser"),
including information regarding the Adviser, its affiliates and its personnel, operations and financial
condition. The Directors also reviewed information regarding UBS Alternative and Quantitative Investments
LLC ("UBS A&Q"), its affiliates and its personnel, operations and financial condition in light of the
transition of management of the Fund from the Adviser to UBS A&Q as of October 1, 2010. 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 and UBS A&Q the Fund's operations and UBS A&Q'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 UBS A&Q, 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 UBS A&Q 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 UBS A&Q 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 UBS
A&Q'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 UBS A&Q and UBS A&Q's affiliates, including UBS AG and UBS Financial
Services Inc. Accordingly, the Directors felt that the quality of service offered by the Adviser, and to be
offered by UBS A&Q, to the Fund were appropriate, and that UBS A&Q'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 the Adviser 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 recognized that the Comparable Funds, as private funds, are not subject to certain investment
restrictions under the Investment Company Act of 1940, as amended, that are applicable to the Fund and
which can adversely affect the Fund's performance relative to that of its Comparable Funds. The Directors
noted that the Fund's 2010 performance as of June 30, 2010 exceeded the median performance of the
Comparable Funds and the relevant indexes (HFRX Absolute Return Index, Barclays Aggregate Bond Index, S&P
500 DRI and Citigroup 3-Month Treasury Bill Index), and that the Fund's performance for the three- and
five-year periods ended June 30, 2010 exceeded the median performance of the Comparable Funds and relevant
indexes. The Directors also compared the volatility of the Fund to that of its Comparable Funds. The
Directors observed that for the three-
and five-year periods ended June 30, 2010, the Fund's volatility was above the median volatility of the
relevant indexes but below the median volatility of the Comparable Funds.
The Directors considered the advisory 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 the Adviser
and its affiliates for other UBS alternative investment products. The information presented to the
Directors showed that although the combination of the Fund's management fee and service fee was above the
median management fee of the Comparable Funds, unlike most of the Comparable Funds, the Fund did not charge
an incentive fee. In comparing the advisory fees being charged to the Fund to the fees being charged by the
Adviser and its affiliates for other UBS alternative investment products, the Directors noted that although
the combination of the Fund's management fee and service fee was the second highest management fee being
charged to the multi-manager funds, unlike most of the other multi-manager funds, 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 and was within the overall range of the fees paid by the Comparable Funds and
other relevant UBS alternative investment products.
The Directors also considered the profitability to the Adviser or UBS A&Q, as the case may be, both
before payment to brokers and after payment to brokers and concluded that the profits to be realized by
Adviser or UBS A&Q, as the case may be, and their affiliates under the Fund's Investment Advisory Agreement
and from other relationships between the Fund and Adviser or UBS A&Q, as the case may be, 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 under the Investment Advisory Agreement did not constitute fees that are
so disproportionally large as to bear no reasonable relationship to the services rendered and that could
not have been the product of arm's length bargaining, and concluded 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 as of December 31, 2010 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 Alternative and Quantitative Investments LLC ("UBS A&Q") at (888) 793-8637.
NUMBER OF
PORTFOLIOS IN OTHER TRUSTEESHIPS/
FUND DIRECTORSHIPS HELD BY
TERM OF OFFICE COMPLEX DIRECTOR OUTSIDE
NAME, AGE, ADDRESS AND AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY FUND COMPLEX
POSITION(S) WITH FUNDS TIME SERVED(1) DURING PAST 5 YEARS DIRECTOR(2) DURING THE PAST 5 YEARS
-----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
George W. Gowen (81) Term -- Indefinite Law partner of Dunnington, Bartholow 11 None
UBS Alternative and Length--since & Miller.
Quantitative Investments LLC Commencement of
677 Washington Boulevard Operations
Stamford, Connecticut 06901
Director
Stephen H. Penman (64) Term -- Indefinite Professor of Financial Accounting of 11 None
UBS Alternative and Length--since the Graduate School of Business,
Quantitative Investments LLC July 1, 2004 Columbia University.
677 Washington Boulevard
Stamford, Connecticut 06901
Director
Virginia G. Breen (46) Term -- Indefinite General Partner of Sienna Ventures; 11 Director of: Modus Link,
UBS Alternative and Length--since General Partner of Blue Rock Capital. Inc.; Excelsior Absolute
Quantitative Investments LLC May 2, 2008 Return Fund of Funds,
677 Washington Boulevard L.L.C.; Excelsior Buyout
Stamford, Connecticut 06901 Investors, L.L.C.; Excelsior
Director LaSalle Property Fund, Inc;
UST Global Private Markets
Fund, L.L.C.
INTERESTED DIRECTOR
Meyer Feldberg (68)(3) Term -- Indefinite Dean Emeritus and Professor of 58 Director of: Primedia, Inc.;
UBS Alternative and Length--since Management of the Graduate School of Macy's, Inc.; Revlon, Inc.;
Quantitative Investments LLC Commencement of Business, Columbia University; Senior NYC Ballet; SAPPI Ltd.
677 Washington Boulevard Operations Advisor for Morgan Stanley. Advisory Director of Welsh
Stamford, Connecticut 06901 Carson Anderson & Stowe.
Director
OFFICER(S) WHO ARE NOT DIRECTORS
William J. Ferri (44) Term -- Indefinite Global Head of UBS Alternative and N/A N/A
UBS Alternative and Length--since Quantitative Investments LLC since
Quantitative Investments LLC October 1, 2010 June 2010. Prior to serving in this
677 Washington Boulevard role, he was Deputy Global Head of
Stamford, Connecticut 06901 UBS Alternative and Quantitative
Principal Executive Officer Investments LLC.
Robert F. Aufenanger (57) Term -- Indefinite Executive Director of UBS Alternative N/A N/A
UBS Alternative and Length--since and Quantitative Investments LLC
Quantitative Investments LLC May 1, 2007 since October 2010. Prior to October
677 Washington Boulevard 2010, Executive Director of UBS
Stamford, Connecticut 06901 Alternative Investments US from April
Principal Accounting Officer 2007 to October 2010. Prior to April
2007, Chief Financial Officer and
Senior Vice President of Alternative
Investments Group of U.S. Trust
Corporation from 2003 to 2007.
NUMBER OF
PORTFOLIOS IN OTHER TRUSTEESHIPS/
FUND DIRECTORSHIPS HELD BY
TERM OF OFFICE COMPLEX DIRECTOR OUTSIDE
NAME, AGE, ADDRESS AND AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY FUND COMPLEX
POSITION(S) WITH FUNDS TIME SERVED(1) DURING PAST 5 YEARS DIRECTOR(2) DURING THE PAST 5 YEARS
-----------------------------------------------------------------------------------------------------------------------------------
Frank S. Pluchino (51) Term - Indefinite Executive Director of UBS Alternative N/A N/A
UBS Alternative and Length--since and Quantitative Investments LLC
Quantitative Investments LLC July 19, 2005 since October 2010. Prior to October
677 Washington Boulevard 2010, Executive Director of
Stamford, Connecticut 06901 Compliance of UBS Financial Services
Chief Compliance Officer Inc. from 2003 to 2010 and Deputy
Director of Compliance of UBS
Financial Services of Puerto Rico
Inc. from October 2006 to October
2010.
(1) The Fund commenced operations on October 1, 2004.
(2) Of the 58 funds/portfolios in the complex, 47 are advised by an affiliate of UBS Financial Services Inc. ("UBSFS") and 11
comprise the UBS A&Q Family 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 A&Q
Family of Funds may do business. Mr. Feldberg is not affiliated with UBSFS 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 Global Asset Management Sales Desk at 888-793-8637.
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 212-821-6053.
(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
$68,100 in 2010 and $77,560 in 2009. 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 $8,250 in 2010 and $13,000 in 2009. 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 $89,000 in 2010 and
$93,000 in 2009. 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 2010 and $0 in 2009.
(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 $2.273 million for 2010 and $3.029 million for
2009.
(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:
UBSAQ
PROXY-VOTING POLICIES AND PROCEDURES
A. INTRODUCTION
UBSAQ 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;
Revised: June 26, 2006
Rebranded: 10/1/2010
- 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
Revised: June 26, 2006
Rebranded: 10/1/2010
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).
Revised: June 26, 2006
Rebranded: 10/1/2010
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, Joseph
M. Sciortino and Matthew Woodbury, 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. He
served as head of UBS Alternative Investments US' ("AI - US") portfolio
management group from 1998 to 2010, prior to his group joining UBS Alternative
and Quantitative Investments LLC, the Fund's investment adviser (the "Adviser").
He is also currently an Executive Director of the Adviser. Mr. Sinder has been a
Portfolio Manager of the Fund since 2007. Mr. Sinder was associated with AI - US
from 1998 to 2010, prior to joining the Adviser, and is an Executive Director of
the Adviser. Mr. Sciortino joined the portfolio management team in 2007. He was
associated with AI - US from December 2006 to October 2010, prior to joining the
Adviser, and is a Director of the Adviser. Previously, Mr. Sinder served as
Senior Analyst at Lake Partners, Inc. from April 2001 through August 2006. Mr.
Woodbury was associated with AI - US from 2008 to 2010, prior to joining the
Adviser, and is a Director of the Adviser. Previously, he served as an Analyst
at Allianz Hedge Fund Partners, LP (2002-2008) and an Accountant at Arthur
Anderson LLP (1999-2002).
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 of the
Adviser 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 the Adviser 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 the Adviser. 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 the Adviser; the overall performance of UBS AG; the profitability
to the Adviser derived from the management of the Fund and the other accounts
managed by the Adviser; the absolute performance of the Fund and such other
accounts for the preceding year; contributions by the Portfolio Manager to
assisting in managing the Adviser; 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 ASSETS NUMBER OF ASSETS
ACCOUNTS (1) ASSETS MANAGED ACCOUNTS (2) MANAGED ACCOUNTS MANAGED
------------ -------------- ------------ ------------ --------- -------
5 $1,353,916,348 5 $384,425,700 0 N/A
RUSSELL SINDER
REGISTERED INVESTMENT
COMPANIES POOLED ACCOUNTS OTHER ACCOUNTS
----------------------------- --------------------------- -------------------
NUMBER OF NUMBER OF ASSETS NUMBER OF ASSETS
ACCOUNTS (1) ASSETS MANAGED ACCOUNTS (2) MANAGED ACCOUNTS MANAGED
------------ -------------- ------------ ------------ --------- -------
5 $1,353,916,348 5 $384,425,700 0 N/A
JOSEPH M. SCIORTINO
REGISTERED INVESTMENT
COMPANIES POOLED ACCOUNTS OTHER ACCOUNTS
----------------------------- --------------------------- -------------------
NUMBER OF NUMBER OF ASSETS NUMBER OF ASSETS
ACCOUNTS (1) ASSETS MANAGED ACCOUNTS (2) MANAGED ACCOUNTS MANAGED
------------ -------------- ------------ ------------ --------- -------
5 $1,353,916,348 5 $384,425,700 0 N/A
MATTHEW WOODBURY
REGISTERED INVESTMENT
COMPANIES POOLED ACCOUNTS OTHER ACCOUNTS
----------------------------- --------------------------- -------------------
NUMBER OF NUMBER OF ASSETS NUMBER OF ASSETS
ACCOUNTS (1) ASSETS MANAGED ACCOUNTS (2) MANAGED ACCOUNTS MANAGED
------------ -------------- ------------ ------------ --------- -------
5 $1,353,916,348 5 $384,425,700 0 N/A
(1) Of these accounts, 3 accounts with total assets of approximately
$489,525,737 charge performance-based advisory fees.
(2) Of these accounts, 3 accounts with total assets of approximately
$119,016,690 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.
By (Signature and Title)* /s/ William Ferri
----------------------------------------------
William Ferri, Principal Executive Officer
Date March 9, 2011
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/ William Ferri
----------------------------------------------
William Ferri, Principal Executive Officer
Date March 9, 2011
By (Signature and Title)* /s/ Robert Aufenanger
----------------------------------------------
Robert Aufenanger, Principal Financial Officer
Date March 9, 2011
* Print the name and title of each signing officer under his or her
signature.