UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21760
Name of Fund: BlackRock Multi-Strategy Hedge Advantage
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Donald C. Burke, Chief Executive
Officer, BlackRock Multi-Strategy Hedge Advantage, 800 Scudders Mill Road,
Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton, NJ,
08543-9011
Registrant's telephone number, including area code: (877) GPC-ROCK
Date of fiscal year end: 03/31/2009
Date of reporting period: 04/01/2008 - 09/30/2008
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES
BLACKROCK SOLUTIONS
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BlackRock Multi-Strategy [BLACKROCK LOGO]
Hedge Advantage
SEMI-ANNUAL REPORT
SEPTEMBER 30, 2008 | (UNAUDITED)
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NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
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Table of Contents
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Page
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A Letter to Shareholders ................................................ 3
Semi-Annual Report:
Fund Summary ............................................................ 4
Disclosure of Expenses .................................................. 5
Financial Statements:
Schedule of Investments .............................................. 6
Statement of Assets and Liabilities .................................. 7
Statement of Operations .............................................. 7
Statements of Changes in Net Assets .................................. 8
Statement of Cash Flows .............................................. 9
Financial Highlights .................................................... 10
Notes to Financial Statements ........................................... 11
Disclosure of Investment Advisory Agreement and Subadvisory Agreement ... 15
Officers and Trustees ................................................... 17
Additional Information .................................................. 18
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2 BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008
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A Letter to Shareholders
Dear Shareholder
It has been a tumultuous period for investors, marked by almost daily headlines
related to the housing market turmoil, volatile energy prices, and the
escalating credit crisis. The news took an extraordinarily heavy tone in
September as the credit crisis boiled over and triggered unprecedented failures
and consolidation in the financial sector, stoking fears of a market and
economic collapse and prompting the largest government rescue plan since the
Great Depression.
Through it all, the Federal Reserve Board (the "Fed") has taken decisive action
to restore liquidity and bolster financial market stability. Key moves included
slashing the target federal funds rate 275 basis points (2.75%) between October
2007 and April 2008 and providing massive cash injections and lending programs.
As the credit crisis took an extreme turn for the worse, the Fed, in concert
with five other global central banks, cut interest rates by 50 basis points in
early October in a rare move intended to stave off worldwide economic damage
from the intensifying financial market turmoil. The U.S. economy managed to grow
at a slow-but-positive pace through the second quarter of the year, though
recent events almost certainly portend a global economic recession.
Against this backdrop, U.S. stocks experienced intense volatility and generally
posted losses for the current reporting period, with small-cap stocks faring
noticeably better than their larger counterparts. Non-U.S. markets followed the
U.S. on the way down and, notably, decelerated at a faster pace than domestic
equities -- a stark reversal of recent years' trends, when international stocks
generally outpaced U.S. stocks.
Treasury securities also traded in a volatile fashion, but rallied overall
(yields fell and prices correspondingly rose) amid an ongoing flight to quality.
The yield on 10-year Treasury issues, which fell to 3.34% in March, climbed to
the 4.20% range in mid-June as investors temporarily shifted out of Treasury
issues in favor of riskier assets (such as stocks and other high-quality fixed
income sectors), then declined again to 3.85% by period-end as the financial
market contagion widened. Tax-exempt issues underperformed overall, as problems
among municipal bond insurers and the collapse in the market for auction rate
securities pressured the group throughout the course of the past year. At the
same time, the above mentioned economic headwinds and malfunctioning credit
markets led to considerable weakness in the high yield sector.
Facing unprecedented volatility and macro pressures, the major benchmark indexes
generally recorded losses over the six- and 12-month reporting periods:
Total Returns as of September 30, 2008 6-month 12-month
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U.S. equities (S&P 500 Index(R)) (10.87)% (21.98)%
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Small cap U.S. equities (Russell 2000 Index(R)) (0.54) (14.48)
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International equities (MSCI Europe, Australasia, Far East Index) (22.35) (30.50)
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Fixed income (Barclays Capital U.S. Aggregate Index)* (1.50) 3.65
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Tax-exempt fixed income (Barclays Capital Municipal Bond Index)* (2.59) (1.87)
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High yield bonds (Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index)* (6.77) (10.51)
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* Formerly a Lehman Brothers index.
Past performance is no guarantee of future results. Index performance
shown for illustrative purposes only. You cannot invest directly in an
index.
Through periods of market turbulence, as ever, BlackRock's full resources are
dedicated to the management of our clients' assets. For our most current views
on the economy and financial markets, we invite you to visit
www.blackrock.com/funds. As always, we thank you for entrusting BlackRock with
your investments, and we look forward to continuing to serve you in the months
and years ahead.
Sincerely,
/s/ Rob Kapito
Rob Kapito
President, BlackRock Advisors, LLC
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THIS PAGE NOT PART OF YOUR FUND REPORT 3
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Fund Summary as of September 30, 2008
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Investment Objective
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BlackRock Multi-Strategy Hedge Advantage (the "Fund") seeks high total return
over a full market cycle through investments in hedge funds and other investment
vehicles pursuing alternative investment strategies.
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Performance
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For the six-month period ended September 30, 2008, the Fund returned (12.94)%
based on net asset value ("NAV"), with dividends reinvested. For the same
period, the Hedge Fund Research Inc. Fund of Funds Composite Index returned
(7.93)% on a NAV basis. The hedge fund industry experienced an extraordinary
period as the meltdown of the financial system entered the realm of reality.
Fierce headwinds in the equity and credit markets challenged most strategies. In
addition to the historical declines in equity valuations, widening credit
spreads, regulatory changes, government intervention and the failure of several
financial institutions put additional pressures on hedge funds. Against this
backdrop, most managers in equity-based, credit and relative value strategies
contributed to losses for the period. On the positive side, directional
strategies in global macro and commodity trading helped mitigate some of the
losses. Short positions in global equity indexes were the primary drivers of
profit in the directional trading space.
The views expressed reflect the opinions of BlackRock as of the date of
this report and are subject to change based on changes in market, economic
or other conditions. These views are not intended to be a forecast of
future events and are no guarantee of future results.
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Fund Information
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As of September 30, 2008, the Fund had liquidated all but nine of its
investments in hedge funds. The following chart shows the Fund's holdings as a
percent of long-term investments:
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Holdings
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GoldenTree European Select Opportunities Ltd. ............................ 25%
Sandelman Partners Multi-Strategy Fund Ltd. .............................. 24
Amber Fund Cayman Ltd. ................................................... 17
Hayground Cove Acquisition Strategies Fund Ltd. .......................... 10
Ore Hill International Fund Ltd. ......................................... 8
HBK Offshore Fund Ltd. ................................................... 8
LibertyView Credit Opportunities Fund Ltd. ............................... 4
Drawbridge Global Macro Fund Ltd. ........................................ 2
Glenview Capital Partners Ltd. ........................................... 2
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The table below summarizes the change in the Fund's net asset value per share:
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9/30/08 3/31/08 Change High Low
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Net Asset Value ............. $0.7755 $0.8908 (12.94)% $0.9184 $0.7755
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The table below provides the Fund's average annual total returns:
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Average Annual Total Return
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Return Without Return With
Sales Charge Sales Charge(1)
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One Year Ended 9/30/08 (18.02)% (20.48)%
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Inception (9/01/05)
through 9/30/08 (2.03) (2.99)
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(1) Maximum sales charge is 3%.
Past results shown should not be considered a representation of future
performance.
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4 BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008
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Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses related
to transactions, including sales charges, redemption fees and exchange fees; and
(b) operating expenses, including advisory fees, distribution fees including
12b-1 fees, and other Fund expenses. The expense example below (which is based
on a hypothetical investment of $1,000 invested on April 1, 2008 and held
through September 30, 2008) is intended to assist shareholders both in
calculating expenses based on an investment in the Fund and in comparing these
expenses with similar costs of investing in other registered investment
companies. See the Notes to Financial Statements for additional expense
disclosures.
The table provides information about actual account values and actual expenses.
In order to estimate the expenses a shareholder paid during the period covered
by this report, shareholders can divide their account value by $1,000 and then
multiply the result by the number in the first line under the heading entitled
"Expenses Paid During the Period."
The table also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses. In order to assist shareholders
in comparing the ongoing expenses of investing in this Fund and other funds,
compare the 5% hypothetical example with the 5% hypothetical examples that
appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders' ongoing
costs only and do not reflect any transactional expenses, such as sales charges.
Therefore, the hypothetical example is useful in comparing ongoing expenses
only, and will not help shareholders determine the relative total expenses of
owning different funds. If these transactional expenses were included,
shareholder expenses would have been higher.
Actual Hypothetical(2)
------------------------------------------------------- -------------------------------------------------------
Beginning Ending Beginning Ending
Account Value Account Value Expenses Paid Account Value Account Value Expenses Paid
April 1, 2008 September 30, 2008 During the Period(1) April 1, 2008 September 30, 2008 During the Period(1)
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BlackRock Multi-
Strategy Hedge
Advantage ...... $1,000 $871 $11.93 $1,000 $1,012 $12.84
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(1) Expenses are equal to the annualized expense ratio of 2.54%, multiplied by
the average account value over the period, multiplied by 183/365 (to
reflect the one-half year period shown).
(2) Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 365.
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BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008 5
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Schedule of Investments September 30, 2008 (Unaudited)
(Percentages shown are based on Net Assets)
Portfolio Funds Value
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Directional -- 0.3%
Drawbridge Global Macro Fund Ltd. $ 91,084
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Equity Opportunistic -- 1.8%
Glenview Capital Partners Ltd. 95,422
Hayground Cove Acquisition Strategies Fund Ltd. 548,662
------------
644,084
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Event Driven -- 2.8%
Amber Fund Cayman Ltd. 967,788
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High Yield -- 5.9%
GoldenTree European Select Opportunities Ltd. 1,391,316
LibertyView Credit Opportunities Fund Ltd.*** 201,887
Ore Hill International Fund Ltd. 474,084
------------
2,067,287
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Multi-Strategy -- 5.1%
HBK Offshore Fund Ltd. 462,321
Sandelman Partners Multi-Strategy Fund Ltd. 1,331,541
------------
1,793,862
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Total Investments** (Cost -- $7,075,618*) -- 15.9% 5,564,105
Other Assets Less Liabilities -- 84.1% 29,334,611
------------
Net Assets -- 100.0% $ 34,898,716
============
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* The cost and unrealized appreciation (depreciation) of investments as of
September 30, 2008, as computed for federal income tax purposes, were as
follows:
Aggregate cost ........................................... $ 7,603,664
============
Gross unrealized appreciation ............................ $ 3,981
Gross unrealized depreciation ............................ (2,043,540)
------------
Net unrealized depreciation .............................. $ (2,039,559)
============
** Non-income producing securities. Please refer to Note 5 of the Notes to
Financial Statements.
*** Security is fair valued.
o Effective April 1, 2008, the Fund adopted Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 157, "Fair Value
Measurements" ("FAS 157"). FAS 157 clarifies the definition of fair value,
establishes a framework for measuring fair values and requires additional
disclosures about the use of fair value measurements. Various inputs are
used in determining the fair value of investments, which are as follows:
o Level 1 -- price quotations in active markets/exchanges for
identical securities
o Level 2 -- other observable inputs (including, but not limited to:
quoted prices for similar assets or liabilities in markets that are
not active, inputs other than quoted prices that are observable for
the assets or liabilities (such as interest rates, yield curves,
volatilities, prepayment speeds, loss severities, credit risks, and
default rates) or other market-corroborated inputs)
o Level 3 -- unobservable inputs based on the best information
available in the circumstance, to the extent observable inputs are
not available (including the Fund's own assumption used in
determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. For
information about the Fund's policy regarding valuation of investments and other
significant accounting policies, please refer to Note 1 of the Notes to
Financial Statements.
The Fund's investments in Portfolio Funds not otherwise traded on a securities
exchange are classified within Level 3 of the fair value hierarchy as the value
of these interests are primarily based on the respective net asset value
reported by management of each Portfolio Fund rather than actual market
transactions and other observable market data. The Fund's investments in
Portfolio Funds traded on a securities exchange are classified within Level 1 of
the fair value hierarchy.
The following table summarizes inputs used as of September 30, 2008 in
determining the fair valuation of the Fund's investments:
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Investments in
Valuation Inputs Portfolio Funds*
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Level 1 ..................................................... --
Level 2 ..................................................... --
Level 3 ..................................................... $ 5,564,105
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Total $ 5,564,105
===========
* In determining the classification of investments in Portfolio Funds
included in the table above, no consideration was given to the
classification of securities held by each underlying Portfolio Fund.
The following is a reconciliation of investments for unobservable inputs (Level
3) used in determining fair value:
- --------------------------------------------------------------------------------
Investments in
Portfolio Funds
- --------------------------------------------------------------------------------
Balance as of April 1, 2008 ................................. $ 47,115,294
Net purchases (sales) ....................................... (36,773,964)
Realized gain (loss) ........................................ 2,369,677
Change in unrealized appreciation (depreciation) ............ (7,146,902)
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Balance as of September 30, 2008 $ 5,564,105
============
See Notes to Financial Statements.
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6 BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008
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Statement of Assets and Liabilities
September 30, 2008 (Unaudited)
- -------------------------------------------------------------------------------
Assets
- -------------------------------------------------------------------------------
Investments at value -- unaffiliated (cost -- $7,075,618) ..... $ 5,564,105
Cash .......................................................... 3,374,071
Investments sold receivable ................................... 27,010,886
Interest receivable -- affiliated ............................. 5,796
Prepaid expenses 1,178
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Total assets .................................................. 35,956,036
-------------
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Liabilities
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Investment advisory fees payable .............................. 720,181
Service fees payable .......................................... 123,016
Accrued expenses and other liabilities ........................ 214,123
-------------
Total liabilities ............................................. 1,057,320
-------------
Net Assets .................................................... $ 34,898,716
=============
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Net Assets Consist of
- -------------------------------------------------------------------------------
Shares, $0.01 par value, unlimited number of shares
authorized ................................................. $ 450,035
Paid-in capital in excess of par .............................. 46,432,584
Accumulated net investment loss ............................... (10,738,920)
Accumulated net realized gain ................................. 266,530
Net unrealized appreciation/depreciation ...................... (1,511,513)
-------------
Net Assets .................................................... $ 34,898,716
=============
Shares outstanding ............................................ 45,003,499
=============
Net asset value per share ..................................... $ 0.7755
=============
Statement of Operations
Six Months Ended September 30, 2008 (Unaudited)
- -------------------------------------------------------------------------------
Investment Income
- -------------------------------------------------------------------------------
Interest -- affiliated ........................................ $ 38,375
-------------
- -------------------------------------------------------------------------------
Expenses
- -------------------------------------------------------------------------------
Investment advisory ........................................... 327,470
Accounting and administration services ........................ 115,353
Service ....................................................... 53,555
Professional .................................................. 31,174
Custodian ..................................................... 21,540
Offering costs ................................................ 944
Miscellaneous ................................................. 5,472
-------------
Total expenses ................................................ 555,508
-------------
Net investment loss ........................................... (517,133)
-------------
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Realized and Unrealized Gain (Loss)
- -------------------------------------------------------------------------------
Net realized gain from investments ............................ 2,369,677
Net change in unrealized appreciation/depreciation
on investments ............................................. (7,146,902)
-------------
Total realized and unrealized loss ............................ (4,777,225)
-------------
Net Decrease in Net Assets Resulting from Operations .......... $ (5,294,358)
=============
See Notes to Financial Statements.
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BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008 7
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
Six Months
Ended
September 30, Year Ended
2008 March 31,
Increase (Decrease) in Net Assets: (Unaudited) 2008
- ----------------------------------------------------------------------------------------------------------------------------------
Operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment loss ......................................................................... $ (517,133) $ (1,320,883)
Net realized gain ........................................................................... 2,369,677 493,377
Net change in unrealized appreciation/depreciation .......................................... (7,146,902) (1,032,850)
----------------------------------
Net decrease in net assets resulting from operations ........................................ (5,294,358) (1,860,356)
----------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends to Shareholders From
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income ....................................................................... -- (6,415,109)
----------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Capital Transactions
- ----------------------------------------------------------------------------------------------------------------------------------
Net proceeds from issuance of shares ........................................................ -- 6,115,605
Reinvestment of dividends ................................................................... -- 5,188,504
Fair value of shares tendered ............................................................... (7,590,134) (13,249,371)
----------------------------------
Net decrease in net assets derived from capital transactions ................................ (7,590,134) (1,945,262)
----------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Total decrease in net assets ................................................................ (12,884,492) (10,220,727)
Beginning of period ......................................................................... 47,783,208 58,003,935
----------------------------------
End of period ............................................................................... $ 34,898,716 $ 47,783,208
==================================
End of period accumulated net investment loss ............................................... $ (10,738,920) $ (10,221,787)
==================================
See Notes to Financial Statements.
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8 BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008
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Statement of Cash Flows
Six Months Ended September 30, 2008 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash Provided by Operating Activities
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations ........................................................... $ (5,294,358)
----------------
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by
operating activities:
Increase in receivables and other assets .................................................................... (25,553,997)
Increase in liabilities ..................................................................................... 243,927
Net change in unrealized appreciation/depreciation .......................................................... 7,146,902
Net realized gain ........................................................................................... (2,369,677)
Proceeds from the sales of long-term investments ............................................................... 36,773,964
----------------
Net cash provided by operating activities ...................................................................... 10,946,761
----------------
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Cash Used for Financing Activities
- -----------------------------------------------------------------------------------------------------------------------------------
Payments for tender of shares .................................................................................. (10,284,771)
----------------
- -----------------------------------------------------------------------------------------------------------------------------------
Cash
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in cash ........................................................................................... 661,990
Cash at beginning of period .................................................................................... 2,712,081
----------------
Cash at end of period .......................................................................................... $ 3,374,071
================
See Notes to Financial Statements.
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BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008 9
- --------------------------------------------------------------------------------
Financial Highlights
Six Months Period
Ended September 1,
September 30, Year Ended March 31, 2005(1) to
2008 ------------------------ March 31,
(Unaudited) 2008 2007 2006
- ---------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .................. $ 0.8908 $ 1.0387 $ 1.0486 $ 1.0000
-----------------------------------------------------------------
Net investment loss(2) ................................ (0.0104) (0.0233) (0.0286) (0.0158)
Net realized and unrealized gain (loss) ............... (0.1049) (0.0104) 0.0999 0.0644
-----------------------------------------------------------------
Net increase (decrease) from investment operations .... (0.1153) (0.0337) 0.0713 0.0486
-----------------------------------------------------------------
Dividends from net investment income .................. -- (0.1142) (0.0812) --
-----------------------------------------------------------------
Net asset value, end of period ........................ $ 0.7755 $ 0.8908 $ 1.0387 $ 1.0486
=================================================================
- ---------------------------------------------------------------------------------------------------------------------------
Total Investment Return(3)
- ---------------------------------------------------------------------------------------------------------------------------
Based on net asset value .............................. (12.94)%(4) (3.87)% 6.99% 4.86%(4)
=================================================================
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses net of reimbursement ................... 2.54%(5) 2.45% 2.92% 3.00%(5)
=================================================================
Total expenses ........................................ 2.54%(5) 2.45% 3.15% 5.68%(5)
=================================================================
Net investment loss ................................... (2.37)%(5) (2.26)% (2.73)% (2.70)%(5)
=================================================================
- ---------------------------------------------------------------------------------------------------------------------------
Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) ....................... $ 34,899 $ 47,783 $ 58,004 $ 41,759
=================================================================
Portfolio turnover .................................... 0% 21% 37% 0%
=================================================================
(1) Commencement of operations.
(2) Based on average shares outstanding.
(3) Total investment returns exclude the effects of sales charges.
(4) Aggregate total investment return.
(5) Annualized.
See Notes to Financial Statements.
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10 BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
1. Significant Accounting Policies:
BlackRock Multi-Strategy Hedge Advantage (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a closed-end, non-diversified
management investment company. The Fund's financial statements are prepared in
conformity with accounting principles generally accepted in the United States of
America, which may require the use of management accruals and estimates. Actual
results may differ from these estimates. The Fund offers one class of shares,
which may be sold with a front-end sales charge.
On September 12, 2008, the Board of Trustees (the "Board," the members of which
are referred to as "Trustees") of the Fund approved a resolution to liquidate
and dissolve the Fund. The Fund began the liquidation and dissolution process by
redeeming a substantial portion of its underlying investments and anticipates
distributing the proceeds from such redemptions to investors in December of
2008. The remaining assets of the Fund will be illiquid and will be transferred
into a liquidating trust, for which investors will receive interests, and the
Fund will subsequently be dissolved. The interests in the liquidating trust will
be transferred before the cash distributions are made. The final distribution
from the liquidating trust to investors is expected to occur when all proceeds
from the redemption of underlying investments have been received. The
investments sold receivable was $27,010,886 at September 30, 2008. As of
November 10, 2008, $25,449,364 has been received.
BlackRock will seek to mitigate the costs of the liquidation and dissolution by
reimbursing the Fund for any redemption fees charged by the underlying managers,
waiving management fees after September 30, 2008 and directly paying the legal
costs associated with the liquidation and dissolution of the Fund. The Fund will
continue to incur certain fund expenses and the liquidating trust will have some
expenses, although the expenses of the liquidating trust are expected to be
significantly lower than the expenses of the Fund itself. In addition, the
Fund's redemptions of the underlying investments will result in the full
recognition of any unrealized gains or losses on those investments for federal
income tax purposes.
The Fund's investors who are tax-exempt will not be subject to U.S. federal
income tax as they will not receive unrelated business taxable income or income
from debt-financed property for U.S. federal income tax purposes (collectively,
"UBTI") upon receiving a liquidating distribution or upon a future disposition
of liquidating trust interests, provided that such investors in the Fund do not
incur "acquisition indebtedness" as defined for U.S. federal income tax purposes
with respect to their investments in the Fund. If any investor in the Fund is
subject to U.S. federal income tax, then the excess, if any, of the value of the
cash plus the liquidating trust interest over such investors' cost basis is
taxable income to such investor in the Fund. The cost basis in the liquidating
trust interests for such investors in the Fund will be the value of those
interests on the date of the distribution. In addition, for any investor in the
Fund subject to U.S. federal income tax, future disposition of liquidating trust
interests will be a taxable event. The Fund will provide investors with the
appropriate tax reporting forms for all applicable years. Investors in the Fund
are urged to consult their own tax advisors concerning possible federal, state,
local and non-U.S. tax consequences from the liquidation and dissolution of the
Fund.
The following is a summary of significant accounting policies followed by the
Fund:
Valuation of Investments in Portfolio Funds: The Fund values its investments in
portfolio funds (the "Portfolio Funds") at fair value in accordance with
procedures established by the Board of Trustees. The valuations reported by the
Portfolio Fund managers of the Portfolio Funds, upon which the Fund calculates
its month-end net asset value and net asset value per share, may be subject to
later adjustment, based upon information reasonably available at that time. The
Fund will pay redemption proceeds, as well as calculate management fees, on the
basis of net asset valuations determined using the best information available as
of the valuation date. In the event a Portfolio Fund subsequently corrects,
revises, or adjusts a valuation after the Fund has determined a net asset value,
the Fund will generally not make any retroactive adjustment to such net asset
value, or to any amounts paid based on such net asset value, to reflect a
revised valuation.
In the event that application of the valuation reported by a Portfolio Fund
results in a price for an investment which is deemed not to be representative of
the market value of such investment or if a Portfolio Fund does not report a
valuation, the investment will be valued by a method approved by the Board of
Trustees as reflecting fair value ("Fair Value Assets"). When determining the
price for Fair Value Assets, the investment advisor seeks to determine the price
that the Fund might reasonably expect to receive from the current sale of that
asset in an arm's-length transaction. Fair value determinations shall be based
upon all available factors that the investment advisor deems relevant. Some of
the assumptions may be complex and susceptible to significant uncertainty and
resulting valuations are susceptible to inaccuracies during periods of market
volatility and uncertainty. The pricing of all Fair Value Assets is subsequently
reported to the Board of Trustees.
Foreign Currency Transactions: Transactions denominated in foreign currencies
are recorded at the exchange rate prevailing when recognized. Assets and
liabilities denominated in foreign currencies are valued at the exchange rate at
the end of the period. Foreign currency transactions are the result of settling
(realized) or valuing (unrealized) assets or liabilities expressed in foreign
currencies into U.S. dollars. Realized and unrealized gains or losses from
investments include the effects of foreign exchange rates on investments. The
Fund invests in foreign securities, which may involve a number of risk factors
and special considerations not present with investments in securities of U.S.
corporations.
Income Taxes: It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies
- --------------------------------------------------------------------------------
BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008 11
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
and to distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required. Under the applicable
foreign tax law, a withholding tax may be imposed on interest, dividends and
capital gains at various rates.
The Fund files U.S. and various state tax returns. No income tax returns are
currently under examination. The statute of limitations on the Fund's tax
returns remains open for the years ended March 31, 2006 through March 31, 2007.
The statute of limitations on the Fund's state tax returns may remain open for
an additional year depending upon the jurisdiction.
Security Transactions and Investment Income: Portfolio Fund transactions are
recorded on the effective dates of the transactions. Realized gains and losses
on Portfolio Fund transactions are determined on the average cost basis.
Interest income is recognized on the accrual basis.
Cash Balances: The Fund maintains cash at PFPC Trust Company (an affiliate).
Offering Costs: Offering costs associated with the ongoing sale of the Fund's
shares were expensed as incurred.
2. Investment Advisory Agreement and Other Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with BlackRock
Advisors, LLC ("BlackRock"). Merrill Lynch & Co., Inc. ("Merrill Lynch") and The
PNC Financial Services Group, Inc. are principal owners of BlackRock, Inc.
BlackRock is responsible for the management of the Fund's portfolio and provides
the necessary personnel, facilities, equipment and certain other services
necessary to the operations of the Fund. For such services, the Fund pays
BlackRock a monthly fee at an annual rate of 1.50% of the average daily value of
the Fund's net assets. BlackRock waived this fee after September 30, 2008,
although BlackRock and its affiliates may earn fees to the extent the Fund's
cash is temporarily invested in money market funds managed by BlackRock.
The Fund has also entered into a Member Services Agreement with FAM
Distributors, Inc. ("FAMD" or the "Service Agent"), a subsidiary of Merrill
Lynch. FAMD provides or arranges for provision of ongoing investor and
shareholder servicing. The Fund pays a monthly fee computed at the annual rate
of 0.25% of the Fund's average month-end assets (the "Service Fee") to certain
affiliates of the Fund, who in turn, pay the Service Agent for payments it makes
to broker-dealers and financial advisors that have agreed to provide ongoing
investor and shareholder maintenance servicing to shareholders of the Fund and
for ongoing investor servicing activities performed by the Service Agent.
Certain officers and/or trustees of the Fund are officers and/or directors of
BlackRock and/or BlackRock, Inc. or its affiliates. The Fund reimburses
BlackRock for compensation paid to the Fund's Chief Compliance Officer.
3. Investments:
Purchases and sales of investments for the six months ended September 30, 2008
were $0 and $36,773,964, respectively.
4. Capital Transactions:
The Fund is closed to new subscriptions and is in the process of being
liquidated.
Transactions in capital shares were as follows:
- --------------------------------------------------------------------------------
Six Months Ended September 30, 2008 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ..................................... -- $ --
Reinvestments ................................... -- --
Shares tendered ................................. (8,638,896) (7,590,134)
----------------------------
Net decrease .................................... (8,638,896) $ (7,590,134)
============================
- --------------------------------------------------------------------------------
Year Ended March 31, 2008 Shares Amount
- --------------------------------------------------------------------------------
Shares sold ..................................... 5,801,944 $ 6,115,605
Reinvestments ................................... 5,495,296 5,188,504
Shares tendered ................................. (13,495,973) (13,249,371)
----------------------------
Net decrease .................................... (2,198,733) $ (1,945,262)
============================
5. Investments in Portfolio Funds:
The following table lists the Fund's investments in Portfolio Funds for the six
months ended September 30, 2008, none of which was a related party. The
agreements related to investments in Portfolio Funds provide for the
compensation in the form of management fees of 1% to 3.5% (per annum) of net
assets and performance incentive fees or allocations of 20% to 25% of net
profits earned.
Complete information about the underlying investments held by the Portfolio
Funds is not readily available, so it is unknown whether the Portfolio Funds
hold any single investment whereby the Fund's proportionate share exceeds 5% of
the Fund's net assets at September 30, 2008.
- --------------------------------------------------------------------------------
12 BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
Fees
% of Fund's Net Income ---------------------- Redemptions
Investments Total Fair Value Fair Value (Loss) Management Incentive Permitted
- -----------------------------------------------------------------------------------------------------------------------------------
Altairis Offshore Levered Ltd. --(e) --(e) $ 50,314 2% 20% Monthly
Amber Fund Cayman Ltd. 17.4% $ 967,788 (259,909) 1.5 20 Quarterly
Aristeia International Ltd. --(e) --(e) (301,172) 1 20 Quarterly
Avenue Europe International Ltd. --(e) --(e) (167,993) 2 20 Quarterly
Boronia Diversified Fund Ltd. --(e) --(e) (198,109) 1.5 20 Monthly
Cantillion Europe Ltd. --(e) --(e) (195,237) 1.5 20 Monthly
The Canyon Value Realization
Fund (Cayman) Ltd. --(e) --(e) (124,443) 2 20 Monthly
Crabel Fund Ltd. --(e) --(e) 48,231 3.5 20 Monthly
Drawbridge Global Macro Fund Ltd. 1.6 91,084 (393,022) 2 20-25 Quarterly-Annually
Glenview Capital Partners Ltd. 1.7 95,422 (579,255) 2 20 Quarterly
GoldenTree European Select
Opportunities 25.0 1,391,316 (311,552) 2 20 Semi-Annually
Gruss Global Investors Ltd. --(e) --(e) (79,769) 1.5 20 Quarterly
Hayground Cove Acquisitions
Strategies Fund Ltd. 10.0 548,662 (22,803) 1.5 20 Quarterly
Hayground Cove Overseas Partners Ltd. --(c) --(c) 190,256 1.5 20 Monthly
HBK Offshore Fund Ltd. 8.3 462,321 (49,013) 2 20 Quarterly
Kinetics Fund Ltd. --(d) --(d) (264,538) 1.25 20 Monthly
LibertyView Credit Opportunities Fund
Ltd. 3.6 201,887(f) (636,671) 1 20 Quarterly
Neon Liberty Emerging Markets Fund Ltd. --(e) --(e) (267,179) 1.5 20 Quarterly
North Sound Legacy International Ltd. --(b) --(b) 1,371 1.5 20 Quarterly
Ore Hill International Fund Ltd. 8.5 474,084 (61,148) 1.5 20 Semi-Annually
OZ Europe Overseas Fund II Ltd. --(e) --(e) (63,733) 2.5 20 Quarterly
Sandelman Partners Multi-Strategy
Fund Ltd. 23.9 1,331,541 (180,022) 2 20 Quarterly
SR Capital Partners Inc. --(a) --(a) 185 1.5 20 Quarterly
SR Phoenicia Inc. --(e) --(e) (480,587) 1 20 Monthly
Trivium Offshore --(c) --(c) (286,009) 1.5 20 Monthly
York European Opportunities Unit Trust --(e) --(e) (49,756) 2 20 Quarterly
York Investments Ltd. --(e) --(e) (95,662) 1.5 20 Quarterly
---------------------------------------------
Total 100.0% $5,564,105 $(4,777,225)
=============================================
(a) Net income from prior period audit holdback.
(b) Net income from prior period audit holdback.
(c) The Fund fully redeemed from the Portfolio Fund as of June 30, 2008.
(d) The Fund fully redeemed from the Portfolio Fund as of July 31, 2008.
(e) The Fund fully redeemed from the Portfolio Fund as of September 30, 2008.
(f) Security is fair valued.
- --------------------------------------------------------------------------------
BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008 13
- --------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
6. Short-Term Borrowings:
The Fund, along with another BlackRock registered investment company, BlackRock
Multi-Strategy Hedge Opportunities LLC, has jointly entered into a $20,000,000
revolving credit agreement with Citibank, N.A. Amounts borrowed under the credit
agreement bear interest at a rate equal to, at the Fund's election, the federal
funds rate plus 1.25% or a base rate, as defined in the credit agreement, or the
Eurodollar rate plus 1.25%. Through September 30, 2008, the Fund had weighted
average borrowings of $0. The Fund had no loans outstanding as of September 30,
2008.
7. Risk Factors:
An investment in the Fund involves a high degree of risk, including the risk
that the entire amount invested may be lost. The Fund allocates assets to
portfolio managers and invests in Portfolio Funds that invest in and actively
trade securities and other financial instruments using a variety of strategies
and investment techniques with significant risk characteristics, including the
risks arising from the volatility of the equity, fixed income, commodity and
currency markets, the risks of borrowings and short sales, the risks arising
from leverage associated with trading in the equities, currencies and
over-the-counter derivatives markets, the illiquidity of derivative instruments
and the risk of loss from counterparty defaults. No guarantee or representation
is made that the investment program will be successful.
8. Capital Loss Carryforward:
On March 31, 2008, the Fund had a capital loss carryforward of $1,077,249, all
of which expires in 2016. This amount will be available to offset future
realized capital gains through date of liquidation.
9. Subsequent Events:
On September 15, 2008, Bank of America Corporation announced that it has agreed
to acquire Merrill Lynch, one of the principal owners of BlackRock, Inc. The
purchase has been approved by the directors of both companies. Subject to
shareholder approval and regulatory appeals, the transaction is expected to
close on or before December 31, 2008.
The revolving credit agreement was terminated on October 24, 2008.
- --------------------------------------------------------------------------------
14 BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008
- --------------------------------------------------------------------------------
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
The Board of Trustees (the "Board," the members of which are referred to as
"Trustees") of BlackRock Multi-Strategy Hedge Advantage (the "Fund") met in
April and May 2008 to consider approving the continuation of the Fund's
investment advisory agreement (each, an "Advisory Agreement") with BlackRock
Advisors, LLC (the "Advisor"), the Fund's investment advisor. The Board also
considered the approval of the Fund's subadvisory agreement (each, a
"Subadvisory Agreement" and, together with the Advisory Agreement, the
"Agreements") between the Advisor and BlackRock Financial Management, Inc. (the
"Subadvisor"). The Advisor and the Subadvisor are collectively referred to
herein as the "Advisors" and, together with BlackRock, Inc., "BlackRock."
Activities and Composition of the Board
The Board of the Fund consists of thirteen individuals, eleven of whom are not
"interested persons" of the Fund as defined in the Investment Company Act of
1940 (the "1940 Act") (the "Independent Trustees"). The Trustees are responsible
for the oversight of the operations of the Fund and perform the various duties
imposed on the directors of investment companies by the 1940 Act. The
Independent Trustees have retained independent legal counsel to assist them in
connection with their duties. The Chairman of the Board is an Independent
Trustee. The Board has established four standing committees: an Audit Committee,
a Governance and Nominating Committee, a Compliance Committee and a Performance
Oversight Committee.
Advisory Agreement and Subadvisory Agreement
Upon the consummation of the combination of BlackRock, Inc.'s investment
management business with Merrill Lynch & Co., Inc.'s investment management
business, including Merrill Lynch Investment Managers, L.P., and certain
affiliates, the Fund entered into an Advisory Agreement and a Subadvisory
Agreement, each with an initial two-year term. Consistent with the 1940 Act,
after the Advisory Agreement's and Subadvisory Agreement's respective initial
two-year term, the Board is required to consider the continuation of the Fund's
Advisory Agreement and Subadvisory Agreement on an annual basis. In connection
with this process, the Board assessed, among other things, the nature, scope and
quality of the services provided to the Fund by the personnel of BlackRock and
its affiliates, including investment advisory services, administrative services,
secondary market support services, oversight of fund accounting and custody, and
assistance in meeting legal and regulatory requirements. The Board also received
and assessed information regarding the services provided to the Fund by certain
unaffiliated service providers.
Throughout the year, the Board also considered a range of information in
connection with its oversight of the services provided by BlackRock and its
affiliates. Among the matters the Board considered were: (a) investment
performance for one- and three-years and since inception periods, as applicable,
against a benchmark, as well as senior management and portfolio managers'
analysis of the reasons for underperformance, if applicable; (b) fees, including
advisory, administration and other fees paid to BlackRock and its affiliates by
the Fund, such as transfer agency fees and fees for marketing and distribution;
(c) fund operating expenses paid to third parties; (d) the resources devoted to
and compliance reports relating to the Fund's investment objective, policies and
restrictions; (e) the Fund's compliance with its Code of Ethics and compliance
policies and procedures; (f) the nature, cost and character of non-investment
management services provided by BlackRock and its affiliates; (g) BlackRock's
and other service providers' internal controls; (h) BlackRock's implementation
of the proxy voting guidelines approved by the Board; (i) execution quality; (j)
valuation and liquidity procedures; and (k) reviews of BlackRock's business,
including BlackRock's response to the increasing scale of its business.
Board Considerations in Approving the Advisory Agreement and Subadvisory
Agreement
To assist the Board in its evaluation of the Agreements, the Trustees received
information from BlackRock in advance of the April 22, 2008 meeting which
detailed, among other things, the organization, business lines and capabilities
of the Advisors, including: (a) the responsibilities of various departments and
key personnel and biographical information relating to key personnel; (b)
financial statements for BlackRock; (c) the advisory and/or administrative fees
paid by the Fund to the Advisors, including comparisons, compiled by Lipper Inc.
("Lipper"), an independent third party, with the management fees, which include
advisory and administration fees, of funds with similar investment objectives
("Peers"); (d) the profitability of BlackRock and certain industry profitability
analyses for advisors to registered investment companies; (e) the expenses of
BlackRock in providing various services; (f) non-investment advisory
reimbursements, if applicable, and "fallout" benefits to BlackRock; (g)
economies of scale, if any, generated through the Advisors' management of all of
the BlackRock closed-end funds; (h) the expenses of the Fund, including
comparisons of each such Fund's expense ratios (both before and after any fee
waivers) with the expense ratios of its Peers; and (i) an internal comparison of
management fees classified by Lipper, if applicable.
In addition to the foregoing materials, independent legal counsel to the
Independent Trustees provided a legal memorandum outlining, among other things,
the duties of the Board under the 1940 Act, as well as the general principles of
relevant law in reviewing and approving advisory contracts, the requirements of
the 1940 Act in such matters, an advisor's fiduciary duty with respect to
advisory agreements and compensation, and the standards used by courts in
determining whether investment company boards of directors have fulfilled their
duties and the factors to be considered by boards in voting on advisory
agreements.
- --------------------------------------------------------------------------------
BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008 15
- --------------------------------------------------------------------------------
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
(concluded)
The Independent Trustees reviewed this information and discussed it with
independent legal counsel prior to the meeting on April 22, 2008. At the Board
meeting on April 22, 2008, BlackRock made a presentation to and responded to
questions from the Board. Following the meeting on April 22, 2008, the Board
presented BlackRock with questions and requests for additional information.
BlackRock responded to these requests with additional written materials provided
to the Trustees prior to the meetings on May 29 and 30, 2008.
Matters Considered by the Board
In connection with its deliberations with respect to the Agreements, the Board
considered all factors it believed relevant with respect to the Fund, including
the fact that on February 29, 2008, the Board approved a resolution to close the
Fund to new investments. This action meant that the Fund would no longer accept
either new subscriptions or additional capital from existing investors. Due to
the size of the capital base of the Fund and recent tender activity, the Fund
was closed to new investments so that the Advisor could review the Fund's
long-term investment strategy while not having to contend with additional
inflows of capital until such review was final.
On May 30, 2008, the Board received a presentation from the Advisor seeking
approval to liquidate and dissolve the Fund on or about November 30, 2008. The
Advisor reviewed the reasons for liquidating the Fund and the Fund's shares
outstanding, assets under management, annual performance, gross sales and sales
charges. The Board then considered, among other things, the timing, fees,
liquidity and disclosure issues associated with the liquidation. The Board noted
that the Advisor will waive management fees after September 30, 2008, although
the Advisor and its affiliates may earn fees to the extent the Fund's cash is
temporarily invested in money market funds managed by BlackRock.
Conclusion with Respect to Agreements
In light of BlackRock's efforts to manage the liquidation and dissolution of the
Fund, and after considering other facts and circumstances applicable to the
Fund, including the waiver of all advisory fees after September 30, 2008, the
Trustees, including the Trustees who are not "interested persons" of the Fund as
defined in the Investment Company Act of 1940, unanimously approved the
continuation of the Fund's Agreements.
- --------------------------------------------------------------------------------
16 BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008
- --------------------------------------------------------------------------------
Officers and Trustees
Richard E. Cavanagh, Chairman of the Board and Trustee
Karen P. Robards, Vice Chair of the Board, Chair of the Audit
Committee and Trustee
G. Nicholas Beckwith, III, Trustee
Richard S. Davis, Trustee
Kent Dixon, Trustee
Frank J. Fabozzi, Trustee
Kathleen F. Feldstein, Trustee
James T. Flynn, Trustee
Henry Gabbay, Trustee
Jerrold B. Harris, Trustee
R. Glenn Hubbard, Trustee
W. Carl Kester, Trustee
Robert S. Salomon, Jr., Trustee
Donald C. Burke, Fund President and Chief Executive Officer
Anne F. Ackerley, Vice President
Neal J. Andrews, Chief Financial Officer
Jay M. Fife, Treasurer
Brian P. Kindelan, Chief Compliance Officer of the Fund
Howard B. Surloff, Secretary
Custodian
PFPC Trust Company
Philadelphia, PA 19153
Administrator & Escrow Agent
PNC Global Investment Servicing (U.S.) Inc.
Wilmington, DE 19809
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom LLP
New York, NY 10036
- --------------------------------------------------------------------------------
BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008 17
- --------------------------------------------------------------------------------
Additional Information
- --------------------------------------------------------------------------------
Availability of Quarterly Schedule of Investments
- --------------------------------------------------------------------------------
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 also be reviewed and copied at the SEC's Public
Reference Room in Washington, DC. Information on the operation of the Public
Reference Room may be obtained by calling (800) SEC-0330. The Fund's Forms N-Q
may also be obtained upon request and without charge by calling (800) 441-7762.
- --------------------------------------------------------------------------------
Electronic Delivery
- --------------------------------------------------------------------------------
Electronic copies of most financial reports are available on the Fund's website
or shareholders can sign up for e-mail notifications of quarterly statements,
annual and semi-annual reports by enrolling in the Fund's electronic delivery
program.
Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all
investment advisors, banks or brokerages may offer this service.
- --------------------------------------------------------------------------------
General Information
- --------------------------------------------------------------------------------
During the period, there were no material changes in the Fund's investment
objective or policies or to the Fund's charter or by-laws that were not approved
by the shareholders or in the principal risk factors associated with investment
in the Fund. There have been no changes in the persons who are primarily
responsible for the day-to-day management of the Fund's portfolio.
- --------------------------------------------------------------------------------
BlackRock Privacy Principles
- --------------------------------------------------------------------------------
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their non-public personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose to non-affiliated third parties any
non-public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client accounts.
These non-affiliated third parties are required to protect the confidentiality
and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to non-public
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the non-public
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
- --------------------------------------------------------------------------------
18 BLACKROCK MULTI-STRATEGY HEDGE ADVANTAGE SEPTEMBER 30, 2008
GO
[LOGO]
PAPERLESS...
It's Fast, Convenient, & Timely!
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus. Past performance results shown in this report should not be
considered a representation of future performance. Statements and other
information herein are as dated and are subject to change.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free (800) 441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's website
at http://www.sec.gov.
Information about how the Fund voted proxies relating to securities held in the
Fund's portfolio during the most recent 12-month period ended June 30 is
available upon request and without charge (1) by calling (800) 441-7762 and (2)
on the Securities and Exchange Commission's website at http://www.sec.gov.
BlackRock Multi-Strategy Hedge Advantage
100 Bellevue Parkway
Wilmington, DE 19809
[BLACKROCK LOGO]
#MHA-9/08
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-annual
report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to this
semi-annual report
Item 6 - Investments
(a) The registrant's Schedule of Investments is included as part of
the Report to Stockholders filed under Item 1 of this form.
(b) Not Applicable due to no such divestments during the semi-annual
period covered since the previous Form N-CSR filing.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable to this semi-annual
report
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable to this semi-annual report
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 - The
registrant's Nominating and Governance Committee will consider
nominees to the board of directors recommended by shareholders when a
vacancy becomes available. Shareholders who wish to recommend a
nominee should send nominations that include biographical information
and set forth the qualifications of the proposed nominee to the
registrant's Secretary. There have been no material changes to these
procedures.
Item 11 - Controls and Procedures
11(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")) are effective as of a date within 90 days of the filing
of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
13a-15(b) under the Securities Exchange Act of 1934, as amended.
11(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)
that occurred during the second fiscal quarter of the period covered
by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
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.
BlackRock Multi-Strategy Hedge Advantage
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke
Chief Executive Officer of
BlackRock Multi-Strategy Hedge Advantage
Date: November 24, 2008
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: /s/ Donald C. Burke
-------------------------------
Donald C. Burke
Chief Executive Officer (principal executive officer) of
BlackRock Multi-Strategy Hedge Advantage
Date: November 24, 2008
By: /s/ Neal J. Andrews
-------------------------------
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock Multi-Strategy Hedge Advantage
Date: November 24, 2008