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 811-21537
Name of Fund: BlackRock Multi-Strategy Hedge Opportunities LLC
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, BlackRock Multi-Strategy Hedge Opportunities LLC, 800 Scudders
Mill Road, Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011,
Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 03/31/07
Date of reporting period: 04/01/06 - 03/31/07
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES
FIXED INCOME LIQUIDITY REAL ESTATE
BlackRock Multi-Strategy BLACKROCK
Hedge Opportunities LLC
ANNUAL REPORT | MARCH 31, 2007
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock Multi-Strategy Hedge Opportunities LLC
Portfolio Information as of March 31, 2007
Percent of Total
Ten Largest Holdings Investments
- --------------------------------------------------------------------------------
Glenview Institutional Partners LP .............................. 8.8%
Kinetics Partners LP ............................................ 8.0
Aristeia Partners LP ............................................ 8.0
Double Black Diamond LP ......................................... 7.9
ARX Global High Yield Securities Fund I LP ...................... 7.9
Trivium Onshore Fund LP ......................................... 7.0
LibertyView Credit Opportunities Fund II LLC .................... 7.0
Hayground Cove Institutional Partners LP ........................ 5.2
Grinham Diversified Fund (U.S.) LP .............................. 4.6
SR Phoenicia LP ................................................. 4.6
- --------------------------------------------------------------------------------
Percent of
Investments by Strategy Net Assets
- --------------------------------------------------------------------------------
Equity Opportunistic ............................................ 35.1%
Directional ..................................................... 21.4
High Yield ...................................................... 13.8
Multi-Strategy .................................................. 11.2
Convertible Arbitrage ........................................... 7.4
Equity Neutral .................................................. 3.7
Other* .......................................................... 7.4
- --------------------------------------------------------------------------------
* Includes other assets less liabilities.
Announcement of Annual Stockholders Meeting
The Company has determined that its annual stockholders meeting originally
scheduled to be held in April 2007 will be postponed and will be held in
September 2007. Proposals of stockholders intended to be presented at the
meeting must be received by the Company by June 15, 2007 for inclusion in the
Company's proxy statement and form of proxy for that meeting. The persons named
as proxies in the proxy materials for the Company's 2007 annual meeting of
stockholders may exercise discretionary authority with respect to any
stockholder proposal presented at such meeting if written notice of such
proposal has not been received by the Company by July 1, 2007. Written proposals
and notices should be sent to the Secretary of the Company, 800 Scudders Mill
Road, Plainsboro, New Jersey 08536.
2 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007
A Letter to Shareholders
Dear Shareholder
For most financial markets, 2007 opened just as 2006 ended -- on a positive
trajectory. At the end of February and into March, however, global equity
markets registered their first significant decline since last summer. The market
jitters were triggered by a significant setback in the Chinese market and were
exacerbated by several concerns, notably a weakening economy, some disappointing
corporate earnings announcements, escalating geopolitical concerns in the Middle
East and increasing delinquencies in the subprime mortgage market. Despite the
recent spate of volatility, underlying stock market fundamentals appear quite
sound, supported by a generally favorable global economic backdrop, tame
inflation, relatively low interest rates and attractive valuations.
Not unlike the equity market, the bond market also has seen volatility recently
as observers have attempted to interpret mixed economic signals. A bond market
rally late last year reversed itself early in 2007 as economic data
strengthened. Prices improved (and yields fell) again in February as equities
struggled, but retrenched slightly in March. Notably, the Treasury curve
remained inverted for much of 2006 and into 2007. The 30-year Treasury yield
stood at 4.84% at the end of March 2007, while the one-month Treasury offered
the highest yield on the curve at 5.07%.
For its part, the Federal Reserve Board (the Fed) has left the target short-term
interest rate on hold at 5.25% since first pausing in its interest rate-hiking
campaign on August 8, 2006. Although the central bankers continue to express
concern about potential inflationary pressures, they also have made reference to
signs of economic weakness in their public statements. Most observers expect the
Fed to keep interest rates on hold for now.
Notwithstanding some recent volatility, most major market indexes managed to
post positive returns for the annual and semi-annual reporting periods ended
March 31, 2007:
Total Returns as of March 31, 2007 6-month 12-month
========================================================================================================
U.S. equities (Standard & Poor's 500 Index) + 7.38% +11.83%
- --------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) +11.02 + 5.91
- --------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +14.85 +20.20
- --------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) + 2.76 + 6.59
- --------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 1.93 + 5.43
- --------------------------------------------------------------------------------------------------------
High yield bonds (Credit Suisse High Yield Index) + 7.59 +11.82
- --------------------------------------------------------------------------------------------------------
If recent market movements are any guide, 2007 could be a year of enhanced
market volatility. As you navigate the uncertainties of the financial markets,
we encourage you to review your investment goals with your financial
professional and to make portfolio changes, as needed. For more reflection on
the markets, please ask your financial professional for the latest issue of
"What's Ahead in 2007: First Quarter Update," or view it online at
www.blackrock.com/funds. We thank you for trusting BlackRock with your
investment assets, and we look forward to continuing to serve you in the months
and years ahead.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
Company President and Director
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007 3
A Discussion With Your Fund's Portfolio Managers
We continued to favor disciplined, processed-oriented, research-driven
funds that, in our opinion, were well positioned to benefit from relatively
benign global equity markets.
How did the Company perform during the fiscal year?
For the 12-month period ended March 31, 2007, the Common Stock of BlackRock
Multi-Strategy Hedge Opportunities LLC provided a total net investment return of
+9.08% (not including a maximum distribution fee of 3%), based on a change in
per unit net asset value from $1.0693 to $1.1664. For the same period, the Hedge
Fund Research Inc. (HFRI) Fund of Funds Composite Index returned +8.43%, while
the Standard & Poor's (S&P) 500 Index and the Lehman Brothers Aggregate Bond
Index returned +11.83% and +6.59%, respectively.
Describe the market environment during the past year.
Equities posted positive double-digit returns for the year. In the second
quarter of 2006, when the fiscal period began, stocks declined. Inflation data
led to concerns that the U.S. Federal Reserve Board (the Fed) would raise
interest rates. The fear of rising rates caused stock market volatility to
increase, as measured by the Chicago Board Options Exchange S&P 500 Volatility
Index (VIX). By the end of the quarter, however, the VIX had retreated back to
near decade-low levels. Investors' aversion to risk contributed to a rotation
away from small-cap stocks and toward large-cap stocks, resulting in small caps
underperforming their large-cap counterparts.
In the third quarter, U.S. equities rebounded strongly. Diminished inflation
concerns, primarily from declining crude oil prices, gave investors confidence
that there would be no imminent rate increases. For the second straight quarter,
large caps outperformed small caps. Non-U.S. markets rebounded as well. The
positive momentum continued in the fourth quarter, with all the major U.S.
equity indexes adding over 6%. Earnings growth, share buybacks and strong
activity from private equity firms were all significant drivers. U.S. small-cap
stocks outperformed large-cap stocks for the quarter, reversing the trend seen
in the prior two quarters. Non-U.S. markets (particularly in Europe)
outperformed U.S. markets. The MSCI Europe Index increased over 11%, driven by
strong consumption and robust merger-and-acquisition (M&A) activity.
The first quarter of 2007 proved difficult for equities. On February 27, 2007,
the U.S. equity market, as measured by the S&P 500 Index, fell 3.5%, its largest
one-day decline since September 11, 2001. The Chinese market fell 9%, and equity
markets in Latin America, South America, Europe and Asia followed China's lead.
The equity market decline triggered a rally in U.S. Treasury issues, with
interest rates declining across the curve (as bond prices correspondingly rose).
Concerns in the subprime mortgage industry induced fears of a housing-related
recession in the United States. The subsequent steepening in the front end of
the Treasury yield curve was a manifestation of the market's concerns over
moderating growth and persistent signs of inflation, combined with a decline in
investor appetite for risk.
In the fixed income market, the U.S. Treasury curve steepened almost 50 basis
points (.50%) in the front end between March 2006 and March 2007, but flattened
from the six-month point forward. With overnight rates just over 5% and 30-year
rates at 4.85%, the curve remained quite flat. There was little opportunity for
extending maturities, or speculating on interrelated securities such as
mortgages, Treasury issues, municipals and swaps. As a result, we did not invest
in this area as a single strategy during the fiscal year.
How did the various alternative investment strategies fare amid these
conditions?
Equity long/short strategies represented the largest exposure in the Company
during the fiscal year. Within this category, opportunistic and market-neutral
strategies were strong contributors to performance. Managers with global
emerging markets exposure performed well in the earlier part of the period, but
some gains were given back as equity markets corrected at the end of February.
Managers focused on U.S. markets took advantage of the fourth-quarter market
rotation, when small cap outperformed large cap. A robust corporate merger
market provided ample trading opportunities. Long positions in health care and
consumer/retail drove the gains later in the period. The Company's equity
strategies closed out the period on a strong note relative to the weak
performance in the global equity markets. Despite the weakness and extreme
volatility, the Company's equity managers were profitable on an aggregate basis.
Managers endured the drop with superior stock selection and profits in the short
book.
Event-driven strategies -- broadly consisting of high yield and distressed,
corporate restructurings, reorganizations, spinoffs, special situations and
capital structure arbitrage -- produced positive results for the period.
Corporations flush with cash on their balance sheets provided the catalyst for a
robust
4 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007
environment in corporate transactions. On a regional basis, activity was strong
in the U.S. and European markets. The combination of excess corporate cash,
strong equity markets and tightening credit spreads provided a variety of
opportunities. As the period progressed, the majority of the deals occurred
within the energy and steel industries amid ongoing consolidation activity.
Equity event-driven funds continued to profit from exceptional corporate
activity, including large leveraged buyouts (LBOs) sponsored by private equity
firms hungry to put capital to work. Fewer opportunities were available in
credit arbitrage and distressed. Early in the period, credit-oriented trades in
the auto and airline sectors proved advantageous. Bidding competitions on
several existing deals allowed managers to capitalize on increased prices.
Positions in autos and auto supplier managers, including Delphi, profited. At
the end of the period, a spike in equity market volatility afforded trading
opportunities for convertible managers focused on volatility-oriented trades.
The Company's directional strategies included global macro trading and managed
futures. After a strong start to the period, managers in this space ended the
year mixed. At the beginning of the period, short positions in global bond
futures were the best performers. Macro managers maintained a long bias to
global equity positions that added to profits. Mid-year, foreign exchange and
commodities contributed to performance. Specifically, the dollar declined
against both the euro and the yen as market participants expected rate increases
in Europe and Japan to occur at a quicker pace than in the U.S. Most managers
were short the U.S. dollar.
In the commodity sector, long positions in agriculture and energy profited. In
the final six months of the period, foreign exchange proved difficult to trade,
as many of the major currencies remained trendless and range bound. In late
February, the global decline in equity markets impacted long-term trend
followers that held long positions in these markets. U.S. equity, fixed income
and foreign exchange markets all incurred losses with trend reversals.
What changes were made to the portfolio during the period?
The portfolio's assets under management grew from $125 million at March 31,
2006, to approximately $129 million at March 31, 2007. During the period, our
allocation to equity long/short managers was relatively unchanged, based on our
belief that strong bottom-up oriented stock pickers would continue to benefit
from the environment in the upcoming months. We allocated exposure to those
managers with a global focus in the equity long/short and event-driven space, as
we believed ample profit opportunities existed in Europe, Japan and Asia
(ex-Japan). In the event-driven space, our exposure is to managers with a
greater focus on Europe. Cash-affluent European corporations, private equity and
LBO buyers have increased the pace and volume of cross-border transactions in
Europe. Overall, however, we reduced our allocation to high yield managers,
particularly those with outsized distressed credit exposure. Spreads and default
rates are at or near cyclical lows, while companies are beginning to lever their
balance sheets again to the benefit of shareholders.
At March 31, 2007, the Company was comprised of 20 underlying managers and its
market exposure was broken down as follows: equity opportunistic (35.1%),
directional (21.4%), high yield (13.8%), multi-strategy (11.2%), convertible
arbitrage (7.4%), equity neutral (3.7%) and other (7.4%).
How would you characterize the Company's position at the close of the period?
We have positioned the portfolio to benefit from relatively benign global equity
markets, with some Asian and emerging market equity exposure. Despite concerns
over rising interest rates and elevated commodity prices, companies had strong
balance sheets and continued to generate solid free cash flow. We expect
companies to continue to engage in shareholder-friendly activities, such as
stock buybacks, dividend increases, M&A and tender offers. We will look to
increase our positions in Asia and Europe, where we perceive greater capital
market inefficiencies. We believe that a diverse group of macro and CTA
(Commodity Trading Advisors) managers can offer some insulation from sudden
increases in market volatility. Furthermore, we believe that traditional fixed
income arbitrage managers are facing a difficult environment given low
volatility, tight credit and mortgage spreads and a flat yield curve. As such,
we do not intend to actively allocate to this area.
Howard P. Berkowitz
Portfolio Manager
Anson H. Beard
Portfolio Manager
Christine Jurinich
Portfolio Manager
Edward Rzeszowski
Portfolio Manager
April 17, 2007
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007 5
Disclosure of Expenses
Members of this Company may incur the following charges: (a) expenses related to
transactions, including sales charges, and (b) operating expenses, including
advisory fees, member services fees and other fund expenses. The following
example (which is based on a hypothetical investment of $1,000 invested on
October 1, 2006 and held through March 31, 2007) is intended to assist members
both in calculating expenses based on an investment in the Company and in
comparing these expenses with similar costs of investing in other mutual funds.
The first table below provides information about actual account values and
actual expenses. In order to estimate the expenses a member paid during the
period covered by this report, members 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 second table below provides information about hypothetical account values
and hypothetical expenses based on the Company's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
members in comparing the ongoing expenses of investing in this Company and other
funds, compare the 5% hypothetical example with the 5% hypothetical examples
that appear in other funds' member reports.
The expenses shown in the table are intended to highlight members' ongoing costs
only and do not reflect any transactional expenses, such as sales charges.
Therefore, the second table is useful in comparing ongoing expenses only, and
will not help members determine the relative total expenses of owning different
funds. If these transactional expenses were included, member expenses would have
been higher.
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value October 1, 2006 to
October 1, 2006 March 31, 2007 March 31, 2007
====================================================================================================================================
Actual
====================================================================================================================================
BlackRock Multi-Strategy Hedge Opportunities LLC $1,000 $1,075 $12.21
====================================================================================================================================
Hypothetical (5% annual return before expenses)**
====================================================================================================================================
BlackRock Multi-Strategy Hedge Opportunities LLC $1,000 $1,013 $11.84
====================================================================================================================================
* Expenses are equal to the annualized expense ratio of 2.36%, multiplied by
the average account value over the period, multiplied by 182/365 (to
reflect the one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal six months divided by 365.
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge*
================================================================================
One Year Ended 3/31/07 +9.08% +5.81%
- --------------------------------------------------------------------------------
Inception (1/03/05)
through 3/31/07 +7.12 +5.67
- --------------------------------------------------------------------------------
* Maximum sales charge is 3%.
Past results shown should not be considered a representation of future
performance.
6 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007
Schedule of Investments as of March 31, 2007 (in U.S. dollars)
Strategy Portfolio Funds Value
=============================================================================================================
Convertible Arbitrage -- 7.4% Aristeia Partners LP $ 9,522,087
=============================================================================================================
Directional -- 21.4% Campbell QMF LLC 4,394,533
Cornerstone International Value Fund LLC 5,317,952
FORT Global Contrarian LP 3,056,219
Grinham Diversified Fund (U.S.) LP 5,520,952
Grossman Currency Fund LP 3,588,452
Kottke Arbitrage Opportunity Fund LLC 3,792,502
Salem Futures Fund LP 1,946,232
------------
27,616,842
=============================================================================================================
Equity Neutral -- 3.7% Ventus US$ Double Leverage Fund 4,683,211
=============================================================================================================
Equity Opportunistic -- 35.1% Glenview Institutional Partners LP 10,490,828
Hayground Cove Institutional Partners LP 6,219,449
Kinetics Partners LP 9,571,633
Maverick Levered Partners LP 2,076,213
Neon Liberty Emerging Markets Fund LP 3,051,142
SR Phoenicia LP 5,459,748
Trivium Onshore Fund LP 8,390,359
------------
45,259,372
=============================================================================================================
High Yield -- 13.8% ARX Global High Yield Securities Fund I LP 9,414,925
LibertyView Credit Opportunities Fund II LLC 8,375,603
------------
17,790,528
=============================================================================================================
Multi-Strategy -- 11.2% Double Black Diamond LP 9,480,263
Suttonbrook Capital Partners LP 4,956,655
------------
14,436,918
=============================================================================================================
Total Investments** (Cost -- $101,550,000*) -- 92.6% 119,308,958
Other Assets Less Liabilities -- 7.4% 9,582,750
------------
Net Assets -- 100.0% $128,891,708
============
* The cost and unrealized appreciation (depreciation) of investments as of
March 31, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost......................................... $107,622,702
============
Gross unrealized appreciation.......................... $ 12,348,556
Gross unrealized depreciation.......................... (662,300)
------------
Net unrealized appreciation............................ $ 11,686,256
============
** Non-income producing securities.
See Notes to Financial Statements.
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007 7
Statement of Assets and Liabilities
As of March 31, 2007
===================================================================================================================================
Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Investments in Portfolio Funds,* at value (identified cost -- $101,550,000) ......... $ 119,308,958
Cash ................................................................................ 127,427
Investments paid in advance ......................................................... 13,000,000
Investments sold receivable ......................................................... 8,831,534
Interest receivable ................................................................. 15,218
Prepaid expenses and other assets ................................................... 5,545
-------------
Total assets ........................................................................ 141,288,682
-------------
===================================================================================================================================
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------------
Payables:
Investment adviser .............................................................. $ 492,847
Service agents .................................................................. 82,975 575,822
-------------
Redemptions payable ................................................................. 5,666,917
Loan payable ........................................................................ 3,900,000
Subscriptions received in advance ................................................... 1,712,846
Loan interest payable ............................................................... 2,090
Accrued expenses and other liabilities .............................................. 539,299
-------------
Total liabilities ................................................................... 12,396,974
-------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets .......................................................................... $ 128,891,708
=============
===================================================================================================================================
Net Assets Consist of
- -----------------------------------------------------------------------------------------------------------------------------------
Members' capital .................................................................... $ 109,270,126
Unrealized appreciation on investments -- net ....................................... 17,758,958
Undistributed realized gain on investments -- net ................................... 7,836,924
Accumulated investment loss -- net .................................................. (5,974,300)
-------------
Net Assets .......................................................................... $ 128,891,708
=============
Units outstanding ................................................................... 110,503,841
=============
Net asset value per unit ............................................................ $ 1.1664
=============
* Non-income producing securities.
See Notes to Financial Statements.
8 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007
Statement of Operations
For the Year Ended March 31, 2007
=================================================================================================================================
Investment Income
- ---------------------------------------------------------------------------------------------------------------------------------
Interest ............................................................................ $ 411,776
-----------
=================================================================================================================================
Expenses
- ---------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ............................................................ $ 1,971,699
Service agent fees .................................................................. 330,969
Accounting and administration services .............................................. 321,345
Loan commitment fee ................................................................. 139,623
Professional fees ................................................................... 135,467
Printing and member reports ......................................................... 94,743
Directors' fees and expenses ........................................................ 34,000
Loan interest expense ............................................................... 18,412
Offering costs ...................................................................... 14,315
Custodian fees ...................................................................... 13,925
Other ............................................................................... 22,262
-----------
Total expenses ...................................................................... 3,096,760
-----------
Investment loss -- net .............................................................. (2,684,984)
-----------
=================================================================================================================================
Unrealized/Realized Gain -- Net
- ---------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation on investments -- net ............................. 7,176,547
Realized gain on investments -- net ................................................. 6,982,673
-----------
Total unrealized/realized gain -- net ............................................... 14,159,220
-----------
Net Increase in Net Assets Resulting from Operations ................................ $11,474,236
===========
See Notes to Financial Statements.
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007 9
Statements of Changes in Net Assets
For the Year Ended March 31,
------------------------------
Increase in Net Assets 2007 2006
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Investment loss -- net .............................................................. $ (2,684,984) $ (2,840,091)
Change in unrealized appreciation on investments -- net ............................. 7,176,547 10,271,129
Realized gain on investments -- net ................................................. 6,982,673 854,251
------------------------------
Net increase in net assets resulting from operations ................................ 11,474,236 8,285,289
------------------------------
===================================================================================================================================
Capital Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Proceeds from issuance of Units ..................................................... 22,515,567 51,113,201
Fair value of Units tendered ........................................................ (30,548,590) (9,295,455)
------------------------------
Net increase (decrease) in net assets derived from capital transactions ............. (8,033,023) 41,817,746
------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets ........................................................ 3,441,213 50,103,035
Beginning of year ................................................................... 125,450,495 75,347,460
------------------------------
End of year* ........................................................................ $ 128,891,708 $ 125,450,495
==============================
* Accumulated investment loss -- net .............................................. $ (5,974,300) $ (3,289,316)
==============================
See Notes to Financial Statements.
Statement of Cash Flows
For the Year Ended March 31, 2007
==================================================================================================================================
Cash Provided by Operating Activities
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations ................................................ $ 11,474,236
------------
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by
operating activities:
Increase in investments paid in advance ......................................................... (10,500,000)
Increase in receivables and other assets ........................................................ (11,163)
Increase in liabilities ......................................................................... 52,245
Change in unrealized appreciation on investments -- net ......................................... (7,176,547)
Realized gain on investments -- net ............................................................. (6,982,673)
Purchases of long-term securities ................................................................... (44,000,000)
Sales of long-term securities ....................................................................... 60,168,064
------------
Net cash provided by operating activities ........................................................... 3,024,162
------------
==================================================================================================================================
Cash Used for Financing Activities
- ----------------------------------------------------------------------------------------------------------------------------------
Receipts from issuance of Units (including subscriptions received in advance of $1,712,846) ......... 21,499,227
Payments for tender of Units ........................................................................ (30,106,827)
Receipts from borrowings ............................................................................ 15,900,000
Payments on borrowings .............................................................................. (12,000,000)
------------
Net cash used for financing activities .............................................................. (4,707,600)
------------
==================================================================================================================================
Cash
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease in cash ................................................................................ (1,683,438)
Cash at beginning of year ........................................................................... 1,810,865
------------
Cash at end of year ................................................................................. $ 127,427
============
==================================================================================================================================
Cash Flow Information
- ----------------------------------------------------------------------------------------------------------------------------------
Cash paid for interest .............................................................................. $ 16,322
============
See Notes to Financial Statements.
10 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007
Financial Highlights
For the Year Ended For the Period
March 31, January 3, 2005+
The following ratios have been derived from -------------------------------- to March 31,
information provided in the financial statements. 2007 2006 2005
===================================================================================================================
Per Unit Operating Performance
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ......... $ 1.0693 $ .9979 $ 1.0000
-----------------------------------------------------
Investment loss -- net*** .................... (.0225) (.0266) (.0070)
Unrealized/realized gain on investments -- net .1196 .0980 .0049
-----------------------------------------------------
Total from investment operations ............. .0971 .0714 (.0021)
-----------------------------------------------------
Net asset value, end of period ............... $ 1.1664 $ 1.0693 $ .9979
=====================================================
===================================================================================================================
Total Investment Return**
- -------------------------------------------------------------------------------------------------------------------
Total investment return ...................... 9.08% 7.16% (.21%)@
=====================================================
===================================================================================================================
Ratios to Average Net Assets
- -------------------------------------------------------------------------------------------------------------------
Expenses ..................................... 2.36% 2.84% 3.28%*
=====================================================
Expenses net of reimbursement ................ 2.36% 2.78% 2.96%*
=====================================================
Investment loss -- net ....................... (2.05%) (2.65%) (2.83%)*
=====================================================
===================================================================================================================
Supplemental Data
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ..... $ 128,892 $ 125,450 $ 75,347
=====================================================
Portfolio turnover ........................... 51% 19% 0%
=====================================================
* Annualized.
** Total investment returns exclude the effect of sales charges.
*** Based on average units outstanding.
+ Commencement of operations.
@ Aggregate total investment return; not annualized.
See Notes to Financial Statements.
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007 11
Notes to Financial Statements
1. Significant Accounting Policies:
BlackRock Multi-Strategy Hedge Opportunities LLC (the "Company") (formerly
Multi-Strategy Hedge Opportunities LLC) is registered under the Investment
Company Act of 1940, as amended, as a closed-end, non-diversified management
investment company. The Company's financial statements are prepared in
conformity with U.S. generally accepted accounting principles, which may require
the use of management accruals and estimates. Actual results may differ from
these estimates. The Company offers one class of units, which may be sold with a
front-end sales charge. The following is a summary of significant accounting
policies followed by the Company.
(a) Valuation of investments in Portfolio Funds -- The Company values its
investments in Portfolio Funds at fair value in accordance with procedures
established by the Board of Directors. The valuations reported by the Portfolio
Fund Managers of the Portfolio Funds, upon which the Company calculates its
month-end net asset value and net asset value per Unit, may be subject to later
adjustment, based upon information reasonably available at that time. The
Company will pay repurchase 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 Company has determined a net
asset value, the Company 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.
(b) Income taxes -- The Company is classified as a partnership for federal
income tax purposes. As such, each investor in the Company is treated as owner
of its proportionate share of the net assets, income, expenses and realized and
unrealized gains and losses of the Company. Therefore, no federal income tax
provision is required.
(c) 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.
(d) Cash balances -- The Company maintains cash in the PNC interest-bearing
money market account, which, at times, may exceed federally insured limits. The
Company has not experienced any losses in such accounts and does not believe it
is exposed to any significant credit risk on such bank deposits. All interest
income earned will be paid to the Company.
(e) Offering costs -- Direct costs related to the initial public offering of the
Company's Units were deferred and amortized over the 12 month period beginning
with the commencement of operations. Offering costs associated with the ongoing
sale of the Company's Units are expensed as incurred.
(f) Recent accounting pronouncements -- In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109."
FIN 48 prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity, including mutual funds, before being measured
and recognized in the financial statements. Adoption of FIN 48 is required for
the last net asset value calculation in the first required financial statement
reporting period for fiscal years beginning after December 15, 2006. The impact
on the Company's financial statements, if any, is currently being assessed.
In September 2006, "Statement of Financial Accounting Standards No. 157, Fair
Value Measurements" ("FAS 157"), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. At this time, management is evaluating the implications of FAS 157
and its impact on the Company's financial statements, if any, has not been
determined.
In addition, in February 2007, FASB issued "Statement of Financial Accounting
Standards No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities" ("FAS 159"), which is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provisions of FAS 157. FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. At this time, management is evaluating
the implications of FAS 159 and its impact on the Company's financial
statements, if any, has not been determined.
12 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007
Notes to Financial Statements (continued)
2. Investment Advisory Agreement and Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business, Merrill Lynch
Investment Managers, L.P. ("MLIM"), and its affiliates, with BlackRock, Inc. to
create a new independent company. Merrill Lynch has a 49.8% economic interest
and a 45% voting interest in the combined company and The PNC Financial Services
Group, Inc. has approximately a 34% economic and voting interest. The new
company operates under the BlackRock name and is governed by a board of
directors with a majority of independent members.
On September 22, 2006, Members of the Company approved a new investment Advisory
Agreement with BlackRock Advisors, Inc., an indirect, wholly owned subsidiary of
BlackRock, Inc., which was reorganized into BlackRock Advisors, LLC
("BlackRock"). The new advisory agreement was effective on September 29, 2006
and the investment advisory fee is unchanged. In addition, BlackRock has entered
into a sub-advisory agreement with BlackRock Investment Management, LLC, an
affiliate of BlackRock, under which BlackRock pays the Sub-Adviser for services
it provides, a fee equal to 74% of the management fee paid to BlackRock.
Prior to December 1, 2005, the Company had entered into an Investment Advisory
Agreement with MLIM. Effective December 1, 2005 and continuing through September
29, 2006, Merrill Lynch Alternative Investments LLC ("MLAI"), an indirect,
wholly owned subsidiary of Merrill Lynch, was the investment adviser of the
Company.
BlackRock is responsible for the management of the Company's portfolio and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Company. For such services, the
Company pays a monthly fee at an annual rate of 1.50% of the average daily value
of the Company's net assets.
The Company has also entered into a Member Services Agreement with FAM
Distributors, Inc. ("FAMD" and the "Service Agent"). FAMD provides or arranges
for provision of ongoing investor and shareholder servicing. The Company pays a
monthly fee computed at the annual rate of .25% of the Company's average
month-end assets (the "Service Fee"). The Service Fee will be paid to the
Service Agent to reimburse it for payments made to broker-dealers and financial
advisors that have agreed to provide ongoing investor and shareholder servicing
to Members of the Company and for ongoing investor servicing activities
performed by the Service Agent.
For the year ended March 31, 2007, FAMD received $312,057 in sales charges on
sales of units in the Company.
MLAI had agreed to voluntarily cap the total annual expenses of the Company at
0.25% per month (3.0% per year) until December 31, 2005.
In connection with the closing, the Company's Transfer Agent became PFPC Inc.,
an affiliate of the Manager. In addition, BlackRock Distributors, Inc., an
affiliate of BlackRock, Inc., became an additional distributor.
Prior to closing, certain officers and/or directors of the Company were officers
and/or directors of MLAI and/or ML & Co.
Commencing September 29, 2006, certain officers and/or directors of the Company
are officers and/or directors of BlackRock and/or BlackRock, Inc.
3. Investments:
Purchases of investments for the year ended March 31, 2007 were $44,000,000.
Sales of investments for the year ended March 31, 2007 were $62,482,672.
4. Capital Share Transactions:
An investor purchases Units in the Company and the Units are offered at their
net asset value. The minimum initial investment for each investor is $25,000
(net of any distribution fees) and the minimum additional investment is $10,000.
An investor's subscription for Units is irrevocable by the investor and will
generally require the investor to maintain its investment in the Company until
such time as the Company offers to repurchase the Units in a tender offering. No
Member or other person holding Units acquired from a Member will have the right
to require the Company to redeem the Units. The Company may, from time to time,
repurchase Units from Members in accordance with written tenders by Members at
those times, in those amounts and on terms and conditions as the Board of
Directors may determine in its sole discretion. BlackRock expects that it will
recommend to the Board of Directors that the Company offer to repurchase Units
from Members quarterly on the last business day of March, June, September and
December.
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007 13
Notes to Financial Statements (continued)
Transactions in capital were as follows:
- -------------------------------------------------------------------------------
For the Year Ended Dollar
March 31, 2007 Units Amount
- -------------------------------------------------------------------------------
Units sold ............................... 20,657,258 $ 22,515,567
Units tendered ........................... (27,471,409) (30,548,590)
-----------------------------
Net decrease ............................. (6,814,151) $ (8,033,023)
=============================
- -------------------------------------------------------------------------------
For the Year Ended Dollar
March 31, 2006 Units Amount
- -------------------------------------------------------------------------------
Units sold ............................... 50,679,465 $ 51,113,201
Units tendered ........................... (8,870,777) (9,295,455)
-----------------------------
Net increase ............................. 41,808,688 $ 41,817,746
=============================
5. Investments in Portfolio Funds:
The following table lists the Company's investments in Portfolio Funds for the
year ended March 31, 2007, 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 0.5% to 2% (per annum) of net assets and performance
incentive fees or allocations of 20% to 25% of net profits earned.
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 Company's proportionate share exceeds 5% of the Company's
net assets at March 31, 2007.
- ---------------------------------------------------------------------------------------------------------------------------------
Fees
% of Company's Net Income ----------------------- Redemptions
Investments Total Fair Value Fair Value (Loss) Management Incentive Permitted
- ---------------------------------------------------------------------------------------------------------------------------------
Aristeia Partners 8.0% $ 9,522,087 $ 672,087 1% 20% Quarterly
ARX Global 7.9 9,414,925 264,925 1.75 20 Quarterly
CRG Partners --(c) --(c) (39,472) 2 20 Monthly
Campbell 3.7 4,394,533 (105,467) 2 20 Monthly
Canyon Value --(b) --(b) 746,153 1.5 20 Monthly
Context --(b) --(b) 461,919 1.5 20 Quarterly
Cornerstone International 4.5 5,317,952 (443,806) 1 20 Monthly
Denali Partners --(b) --(b) (26,128) 2 25 Quarterly
Double Black Diamond 7.9 9,480,263 1,059,686 1 - 1.5 20 Quarterly
FORT Global 2.6 3,056,219 253,180 1 20 Monthly
FX Concepts --(c) --(c) 352,048 1.5 20 Monthly
Glenview Institutional 8.8 10,490,828 1,227,019 1 20 Monthly
Golden Tree Credit Opportunities --(b) --(b) 829,084 2 20 Semi-Annually
Grinham Diversified 4.6 5,520,952 329,724 1.5 20 Monthly
Grossman Currency 3.0 3,588,452 17,458 2 25 Monthly
Hayground Cove Institutional 5.2 6,219,449 914,821 1.5 20 Monthly
Kinetics Partners 8.0 9,571,633 1,647,741 1 20 Monthly
Kottke Arbitrage 3.2 3,792,502 172,294 2 20 Monthly
LibertyView Credit 7.0 8,375,603 1,672,442 1 20 Quarterly
Litespeed Partners --(b) --(b) 766,000 1.5 20 Quarterly
Martin Currie Absolute Return
Funds Ltd Daijiro --(f) --(f) (430,409) 1.5 20 Monthly
Maverick Levered 1.7 2,076,213 894,931 2 20 Annually
Neon Liberty 2.6 3,051,142 484,215 1.5 20 Quarterly
North Sound --(b) --(b) (988,541) 1.5 20 Quarterly
Para Partners --(d) --(d) 13,959 1.25 20 Quarterly
SR Capital --(a) --(a) 300 1 20 Quarterly
SR Phoenicia 4.6 5,459,748 842,457 1 20 Monthly
Salem Futures 1.6 1,946,232 (101,636) 2 20 Monthly
Smith Breeden --(g) --(g) 149,801 1 20 Quarterly
Suttonbrook 4.2 4,956,655 (43,345) 2 20 Quarterly
Trivium 7.0 8,390,359 1,290,974 1.5 20 Monthly
Ventus 3.9 4,683,211 1,004,724 2 20 Monthly
Zaxis Equity --(c) --(c) 270,082 1 20 Quarterly
-----------------------------------------------
Total 100.0% $119,308,958 $14,159,220
===============================================
(a) The Company fully redeemed from the Portfolio Fund as of April 30, 2006.
(b) The Company fully redeemed from the Portfolio Fund as of December 31,
2006.
(c) The Company fully redeemed from the Portfolio Fund as of March 31, 2007.
(d) The Company fully redeemed from the Portfolio Fund as of March 31, 2006.
(e) The Company fully redeemed from the Portfolio Fund as of November 30,
2006.
(f) The Company fully redeemed from the Portfolio Fund as of February 28,
2007.
(g) The Company fully redeemed from the Portfolio Fund as of October 31, 2006.
14 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007
Notes to Financial Statements (concluded)
6. Short-Term Borrowings:
The Company was a party to a $50,000,000 credit agreement with Harris Trust and
Savings Bank. The Company could have borrowed under the credit agreement to fund
member redemptions and for other lawful purposes including leverage. The Company
paid a commitment fee of .375% per annum based on the unused portion of the Fee
Cap (a minimum of $20,000,000) as defined in the credit agreement. Amounts
borrowed under the credit agreement bore interest at a rate equal to, at the
Company's election, the federal funds rate plus 1.75% or a base rate, as defined
in the credit agreement, minus 1%. The Company did not borrow under the credit
agreement and the agreement was terminated on December 27, 2006.
The Company, along with another BlackRock registered investment company,
BlackRock Multi-Strategy Hedge Advantage, 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 Company'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 March 31, 2007, the Company had
weighted average borrowings of $248,219 and currently has a loan outstanding for
$3,900,000. Interest rates on the borrowings for the year ended March 31, 2007
ranged from 6.52% to 6.55%.
7. Risk Factors:
An investment in the Company involves a high degree of risk, including the risk
that the entire amount invested may be lost. The Company 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. Subsequent Events:
Throughout the normal course of business on May 1, 2007, there were additional
proceeds of $3,171,180 from the issuance of units by the Company.
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007 15
Report of Independent Registered Public Accounting Firm
To the Members and Board of Directors of BlackRock Multi-Strategy Hedge
Opportunities LLC:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of BlackRock Multi-Strategy Hedge Opportunities LLC
(the "Company") (formerly Multi-Strategy Hedge Opportunities LLC) as of March
31, 2007, the related statements of operations and cash flows for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the respective periods then
ended. These financial statements and financial highlights are the
responsibility of the Company'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. The
Company is not required to have, nor were we engaged to perform, an audit of its
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 Company'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
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of March 31, 2007, by correspondence with the financial
intermediaries. 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
BlackRock Multi-Strategy Hedge Opportunities LLC as of March 31, 2007, the
results of its operations and its cash flows for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and its financial highlights for the respective periods then ended, in
conformity with accounting principles generally accepted in the United States of
America.
As explained in Note 1 to the financial statements, the financial statements
include investments valued at $119,308,958, whose fair values have been
estimated by management in the absence of readily determinable fair values.
Management's estimates are based on information provided by the fund managers.
Deloitte & Touche LLP
Princeton, New Jersey
May 25, 2007
16 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007
Officers and Directors
Number of
Funds and
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Company Served Principal Occupation(s) During Past 5 Years Trustee Trustee
====================================================================================================================================
Interested Director
- ------------------------------------------------------------------------------------------------------------------------------------
Robert C. P.O. Box 9011 President 2005 to Vice Chairman and Director of BlackRock, Inc., 122 Funds None
Doll, Jr.* Princeton, NJ and present Global Chief Investment Officer for Equities, 168 Portfolios
08543-9011 Director Chairman of the BlackRock Retail Operating
Age: 52 Committee, and member of the BlackRock Executive
Committee since 2006; President of the funds
advised by Merrill Lynch Investment Managers, L.P.
("MLIM") and its affiliates ("MLIM/FAM-advised
funds") from 2005 to 2006 and Chief Investment
Officer thereof from 2001 to 2006; President of
MLIM and Fund Asset Management, L.P. ("FAM") from
2001 to 2006; Co-Head (Americas Region) thereof
from 2000 to 2001 and Senior Vice President from
1999 to 2001; President and Director of Princeton
Services, Inc. ("Princeton Services") and President
of Princeton Administrators, L.P. ("Princeton
Administrators") from 2001 to 2006; Chief
Investment Officer of OppenheimerFunds, Inc. in
1999 and Executive Vice President thereof from 1991
to 1999.
------------------------------------------------------------------------------------------------------------------------
* Mr. Doll is a director, trustee or member of an advisory board of certain other investment companies for which
BlackRock Advisors, LLC and its affiliates act as investment adviser. Mr. Doll is an "interested person," as
defined in the Investment Company Act, of the Company based on his positions with BlackRock, Inc. and its
affiliates. Directors serve until their resignation, removal or death, or until December 31 of the year in which
they turn 72. As Company President, Mr. Doll serves at the pleasure of the Board of Directors.
====================================================================================================================================
Independent Directors*
- ------------------------------------------------------------------------------------------------------------------------------------
David O. P.O. Box 9095 Director 2004 to Professor of Finance and Economics at the Columbia 17 Funds None
Beim** Princeton, NJ present University Graduate School of Business since 1991; 24 Portfolios
08543-9095 Chairman of Outward Bound USA from 1997 to
Age: 66 2001; Chairman of Wave Hill Inc., from 1990 to
2006; Trustee of Phillips Exeter Academy from
2002 to present.
- ------------------------------------------------------------------------------------------------------------------------------------
James T. P.O. Box 9095 Director 2004 to Chief Financial Officer of JPMorgan & Co., Inc. 17 Funds None
Flynn Princeton, NJ present from 1990 to 1995 and an employee of JPMorgan in 24 Portfolios
08543-9095 various capacities from 1967 to 1995.
Age: 67
- ------------------------------------------------------------------------------------------------------------------------------------
W. Carl P.O. Box 9095 Director 2004 to Deputy Dean for Academic Affairs, Harvard Business 17 Funds None
Kester Princeton, NJ present School since 2006; Mizuho Financial Group, 24 Portfolios
08543-9095 Professor of Finance, Harvard Business School; Unit
Age: 55 Head, Finance in 2005 to 2006; Senior Associate
Dean and Chairman of the MBA Program of Harvard
Business School, 1999 to 2005; Member of the
faculty of Harvard Business School since 1981;
Independent Consultant since 1978.
- ------------------------------------------------------------------------------------------------------------------------------------
Karen P. P.O. Box 9095 Director 2004 to Partner of Robards & Company, LLC, a financial 17 Funds AtriCure, Inc.
Robards*** Princeton, NJ present advisory firm since 1987; formerly an investment 24 Portfolios (medical
08543-9095 banker with Morgan Stanley for more than 10 years; devices)
Age: 57 Director of Enable Medical Corp. from 1996 to 2005;
Director of AtriCure, Inc., since 2000; Director of
the Cooke Center for Learning and Development, a
not-for-profit organization, since 1987.
- ------------------------------------------------------------------------------------------------------------------------------------
* Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
** Chairman of the Audit Committee.
*** Chair of the Board of Directors.
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007 17
Officers and Directors (concluded)
Position(s) Length of
Held with Time
Name Address & Age Company Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund Officers*
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 2004 to Managing Director of BlackRock, Inc. since 2006; Managing Director of Merrill Lynch
Burke Princeton, NJ President present Investment Managers, L.P. ("MLIM") and Fund Asset Management, L.P. ("FAM") in 2006;
08543-9011 and First Vice President of MLIM and FAM from 1997 to 2005 and Treasurer thereof from
Age: 46 Treasurer 1999 to 2006; Vice President of MLIM and FAM from 1990 to 1997.
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey P.O. Box 9011 Fund Chief 2004 to Managing Director of BlackRock, Inc. and Fund Chief Compliance Officer since 2006;
Hiller Princeton, NJ Compliance present Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President
08543-9011 Officer and Chief Compliance Officer of MLIM (Americas Region) from 2004 to 2006; Chief
Age: 55 Compliance Officer of the IQ Funds since 2004; Global Director of Compliance at
Morgan Stanley Investment Management from 2002 to 2004; Managing Director and
Global Director of Compliance at Citigroup Asset Management from 2000 to 2002;
Chief Compliance Officer at Soros Fund Management in 2000; Chief Compliance
Officer at Prudential Financial from 1995 to 2000; Senior Counsel in the
Securities and Exchange Commission's Division of Enforcement in Washington, D.C.
from 1990 to 1995.
- ------------------------------------------------------------------------------------------------------------------------------------
Alice A. P.O. Box 9011 Secretary 2004 to Director of BlackRock, Inc. since 2006; Director (Legal Advisory) of MLIM from 2002
Pellegrino Princeton, NJ present to 2006; Vice President of MLIM from 1999 to 2002; Attorney associated with MLIM
08543-9011 from 1997 to 1999; Secretary of MLIM, FAM, FAM Distributors, Inc. and Princeton
Age: 47 Services from 2004 to 2006.
------------------------------------------------------------------------------------------------------------------------
* Officers of the Company serve at the pleasure of the Board of Directors.
- ------------------------------------------------------------------------------------------------------------------------------------
Custodian
PFPC Trust Company
8800 Tinicum Boulevard
3rd Floor, Suite 200
Philadelphia, PA 19153
Administrator & Escrow Agent
PFPC Inc.
Wilmington, DE 19809
- --------------------------------------------------------------------------------
Effective April 13, 2007, Jeffrey Hiller resigned his position as Chief
Compliance Officer of the Company. Also effective April 13, 2007, Karen Clark
was appointed Chief Compliance Officer of the Company. Ms. Clark has been a
Managing Director of BlackRock, Inc. since 2007. She was a Director thereof from
2005 to 2007. Prior to that, Ms. Clark was a principal and senior compliance
officer at State Street Global Advisors from 2001 to 2005. Ms. Clark was a
principal consultant with PricewaterhouseCoopers, LLP from 1998 to 2001. From
1993 to 1998, Ms. Clark was Branch Chief, Division of Investment Management and
Office of Compliance Inspections and Examinations, with the U.S. Securities and
Exchange Commission.
- --------------------------------------------------------------------------------
18 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007
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 nonpublic 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 nonpublic 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 Web sites.
BlackRock does not sell or disclose to nonaffiliated third parties any nonpublic
personal information about its Clients, except as permitted by law or as is
necessary to service Client accounts. These nonaffiliated 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 nonpublic
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 nonpublic
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
Availability of Quarterly Schedule of Investments
The Company 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 Company's Forms N-Q are available on the SEC's
Web site at http://www.sec.gov. The Company's Forms N-Q 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
1-800-SEC-0330.
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on
the Company's Web site. Shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Company's electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor. Please note that not all investment
advisers, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
1) Access the BlackRock Web site at
http://www.blackrock.com/edelivery
2) Log into your account
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC MARCH 31, 2007 19
BlackRock Multi-Strategy Hedge Opportunities LLC seeks high total return over a
full market cycle through investments in hedge funds and other investment
vehicles pursuing alternative investment strategies.
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Company unless accompanied or preceded by the
Company'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 Company uses to determine
how to vote proxies relating to portfolio securities is available without
charge, upon request, by calling toll-free 866-878-2987 or on the Securities and
Exchange Commission's Web site at http://www.sec.gov.
BlackRock Multi-Strategy Hedge Opportunities LLC
P.O. Box 9011
Princeton, NJ 08543-9011
BLACKROCK
#MHO-3/07
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as
of the end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial officer
and principal accounting officer, or persons performing similar
functions. A copy of the code of ethics is available without charge
at www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors has determined that (i) the registrant has the following
audit committee financial experts serving on its audit committee and
(ii) each audit committee financial expert is independent: (1) David
O. Beim, (2) W. Carl Kester, (3) James T. Flynn and (4) Karen P.
Robards.
The registrant's board of directors has determined that David O.
Beim, W. Carl Kester and Karen P. Robards qualify as financial
experts pursuant to Item 3(c)(4) of Form N-CSR.
Mr. Beim has a thorough understanding of generally accepted
accounting principles, financial statements and internal control over
financial reporting as well as audit committee functions. For 25
years, Mr. Beim was an investment banker actively engaged in
financial analysis for securities transactions and mergers. These
transactions presented a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and
complexity of issues that can reasonably be expected to be raised by
the Registrant's financial statements. Mr. Beim has also been a
professor of finance and economics at the Columbia University
Graduate School of Business for the past 14 years.
Prof. Kester has a thorough understanding of generally accepted
accounting principles, financial statements and internal control over
financial reporting as well as audit committee functions. Prof.
Kester has been involved in providing valuation and other financial
consulting services to corporate clients since 1978. Prof. Kester's
financial consulting services present a breadth and level of
complexity of accounting issues that are generally comparable to the
breadth and complexity of issues that can reasonably be expected to
be raised by the Registrant's financial statements.
Ms. Robards has a thorough understanding of generally accepted
accounting principles, financial statements and internal control over
financial reporting as well as audit committee functions. Ms. Robards
has been President of Robards & Company, a financial advisory firm,
since 1987. Ms. Robards was formerly an investment banker for more
than 10 years where she was responsible for evaluating and assessing
the performance of companies based on their financial results. Ms.
Robards has over 30 years of experience analyzing financial
statements. She also is the member of the Audit Committees of one
publicly held company and a non-profit organization.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ended March 31, 2007 - $31,000
Fiscal Year Ended March 31, 2006 - $31,000
(b) Audit-Related Fees - Fiscal Year Ended March 31, 2007 - $0
Fiscal Year Ended March 31, 2006 - $0
(c) Tax Fees - Fiscal Year Ended March 31, 2007 - $45,000
Fiscal Year Ended March 31, 2006 - $45,000
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ended March 31, 2007 - $0
Fiscal Year Ended March 31, 2006 - $0
(e)(1) The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to
the registrant's affiliated service providers that relate directly to
the operations and the financial reporting of the registrant. Certain
of these non-audit services that the Committee believes are a)
consistent with the SEC's auditor independence rules and b) routine
and recurring services that will not impair the independence of the
independent accountants may be approved by the Committee without
consideration on a specific case-by-case basis ("general
pre-approval"). However, such services will only be deemed
pre-approved provided that any individual project does not exceed
$5,000 attributable to the registrant or $50,000 for all of the
registrants the Committee oversees. Any proposed services exceeding
the pre-approved cost levels will require specific pre-approval by
the Committee, as will any other services not subject to general
pre-approval (e.g., unanticipated but permissible services). The
Committee is informed of each service approved subject to general
pre-approval at the next regularly scheduled in-person board meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ended March 31, 2007 - $3,016,200
Fiscal Year Ended March 31, 2006 - $3,754,550
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's 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.
Regulation S-X Rule 2-01(c)(7)(ii) - $1,739,500, 0%
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Proxy Voting Policies and
Procedures
Each Fund's Board of Directors has delegated to the Manager authority
to vote all proxies relating to the Fund's portfolio securities. The
Manager has adopted policies and procedures (the "Proxy Voting
Procedures") with respect to the voting of proxies related to the
portfolio securities held in the account of one or more of its
clients, including a Fund. Pursuant to these Proxy Voting Procedures,
the Manager's primary objective when voting proxies is to make proxy
voting decisions solely in the best interests of each Fund and its
shareholders, and to act in a manner that the Manager believes is
most likely to enhance the economic value of the securities held by
the Fund. The Proxy Voting Procedures are designed to ensure that the
Manager considers the interests of its clients, including each Fund,
and not the interests of the Manager, when voting proxies and that
real (or perceived) material conflicts that may arise between the
Manager's interest and those of the Manager's clients are properly
addressed and resolved.
In order to implement the Proxy Voting Procedures, the Manager has
formed a Proxy Voting Committee (the "Committee"). The Committee,
which is a subcommittee of the Manager's Equity Investment Policy
Oversight Committee ("EIPOC"), is comprised of a senior member of the
Manager's equity management group who is also a member of EIPOC, one
or more other senior investment professionals appointed by EIPOC,
portfolio managers and investment analysts appointed by EIPOC and any
other personnel EIPOC deems appropriate. The Committee will also
include two non-voting representatives from the Manager's Legal
Department appointed by the Manager's General Counsel. The
Committee's membership shall be limited to full-time employees of the
Manager. No person with any investment banking, trading, retail
brokerage or research responsibilities for the Manager's affiliates
may serve as a member of the Committee or participate in its decision
making (except to the extent such person is asked by the Committee to
present information to the Committee on the same basis as other
interested knowledgeable parties not affiliated with the Manager
might be asked to do so). The Committee determines how to vote the
proxies of all clients, including a Fund, that have delegated proxy
voting authority to the Manager and seeks to ensure that all votes
are consistent with the best interests of those clients and are free
from unwarranted and inappropriate influences. The Committee
establishes general proxy voting policies for the Manager and is
responsible for determining how those policies are applied to
specific proxy votes, in light of each issuer's unique structure,
management, strategic options and, in certain circumstances, probable
economic and other anticipated consequences of alternate actions. In
so doing, the Committee may determine to vote a particular proxy in a
manner contrary to its generally stated policies. In addition, the
Committee will be responsible for ensuring that all reporting and
recordkeeping requirements related to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires
a case-by-case determination. In such cases, the Committee may elect
not to adopt a specific voting policy applicable to that issue. The
Manager believes that certain proxy voting issues require investment
analysis - such as approval of mergers and other significant
corporate transactions - akin to investment decisions, and are,
therefore, not suitable for general guidelines. The Committee may
elect to adopt a common position for the Manager on certain proxy
votes that are akin to investment decisions, or determine to permit
the portfolio manager to make individual decisions on how best to
maximize economic value for a Fund (similar to normal buy/sell
investment decisions made by such portfolio managers). While it is
expected that the Manager will generally seek to vote proxies over
which the Manager exercises voting authority in a uniform manner for
all the Manager's clients, the Committee, in conjunction with a
Fund's portfolio manager, may determine that the Fund's specific
circumstances require that its proxies be voted differently.
To assist the Manager in voting proxies, the Committee has retained
Institutional Shareholder Services ("ISS"). ISS is an independent
adviser that specializes in providing a variety of fiduciary-level
proxy-related services to institutional investment managers, plan
sponsors, custodians, consultants, and other institutional investors.
The services provided to the Manager by ISS include in-depth
research, voting recommendations (although the Manager is not
obligated to follow such recommendations), vote execution, and
recordkeeping. ISS will also assist the Fund in fulfilling its
reporting and recordkeeping obligations under the Investment Company
Act.
The Manager's Proxy Voting Procedures also address special
circumstances that can arise in connection with proxy voting. For
instance, under the Proxy Voting Procedures, the Manager generally
will not seek to vote proxies related to portfolio securities that
are on loan, although it may do so under certain circumstances. In
addition, the Manager will vote proxies related to securities of
foreign issuers only on a best efforts basis and may elect not to
vote at all in certain countries where the Committee determines that
the costs associated with voting generally outweigh the benefits. The
Committee may at any time override these general policies if it
determines that such action is in the best interests of a Fund.
From time to time, the Manager may be required to vote proxies in
respect of an issuer where an affiliate of the Manager (each, an
"Affiliate"), or a money management or other client of the Manager,
including investment companies for which the Manager provides
investment advisory, administrative and/or other services (each, a
"Client"), is involved. The Proxy Voting Procedures and the Manager's
adherence to those procedures are designed to address such conflicts
of interest. The Committee intends to strictly adhere to the Proxy
Voting Procedures in all proxy matters, including matters involving
Affiliates and Clients. If, however, an issue representing a
non-routine matter that is material to an Affiliate or a widely known
Client is involved such that the Committee does not reasonably
believe it is able to follow its guidelines (or if the particular
proxy matter is not addressed by the guidelines) and vote
impartially, the Committee may, in its discretion for the purposes of
ensuring that an independent determination is reached, retain an
independent fiduciary to advise the Committee on how to vote or to
cast votes on behalf of the Manager's clients.
In the event that the Committee determines not to retain an
independent fiduciary, or it does not follow the advice of such an
independent fiduciary, the Committee may pass the voting power to a
subcommittee, appointed by EIPOC (with advice from the Secretary of
the Committee), consisting solely of Committee members selected by
EIPOC. EIPOC shall appoint to the subcommittee, where appropriate,
only persons whose job responsibilities do not include contact with
the Client and whose job evaluations would not be affected by the
Manager's relationship with the Client (or failure to retain such
relationship). The subcommittee shall determine whether and how to
vote all proxies on behalf of the Manager's clients or, if the proxy
matter is, in their judgment, akin to an investment decision, to
defer to the applicable portfolio managers, provided that, if the
subcommittee determines to alter the Manager's normal voting
guidelines or, on matters where the Manager's policy is case-by-case,
does not follow the voting recommendation of any proxy voting service
or other independent fiduciary that may be retained to provide
research or advice to the Manager on that matter, no proxies relating
to the Client may be voted unless the Secretary, or in the
Secretary's absence, the Assistant Secretary of the Committee concurs
that the subcommittee's determination is consistent with the
Manager's fiduciary duties.
In addition to the general principles outlined above, the Manager has
adopted voting guidelines with respect to certain recurring proxy
issues that are not expected to involve unusual circumstances. These
policies are guidelines only, and the Manager may elect to vote
differently from the recommendation set forth in a voting guideline
if the Committee determines that it is in a Fund's best interest to
do so. In addition, the guidelines may be reviewed at any time upon
the request of a Committee member and may be amended or deleted upon
the vote of a majority of Committee members present at a Committee
meeting at which there is a quorum.
The Manager has adopted specific voting guidelines with respect to
the following proxy issues:
o Proposals related to the composition of the board of directors of
issuers other than investment companies. As a general matter, the
Committee believes that a company's board of directors (rather than
shareholders) is most likely to have access to important, nonpublic
information regarding a company's business and prospects, and is,
therefore, best-positioned to set corporate policy and oversee
management. The Committee, therefore, believes that the foundation of
good corporate governance is the election of qualified, independent
corporate directors who are likely to diligently represent the
interests of shareholders and oversee management of the corporation
in a manner that will seek to maximize shareholder value over time.
In individual cases, the Committee may look at a nominee's number of
other directorships, history of representing shareholder interests as
a director of other companies or other factors, to the extent the
Committee deems relevant.
o Proposals related to the selection of an issuer's independent
auditors. As a general matter, the Committee believes that corporate
auditors have a responsibility to represent the interests of
shareholders and provide an independent view on the propriety of
financial reporting decisions of corporate management. While the
Committee will generally defer to a corporation's choice of auditor,
in individual cases, the Committee may look at an auditors' history
of representing shareholder interests as auditor of other companies,
to the extent the Committee deems relevant.
o Proposals related to management compensation and employee benefits.
As a general matter, the Committee favors disclosure of an issuer's
compensation and benefit policies and opposes excessive compensation,
but believes that compensation matters are normally best determined
by an issuer's board of directors, rather than shareholders.
Proposals to "micro-manage" an issuer's compensation practices or to
set arbitrary restrictions on compensation or benefits will,
therefore, generally not be supported.
o Proposals related to requests, principally from management, for
approval of amendments that would alter an issuer's capital
structure. As a general matter, the Committee will support requests
that enhance the rights of common shareholders and oppose requests
that appear to be unreasonably dilutive.
o Proposals related to requests for approval of amendments to an
issuer's charter or by-laws. As a general matter, the Committee
opposes poison pill provisions.
o Routine proposals related to requests regarding the formalities of
corporate meetings.
o Proposals related to proxy issues associated solely with holdings
of investment company shares. As with other types of companies, the
Committee believes that a fund's board of directors (rather than its
shareholders) is best positioned to set fund policy and oversee
management. However, the Committee opposes granting boards of
directors authority over certain matters, such as changes to a fund's
investment objective, which the Investment Company Act envisions will
be approved directly by shareholders.
o Proposals related to limiting corporate conduct in some manner that
relates to the shareholder's environmental or social concerns. The
Committee generally believes that annual shareholder meetings are
inappropriate forums for discussion of larger social issues, and
opposes shareholder resolutions "micromanaging" corporate conduct or
requesting release of information that would not help a shareholder
evaluate an investment in the corporation as an economic matter.
While the Committee is generally supportive of proposals to require
corporate disclosure of matters that seem relevant and material to
the economic interests of shareholders, the Committee is generally
not supportive of proposals to require disclosure of corporate
matters for other purposes.
Information about how a Fund voted proxies relating to securities
held in the Fund's portfolio during the most recent 12 month period
ended February 28 is available without charge (1) at
www.blackrock.com and (2) on the Commission's web site at
http://www.sec.gov.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies - as
of March 31, 2007.
(a)(1)
The BlackRock Fund of Funds Team is responsible for managing the
Company's investments. Howard P. Berkowitz, Anson H. Beard, Christine
Jurinich and Edward Rzeszowski are the portfolio managers responsible
for investing the Company's assets. The Company's portfolio managers
will consider analyses from various sources, make the necessary
investment decisions, and place orders for transactions accordingly.
Mr. Berkowitz is the head of the team and is responsible for
overseeing the management of the Company's investments. Mr. Beard is
responsible for evaluating potential long/short equity Portfolio Fund
Managers and monitoring existing Portfolio Fund Managers, Ms.
Jurinich is responsible for evaluating potential Portfolio Fund
Managers and monitoring existing Portfolio Fund Managers, and Mr.
Rzeszowski is responsible for evaluating potential Portfolio Fund
Managers and monitoring existing Portfolio Fund Managers with a focus
on managed futures, macro funds and statistical arbitrage.
Mr. Berkowitz is a Managing Director of BlackRock, Inc. ("BlackRock")
and a member of BlackRock's Management Committee. Mr. Berkowitz has
more than 35 years of experience running private investment funds and
funds of hedge funds. He joined BlackRock in April 2003 and has been
the Company's portfolio manager since 2006. Prior to joining
BlackRock, Mr. Berkowitz was the founder and managing partner of HPB
Associates which he initially formed in 1979 as a traditional equity
hedge fund. In 1967, Mr. Berkowitz co-founded and managed Steinhardt,
Fine, Berkowitz & Co., one of the earliest and most highly successful
entrants into the hedge fund industry.
Mr. Beard is a Managing Director of BlackRock and has been a member
of the Company's portfolio management team since 2006. Prior to
joining BlackRock in 2004, Mr. Beard was the Founder, Managing
Partner, and portfolio manager of Archimedes Capital Partners, LLC, a
long/short equity hedge fund. From 1996 to 2000, Mr. Beard was an
associate at Tiger Management LLC, focusing on basic industrial
equities and commodities.
Ms. Jurinich is a Managing Director of BlackRock and has been a
member of the Company's portfolio management team since 2006. Ms.
Jurinich has been a portfolio manager with BlackRock since 2003.
Before taking on her current responsibilities in 2003, Ms. Jurinich
was a member of the Account Management Group where she was
responsible for developing and maintaining relationships with
non-U.S. clients and for developing alternative investment products.
Prior to joining BlackRock in 2002, Ms. Jurinich was responsible for
investor relations and hedge fund research at Victus Capital LLC.
From 2000 to 2001, she was responsible for manager research and
recommendations relating to relative value managers at Alpha
Investment Management LLC. She spent the prior year with Arista
Group, where her duties included all aspects of due diligence and
performance reporting. Ms. Jurinich began her career in 1993 with
Allied Capital Asset Management.
Mr. Rzeszowski joined BlackRock in 2006 as a member of the Fund of
Fund's team and became part of the Company's portfolio management
team at that time. Prior to joining BlackRock, Mr. Rzeszowski was a
Director with the fund of funds team of MLIM LP. In this role, he was
responsible for the selection and analysis of hedge funds with a
focus on managed futures, macro funds and statistical arbitrage, and
served as senior hedge fund analyst and portfolio manager for the
Global Horizons I, L.P. and ML Global Horizons Ltd. Previously, Mr.
Rzeszowski was a Senior Quantitative Analyst for the MLIM LP fund of
funds team, responsible for risk management of the managed futures
product line. He has held various positions in MLIM LP's finance
department. His additional previous work experience includes OMR
Systems Corporation (a financial investments service company), where
he was responsible for the consolidation of managed futures risks.
(a)(2) As of March 31, 2007:
(iii) Number of Other Accounts and
(ii) Number of Other Accounts Managed Assets for Which Advisory Fee is
and Assets by Account Type Performance-Based
Other Other
Registered Other Pooled Registered Other Pooled
(i) Name of Investment Investment Other Investment Investment Other
Portfolio Manager Companies Vehicles Accounts Companies Vehicles Accounts
---------- ----------
Howard P
Berkowitz 1 22 5 0 6 3
$ 58,003,935 $2,132,900,183 $ 308,307,475 $ 0 $1,054,213,667 $ 264,253,378
Anson H. Beard 1 22 5 0 6 3
$ 58,003,935 $2,132,900,183 $ 308,307,475 $ 0 $1,054,213,667 $ 264,253,378
Christine
Jurinich 1 22 5 0 6 3
$ 58,003,935 $2,132,900,183 $ 308,307,475 $ 0 $1,054,213,667 $ 264,253,378
Edward
Rzeszowski 1 22 5 0 6 3
$ 58,003,935 $2,132,900,183 $ 308,307,475 $ 0 $1,054,213,667 $ 264,253,378
(iv) Potential Material Conflicts of Interest
BlackRock has built a professional working environment, firm-wide
compliance culture and compliance procedures and systems designed to
protect against potential incentives that may favor one account over
another. BlackRock has adopted policies and procedures that address
the allocation of investment opportunities, execution of portfolio
transactions, personal trading by employees and other potential
conflicts of interest that are designed to ensure that all client
accounts are treated equitably over time. Nevertheless, BlackRock
furnishes investment management and advisory services to numerous
clients in addition to the Fund, and BlackRock may, consistent with
applicable law, make investment recommendations to other clients or
accounts (including accounts which are hedge funds or have
performance or higher fees paid to BlackRock, or in which portfolio
managers have a personal interest in the receipt of such fees), which
may be the same as or different from those made to the Fund. In
addition, BlackRock, its affiliates and any officer, director,
stockholder or employee may or may not have an interest in the
securities whose purchase and sale BlackRock recommends to the Fund.
BlackRock, or any of its affiliates, or any officer, director,
stockholder, employee or any member of their families may take
different actions than those recommended to the Fund by BlackRock
with respect to the same securities. Moreover, BlackRock may refrain
from rendering any advice or services concerning securities of
companies of which any of BlackRock's (or its affiliates') officers,
directors or employees are directors or officers, or companies as to
which BlackRock or any of its affiliates or the officers, directors
and employees of any of them has any substantial economic interest or
possesses material non-public information. Each portfolio manager
also may manage accounts whose investment strategies may at times be
opposed to the strategy utilized for the Fund. In this connection, it
should be noted that certain portfolio managers currently manage
certain accounts that are subject to performance fees. In addition,
certain portfolio managers assist in managing certain hedge funds and
may be entitled to receive a portion of any incentive fees earned on
such funds and a portion of such incentive fees may be voluntarily or
involuntarily deferred. Additional portfolio managers may in the
future manage other such accounts or funds and may be entitled to
receive incentive fees.
As a fiduciary, BlackRock owes a duty of loyalty to its clients and
must treat each client fairly. When BlackRock purchases or sells
securities for more than one account, the trades must be allocated in
a manner consistent with its fiduciary duties. BlackRock attempts to
allocate investments in a fair and equitable manner among client
accounts, with no account receiving preferential treatment. To this
end, BlackRock has adopted a policy that is intended to ensure that
investment opportunities are allocated fairly and equitably among
client accounts over time. This policy also seeks to achieve
reasonable efficiency in client transactions and provide BlackRock
with sufficient flexibility to allocate investments in a manner that
is consistent with the particular investment discipline and client
base.
(a)(3) As of March 31, 2007:
Portfolio Manager Compensation
BlackRock's financial arrangements with its portfolio managers, its
competitive compensation and its career path emphasis at all levels
reflect the value senior management places on key resources.
Compensation may include a variety of components and may vary from
year to year based on a number of factors. The principal components
of compensation include a base salary, a discretionary bonus,
participation in various benefits programs and one or more of the
incentive compensation programs established by BlackRock such as its
Long-Term Retention and Incentive Plan and Restricted Stock Program.
Base compensation. Generally, portfolio managers receive base
compensation based on their seniority and/or their position with the
firm.
Discretionary compensation. In addition to base compensation,
portfolio managers may receive discretionary compensation, which can
be a substantial portion of total compensation. Discretionary
compensation can include a discretionary cash bonus as well as one or
more of the following:
Long-Term Retention and Incentive Plan ("LTIP") --The LTIP is a
long-term incentive plan that seeks to reward certain key employees.
The plan provides for the grant of awards that are expressed as an
amount of cash that, if properly vested and subject to the attainment
of certain performance goals, will be settled in cash and/or in
BlackRock, Inc. common stock.
Deferred Compensation Program --A portion of the compensation paid to
each portfolio manager may be voluntarily deferred by the portfolio
manager into an account that tracks the performance of certain of the
firm's investment products. Each portfolio manager is permitted to
allocate his or her deferred amounts among various options, including
to certain of the firm's hedge funds and other unregistered products.
Beginning in 2005, a portion of the annual compensation of certain
senior managers is paid in the form of BlackRock, Inc. restricted
stock units which vest ratably over a number of years.
Options and Restricted Stock Awards - BlackRock also has a restricted
stock award program designed to reward certain key employees as an
incentive to contribute to the long-term success of BlackRock. These
awards vest over a period of years.
Incentive Savings Plans --BlackRock has created a variety of
incentive savings plans in which BlackRock employees are eligible to
participate, including a 401(k) plan, the BlackRock Retirement
Savings Plan (RSP) and the BlackRock Employee Stock Purchase Plan
(ESPP). The employer contribution components of the RSP include a
company match equal to 50% of the first 6% of eligible pay
contributed to the plan capped at $4,000 per year, and a company
retirement contribution equal to 3% of eligible compensation, plus an
additional contribution of 2% for any year in which BlackRock has
positive net operating income. The RSP offers a range of investment
options, including registered investment companies managed by the
firm. Company contributions follow the investment direction set by
participants for their own contributions or absent, employee
investment direction, are invested into a stable value fund. The ESPP
allows for investment in BlackRock common stock at a 5% discount on
the fair market value of the stock on the purchase date. Annual
participation in the ESPP is limited to the purchase of 1,000 shares
or a dollar value of $25,000. Each portfolio manager is eligible to
participate in these plans.
Annual incentive compensation for each portfolio manager is a
function of several components: the performance of BlackRock, the
performance of the portfolio manager's group within BlackRock, the
investment performance, including risk-adjusted returns, of the
firm's assets under management or supervision by that portfolio
manager relative to predetermined benchmarks, and the individual's
teamwork and contribution to the overall performance of these
portfolios and BlackRock. Unlike many other firms, portfolio managers
at BlackRock compete against benchmarks rather than each other. In
most cases, these benchmarks are the same as the benchmark or
benchmarks against which the performance of the Fund or other
accounts are measured. A group of BlackRock's officers determines the
benchmarks against which to compare the performance of funds and
other accounts managed by each portfolio manager. With respect to the
Fund of Funds Team, such benchmarks include the S&P Hedge Fund Index
and HFRI Fund of Funds Composite Index.
The group of BlackRock's officers then makes a subjective
determination with respect to the portfolio manager's compensation
based on the performance of the funds and other accounts managed by
each portfolio manager relative to the various benchmarks. This
determination may take into consideration the fact that a benchmark
may not perfectly correlate to the way the Registrant or other
accounts are managed, even if it is the benchmark that is most
appropriate for the Registrant or other account. For example, a
benchmark's return may be based on the total return of the securities
comprising the benchmark, but the Registrant or other account may be
managed to maximize income and not total return. Senior portfolio
managers who perform additional management functions within BlackRock
may receive additional compensation for serving in these other
capacities.
(a)(4) Beneficial Ownership of Securities. As of March 31, 2007, none
of Messrs. Berkowitz, Beard, Rzeszowski and Ms. Jurinich beneficially
owns any stock issued by the Fund.
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating Committee will consider nominees to the Board
recommended by shareholders when a vacancy becomes available.
Shareholders who wish to recommend a nominee should send nominations
which include biographical information and sets 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 certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others particularly
during the period in which this report is being prepared. The
registrant's certifying officers have determined that the
registrant's disclosure controls and procedures are effective based
on our evaluation of these controls and procedures as of a date
within 90 days prior to the filing date of this report.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act (17
CFR 270.30a-3(d)) that occurred during the second fiscal half-year 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 attached hereto
12(a)(1) - Code of Ethics - See Item 2
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 Opportunities LLC
By: /s/ Robert C. Doll, Jr.
------------------------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Multi-Strategy Hedge Opportunities LLC
Date: May 21, 2007
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/ Robert C. Doll, Jr.
------------------------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock Multi-Strategy Hedge Opportunities LLC
Date: May 21, 2007
By: /s/ Donald C. Burke
------------------------------------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock Multi-Strategy Hedge Opportunities LLC
Date: May 21, 2007