UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21537
Name of Fund: BlackRock Multi-Strategy Hedge Opportunities, LLC
Fund Address: 55 East 52nd Street, New York, NY 10065
Name and address of agent for service: Donald C. Burke, 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: (877) GPC-ROCK
Date of fiscal year end: 03/31/2008
Date of reporting period: 04/01/2007 - 09/30/2007
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
BlackRock Multi-Strategy Hedge Opportunities LLC BLACKROCK
SEMI-ANNUAL REPORT
SEPTEMBER 30, 2007 | (UNAUDITED)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock Multi-Strategy Hedge Opportunities LLC
================================================================================
Table of Contents Page
- --------------------------------------------------------------------------------
A Letter to Members ...................................................... 3
Semi-Annual Report:
Company Summary .......................................................... 4
Disclosure of Expenses ................................................... 5
Financial Statements:
Schedule of Investments ................................................ 6
Statement of Assets and Liabilities .................................... 7
Statement of Operations ................................................ 7
Statements of Changes in Net Assets .................................... 8
Statement of Cash Flows ................................................ 9
Financial Highlights ..................................................... 10
Notes to Financial Statements ............................................ 11
Officers and Directors ................................................... 14
Proxy Results ............................................................ 14
BlackRock Privacy Principles ............................................. 15
Availability of Quarterly Schedules of Investments ....................... 15
Electronic Delivery ...................................................... 15
2 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC SEPTEMBER 30, 2007
A Letter to Members
Dear Member
The September reporting period took financial markets on a wild ride. While
subprime mortgage woes dominated headlines for much of 2007, troubles
intensified in the final months of the period, spawning a widespread "credit
crunch" that crept into other areas of the market. The U.S. Federal Reserve
Board (the "Fed") and other countries' central banks stepped in to inject
liquidity into the markets and bolster investor confidence. The Fed cut the
discount rate, the rate banks pay to borrow money directly from the Fed, from
6.25% to 5.25% in two moves in August and September. The central bankers also
cut the more widely followed federal funds target rate, which had remained
unchanged at 5.25% for over a year, to 4.75% in September. After a tumultuous
summer, the dust began to settle toward period-end amid speculation that the
worst of the credit crunch had passed.
Although heightened volatility and a weakening U.S. economy have been recurring
themes throughout the past year, equity markets have displayed surprising
resilience. Most recently, the credit turmoil dampened corporate merger-and-
acquisition activity, a key source of strength for equity markets. However,
market fundamentals have held firm, dividend payouts and share buybacks have
continued to grow, and valuations remain attractive. These tailwinds generally
have prevailed over the headwinds created by the slowing U.S. economy and
troubled housing market.
In fixed income markets, mixed economic signals and the credit market debacle
resulted in a flight to quality. At the height of the uncertainty, investors
shunned bonds associated with the housing and credit markets in favor of higher-
quality Treasury issues. The yield on 10-year Treasury issues, which touched
5.30% in June (its highest level in five years), fell to 4.59% by period-end,
while prices correspondingly rose.
Against this backdrop, financial markets posted generally positive results for
the six-month period, and relatively stronger returns for the full year ended
September 30, 2007:
Total Returns as of September 30, 2007 6-month 12-month
========================================================================================================
U.S. equities (S&P 500 Index) +8.44% +16.44%
- --------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) +1.19 +12.34
- --------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +8.72 +24.86
- --------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers U.S. Aggregate Bond Index) +2.31 + 5.14
- --------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +1.15 + 3.10
- --------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) +0.56 + 7.62
- --------------------------------------------------------------------------------------------------------
Past performance is no guarantee of future results. Index performance shown for
illustrative purposes only. You cannot invest directly in an index.
As you navigate market volatility, we encourage you to review your investment
goals with your financial professional and to make portfolio changes, as needed.
For more market insight, we invite you to view "What's Ahead in 2007: Third
Quarter Update" and "Are You Prepared for Volatility?" at
www.blackrock.com/funds. We thank you for entrusting 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.
Vice Chairman, BlackRock, Inc.
3
THIS PAGE NOT PART OF YOUR FUND REPORT
Company Summary as of September 30, 2007
Company Information
The following charts show the ten largest holdings and investments by strategy
of the Company's long-term investments:
Ten Largest Holdings
Kinetics Partners LP ................................................. 8.9%
Glenview Institutional Partners LP ................................... 8.6
Double Black Diamond LP .............................................. 7.7
Suttonbrook Capital Partners LP ...................................... 7.7
Aristeia Partners LP ................................................. 7.4
SR Phoenicia LP ...................................................... 7.3
Trivium Onshore Fund LP .............................................. 7.2
ARX Global High Yield Securities Fund I LLC .......................... 6.7
LibertyView Credit Opportunities Fund II LLC ......................... 6.5
Hayground Cove Institutional Partners LP ............................. 4.8
- -------------------------------------------------------------------------------
Investments by Strategy
9/30/07 3/31/07
- --------------------------------------------------------------------------------
Equity Opportunistic ....................................... 41.3% 38.0%
Directional ................................................ 17.9 23.1
Multi-Strategy ............................................. 15.4 12.1
High Yield ................................................. 13.2 14.9
Convertible Arbitrage ...................................... 7.4 8.0
Equity Neutral ............................................. 2.9 3.9
Event Driven ............................................... 1.9 0.0
- --------------------------------------------------------------------------------
The table below summarizes the change in the Company's net asset value per unit:
- --------------------------------------------------------------------------------
9/30/07 3/31/07 Change High Low
- --------------------------------------------------------------------------------
Net Asset Value ........ $1.2043 $1.1664 3.25% $1.2349 $1.1664
- --------------------------------------------------------------------------------
The table below provides the Company's average annual total returns:
Average Annual Total Return
Return Without Return With
Sales Charge Sales Charge*
================================================================================
One Year Ended 9/30/07 +11.02% +7.69%
- --------------------------------------------------------------------------------
Inception (1/03/05)
through 9/30/07 + 7.02 +5.84
- --------------------------------------------------------------------------------
* Maximum sales charge is 3%.
Past results shown should not be considered a representation of future
performance.
4 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC SEPTEMBER 30, 2007
Disclosure of Expenses
Members of this Company may incur the following charges: (a) expenses related to
transactions, including sales charges, redemption fees and exchange fees; and
(b) operating expenses, including advisory fees, distribution fees including
12b-1 fees, and other Company expenses. The expense example below (which is
based on a hypothetical investment of $1,000 invested on April 1, 2007 and held
through September 30, 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 table 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 table also 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' shareholder 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,
redemption fees or exchange fees. 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.
Expense Example
Actual Hypothetical**
------------------------------------------------- -------------------------------------------------
Beginning Ending Beginning Ending
Account Value Account Value Expenses Paid Account Value Account Value Expenses Paid
April 1, 2007 Sept. 30, 2007 During the Period* April 1, 2007 Sept. 30, 2007 During the Period*
- ------------------------------------------------------------------------------------------------------------------------------------
BlackRock Multi-Strategy
Hedge Opportunities LLC ... $1,000 $1,032 $11.79 $1,000 $1,013 $11.68
- ------------------------------------------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 2.33%, multiplied by
the average account value over the period, multiplied by 183/365 (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.
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC SEPTEMBER 30, 2007 5
Schedule of Investments as of September 30, 2007 (Unaudited) (in U.S. dollars)
Strategy Portfolio Funds Value
===================================================================================================================================
Convertible Arbitrage -- 7.8% Aristeia Partners LP $ 9,743,084
===================================================================================================================================
Directional -- 18.7% Bayswater Global Quant Alpha Fund LLC 5,434,181
Campbell QMF LLC 3,769,197
Cornerstone International Value Fund LLC 5,203,656
FORT Global Contrarian LP 2,996,339
Grinham Diversified Fund (U.S.) LP 6,051,026
------------
23,454,399
===================================================================================================================================
Equity Neutral -- 3.1% Ventus US$ Double Leverage Fund 3,864,449
===================================================================================================================================
Equity Opportunistic -- 43.2% Glenview Institutional Partners LP 11,237,131
Hayground Cove Institutional Partners LP 6,274,808
Kinetics Partners LP 11,700,455
Maverick Levered Partners LP 2,526,507
Neon Liberty Emerging Markets Fund LP 3,303,294
SR Phoenicia LP 9,618,165
Trivium Onshore Fund LP 9,440,273
------------
54,100,633
===================================================================================================================================
Event Driven -- 2.0% Gruss Global Investors LP 2,462,629
===================================================================================================================================
High Yield -- 13.8% ARX Global High Yield Securities Fund I LP 8,742,451
LibertyView Credit Opportunities Fund II LLC 8,578,179
------------
17,320,630
===================================================================================================================================
Multi-Strategy -- 16.1% Double Black Diamond LP 10,145,809
Suttonbrook Capital Partners LP 10,049,604
------------
20,195,413
===================================================================================================================================
Total Investments** (Cost -- $107,850,000*) -- 104.7% 131,141,237
Liabilities in Excess of Other Assets -- (4.7)% (5,865,808)
------------
Net Assets -- 100.0% $125,275,429
============
* The cost and unrealized appreciation (depreciation) of investments as of
September 30, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost ......................................... $ 113,815,116
=============
Gross unrealized appreciation .......................... $ 20,393,252
Gross unrealized depreciation .......................... (3,067,131)
-------------
Net unrealized appreciation ............................ $ 17,326,121
=============
** Non-income producing securities.
See Notes to Financial Statements.
6 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC SEPTEMBER 30, 2007
Statement of Assets and Liabilities
As of September 30, 2007 (Unaudited)
===============================================================================
Assets
- -------------------------------------------------------------------------------
Investments in Portfolio Funds,* at value
(identified cost -- $107,850,000) ............................ $ 131,141,237
Cash ......................................................... 2,658,477
Interest receivable .......................................... 9,047
Prepaid expenses and other assets ............................ 5,550
-------------
Total assets ................................................. 133,814,311
-------------
===============================================================================
Liabilities
- -------------------------------------------------------------------------------
Payables:
Investment adviser ......................................... 492,451
Service agents ............................................. 81,508
Redemptions payable .......................................... 7,142,113
Subscriptions received in advance ............................ 355,290
Accrued expenses and other liabilities ....................... 467,520
-------------
Total liabilities ............................................ 8,538,882
-------------
===============================================================================
Net Assets
- -------------------------------------------------------------------------------
Net assets ................................................... $ 125,275,429
=============
===============================================================================
Net Assets Consist of
- -------------------------------------------------------------------------------
Members' capital ............................................. $ 101,226,362
Unrealized appreciation on investments -- net ................ 23,291,237
Undistributed realized gain on investments -- net ............ 8,114,432
Accumulated investment loss -- net ........................... (7,356,602)
-------------
Net Assets ................................................... $ 125,275,429
=============
Units outstanding ............................................ 104,022,750
=============
Net asset value per unit ..................................... $ 1.2043
=============
* Non-income producing securities.
See Notes to Financial Statements.
Statement of Operations
For the Six Months Ended September 30, 2007 (Unaudited)
===============================================================================
Investment Income
- -------------------------------------------------------------------------------
Interest ..................................................... $ 166,989
-------------
===============================================================================
Expenses
- -------------------------------------------------------------------------------
Investment advisory fees ..................................... 999,032
Service agent fees ........................................... 167,671
Accounting and administration services ....................... 167,406
Professional fees ............................................ 93,253
Printing and member reports .................................. 66,747
Custodian fees ............................................... 34,434
Loan interest expense ........................................ 7,563
Other ........................................................ 13,185
-------------
Total expenses ............................................... 1,549,291
-------------
Investment loss -- net ....................................... (1,382,302)
-------------
===============================================================================
Unrealized/Realized Gain -- Net
- -------------------------------------------------------------------------------
Change in unrealized appreciation on investments -- net ...... 5,532,279
Realized gain on investments -- net .......................... 277,508
-------------
Total unrealized/realized gain -- net ........................ 5,809,787
-------------
Net Increase in Net Assets Resulting from Operations ......... $ 4,427,485
=============
See Notes to Financial Statements.
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC SEPTEMBER 30, 2007 7
Statements of Changes in Net Assets
For the Six
Months Ended For the
September 30, Year Ended
2007 March 31,
Increase (Decrease) in Net Assets (Unaudited) 2007
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Investment loss -- net ......................................................................... $ (1,382,302) $ (2,684,984)
Change in unrealized appreciation on investments -- net ........................................ 5,532,279 7,176,547
Realized gain on investments -- net ............................................................ 277,508 6,982,673
-------------------------------
Net increase in net assets resulting from operations ........................................... 4,427,485 11,474,236
-------------------------------
===================================================================================================================================
Capital Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Proceeds from issuance of Units ................................................................ 6,006,585 22,515,567
Fair value of Units tendered ................................................................... (14,050,349) (30,548,590)
-------------------------------
Net decrease in net assets derived from capital transactions ................................... (8,043,764) (8,033,023)
-------------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ........................................................ (3,616,279) 3,441,213
Beginning of period ............................................................................ 128,891,708 125,450,495
-------------------------------
End of period* ................................................................................. $ 125,275,429 $ 128,891,708
===============================
* Accumulated investment loss -- net ....................................................... $ (7,356,602) $ (5,974,300)
===============================
See Notes to Financial Statements.
8 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC SEPTEMBER 30, 2007
For the Six Months Ended September 30, 2007 (Unaudited)
===================================================================================================================================
Cash Provided by Operating Activities
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations .............................................................. $ 4,427,485
------------
Adjustments to reconcile net increase in net assets resulting from operations to
net cash provided by operating activities:
Decrease in investments paid in advance ....................................................................... 13,000,000
Decrease in receivables and other assets ...................................................................... 6,166
Decrease in liabilities ....................................................................................... (75,733)
Change in unrealized appreciation on investments -- net ....................................................... (5,532,279)
Realized gain on investments -- net ........................................................................... (277,508)
Purchases of long-term securities ................................................................................. (15,500,000)
Sales of long-term securities ..................................................................................... 18,309,043
------------
Net cash provided by operating activities ......................................................................... 14,357,174
------------
===================================================================================================================================
Cash Used for Financing Activities
- -----------------------------------------------------------------------------------------------------------------------------------
Receipts from issuance of Units (including subscriptions received in advance of $355,290) ......................... 4,649,029
Payments from tender of Units ..................................................................................... (12,575,153)
Payments on borrowings ............................................................................................ (3,900,000)
------------
Net cash used for financing activities ............................................................................ (11,826,124)
------------
===================================================================================================================================
Cash
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in cash .............................................................................................. 2,531,050
Cash at beginning of period ....................................................................................... 127,427
------------
Cash at end of period ............................................................................................. $ 2,658,477
============
===================================================================================================================================
Cash Flow Information
- -----------------------------------------------------------------------------------------------------------------------------------
Cash paid for interest ............................................................................................ $ 9,653
============
See Notes to Financial Statements.
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC SEPTEMBER 30, 2007 9
Financial Highlights
For the Six For the Period
Months Ended For the Year Ended January 3,
September 30, March (31,) 2005+ to
The following ratios have been derived from 2007 -------------------------------- March 31,
information provided in the financial statements. (Unaudited) 2007 2006 2005
==================================================================================================================================
Per Unit Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .................. $ 1.1664 $ 1.0693 $ .9979 $ 1.0000
------------------------------------------------------------------------
Investment loss -- net*** ............................. (.0125) (.0225) (.0266) (.0070)
Unrealized/realized gain on investments -- net ........ .0504 .1196 .0980 .0049
------------------------------------------------------------------------
Total from investment operations ...................... .0379 .0971 .0714 (.0021)
------------------------------------------------------------------------
Net asset value, end of period ........................ $ 1.2043 $ 1.1664 $ 1.0693 $ .9979
========================================================================
==================================================================================================================================
Total Investment Return**
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment return ............................... 3.25%@ 9.08% 7.16% (.21%)@
========================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses .............................................. 2.33%* 2.36% 2.84% 3.28%*
========================================================================
Expenses net of reimbursement ......................... 2.33%* 2.36% 2.78% 2.96%*
========================================================================
Investment loss -- net ................................ (2.08%)* (2.05%) (2.65%) (2.83%)*
========================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) .............. $ 125,275 $ 128,892 $ 125,450 $ 75,347
========================================================================
Portfolio turnover .................................... 7% 51% 19% 0%
========================================================================
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Based on average units outstanding.
+ Commencement of operations.
@ Aggregate total investment return; not annualized.
See Notes to Financial Statements.
10 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC SEPTEMBER 30, 2007
Notes to Financial Statements (Unaudited)
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 -- Effective September 30, 2007, the
Company implemented Financial Accounting Standards Board ("FASB") interpretation
No. 48, "Accounting for Uncertainty in Income Taxes -- an interpretation of FASB
Statement No. 109" ("FIN 48"). 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 investment companies, before being measured and recognized in
the financial statements. Management has evaluated the application of FIN 48 to
the Company, and has determined that the adoption of FIN 48 does not have a
material impact on the Company's financial statements. The Company files U.S.
and various state tax returns. No income tax returns are currently under
examination. The status of limitations on the Company's tax returns remains open
for the years ended March 31, 2005 through March 31, 2007.
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, Statement of Financial Accounting Standards No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("FAS 159"), was issued and 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 of the Company's financial
statements, if any, has not been determined.
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC SEPTEMBER 30, 2007 11
Notes to Financial Statements (continued)
2. Investment Advisory Agreement and Transactions with Affiliates:
The Company has entered into an Investment Advisory Agreement with BlackRock
Advisors, LLC ("BlackRock"). Merrill Lynch & Co., Inc. ("Merrill Lynch") and The
PNC Financial Services Group, Inc. are principal owners of BlackRock, Inc.
BlackRock is responsible for the management of the 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" or "Service Agent"), a subsidiary of Merrill Lynch.
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 six-month period ended September 30, 2007, FAMD received $91,359 in
sales charges on sales of units in the Company.
Certain officers and/or directors of the Company are officers and/or directors
of BlackRock and/or BlackRock, Inc. or its affiliates.
3. Investments:
Purchases of investments for the six months ended September 30, 2007 were
$15,500,000.
Sales of investments for the six months ended September 30, 2007 were
$9,477,509.
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.
Transactions in capital were as follows:
- -------------------------------------------------------------------------------
For the Six Months Ended Dollar
September 30, 2007 Units Amount
- -------------------------------------------------------------------------------
Units sold ................................... 5,043,585 $ 6,006,585
Units tendered ............................... (11,524,676) (14,050,349)
----------------------------
Net decrease ................................. (6,481,091) $ (8,043,764)
============================
- -------------------------------------------------------------------------------
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)
============================
5. Investments in Portfolio Funds:
The following table lists the Company's investments in Portfolio Funds for the
six months ended September 30, 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 1% 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 September 30, 2007.
12 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC SEPTEMBER 30, 2007
Notes to Financial Statements (concluded)
% of Company's Net Income Fees Redemptions
Investments Total Fair Value Fair Value (Loss) Management Incentive Permitted
- ------------------------------------------------------------------------------------------------------------------------------------
Aristeia Partners 7.4% $ 9,743,084 $ 220,997 1% 20% Quarterly
ARX Global 6.7 8,742,451 (672,474) 1.75 20 Quarterly
Bayswater Global 4.1 5,434,181 (565,819) 2 20 Monthly
Campbell 2.9 3,769,197 (625,335) 2 20 Monthly
Cornerstone International 4.0 5,203,656 (114,296) 1 20 Monthly
Double Black Diamond 7.7 10,145,809 665,546 1 - 1.5 20 Quarterly
FORT Global 2.3 2,996,339 (59,880) 1 20 Monthly
Glenview Institutional 8.6 11,237,131 746,303 1 20 Monthly
Golden Tree Credit Opportunities --(a) --(a) 7,755 2 20 Semi-Annually
Grinham Diversified 4.6 6,051,026 530,074 1.5 20 Monthly
Grossman Currency --(b) --(b) 40,069 2 25 Monthly
Gruss Global 1.9 2,462,629 (37,371) 1.5 20 Quarterly
Hayground Cove Institutional 4.8 6,274,808 55,359 1.5 20 Monthly
Kinetics Partners 8.9 11,700,455 2,128,822 1 20 Monthly
Kottke Arbitrage --(b) --(b) (34,732) 2 20 Monthly
LibertyView Credit 6.5 8,578,179 202,575 1 20 Quarterly
Litespeed Partners --(a) --(a) 7,335 1.5 20 Quarterly
Maverick Levered 1.9 2,526,507 451,498 2 20 Annually
Neon Liberty 2.5 3,303,294 252,152 1.5 20 Quarterly
Salem Futures --(b) --(b) 127,388 2 20 Monthly
SR Phoenicia 7.3 9,618,165 2,159,721 1 20 Monthly
Suttonbrook 7.7 10,049,604 92,948 2 20 Quarterly
Trivium 7.2 9,440,273 1,049,914 1.5 20 Monthly
Ventus 3.0 3,864,449 (818,762) 2 20 Monthly
------------------------------------------------
Total 100.0% $131,141,237 $ 5,809,787
================================================
(a) The Company fully redeemed from the Portfolio Funds as of December 31,
2006.
(b) The Company fully redeemed from the Portfolio Funds as of April 30, 2007.
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 September 30, 2007, the Company had
weighted average borrowings of $223,497. Interest rates on borrowings for the
six months ended September 30, 2007 was 6.52%.
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:
On October 1, 2007, BlackRock, Inc. completed its acquisition of the
fund-of-funds business of Quellos Group, LLC. The combined fund-of- funds
platform, including the fund of funds advised by BlackRock Investment
Management, LLC, will operate under the name BlackRock Alternative Advisors.
Throughout the normal course of business on October 1, 2007, there were
additional proceeds of $355,290 from the issuance of units by the Company.
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC SEPTEMBER 30, 2007 13
Officers and Directors as of September 30, 2007
Robert C. Doll, Jr., Company President and Director
David O. Beim, Director
James T. Flynn, Director
W. Carl Kester, Director
Karen P. Robards, Director
Donald C. Burke, Vice President and Treasurer
Karen Clark, Chief Compliance Officer
Howard Surloff, Secretary
Custodian
PFPC Trust Company
8800 Tinicum Boulevard
4th Floor
Philadelphia, PA 19153
Administrator & Escrow Agent
PFPC, Inc.
Wilmington, DE 19809
Proxy Results
During the six-month period ended September 30, 2007, the members of BlackRock
Multi-Strategy Hedge Opportunities LLC voted on the following proposal, which
was approved at an annual members' meeting on August 16, 2007. This proposal was
part of the reorganization of the Company's Board of Directors to take effect on
or about November 1, 2007. A description of the proposal and number of units
voted for each Director are as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Units Voted Units Withheld
For From Voting
- ------------------------------------------------------------------------------------------------------------------------------------
To elect the Company's Board of Directors: G. Nicholas Beckwith, III, Richard E. Cavanagh,
Richard S. Davis, Kent Dixon, Frank J. Fabozzi,
Kathleen F. Feldstein, James T. Flynn, Henry Gabbay,
Jerrold B. Harris, R. Glenn Hubbard, W. Carl Kester,
Karen P. Robards and Robert S. Salomon, Jr. 94,982,750 5,183,135
- ------------------------------------------------------------------------------------------------------------------------------------
14 BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC SEPTEMBER 30, 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 non-public personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our Web sites.
BlackRock does not sell or disclose to non-affiliated third parties any
non-public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client accounts.
These non-affiliated third parties are required to protect the confidentiality
and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to non-public
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the non-public
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
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. Members 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.
Members Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all
investment advisers, banks or brokerages may offer this service.
BLACKROCK MULTI-STRATEGY HEDGE OPPORTUNITIES LLC SEPTEMBER 30, 2007 15
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 units 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-9/07
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this
semi-annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to this
semi-annual report
Item 6 - Schedule of Investments - The registrant's Schedule of Investments
is included as part of the Report to Stockholders filed under Item 1
of this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable to this semi-annual
report
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
as of October 1, 2007
(a) Not Applicable
(b) Effective October 1, 2007, Mr. Anson Beard, a co-portfolio
manager of the Registrant identified in response to paragraph (a) of
this item in the Registrant's most recent annual report, has
resigned from the Adviser. The remainder of the portfolio management
team, as identified in the Registrant's most recent annual report,
remains unchanged.
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 set forth the
qualifications of the proposed nominee to the registrant's
Secretary. There have been no material changes to these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
13a-15(b) under the Securities and Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act)
that occurred during the second fiscal quarter of the period covered
by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Multi-Strategy Hedge Opportunities, LLC
By: /s/ Donald C. Burke
-------------------
Donald C. Burke,
Chief Executive Officer of
BlackRock Multi-Strategy Hedge Opportunities, LLC
Date: November 20, 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/ Donald C. Burke
-------------------
Donald C. Burke,
Chief Executive Officer (principal executive officer) of
BlackRock Multi-Strategy Hedge Opportunities, LLC
Date: November 20, 2007
By: /s/ Neal J. Andrews
-------------------
Neal J. Andrews,
Chief Financial Officer (principal financial officer) of
BlackRock Multi-Strategy Hedge Opportunities, LLC
Date: November 20, 2007