This brochure describes the services provided by Fund Advisor.
A. Our Firm and Corporate Structure
UBS Fund Advisor, L.L.C. was organized as a Delaware limited liability company on June 25, 1996. It is
a wholly owned subsidiary of UBS Americas Inc., a Delaware corporation. UBS Americas Inc. is a wholly
owned subsidiary of UBS Americas Holdings LLC, which in turn is a wholly owned subsidiary of UBS AG
a Swiss stock corporation. Fund Advisor became a registered investment adviser on July 10, 1998.
As of November 28, 2014, UBS AG has a new Group Holding Company, UBS Group AG, that is now the
ultimate parent of UBS Americas Inc.
B. Our Advisory Services
As an adviser or administrator, we provide access to various third party managers through a number of
funds structured as feeder funds, and as a result, our investment advisory functions are limited to advice
with respect to those types of investments and related cash investments. The performance of the
respective feeder funds that we advise or administer will be primarily determined by the advisory
decisions of the third party manager of the underlying fund. Nevertheless, in this role, Fund Advisor has
limited discretion to make a number of decisions that may have some effect on feeder fund
performance. For example, Fund Advisor makes decisions with respect to the retention of appropriate
reserves; investment of excess cash; valuation procedures with respect to the feeder's investment in the
underlying fund; voting the interests of the underlying fund; the treatment of investor defaults in the
private equity context; among other things.
We do not hold ourselves out as specializing in a particular type of advisory service or strategy. Instead,
our advisory programs and services offer a broad variety of strategies, investment options, asset
allocations and features.
Fund Advisor provides all of its advisory or administration services through the efforts of employees of its
affiliates, UBS Solutions LLC and UBSFS, which is also a registered investment adviser limited to advice
with respect to those types of investments and related cash investments.
All of Fund Advisor's officers and other personnel are employees of UBSFS. Fund Advisor does not pay
overhead or payroll directly. All of Fund Advisor's officers and other personnel are paid fully by UBSFS.
As a result, a reallocation is made internally from Fund Advisor to UBSFS to reimburse it for various
expenses that UBSFS covers on behalf of Fund Advisor, including without limitation, salaries, rent, and
other applicable overhead expenses.
Generally, the funds advised or administered by Fund Advisor are distributed by UBSFS and its Financial
Advisors. Under the distribution agreements, UBSFS and its Financial Advisors receive compensation in
connection with the sale and distribution of hedge funds, funds of funds, private equity and real estate funds
advised or administered by Fund Advisor.
The amount of fees paid to UBSFS, and its Financial Advisors, may vary depending on the arrangement
between UBSFS and Fund Advisor. Fund Advisor pays UBSFS up to 90 bps for distribution of the feeder
funds. These payments are shared with UBSFS Financial Advisors. UBSFS may also charge placement fees
of up to 2% to its clients, and may receive a one-time service fee from the sponsor of the underlying
fund into which a proprietary feeder fund invests.
As a result of the various payments to us or our affiliated companies, the amount of compensation that UBS
entities receive with respect to the sale of affiliated or proprietary hedge funds, funds of funds, private equity
funds and real estate funds is greater than the amount payable to the organization as a whole from the sale of
unaffiliated investments.
C. How We Tailor Our Advisory Services
Fund Advisor provides different types of advisory or administration service depending on the structure of
the fund. For example, there are general differences between hedge funds, funds of funds, private
equity and real estate funds, and Fund Advisor adapts its approach accordingly.
D. Participation in Wrap Fee Programs
Our services do not include the participation or offering of our services in wrap fee programs. However,
funds to which we provide investment advisory services are offered in wrap fee programs offered by our
affiliate, UBS Financial Services Inc. We do not receive an investment advisory or performance fee in
connection with the advisory share classes of the funds offered in advisory programs.
E. Assets Under Management
Our assets under management as of December 31, 2018 are listed below.
• Non-discretionary: N/A
• *Discretionary: 6,442,334,341
• Total: 6,442,334,341
*Fund Advisor exercises limited discretion in connection with certain administration services it provides
to the funds. Fund Advisor does not have discretion to determine how the underlying funds invest.
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A. Fees
Generally, Fund Advisor charges an advisory or administration fee between .50 and 1.75 bps. Our fees
are negotiable, and at our sole discretion, may be waived and may differ for different funds and for
different classes within the same fund, based on a number of factors. These factors include, but are not
limited to:
• the type and size of the fund,
• the number and type of services selected,
• the scope of the engagement,
• the complexity of the services provided and preferences of the fund
• the expected frequency with which services may be needed, and
• the nature and amount of investor assets involved.
The advisory or administration fee paid to Fund Advisor may be waived in their entirety for certain
classes of investors (for example, ERISA plans investing through an advisory program). Our ability to
charge a fee less than the maximum or waive the fee may result in one fund paying for the same set of
services provided to another fund at a lower fee or free of charge. We also have the discretion to
discount fees for specific investors in our funds purchasing multiple funds or investing a large amount in
a specific fund.
B. Billing Practices
Valuation and Billing: Fund Advisor generally relies on the value of the underlying fund's assets
provided by the underlying fund or other third party service providers, and engages in an internal
valuation process with respect to a feeder fund's other assets for purposes of determining or calculating
our advisory or administration fees, although, under limited circumstances, Fund Advisor may re-value
the underlying fund.
Our fees are generally payable monthly or quarterly in arrears. Fees for certain private equity funds are
payable in advance.
C. Fees/Other Charges Not Covered by Our Advisory Fee
The fee you pay covers only our advisory or administration services provided in our agreement with the
fund. Our fees do not:
• cover any other services, accounts or products any UBS entity provides to you;
• any fees charged at the UBSFS brokerage account level
• custody fees imposed by other financial institutions if you choose to custody your assets at other
financial institutions; or
• any fees charged to the fund by other UBS entities or third party entities, as disclosed in the fund's
offering document.
Please review the applicable prospectus and offering documents for the investment vehicles offered in the program carefully for a detailed description of the additional fees associated with these securities.
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Fund Advisor receives an approximate 5% performance based fee on two of its private equity feeder
funds. While, as described above, Fund Advisor has very little discretion with respect to the funds to
which it provides advisory or administration services, performance based compensation may create an
incentive for Fund Advisor to recommend an investment that may carry a higher degree of risk to the
fund.
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A. Type of Clients
We provide advisory or administration services exclusively to unregistered investment companies
including hedge funds, funds of funds, private equity and real estate funds.
B. Requirements for Receipt of Services
1. Agreements. As part of our engagement, we require that each fund execute an
agreement with us that describes the nature of the services we provide, the fees and any restrictions
applicable to our services.
2. Investment Recommendations. Our services do not include the recommendation or
solicitation of any other types of securities.
3. Termination. Each Fund may terminate its agreement with Fund Advisor by notifying
Fund Advisor in writing, generally upon 30 to 60 days notice. Upon termination, we will have no further
obligation to advise or administer the fund, as applicable.
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As the advisor or administrator to feeder funds, Fund Advisor's investment advisory or administration
functions are limited.
The decision to offer a third party manager on the UBSFS platform is made by Fund Advisor's affiliate,
UBSFS, which either acts as the placement agent for the third party manager's fund, or as placement
agent for a UBS feeder fund that invests primarily in the third party manager's fund. In the case of a
hedge fund feeder, UBSFS has the discretion to cease offering the fund, which will result in Fund
Advisor closing the feeder fund.
Before approving the creation of a feeder fund, UBSFS engages in a due diligence process, which begins
with an analysis of:
• the manager's investment philosophy and strategy,
• investment process,
• quality and depth of research,
• portfolio construction, and
• risk management and corporate structure.
The due diligence team then performs a more in-depth analysis on the manager, to gather information
directly from the manager, through multiple meetings and interviews, documentation requests (
including marketing materials and historical client correspondence), personal and professional
references, and completion of a due diligence questionnaire.
After collecting this information, the due diligence team may consider a number of other factors,
including background checks, government filings, audited financial statements, public information
searches and reference calls to former employees and/or former investors. The due diligence team
reviews both qualitative and quantitative considerations, including the background and experience of
the manager and team, portfolio construction and risk management discipline, strategy viability through
a complete economic cycle, relevant metrics appropriate for the strategy, such as absolute historical level
of returns, volatility, correlation, and drawdowns, performance comparison of the fund to other similar
funds, peer universe, and relevant indexes, and maturity of the investment fund, including strength of
the control environment. Initial and ongoing due diligence is conducted on all open and currently
offered funds advised or administered by Fund Advisor. Ongoing due diligence may or may not be
conducted on closed funds and funds not currently offered and if conducted, may be limited in scope.
• Alternative Investments
All investments carry the significant risk of loss.
Feeder funds have certain specific risks, which are disclosed in each fund's offering memorandum. For
example, the investment performance of a feeder fund depends almost entirely on the performance of
the underlying fund, over which Fund Advisor has no control. Generally, Fund Advisor does not hedge
the risks of the underlying fund's investments or take any defensive actions in the event of declining
performance or asset losses at the underlying fund, and a feeder fund's investment performance could
be materially worse than would be the case if Fund Advisor diversified investments among asset classes
or hedged investment risks. Furthermore, investors in a UBS feeder fund bear two levels of fees, and
investments by investors in the feeder fund are not investments in the underlying fund on a dollar-for-
dollar basis.
Interests of alternative investment funds are sold only to qualified investors, and only by means of
offering documents that include information about the risks, performance and expenses of the Funds,
and which clients are urged to read carefully before subscribing.
Investments in alternative investment funds are speculative and involve significant risks as the funds:
• are not registered investment funds and are not subject to the same regulatory requirements or
protections under the Investment Company Act of 1940, as amended, as registered investment
funds, also known as mutual funds;
• may fluctuate in value, performance may be volatile, and investors may lose all or a significant
amount of their investment in a fund;
• may engage in leveraging and other speculative investment practices that may increase the risk
of investment loss;
• interests are typically illiquid and subject to restrictions on transfer; and the fund may not be
required to provide periodic pricing or valuation information to investors;
• investment programs generally involve complex tax strategies and there may be delays in
distributing tax information to investors;
• are subject to high fees, and layering of fees, including management fees and other fees, and as
such expenses, all of which will reduce fund return
• are structured as feeder funds that are usually created for the purpose of investing in the master
fund, as such, the feeder fund has no operating history;
• is a long-term investment as there is generally no secondary market for the interests of the
Fund, and none is expected to develop; and
• interests are not deposits or obligations of, or guaranteed or endorsed by, any bank or other
insured depository institution, and are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other governmental agency.
Prospective investors should understand these risks and have the financial ability and willingness to accept them for an extended period of time before making an investment in a fund. Investors should consider a fund as a supplement to an overall investment program.
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Below is a summary of the material legal and disciplinary events against Fund Advisor during the last ten
years. As of the date of this brochure, there are no reportable legal and disciplinary events for our
senior management personnel or those individuals in senior management responsible for determining
the general investment advice or services available to clients of Fund Advisor.
The information in this report is not the only resource you can consult. You can access additional
information about Fund Advisor and its management personnel on the Security and Exchange
Commission's website, located at brokercheck.finra.org
Executive Officers and Board of Directors • Jerry Pascucci is a Board Member and the President of Fund Advisor and Managing Director of
UBSFS.
• Daryl Dewbrey is a Managing Director, Head of Business Development for the UBS Alternative
Investment Group, and a Vice President and Board Member of Fund Advisor.
• Lina Rubin is a Managing Director and the Alternative Investments Head of Product
Development and Management and a Vice President and Board Member of Fund Advisor.
• Jennifer Magro is an Executive Director of UBSFS and Vice President, Board Member,
Treasurer and Principal Accounting Officer of Fund Advisor.
• The following individuals serve as Vice Presidents of Fund Advisor and also serve as officers of
UBSFS. Their positions at UBSFS are listed below:
• James Augir, Executive Director
• Catherine Benlian, Director
• Anna Gindes, Executive Director
• Gary Muniz, Director
• Ottavio Roseto, Director
• Gregory Sciametta, Associate Director
• Clifford Wattley, Director
Chief Compliance Officer • Francine F. Hoyt is an Executive Director of UBSFS and Chief Compliance Officer for Fund
Advisor.
DATE OF ACTION BROUGHT BY ALLEGATION DISPOSITION MONETARY SANCTIONS 1. September
2015
SEC Entity:
UBS Fund Advisor LLC
UBS Willow Management LLC
This matter relates to UBS Willow
Management's misrepresentations and
omissions concerning a material change in the
investment strategy of UBS Willow Fund and
UBS Fund Advisors LLC's failure to reasonably
supervise UBS Willow Management.
UBS consented to
the entry of findings,
censure, fine, and
disgorgement.
Disgorgement
8,223,110
Interest 1,373,436
Fine 3,000,000
Investor losses
4,373,436
2. December 12,
2012
FSA, FINMA,
CFTC
Entity: UBS AG
On 19 December 2012, UBS AG entered into
settlements with the US Department of Justice
(DOJ), UK Financial Services Authority, and the
Commodity Futures Trading Commission
(CFTC) in connection with their investigations
of manipulation of LIBOR and other benchmark
interest rates. The Swiss Financial Market
Supervisory Authority (FINMA) also issued an
order concluding its formal proceedings with
respect to UBS.
UBS agreed to pay a
total of
approximately CHF
1.4 billion in fines
and disgorgement.
UBS will pay GBP
160million in fines to
the FSA and CHF 59
million as
disgorgement of
estimated profits to
FINMA.
FINMA: Reprimand
and disgorgement
of estimated profits
CHF 59 million
FSA: Fine GBP 160
million
CFTC: Fine, USD
700 million
3. November 12,
2012
FSA, FINMA
Entity: UBS AG London
The UBS AG London branch was fined by the
FSA for (1) failure to establish and maintain
systems and control appropriate to its
business, and (2) failure to act with due skill,
care and diligence in conducting its business.
The penalties were levied in connection with
an unauthorized trading incident.
FINMA: Disposition:
Reprimand;
Additional measures
re: business conduct
and capital until
effective remediation
is demonstrated.
FSA Fine GBP £29.7
million
4. January
2011
SIX Swiss
Exchange
Regulation
UBS AG was fined for (i) publishing too
late internally available information
related to expected losses in the
summer of 2007 and (2) breaching rules
on the provision of information about
corporate governance in the 2008 UBS
annual report.
Fine CHF100,000
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Fund Advisor advises, administers and/or sponsors private pooled investment vehicles, including hedge
funds, funds of funds, private equity funds and real estate funds, whose shares or other interests are
sold to clients of UBS Finance Services.
Currently, our principal business, in terms of its revenues and personnel, is that of an advisor and
administrator to unregistered funds and certain registered funds.
Fund Advisor Subsidiaries & Other Affiliates There are a number of related persons that provide distribution and other financial services to our funds,
which may be material to our advisory business.
UBS, our subsidiaries or affiliates act in one or more capacities, including investment adviser, sub-
adviser, consultant, administrator and principal underwriter (as applicable) to a number of open-end and
closed-end investment companies with varying investment objectives. Certain of our subsidiaries,
affiliates and related entities include the following:
• UBS Financial Services Inc.
• Sydling Futures Management LLC.
• UBS Financial Services Insurance Agency Inc.
• UBS Financial Services Incorporated of Puerto Rico, Inc., a separately registered broker-dealer
• UBS Insurance Agency of Puerto Rico Inc.
• UBS Trust Company of Puerto Rico.
• UBS Credit Corp. provides loans to clients that are either unsecured or secured by securities or
other financial instruments. These loans may be used to buy securities or for other purposes.
These loans are not subject to the maintenance requirements and potential capital charges that
are imposed on broker- dealers.
• UBS Bank USA is an FDIC-insured Utah industrial bank. UBS Bank USA provides deposit services
and secured and unsecured loans to clients, including loans secured by securities, other
financial instruments and residential real estate. The securities based loans made by the Bank are
predominately loans that are "non-purpose" and may be used for purposes other than buying,
trading or carrying securities. Non-purpose securities backed loans are not subject to the
maintenance requirements and potential capital charges that are imposed on broker- dealers.
• UBS Business Solutions US LLC is an affiliate of UBS Group AG that provides certain services to UBS
Group AG's affiliates and subsidiaries that operate in the United States. Services currently include
Finance, Risk Control, Compliance, Legal, Human Resources, Technology and Operations.
UBS AG offers investment advisory services through a variety of direct and indirect subsidiaries. These
entities are separately registered investment advisors and, in some cases, registered broker-dealers and
commodity-trading advisors. Their principal lines of business range from developing and distributing
investment products including wrap fee products, mutual funds, closed-end funds, privately placed
funds and other pooled investment products, providing investment advice to individuals, pension and
other employee benefit plans, other tax-exempt organizations, insurance companies, investment
companies, commingled trust funds, corporations, and other institutional investors, and serving as
investment managers, administrators, distributors and/or placement agents for a number of funds.
The UBS AG subsidiaries registered as investment advisers in the United States include the entities
below. These companies manage the assets of, or serve as general partners or managers of registered
investment companies and private investment funds that may be offered and sold to our advisory
clients. Information on those investment vehicles can be found on the respective Form ADV of each
affiliated advisor.
– UBS Financial Services Inc.
– UBS Farmland Investors LLS
– UBS Hedge Fund Solutions LLC
– UBS Asset Management (Americas) Inc.
– UBS O’Connor LLC
– UBS Realty Investors LLC
– UBS Swiss Financial Advisers AG
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PERSONAL TRADING A. Code of Ethics
We maintain and enforce a written code of ethics in accordance with Rule 204A-1 under the Investment
Advisers Act of 1940, as amended ("Advisers Act"). The Fund Advisor Code of Ethics incorporates and
adopts both the UBSFS Code of Ethics and Code of Conduct. The UBSFS Code of Ethics and Code of
Conduct (including any and all subsequent amendments), is provided to all officers of Fund Advisor and
each officer is responsible for acknowledging receipt. All Fund Advisor Officers, as employees of UBSFS,
are thereby subject to both the UBSFS Code of Ethics as well as the UBSFS Code of Conduct.
The Code of Ethics, incorporating both the UBSFS Code of Ethics as well as the UBSFS Code of Conduct,
has a dual purpose:
• To set forth standards of conduct that apply to all employees of the firm, including the firm’s
fiduciary obligation to its clients
• To address conflicts of interest associated with the personal trading activities of a subset of
employees defined as "access persons."
Employees are required to promptly report any suspected violation of the code. Violations of the code
may result in discipline, up to and including termination. Clients or prospective clients may obtain a copy
of the Code of Ethics upon request.
B. Participation or Interests in Client Transactions
In addition, our affiliates receive trading commissions and other compensation from mutual funds and
insurance companies whose products we distribute.
UBSFS or our affiliates may engage in a variety of transactions with (or provide other services to) the
investment managers, mutual funds, their affiliates or service providers with which you are doing
business. We may, in turn, receive compensation from these entities. Those transactions and services
that we provide may include:
• Executing transactions in securities or other instruments
• Broker-dealer services for our own account
• Research services
• Consulting services
• Performance evaluation services
• Investment banking services
• Banking or insurance services
Credit Lines Fund Advisor does not extend credit to the funds that it advises or administers, as applicable. To the
extent permissible under applicable law, its affiliates may extend credit to those funds under limited
circumstances. As creditor, our affiliate may earn interest on the loans it provides and has the ability to
exercise certain rights in the event of defaults. As a result, as creditors, our affiliates may have interests
adverse to those of the funds.
Advice/Services to Other Clients and Activities in our Proprietary Accounts We and/or our affiliates provide investment banking, research, brokerage, investment advisory and other
services for different types of clients. In providing those services, we and our affiliates may:
• give advice to or take actions for those clients or for our accounts or our affiliates accounts that
differs from advice given to, or the timing and nature of actions taken for you.
• buy and sell securities for our own or other accounts,
• act as a market maker or an underwriter for securities recommended, purchased or sold.
UBSFS and our affiliates occasionally may not be free to divulge or act upon certain information in their
possession on behalf of advisory or other clients. We are not obligated to execute any transaction for
your account that we believe to be improper under applicable law or rules or contrary to our own
policies. In particular, you should note that some of our programs may recommend asset allocations or
analyze markets and the economy in a different way than would be recommended by some of our
research, trading or other departments. Fund Advisor generally makes a small investment in the funds
that it advises or administers.
We have adopted policies and procedures that limit transactions for our proprietary accounts and the
accounts of our employees. These policies and procedures are designed to prevent, among other things,
improper or abusive conduct when there may be a potential conflict with the interests of a client.
Trading Activity
The vast majority of our exchange-listed securities and over-the-counter orders are executed through
our affiliate, UBS Securities LLC—which executes orders as either principal or as agent, depending on
the circumstances and type of program involved and receives compensation for those services.
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Our advisory services do not include the review or recommendation of broker-dealers for client
transactions. We do not participate in soft dollar arrangements or require our clients to direct
brokerage to us or our affiliates.
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We have various policies and procedures applicable to the review and supervision of our services. Those
policies are designed to comply with the requirements of the Advisers Act, and where applicable, ERISA
and other applicable rules and regulations.
There are general policies applicable to all advisory activities as well as individually tailored guidelines for
the specific requirements of a fund.
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Arrangements with affiliates: We have referral agreements with our affiliates that outline how they
refer prospective investors to us. Under those agreements, we share fees with, or receive fees from, our
affiliates for the referral or solicitation of investors in our funds. These payments may vary, depending
on the type of agreement, product or the nature and extent of the services provided, and may continue
as long as the client account is maintained with UBS or our affiliate or for an agreed upon period.
Arrangements may also be based on a percentage of revenue received.
It is our practice to disclose to the investor being referred the general terms of the arrangement.
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Fund Advisor is deemed to have custody of client assets as it serves as member designee, or a similar
capacity, for several funds.
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Fund Advisor has voting authority for the funds we advise, administer and/or sponsor, or act as member
designee. Because each fund invests almost entirely in the securities of a single alternative fund issuer, it
is unusual that a fund receives a request to vote its interests. Nevertheless, when a vote is requested,
management of Fund Advisor considers the best interests of the fund and votes pursuant to the powers
designated to it in the fund documents. In certain cases, when the fund’s vote would not make a
difference to the result, Fund Advisor may have the fund abstain from voting.
Copies of our proxy voting policies will be provided upon request.
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• As of the date of this Brochure, there is no financial condition that is reasonably likely to impair
our ability to meet our contractual commitment to our clients.
• Our Firm has not been the subject of a bankruptcy petition at any time during the last ten years.
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