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 811-21117
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UBS Credit & Recovery Fund L.L.C.
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(Exact name of registrant as specified in charter)
1285 Avenue of the Americas, 37th Floor
New York, NY 10019
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(Address of principal executive offices) (Zip code)
Michael Mascis
c/o UBS Financial Services, Inc.
1285 Avenue of the Americas
New York, NY 10019
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(Name and address of agent for service)
registrant's telephone number, including area code: 212-713-2217
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Date of fiscal year end: December 31, 2004
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Date of reporting period: June 30, 2004
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
UBS CREDIT & RECOVERY FUND, L.L.C.
FINANCIAL STATEMENTS
(UNAUDITED)
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED
JUNE 30, 2004
UBS CREDIT & RECOVERY FUND, L.L.C.
FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 30, 2004
CONTENTS
Statement of Assets, Liabilities and Members' Capital...................... 1
Statement of Operations.................................................... 2
Statements of Changes in Members' Capital.................................. 3
Statement of Cash Flows.................................................... 4
Notes to Financial Statements.............................................. 5
UBS CREDIT & RECOVERY FUND, L.L.C.
STATEMENT OF ASSETS, LIABILITIES AND MEMBERS' CAPITAL
(UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2004
- --------------------------------------------------------------------------------
ASSETS
Investments in Investment Funds, at value (cost $123,950,000) $145,321,106
Cash and cash equivalents 1,851,667
Interest receivable 247
Other assets 4,164
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TOTAL ASSETS 147,177,184
- --------------------------------------------------------------------------------
LIABILITIES
Payables:
Investment management fee 176,167
Professional fees 56,475
Administrator fee 36,448
Administration fee 26,337
Other 26,128
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TOTAL LIABILITIES 321,555
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NET ASSETS $146,855,629
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MEMBERS' CAPITAL
Represented by:
Net capital contributions $125,484,523
Accumulated net unrealized appreciation on investments 21,371,106
- --------------------------------------------------------------------------------
MEMBERS' CAPITAL $146,855,629
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
1
UBS CREDIT & RECOVERY FUND, L.L.C.
STATEMENT OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2004
- ---------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 6,112
- --------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 6,112
- --------------------------------------------------------------------------------------
EXPENSES
Investment management fee 962,812
Administrator fee 199,203
Administration fee 68,235
Professional fees 42,757
Miscellaneous 37,271
- --------------------------------------------------------------------------------------
TOTAL EXPENSES 1,310,278
- --------------------------------------------------------------------------------------
NET INVESTMENT LOSS (1,304,166)
- --------------------------------------------------------------------------------------
UNREALIZED GAIN FROM INVESTMENTS
Change in net unrealized appreciation/depreciation from investments 5,490,719
- --------------------------------------------------------------------------------------
NET UNREALIZED GAIN FROM INVESTMENTS 5,490,719
- --------------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS $ 4,186,553
- --------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
2
UBS CREDIT & RECOVERY FUND, L.L.C.
STATEMENTS OF CHANGES IN MEMBERS' CAPITAL
SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2003
- --------------------------------------------------------------------------------
UBS FUND
ADVISOR, L.L.C. MEMBERS TOTAL
- ----------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT JANUARY 1, 2003 1,032,662 $ 31,177,960 $ 32,210,622
INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment loss (3,241) (1,523,795) (1,527,036)
Change in net unrealized
appreciation/depreciation from investments 222,042 14,637,058 14,859,100
- ----------------------------------------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 218,801 13,113,263 13,332,064
- ----------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL TRANSACTIONS
Proceeds from Members' subscriptions -- 71,431,899 71,431,899
Members' withdrawals (1,233,355) (9,622,587) (10,855,942)
Offering costs (781) (141,504) (142,285)
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NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS (1,234,136) 61,667,808 60,433,672
- ----------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT DECEMBER 31, 2003 $ 17,327 $105,959,031 $105,976,358
- ----------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment loss (19) (1,304,147) (1,304,166)
Change in net unrealized
appreciation/depreciation from investments 758 5,489,961 5,490,719
- ----------------------------------------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 739 4,185,814 4,186,553
- ----------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL TRANSACTIONS
Proceeds from Members' subscriptions -- 37,026,267 37,026,267
Members' withdrawals -- (315,469) (315,469)
Offering costs (2) (18,078) (18,080)
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NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
FROM CAPITAL TRANSACTIONS (2) 36,692,720 36,692,718
- ----------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT JUNE 30, 2004 $ 18,064 $146,837,565 $146,855,629
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The accompanying notes are an integral part of the financial statements.
3
UBS CREDIT & RECOVERY FUND, L.L.C.
STATEMENT OF CASH FLOWS
(UNAUDITED)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2004
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CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in Members' capital derived from operations $ 4,186,553
Adjustments to reconcile net increase in Members' capital derived from operations
to net cash used in operating activities:
Purchases of investments (31,500,000)
Change in net unrealized appreciation/depreciation from investments (5,490,719)
Changes in assets and liabilities:
(Increase) decrease in assets:
Advanced subscription in Investment Fund 1,000,000
Interest receivable 606
Other assets (3,945)
Increase (decrease) in payables:
Investment management fee 38,604
Professional fees (10,229)
Administrator fee 7,987
Administration fee 7,537
Other 14,044
- ---------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (31,749,562)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Members' subscriptions 37,026,267
Members' withdrawals (11,037,344)
Offering costs (18,080)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 25,970,843
Net decrease in cash and cash equivalents (5,778,719)
Cash and cash equivalents--beginning of period 7,630,387
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CASH AND CASH EQUIVALENTS--END OF PERIOD $ 1,851,667
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The accompanying notes are an integral part of the financial statements.
4
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2003
- --------------------------------------------------------------------------------
1. ORGANIZATION
UBS Credit & Recovery Fund, L.L.C. (the "Fund") (formerly, UBS PW
Credit & Recovery Fund, L.L.C.) was organized as a limited liability
company under the laws of Delaware on April 30, 2002. The Fund is
registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as a closed-end, non-diversified, management investment
company. The Fund's investment objective is to maximize total return
over the long-term. The Fund is a multi-manager fund that seeks to
achieve its objective by deploying its assets primarily among a select
group of portfolio managers who invest in debt and, to a lesser extent,
equity securities ("Obligations"), to take advantage of market
opportunities and pricing inefficiencies between the perceived value of
an Obligation and its market value. Generally, such portfolio managers
conduct their investment programs through unregistered investment funds
(collectively, the "Investment Funds"), in which the Fund invests as a
limited partner or member along with other investors. The Fund
commenced operations on August 1, 2002.
The Fund's Board of Directors (the "Directors") has overall
responsibility to manage and control the business affairs of the Fund,
including the exclusive authority to oversee and to establish policies
regarding the management, conduct and operation of the Fund's business.
The Directors have engaged UBS Fund Advisor, L.L.C. ("UBSFA", the
"Adviser" and, when providing services under the Administration
Agreement, the "Administrator") (formerly, PW Fund Advisor, L.L.C.), a
Delaware limited liability company, to provide investment advice
regarding the selection of Investment Funds and the responsibility of
the day-to-day management of the Fund.
The Adviser is an indirect wholly-owned subsidiary of UBS Americas,
Inc., which is a wholly-owned subsidiary of UBS AG, and is registered
as an investment adviser under the Investment Advisers Act of 1940, as
amended.
Initial and additional applications for interests by eligible investors
may be accepted at such times as the Adviser may determine and are
generally accepted monthly. The Fund reserves the right to reject any
application for interests in the Fund.
The Fund from time to time may offer to repurchase interests pursuant
to written tenders to Members. These repurchases will be made at such
times and on such terms as may be determined by the Directors, in their
complete and exclusive discretion. The Adviser expects that it will
recommend to the Directors that the Fund offer to repurchase interests
from Members once each year, at year end. Members can only transfer or
assign their membership interests (i) by operation of law pursuant to
the death, bankruptcy, insolvency or dissolution of a Member, or (ii)
with the written approval of the Directors, which may be withheld in
their sole and absolute discretion.
2. SIGNIFICANT ACCOUNTING POLICIES
A. PORTFOLIO VALUATION
Net asset value of the Fund is determined by or at the direction of the
Adviser as of the close of business at the end of any fiscal period in
accordance with the valuation principles set forth below or as may be
5
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2004
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
determined from time to time pursuant to policies established by the
Directors. The Fund's investments in Investment Funds are subject to
the terms and conditions of the respective operating agreements and
offering memoranda, as appropriate. The Fund's investments in the
Investment Funds are carried at fair value as determined by the Fund's
pro-rata interest in the net assets of each Investment Fund. All
valuations utilize financial information supplied by each Investment
Fund and are net of management and performance incentive fees or
allocations payable to the Investment Funds' managers or pursuant to
the Investment Funds' agreements. The Fund's valuation procedures
require the Adviser to consider all relevant information available at
the time the Fund values its portfolio. The Adviser and/or the Board
will consider such information and consider whether it is appropriate,
in light of all relevant circumstances, to value such a position at its
net asset value as reported or whether to adjust such value. The
underlying investments of each Investment Fund are accounted for at
fair value as described in each Investment Fund's financial statements.
(See Footnote 6)
Distributions received or withdrawals from Investment Funds, whether in
the form of cash or securities, are first applied as a reduction of the
investment's cost.
B. INCOME RECOGNITION
Interest income is recorded on the accrual basis. Realized gains and
losses from the Investment Fund transactions are calculated on the
identified cost basis.
C. FUND COSTS
The Fund bears all expenses incurred in its business, including, but
not limited to, the following: all costs and expenses related to
portfolio transactions and positions for the Fund's account; legal
fees; accounting and auditing fees; custodial fees; costs of computing
the Fund's net asset value; costs of insurance; registration expenses;
certain organization costs; due diligence, including travel and related
expenses; expenses of meetings of Directors and Members; all costs with
respect to communications to Members; and other types of expenses
approved by the Directors. Offering costs are charged to capital as
incurred.
D. INCOME TAXES
No provision for the payment of Federal, state or local income taxes
has been provided, since the Fund is not subject to income tax. Each
Member is individually required to report on its own tax return its
distributive share of the Fund's taxable income or loss.
E. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of monies invested in a PNC Bank, NA
account which pays money
6
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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SIX MONTHS ENDED JUNE 30, 2004
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. CASH AND CASH EQUIVALENTS (CONTINUED)
market rates and are accounted for at cost plus accrued interest, which
is included in interest receivable on the Statement of Assets,
Liabilities and Members' Capital.
F. REPURCHASE AGREEMENTS
From time to time the Fund may enter into repurchase agreements. In
connection with such transactions it is the Fund's policy that its
custodian take possession of the underlying collateral securities, the
fair value of which exceeds the principal amount of the repurchase
transaction, including accrued interest, at all times. If the seller
defaults, and the fair value of the collateral declines, realization of
the collateral by the Fund may be delayed or limited. As of June 30,
2004 there were no open repurchase agreements.
G. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires the Adviser
to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. The Adviser believes
that the estimates utilized in preparing the Fund's financial
statements are reasonable and prudent; however, actual results could
differ from these estimates.
3. RELATED PARTY TRANSACTIONS
The Adviser provides investment advisory services to the Fund pursuant
to an Investment Management Agreement. Pursuant to that agreement, the
Fund pays the Adviser a monthly fee (the "Investment Management Fee")
at the annual rate of 1.45% of the Fund's net assets, excluding assets
attributable to the Adviser and the Administrator.
The Administrator provides certain administrative services to the Fund,
including, among other things, providing office space and other support
services. In consideration for such services, the Fund pays the
Administrator a monthly fee (the "Administrator Fee") at an annual rate
of 0.30% of the Fund's net assets, excluding assets attributable to the
Administrator's and the Adviser's capital account. The Administrator
Fee is paid to the Administrator out of the Fund's assets and debited
against the Members' capital accounts, excluding net assets
attributable to the Administrator and the Adviser's capital account. A
portion of the Investment Management Fee and the Administrator Fee is
paid by UBSFA to its affiliates.
UBS Financial Services Inc. ("UBS FSI") (formerly, UBS PaineWebber
Inc.), a wholly-owned subsidiary of UBS Americas, Inc., acts as a
placement agent for the Fund, without special compensation from the
Fund, and will bear its own costs associated with its activities as
placement agent. Placement fees, if any, charged on contributions are
debited against the contribution amounts, to arrive at a net
7
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2004
- --------------------------------------------------------------------------------
3. RELATED PARTY TRANSACTIONS (CONTINUED)
subscription amount. The placement fee does not constitute assets of
the Fund. The net increase (or decrease) in Members' capital derived
from operations (net income or loss) is allocated to the capital
accounts of all Members on a pro-rata basis, other than the Investment
Management Fee and the Administrator Fee which are similarly allocated
to all Members other than the Adviser and the Administrator as
described above.
Each Director who is not an "interested person" of the Fund, as defined
by the 1940 Act, receives an annual retainer of $5,000 plus a fee for
each meeting attended. Any Director who is an "interested person" does
not receive any annual or other fee from the Fund. All Directors are
reimbursed by the Fund for all reasonable out of pocket expenses. Total
amounts expensed related to Directors by the Fund for the six months
ended June 30, 2004 were $12,625.
4. ADMINISTRATION AND CUSTODIAN FEES
PFPC Trust Company (an affiliate of PNC Bank, NA) serves as the
custodian (the "Custodian") of the Fund's assets and provides custodial
services for the Fund.
PFPC Inc. (also an affiliate of PNC Bank, NA) serves as Accounting and
Investor Servicing Agent to the Fund and in that capacity provides
certain administrative, accounting, record keeping, tax and Member
related services. PFPC Inc. receives a monthly fee primarily based upon
(i) the average net assets of the Fund subject to a minimum monthly
fee, and (ii) the aggregate net assets of the Fund and certain other
investment funds sponsored or advised by UBS Americas, Inc. or its
affiliates. Additionally, the Fund reimburses certain out of pocket
expenses incurred by PFPC Inc.
5. SECURITIES TRANSACTIONS
Aggregate purchases of Investment Funds for the six months ended June
30, 2004, amounted to $31,500,000.
The cost of investment for Federal income tax purposes is adjusted for
items of taxable income allocated to the Fund from the Investment
Funds. The allocated taxable income is reported to the Fund by the
Investment Funds on Schedules K-1.
6. INVESTMENTS
As of June 30, 2004, the Fund had investments in Investment Funds, none
of which were related parties. The Fund's investments are summarized
below based on the investment objectives of the specific Investment
Funds at June 30, 2004.
8
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2004
- --------------------------------------------------------------------------------
6. INVESTMENTS (CONTINUED)
Investment Objective Cost Fair Value
-------------------- ---- ----------
Distressed Obligations - (Public and Private) $ 85,302,390 $100,009,984
High Yield 25,248,615 29,601,910
Direct Debt/Bank Loans 13,398,995 15,709,212
------------ ------------
Total $123,950,000 $145,321,106
============ ============
The following table lists the Fund's investments in Investment Funds as
of June 30, 2004. The agreements related to investments in Investment
Funds provide for compensation to the general partners/managers in the
form of management fees of between 1% and 2% (per annum) of net assets
and performance incentive fees or allocations of 20% of net profits
earned. The Investment Funds provide for periodic redemptions, with
lock up provisions of up to one year from initial investment. Detailed
information about the Investment Funds' portfolios is not available.
UNREALIZED % OF
GAIN/(LOSS) MEMBERS'
INVESTMENT FUND: COST FROM INVESTMENTS FAIR VALUE CAPITAL LIQUIDITY
---------------- ---- ---------------- ---------- ------- ---------
Ahab Partners, L.P. $ 7,750,000 $ 374,191 $ 9,858,027 6.71% Quarterly
Aspen Partners, L.P. Series A 12,500,000 730,854 14,148,112 9.63 Annually
Canyon Value Realization Fund, L.P. 6,400,000 413,480 7,923,548 5.40 Annually
Chatham Assets Partners High Yield Fund, L.P. 11,000,000 343,927 11,502,727 7.83 Quarterly
Harbert Distressed Investment Fund, L.P. 12,400,000 525,130 15,025,189 10.23 Quarterly
HBV Rediscovered Opportunities Fund, L.P. 6,000,000 (24,901) 6,487,557 4.42 Quarterly
MacKay Shields Long/Short Fund, L.P. 10,750,000 210,312 12,507,853 8.52 Monthly
Marathon Special Opportunity Fund, L.P. 4,500,000 741,930 6,663,713 4.54 Quarterly
OZF Credit Opportunities Fund II, L.P. 5,400,000 173,647 6,318,220 4.30 Annually
Quadrangle Debt Recovery Fund, L.P. 6,750,000 850,309 10,276,715 7.00 Quarterly
Scottwood Partners, L.P. 6,500,000 95,753 7,605,980 5.18 Quarterly
Styx Partners, L.P. 14,000,000 615,126 15,713,552 10.70 Annually
Trilogy Financial Partners, L.P. 14,500,000 364,725 15,713,677 10.70 Quarterly
Whitebox Hedged High Yield Fund, L.P. 5,500,000 76,236 5,576,236 3.80 Monthly
------------ ---------- ------------ ------
TOTAL $123,950,000 $5,490,719 145,321,106 98.96
============ ==========
OTHER ASSETS, LESS LIABILITIES 1,534,522 1.04
------------ ------
MEMBERS' CAPITAL $146,855,629 100.00%
============ ======
7. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Investment Funds in which the
Fund invests trade various financial instruments and enter into various
investment activities with off-balance sheet risk. These include, but
are not limited to, short selling activities, writing option contracts,
contracts for differences, equity swaps, distressed investing, merger
arbitrage and convertible arbitrage. The Fund's risk of loss in these
Investment Funds is limited to the value of these investments as
reported by the Fund.
9
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2004
- --------------------------------------------------------------------------------
8. FINANCIAL HIGHLIGHTS
The following represents the ratios to average net assets and other
supplemental information for the periods indicated:
PERIOD FROM
AUGUST 1, 2002
(COMMENCEMENT OF
SIX MONTHS ENDED OPERATIONS) THROUGH
JUNE 30, 2004 YEAR ENDED YEAR ENDED
(UNAUDITED) DECEMBER 31, 2003 DECEMBER 31, 2002
----------- ----------------- -----------------
Ratio of net investment loss to average net assets*** (2.02)%* (2.03)% (3.06)%*
Ratio of total expenses to average net assets(a), *** 2.03%* 2.09% 3.20%*
Portfolio turnover rate 0.00% 0.00% 0.00%
Total return** 3.35% 18.81% 2.52%
Net asset value at end of period $146,855,629 $105,976,358 $32,210,622
<FN>
(a) Ratio of total expenses to average net assets does not include
the impact of expenses for incentive allocations or incentive
fees related to the underlying Investment Funds.
* Annualized.
** Total return assumes a purchase of an interest in the Fund at
the beginning of the period and a sale of the Fund interest on
the last day of the period noted and does not reflect the
deduction of placement fees, if any, incurred when subscribing
to the Fund. Total returns for a period of less than a full
year are not annualized.
*** The average net assets used in the above ratios are calculated
by adding any withdrawals payable effective at the end of a
period to the net assets for such period.
</FN>
9. SUBSEQUENT EVENT
Effective July 2, 2004 the Fund, along with other UBS sponsored funds,
entered into a $75,000,000 committed, unsecured revolving line of
credit with Harris Trust and Savings Bank. Under the most restrictive
arrangement, the Fund may borrow an amount that combined with the other
borrowings of the Fund would not exceed 20% of its net assets. The
Fund's borrowing capacity is also limited to the portion of the unused
line of credit at any point in time. The Fund is only liable under the
line of credit to the extent of its own borrowing thereunder. The
interest rate on the borrowing is based on the Federal Funds rate plus
150 basis points per annum. The expiration date of such credit
agreements is July 1, 2005. The committed facility also requires a fee
to be paid by the Fund, on a pro rata basis, based on the amount of the
aggregate commitment which has not been utilized of 25 basis points per
annum.
10
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THIS PAGE INTENTIONALLY LEFT BLANK.
Proxy Voting
A description of the policies and procedures that the Fund uses to determine how
to vote proxies and on or after August 31, 2004 its Funds proxy voting record
for the most recent twelve month period ended June30 is available (i) without
charge upon request by calling the Alternative Investment Group at 800-486-2608
or (ii) on the Securities and Exchange Commissions website at www.sec.gov.
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not yet applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The function of the Nominating Committee, pursuant to its adopted written
charter, is to select and nominate persons for election as Directors of the
Fund. As more fully disclosed in the charter, the Nominating Committee reviews
and considers, as the Nominating Committee deems appropriate after taking into
account, among other things, the factors listed in the charter, nominations of
potential Directors made by Fund management and by Fund investors who have
submitted such nominations which include all information relating to the
recommended nominee that is required to be disclosed in solicitations or proxy
statements for the election of Directors, including without limitation the
biographical information and the qualifications of the proposed nominees.
Nomination submissions must be accompanied by a written consent of the
individual to stand for election if nominated by the Board and to serve if
elected by the Members of the Fund, and such additional information must be
provided regarding the recommended nominee as reasonably requested by the
Nominating Committee. The Nominating Committee meets as is necessary or
appropriate.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section
302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section
906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) UBS Credit & Recovery Fund L.L.C.
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By (Signature and Title)* /s/ Mitchell Tanzman
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Mitchell Tanzman, Co-Chief Executive Officer
(principal executive officer)
Date August 25, 2004
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By (Signature and Title)* /s/ Gregory Brousseau
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Gregory Brousseau, Co-Chief Executive Officer
(principal executive officer)
Date August 25, 2004
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Mitchell Tanzman
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Mitchell Tanzman, Co-Chief Executive Officer
(principal executive officer)
Date August 25, 2004
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By (Signature and Title)* /s/ Gregory Brousseau
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Gregory Brousseau, Co-Chief Executive Officer
(principal executive officer)
Date August 25, 2004
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By (Signature and Title)* /s/ Michael Mascis
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Michael Mascis, Chief Financial Officer
(principal financial officer)
Date August 25, 2004
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* Print the name and title of each signing officer under his or her signature.