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.
--------------------------------------------------
(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)
James Dwyer
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: 212-882-5819
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Date of fiscal year end: December 31
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Date of reporting period: June 30, 2006
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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, 100 F Street, NE,
Washington, DC 20549. 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
PERIOD FROM JANUARY 1, 2006 TO JUNE 30, 2006
UBS CREDIT & RECOVERY FUND, L.L.C.
FINANCIAL STATEMENTS
(UNAUDITED)
SEMI ANNUAL REPORT
PERIOD FROM JANUARY 1, 2006 TO JUNE 30, 2006
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
Schedule of Portfolio Investments................................. 11
UBS CREDIT & RECOVERY FUND, L.L.C.
STATEMENT OF ASSETS, LIABILITIES AND MEMBERS' CAPITAL
(UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2006
- --------------------------------------------------------------------------------
ASSETS
Investments in Investment Funds, at value (cost $168,428,000) $227,410,222
Cash and cash equivalents 4,680,941
Advanced subscription in Investment Fund 3,000,000
Receivable from Investments 724,685
Interest receivable 13,441
Other assets 3,116
- --------------------------------------------------------------------------------
TOTAL ASSETS 235,832,405
- --------------------------------------------------------------------------------
LIABILITIES
Payables:
Investment management fee 284,578
Professional fees 88,136
Administration fee 81,749
Administrator fee 58,878
Other 43,814
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 557,155
- --------------------------------------------------------------------------------
NET ASSETS $235,275,250
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MEMBERS' CAPITAL
Represented by:
Net capital contributions $176,293,028
Accumulated net unrealized appreciation on investments 58,982,222
- --------------------------------------------------------------------------------
MEMBERS' CAPITAL $235,275,250
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 1
UBS CREDIT & RECOVERY FUND, L.L.C.
STATEMENT OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
Period from January 1, 2006 to June 30, 2006
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 196,243
- --------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 196,243
- --------------------------------------------------------------------------------
EXPENSES
Investment management fee 1,568,888
Administrator fee 324,597
Administration fee 112,463
Professional fees 76,274
Other 62,972
- --------------------------------------------------------------------------------
TOTAL EXPENSES 2,145,194
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS (1,948,951)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENTS
Net realized gain from investments 2,925,496
Change in net unrealized appreciation/depreciation
from investments 17,364,021
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS 20,289,517
- --------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS $18,340,566
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 2
UBS CREDIT & RECOVERY FUND, L.L.C.
STATEMENTS OF CHANGES IN MEMBERS' CAPITAL
PERIOD FROM JANUARY 1, 2006 TO JUNE 30, 2006 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 2005
UBS FUND
ADVISOR, L.L.C. MEMBERS TOTAL
- ----------------------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT JANUARY 1, 2005 $19,304 $146,170,987 $146,190,291
INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment loss (376) (3,530,809) (3,531,185)
Net realized gain from investments 129 3,704,104 3,704,233
Change in net unrealized
appreciation/depreciation from investments 1,094 8,664,461 8,665,555
- ----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 847 8,837,756 8,838,603
- ----------------------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL TRANSACTIONS
Proceeds from Members' subscriptions -- 71,838,790 71,838,790
Members' withdrawals -- (29,871,459) (29,871,459)
Syndication costs (6) (61,472) (61,478)
- ----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS (6) 41,905,859 41,905,853
- ----------------------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT DECEMBER 31, 2005 $20,145 $196,914,602 $196,934,747
- ----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment loss (182) (1,948,769) (1,948,951)
Net realized gain from investments 308 2,925,188 2,925,496
Change in net unrealized
appreciation/depreciation from investments 1,687 17,362,334 17,364,021
- ----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 1,813 18,338,753 18,340,566
- ----------------------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL TRANSACTIONS
Proceeds from Members' subscriptions -- 20,004,583 20,004,583
Syndication costs -- (4,646) (4,646)
- ----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
FROM CAPITAL TRANSACTIONS -- 19,999,937 19,999,937
- ----------------------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT JUNE 30, 2006 $21,958 $235,253,292 $235,275,250
- ----------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 3
UBS CREDIT & RECOVERY FUND, L.L.C.
STATEMENT OF CASH FLOWS
(UNAUDITED)
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PERIOD FROM JANUARY 1, 2006 TO JUNE 30, 2006
- ------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in Members' capital derived from operations $ 18,340,566
Adjustments to reconcile net increase in Members' capital derived from operations
to net cash used in operating activities:
Purchases of investments (45,250,000)
Proceeds from disposition of investments 15,675,496
Net realized gain (loss) on investments (2,925,496)
Change in net unrealized appreciation/depreciation from investments (17,364,021)
Offering costs
Changes in assets and liabilities:
(Increase) decrease in assets:
Advanced subscription in Investment Fund (2,000,000)
Receivable from Investments 8,973,548
Interest receivable (2,366)
Other assets (2,695)
Increase (decrease) in payables:
Investment management fee 14,684
Administrator fee 3,038
Administration fee 41,873
Professional fees 27,697
Other 16,402
- -------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (24,451,274)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Members' subscriptions 20,004,583
Members' withdrawals (28,458,367)
Syndication costs (4,646)
- -------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (8,458,430)
Net decrease in cash and cash equivalents (32,909,704)
Cash and cash equivalents--beginning of period 37,590,645
- -------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS--END OF PERIOD $ 4,680,941
- -------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 4
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
PERIOD FROM JANUARY 1, 2006 TO JUNE 30, 2006
- --------------------------------------------------------------------------------
1. ORGANIZATION
UBS Credit & Recovery Fund, L.L.C. (the "Fund") was organized as a
limited liability company under the laws of placeStateDelaware 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"), a Delaware limited liability company,
to provide investment advice regarding the selection of Investment
Funds and to be responsible for 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)
- --------------------------------------------------------------------------------
PERIOD FROM JANUARY 1, 2006 TO JUNE 30, 2006
- --------------------------------------------------------------------------------
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 Schedule of Portfolio Investments)
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. Syndication 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.
6
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
PERIOD FROM JANUARY 1, 2006 TO JUNE 30, 2006
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of monies invested in a PNC Bank, NA
account which pays money 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,
2006, there were no open repurchase agreements.
G. USE OF ESTIMATES
The preparation of financial statements in conformity with
placecountry-regionU.S. generally accepted accounting principles
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"), 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 subscription amount. The placement fee does
7
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
PERIOD FROM JANUARY 1, 2006 TO JUNE 30, 2006
- --------------------------------------------------------------------------------
3. RELATED PARTY TRANSACTIONS (CONTINUED)
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 of the Fund receives an annual retainer of $7,500 plus a
fee for each meeting attended. All Directors are reimbursed by the Fund
for all reasonable out of pocket expenses. Total amounts expensed by
the Fund related to Directors for the period from January 1, 2006 to
June 30, 2006 were $14,785.
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. CREDIT FACILITY
Effective July 1, 2005, the Fund, along with other UBS sponsored funds,
entered into a $150,000,000 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 there under. 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 June 30, 2006. 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. The Fund had no borrowings outstanding at June 30, 2006, or for
the period January 1, 2006 to June 30, 2006.
6. SECURITIES TRANSACTIONS
Aggregate purchases and proceeds from sales of Investment Funds for the
period from January 1, 2006 to June 30, 2006, amounted to $45,250,000
and $15,675,496, respectively.
The cost of investments 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.
8
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
PERIOD FROM JANUARY 1, 2006 TO JUNE 30, 2006
- --------------------------------------------------------------------------------
7. INVESTMENTS
As of June 30, 2006, 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, 2006.
INVESTMENT OBJECTIVE COST FAIR VALUE
-------------------- ------------ ------------
Diversified Credit $ 76,146,323 $102,812,195
Distressed Securities 35,929,913 48,512,298
Capital Structure Arbitreage 29,465,316 39,783,849
Direct Loans 26,886,448 36,301,880
------------ ------------
Total $168,428,000 $227,410,222
============ ============
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 24 months from initial investment. Detailed
information about the Investment Funds' portfolios is not available.
8. 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. INDEMNIFICATION
In the ordinary course of business, the Fund may enter into contracts
or agreements that contain indemnifications or warranties. Future
events could occur that lead to the execution of these provisions
against the Fund. Based on its history and experience, management feels
the likelihood of such an event is remote.
9
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
PERIOD FROM JANUARY 1, 2006 TO JUNE 30, 2006
- --------------------------------------------------------------------------------
10. FINANCIAL HIGHLIGHTS
The following represents the ratios to average net assets and other
supplemental information for the periods indicated:
PERIOD FROM AUGUST
1, 2002
PERIOD FROM (COMMENCEMENT OF
JANUARY 1, 2006 OPERATIONS) THROUGH
TO JUNE 30, 2006 YEAR ENDED
(UNAUDITED) 2005 2004 2003 DECEMBER 31, 2002
----------- ---- ---- ---- -----------------
Ratio of net investment loss
to average net assets *** (1.82)%* (1.93)% (1.97)% (2.03)% (3.06)%*
Ratio of total expenses to
average net assets a,*** 2.00%* 2.09% 2.00% 2.09% 3.20%*
Portfolio Turnover Rate 7.74% 24.36% 6.71% -- --
Total Return** 8.87% 4.36% 9.96% 18.81% 2.52%
Average Debt Ratio*** -- 1.09% -- N/A N/A
Net asset value at end of
period $235,275,250 $196,934,747 $146,190,291 $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 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. An individual member's ratios and return may vary from the above based on the timing of capital
transactions.
*** 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>
11. SUBSEQUENT EVENT
Effective July 1, 2006, the Fund, along with other UBS sponsored funds,
renewed and increased its unsecured revolving line of credit with
Harris Trust and Savings Bank to a $200,000,000 commitment. The
expiration date of such credit agreement is July 31, 2007.
10
UBS CREDIT & RECOVERY FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2006
- --------------------------------------------------------------------------------
PERIOD FROM
JANUARY 1, 2006
AT JUNE 30, 2006 TO JUNE 30, 2006
----------------------------------- ----------------
REALIZED/
UNREALIZED
% OF
MEMBERS GAIN/(LOSS) FROM
INVESTMENT FUND COST FAIR VALUE CAPITAL INVESTMENTS LIQUIDITY
- ------------------------------------------------ ------------ ------------ ------- ----------------- -----------
Ahab Partners, L.P. $ 9,000,000 $ 13,768,224 5.85% $ 380,528 Quarterly
Aspen Partners, L.P. Series A 1,978,000 5,455,925 2.32 2,127,998 Annually
Camulos Master Fund, L.P. 10,500,000 11,789,944 5.01 1,289,944 Quarterly
Canyon Value Realization Fund, L.P. 7,400,000 11,214,553 4.77 571,805 Annually
Cyrus Credit Opportunities Fund II, L.P. 10,400,000 12,891,616 5.48 846,646 Annually
Harbinger Capital Partners Fund I, L.P. * 14,150,000 21,523,076 9.15 2,335,181 Quarterly
Highland Crusader Fund, L.P. 11,500,000 13,809,954 5.87 2,066,358 Monthly
Highland Credit Strategies Fund, LTD 13,500,000 14,023,287 5.96 523,287 Quarterly
Marathon Special Opportunity Fund, L.P. 13,500,000 19,135,451 8.13 1,291,947 Annually
Marathon Structured Finance Fund, L.P. 15,000,000 17,402,552 7.40 1,196,836 Quarterly
Pardus European Special Opportunities Fund, L.P. 10,500,000 12,149,334 5.16 1,649,334 Quarterly
Quadrangle Debt Recovery Fund, L.P. 6,750,000 15,565,011 6.62 1,434,598 Quarterly
Styx Partners, L.P. 14,000,000 18,902,107 8.03 555,695 Annually
Trilogy Financial Partners, L.P. 15,500,000 21,190,239 9.01 2,132,861 Quarterly
Whitebox Hedged High Yield Fund, L.P. 9,500,000 12,519,166 5.32 1,370,816 Monthly
Whitebox Hedged High Yield Fund, LTD 5,250,000 6,069,783 2.58 611,340 Monthly
Redeemed Investment Funds -- -- -- (95,657)
------------ ------------ ------ -----------
TOTAL $168,428,000 $227,410,222 96.66% $20,289,517
============ ============ ====== ===========
<FN>
* Name officially changed as of January 1, 2006, previously known as Harbert Distressed Fund, L.P.
</FN>
Proxy Voting:
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge
upon request by calling the UBS Financial Services Inc.'s Alternative Investment
Group at 1-800-580-2329.
The preceding notes are an integral part of these financial statements. 11
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.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) Not applicable.
(b) George Rudman ceased to be a member of the portfolio management team
as of April 8, 2006.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 11. 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 second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(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) Not applicable.
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/ Douglas Lindgren
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Douglas Lindgren, Principal Executive Officer
(principal executive officer)
Date September 6, 2006
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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/ Douglas Lindgren
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Douglas Lindgren, Principal Executive Officer
(principal executive officer)
Date September 6, 2006
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By (Signature and Title)* /s/ C. Philip Tazza
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C. Philip Tazza, Principal Accounting
Officer (principal financial officer)
Date September 6, 2006
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* Print the name and title of each signing officer under his or her signature.