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
---------
UBS Credit Recovery Fund L.L.C.
---------------------------------------------------
(Exact name of registrant as specified in charter)
51W 52nd Street, 23rd Floor
New York, NY 10019
---------------------------------------------------
(Address of principal executive offices) (Zip code)
James Dwyer
c/o UBS Financial Services, Inc.
51W 52nd Street, 23rd Floor
New York, NY 10019
---------------------------------------------------
(Name and address of agent for service)
registrant's telephone number, including area code: 212-882-5819
------------
Date of fiscal year end: December 31
-----------
Date of reporting period: June 30, 2007
-------------
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, 2007 TO JUNE 30, 2007
UBS CREDIT RECOVERY FUND, L.L.C.
FINANCIAL STATEMENTS
(UNAUDITED)
SEMI ANNUAL REPORT
PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007
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 ........................................12
UBS CREDIT RECOVERY FUND, L.L.C.
STATEMENT OF ASSETS, LIABILITIES AND MEMBERS' CAPITAL
(UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2007
- --------------------------------------------------------------------------------
ASSETS
Investments in Investment Funds, at value (cost $247,153,489) $354,394,752
Cash and cash equivalents 605,528
Advanced subscription in Investment Fund 15,500,000
Interest receivable 6,901
- --------------------------------------------------------------------------------
TOTAL ASSETS 370,507,181
- --------------------------------------------------------------------------------
LIABILITIES
Payables:
Credit facility payable 12,200,000
Investment management fee 426,608
Professional fees 89,064
Administrator fee 88,264
Administration fee 86,937
Other 20,518
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 12,911,391
- --------------------------------------------------------------------------------
NET ASSETS $357,595,790
- --------------------------------------------------------------------------------
MEMBERS' CAPITAL
Represented by:
Net capital contributions $250,354,527
Accumulated net unrealized appreciation on investments 107,241,263
- --------------------------------------------------------------------------------
MEMBERS' CAPITAL $357,595,790
- --------------------------------------------------------------------------------
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, 2007 TO JUNE 30, 2007
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 56,867
- -------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 56,867
- -------------------------------------------------------------------------------
EXPENSES
Investment management fee 2,176,549
Professional fees 386,427
Administrator fee 450,321
Administration fee 154,924
Interest expense 50,668
Other 128,038
- -------------------------------------------------------------------------------
TOTAL EXPENSES 3,346,927
- -------------------------------------------------------------------------------
NET INVESTMENT LOSS (3,290,060)
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENTS
Change in net unrealized appreciation/depreciation
from investments 29,423,771
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS 29,423,771
- --------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS $26,133,711
- --------------------------------------------------------------------------------
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, 2007 TO JUNE 30, 2007 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 2006
- --------------------------------------------------------------------------------
UBS FUND
ADVISOR, L.L.C. MEMBERS TOTAL
- ------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT JANUARY 1, 2006 $20,145 $196,914,602 $196,934,747
INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment loss (241) (4,258,721) (4,258,962)
Net realized gain from investments 341 3,000,352 3,000,693
Change in net unrealized
appreciation/depreciation from investments 3,236 36,196,055 36,199,291
- -------------------------------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 3,336 34,937,686 34,941,022
- -------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL TRANSACTIONS
Proceeds from Members' subscriptions -- 58,960,902 58,960,902
Members' withdrawals -- (15,262,933) (15,262,933)
Offering costs (1) (11,003) (11,004)
- -------------------------------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
FROM CAPITAL TRANSACTIONS (1) 43,686,966 43,686,965
- -------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT DECEMBER 31, 2006 $23,480 $275,539,254 $275,562,734
- -------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment loss (95) (3,289,965) (3,290,060)
Change in net unrealized
appreciation/depreciation from investments 2,401 29,421,370 29,423,771
- -------------------------------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 2,306 26,131,405 26,133,711
- -------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL TRANSACTIONS
Proceeds from Members' subscriptions -- 56,328,196 56,328,196
Members' withdrawals -- (427,485) (427,485)
Offering costs -- (1,366) (1,366)
- -------------------------------------------------------------------------------------------------------
NET INCREASE IN MEMBERS' CAPITAL
FROM CAPITAL TRANSACTIONS -- 55,899,345 55,899,345
- -------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT JUNE 30, 2007 $25,786 $357,570,004 $357,595,790
- -------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
3
UBS CREDIT RECOVERY FUND, L.L.C.
STATEMENT OF CASH FLOWS
(UNAUDITED)
- --------------------------------------------------------------------------------
PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in Members' capital derived from operations $ 26,133,711
Adjustments to reconcile net increase in Members' capital
derived from operations to net cash used in operating
activities:
Purchases of investments (47,916,757)
Change in net unrealized appreciation/depreciation from
investments (29,423,771)
Changes in assets and liabilities:
(Increase) decrease in assets:
Advanced subscription in Investment Fund (15,500,000)
Interest receivable 7,209
Other assets 445
Increase (decrease) in payables:
Credit facility payable 12,200,000
Investment management fee 82,159
Professional fees (80,590)
Administrator fee 16,999
Administration fee 34,951
Other (18,881)
- --------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (54,464,525)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Members' subscriptions 56,328,196
Members' withdrawals (15,690,418)
Offering costs (1,366)
- --------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 40,636,412
Net decrease in cash and cash equivalents (13,828,113)
Cash and cash equivalents--beginning of period 14,433,641
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS--END OF PERIOD $ 605,528
- --------------------------------------------------------------------------------
Supplemental cash flows disclosure:
Interest paid $ 45,944
- --------------------------------------------------------------------------------
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, 2007 TO JUNE 30, 2007
- --------------------------------------------------------------------------------
1. ORGANIZATION
UBS Credit Recovery Fund, L.L.C. (the "Fund"), formerly known as UBS 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"), 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 a direct 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 or a portion thereof (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, 2007 TO JUNE 30, 2007
- --------------------------------------------------------------------------------
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 Directors 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. 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.
6
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007
- --------------------------------------------------------------------------------
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, 2007, there were no outstanding
repurchase agreements.
G. USE OF ESTIMATES
The preparation of financial statements in conformity with U.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
7
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007
- --------------------------------------------------------------------------------
3. RELATED PARTY TRANSACTIONS (CONTINUED)
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 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 January 1, 2007 to June 30, 2007 were
$17,009.
Other investment partnerships sponsored by UBS Americas or its affiliates
may also maintain investment interests in the Investment Funds owned by the
Fund.
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, 2006, the Fund, along with other UBS sponsored funds,
entered into a $200,000,000 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 July 31, 2007. 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. For the period January 1, 2007 to June 30, 2007 the Funds'
average interest rate paid on borrowings were 6.73% per annum and the
average borrowings outstanding were $1,502,376. The Fund had $12,200,000
borrowings outstanding at June 30, 2007. Interest expense for the period
from January 1, 2007 to June 30, 2007 was $50,668, of which $4,724 was
payable at June 30, 2007. See Subsequent Event for further information.
8
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007
- --------------------------------------------------------------------------------
6. SECURITIES TRANSACTIONS
Aggregate purchases of Investment Funds for the period January 1, 2007 to
June 30, 2007, amounted to $47,916,757.
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
Schedule K-1.
7. INVESTMENTS
As of June 30, 2007, 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, 2007.
Investment Objective Cost Fair Value
-------------------- ------------ -------------
Diversified Credit $129,459,296 $ 185,632,399
Distressed Securities 39,840,027 57,126,835
Capital Structure Arbitrage 44,115,235 63,257,079
Direct Loans 33,738,931 48,378,439
------------ -------------
Total $247,153,489 $ 354,394,752
============ =============
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.
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, 2007 TO JUNE 30, 2007
- --------------------------------------------------------------------------------
10. NEW ACCOUNTING PRONOUNCEMENTS
On September 20, 2006, the FASB released Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes
an authoritative definition of fair value, sets out a framework for
measuring fair value, and requires additional disclosures about fair-value
measurements. The application of FAS 157 is required for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal
years. At this time, management is evaluating the implications of FAS 157
and its impact on the financial statements has not yet been determined.
10
UBS CREDIT & RECOVERY FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007
- --------------------------------------------------------------------------------
11. FINANCIAL HIGHLIGHTS
The following represents the ratios to average net assets and other
supplemental information for the periods indicated:
PERIOD FROM
PERIOD FROM AUGUST 1, 2002
JANUARY 1, (COMMENCEMENT OF
2007 TO JUNE OPERATIONS)
30, 2007 YEARS ENDED DECEMBER 31, THROUGH YEAR ENDED
UNAUDITED 2006 2005 2004 2003 2002
--------- ---- ---- ---- ---- ----
Ratio of net
investment loss to
average net assets *** (2.21)%* (1.78)% (1.93)% (1.97)% (2.03)% (3.06)%*
Ratio of total
expenses to average
net assets *** 2.25%* 1.99% 2.09% 2.00% 2.09% 3.20%*
Portfolio turnover rate -- 7.60% 24.36% 6.71% -- --
Total return** 9.04% 15.58% 4.36% 9.96% 18.81% 2.52%
Average debt ratio*** 0.50% -- 1.09% -- N/A N/A
Net asset value at end
of period $357,595,790 $275,562,734 $196,934,747 $146,190,291 $105,976,358 $32,210,622
<FN>
* 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 using pre-tender net assets.
</FN>
12. SUBSEQUENT EVENT
The Fund, along with other UBS sponsored funds, renewed its $200,000,000
unsecured revolving line of credit with Bank of Montreal--Chicago Branch,
which is the Illinois branch of the parent to Harris Trust and Savings
Bank.." The expiration date of such credit agreement is July 31, 2008.
11
UBS CREDIT RECOVERY FUND, LLC
SCHEDULE OF PORTFOLIO INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2007
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
REALIZED/
% OF UNREALIZED
FAIR MEMBER'S GAIN/(LOSS) LOCK
COST VALUE CAPITAL FROM INVESTMENTS LIQUIDITY UP**
- ------------------------------------------------------------------------------------------------------------------------------------
Ahab Partners, L.P. $ 9,000,000 $ 16,193,379 4.53% $ 1,481,842 Quarterly
Aspen Partners, L.P. Series A 536,732 3,007,273 0.84 (231,061) Annually
Camulos Master Fund L.P. 15,500,000 18,890,836 5.28 1,265,903 Quarterly X
Canyon Value Realization Fund, L.P. 12,400,000 18,067,983 5.05 939,884 Annually
Claren Road Credit Partners, L.P. 30,000,000 31,201,528 8.73 861,016 Quarterly X
Cyrus Credit Opportunities Fund II, L.P. 17,400,000 21,232,153 5.94 740,337 Annually
Harbinger Capital Partners Fund I, L.P. 16,150,000 31,303,267 8.75 6,122,936 Quarterly X
Harbinger Capital Partners Special
Situations Fund, L.P. 5,250,000 9,064,911 2.53 2,750,939 Annually X
Highland Crusader Fund L.P. 13,500,000 18,106,788 5.06 1,701,871 Quarterly
Highland Credit Strategies Fund LTD 11,500,000 18,505,706 5.18 2,408,256 Quarterly
Indus Structured Finance Fund, L.P. 2,916,757 2,770,919 0.77 (145,838) Annually X
Marathon Special Opportunity Fund, L.P. 13,500,000 21,446,048 6.00 1,488,638 Annually
Marathon Structured Finance Fund, L.P. 14,550,715 18,653,693 5.22 578,753 Quarterly X
Marathon Structured Finance Fund, L.P.
(side pocket) 449,285 449,285 0.13 - Quarterly
Pardus European Special Opportunities Fund, L.P. 13,500,000 18,564,282 5.19 1,558,704 Quarterly
Quadrangle Debt Recovery Fund, L.P. 6,750,000 17,175,080 4.80 889,328 Quarterly
Styx Partners, L.P. 14,000,000 20,576,400 5.75 946,059 Annually
Subprime Credit Strategies Fund II, L.P. 3,000,000 5,928,142 1.66 2,662,441 Quarterly X
Trilogy Financial Partners, L.P. 25,500,000 33,892,481 9.48 1,399,815 Quarterly X
Whitebox Hedged High Yield Fund, L.P. 9,500,000 14,597,793 4.08 1,079,393 Monthly
Whitebox Hedged High Yield Fund, LTD 12,250,000 14,766,805 4.13 924,555 Monthly
------------ ------------ ----- -----------
TOTAL $247,153,489 $354,394,752 99.10% $29,423,771
============ ============ ===== ===========
<FN>
** The Investment Fund provides for periodic redemptions. As of June 30, 2007, the Fund was subject to lock up provisions of up to
three years from the initial investment.
</FN>
The preceding notes are an integral part of these financial statements.
12
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) There has been no change, as of the date of this filing, in any of the
portfolio managers identified in response to paragraph (a)(1) of this Item
in the registrant's most recently filed annual report on Form N-CSR.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
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) Certifications pursuant to Rule 30a-2(b) 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.
-------------------------------------------------------------------
By (Signature and Title)* /s/ Douglas Lindgren
-------------------------------------------------------
Douglas Lindgren, Principal Executive Officer
(principal executive officer)
Date August 24, 2007
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Douglas Lindgren
-------------------------------------------------------
Douglas Lindgren, Principal Executive Officer
(principal executive officer)
Date August 24, 2007
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Robert Aufenanger
-------------------------------------------------------
Robert Aufenanger, Principal Accounting Officer
(principal financial officer)
Date August 24, 2007
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.