-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P9I4zjNM+4KYfy169B11GRlrseKFEAH4VJNRauOnF9oXwxKyfavfsAbQex9kGNwr V9KIIMMbxXm4KXmAvZjg4g== 0000935069-07-000571.txt : 20070309 0000935069-07-000571.hdr.sgml : 20070309 20070309153841 ACCESSION NUMBER: 0000935069-07-000571 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070309 DATE AS OF CHANGE: 20070309 EFFECTIVENESS DATE: 20070309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UBS HEALTH SCIENCES FUND LLC CENTRAL INDEX KEY: 0001116730 IRS NUMBER: 134121400 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-09985 FILM NUMBER: 07684372 BUSINESS ADDRESS: STREET 1: 1285 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124832323 MAIL ADDRESS: STREET 1: 1285 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: PW HEALTH SCIENCES FUND LLC DATE OF NAME CHANGE: 20000616 N-CSR 1 g36061ubs_healthsciences.txt UBS HEALTH SCIENCES 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 811-09985 --------- UBS Health Sciences 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: December 31, 2006 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 HEALTH SCIENCES FUND, L.L.C. FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM YEAR ENDED DECEMBER 31, 2006 UBS HEALTH SCIENCES FUND, L.L.C. FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2006 CONTENTS Report of Independent Registered Public Accounting Firm .................. 1 Statement of Assets, Liabilities and Members' Capital .................... 2 Statement of Operations .................................................. 3 Statements of Changes in Members' Capital ................................ 4 Statement of Cash Flows .................................................. 5 Notes to Financial Statements ............................................ 6 Schedule of Portfolio Investments ........................................ 13 [GRAPHIC OMITTED] ERNST & YOUNG LLP [GRAPHIC OMITTED] ERNST & YOUNG LLP 5 Times Square New York, New York 10036-6530 [GRAPHIC OMITTED] Phone: (212) 773-3000 www.ey.com To the Members and Board of Directors of UBS Health Sciences Fund, L.L.C. We have audited the accompanying statement of assets, liabilities and members' capital of UBS Health Sciences Fund, L.L.C. (the "Fund"), including the schedule of portfolio investments, as of December 31, 2006, and the related statement of operations and cash flows for the year then ended and the statements of changes in members' capital for each of the two years in the period then ended. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2006 by correspondence with the custodian and others or by the other appropriate auditing procedures where replies from others were not received. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of UBS Health Sciences Fund, L.L.C. at December 31, 2006, the results of its operations and its cash flows for the year then ended and the changes in its members' capital for each of the two years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP New York, NY February 26, 2007 A Member Practice of Ernst & Young Global 1 UBS HEALTH SCIENCES FUND, L.L.C. STATEMENT OF ASSETS, LIABILITIES AND MEMBERS' CAPITAL - -------------------------------------------------------------------------------- DECEMBER 31, 2006 - -------------------------------------------------------------------------------- ASSETS Investments in Investment Funds, at value (cost $24,475,000) $46,511,129 Cash and cash equivalents 1,497,124 Receivable from Investment Funds 6,175,000 Interest receivable 3,614 Other assets 144 - ----------------------------------------------------------------------------- TOTAL ASSETS 54,187,011 - ----------------------------------------------------------------------------- LIABILITIES Payables: Withdrawals payable 7,879,149 Professional fees 166,223 Management fee 44,100 Administration fee 12,189 Other 34,131 - ----------------------------------------------------------------------------- TOTAL LIABILITIES 8,135,792 - ----------------------------------------------------------------------------- NET ASSETS $46,051,219 - ----------------------------------------------------------------------------- MEMBERS' CAPITAL Represented by: Net capital contributions $24,015,090 Accumulated net unrealized appreciation on investments 22,036,129 - ----------------------------------------------------------------------------- TOTAL MEMBERS' CAPITAL $46,051,219 - ----------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 2 UBS HEALTH SCIENCES FUND, L.L.C. STATEMENT OF OPERATIONS - --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2006 - ---------------------------------------------------------------------------------------------- INVESTMENT INCOME Interest $ 95,923 - ---------------------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 95,923 - ---------------------------------------------------------------------------------------------- EXPENSES Management fee 538,491 Professional fees 153,140 Administration fees 45,531 Interest 14,749 Other 83,321 - ---------------------------------------------------------------------------------------------- TOTAL EXPENSES 835,232 - ---------------------------------------------------------------------------------------------- NET INVESTMENT LOSS (739,309) - ---------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN FROM INVESTMENTS Net realized gain from Investments 4,881,341 Change in net unrealized appreciation/depreciation from investments 479,074 - ---------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS 5,360,415 - ---------------------------------------------------------------------------------------------- NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS $ 4,621,106 - ----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 3 UBS HEALTH SCIENCES FUND, L.L.C. STATEMENTS OF CHANGES IN MEMBERS' CAPITAL YEARS ENDED 2006 AND 2005 - --------------------------------------------------------------------------------
UBS Fund ADVISOR, L.L.C. MEMBERS TOTAL - ---------------------------------------------------------------------------------------------------------------------- MEMBERS' CAPITAL AT JANUARY 1, 2005 $ 66,142 $ 76,095,720 $ 76,161,862 INCREASE (DECREASE) FROM OPERATIONS Pro rata allocation: Net investment loss (223) (1,030,960) (1,031,183) Net realized gain from investments and foreign currency transactions 782 6,262,251 6,263,033 Change in net unrealized appreciation/depreciation from investments (295) (4,693,478) (4,693,773) Incentive allocation 62,030 (62,030) -- - ---------------------------------------------------------------------------------------------------------------------- NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS 62,294 475,783 538,077 - ---------------------------------------------------------------------------------------------------------------------- MEMBERS' CAPITAL TRANSACTIONS Proceeds from Members' subscriptions -- 3,199,088 3,199,088 Members' withdrawals (57,197) (24,843,570) (24,900,767) Offering costs (3) (13,170) (13,173) - ---------------------------------------------------------------------------------------------------------------------- NET DECREASE IN MEMBERS' CAPITAL DERIVED FROM CAPITAL TRANSACTIONS (57,200) (21,657,652) (21,714,852) - ---------------------------------------------------------------------------------------------------------------------- MEMBERS' CAPITAL AT DECEMBER 31, 2005 $ 71,236 $ 54,913,851 $ 54,985,087 - ---------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) FROM OPERATIONS Pro rata allocation: Net investment loss (144) (739,165) (739,309) Net realized gain from investments 1,614 4,879,727 4,881,341 Change in net unrealized appreciation/depreciation from investments 238 478,836 479,074 Incentive allocation 227,657 (227,657) -- - ---------------------------------------------------------------------------------------------------------------------- NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS 229,365 4,391,741 4,621,106 - ---------------------------------------------------------------------------------------------------------------------- MEMBERS' CAPITAL TRANSACTIONS Proceeds from Members' subscriptions -- 2,090,250 2,090,250 Members' withdrawals (68,258) (15,573,552) (15,641,810) Offering costs (1) (3,413) (3,414) - ---------------------------------------------------------------------------------------------------------------------- NET DECREASE IN MEMBERS' CAPITAL DERIVED FROM CAPITAL TRANSACTIONS (68,259) (13,486,715) (13,554,974) - ---------------------------------------------------------------------------------------------------------------------- MEMBERS' CAPITAL AT DECEMBER 31, 2006 $232,342 $ 45,818,877) $ 46,051,219 - ----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 4 UBS HEALTH SCIENCES FUND, L.L.C. STATEMENT OF CASH FLOWS - -------------------------------------------------------------------------------
Year Ended December 31, 2006 - -------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net increase in Members' capital derived from operations $ 4,621,106 Adjustments to reconcile net increase in Members' capital derived from operations to net cash provided by operating activities: Purchases of investments (7,500,000) Proceeds from disposition of investments 16,056,341 Net realized gain from investments (4,881,341) Change in net unrealized appreciation/depreciation from investments (479,074) Changes in assets and liabilities: (Increase) decrease in assets: Receivable from Investment Funds 9,447,584 Interest receivable (593) Other assets 74 Increase (decrease) in payables: Professional fees 84,655 Management fee (9,721) Administration fee 49 Other 12,677 - -------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 17,351,757 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Members' subscriptions 2,090,250 Members' withdrawals (19,312,402) Manager withdrawals (68,258) Offering costs (3,414) - -------------------------------------------------------------------------------------------------- NET CASH USED IN FINANCING ACTIVITIES (17,293,824) Net increase in cash and cash equivalents 57,933 Cash and cash equivalents--beginning of year 1,439,191 - -------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS--END OF YEAR $ 1,497,124 - -------------------------------------------------------------------------------------------------- Supplemental cash flows disclosure: Interest paid $ 14,749 - --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 5 UBS HEALTH SCIENCES FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- DECEMBER 31, 2006 - -------------------------------------------------------------------------------- 1. ORGANIZATION UBS Health Sciences Fund, L.L.C. (the "Fund") was organized as a limited liability company under the laws of Delaware on April 28, 2000. 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 capital appreciation over the long-term. The Fund pursues its investment objective by deploying its assets primarily among a select group of specialized portfolio managers that emphasize investments in the health sciences sector. 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, 2000. 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" or the "Manager"), a Delaware limited liability company and the Managing Member of the Fund, to provide investment advice regarding the selection of Investment Funds and to be responsible for the day-to-day management of the Fund. The Manager 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 Manager 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 Manager expects that, generally it will recommend to the Directors that the Fund offer to repurchase interests from Members twice each year, near mid year and 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. Such transfers may be made even if the balance of the capital account to such transferee is equal to or less than the transferor's initial capital contribution. 2. SIGNIFICANT ACCOUNTING POLICIES A. PORTFOLIO VALUATION Net asset value of the Fund is determined by or at the direction of the Manager 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 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 Investment Funds are 6 UBS HEALTH SCIENCES FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- DECEMBER 31, 2006 - -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) A. PORTFOLIO VALUATION (CONTINUED) 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 Manager to consider all relevant information available at the time the Fund values its portfolio. The Manager 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 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 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. 7 UBS HEALTH SCIENCES FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- DECEMBER 31, 2006 - -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 December 31, 2006, 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 Manager to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Manager 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 UBSFA provides certain management and administrative services to the Fund, including, among other things, providing office space and other support services. In consideration for such services, the Fund pays UBSFA a monthly management fee (the "Fee") at an annual rate of 1% of the Fund's net assets, excluding assets attributable to the Manager's capital account. The Fee is paid to UBSFA out of Fund assets and debited against the Members' capital accounts, excluding the Manager's capital account. A portion of the 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 not constitute assets of the Fund. The net increase (or decrease) in Members' capital derived from operations (net income or loss) is initially allocated to the capital accounts of all Members on a pro-rata basis, other than the Fee which is similarly allocated to all Members other than the Manager as described above. At the end of the twelve month period following the admission of a Member to the Fund, at the end of each fiscal year thereafter, and generally upon a Member's withdrawal from the Fund, the Manager is entitled to an incentive allocation (the "Incentive Allocation") of 5% of the net profits (defined as net increase in Members' Capital derived from operations), if any, that would have been credited to the Member's capital account for such period. The Incentive Allocation will be made only with respect to net profits that exceed any net losses previously debited from the account of such Member which have not been offset by any net profits, subsequently credited to the account of the Member. The Incentive Allocation for the year ended December 31, 2006 and the year ended December 31, 2005 was $227,657 and $62,030, respectively, and has been recorded as an increase to the Manager's capital account. Such amount is not eligible to 8 UBS HEALTH SCIENCES FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- DECEMBER 31, 2006 - -------------------------------------------------------------------------------- 3. RELATED PARTY TRANSACTIONS (CONTINUED) receive a pro-rata share of the income/expense and gain or loss of the Fund. For Members which were not in the Fund for twelve months as of the year ended December 31, 2006 and as of the year ended December 31, 2005, an Incentive Allocation period has not occurred and therefore no amount has been recorded in the financial statements with respect to such Members. 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 year ended December 31, 2006 were $26,001. 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 Administrator and Accounting 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 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 1, 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 year ended December 31, 2006, the Fund's average interest rate paid on borrowings was 6.08% per annum and the average borrowings outstanding were $242,466. Interest expense for the year ended December 31, 2006 was $14,749, all of which was paid during the period. The Fund had no borrowings outstanding at December 31, 2006. 6. SECURITIES TRANSACTIONS Aggregate purchases and sales of Investment Funds for the year ended December 31, 2006 amounted to $7,500,000 and $16,056,341, respectively. 9 UBS HEALTH SCIENCES FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- DECEMBER 31, 2006 - -------------------------------------------------------------------------------- 6. SECURITIES TRANSACTIONS (CONTINUED) 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. The Fund has not yet received all such Schedule K-1's for the year ended December 31, 2006. 7. INVESTMENTS As of December 31, 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 December 31, 2006. Investment Objective Cost Fair Value -------------------- ---- ----------- Long/Short Equity $24,475,000 $46,511,129 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 ranging from 20% to 25% of net profits earned. 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, and equity swaps. 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 that the likelihood of such an event is remote. 10. NEW ACCOUNTING PRONOUNCEMENTS A. FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) INTERPRETATION NO. 48 (FIN 48) On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 10 UBS HEALTH SCIENCES FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- DECEMBER 31, 2006 - -------------------------------------------------------------------------------- 10. NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED) A. FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) INTERPRETATION NO. 48 (FIN 48) (CONTINUED) 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications of FIN 48 and its impact on the financial statements has not yet been determined. B. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 157 (FAS 157) 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. 11 UBS HEALTH SCIENCES FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- DECEMBER 31, 2006 - -------------------------------------------------------------------------------- 11. FINANCIAL HIGHLIGHTS The following represents the ratios to average net assets and other supplemental information for the years indicated:
YEARS ENDED DECEMBER 31, 2006 2005 2004 2003 2002 ----- ----- ----- ---- ---- Ratio of net investment loss to average net assets *** (1.36)% (1.47)% (1.31)% (1.19)% (1.21)% Ratio of total expenses to average net assets before incentive(a), *** 1.54% 1.53% 1.34% 1.24% 1.29% Ratio of total expenses to average net assets after incentive(a), **** 1.96% 1.62% 1.41% 1.27% 1.29% Portfolio turnover rate 14.72% 4.31% 28.04% 32.57% 25.35% Total return before incentive allocation* 9.12% 1.51% 6.84% 9.58% (14.44)% Total return after incentive allocation** 8.66% 1.43% 6.50% 9.10% (14.44)% Average debt ratio*** 0.44% 2.04% 0.02% -- -- Net asset value at end of year $46,051,219 $54,985,087 $76,161,862 $95,124,225 $108,265,722
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. * 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. An individual member's ratios and return may vary from the above based on incentive allocation, if applicable, and the timing of capital transactions. ** 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, after Incentive Allocation to the Manager, and does not reflect the deduction of placement fees, if any, incurred when subscribing to the Fund. *** The average net assets used in the above ratios are calculated using pre-tender net assets. **** Ratio of total expenses to average net assets after incentive allocation to the Manager may vary from the above for individual Members due to incentive allocation, if applicable, and timing of capital transactions. 12 UBS HEALTH SCIENCES FUND, L.L.C. SCHEDULE OF INVESTMENTS IN FUNDS - --------------------------------------------------------------------------------
DECEMBER 31, 2006 - ------------------------------------------------------------------------------------------------------------------------- REALIZED/ UNREALIZED GAIN/(LOSS) % OF MEMBERS' FROM INVESTMENT FUND COST FAIR VALUE CAPITAL INVESTMENTS LIQUIDITY - ------------------------------------------------------------------------------------------------------------------------- Asian Healthcare Absolute Partners, L.P. $ 4,000,000 $ 4,335,566 9.41% $ 335,566 Quarterly Meditor Cobra Fund (C), LTD 4,200,000 5,781,047 12.55 1,027,493 Monthly North River Partners, L.P. -- 7,791,885 16.92 1,011,284 Quarterly Pequot Healthcare Fund, L.P. -- 8,387,777 18.21 1,069,445 Annually Salthill Partners, L.P. 4,250,000 5,134,561 11.15 411,368 Quarterly The Steeple Capital Fund ll, L.P. 6,100,000 6,887,443 14.96 (13,659) Quarterly Westfield Life Sciences Fund II, L.P. 5,925,000 8,192,850 17.79 1,323,086 Quarterly Redeemed Investment Funds -- -- -- 195,832 ----------- ----------- ------ ---------- TOTAL $24,475,000 $46,511,129 100.99% $5,360,415 =========== =========== ====== ==========
The accompanying notes are an integral part of these financial statements. 13 DIRECTORS AND OFFICERS (UNAUDITED) Information pertaining to the Directors and officers of the Fund is set forth below. The statement of additional information (SAI) includes additional information about the Directors and is available without charge, upon request, by calling UBS Financial Services Inc.'s, Alternative Investment Group at 800-580-2359.
- ---------------------------------------------------------------------------------------------------------------------- Number of Portfolios in Fund Complex Other Trusteeships/ Term of Office Overseen Directorships Held and Length of Principal Occupation(s) by by Director Outside Name, Age and Address Time Served(1) During Past 5 Years Director(2) Fund Complex - ---------------------------------------------------------------------------------------------------------------------- INDEPENDENT DIRECTORS - ---------------------------------------------------------------------------------------------------------------------- George W. Gowen (77) Term -- Law partner of Dunnington, 13 None UBS Financial Services Inc. Indefinite Bartholow & Miller 1285 Avenue of the Americas Length--since New York, NY 10019 Commencement of Director Operations - ---------------------------------------------------------------------------------------------------------------------- Stephen H. Penman (60) Term -- Professor of Financial 13 None UBS Financial Services Inc. Indefinite Accounting of the Graduate 1285 Avenue of the Americas Length--since School of Business, Columbia New York, NY 10019 Commencement of University Director Operations - ---------------------------------------------------------------------------------------------------------------------- INTERESTED DIRECTOR - ---------------------------------------------------------------------------------------------------------------------- Meyer Feldberg (64) (3) Term -- Senior Advisor for Morgan 35 Director of: UBS Financial Services Inc. Indefinite Stanley & Co. Incorporated and Primedia, Inc., 1285 Avenue of the Americas Length--since Dean Emeritus and Professor at Federated New York, NY 10019 Commencement of Columbia Business School Department Stores, Director Operations Inc., Revlon, Inc. and SAPPI, Ltd. - ---------------------------------------------------------------------------------------------------------------------- OFFICERS WHO ARE NOT DIRECTORS - ---------------------------------------------------------------------------------------------------------------------- Douglas Lindgren (45) Term -- Managing Director of UBS N/A N/A UBS Financial Services Inc. Indefinite Financial Services Inc. since 1285 Avenue of the Americas Length--since June 2005 New York, NY 10019 July 19, 2005 Prior to June 2005, Managing Principal Executive Officer Director and Head of Alternative Investments at United States Trust Company, N.A. - ---------------------------------------------------------------------------------------------------------------------- Philip Tazza (48) Term -- Executive Director of UBS N/A N/A UBS Financial Services Inc. Indefinite Financial Services, Inc. since 51 West 52nd Street Length--since May 22, 2006. Prior to May 22, New York, NY 10019 May 22, 2006 2006, Head of Regulatory Principal Accounting Officer Implementation and Chief Operating Officer of Investment Management at Bank of America - ---------------------------------------------------------------------------------------------------------------------- Frank S. Pluchino (47) Term -- Assistant Director of N/A N/A UBS Financial Services Inc. Indefinite Compliance of UBS Financial 51 West 52nd Street Length--since Services Inc. since 2003 New York, NY 10019 July 19, 2005 Prior to 2003, Chief Compliance Chief Compliance Officer Officer of LibertyView Capital Management, Inc., an investment adviser, and LibertyView Alternative Asset Management, Inc., an NASD broker-dealer - ---------------------------------------------------------------------------------------------------------------------- (1) For Directors, their terms are for the duration of the term of the Fund, unless his status as a Director shall be sooner terminated by death, adjudicated incompetent, voluntarily withdraw, physically unable to perform duties, removed either by vote or written consent of at two-thirds of the Directors or vote or written consent of Members holding not less than two-thirds of the total number of votes eligible to the cast by all Members. (2) Of the 35 funds/portfolios in the complex as of December 31, 2006, 22 are advised by an affiliate of UBS Financial Services Inc. and 13 comprise UBS Financial Services' Alternative Investment Group of Funds. (3) Mr. Feldberg is an "interested person" of the Fund because he is an affiliated person of a broker-dealer with which the UBS Financial Services Alternative Investment Group of Funds does business. Mr. Feldberg is not an affiliated person of UBS Financial Services or its affiliates.
UBS FINANCIAL SERVICES INC. IS A SUBSIDIARY OF UBS AG The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at HTTP://WWW.SEC.GOV and may be reviewed or copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 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 with out charge upon request by calling the UBS Financial Services Inc.'s Alternative Investment Group at 800-580-2329. UBS FINANCIAL SERVICES INC. IS A SUBSIDIARY OF UBS AG 2 ITEM 2. CODE OF ETHICS. (a) The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. The code of ethics may be obtained without charge by calling 800-486-2608. (c) There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics. (d) The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item's instructions. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. As of the end of the period covered by the report, the registrant's Board had determined that Professor Stephen Penman, a member of the audit committee of the Board, is the audit committee financial expert and that he is "independent," as defined by Item 3 of Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Audit Fees - ---------- (a) The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $54,140 in 2006 and $58,518 in 2005. Such audit fees include fees associated with annual audits for providing a report in connection with the registrant's report on form N-SAR. Audit-Related Fees - ------------------ (b) The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item are $5,000 in 2006 and $4,500 in 2005. Audit related fees principally include fees associated with reviewing and providing comments on semi-annual reports. Tax Fees - -------- (c) The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $65,000 in 2006 and $41,000 in 2005. Tax fees include fees for tax compliance services and assisting management in preparation of tax estimates. All Other Fees - -------------- (d) The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 in 2006 and $0 in 2005. (e)(1) The registrant's audit committee pre-approves the principal accountant's engagements for audit and non-audit services to the registrant, and certain non-audit services to service Affiliates that are required to be pre-approved, on a case-by-case basis. Pre-approval considerations include whether the proposed services are compatible with maintaining the principal accountant's independence. (e)(2) There were no services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, because such services were pre-approved. (f) Not applicable. (g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $3.0 million in 2006 and $3.1 million in 2005. (h) The registrant's audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. 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. The Proxy Voting Policies are as follows: UBS FUND ADVISOR, L.L.C. PROXY-VOTING POLICIES AND PROCEDURES A. INTRODUCTION UBS Fund Advisor, L.L.C. (the "Adviser") votes proxies for each fund (each a "Fund," collectively, the "Funds") for which it acts as the Adviser and as such, has adopted these Proxy-Voting Policies and Procedures (these "Policies and Procedures"). The Funds are funds of funds that invest primarily in unregistered investment vehicles ("Investment Funds") which have investors other than the Fund. Generally, each of the Funds may invest a majority of its assets in non-voting securities of Investment Funds. The Investment Funds typically do not submit matters to investors for vote; however, should a matter be submitted for vote and provided the Fund holds voting interests in the Investment Fund, the Adviser will vote proxies in what it views to be in the best interest of the Fund and in accordance with these Policies and Procedures. The Board of Directors (the "Board") of the Funds has adopted these Policies and Procedures as the Funds'. The Adviser will notify the Board of any changes to the Adviser's Policies and Procedures. B. FIDUCIARY DUTY Proxy-voting is an integral part of the Adviser's investment management process. The Adviser is under a fiduciary duty to act in the best interest of the Fund(s) and to vote in a manner it believes to be consistent with efforts to maximize shareholder value. This authority carries with it a responsibility on the Adviser's part to analyze the issues connected with the votes and to evaluate the probable impact of its vote on the value of the investment. C. VOTING PROCEDURES Generally speaking, where the Adviser holds voting rights, it will vote consistent with management's recommendations on routine matters, absent a particular reason to the contrary. Non-routine matters will be voted on a case-by-case basis taking into consideration the best interests of the Fund(s) and the maximization of shareholder value. D. CONFLICTS OF INTEREST Any circumstance or relationship which would compromise a portfolio manager's objectivity in voting proxies in the best interest of the Fund(s) would constitute a conflict of interest. In such situations, the Adviser will address any material conflicts before voting proxies on behalf of the Fund(s). As a matter of policy, the Adviser will presume the existence of a conflict of interest for proxy-voting purposes in situations where: >> A current investor of the Adviser is affiliated with an Investment Fund soliciting proxies or has communicated its view to the Adviser on an impending proxy vote; >> The portfolio manager responsible for proxy-voting has identified a personal interest in the Investment Fund soliciting proxies or in the outcome of a shareholder vote; >> Members of the portfolio management team, including the portfolio manager responsible for proxy-voting, and/or members of senior management, have a personal interest through investment in the Investment Fund soliciting proxies; >> Members of the Investment Fund or a third party with an interest in the outcome of a shareholder vote have attempted to influence either the Adviser or the portfolio manager responsible for voting a proxy. Employees of the Adviser should be aware of the potential for conflicts of interest that may result, on the part of the Adviser, from employees' personal relationships or special circumstances that may result as part of the Adviser's normal course of business. Employees who become aware of any such conflicts of interest are under obligation to bring them to the attention of the Chief Compliance Officer or Legal who will work with appropriate personnel of the Adviser to determine the materiality of the conflict. ADDRESSING MATERIAL CONFLICTS OF INTEREST. A conflict of interest will be considered material to the extent it is determined that such conflict has the potential to influence the Adviser's decision-making in the proxy-voting process and the determination will be based on an assessment of the particular facts and circumstances. If it is determined that a conflict of interest is not material, the Adviser may vote proxies notwithstanding the existence of the conflict. The Adviser shall maintain a written record of all conflicts of interest identified, the materiality determination, and the method used to resolve the material conflict of interest. If it is determined that a conflict of interest is material, the Adviser's Chief Compliance Officer or Legal will work with appropriate personnel of the Adviser to determine a resolution before voting proxies affected by such conflict of interest. Resolutions may include: >> Disclosing the conflict and obtaining consent before voting (which consent in the case of the Fund(s) may be obtained from the Fund's board of directors); >> Engaging another party on behalf of the Fund(s) to vote the proxy on its behalf; >> Engaging a third party to recommend a vote with respect to the proxy based on application of the policies set forth herein; or >> Such other method as is deemed appropriate under the circumstances given the nature of the conflict. E. ANNUAL FILING OF PROXY VOTING RECORD The Adviser will file an annual report of each proxy voted with respect to the Fund(s) during the preceding twelve-month period ended June 30 on Form N-PX, no later than August 31st of the then year. F. PROXY-VOTING DISCLOSURES Where the Funds hold voting rights, the Funds shall include in their Form N-CSR (Certified Shareholder Report) : (i) a description of these Policies and Procedures; (ii) a statement that a description of these Policies and Procedures is available without charge, upon request by taking the specified action; and (iii) a statement that information regarding how the Adviser voted proxies relating to the Funds during the most recent 12-month period, is available upon request, without charge by taking the specified action. G. CONTROL PROCESS To ensure compliance with these Policies and Procedures, at the time of a fund's investment in an Investment Fund, the subscription document will be reviewed to ensure that voting rights have been waived, as is current practice. In the event a fund does not waive voting rights, the Adviser will adhere to these Policies and Procedures. H. RECORD-KEEPING The Adviser shall maintain the following records relating to proxy-voting in an easily accessible place for a period of not less than six years from the end of the fiscal year during which the last entry was made on such record, the first two years on-site: >> A copy of the Adviser's current Proxy-Voting Policies and Procedures; >> A record of each vote cast by the Adviser on behalf of the Fund(s); >> A copy of each proxy solicitation (including proxy statements) and related materials with regard to each vote; >> A copy of any document relating to the identification and resolution of conflicts of interest; >> A copy of any document created by the Adviser that was material to a proxy -voting decision or that memorialized the basis for that decision; and >> A copy of each written investor request for information on how the Adviser voted proxies on behalf of the Fund(s), and a copy of any written response from the Adviser to any (written or oral) investor request for information on how the Adviser voted proxies on behalf of the Fund(s). ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. UBS HEALTH SCIENCES FUND, L.L.C. PORTFOLIO MANAGER DISCLOSURE The Fund is managed by a portfolio management team, each member of which (each, a "Portfolio Manager" and together, the "Portfolio Managers") is responsible for the day-to-day management of the Fund's portfolio. Norman E. Sienko, Jr., the lead member of the portfolio management team, is primarily responsible for the selection of the Fund's investments, and is jointly responsible for the allocation of the Fund's assets among Investment Funds. Kevin Hite, the other member of the portfolio management team, is primarily responsible for the allocation of the Fund's investments. Mr. Sienko has served as a Portfolio Manager of the Fund since August 2000, and as head of the Adviser's portfolio management group since 1998. Prior thereto, Mr. Sienko served from 1996 to 1997 as Product Manager, and from 1997 to 1998 as a Fund Manager in the UBS Financial Services Alternative Investment Group. He is also currently an Executive Director of UBS Financial Services. Mr. Hite has been associated with the Fund since August 2000 and joined the portfolio management team in 2005. Mr. Hite has been associated with the Adviser since 1999 and is also a Director of UBS Financial Services. The Fund's Portfolio Managers manage multiple accounts for the Adviser, including registered closed-end funds and private domestic and offshore pooled investment vehicles. Potential conflicts of interest may arise because of the Portfolio Managers' management of the Fund and other accounts. For example, conflicts of interest may arise with the allocation of investment transactions and allocation of limited investment opportunities. Allocations of investment opportunities generally could raise a potential conflict of interest to the extent that the Portfolio Managers may have an incentive to allocate investments that are expected to increase in value to preferred accounts. Conversely, a Portfolio Manager could favor one account over another in the amount or the sequence in which orders to redeem investments are placed. The Portfolio Managers may be perceived to have a conflict of interest if there are a large number of other accounts, in addition to the Fund, that they are managing on behalf of the Adviser. In addition, each Portfolio Manager could be viewed as having a conflict of interest to the extent that one or more Portfolio Managers have an investment in accounts other than the Fund. The Adviser periodically reviews the Portfolio Managers' overall responsibilities to ensure that they are able to allocate the necessary time and resources to effectively manage the Fund. Other accounts may have investment objectives, strategies and risks that differ from those of the Fund. For these or other reasons, the Portfolio Managers may purchase different investments for the Fund and the other accounts, and the performance of investments purchased for the Fund may vary from the performance of the investments purchased for other accounts. The Portfolio Managers may place transactions on behalf of other accounts that are directly or indirectly contrary to investment decisions made for the Fund, which could have the potential to adversely impact the Fund, depending on market conditions. A potential conflict of interest may be perceived if the Adviser receives a performance-based advisory fee as to one account but not another, because a Portfolio Manager may favor the account subject to the performance fee, whether or not the performance of that account directly determines the Portfolio Manager's compensation. The Adviser's goal is to provide high quality investment services to all of its clients, while meeting its fiduciary obligation to treat all clients fairly. The Adviser has adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, that it believes address the conflicts associated with managing multiple accounts for multiple clients. In addition, the Adviser monitors a variety of areas, including compliance with Fund guidelines. Furthermore, senior investment and business personnel at UBS Financial Services periodically review the performance of the Portfolio Managers. The Portfolio Managers' compensation is comprised primarily of a fixed salary and a discretionary bonus paid by UBS Financial Services or its affiliates and not by the Fund. A portion of the discretionary bonus may be paid in shares of stock or stock options of UBS AG, the ultimate parent company of the Adviser, subject to certain vesting periods. The amount of a Portfolio Manager's discretionary bonus, and the portion to be paid in shares or stock options of UBS AG, is determined by senior officers of UBS Financial Services. In general, the amount of the bonus will be based on a combination of factors, none of which is necessarily weighted more than any other factor. These factors may include: the overall performance of UBS Financial Services and its Alternative Investment Group; the overall performance of UBS AG; the profitability to UBS Financial Services derived from the management of the Fund and the other accounts managed by the Alternative Investment Group; the absolute performance of the Fund and such other accounts for the preceding year; contributions by the Portfolio Manager to assisting in managing the Alternative Investment Group; participation by the Portfolio Manager in training of personnel; and support by the Portfolio Manager generally to colleagues. The bonus is not based on a precise formula, benchmark or other metric. The following table lists the number and types of other accounts advised by the Fund's Portfolio Managers and approximate assets under management in those accounts as of the end of the Fund's most recent fiscal year. NORMAN E. SIENKO, JR.
REGISTERED INVESTMENT COMPANIES POOLED ACCOUNTS OTHER ACCOUNTS NUMBER OF NUMBER OF NUMBER OF ACCOUNTS(1) ASSETS MANAGED ACCOUNTS(2) ASSETS MANAGED ACCOUNTS ASSETS MANAGED - ----------- -------------- ----------- ------------- --------- -------------- 7 $2.45 billion 3 $165 million 0 N/A
KEVIN HITE
REGISTERED INVESTMENT COMPANIES POOLED ACCOUNTS OTHER ACCOUNTS NUMBER OF NUMBER OF NUMBER OF ACCOUNTS(3) ASSETS MANAGED ACCOUNTS(2) ASSETS MANAGED ACCOUNTS ASSETS MANAGED - ----------- -------------- ----------- ------------- --------- -------------- 3 $1.41 billion 2 $138 million 0 N/A
(1) Of these accounts, 4 accounts with total assets of approximately $1.23 billion charge performance-based advisory fees. (2) All of these accounts charge performance-based advisory fees. (3) Of these accounts, 2 accounts with total assets of approximately $594 million charge performance-based advisory fees. None of the Fund's Portfolio Managers beneficially owns any interests in the Fund. (B) Not applicable. 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) 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 Health Sciences Fund L.L.C. ------------------------------------------------------------------- By (Signature and Title)* /s/ Douglas Lindgren ------------------------------------------------------ Douglas Lindgren, Principal Executive Officer (principal executive officer) Date March 8, 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 March 8, 2007 --------------------------------------------------------------------------- By (Signature and Title)* /s/ C. Philip Tazza ------------------------------------------------------ C. Philip Tazza, Principal Accounting Officer (principal financial officer) Date March 8, 2007 --------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CERT 2 g36061_302cert.txt 302 CERT CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, Douglas Lindgren, certify that: 1. I have reviewed this report on Form N-CSR of UBS Health Sciences Fund L.L.C.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the 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; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 8, 2007 /s/ Douglas Lindgren --------------------- ----------------------------------------------- Douglas Lindgren, Principal Executive Officer (principal executive officer) CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, C. Philip Tazza, certify that: 1. I have reviewed this report on Form N-CSR of UBS Health Sciences Fund L.L.C.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the 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; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 8, 2007 /s/ C. Philip Tazza --------------------- ----------------------------------------------- C. Philip Tazza, Principal Accounting Officer (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----