-----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, NtCzSr6Jhx8fX4lZe7Q6qx+F6QHhFBcEwe57k6BD3+0WSCXtd+9awvxF3PCGiAUr S+9eusidJPRyQyreB0008w== 0000935069-07-002143.txt : 20070831 0000935069-07-002143.hdr.sgml : 20070831 20070831155655 ACCESSION NUMBER: 0000935069-07-002143 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070630 FILED AS OF DATE: 20070831 DATE AS OF CHANGE: 20070831 EFFECTIVENESS DATE: 20070831 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-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-09985 FILM NUMBER: 071094572 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-CSRS 1 g38820healthsciences_ncsrs.txt UBS HEALTH SCIENCES NCSRS 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: 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 HEALTH SCIENCES FUND, L.L.C. FINANCIAL STATEMENTS (UNAUDITED) SEMI ANNUAL REPORT PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 UBS HEALTH SCIENCES 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 Statement............................................ 5 Schedule of Portfolio Investments....................................... 11 UBS HEALTH SCIENCES FUND, L.L.C. STATEMENT OF ASSETS, LIABILITIES AND MEMBERS' CAPITAL (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- ASSETS Investments in Investment Funds, at value (cost $13,875,000) $ 36,691,269 Cash and cash equivalents 105,711 Receivable from Investment Funds 11,728,292 Interest receivable 528 - -------------------------------------------------------------------------------- TOTAL ASSETS 48,525,800 - -------------------------------------------------------------------------------- LIABILITIES Payables: Credit facility payable 140,000 Withdrawals payable 6,942,927 Professional fees 104,964 Management fee 40,478 Administration fee 13,088 Other 29,994 - -------------------------------------------------------------------------------- TOTAL LIABILITIES 7,271,451 - -------------------------------------------------------------------------------- NET ASSETS $ 41,254,349 - -------------------------------------------------------------------------------- MEMBERS' CAPITAL Represented by: Net capital contributions $ 18,438,080 Accumulated net unrealized appreciation on investments 22,816,269 - -------------------------------------------------------------------------------- TOTAL MEMBERS' CAPITAL $ 41,254,349 - -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 1 UBS HEALTH SCIENCES FUND, L.L.C. STATEMENT OF OPERATIONS (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- INVESTMENT INCOME Interest $ 9,533 - ------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 9,533 - ------------------------------------------------------------------------------- EXPENSES Management fee 234,898 Professional fees 80,720 Loan interest expense 16,434 Administration fees 15,672 Other 55,393 - ------------------------------------------------------------------------------- TOTAL EXPENSES 403,117 - ------------------------------------------------------------------------------- NET INVESTMENT LOSS (393,584) - ------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN FROM INVESTMENTS Net realized gain from Investments 1,628,264 Change in net unrealized appreciation/depreciation from investments 780,140 - ------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS 2,408,404 - ------------------------------------------------------------------------------- NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS $ 2,014,820 - ------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 2
UBS HEALTH SCIENCES 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 $ 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 and foreign currency transactions 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 - ------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) FROM OPERATIONS Pro rata allocation: Net investment loss (67) (393,517) (393,584) Net realized gain from investments 681 1,627,583 1,628,264 Change in net unrealized appreciation/depreciation from investments 327 779,813 780,140 Incentive allocation 88,465 (88,465) - - ------------------------------------------------------------------------------------------------------------------------------- NET INCREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS 89,406 1,925,414 2,014,820 - ------------------------------------------------------------------------------------------------------------------------------- MEMBERS' CAPITAL TRANSACTIONS Proceeds from Members' subscriptions - 347,500 347,500 Members' withdrawals (215,411) (6,942,926) (7,158,337) Offering costs - (853) (853) - ------------------------------------------------------------------------------------------------------------------------------- NET DECREASE IN MEMBERS' CAPITAL DERIVED FROM CAPITAL TRANSACTIONS (215,411) (6,596,279) (6,811,690) - ------------------------------------------------------------------------------------------------------------------------------- MEMBERS' CAPITAL AT JUNE 30, 2007 $ 106,337 $ 41,148,012 $ 41,254,349 - -------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 3 - -------------------------------------------------------------------------------- UBS HEALTH SCIENCES 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 $ 2,014,820 Adjustments to reconcile net increase in Members' capital derived from operations Proceeds from disposition of investments 12,228,264 Net realized gain from investments (1,628,264) Change in net unrealized appreciation/depreciation from investments (780,140) (Increase) decrease in assets: Receivable from Investment Funds (5,553,292) Interest receivable 3,086 Other assets 144 Increase (decrease) in payables: Credit facility payable 140,000 Professional fees (61,259) Management fee (3,622) Administration fee 899 Other (4,137) - ------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 6,356,499 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Members' subscriptions 347,500 Members' withdrawals (7,879,148) Manager withdrawals (215,411) Offering costs (853) - ------------------------------------------------------------------------------- NET CASH USED IN FINANCING ACTIVITIES (7,747,912) Net decrease in cash and cash equivalents (1,391,413) Cash and cash equivalents--beginning of period 1,497,124 - ------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS--END OF PERIOD $ 105,711 - ------------------------------------------------------------------------------- Supplemental cash flows disclosure: Interest paid $ 14,895 - ------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 4 UBS HEALTH SCIENCES FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- 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 5 UBS HEALTH SCIENCES 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) 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. 6 UBS HEALTH SCIENCES FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- 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 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 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 period from 7 UBS HEALTH SCIENCES FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- 3. RELATED PARTY TRANSACTIONS (CONTINUED) January 1, 2007 to June 30, 2007 and the year ended December 31, 2006 was $88,465 and $227,657, respectively, and has been recorded as an increase to the Manager's capital account. Such amount is not eligible to 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 the period from January 1, 2007 to June 30, 2007 and as of the year ended December 31, 2006, 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 period from January 1, 2007 to June 30, 2007 were $22,120. 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 period from January 1, 2007 to June 30, 2007, the Fund's average interest rate paid on borrowings was 6.83% per annum and the average borrowings outstanding were $484,254. Interest expense for the period from January 1, 2007 to June 30, 2007 was $16,434 of which $1,539 was payable at period end. See Subsequent Events for further information. 8 UBS HEALTH SCIENCES FUND, L.L.C. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) - -------------------------------------------------------------------------------- PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 - -------------------------------------------------------------------------------- 6. SECURITIES TRANSACTIONS Aggregate proceeds from sales of Investment Funds for the period from January 1, 2007 to June 30, 2007 amounted to $12,228,264. 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 period from January 1, 2007 to June 30, 2007. 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 ---------------------- ----------- ------------ Long/Short Equity $13,875,000 $36,691,269 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. 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 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. 9 UBS HEALTH SCIENCES 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:
YEARS ENDED DECEMBER 31, PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007 (UNAUDITED) 2006 2005 2004 2003 2002 ----------- ---- ---- ---- ---- ---- Ratio of net investment loss to average net assets *** (1.68)%* (1.36)% (1.47)% (1.31)% (1.19)% (1.21)% Ratio of total expenses to average net assets before incentive(a), *** 1.72%* 1.54% 1.53% 1.34% 1.24% 1.29% Ratio of total expenses to average net assets after incentive(a), **** 2.10%* 1.96% 1.62% 1.41% 1.27% 1.29% Portfolio turnover rate 0.00% 14.72% 4.31% 28.04% 32.57% 25.35% Total return before incentive allocation***** 4.38% 9.12% 1.51% 6.84% 9.58% (14.44)% Total return after incentive allocation** 4.16% 8.66% 1.43% 6.50% 9.10% (14.44)% Average debt ratio*** 0.73% 0.44% 2.04% 0.02% - - Net asset value at end of period $41,254,349 $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. * 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, 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. ***** 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. 12. SUBSEQUENT EVENTS The Fund, along with other UBS sponsored funds, renewed its $200,000,000 unsecured revolving line of credit with the Bank of Montreal--Chicago Branch, which is the Illinois branch of the parent to Harris Trust and Savings Bank. The expiration date of such agreement is July 31, 2008. On July 20, 2007, the Managing Member of the Fund determined that the Fund would liquidate its assets in accordance with the Fund's limited liability company agreement. Capital interests of members will be distributed prior to or upon completion of the liquidation. 10 UBS HEALTH SCIENCES FUND, L.L.C. SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) - -------------------------------------------------------------------------------- JUNE 30, 2007 - --------------------------------------------------------------------------------
REALIZED AND % OF UNREALIZED MEMBERS' GAIN/(LOSS) FROM INVESTMENT FUND COST FAIR VALUE CAPITAL INVESTMENTS LIQUIDITY - -------------------------------------------------------------------------------------------------------------------- Meditor Cobra Fund (C), LTD 4,200,000 6,132,390 14.86 351,343 Monthly North River Partners, L.P. - 7,880,953 19.10 89,068 Quarterly Pequot Healthcare Fund, L.P. - 8,976,486 21.76 588,709 Annually Salthill Partners, L.P. 4,250,000 5,356,980 12.99 222,419 Quarterly Westfield Life Sciences Fund II, L.P. 5,425,000 8,344,460 20.23 651,610 Quarterly Redeemed Investment Funds - - - 505,255 ------------ ------------ ------- ----------- TOTAL $ 13,875,000 $ 36,691,269 88.94% $ 2,408,404 ============ ============ ======= ===========
The preceding notes are an integral part of these financial statements. 11 UBS HEALTH SCIENCES FUND, L.L.C. The Directors (including the Independent Directors) last evaluated the Investment Advisory Agreement at a meeting on April 26, 2007. The Directors met in an executive session during which they were advised by and had the opportunity to discuss with independent legal counsel the approval of the Investment Advisory Agreement. The Directors reviewed materials furnished by the Adviser, including information regarding the Adviser, its affiliates and its personnel, operations and financial condition. Tables indicating comparative fee information, and comparative performance information, as well as a summary financial analysis for the Fund, were also included in the meeting materials and were reviewed and discussed. The Directors discussed with representatives of the Adviser the Fund's operations and the Adviser's ability to provide advisory and other services to the Fund. The Independent Directors reviewed, among other things, the nature of the advisory services to be provided to the Fund by the Adviser, including its investment process, and the experience of the investment advisory and other personnel proposing to provide services to the Fund. The Independent Directors discussed the ability of the Adviser to manage the Fund's investments in accordance with the Fund's stated investment objectives and policies, as well as the services to be provided by the Adviser to the Fund, including administrative and compliance services, oversight of Fund accounting, marketing services, assistance in meeting legal and regulatory requirements and other services necessary for the operation of the Fund. The Independent Directors acknowledged the Adviser's employment of highly skilled investment professionals, research analysts and administrative, legal and compliance staff members to ensure that a high level of quality in compliance and administrative services would be provided to the Fund. The Independent Directors also recognized the benefits which the Fund derives from the resources available to the Adviser and the Adviser's affiliates, including UBS AG and UBS Financial Services Inc. ("UBS Financial"). Accordingly, the Independent Directors felt that the quality of service offered by the Adviser to the Fund was appropriate, and that the Adviser's personnel had sufficient expertise to manage the Fund. The Independent Directors reviewed the performance of the Fund and compared that performance to the performance of other investment companies presented by UBS Financial which had objectives and strategies similar to those of the Fund and which are managed by other, third-party investment advisers ("Comparable Funds"). The Independent Directors determined that the Fund's performance was consistent with that of its Comparable Funds by noting that the Fund's annualized performance since inception was above the median performance of its Comparable Funds. The Independent Directors also compared the volatility of the Fund to that of its Comparable Funds. The Directors observed that the Fund's volatility was below the median volatility of its Comparable Funds. The Directors considered the fees being charged by the Adviser for its services to the Fund as compared to those charged to the Comparable Funds, and as compared to the management and incentive fees charged by UBS Fund Advisor, L.L.C. ("UBSFA") and its affiliates for other UBS alternative investment products. The information presented to the Directors showed that the management fee being charged to the Fund was the lowest management fee being charged to its Comparable Funds, and that the incentive fee being charged to the Fund was lower than one Comparable Fund but noted that the second Comparable Fund did not charge an incentive fee. In comparing the management and incentive fees being charged to the Fund to the fees being charged by UBSFA and its affiliates for other UBS alternative investment products, the Directors observed that the management fee being charged to the Fund was equal to the lowest management fee being charged to other Alternative Investment Group funds, and the Fund's incentive fee was identical to the incentive fee being charged to four other multi-manager funds subject to a profit-based incentive fee, with three other multi-manager funds not being subject to any incentive fee. In light of the foregoing, the Directors felt that the combination of management fee and incentive fee being charged to the Fund was appropriate. The Directors also considered the profitability of UBSFA both before payment to brokers and after payment to brokers and concluded that the profits to be realized by UBSFA and its affiliates under the Fund's Investment Advisory Agreement and from other relationships between the Fund and the UBSFA were within a range the Directors considered reasonable and appropriate. The Directors also discussed the fact that the Fund was not large enough at that time to support a request for breakpoints due to economies of scale. The Independent Directors determined that the fees were reasonable. The Directors concluded that approval of the Investment Advisory Agreement was in the best interests of the Fund and its shareholders. This page intentionally left blank 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) 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 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. EX-99.CERT 2 g38820_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: August 24, 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, Robert Aufenanger, 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: August 24, 2007 /s/ Robert Aufenanger ---------------------- ------------------------------------------------ Robert Aufenanger, Principal Accounting Officer (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----