0000950123-11-080581.txt : 20110826
0000950123-11-080581.hdr.sgml : 20110826
20110826164431
ACCESSION NUMBER: 0000950123-11-080581
CONFORMED SUBMISSION TYPE: N-CSRS
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 20110630
FILED AS OF DATE: 20110826
DATE AS OF CHANGE: 20110826
EFFECTIVENESS DATE: 20110826
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: UBS EQUITY OPPORTUNITY FUND, L.L.C.
CENTRAL INDEX KEY: 0001131682
IRS NUMBER: 134151331
STATE OF INCORPORATION: NY
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: N-CSRS
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-10269
FILM NUMBER: 111060426
BUSINESS ADDRESS:
STREET 1: 1285 AVENUE OF THE AMERICAS
CITY: NEW YORK
STATE: NY
ZIP: 10019
BUSINESS PHONE: 8004862608
MAIL ADDRESS:
STREET 1: 1285 AVENUE OF THE AMERICAS
STREET 2: 1285 AVENUE OF THE AMERICAS
CITY: NEW YORK
STATE: NY
ZIP: 10019
FORMER COMPANY:
FORMER CONFORMED NAME: UBS EQUITY OPPORTUNITY FUND LLC
DATE OF NAME CHANGE: 20040930
FORMER COMPANY:
FORMER CONFORMED NAME: PW EQUITY OPPORTUNITY FUND LLC
DATE OF NAME CHANGE: 20010108
N-CSRS
1
w84152nvcsrs.txt
FORM N-CSRS
================================================================================
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 811-10269
UBS Equity Opportunity Fund, L.L.C.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
299 Park Avenue, 29th Floor
New York, NY 10171
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
James M. Hnilo, Esq.
UBS Alternative and Quantitative Investments LLC
One North Wacker Drive, 32nd Floor
Chicago, Illinois 60606
--------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 525-5000
Date of fiscal year end: December 31
Date of reporting period: June 30, 2011
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. Section 3507.
================================================================================
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
UBS EQUITY OPPORTUNITY FUND, L.L.C.
(LIQUIDATION BASIS)
FINANCIAL STATEMENTS
(UNAUDITED)
SEMI-ANNUAL REPORT
PERIOD FROM JANUARY 1, 2011 TO JUNE 30, 2011
UBS EQUITY OPPORTUNITY FUND, L.L.C.
(LIQUIDATION BASIS)
FINANCIAL STATEMENTS
(UNAUDITED)
SEMI-ANNUAL REPORT
PERIOD FROM JANUARY 1, 2011 TO JUNE 30, 2011
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
Financial Highlights 5
Notes to Financial Statements 6
Schedule of Portfolio Investments 14
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
STATEMENT OF ASSETS, LIABILITIES AND MEMBERS' CAPITAL
(UNAUDITED)
JUNE 30, 2011
ASSETS
Investments in Investment Funds, at fair value
(cost $2,142,146) $ 1,686,616
Cash and cash equivalents 741,049
Receivable from Investment Funds 1,412,283
--------------------------------------------------------------------------------
TOTAL ASSETS 3,839,948
--------------------------------------------------------------------------------
LIABILITIES
Liquidating distributions payable 2,004,294
Professional fees payable 70,852
Administration fee payable 11,763
Custody fee payable 5,236
Other liabilities 61,187
--------------------------------------------------------------------------------
TOTAL LIABILITIES 2,153,332
--------------------------------------------------------------------------------
MEMBERS' CAPITAL $ 1,686,616
--------------------------------------------------------------------------------
MEMBERS' CAPITAL
Represented by:
Net capital contributions $ 2,142,146
Accumulated net unrealized appreciation/
(depreciation) on investments in Investment Funds (455,530)
--------------------------------------------------------------------------------
MEMBERS' CAPITAL $ 1,686,616
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
1
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
STATEMENT OF OPERATIONS
(UNAUDITED)
PERIOD FROM JANUARY 1, 2011 TO JUNE 30, 2011
INVESTMENT INCOME
Interest $ 1,922
--------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 1,922
--------------------------------------------------------------------------------
EXPENSES
Directors' fees 3,083
Other expenses 554
--------------------------------------------------------------------------------
TOTAL EXPENSES 3,637
--------------------------------------------------------------------------------
NET INVESTMENT LOSS (1,715)
--------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) FROM INVESTMENTS
Net realized gain/(loss) from investments in Investment Funds 94,826
Net change in unrealized appreciation/depreciation on
investments in Investment Funds (777,921)
--------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) FROM INVESTMENTS (683,095)
--------------------------------------------------------------------------------
NET DECREASE IN MEMBERS' CAPITAL DERIVED FROM OPERATIONS $(684,810)
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
2
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
STATEMENTS OF CHANGES IN MEMBERS' CAPITAL
YEAR ENDED DECEMBER 31, 2010 AND PERIOD FROM JANUARY 1, 2011 TO JUNE 30, 2011
(UNAUDITED)
ADVISER MEMBERS TOTAL
---------------------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT JANUARY 1, 2010 $ 39,362 $ 71,331,180 $ 71,370,542
INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment income/(loss) (280) (1,299,437) (1,299,717)
Net realized gain/(loss) from investments in Investment
Funds 10,046 15,243,519 15,253,565
Net change in unrealized appreciation/depreciation on
investments in Investment Funds (7,689) (11,873,865) (11,881,554)
---------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS 2,077 2,070,217 2,072,294
---------------------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL TRANSACTIONS
Members' subscriptions - 35,000 35,000
Members' tender offer withdrawals - (12,602,116) (12,602,116)
Adviser and Members' liquidating distributions (37,824) (55,658,811) (55,696,635)
---------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS (37,824) (68,225,927) (68,263,751)
---------------------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT DECEMBER 31, 2010 $ 3,615 $ 5,175,470 $ 5,179,085
---------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) FROM OPERATIONS
Pro rata allocation:
Net investment income/(loss) (1) (1,714) (1,715)
Net realized gain/(loss) from investments in Investment
Funds 8 94,818 94,826
Net change in unrealized appreciation/depreciation on
investments in Investment Funds (472) (777,449) (777,921)
---------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
DERIVED FROM OPERATIONS (465) (684,345) (684,810)
---------------------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL TRANSACTIONS
Adviser and Members' liquidating distributions (1,907) (2,805,752) (2,807,659)
---------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN MEMBERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS (1,907) (2,805,752) (2,807,659)
---------------------------------------------------------------------------------------------------------------------------
MEMBERS' CAPITAL AT JUNE 30, 2011 $ 1,243 $ 1,685,373 $ 1,686,616
---------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
3
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
STATEMENT OF CASH FLOWS
(UNAUDITED)
PERIOD FROM JANUARY 1, 2011 TO JUNE 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net decrease in members' capital derived from operations $(684,810)
Adjustments to reconcile net decrease in member's capital
derived from operations
to net cash provided by operating activities:
Proceeds from disposition of investments in
Investment Funds 2,809,374
Net realized (gain)/loss from investments in
Investment Funds (94,826)
Net change in unrealized appreciation/depreciation
on investments in Investment Funds 777,921
Changes in assets and liabilities:
(Increase) decrease in assets:
Interest receivable 298
Receivable from Investment Funds 48,130,225
Increase (decrease) in liabilities:
Administration fee payable (19,247)
Custody fee payable (4,194)
Directors' fees payable (15,000)
Management Fee payable (49,822)
Professional fees payable (139,950)
Other liabilities (139,789)
--------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 50,570,180
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on Members' tender offer withdrawals,
including change in tender offer payable (615,245)
Liquidating distributions, including change in
liquidating distributions payable (56,500,000)
--------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (57,115,245)
Net decrease in cash and cash equivalents (6,545,065)
Cash and cash equivalents--beginning of period 7,286,114
--------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS--END OF PERIOD $741,049
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statement
4
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
FINANCIAL HIGHLIGHTS
JUNE 30, 2011
The following represents the ratios to average members' capital and other
supplemental information for all Members, excluding the Adviser, for the periods
indicated.
An individual Member's ratios and returns may vary from the below based on the
Incentive Allocation, if applicable, and the timing of capital transactions.
PERIOD FROM
JANUARY 1,
2011 TO JUNE YEARS ENDED DECEMBER 31,
30, 2011 -------------------------------------------------------------------------------
(UNAUDITED) 2010 2009 2008 2007 2006
------------- ------------ ---------------- ------------- -------------- ---------------
Ratio of net investment loss to
average members' capital (a), (b) (0.03%) (c) (1.98%) (1.58%) (1.23%) (1.41%) (1.19%)
Ratio of total expenses to
average members' capital
before Incentive Allocation (a), (b) 0.06% (c) 1.99% 1.59% 1.28% 1.43% 1.30%
Ratio of total expenses to
average members' capital after
Incentive Allocation (a), (d) 0.06% (c) 1.99% 1.59% 1.28% 2.00% 1.84%
Portfolio turnover rate 0.00% 2.88% 6.58% 26.32% 2.69% 16.77%
Total return before
Incentive Allocation (e) (8.23%) 4.00% 6.51% (21.99%) 12.25% 11.63%
Total return after Incentive
Allocation (f) (8.23%) 4.00% 6.51% (21.99%) 11.64% 11.04%
Average debt ratio (a) 0.00% 0.00% 0.00% 0.50% 1.28% 0.55%
Members' capital at end of
period (including the Adviser) $1,686,616 $5,179,085 $ 71,370,542 $90,716,677 $177,644,870 $178,185,119
-----------------
a The average members' capital used in the above ratios is calculated using
pre-tender members' capital, excluding the Adviser.
b Ratios of net investment loss and total expenses to average members' capital
do not include the impact of expenses and incentive allocations or incentive
fees related to the underlying Investment Funds.
c Annualized.
d The ratio of net expenses to average members' capital after Incentive
Allocation does not include the impact of expenses and incentive allocations
or incentive fees related to the underlying Investment Funds.
e Total return assumes a purchase of an interest in the Fund at the beginning
of the period and a sale of the Fund interest on the last day of the period
noted, and does not reflect the deduction of placement fees, if any, incurred
when subscribing to the Fund. Total return for periods less than a full year
are not annualized.
f 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 Adviser, and does not reflect the
deduction of placement fees, if any, incurred when subscribing to the Fund.
Total return for periods less than a full year are not annualized.
The accompanying notes are an integral part of these financial statements.
5
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2011
1. FUND LIQUIDATION
UBS Equity Opportunity Fund, L.L.C.'s (the "Fund") Board of Directors (the
"Directors") approved the formal liquidation of the Fund on November 18,
2010, and as such, the Fund is proceeding with a liquidation of its
portfolio of investments. As a result of the approved liquidation plan,
subscriptions and repurchases into the Fund have been suspended. The
Adviser (as defined below) is managing the Fund with the objective of
maximizing current investment value while seeking to realize all
investments as soon as reasonably practicable. The Fund is in the process
of liquidating its investments in an orderly manner and distributing the
proceeds in accordance with its offering memorandum. Based on proceeds
received from redeemed investments, the Fund distributed $45,000,000,
$7,500,000, and $4,000,000 to its members on January 21, 2011, March 2,
2011, and June 27, 2011, respectively. As a result of the liquidation,
these financial statements have been prepared on the liquidation basis of
accounting.
For the six month period ended June 30, 2011, the Fund has currently
accrued for its future expenses for the estimated maximum holding period of
the investments held by the Fund.
2. ORGANIZATION
The Fund was organized as a limited liability company under the laws of
Delaware on May 3, 2000 and commenced operations on March 1, 2001. 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 is a multi-manager fund that
seeks to achieve its objective by deploying its assets primarily among a
select group of portfolio managers who over time have produced attractive
returns in the U.S. equity market. 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, member or shareholder along with other investors.
The Fund's Directors have 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 Alternative and Quantitative Investments LLC
("UBS A&Q", the "Adviser" and, when providing services under the
Administration Agreement, the "Administrator"), a Delaware limited
liability company, to provide investment advice regarding the selection of
Investment Funds and to be responsible for the day-to-day management of the
Fund. The Adviser is a wholly owned subsidiary of UBS AG and is registered
as an investment adviser under the Investment Advisers Act of 1940, as
amended.
6
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
JUNE 30, 2011
2. ORGANIZATION (CONTINUED)
Initial and additional applications for interests by eligible investors may
be accepted at such times as the Directors may determine and are generally
accepted monthly. The Directors reserve the right to reject any application
for interests in the Fund.
Prior to the liquidation, the Fund from time to time offered to repurchase
interests pursuant to written tenders to members (the "Members"). These
repurchases were made at such times and on such terms as determined by the
Directors, in their complete and exclusive discretion. The Adviser
typically recommended to the Directors that the Fund offer to repurchase
interests twice each year, near mid-year and year-end. Members were only
able to 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 have been withheld in their sole and absolute
discretion. Such transfers were made even if the balance of the capital
account to such transferee was equal to or less than the transferor's
initial capital contribution.
3. NEW ACCOUNTING PRONOUNCEMENTS
In May 2011, the Financial Accounting Standards Board ("FASB") issued
Codification Accounting Standards Update No. 2011-04, Fair Value
Measurement (Topic 820): Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and IFRSs ("ASU
2011-04"). ASU 2011-04 requires disclosure of all transfers between Level 1
and Level 2 of the fair value hierarchy and the reasons for those
transfers. In addition, ASU 2011-04 expands the qualitative and
quantitative fair value disclosure requirements for fair value measurements
categorized in Level 3 of the fair value hierarchy and requires a
description of the valuation processes in place and a description of the
sensitivity of the fair value to changes in unobservable inputs and
interrelationships between those inputs if a change in those inputs would
result in a significantly different fair value measurement. ASU 2011-04 is
effective for fiscal years beginning after December 15, 2011 and for
interim periods within those fiscal years. The adoption of the ASU 2011-04
is currently being assessed but is not expected to have a material impact
on the Fund's financial statements.
4. SIGNIFICANT ACCOUNTING POLICIES
a. PORTFOLIO VALUATION
The Fund values its investments at fair value, in accordance with U.S.
generally accepted accounting principles ("GAAP"), which is the price that
would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.
Various inputs are used in determining the fair value of the Fund's
investments which are summarized in the three broad levels listed below.
7
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
JUNE 30, 2011
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
a. PORTFOLIO VALUATION (CONTINUED)
LEVEL 1- quoted prices in active markets for identical securities
LEVEL 2- fair value of investments in Investment Funds with the ability to
redeem at net asset value as of the measurement date, or within one year of
the measurement date
LEVEL 3- fair value of investments in Investment Funds that do not have the
ability to redeem at net asset value within one year of the measurement
date
The Fund recognizes transfers into and out of the levels indicated above at
the end of the reporting period. All transfers into and out of Level 3 can
be found in the Level 3 reconciliation table within the Schedule of
Portfolio Investments.
GAAP provides guidance in determining whether there has been a significant
decrease in the volume and level of activity for an asset or liability when
compared with normal market activity for such asset or liability (or
similar assets or liabilities). GAAP also provides guidance on identifying
circumstances that indicate a transaction with regards to such an asset or
liability is not orderly. In its consideration, the Fund must consider
inputs and valuation techniques used for each class of assets and
liabilities. Judgment is used to determine the appropriate classes of
assets and liabilities for which disclosures about fair value measurements
are provided. Fair value measurement disclosures for each class of assets
and liabilities requires greater disaggregation than the Fund's line items
in the Statement of Assets, Liabilities and Members' Capital. The Fund
determines the appropriate classes for those disclosures on the basis of
the nature and risks of the assets and liabilities and their classification
in the fair value hierarchy (i.e., Levels 1, 2, and 3).
For assets and liabilities measured at fair value on a recurring basis
during the period, the Fund provides quantitative disclosures about the
fair value measurements separately for each class of assets and
liabilities, as well as a reconciliation of beginning and ending balances
of Level 3 assets and liabilities broken down by class.
The following is a summary of the investment strategies and any
restrictions on the liquidity provisions of the investments in Investment
Funds held in the Fund as of June 30, 2011. Investment Funds with no
current redemption restrictions may be subject to future gates, lock-up
provisions or other restrictions, in accordance with their offering
documents. The Fund had no unfunded capital commitments as of June 30,
2011. Effective June 30, 2011, the Fund used the following category to
classify its Investment Funds.
The Investment Funds in the equity hedged strategy generally utilize
fundamental analysis to invest in publicly traded equities investing in
both long and short positions seeking to capture perceived security
mispricings. Portfolio construction is driven primarily by bottom-up
fundamental research;
8
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
JUNE 30, 2011
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
a. PORTFOLIO VALUATION (CONTINUED)
top-down analysis may also be applied. Investment Funds representing
approximately 35 percent of the fair value of the investments in this
strategy are side pockets or liquidating trusts where the liquidation of
assets is expected over the next 6 months. The remaining Investment Fund,
representing approximately 65 percent of the fair value of the investments
in this strategy, have been notified of our redemption and will be redeemed
in full as of September 30, 2011. One Investment Fund, with a fair value of
$591,740, transferred from Level 3 to Level 2 at the measurement date.
A detailed depiction of each investment in the portfolio by investment
strategy, including any additional liquidity terms and other restrictions,
as well as a breakdown of the portfolio into the fair value measurement
levels, can be found in the tables within the Schedule of Portfolio
Investments.
Net asset value of the Fund is determined by or at the direction of the
Adviser as of the close of business at the end of any fiscal period in
accordance with the valuation principles set forth below or as may be
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
memorandums, as appropriate. The Fund's investments in Investment Funds are
carried at fair value. All valuations utilize financial information
supplied by each Investment Fund and are net of management and performance
incentive fees or allocations payable to the Investment Funds' managers or
pursuant to the Investment Funds' agreements. The Fund's valuation
procedures require the Adviser to consider all relevant information
available at the time the Fund values its portfolio. The Adviser has
assessed factors including, but not limited to the individual Investment
Funds' compliance with fair value measurements, price transparency and
valuation procedures in place, and subscription and redemption activity.
The Adviser and/or the Directors will consider such information and
consider whether it is appropriate, in light of all relevant circumstances,
to value such a position at its net asset value as reported or whether to
adjust such value. The underlying investments of each Investment Fund are
accounted for at fair value as described in each Investment Fund's
financial statements. (See Schedule of Portfolio Investments).
The fair value relating to certain underlying investments of these
Investment Funds, for which there is no ready market, has been estimated by
the respective Investment Funds' management and is based upon available
information in the absence of readily ascertainable fair values and does
not necessarily represent amounts that might ultimately be realized. Due to
the inherent uncertainty of valuation, those estimated fair values may
differ significantly from the values that would have been used had a ready
market for the investments existed. These differences could be material.
9
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
JUNE 30, 2011
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
a. PORTFOLIO VALUATION (CONTINUED)
It is unknown on an aggregate basis whether the Investment Funds held any
investments whereby the Fund's proportionate share exceeded 5% of the
Fund's net assets at June 30, 2011.
The fair value of the Fund's assets and liabilities which qualify as
financial instruments approximates the carrying amounts presented in the
Statement of Assets, Liabilities and Members' Capital.
b. INVESTMENT TRANSACTIONS AND INCOME RECOGNITION
The Fund accounts for realized gains and losses from Investment Fund
transactions based on the pro-rata ratio of the fair value and cost of the
underlying investment at the date of redemption. Interest income and
expenses are recorded on the accrual basis.
c. FUND EXPENSES
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; offering and organization
costs; due diligence, including travel and related expenses; expenses of
meetings of Directors; all costs with respect to communications to Members;
and other types of expenses approved by the Directors.
d. INCOME TAXES
The Fund has reclassified $1,716 and $94,826 from accumulated net
investment loss and accumulated net realized gain from investments in
Investment Funds, respectively, to net capital contributions during the six
month period ended June 30, 2011. The reclassification was to reflect, as
an adjustment to net contributions, the amount of estimated taxable income
or loss that have been allocated to the Fund's Members as of June 30, 2011
and had no effect on members' capital.
The Fund files income tax returns in the U.S. federal jurisdiction and
applicable states. Management has analyzed the Fund's tax positions taken
on its federal and state income tax returns for all open tax years, and has
concluded that no provision for federal or state income tax is required in
the Fund's financial statements. The Fund's federal and state income tax
returns for tax years for which the applicable statutes of limitations have
not expired are subject to examination by the Internal Revenue Service and
state departments of revenue. The Fund recognizes interest and penalties,
if any, related to unrecognized tax benefits as income tax expense in the
Statement of Operations. For the six month period ended June 30, 2011, the
Fund did not incur any interest or penalties.
10
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
JUNE 30, 2011
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d. INCOME TAXES (CONTINUED)
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 held in custodial accounts. The
Fund has not experienced any losses in such accounts and does not believe
it is exposed to any significant credit risk on such accounts.
f. USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of increases and decreases in members' capital from operations
during the reporting period. Actual results could differ from those
estimates.
5. RELATED PARTY TRANSACTIONS
The Administrator 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
the Administrator a monthly fee (the "Management Fee") at an annual rate of
1% of the Fund's members' capital, excluding the capital account
attributable to the Administrator, the Adviser and the Special Advisory
Account described below. The Management Fee is paid to the Administrator
out of the Fund's assets and debited against the Members' capital accounts,
excluding the capital account attributable to the Administrator, the
Adviser and the Special Advisory Account. A portion of the Management Fee
is paid by UBS A&Q to its affiliates. Due to the formal liquidation of the
Fund, the Adviser has agreed to waive the Management Fee for the period
subsequent to December 31, 2010 through the date of the final liquidation.
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 bears 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.
11
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
JUNE 30, 2011
5. RELATED PARTY TRANSACTIONS (CONTINUED)
The net increase or decrease in members' capital derived from operations
(net income or loss) is allocated to the capital accounts of all Members on
a pro-rata basis, other than the Management Fee which is similarly
allocated to all Members other than the Adviser, Special Advisory Account
or Administrator as described above.
The Adviser is entitled to receive, generally at the end of each fiscal
year and upon a Member's withdrawal, 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. A Special
Advisory Account has been established by the Fund for crediting any
Incentive Allocation due to the Adviser. The Incentive Allocation is 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. There was
no Incentive Allocation for the six month period ended June 30, 2011 and
the year ended December 31, 2010.
Each Director of the Fund receives an annual retainer of $8,250 plus a fee
for each meeting attended. The Chairman of the Board of Directors and the
Chairman of the Audit Committee of the Board of Directors each receive an
additional annual retainer in the amount of $20,000. These additional
annual retainer amounts are paid for by the Fund on a pro-rata basis with
ten other UBS funds where UBS A&Q is the investment adviser. All Directors
are reimbursed by the Fund for all reasonable out of pocket expenses.
Other investment partnerships sponsored by UBS AG or its affiliates may
also maintain investment interests in the Investment Funds owned by the
Fund.
6. ADMINISTRATION AND CUSTODY FEES
PFPC Trust Company (the "Custodian"), which was renamed BNY Mellon
Investment Servicing Trust Company effective July 1, 2011, provides
custodial services for the Fund. The Custodian entered into a service
agreement whereby The Bank of New York Mellon provides securities clearance
functions, as needed.
BNY Mellon Investment Servicing (US) Inc. ("BNY Mellon") serves as
accounting and investor servicing agent to the Fund and in that capacity
provides certain administrative, accounting, record keeping, tax and Member
related services. BNY Mellon receives a monthly fee primarily based upon
(i) the average members' capital of the Fund subject to a minimum monthly
fee, and (ii) the aggregate members' capital of the Fund and certain other
investment funds sponsored or advised by UBS AG, UBS Americas, Inc. or
their affiliates. Additionally, the Fund reimburses certain out of pocket
expenses incurred by BNY Mellon.
12
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
JUNE 30, 2011
7. INVESTMENTS
As of June 30, 2011, the Fund had investments in Investment Funds, none of
which were related parties.
Aggregate purchases and proceeds from sales of investments for the six
month period ended June 30, 2011 amounted to $0 and $2,809,374,
respectively.
The cost of investments for federal income tax purposes is adjusted for
items of taxable income allocated to the Fund from the Investment Funds.
The allocated taxable income is reported to the Fund by the Investment
Funds on Schedule K-1. The tax basis of investments for 2011 will not be
finalized by the Fund until after the fiscal year end.
The agreements related to investments in Investment Funds provide for
compensation to the general partners/managers in the form of management
fees of 1.00% to 1.50% (per annum) of net assets and performance incentive
fees or allocations of 20.00% 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 fair value of these investments.
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, the Fund believes that the likelihood
of such an event is remote.
10. SUBSEQUENT EVENTS
As of June 30, 2011, the Fund had $2,004,294 of liquidating distributions
payable, which will be paid in accordance with the Fund's offering
memorandum.
13
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
SCHEDULE OF PORTFOLIO INVESTMENTS
(UNAUDITED)
JUNE 30, 2011
REALIZED DOLLAR
AND AMOUNT OF
UNREALIZED FAIR VALUE
% OF GAIN/(LOSS) INITIAL FIRST FOR FIRST
MEMBERS' FROM ACQUISITION AVAILABLE AVAILABLE
INVESTMENT FUND COST FAIR VALUE CAPITAL INVESTMENTS DATE LIQUIDITY (a) REDEMPTION (b) REDEMPTION (b)
--------------------- ------------ ------------ -------- ------------- ----------- ------------- --------------- --------------
EQUITY HEDGED
Bonanza Liquidating
Trust, Class A (c) $ 66,772 $ 23,519 1.39 $ (29,205) 4/1/2004 N/A
North Run Qualified
Partners, L.P. (d) 1,000,222 1,071,357 63.52 (177,427) 1/1/2008 Quarterly
Seneca Capital,
L.P., SLV (c) 1,075,152 591,740 35.09 (478,008) 7/1/2004 N/A
------------ ------------ ------ ----------
EQUITY HEDGED
SUBTOTAL $ 2,142,146 $ 1,686,616 100.00 % $ (684,640)
Redeemed Investment
Funds - - - 1,545
------------ ------------ ------ ----------
TOTAL $ 2,142,146 $ 1,686,616 100.00 % $ (683,095)
============ ============ ====== ==========
-------------
(a) Available frequency of redemptions after the initial lock-up period, if
any. Different tranches may have varying liquidity terms.
(b) Investment Funds with no dates or amounts can be redeemed in full.
(c) The Investment Fund is in liquidation. In addition to any redemption
proceeds that may have already been received, the Fund will continue to
receive proceeds periodically as the Investment Fund liquidates its
underlying investments.
(d) Investment Funds categorized as Level 2 investments.
Complete information about the Investment Funds' underlying investments is not
readily available.
The following is a summary of the inputs used in valuing the Fund's investments
at fair value. The inputs or methodology used for valuing the Fund's investments
are not necessarily an indication of the risk associated with investing in those
investments. The Fund's valuation procedures require evaluation of all relevant
factors available at the time the Fund values its portfolio. These relevant
factors include the individual Investment Funds' compliance with fair value
measurements, price transparency and valuation procedures in place, subscription
and redemption activity, level of illiquid securities held, and the existence or
absence of redemption restrictions.
The Fund's investments are categorized in three levels as disclosed below. Level
1 discloses the amount of investments where the values of those investments are
based upon quoted prices in active markets for identical securities. Level 2
discloses the amount of investments where the Fund has the ability to redeem at
net asset value as of the June 30, 2011 measurement date, or within one quarter
of the measurement date. Level 3 discloses the amount of investments where the
Fund does not have the ability to redeem at net asset value within one quarter
of the June 30, 2011 measurement date. There were no transfers between Level 1
and Level 2 at June 30, 2011.
ASSETS TABLE
TOTAL FAIR VALUE
AT LEVEL 1 LEVEL 2 LEVEL 3
DESCRIPTION JUNE 30, 2011
------------------------------------------------------------------------------
Equity Hedged $ 1,686,616 $ - $ 1,071,357 $ 615,259
---------------------------------------------------------------
TOTAL ASSETS $ 1,686,616 $ - $ 1,071,357 $ 615,259
---------------------------------------------------------------
The preceding notes are an integral part of these financial statements.
14
UBS EQUITY OPPORTUNITY FUND, L.L.C. (LIQUIDATION BASIS)
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
(UNAUDITED)
JUNE 30, 2011
The following is a reconciliation of assets in which significant unobservable
inputs (Level 3) were used in determining fair value:
NET TRANSFERS
BALANCE CHANGE IN IN BALANCE
AS OF REALIZED UNREALIZED AND/OR AS OF
DECEMBER STRATEGY GAIN / APPRECIATION / (OUT) OF JUNE
DESCRIPTION 31, 2010 RECLASSIFICATION * (LOSS) DEPRECIATION PURCHASES SALES LEVEL 3 ** 30, 2011
-------------------------------------------------------------------------------------------------------------------------------
Equity Hedged $ - $ 1,312,018 $ 2,958 $(480,965) $ - $ (242,271) $23,519 $615,259
Long/Short Equity 1,312,018 (1,312,018) - - - - - -
-------------------------------------------------------------------------------------------------------------------------------
Total $ 1,312,018 $ - $ 2,958 $(480,965) $ - $ (242,271) $23,519 $615,259
-------------------------------------------------------------------------------------------------------------------------------
----------
* Effective June 30, 2011, the Fund's underlying fund investments were
reclassified into new investment strategies. See Note 4a in Notes to
Financial Statements for further description of the new investment
strategies.
** The transfer into Level 3 noted above is due to the liquidity of the
underlying Investment Funds in relation to the change in the measurement
date from December 31, 2010 to June 30, 2011.
Net change in unrealized appreciation/depreciation on Level 3 assets still
held as of June 30, 2011 is $(384,980).
15
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. INVESTMENTS.
(a) 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.
(b) Not applicable.
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 Equity Opportunity Fund, L.L.C.
By (Signature and Title)* /s/ William Ferri
-----------------------------------------------
William Ferri, Principal Executive Officer
Date August 26, 2011
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/ William Ferri
-----------------------------------------------
William Ferri, Principal Executive Officer
Date August 26, 2011
By (Signature and Title)* /s/ Robert Aufenanger
-----------------------------------------------
Robert Aufenanger, Principal Financial Officer
Date August 26, 2011
----------
* Print the name and title of each signing officer under his or her signature.
EX-99.CERT
2
w84152exv99wcert.txt
EX-99.CERT
EXHIBIT 99.CERT
CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 302 OF
THE SARBANES-OXLEY ACT
I, William Ferri, certify that:
1. I have reviewed this report on Form N-CSR of UBS Equity Opportunity 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 26, 2011 /s/ William Ferri
-----------------------------------------------
William Ferri, Principal Executive Officer
EXHIBIT 99.CERT
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 Equity Opportunity 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 26, 2011 /s/ Robert Aufenanger
--------------------------------------------------
Robert Aufenanger, Principal Financial Officer