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 811-21190
SkyBridge Multi-Adviser Hedge Fund Portfolios LLC
(Exact name of registrant as specified in charter)
527 Madison Avenue-16th Floor
New York, NY 10022
(Address of principal executive offices) (Zip code)
Marie Noble
SkyBridge Capital II, LLC
527 Madison Avenue-16th Floor
New York, NY 10022
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 485-3100
Date of fiscal year end: March 31
Date of reporting period: September 30, 2010
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.
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
SEMI-ANNUAL REPORT
SEPTEMBER 30, 2010
(UNAUDITED)
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
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TABLE OF CONTENTS
Statement of Assets and Liabilities 1
Schedule of Investments 2
Statement of Operations 4
Statements of Changes in Shareholders' Capital 5
Statement of Cash Flows 6
Financial Highlights 7
Notes to Financial Statements 8
Fund Management 19
Independent Directors 20
Interested Director 21
Officers 22
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2010 (UNAUDITED)
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ASSETS
Investments in Investment Funds, at fair value (cost $625,734,373) $ 771,989,367
Cash and cash equivalents 26,110,981
Receivable from Investment Funds 43,727,639
Other assets 122,259
-----------------
TOTAL ASSETS 841,950,246
-----------------
LIABILITIES
Contributions received in advance 24,173,250
Withdrawals payable 15,743,760
Management fee payable 1,021,349
Professional fees payable 497,893
Directors' fees payable 36,000
Accounts payable and other accrued expenses 161,019
-----------------
TOTAL LIABILITIES 41,633,271
-----------------
SHAREHOLDERS' CAPITAL (712,707.750 SHARES OUTSTANDING) $ 800,316,975
=================
NET ASSET VALUE PER SHARE $ 1,122.92
=================
COMPOSITION OF SHAREHOLDERS' CAPITAL
Paid-in capital $ 831,269,994
Accumulated net investment income 2,221,611
Accumulated net realized loss on investment transactions (179,429,624)
Accumulated net unrealized appreciation on investments 146,254,994
-----------------
SHAREHOLDERS' CAPITAL $ 800,316,975
=================
See accompanying notes to financial statements.
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SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
SCHEDULE OF INVESTMENTS (UNAUDITED)
SEPTEMBER 30, 2010
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% OF
SHAREHOLDERS'
COST FAIR VALUE CAPITAL
INVESTMENTS IN INVESTMENT FUNDS
DIRECTIONAL EQUITY
Artha Emerging Markets Fund LP - b $ 19,281,470 $ 20,669,800 2.58 %
Artis Partners 2X Ltd. - a 16,000,000 17,271,812 2.16
Frontpoint Onshore Healthcare Fund 2X LP - b 5,190,260 6,537,251 0.82
Horseman European Select Fund - a 11,220,923 11,917,347 1.49
JAT Capital Domestic Fund L.P. - Series A - b 7,000,000 7,485,670 0.94
Passport Global Strategies III LTD - e 779,292 553,175 0.07
Passport II LP - b 11,565,455 12,999,993 1.62
Prism Partners III Leveraged L.P. - b 5,000,000 5,064,907 0.63
Redmile Capital Fund LP, Tranche A - b 3,500,000 3,671,850 0.46
Sprott Offshore Fund II LTD Class B - a 6,036,890 7,065,414 0.88
Tiger Asia Overseas Fund, Ltd. Class B Offshore Fund - b 10,000,000 7,351,621 0.92
------------ ------------ -----
Total Directional Equity 95,574,290 100,588,840 12.57
------------ ------------ -----
DIRECTIONAL MACRO
Asset Management Offshore LTD - a 7,823,140 7,602,287 0.95
Brevan Howard Fund Limited - a 10,933,478 11,991,596 1.50
Drawbridge Global Macro Fund Ltd - SP Reserve - e 47,865 47,993 0.01
Drawbridge Global Macro Fund Ltd Side Pocket 10 - e 6,492 2,877 0.00 *
Drawbridge Global Macro Fund Ltd Side Pocket 11 - e 6,405 5,599 0.00 *
Drawbridge Global Macro Fund Ltd Side Pocket 12 - e 392,220 247,638 0.03
Drawbridge Global Macro Fund Ltd Side Pocket 4 - e 90,607 61,248 0.01
Drawbridge Global Macro Fund Ltd Side Pocket 5 - e 16,968 44,606 0.01
Drawbridge Global Macro Fund Ltd Side Pocket 6 - e 28,069 -- 0.00 *
Drawbridge Global Macro Fund Ltd Side Pocket 7 - e 5,905 33,775 0.00 *
Drawbridge Global Macro Ltd C1 H10D SP May 9 2008 - e 50,312 19,137 0.00 *
------------ ------------ -----
Total Directional Macro 19,401,461 20,056,756 2.51
------------ ------------ -----
EVENT DRIVEN
Alden Global Distressed Opp Fund, LP - a 46,050,000 43,143,519 5.39
Alden Global Value Recovery, L.P. - a 8,000,000 8,171,304 1.02
Amber Global Opportunities Fund L.P. - Class B(R) - a 15,500,000 16,351,745 2.04
Ashmore Asian Recovery Fund Limited - b 6,437,700 6,326,123 0.79
Carrington Investment Partners (US) LP - b 10,946,814 2,131,975 0.27
CPIM Structured Credit Fund 1000 INC - b 2,977,218 529,619 0.07
CPIM Structured Credit Fund 1500 INC - c 3,573,523 445,681 0.06
Harbinger Capital Partners Class L Holdings Series 2 - e 266,623 842,049 0.10
Harbinger Capital Partners Class PE Holdings Series 1 - e 7,232,915 5,441,067 0.68
Harbinger Capital Partners Offshore Fund I, LTD - b 6,204,552 5,063,031 0.63
Marathon Distressed Subprime Fund (Cayman) LTD Class B - e 5,000,000 6,328,380 0.79
Marathon Special Opp Fund LTD SP 2 - e 408,538 501,190 0.06
Marathon Special Opp LTD SP 4 - e 588,093 349,664 0.04
Marathon Special Opportunity Fund LTD Ser. 31 Dec 2008 - e 410,685 441,568 0.05
Marathon Special Opportunity Fund LTD SP 6 - e 276,235 328,098 0.04
Marathon Structured Finance Fund LTD - d 12,420,000 10,747,164 1.34
Pardus Special Opportunities Fund I, LTD - b 15,000,000 6,444,625 0.81
Stark Investments Structured Finance Onshore Fund - d 9,712,557 9,202,345 1.15
Taconic Offshore Fund 1.5 LTD - b 5,627,770 6,126,727 0.77
Third Point Ultra, Ltd. - b 55,711,018 58,465,565 7.31
York Credit Opportunities Fund, LP - b 16,500,000 18,808,985 2.35
See Accompanying Notes to Financial Statements
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SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 2010
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% OF
SHAREHOLDERS'
COST FAIR VALUE CAPITAL
INVESTMENTS IN INVESTMENT FUNDS (CONTINUED)
EVENT DRIVEN (CONTINUED)
York Credit Opportunities Unit Trust - b $ 5,000,000 $ 6,332,321 0.79 %
York European Opportunities Fund L.P. - b 15,000,000 15,108,202 1.89
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Total Event Driven 248,844,241 227,630,947 28.44
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RELATIVE VALUE
Brigade Leveraged Capital Structures LP - b 6,004,177 7,308,684 0.91
Metacapital Mortgage Opportunities Fund, L.P. - b 46,000,000 48,809,428 6.10
Nisswa Fixed Income Fund LP - b 46,872,139 69,754,403 8.71
Perella Weinberg Partners Xerion Fund LP - b 34,000,000 38,381,041 4.79
Providence MBS Fund, LP - b 30,000,000 59,830,442 7.47
Providence MBS Offshore Fund, LTD - b 10,301,594 27,021,187 3.38
SOLA 1 - a 25,894,387 24,416,063 3.05
Sola I Class L1 Master - e 6,487,047 8,464,203 1.06
Stratus Feeder Fund LTD Class C - a 11,511,640 13,601,361 1.70
Stratus Fund Ltd - Class C - a 4,701,952 8,160,864 1.02
Stratus Fund LTD Double Lev Class C Side Pocket - e 137,413 136,107 0.02
Structured Service Holdings LP - a 23,440,770 73,679,287 9.21
Structured Service Holdings LTD - a 16,563,262 44,149,754 5.52
------------ ------------ -----
Total Relative Value 261,914,381 423,712,824 52.94
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TOTAL INVESTMENTS IN INVESTMENT FUNDS $625,734,373 $771,989,367 96.46
============
OTHER ASSETS, LESS LIABILITIES 28,327,608 3.54
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SHAREHOLDERS' CAPITAL $800,316,975 100.00%
============ ======
Note: Investments in underlying Investment Funds are categorized by investment strategy.
* Amounts are less than 0.005%.
a Redemptions permitted monthly.
b Redemptions permitted quarterly.
c Redemptions permitted semi annually.
d Redemptions permitted annually.
e Illiquid, redeemable only when underlying investment is realized or converted to regular interest in Investment Fund.
See Accompanying Notes to Financial Statements
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SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED)
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INVESTMENT INCOME
Interest income $ 6,612
-----------------
TOTAL INVESTMENT INCOME 6,612
-----------------
EXPENSES
Management fees 5,572,414
Accounting fees 609,022
Professional fees 302,500
Risk monitoring fees 272,335
Directors' fees and expenses 39,000
Custodian fees 13,178
Miscellaneous expenses 309,022
-----------------
TOTAL EXPENSES 7,117,471
-----------------
NET INVESTMENT LOSS (7,110,859)
-----------------
NET REALIZED GAIN/(LOSS) AND CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON INVESTMENTS
IN INVESTMENT FUNDS
Net realized gain/(loss) on sales of investments in Investment Funds 2,548,175
Net change in unrealized appreciation/depreciation on investments in Investment Funds 45,485,339
-----------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS IN INVESTMENT FUNDS 48,033,514
-----------------
NET INCREASE IN SHAREHOLDERS' CAPITAL FROM OPERATIONS $ 40,922,655
=================
See accompanying notes to financial statements.
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SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
STATEMENTS OF CHANGES IN SHAREHOLDERS' CAPITAL
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SIX MONTHS
ENDED
SEPTEMBER 30,
2010 YEAR ENDED
(UNAUDITED) MARCH 31, 2010
------------- --------------
OPERATIONS
Net investment loss $ (7,110,859) $ (11,808,179)
Net realized gain on sales of investments in Investment Funds 2,548,175 38,747,888
Net change in unrealized appreciation/depreciation on investments
in Investment Funds 45,485,339 92,979,383
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NET INCREASE IN SHAREHOLDERS' CAPITAL FROM OPERATIONS 40,922,655 119,919,092
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income -- (85,488,824)
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DECREASE IN SHAREHOLDERS' CAPITAL FROM DISTRIBUTIONS TO SHAREHOLDERS -- (85,488,824)
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SHAREHOLDERS' CAPITAL TRANSACTIONS
Capital contributions 130,521,061 155,524,519
Reinvestment of distributions -- 81,914,430
Capital withdrawals (36,918,067) (121,606,714)
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INCREASE IN SHAREHOLDERS' CAPITAL FROM CAPITAL TRANSACTIONS 93,602,994 115,832,235
------------- -------------
SHAREHOLDERS' CAPITAL AT BEGINNING OF PERIOD 665,791,326 515,528,823
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SHAREHOLDERS' CAPITAL AT END OF YEAR (712,707.750 AND 624,958.550 SHARES
OUTSTANDING AT SEPTEMBER 30, 2010 AND MARCH 31, 2010, RESPECTIVELY) $ 800,316,975 $ 665,791,326
============= =============
ACCUMULATED NET INVESTMENT INCOME/(LOSS) $ 2,221,611 $ 9,332,470
============= =============
See accompanying notes to financial statements.
- 5 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED)
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CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in Shareholders' capital from operations $ 40,922,655
Adjustments to reconcile net increase in Shareholders' capital from operations to net cash
used in operating activities:
Purchases of investments in Investment Funds (127,000,000)
Proceeds from disposition of investments in Investment Funds 65,840,232
Net realized (gain)/loss on sales of investments in Investment Funds (2,548,175)
Change in net unrealized appreciation/depreciation on investments in Investment Funds (45,485,339)
Changes in operating assets and liabilities:
Decrease in other assets 20,913
Increase in management fee payable 145,822
Decrease in professional fees payable (205,399)
Decrease in directors' fees payable (3,000)
Decrease in accounts payable and other accrued expenses (116,226)
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NET CASH USED IN OPERATING ACTIVITIES (68,428,517)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions 127,238,538
Capital withdrawals (44,759,177)
-------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 82,479,361
-------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 14,050,844
Cash and cash equivalents at beginning of period 12,060,137
-------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 26,110,981
=============
SUPPLEMENTAL NON-CASH INFORMATION:
Decrease in contributions received in advance $ (3,282,523)
=============
Decrease in withdrawals payable $ (7,841,110)
=============
See accompanying notes to financial statements.
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SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
FINANCIAL HIGHLIGHTS
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SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2010 2010 2009 2008 2007 2006
(UNAUDITED)
------------- ------------ ------------ ------------ ------------ ------------
Net Asset Value, beginning of period: $ 1,065.34 $ 1,005.77 $ 1,216.46 $ 1,207.54 $ 1,241.60 $ 1,115.09
Income (loss) from investment
operations:*
Net investment loss (10.35) (22.13) (29.47) (34.29) (28.26) (26.88)
Net realized and unrealized
gain/(loss) on investments 67.93 247.91 (153.56) 133.84 108.05 153.39
------------ ------------ ------------ ------------ ------------ ------------
TOTAL FROM INVESTMENT OPERATIONS 57.58 225.78 (183.03) 99.55 79.79 126.51
------------ ------------ ------------ ------------ ------------ ------------
Distributions from net investment
income -- (166.21) -- -- (47.12) --
Distributions from net realized gains -- -- (27.66) (90.63) (66.73) --
------------ ------------ ------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS -- (166.21) (27.66) -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Asset Value, end of period: $ 1,122.92 $ 1,065.34 $ 1,005.77 $ 1,216.46 $ 1,207.54 $ 1,241.60
============ ============ ============ ============ ============ ============
TOTAL RETURN**** 5.40% 23.21% (15.05%) 8.24% 6.43% 11.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $800,316,975 $665,791,326 $515,528,823 $571,709,686 $327,210,824 $188,116,360
============ ============ ============ ============ ============ ============
Portfolio turnover 12.64% 38.58% 41.45% 30.05% 69.45% 57.90%
Ratio of expenses to average
Shareholder's capital**,*** 1.91% 2.04% 2.63% 2.90% 2.51% 2.60%
Ratio of net investment loss to average
Shareholders' capital**,*** (1.91%) (2.04%) (2.62%) (2.87%) (2.37%) (2.35%)
The above ratios may vary for individual investors based on the timing of capital transactions during the period.
* Per share data for income (loss) from investment operations is computed using the total of monthly income and expense divided
by beginning of month shares.
** The ratios of total expenses and net investment loss to average Shareholders' capital does not include the impact of expenses
and incentive allocations or incentive fees related to the underlying Investment Funds or the impact of any placement fees paid
by the Shareholders. Ratios for periods less than one year have been annualized.
*** The subscription and redemption fees had no impact on the ratio of expenses to average Shareholders capital and the ratio of
net investment loss to average Shareholders capital for the period ended September 30, 2010. Furthermore, for the prior years
ended 2010, 2009 and 2008, the Company incurred redemption fees of $328,671, $2,199,068 and $2,151,669, respectively. Had the
Company not incurred these fees, the ratio of expenses to average Shareholders capital and the ratio of net investment loss to
average Shareholders capital would have been 1.99% and (1.98)% for the year end 2010, 2.30% and (2.29)% for the year end 2009
and 2.40% and (2.37)% for the year ended 2008, respectively. There were no subscription or redemption fees for the years ended
2007 or 2006.
****The total return ratios for periods less than one year have not been annualized.
See accompanying notes to financial statements.
- 7 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 (UNAUDITED)
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1. ORGANIZATION
SkyBridge Multi-Adviser Hedge Fund Portfolios LLC (the "Company") (formerly Citigroup Alternative Investments Multi-Adviser
Hedge Fund Portfolios LLC) was organized as a Delaware Limited Liability Company on August 16, 2002. The Company is registered
under the Investment Company Act of 1940 (the "1940 Act") as amended, as a closed-end, non-diversified management investment
company. The Company is also registered under the Securities Act of 1933 (the "1933 Act").
The investment objective of the Company is to achieve capital appreciation principally through investing in investment funds
("Investment Funds") managed by third-party investment managers ("Investment Managers") that employ a variety of alternative
investment strategies. These investment strategies allow Investment Managers the flexibility to use leverage or short-side
positions to take advantage of perceived inefficiencies across the global markets, often referred to as "alternative"
strategies. Because Investment Funds following alternative investment strategies are often described as hedge funds, the
investment program of the Company can be described as a fund of hedge funds.
Shares of the Company ("Shares") are sold to eligible investors (referred to as "Shareholders"). The minimum initial investment
in the Company from each Shareholder is $25,000; the minimum additional investment is $10,000.
SkyBridge Capital II, LLC (the "Adviser"), a Delaware limited liability company, serves as the Company's investment adviser.
The Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and, among other
things, is responsible for the allocation of the Company's assets to various Investment Funds. Under the Company's governing
documents, the Company has delegated substantially all authority to oversee the management of the operations and assets of the
Company to the Board of Directors.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of
America ("GAAP") and are expressed in United States dollars. The following is a summary of significant accounting and reporting
policies used in preparing the financial statements.
A. PORTFOLIO VALUATION
Investments in Investment Funds are subject to the terms of the respective limited partnership agreements, limited liability
company agreements, offering memoranda and such negotiated "side letter" or similar arrangements as the Adviser may have
entered into with the Investment Fund on behalf of the Company. The Company's investments in the Investment Funds are carried
at fair value as determined by the Company's pro-rata interest in the net assets of each Investment Fund.
- 8 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (CONTINUED)
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All valuations utilize financial information supplied by each Investment Fund and are net of management and performance
incentive fees or other allocations payable to the Investment Funds' managers as required by the Investment Funds' agreements.
Each Investment Manager to which the Adviser allocates assets will charge the Company, as an investor in an underlying
Investment Fund, an asset-based fee, and some or all of the Investment Managers will receive performance-based compensation in
the form of an incentive fee. The asset-based fees of the Investment Managers are generally expected to range from 1% to 3%
annually of the net assets under their management and the incentive fee is generally expected to range from 15% to 25% of net
profits annually. These management and incentive fees are accounted for in the valuations of the Investment Funds and are not
included in the management fees reflected in the Statement of Operations.
The Company may invest in Investment Funds that may designate certain investments within those Investment Funds, typically
those that are especially illiquid and/or hard to value, as "special situation" (often called "Side-Pocket") investments with
additional redemption limitations. Such a Side-Pocket is, in effect, similar to a private equity fund that requires its
investors to remain invested for the duration of the fund and distributes returns on the investment only when liquid assets are
generated within the fund, typically through the sale of the fund's illiquid assets in exchange for cash.
As a general matter, the fair value of the Company's investment in an Investment Fund represents the amount that the Company
can reasonably expect to receive if the Company's investment was sold in an orderly transaction at the time of valuation. The
Investment Funds provide for periodic redemptions ranging from monthly to annually. Investment Funds generally require advance
notice of a shareholder's intent to redeem its interest, and may, depending on the Investment Funds' governing agreements, deny
or delay a redemption request. The Company considers whether a liquidity discount on any Investment Fund should be taken due to
redemption restrictions or suspensions by the Investment Fund. However, the effects of any discounts related to redemption
restrictions or lock-up periods were determined by the Adviser to be insignificant at September 30, 2010, and therefore, no
discounts were applied to the fair value of the Investment Funds. The underlying investments of each Investment Fund are
accounted for at fair value as described in each Investment Fund's financial statements. The Investment Funds may invest a
portion of their assets in restricted securities and other investments that are illiquid.
B. NET ASSET VALUE DETERMINATION
The net asset value of the Company is determined as of the close of business at the end of each month in accordance with the
valuation principles set forth below or as may be determined from time to time pursuant to policies established by the Board of
Directors.
Retroactive adjustments to the Company's net asset value might be made after the valuation date which could impact the net
asset value per share at which Shareholders purchase or sell Company Shares. The valuations reported by the Investment Funds,
upon which the Company calculates its month end net asset value, may be subject to adjustment subsequent to the valuation date,
based on information which becomes available after that valuation date. For example, fiscal year-end net
- 9 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (CONTINUED)
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asset values of an Investment Fund may be revised as a result of a year-end audit performed by the independent auditors of that
Investment Fund. Other adjustments to the Company's net asset value may also occur from time to time, such as from the
misapplication by the Company or its agents of the valuation policies described in the Company's valuation procedures.
Retroactive adjustments to the Company's net asset value, which are caused by adjustments to the Investment Funds values or by
a misapplication of the Company's valuation policies, that are able to be made within 90 days of the valuation date(s) to which
the adjustment would apply will be made automatically unless determined to be de minimis. Other potential retroactive
adjustments, regardless of whether their impact increases or decreases the Company's net asset value, will be made only if they
both (i) are caused by a misapplication of the Company's valuation policies and (ii) deemed to be material. All retroactive
adjustments are reported to the Company's Valuation Committee and to affected Shareholders.
The Company follows a policy which permits revisions to the number of Shares purchased or sold by Shareholders due to
retroactive adjustments made under the circumstances described above which occur within 90 days of the valuation date. In
circumstances where a retroactive adjustment is not made under the circumstances described above, Shares purchased or sold by
Shareholders will not be adjusted. As a result, to the extent that the subsequent impact of the event which was not adjusted
adversely affects the Company's net asset value, the outstanding Shares of the Company will be adversely affected by prior
repurchases made at a net asset value per Share higher than the adjusted value. Conversely, any increases in net asset value
per Share resulting from such subsequent impact will be to the benefit of the holders of the outstanding Shares of the Company
and to the detriment of Shareholders who previously had their Shares repurchased at a net asset value per Share lower than the
post-impact value. New Shareholders may be affected in a similar way, because the same principles apply to the purchase of
Shares.
C. INCOME RECOGNITION AND EXPENSES
Interest income is recognized on an accrual basis as earned. Expenses are recognized as incurred. Income, expenses and realized
and unrealized gains and losses are recorded monthly.
The change in an Investment Fund's net asset value is included in net change in unrealized appreciation/depreciation on
investments in Investment Funds on the Statement of Operations. During the six month period ended September 30, 2010, the
Company accounted 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. Previously, the Company utilized the cost recovery method.
This retroactive change in presentation resulted in an increase in cost in the amount of $5,624,268 through a decrease in
unrealized appreciation and a corresponding increase in realized gain at March 31, 2010. The change did not affect the
Company's financial position, results of operations or cash flows.
The Company bears all expenses incurred in the course of its operations, including, but not limited to, the following: all
costs and expenses related to portfolio transactions and positions for the
- 10 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Company's account; professional fees; costs of insurance; registration expenses; and expenses of meetings of the Board of
Directors.
D. INCOME TAXES
The Company became a corporation that is taxed as a regulated investment company ("RIC') as of October 1, 2005. The Company
operated as a partnership from inception through September 30, 2005.
It is the Company's intention to meet the requirements of the Internal Revenue Code applicable to RICs and distribute
substantially all of its taxable net investment income and capital gains, if any, to Shareholders each year. Therefore, no
federal income or excise tax provision is required for the Company's financial statements. While the Company intends to
distribute substantially all of its taxable net investment income and capital gains, in the manner necessary to avoid
imposition of the 4% excise tax as described above, it is possible that some excise tax will be incurred. In such event, the
Company will be liable for the tax only on the amount by which it does not meet the foregoing distribution requirements. During
the six month period ended September 30, 2010, the Company incurred $189,591 of excise tax which is recognized as a component
of miscellaneous expenses on the Statement of Operations. This expense was attributable to the Company not distributing 98% of
its income during the March 31, 2010 tax year end.
The Company has analyzed tax positions taken or expected to be taken in the course of preparing the Company's tax return for
all open tax years and has concluded, as of September 30, 2010, no provision for income tax would be required in the Company's
financial statements. The Company's federal and state income and federal excise 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 Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income
tax expense in the Statement of Operations. During the six month period ended September 30, 2010, the Company did not incur any
interest or penalties.
E. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on deposit and monies invested in money market deposit accounts that are accounted
for at amortized cost, which approximates fair value. Such cash, at times, may exceed federally insured limits. The Company has
not experienced any losses in such accounts and does not believe it is exposed to any significant credit risk on such bank
deposits.
F. USE OF ESTIMATES AND RECLASSIFICATIONS
The preparation of financial statements in conformity with GAAP requires management of the Company to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying notes. Changes in the economic
environment, financial markets, and any other parameters used in determining these estimates could cause actual results to
differ materially.
- 11 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Certain amounts have been reclassified from the prior year's information to conform to the current year's presentation.
G. NEW ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2010-06 which
requires new disclosures and provides amendments to Accounting Standards Codification ("ASC") Subtopic 820-10 clarifying
existing disclosures. The disclosure regarding the Level 3 investment rollforward of purchases and sales activity on a gross
basis is effective for fiscal years beginning after December 15, 2010. The Company is currently evaluating the impact of this
disclosure on its financial statements.
3. FAIR VALUE DISCLOSURES
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the Company discloses the
fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair
value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that
are significant to the valuation (Level 3 measurement). The guidance establishes three levels of fair value as listed below.
Level 1- Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company
has the ability to access at the measurement date;
Level 2- Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly,
including inputs in markets that are not considered to be active;
Level 3- Inputs that are unobservable.
The notion of unobservable inputs is intended to allow for situations in which there is little, if any, market activity for the
asset or liability at the measurement date. Under Level 3, the owner of an asset must determine valuation based on their own
assumptions about what market participants would take into account in determining the fair value of the asset, using the best
information available.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing
in those securities.
The following is a summary of the investment strategies, their liquidity and redemption notice periods and any restrictions on
the liquidity provisions of the investments in Investment Funds held by the Company as of September 30, 2010. 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 which, in accordance with ASU 2009-12, would affect its disclosure. The Company had no unfunded
capital commitments as of September 30, 2010.
- 12 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Directional equity funds take long and short stock positions. The manager may attempt to profit from both long and short stock
positions independently, or profit from the relative outperformance of long positions against short positions. The stock
picking and portfolio construction process is usually based on bottom-up fundamental stock analysis, but may also include
top-down macro-based views, market trends and sentiment factors. Directional equity managers may specialize by region (e.g.,
global, U.S., Europe or Japan) or by sector. No assurance can be given that the managers will be able to correctly locate
profitable trading opportunities, and such opportunities may be adversely affected by unforeseen events. In addition, short
selling creates the risk of loss if the security that has been sold short appreciates in value. The Investment Funds within
this strategy have monthly to quarterly liquidity, and are generally subject to a 30 to 90 day notice period. One Investment
Fund in this strategy, representing approximately 1 percent in this strategy, is an illiquid side pocket investment, and has
suspended redemptions. The remaining approximately 99 percent of the Investment Funds in this strategy can be redeemed with no
restrictions as of the measurement date, and so, are classified as Level 2 investments in Investment Funds.
Directional macro strategies require well developed risk management procedures due to the frequent employment of leverage.
Investment managers may trade futures, options on future contracts and foreign exchange contracts and may trade in diversified
markets or focus on one market sector. Two types of strategies employed by directional macro managers are DISCRETIONARY and
SYSTEMATIC trading. Discretionary trading strategies seek to dynamically allocate capital to relatively short-term trading
opportunities around the world. Directional strategies (seeking to participate in rising and declining when the trend appears
strong and justified by fundamentals) and relative value approaches (establishing long positions in undervalued instruments and
short positions in related instruments believed to be over valued) or in "spread" positions in an attempt to capture changes in
the relationships between instruments. Systematic trading strategies generally rely on computerized trading systems or models
to identify and capitalize on trends in financial and commodity markets. This systematic approach allows investment managers to
seek to take advantage of price patterns in very large number of markets. The trading models may be focused on technical or
fundamental factors or combination of factors. Generally, the Investment Funds within this strategy have monthly liquidity,
subject to a 5 to 90 day notice period. Investment Funds in this strategy, representing approximately 2 percent in this
strategy, are illiquid side pocket investments with suspended redemptions. The remaining approximately 98 percent of the
Investment Funds in this strategy can be redeemed with no restrictions as of the measurement date, and so, are classified as
Level 2 investments in Investment Funds.
Event driven strategies involve investing in opportunities created by significant transactional events such as spin-offs,
mergers and acquisitions, bankruptcies, recapitalizations and share buybacks. Event driven strategies include "merger
arbitrage" and "distressed securities". Generally, the Investment Funds within this strategy have monthly to annual liquidity,
subject to a 30 to 180 day notice period. Investment Funds in this strategy, representing approximately 3 percent in this
strategy, are illiquid side pocket investments with suspended redemptions. Approximately 5 percent of the Investment Funds in
this strategy have gated redemptions, which are expected to be lifted within 12 months. In addition, approximately 11 percent
of the Investment Funds in this strategy are classified as Level 3 investments due to liquidity provisions on a greater than
quarterly basis. The
- 13 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
remaining approximately 81 percent of the Investment Funds in this strategy can be redeemed with no restrictions as of the
measurement date, and so, are classified as Level 2 investments in Investment Funds.
Relative value arbitrage strategies seek to take advantage of specific pricing anomalies, while also seeking to maintain
minimal exposure to systematic market risk. This may be achieved by purchasing one security previously believed to be
undervalued, while selling short another security perceived to be overvalued. Relative value arbitrage strategies include
equity market neutral, statistical arbitrage, convertible arbitrage, and fixed income arbitrage. Some investment managers
classified as multi-strategy relative value arbitrage use a combination of these substrategies. Generally, the Investment Funds
within this strategy have monthly to quarterly liquidity, subject to a 30 to 90 day notice period. Investment Funds in this
strategy, representing approximately 2 percent in this strategy, are illiquid side pocket investments with suspended
redemptions. The remaining approximately 98 percent of the Investment Funds in this strategy can be redeemed with no
restrictions as of the measurement date, and so, are classified as Level 2 investments in Investment Funds.
The Company follows the authoritative guidance under GAAP on determining fair value when the volume and level of activity for
the asset or liability have significantly decreased and identifying transactions that are not orderly. Accordingly, if the
Company determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from
normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly
transactions, increased analysis and management judgment will be required to estimate fair value. Valuation techniques such as
an income approach might be appropriate to supplement or replace a market approach in those circumstances.
The guidance also provides a list of factors to determine whether there has been a significant decrease in relation to normal
market activity. Regardless, however, of the valuation technique and inputs used, the objective for the fair value measurement
in those circumstances is unchanged from what it would be if markets were operating at normal activity levels and/or
transactions were orderly; that is, to determine the current exit price.
A financial instrument's level within the fair value hierarchy is based upon the lowest level of any input that is significant
to the fair value measurement. However, the determination of what constitutes "observable" requires significant judgment by the
Adviser. The Adviser considers observable data to be market data which is readily available, regularly distributed or updated,
reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant
market.
- 14 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
The following is a summary of the inputs used as of September 30, 2010, in valuing the Company's assets and liabilities carried
at fair value:
- -----------------------------------------------------------------------------------------------------------------------
TOTAL FAIR VALUE LEVEL 2 LEVEL 3
AT SIGNIFICANT SIGNIFICANT
SEPTEMBER 30, LEVEL 1 OBSERVABLE UNOBSERVABLE
DESCRIPTION 2010 QUOTED PRICES INPUTS INPUTS
- -----------------------------------------------------------------------------------------------------------------------
Investments in Investment Funds
Directional Equity $ 100,588,840 $ -- $ 100,035,665 $ 553,175
Directional Macro 20,056,756 -- 19,593,883 462,873
Event Driven 227,630,947 -- 175,844,720 51,786,227
Relative Value 423,712,824 -- 415,112,514 8,600,310
- -----------------------------------------------------------------------------------------------------------------------
Total Investments in Investment Funds $ 771,989,367 $ -- $ 710,586,782 $ 61,402,585
- -----------------------------------------------------------------------------------------------------------------------
The following is a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining fair
value:
NET CHANGE IN
UNREALIZED TRANSFERS IN BALANCE AS OF
BALANCE AS OF NET REALIZED GAIN / APPRECIATION / NET PURCHASES / AND/OR (OUT) OF SEPTEMBER 30,
INVESTMENT STRATEGY MARCH 31, 2010 (LOSS) DEPRECIATION (SALES) LEVEL 3* 2010
- -------------------------------------------------------------------------------------------------------------------------------
Directional Equity $ 716,554 $ (994) $ (154,226) $ (8,159) $ -- $ 553,175
Directional Macro 651,240 159,055 (188,376) (159,046) -- 462,873
Event Driven 55,976,334 (3,395,161) 5,196,514 251,512 (6,242,972)** 51,786,227
Relative Value 51,611,847 (680) (1,586,394) (3,043,422) (38,381,041)*** 8,600,310
- -------------------------------------------------------------------------------------------------------------------------------
Total $ 108,955,975 $ (3,237,780) $ 3,267,518 $ (2,959,115) $ (44,624,013) $ 61,402,585
- -------------------------------------------------------------------------------------------------------------------------------
* The Company 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 above.
** Amount includes the transfer of one Investment Fund into Level 3 of $6,328,380 and two Investment Funds out of Level 3 of
$12,571,352. In addition, the transfer out of Level 3 investments in the amount of $6,444,625 is due to a gate that was lifted
on the Investment Fund as of September 30, 2010. The transfer out of Level 3 of $6,126,727 and the transfer into Level 3 of
$6,328,380 are due to the liquidity of the underlying Investment Funds in relation to the change in the measurement date from
March 31, 2010 to September 30, 2010.
*** The transfer out of Level 3 investments is due to the liquidity of the underlying Investment Fund in relation to the change in
the measurement date from March 31, 2010 to September 30, 2010.
All net unrealized gains/(losses) in the table above are reflected in the accompanying Statement of Operations.
4. MANAGEMENT FEE, ADMINISTRATIVE FEE, RELATED PARTY TRANSACTIONS AND OTHER
The Adviser provides certain management and administrative services to the Company. The Adviser acts primarily to evaluate and
select Investment Managers, to allocate assets, to establish and apply risk management procedures, and to monitor overall
investment performance. In addition, the Adviser also provides office space and other support services. In consideration for
such services, the Company will pay the Adviser a monthly management fee of 0.125% (1.5% annually) based on end of month
Shareholders' capital.
- 15 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Placement agents may be retained by the Company to assist in the placement of the Company's Shares. A placement agent will
generally be entitled to receive a fee from each investor in the Company whose Shares the agent places. The specific amount of
the placement fee paid with respect to a Shareholder is generally dependent on the size of the investment in the Company.
The Company has entered into agreements with third parties to act as additional placement agents for the Company's Shares.
Placement fees may range from 0 to 3%. In addition to the placement fee paid by Shareholders, the Adviser and/or its affiliates
will pay placement agents an annual fee. The annual fee is paid from the Adviser's own resources (or those of its affiliates).
On July 1, 2010, The PNC Financial Services Group, Inc. sold the outstanding stock of PNC Global Investment Servicing Inc. to
The Bank of New York Mellon Corporation. At the closing of the sale, PNC Global Investment Servicing (U.S.) Inc. changed its
name to BNY Mellon Investment Servicing (US) Inc. The Adviser and BNY Mellon Investment Servicing (US) Inc. have separate
agreements with the Company and act as co-administrators to the Company. The Adviser, as co-administrator, receives no fees for
providing administrative services to the Company. BNY Mellon Investment Servicing (US) Inc. provides certain accounting,
recordkeeping, tax and investor related services and charges fees for their services based on a rate applied to the average
Shareholders' capital and are charged directly to the Company.
Each Director who is not an "interested person" of the Company, as defined by the 1940 Act, receives an annual retainer of
$20,000 plus a Board of Directors meeting fee of $1,000 and a telephone meeting fee of $500. The Chairman of the Audit
Committee receives an additional fee of $3,000 per year. Any Director who is an "interested person" does not receive any annual
or other fee from the Company.
All Directors are reimbursed for all reasonable out of pocket expenses. Total amounts expensed related to Directors by the
Company for the six month period ended September 30, 2010 were $39,000.
PFPC Trust Company, which will be renamed BNY Mellon Investment Servicing Trust Company effective July 1, 2011, serves as
custodian of the Company's assets and provides custodial services for the Company. Fees payable to the custodian and
reimbursement for certain expenses are paid by the Company. Total amounts expensed related to custodian fees by the Company for
the six month period ended September 30, 2010 were $13,178.
- 16 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
5. SECURITIES TRANSACTIONS
The following table lists the aggregate purchases and proceeds from sales of Investment Funds for the six month period ended
September 30, 2010, net unrealized appreciation, gross unrealized appreciation, and gross unrealized depreciation from
inception to September 30, 2010.
Cost of purchases * $212,154,941
============
Proceeds from sales * $150,069,187
============
Gross unrealized appreciation $182,473,138
Gross unrealized depreciation (36,218,144)
------------
Net unrealized appreciation $146,254,994
============
* Cost of purchases and proceeds from sales include non-cash transfers of $59,154,941 for the six month period ended September
30, 2010.
6. CONTRIBUTIONS, REDEMPTIONS, AND ALLOCATION OF INCOME
Generally, initial and additional subscriptions for Shares may be accepted as of the first day of each month. The Adviser has
been authorized by the Board of Directors of the Company to accept or reject any initial and additional subscriptions for
Shares in the Company. The Board of Directors from time to time and in its complete and exclusive discretion, may determine to
cause the Company to repurchase Shares from Shareholders pursuant to written tenders by Shareholders on such terms and
conditions as it may determine. The Adviser expects that it typically will recommend to the Board of Directors that the Company
offer to repurchase Shares from Shareholders quarterly, on each March 31, June 30, September 30 and December 31 (or, if any
such date is not a business day, on the immediately preceding business day).
Transactions in Shares were as follows for the six month period ended September 30, 2010 and the year ended March 31, 2010:
September 30, 2010 March 31, 2010
------------------ --------------
Shares outstanding, beginning of period 624,958.550 517,570.369
Shares purchased 121,807.616 146,054.199
Shares issued for reinvestment of distributions 0.000 80,411.975
Shares redeemed (34,058.416) (114,077.993)
------------------ --------------
Shares outstanding, end of period 712,707.750 624,958.550
================== ==============
7. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Investment Funds in which the Company invests trade various financial instruments and
enter into various investment activities with off-balance sheet risk. These
- 17 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 (UNAUDITED) (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
include, but are not limited to, short selling activities, writing option contracts and entering into equity swaps. The
Company's risk of loss in these Investment Funds is limited to the value of it's investment in the respective Investment Funds.
8. REDEMPTION PENALTY
The Company may be charged redemption penalties for redeeming its interests of certain Investment Funds prior to the expiration
of applicable lock-up periods. The payment of such penalties releases the Company from any further liability for its
investments in the applicable Investment Funds and is recorded as an operating expense within miscellaneous expenses on the
Statement of Operations.
9. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events on the Company through the date the financial statements were
issued, and has determined that there were no additional subsequent events requiring recognition or disclosure in the financial
statements.
- 18 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
- ------------------------------------------------------------------------------------------------------------------------------------
FUND MANAGEMENT
(UNAUDITED)
The Company's officers are appointed by the Directors and oversee the management of the day-today operations of the Company
under the supervision of the Board of Directors. One of the Directors and all of the officers of the Company are directors,
officers or employees of the Adviser or its subsidiaries. The other Directors are not affiliated with the Adviser or its
subsidiaries and are not "interested persons" as defined under Section 2(a)(19) of the 1940 Act (the "Independent Directors").
The Directors and officers of the Company also may be directors and officers of other investment companies or managed or
advised by SkyBridge or its subsidiaries. A list of the Directors and officers of the Company and a brief statement of their
present positions, principal occupations and directorships during the past five years are set out below. To the fullest extent
allowed by applicable law, including the 1940 Act, the LLC Agreement indemnifies the Directors and officers for all costs,
liabilities and expenses that they may experience as a result of their service as such.
Certain of the Directors and officers of the Company are also directors and/or officers of other investment companies that are
advised by the Adviser. (The Company and such other investment companies, if also registered under the 1940 Act, are referred
to collectively in the Prospectus as the "Fund Complex."). The address for each Director and officer in his or her capacity as
such is 527 Madison Avenue, 16th Floor, New York, New York 10022.
On July 30, 2010, a special meeting of Shareholders was held to seek approval of the current investment advisory agreement
between the Company and the Adviser. The required vote to approve the agreement was met, and the inspector of election tallied
and certified the vote as follows:
--------------------------------------------------------------
Shares Voted
------------
For 48.525%
Votes in Favor (as % of votes present in) 94.272%
Votes Against 0.588%
Abstain 2.360%
Broker Non-Votes 0.000%
--------------------------------------------------------------
- 19 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
(INFORMATION UNAUDITED)
NUMBER OF
POSITION(S) TERM OF PRINCIPAL PORTFOLIOS IN
HELD WITH OFFICE AND OCCUPATION(S) FUND COMPLEX
NAME THE LENGTH OF DURING OVERSEEN BY OTHER DIRECTORSHIPS
AND AGE COMPANY TIME SERVED PAST 5 YEARS DIRECTOR HELD BY DIRECTOR
- ------------------- --------------- ------------------ ---------------------- ------------- ------------------------------
Charles Hurty Director November 2002 Business Consultant One Promark Global Advisors; CS
(born 1943) to present since October 2001; Alternative Capital Registered
prior thereto, partner Funds (6 portfolios); iShares
with accounting firm Trust and iShares, Inc. (201
of KPMG LLP. portfolios)
Steven Krull Director November 2002 Professor of Finance One Cadogan Opportunistic
(born 1957) to present at Hofstra University; Alternatives Fund, LLC
Business Consultant.
Josh Weinreich Director December 2006 to Retired since 2004. One Cornell University - Endowment
(born 1960) present (served as 1985 to 2004 held Hedge Fund Subcommittee;
an Advisory various executive Community Foodbank of NJ -
Director from positions at Bankers Treasurer, Chair Capital
January 2006 to Trust/Deutsche Bank. Campaign; House Party Inc. -
November 2006) Chairman; Newark Academy -
Board of Trustees; Overlook
Hospital Foundation - Chair
Investment Committee
As an Advisory Director, Mr. Weinreich participated in Board meetings in the same manner as a full Director, except that he was
ineligible to cast a vote on any matter, as his appointment to the Board as an Independent Director had not yet been ratified by
Shareholders.
In addition to his role as Independent Director of the Company, Steven Krull serves on a special independent committee representing
clients of Citigroup Alternative Investments, LLC, the Fund's predecessor investment adviser ("CAI"). The committee engagements and
related compensation are described below. These matters have been reviewed by the Company's Board of Directors, which determined
that the engagements are appropriate for Independent Directors of the Company.
- -------------------------------------
- 20 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR
(INFORMATION UNAUDITED)
NUMBER OF
PORTFOLIOS IN
POSITION(S) FUND OTHER
HELD WITH TERM OF OFFICE PRINCIPAL OCCUPATION(S) COMPLEX DIRECTORSHIPS
NAME THE AND LENGTH OF DURING OVERSEEN BY HELD BY
AND AGE COMPANY TIME SERVED PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------- ---------------- ----------------- -------------------------- ------------- -------------
Raymond Nolte President and September 2005 Managing Partner, One None
(born 1961) Director (Chair) to present SkyBridge (2010- present);
CEO, Citigroup Alternative
Investments Fund of Hedge
Funds Group (2005-2010);
Portfolio Manager to the
Company since 2005; Global
Head and Chief Investment
Officer, Deutsche Bank ARS
Fund of Funds business
(1996-2005).
- --------------------------------
* Term of office of each Director is indefinite.
- 21 -
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
(FORMERLY CITIGROUP ALTERNATIVE INVESTMENTS MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC)
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
(INFORMATION UNAUDITED)
POSITION(S) TERM OF OFFICE*
NAME HELD WITH AND LENGTH OF TIME PRINCIPAL OCCUPATION(S)
AND AGE THE COMPANY SERVED DURING PAST 5 YEARS
- ------------------- ---------------- ------------------------- --------------------------------------------------
Raymond Nolte President and September 2005 to present See table for "Interested Director" above.
(born 1961) Director
Christopher Hutt Vice June 2009 to present Director, SkyBridge (2010-present); Director,
(born 1970) President Citigroup Alternative Investments LLC
(January 2008 - 2010); Vice President,
Citigroup Alternative Investments LLC (2004
- 2008)
Eric Alper Chief June 2010 to present General Counsel, Chief Compliance Officer,
(born 1964) Compliance SkyBridge (2009-present); Chief Financial
Officer Officer/Chief Operating Officer, U Capital
Group, LP (2007- 2009); Chief Financial
Officer, Weston Capital Management, LLC
(2006-2007); Vice President, Fund
Accounting, Ivy Asset Management Corp.
(2004-2006)
Robert J. Treasurer; July 2010 to present Partner and Chief Financial Officer,
Phillips Principal SkyBridge (2007-present); Executive Vice
(born 1962) Financial President and Chief Financial Officer,
Officer Coventry Capital LLC and Lucerne
Management, LLC (2001-2007)
Brahm Pillai Secretary June 2009 to present Vice President, SkyBridge (2010- present);
(born 1979) Vice President, Citigroup Alternative
Investments LLC (2008-2010); Assistant Vice
President, Citigroup Alternative Investments
LLC (2007-2008); Associate, Citigroup
Alternative Investments LLC (2005-2006)
* Term of office of each officer is indefinite.
- 22 -
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.
There has been no change, as of the date of this filing, in any of the portfolio
managers identified in response to paragraph (a)(1) of this Item in the
registrant's most recently filed annual report on Form N-CSR.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Skybridge Multi-Adviser Hedge Fund Portfolios LLC
By (Signature and Title)* /s/ Raymond Nolte
---------------------------------------
Raymond Nolte, President
(principal executive officer)
Date November 29, 2010
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/ Raymond Nolte
---------------------------------------
Raymond Nolte, President
(principal executive officer)
Date November 29, 2010
By (Signature and Title)* /s/ Robert Phillips
---------------------------------------
Robert Phillips, Treasurer and
Principal Financial Officer
(principal financial officer)
Date November 29, 2010
* Print the name and title of each signing officer under his or her
signature.