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
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SkyBridge Multi-Adviser Hedge Fund Portfolios LLC
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(Exact name of registrant as specified in charter)
527 Madison Avenue-16th Floor
New York, NY 10022
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(Address of principal executive offices) (Zip code)
Marie Noble
SkyBridge Capital II, LLC
527 Madison Avenue-16th Floor
New York, NY 10022
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(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 485-3100
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Date of fiscal year end: March 31
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Date of reporting period: March 31, 2011
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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.
(KPMG LOGO)
SKYBRIDGE
MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
ANNUAL REPORT
MARCH 31, 2011
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm 1
Statement of Assets and Liabilities 2
Schedule of Investments 3
Statement of Operations 5
Statements of Changes in Shareholders' Capital 6
Statement of Cash Flows 7
Financial Highlights 8
Notes to Financial Statements 9
Federal Tax Information (unaudited) 22
Fund Management (unaudited) 23
Independent Directors (unaudited) 24
Interested Director (unaudited) 25
Officers (unaudited) 26
(KPMG LOGO) KPMG LLP
345 Park Avenue
New York, NY 10154
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
SkyBridge Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC:
We have audited the accompanying statement of assets and liabilities of
SkyBridge Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC
(formerly Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios
LLC) (the Company), including the schedule of investments, as of March 31, 2011
and the related statements of operations and cash flows for the year then ended,
the statements of changes in shareholders' capital for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period then ended. These financial statements and financial
highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of March 31, 2011, by correspondence with underlying fund
operators, the custodian and other appropriate auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
SkyBridge Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC as of
March 31, 2011, and the results of its operations and its cash flows for the
year then ended, the changes in its shareholders' capital for each of the years
in the two-year period then ended, and the financial highlights for each of the
years in the five-year period then ended, in conformity with U.S. generally
accepted accounting principles.
(KPMG LLP)
New York, New York
May 26, 2011
KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of
KPMG International Cooperative ("KPMG International"), a Swiss entity.
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2011
ASSETS
Investments in Investment Funds, at fair value (cost $947,254,808) $1,198,849,350
Cash and cash equivalents 19,941,246
Investments in Portfolio Funds paid in advance 150,500,000
Receivable for redemptions from Investment Funds 22,548,997
Other assets 43,294
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TOTAL ASSETS 1,391,882,887
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LIABILITIES
Contributions received in advance 138,347,625
Redemptions payable 12,956,805
Management fee payable 1,565,602
Professional fees payable 596,822
Directors' fees payable 30,000
Accounts payable and other accrued expenses 426,571
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TOTAL LIABILITIES 153,923,425
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SHAREHOLDERS' CAPITAL (1,093,651.009 SHARES OUTSTANDING) $1,237,959,462
==============
NET ASSET VALUE PER SHARE $ 1,131.95
==============
COMPOSITION OF SHAREHOLDERS' CAPITAL
Paid-in capital $1,257,844,594
Accumulated net investment loss (5,708,685)
Accumulated net realized loss on investment transactions (265,770,989)
Accumulated net unrealized appreciation on investments 251,594,542
--------------
SHAREHOLDERS' CAPITAL $1,237,959,462
==============
See accompanying notes to financial statements.
-2-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
SCHEDULE OF INVESTMENTS
MARCH 31, 2011
% OF
SHAREHOLDERS'
COST FAIR VALUE CAPITAL
------------ -------------- -------------
INVESTMENTS IN INVESTMENT FUNDS
DIRECTIONAL EQUITY
Artha Emerging Markets Fund LP - b $ 19,281,470 $ 20,240,283 1.64%
Artis Partners 2X Ltd. - a 16,000,000 18,348,781 1.48
East Side Capital Offshore, Ltd. - b 25,700,000 26,898,330 2.17
Frontpoint Onshore Healthcare Fund 2X LP - e 26,201 32,533 0.00*
Horseman European Select Fund - a 24,220,923 26,032,359 2.10
JAT Capital Domestic Fund L.P. - Series A - b 12,000,000 14,343,040 1.16
Keywise Greater China Onshore Fund - b 9,400,000 8,847,760 0.72
Passport Global Strategies III LTD - e 1,424,877 1,221,511 0.10
Passport Special Opp Fund, L.P. - Class E - d 35,823,312 37,333,805 3.02
Prism Partners III Leveraged L.P. - b 5,000,000 5,497,906 0.44
Redmile Capital Fund LP, Tranche A - b 5,500,000 5,685,474 0.46
Sprott Offshore Fund II LTD Class B - a 10,036,890 13,025,135 1.05
Tao Holdings - e 256,124 256,090 0.02
Zaxis Equity Neutral, L.P. - a 9,000,000 9,530,497 0.77
------------ -------------- ------
Total Directional Equity 173,669,797 187,293,504 15.13
------------ -------------- ------
DIRECTIONAL MACRO
Brevan Howard Fund Limited - a 8,200,108 9,060,545 0.73
Drawbridge Global Macro Fund Ltd - SP Reserve - e 45,301 45,495 0.01
Drawbridge Global Macro Fund Ltd Side Pocket 10 - e 6,510 2,631 0.00*
Drawbridge Global Macro Fund Ltd Side Pocket 11 - e 6,437 12,178 0.00*
Drawbridge Global Macro Fund Ltd Side Pocket 12 - e 379,456 238,903 0.02
Drawbridge Global Macro Fund Ltd Side Pocket 4 - e 91,011 70,653 0.01
Drawbridge Global Macro Fund Ltd Side Pocket 5 - e 17,217 44,374 0.00*
Drawbridge Global Macro Fund Ltd Side Pocket 6 - e 28,069 -- 0.00*
Drawbridge Global Macro Fund Ltd Side Pocket 7 - e 6,116 37,188 0.00*
Drawbridge Global Macro Ltd C1 H10D SP May 9 2008 - e 36,424 17,070 0.00*
Graham Global Investment Fund Ltd. II - a 6,000,000 5,667,876 0.46
------------ -------------- ------
Total Directional Macro 14,816,649 15,196,913 1.23
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EVENT DRIVEN
Alden Global Distressed Opp Fund, LP - a 37,886,389 39,919,623 3.23
Alden Global Value Recovery, L.P. - a 8,000,000 9,251,689 0.75
Amber Global Opportunities Fund L.P. - Class B(R) - a 28,500,000 33,310,612 2.69
Ashmore Asian Recovery Fund Limited - b 4,847,352 4,587,016 0.37
BHR Master Fund, Ltd. - b 15,000,000 15,875,766 1.28
Carrington Investment Partners ( US ) LP - b 10,946,814 2,131,975 0.17
CPIM Structured Credit Fund 1000 INC - b 2,102,975 308,854 0.03
CPIM Structured Credit Fund 1500 INC - c 1,521,246 165,062 0.01
Harbinger Capital Partners Class L Holdings Series 2 - e 108,401 334,702 0.03
Harbinger Capital Partners Class PE Holdings Series 1 - e 5,783,199 3,794,965 0.31
Harbinger Capital Partners Offshore Fund I, LTD - b 3,153,854 2,535,713 0.21
JLP Credit Opportunity Fund L.P. - b 6,000,000 6,058,481 0.49
Marathon Distressed Subprime Fund (Cayman) LTD Class B - e 1,218,037 1,768,049 0.14
Marathon Securitized Credit Fund, Ltd. - b 13,503,445 14,001,344 1.13
Marathon Special Opp Fund LTD SP 2 - e 408,538 502,669 0.04
Marathon Special Opp LTD SP 4 - e 588,093 258,351 0.02
Marathon Special Opportunity Fund LTD Ser. 31 Dec 2008 - e 102,367 147,366 0.01
Marathon Special Opportunity Fund LTD SP 6 - e 276,235 321,408 0.03
Marathon Structured Finance Ltd. Class D Ser 1 - e 4,313,004 4,593,592 0.37
Pardus Special Opportunities Fund I, LTD - b 15,000,000 7,704,201 0.62
Paulson Partners Enhanced L.P. - c 32,000,000 31,899,687 2.58
Paulson Recovery Fund, LP, Class A (Gold Exposure) - b 91,230,129 95,480,093 7.71
See accompanying notes to financial statements.
-3-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 2011
% OF
SHAREHOLDERS'
COST FAIR VALUE CAPITAL
------------ -------------- -------------
INVESTMENTS IN INVESTMENT FUNDS (CONTINUED)
EVENT DRIVEN (CONTINUED)
Stark Investments Structured Finance Onshore Fund - d $ 6,519,237 $ 6,689,945 0.54%
Taconic Offshore Fund 1.5 LTD - b 3,165,318 3,520,638 0.28
Third Point Ultra, Ltd. - b 101,711,018 123,432,207 9.97
York Credit Opportunities Fund, LP - b 16,500,000 20,847,118 1.68
York Credit Opportunities Unit Trust - b 5,000,000 7,053,708 0.57
------------ -------------- ------
Total Event Driven 415,385,651 436,494,834 35.26
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RELATIVE VALUE
Brigade Leveraged Capital Structures LP - b 6,005,807 7,698,809 0.62
Lazard Rathmore Fund, L.P. - b 16,200,000 17,492,079 1.41
Metacapital Mortgage Opp Fund Ltd. Class B - b 63,000,000 70,276,273 5.68
Metacapital Mortgage Opportunities Fund, L.P. - b 15,790,227 20,626,315 1.67
Midway Market Neutral Fund, LLC - a 23,975,000 25,569,202 2.06
Midway Market Neutral International Fund Ltd. - a 9,525,000 10,028,031 0.81
Nisswa Fixed Income Fund LP - b 56,872,139 90,522,189 7.31
Perella Weinberg Partners Xerion Fund LP - b 34,000,000 43,875,262 3.54
Providence MBS Fund, LP - b 30,000,000 65,870,110 5.32
Providence MBS Offshore Fund, LTD - b 15,301,594 34,932,229 2.82
SOLA 1 - a 27,113,212 30,588,710 2.47
Sola I Class L1 Master - e 5,268,223 7,033,692 0.57
Stratus Fund LTD Double Lev Class C Side Pocket - e 327,477 325,950 0.03
Structured Service Holdings LP - a 23,440,770 84,402,845 6.82
Structured Service Holdings LTD - a 16,563,262 50,622,403 4.09
------------ -------------- ------
Total Relative Value 343,382,711 559,864,099 45.22
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TOTAL INVESTMENTS IN INVESTMENT FUNDS $947,254,808 $1,198,849,350 96.84
OTHER ASSETS, LESS LIABILITIES 39,110,112 3.16
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SHAREHOLDERS' CAPITAL $1,237,959,462 100.00%
============== ======
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. The Company held
$21,059,370 (1.76% of total Investments in Investment Funds) of illiquid
investments at March 31, 2011.
See accompanying notes to financial statements.
-4-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 2011
INVESTMENT INCOME
Interest income $ 16,299
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TOTAL INVESTMENT INCOME 16,299
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EXPENSES
Management fees 13,194,392
Accounting fees 1,405,660
Professional fees 769,168
Risk monitoring fees 636,090
Filing fees 390,401
Directors' fees and expenses 78,000
Marketing fees 49,215
Custodian fees 30,869
Miscellaneous expenses (See Note 2d) 465,921
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TOTAL EXPENSES 17,019,716
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NET INVESTMENT LOSS (17,003,417)
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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 17,025,386
Net change in unrealized appreciation/depreciation on investments in Investment Funds 150,824,887
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NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS IN INVESTMENT FUNDS 167,850,273
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NET INCREASE IN SHAREHOLDERS' CAPITAL FROM OPERATIONS $150,846,856
============
See accompanying notes to financial statements.
-5-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
STATEMENTS OF CHANGES IN SHAREHOLDERS' CAPITAL
YEAR ENDED YEAR ENDED
MARCH 31, 2011 MARCH 31, 2010
-------------- --------------
OPERATIONS
Net investment loss $ (17,003,417) $ (11,808,179)
Net realized gain/(loss) on sales of investments in Investment Funds 17,025,386 33,123,620
Net change in unrealized appreciation/depreciation on investments
in Investment Funds 150,824,887 98,603,651
-------------- -------------
NET INCREASE IN SHAREHOLDERS' CAPITAL FROM OPERATIONS 150,846,856 119,919,092
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income (92,062,159) (85,488,824)
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DECREASE IN SHAREHOLDERS' CAPITAL FROM DISTRIBUTIONS TO SHAREHOLDERS (92,062,159) (85,488,824)
-------------- -------------
SHAREHOLDERS' CAPITAL TRANSACTIONS
Capital contributions 486,860,811 155,524,519
Reinvestment of distributions 89,128,586 81,914,430
Capital redemptions (62,605,958) (121,606,714)
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INCREASE IN SHAREHOLDERS' CAPITAL FROM CAPITAL TRANSACTIONS 513,383,439 115,832,235
-------------- -------------
SHAREHOLDERS' CAPITAL AT BEGINNING OF YEAR 665,791,326 515,528,823
-------------- -------------
SHAREHOLDERS' CAPITAL AT END OF YEAR (1,093,651.009 AND 624,958.550 SHARES
OUTSTANDING AT MARCH 31, 2011 AND MARCH 31, 2010, RESPECTIVELY) $1,237,959,462 $ 665,791,326
-------------- -------------
ACCUMULATED NET INVESTMENT INCOME/(LOSS) $ (5,708,685) $ 9,332,470
============== =============
See accompanying notes to financial statements.
-6-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
STATEMENT OF CASH FLOWS
YEAR ENDED MARCH 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in Shareholders' capital from operations $ 150,846,856
Adjustments to reconcile net increase in Shareholders' capital from
operations to net cash used in operating activities:
Purchases of investments in Investment Funds (681,500,000)
Proceeds from disposition of investments in Investment Funds 183,975,650
Net realized (gain)/loss on sales of investments in Investment Funds (17,025,386)
Net change in unrealized appreciation/depreciation on investments in
Investment Funds (150,824,887)
Changes in operating assets and liabilities:
Decrease in other assets 99,878
Increase in management fee payable 690,075
Decrease in professional fees payable (106,470)
Decrease in directors' fees payable (9,000)
Increase in accounts payable and other accrued expenses 149,326
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NET CASH USED IN OPERATING ACTIVITIES (513,703,958)
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CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions 597,752,663
Distributions paid (2,933,573)
Capital redemptions (73,234,023)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 521,585,067
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NET INCREASE IN CASH AND CASH EQUIVALENTS 7,881,109
Cash and cash equivalents at beginning of year 12,060,137
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CASH AND CASH EQUIVALENTS AT END OF YEAR $ 19,941,246
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SUPPLEMENTAL NON-CASH INFORMATION:
Increase in contributions received in advance $ 110,891,852
=============
Decrease in withdrawals payable $ (10,628,065)
=============
See accompanying notes to financial statements.
-7-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
FINANCIAL HIGHLIGHTS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2011 MARCH 31, 2010 MARCH 31, 2009 MARCH 31, 2008 MARCH 31, 2007
-------------- -------------- --------------- -------------- --------------
Net Asset Value per Share, beginning of
year: $ 1,065.34 $ 1,005.77 $ 1,216.46 $ 1,207.54 $ 1,241.60
Income (loss) from investment
operations:*
Net investment loss (21.47) (22.13) (29.47) (34.29) (28.26)
Net realized and unrealized
gain/(loss) on investments 206.41 247.91 (153.56) 133.84 108.05
-------------- ------------ ------------ ------------ ------------
TOTAL FROM INVESTMENT OPERATIONS 184.94 225.78 (183.03) 99.55 79.79
-------------- ------------ ------------ ------------ ------------
Distributions from net investment
income (118.33) (166.21) -- -- (47.12)
Distributions from net realized gains -- -- (27.66) (90.63) (66.73)
-------------- ------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS (118.33) (166.21) (27.66) -- --
-------------- ------------ ------------ ------------ ------------
Net Asset Value per Share, end of year: $ 1,131.95 $ 1,065.34 $ 1,005.77 $ 1,216.46 $ 1,207.54
============== ============ ============ ============ ============
TOTAL RETURN 17.92% 23.21% (15.05%) 8.24% 6.43%
RATIOS/SUPPLEMENTAL DATA:
Shareholders' capital, end of year $1,237,959,462 $665,791,326 $515,528,823 $571,709,686 $327,210,824
============== ============ ============ ============ ============
Portfolio turnover 38.53% 38.58% 41.45% 30.05% 69.45%
Ratio of expenses to average Shareholders'
capital**, *** 1.90% 2.04% 2.63% 2.90% 2.51%
Ratio of net investment loss to average
Shareholders' capital**, *** (1.90%) (2.04%) (2.62%) (2.87%) (2.37%)
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 expenses and net investment loss to average Shareholders'
capital do 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 Shareholder.
*** The subscription and redemption fees were immaterial and therefore 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 year
ended March 31, 2011. 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 year ended 2007.
See accompanying notes to financial statements.
-8-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2011
1. ORGANIZATION
SkyBridge Multi-Adviser Hedge Fund Portfolios LLC (formerly known as
Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC)
(the "Company") 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.
-9-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2011 (CONTINUED)
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 4% 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 March 31, 2011, 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
-10-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2011 (CONTINUED)
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 year ended March 31, 2011,
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. For tax purposes,
the Company continues to use the cost recovery method with respect to sales
of Investment Funds that are classified as partnerships for U.S. federal
tax purposes, and the first-in-first-out method with respect to sales of
Investment Funds that are classified as corporations for U.S. federal tax
purposes.
-11-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2011 (CONTINUED)
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 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 year ended March 31, 2011, 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
for not distributing at least 98% of its income during the calendar year
ended December 31, 2009.
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 March 31, 2011, 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 year ended March 31, 2011, 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
-12-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2011 (CONTINUED)
any other parameters used in determining these estimates could cause actual
results to differ materially.
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
March 31, 2011. Investment Funds with no current redemption restrictions
may be subject to future gates, lock-up provisions or other restrictions,
in accordance with their
-13-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2011 (CONTINUED)
offering documents which would affect its disclosure. The Company had no
unfunded capital commitments as of March 31, 2011.
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 annual liquidity, and are
generally subject to a 30 to 90 day notice period. Three Investment Funds
in this strategy, representing approximately 1 percent in this strategy,
are illiquid side pocket investments, and have suspended redemptions. In
addition, another approximately 20 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 remaining approximately 79 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 markets 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 3 percent in
this strategy, are illiquid side pocket investments with suspended
redemptions and are classified as Level 3 investments. The remaining
approximately 97 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
-14-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2011 (CONTINUED)
notice period. Investment Funds in this strategy, representing
approximately 2 percent in this strategy, are illiquid side pocket
investments with suspended redemptions. Approximately 2 percent of the
Investment Funds in this strategy have gated redemptions, which are
expected to be lifted within 12 to 36 months. In addition, approximately 15
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 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 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.
-15-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2011 (CONTINUED)
The following is a summary of the inputs used as of March 31, 2011, in
valuing the Company's assets carried at fair value:
TOTAL FAIR LEVEL 2 LEVEL 3
VALUE SIGNIFICANT SIGNIFICANT
AT LEVEL 1 OBSERVABLE UNOBSERVABLE
DESCRIPTION MARCH 31, 2011 QUOTED PRICES INPUTS INPUTS
----------- -------------- ------------- -------------- ------------
Investments in Investment Funds
Directional Equity $ 187,293,504 $-- $ 148,449,565 $ 38,843,939
Directional Macro 15,196,913 -- 14,728,421 468,492
Event Driven 436,494,834 -- 349,679,679 86,815,155
Relative Value 559,864,099 -- 552,504,457 7,359,642
-------------- --- -------------- ------------
Total Investments in Investment Funds $1,198,849,350 $-- $1,065,362,122 $133,487,228
-------------- --- -------------- ------------
The following is a reconciliation of assets for which significant
unobservable inputs (Level 3) were used in determining fair value:
NET CHANGE IN
NET REALIZED UNREALIZED TRANSFERS IN
BALANCE AS OF GAIN / APPRECIATION / NET PURCHASES / AND/OR (OUT) OF BALANCE AS OF
INVESTMENT STRATEGY MARCH 31, 2010 (LOSS) DEPRECIATION (SALES) LEVEL 3 * MARCH 31, 2011
------------------- -------------- ------------ -------------- --------------- --------------- --------------
Directional Equity $ 716,554 $ (14,239) $ 1,378,984 $36,730,107 $ 32,533** $ 38,843,939
Directional Macro 651,240 32,847 (40,872) (174,723) -- 468,492
Event Driven 55,976,334 (4,862,497) 10,690,362 34,467,746 (9,456,790)*** 86,815,155
Relative Value 51,611,847 (434) 3,695,673 (4,072,182) (43,875,262)**** 7,359,642
------------ ----------- ----------- ----------- ------------ ------------
Total $108,955,975 $(4,844,323) $15,724,147 $66,950,948 $(53,299,519) $133,487,228
------------ ----------- ----------- ----------- ------------ ------------
* 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.
** The transfer into Level 3 investments is due to the change in liquidity
provisions of one Investment Fund.
*** Amount includes the transfer of one Investment Fund into Level 3 of
$1,768,049 and two Investment Funds out of Level 3 of $11,224,839. In
addition, the transfer out of Level 3 investments in the amount of
$3,520,638 is due to a gate that was lifted on the Investment Fund as of
March 31, 2011. The transfer out of Level 3 of $7,704,201 and the transfer
into Level 3 of $1,768,049 are due to the liquidity of the underlying
Investment Funds in relation to the change in the measurement date from
March 31, 2010 to March 31, 2011.
**** The transfer out of Level 3 investments are due to the liquidity of the
Investment Fund in relation to the change in the measurement date from
March 31, 2010 to March 31, 2011.
Net change in unrealized appreciation (depreciation) on Level 3 assets and
liabilities still held as of March 31, 2011 is $9,051,801.
All net unrealized gains/(losses) in the table above are reflected in the
accompanying Statement of Operations.
-16-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2011 (CONTINUED)
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.
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 year
ended March 31, 2011 were $78,000.
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
year ended March 31, 2011 were $30,869.
-17-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2011 (CONTINUED)
5. SECURITIES TRANSACTIONS
The following table lists the aggregate purchases and proceeds from sales
of Investment Funds for the year ended March 31, 2011, net unrealized
appreciation, gross unrealized appreciation, and gross unrealized
depreciation from inception to March 31, 2011.
Cost of purchases * $696,570,739
============
Proceeds from sales * $327,441,761
============
Gross unrealized appreciation $275,454,943
Gross unrealized depreciation (23,860,401)
------------
Net unrealized appreciation $251,594,542
============
* Cost of purchases and proceeds from sales include non-cash transfers of
$139,570,739 for the year ended March 31, 2011.
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 year ended March 31, 2011
and the year ended March 31, 2010:
March 31, 2011 March 31, 2010
-------------- --------------
Shares outstanding, beginning of year 624,958.550 517,570.369
Shares purchased 443,299.969 146,054.199
Shares issued for reinvestment of distributions 82,711.506 80,411.975
Shares redeemed (57,319.016) (114,077.993)
------------- ------------
Shares outstanding, end of year 1,093,651.009 624,958.550
============= ============
-18-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2011 (CONTINUED)
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 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 its investment in the respective
Investment Funds.
8. INCOME TAXES
The tax basis of distributable earnings shown in the table below represent
distribution requirements the Company must satisfy under the income tax
regulations, losses the Company may be able to offset against income and
gains realized in future years and unrealized appreciation or depreciation
of Investment Funds for federal income tax purposes.
Undistributed Capital loss Post-October Net unrealized
ordinary income carryforward capital loss appreciation
--------------- ------------ ------------ --------------
$6,150,901 $36,398,784 $5,864,617 $16,227,368
The primary difference between the book and tax appreciation or
depreciation of Investment Funds is attributable to adjustments to the tax
basis of Investment Funds based on allocation of income and distributions
from Investment Funds and the tax realization of financial statement
unrealized gain or loss. In addition, the cost of Investment Funds for
federal income tax purposes is adjusted for items of taxable income
allocated to the Company from the Investment Funds. The allocated taxable
income is reported to the Company by each Investment Fund on Schedule K-1.
The aggregate cost on Investment Funds for federal income tax purposes is
therefore calculated and presented annually as of March 31. The aggregate
cost on Investment Funds and the composition of unrealized appreciation and
depreciation on Investment Funds for federal income tax purposes is noted
below.
Federal tax cost of Investment Funds $1,182,621,982
--------------
Gross unrealized appreciation $ 239,734,956
Gross unrealized depreciation (223,507,588)
--------------
Net unrealized appreciation $ 16,227,368
--------------
Net investment income (loss) and net realized gain (loss) differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions,
the fiscal year in which amounts are distributed differ from the fiscal
year in which the income or net realized gain was recorded by the Company.
-19-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2011 (CONTINUED)
Accordingly, the following amounts have been reclassified for March 31,
2011, and are primarily due to the different book to tax treatment for the
distributive share of partnership items, different book to tax treatment
for gains realized on the sale of Investment Funds classified as passive
foreign investment companies and retroactive changes in the cost recovery
method presentation on Financial Statements.
Net assets of the Company were unaffected by the reclassifications.
Accumulated net Accumulated net realized
investment income (loss) loss on investments Paid-in capital
------------------------ ------------------------ ---------------
$94,024,421 $(100,818,576) $6,794,155
As noted above, the differences between book and tax treatment for certain
items impact the amount of distributable income and to conform with U.S.
GAAP, results in the reclassification to accumulated net investment income
(loss). The following table reconciles the beginning and end of year
balances of accumulated net investment income (loss).
Accumulated net investment income (loss), beginning of year $ 9,332,470
Net investment income (loss) (17,003,417)
Reclassification of differences between book and tax 94,024,421
------------
Income available for distribution 86,353,474
Distributions (92,062,159)
------------
Accumulated net investment income (loss), end of year $ (5,708,685)
============
For the year ended March 31, 2011, the tax character of distributions paid
by the Company was $92,062,159 ordinary income. For the year ended March
31, 2010, the tax character of distributions paid by the Company was
$85,488,824 ordinary income. Distributions from net investment income and
short-term capital gains are treated as ordinary income for federal income
tax purposes.
As of March 31, 2011, the Company has a capital loss carryforward of
$36,398,784, which is available to offset future capital gains. If not
utilized against capital gains, this capital loss carryforward will expire
on March 31, 2018.
As permitted by federal tax rules, the Company intends to treat capital
losses of $5,864,617 incurred between November 1, 2010 and March 31, 2011
as being incurred during the tax year ending on March 31, 2011. These
losses are available to offset future capital gains, if any.
Under the recently enacted Regulated Investment Company Modernization Act
of 2010, the Company is permitted to carryforward capital losses incurred
in taxable years beginning after
-20-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 2011 (CONTINUED)
December 22, 2010 ("post-enactment losses") for an unlimited period.
However, any post-enactment losses are required to be utilized before the
utilization of losses incurred prior to the effective date of the Act. As a
result of this ordering rule, capital loss carryforwards related to taxable
years beginning prior to the effective date of the Act may be more likely
to expire unused. Additionally, post-enactment capital losses that are
carried forward will retain their character as either short term or
long-term capital losses rather than being considered all short term as
under previous law. As the principle provisions of the Act will commence
for fiscal periods beginning after December 22, 2010, or for the Company's
fiscal year beginning April 1, 2011, the effect of the Act on the Company
will not be fully known until that time.
9. REDEMPTION PENALTY
During the year ended March 31, 2011, the Company paid redemption penalties
totaling $48,024. The redemption penalties were charged to the Company for
redeeming its interests of certain Investment Funds prior to the expiration
of applicable lock-up periods. The payment of these penalties released the
Company from any further liability for its investments in the applicable
Investment Funds and is recorded as an operating expense in the Statement
of Operations.
10. 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 subsequent events requiring recognition or disclosure in
the financial statements.
-21-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
FEDERAL TAX INFORMATION
(UNAUDITED)
We are required by the Internal Revenue Code of 1986, as amended ("the
Code"), to advise you within 60 days of the Company's fiscal year end
(March 31, 2011) as to the federal tax status of dividends paid by the
Company during such fiscal year.
The Company designates the maximum amount allowable, but not less than
0.96% as ordinary income dividends paid during the year as qualified
dividend income in accordance with Section 854(b)(1)(B) of the Internal
Revenue Code.
The Company designates the maximum amount allowable but not less than 0.16%
of ordinary income dividends paid during the year as eligible for the
corporate dividends received deduction provided under Section 243 of the
Internal Revenue Code in accordance with Section 854(b)(1)(A) of the
Internal Revenue Code.
In January 2012, shareholders will receive federal income tax information
on all distributions declared in the calendar year 2011, including any
distributions paid to their accounts between April 1, 2011 and January 31,
2012.
-22-
SKYBRIDGE 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-to-day 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%
-23-
SKYBRIDGE 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 since One Promark Global Advisors; CS
(born 1943) to present October 2001; prior Alternative Capital
thereto, partner with Registered Funds (6
accounting firm of KPMG portfolios); iShares Trust
LLP. and iShares, Inc. (224
portfolios)
Steven Krull Director November 2002 Professor of Finance at One Cadogan Opportunistic
(born 1957) to present Hofstra University; Alternatives Fund, LLC
Business Consultant.
Josh Weinreich Director December 2006 to Retired since 2004. 1985 One Cornell University -
(born 1960) present (served to 2004 held various Endowment Hedge Fund
as an Advisory executive positions at Subcommittee; Community
Director from Bankers Trust/Deutsche Foodbank of NJ - Treasurer,
January 2006 to Bank. Chair Capital Campaign;
November 2006) House Party Inc. - 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 served on a special independent committee (the "Committee")
representing clients of Citigroup Alternative Investments, LLC, the Fund's
predecessor investment adviser. The Committee was terminated in 2010.
-24-
SKYBRIDGE MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC
INTERESTED DIRECTOR
(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
---------------- ------------- ---------------- -------------------------- ------------- ----------------------------
Raymond Nolte President and September 2005 Managing Partner, One None
(born 1961) Director to present SkyBridge (2010- present);
(Chair) 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.
-25-
SKYBRIDGE 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)
A. Marie Noble Chief December 2010 to present General Counsel, Chief Compliance Officer,
(born 1972) Compliance SkyBridge (2010-present); Associate General
Officer Counsel, Citigroup Alternative Investments
LLC (2006-2010)
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.
-26-
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, and that relates to any
element of the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, that relates to one or
more of the items set forth in paragraph (b) of this item's
instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's board of
directors has determined that Charles Hurty is qualified to serve as an audit
committee financial expert serving on its audit committee and that he is
"independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$115,000 for 2010 and $128,000 for 2011.
Audit-Related Fees
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 for 2010 and $0 for 2011.
Tax Fees
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $69,900 for 2010 and
$265,100 for 2011. This fee relates to the preparation of the
registrant's tax return and for the investors' K-1.
All Other Fees
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are
$6,500 for 2010 and $0 for 2011. This fee relates to the auditors
review of the Form-N-2
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
The Audit Committee will approve in advance any audit and non-audit
services to be provided by the audit firm to (i) the Fund; (ii) the
Fund's investment adviser (non-audit services only); or (iii) any
affiliates of such investment adviser (non-audit services only) that
provide ongoing services to the Fund if the engagement relates
directly to the Fund's operations and financial reporting; provided,
that any single member of the Committee may approve such services on
behalf of the Committee if payments for such services are reasonably
estimated at less than $10,000 and such approval is reported to the
Committee at it next regular meeting; and provided further, that no
such non-audit service may be approved if prohibited by applicable
rules of the Securities and Exchange Commission.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are
as follows:
(b) NA
(c) 100%
(d) 100%
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was 0%.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen
by another investment adviser), and any entity controlling, controlled
by, or under common control with the adviser that provides ongoing
services to the registrant for each of the last two fiscal years of
the registrant was are $0 for 2010 and $0 for 2011.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen
by another investment adviser), and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. 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.
The Proxy Voting Policies are attached herewith.
SKYBRIDGE
MULTI-ADVISER HEDGE FUND PORTFOLIOS LLC.
Proxy Voting Procedures
SkyBridge Multi-Adviser Hedge Fund Portfolios LLC (the "Fund"), a "series"
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), has adopted these proxy voting procedures (the
"Procedures") in accordance with, and for the purpose of complying with, rules
related to proxy voting promulgated by the Securities and Exchange Commission
("SEC") under the 1940 Act and the Investment Advisers Act of 1940, as amended
(the "Advisers Act").
Delegation of Proxy Voting. The Fund has delegated the responsibility for voting
proxies of its underlying portfolio funds (or other underlying securities) to
its investment adviser, an adviser registered with the SEC pursuant to the
Advisers Act. The investment adviser, SkyBridge Capital II, LLC (the "Adviser"),
has adopted proxy-voting procedures, including those designed to address any
material conflicts of interests between the Adviser and its clients ("Adviser
Procedures"), which have been reviewed and approved by the Board of Directors of
the Fund.
Annual Review. The Board of Directors of the Fund will review the Procedures and
the Adviser Procedures annually to ensure the procedures are reasonably designed
to ensure compliance with all relevant proxy-voting rules that are applicable to
the Funds.
Form N-PX. Commencing in 2004, the Fund will cause Form N-PX to be filed by
August 31 each year and will include proxy-voting information for the one-year
period ending that June 30. Form N-PX is an
annual filing of the Fund's complete proxy voting record which requires
information disclosing: (1) each proxy proposal subject matter; (2) if the proxy
proposal was proposed by the issuer or a shareholder; (3) how the Fund cast its
votes; and (4) if the vote cast was for or against management.
NOTE: By August 31, 2011, the Fund will be required to file Form N-PX for the
period July 1, 2010 to June 30, 2011.
Disclosure of Proxy Procedures. Commencing in 2003, the Fund will ensure that a
description of its (and the Adviser's) proxy-voting procedures, including
procedures related to proxy-voting conflicts of interest, are disclosed in its
Offering Memorandum (the Statement of Additional Information portion, if
applicable) and shareholder reports.
NOTE: Required with the next such document filed with the SEC.
Availability of Proxy Voting Procedures and Voting Record. Commencing in 2004,
the Fund will state in its Offering Memorandum (the Statement of Additional
Information portion, if applicable) and shareholder reports that its proxy
voting procedures and voting records are available free of charge directly from
the Fund (or its designee) as well as from the SEC website. The Fund will make
its proxy voting records available on either a Fund or Adviser website or upon
request by calling a toll-free or collect telephone number.
NOTE: Required with the next such document filed with the SEC on or after August
31, 2011.
Adopted: September 18, 2003
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
Raymond Nolte is currently the sole portfolio manager of the registrant's
portfolio and as such has primary responsibility for the day-to-day
management of the Company. In that capacity he receives significant input
and support from a team of analysts also employed by the Adviser. Mr.
Nolte's professional background is described above in the table below.
POSITION(S) HELD WITH TERM OF OFFICE* AND PRINCIPAL OCCUPATION(S)
NAME AND AGE COMPANY LENGTH OF TIME SERVED DURING THE PAST 5 YEARS
------------- --------------------- ------------------------- ------------------------------
Raymond Nolte Portfolio Manager, September 2005 to present CIO, SkyBridge Capital II, LLC
(born 1961) Director, President (July 2010 to present); CEO,
Citigroup Alternative
Investments LLC, Fund of Hedge
FundsGroup
(September 2005-June 2010)
(a)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
AND POTENTIAL CONFLICTS OF INTEREST
OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBER
- AS OF MARCH 31, 2011
No. of Total Assets
Accounts in Accounts
Name of where where
Portfolio Total Advisory Fee Advisory Fee
Manager or Type of No. of Accounts Total is Based on is Based on
Team Member Accounts Managed Assets Performance Performance
------------- --------------------------------- --------------- -------------- ------------ ------------
Raymond Nolte Registered Investment Companies: 1 $1,250 million 0 0
Raymond Nolte Other Pooled Investment Vehicles: 8 $ 949 million 7 $937 million
Raymond Nolte Other Accounts: 7 $ 150 million 5 $ 21 million
POTENTIAL CONFLICTS OF INTERESTS
As shown in the table above, Mr. Nolte is responsible for managing other
accounts ("Other Accounts") in addition to the Fund. In certain instances,
conflicts may arise in his management of the Fund and such other Accounts.
One situation where a conflict may arise between the Fund and an Other
Account is in the allocation of investment opportunities among the Fund and
the Other Account. For example, the Adviser may determine that there is an
opportunity that is suitable for the Fund as well as for Other Accounts of
the Adviser, which have a similar investment objective. As a related
matter, a particular Investment Fund interest or other security may be
bought for one or more clients when one or more other clients are selling
that same security, which may adversely affect the Fund. The Company and
the Adviser have adopted policies and procedures regarding the allocation
of investment opportunities, which generally require that investment
opportunities be allocated among the Fund and Other Accounts in a manner
that is fair, equitable and consistent with their fiduciary obligations to
each.
Mr. Nolte's management of the Fund and Other Accounts may result in his
devoting a disproportionate amount of time and attention to the management
of a particular account as against another. This particularly may be the
case when accounts have different objectives, benchmarks, time horizons,
asset levels and fees.
The management of personal accounts by Mr. Nolte may give rise to potential
conflicts of interest. While the Adviser's code of ethics will impose
limits on the ability of Mr. Nolte to trade for his personal account, there
is no assurance that the Adviser's code of ethics will eliminate such
conflicts.
Other than the conflicts described above, the Company is not aware of any
material conflicts that may arise in connection with the Adviser's
management of the Fund's investments and such Other Accounts.
(a)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS
- AS OF MARCH 31, 2011
Mr. Nolte's compensation is a combination of salary, discretionary bonus,
deferred compensation, retirement plans and automatic participation in a
company-funded retirement bonus. The discretionary bonus is based upon the
financial results and profitability of SkyBridge as a whole for which Mr.
Nolte serves as chief investment officer. The discretionary bonus is not
linked to the performance of any specific benchmark or that of any
SkyBridge investment fund or account; nor are specific asset size targets
considered.
(a)(4) DISCLOSURE OF SECURITIES OWNERSHIP - AS OF MARCH 31, 2011
Name of Portfolio Dollar ($) Range of Fund
Manager or Shares Beneficially
Team Member Owned
----------------- ------------------------
Raymond Nolte $100,001-$500,000
(b) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(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 June 3, 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/ Raymond Nolte
-------------------------------------
Raymond Nolte, President
(principal executive officer)
Date June 3, 2011
By (Signature and Title)* /s/ Robert Phillips
-------------------------------------
Robert Phillips, Treasurer and
Principal Financial Officer
(principal financial officer)
Date June 3, 2011
* Print the name and title of each signing officer under his or her signature.