Citibank Extends Hedge Fund Offer To HINWIs

by Carla Johnson, Investors Offshore, London

30 August 2002

Following a popular trend, Citigroup Inc.'s Citigroup Alternative Investments LLC registered a fund with the SEC in order to be able to offer units of the closed-end Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC in large minimum denominations to high net worth individuals.

The company said it will offer two series of the units, Series A and Series B. The objective of each series is to seek capital appreciation. Series A will seek a targeted annualized net return over any three-to-five-year period that is equal to the return for that period of three-month US Treasury Bills plus 6%. Series B will seek a targeted annualized net return over any three-to-five-year period equal to the return for that period of three-month US Treasury Bills plus 8.5%.

Each series will invest in investment funds managed by third-party investment managers that use a variety of alternative strategies, including leveraged or short-sale positions. Both series will carry a maximum 3% placement fee and a 0.3% administrative fee. Series A shares will have a 2% management fee, while the fee for Series B shares will be 2.25%.

The minium investment required is $50,000. Registration of the issue allows Citigroup to avoid some marketing restrictions that limit issuers to professional and very wealthy investors, but carries with it reporting and transparency requirements that don't apply to classical hedge funds.

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