Hedge Fund Managers (Diversified) LLC - FORM 10-Q

Attached files

file	filename
EX-31.2 - EX-31.2 - Hedge Fund Managers (Diversified) LLC	y91075exv31w2.htm
EX-32.1 - EX-32.1 - Hedge Fund Managers (Diversified) LLC	y91075exv32w1.htm
EX-31.1 - EX-31.1 - Hedge Fund Managers (Diversified) LLC	y91075exv31w1.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended March 31, 2011

		or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to

Commission file number: 000-50723

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

(Exact name of registrant as specified in its charter)


Delaware		04-3638229
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

200 West Street New York, New York (Address of principal executive offices)		10282 (Zip Code)

Registrant’s telephone number, including area code: (212) 902-1000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The Registrant’s Units of Limited Liability Company Interests are not traded on any market and, accordingly, have no aggregate market value. The Registrant had 4,835,105.99 Units of Limited Liability Company Interests outstanding as of May 13, 2011.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

QUARTERLY REPORT ON FORM 10-Q

INDEX


PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Schedule of Investments as of March 31, 2011 and December 31, 2010			1
Balance Sheet as of March 31, 2011 and December 31, 2010			2
Statement of Operations for the three months ended March 31, 2011 and March 31, 2010			3
Statement of Changes in Members’ Equity for the three months ended March 31, 2011 and the year ended December 31, 2010			4
Statement of Cash Flows for the three months ended March 31, 2011 and March 31, 2010			5
Notes to Unaudited Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
Item 3. Quantitative and Qualitative Disclosures About Market Risk			40
Item 4. Controls and Procedures			43

PART II — OTHER INFORMATION
Item 1. Legal Proceedings			44
Item 1A. Risk Factors			44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			44
Item 3. Defaults Upon Senior Securities			44
Item 4. Reserved			44
Item 5. Other Information			44
Item 6. Exhibits			47
SIGNATURES			48
INDEX TO EXHIBITS			49
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION
EX-31.1
EX-31.2
EX-32.1

PART I — FINANCIAL INFORMATION


Item 1.	Financial Statements

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

Schedule of Investments

March 31, 2011 and December 31, 2010


	(Unaudited)					(Audited)
	March 31, 2011					December 31, 2010
			% of					% of
	Fair		members’			Fair		members’
Affiliated Investee	value		equity⁽¹⁾			value		equity⁽¹⁾

Goldman Sachs Global Equity Long/Short, LLC	$	250,021,506		41.16	%	$	248,593,542		39.98	%
Goldman Sachs Global Fundamental Strategies, LLC		153,111,813		25.21	%		157,347,212		25.30	%
Goldman Sachs Global Fundamental Strategies Asset Trust		21,613,715		3.56	%		23,188,415		3.73	%
Goldman Sachs Global Relative Value, LLC		1,563,216		0.26	%		1,649,094		0.27	%
Goldman Sachs Global Tactical Trading, LLC		178,994,469		29.47	%		181,173,125		29.14	%
Goldman Sachs HFP Opportunistic Fund, LLC		725,848		0.12	%		735,686		0.12	%

Total investments (cost $519,524,598 and $529,138,634, respectively)	$	606,030,567		99.78	%	$	612,687,074		98.54	%

The Company’s aggregate proportionate share of the following underlying investments of the Investees represented greater than 5% of the Company’s member’s equity at March 31, 2011 and December 31, 2010.

March 31, 2011 (Unaudited)

Proportionate

% of

Underlying

share of

members’

Investee

investment

Strategy

fair value

equity⁽¹⁾

Goldman Sachs Global Tactical Trading, LLC

GS Global Trading
Advisors, LLC⁽²⁾

Managed Futures

46,877,892

7.72%

December 31, 2010 (Audited)

Proportionate

% of

Underlying

share of

members’

Investee

investment

Strategy

fair value

equity⁽¹⁾

Goldman Sachs Global Tactical Trading, LLC

GS Global Trading Advisors, LLC⁽²⁾

Managed Futures

47,508,604

7.64%


(1)		Members’ equity used in the calculation of the fair value of each of the Investees and the underlying investment as a percentage of members’ equity, is based on the members’ equity per the Balance Sheet and in accordance with Statement of Financial Accounting Standards ASC 480, “Distinguishing Liabilities from Equity.” Excluding redemptions payable per the Balance Sheet, total investments would represent 95.17% and 95.63% of members’ equity at March 31, 2011 and December 31, 2010, respectively.

(2)		Affiliated investment fund with a monthly liquidity term.

See accompanying notes.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

BALANCE SHEET

March 31, 2011 and December 31, 2010


	(Unaudited)		(Audited)
	March 31, 2011		December 31, 2010

ASSETS
Assets:
Investments in affiliated Investees, at fair value (cost $519,524,598 and $529,138,634, respectively)	$	606,030,567	$	612,687,074
Cash and cash equivalents		33,528,539		29,949,410

Total assets	$	639,559,106	$	642,636,484


LIABILITIES AND MEMBERS’ EQUITY
Liabilities:
Redemptions payable	$	29,405,252	$	18,895,114
Management fee payable		1,980,445		1,322,217
Accrued expenses and other liabilities		802,407		625,160

Total liabilities		32,188,104		20,842,491
Members’ equity (units outstanding 4,749,275.04 and 4,849,206.06, respectively)		607,371,002		621,793,993

Total liabilities and members’ equity	$	639,559,106	$	642,636,484

Analysis of members’ equity:
Net capital contributions, accumulated net investment income/(loss) and realized gain/(loss) on investments	$	520,865,033	$	538,245,553
Accumulated net unrealized gain/(loss) on investments		86,505,969		83,548,440

Total members’ equity⁽¹⁾	$	607,371,002	$	621,793,993


(1)		Refer to Note 8 for units outstanding and NAV per unit amounts by series.

See accompanying notes.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

STATEMENT OF OPERATIONS

(Unaudited)

For the three months ended March 31, 2011 and March 31, 2010


	2011			2010

Dividend income	$	4,183		$	2,407
Expenses:
Management fee		1,980,445			1,922,133
Professional fees		147,537			233,163
Administration fee		38,563			—
Interest expense		—			23,004
Miscellaneous expenses		50,352			39,025

Total expenses		2,216,897			2,217,325

Net investment income/(loss)		(2,212,714	)		(2,214,918	)

Realized and unrealized gain/(loss) on investments in affiliated Investees:
Net realized gain/(loss)		5,529,127			13,833,912
Net change in unrealized gain/(loss)		2,957,529			(3,686,887	)

Net realized and unrealized gain/(loss)		8,486,656			10,147,025

Net income/(loss)	$	6,273,942		$	7,932,107

See accompanying notes.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

STATEMENT OF CHANGES IN MEMBERS’ EQUITY

For the three months ended March 31, 2011 (Unaudited)

and the year ended December 31, 2010 (Audited)


	Managing						Total
	member’s			Members’			members’
	equity			equity			equity

Member’s equity at December 31, 2009	$	—		$	597,698,035		$	597,698,035
Subscriptions		—			64,918,041			64,918,041
Redemptions		(283,319	)		(69,624,119	)		(69,907,438	)
Allocations of net income/(loss):
Incentive allocation		283,319			(283,319	)		—
Pro-rata allocation		—			29,085,355			29,085,355

Member’s equity at December 31, 2010		—			621,793,993			621,793,993
Subscriptions		—			8,425,000			8,425,000
Redemptions		—			(29,121,933	)		(29,121,933	)
Allocations of net income/(loss):
Incentive allocation		84,590			(84,590	)		—
Pro-rata allocation		—			6,273,942			6,273,942

Member’s equity at March 31, 2011	$	84,590		$	607,286,412		$	607,371,002

See accompanying notes.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

STATEMENT OF CASH FLOWS

(Unaudited)

For the three months ended March 31, 2011 and March 31, 2010


	2011			2010

Cash flows from operating activities
Net income/(loss)	$	6,273,942		$	7,932,107
Adjustments to reconcile net income/(loss) to net cash provided by (used in) operating activities:
Purchases of investments in affiliated Investees		(2,792,618	)		(58,000,000	)
Proceeds from sales of investments in affiliated Investees		17,935,781			63,830,919
Net realized (gain)/loss from investments in affiliated Investees		(5,529,127	)		(13,833,912	)
Net change in unrealized (gain)/loss of investments in affiliated Investees		(2,957,529	)		3,686,887
Increase/(decrease) in operating liabilities:
Management fee payable		658,228			633,165
Interest Payable		—			(5,140	)
Accrued expenses and other liabilities		177,247			165,791

Net cash from operating activities		13,765,924			4,409,817

Cash flows from financing activities
Subscriptions		8,425,000			21,075,256
Redemptions		(18,611,795	)		(22,273,475	)

Net cash from financing activities		(10,186,795	)		(1,198,219	)

Net change in cash and cash equivalents		3,579,129			3,211,598
Cash and cash equivalents at beginning of period		29,949,410			35,470,838

Cash and cash equivalents at end of period	$	33,528,539		$	38,682,436

Supplemental disclosure of cash flow information
Cash paid by the Company during the period for interest	$	—		$	28,144

See accompanying notes.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 2011


Note 1 –	Organization

Goldman Sachs Hedge Fund Partners, LLC (the “Company”) was organized as a limited liability company, pursuant to the laws of the State of Delaware, and commenced operations on April 1, 2002 for the principal purpose of investing in the equity long/short, event driven, relative value and tactical trading hedge fund sectors (the “Investment Sectors”). Currently, substantially all of the Company’s assets are allocated to Goldman Sachs Global Equity Long/Short, LLC (“GELS”), Goldman Sachs Global Fundamental Strategies, LLC (“GFS”) and Goldman Sachs Global Tactical Trading, LLC (“GTT”) (collectively, the “Investment Funds”). The balance of the Company’s assets are invested in Goldman Sachs Global Fundamental Strategies Asset Trust (“GFS Trust”), Goldman Sachs Global Relative Value, LLC (“GRV”) and Goldman Sachs HFP Opportunistic Fund, LLC (“HFPO” and, together with GFS Trust, GRV and the Investment Funds, the “Investees”). Each of these Investees invests indirectly through investment vehicles (“Advisor Funds”) managed by such trading advisors (the “Advisors”). In addition, the Company may, directly or indirectly, allocate assets to Advisors whose principal investment strategies are not within one of the Investment Sectors. Goldman Sachs Hedge Fund Strategies LLC (“GS HFS”), a wholly-owned subsidiary of The Goldman Sachs Group, Inc., is the managing member (the “Managing Member”) and commodity pool operator of the Company and a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended. SEI Global Services, Inc. (“SEI”) serves as administrator of the Company.


Note 2 –	Significant accounting policies

Basis of presentation

The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and are expressed in United States dollars.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates.

Fair value of investments

The Company is an investment company for financial reporting purposes and accordingly carries its investments at fair value. The carrying value of the Company’s assets and liabilities not recorded at fair value that qualify as financial instruments approximates fair value.

Realized and unrealized gain/(loss) on investments in affiliated Investees

Realized and unrealized gain/(loss) on investments in affiliated Investees includes the change in fair value of each Investee. Fair values are determined utilizing net asset value (“NAV”) information supplied by each individual Investee, which includes realized and unrealized gains/losses on underlying investments of the Investees as well as management fees and incentive fees charged by the Advisors, administration fees and all other income/expenses of the Investees. See “Note 3 — Investments in affiliated Investees” for further information.

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of less than 90 days at the time of purchase, which are not held for resale, to be cash equivalents. Cash equivalents, consisting of investments in money market funds, are held at financial institutions to which the Company is exposed to credit risk. Money market funds are valued at net asset value per share.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 2 –	Significant accounting policies (continued)

Allocation of net income/(loss)

Net income/(loss) is allocated monthly to the capital account of each member in the ratio that the balance of each member’s capital account bears to the total balance of all members’ capital accounts. The Managing Member earns an annual incentive allocation equal to 5.0% of any new net appreciation in the NAV of each series. Any net depreciation in the NAV of a series for a fiscal year must be recouped prior to the Managing Member earning an incentive allocation in future years.

Subscriptions and redemptions

Subscriptions to the Company can be made as of the first day of each calendar month or at the sole discretion of the Managing Member. Redemptions from the Company can be made at the end of each calendar quarter, upon 91 days prior written notice after a twelve-month holding period or at such other times as determined in the sole discretion of the Managing Member, as provided for in the Company’s limited liability company agreement.

Income taxes

The Company is taxed as a partnership for U.S. federal income tax purposes. The members include their distributive share of the Company’s taxable income or loss on their respective income tax returns. Accordingly, no U.S. federal income tax liability or expense has been recorded in the financial statements of the Company.

The Managing Member has reviewed the Company’s tax positions for the open tax years by major jurisdictions and has concluded that no provision for taxes is required in the Company’s financial statements. Such open tax years vary by jurisdiction and remain subject to examination by the foreign taxing authorities. The tax liability is also subject to ongoing interpretation of laws by taxing authorities.

Recent accounting pronouncements

Improving Disclosures about Fair Value Measurements (ASC 820). In January 2010, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2010-06, “Fair Value Measurements and Disclosures (Topic 820) — Improving Disclosures about Fair Value Measurements.” ASU No. 2010-06 provides amended disclosure requirements related to fair value measurements. Certain disclosure requirements of ASU No. 2010-06 were effective for the Company beginning in the first quarter of 2010, while other disclosure requirements of the ASU are effective for financial statements issued for reporting periods beginning after December 15, 2010. Since these amended principles require only additional disclosures concerning fair value measurements, adoption did not and will not affect the Company’s financial condition, results of operations or cash flows.


Note 3 –	Investments in affiliated Investees

The Investees seek capital appreciation over time by investing primarily within one of the following Investment Sectors: the equity long/short sector, the event driven sector, the relative value sector and the tactical trading sector. The Company’s investments in affiliated Investees are subject to the terms and conditions of the respective operating agreements. The investments in affiliated Investees are carried at fair value. Fair values are determined utilizing NAV information supplied by each individual affiliated Investee. GS HFS is the managing member of each of the Investees. GS HFS does not charge the Company any management fee or incentive allocation at the Investee level. Realized gains/(losses) on the redemption of investments in affiliated Investees are calculated using the specific identification cost method.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 3 –	Investments in affiliated Investees (continued)

Performance of the Company in any period will be dependent upon the performance in the relevant period by the affiliated Investees and the weighted average percentage of the Company’s assets in each of the affiliated Investees during the period. In addition, performance is determined by the Investment Funds’ asset allocation with the various Advisors and the performance of each of their Advisor Funds and interests held by GFS Trust, GRV and HFPO. In the normal course of business, the Advisor Funds may trade various financial instruments and enter into various investment transactions with off-balance sheet risk, which include, but are not limited to, securities sold short, futures, forwards, swaps and written options. The Managing Member generally has limited access, if at all, to specific information regarding the Advisor Funds’ portfolios and relies on NAV provided by the Advisors. Generally, the NAV provided by the Advisors is only audited on an annual basis and is not subject to independent third party verification. Typically, audited financial statements are not received before issuance of the Company’s financial statements. GS HFS, in its capacity as managing member of the Company, performs additional procedures including Advisor due diligence reviews and analytical procedures with respect to the NAV provided by the Advisors to ensure conformity with U.S. GAAP. The Managing Member has assessed factors including, but not limited to, Advisors’ compliance with U.S. GAAP applicable to fair value measurements and disclosures, price transparency and valuation procedures in place. NAV provided by the Advisors may differ from the audited values received subsequent to the date of the Company’s NAV determination. In such cases, the Company will evaluate the materiality of any such differences.

The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company uses NAV as its measure of fair value for investments in Investees when (i) the fund investment does not have a readily determinable fair value and (ii) the NAV of the investment fund is calculated in a manner consistent with the measurement principles of investment company accounting, including measurement of the underlying investments at fair value. In evaluating the level at which the fair value measurements of the Company’s investments have been classified, the Company has assessed factors including, but not limited to, price transparency, the ability to redeem at NAV at the measurement date and the existence or absence of certain restrictions at the measurement date. The three levels of the fair value hierarchy are described below:


	•	Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

	•	Level 2 — Quoted prices in markets that are not active or financial instruments for which significant inputs are observable (including investments in Investees that can be redeemed at the measurement date or in the near-term at NAV), either directly or indirectly; and

	•	Level 3 — Prices or valuations that require significant unobservable inputs (including investments in Investees that will never have the ability to be voluntarily redeemed or are restricted from redemption for an uncertain or extended period of time from the measurement date).

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 3 –	Investments in affiliated Investees (continued)

The following tables set forth by level within the fair value hierarchy the Company’s assets and liabilities by investment strategy at fair value measured at March 31, 2011 and December 31, 2010:


	March 31, 2011 (Unaudited)
Assets	Level 1		Level 2		Level 3		Total

Investees by investment strategy:
Equity Long/Short	$	—	$	250,021,506	$	—	$	250,021,506
Event Driven		—		153,111,813		21,613,715		174,725,528
Tactical Trading		—		178,994,469		—		178,994,469
Multi-Sector		—		—		725,848		725,848
Relative Value		—		—		1,563,216		1,563,216

Total	$	—	$	582,127,788	$	23,902,779	$	606,030,567


	December 31, 2010 (Audited)
Assets	Level 1		Level 2		Level 3		Total

Investees by investment strategy:
Equity Long/Short	$	—	$	248,593,542	$	—	$	248,593,542
Event Driven		—		157,347,212		23,188,415		180,535,627
Tactical Trading		—		181,173,125		—		181,173,125
Multi-Sector		—		—		735,686		735,686
Relative Value		—		—		1,649,094		1,649,094

Total	$	—	$	587,113,879	$	25,573,195	$	612,687,074

Included in cash and cash equivalents on the Balance Sheet are investments in money market funds with a fair value of $33,498,804 and $29,919,410, which were classified as Level 1 assets as of March 31, 2011 and December 31, 2010, respectively.

The following table summarizes the changes in fair value of the Company’s Level 3 investments for the quarter ended March 31, 2011:


	Event Driven			Multi-Sector			Relative Value			Total

Balance as at January 1, 2011	$	23,188,415		$	735,686		$	1,649,094		$	25,573,195
Net realized gain/(loss) from investments		1,673			—			(778	)		895
Net change in unrealized gain/(loss) on investments still held at March 31, 2011		(283,755	)		(9,838	)		58,063			(235,530	)
Sales		(1,292,618	)		—			(143,163	)		(1,435,781	)

Balance as at March 31, 2011	$	21,613,715		$	725,848		$	1,563,216		$	23,902,779

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 3 –	Investments in affiliated Investees (continued)

The following table summarizes the changes in fair value of the Company’s Level 3 investments for the quarter ended March 31, 2010:


	Event Driven			Relative Value			Total

Balance as at January 1, 2010	$	37,532,758		$	4,887,674		$	42,420,432
Net realized gain/(loss) from investments		(20,043	)		15,053			(4,990	)
Net change in unrealized gain/(loss) on investments still held at March 31, 2010		268,907			94,638			363,545
Sales		(5,254,774	)		(1,632,316	)		(6,887,090	)

Balance as at March 31, 2010	$	32,526,848		$	3,365,049		$	35,891,897

The following table summarizes the cost of the Company’s investments in the affiliated Investees at March 31, 2011 and December 31, 2010:


Investee	March 31, 2011		December 31, 2010

GELS	$	216,756,022	$	218,989,189
GFS		134,780,693		138,846,103
GFS Trust		19,266,841		20,402,700
GRV		1,539,064		1,686,248
GTT		146,472,850		148,505,266
HFPO		709,128		709,128

Total	$	519,524,598	$	529,138,634

The following table summarizes the Company’s realized and unrealized gain/(loss) on investments in affiliated Investees for the three months ended March 31, 2011 and March 31, 2010:


		Three Months Ended March 31,
Investee	Liquidity	2011			2010

GELS	(1)	$	4,427,965		$	2,195,376
GFS	(2)		2,471,982			5,745,392
GFS Trust	(3)		(282,082	)		248,864
GRV	(4)		57,285			109,691
GTT	(5)		1,821,344			1,883,085
HFPO	(6)		(9,838	)		(35,383	)

Total		$	8,486,656		$	10,147,025


(1)		Redemptions can be made quarterly with 61 days’ notice, or at the sole discretion of the Managing Member.

(2)		Redemptions can be made quarterly on or after the first anniversary of the initial purchase of the units with at least 91 days’ notice, or at the sole discretion of the Managing Member.

(3)		GFS Trust does not provide investors with a voluntary redemption right. Pursuant to the terms of the trust agreement for GFS Trust, distributions will be made to holders of interests in GFS Trust as GFS Trust receives proceeds in respect of its underlying investments. The estimated remaining holding period of its remaining underlying investments range from one to six years.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 3 –	Investments in affiliated Investees (continued)


(4)		GRV ceased its trading activities effective on July 1, 2009, and will dissolve at the time all assets are liquidated, liabilities are satisfied and liquidation proceeds are distributed through payment of a liquidating distribution. GRV suspended redemptions pending the completion of the liquidation proceedings. The estimated remaining holding period of its remaining underlying investments range from one to six years.

(5)		Redemptions can be made quarterly with 60 days’ notice, or at the sole discretion of the Managing Member.

(6)		HFPO’s current holdings consist solely of one illiquid Advisor Fund, which cannot be redeemed until the relevant Advisor liquidates such investment. The estimated remaining holding period of the illiquid investment is approximately two to five years.

The investment strategy for each Investee is as follows:

Goldman Sachs Global Equity Long/Short, LLC

GELS seeks risk-adjusted absolute returns with volatility lower than the broad equity markets, primarily through long and short investment opportunities in the global equity markets. Strategies generally involve making long and short equity investments, often based on the Advisor’s assessment of fundamental value compared to market price, although Advisors employ a wide range of styles. Strategies that may be utilized in the equity long/short sector include catalyst-activist, consumer, diversified, energy, growth, long-bias, real estate, multi-strategy, short-term trading and value. Other strategies may be employed as well.

Goldman Sachs Global Fundamental Strategies, LLC

GFS seeks risk-adjusted absolute returns with volatility and correlation lower than the broad equity markets by allocating assets to Advisors that operate primarily in the global event driven sector. Event driven strategies seek to identify security price changes resulting from corporate events such as restructurings, mergers, takeovers, spin-offs, and other special situations. Corporate event arbitrageurs generally choose their investments based on their perceptions of the likelihood that the event or transaction will occur, the amount of time that the process will take, and the perceived ratio of return to risk. Strategies that may be utilized in the event driven sector include catalyst-activist, merger arbitrage/special situations, credit opportunities/distressed securities and multi-strategy investing. Other strategies may be employed as well.

Goldman Sachs Global Fundamental Strategies Asset Trust

GS HFS, the managing member of GFS, created GFS Trust, a Delaware statutory trust, for the benefit of its investors, including the Company. Goldman Sachs Trust Company, a Delaware Corporation, is the trustee of GFS Trust (the “Trustee”). The Trustee appointed GS HFS as the “Special Assets Direction Advisor,” responsible for, among other duties, disposition of GFS Trust assets. On March 31, 2009, GFS transferred to GFS Trust its interest in certain illiquid investments, including illiquid investments made by Advisor Funds, as well as liquidating vehicles that the Advisors formed as liquidity decreased for previously liquid investments, such as certain credit instruments. GFS transferred to GFS Trust the economic risks and benefits of its interests in such assets. In connection with such transfer, each investor in GFS, including the Company, was issued its pro-rata share of GFS Trust interests based on its ownership in GFS as of the transfer date. Distributions from GFS Trust in respect of GFS Trust interests will be made to holders of GFS Trust interests, including the Company, as amounts in respect of the assets transferred to GFS Trust are received from the Advisors. However, the actual timing of these distributions will be dependent on the Advisors’ ability to liquidate positions as market conditions allow, and it could be a significant period of time before such positions are realized or disposed of.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 3 –	Investments in affiliated Investees (continued)

Goldman Sachs Global Relative Value, LLC

GRV ceased its trading activities effective July 1, 2009 and will dissolve at the time all assets are liquidated, liabilities are satisfied and liquidation proceeds are distributed through payment of a liquidating distribution. Investors in GRV (including the Company) will receive proceeds from the liquidation over time as GRV receives redemption proceeds from Advisor Funds.

Goldman Sachs Global Tactical Trading, LLC

GTT seeks long-term risk-adjusted returns by allocating its assets to Advisors that employ strategies primarily within the tactical trading sector. Tactical trading strategies are directional trading strategies that generally fall into one of the following two categories: managed futures strategies and global macro strategies. Managed futures strategies involve trading in the global futures and currencies markets, generally using systematic or discretionary approaches. Global macro strategies generally utilize analysis of macroeconomic, geopolitical and financial conditions to develop views on country, regional or broader economic themes and then seek to capitalize on such views by trading in securities, commodities, interest rates, currencies and various financial instruments.

Goldman Sachs HFP Opportunistic Fund, LLC

HFPO’s investment objective is to make opportunistic investments in underlying Advisor Funds in order to (a) increase the weighting of a particular Advisor Fund which had a low weighting in the Company due to a lower target weight in one of the other Investees or (b) add an Advisor Fund that is not currently represented in any of the other Investees.

Management fees and incentive allocation/fees

GS HFS does not charge the Company any management fee or incentive allocation at the Investee level. The underlying Advisor Funds held by the Investees charge management and incentive allocation/fees to the Investees. The following table reflects the contractual weighted average Advisors’ management fee and incentive allocation/fee rates at the Investee level for the three months ended March 31, 2011 and March 31, 2010. The weighted average is based on the period-end fair values of each investment in the Advisor Fund in proportion to the Investee’s total investments. The fee rates used are the contractual rates charged by each Advisor. The Advisors’ management fee and incentive allocation/fee are not paid to the Managing Member.


	March 31, 2011						March 31, 2010
	Management			Incentive			Management			Incentive
Investee	fees			allocation/fees			fees			allocation/fees

GELS		1.57	%		19.49	%		1.56	%		18.83	%
GFS		1.70	%		18.96	%		1.63	%		18.49	%
GFS Trust		1.34	%		15.31	%		1.52	%		17.21	%
GRV		1.06	%		9.03	%		0.97	%		8.94	%
GTT		1.85	%		19.05	%		1.94	%		18.80	%
HFPO		—	%⁽¹⁾		—	%⁽¹⁾		2.01	%		20.15	%


(1)		The sole Advisor Fund within HFPO is illiquid and the Advisor has elected to forego the management and incentive fees.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 4 –	Fees

The Company incurs a monthly management fee paid in arrears to GS HFS equal to 1.25% per annum of the net assets of the Company as of each month-end.

Effective August 1, 2010, the Company incurs a monthly administration fee payable to SEI equal to one twelfth of 0.02% of the net assets of the Company as of each month end which is included in Administration fee in the Statement of Operations. The Company also incurs an indirect monthly administration fee to SEI at the Investee level which is included in Realized and unrealized gain/(loss) on investments in affiliated Investees in the Statement of Operations. For the three months ended March 31, 2011 and March 31, 2010, the Company’s pro-rata indirect share of the administration fee charged at the Investee level totaled $71,527 and $77,351, respectively.


Note 5 –	Risk Management

The Investees’ investing activities and those of the Advisor Funds in which they invest expose the Company to various types of risks that are associated with the financial investments and markets in which the Investees and such Advisor Funds invest. In the ordinary course of business, GS HFS, in its capacity as Managing Member of the Company and the Investees, attempts to manage a variety of risks, including market, operational, liquidity and credit risk and attempts to identify, measure and monitor risk through various mechanisms including risk management strategies and credit policies. GS HFS monitors risk guidelines and diversifies exposures across a variety of instruments, markets and counterparties.

Item 1A of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 provides details of these and other types of risks, some of which are additional to the information provided in these financial statements.

Asset allocation is determined by the Company’s Managing Member who manages the allocation of assets to achieve the investment objectives. Achievement of the investment objectives involves taking risks. The Managing Member exercises judgment based on analysis, research and risk management techniques when making investment decisions. Divergence from target asset allocations and the composition of the Company’s investments is monitored by the Company’s Managing Member.

Market risk

The potential for changes in the fair value of the Company’s investment portfolio is referred to as market risk. Commonly used categories of market risk include currency risk, interest rate risk and price risk.

(i) Currency risk

The Advisor Funds may invest in financial investments and enter into transactions denominated in currencies other than its functional currency. Consequently, the Company, its Investees and their Advisor Funds may be exposed to risks that the exchange rate of its functional currency relative to other foreign currencies may change in a manner that has an adverse effect on the value of that portion of the Company’s or Investees’ assets or liabilities denominated in currencies other than the functional currency.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 5 –	Risk Management (continued)

(ii) Interest rate risk

The Advisor Funds may invest in fixed income securities and derivatives. Any change to market interest rates relevant for particular securities may result in the Advisors being unable to secure similar returns on the expiration of contracts or the sale of securities. In addition, changes to prevailing interest rates or changes in expectations of future rates may result in an increase or decrease in the value of the securities held. In general, if interest rates rise, the value of the fixed income securities and derivatives will decline. A decline in interest rates will in general have the opposite effect.

(iii) Price risk

Price risk is the risk that the value of the Investees’ and Advisor Funds’ financial investments will fluctuate as a result of changes in market prices, other than those arising from currency risk or interest rate risk whether caused by factors specific to an individual investment, its issuer or any factor affecting financial investments traded in the market.

As all of the Company’s investments in Investees and the Investees’ investments in Advisor Funds are carried at fair value with changes in fair value recognized in the Statement of Operations, all changes in market conditions will directly affect net assets. The Company’s maximum risk of loss is limited to the Company’s investment in the Investees. The Investees’ maximum risk of loss is limited to the Investees’ investment in the Advisor Funds.

The Investees’ investments in the Advisor Funds are determined utilizing NAVs supplied by, or on behalf of, the Advisors of each Advisor Fund. Furthermore, NAVs received from the administrator of the Advisor Funds may be estimates and such values will be used to calculate the NAV of the Investees for purposes of determining amounts payable on redemptions and reported performance of the Investees. Such estimates provided by the administrators of the Advisor Funds may be subject to subsequent revisions which may not be reflected in the Investees’ final month-end NAV.

Operational risk

Operational risk is the potential for loss caused by a deficiency in information, communications, transaction processing and settlement and accounting systems. The Company’s service providers maintain controls and procedures for the purpose of mitigating operational risk. Reviews of the service levels of service providers are performed on a regular basis. No assurance is given that these measures will be 100% effective. Operational risk also exists at the Investee and Advisor Fund level.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The Company provides for the subscription and redemption of units and it is therefore exposed to the liquidity risk of meeting member redemptions.

In order to meet its obligations associated with financial liabilities, the Company primarily redeems from the investments in the Investees. However, the Company’s investments in the Investees may only be redeemed on a limited basis. As detailed in “Note 3 — Investments in affiliated Investees”, neither GFS Trust nor GRV provide investors with a voluntary redemption right and HFPO’s current holdings consist solely of one illiquid investment in an Advisor Fund, which cannot be redeemed until the relevant Advisor liquidates such investment. As a result, the Company may not be able to liquidate quickly some of its investments in order to meet liquidity requirements.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 5 –	Risk Management (continued)

Certain of the Advisor Funds held by the Investees may have liquidity exposure related to the Advisors’ estimates of the recovery value of these claims against Lehman Brothers Holdings, Inc. and for certain of its subsidiaries and affiliates (“Lehman”), including cash claims involving amounts owed to the Advisors by Lehman and/or proprietary claims involving the recovery of Advisor Funds’ assets held by Lehman at the time of its insolvency. These estimates are based on information received from the majority, but not all, of the Advisor Funds’, and the Company has no way of independently verifying or otherwise confirming the accuracy of the information provided. As a result, there can be no guarantee that such estimates are accurate. There is significant uncertainty with respect to the ultimate outcome of the Lehman insolvency proceedings, and therefore the amounts ultimately recovered in respect of the Advisors’ claims against Lehman could be materially different than such estimates. Based on the information received, the gross indirect exposure to Lehman did not materially affect the Company’s net assets.

Certain of the Advisor Funds held by the Investees are subject to various lock-up provisions. Additionally, an Advisor may, at its discretion, transfer a portion of an Investee’s investment in the Advisor Fund into share classes where liquidity terms are directed by the Advisor in accordance with the Advisor’s operating agreement, commonly referred to as side pocket share classes (“side pockets”). These side pockets may have restricted liquidity and prohibit the Investees from fully liquidating their investments without delay. The managing member of the Investees attempts to determine each Advisor’s strategy on side pockets through its due diligence process prior to making an allocation to the Advisor. However, no assurance can be given on whether or not the Advisor will implement side pockets during the investment period. The Advisors may also, at their discretion, suspend redemptions or implement other restrictions on liquidity which could impact the Investees’ ability to meet redemptions submitted by the Company. As of March 31, 2011 and December 31, 2010, approximately 2% of the Company’s investments in the Investees were considered illiquid due to restrictions implemented by the Advisors of the investments held by Investees, excluding contractual restrictions imposed by the Advisors at the time of purchase, such as lock-ups. In addition, as of March 31, 2011 and December 31, 2010, approximately 4% of the Company’s members’ equity was considered illiquid due to restrictions implemented by the Investees, including the lack of a voluntary redemption right for GFS Trust and GRV.

To mitigate some of the liquidity risks above, the Company has the ability to suspend redemptions prior to the effectiveness of redemption requests at the Managing Member’s sole discretion should conditions warrant.

Credit risk

Credit risk is the risk that one party to a contract will cause a financial loss for the other party by failing to discharge an obligation.

The Managing Member has adopted procedures to reduce credit risk related to the Company’s dealings with counterparties and Advisor Funds. Before transacting with any counterparty or Advisor Fund, the Managing Member or its affiliates evaluate both creditworthiness and reputation by conducting a credit analysis of the party, their business and reputation. The credit risk of approved counterparties and Advisor Funds are then monitored on an ongoing basis, including periodic reviews of financial statements and interim financial reports as needed.

Some of the Investees’ investments in Advisor Funds may have had credit exposure related to the bankruptcy of Lehman. See “Liquidity risk” for further information related to Lehman exposure.


Note 6 –	Related parties

The management fee payable in the Balance Sheet represents management fees due to GS HFS at March 31, 2011 and December 31, 2010, respectively.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 6 –	Related parties (continued)

Included in the redemptions payable on the Balance Sheet at March 31, 2011 and December 31, 2010 were redemptions due to the Managing Member of $283,319.

For the three months ended March 31, 2011, the Company earned dividends of $4,183 from an investment in Goldman Sachs Financial Square Government Fund, a money market fund managed by Goldman Sachs Asset Management, L.P., an affiliate of GS HFS. For the three months ended March 31, 2010, the Company earned dividends of $2,407 from an investment in Goldman Sachs Financial Square Government Fund and Goldman Sachs Financial Square Treasury Obligations Fund, money market funds managed by Goldman Sachs Asset Management, L.P., an affiliate of GS HFS. At March 31, 2011 and December 31, 2010, the fair values of such money market investments was $33,498,804 and $29,919,410, respectively. The Company will bear its proportionate share of all fees, including investment advisory fees, paid by the money market funds.

The Advisor Funds may have executed investment transactions with various affiliates of the Managing Member.

Directors and executive officers of the Company and the Managing Member owned less than 1% of the Company’s equity at March 31, 2011 and December 31, 2010. Employees of Goldman, Sachs & Co. owned approximately 2% of the Company’s equity at March 31, 2011 and December 31, 2010.


Note 7 –	Borrowing facility

The following table summarizes the Company’s credit facility (as amended from time to time, the “Credit Facility”) with Barclays Bank PLC (the “Facility Counterparty”) between January 1, 2010 and November 1, 2010:


			Facility fee/
Time periods⁽¹⁾⁽²⁾	Maximum amount⁽²⁾	Interest rate⁽³⁾	Commitment fee

September 1, 2010 through November 1, 2010⁽⁴⁾	Lesser of $33,700,000 or 14.25% of the Company’s NAV	LIBOR plus 5.00%		1.00%
June 1, 2010 through August 31, 2010	Lesser of $33,700,000 or 14.25% of the Company’s NAV	LIBOR plus 1.50%		1.00%
January 28, 2010 through May 31, 2010	Lesser of $33,700,000 or 14.25% of the Company’s NAV	LIBOR plus 1.00%		0.29%
January 1, 2010 through January 27, 2010	Lesser of $32,000,000 or 14.25% of the Company’s NAV	LIBOR plus 1.00%		0.25%


(1)		The Credit Facility matured on November 1, 2010 and was not renewed.

(2)		The Company also granted a security interest in the Company’s cash accounts and any other accounts that contain any other investment property of the Company.

(3)		London Interbank Offered Rate (“LIBOR”).

(4)		Effective September 1, 2010, the Credit Facility was extended to November 1, 2010 and converted to an uncommitted facility. Additionally, the commitment fee terminated and the Company commenced paying a monthly facility fee to the Facility Counterparty at the rate of 1% per annum of the average Credit Facility.

The proceeds of the advances under the Credit Facility were used for liquidity management in connection with subscriptions to the Company and redemption of the Company’s investments in the Investment Funds and for general purposes not prohibited by the Credit Facility or the investment guidelines therein. Interest related to borrowing and the commitment / facility fee is included in interest expense in the Statement of Operations. Effective November 1, 2010, the Credit Facility matured and was not renewed.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 8 –	Members’ equity

At March 31, 2011 and December 31, 2010, the Company had Class A units outstanding. Each series of Class A units is identical in every regard except with respect to its individualized incentive allocation base. Effective January 1, 2011, Class A Series 48, Class A Series 53, Class A Series 54, Class A Series 77 through Series 81 and Class A Series 84 through Series 90 units were converted into Class A Series 46 units. The Managing Member does not own any units in the Company.

The Company’s unit activity for the three month ended March 31, 2011 is as follows:


	December 31,		Unit								March 31,
	2010		conversion			Subscriptions		Redemptions			2011
Class A:
Series 1		2,560,820.36		—			—		(91,964.84	)		2,468,855.52
Series 45		45,322.13		—			—		—			45,322.13
Series 46		89,711.22		1,435,142.41			—		(106,148.56	)		1,418,705.07
Series 47		55,000.00		—			—		—			55,000.00
Series 48		101,345.88		(101,345.88	)		—		—			—
Series 49		140,800.00		—			—		—			140,800.00
Series 50		194,430.21		—			—		(22,374.91	)		172,055.30
Series 51		101,300.00		—			—		(17,510.59	)		83,789.41
Series 52		86,750.00		—			—		—			86,750.00
Series 53		55,451.17		(55,451.17	)		—		—			—
Series 54		589,036.01		(589,036.01	)		—		—			—
Series 66		84,244.41		—			—		(4,066.34	)		80,178.07
Series 67		1,367.32		—			—		—			1,367.32
Series 68		57,080.94		—			—		—			57,080.94
Series 69		20,861.87		—			—		—			20,861.87
Series 70		6,848.67		—			—		—			6,848.67
Series 71		1,403.93		—			—		—			1,403.93
Series 72		6,915.70		—			—		—			6,915.70
Series 73		1,335.83		—			—		—			1,335.83
Series 77		76,950.00		(76,950.00	)		—		—			—
Series 78		62,345.96		(62,345.96	)		—		—			—
Series 79		71,456.60		(71,456.60	)		—		—			—
Series 80		56,950.00		(56,950.00	)		—		—			—
Series 81		201,150.00		(201,150.00	)		—		—			—
Series 82		12,294.48		—			—		—			12,294.48
Series 83		5,460.80		—			—		—			5,460.80
Series 84		34,000.00		(34,000.00	)		—		—			—
Series 85		16,500.00		(16,500.00	)		—		—			—
Series 86		21,942.57		(21,942.57	)		—		—			—
Series 87		33,930.00		(33,930.00	)		—		—			—
Series 88		1,000.00		(1,000.00	)		—		—			—
Series 89		43,250.00		(43,250.00	)		—		—			—
Series 90		11,950.00		(11,950.00	)		—		—			—
Series 91		—		—			39,500.00		—			39,500.00
Series 92		—		—			26,500.00		—			26,500.00
Series 93		—		—			18,250.00		—			18,250.00

Total		4,849,206.06		57,884.22			84,250.00		(242,065.24	)		4,749,275.04

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 8 –	Members’ equity (continued)

The Company’s unit activity for the year ended December 31, 2010 is as follows:


	December 31,		Unit								December 31,
	2009		conversion			Subscriptions		Redemptions			2010
Class A:
Series 1		2,885,415.51		—			—		(324,595.15	)		2,560,820.36
Series 45		52,822.13		—			—		(7,500.00	)		45,322.13
Series 46		121,252.89		—			—		(31,541.67	)		89,711.22
Series 47		72,250.00		—			—		(17,250.00	)		55,000.00
Series 48		121,500.00		—			—		(20,154.12	)		101,345.88
Series 49		140,800.00		—			—		—			140,800.00
Series 50		208,466.39		—			—		(14,036.18	)		194,430.21
Series 51		123,068.00		—			—		(21,768.00	)		101,300.00
Series 52		96,750.00		—			—		(10,000.00	)		86,750.00
Series 53		73,550.00		—			—		(18,098.83	)		55,451.17
Series 54		69,350.00		592,596.98			—		(72,910.97	)		589,036.01
Series 55		22,500.00		(22,500.00	)		—		—			—
Series 56		10,000.00		(10,000.00	)		—		—			—
Series 57		25,000.00		(25,000.00	)		—		—			—
Series 58		50,000.00		(50,000.00	)		—		—			—
Series 59		15,000.00		(15,000.00	)		—		—			—
Series 60		27,600.00		(27,600.00	)		—		—			—
Series 61		11,312.98		(11,312.98	)		—		—			—
Series 62		62,000.00		(62,000.00	)		—		—			—
Series 63		66,712.98		(66,712.98	)		—		—			—
Series 64		36,650.00		(36,650.00	)		—		—			—
Series 65		54,137.27		(54,137.27	)		—		—			—
Series 66		95,580.88		—			—		(11,336.47	)		84,244.41
Series 67		1,367.32		—			—		—			1,367.32
Series 68		57,080.94		—			—		—			57,080.94
Series 69		20,861.87		—			—		—			20,861.87
Series 70		6,848.67		—			—		—			6,848.67
Series 71		1,403.93		—			—		—			1,403.93
Series 72		6,915.70		—			—		—			6,915.70
Series 73		1,335.83		—			—		—			1,335.83
Series 74		83,000.00		(83,000.00	)		—		—			—
Series 75		85,100.00		(85,100.00	)		—		—			—
Series 76		30,850.00		(30,850.00	)		—		—			—
Series 77		—		—			76,950.00		—			76,950.00
Series 78		—		—			62,345.96		—			62,345.96
Series 79		—		—			71,456.60		—			71,456.60
Series 80		—		—			56,950.00		—			56,950.00
Series 81		—		—			201,150.00		—			201,150.00
Series 82		—		—			12,294.48		—			12,294.48
Series 83		—		—			5,460.80		—			5,460.80
Series 84		—		—			34,000.00		—			34,000.00
Series 85		—		—			16,500.00		—			16,500.00
Series 86		—		—			21,942.57		—			21,942.57
Series 87		—		—			33,930.00		—			33,930.00
Series 88		—		—			1,000.00		—			1,000.00
Series 89		—		—			43,250.00		—			43,250.00
Series 90		—		—			11,950.00		—			11,950.00

Total		4,736,483.29		12,733.75			649,180.41		(549,191.39	)		4,849,206.06

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 8 –	Members’ equity (continued)

The Company’s members’ capital activity for the three months ended March 31, 2011 is as follows:


	December 31,		Equity								Net			March 31,		NAV
	2010		conversion			Subscriptions		Redemptions			income/(loss)			2011		per unit

Managing Member	$	—	$	—		$	—	$	—		$	84,590		$	84,590
Class A:
Series 1		386,220,632		—			—		(14,004,149	)		3,861,136			376,077,619	$	152.33
Series 45		4,471,072		—			—		—			44,698			4,515,770		99.64
Series 46		9,003,589		144,033,620			—		(10,754,452	)		1,453,449			143,736,206		101.32
Series 47		5,407,597		—			—		—			54,061			5,461,658		99.30
Series 48		10,142,713		(10,142,713	)		—		—			—			—		—
Series 49		13,960,216		—			—		—			138,574			14,098,790		100.13
Series 50		18,928,004		—			—		(2,200,000	)		189,227			16,917,231		98.32
Series 51		9,855,874		—			—		(1,720,706	)		98,532			8,233,700		98.27
Series 52		8,669,138		—			—		—			82,627			8,751,765		100.88
Series 53		5,610,812		(5,610,812	)		—		—			—			—		—
Series 54		62,770,502		(62,770,502	)		—		—			—			—		—
Series 66		9,079,321		—			—		(442,626	)		90,768			8,727,463		108.85
Series 67		147,361		—			—		—			1,474			148,835		108.85
Series 68		6,151,816		—			—		—			61,501			6,213,317		108.85
Series 69		2,248,358		—			—		—			22,477			2,270,835		108.85
Series 70		738,106		—			—		—			7,379			745,485		108.85
Series 71		151,306		—			—		—			1,513			152,819		108.85
Series 72		745,329		—			—		—			7,451			752,780		108.85
Series 73		143,967		—			—		—			1,440			145,407		108.85
Series 77		8,047,216		(8,047,216	)		—		—			—			—		—
Series 78		6,529,247		(6,529,247	)		—		—			—			—		—
Series 79		7,466,991		(7,466,991	)		—		—			—			—		—
Series 80		5,883,928		(5,883,928	)		—		—			—			—		—
Series 81		20,682,620		(20,682,620	)		—		—			—			—		—
Series 82		1,273,182		—			—		—			12,729			1,285,911		104.59
Series 83		565,505		—			—		—			5,654			571,159		104.59
Series 84		3,566,739		(3,566,739	)		—		—			—			—		—
Series 85		1,749,127		(1,749,127	)		—		—			—			—		—
Series 86		2,311,363		(2,311,363	)		—		—			—			—		—
Series 87		3,557,487		(3,557,487	)		—		—			—			—		—
Series 88		103,011		(103,011	)		—		—			—			—		—
Series 89		4,394,876		(4,394,876	)		—		—			—			—		—
Series 90		1,216,988		(1,216,988	)		—		—			—			—		—
Series 91		—		—			3,950,000		—			37,515			3,987,515		100.95
Series 92		—		—			2,650,000		—			20,689			2,670,689		100.78
Series 93		—		—			1,825,000		—			(3,542	)		1,821,458		99.81

Subtotal:		621,793,993		—			8,425,000		(29,121,933	)		6,189,352			607,286,412

Total	$	621,793,993	$	—		$	8,425,000	$	(29,121,933	)	$	6,273,942		$	607,371,002

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 8 –	Members’ equity (continued)

The Company’s members’ capital activity for the year ended December 31, 2010 is as follows:


	December 31,		Equity								Net		December 31,		NAV
	2009		conversion			Subscriptions		Redemptions			income/(loss)		2010		per unit

Managing Member	$	—	$	—		$	—	$	(283,319	)	$	283,319	$	—
Class A:
Series 1		415,172,330		—			—		(47,275,206	)		18,323,508		386,220,632	$	150.82
Series 45		4,971,425		—			—		(716,408	)		216,055		4,471,072		98.65
Series 46		11,612,001		—			—		(3,068,917	)		460,505		9,003,589		100.36
Series 47		6,777,089		—			—		(1,680,917	)		311,425		5,407,597		98.32
Series 48		11,601,290		—			—		(1,950,610	)		492,033		10,142,713		100.08
Series 49		13,318,515		—			—		—			641,701		13,960,216		99.15
Series 50		19,361,580		—			—		(1,321,802	)		888,226		18,928,004		97.35
Series 51		11,423,377		—			—		(2,033,895	)		466,392		9,855,874		97.29
Series 52		9,224,038		—			—		(969,605	)		414,705		8,669,138		99.93
Series 53		7,104,425		—			—		(1,805,063	)		311,450		5,610,812		101.18
Series 54		7,066,804		60,385,988			—		(7,592,307	)		2,910,017		62,770,502		106.56
Series 55		2,379,248		(2,379,248	)		—		—			—		—		—
Series 56		1,076,095		(1,076,095	)		—		—			—		—		—
Series 57		2,715,361		(2,715,361	)		—		—			—		—		—
Series 58		5,386,946		(5,386,946	)		—		—			—		—		—
Series 59		1,618,719		(1,618,719	)		—		—			—		—		—
Series 60		2,979,262		(2,979,262	)		—		—			—		—		—
Series 61		1,212,471		(1,212,471	)		—		—			—		—		—
Series 62		6,519,496		(6,519,496	)		—		—			—		—		—
Series 63		7,009,995		(7,009,995	)		—		—			—		—		—
Series 64		3,809,919		(3,809,919	)		—		—			—		—		—
Series 65		5,558,740		(5,558,740	)		—		—			—		—		—
Series 66		9,827,589		—			—		(1,209,389	)		461,121		9,079,321		107.77
Series 67		140,588		—			—		—			6,773		147,361		107.77
Series 68		5,869,039		—			—		—			282,777		6,151,816		107.77
Series 69		2,145,009		—			—		—			103,349		2,248,358		107.77
Series 70		704,178		—			—		—			33,928		738,106		107.77
Series 71		144,351		—			—		—			6,955		151,306		107.77
Series 72		711,069		—			—		—			34,260		745,329		107.77
Series 73		137,350		—			—		—			6,617		143,967		107.77
Series 74		8,401,415		(8,401,415	)		—		—			—		—		—
Series 75		8,628,531		(8,628,531	)		—		—			—		—		—
Series 76		3,089,790		(3,089,790	)		—		—			—		—		—
Series 77		—		—			7,695,000		—			352,216		8,047,216		104.58
Series 78		—		—			6,234,596		—			294,651		6,529,247		104.73
Series 79		—		—			7,145,660		—			321,331		7,466,991		104.50
Series 80		—		—			5,695,000		—			188,928		5,883,928		103.32
Series 81		—		—			20,115,000		—			567,620		20,682,620		102.82
Series 82		—		—			1,229,448		—			43,734		1,273,182		103.56
Series 83		—		—			546,080		—			19,425		565,505		103.56
Series 84		—		—			3,400,000		—			166,739		3,566,739		104.90
Series 85		—		—			1,650,000		—			99,127		1,749,127		106.01
Series 86		—		—			2,194,257		—			117,106		2,311,363		105.34
Series 87		—		—			3,393,000		—			164,487		3,557,487		104.85
Series 88		—		—			100,000		—			3,011		103,011		103.01
Series 89		—		—			4,325,000		—			69,876		4,394,876		101.62
Series 90		—		—			1,195,000		—			21,988		1,216,988		101.84

Subtotal:		597,698,035		—			64,918,041		(69,624,119	)		28,802,036		621,793,993

Total	$	597,698,035	$	—		$	64,918,041	$	(69,907,438	)	$	29,085,355	$	621,793,993

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 9 –	Ownership in Investees

During the three months ended March 31, 2011 and the year ended December 31, 2010, the Company’s ownership percentage of certain Investees exceeded 50%. This ownership percentage will fluctuate as a result of the Company’s investment strategy and investor subscriptions and redemptions at the Company and Investee levels. The Company does not consolidate the results of the Investees in its financial statements because the Company does not invest in such Investees for purposes of exercising control; ownership in excess of 50% may be temporary; and the consolidation of these balances would not enhance the usefulness or understandability of information to the members. The Company does not exercise control over majority owned Investees. The following tables summarize the Company’s ownership in the Investees at March 31, 2011 and December 31, 2010:


	March 31, 2011 (Unaudited)
					% owned
	Company		Investee		by the
	investment		equity⁽¹⁾		Company⁽¹⁾
GELS	$	250,021,506	$	522,862,364		47.82	%
GFS		153,111,813		383,492,667		39.93	%
GFS Trust		21,613,715		66,916,057		32.30	%
GRV		1,563,216		5,690,945		27.47	%
GTT		178,994,469		423,373,276		42.28	%
HFPO		725,848		1,222,473		59.38	%

Total	$	606,030,567


	December 31, 2010 (Audited)
					% owned
	Company		Investee		by the
	investment		equity⁽¹⁾		Company⁽¹⁾
GELS	$	248,593,542	$	511,245,480		48.63	%
GFS		157,347,212		381,734,121		41.22	%
GFS Trust		23,188,415		82,519,893		28.10	%
GRV		1,649,094		6,277,870		26.27	%
GTT		181,173,125		397,291,003		45.60	%
HFPO		735,686		1,239,043		59.38	%

Total	$	612,687,074


(1)		The Investees’ equity used in the calculation of the percentage owned by the Company is based on the net assets per the Investee’s Balance Sheet and in accordance with ASC 480, “Distinguishing Liabilities from Equity.”

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 10 –	Indemnifications

The Company enters into contracts that contain a variety of indemnification arrangements. The indemnification arrangements the Company has entered into with service providers include provisions for the Company to indemnify and hold harmless such service providers for certain liabilities. These indemnification arrangements typically cover liabilities incurred by service providers in connection with the services provided under the contractual arrangements with the Company and are generally entered into as part of a negotiated contractual arrangement stipulating the furnishing of the delineated services. However, under the terms of such contractual arrangements, the Company will not be required to indemnify service providers in certain situations to the extent that the liabilities incurred by the service providers were caused by the gross negligence, willful misconduct, bad faith, reckless disregard of duties, or similar conduct on the part of the service provider. The Company’s maximum exposure under these arrangements is unknown. It is not possible to estimate the maximum potential exposure under these agreements, because the indemnification arrangements relate to unforeseeable liabilities suffered as a result of the conduct of the Company or other parties, which is presently unknown or unforeseeable. However, the Company has not had prior claims or losses pursuant to these indemnification arrangements and expects the risk of material loss to be remote.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 11 –	Financial highlights

Financial highlights for the Company for the three months ended March 31, 2011 and 2010 are as follows:


	Three Months Ended
	March 31,
	2011			2010
	Class A			Class A
	Series 1			Series 1
Per unit operating performance:
Net asset value, beginning of period	$	150.82		$	143.89
Income from operations:
Net realized and unrealized gain/(loss)		2.04			2.36
Net investment income/(loss)⁽¹⁾⁽²⁾		(0.53	)		(0.52	)

Total income/(loss) from operations		1.51			1.84

Net asset value, end of period	$	152.33		$	145.73

Ratios to average members’ equity⁽³⁾
Expenses		1.42	%		1.46	%
Incentive allocation		0.00	%		0.00	%

Total expenses and incentive allocation		1.42	%		1.46	%

Net investment income/(loss)⁽²⁾		(1.42	)%		(1.46	)%

Total return (prior to incentive allocation)⁽⁴⁾		1.00	%		1.28	%
Incentive allocation		0.00	%		0.00	%

Total return		1.00	%		1.28	%


(1)		Net investment income/(loss) is calculated based on average units outstanding during the period.

(2)		Includes incentive allocation, if applicable.

(3)		The ratios of expenses and net investment income/(loss) to average members’ equity are calculated by dividing total expenses and net investment income/(loss), respectively, by the month-end average members’ equity for the period. The ratios to average members’ equity calculated above do not include the Company’s proportionate share of the net investment income and expenses of the Investees. The ratios to average members’ equity for each member may vary based on individualized incentive allocation bases and the timing of capital transactions.

(4)		The components of total return are calculated by dividing the change in the per unit value of each component for the period by the NAV per unit at the beginning of the period. The total return for Class A Series 1 units is calculated taken as a whole. The total return for each member may vary based on individualized incentive allocation bases and the timing of capital transactions.

The per unit operating performance, ratios to average net assets and total return are calculated and presented for the initial series.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 12 –	Significant Investees

The following is a summary of financial information for Investees that represented more than 20% of the Company’s total assets and/or income as of and/or for the three months ended March 31, 2011 (the “Significant Investees”):

Balance Sheet

The balance sheets as of March 31, 2011 and December 31, 2010, are summarized as follows:


	March 31, 2011 (Unaudited)
	GELS		GFS		GTT
Assets
Investments in Investees, at fair value	$	518,958,548	$	353,534,584	$	214,406,295
Investments in affiliated Investees, at fair value		—		28,275,358		205,270,929
Cash and cash equivalents		20,736,479		7,372,964		18,858,640
Other assets		4,596,222		4,000,864		71,464

Total assets	$	544,291,249	$	393,183,770	$	438,607,328


Liabilities and Net Assets
Liabilities
Redemptions payable	$	20,464,359	$	9,081,382	$	14,392,274
Accrued expenses and other liabilities		964,526		609,721		841,778

Total liabilities		21,428,885		9,691,103		15,234,052
Net assets		522,862,364		383,492,667		423,373,276

Total liabilities and net assets	$	544,291,249	$	393,183,770	$	438,607,328



	December 31, 2010 (Audited)
	GELS		GFS		GTT

Assets
Investments in Investees, at fair value	$	502,195,620	$	351,240,904	$	195,143,057
Investments in affiliated Investees, at fair value		—		27,393,668		195,355,421
Cash and cash equivalents		36,020,084		8,819,210		13,003,556
Other assets		3,495,222		6,067,742		8,500,000

Total assets	$	541,710,926	$	393,521,524	$	412,002,034


Liabilities and Net Assets
Liabilities
Redemptions payable	$	6,558,606	$	11,292,278	$	11,183,178
Subscriptions received in advance		20,000,000		—		2,990,000
Loan Payable		3,100,000		—		—
Accrued expenses and other liabilities		806,840		495,125		537,853

Total liabilities		30,465,446		11,787,403		14,711,031
Net assets		511,245,480		381,734,121		397,291,003

Total liabilities and net assets	$	541,710,926	$	393,521,524	$	412,002,034

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 12 –	Significant Investees (continued)

Statement of Operations

For the three months ended March 31, 2011 and March 31, 2010, the statements of operations are summarized as follows:


	March 31, 2011
Income/(Loss)	GELS			GFS			GTT

Net realized gain/(loss) on Investees	$	2,053,386		$	11,842,092		$	1,000,736
Net change in unrealized gain/(loss) on Investees		8,017,755			(5,122,192	)		3,768,872
Investment income		2,159			1,214			2,016
Expenses		(700,663	)		(683,069	)		(979,352	)

Net income/(loss) from operations	$	9,372,637		$	6,038,045		$	3,792,272



	March 31, 2010
Income/(Loss)	GELS			GFS			GTT

Net realized gain/(loss) on Investees	$	(1,152,751	)	$	6,349,933		$	175,745
Net change in unrealized gain/(loss) on Investees		5,743,732			9,334,956			3,916,891
Investment income		1,876			1,429			707
Expenses		(369,675	)		(463,411	)		(465,870	)

Net income/(loss) from operations	$	4,223,182		$	15,222,907		$	3,627,473

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2011


Note 12 –	Significant Investees (continued)

Statement of Cash Flows

For the three months ended March 31, 2011 and March 31, 2010, the statements of cash flows are summarized as follows:


	March 31, 2011
	GELS			GFS			GTT

Cash flows from operating activities
Net income/(loss) from operations	$	9,372,637		$	6,038,045		$	3,792,272
Net change in investments in investees		(16,762,928	)		(3,175,370	)		(29,178,746	)
Net change in operating assets and liabilities		(20,943,314	)		2,181,474			5,742,462

Net cash provided by/(used in) operating activities		(28,333,605	)		5,044,149			(19,644,012	)

Cash flows from financing activities
Net subscriptions/(redemptions)		16,150,000			(6,490,395	)		25,499,096
Proceeds/(repayments) from loan		(3,100,000	)		—			—

Net cash provided by/(used in) financing activities		13,050,000			(6,490,395	)		25,499,096

Net change in cash and cash equivalents		(15,283,605	)		(1,446,246	)		5,855,084
Cash and cash equivalents at beginning of period		36,020,084			8,819,210			13,003,556

Cash and cash equivalents at end of period	$	20,736,479		$	7,372,964		$	18,858,640


	March 31, 2010
	GELS			GFS			GTT
Cash flows from operating activities
Net income/(loss) from operations	$	4,223,182		$	15,222,907		$	3,627,473
Net change in investments in investees		(22,902,698	)		(16,414,054	)		(35,164,219	)
Net change in operating assets and liabilities		(17,577,991	)		1,567,281			853,508

Net cash provided by/(used in) operating activities		(36,257,507	)		376,134			(30,683,238	)

Cash flows from financing activities
Net subscriptions/(redemptions)		13,285,074			(7,407,883	)		21,740,219
Proceeds/(repayments) from loan		29,000,000			—			2,003,114

Net cash provided by/(used in) financing activities		42,285,074			(7,407,883	)		23,743,333

Net change in cash and cash equivalents		6,027,567			(7,031,749	)		(6,939,905	)
Cash and cash equivalents at beginning of period		18,030,775			25,410,020			8,723,057

Cash and cash equivalents at end of period	$	24,058,342		$	18,378,271		$	1,783,152


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The following discussion should be read in conjunction with the financial statements of Goldman Sachs Hedge Fund Partners, LLC (the “Company”) and the related notes thereto.

The Company is a Delaware limited liability company organized in March 2002 to operate as an investment fund. It commenced operations on April 1, 2002. GS HFS, a Delaware limited liability company, serves as the Company’s managing member (the “Managing Member”).

As of March 31, 2011, the Company had total assets of $639,559,106 compared with total assets of $642,636,484 as of December 31, 2010. Total liabilities of the Company were $32,188,104 as of March 31, 2011 compared with $20,842,491 as of December 31, 2010. Member’s equity of the Company was $607,371,002 as of March 31, 2011 compared with $621,793,993 as of December 31, 2010.

The Company’s investment objective is to target attractive long-term risk-adjusted returns across a variety of market environments with volatility and correlation that are lower than those of the broad equity markets. To achieve this objective, the Company allocates all or substantially all of its assets among investment funds managed by the Managing Member (such funds and any successor funds thereto, individually, an “Investment Fund” and collectively the “Investment Funds”), each of which (directly or through other entities) allocates its assets to, or invests in entities managed by, independent investment managers (collectively, the “Advisors”) that employ a broad range of investment strategies primarily within one or more of the following hedge fund sectors (each, an “Investment Sector” and, collectively, the “Investment Sectors”): the tactical trading sector, the equity long/short sector, the event driven sector and the relative value sector. Currently, substantially all of the Company’s assets are invested in three Investment Funds, each of which is managed by the Managing Member. The current Investment Funds are Goldman Sachs Global Equity Long/Short, LLC (“GELS”), which employs investment strategies within the equity long/short sector; Goldman Sachs Global Fundamental Strategies, LLC (“GFS”), which employs investment strategies within the event driven sector and Goldman Sachs Global Tactical Trading, LLC (“GTT”), which employs investment strategies in the tactical trading sector. The balance of the Company’s assets are invested in Goldman Sachs Global Fundamental Strategies Asset Trust (“GFS Trust”), which is a trust containing certain interests in illiquid assets transferred by GFS and Goldman Sachs Global Relative Value, LLC (“GRV”), which are both in the process of liquidation; and Goldman Sachs HFP Opportunistic Fund, LLC (“HFPO” and together with GFS Trust, GRV and the Investment Funds, the “Investees”), which employs investment strategies within one or more of the Investment Sectors. In addition, the Company may, directly or indirectly, allocate assets to Advisors whose principal investment strategies are not within one of the Investment Sectors referenced herein.

Performance of the Company in any period will be dependent upon the performance in the relevant period by the Investees and the weighted average percentage of the Company’s assets in each of the Investees during the period. In addition, performance is determined by the allocation by the Investment Funds of their assets with the various Advisors and the performance of each of those Advisors.

While the Managing Member currently expects to allocate assets to all the Investment Sectors through allocations to the Investment Funds, since April 1, 2008, the Managing Member has had no constraints with respect to the percentage of the Company’s assets to be allocated, directly or indirectly, to any single Advisor, group of Advisors, Investment Fund, or Investment Sector, or with respect to the number of Investment Funds and Advisors to which, directly or indirectly, assets of the Company are allocated at any time. The percentage of the Company’s assets to be allocated to any single Advisor, group of Advisors, Investment Fund or Investment Sector, and the number of Investment Funds and Advisors to which the Company allocates assets from time to time will be determined by the Managing Member in its sole discretion, based on factors deemed relevant by the Managing Member at the time of such allocation, which may include the amount of the Company’s assets under management, constraints on the capital capacity of the Investment Funds and Advisors, the availability of attractive opportunities, and other portfolio construction and portfolio management considerations.

The performance described herein is based in part on estimates of the recovery value of the Advisors’ claims against Lehman Brothers Holdings, Inc. and for certain subsidiaries and affiliates (“Lehman”), including cash claims involving amounts owed to the Advisors by Lehman and/or proprietary claims involving the recovery of the Advisors’ assets held by Lehman at the time of its insolvency. These estimates are based on information received from the majority, but not all of, the Advisors, and the Company has no way of independently verifying or otherwise confirming the accuracy of the information provided. As a result, there can be no guarantee that such estimates are accurate. There is significant uncertainty with respect to the ultimate outcome of the Lehman insolvency proceedings, and therefore the amounts ultimately recovered in respect of the Advisor’s claims against Lehman could be materially different than such estimates. Based on the information received, the gross indirect exposure to Lehman did not materially affect the Company’s Members’ Equity.

The managing member of GFS created GFS Trust, a Delaware statutory trust, for the benefit of its investors, including the Company. On March 31, 2009, GFS transferred to GFS Trust its interest in certain illiquid investments, including illiquid investments made by Advisor Funds, as well as liquidating vehicles that Advisors formed as liquidity decreased for previously liquid investments, such as certain credit instruments. See “— Liquidity and Capital Resources” for a further discussion of GFS Trust.

GRV ceased trading activities effective July 1, 2009 and will dissolve at the time all assets are liquidated, liabilities are satisfied and liquidation proceeds are distributed through payment of a liquidating distribution. Investors in GRV (including the Company) will receive proceeds from the liquidation over time as GRV receives redemption proceeds from Advisors. See “— Liquidity and Capital Resources” and ITEM 3. “QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK — Risk Management.”

The Company’s results depend on the Managing Member, including in its capacity as managing member of each of the Investment Funds, and the ability of the Managing Member to recognize and capitalize on trends and other profit and investment opportunities within the Investment Sectors. Unlike many operating businesses, general economic or seasonal conditions may not have any direct effect on the profit potential of the Company due to the uncertain nature of the Company’s investments and since the Company’s investments in the Investment Funds are managed to seek to eliminate or reduce the impact of general economic or seasonal conditions. In addition, the Company’s past performance is not necessarily indicative of future results. Each Investment Fund allocates assets to Advisors that invest in various markets at different times and prior activity in a particular market does not mean that such market will be invested in by the Advisors or will be profitable in the future.

Results of Operations for the Three Months Ended March 31, 2011 and March 31, 2010

The following presents a summary of the operations for the three months ended March 31, 2011 and March 31, 2010 and a general discussion of each material Investees’ performance during those periods. The Investees’ dealing net asset value (“NAV”) and reported performance are prepared using the latest information available from the Advisor Funds at the time of such valuation in accordance with their Limited Liability Company Agreement. The Investees’ investments in the Advisor Funds are determined utilizing NAVs supplied by, or on behalf of, the Advisors of each Advisor Fund. Furthermore, NAVs received from the administrator of the Advisor Funds may be estimates and such values will be used to calculate the NAV of the Investees for purposes of determining amounts payable on redemptions and reported performance of the Investees. Such estimates provided by the administrators of the Advisor Funds may be subject to subsequent revisions which may not be reflected in the Investees’ final month-end dealing NAV. The annual audited financial statements may reflect adjustments for such subsequent revisions which may result in a variance between the Investees’ total return reported in their audited financial statements and the reported performance based on the month-end dealing NAV.

Performance for the Three Months Ended March 31, 2011

The Company’s net realized and unrealized gain/(loss) for the three months ended March 31, 2011 was $8,486,656 compared to the Company’s net realized and unrealized gain/(loss) for the three months ended March 31, 2010 of $10,147,025.

Overview

The Company is designed to be broadly exposed to hedge fund strategies by allocating its assets to the Investment Funds in the Investment Sectors. As further described under ITEM 3. “QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK — Risk Management,” quantitative analysis is combined with judgment to determine weightings, strategic return, risk and correlation estimates to inform the quantitative analysis. Judgment is applied to both estimates and weights in an attempt to achieve exposure to hedge funds while targeting attractive risk adjusted returns. The first two months of 2011 saw a continuation of the rally in risk assets that began in September of 2010, as the positive effects of strong earnings and constructive macro data outweighed the negative impact of investor fears of instability in the Middle East. However, increasing geopolitical unrest in the Middle East and North Africa and an earthquake off the East coast of Japan led to a sharp correction in global equities in the middle of March. Despite this, risk sentiment proved resilient and many investors “bought the dip”, leading equity markets to finish largely flat for the month of March and positive for the first quarter of 2011. World equities (proxied by the MSCI AC World TR Index) returned 4.4% for the first quarter of 2011, with some difference in results across geographies. Developed market equities generated positive performance with the notable exception of Japan, with European equities returning 6.5% (proxied by the MSCI Europe TR Index) and U.S. equities returning 5.9% (proxied by the S&P 500 TR Index); Japanese equities returned -2.3% (proxied by the TOPIX TR Index). Emerging market equities underperformed developed market equities given investor concern over growing inflationary pressures, returning 2.1% (proxied by the MSCI Emerging Markets TR Index). Credit markets tracked broader risk sentiment and continued the strong performance generated in the second half of 2010 with high yield bonds (proxied by the Credit Suisse High Yield Index) and leveraged loans (proxied by the S&P Leveraged Loan 100 Index) returning 3.8% and 2.5% in the first quarter of 2011, respectively. Commodity prices continued to rise, leading the S&P GSCI TR index to post its seventh consecutive positive month in March and return 11.6% for the quarter. Commodities saw significant price performance from silver and crude oil (proxied by generic front month futures contracts), which appreciated 22.6% and 16.8%, respectively. Although risk assets provided the majority of trading opportunities, there were some observable moves in interest rates and foreign exchange markets. Although U.S. short-dated interest rates (proxied by the U.S. 3-month Treasury rate) were relatively unchanged during the first quarter of 2011 as the Federal Reserve remained on hold, yields rose at the long end of the curve (proxied by the 10-year Treasury rate) amid growing concerns related to inflation. In Europe, interest rates (proxied by the Euro Generic Government Bond 10-year Index) rose as the market anticipated rate hikes from the European Central Bank. In foreign exchange markets, the US Dollar declined 4.0% (proxied by the Dollar Index).

The Company cannot predict which Investment Sector and accordingly which Investee will perform best in the future. The table below illustrates the portfolio weighting of each material Investee as of March 31, 2011, as well as each material Investee’s net return for the three months ended March 31, 2011.


	Portfolio Weight			Three Months Ended
	as a % of			March 31, 2011
Investee	Members’ Equity⁽¹⁾			Net Return⁽²⁾

GELS		41.16	%		1.80	%
GFS		25.21	%		1.66	%
GTT		29.47	%		1.04	%


(1)		Members’ equity, used in the calculation of the fair value of the Investees as a percentage of members’ equity, is based on the members’ equity per the Balance Sheet and in accordance with ASC 480, “Distinguishing Liabilities from Equity.”

(2)		These returns are based on the performance of Class C Series 1 units for GELS, GFS and GTT. The returns include administration fees. No management fee or incentive allocation was charged by the managing member of the Investment Funds with respect to the Company’s investment in any of the Investment Funds. Past performance is not indicative of future results, which may vary.

For the three months ended March 31, 2011, the Company’s Class A Series 1 units returned 1.00% net of fees and incentive allocation.

The Investees

Each of the material Investees’ performance during the three months ended March 31, 2011 is described in the following.

Goldman Sachs Global Equity Long/Short, LLC

As of March 31, 2011, GELS represented approximately 41% of the Company’s members’ equity. GELS returned 1.80% for Class C Series 1 units for the three months ended March 31, 2011.

GELS Advisors generated positive performance during the first quarter of 2011, with positive performance in January and February and mixed performance from underlying GELS Advisors in March.

GELS Advisors entered 2011 with increased net exposure and higher portfolio concentrations compared to their average positioning throughout most of 2010. While some GELS Advisors decreased exposure periodically during the quarter in response to increased volatility and heightened geopolitical uncertainty, most GELS Advisors remained generally positive on their portfolios, with a focus on attractive long positions. In January, GELS Advisors who had significant exposure to European, Asian, and emerging markets lagged those GELS Advisors with predominantly U.S. focused strategies. GELS Advisors realized gains from long positions in the energy, industrials, and technology sectors, and from strong stock selection during earnings season which saw an above average number of companies beating consensus estimates. The largest detractors in January came from long positions in the consumer staples and discretionary sectors, long exposure to Asia and emerging markets in general, and short positions in European financials. In February, GELS Advisors extended January gains supported by strong developed market equity performance. U.S. and European focused GELS Advisors realized the strongest returns in February, while underperforming GELS Advisors generally had exposure to Asia and emerging markets, as concerns about inflation tempered the returns of emerging market equities. Positive contributors included long positions in the energy, consumer discretionary, and technology sectors. Underperforming GELS Advisors experienced detraction from long exposure to emerging markets, and from portfolio hedges and short exposures across sectors. In March, GELS Advisors realized a mix of positive and negative performance as U.S. and emerging market focused GELS Advisors generated positive returns, while GELS Advisors with exposure to Europe and Asia underperformed. Top performing GELS Advisors realized gains from long exposure to cyclically-oriented sectors such as energy, industrials and materials. Detractors on the long exposure side came from the financials, consumer discretionary and technology sectors, often the result of idiosyncratic stock events. Short exposures broadly detracted, with losses coming from nearly all sectors except for small contributions from media & telecom. Overall, globally focused GELS Advisors had little exposure to Japan resulting in limited losses from direct exposure to the country.

Goldman Sachs Global Fundamental Strategies, LLC

As of March 31, 2011, GFS represented approximately 25% of the Company’s members’ equity. GFS returned 1.66% for Class C Series 1 units for the three months ended March 31, 2011.

GFS Advisors generally produced positive returns during the first quarter of 2011. The quarter began as a continuation of 2010, with the market environment generally supportive of long positions across the capital structure; GFS Advisors benefited from this positive backdrop in both equity and credit markets. GFS Advisors collectively realized positive performance in January and February, while March saw high dispersion in performance of underlying Advisors given heightened volatility. Credit focused GFS Advisors benefited from the constructive environment for high yield and leveraged loan assets, which both finished the quarter in positive territory. Additionally, distressed credit positions performed well, driven by positive idiosyncratic developments and tight supply-demand dynamics with few new opportunities adding to supply. For multi-strategy GFS Advisors, special situation equities continued to generate returns due to a combination of idiosyncratic developments and the supportive market backdrop. Merger arbitrage positions also contributed to performance with increased activity throughout the quarter. In contrast, hedges were the most notable detractors over the quarter, although managers with more balanced positioning generally avoided significant losses in the middle of March, when volatility spiked with the events in Japan and the Middle East and several long investments experienced sharp declines.

Goldman Sachs Global Tactical Trading, LLC

As of March 31, 2011, GTT represented approximately 29% of the Company’s members’ equity. GTT returned 1.04% for Class C Series 1 units for the three months ended March 31, 2011.

Tactical trading strategies experienced positive performance in the first quarter as macro GTT Advisors contributed positively to gains while managed futures GTT Advisors detracted from performance. Performance was mixed in January for tactical trading strategies as managed futures GTT Advisors suffered from the reversal of several strong market trends, particularly in foreign exchange markets, while macro GTT Advisors were able to generate positive performance primarily from gains in energy and agricultural commodity markets. Markets were volatile in February as broad risk asset price increases over the first several weeks of the month reversed into month-end as political instability in the Middle East led to heightened investor risk aversion. Tactical trading strategies profited over the first part of the month from broadly pro-cyclical positioning across asset classes before giving back some of the gains on the reversal with the exception of continued profits in long energy positions. March also experienced high levels of intra-month volatility as continued tensions in the Middle East and the after effects of the earthquake in Japan further increased investor risk aversion and led to losses across GTT Advisors over the first half of the month. Although macro GTT Advisors were able to recover some of the losses into the end of March as investor risk appetite returned and markets normalized, managed futures GTT Advisors had broadly reduced risk in response to higher volatility which limited participation in the recovery and resulted in overall losses on the month. GTT Advisors were generally long equities and commodities, notably precious metals, energy and agricultural commodities, throughout the quarter. The long equities and commodity positions contributed positively in January and February, but were the largest detractors in March. Fixed income positioning was mixed across GTT Advisors, which resulted in mixed performance during the first quarter. Performance within currencies was also mixed over the quarter, as broadly short U.S. dollar positions contributed to gains overall, but positioning in the Japanese Yen generally detracted from performance, particularly for managed futures GTT Advisors in March.

Performance for the Three Months Ended March 31, 2010

The Company’s net realized and unrealized gain/(loss) for the three months ended March 31, 2010 was $10,147,025 compared to the Company’s net realized and unrealized gain/(loss) for the three months ended March 31, 2009 of $6,140,299.

Overview

The first quarter of 2010 generally saw a continuation of the upward trend in equities which typified the final three quarters of 2009. This came despite a bout of uncertainty during January and early February, sparked by a number of factors including concerns relating to monetary tightening (particularly in China), fears relating to possible sovereign debt defaults, and uncertainty regarding financial reform. In the United States, the S&P 500 Index finished with a gain of 4.9% (5.4% with dividends) despite a pullback of 8.2% between January 19 and February 8. Japanese equities outperformed during the quarter with the Topix rising 7.9%, while European markets experienced more muted gains as the MSCI Europe (local currency) rose 3.6%. Credit markets continued their consistent rebound from early 2009 lows, as inflows into the space supported further improvement. The S&P Leveraged Loan 100 Index rose 4.2% during the quarter while the Credit Suisse High Yield Index gained 4.5% in March, with March being the 13th consecutive month of positive performance for both indices. Rates markets traded actively during the first quarter, but without any sustained directional changes. In FX markets, “core” currencies such as the Euro and British Pound were notable underperformers (down 5.7% and 6.1% respectively against the US Dollar), while “periphery” emerging and developed currencies tended to be firmer, such as the Canadian Dollar which strengthened 3.6% against the US Dollar. In this environment, Advisors performed well in the aggregate, protecting capital through the sell off in the first part of the quarter before capturing some of the upside from more positive trends in late February and March.

The Company cannot predict which Investment Sector and accordingly which Investee will perform best in the future. The table below illustrates the portfolio weighting of each material Investee as of March 31, 2010, as well as each material Investee’s net return for the three months ended March 31, 2010.


	Portfolio Weight			Three Months Ended
	as a % of			March 31, 2010
Investee	Members’ Equity⁽¹⁾			Net Return⁽²⁾

GELS		39.96	%		0.88	%
GFS		22.57	%		4.53	%
GFS Trust		5.31	%		0.83	%
GTT		26.79	%		1.14	%


(1)		Members’ equity, used in the calculation of the fair value of the Investees as a percentage of members’ equity, is based on the members’ equity per the Balance Sheet and in accordance with ASC 480, “Distinguishing Liabilities from Equity.”

(2)		These returns are based on the performance of Class C Series 1 units for GELS, GFS and GTT and GFS Trust interests for GFS Trust. The returns include administration fees. No management fee or incentive allocation was charged by the managing member of the Investment Funds with respect to the Company’s investment in any of the Investment Funds. Past performance is not indicative of future results, which may vary.

For the three months ended March 31, 2010, the Company’s Class A Series 1 units returned 1.28% net of fees and incentive allocation.

The Investees

Each material Investees’ performance during the three months ended March 31, 2010 is described in the following.

Goldman Sachs Global Equity Long/Short, LLC

As of March 31, 2010, GELS represented approximately 40% of the Company’s members’ equity. GELS returned 0.88% for Class C Series 1 units for the three months ended March 31, 2010.

GELS Advisors generated positive performance in the first quarter, benefitting from the strong performance in global equity markets during February and March. As was the case for much of 2009, performance continued to be largely dictated by the GELS Advisors’ levels of market exposure. In January, when equity markets declined globally, GELS Advisors with higher levels of net and long exposure concentrated in emerging markets, technology, media/telecom, and select financials and resources/energy positions experienced some of the largest declines. A minority of GELS Advisors experienced gains in January due to strong performance in the healthcare sector, specifically managed care companies, and the strong performance of their hedges and short positions. During February and March, GELS Advisors with higher gross and net exposure generally performed strongly. In February, North American markets led performance and top performing GELS Advisors benefited from relatively net long positioning and exposure to the consumer, technology, and media sectors, while many of the top performing GELS Advisors were also able to limit losses from short positions and hedges, which led to attractive long/short performance spreads during the month. Bottom performing GELS Advisors in February generally underperformed on the short side, where losses from short positions in consumer, financials, commodities/resources, small cap, and hedges offset long position gains. In March, GELS Advisors realized long position gains across a broad range of sectors including financials, consumer discretionary, industrials/materials, energy, technology, and healthcare. However, March differed from February in that it was challenging for a number of GELS Advisors as their short positions rose more than their long positions and often led to a negative performance spread. Bottom performing GELS Advisors had more neutrally positioned portfolios and experienced the largest losses from short positions and hedges in the more cyclical and levered sectors such as financials, industrials/materials, and consumer discretionary.

For the quarter, catalyst/activist focused GELS Advisors generated strong returns as markets continued to perform strongly. After modest losses in January, when broad based losses in equities offset gains in credit, the catalyst/activist focused GELS Advisors rebounded with positive performance in February and March. Key drivers of returns included long equity positions in the business services, internet, for-profit education, healthcare, and real estate sectors. Equity short positions and CDS positions held by catalyst/activist focused GELS Advisors detracted during the quarter.

Goldman Sachs Global Fundamental Strategies, LLC

As of March 31, 2010, GFS represented approximately 23% of the Company’s members’ equity. GFS returned 4.53% for Class C Series 1 units for the three months ended March 31, 2010.

GFS Advisors largely continued to produce positive returns over the course of the first quarter, despite some volatility driven by the push for financial reform in Washington and the deteriorating economic conditions in Europe, particularly relating to Greece. High-yield bonds and loans concluded the quarter with strong performance, both up 4.7%, supported by a slowly improving economy, mild inflation expectations and continued strong demand for credit. GFS Advisors benefitted from strength in the broader markets, but also generated returns driven by developments in specific situations. Most notably, the post reorganized equity in a large auto-parts producer continued to drive gains for many dedicated credit GFS Advisors during the quarter following the company’s well-received investor conference in January, when management reported improving company fundamentals.

For multi-strategy GFS Advisors, while credit continued to be a source of positive attribution, many also reported positive performance as activities in merger arbitrage and special situations equity investing proved accretive to returns. In merger arbitrage, the closing of a large US railroad operator merger transaction contributed to returns in the beginning of the quarter. Other merger arbitrage situations were less profitable. An investment in a fertilizer manufacturer and distributor that was the subject of a potential acquisition generated losses when the bid to acquire the company was dropped upon the target company’s self-directed acquisition of a rival fertilizer maker. Throughout the quarter, while portfolio hedges minimized return volatility relative to the broader credit and equity markets, they generally detracted from performance as markets moved higher.

Goldman Sachs Global Fundamental Strategies Asset Trust

As of March 31, 2010, GFS Trust represented approximately 5% of the Company’s members’ equity. GFS Trust returned 0.83% for GFS Trust interests for the three months ended March 31, 2010.

On March 31, 2009, GFS transferred to GFS Trust its interest in certain illiquid investments, including illiquid investments made by Advisor Funds, as well as liquidating vehicles that the Advisors formed as liquidity decreased for previously liquid investments, such as certain credit instruments. GFS transferred to GFS Trust the economic risks and benefits of its interests in the assets. In connection with such transfer, each investor in GFS, including the Company, was issued its pro-rata share of GFS Trust interests based on its ownership in GFS as of the transfer date. Distributions from GFS Trust in respect of GFS Trust interests will be made to holders of GFS Trust interests, including the Company, as amounts in respect of the assets transferred to GFS Trust are received from the advisors. However, the actual timing of these distributions will be dependent on the Advisors’ ability to liquidate positions as market conditions allow, and it could be a significant period of time before such positions are realized or disposed of. See ITEM 7. “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Liquidity and Capital Resources”.

Goldman Sachs Global Tactical Trading, LLC

As of March 31, 2010, GTT represented approximately 27% of the Company’s members’ equity. GTT returned 1.14% for Class C Series 1 units for the three months ended March 31, 2010.

Tactical trading strategies experienced positive performance in the first quarter as both macro GTT Advisors and managed futures GTT Advisors were profitable. In the aggregate, macro GTT Advisors outperformed managed futures GTT Advisors as sharp intra-month reversals in January created a difficult trading environment for trend followers. Managed futures GTT Advisors rebounded from losses in January to generate profits in both February and March, ending the quarter in positive territory. Fixed income positioning was more mixed than it had been in 2009, but trading in the asset class resulted in gains in the first quarter across macro and commodity trading advisors (“CTA”) strategies as interest rates generally fell and yield curves steepened. Currency trading was also profitable, as a short position in the Euro was a prominent position across GTT Advisors that resulted in profits as the Euro fell more than 5% against the U.S. Dollar during the quarter. Equity positioning continues to be relatively light in macro strategies, but both CTA and macro GTT Advisors captured the upward trends in markets. Commodities trading was mixed but overall a detractor in the first quarter. CTAs lost money in commodities’ choppier markets in January and February, but were profitable in the aggregate in March as some CTAs were able to capture the strong downward trend in natural gas. Macro GTT Advisors had limited risk in commodities but some Macro GTT Advisors were hurt trading in gold, which moved sideways after 2009’s run-up.

Comparison of Selected Financial Information for the Three Months ended March 31, 2011 and March 31, 2010

Dividend Income

Dividend income for the three months ended March 31, 2011 was $4,183 compared to dividend income for the three months ended March 31, 2010 of $2,407. The Company’s dividend income fluctuates with the level of cash available to invest.

Expenses

The management fee for the three months ended March 31, 2011 was $1,980,445 compared to the management fee for the three months ended March 31, 2010 of $1,922,133. Because the management fee is calculated as a percentage of the Company’s net assets as of each month end (equal to one-twelfth of 1.25% of the net assets of the Company of the applicable month), the changes in the expense were due to fluctuations in the Company’s net assets for the period ended March 31, 2011 compared to the same period in 2010.

Effective November 1, 2010, the Company’s credit facility matured and was not renewed. The Company had no interest expenses for the three months ended March 31, 2011. Interest expense for the three months ended March 31, 2010 was $23,004.

Professional fees for the three months ended March 31, 2011 were $147,537 compared to professional fees for the three months ended March 31, 2010 of $233,163. The decrease in professional fees for the period ended March 31, 2011 was primarily due to reduced costs related to the ongoing operations as a publicly registered company.

Effective August 1, 2010, the Company incurs a monthly administration fee payable to SEI equal to one twelfth of 0.02% of the net assets of the Company as of each month end. The administration fee for the three months ended March 31, 2011 was $38,563.

Miscellaneous expenses for the three months ended March 31, 2011 were $50,352 compared to miscellaneous expenses for the three months ended March 31, 2010 of $39,025.

Incentive Allocation

Incentive allocation for the three months ended March 31, 2011 was $84,590 compared to incentive allocation for the three months ended March 31, 2010 of $56,897. The increase in incentive allocation for the three months ended March 31, 2011 from the three months ended March 31, 2010 was due to an increase in net income from operations for the period for certain series of Class A shares that were above their high watermark.

Other than the management fee, interest expense, professional fees, administration fee, miscellaneous expenses and incentive allocation, there are no other fees directly borne by the Company.

Liquidity and Capital Resources

The Company’s liquidity requirements consist of cash needed to fund investments in the Investment Funds in accordance with the Company’s investment strategy, to fund quarterly redemptions and to pay costs and expenses. The Company periodically re-allocates its investments in the Investment Funds based on the performance of the Investment Funds and other factors. Redemptions are permitted on a quarterly basis and written notices of redemption must be delivered to the Company at least 91 days prior to the applicable valuation date, which is the day immediately preceding the applicable redemption date. Accordingly, the Company cannot predict the level of redemptions in the Company for any quarterly period until 91 days prior to the redemption date. The Company endeavors to pay redemption proceeds within 45 days following the redemption date, without interest. If the Company faces a liquidity problem, the redemptions may be limited or postponed under certain limited circumstances. The Managing Member’s ability to limit or postpone redemptions in the Company enables the Company to control and to some extent avoid a liquidity problem. However, substantial redemptions of units in the Company could require the Company to liquidate certain of its investments in the Investment Funds in order to raise cash to fund the redemptions, which could have a material adverse effect on the NAV of the units and the performance of the Company.

The Company can fund its liquidity requirements by liquidation (through redemptions, or as otherwise permitted in the limited liability company agreements of the Investment Funds) of its investments in the Investment Funds and from new investments from existing and new investors. Neither GFS Trust nor GRV provide investors with a voluntary redemption right. Redemptions can be made quarterly, subject to certain limitations. During certain historic periods, the Company only took in investments from existing investors and limited subscriptions from new qualified investors; however, the Company has been accepting additional amounts of new subscriptions throughout the first quarter of 2011. The Company may close again at any time without notice at the sole discretion of the Managing Member. The acceptance of future subscriptions in the Company and the continued growth of the Company will be determined by the Managing Member in its sole discretion. Although the Managing Member has been receiving new subscriptions, any liquidity requirements in the near term may need to be funded through the redemption of existing investments in the Investment Funds to the extent new investments are not received in sufficient amounts to cover redemptions. If the Company seeks to redeem all or a portion of its investment positions in any of the Investment Funds, the Investment Fund, to the extent it does not have cash on hand to fund such redemption, will need to liquidate some of its investments. Substantial redemptions of membership units in an Investment Fund, including by the Company, could require the Investment Fund to liquidate certain of its investments more rapidly than otherwise desirable in order to raise cash to fund the redemptions and achieve a market position appropriately reflecting a smaller asset base. This could have a material adverse effect on the value of the membership units redeemed and the membership units that remain outstanding and on the performance of the Investment Fund. Under certain exceptional circumstances, such as force majeure, the managing member of an Investment Fund (currently, the Managing Member) may find it necessary (a) to postpone redemptions if it determines that the liquidation of investments in the Investment Fund to fund redemptions would adversely affect the NAV per membership unit of the Investment Fund or (b) to set up a reserve for undetermined or contingent liabilities and withhold a certain portion of redemption proceeds. In such circumstances, the Investment Fund would likely postpone any redemptions.

Certain investment positions in which the Investment Funds have a direct or indirect interest are illiquid. The Advisors may invest in restricted or non-publicly traded securities, securities on foreign exchanges and futures. These positions may be illiquid because certain exchanges limit fluctuations in certain securities and futures contract prices during a single day by regulations referred to as “daily price fluctuation limits” or “daily limits.” Under such daily limits, during a single trading day no trades may be executed at prices beyond the daily limits. Once the price of a particular security or futures contract has increased or decreased by an amount equal to the daily limit, positions in that security or contract can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit.

In addition, certain of the investments held by the Investment Funds are subject to various lock-up provisions. Additionally, the Advisors of the investments held by the Investment Funds may, at their discretion, transfer a portion of the Investment Funds’ investment into share classes where liquidity terms are directed by the Advisor in accordance with the respective investment’s private placement memorandum, commonly referred to as side pocket share classes (“side pockets”). These side pockets may have restricted liquidity and prohibit the Investment Funds from fully liquidating their investments without delay. The managing member of each Investment Fund attempts to determine each Advisor’s strategy on side pockets through its due diligence process prior to making an allocation to the investment managed by the Advisor. However, no assurance can be given on whether or not the Advisor will implement side pockets during the investment period. The Advisors of the investments held by the Investment Funds may also, at their discretion, suspend redemptions or implement other restrictions on liquidity which could impact the Investment Funds’ ability to meet redemptions submitted by the Company. As of March 31, 2011, approximately 2% of the Company’s investments in the Investees were considered illiquid due to restrictions implemented by the Advisors of the investments held by Investees, excluding contractual restrictions imposed by the Advisors at the time of purchase, such as lock-ups. In addition, as of March 31, 2011, approximately 4% of the Company’s members’ equity was considered illiquid due to restrictions implemented by the Investees including the lack of a voluntary redemption right from GFS Trust and GRV.

GS HFS, the managing member of GFS, created GFS Trust for the benefit of its investors, including the Company. Goldman Sachs Trust Company, a Delaware Corporation, is the trustee of GFS Trust (the “Trustee”). The Trustee appointed GS HFS as the “Special Assets Direction Advisor”, responsible for, among other things, disposition of GFS Trust assets. On March 31, 2009, GFS transferred to GFS Trust its interest in certain illiquid investments, including illiquid investments made by Advisor Funds, as well as liquidating vehicles that the Advisors formed as liquidity decreased for previously liquid investments, such as certain credit instruments. GFS transferred to GFS Trust the economic risks and benefits of its interests in the assets. In connection with such transfer, each investor in GFS, including the Company, was issued its pro-rata share of GFS Trust interests based on its ownership in GFS as of the transfer date. Distributions from GFS Trust in respect of GFS Trust interests will be made to holders of GFS Trust interests, including the Company, as amounts in respect of the assets transferred to GFS Trust are received from the Advisors. However, the actual timing of these distributions will be dependent on the Advisors’ ability to liquidate positions as market conditions allow, and it could be a significant period of time before such positions are realized or disposed of.

The Company received subscriptions from new and existing investors of $8,425,000 during the three months ended March 31, 2011 and of $21,075,256 during the three months ended March 31, 2010.

Demand from new and existing investors varies from period to period based upon market conditions, the Company’s returns and other alternative investments available to investors. The Company believes that in more recent periods investors’ interest has decreased from earlier periods as investors have sought to reduce overall portfolio exposure.

The Company paid out redemptions in the amount of $18,611,795 during the three months ended March 31, 2011 and $22,273,475 during the three months ended March 31, 2010. The Company had Redemptions payable in the amount of $29,405,252 at March 31, 2011 and $18,895,114 at December 31, 2010. The Company funded the redemptions made in January, April, July and October 2010 and in January 2011 by making redemptions from the Investment Funds in proportion to the then current weightings and through the use of uninvested cash on hand. The Managing Member expects the Company to fund future redemptions in a similar manner and does not believe that the Redemptions payable in April 2011 had a material adverse effect on the value of the units or the performance of the Company.

Demand for redemptions varies from period to period based upon market conditions, the Company’s returns and other alternative investments available to investors.

The Company and each Investment Fund may, but are not required to, borrow from (including through direct borrowings, borrowings through derivative instruments, or otherwise) The Goldman Sachs Group, Inc. or its affiliates, including Goldman, Sachs & Co. (collectively referred to herein, together with their affiliates, directors, partners, trustees, managers, members, officers and employees, as the “GS Group”), or other parties, when deemed appropriate by its managing member, including to make investments and distributions in respect of redemptions of membership units, to pay expenses or for other purposes.

As of March 31, 2011, the Company had cash and cash equivalents on hand of $33,528,539. As of December 31, 2010, the Company had cash and cash equivalents on hand of $29,949,410.

Investments as of March 31, 2011 were $606,030,567 as compared to $612,687,074 as of December 31, 2010. The decrease was primarily due to net redemptions made by the Company from the Investment Funds partially offset by net realized and unrealized gains during the three months ended March 31, 2011.

Management fee payable represents the management fees due to the Managing Member. Management fee payable as of March 31, 2011 was $1,980,445 as compared to $1,322,217 as of December 31, 2010. Because the management fee is calculated as a percentage of the Company’s net assets as of each month end, the liability related to management fees will fluctuate based on the fluctuation of the month-end NAV of the Company. The increase in Management fee payable is due to the amount and timing of the payment of the monthly management fee to the Managing Member and fluctuations in the NAV.

The Company generally expects that its cash flows from liquidating its investment positions in the Investment Funds to the extent necessary, and from new subscriptions into the Company are adequate to fund its operations and liquidity requirements.

The value of the Company’s directly held cash and financial instruments is not expected to be materially affected by inflation. At the Investee level, given that GFS’s Advisors seek to profit from price movements and can take both positive and negative views on the drivers of such movements, their outlooks may include a view on the direction of inflation, with the outcome of their trades derived, at least in part, from the accuracy of such a view. No first-order endemic effects from inflation, as may exist in long-only bond portfolios, are expected. Further, extended changes in inflation may be associated with strong up or down trends in interest rates, creating a favorable environment for GTT’s Advisors, and therefore contributing to the Company’s profit potential. However, unexpected changes in inflation can also give rise to rapid reversals in interest rate markets, creating an environment in which such Advisors, and the Company, potentially may suffer losses. The impact of changes in inflation on equity long/short strategies used by GELS’ Advisors is difficult to predict and depends upon how large the change is in both absolute terms and relative to expectations. A sharp increase in inflation could hurt certain sectors, such as regional banks, homebuilders, and autos, while sharp downward moves could be beneficial for equities. If a downward move were too large, however, it could give rise to concerns about deflation. In all cases, however, the Company endeavors to take inflation, and its possible effects on each of the Investment Funds, into account when it develops its investment strategies.

Recent Accounting Pronouncements

Critical Accounting Policies and Estimates

Use of estimates

The discussion and analysis of the Company’s financial condition and results of operations are based on the Company’s financial statements, which have been prepared in accordance with U.S. GAAP, which require the Managing Member to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. The financial statements are expressed in U.S. dollars. A summary of the Company’s significant accounting policies is set forth in Note 2 to the Company’s financial statements. In the Managing Member’s view, the policy that involves the most subjective judgment is set forth below.

Fair value of investments

The Company’s investments in Investees are subject to the terms and conditions of the operating agreements of the respective Investees. These investments are carried at fair value, based on the Company’s attributable share of the net assets of the respective Investee. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

U.S. GAAP has a three-level fair value hierarchy for disclosure of fair value measurements. The fair value hierarchy prioritizes inputs to the valuation techniques used to measure fair value, giving the highest priority to Level 1 inputs and the lowest to Level 3 inputs. A financial instrument’s level in the fair value hierarchy is based on the lowest level of any input that is significant to its fair value measurement.

The Company uses NAV as its measure of fair value for investments in Investees. In evaluating the level at which the fair value measurements of the Company’s investments have been classified, the Company has assessed factors including, but not limited to, price transparency, the ability to redeem at NAV at the measurement date and the existence or absence of certain restrictions at the measurement date. See Note 3 to the Company’s financial statements.

For the three months ended March 31, 2011 and the fiscal year ended December 31, 2010, the fair value of the Company’s pro rata share investments in the material Investees was determined by the following valuation techniques:

March 31, 2011


	% of fair value			% of fair value
	investments valued using			utilizing NAV provided
Investee	quoted market prices			by external advisors

GELS		—	%		41.26	%
GFS		—	%		25.26	%
GTT		0.95	%		28.58	%

Total		0.95	%		95.10	%

December 31, 2010


	% of fair value			% of fair value
	investments valued using			utilizing NAV provided
Investee	quoted market prices			by external advisors

GELS		—	%		40.57	%
GFS		—	%		25.68	%
GTT		1.00	%		28.57	%

Total		1.00	%		94.82	%

Valuations generally are made based on information the Company or the Investees, as applicable, receive from the Advisors. This information is generally not audited, except at year-end, and could prove to be inaccurate due to inadvertent mistakes, negligence, recklessness or fraud by the Advisors. The Company receives preliminary and final NAVs from each of the Investees on a monthly basis. Historically, the Company has not experienced any material variance between the preliminary and final NAVs, which would have required adjustment to the Company’s financial statements. If the Managing Member determines that any such valuation may be inaccurate or incomplete, the Managing Member may determine the fair value of the asset based on information available to, and factors deemed relevant by, the Managing Member at the time of such valuation. Generally, however, neither the Company nor the Investees will receive independent valuations with respect to the assets managed by Advisors and will not in many cases be able to conduct any independent valuations on their own or to cause any third parties to undertake such valuations. In addition, valuations of illiquid securities and other investments are inherently uncertain and may prove to be inaccurate in hindsight. These risks are more fully described in the Company’s Form 10-K for the year ended December 31, 2010 (the “Form 10-K”).

The valuation provisions of the Company’s limited liability company agreement and the limited liability company agreements of the Investment Funds were revised as of January 1, 2006 to provide the Managing Member with greater flexibility to more accurately value the Company’s assets (for purposes of subscriptions, redemptions and fees) in circumstances where the Managing Member has information available to it indicating that a valuation may be inaccurate or incomplete, although generally, as described above, the Managing Member will not have access to independent valuations and will rely on valuations provided by the Advisors. Valuations are performed in a substantially similar manner for GFS Trust. However, where such information does exist, the Managing Member will be entitled to apply its authority to more accurately reflect the Company’s value. Accordingly, to the extent that the Managing Member determines that a valuation provided by an Advisor may be inaccurate or incomplete, the additional flexibility on the Company’s valuation practices is designed to make the Company’s valuations more accurate. For example, to the extent an Advisor has allocated assets to an Advisor Fund that has provided the Company with a valuation report indicating a positive valuation, but the Managing Member is aware that the Advisor Fund has filed for bankruptcy, the Managing Member will be able to take the bankruptcy into account to attempt to more accurately determine the fair value of such assets.

There has been no situation during the periods contained in this Quarterly Report on Form 10-Q where the impact of an adjustment to a valuation provided by an Advisor or independent investment manager at an Investee was material to the Company in which one of the Investees had invested was not complete or was inaccurate.

Off-Balance Sheet Risk

In the normal course of business, the Advisors of the Advisor Funds may trade various financial instruments and enter into various investment transactions with off-balance sheet risk, which includes, but are not limited, to securities sold short, futures, forwards, swaps and written options. There are no off-balance sheet or material contingent liabilities at the Company or Investee levels.

Contractual Obligations

The Company does not have any long-term debt obligations, capital or operational lease obligations or other long-term debt liabilities.


Item 3.	Quantitative and Qualitative Disclosures About Market Risk

The following table lists the significant market risk sensitive instruments held by the Company, through the Investees, as of March 31, 2011 and as of December 31, 2010, as indicated by the Fair Value/Value at Risk column, and the Net Realized and Unrealized Gain/(Loss) from January 1, 2011 to March 31, 2011 and from January 1, 2010 to December 31, 2010. Because of the uncertain nature of the investments that the Company engages in through the Investees, the Managing Member believes the entire portfolio value of the Company is at risk. The Managing Member is unable to track the impact of market volatility, credit and interest rate risk on the units because in many cases it does not receive information on individual investments made by Advisors or their aggregate holdings and so is not in a position to track such risks on an aggregate basis.


	Three Months Ended March 31, 2011
						Net Realized
	% of					and Unrealized
	Members’			Fair Value/Value		Gain/(Loss)
Investee	Equity⁽¹⁾			at Risk		(In millions)			Liquidity

GELS		41.16	%	$	250,021,506	$	4.4			(2	)
GFS		25.21	%		153,111,813		2.5			(3	)
GFS Trust		3.56	%		21,613,715		(0.3	)		(4	)
GTT		29.47	%		178,994,469		1.8			(5	)
GRV		0.26	%		1,563,216		0.1			(6	)
HFPO		0.12	%		725,848		0.0			(7	)

Total		99.78	%⁽⁸⁾	$	606,030,567	$	8.5


	Year Ended December 31, 2010
						Net Realized
	% of					and Unrealized
	Members’			Fair Value/Value		Gain/(Loss)
Investee	Equity⁽¹⁾			at Risk		(In millions)			Liquidity

GELS		39.98	%	$	248,593,542	$	9.1			(2	)
GFS		25.30	%		157,347,212		12.8			(3	)
GFS Trust		3.73	%		23,188,415		0.1			(4	)
GTT		29.14	%		181,173,125		15.9			(5	)
GRV		0.27	%		1,649,094		0.1			(6	)
HFPO		0.12	%		735,686		(0.1	)		(7	)

Total		98.54	%⁽⁸⁾	$	612,687,074	$	37.9


(1)		Members’ equity, used in the calculation of the investments as a percentage of members’ equity, is based on the members’ equity per the Balance Sheet and in accordance with ASC 480, “Distinguishing Liabilities from Equity.”

(2)		Redemptions can be made quarterly with 61 days’ notice, or at the sole discretion of the Managing Member.

(3)		Redemptions can be made quarterly on or after the first anniversary of the initial purchase of the units with at least 91 days’ notice, or at the sole discretion of the Managing Member.

(4)		GFS Trust does not provide investors with a voluntary redemption right. Pursuant to the terms of the trust agreement for GFS Trust, distributions will be made to holders of interests in GFS Trust as GFS Trust receives proceeds in respect of its Advisors. The estimated remaining holding period of its remaining underlying investments range from one to six years.

(5)		Redemptions can be made quarterly with 60 days’ notice, or at the sole discretion of the Managing Member.

(6)		GRV ceased its trading activities effective on July 1, 2009, and will dissolve at the time all assets are liquidated, liabilities are satisfied and liquidation proceeds are distributed through payment of a liquidating distribution. GRV suspended redemptions pending the completion of the liquidation proceedings. The estimated remaining holding period of its remaining underlying investments range from one to six years.

(7)		HFPO’s current holdings consist solely of one illiquid investment in an Advisor Fund, which cannot be redeemed until the relevant Advisor liquidates such investment. The estimated remaining holding period of the illiquid investment is approximately two to five years.

(8)		The total value of the Company’s investment in the Investees was less than 100% of members’ equity because members’ equity reflected cash and cash equivalents greater than total liabilities.

Risk Management

In the ordinary course of business, the Managing Member, including in its capacity as managing member of the Investment Funds, attempts to manage a variety of risks, including market, credit and operational risk. The Managing Member, including in its capacity as managing member of the Investment Funds, attempts to identify, measure and monitor risk through various mechanisms including risk management strategies and credit policies. These include monitoring risk guidelines and diversifying exposures across a variety of instruments, markets and counterparties.

Market risk is the risk of potential significant adverse changes to the value of financial instruments because of changes in market conditions such as interest rates, foreign exchange rates, equity prices, credit spreads, liquidity and volatility in commodity or security prices. The Managing Member, including in its capacity as managing member of the Investment Funds, monitors its exposure to market risk at both the Advisor and portfolio level through various analytical techniques. At the Advisor level, market risk is monitored on a regular basis. Where position level detail is available, the Managing Member, including in its capacity as managing member of the Investment Funds, monitors its exposure to market risk through a variety of analytical techniques, including Value-at-Risk (“VaR”) and scenario analysis (stress testing). VaR is calculated for each Advisor using a Monte Carlo simulation with a one-year look back period. The Managing Member looks at VaR over a one-day horizon at the 95% and 99% confidence intervals. As of March 31, 2011, the Managing Member had full position level transparency for approximately 45% (as a percentage of fair value investments) of the Advisors in which the Company invests through the Investment Funds. To determine position level transparency, the Company uses a list containing all Advisors for whom the Company received position level details, whether or not the Advisors also provided pricing information for those positions. The Company believes that knowing its transparency on the position level details of its Advisors provides meaningful information about its underlying investments in its Advisors whether or not the Company also has transparency on the pricing information for these positions and therefore will continue to use such methodology for conveying information regarding the Company’s position level transparency in future quarters. The Managing Member believes that the VaR assumptions it utilizes are reasonable given that VaR is only one determinant in the Managing Member’s overall risk management. Where position level detail is unavailable, an Investment Fund relies on risk reports provided by the Advisors as well as through open communication channels with Advisors, which generally includes site visits and monthly conference calls. The Company’s maximum risk of loss is limited to the Company’s investment in the Investment Funds. The risks involved are more fully described in the Company’s Form 10-K.

The managing member of the Investment Funds monitors Advisors to prevent style drift. “Style drift” is defined as Advisors changing their investment style from the Investment Fund’s expectations. Where position level detail is available, the managing member of the Investment Funds monitors leverage against predetermined limits. Position sizing limits are also monitored to ensure Advisors are properly diversified and risk normally is not concentrated in one or relatively few positions. In some cases, the managing member of the Investment Funds also has the ability to monitor approved trading instruments to ensure Advisors are not trading securities outside their mandate. Where position level detail is not available, the managing member of the Investment Funds relies on both written and oral Advisor communications. The risks involved are more fully described in the Company’s Form 10-K.

At the Company’s portfolio level, the Company’s portfolio construction process is designed to provide for adequate diversification. Each Investment Fund is a portfolio of approximately 10-30 underlying Advisors and the managing member of each of the Investment Funds regularly reviews portfolio statistics, such as relative contribution to risk, to confirm that risk is not concentrated in any single Advisor. However, as of April 1, 2008, GFS is no longer prohibited from allocating 25% or more of its assets to any single Advisor. The managing member of GFS, in its sole discretion, may determine from time to time the number of Advisors with which GFS invests based on factors such as the amount of GFS’s assets under management, the availability of attractive opportunities, and other portfolio construction considerations. Any such greater concentration with any single Advisor or in any single investment strategy may entail additional risks. The risks involved are more fully described in the Company’s Form 10-K.

Quantitative analysis is combined with judgment to determine weightings, strategic return, risk and correlation estimates to inform the quantitative analysis. Judgment is applied to both estimates and weights in an attempt to achieve exposure to hedge funds while delivering attractive risk-adjusted returns. The approximate weights of the material Investees were 41% GELS, 25% GFS and 29% GTT as of March 31, 2011 as a percentage of members’ equity. The approximate weights of the material Investees were 40% GELS, 25% GFS and 29% GTT as of December 31, 2010 as a percentage of members’ equity. This portfolio construction process is designed to create a diversified hedge fund portfolio with attractive return and risk characteristics.

The Managing Member may, from time to time, vary or change materially the actual allocation of assets made by the Company, as it deems appropriate in its sole discretion, including without limitation by way of allocation of Company assets to any new Investment Fund or Advisor, complete or partial withdrawal of an allocation from any existing Investment Fund or Advisor, a reallocation of assets among existing Investment Funds or Advisors, or any combination of the foregoing. In carrying out any reallocation of Company assets, the Managing Member will have the sole discretion to determine the manner of such reallocation, including from which Investment Funds or Advisors to withdraw assets and to which Investment Funds or Advisors to allocate assets. Any reallocation of Company assets, for purposes of diversification, attempts to meet target allocations or otherwise, may take a significant period of time to implement due to the liquidity provisions and restrictions of the Investment Funds and the Advisors and for other reasons. There can be no assurance that market or other events will not have an adverse impact on the strategies employed by multiple Investment Funds and Advisors. Investment Funds and Advisors may at certain times hold large positions in a relatively limited number of investments. The Company could be subject to significant losses if an Investment Fund or an Advisor holds a large position in a particular investment that declines in value that cannot be liquidated without adverse market reaction or is otherwise adversely affected by changes in market conditions or circumstances. While the Managing Member currently expects to allocate assets to all the Investment Sectors (other than relative value) through allocations to the Investment Funds, since April 1, 2008, the Managing Member had no constraints with respect to the percentage of the Company’s assets to be allocated, directly or indirectly, to any single Advisor, group of Advisors, Investment Fund, or Investment Sector, or with respect to the number of Investment Funds and Advisors to which, directly or indirectly, assets of the Company are allocated at any time. The percentage of the Company’s assets to be allocated to any single Advisor, group of Advisors, Investment Fund or Investment Sector, and the number of Investment Funds and Advisors to which the Company allocates assets from time to time will be determined by the Managing Member in its sole discretion, based on factors deemed relevant by the Managing Member at the time of such allocation, which may include the amount of the Company’s assets under management, constraints on the capital capacity of the Investment Funds and Advisors, the availability of attractive opportunities, and other portfolio construction and portfolio management considerations.

The Company invests in the Investment Funds, and may from time to time redeem its membership units of the Investment Funds. Neither GFS Trust nor GRV provide investors with a voluntary redemption right. The Investment Funds, in turn, maintain relationships with counterparties that include the Advisors. These relationships could result in concentrations of credit risk. Credit risk arises from the potential inability of counterparties to perform their obligations under the terms of the contract, including, in the case of the Company’s investments in the Investment Funds, the potential inability of an Investment Fund to satisfy its redemption obligations. The managing member of the Investment Funds (currently, the Managing Member) has formal credit-review policies to monitor counterparty risk.

In addition to market risk and credit risk, the Managing Member, including in its capacity as managing member of the Investment Funds, allocates resources to mitigate operational risk. Operational risk is the potential for loss caused by a deficiency in information, communication, transaction processing, settlement and accounting systems. The Managing Member, including in its capacity as managing member of the Investment Funds, maintains controls and procedures for the purpose of mitigating its own operational risk but it does not have control over the systems of the Advisors. In addition, the Managing Member, including in its capacity as managing member of the Investment Funds, deploys resources to assess control systems, legal risk, compliance risk, operations and treasury risk, credit risk, accounting risk and reputational risk.

Fraud and other business risks cannot be eliminated; however, the Managing Member, including in its capacity as managing member of the Investment Funds, seeks to significantly reduce such risks. The portfolio risk management process includes an effort to monitor and manage risk, but should not be confused with and does not imply low risk. There can be no assurance that the Managing Member, including in its capacity as managing member of the Investment Funds, will be able to implement its risk guidelines or that its risk monitoring strategies will be successful.


Item 4.	Controls and Procedures

As of the end of the period covered by this report, an evaluation was carried out by the board of directors of the Company, with the participation of the principal executive officer and principal financial officer (or persons performing similar functions) of the Managing Member, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, the Company’s principal executive officer and principal financial officer (or persons performing similar functions) concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report. In addition, no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION


Item 1.	Legal Proceedings

There are no material pending legal proceedings to which the Company or the Managing Member is a party or to which any of their assets are subject.


Item 1A.	Risk Factors

None.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

From January 1, 2011 to March 31, 2011, aggregate subscriptions totaled $8,425,000. Details of the sale of the series of units are as follows:


	Class and						Total
	Series of		Number of		Number of		Subscription
Date of Sale	Units		Units Sold		Investors		Amount

January 1, 2011		Class A Series 91		39,500.00		8	$	3,950,000
February 1, 2011		Class A Series 92		26,500.00		8		2,650,000
March 1, 2011		Class A Series 93		18,250.00		5		1,825,000

Total				84,250.00		21	$	8,425,000

The units were sold at $100.00 per unit. The sale was not subject to any underwriting discount or commission. The units were privately offered and sold to accredited investors pursuant to Rule 506 of Regulation D and the sales were exempt from registration under the Securities Act of 1933.

Pursuant to the Company’s limited liability company agreement, holders of units may redeem their units upon 91 days’ prior written notice to the Managing Member (unless such notice is waived by the Managing Member in its sole discretion), on each January 1, April 1, July 1 or October 1 occurring on or after the first anniversary of the purchase of such units by the holder (each a “Redemption Date”). Units of a particular series will be redeemed at a per unit price based upon the NAV of such series as of the close of business on the day immediately preceding the Redemption Date (taking into account the allocation of any net appreciation or depreciation in the net assets of the Company for the accounting period then ending), after reduction for any management fee and incentive fee and other liabilities to the extent accrued or otherwise attributable to the units being redeemed. The Company paid out redemptions of $18,611,795 during the three months ended March 31, 2011.


Item 3.	Defaults Upon Senior Securities

Not applicable.


Item 4.	Reserved


Item 5.	Other Information

A. Charles Baillie had been a director of the Company since April 1, 2009. On May 12, 2011, A. Charles Baillie notified the Company that, effective May 12, 2011, he would no longer serve on the Board of Directors of the Company. There are no current plans to appoint a replacement director for A. Charles Baillie.

This Form 10-Q contains certain “forward-looking statements” regarding the operation of the Company and the Company’s investment objective, including, among other things:


	•	investment strategies and allocations of assets;

	•	future performance;


	•	the Company’s liquidity position; and

	•	trends in the Investment Sectors.

Forward-looking statements are typically identified by the use of terms such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology. These statements are only predictions and are not historical facts. Actual events or results may differ materially.

The forward-looking statements included herein are based on the Managing Member’s current expectations, plans, estimates and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business strategies and decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company’s control. Any of the assumptions underlying the forward-looking statements contained herein could be inaccurate and, therefore, the Managing Member of the Company cannot assure Members that the forward-looking statements included in this Form 10-Q will prove to be accurate.

In light of the significant uncertainties inherent in the forward-looking statements included in this Form 10-Q, the inclusion of such information should not be regarded as a representation by the Company or the Managing Member that the investment objective set forth in this Form 10-Q will be achieved. The Company cautions Members that forward-looking statements are not guarantees and that the actual results could differ materially from those expressed or implied in the forward-looking statements.

In addition to the risks identified in our Form 10-K, which is incorporated herein by reference, the following list indicates some of the risks that could impact the likelihood that any forward-looking statements will come true:


	•	There can be no assurance that the Managing Member’s decisions regarding risk allocations will be successful; inaccurate information provided by the Advisors may have a material adverse effect on implementing the Company’s investment objective;

	•	The Managing Member generally has limited access to information on or control over Advisors’ portfolios and Members assume the risk that Advisors may knowingly misrepresent information which could have a material negative impact on the Company materially;

	•	The Company faces legal, tax and regulatory risks that may adversely affect the Company;

	•	Units will not be listed and will not be marketable; the Company is a closed-end fund with limited liquidity and limited rights for redemption; substantial redemptions could have a material adverse effect on the Company;

	•	The fee structure of the Company, including compensation arrangements with the Managing Member and the Advisors of the Investment Funds, may create incentives for the Managing Member, the Investment Funds or the Advisors to make riskier investments or to inflate returns;

	•	Past performance of affiliated funds and of Advisors are not necessarily indicative of the results that the Company and any Investee may achieve or of future results;

	•	Valuation of the Investees’ investments will be based upon valuations provided by the Advisors which are generally not audited; uncertainties in valuations could have a material adverse effect on the Company’s net assets;

	•	Advisor redemption holdbacks and other Advisor liquidity restrictions may adversely affect the Investment Funds’ ability to redeem interests in order to meet redemption requests, which could have an adverse effect on the Company’s portfolio mix and liquidity for remaining Members;

	•	Frequent trading and turnover typically result in high transaction costs and the Investment Funds have no control over this turnover;

	•	Allocation of the Company’s assets may not protect the Company from exposure to economic downturns in any Investment Fund or Investment Sector;


	•	An investment in the Company involves a high degree of risk that the entire amount invested may be lost; investment results may vary substantially over time;

	•	A Member’s investment in the Company will be affected by the investment policies and decisions of Advisors which are outside the Company’s control; the Advisors may be unable to or may choose not to seek to achieve their investment goals; Advisors may not be able to locate suitable investment opportunities;

	•	Certain Advisors may invest in private equity investments and real estate investments which involve a high degree of business and financial risk and may be difficult to value;

	•	Transactions between and among funds may be undervalued and negatively affect the Company’s performance;

	•	The ability of an Investment Fund to hedge successfully will depend on the particular Advisor’s ability to predict pertinent market movements which cannot be assured;

	•	The prices of an Investee’s investments can be highly volatile and influenced by external factors outside the control of such Investee;

	•	International investments may involve special risks not usually associated with investments in U.S. securities, including higher risk of financial irregularities and/or lack of appropriate risk monitoring and controls;

	•	Equity securities and equity-related instruments may be subject to various types of risk, including market risk, liquidity risk, counterparty credit risk, legal risk and operations risk; and

	•	The issuers of securities acquired by Advisors will sometimes face a high degree of business and financial risk.

The foregoing list of factors is not exhaustive. Investors should carefully consider the foregoing factors and the other uncertainties and potential events described in the Form 10-K. The Company or the Managing Member does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by the Managing Member of the Company or the Company or on their behalf.

References to market or composite indices, benchmarks or other measures of relative market performance are provided for Investor’s information only. Reference to an index does not imply that the portfolio will achieve results similar (or dissimilar) to that index.


Item 6.	Exhibits


Number			Description

	31	.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31	.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32	.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GOLDMAN SACHS HEDGE FUND
PARTNERS, LLC
(Registrant)


	By:	Goldman Sachs Hedge Fund Strategies, LLC Managing Member

	By:	/s/ Jennifer Barbetta

Name: Jennifer Barbetta


	Title:	Chief Financial Officer, Managing Director

Date: May 13, 2011

Index to Exhibits


Number			Description

	31	.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31	.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32	.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Hedge Fund Managers (Diversified) LLC - FORM 10-Q - May 13, 2011

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