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

Attached files

file	filename
EX-32.1 - EX-32.1 - Hedge Fund Managers (Diversified) LLC	y84296exv32w1.htm
EX-31.2 - EX-31.2 - Hedge Fund Managers (Diversified) LLC	y84296exv31w2.htm
EX-31.1 - EX-31.1 - Hedge Fund Managers (Diversified) LLC	y84296exv31w1.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, 2010

		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

One New York Plaza, New York, New York 10004

(Former address of principal executive offices)

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 5,218,069.59 Units of Limited Liability Company Interests outstanding as of May 17, 2010.

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, 2010 and December 31, 2009			1
Balance Sheet as of March 31, 2010 and December 31, 2009			2
Statement of Operations for the three months ended March 31, 2010 and March 31, 2009			3
Statement of Changes in Members’ Equity for the three months ended March 31, 2010 and the year ended December 31, 2009			4
Statement of Cash Flows for the three months ended March 31, 2010 and March 31, 2009			5
Notes to Unaudited Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			29
Item 3. Quantitative and Qualitative Disclosures About Market Risk			44
Item 4T. Controls and Procedures			47

PART II — OTHER INFORMATION
Item 1. Legal Proceedings			48
Item 1A. Risk Factors			48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			48
Item 3. Defaults Upon Senior Securities			48
Item 4. Reserved			48
Item 5. Other Information			48
Item 6. Exhibits			51
SIGNATURES			52
INDEX TO EXHIBITS			53
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, 2010 and December 31, 2009


	(Unaudited)								(Audited)
	March 31, 2010								December 31, 2009
			% of			% of adjusted					% of			% of adjusted
	Fair		members’			members’			Fair		members’			members’
Affiliated Investee⁽¹⁾	value		equity⁽²⁾			equity⁽³⁾			value		equity⁽²⁾			equity⁽³⁾
Goldman Sachs Global Equity Long/Short, LLC	$	244,714,208		39.96	%		39.04	%	$	235,518,832		39.40	%		37.98	%
Goldman Sachs Global Fundamental Strategies, LLC		138,222,519		22.57	%		22.05	%		132,477,127		22.17	%		21.36	%
Goldman Sachs Global Fundamental Strategies Asset Trust		32,526,848		5.31	%		5.19	%		37,532,758		6.28	%		6.05	%
Goldman Sachs Global Relative Value, LLC		3,365,049		0.55	%		0.53	%		4,887,674		0.82	%		0.79	%
Goldman Sachs Global Tactical Trading, LLC		164,100,901		26.79	%		26.18	%		155,217,816		25.97	%		25.03	%
Goldman Sachs HFP Opportunistic Fund, LLC		7,822,077		1.28	%		1.25	%		20,801,289		3.48	%		3.36	%

Total investments (cost $534,492,480 and $526,489,487, respectively)	$	590,751,602		96.46	%		94.24	%	$	586,435,496		98.12	%		94.57	%

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, 2010 and December 31, 2009.

March 31, 2010 (Unaudited)

Proportionate

% of

% of adjusted

Underlying

share of

members’

Investee

investment

Strategy

fair value

equity⁽²⁾

equity⁽³⁾

Goldman Sachs Global Tactical Trading, LLC

GS Global Trading Advisors, LLC⁽⁴⁾

Managed
Futures

58,659,503

9.58%

9.36%

December 31, 2009 (Audited)

Proportionate

% of

% of adjusted

Underlying

share of

members’

Investee

investment

Strategy

fair value

equity⁽²⁾

equity⁽³⁾

Goldman Sachs Global Tactical Trading, LLC

GS Global Trading Advisors, LLC⁽⁴⁾

Managed
Futures

58,480,624

9.78%

9.43%


(1)		Refer to Note 3 to the financial statements for liquidity provisions.

(2)		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 reduced for member redemptions that are paid after the balance sheet date according to Statement of Financial Accounting Standards ASC 480, “Distinguishing Liabilities from Equity.”

(3)		Adjusted members’ equity, used in the calculation of the fair value of each of the investees and the underlying investment as a percentage of adjusted members’ equity, represents members’ equity excluding Redemptions payable in the amount of $14,420,221 at March 31, 2010 and Redemptions payable in the amount of $22,410,715 at December 31, 2009.

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

See accompanying notes.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

BALANCE SHEET

March 31, 2010 and December 31, 2009


	(Unaudited)		(Audited)
	March 31, 2010		December 31, 2009

ASSETS
Assets:
Investments in affiliated Investees, at fair value (cost $534,492,480 and $526,489,487, respectively)	$	590,751,602	$	586,435,496
Cash and cash equivalents		38,682,436		35,470,838

Total assets	$	629,434,038	$	621,906,334


LIABILITIES AND MEMBERS’ EQUITY
Liabilities:
Redemptions payable	$	14,420,221	$	22,410,715
Due to managing member		1,922,133		1,288,968
Interest payable		8,416		13,556
Accrued expenses and other liabilities		660,851		495,060

Total liabilities		17,011,621		24,208,299
Members’ equity (units outstanding 4,849,832.12 and 4,736,483.29, respectively)		612,422,417		597,698,035

Total liabilities and members’ equity	$	629,434,038	$	621,906,334

Analysis of members’ equity:
Net capital contributions, accumulated net investment income/(loss) and realized gain/(loss) on investments	$	556,163,295	$	537,752,026
Accumulated net unrealized gain/(loss) on investments		56,259,122		59,946,009

Total members’ equity	$	612,422,417	$	597,698,035

See accompanying notes.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

STATEMENT OF OPERATIONS

(Unaudited)

For the three months ended March 31, 2010 and March 31, 2009


	2010			2009

Income from trading:
Realized and unrealized gain/(loss) on investments in affiliated Investees:
Net realized gain/(loss)	$	13,833,912		$	8,403,003
Net change in unrealized gain/(loss)		(3,686,887	)		(2,262,704	)

Net trading gain/(loss)		10,147,025			6,140,299
Interest and dividend income		2,407			80,359
Expenses:
Management fee		1,922,133			1,941,772
Professional fees		233,163			245,427
Interest expense		23,004			20,000
Other expenses		39,025			37,050

Total expenses		2,217,325			2,244,249

Net investment income/(loss)		(2,214,918	)		(2,163,890	)

Net income/(loss)		7,932,107			3,976,409
Less: Incentive allocation to the Managing Member		56,897			814

Net income/(loss) available for pro-rata allocation to members	$	7,875,210		$	3,975,595

See accompanying notes.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

STATEMENT OF CHANGES IN MEMBERS’ EQUITY

For the three months ended March 31, 2010 (Unaudited)

and the year ended December 31, 2009 (Audited)


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

Member’s equity at December 31, 2008	$	—			5,040,063.11		$	609,936,071		$	609,936,071
Subscriptions		—			738,758.37			73,875,837			73,875,837
Redemptions		(137,681	)		(1,042,338.19	)		(137,820,155	)		(137,957,836	)
Share class conversion		—			—			—			—
Allocations of net income/(loss):
Incentive allocation		137,681			—			—			137,681
Pro-rata allocation		—			—			51,706,282			51,706,282

Member’s equity at December 31, 2009		—			4,736,483.29			597,698,035			597,698,035
Subscriptions		—			210,752.56			21,075,256			21,075,256
Redemptions		—			(110,137.48	)		(14,282,981	)		(14,282,981	)
Share class conversion		—			12,733.75			—			—
Allocations of net income/(loss):
Incentive allocation		56,897			—			—			56,897
Pro-rata allocation		—			—			7,875,210			7,875,210

Member’s equity at March 31, 2010	$	56,897			4,849,832.12		$	612,365,520		$	612,422,417

See accompanying notes.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

STATEMENT OF CASH FLOWS

(Unaudited)

For the three months ended March 31, 2010 and March 31, 2009


	2010			2009

Cash flows from operating activities
Net income/(loss)	$	7,932,107		$	3,976,409
Adjustments to reconcile net income/(loss) to net cash provided by (used in) operating activities:
Purchases of investments in Investees		(58,000,000	)		(12,600,000	)
Proceeds from sales of investments in Investees		63,830,919			73,000,000
Net realized (gain)/loss from investments in Investees		(13,833,912	)		(8,403,003	)
Net change in unrealized (gain)/loss of investments in Investees		3,686,887			2,262,704
Increase/(decrease) in operating liabilities:
Due to managing member		633,165			(75,881	)
Interest Payable		(5,140	)		—
Accrued expenses and other liabilities		165,791			21,695

Net cash from operating activities		4,409,817			58,181,924

Cash flows from financing activities
Subscriptions		21,075,256			9,000,000
Redemptions		(22,273,475	)		(28,982,893	)

Net cash from financing activities		(1,198,219	)		(19,982,893	)

Net change in cash and cash equivalents		3,211,598			38,199,031
Cash and cash equivalents at beginning of period		35,470,838			26,943,800

Cash and cash equivalents at end of period	$	38,682,436		$	65,142,831

Supplemental disclosure of cash flow information
Cash paid by the Company during the period for interest	$	28,144		$	20,000

In-kind transfer from Goldman Sachs Global Fundamental Strategies, LLC to Goldman Sachs Fundamental Strategies Asset Trust (Refer to Note 3)	$	—		$	47,730,311

See accompanying notes.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 2010


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”), Goldman Sachs Global Tactical Trading, LLC (“GTT”) and Goldman Sachs HFP Opportunistic Fund, LLC (“HFPO”) (collectively, the “Investment Funds”). The balance of the Company’s assets are invested in Goldman Sachs Global Fundamental Strategies Asset Trust (“GFS Trust”) and Goldman Sachs Global Relative Value, LLC (“GRV” and, together with GFS Trust 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.

Recent Accounting Developments

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.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 2 –	Significant accounting policies (continued)

Fair value of investments

The Company is an investment company for financial reporting purposes and accordingly carries its financial assets and liabilities at fair value. The fair value of the Company’s assets and liabilities that qualify as financial instruments approximates the carrying amounts presented in the Balance Sheet.

ASC 820 “Fair Value Measurements and Disclosure” Fair value hierarchy establishes a fair value hierarchy and specifies that a valuation technique used to measure fair value shall maximize the use of observable inputs and minimize the use of unobservable inputs. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820 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 considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly; and

	•	Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

As required by ASC 820, investments are classified within the level of the lowest significant input considered in determining fair value. In evaluating the level at which the Company’s investments have been classified, the Company has assessed factors including, but not limited to, price transparency, the ability to redeem at net asset value (“NAV”) at the measurement date and the existence or absence of certain restrictions at the measurement date. In accordance with ASU 2009-12, if the Company has the ability to redeem from the investment at the measurement date or in the near-term at NAV, the investment would be classified as a Level 2 fair value measurement. Alternatively, if the Company will never have the ability to redeem from the investment or is restricted from redeeming for an uncertain or extended period of time from the measurement date, the investment would be classified as a Level 3 fair value measurement. See “Note 3 — Investments in affiliated Investees” for further information.

Ownership in Investees

During the three months ended March 31, 2010 and the year ended December 31, 2009, 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.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 2 –	Significant accounting policies (continued)

The following tables summarize the Company’s ownership in the Investees at March 31, 2010 and December 31, 2009:


	March 31, 2010 (Unaudited)
					% owned			Adjusted		Adjusted %
	Company		Investee		by the			Investee		owned by the
	investment		equity⁽¹⁾		Company⁽¹⁾			equity⁽²⁾		Company⁽²⁾
GELS	$	244,714,208	$	461,464,458		53.03	%	$	482,101,423		50.76	%
GFS		138,222,519		348,751,140		39.63	%		365,151,140		37.85	%
GFS Trust		32,526,848		115,752,284		28.10	%		115,752,284		28.10	%
GRV		3,365,049		12,010,270		28.02	%		12,810,270		26.27	%
GTT		164,100,901		324,423,188		50.58	%		338,023,188		48.55	%
HFPO		7,822,077		13,173,944		59.38	%		13,173,944		59.38	%

Total	$	590,751,602



	December 31, 2009 (Audited)
					% owned			Adjusted		Adjusted %
	Company		Investee		by the			Investee		owned by the
	investment		equity⁽¹⁾		Company⁽¹⁾			equity⁽²⁾		Company⁽²⁾
GELS	$	235,518,832	$	406,728,241		57.91	%	$	464,593,167		50.69	%
GFS		132,477,127		275,465,080		48.09	%		357,336,116		37.07	%
GFS Trust		37,532,758		133,566,660		28.10	%		133,566,660		28.10	%
GRV		4,887,674		18,606,692		26.27	%		18,606,692		26.27	%
GTT		155,217,816		296,045,714		52.43	%		312,655,496		49.64	%
HFPO		20,801,289		35,033,537		59.38	%		35,033,537		59.38	%

Total	$	586,435,496


(1)		The Investees’ equity used in the calculation of the percentage owned by the Company is reduced for member redemptions from the Investees that are paid after the balance sheet date according to ASC 480, “Distinguishing Liabilities from Equity.”

(2)		The adjusted Investees’ equity used in the calculation of the percentage owned by the Company represents Investees’ equity excluding redemptions payable at March 31, 2010 and December 31, 2009, respectively.

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 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, 2010


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 such 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 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.

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.


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 terms and conditions of the respective operating agreements. The investments in affiliated Investees are carried at fair value. Fair values are determined utilizing

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 3 –	Investments in affiliated Investees (continued)

NAV information supplied by each individual affiliated Investee. GS HFS is the managing member of each of the Investment Funds. 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. Because of the inherent uncertainty of valuation, estimated fair values may differ, at times significantly, from the values that would have been used had a ready market existed.

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 allocation by the Investment Funds of their assets with the various Advisors and the performance of each of their Advisor Funds and interests held by GFS Trust and GRV. 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 are 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 ASC 820, price transparency and valuation procedures in place, the ability to redeem at NAV at the measurement date, and existence of certain redemption restrictions at the measurement date. 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.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


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, 2010 and December 31, 2009:


	March 31, 2010 (Unaudited)
Assets	Level 1		Level 2		Level 3		Total
Investees by investment strategy:
Equity Long/Short	$	—	$	244,714,208	$	—	$	244,714,208
Event Driven		—		138,222,519		32,526,848		170,749,367
Tactical Trading		—		164,100,901		—		164,100,901
Multi-Strategy		—		7,822,077		—		7,822,077
Relative Value		—		—		3,365,049		3,365,049

Total	$	—	$	554,859,705	$	35,891,897	$	590,751,602



	December 31, 2009
Assets	Level 1		Level 2		Level 3		Total
Investees by investment strategy:
Equity Long/Short	$	—	$	235,518,832	$	—	$	235,518,832
Event Driven		—		132,477,127		37,532,758		170,009,885
Tactical Trading		—		155,217,816		—		155,217,816
Multi-Strategy		—		20,801,289		—		20,801,289
Relative Value		—		—		4,887,674		4,887,674

Total	$	—	$	544,015,064	$	42,420,432	$	586,435,496

Included in cash and cash equivalents on the Balance Sheet are investments in money market funds with a fair value of $38,652,331 and $35,440,838, which were classified as Level 1 assets as of March 31, 2010 and December 31, 2009, respectively.

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
Purchase/(Sales)		(5,254,774	)		(1,632,316	)		(6,887,090	)
Level 3 transfers in/(out)		—			—			—

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

Transfers into and out of Level 3 are effective as of actual date of the event or circumstances that caused the transfer.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 3 –	Investments in affiliated Investees (continued)

The following is a reconciliation of Level 3 investments for the quarter ended March 31, 2009:


	Event Driven		Total
Balance as at January 1, 2009	$	—	$	—
Net realized gain/(loss) from investments		—		—
Net change in unrealized gain/(loss) on investments still held at March 31, 2009		—		—
Net purchase/(sales)		47,730,311		47,730,311
Net Level 3 transfers in/(out)		—		—

Balance as at March 31, 2009	$	47,730,311	$	47,730,311

Transfers into and out of Level 3 are effective as of actual date of the event or circumstances that caused the transfer.

The following table summarizes the cost of the Company’s investments in the affiliated Investees at March 31, 2010 and December 31, 2009:


Investee	March 31, 2010		December 31, 2009
GELS	$	222,148,284	$	211,430,047
GFS		126,243,799		122,004,423
GFS Trust		28,570,165		32,545,763
GRV		3,447,100		5,165,590
GTT		147,194,072		136,619,878
HFPO		6,889,060		18,723,786

Total	$	534,492,480	$	526,489,487

The following table summarizes the Company’s realized and unrealized gain/(loss) on investments in affiliated Investees for the three months ended March 31, 2010 and March 31, 2009:


		Three Months Ended March 31,
Investee	Liquidity	2010			2009
GELS	(1)	$	2,195,376		$	2,393,533
GFS	(2)		5,745,392			1,687,081
GFS Trust	(3)		248,864			—
GRV	(4)		109,691			385,955
GTT	(5)		1,883,085			1,131,523
HFPO	(2)		(35,383	)		542,207

Total		$	10,147,025		$	6,140,299


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

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 3 –	Investments in affiliated Investees (continued)


(4)		Redemptions can be made quarterly with 91 days’ notice, or at the sole discretion of its managing member. 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 five years.

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

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

The managing member of GFS, GS HFS, 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. The transfer was accounted for as an in-kind transfer at a fair value of $47,730,311, which resulted in a realized gain of $3,179,237. In connection with the transfer, the historical cost of the Company’s investment in GFS of $44,551,074 was transferred to GFS Trust including an unrealized gain of $3,179,237. 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’s pro-rata share of GFS Trust interests as of March 31, 2010 was an amount equal to approximately 5% of the Company’s adjusted members’ equity. Such amount of the Company’s pro-rata share of GFS Trust interests is included in the percentage of the Company’s investments in the Investees that were considered illiquid at March 31, 2010.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 3 –	Investments in affiliated Investees (continued)

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

On July 1, 2007, the Company made an investment in HFPO whose 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.

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. The Company is reinvesting the liquidation proceeds it receives from GRV in accordance with the Company’s investment program.

GRV 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 relative value sector. Relative value strategies seek to profit from the mispricing of financial instruments, capturing spreads between related securities that deviate from their fair value or historical norms. Directional and market exposure is generally held to a minimum or completely hedged. Strategies that may be utilized in the relative value sector include convertible arbitrage, equity arbitrage and fixed-income arbitrage. Other strategies may be employed as well.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 3 –	Investments in affiliated Investees (continued)

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, 2010 and March 31, 2009. 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.


	March 31, 2010						March 31, 2009
	Management			Incentive			Management			Incentive
Investee	fees			allocation/fees			fees			allocation/fees
GELS		1.56	%		18.83	%		1.64	%		19.74	%
GFS		1.63	%		18.49	%		1.74	%		19.64	%
GFS Trust		1.52	%		17.21	%		—			—
GRV		0.97	%		8.94	%		1.55	%		18.04	%
GTT		1.94	%		18.80	%		2.26	%		22.20	%
HFPO		2.01	%		20.15	%		2.28	%		22.76	%

The Advisors’ management fee and incentive allocation/fee are not paid to the Managing Member.


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.

The Company incurs an indirect monthly administration fee to SEI which ranges between 0.05% and 0.06% per annum of the net assets at the Investee level, but such rate may be exceeded under certain circumstances subject to a maximum of approximately 0.20% during the year ended December 31, 2009. The administration fee is charged at the Investee level and 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, 2010 and March 31, 2009, the Company’s pro-rata indirect share of the administration fee charged at the Investee level totaled $77,351 and $72,092, 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, credit, operational and liquidity 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 diversifying 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, 2009 provides details of these and other types of risks, some of which are additional to the information provided in these financial statements.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 5 –	Risk management (continued)

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.

(ii) Interest rate risk

The Advisor Funds may invest in fixed income securities and derivatives. Any change to the 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 value 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.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 5 –	Risk management (continued)

Credit risk

Credit risk is the risk that one party to a financial investment 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.

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 Investment Funds. However, the Company’s investments in the Investment Funds may only be redeemed on a limited basis. Neither GFS Trust nor GRV provide investors with a voluntary redemption right as detailed in “Note 3 — Investments in affiliated Investees.” As a result, the Company may not be able to liquidate quickly some of its investments in order to meet liquidity requirements.

To mitigate some of the liquidity risks described above, the Company currently maintains a committed credit facility with a financial institution which may be used to meet member redemptions. See “Note 7 — Borrowing facility” for further information. Additionally, the Company has the ability to suspend redemptions prior to the effectiveness of redemption requests at the Managing Member’s sole discretion.

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.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 5 –	Risk management (continued)

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, 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, 2010, approximately 6% 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 should conditions warrant.


Note 6 –	Related parties

The due to managing member liability in the Balance Sheet represents management fees due to GS HFS at March 31, 2010 and December 31, 2009

Included in the redemptions payable on the Balance Sheet at March 31, 2010 and December 31, 2009 were redemptions due to the Managing Member of $137,240, and $137,240, respectively.

For the period from January 1, 2010 to March 31, 2010, the Company earned dividends of $2,407 from investments in the 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. For the period from January 1, 2009 to March 31, 2009, the Company earned dividends of $80,359 from an investment in the Goldman Sachs Financial Square Prime Obligations Fund, a money market fund managed by Goldman Sachs Asset Management, L.P. At March 31, 2010 and December 31, 2009, the Company held investments in the Goldman Sachs Financial Square Government Fund and Goldman Sachs Financial Square Treasury Obligations Funds with the fair values of $38,652,331 and $35,440,838, respectively.

Goldman, Sachs & Co. (“GS & Co.”), an affiliate of the Managing Member, may serve as one of several prime brokers for certain of the Advisor Funds. Goldman Sachs Administration Services, an affiliate of the Managing Member, may serve as the administrator for one or more Advisor Funds.

Directors and executive officers of the Company and the Managing Member owned less than 1% of the Company’s equity at March 31, 2010 and December 31, 2009. Employees of GS & Co. owned approximately 2% of the Company’s equity at March 31, 2010 and December 31, 2009.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 7 –	Borrowing facility

The following table summarizes the Company’s committed credit facility (as amended from time to time, the “Credit Facility”) with Barclays Bank PLC (the “Facility Counterparty”) between January 1, 2009 and March 31, 2010:


Time periods⁽¹⁾⁽²⁾	Maximum amount⁽²⁾	Interest rate⁽³⁾	Commitment fee
1/28/10-03/31/10	Lesser of $33,700,000 or 14.25% of the Company’s NAV	LIBOR plus 1.00%		0.29%
01/01/09-01/27/10	Lesser of $32,000,000 or 14.25% of the Company’s NAV	LIBOR plus 1.00%		0.25%


(1)		The maturity date of the Credit Facility is June 5, 2010.

(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”).

The Company borrows from the Credit Facility to meet its liquidity needs. As of March 31, 2010 and December 31, 2009, there were no borrowings outstanding. Interest related to borrowing and the commitment fees are included in Interest expense in the Statement of Operations. Included in Interest payable in the Balance Sheet are amounts owed for interest and commitment fees.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 8 –	Members’ equity

At March 31, 2010 and December 31, 2009, 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, 2010, Class A Series 55 through Class A Series 65 units and Class A Series 74 through Class A Series 76 units were converted into Class A Series 1 units. The Managing Member does not own any units in the Company.

Transactions in units for non-managing members for the three months ended March 31, 2010 and the year ended December 31, 2009 are as follows:


	Three Months Ended						Year Ended
	March 31, 2010						December 31, 2009
	Units			Amount			Units		Amount
Share Class Conversion
Class A
Series 54		592,596.98		$	60,385,988			—	$	—
Series 55		(22,500.00	)		(2,379,248	)		—		—
Series 56		(10,000.00	)		(1,076,095	)		—		—
Series 57		(25,000.00	)		(2,715,361	)		—		—
Series 58		(50,000.00	)		(5,386,946	)		—		—
Series 59		(15,000.00	)		(1,618,719	)		—		—
Series 60		(27,600.00	)		(2,979,262	)		—		—
Series 61		(11,312.98	)		(1,212,471	)		—		—
Series 62		(62,000.00	)		(6,519,496	)		—		—
Series 63		(66,712.98	)		(7,009,995	)		—		—
Series 64		(36,650.00	)		(3,809,919	)		—		—
Series 65		(54,137.27	)		(5,558,740	)		—		—
Series 74		(83,000.00	)		(8,401,415	)		—		—
Series 75		(85,100.00	)		(8,628,531	)		—		—
Series 76		(30,850.00	)		(3,089,790	)		—		—

		12,733.75		$	—			—	$	—

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 8 –	Members’ equity (continued)


	Three Months Ended				Year Ended
	March 31, 2010				December 31, 2009
	Units		Amount		Units		Amount
Subscriptions
Class A
Series 57		—	$	—		25,000.00	$	2,500,000
Series 58		—		—		50,000.00		5,000,000
Series 59		—		—		15,000.00		1,500,000
Series 60		—		—		27,600.00		2,760,000
Series 61		—		—		11,312.98		1,131,298
Series 62		—		—		62,000.00		6,200,000
Series 63		—		—		66,712.98		6,671,298
Series 64		—		—		36,650.00		3,665,000
Series 65		—		—		54,137.27		5,413,727
Series 66		—		—		95,580.88		9,558,088
Series 67		—		—		1,367.32		136,732
Series 68		—		—		57,080.94		5,708,094
Series 69		—		—		20,861.87		2,086,187
Series 70		—		—		6,848.67		684,867
Series 71		—		—		1,403.93		140,393
Series 72		—		—		6,915.70		691,570
Series 73		—		—		1,335.83		133,583
Series 74		—		—		83,000.00		8,300,000
Series 75		—		—		85,100.00		8,510,000
Series 76		—		—		30,850.00		3,085,000
Series 77		76,950.00		7,695,000		—		—
Series 78		62,345.96		6,234,596		—		—
Series 79		71,456.60		7,145,660		—		—

Total		210,752.56	$	21,075,256		738,758.37	$	73,875,837

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 8 –	Members’ equity (continued)


	Three Months Ended				Year Ended
	March 31, 2010				December 31, 2009
	Units		Amount		Units		Amount
Redemptions
Class A
Series 1		73,601.30	$	10,725,931		918,434.94	$	126,197,094
Series 45		2,500.00		238,306		18,500.00		1,619,229
Series 46		—		—		28,057.64		2,537,895
Series 48		15,000.00		1,450,610		5,000.00		453,200
Series 49		—		—		5,000.00		472,959
Series 50		9,036.18		850,000		13,613.61		1,240,823
Series 51		—		—		3,232.00		300,000
Series 52		—		—		12,000.00		1,138,619
Series 53		2,500.00		244,577		16,000.00		1,525,865
Series 54		7,500.00		773,557		12,500.00		1,258,376
Series 56		—		—		10,000.00		1,076,095

Total		110,137.48	$	14,282,981		1,042,338.19	$	137,820,155

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 8 –	Members’ equity (continued)

At March 31, 2010 and December 31, 2009, members’ equity consisted of the following:


	March 31, 2010						December 31, 2009
	Outstanding		Net		NAV		Outstanding		Net		NAV
	units		asset value		per unit		units		asset value		per unit
Non-managing members
Class A
Series 1		2,811,814.21	$	409,766,112	$	145.73		2,885,415.51	$	415,172,330	$	143.89
Series 45		50,322.13		4,796,820		95.32		52,822.13		4,971,425		94.12
Series 46		121,252.89		11,760,789		96.99		121,252.89		11,612,001		95.77
Series 47		72,250.00		6,863,925		95.00		72,250.00		6,777,089		93.80
Series 48		106,500.00		10,299,331		96.71		121,500.00		11,601,290		95.48
Series 49		140,800.00		13,489,169		95.80		140,800.00		13,318,515		94.59
Series 50		199,430.21		18,759,665		94.07		208,466.39		19,361,580		92.88
Series 51		123,068.00		11,569,748		94.01		123,068.00		11,423,377		92.82
Series 52		96,750.00		9,342,228		96.56		96,750.00		9,224,038		95.34
Series 53		71,050.00		6,950,879		97.83		73,550.00		7,104,425		96.59
Series 54		654,446.98		67,500,310		103.14		69,350.00		7,066,804		101.90
Series 55		—		—		—		22,500.00		2,379,248		105.74
Series 56		—		—		—		10,000.00		1,076,095		107.61
Series 57		—		—		—		25,000.00		2,715,361		108.61
Series 58		—		—		—		50,000.00		5,386,946		107.74
Series 59		—		—		—		15,000.00		1,618,719		107.91
Series 60		—		—		—		27,600.00		2,979,262		107.94
Series 61		—		—		—		11,312.98		1,212,471		107.18
Series 62		—		—		—		62,000.00		6,519,496		105.15
Series 63		—		—		—		66,712.98		7,009,995		105.08
Series 64		—		—		—		36,650.00		3,809,919		103.95
Series 65		—		—		—		54,137.27		5,558,740		102.68
Series 66		95,580.88		9,953,512		104.14		95,580.88		9,827,589		102.82
Series 67		1,367.32		142,389		104.14		1,367.32		140,588		102.82
Series 68		57,080.94		5,944,241		104.14		57,080.94		5,869,039		102.82
Series 69		20,861.87		2,172,494		104.14		20,861.87		2,145,009		102.82
Series 70		6,848.67		713,200		104.14		6,848.67		704,178		102.82
Series 71		1,403.93		146,201		104.14		1,403.93		144,351		102.82
Series 72		6,915.70		720,180		104.14		6,915.70		711,069		102.82
Series 73		1,335.83		139,110		104.14		1,335.83		137,350		102.82
Series 74		—		—		—		83,000.00		8,401,415		101.22
Series 75		—		—		—		85,100.00		8,628,531		101.39
Series 76		—		—		—		30,850.00		3,089,790		100.16
Series 77		76,950.00		7,788,668		101.22		—		—		—
Series 78		62,345.96		6,319,455		101.36		—		—		—
Series 79		71,456.60		7,227,094		101.14		—		—		—

Subtotal		4,849,832.12		612,365,520				4,736,483.29		597,698,035

Managing member				56,897						—

Total members’ equity			$	612,422,417					$	597,698,035

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 9 –	Financial highlights

Financial highlights for the Company for the three months ended March 31, 2010 and 2009 are as follows:


	Three Months Ended
	March 31,
	2010			2009
	Class A			Class A
	Series 1			Series 1
Per unit operating performance:
Net asset value, beginning of period	$	143.89		$	131.92
Income from operations:
Net trading gain/(loss)		2.36			1.32
Net investment income/(loss)⁽¹⁾⁽²⁾		(0.52	)		(0.46	)

Total income/(loss) from operations		1.84			0.86

Net asset value, end of period	$	145.73		$	132.78

Ratios to average members’ equity⁽³⁾
Expenses		1.46	%		1.47	%
Incentive allocation		0.00	%		0.00	%

Total expenses and incentive allocation		1.46	%		1.47	%

Net investment income/(loss)⁽²⁾		(1.46	)%		(1.41	)%

Total return (prior to incentive allocation)⁽⁴⁾		1.28	%		0.65	%
Incentive allocation⁽⁴⁾		0.00	%		0.00	%

Total return⁽⁴⁾		1.28	%		0.65	%


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

(2)		Includes incentive allocation.

(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, 2010


Note 10 –	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, 2010 (the “Significant Investees”):

Balance Sheet

The balance sheets as of March 31, 2010 and December 31, 2009, are summarized as follows:


	March 31, 2010
	GELS		GFS		GTT
Assets
Investments in Investees, at fair value	$	445,820,851	$	318,459,665	$	134,471,409
Investments in affiliated Investees, at fair value		—		25,369,730		192,694,094
Cash and cash equivalents		24,058,342		18,378,271		1,783,152
Other assets		42,000,000		3,502,573		11,777,297

Total assets	$	511,879,193	$	365,710,239	$	340,725,952


Liabilities and Net Assets
Liabilities
Redemptions payable	$	20,636,965	$	16,400,000	$	13,600,000
Loan payable		29,000,000		—		2,003,114
Accrued expenses and other liabilities		777,770		559,099		699,650

Total liabilities		50,414,735		16,959,099		16,302,764
Net assets		461,464,458		348,751,140		324,423,188

Total liabilities and net assets	$	511,879,193	$	365,710,239	$	340,725,952



	December 31, 2009
	GELS		GFS		GTT
Assets
Investments in Investees, at fair value	$	422,198,049	$	303,788,708	$	106,086,018
Investments in affiliated Investees, at fair value		720,104		23,626,633		185,915,266
Cash and cash equivalents		18,030,775		25,410,020		8,723,057
Other assets		24,466,148		6,509,847		12,457,432

Total assets	$	465,415,076	$	359,335,208	$	313,181,773


Liabilities and Net Assets
Liabilities
Redemptions payable	$	57,864,926	$	81,871,036	$	16,609,782
Accrued expenses and other liabilities		821,909		1,999,092		526,277

Total liabilities		58,686,835		83,870,128		17,136,059
Net assets		406,728,241		275,465,080		296,045,714

Total liabilities and net assets	$	465,415,076	$	359,335,208	$	313,181,773

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 10 –	Significant Investees (continued)

Statement of Operations

For the three months ended March 31, 2010 and March 31, 2009, the statements of operations are summarized as follows:


	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



	March 31, 2009
Income/(Loss)	GELS			GFS			GTT
Net realized gain/(loss) on Investees	$	(4,602,421	)	$	54,022,131		$	5,573,847
Net change in unrealized gain/(loss) on Investees		11,944,579			(43,860,368	)		(3,426,392	)
Investment income		221,877			235,537			85,570
Expenses		(271,830	)		(630,602	)		(233,353	)

Net income/(loss) from operations	$	7,292,205		$	9,766,698		$	1,999,672

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 10 –	Significant Investees (continued)

Statement of Cash Flows

For the three months ended March 31, 2010 and March 31, 2009, the statements of cash flows are summarized as follows:


	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
Net 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



	March 31, 2009
	GELS			GFS			GTT
Cash flows from operating activities
Net income/(loss) from operations	$	7,292,205		$	9,766,698		$	1,999,672
Net change in investments in investees		83,574,665			193,498,734			47,331,939
Net change in operating assets and liabilities		(1,013,392	)		2,857,748			(7,208,636	)

Net cash provided by/(used in) operating activities		89,853,478			206,123,180			42,122,975

Cash flows from financing activities
Net subscriptions/(redemptions)⁽¹⁾		(66,145,535	)		(74,935,161	)		(41,651,095	)
Net proceeds/(repayments) from loan		—			—			25,023,297

Net cash provided by/(used in) financing activities		(66,145,535	)		(74,935,161	)		(16,627,798	)

Net change in cash and cash equivalents		23,707,943			131,188,019			25,495,177
Cash and cash equivalents at beginning of period		86,798,258			48,995,300			45,129,030

Cash and cash equivalents at end of period	$	110,506,201		$	180,183,319		$	70,624,207


(1)		During the period ended March 31, 2009, GFS had an in-kind redemption of $157,265,966.

GOLDMAN SACHS HEDGE FUND PARTNERS, LLC

NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
March 31, 2010


Note 11 –	Subsequent Events

On April 16, 2010, the Securities and Exchange Commission (“SEC”) brought an action under the U.S. federal securities laws in the U.S. District Court for the Southern District of New York against GS & Co. and one of its employees alleging that they made materially misleading statements and omissions in connection with a 2007 private placement of securities relating to a synthetic collateralized debt obligation sold to two institutional investors. GS & Co. and/or other affiliates of The Goldman Sachs Group, Inc. have received or may in the future receive notices and requests for information from various regulators, and have become or may in the future become involved in legal proceedings, based on allegations similar to those made by the SEC or other matters.

Neither Goldman Sachs Asset Management, L.P. or GS HFS (collectively “GSAM”) nor any GSAM-managed funds have been named in the complaint. Moreover, the SEC complaint does not seek any penalties against any employee who is or has been part of GSAM.


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, 2010, the Company had total assets of $629,434,038 compared with total assets of $621,906,334 as of December 31, 2009. Total liabilities of the Company were $17,011,621 as of March 31, 2010 compared with $24,208,299 as of December 31, 2009. Member’s equity of the Company was $612,422,417 as of March 31, 2010 compared with $597,698,035 as of December 31, 2009.

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 four Investment Funds, each of which is managed by the Managing Member. The current Investment Funds are Goldman Sachs Global Tactical Trading, LLC (“GTT”), which employs investment strategies in the tactical trading sector; 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 HFP Opportunistic Fund, LLC (“HFPO”), which employs investment strategies within one or more of the Investment Sectors. 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” and together with GFS Trust and the Investment Funds, the “Investees”), which is in the process of liquidation. In addition, the Company may, directly or indirectly, allocate assets to Advisors whose principal investment strategies are not within one of the hedge fund 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. The Company is reinvesting the liquidation proceeds it receives from GRV in accordance with the Company’s investment program. 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, 2010 and March 31, 2009

The following presents a summary of the operations for the three months ended March 31, 2010 and March 31, 2009 and a general discussion of the 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, 2010

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

Overview

The Company is designed to be broadly exposed to the hedge fund market 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 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			Portfolio Weight			Three Months Ended
	as a % of			as a % of Adjusted			March 31, 2010
Investee	Members’ Equity⁽¹⁾			Members’ Equity⁽²⁾			Net Return⁽³⁾

GELS		39.96	%		39.04	%		0.88	%
GFS		22.57	%		22.05	%		4.53	%
GFS Trust		5.31	%		5.19	%		0.83	%
GTT		26.79	%		26.18	%		1.14	%


(1)		Members’ equity, used in the calculation of the fair value of the Investees as a percentage of members’ equity, is reduced for member redemptions that are paid after the balance sheet date according to ASC 480, “Distinguishing Liabilities from Equity.”

(2)		Adjusted members’ equity, used in the calculation of the fair value of the Investees as a percentage of adjusted members’ equity, represents members’ equity excluding Redemptions payable in the amount of $14,420,221 at March 31, 2010.

(3)		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

The 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 39% of the Company’s adjusted members’ equity, which excluded redemptions paid after March 31, 2010. 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 22% of the Company’s adjusted members’ equity, which excluded redemptions paid after March 31, 2010. 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 adjusted members’ equity, which excluded redemptions paid after March 31, 2010. 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 26% of the Company’s adjusted members’ equity, which excluded redemptions paid after March 31, 2010. 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.

Performance for the Three Months Ended March 31, 2009

The Company’s net trading gain/(loss) for the three months ended March 31, 2009 was $6,140,299 compared to the Company’s net trading gain/(loss) for the three months ended March 31, 2008 of $(7,642,197).

Overview

During the first quarter of 2009, Advisors in the portfolio were able to take advantage of improved liquidity conditions in the secondary credit markets and in equity markets globally. Advisors largely continued to operate with lower levels of gross and net exposure which allowed them to preserve capital and limit portfolio volatility in the challenging market environment. Advisors with macro views and trading orientations were also able to benefit from the volatility and capture opportunities. Advisors with high net exposure to cyclical sectors underperformed over the period.

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 Investee as of March 31, 2009, as well as each Investee’s net return for the three months ended March 31, 2009.


	Portfolio Weight			Portfolio Weight			Three Months Ended
	as a % of			as a % of Adjusted			March 31, 2009
Investee	Members’ Equity⁽¹⁾			Members’ Equity⁽²⁾			Net Return⁽³⁾

GELS		30.58	%		28.05	%		1.39	%
GFS		26.46	%		24.26	%		0.86	%
GFS Trust		8.35	%		7.66	%		—
GRV		8.66	%		7.94	%		0.79	%
GTT		20.70	%		18.98	%		1.03	%
HFPO		3.37	%		3.09	%		2.96	%


(1)		Members’ equity, used in the calculation of the fair value of the Investees as a percentage of members’ equity, is reduced for member redemptions that are paid after the balance sheet date according to SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.”

(2)		Adjusted members’ equity, used in the calculation of the fair value of the Investees as a percentage of adjusted members’ equity, represents members’ equity excluding Redemptions payable in the amount of $51,670,155 at March 31, 2009.

(3)		These returns are based on the performance of Class C Series 1 units for GELS, GFS, GRV and GTT and Class A Series 1 units for HFPO. 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 Investees. Past performance is not indicative of future results, which may vary. GFS Trust commenced operations on March 31, 2009.

For the three months ended March 31, 2009, the Company’s Class A Series 1 units returned 0.65% net of fees and incentive allocation.

The Investees

Each of the Investees’ performance during the three months ended March 31, 2009 is described in the following.

Goldman Sachs Global Equity Long/Short, LLC

As of March 31, 2009, GELS represented approximately 28% of the Company’s adjusted members’ equity, which excluded redemptions paid after March 31, 2009. GELS returned 1.39% for Class C Series 1 units for the three months ended March 31, 2009.

GELS Advisors ended the first quarter of 2009 in positive territory, outperforming developed market equity indices which generally realized double-digit losses. GELS Advisors largely continued to operate with lower levels of gross and net exposure which helped them preserve capital and limit portfolio volatility in the challenging market environment. Throughout the first quarter of 2009, equity markets experienced a wide dispersion of both intra- and inter-sector performance which benefited GELS Advisors with strong security selection and low levels of net equity exposure as they generated profits from the performance spread between long positions and short positions. Several GELS Advisors were able to take advantage of the weakness in the cyclical, financial, industrial and REIT sectors, generating significant gains through short positions. While most sectors and geographies realized losses during the first quarter of 2009, GELS Advisors were able to selectively generate gains on the long side through special situations equity positions in the technology, telecom, healthcare and consumer sectors, among others. Top performing GELS Advisors also used the market volatility to their advantage by actively trading individual positions and adjusting exposures during market sell-offs and rallies. Underperforming GELS Advisors tended to have the highest levels of net exposure, particularly in the financials, energy and industrials sectors.

GELS Advisors remained cautiously positioned during the first quarter of 2009. Advisors selectively added to market exposure with a focus on liquidity. GELS Advisors began to increase portfolio risk in March as market sentiment improved and additional details were revealed about the U.S. government’s economic policy response. However, gross and net exposure levels were well below historical averages given the elevated levels of market volatility. Long holdings continue to be weighted towards high-quality businesses in defensive industries such as healthcare, education, payment processing, consumer staples and technology. Long holdings were concentrated in developed markets (particularly the U.S. and Europe) and GELS Advisors had very limited exposure to emerging markets. Despite the steep drop in equity prices over the past year, GELS Advisors found a number of attractive short opportunities. Short opportunities included cyclical industries with significant overcapacity and pricing pressure, highly levered industries which face near term financing issues and sectors sensitive to consumer weakness such as luxury goods.

Goldman Sachs Global Fundamental Strategies, LLC

As of March 31, 2009, GFS represented approximately 24% of the Company’s adjusted members’ equity, which excluded redemptions paid after March 31, 2009. GFS returned 0.86% for Class C Series 1 units for the three months ended March 31, 2009. On March 31, 2009, the managing member of GFS transferred its interests in certain illiquid assets to GFS Trust for the benefit of its investors. See “— Liquidity and Capital Resources”. As of March 31, 2009, GFS’ portion of the Company’s adjusted members’ equity, 24%, reflects the transfer of GFS’ interest in those illiquid assets, however, GFS’ return for the three months ended March 31, 2009, 0.86%, reflects that the transfer of GFS’ interest in those illiquid assets took place as of March 31, 2009.

GFS Advisors produced positive returns over the course of the first quarter of 2009, benefiting from an overweight in credit markets and little directional exposure to equity markets. Credit markets outperformed equity markets significantly over the first quarter of 2009, primarily benefitting from a modest recovery in liquidity. Several GFS Advisors in the portfolio were able to take advantage of improved liquidity conditions in the secondary credit markets and as a result, reported positive performance particularly in the first two months of 2009. While fundamentals in the equity/financial market continued to deteriorate, the increased price differentiation among credit names in the first quarter of 2009 allowed GFS Advisors to perform well on both long and short positions. In general, high yield bonds outperformed investment grade bonds and sovereign bonds in the first quarter, which further added to performance as many GFS Advisors took long positions in high yield bonds and short positions with investment grade corporate issuers and sovereign issuers. With regard to event-driven strategies, and according to Bloomberg, year-to-date as of March 31, 2009 announced M&A volume and count are down 20% and 36%, respectively, year-over-year. GFS Advisors have been able to generate attractive returns by investing in select high-quality transactions. For example, positions in Rohm and Haas/Dow Chemical and Genentech/Roche were some of the best contributors to performance in the first quarter.

GFS Advisors remained cautiously positioned during the first quarter of 2009. Advisors selectively added risk exposures given the high level of macro economic uncertainty. Credit continued to be a favored asset class in the first quarter of 2009 as GFS Advisors generally sought more attractive return/risk profile in credit relative to equity. GFS Advisors were increasingly focused on credit selection by differentiating between the high quality and low quality names given the current economic downdraft. Similarly, while risk arbitrage was a less prominent strategy given the general unavailability of credit, GFS Advisors have pointed to a few high quality transactions, which generated attractive returns. In addition, as policy responses around the world have become more influential in the markets, GFS Advisors have begun to incorporate more macro themes when identifying investment opportunities.

Goldman Sachs Global Fundamental Strategies Asset Trust

As of March 31, 2009, GFS Trust represented approximately 8% of the Company’s adjusted members’ equity, which excluded redemptions paid after March 31, 2009. Performance information for GFS Trust cannot be provided because GFS Trust was only formed on March 31, 2009. See “— Liquidity and Capital Resources.”

Goldman Sachs Global Relative Value, LLC

As of March 31, 2009, GRV represented approximately 8% of the Company’s adjusted members’ equity, which excluded redemptions paid after March 31, 2009. GRV returned 0.79% for Class C Series 1 units for the three months ended March 31, 2009.

Overall, relative value strategies were positive in the first quarter of 2009. A U.S. equity volatility-focused GRV Advisor was the strongest relative value performer in the first quarter of 2009, as equity option volumes were sufficiently high to allow for good trading opportunities. Fixed income strategies generated positive results, with strategies in Asia outperforming. Emerging markets strategies generated gains in sovereign and corporate debt in countries such as Kazakhstan and Russia. Equity market neutral strategies were mixed as traditional value and momentum factors underperformed and fundamental and event factor strategies generated positive results. Multi-strategy GRV Advisors detracted from performance as losses in credit and equity strategies outpaced gains in convertibles and macro trading strategies.

Goldman Sachs Global Tactical Trading, LLC

As of March 31, 2009, GTT represented approximately 19% of the Company’s adjusted members’ equity, which excluded redemptions paid after March 31, 2009. GTT returned 1.03% for Class C Series 1 units for the three months ended March 31, 2009.

Tactical trading strategies experienced positive performance in the first quarter, as the gains in macro strategies outpaced the losses in trend-following strategies. Trend-following GTT Advisors’ returns were fairly muted during January and February, but trend reversals in March led to losses in the first quarter of 2009. Within macro strategies, currency trading returns were mixed. Developed currency trading in the U.S. dollar and the Euro was profitable early in the first quarter of 2009 but proved more challenging for some GTT Advisors in March, particularly around the mid month announcement from the U.S. Federal Reserve on quantitative easing. Macro commodity trading produced similar results, with some GTT Advisors giving back gains in March. Fixed income trading generated positive returns overall, while performance in equities was more muted. Emerging markets strategies generated gains in sovereign and corporate debt in countries such as Kazakhstan and Russia.

Goldman Sachs HFP Opportunistic Fund, LLC

As of March 31, 2009, HFPO represented approximately 3% of the Company’s adjusted members’ equity, which excluded redemptions paid after March 31, 2009. HFPO returned 2.96% for Class A Series 1 units for the three months ended March 31, 2009.

HFPO Advisors finished the first quarter of 2009 in positive territory. An equity long/short HFPO Advisor benefited from low gross exposure and single stock picking on both the long and short side in the industrials, energy and material sectors. A tactical trading HFPO Advisor benefited from macro trading across all assets.

Comparison of Selected Financial Information for the Three Months ended March 31, 2010 and March 31, 2009

Interest and Dividend Income

Interest and dividend income for the three months ended March 31, 2010 was $2,407 compared to interest and dividend income for the three months ended March 31, 2009 of $80,359. The Company’s interest and dividend income fluctuates with the level of cash available to invest.

Expenses

The management fee for the three months ended March 31, 2010 was $1,922,133 compared to the management fee for the three months ended March 31, 2009 of $1,941,772. 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, 2010 compared to the same period in 2009.

Interest expense for the three months ended March 31, 2010 was $23,004 compared to interest expense for the three months ended March 31, 2009 of $20,000.

Professional fees for the three months ended March 31, 2010 were $233,163 compared to professional fees for the three months ended March 31, 2009 of $245,427. The decrease in professional fees for the period ended March 31, 2010 was primarily due to reduced costs related to the ongoing operations as a publicly registered company.

Miscellaneous expenses for the three months ended March 31, 2010 were $39,025 compared to miscellaneous expenses for the three months ended March 31, 2009 of $37,050.

Incentive Allocation

Incentive allocation for the three months ended March 31, 2010 was $56,897 compared to incentive allocation for the three months ended March 31, 2009 of $814. The increase in incentive allocation for the three months ended March 31, 2010 from the three months ended March 31, 2009 was due to an increase in net income from operations for the period.

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 2010. 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, 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, 2010, approximately 6% 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.

The managing member of GFS, GS HFS, 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. The transfer was accounted for as an in-kind transfer at a fair value of $47,730,311, which resulted in a realized gain of $3,179,237. In connection with the transfer, the historical cost of the Company’s investment in GFS of $44,551,074 was transferred to GFS Trust including an unrealized gain of $3,179,237. 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’s pro-rata share of GFS Trust interests as of March 31, 2010 was an amount equal to approximately 5% of the Company’s members’ equity. Such amount of the Company’s pro-rata share of GFS Trust interests is included in the percentage of the Company’s investments in the Investees that were considered illiquid at March 31, 2010.

The Company received subscriptions from new and existing investors of $21,075,256 during the three months ended March 31, 2010 and of $9,000,000 during the three months ended March 31, 2009.

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 the more recent periods investors’ interest has increased from earlier periods as investors have sought to increase overall portfolio exposure.

The Company paid out redemptions in the amount of $22,273,475 during the three months ended March 31, 2010 and $28,982,893 during the three months ended March 31, 2009. The Company had Redemptions payable in the amount of $14,420,221 at March 31, 2010 and $22,410,715 at December 31, 2009. The Company funded the redemptions made in January, April, July and October 2009 and in January 2010 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 2010 had a material adverse effect on the value of the units or the performance of the Company. As further described below in this section, the Company entered into a Credit Facility on June 30, 2006, which was amended as described below. Although the Company may elect to borrow under its Credit Facility, including, without limitation, to fund redemptions, from time to time, in the future, it currently expects any such borrowing would not result in long term debt of the Company and does not expect the Company’s risk position to change as a result thereof.

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.

On June 30, 2006, the Company entered into a committed credit facility (as amended from time to time, the “Credit Facility”) with Barclays Bank PLC (the “Facility Counterparty”). The Company amended certain terms of the Credit Facility on January 28, 2010 to, among other things, extend the maturity date to June 5, 2010. As of March 31, 2010, the Company had no outstanding borrowings under the Credit Facility. Pursuant to the Credit Facility, the Company may borrow up to an amount equal to the lesser of (i) $33,700,000 which amount may be subsequently increased to $100,000,000 subject to the approval of the Facility Counterparty, and (ii) 14.25% of the Company’s NAV from time to time. If borrowings by the Company exceed 14.25% of its NAV at any time, then the Company is required to make mandatory prepayments to the extent necessary so that borrowings (subject to adjustments for pending redemptions by the Company) do not exceed 12.5% of the Company’s NAV, payable when it has received proceeds of redemptions from the Investment Funds. The Company is also required to prepay all borrowings if, after a five business day remediation period, the Facility Counterparty notifies the Company that its investments in funds continue to not meet certain liquidity and diversification criteria set forth in the Credit Facility, payable within ninety days of any such notice. The Company may voluntarily borrow, repay and reborrow advances on a revolving basis. The advances bear interest at a per annum rate equal to (i) with respect to advances provided on less than three business days’ notice, the overnight London Interbank Offered Rate (“LIBOR”), for the initial day of such advance and one-week LIBOR thereafter, and (ii) with respect to all other advances, one-week LIBOR, plus in each case 1.00%. The Company also pays a monthly commitment fee to the Facility Counterparty at the rate of 0.29% per annum of the average daily aggregate unused portion of the commitment. If the Company terminates the Credit Facility prior to the stated final maturity, it has agreed to pay a fee (except in certain circumstances where no such fee will be payable) equal to the product of 0.25% per annum times the commitment in effect immediately prior to such optional termination times “M”; where “M” equals the period commencing on the date of such optional termination and ending on the stated final maturity. The proceeds of the advances under the Credit Facility will be used for liquidity management in connection with subscriptions to the Company and redemptions of the Company’s investments in the Investment Funds and for general purposes not prohibited by the Credit Facility or the investment guidelines therein. The obligation of the Facility Counterparty to make advances is subject to customary conditions precedent, including the absence of defaults. The Credit Facility contains customary representations and warranties, affirmative covenants, including a covenant to deliver information regarding

the Company’s NAV and negative covenants, including restrictions on the Company’s ability to incur additional indebtedness (other than the advances or fees and expenses incurred in the ordinary course of business), grant liens, merge or sell all or substantially all of its assets, pay dividends or make redemptions of the Company’s investors if advances would exceed the permitted borrowing amount or there is an event of default regarding non-payment of advances, failure to comply with investment guidelines, failure to provide access to financial records, insolvency events or change of control events, and enter into material amendments of the Company’s organizational documents or investment management or fund administration agreements. The Credit Facility contains customary events of default (subject to thresholds, materiality qualifications and notice periods specified therein), including: failure to make payments when due, incorrectness of representations and warranties, non-compliance with the Credit Facility and note, breach of material agreements, insolvency events, judgments or orders to pay money, a “material adverse effect” as defined in the Credit Facility, change in the control of the Managing Member, or its removal or resignation, violation of law or suspension of licenses held by the Company or the Managing Member and suspension in the redemption of the units. In addition, the Credit Facility contains investment guidelines setting forth certain requirements regarding permitted instruments, strategy limits, leverage and borrowing, liquidity, diversification and remediation. The Managing Member does not expect that any of these investment guidelines, including, but not limited to, the strategy limits, will have a limiting effect on the operation of the Company or the Managing Member’s investment strategy for the Company. Each Investment Fund, except HFPO, has entered into a similar facility with a different counterparty. See Note 7 to the financial statements for a description of the Company’s Credit Facility.

As of March 31, 2010, the Company had cash and cash equivalents on hand of $38,682,436. As of December 31, 2009, the Company had cash and cash equivalents on hand of $35,470,838. The change in cash and cash equivalents held by the Company at March 31, 2010 was attributed to actions taken by the Company to anticipate future liquidity requirements.

Investments as of March 31, 2010 were $590,751,602 as compared to $586,435,496 as of December 31, 2009. The increase was primarily due to net trading gains partially offset by net redemptions made by the Company from the Investment Funds during the three months ended March 31, 2010.

Due to managing member represents the management fees due to the Managing Member. Due to managing member as of March 31, 2010 was $1,922,133 as compared to $1,288,968 as of December 31, 2009. 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 Due to managing member 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 flow from liquidating its investment positions in the Investment Funds to the extent necessary and from new investments in the Company, together with borrowings under the Credit Facility, 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 addition, as HFPO employs a broad range of alternative investment strategies primarily within one or more of the Investment Sectors, HFPO’s Advisors could experience similar effects from changes in inflation depending on the particular strategy employed. 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

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 Company adopted ASC 820 on January 1, 2008, which establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurements). Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. See Note 3 to the Company’s financial statements.

Fair values of interests in Investees are determined utilizing NAV information supplied by each individual Investee that is net of the Advisors’ management and incentive fees charged to the Investees. The underlying investments of each Investee are also accounted for at fair value. For investments of the underlying Advisor Funds, market value normally is based on quoted market prices or broker-dealer price quotations provided to the Advisor Fund. In the absence of quoted market prices or broker-dealer price quotations, underlying Advisor Fund investments are valued at fair value as determined by the Advisors or their administrator. Assets of the Company invested directly in Advisor Funds will generally be valued based on the net asset value reported by or on behalf of the applicable Advisor.

For the three months ended March 31, 2010 and the fiscal year ended December 31, 2009, the fair value of the Company’s material investments in the Investees was determined by the following valuation techniques:

March 31, 2010


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

GELS		—	%		41.43	%
GFS		—	%		23.40	%
GFS Trust		—	%		5.51	%
GTT		0.78	%		26.99	%

Total		0.78	%		97.33	%

December 31, 2009


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

GELS		0.07	%		40.09	%
GFS		—	%		21.59	%
GFS Trust		—	%		6.40	%
GTT		0.57	%		25.89	%

Total		0.64	%		93.97	%

Because of the inherent uncertainty of valuation, estimated fair values may differ, at times significantly, from the values that would have been used had a ready market existed. In particular, the 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, 2009 (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.

During the periods contained in this Quarterly Report on Form 10-Q (the “Form 10-Q”), the managing member of an Investee had adjusted the valuation provided by an Advisor in which an Investee had invested to reflect what the managing member believes to be the appropriate fair value of that investment. There has been no situation during the periods contained in this 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, 2010 and as of December 31, 2009, as indicated by the Fair Value/Value at Risk column, and the Net Trading Gain/(Loss) from January 1, 2010 to March 31, 2010 and from January 1, 2009 to December 31, 2009. 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, 2010
				% of
	% of			Adjusted					Net Trading
	Members’			Members’			Fair Value/Value		Gain/(Loss)
Investees	Equity⁽¹⁾			Equity⁽²⁾			at Risk		(In millions)			Liquidity

GELS		39.96	%		39.04	%	$	244,714,208	$	2.2			(3	)
GFS		22.57	%		22.05	%		138,222,519		5.7			(4	)
GFS Trust		5.31	%		5.19	%		32,526,848		0.2			(5	)
GTT		26.79	%		26.18	%		164,100,901		1.9			(7	)
HFPO		1.28	%		1.25	%		7,822,077		(0.0	)		(4	)
GRV		0.55	%		0.53	%		3,365,049		0.1			(6	)

Total		96.46	%⁽⁹⁾		94.24	%⁽⁸⁾	$	590,751,602	$	10.1


	Year Ended December 31, 2009 (Audited)
				% of
	% of			Adjusted					Net Trading
	Members’			Members’			Fair Value/Value		Gain/(Loss)
Investee	Equity⁽¹⁾			Equity⁽²⁾			at Risk		(In millions)		Liquidity

GELS		39.40	%		37.98	%	$	235,518,832	$	24.2		(3	)
GFS		22.17	%		21.36	%	$	132,477,127	$	22.5		(4	)
GFS Trust		6.28	%		6.05	%	$	37,532,758	$	2.2		(5	)
GTT		25.97	%		25.03	%	$	155,217,816	$	8.1		(7	)
HFPO		3.48	%		3.36	%	$	20,801,289	$	2.1		(4	)
GRV		0.82	%		0.79	%	$	4,887,674	$	1.5		(6	)

Total		98.12	%⁽⁹⁾		94.57	%⁽⁸⁾	$	586,435,496	$	60.6


(1)		Members’ equity, used in the calculation of the investments as a percentage of members’ equity, is reduced for member redemptions that are paid after the balance sheet date according to ASC 480, “Distinguishing Liabilities from Equity.”

(2)		Adjusted members’ equity, used in the calculation of the fair value of the Investees as a percentage of adjusted members’ equity, represents members’ equity excluding Redemptions payable in the amount of $14,420,221 at March 31, 2010 and Redemptions payable in the amount of $22,410,715 at December 31, 2009.

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

(4)		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.

(5)		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.

(6)		Redemptions can be made quarterly with 91 days’ notice, or at the sole discretion of the Managing Member. 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. GRV suspended redemptions pending the completion of the liquidation proceedings.

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


(8)		The total value of the Company’s investment in the Investees was less than 100% of adjusted members’ equity because adjusted members’ equity reflected cash and cash equivalents greater than total liabilities excluding Redemptions payable in the amount of $14,420,221 that was payable at March 31, 2010 and $22,410,715 that was payable at December 31, 2009.

(9)		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, 2010, the Managing Member had full position level transparency for approximately 28% (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 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 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 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 Investees were 39% GELS, 22% GFS, 5% GFS Trust, 1% GRV, 26% GTT and 1% HFPO as of March 31, 2010 as a percentage of adjusted members’ equity, which excluded redemptions paid after March 31, 2010. 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 4T. 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, 2010 to March 31, 2010, aggregate subscriptions totaled $21,075,256. 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, 2010		Class A Series 77		76,950.00		11	$	7,695,000
February 1, 2010		Class A Series 78		62,345.96		10		6,234,596
March 1, 2010		Class A Series 79		71,456.60		12		7,145,660

Total				210,752.56		33	$	21,075,256

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 $22,273,475 during the three months ended March 31, 2010.


Item 3.	Defaults Upon Senior Securities

Not applicable.


Item 4.	Reserved


Item 5.	Other Information

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:	Managing Director and Principal Financial Officer

Date: May 17, 2010

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 17, 2010

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