Hedge Fund Managers (Diversified) LLC – ‘8-K’ for 10/3/05 – EX-99.1

On:  Monday, 10/3/05, at 4:24pm ET   ·   For:  10/3/05   ·   Accession #:  895345-5-1009   ·   File #:  0-50723

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Current Report   —   Form 8-K
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Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         4     13K 
 2: EX-3.1      Articles of Incorporation/Organization or By-Laws     31±   155K 
 3: EX-99.1     Miscellaneous Exhibit                                  8±    34K 

EX-99.1   —   Miscellaneous Exhibit
Exhibit Table of Contents

EX-99.1
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                                                                  Exhibit 99.1

Goldman, Sachs & Co| 32 Old Slip | New York, NY  10005                          
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[GRAPHIC OMITTED][GRAPHIC OMITTED]                                              

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October 3, 2005                                                                 

Dear Investor:                                                                  

We wish to inform you of  certain  upcoming  changes  being made to Goldman     
Sachs Hedge Fund Partners,  LLC (the "Fund") effective January 1, 2006. The     
changes are summarized in the attached Annex.                                   

Some of the changes relate to modifications to your redemption  rights.  We     
periodically review the redemption  provisions of our funds,  including the     
Fund, to ensure prudent  alignment with those of the underlying  investment     
funds in which the Fund indirectly  invests. As a result of this review, we     
are  amending  the Fund's  limited  liability  company  agreement to permit     
redemptions  on a  quarterly  basis  rather  than on a  semi-annual  basis.     
Accordingly,  beginning in calendar year 2006, with the appropriate  notice     
and  subject  to  the  limitations  on  redemption  or  lock-ups  otherwise     
applicable to your units in the Fund  ("Units"),  you may redeem your Units     
as of the time immediately prior to the opening of business on each January     
1, April 1, July 1 and  October  1. Over the last  several  years,  we have     
noticed a trend  toward  longer  notice  periods  among  investment  funds.     
Therefore,  the Fund is making  certain  changes to the  notice  period and     
other  provisions  related to redemptions,  the specific terms and risks of     
which are described in the attached Annex.                                      

Other changes being made to the Fund are intended to reduce  administrative     
burdens and costs to the Fund and to  standardize  terms across our various     
funds. These changes,  and certain related risks, are also described in the     
attached Annex.                                                                 

The Fund filed a Form 8-K with the  Securities  and Exchange  Commission on     
October 3, 2005 that discusses the proposed changes.  The Form 8-K includes     
a form of the amended and restated limited liability company agreement (the     
"Amended LLC Agreement") that reflects many of the changes described in the     
attached  Annex.  The Amended  LLC  Agreement  will take  effect  beginning     
January 1, 2006. We will send you a copy of the Amended LLC Agreement  upon     
request.                                                                        

You may redeem the Units you currently hold in the Fund before the upcoming     
changes take effect.  Should you wish to exercise this right, you may do so     
on the Fund's next scheduled  redemption  date,  January 1, 2006,  provided     
that  your  redemption  request  is  received  in  writing  no  later  than     
Wednesday,  November 2, 2005. The minimum holding period applicable to your     
Units,   if  any,   will  be  waived  for  purposes  of  such   redemption.     
Alternatively,  if you wish to  continue  your  investment  in the Fund but     
object to the  liquidity  changes  described  in the  attached  Annex under     
"Changes to the Fund's  Liquidity" or the amendment changes described under     
"Dissolution  Rights"  applying  to your Units,  please  notify the Fund in     
writing no later than Wednesday,  November 2, 2005. If you do not provide a     
redemption  request or notice of objection by Wednesday,  November 2, 2005,     
you will be  deemed  to have  consented  to the  changes  described  in the     
attached Annex.                                                                 

We recommend  that you review the attached  Annex as it describes  material     
changes being made to the Fund and certain related risks.                       

Please  do  not  hesitate  to  contact  your   Goldman   Sachs   Investment     
Professional  if we  can  be  helpful  to you  in  any  way,  including  in     
connection  with any questions you may have  concerning  the changes taking     
place to the Fund.                                                              

               Very truly yours,

                                     GOLDMAN SACHS HEDGE FUND STRATEGIES LLC

EX-99.1
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                                                                         ANNEX
                                                                         -----

SUMMARY OF CHANGES    
TO    
GOLDMAN SACHS HEDGE FUND PARTNERS, LLC    
(to take effect beginning January 1, 2006)    

This summary  describes  certain  changes to be made to Goldman Sachs Hedge     
Fund  Partners,  LLC (the  "Fund").  These  changes  will go into effect on     
January 1, 2006. Certain of these changes will be reflected in an amendment     
to the  Fund's  limited  liability  company  agreement  (the  "Amended  LLC     
Agreement").  This summary is qualified in all respects by the  description     
of such changes in the Amended LLC  Agreement.  Please contact your Goldman     
Sachs  Investment  Professional  to  request  a  copy  of the  Amended  LLC     
Agreement.                                                                      

CHANGES TO THE FUND'S LIQUIDITY     
-------------------------------     

REDEMPTION  REQUESTS  WILL BE PERMITTED ON A QUARTERLY  BASIS  (RATHER THAN     
SEMI-ANNUALLY).  The Amended LLC  Agreement  will permit  redemptions  on a     
quarterly basis rather than on a semi-annual basis. Accordingly,  beginning     
in  calendar  year 2006,  with the  appropriate  notice and  subject to the     
limitations on redemption or lock-ups otherwise applicable to your units in     
the Fund  ("Units"),  you may redeem your Units as of the time  immediately     
prior to the  opening of  business  on each  January 1, April 1, July 1 and     
October 1.                                                                      

REDEMPTION  REQUESTS WILL REQUIRE A 91 DAY NOTICE PERIOD.  After January 1,     
2006,  you will be required to provide  the Fund with  written  notice of a     
redemption request at least 91 days prior to the applicable valuation date,     
which is the day  immediately  preceding the  applicable  redemption  date,     
rather than the 60 day notice  period  previously  required.  Over the last     
several  years,  we have noticed a growing trend among  certain  investment     
funds to require  longer notice  periods.  We believe that in order to meet     
our investors'  redemption  requests and to avoid causing imbalances in our     
portfolio  holdings,  it is  prudent to match to a  significant  extent the     
investors'  notice  periods  with  the  notice  periods  of the  underlying     
investment  funds.  As a result,  certain of the  underlying  sector  funds     
(each, a "Sector  Fund") in which the Fund invests,  and  consequently  the     
Fund, will soon require a 91 day notice period for redemptions.                 

Once a  redemption  request is made,  it cannot be  voluntarily  rescinded.     
Accordingly, you will bear the risk that the Fund's net asset value ("NAV")     
may  fluctuate  significantly  in the  period  between  the  date by  which     
redemption  requests  must be submitted and the date as of which such Units     
are valued for purposes of such  redemption.  Lengthening the notice period     
potentially  increases  the risk of variation in the Fund's NAV between the     
date of the  redemption  request  and the  applicable  valuation  date  and     
further  increases  your  burden  of  having  to make a  decision  based on     
valuation  information that is not proximate to the date on which Units are     
valued by the Fund for purposes of effecting such redemptions.                  

THE FUND IS ADOPTING A 25% "GATE,"  WHICH MAY LIMIT THE AMOUNT OF INTERESTS     
THAT MAY BE REDEEMED ON ANY SINGLE  REDEMPTION DATE. In order to permit the     
Fund  to  avoid  disproportionately  high  redemptions  on  any  particular     
redemption date, which could have an adverse effect on the Fund's portfolio     
mix and therefore on those  investors not redeeming all of their  interests     
in the Fund,  the Fund is  instituting a limit on the amount of outstanding     
interests  in the Fund that may be  redeemed on any  particular  redemption     
date,  also  known  as a  "gate."  Pursuant  to the  gate,  if  outstanding     
redemption  requests for any  redemption  date total in the aggregate  more     
than 25% of the net  asset  value of the Fund,  Goldman  Sachs  Hedge  Fund     
Strategies LLC (the "Managing Member") may, in its sole discretion,  refuse     
to  redeem  Units in  excess  of the 25%  threshold.  If this  occurs,  the     
requests  for  redemption  on such date  will be  reduced  ratably  and the     
unredeemed Units will be redeemed on a subsequent  regular  redemption date     
in priority to any subsequent redemption request.                               

The intention of a gate is to attempt to reduce potentially adverse effects     
on the  Fund's  investment  mix  and  potential  disruption  of the  Fund's     
investment  strategy  that  could  occur  should  the Fund be  required  to     
liquidate   significant   portions  of  its  investment  portfolio  over  a     
relatively  short  period.  This risk is  particularly  acute as the Sector     
Funds in which the Fund  invests  impose  similar  liquidity  restrictions,     
which  from  time to time may  limit  the  Fund's  ability  to  redeem  its     
interests  in such Sector  Funds.  Members  whose  redemption  requests are     
delayed  because  of the  application  of the  gate (i) will not be able to     
liquidate  all of their  interests  in the Fund as quickly as they may have     
desired, and (ii) with respect to the unredeemed portion of their holdings,     
will be  required  to bear the risk of  fluctuations  in the Fund NAV until     
such remaining holdings can be liquidated.                                      

COMMODITY EXCHANGE ACT REGISTRATION     
-----------------------------------     

The Managing Member currently  provides you with quarterly reports required     
to be  provided  by  commodity  pool  operators  registered  under the U.S.     
Commodity Exchange Act of 1974, as amended (the "Commodity  Exchange Act").     
Because  operating  as a  registered  commodity  pool  operator  under  the     
Commodity Exchange Act creates added administrative  burden and cost to the     
Fund and the Managing Member, the Managing Member has determined to operate     
the Fund as if the  Managing  Member  were exempt  from  registration  as a     
commodity  pool  operator  under the  Commodity  Exchange Act, as permitted     
under  Rule  4.13(a)(4)  under  the  Commodity  Exchange  Act.   Therefore,     
beginning on January 1, 2006, the Managing  Member will operate the Fund as     
if the Managing  Member were exempt from  registration  as a commodity pool     
operator pursuant to such Rule 4.13(a)(4) because Units (i) are exempt from     
registration  under the U.S.  Securities  Act of 1933, as amended,  and are     
being  offered  and sold  without  marketing  to the  public in the  United     
States,  and (ii)  may be  purchased  only by  persons  who are  "qualified     
eligible  persons" as defined in Rule 4.7 under the Commodity  Exchange Act     
(the "Rule 4.13  Conversion").  Pursuant to Rule  4.13(a)(4),  the Managing     
Member  will no longer be required  to, and will no longer,  deliver to you     
quarterly  reports  otherwise  required to be delivered under the Commodity     
Exchange Act. Moreover, the Managing Member will not be required to deliver     
to you the certified annual reports and disclosure  documents that it would     
otherwise be required to deliver  pursuant to the  Commodity  Exchange Act.     
Such documents may have contained certain disclosures that are not included     
in the Fund's confidential private placement memorandum or any reports that     
will be provided to you going  forward.  Please note that you will continue     
to receive the audited financial statements of the Fund, and, if your Units     
are held in a  brokerage  account at  Goldman,  Sachs & Co.,  your  monthly     
brokerage  statements  will continue to include the estimated value of your     
Units.                                                                          

DISSOLUTION RIGHTS    
------------------    

THE  MEMBERS,  BY  MAJORITY  VOTE,  WILL  BE  ABLE TO  DISSOLVE  THE  FUND.     
Currently, the members (by the affirmative vote of members holding at least     
66-2/3%  of the  voting  power,  based  on NAV,  of the  outstanding  Units     
(excluding  for purposes of calculating  such  percentage any Units held by     
Goldman, Sachs & Co., its affiliates, employees and officers) may terminate     
the Managing  Member or dissolve the Fund.  After  January 1, 2006,  at any     
time,  at a meeting  validly  called for such purpose  (such  meeting,  the     
"Dissolution Meeting"), the members may, by the affirmative vote of members     
holding  at least a  majority  of the voting  power,  based on NAV,  of the     
outstanding  Units (excluding  Units held by the Managing Member,  Goldman,     
Sachs & Co.  and any  affiliate  or  employee  of the  Managing  Member  or     
Goldman,  Sachs & Co. (collectively,  the "Managing Member Units")),  cause     
the  dissolution  of the Fund.  There will no longer be an  opportunity  to     
remove the Managing Member.  Under the new policy, a dissolution is subject     
to certain additional procedures and requirements that will be set forth in     
the Amended LLC Agreement,  including,  among others,  that (i) one or more     
members  holding  at least 1% of the  voting  power,  based on NAV,  of the     
outstanding  Units  (excluding for purposes of calculating  such percentage     
the Managing Member Units) request in writing that the Managing Member send     
a notice to the members  soliciting  them to make a request in writing that     
the Managing  Member call a Dissolution  Meeting,  (ii) members  holding at     
least 20% of the  voting  power,  based on NAV,  of the  outstanding  Units     
(excluding for purposes of calculating  such percentage the Managing Member     
Units) request in writing that a Dissolution  Meeting be called,  and (iii)     
the Dissolution Meeting has a quorum of members, in attendance in person or     
by proxy,  holding a majority  of the voting  power,  based on NAV,  of the     
outstanding  Units  (excluding for purposes of calculating  such percentage     
the Managing Member Units).                                                     

In the event of an  affirmative  vote in favor of dissolving  the Fund at a     
Dissolution Meeting, the Managing Member will seek to liquidate the Fund as     
soon as reasonably practicable (including by submitting redemption requests     
to the underlying  Sector Funds within 30 days of such vote),  and the Fund     
will be wound up in accordance  with the terms of its Amended LLC Agreement     
and applicable law.                                                             

On or  before  August  25,  2006,  the  Managing  Member  may,  in its sole     
discretion,  amend,  delete or waive any of the provisions  relating to the     
dissolution of the Fund by the members described above without prior notice     
to or consent of the members.  Thereafter,  the dissolution provisions will     
become permanent.                                                               

OTHER CHANGES     
-------------     

THE FUND MAY CREATE CLASSES OF UNITS OFFERED TO  NON-RESTRICTED  PERSONS IN     
ORDER TO  PERMIT  THE FUND TO  INVEST  IN "NEW  ISSUES."  The Fund does not     
currently  intend to  participate  in "new issues," as such term is defined     
under  National  Association  of  Securities  Dealers,  Inc.  Rule 2790, as     
amended,  supplemented and interpreted from time to time (the "NASD Rule"),     
but this  intention  could change at any time as determined by the Managing     
Member  in its  sole  discretion.  If the  Managing  Member  in the  future     
determines that the Fund will participate in new issues, the Fund will have     
the ability to create one or more  additional  classes (or  sub-classes) of     
Units that would be offered only to those  members who are not  "Restricted     
Persons"  under  the  NASD  Rule  (and  therefore  generally  permitted  to     
participate in new issues), and only such classes (or sub-classes) of Units     
would be permitted to invest in and have a  participatory  interest in such     
new issues.  Should the Fund elect to participate in new issues,  investors     
wishing to invest in or have a  participatory  interest  in such new issues     
will be required to establish to the  satisfaction  of the Managing  Member     
that they are eligible to hold such Units.  Investors  participating in new     
issues may have returns on their  investment that are materially  different     
from  the  returns  on  investment   obtained  by  investors  that  do  not     
participate in new issues.                                                      

THE FUND MAY HEDGE TO REDUCE  POTENTIAL  RISKS.  Consistent with the Fund's     
investment strategy,  the Managing Member may, from time to time and in its     
sole  discretion,  employ  various  hedging  techniques  with the intent of     
reducing  certain  potential  risks to which the  Fund's  portfolio  may be     
exposed.  These  hedging  techniques  generally  will  involve  the  use of     
derivative  transactions,  including swaps,  futures and forward contracts,     
exchange-listed  and  over-the-counter  put  and  call  options,   currency     
contracts,  and interest  rate  transactions.  The  Managing  Member is not     
required to hedge and there can be no assurance  that hedging  transactions     
will be available or, even if undertaken, will be effective. Members should     
be aware that the  successful use of hedging  techniques  will minimize the     
risk of loss to the Fund,  but will also tend to limit  potential  gain. In     
addition,  because the Fund may have incomplete  information  regarding the     
amount of exposure to which the Fund's investments are subject or for other     
reasons,  the Fund may not be able to precisely  match the level of hedging     
to the level of exposure. Consequently, it may be the case that the loss on     
a hedge may be greater than gains in the value of the Fund's positions. The     
Fund also may be exposed to both  counterparty  risk and settlement risk in     
connection with its hedging activity.                                           

TEMPORARY AND DEFENSIVE STRATEGIES. The Fund and the Sector Funds may, from     
time  to  time,  take  temporary  or  defensive  positions  in  cash,  cash     
equivalents,  other short-term  securities or money market funds to attempt     
to  minimize  volatility  caused  by  adverse  market,  economic,  or other     
conditions.  Any such  temporary or defensive  positions  could prevent the     
Fund and the Sector Funds from achieving their investment objectives.           

THE FUND MAY INVEST WITH THIRD-PARTY ADVISORS OUTSIDE OF AN INVESTMENT IN A     
GOLDMAN  SACHS  MANAGED  SECTOR  FUND.  Currently,  the Fund invests in the     
Sector Funds,  each of which  allocates  assets to  independent  investment     
managers ("Advisors").  As of January 1, 2006, the Fund may allocate assets     
to  Advisors  other than  through  investments  in the Sector  Funds.  This     
additional  flexibility  will  permit  the  Managing  Member to make  asset     
allocations  that  otherwise may be limited,  or may not be  available,  by     
investing only through the Sector Funds.                                        

TAX  ALLOCATIONS.  Currently,  the Managing  Member may specially  allocate     
items of Fund  taxable  income  and gain to a  redeeming  member  who would     
otherwise recognize a gain on redemption of the member's Units, in order to     
reduce or  eliminate  the  difference  between  the  amount  of  redemption     
proceeds  with  respect  to such Units and the  member's  tax basis in such     
Units.  Beginning  on January 1, 2006,  the  Managing  Member will have the     
additional flexibility to make special allocations of loss and deduction to     
a redeeming  member that would  otherwise have  recognized a loss (with the     
same intent to reduce the difference  between  redemption  proceeds and tax     
basis).  The Managing Member may also make similar  special  allocations to     
the  Managing  Member  with  respect  to  withdrawals  from  its  incentive     
allocation account. In addition, beginning on January 1, 2006, the Managing     
Member will have the right  generally to adjust the  allocation of items of     
Fund taxable  income,  gain,  loss and  deduction  among the members as the     
Managing  Member in its sole  discretion  deems  equitable and necessary or     
desirable.  These special  allocations  are susceptible to challenge by the     
Internal   Revenue  Service  and  if  such   allocations  are  successfully     
challenged by the Internal Revenue Service,  the Fund's items of income and     
gain or loss and  deduction  allocable  to the  remaining  members  will be     
increased.                                                                      

Pursuant to U.S.  Treasury  Department  Circular 230, the Fund is informing     
investors that (i) the statements  concerning U.S.  federal tax matters set     
forth above are not intended and were not written to be used, and cannot be     
used, by any taxpayer for the purpose of avoiding  penalties under the U.S.     
federal tax laws that may be imposed on the taxpayer,  (ii) the  statements     
concerning  U.S.  federal  tax  matters  set forth  above  were  written in     
connection  with the  promotion or marketing by the Fund and the  placement     
agent of the Units, and (iii) each taxpayer should seek advice based on its     
particular circumstances from an independent tax advisor.                       

THE  AMENDED  LLC  AGREEMENT  HAS BEEN  GENERALLY  UPDATED.  In addition to     
reflecting the changes  described above, the Amended LLC Agreement has been     
updated to standardize  terms across the Managing  Member's  various funds,     
including the following:                                                        

     o    Valuation  of  underlying   investment  fund  and  portfolio
          company  interests.  The  value of the  Fund's  assets  will
          principally be based on the value of the Fund's interests in
          the  Sector  Funds.   Beginning  on  January  1,  2006,  the
          administrator  of each Sector Fund in which the Fund invests
          will be given the additional flexibility to modify the value
          of an interest  in an  underlying  investment  fund from the
          value  reported by the Advisor of such  investment  fund, if
          the administrator determines,  in its sole discretion,  that
          any such valuation is inaccurate or incomplete. In that case
          the Sector Fund's administrator may, in its sole discretion,
          determine  the  fair  value  of  the  investment   based  on
          information  available to, and factors  deemed  relevant by,
          such  administrator  at  the  time  of  such  valuation.  In
          addition,  assets of the Sector  Funds that are  invested in
          portfolio  companies will be valued by the  administrator at
fair value in a commercially reasonable manner.   

          As described above, beginning in 2006, the Fund may allocate
          assets to Advisors  other than  through  investments  in the
          Sector   Funds.   These   assets   will  be  valued  by  the
          Administrator  in  accordance  with the  following:  (i) the
          assets of the Fund that are  invested  in  investment  funds
          will be valued in accordance  with the terms and  conditions
          of the  respective  governing  agreement of each  investment
          fund  as  reported  to  the  Fund,   provided  that  if  the
          Administrator determines,  in its sole discretion,  that any
          such   valuation   is   inaccurate   or   incomplete,    the
          Administrator  may, in its sole  discretion,  determine  the
          fair value of the investment based on information  available
          to, and factors deemed  relevant by, such  Administrator  at
          the time of such valuation;  and (ii) the assets of the Fund
          that  are  invested   pursuant  to   investment   management
          agreements or in portfolio  companies  will be valued by the
          Administrator  at fair  value in a  commercially  reasonable
          manner.  All other assets of the Fund will be assigned  such
  value as the Administrator may reasonably determine.

     o    Suspending  redemptions because of no underlying  investment
          fund valuations.  Currently, the Managing Member may suspend
          redemptions  when (among other things) the Fund is unable to
          withdraw  sufficient  funds from underlying  Sector Funds or
          otherwise to meet  redemption  requests or in  circumstances
          when the  disposal  of part or all of the  Fund's  assets to
          meet  such  redemption  requests  would  be  prejudicial  to
          members.  In order to help ensure that the Fund would not be
          required to redeem  Units when the Fund's NAV is  uncertain,
          the Amended  LLC  Agreement  makes  clear that the  Managing
          Member can  suspend  redemptions  during any period in which
          any  underlying  Sector Fund,  investment  fund or portfolio
          company has suspended  redemptions or the calculation of its
NAV.                                              

* * *     

If you have any questions regarding the foregoing or if you wish to receive     
a copy of the Amended LLC  Agreement,  please  contact your  Goldman  Sachs     
Investment Professional.                                                        

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
		8/25/06		2
		1/1/06		1		2
		11/2/05		1
Filed on / For Period End:		10/3/05		1					3
									List all Filings