##### 



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
   o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
  GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
  Delaware
    
    02-0699398(State or other jurisdiction of incorporation)
    
    (I.R.S. Employer Identification No.)701 Mount Lucas RoadPrinceton, New Jersey
    
    08540(Address of principal executive offices)
    
    (Zip Code)
  
 þ o
  o o þ
 o þ







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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 QUARTERLY REPORT ON FORM 10-Q
 INDEX
 PART I  FINANCIAL INFORMATION
 Item 1.
    
    Financial StatementsSchedule of Investments as of March 31, 2006 and December 31, 2005
    
    
    1Balance Sheet as of March 31, 2006 and December 31, 2005
    
    
    3Statement of Operations for the three months ended March 31, 2006 and 2005
    
    
    4Statement of Changes in Members Equity for the three months ended March 31, 2006
and for the year ended December 31, 2005
    
    
    5Statement of Cash Flows for the three months ended March 31, 2006 and March 31, 2005
    
    
    6Notes to Unaudited Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    18Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4.
    
    Controls and Procedures
    
    
    35PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    36Item 1A.
    
    Risk Factors
    
    
    36Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 3.
    
    Defaults Upon Senior Securities
    
    
    36Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    37Item 5.
    
    Other Information
    
    
    37Item 6.
    
    Exhibits
    
    
    39SIGNATURES
    
    
    40INDEX TO EXHIBITS
    
    
    41







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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 Schedule of Investments
 March 31, 2006 and December 31, 2005
 (Unaudited)
    
    
    (Audited)2006
    
    
    2005% of
    
    
    % of adjusted
    
    
    
    
    
    
    % of
    
    
    % of adjustedFair
    
    
    members
    
    
    members
    
    
    Fair
    
    
    members
    
    
    membersInvestee
    
    value
    
    
    equity(1)
    
    
    equity(2)
    
    
    value
    
    
    equity(1)
    
    
    equity(2)Goldman Sachs
Global Equity
Long/Short, LLC
    
    $
    180,547,128
    
    
    
    40.02
    %
    
    
    33.30
    %
    
    $
    258,033,227
    
    
    
    50.15
    %
    
    
    26.12
    %Goldman Sachs
Global Event
Driven, LLC
    
    
    178,245,808
    
    
    
    39.51
    %
    
    
    32.87
    %
    
    
    266,901,365
    
    
    
    51.87
    %
    
    
    27.02
    %Goldman Sachs
Global Relative
Value II, LLC
    
    
    107,595,691
    
    
    
    23.85
    %
    
    
    19.84
    %
    
    
    278,973,687
    
    
    
    54.22
    %
    
    
    28.24
    %Goldman Sachs
Global Tactical
Trading II, LLC
    
    
    77,119,365
    
    
    
    17.09
    %
    
    
    14.22
    %
    
    
    187,997,054
    
    
    
    36.54
    %
    
    
    19.03
    %Total investments
(cost $466,940,909
and $891,831,562,
respectively)
    
    $
    543,507,992
    
    
    
    120.47
    %
    
    
    100.23
    %
    
    $
    991,905,333
    
    
    
    192.78
    %
    
    
    100.41
    %
 
 (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.(2)
    
    Adjusted members
equity used in the calculation of the investments as a percentage of adjusted
members equity, represents members equity excluding Redemptions payable in the amount of
$91,107,548 that was payable at March 31, 2006 and Redemptions payable in the amount of
$473,342,637 that was payable at December 31, 2005.  1




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 Schedule of Investments (continued)
 March 31, 2006 and December 31, 2005
   2006% ofProportionate
    

    % of
    
    AdjustedShare of Fair
    
    members
    
    membersInvestee
    
    Underlying investment
    
    Value
    
    equity(1)
    

equity(2)Goldman Sachs Global Event Driven, LLC
    
    OZ Domestic Partners, LP
    
    $
    15,263,619
    
    
    3.38
    %
    
    2.81
    %Goldman Sachs Global Relative Value II, LLC
    
    OZ Domestic Partners, LP
    
    $
    14,980,390
    
    
    3.32
    %
    
    2.76
    %Total OZ Domestic Partners, LP
    
    $
    30,244,009
    
    
    6.70
    %
    
    5.57
    %
 
 (1)
    
    Members equity used in the calculation of the underlying investments held by the Investees
as a percentage of members equity, is reduced for member redemptions that are paid after the balance
sheet date.(2)
    
    Adjusted members equity used in the calculation of the underlying investments held by the
Investees as a percentage of adjusted members equity, represents members equity excluding
Redemptions payable in the amount of $91,107,548 that was payable at
March 31, 2006.  2005% ofProportionate
    
    % of
    
    AdjustedShare of Fair
    
    members
    
    membersInvestee
    
    Underlying investment
    
    Value
    
    equity(1)
    

equity(2)Goldman Sachs Global Event Driven, LLC
    
    Eton Park Fund, L.P.
    
    $
    28,321,633
    
    
    5.50
    %
    
    2.87
    %Goldman Sachs Global Event Driven, LLC
    
    GS RP Partners, LLC
    
    $
    34,294,336
    
    
    6.67
    %
    
    3.47
    %Goldman Sachs Global Event Driven, LLC
    
    OZ Domestic Partners, LP
    
    $
    20,943,442
    
    
    4.07
    %
    
    2.12
    %Goldman Sachs Global Relative Value II, LLC
    
    OZ Domestic Partners, LP
    
    $
    20,661,296
    
    
    4.02
    %
    
    2.09
    %Total OZ Domestic Partners, LP
    
    $
    41,604,738
    
    
    8.09
    %
    
    4.21
    %Goldman Sachs Global Relative Value II, LLC
    
    Amaranth Partners LLC
    
    $
    28,932,274
    
    
    5.62
    %
    
    2.93
    %Goldman Sachs Global Relative Value II, LLC
    
    III Relative Value/Macro Fund L.P.
    
    $
    28,590,699
    
    
    5.56
    %
    
    2.89
    %Goldman Sachs Global Relative Value II, LLC
    
    Stark Investments L.P.
    
    $
    28,602,059
    
    
    5.56
    %
    
    2.90
    %
 
 (1)
    
    Members equity used in the calculation of the underlying investments held by the Investees
as a percentage of members equity, is reduced for member redemptions that are paid after the balance
sheet date.(2)
    
    Adjusted members equity used in the calculation of the underlying investments held by the
Investees as a percentage of adjusted members equity, represents members equity excluding
Redemptions payable in the amount of $473,342,637 that was payable at December 31, 2005.  2




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 BALANCE SHEET
 March 31, 2006 and December 31, 2005
 ASSETS
 (Unaudited)
    
    
    (Audited)2006
    
    
    2005Assets:Investments (cost $466,940,909 and
$891,831,562, respectively)
    
    $
    543,507,992
    
    
    $
    991,905,333Cash and cash equivalents
    
    
    1,319,145
    
    
    
    452,487Total assets
    
    $
    544,827,137
    
    
    $
    992,357,820
 LIABILITIES AND MEMBERS EQUITY
 Liabilities:Redemptions payable
    
    $
    91,107,548
    
    
    $
    473,342,637Due to managing member
    
    
    2,147,736
    
    
    
    4,060,736Due to bank
    
    
    
    
    
    
    70,045Accounts payable and accrued liabilities
    
    
    407,360
    
    
    
    362,094Total liabilities
    
    
    93,662,644
    
    
    
    477,835,512Members equity (units outstanding 3,762,399.37 and
4,518,035.18, respectively)
    
    
    451,164,493
    
    
    
    514,522,308Total liabilities and members equity
    
    $
    544,827,137
    
    
    $
    992,357,820Analysis of members equity:Net capital contributions, accumulated net investment
income/(loss) and realized profit/(loss)
    
    $
    374,597,410
    
    
    $
    414,448,537Accumulated net unrealized profit/(loss)
    
    $
    76,567,083
    
    
    $
    100,073,771
  3




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 STATEMENT OF OPERATIONS
 (Unaudited)
 For the three months ended March 31, 2006 and March 31, 2005
 Three
months ended March 31,2006
    
    
    2005Income from trading:Equity in earnings of investees:Realized profit/(loss)
    
    $
    51,109,347
    
    
    $
    8,956,754Changed in unrealized profit/(loss)
    
    
    (23,506,688
    )
    
    
    (5,871,599
    )Net trading profit/(loss)
    
    
    27,602,659
    
    
    
    3,085,155Interest income
    
    
    274,826
    
    
    
    24,599Expenses:Management fee
    
    
    1,669,668
    
    
    
    3,643,335Professional fees
    
    
    353,120
    
    
    
    25,121Interest expense
    
    
    8,744
    
    
    
    23,006Miscellaneous expenses
    
    
    25,000
    
    
    
    1,508Total expenses
    
    
    2,056,532
    
    
    
    3,692,970Net investment income/(loss)
    
    
    (1,781,706
    )
    
    
    (3,668,371
    )Net income/(loss)
    
    
    25,820,953
    
    
    
    (583,216
    )Less: Incentive allocation to the managing member
    
    
    1,291,048
    
    
    
    3,506Net income/(loss) available for pro-rata allocation to
members
    
    $
    24,529,905
    
    
    $
    (586,722
    )
  4




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 STATEMENT OF CHANGES IN MEMBERS EQUITY
 For the three months ended March 31, 2006 (Unaudited)
and the year ended December 31, 2005 (Audited)
 Managing
    
    
    
    
    
    
    
    
    
    
    Totalmembers
    
    
    Members
    
    
    Members
    
    
    membersequity
    
    
    units
    
    
    equity
    
    
    equityBalance at December 31, 2004
    
    $
    
    
    
    
    10,922,127.85
    
    
    $
    1,150,821,624
    
    
    $
    1,150,821,624Subscriptions
    
    
    
    
    
    
    338,363.33
    
    
    
    33,836,333
    
    
    
    33,836,333Redemptions
    
    
    (1,928,780
    )
    
    
    (6,291,569.07
    )
    
    
    (704,730,327
    )
    
    
    (706,659,107
    )Share class conversion
    
    
    
    
    
    
    (450,886.93
    )
    
    
    
    
    
    
    Allocations of net income/(loss):Incentive allocation
    
    
    1,928,780
    
    
    
    
    
    
    
    
    
    
    
    1,928,780Pro-rata allocation
    
    
    
    
    
    
    
    
    
    
    34,594,678
    
    
    
    34,594,678Balance at December 31, 2005
    
    
    
    
    
    
    4,518,035.18
    
    
    
    514,522,308
    
    
    
    514,522,308Redemptions
    
    
    
    
    
    
    (745,823.34
    )
    
    
    (89,178,768
    )
    
    
    (89,178,768
    )Share class conversion
    
    
    
    
    
    
    (9,812.47
    )
    
    
    
    
    
    
    Allocations of net income/(loss):Incentive allocation
    
    
    1,291,048
    
    
    
    
    
    
    
    
    
    
    
    1,291,048Pro-rata allocation
    
    
    
    
    
    
    
    
    
    
    24,529,905
    
    
    
    24,529,905Balance at March 31, 2006
    
    $
    1,291,048
    
    
    
    3,762,399.37
    
    
    $
    449,873,445
    
    
    $
    451,164,493
  5




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 STATEMENT OF CASH FLOWS
 (Unaudited)
 For the three months ended March 31, 2006 and 2005
 2006
    
    
    2005Cash flows from operating activitiesNet income/(loss)
    
    $
    25,820,953
    
    
    $
    (583,216
    )Adjustments to reconcile net income/(loss) to net
cash from operating activities:Purchases of investments
    
    
    (24,000,000
    )
    
    
    (37,000,000
    )Proceeds from sales of investments
    
    
    500,000,000
    
    
    
    103,000,000Realized (profit)/loss from sales of
investments
    
    
    (51,109,347
    )
    
    
    (8,956,754
    )Change in unrealized (profit)/loss
    
    
    23,506,688
    
    
    
    5,871,599Increase/(decrease) in operating liabilities:Due to managing member
    
    
    (1,913,000
    )
    
    
    (2,643,305
    )Accounts payable and accrued liabilities
    
    
    45,266
    
    
    
    (14,725
    )Net cash from operating activities
    
    
    472,350,560
    
    
    
    59,673,599Cash flows from financing activitiesSubscriptions
    
    
    
    
    
    
    19,286,333Redemptions
    
    
    (471,413,857
    )
    
    
    (84,411,871
    )Proceeds
from loan
    
    
    
    
    
    
    4,218,895Repayments
of loan
    
    
    (70,045
    )
    
    
    Net cash from financing activities
    
    
    (471,483,902
    )
    
    
    (60,906,643
    )Net change in cash and cash equivalents
    
    
    866,658
    
    
    
    (1,233,044
    )Cash and cash equivalents at beginning of period
    
    
    452,487
    
    
    
    2,909,015Cash and cash equivalents at end of period
    
    $
    1,319,145
    
    
    $
    1,675,971Supplemental disclosure of cash flow informationCash paid by the Company during the period for
interest
    
    $
    19,589
    
    
    $
    4,111
  6




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 NOTES TO FINANCIAL STATEMENTS
 (Unaudited)
 March 31, 2006
 Note 1  Significant accounting policies
 Organization and basis of financial statements
    Consolidation
  7




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GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 NOTES TO FINANCIAL STATEMENTS (continued)
 (Unaudited)
 March 31, 2006
 Note 1  Significant accounting policies (continued)
 Consolidation (continued)
  March 31, 2006% owned
    
    
    Adjusted
    
    
    Adjusted %Company
    
    
    Investee
    
    
    by the
    
    
    Investee
    
    
    owned by theinvestment
    
    
    equity(1)
    
    
    Company(1)
    
    
    equity(2)
    
    
    Company(2)GELS
    
    $
    180,547,128
    
    
    $
    880,593,874
    
    
    20.50
    %
    
    
    $
    917,685,247
    
    
    
    19.67
    %GED
    
    
    178,245,808
    
    
    
    921,772,949
    
    
    19.34
    %
    
    
    
    968,147,745
    
    
    
    18.41
    %GRV II
    
    
    107,595,691
    
    
    
    159,415,533
    
    
    67.49
    %
    
    
    
    242,610,003
    
    
    
    44.35
    %GTT II
    
    
    77,119,365
    
    
    
    116,679,204
    
    
    66.10
    %
    
    
    
    143,788,814
    
    
    
    53.63
    %Total
    
    $
    543,507,992
 December 31, 2005% owned
    
    
    Adjusted
    
    
    Adjusted %Company
    
    
    Investee
    
    
    by the
    
    
    Investee
    
    
    owned by theinvestment
    
    
    equity(1)
    
    
    Company(1)
    
    
    equity(2)
    
    
    Company(2)GELS
    
    $
    258,033,227
    
    
    $
    816,334,736
    
    
    
    31.61
    %
    
    $
    971,851,587
    
    
    
    26.55
    %GED
    
    
    266,901,365
    
    
    
    971,795,729
    
    
    
    27.46
    %
    
    
    1,014,743,053
    
    
    
    26.30
    %GRV II
    
    
    278,973,687
    
    
    
    201,563,797
    
    
    
    138.40
    %
    
    
    575,194,979
    
    
    
    48.50
    %GTT II
    
    
    187,997,054
    
    
    
    138,034,804
    
    
    
    136.20
    %
    
    
    309,420,276
    
    
    
    60.76
    %Total
    
    $
    991,905,333
 
 (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.(2)
    
    The Adjusted Investees
Equity used in the calculation of the percentage owned by the Company
represents Investees equity excluding Redemptions that were paid after March 31, 2006 and
December 31, 2005, respectively. Consolidation of Variable Interest Entities
 Equity in earnings of investees
 
 8




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 NOTES TO FINANCIAL STATEMENTS (continued)
 (Unaudited)
 March 31, 2006
 Note 1  Significant accounting policies (continued)
 Cash and cash equivalents
  Allocation of net income/(loss)
  Subscriptions and redemptions
  Income taxes
  Indemnifications
  9




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 NOTES TO FINANCIAL STATEMENTS (continued)
 (Unaudited)
 March 31, 2006
 Note 2  Investments
    Three months ended March 31,Investee
    
    Liquidity
    
    2006
    
    
    2005GELS
    
    (1)
    
    $
    12,513,901
    
    
    $
    2,733,608GED
    
    (2)
    
    
    9,344,443
    
    
    
    5,364,036GRV II
    
    (3)
    
    
    3,622,004
    
    
    
    3,649,348GTT II
    
    (4)
    
    
    2,122,311
    
    
    
    (8,661,837
    )Total
    
    
    
    $
    27,602,659
    
    
    $
    3,085,155
 
 (1)
    
    Redemptions can be made quarterly with 45 days notice, or at the sole discretion of the
managing member.(2)
    
    Effective January 1, 2006, redemptions can be made quarterly with 91 days notice or at the sole discretion of the
managing member. Prior to January 1, 2006, redemptions could be made semi-annually with 45
days notice.(3)
    
    Effective January 1, 2006,
redemptions can be made quarterly with 91 days notice
after a twelve month holding period or at the sole discretion of the
managing member. Prior to January 1, 2006, redemptions could be made semi-annually with 45
days notice after a twelve month holding period.(4)
    
    Effective January 1, 2006, redemptions can be made quarterly with 60 days notice or at the sole discretion of the
managing member. Prior to January 1, 2006, redemptions could be made semi-annually with 61
days notice. 10




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 NOTES TO FINANCIAL STATEMENTS (continued)
 (Unaudited)
 March 31, 2006
 Note 2  Investments (continued)
 Goldman Sachs Global Equity Long/Short, LLC
 Goldman Sachs Global Event Driven, LLC
 Goldman Sachs Global Relative Value II, LLC
 Goldman Sachs Global Tactical Trading II, LLC
 11




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 NOTES TO FINANCIAL STATEMENTS (continued)
 (Unaudited)
 March 31, 2006
 Note 2  Investments (continued)
  March 31, 2006
    
    March 31, 2005Management
    
    Incentive
    
    Management
    
    IncentiveInvestee
    
    fees
    
    fee
    
    fees
    
    feeGELS
    
    
    1.58
    %
    
    
    19.93
    %
    
    
    1.46
    %
    
    
    19.85
    %GED
    
    
    1.51
    %
    
    
    19.91
    %
    
    
    1.45
    %
    
    
    19.94
    %GRV II
    
    
    1.49
    %
    
    
    20.28
    %
    
    
    1.53
    %
    
    
    20.00
    %GTT II
    
    
    2.10
    %
    
    
    21.33
    %
    
    
    2.12
    %
    
    
    20.43
    %
   Investee
    
    March 31, 2006
    
    

December 31, 2005GELS
    
    $
    146,140,232
    
    
    $
    217,893,657GED
    
    
    145,607,826
    
    
    
    223,174,000GRV II
    
    
    99,203,814
    
    
    
    262,488,385GTT II
    
    
    75,989,037
    
    
    
    188,275,520Total
    
    $
    466,940,909
    
    
    $
    891,831,562
 Note 3  Fees
    12




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 NOTES TO FINANCIAL STATEMENTS (continued)
 (Unaudited)
 March 31, 2006
 Note 4  Risk Management
      Note 5  Related parties
 December 31, 2005.
   December 31, 2005.
 13




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 NOTES TO FINANCIAL STATEMENTS (continued)
 (Unaudited)
 March 31, 2006
 Note 6  Borrowing facility
   14




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 NOTES TO FINANCIAL STATEMENTS (continued)
 (Unaudited)
 March 31, 2006
 Note 7  Members equity
  Three months ended March 31, 2006
    
    
    Year ended December 31, 2005Units
    
    
    Amount
    
    
    Units
    
    
    AmountShare Class ConversionClass ASeries 1
    
    
    105,561.72
    
    
    $
    12,047,573
    
    
    
    5,993,535.32
    
    
    $
    658,708,137Series 2
    
    
    
    
    
    
    
    
    
    
    (1,618,389.13
    )
    
    
    (167,180,096
    )Series 3
    
    
    
    
    
    
    
    
    
    
    (2,184,050.00
    )
    
    
    (222,344,197
    )Series 4
    
    
    
    
    
    
    
    
    
    
    (2,403,942.74
    )
    
    
    (244,478,196
    )Series 5
    
    
    
    
    
    
    
    
    
    
    (2,500.00
    )
    
    
    (258,258
    )Series 6
    
    
    
    
    
    
    
    
    
    
    (106,226.72
    )
    
    
    (11,010,123
    )Series 7
    
    
    
    
    
    
    
    
    
    
    (40,803.57
    )
    
    
    (4,258,112
    )Series 8
    
    
    
    
    
    
    
    
    
    
    (19,109.20
    )
    
    
    (2,001,573
    )Series 9
    
    
    
    
    
    
    
    
    
    
    (32,500.00
    )
    
    
    (3,392,326
    )Series 10
    
    
    
    
    
    
    
    
    
    
    (22,900.89
    )
    
    
    (2,371,617
    )Series 11
    
    
    
    
    
    
    
    
    
    
    (14,000.00
    )
    
    
    (1,413,639
    )Series 12
    
    
    (23,331.66
    )
    
    
    (2,422,896
    )
    
    
    
    
    
    
    Series 13
    
    
    (10,542.56
    )
    
    
    (1,101,917
    )
    
    
    
    
    
    
    Series 14
    
    
    (9,000.00
    )
    
    
    (930,835
    )
    
    
    
    
    
    
    Series 15
    
    
    (37,499.97
    )
    
    
    (3,896,297
    )
    
    
    
    
    
    
    Series 16
    
    
    (10,000.00
    )
    
    
    (1,057,176
    )
    
    
    
    
    
    
    Series 17
    
    
    (19,000.00
    )
    
    
    (2,010,161
    )
    
    
    
    
    
    
    Series 18
    
    
    (6,000.00
    )
    
    
    (628,291
    )
    
    
    
    
    
    
    Total
    
    
    (9,812.47
    )
    
    $
    
    
    
    
    (450,886.93
    )
    
    $
    SubscriptionsClass ASeries 12
    
    
    
    
    
    $
    
    
    
    
    71,977.84
    
    
    $
    7,197,784Series 13
    
    
    
    
    
    
    
    
    
    
    111,885.49
    
    
    
    11,188,549Series 14
    
    
    
    
    
    
    
    
    
    
    9,000.00
    
    
    
    900,000Series 15
    
    
    
    
    
    
    
    
    
    
    110,500.00
    
    
    
    11,050,000Series 16
    
    
    
    
    
    
    
    
    
    
    10,000.00
    
    
    
    1,000,000Series 17
    
    
    
    
    
    
    
    
    
    
    19,000.00
    
    
    
    1,900,000Series 18
    
    
    
    
    
    
    
    
    
    
    6,000.00
    
    
    
    600,000Total
    
    
    
    
    
    $
    
    
    
    
    338,363.33
    
    
    $
    33,836,333
 15




---



##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 NOTES TO FINANCIAL STATEMENTS (continued)
 (Unaudited)
 March 31, 2006
 Note 7  Members equity (continued)
 Three months ended March 31, 2006
    
    
    Year ended December 31, 2005Units
    
    
    Amount
    
    
    Units
    
    
    AmountRedemptionsClass ASeries 1
    
    
    745,823.34
    
    
    $
    89,178,768
    
    
    
    6,068,579.93
    
    
    $
    681,501,372Series 12
    
    
    
    
    
    
    
    
    
    
    48,646.18
    
    
    
    5,051,701Series 13
    
    
    
    
    
    
    
    
    
    
    101,342.93
    
    
    
    10,592,464Series 15
    
    
    
    
    
    
    
    
    
    
    73,000.03
    
    
    
    7,584,790Total
    
    
    745,823.34
    
    
    $
    89,178,768
    
    
    
    6,291,569.07
    
    
    $
    704,730,327
  March 31, 2006
    
    
    December 31, 2005Units
    
    
    Net
    
    
    Units
    
    
    Netoutstanding
    
    
    asset value
    
    
    outstanding
    
    
    asset valueNon-managing membersClass ASeries 1
    
    
    3,762,399.37
    
    
    $
    449,873,445
    
    
    
    4,402,660.99
    
    
    $
    502,474,735Series 12
    
    
    
    
    
    
    
    
    
    
    23,331.66
    
    
    
    2,422,896Series 13
    
    
    
    
    
    
    
    
    
    
    10,542.56
    
    
    
    1,101,917Series 14
    
    
    
    
    
    
    
    
    
    
    9,000.00
    
    
    
    930,835Series 15
    
    
    
    
    
    
    
    
    
    
    37,499.97
    
    
    
    3,896,297Series 16
    
    
    
    
    
    
    
    
    
    
    10,000.00
    
    
    
    1,057,176Series 17
    
    
    
    
    
    
    
    
    
    
    19,000.00
    
    
    
    2,010,161Series 18
    
    
    
    
    
    
    
    
    
    
    6,000.00
    
    
    
    628,291Subtotal
    
    
    3,762,399.37
    
    
    $
    449,873,445
    
    
    
    4,518,035.18
    
    
    $
    514,522,308Managing member
    
    
    
    
    
    
    1,291,048
    
    
    
    
    
    
    
    Total members equity
    
    
    
    
    
    $
    451,164,493
    
    
    
    
    
    
    $
    514,522,308
 16




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##### 



GOLDMAN SACHS HEDGE FUND PARTNERS II, LLC
 NOTES TO FINANCIAL STATEMENTS (continued)
 (Unaudited)
 March 31, 2006
 Note 8  Financial highlights
  Three months endedMarch 31,2006
    
    
    2005Class A
    
    
    Class ASeries 1
    
    
    Series 1Per unit operating performance:Net asset value, beginning of period
    
    $
    114.13
    
    
    $
    109.90Income from operations:Net trading profit/(loss)
    
    
    6.12
    
    
    
    0.28Net
investment
income/(loss)(1) (2)
    
    
    (0.68
    )
    
    
    (0.34
    )Total income/(loss) from operations
    
    
    5.44
    
    
    
    (0.06
    )Net asset value, end of period
    
    $
    119.57
    
    
    $
    109.84Ratios to average net assets(3)Expenses
    
    
    1.36
    %
    
    
    1.26
    %Incentive allocation
    
    
    0.24
    %
    
    
    0.00
    %Total expenses and incentive allocation
    
    
    1.60
    %
    
    
    1.26
    %Net investment income/(loss)
    
    
    (1.40
    %)
    
    
    (1.25
    %)Total return (prior to incentive allocation)(4)
    
    
    5.02
    %
    
    
    (0.06
    %)Incentive allocation(4)
    
    
    (0.25
    %)
    
    
    (0.00
    %)Total return(4)
    
    
    4.77
    %
    
    
    (0.06
    %)
 
 (1)
    
    Net investment income/(loss) is calculated based on average shares outstanding during the period.(2)
    
    Includes incentive allocation.(3)
    
    The ratios of expenses and net investment
income/(loss) to average net assets are calculated by dividing total
expenses and net investment income/(loss), respectively, by the month end average net assets for the period. The ratios to average net assets calculated above do not include the Companys proportionate share of net investment income and expenses of the Investees. The ratios to average net assets for each member may vary based on individualized fee structures
 and the timing of capital transactions.(4)
    
    The components of total return are calculated by dividing the change in the per share value of each component for the
period by the net asset value per share at the beginning of the period. The total return for Class A
Series 1 is calculated taken as a whole. The total return for each member may vary based on individualized fee structures and the timing of capital transactions.The per share operating performance, expense ratio and total return are calculated and presented for the initial series
of each share class. 17




---



##### 



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


18




---



##### 



Results of Operations for the Three Months Ended March 31, 2006 and 2005
  Performance for the Three Months Ended March 31, 2006
  Overview
  Portfolio Weight
    
    Portfolio Weight as a %
    
    Three Months Endedas a % of
    
    of Adjusted Members
    
    March 31, 2006Investment Fund
    

Members Equity(1)
    
    Equity(2)
    
    Net Return(3)GELS
    
    
    40.02
    %
    
    
    33.30
    %
    
    
    7.45
    %GED
    
    
    39.51
    %
    
    
    32.87
    %
    
    
    5.53
    %GRV II
    
    
    23.85
    %
    
    
    19.84
    %
    
    
    3.48
    %GTT II
    
    
    17.09
    %
    
    
    14.22
    %
    
    
    2.83
    %
 
 (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.(2)
    
    As a percentage of the Companys adjusted members equity which represents members equity excluding
Redemptions payable in the amount of $91,107,548 that was payable at March 31, 2006.(3)
    
    These returns are based on the performance of Class C Series 1 units. 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.


19




---



##### 



The Investment Funds
  Goldman Sachs Global Equity Long/Short, LLC
       Goldman Sachs Global Event Driven, LLC


20




---



##### 



Goldman Sachs Global Relative Value II, LLC
     i.e.


21




---



##### 



Goldman Sachs Global Tactical Trading II, LLC


22




---



##### 



Performance for the Three Months Ended March 31, 2005
  Overview
  Portfolio Weightas a % of
    
    Three Months EndedInvestment Fund
    
    Members' Equity(1)
    
    March 31, 2005 Net Return(2)GELS
    
    
    20.65
    %
    
    
    1.14
    %GED
    
    
    24.66
    %
    
    
    1.90
    %GRV II
    
    
    32.70
    %
    
    
    0.96
    %GTT II
    
    
    22.31
    %
    
    
    (3.24
    %)
 
 (1)
    
    These returns are based on the performance of Class C Series 1 units. The returns include
administration fees. No management fee or incentive allocation was
paid to 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.  The Investment Funds
  Goldman Sachs Global Equity Long/Short, LLC


23




---



##### 



Goldman Sachs Global Event Driven, LLC


24




---



##### 



Goldman Sachs Global Relative Value II, LLC
         25




---



##### 



Goldman Sachs Global Tactical Trading II, LLC
       Comparison of Selected Financial Information for the Three Months ended March 31, 2006 and 2005
 Interest Income


26




---



##### 



Expenses
    Incentive Allocation
  Liquidity and Capital Resources


27




---



##### 



force
majeure
   .


28




---



##### 






29




---



##### 






30




---



##### 



Recent Accounting Pronouncements
 FASB Interpretation No. 46(R)
 Consolidation of Variable Interest
Entities ,
 Critical Accounting Policies and Estimates


31




---



##### 



Off Balance Sheet Risk
  Contractual Obligations
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk


32




---



##### 



Three Months EndedMarch 31, 2006% of% of
    
    Adjusted
    
    FairInvestment
    
    Members'
    
    Members'
    
    Value/Value
    
    Net IncomeFund
    
    Equity
    
    Equity (6)
    
    at Risk
    
    (in millions)
    
    LiquidityGELS
    
    40.02%
    
    33.30%
    
    $180,547,128
    
    $12.5
    
    (1)GED
    
    39.51%
    
    32.87%
    
    $178,245,808
    
    $9.4
    
    (2)GRV II
    
    23.85%
    
    19.84%
    
    $107,595,691
    
    $3.6
    
    (3)GTT II
    
    17.09%
    
    14.22%
    
    $77,119,365
    
    $2.1
    
    (4)Total
    
    120.47%(5)
    
    100.23%(5)
    

$543,507,992
    

$27.6
 Year EndedDecember 31,
2005% of% of
    
    AdjustedInvestment
    
    Members'
    
    Members'
    
    Fair Value/Value
    
    Net IncomeFund
    
    Equity
    
    Equity (7)
    
    at Risk
    
    (in millions)
    
    LiquidityGELS
    
    50.15%
    
    26.12%
    
    $258,033,227
    
    $23.3
    
    (1)GED
    
    51.87%
    
    27.02%
    
    $266,901,365
    
    $19.8
    
    (2)GRV II
    
    54.22%
    
    28.24%
    
    $278,973,687
    
    $8.1
    
    (3)GTT II
    
    36.54%
    
    19.03%
    
    $187,997,054
    
    $(0.5)
    
    (4)Total
    
    192.78%(5)
    
    100.41%(5)
    
    $991,905,333
    
    $50.7
 
 (1)
    
    Redemptions can be made quarterly with 45 days notice or at the sole discretion of the
managing member.(2)
    
    Effective January 1, 2006,
redemptions can be made quarterly with 91 days notice
after a twelve-month holding period or at the
sole discretion of the managing member, rather than semi-annually with 45 days notice as
required prior to January 1,
2006.(3)
    
    Effective January 1, 2006,
redemptions can be made quarterly with 91 days notice
after a twelve-month holding period or at the
sole discretion of the managing member, rather than semi-annually with 45 days notice after a
twelve-month holding period as required prior to January 1, 2006.(4)
    
    Effective January 1, 2006, redemptions can be made quarterly with 60 days notice or at the
sole discretion of the managing member, rather than semi-annually with 61 days notice as
required prior to January 1, 2006.(5)
    
    The total value of the Companys investments in the Investment Funds exceeded 100% of
members equity and adjusted members equity, respectively, because members equity and
adjusted members equity reflected certain accrued liabilities of the Company, including fees
and expenses, and members equity also reflected redemptions payable after the balance sheet
date(6)
    
    Adjusted members equity, used in the calculation of the investments as a percentage of
adjusted members equity, represents members equity excluding Redemptions payable in the
amount of $91,107,548 that was payable at
March 31, 2006 and $473,342,637 that was payable at
December 31, 2005.


33




---



##### 



Risk Management


34




---



##### 



Item 4. Controls and Procedures


35




---



##### 



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   
 Item 3. Defaults Upon Senior Securities


36




---



##### 



Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
        :
 
    
    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
Advisors 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 which may materially 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;


37




---



##### 




    
    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 Investment Fund may achieve or of future results;
    
    Valuation of the Investment Funds 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;
    
    Frequent trading and turnover typically result in high transaction costs and the
Investment Funds have no control over this turnover;
    
    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;
    
    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 Investment Funds investments can be highly volatile and influenced by
external factors outside the control of such Investment Fund;
    
    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 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.


38




---



##### 



Item 6. Exhibits
 (a)
    
    ExhibitsNumber
    
    Description31.1
    
    
    Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as Adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as Adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002


39




---



##### 



Signatures
  GOLDMAN SACHS HEDGE FUNDPARTNERS II, LLC(Registrant)By:
    
    Goldman Sachs Hedge Fund Strategies LLCManaging MemberDate: May 15, 2006
    
    
    
    By:
    
    /s/ Jennifer BarbettaJennifer BarbettaVice President and Chief FinancialOfficer


40




---



##### 



Index to Exhibits
 Number
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002


41