-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G3D9GHF9aVGWm2bZcNPu6UqW/TWDawJM/KjkB5SG2bkfp11PM4s/T3GluSu3ZGk0 reuQ5WWrLCusiTq2Anrp4w== 0000950123-07-003652.txt : 20070313 0000950123-07-003652.hdr.sgml : 20070313 20070312173420 ACCESSION NUMBER: 0000950123-07-003652 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070313 DATE AS OF CHANGE: 20070312 EFFECTIVENESS DATE: 20070313 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FORTRESS PINNACLE INVESTMENT FUND LLC CENTRAL INDEX KEY: 0001178845 IRS NUMBER: 300097476 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-21232 FILM NUMBER: 07688755 BUSINESS ADDRESS: STREET 1: 1251 AVENUE OF THE AMERICAS STREET 2: 16TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2127986100 MAIL ADDRESS: STREET 1: 1251 AVENUE OF THE AMERICAS STREET 2: 16TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10020 N-CSR 1 y31813bnvcsr.txt FORM N-CSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-21232 FORTRESS PINNACLE INVESTMENT FUND LLC (Exact name of Registrant as specified in charter) 1345 Avenue Of The Americas, 46th Floor, New York, NY 10105 (Address of principal executive offices)(Zip code) Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New York, NY 10036 (Name and address of agent for service) Registrant's telephone number, including area code: (212) 798-6100 Date of fiscal year end: December 31 Date of reporting period: December 31, 2006 ITEM 1. REPORTS TO STOCKHOLDERS. The Registrant's annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows: FORTRESS PINNACLE INVESTMENT FUND LLC (A Limited Liability Company) TABLE OF CONTENTS
PAGE ---- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1 FINANCIAL STATEMENTS: Statement of Assets and Liabilities at December 31, 2006 2 Schedule of Investments at December 31, 2006 3 Statement of Operations for the Year Ended December 31, 2006 and Financial Highlights for the Years Ended December 31, 2006, 2005, 2004 and 2003 and the Period from November 1, 2002 through December 31, 2002 4 Statement of Cash Flows for the Year Ended December 31, 2006 5 Statements of Changes in Net Assets for the Years Ended December 31, 2006 and 2005 6 Notes to Financial Statements 7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Members of Fortress Pinnacle Investment Fund LLC We have audited the accompanying statement of assets and liabilities of Fortress Pinnacle Investment Fund LLC ("the Fund"), including the schedule of investments, as of December 31, 2006, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended and for the period from November 1, 2002 (commencement of operations) to December 31, 2002. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2006, by correspondence with the transfer agent. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fortress Pinnacle Investment Fund LLC at December 31, 2006, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended and for the period from November 1, 2002 (commencement of operations) to December 31, 2002, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young New York, NY February 28, 2007 FORTRESS PINNACLE INVESTMENT FUND LLC (A Limited Liability Company) STATEMENT OF ASSETS AND LIABILITIES (dollar amounts in thousands)
December 31, 2006 ------------ ASSETS Investments at fair value (cost $8,787) $ 270,589 Cash and cash equivalents 10,808 Other receivables 20 --------- 281,417 ========= LIABILITIES Due to affiliates 8 Accounts payable and other liabilities 54 Preferred equity (mandatorily redeemable) 52 --------- 114 --------- NET ASSETS, representing members' capital $ 281,303 ========= NET ASSETS CONSISTS OF: Capital paid in $ 26,284 Capital distributed (17,462) Undistributed net investment income 10,679 Accumulated net unrealized gain 261,802 --------- $ 281,303 =========
See notes to financial statements. 2 FORTRESS PINNACLE INVESTMENT FUND LLC (A Limited Liability Company) SCHEDULE OF INVESTMENTS (dollar amounts in thousands)
Dividends, Interest and Investment Description of Securities Cost (a) Realized Gains Fair Value - ---------- ------------------------- -------- -------------- ---------- Global Signal Inc. (GSL) 5,137,444 common shares $8,787 $10,660 $270,589 ====== ======= ========
(a) The United States Federal income tax basis of Fortress Pinnacle Investment Fund LLC's investment at the end of the period was $0, and, accordingly, the unrealized appreciation for United States Federal income tax purposes was approximately $270.6 million. See notes to financial statements. 3 FORTRESS PINNACLE INVESTMENT FUND LLC (A Limited Liability Company) STATEMENT OF OPERATIONS AND FINANCIAL HIGHLIGHTS (dollar amounts in thousands)
Year Ended December 31, 2006 ----------------- Income Dividends $10,660 Interest income 268 ------- 10,928 ------- Expenses Professional fees 50 Directors' fees 17 Insurance expense 5 Operating expense 172 Preferred dividends 5 ------- 249 ------- Net investment income 10,679 Net unrealized gain on investment 48,857 ------- Net increase in net assets resulting from operations $59,536 =======
FINANCIAL HIGHLIGHTS
Period from Year Ended December 31, November 1, 2002 --------------------------- through 2006 2005 2004 2003 December 31, 2002 ---- ----- ----- ---- ----------------- Disclosure of certain ratios: Ratio of total expenses to average net assets 0.1% 0.1% 0.2% 0.0% 0.0%* Ratio of allocations to the Advisory Member 0.0% 0.0% 0.5% 0.1% 0.5% ---- ----- ----- ---- ---- Ratio of expenses and allocations to average net assets 0.1% 0.1% 0.7% 0.1% 0.5%* ==== ===== ===== ==== ==== Ratio of net investment income (loss) to average net assets 4.2% 5.0% 7.2% (0.1)% (0.1)%* Portfolio turnover rate 0.0% 0.0% 0.0% 0.0% 0.0%* IRR since inception 87.1% 104.4% 125.8% 18.8% 0.0% Total return 26.9% 66.5% 392.9% 29.5% (0.1)%
* Annualized See notes to financial statements. 4 FORTRESS PINNACLE INVESTMENT FUND LLC (A Limited Liability Company) STATEMENT OF CASH FLOWS (dollar amounts in thousands)
Year Ended December 31, 2006 ----------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net increase in net assets resulting from operations $ 59,536 Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities: Net unrealized gain on investment (48,857) Change in: Due to affiliate 8 Accounts payable and other liabilities 10 -------- Net cash provided by operating activities 10,697 -------- CASH FLOW FROM FINANCING ACTIVITIES: Capital Contributions -- Capital Distributions -- -------- Net cash used in financing activities -- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 10,697 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 111 -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,808 ========
See notes to financial statements. 5 FORTRESS PINNACLE INVESTMENT FUND LLC (A Limited Liability Company) STATEMENTS OF CHANGES IN NET ASSETS (dollar amounts in thousands)
Year Ended Year Ended December 31, 2006 December 31, 2005 ----------------- ----------------- Increase in net assets resulting from operations Net investment income $ 10,679 $ 8,993 Net unrealized gain on investment 48,857 80,248 -------- -------- Net increase in net assets resulting from operations 59,536 89,241 Capital contributions -- -- Capital distributions -- (7) Distributions of net investment income -- (8,993) -------- -------- Net increase in net assets 59,536 80,241 Net assets, beginning of period 221,767 141,526 -------- -------- Net assets, end of period $281,303 $221,767 ======== ======== Undistributed net investment income $ 10,679 $ -- ======== ========
See notes to financial statements. 6 FORTRESS PINNACLE INVESTMENT FUND LLC (A LIMITED LIABILITY COMPANY) NOTES TO FINANCIAL STATEMENTS December 31, 2006 1. ORGANIZATION Fortress Pinnacle Investment Fund LLC (the "Company") was formed on July 24, 2002 as a Delaware limited liability company and operates as a closed-end, non-diversified management registered investment company ("RIC") under the Investment Company Act of 1940 (the "Act"). The Company was formed primarily to invest in the common stock of Global Signal Inc. ("GSL") (formerly Pinnacle Holdings Inc.), a cell tower leasing company. The Company also invested in Pinnacle Towers Acquisition Inc. ("PTA"), which was subsequently merged into Global Signal Inc. The members of the Company include Weyerhaeuser Company Master Retirement Trust ("Weyerhaeuser"), Aurora Cayman Limited ("Aurora"), Morgan Stanley Private Markets Fund I ("Morgan Stanley"), Howard Hughes Medical Institute ("HHMI") and FIG Advisors LLC ("FIG" and together with Weyerhaeuser, Aurora, Morgan Stanley and HHMI, the "Members"), with FIG acting as Advisory Member. The liability of each member is limited to the amount of capital contributions required to be made by such member in accordance with the provisions of the Company's operating agreement, as amended. The operating agreement provides that, unless terminated earlier in accordance with the Act, the Company can be terminated by a vote of 75% of the membership interests and 75% of the preferred equity interests described in Note 4. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING - The accompanying financial statements are prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). As a RIC, the Company reports its investments at fair value. USE OF ESTIMATES - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. RISKS AND UNCERTAINTIES - In the normal course of business, the Company may encounter two significant types of economic risk: credit risk and market risk. Credit risk is the risk of default on the Company's investments in securities that results from a counterparty's inability or unwillingness to make required or expected payments. Market risk reflects changes in the value of investments in securities due to changes in interest rates or other market factors, including the valuation of equity securities held by the Company. Management believes that the carrying values of its investments are reasonable, taking into consideration these risks. 7 FORTRESS PINNACLE INVESTMENT FUND LLC (A Limited Liability Company) NOTES TO FINANCIAL STATEMENTS December 31, 2006 VALUATION OF ASSETS AND LIABILITIES - Investments in securities traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation; other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are stated at the last quoted bid price, except for short positions and call options written, if any, for which the last quoted asked price is used. FEDERAL INCOME TAXES - No income taxes have been provided for in these financial statements as each Member is individually responsible for reporting income or loss based upon their respective share of the Company's income and expenses as reported for income tax purposes. DISTRIBUTIONS TO MEMBERS - Distributions to members are recorded when paid. The character of distributions made during the reporting period from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes due to GAAP/tax differences in the character of income and expense recognition. SECURITY TRANSACTIONS AND REVENUE RECOGNITION - The Company records security transactions on the trade date. Dividend income is recognized on the ex-dividend date, or in the absence of a formal declaration, on the date of receipt. CASH AND CASH EQUIVALENTS - The Company considers all highly liquid short-term investments with a maturity of 90 days or less when purchased to be cash equivalents. Certain amounts on deposit with major financial institutions may, from time to time, exceed insured limits. RECENT ACCOUNTING PRONOUNCEMENTS - On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications of FIN 48 and its impact on the financial statements has not yet been determined. In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 applies to reporting periods beginning after November 15, 2007. The adoption of SFAS 157 is not expected to have a material impact on the Company's financial condition or results of operations. 8 FORTRESS PINNACLE INVESTMENT FUND LLC (A Limited Liability Company) NOTES TO FINANCIAL STATEMENTS December 31, 2006 In September 2006, the FASB cleared Statement of Position No. 71, "Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies" ("SOP 71") for issuance. SOP 71 addresses whether the accounting principles of the Audit and Accounting Guide for Investment Companies may be applied to an entity by clarifying the definition of an investment company and whether those accounting principles may be retained by a parent company in consolidation or by an investor in the application of the equity method of accounting. When issued, SOP 71 will apply to reporting periods beginning on or after December 15, 2007. Management has determined that the Company continues to meet the definition of an investment company under this guidance. In February 2007, the FASB issued SFAS No. 159, "The Fair Value option for Financial Assets and Financial Liabilities." SFAS 159 permits entities to choose to measure many financial instruments, and certain other items, at fair value. SFAS 159 applies to reporting periods beginning after November 15, 2007. The Company is currently evaluating the potential impact on adoption of SFAS 159. 3. ALLOCATIONS TO MEMBERS Net Profits, as defined, are first allocated to FIG in an amount equal to a cumulative return of 1.5% per annum on all capital contributions provided that FIG shall receive no more than 1.5% of total capital contributions. Such amount was allocated and paid to FIG in 2004. Remaining Net Profits are then allocated to holders of the preferred equity interest in accordance with its terms, then to the Members other than FIG. Net Losses, as defined, are first allocated to the Members other than FIG or holders of the preferred equity interest until their capital accounts have a zero balance. Remaining Net Losses are then allocated to holders of the preferred equity interest until their capital accounts have a zero balance, then to the Members other than FIG or holders of the preferred equity interest. 4. PREFERRED EQUITY INTERESTS The Company has issued preferred equity interests in the aggregate amount of $52,000 to 104 qualified investors. Such securities receive a 10% cumulative preferred return, payable out of the Company's Net Profits. 5. DUE TO AFFILIATES Due to affiliates of $8,000 primarily represents general and administrative expenses paid by an affiliate of the Advisory Member on behalf of the Company. 9 FORTRESS PINNACLE INVESTMENT FUND LLC (A Limited Liability Company) NOTES TO FINANCIAL STATEMENTS December 31, 2006 6. SUBSEQUENT EVENTS On January 12, 2007, Global Signal Inc. ("GSL") completed its announced merger with Crown Castle International Corp. ("Crown Castle") and CCGS Holdings LLC, a wholly owned subsidiary of Crown Castle ("Merger Sub"). In connection with the merger, the Company received $8.16 in cash proceeds and 1.375 shares of Crown Castle common stock in exchange for each share of GSL stock. Subsequent to the merger, the Company sold 1.9 million Crown Castle shares back to Crown Castle for $33.87 per share. 10 FORTRESS PINNACLE INVESTMENT FUND UNAUDITED STATEMENT OF ADDITIONAL INFORMATION I. Managers' and Officers' Information
No. of Portfolios in Fund Name (age) Complex for Position (held since) which Merger Address (see Footnote 3) Principal Occupation During Past 5 yrs Other Directorships Serves - ------------------------ ------------------------------------------------- ------------------------------------- ------------- INDEPENDENT MANAGER (1) ROBERT H. GIDEL (55) - MANAGING PARTNER OF LIBERTY PARTNERS, - AMERICAN INDUSTRIAL PROPERTIES 3 LP (1997 - PRESENT) - DEVELOPERS DIVERSIFIED REALTY TRUSTEE (OCTOBER 2002) - US RESTAURANTS PROPERTIES - GLOBAL SIGNAL INC. OFFICERS (2) WESLEY R. EDENS (45) - PRINCIPAL OF FORTRESS INVESTMENT GROUP - OFFICER OF 4 OTHER INVESTMENT -- LLC (MAY 1998 TO PRESENT) COMPANIES ADVISED BY THE ADVISOR CHAIRMAN AND CHIEF EXECUTIVE OFFICER (MAY 2001) RANDAL A. NARDONE (51) - PRINCIPAL OF FORTRESS INVESTMENT GROUP - OFFICER OF 4 OTHER INVESTMENT -- LLC (MAY 1998 TO PRESENT) COMPANIES ADVISED BY THE ADVISOR VICE PRESIDENT, CHIEF OPERATING OFFICER AND SECRETARY (MAY 2001) JEFFREY R. ROSENTHAL - CHIEF FINANCIAL OFFICER AND TREASURER - OFFICER OF 4 OTHER INVESTMENT -- (56) OF FIG ADVISORS LLC (JULY 2002 TO PRESENT) COMPANIES ADVISED BY THE ADVISOR CHIEF FINANCIAL OFFICER - EXECUTIVE VICE PRESIDENT AND CHIEF AND TREASURER OPERATING OFFICER OF STARWOOD CAPITAL GROUP (JULY 2002) (APRIL 1997 TO JUNE 2002) ROBERT I. KAUFFMAN (43) - PRINCIPAL OF FORTRESS INVESTMENT GROUP - OFFICER OF 3 OTHER INVESTMENT -- LLC (MAY 1998 TO PRESENT) COMPANIES ADVISED BY THE ADVISOR PRESIDENT (MAY 2001)
ALLISON L. THRUSH (43) - MANAGING DIRECTOR OF FORTRESS - OFFICER OF 4 OTHER INVESTMENT -- INVESTMENT GROUP LLC (MARCH 2001 TO PRESENT) COMPANIES ADVISED BY THE ADVISOR VICE PRESIDENT AND ASSISTANT SECRETARY (AUGUST 2006)
(1) Each Manager serves an indefinite term until his or her resignation, death or removal. (2) Officers are elected to annual terms by the Managers; the date of the last election was August 16, 2006. (3) The address for each Trustee and Officer is c/o Fortress, 1345 Avenue of the Americas, 46th Floor, New York, NY 10105. (4) Interested Manager is defined by Section 2 (19)(A) of the Investment Company Act of 1940. Aggregate remuneration paid by the Registrant during the year to all Managers equals $16,625. The Statement of Additional Information includes additional information about Manager and is available upon request without charge by calling collect (212) 798-6100. II. Proxy Voting A description of the policies and procedures that the Registrant uses to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling collect (212) 798-6100, and (ii) on the SEC's website at http://www.sec.gov. Information regarding how the Registrant voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (i) without charge by calling collect (212) 798-6100 and (ii) on the SEC's website at http://www.sec.gov. III. Portfolio Holdings The Registrant files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Registrant's Forms N-Q are available on the SEC's website at http://www.sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The following table depicts the portfolio holdings of the Registrant as of December 31, 2006, by industry based on the net asset value of each investment: Telecommunications 100.0%
ITEM 2. CODE OF ETHICS. (a) As of the end of the period covered by this report, the Registrant has adopted a code of ethics ("the Code of Ethics") that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party. (b) Not applicable. (c) During the period covered by the report, the Code of Ethics was amended to comply with the new code of ethics requirements under Rule 17j-1 promulgated under the Investment Company Act of 1940. (d) During the period covered by the report, the Registrant has not granted any express or implicit waivers from the provisions of the Code of Ethics. (e) Not applicable. (f) A copy of the Code of Ethics is filed as an exhibit to this Form N-CSR. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The Board of Managers has determined that Mr. Robert Gidel is the Audit Committee financial expert and is "independent" pursuant to the general instructions of Form N-CSR Item 3. Under applicable securities laws, a person who is determined to be an Audit Committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an Audit Committee financial expert. The designation or identification of a person as an Audit Committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the Audit Committee and Board of Managers in the absence of such designation or identification. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Audit Fees. The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were: $37,500 for fiscal year 2005 and $50,428 for fiscal year 2006. (b) Audit-Related Fees. Not applicable. (c) Tax Fees. The aggregate fees billed for each of the last two fiscal years by the principal accountant for tax services were $5,100 for fiscal year 2005 and $6,000 for fiscal year 2006. (d) All Other Fees. Not Applicable. (e)(1) Audit Committee's Pre-Approval Policies and Procedures, pursuant to Item 4 of Form N-CSR: The Audit Committee pre-approves all audit, review and attest engagements required under the securities laws and regulations provided by Ernst & Young, the Registrant's independent auditors. The Audit Committee also approves all non-audit services, including tax services, provided to the Registrant by Ernst & Young and verifies, at the time of pre-approval, that such pre-approved non-audit services would not be prohibited services under securities regulations. The Audit Committee pre-approves all non-audit services provided to the Registrant's investment adviser and to affiliates of the investment adviser that provide ongoing services to the Registrant, but only if the non-audit services have a direct impact on the operations or financial reporting of the Registrant. (e)(2) All of the services described in each of paragraphs (b) through (d) of Item 4 were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) Not applicable. (g) There were no non-audit fees billed by the Registrant's accountant for services rendered to the Registrant other than those described in item 4 (c) or 4 (d) above, Registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Registrant for fiscal year 2005 and for fiscal year 2006. (h) The Registrant's Audit Committee of the Board of Managers has not considered whether the provision of non-audit services to the Registrant's investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence because no such services were rendered. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS The Schedule of Investments is included as part of the audited financial statements. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. The Registrant has delegated the voting of proxies relating to its voting securities to its investment advisor, FIG Advisors, LLC. The Proxy Voting Policies and Procedures of the Advisor (the "Proxy Voting Policies") are as follows: FORTRESS INVESTMENT GROUP LLC PROXY VOTING POLICY AND PROCEDURES This policy has been adopted by Fortress Investment Group LLC to facilitate the voting of proxies relating to portfolio securities of clients with respect to which Fortress Investment Group LLC or any of its affiliates that are subject to the Investment Advisers Act of 1940, as amended (collectively "Fortress"). In connection with these investment advisory services, Fortress exercises voting responsibilities for its clients through its corporate proxy voting process. Each of Fortress Registered Investment Trust, Fortress Investment Trust II LLC, Fortress Brookdale Investment Fund LLC, Fortress Pinnacle Investment Fund LLC and RIC Coinvestment Fund LP have delegated to Fortress the authority to vote proxies relating to its portfolio securities in accordance with this policy. This policy is intended by Fortress (i) to constitute "written policies and procedures" as described in Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended and (ii) to constitute proxy voting policies and procedures referred to in Item 18 of Form N-2 adopted under the Investment Company Act of 1940, as amended. INDEX
PAGE ---- Definitions.............................................................. 3 Objective................................................................ 4 Resolutions of Conflicts of Interest..................................... 4 Proxy Voting Coordinator................................................. 5 Assembling Voting Information............................................ 6 Portfolio Managers....................................................... 6 Accumulating Voting Results.............................................. 6 Communicating Votes...................................................... 7 Record of Voting Delegation.............................................. 7 Annual review of Policy Function......................................... 7 Disclosure and Comments on Voting........................................ 8 Joining Insurgent or Voting Committees................................... 8 Social Issues............................................................ 8 Recordkeeping............................................................ 8
DEFINITIONS "Client" means any person with whom Fortress has a contract to perform discretionary investment management services and for whom Fortress is authorized by the contract or required by applicable law to vote or consider voting securities held in the Client's account. "Compliance Officer" means the Director of Compliance, Fortress Investment Group LLC. "Conflict of Interest" means, as to any Client, any conflict between a pecuniary interest of Fortress or any of its affiliates (other than such Client, if deemed an affiliate) and the duties of Fortress to the Client. "Fortress" means Fortress Investment Group LLC and each of its affiliates that is subject to registration under the Investment Advisers Act of 1940, as amended, or is otherwise subject to the rules and regulations thereunder generally, including, specifically, Rule 206(4)-6. "Proxy Voting Coordinator" means the individual appointed from time to time by the Investment Committee to perform the proxy voting coordination functions described in this policy. "Social Issues" means any issue presented for a vote of holders of any security which is held in an account on behalf of a Client which may reasonably be interpreted as (i) unrelated in any substantial respect to the voting objective of this policy and (ii) intended to promote directly or indirectly the interests of persons who are not holders of the relevant security. "Investment Committee" means the Investment Committee of Fortress Investment Group LLC or such committee to which it shall have delegated the functions of the Investment Committee hereunder. "Voting Results" means the specific information described under the caption "Accumulating Voting Results." OBJECTIVES This policy defines procedures for voting securities held on behalf of each Client in respect of which Fortress has the discretionary authority to vote, to ensure that such securities are voted for the benefit of and in the best interest of the Client. The objective of voting a security in each case under this policy is to seek to enhance the value of the investment which the security represents or to reduce the potential for a decline in the value of the investment which the security represents. With respect to Fortress's private equity fund Clients, each vote (including, without limitation, each vote relating to corporate governance matters) will be considered in light of such Clients' possible strategic objective of seeking to influence the management of or control of a company; to the extent that a particular vote has strategic importance in connection with achieving such objective, Fortress will vote the applicable security taking this additional objective into account. This policy does not prescribe voting requirements or specific voting consideration. Instead, this policy provides procedures for (i) assembling voting information and applying the informed expertise and judgment of Fortress's personnel on a timely basis in pursuit of the above stated voting objectives and (ii) addressing conflicts of interest. A further element of this policy is that while voting on all issues presented should be considered, voting on all issues is not required. Some issues presented for a vote of security holders are not relevant to this policy's voting objective, or it is not reasonably possible to ascertain what effect, if any, a vote on a given issue may have on the value of an investment. Accordingly, Fortress may abstain from voting or decline a vote in those cases where, in Fortress's judgments (i) there is no relationship between the issue and the enhancement or preservation of an investment's value or (ii) the achievement of the Client's investment objectives are not reasonably likely to be a function of the outcome of decisions or issues presented by the vote. It is also important to the pursuit of this policy's voting objectives that Fortress be able to substitute its judgment in any specific situation for a presumption in this policy where strict adherence to the presumption could reasonably be expected by Fortress, based upon the information then available, to be inconsistent with the objectives of this policy, as set forth above. Accordingly, Fortress understands that it may substitute its judgment in a specific voting situation described in the preceding sentence, except where explicitly prohibited by a Client or this policy. RESOLUTIONS OF CONFLICTS OF INTEREST It is unlikely that conflicts of interest will arise in the context of Fortress's proxy voting, because Fortress does not engage in investment banking, the advising of public companies or, except in cases where it exercises control, the managing of public companies. In addition, insofar as Fortress refers discretionary votes to its portfolio managers, Fortress's Compliance Department monitors all relationships between portfolio managers and their immediate families, on the one hand, and issuers soliciting proxies from Fortress's Clients, on the other hand. If a portfolio manager conflict is identified with respect to a given proxy vote, the Investment Committee will remove such vote from the conflicted portfolio manager and will instead consider and cast the vote. Certain advisory or other agreements between Fortress and specific Clients set forth procedures which must be followed for identified related party or conflict of interest transactions. In these circumstances, votes which present conflicts of interest to which such procedures apply will be resolved by recourse to the procedures mandated by such agreements; in many of these cases, such procedures mandate referring the matter to the Client's advisory board, board of directors or board of trustees, as the case may be, and Fortress intends to use its reasonable best efforts to ensure that recourse to such bodies is effected in a timely manner where failure to do so might reasonably be expected to have an adverse effect on the value of the investment represented by the applicable security. In the event that a potential material conflict of interest does arise and is not addressed by the foregoing procedures, the primary means by which Fortress avoids a material conflict of interest in the voting of proxies for its clients is by casting such votes solely in the interests of its clients and in the interests of maximizing the value of their portfolio holdings. PROXY VOTING COORDINATOR The Investment Committee shall appoint a Proxy Voting Coordinator. The Proxy Voting Coordinator shall discharge the following function in effectuating this policy: (i) Collecting and assembling proxy statement and other communication pertaining to proxy voting, together with proxies or other means of voting or giving voting instructions, and providing those materials to the appropriate portfolio managers to permit timely voting of proxies; (ii) Collecting recommendations, analysis, commentary and other information respecting subjects of proxy votes, from service providers engaged by Fortress and other services specified by portfolio managers, and providing this information to the appropriate portfolio managers to permit evaluation of proxy voting issues; (iii) Providing to appropriate portfolio managers any specific voting instructions from Clients that are entitled to provide such instructions under the applicable investment advisory agreement; (iv) Collecting proxy votes or instructions from portfolio managers, and transmitting the votes or instructions to the appropriate custodians, brokers, nominees or other persons (which may include proxy voting services or agents engaged by Fortress); (v) Accumulating Voting Results as set forth in this policy and transmitting that information to the Compliance Officer in a timely manner; and (vi) Participating in the annual review of the policy function as set forth in this policy. The Proxy Voting Coordinator may, with the Investment Committee's approval, delegate any portion or all of any one or more of these functions to one or more other individuals employed by Fortress. Any portion or all of any one or more of these functions may be performed by service providers engaged by Fortress. ASSEMBLING VOTING INFORMATION The Proxy Voting Coordinator shall obtain proxy statements and other communications pertaining to proxy voting, together with proxies or other means of voting or giving voting instructions to custodians, brokers, nominees, tabulators or others in a manner to permit voting on relevant issues in a timely manner. Fortress may engage service providers and other third parties to assemble this information, digest, abstract the information where necessary or desirable, and deliver it to the individuals assigned by Fortress to evaluate proxy voting issues. PORTFOLIO MANAGERS The portfolio manager responsible for a particular Client (i.e., the particular Fortress entity providing investment advisory services to such Client and the senior personnel responsible for such entity's investment decisions) is responsible for the timely voting (or determining not to vote in the appropriate cases) of proxies relating to the securities held on behalf of such Client in accordance with this policy. The portfolio manager may, to the extent not prohibited by agreement(s) setting forth its contractual obligations to such Client, and consistent with its fiduciary duties, delegate voting responsibilities to one or more other portfolio managers or other individuals. Portfolio managers are authorized to consider voting recommendations and other information and analysis provided by service providers (including proxy voting services) engaged by Fortress. ACCUMULATING VOTING RESULTS The Proxy Voting Coordinator is responsible for reporting the following information respecting the voting of each proxy to the Compliance Officer, as to each matter relating to a portfolio security held for a Client, considered at a shareholder meeting, and with respect to which the Client was entitled to vote: (i) The name of the issuer of the portfolio security; (ii) The exchange ticker symbol of the portfolio security; (iii) The CUSIP number for the portfolio security; (iv) The shareholder meeting date; (v) A brief identification of the matter voted on; (vi) Whether a vote was cast on the matter; (vii) How the vote was cast on the matter (e.g., for or against the proposal, or abstain, etc.); (viii) Whether a vote was cast for or against management. The foregoing information must be delivered to the Compliance Officer no later than July 31, for each 12 month period ending on the preceding June 30. Fortress may use third party service providers to record, accumulate and deliver the foregoing information to the Compliance Officer. The Proxy Voting Coordinator may, with the Investment Committee's approval, delegate any portion or all of this function to one or more other individuals employed by Fortress. COMMUNICATING VOTES The Proxy Voting Coordinator shall communicate decisions on proxy votes to the custodian or to other persons who transmit or record votes on portfolio securities held by or for each Client in a timely manner. The Coordinator may, with the Investment Committee's approval, delegate any portion or all of this function to one or more individuals employed by Fortress. Fortress may engage one or more service providers to facilitate timely communication of proxy votes. Fortress is not responsible for voting proxies that are not forwarded on a timely basis. Fortress does not control the setting of record dates, shareholder meeting dates or the timing of distribution of proxy materials and ballots relating to shareholder votes as a general matter. RECORD OF VOTING DELEGATION The Compliance Officer shall maintain a list of all Clients with a specification as to each Client whether or not Fortress is authorized to vote proxies respecting the Client's portfolio securities. ANNUAL REVIEW OF POLICY FUNCTION The Compliance Officer shall conduct a periodic review, no less often than annually, which shall comprise the following elements: (i) Review a sample of the record of voting delegation maintained by the Compliance Officer against Voting Results to determine if Fortress is exercising its authority to vote proxies on portfolio securities held on behalf of the selected Clients; (ii) Request and review voting data to determine if timely communication of proxy votes is reasonably accomplished during the relevant period; (iii) Meet with the Proxy Voting Coordinator to review the voting of proxies, communication of proxy votes, accumulation of Voting Results and the general functioning of this policy; and (iv) Prepare a written report to the Investment Committee respecting the foregoing items. DISCLOSURE AND COMMENTS ON VOTING Fortress will provide a copy of these policies and procedures to Clients upon request. Clients may also obtain information on how portfolio securities held on their behalf were voted by written request and addressed to Fortress "Proxy Voting Coordinator." It is the policy of Fortress not to comment on specific proxy votes with respect to securities held for a Client in response to inquiries from persons who are not specifically or authorized representative of such Client. The Investment Committee may authorize comments in specific cases, in its discretion. JOINING INSURGENT OR VOTING COMMITTEES It is the policy of Fortress, for itself and its Clients, not to join any insurgent or voting committee or similar group unless doing so is consistent with the Client's investment objective. The Investment Committee may, in other circumstances, approve participation in any such committee or group in its discretion, and shall advise the authorized representative of the Client of any such action. SOCIAL ISSUES It is the presumption of this policy that proxies shall not be voted on Social Issues, unless the advisory agreement with the Client provides otherwise. The Investment Committee may approve voting of any security held on behalf of a Client on any Social Issue. RECORDKEEPING The Compliance Officer shall maintain the following records: (i) Copies of this policy as from time to time revised or supplemented; (ii) A copy of each proxy statement that Fortress receives regarding Client securities; (iii) Voting Results for each Client; (iv) A copy of any document created by Fortress that was material to making a decision on how to vote proxies on behalf of a Client; (v) A copy of each written Clients request for information on how Fortress voted proxies on behalf of the Client and Fortress's response thereto; (vi) Communications to Client respecting Conflicts of Interest; and (vii) All written reports arising from annual reviews of policy function. The Compliance Officer shall maintain and preserve in his office the foregoing records for a period of not less than five years from the end of Fortress' fiscal year during which the last entry was made on the record the first two years in an appropriate office of Fortress. The Compliance Officer may use the Securities and Exchange Commission's EDGAR database for the items referred to in item (ii) above, and the Investment Committee may authorize the Compliance Officer to engage one or more service providers to perform any portion of this recordkeeping function provided (1) the function is performed in compliance with applicable governmental regulations and (2) each service provider provides a written undertaking to furnish the records to Fortress promptly upon request. As adopted, May 2006. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. ITEM 11. CONTROLS AND PROCEDURES. (a) The Registrant's principal executive officer and principal financial officer have evaluated the Registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the Registrant's disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the Registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. (b) Internal Control Over Financial Reporting. During the fiscal quarter to which this report relates, the Company began using a new information technology system in a live environment. As a result of, and in conjunction with, the implementation of the new system the Company implemented certain new internal controls and modified others. The nature of these new or modified internal controls did not have a material impact on the Company's financial reporting. No other changes in the Company's internal control over financial reporting (as such terms is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Code of Ethics. (a)(2) Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 30a-2(a) under the Act. (b) Certification pursuant to Rule 30a-2(b) under the Act. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Fortress Pinnacle Investment Fund LLC By:/s/ Jeffrey Rosenthal ---------------------------------- Name: Jeffrey Rosenthal Title: Chief Financial Officer Date: March 12, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By: /s/ Wesley R. Edens --------------------------------- Name: Wesley R. Edens Title: Chief Executive Officer Date: March 12, 2007 By: /s/ Jeffrey Rosenthal --------------------------------- Name: Jeffrey Rosenthal Title: Chief Financial Officer Date: March 12, 2007 EX-99.CODE ETH 2 y31813bexv99wcodeeth.txt EX-99.CODE ETH: CODE OF ETHICS EXHIBIT A1 CONSOLIDATED CODE OF ETHICS OF FORTRESS REGISTERED INVESTMENT TRUST FORTRESS INVESTMENT TRUST II FORTRESS BROOKDALE INVESTMENT FUND LLC FORTRESS PINNACLE INVESTMENT FUND LLC RIC COINVESTMENT FUND LP Dated as of August 16, 2000 Amended through February 24, 2007 Pursuant to Rule 17j-1(c) Under the Investment Company Act of 1940, as amended 1. Purpose and Standards of Conduct This Code of Ethics has been adopted by Fortress Registered Investment Trust, Fortress Investment Trust II, Fortress Brookdale Investment Fund LLC, Fortress Pinnacle Investment Fund LLC and RIC Coinvestment Fund LP (each, a "Company") and FIG Advisors LLC ("FIG Advisors") in accordance with Rule 17j-1(c) under the Investment Company Act of 1940, as amended (the "Act"). Rule 17j-1(b) under the Act generally proscribes fraudulent or manipulative practices with respect to purchases or sales of securities held or to be acquired by investment companies registered under the Act, if effected by associated persons of such investment companies. The purpose of this Code of Ethics is to provide each Company and FIG Advisors with regulations and procedures designed to comply with the Act and, in particular, Rule 17j-1(b) which states (defined terms used below in paragraph (a) of this section 1 have the meaning given to such terms in Rule 17j-1(a)): (a) It is unlawful for any affiliated person of or principal underwriter for a Fund, or any affiliated person of an investment adviser of or principal underwriter for a Fund, in connection with the purchase or sale, directly or indirectly, by the person of a Security Held or to be Acquired by the Fund: (i) To employ any device, scheme or artifice to defraud the Fund; (ii) To make any untrue statement of a material fact to the Fund or omit to state a material fact necessary in order to make the statements made to the Fund, in light of the circumstances under which they are made, not misleading; (iii) To engage in any act, practice or course of business that operates or would operate as a fraud or deceit upon the Fund; or (iv) To engage in any manipulative practice with respect to the Fund. This Code of Ethics also proscribes securities transactions involving insider trading (as described below) as well as possible conflicts of interest. 2. Application (a) This Code of Ethics applies to the "access persons" of each Company (as such term is defined in Section 3 below). Each access person must read, acknowledge receipt of and retain this Code of Ethics. (b) FIG Advisors will maintain a list of the access persons of the Trust and will provide each access person with a copy of this Code of Ethics. 3. Definitions For the purposes of this Code of Ethics, the following definitions shall apply: (a) "Access Person" means any "advisory person" of a Company or Investment Advisor. All of the Investment Advisor's directors, officers, and general partners are presumed to be "Access Persons" of a Company. All of a Company's directors, officers, and general partners are presumed to be Access Persons of the Company. A list of the Company's Access Persons who are officers and trustees of a Company is attached as Appendix 2 to this Code of Ethics and will be updated from time to time. (b) "Advisory person" of a Company or the Investment Adviser means (i) any trustee, officer, general partner and employee of FIG Advisors or a Company or of any company in a control relationship to a Company or FIG Advisors who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a security (as defined below in subparagraph (j)) by a Company, or whose functions related to the making of any recommendations with respect to such purchases or sales; and (ii) any natural person, if any, in a control relationship to a Company who obtains information concerning recommendations made to a Company with regard to the purchase or sale of a security. (c) A security is "being considered for purchase or sale" when a recommendation to purchase or sell a security has been made and communicated or, with respect to the person making the recommendation, when such person seriously considers making such a recommendation. (d) "Beneficial ownership" shall be interpreted in the same manner as the definition of "beneficial owner" set forth in Rule 16a-l(a)(2) under the Securities Exchange Act of 1934, as amended, and shall refer to a direct or indirect pecuniary interest in securities, the benefits of which are enjoyed, directly or indirectly by any person by reason of any contract, arrangement, understanding, relationship (such as, for example, that person's spouse, children or other close familial relationship), agreement or otherwise a direct or indirect pecuniary interest, and by reason of which such person should be regarded as the true owner, although such securities may not be registered or standing on the books of the issuer in the name of such person. Thus, for example, securities held for a person's benefit in the names of others, such as nominees, trustees and other fiduciaries, securities held by any partnership of which a person is a partner, and securities held by any corporation which is controlled by a person (directly or through intermediaries), would be deemed to be beneficially owned by said person. Similarly, a person ordinarily obtains benefits equivalent to ownership from, and thus is generally regarded as the "beneficial owner" of, securities held in the name of a spouse, a minor child, or a relative of the person or a spouse. Other illustrations of benefits substantially equivalent to those of ownership include application of the income derived from securities to maintain a common home and application of the income derived from securities to meet expenses which the person otherwise would meet from other sources. Such interests which confer beneficial ownership of a security include having or sharing with another: (1) Voting power including the power to vote, or to direct the voting of; the security; and/or (2) Investment power, including the power to dispose, or to direct the disposition, of such security. A person is also deemed to be the beneficial owner of securities which such person has the right to acquire beneficial ownership of such securities: (i) through the exercise option, warrant or right (including options traded on options exchanges) exercisable within 60 days; (ii) through the conversion of securities which are immediately convertible or will become convertible within 60 days; or (iii) pursuant to a power to revoke within 60 days; or pursuant to the automatic termination within 60 days of, a trust, discretionary account or similar arrangement. In addition, beneficial ownership is conferred if voting or investment power is shared with one or more other persons and, therefore, the same shares of stock may be deemed beneficially owned by a number of persons. The Securities and Exchange Commission regards securities held in trust for others as beneficially owned by the trustee if he or she has or shares voting or investment power with respect to such securities. (e) "Compliance Officer" means the designated compliance officer of a Company or the Investment Adviser, as appropriate. (f) "Control" means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. (g) "Investment Adviser" means FIG Advisors. (h) "Investment personnel" means portfolio managers or other employees of FIG Advisors who participate in making investment recommendations to a Company, as well as persons in a control relationship to a Company who obtain information about investment recommendations. (i) "Independent trustee or manager" means a trustee or manager of a Company, as applicable, who is not an "interested person" of a Company within the meaning of Section 2(a)(l9) of the Act. A trustee or manager is not deemed an interested person of a Company solely by reason of such person being a member of the Board of Trustees/Directors or Managers or an owner of shares of a Company or of any series thereof. (j) "Purchase or sale of a security" includes, among other things, the writing of an option to purchase or sell a security (as defined below in subparagraph(k)). (k) "Security" shall have the meaning set forth in Section 2 (a)(36)of the Act. In general, the term includes any interest or instrument commonly known as a security, except that it shall not include securities issued by the United States which are government securities within the meaning of Section 2(a)(l6) of the Act, bankers acceptances, bank certificates of deposit, commercial paper or shares of registered opened investment companies and such other money market instruments as designated by the Board of Trustees/Directors or Managers of a Company. (l) "Insider trading" shall mean the trading of any security while in the possession of material non-public information as to which the access person (1) has a duty to keep confidential or (2) knows or should have known was improperly obtained. "Material information" means information which is substantially likely to be considered important in making an investment decision by a reasonable investor, or information which is reasonably certain to have a substantial effect on the price of an issuer's securities. Information is non-public until it has been effectively communicated or made available to the market price. 4. Exempted Transactions The prohibitions of Section 5(a)-(d) of this Code of Ethics shall not apply to: (a) Purchases or sales effected in any account over which the access person has no direct or indirect influence or control or in any account of the access person which is managed on a discretionary basis by a person other than such access person and with respect to which such access person does not in fact influence or control such transactions. (b) Purchases or sales of securities which are not eligible for purchase or sale by a Company. (c) Purchases or sales which are nonvolitional on the part of either the access person or a Company. (d) Purchases which are part of an automatic dividend reinvestment plan. (e) Purchases effected upon the exercise of rights issued by an issuer, pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired. (f) Purchases or sales of securities which receive the prior approval of the Compliance Officer (or their designees) (such approving officer having no personal interest in such purchases or sales) because such purchases or sales are not likely to have any economic impact on a Company or on its ability to purchase or sell securities of the same class or other securities of the same issuer. (g) Any equity securities transaction, or series of related transactions, involving 500 shares or less in the aggregate, if the issuer has a market capitalization (outstanding shares multiplied by the current price per share) greater than $1 billion. (h) Purchases or sales which are only remotely potentially harmful to the Trust because they would be very unlikely to affect a highly institutional market, or because they clearly are not related economically to the securities to be purchased, sold or held by a Company. 5. Prohibited Purchases and Sales (a) No access person shall purchase or sell, directly or indirectly, any security in which such person has, or by reason of such transaction acquires, any direct or indirect beneficial ownership and which to such person's actual knowledge at the time of such purchase or sale: (i) is being considered for purchase or sale by a Company; or (ii) is being purchased or sold by a Company. (b) No access person shall reveal to any other person (except in the normal course of his or her duties on behalf of a Company) any information regarding securities transactions by a Company or consideration by a Company or FIG Advisors of any securities transaction. (c) No access person shall make recommendations concerning the purchase or sale of securities by a Company or any series thereof without disclosing any interest such access person has in the securities or issuer thereof, including, without limitation: (i) any direct or indirect beneficial ownership of any securities of such issuer; (ii) any contemplated transaction by such person in such securities; (iii) any position with such issuer or its affiliates; and (iv) any present or proposed business relationship with such issuer or its affiliates on the one hand, and such person or any party in which such person has a significant interest, on the other; provided, however, that in the event the interest of such access person in such securities or issuer is not material to his or her personal net worth and any contemplated transaction by such person in such securities cannot reasonably be expected to have a material adverse effect on any such transaction by a Company or any series thereof or on the market for the securities generally, such access person shall not be required to disclose his or her interest in the securities or issuer thereof in connection with any such recommendation. (d) No access person of a Company shall participate in any securities transactions on a joint basis with a Company in violation of applicable law. (e) No access person shall engage in "insider trading" whether for his or her own benefit or the benefit of a Company, FIG Advisors or others. (f) No investment personnel shall participate Initial Public Offerings or in private placements of securities unless the Compliance Officer reviews and approves such participation. Approval will only be granted if the Compliance Officer determines the investment does not cause a conflict of interest between the investment personnel, FIG Advisors and the Company. The Compliance Officer's decision, and the rationale supporting his or her decision, will be retained in the records of FIG Advisors. 6. Reporting (a) Every access person, subject to the exception in paragraph (b) below for independent trustees or managers, shall report to the Compliance Officer the information described in Section 6(c) of this Code with respect to (i) transactions in any security in which such access person has, or by reason of such transaction acquires, any direct or indirect beneficial ownership in the security and (ii) holding of all securities, on an initial and annual basis, in which such access person has direct or indirect beneficial ownership; provided, however, that an access person shall not be required to make a report with respect to transactions effected in any account over which such person does not have any direct or indirect influence or control or in any account which is managed on a discretionary basis by a person other than such access person and with respect to which such access does not in fact influence or control such transactions. The Compliance Officer shall maintain such reports and such other records as are required by Rule l7j-l under the Act and set forth in Section 7 below. (b) An independent trustee or manager of a Company need only report to the Compliance Officer a transaction if such trustee or manager at the time of that transaction, knew or, in the ordinary course of fulfilling his or her official duties as a trustee of a Company, should have known that during the 15-day period immediately preceding or after the date of the transaction by the trustees security is or was purchased or sold by a Company or any series thereof or such purchase or sale was being considered for purchase or sale by a Company or FIG Advisors. Independent trustees or managers are not required to make the initial holdings reports set forth in Section 6(c)(ii) below and the quarterly reporting requirements set forth in Section 6(c)(i) below or the annual holdings report set forth in Section 6(c)(iii) below, unless a transaction described in this paragraph has occurred in such quarter. (c) Every report shall be in writing and shall be delivered not later than (i) 30 days after the end of the calendar quarter in which a transaction to which the report relates was effected and (ii) 10 days after the individual becomes an access person (which information must be current as of a date no more than 45 days prior to the date the person becomes an access person), and (iii) annually (which information should be current as of a date no more than 45 days before the report is submitted), and shall contain the following information: (i) The date of the transaction and current holdings, the title and the number of shares and the principal amount of each security involved; (ii) The nature of all transactions (i.e., purchase, sale or other type of acquisition or disposition); (iii) The price at which transactions were effected; (iv) The name of the broker, dealer or bank with or through which the transactions were effected; and (v) With respect to any account established by an access person during the quarter in which any securities were held during the quarter for the direct or indirect benefit of the access person: (1) name of the broker, dealer or bank; (2) date account was established; and (3) date that report is submitted to the Compliance Officer. (d) In lieu of the required report, so long as the information in the report required by 6(c) above is provided, an access person may instruct every brokerage firm at which such access person has an account to send duplicate confirmations of all securities transactions and monthly brokerage statements to the Compliance Officer. The annual report required by 6(c)(iii) can be made by confirming in writing the information accumulated through the year. (e) Any such report may contain a statement that the report shall not be construed as an admission by the person making such report that such person has any direct or indirect beneficial ownership in the security to which the report relates. (f) The information on securities transactions received and recorded by FIG Advisors under Rule 204-2(a)(l2) of the Investment Advisers Act of 1940 shall be deemed to satisfy the reporting requirements imposed on access persons of a Company who are officers or employees of FIG Advisors when to require information under this Code of Ethics would be duplicative of that already recorded by FIG Advisors. (g) All reports furnished pursuant to this Section will be reviewed by the Compliance Officer for compliance with these procedures. These reports will be kept confidential, subject to the right of inspection by the Board of Trustees/Directors or Managers of a Company, the Board of Directors of FIG Advisors and by the Securities and Exchange Commission. 7. Maintenance of Records The Compliance Officer shall maintain and cause to be maintained in an easily accessible place, the following records: (a) A copy of any code of ethics adopted by the Investment Adviser or a Company pursuant to the Rule which is or has been in effect during the past five years; (b) A list of all persons who are, or within the preceding five years have been, required to make reports pursuant to the Rule and this Code; (c) A copy of each report made pursuant to the Rule and this Code within the preceding five years (d) A copy of any decision and reasons supporting such decision to approve a pre-clearance transaction pursuant to this Code, made within the past five years after the end of the fiscal year in which such approval is granted; and (e) A copy of any record or report of violation of this Code and any action taken as a result of such violation. 8. Sanctions Upon discovering a violation of this Code, the Board of Trustees/Directors or Managers of a Company or the Board of Directors of FIG Advisors, as applicable, may impose such sanctions as it deems appropriate, including, among other things, a letter of censure or suspension or termination of the employment of the violator. CERTIFICATION FORM This is to certify that I have read and understand the Consolidated Code of Ethics dated August 16, 2000 as amended through February 26, 2007, and that I recognize that I am subject to the provisions thereof and will comply with the policy and procedures stated therein. This is to further certify that I have complied with the requirements of such Code of Ethics and that I have reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of such Code of Ethics. Please sign your name here: ----------------------------- Please print your name here: ----------------------------- Please date here: ----------------------------- Please sign two copies of this Certification Form, return one copy to ___________________________ and retain the other copy, together with a copy of the Code of Ethics, for your records. 36 EX-99.CERT 3 y31813bexv99wcert.txt EX-99.CERT: CERTIFICATION EXHIBIT A2 CERTIFICATION OF CHIEF EXECUTIVE OFFICER CERTIFICATIONS I, Wesley R. Edens, certify that: 1. I have reviewed this report on Form N-CSR of Fortress Pinnacle Investment Fund LLC; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows of the Registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the most recent fiscal quarter of the period 37 covered by this report that has materially affected, or is reasonable likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officer and I have disclosed to the Registrant's auditor and the audit committee of the Registrant's Board of Managers: a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: March 12, 2007 /s/ Wesley R. Edens ---------------------------------------- Chief Executive Officer 38 CERTIFICATION OF CHIEF FINANCIAL OFFICER CERTIFICATIONS I, Jeffrey Rosenthal, certify that: 1. I have reviewed this report on Form N-CSR of Fortress Pinnacle Investment Fund LLC; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows of the Registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the most recent fiscal quarter of the period covered by this report that has materially affected, or is reasonable likely to materially affect, the Registrant's internal control over financial reporting; and 39 5. The Registrant's other certifying officer and I have disclosed to the Registrant's auditor and the audit committee of the Registrant's Board of Managers: a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: March 12, 2007 /s/ Jeffrey Rosenthal ---------------------------------------- Chief Financial Officer 40 EX-99.906CERT 4 y31813bexv99w906cert.txt EX-99.906CERT: CERTIFICATION EXHIBIT B CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to 18 U.S.C. Section 1350, the undersigned officers of Fortress Pinnacle Investment Fund LLC (the "Company"), hereby certify, to the best of their knowledge, that the Company's Report on Form N-CSR for the period ended December 31, 2006 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: March 12, 2007 /s/ Wesley R. Edens - ------------------------------------- Name: Wesley R. Edens Title: Chief Executive Officer /s/ Jeffrey Rosenthal - ------------------------------------- Name: Jeffrey Rosenthal Title: Chief Financial Officer 41 -----END PRIVACY-ENHANCED MESSAGE-----