e10vq

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-50718

TACTICAL DIVERSIFIED FUTURES FUND L.P.

(Exact name of registrant as specified in its charter)


New York		13-4224248

(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

c/o Ceres Managed Futures LLC
522 Fifth Avenue – 14^th Floor
New York, New York 10036

(Address of principal executive offices) (Zip Code)

(212) 296-1999

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of the chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes No

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


Large accelerated filer		Accelerated filer		Non-accelerated filer X		Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No X

As of October 31, 2010, 652,110.3090 Limited Partnership Redeemable Units were outstanding.

Tactical Diversified Futures Fund L.P.

Statements of Income and Expenses and Changes in Partners’ Capital

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Income:
Net gains (losses) on trading of commodity interests and investment in Funds:
Net realized gains (losses) on closed contracts	$	2,368,099		$	(3,867,920	)	$	2,403,532		$	(5,111,540	)
Net realized gains (losses) on investment in Funds		(18,008,775	)		23,514,952			(33,561,270	)		101,332,111
Change in net unrealized gains (losses) on open contracts		2,442,477			1,980,297			3,777,932			1,054,154
Change in net unrealized gains (losses) on investment in Funds		17,599,989			17,239,194			19,322,873			(66,847,707	)

Gain (loss) from trading, net		4,401,790			38,866,523			(8,056,933	)		30,427,018
Interest income		10,033			6,968			22,934			18,877
Interest income from investment in Funds		193,944			155,217			472,408			508,288

Total income (loss)		4,605,767			39,028,708			(7,561,591	)		30,954,183

Expenses:
Brokerage fees including clearing fees		11,292,670			11,685,913			34,664,348			38,696,763
Management fees		3,651,290			3,855,472			11,265,779			12,617,576
Incentive fees		—			2,963,733			—			5,601,417
Other		126,383			56,158			583,181			659,417

Total expenses		15,070,343			18,561,276			46,513,308			57,575,173

Net income (loss)		(10,464,576	)		20,467,432			(54,074,899	)		(26,620,990	)
Additions — Limited Partners		15,481,000			47,869			82,803,000			47,869
Redemptions — Limited Partners		(20,628,964	)		(30,386,870	)		(64,883,838	)		(209,767,249	)

Net increase (decrease) in Partners’ Capital		(15,612,540	)		(9,871,569	)		(36,155,737	)		(236,340,370	)
Partners’ Capital, beginning of period		768,996,085			791,002,053			789,539,282			1,017,470,854

Partners’ Capital, end of period	$	753,383,545		$	781,130,484		$	753,383,545		$	781,130,484

Net asset value per unit (665,475.9152 and 622,152.8424 units outstanding at September 30, 2010 and 2009, respectively)	$	1,132.10		$	1,255.53		$	1,132.10		$	1,255.53

Net income (loss) per Redeemable Unit and General Partner unit equivalents	$	(15.45	)	$	32.21		$	(80.61	)	$	(34.93	)

Weighted average units outstanding		673,625.7951			636,263.7066			670,538.4703			691,724.3480

See accompanying notes to financial statements.

Tactical Diversified Futures Fund L.P.

Notes to Financial Statements

September 30, 2010

(Unaudited)

General:

Tactical Diversified Futures Fund L.P. (the “Partnership”) is a limited partnership organized under the partnership laws of the State of New York on December 3, 2002 to engage, directly or indirectly, in the speculative trading of a diversified portfolio of commodity interests including futures contracts, options, swaps and forward contracts. The sectors traded include currencies, energy, grains, indices, U.S. and non-U.S. interest rates, livestock, lumber, metals and softs. The commodity interests that are traded by the Partnership and the Funds (as defined in Note 5 “Investment in Funds”) are volatile and involve a high degree of market risk.

Between March 27, 2003 (commencement of the public offering period) and April 30, 2003, 36,616 redeemable units of limited partnership interest (“Redeemable Units”) were publicly offered at $1,000 per Redeemable Unit. The proceeds of the initial public offering were held in an escrow account until April 30, 2003, at which time they were turned over to the Partnership for trading. The Partnership was authorized to publicly offer 300,000 Redeemable Units during the initial public offering period. As of December 4, 2003, the Partnership was authorized to publicly offer an additional 700,000 Redeemable Units. As of October 7, 2004, the Partnership was authorized to publicly offer an additional 1,000,000 Redeemable Units. As of June 30, 2005, the Partnership was authorized to publicly offer the 2,000,000 Redeemable Units previously registered. The public offering of Redeemable Units terminated on November 30, 2008. The Partnership currently privately and continuously offers up to 200,000 Redeemable Units to qualified investors. There is no maximum number of Redeemable Units that may be sold by the Partnership.

Ceres Managed Futures LLC, a Delaware limited liability company, acts as the general partner (the “General Partner”) and commodity pool operator of the Partnership. The General Partner is wholly owned by Morgan Stanley Smith Barney Holdings LLC (“MSSB Holdings”), a registered non-clearing futures commission merchant and a member of the National Futures Association (“NFA”). Morgan Stanley, indirectly through various subsidiaries, owns a majority interest in MSSB Holdings. Citigroup Global Markets Inc. (“CGM”), the commodity broker and a selling agent for the Partnership, owns a minority interest in MSSB Holdings. Citigroup Inc. (“Citigroup”), indirectly through various subsidiaries, wholly owns CGM. Prior to July 31, 2009, the date as of which MSSB Holdings became its owner, the General Partner was wholly owned by Citigroup Financial Products Inc., a wholly owned subsidiary of Citigroup Global Markets Holdings Inc., the sole owner of which is Citigroup.

As of September 30, 2010, all trading decisions are made for the Partnership by Drury Capital, Inc., (“Drury”), Graham Capital Management L.P., (“Graham”), John W. Henry & Company, Inc., (“JWH”), Willowbridge Associates Inc. (“Willowbridge”), Aspect Capital Limited (“Aspect”), Capital Fund Management S.A. (“CFM”), Winton Capital Management Limited (“Winton”) and SandRidge Capital L.P. (“SandRidge”), (each an “Advisor” and collectively, the “Advisors”), each of which is a registered commodity trading advisor. AAA Capital Management Advisors, Ltd. (“AAA”) was terminated as of January 31, 2010. Each Advisor is allocated a portion of the Partnership’s assets to manage. The Partnership invests the portion of its assets allocated to JWH directly, where as the Partnership invests the portion of its assets allocated to each of the other Advisors indirectly through investments in master funds.

The General Partner and each limited partner share in the profits and losses of the Partnership in proportion to the amount of Partnership interest owned by each except that no limited partner shall be liable for obligations of the Partnership in excess of its capital contribution and profits, if any, net of distributions.

The accompanying financial statements are unaudited but, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the Partnership’s financial condition at September 30, 2010 and December 31, 2009, and the results of its operations and changes in partners’ capital for the three and nine months ended September 30, 2010 and 2009. These financial statements present the results of interim periods and do not include all disclosures normally provided in annual financial statements. You should read these financial statements together with the financial statements and notes included in the Partnership’s annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) for the year ended December 31, 2009.

The preparation of financial statements and accompanying notes in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses, and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. In making these estimates and assumptions, management has considered the effects, if any, of events occurring after the date of the Partnership’s Statements of Financial Condition through the date the financial statements were filed. As a result, actual results could differ from these estimates.

Tactical Diversified Futures Fund L.P.
Notes to Financial Statements
September 30, 2010
(Unaudited)

Due to the nature of commodity trading, the results of operations for the interim periods presented should not be considered indicative of the results that may be expected for the entire year.

Financial Highlights:

Changes in the net asset value per unit for the three and nine months ended September 30, 2010 and 2009 were as follows:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Net realized and unrealized gains (losses) *	$	(10.15	)	$	42.72		$	(63.67	)	$	(8.44	)
Interest income		0.30			0.26			0.73			0.77
Expenses **		(5.60	)		(10.77	)		(17.67	)		(27.26	)

Increase (decrease) for the period		(15.45	)		32.21			(80.61	)		(34.93	)
Net asset value per unit, beginning of period		1,147.55			1,223.32			1,212.71			1,290.46

Net asset value per unit, end of period	$	1,132.10		$	1,255.53		$	1,132.10		$	1,255.53


*		Includes brokerage fees.

**		Excludes brokerage fees.


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Ratios to average net assets:***
Net investment income (loss) before incentive fees****		(7.8	)%		(7.8	)%		(8.0)	%		(8.0	)%

Operating expenses		7.9	%		7.9	%		8.1	%		8.1	%
Incentive fees		—	%		0.4	%		—	%		0.6	%

Total expenses		7.9	%		8.3	%		8.1	%		8.7	%


Total return:
Total return before incentive fees		(1.3)	%		3.0	%		(6.6)	%		(2.0	)%
Incentive fees		—	%		(0.4	)%		—	%		(0.7	)%

Total return after incentive fees		(1.3)	%		2.6	%		(6.6)	%		(2.7	)%


***		Annualized (other than incentive fees).

****		Interest income less total expenses.

The above ratios may vary for individual investors based on the timing of capital transactions during the period. Additionally, these ratios are calculated for the limited partner class using the limited partners’ share of income, expenses and average net assets.

Tactical Diversified Futures Fund L.P.
Notes to Financial Statements
September 30, 2010
(Unaudited)

Trading Activities:

The Partnership was formed for the purpose of trading contracts in a variety of commodity interests, including derivative financial instruments and derivative commodity instruments. The results of the Partnership’s trading activities are shown in the Statements of Income and Expenses and Changes in Partners’ Capital.

The customer agreements between the Partnership and CGM and the Funds and CGM give the Partnership and the Funds the legal right to net unrealized gains and losses on open futures contracts. The Partnership and the Funds net, for financial reporting purposes, the unrealized gains and losses on open futures contracts on the Statements of Financial Condition as the criteria under Accounting Standards Codification (“ASC”) 210, Balance Sheet, has been met.

All of the commodity interests owned by the Partnership are held for trading purposes. All of the commodity interests owned by the Funds are held for trading purposes. The average number of futures contracts traded directly by the Partnership for the three months ended September 30, 2010 and 2009, based on a monthly calculation were 1,467 and 1,279, respectively. The average number of futures contracts traded directly by the Partnership for the nine months ended September 30, 2010 and 2009, based on a monthly calculation, were 1,406 and 939, respectively.

Brokerage fees are calculated as a percentage of the Partnership’s adjusted net asset value on the last day of each month and are affected by trading performance, additions and redemptions.

The Partnership adopted ASC 815, Derivatives and Hedging, as of January 1, 2009 which requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. ASC 815 only expands the disclosure requirements for derivative instruments and related hedging activities and has no impact on the Statements of Financial Condition or Statements of Income and Expenses and Changes in Partners’ Capital. The following tables indicate the fair values of derivative instruments of futures contracts traded directly by the Partnership as separate assets and liabilities as of September 30, 2010 and December 31, 2009.


	September 30, 2010
Assets
Futures Contracts
Currencies	$	799,887
Energy		98,944
Grains		1,037,450
Indices		15,820
Interest Rates — U.S.		59,531
Interest Rates Non — U.S.		160,383
Metals		1,444,285
Softs		742,212

Total unrealized appreciation on open futures contracts	$	4,358,512


Liabilities
Futures Contracts
Currencies	$	(37,906	)
Energy		(200	)
Indices		(33,501	)
Interest Rates — U.S.		(38,906	)
Interest Rates Non — U.S.		(53,858	)
Softs		(26,376	)

Total unrealized depreciation on open futures contracts	$	(190,747	)


Net unrealized appreciation on open futures contracts	$	4,167,765	*


*		This amount is in “Net unrealized appreciation on open futures contracts” on the Statements of Financial Condition.

Tactical Diversified Futures Fund L.P.
Notes to Financial Statements
September 30, 2010
(Unaudited)


	December 31, 2009
Assets
Futures Contracts
Currencies	$	86,594
Grains		28,112
Indices		95,922
Interest Rates — U.S.		16,469
Softs		503,618

Total unrealized appreciation on open futures contracts	$	730,715


Liabilities
Futures Contracts
Currencies	$	(10,987	)
Energy		(145,049	)
Grains		(75,287	)
Interest Rates Non — U.S.		(107,129	)
Softs		(2,430	)

Total unrealized depreciation on open futures contracts	$	(340,882	)


Net unrealized appreciation on open futures contracts	$	389,833	**


**		This amount is in “Net unrealized appreciation on open futures contracts” on the Statements of Financial Condition.

The following table indicates the trading gains and losses, by market sector, on derivative instruments traded directly by the Partnership for the three and nine months ended September 30, 2010 and 2009.


	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	September 30, 2010			September 30, 2009			September 30, 2010			September 30, 2009
	Gain (loss) from			Gain (loss) from			Gain (loss) from			Gain (loss) from
Sector	trading			trading			trading			trading
Currencies	$	1,610,327		$	114,369		$	2,734,804		$	(774,968	)
Energy		(1,098,182	)		(1,610,086	)		(2,321,114	)		(1,455,983	)
Grains		1,082,276			(66,190	)		673,788			(238,969	)
Indices		(206,939	)		(3,275	)		(467,779	)		142,632
Interest Rates - U.S.		983,281			(490,235	)		2,030,001			(1,042,052	)
Interest Rates Non - U.S.		551,927			(240,846	)		2,204,081			(647,438	)
Metals		736,965			398,555			(355,990	)		(36,530	)
Softs		1,150,921			10,085			1,683,673			(4,078	)

Total	$	4,810,576		$	(1,887,623)		$	6,181,464		$	(4,057,386)

Tactical Diversified Futures Fund L.P.
Notes to Financial Statements
September 30, 2010
(Unaudited)

Fair Value Measurements:

Partnership’s and the Funds’ Investments. All commodity interests (including derivative financial instruments and derivative commodity instruments) are held for trading purposes. The commodity interests are recorded on trade date and open contracts are recorded at fair value (as described below) at the measurement date. Investments in commodity interests denominated in foreign currencies are translated into U.S. dollars at the exchange rates prevailing at the measurement date. Gains or losses are realized when contracts are liquidated. Unrealized gains or losses on open contracts are included as a component of equity in trading account on the Statements of Financial Condition. Realized gains or losses and any change in net unrealized gains or losses from the preceding period are reported in the Statements of Income and Expenses and Changes in Partners’ Capital.

Partnership’s and the Funds’ Fair Value Measurements. The Partnership and the Funds adopted ASC 820, Fair Value Measurements and Disclosures, as of January 1, 2008, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a framework for measuring fair value and expands disclosures regarding fair value measurements in accordance with GAAP. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to fair values derived from unobservable inputs (Level 3). The level in the fair value hierarchy within which the fair value measurement in its entirety falls shall be determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Partnership and the Funds did not apply the deferral allowed by ASC 820 for nonfinancial assets and nonfinancial liabilities measured at fair value on a nonrecurring basis.

In 2009, the Partnership and the Funds adopted amendments to ASC 820, which reaffirms that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. These amendments to ASC 820 also reaffirm the need to use judgment in determining if a formerly active market has become inactive and in determining fair values when the market has become inactive. These amendments to ASC 820 are required for interim and annual reporting periods ending after June 15, 2009. Management has concluded that based on available information in the marketplace, there has not been a decrease in the volume and level of activity in the Partnership’s Level 2 assets and liabilities. The adoption of the amendments to ASC 820 had no effect on the Partnership’s Financial Statements.

The Partnership and the Funds consider prices for exchange-traded commodity futures, forwards and options contracts to be based on unadjusted quoted prices in active markets for identical assets (Level 1). The values of non-exchange-traded forwards, swaps and certain options contracts for which market quotations are not readily available are priced by broker-dealers who derive fair values for those assets from observable inputs (Level 2). Investments in funds (other commodity pools) where there are no other rights or obligations inherent within the ownership interest held by the Partnership are priced based on the end of the day net asset value (Level 2). The value of the Partnership’s investments in the Funds reflects its proportional interest in the Funds. As of and for the periods ended September 30, 2010 and December 31, 2009, the Partnership and the Funds did not hold any derivative instruments that are priced at fair value using unobservable inputs through the application of management’s assumptions and internal valuation pricing models (Level 3).


			Quoted Prices in
			Active Markets		Significant Other		Significant
			for Identical		Observable Inputs		Unobservable
	9/30/2010		Assets (Level 1)		(Level 2)		Inputs (Level 3)
Assets
Futures	$	4,167,765	$	4,167,765	$	—	$	—
Investment in Funds		724,288,825		—		724,288,825		—

Total fair value	$	728,456,590	$	4,167,765	$	724,288,825	$	—

Tactical Diversified Futures Fund L.P.
Notes to Financial Statements
September 30, 2010
(Unaudited)


			Quoted Prices in
			Active Markets		Significant Other		Significant
			for Identical		Observable Inputs		Unobservable
	12/31/2009		Assets (Level 1)		(Level 2)		Inputs (Level 3)
Assets
Futures	$	389,833	$	389,833	$	—	$	—
Investment in Funds		769,374,582		—		769,374,582		—

Total fair value	$	769,764,415	$	389,833	$	769,374,582	$	—

Investment in Funds:

The assets allocated to JWH for trading are invested directly pursuant to JWH’s Global Analytics Program.

On December 1, 2004, the assets allocated to Winton for trading were invested in the CMF Winton Master L.P. (“Winton Master”), a limited partnership organized under the partnership laws of the State of New York. The Partnership purchased 52,981.2908 units of Winton Master with cash equal to $57,471,493. Winton Master was formed in order to permit accounts managed now or in the future by Winton using the Diversified Program, a proprietary, systematic trading system, to invest together in one trading vehicle. The General Partner is also the general partner of Winton Master. Individual and pooled accounts currently managed by Winton, including the Partnership, are permitted to be limited partners of Winton Master. The General Partner and Winton believe that trading through this structure should promote efficiency and economy in the trading process.

On March 1, 2005, the assets allocated to Aspect for trading were invested in the CMF Aspect Master Fund L.P. (“Aspect Master”), a limited partnership organized under the partnership laws of the State of New York. The Partnership purchased 131,340.8450 units of Aspect Master with cash equal to $122,786,448 and a contribution of open commodity futures and forward contracts with a fair value of $8,554,397. Aspect Master was formed in order to permit accounts managed now or in the future by Aspect using the Diversified Program, a proprietary, systematic trading system, to invest together in one trading vehicle. The General Partner is also the general partner of Aspect Master. Individual and pooled accounts currently managed by Aspect, including the Partnership, are permitted to be limited partners of Aspect Master. The General Partner and Aspect believe that trading through this structure should promote efficiency and economy in the trading process.

On July 1, 2005, the assets allocated to Willowbridge for trading were invested in the CMF Willowbridge Argo Master Fund L.P. (“Willowbridge Master”), a limited partnership organized under the partnership laws of the State of New York. The Partnership purchased 95,795.8082 units of Willowbridge Master with cash equal to $85,442,868 and a contribution of open futures and forward contracts with a fair value of $10,352,940. Willowbridge Master was formed in order to permit accounts managed now or in the future by Willowbridge using the Argo Trading System, a proprietary, systematic trading system, to invest together in one trading vehicle. The General Partner is also the general partner of Willowbridge Master. Individual and pooled accounts currently managed by Willowbridge, including the Partnership, are permitted to be limited partners of Willowbridge Master. The General Partner and Willowbridge believe that trading through this structure should promote efficiency and economy in the trading process.

On August 1, 2005, the assets allocated to Drury for trading were invested in the CMF Drury Capital Master Fund L.P. (“Drury Master”), a limited partnership organized under the partnership laws of the State of New York. The Partnership purchased 120,720.7387 units of Drury Master with cash equal to $117,943,205 and a contribution of open futures and forward contracts with a fair value of $2,777,533. Drury Master was formed in order to permit accounts managed now or in the future by Drury using the Diversified Trend-Following Program, a proprietary, systematic trading system, to invest together in one trading vehicle. The General Partner is also the general partner of Drury Master. Individual and pooled accounts currently managed by Drury, including the Partnership, are permitted to be limited partners of Drury Master. The General Partner and Drury believe that trading through this structure should promote efficiency and economy in the trading process.

On August 1, 2005, the assets allocated to CFM for trading were invested in the CMF Capital Fund Management Master Fund L.P. (“CFM Master”), a limited partnership organized under the partnership laws of the State of New York. The Partnership purchased 159,434.0631 units of CFM Master with cash equal to $157,804,021 and a contribution of open futures and forward contracts with a fair value of $1,630,043. CFM Master was formed in order to permit accounts managed now or in the future by CFM using the Discus Program, a proprietary, systematic trading system, to invest together in one trading vehicle. The General Partner is also the general partner of CFM Master. Individual and pooled accounts currently managed by CFM, including the Partnership, are permitted to be limited partners of CFM Master. The General Partner and CFM believe that trading through this structure should promote efficiency and economy in the trading process.

Tactical Diversified Futures Fund L.P.
Notes to Financial Statements
September 30, 2010
(Unaudited)

On October 1, 2005, the assets allocated to AAA for trading were invested in the AAA Master Fund LLC (“AAA Master”) a limited liability company organized under the limited liability company laws of the State of New York. The Partnership purchased 13,956.1190 units of AAA Master with cash equal to $50,000,000. AAA Master was formed in order to permit accounts managed now or in the future by AAA using the Energy Program — Futures and Swaps, a proprietary, discretionary trading system, to invest in one trading vehicle. The Partnership fully redeemed its investment in AAA Master on January 31, 2010 for cash equal to $40,267,084.

On June 1, 2006, the assets allocated to Graham for trading were invested in the CMF Graham Capital Master Fund L.P. (“Graham Master”), a limited partnership organized under the partnership laws of the State of New York. The Partnership purchased 101,486.0491 units of Graham Master with cash equal to $103,008,482. Graham Master was formed in order to permit accounts managed now or in the future by Graham using the K4D-12.5 program, a proprietary, systematic trading system, to invest together in one trading vehicle. The General Partner is also the general partner of Graham Master. Individual and pooled accounts currently managed by Graham, including the Partnership, are permitted to be limited partners of Graham Master. The General Partner and Graham believe that trading through this structure should promote efficiency and economy in the trading process.

On July 1, 2006, the assets allocated to Avant for trading were invested in the CMF Avant Master Fund L.P. (“Avant Master”), a limited partnership organized under the partnership laws of the State of New York. The Partnership purchased 17,941.7382 Redeemable Units of Avant Master with cash equal to $20,000,000. Avant Master was formed in order to permit accounts managed now or in the future by Avant using the Diversified Program, a proprietary, systematic trading system, to invest together in one trading vehicle. The Partnership fully redeemed its investment in Avant Master on January 31, 2009 for cash equal to $14,145,443.

On March 1, 2009, the assets allocated to SandRidge for trading were in invested in the CMF SandRidge Master Fund L.P. (“SandRidge Master”), a limited partnership organized under the partnership laws of the State of New York. The Partnership purchased 14,408.1177 units of SandRidge Master with cash equal to $27,000,000. SandRidge Master was formed in order to permit commodity pools managed now or in the future by SandRidge using SandRidge’s Energy Program, a proprietary, discretionary trading system, to invest together in one trading vehicle. The General Partner is also the general partner of SandRidge Master. Individual and pooled accounts currently managed by SandRidge, including the Partnership, are permitted to be limited partners of SandRidge Master. The General Partner and SandRidge believe that trading through this structure should promote efficiency and economy in the trading process.

The General Partner is not aware of any material changes to the trading programs discussed above during the fiscal quarter ended September 30, 2010.

Winton Master’s, Aspect Master’s, Drury Master’s, Willowbridge Master’s, CFM Master’s, Graham Master’s and SandRidge Master’s (collectively, the “Funds”) and the Partnership’s trading of futures and exchange cleared swaps, forwards and options contracts, if applicable, on commodities is done primarily on U.S. commodity exchanges and foreign commodity exchanges. The Funds and the Partnership engage in such trading through commodity brokerage accounts maintained with CGM.

A limited partner may withdraw all or part of their capital contribution and undistributed profits, if any, from the Funds in multiples of the net asset value per unit as of the end of any day (the “Redemption Date”) after a request for redemption has been made to the General Partner at least 3 days in advance of the Redemption Date. The units are classified as a liability when the limited partner elects to redeem and informs the Funds.

Management and incentive fees are charged at the Partnership level. All exchange, clearing, user, give-up, floor brokerage and NFA fees (collectively the “clearing fees”) are borne by the Partnership directly and through its investment in the Funds. All other fees including CGM’s direct brokerage fees are charged at the Partnership level.

At September 30, 2010, the Partnership owned approximately 89.7% of Drury Master, 25.0% of Willowbridge Master, 65.3% of Aspect Master, 77.7% of CFM Master, 15.8% of Winton Master, 58.2% of Graham Master and 17.2% of SandRidge Master. At December 31, 2009, the Partnership owned approximately 89.2% of Drury Master, 30.8% of Willowbridge Master, 60.3% of Aspect Master, 76.3% of CFM Master, 17.2% of Winton Master, 6.6% of AAA Master, 51.1% of Graham Master and 11.7% of SandRidge Master. It is the Partnership’s intention to continue to invest in the Funds. The performance of the Partnership is directly affected by the performance of the Funds. Expenses to investors as a result of investment in the Funds are approximately the same and the redemption rights are not affected.

Tactical Diversified Futures Fund L.P.
Notes to Financial Statements
September 30, 2010
(Unaudited)

Summarized information reflecting the total assets, liabilities and capital for the Funds is shown in the following tables.


	September 30, 2010
	Total Assets		Total Liabilities		Total Capital
Drury Master	$	111,196,452	$	568,289	$	110,628,163
Willowbridge Master		217,621,623		43,436		217,578,187
Aspect Master		163,825,778		44,212		163,781,566
CFM Master		171,081,061		39,775		171,041,286
Winton Master		799,636,374		116,941		799,519,433
Graham Master		174,561,728		46,918		174,514,810
SandRidge Master		659,157,522		63,882,566		595,274,956

Total	$	2,297,080,538	$	64,742,137	$	2,232,338,401


	December 31, 2009
	Total Assets		Total Liabilities		Total Capital
Drury Master	$	115,272,360	$	28,828	$	115,243,532
Willowbridge Master		231,147,799		42,482		231,105,317
Aspect Master		166,072,281		934,223		165,138,058
CFM Master		194,696,778		28,140		194,668,638
Winton Master		574,479,690		71,377		574,408,313
AAA Master		1,632,583,054		403,387,862		1,229,195,192
Graham Master		171,238,199		25,939		171,212,260
SandRidge Master		715,621,327		30,711,834		684,909,493

Total	$	3,801,111,488	$	435,230,685	$	3,365,880,803

Summarized information reflecting the net gain (loss) from trading, total income (loss) and net income (loss) for the Funds is shown in the following tables.


	For the three months ended September 30, 2010
	Gain (Loss) from			Total Income
	Trading, net			(Loss)			Net Income (Loss)
Drury Master	$	3,181,938		$	3,212,049		$	3,121,881
Willowbridge Master		(2,263,514	)		(2,194,399	)		(2,291,718	)
Aspect Master		11,582,903			11,626,710			11,568,821
CFM Master		(13,238,744	)		(13,189,180	)		(13,924,065	)
Winton Master		26,050,805			26,290,442			26,114,191
Graham Master		5,920,237			5,966,084			5,826,322
SandRidge Master		(42,934,957	)		(42,769,900	)		(43,234,755	)

Total	$	(11,701,332	)	$	(11,058,194	)	$	(12,819,323	)


	For the nine months ended September 30, 2010
	Gain (Loss) from			Total Income
	Trading, net			(Loss)			Net Income (Loss)
Drury Master	$	(4,831,291	)	$	4,757,029		$	(5,000,687	)
Willowbridge Master		(36,147,175	)		(35,978,106	)		(36,294,042	)
Aspect Master		19,462,775			19,567,964			19,334,749
CFM Master		(8,461,284	)		(8,339,494	)		(10,539,054	)
Winton Master		80,520,886			81,058,904			80,474,255
AAA Master		(34,508,985	)		(33,992,563	)		(36,937,144	)
Graham Master		2,934,755			3,044,067			2,605,489
SandRidge Master		(127,118,547	)		(126,683,659	)		(128,068,517	)

Total	$	(108,148,866	)	$	(96,565,858	)	$	(114,424,951	)

Tactical Diversified Futures Fund L.P.
Notes to Financial Statements
September 30, 2010
(Unaudited)

Summarized information reflecting the Partnership’s investment in, and the operations of, the Funds is as shown in the following tables.


	September 30, 2010					For the three months ended September 30, 2010
	% of								Expenses				Net
	Partnership’s			Fair		Income							Income			Investment	Redemptions
Funds	Net Assets			Value		(Loss)			Brokerage Fees		Other		(Loss)			Objective	Permitted
Drury Master		13.18	%	$	99,267,511	$	2,903,985		$	70,216	$	10,261	$	2,823,508		Commodity Portfolio	Monthly
Willowbridge Master		7.22	%		54,377,254		(577,262	)		18,618		6,275		(602,155	)	Commodity Portfolio	Monthly
Aspect Master		14.20	%		107,021,014		7,455,875			29,160		8,010		7,418,705		Commodity Portfolio	Monthly
CFM Master		17.65	%		132,967,960		(10,258,039	)		552,864		18,598		(10,829,501	)	Commodity Portfolio	Monthly
Winton Master		16.78	%		126,423,906		4,150,107			23,622		4,513		4,121,972		Commodity Portfolio	Monthly
Graham Master		13.49	%		101,610,629		3,455,764			74,078		7,068		3,374,618		Commodity Portfolio	Monthly
SandRidge Master		13.62	%		102,620,551		(7,345,272	)		61,281		18,157		(7,424,710	)	Energy Portfolio	Monthly

Total				$	724,288,825	$	(214,842	)	$	829,839	$	72,882	$	(1,117,563	)


	September 30, 2010					For the nine months ended September 30, 2010
	% of								Expenses				Net
	Partnership’s			Fair		Income							Income			Investment	Redemptions
Funds	Net Assets			Value		(Loss)			Brokerage Fees		Other		(Loss)			Objective	Permitted
Drury Master		13.18	%	$	99,267,511	$	(4,136,638	)	$	146,872	$	69,240	$	(4,352,750	)	Commodity Portfolio	Monthly
Willowbridge Master		7.22	%		54,377,254		(10,101,870	)		67,305		17,503		(10,186,678	)	Commodity Portfolio	Monthly
Aspect Master		14.20	%		107,021,014		12,311,024			94,832		50,148		12,166,044		Commodity Portfolio	Monthly
CFM Master		17.65	%		132,967,960		(6,511,885	)		1,640,348		61,331		(8,213,564	)	Commodity Portfolio	Monthly
Winton Master		16.78	%		126,423,906		13,790,394			85,670		13,614		13,691,110		Commodity Portfolio	Monthly
AAA Master		0.00	%		—		(134,982	)		10,603		2,019		(147,604	)	Energy Portfolio	Monthly
Graham Master		13.49	%		101,610,629		2,402,141			201,155		48,746		2,152,240		Commodity Portfolio	Monthly
SandRidge Master		13.62	%		102,620,551		(21,384,173	)		188,467		45,754		(21,618,394	)	Energy Portfolio	Monthly

Total				$	724,288,825	$	(13,765,989	)	$	2,435,252	$	308,355	$	(16,509,596	)


	December 31, 2009					For the three months ended September 30, 2009
	% of								Expenses				Net
	Partnership’s			Fair		Income							Income			Investment	Redemptions
Funds	Net Assets			Value		(Loss)			Brokerage Fees		Other		(Loss)			Objective	Permitted
Drury Master		13.02	%	$	102,802,718	$	12,670,516		$	41,259	$	9,407	$	12,619,850		Commodity Portfolio	Monthly
Willowbridge Master		9.01	%		71,165,944		(6,817,147	)		30,204		6,055		(6,853,406	)	Commodity Portfolio	Monthly
Aspect Master		12.62	%		99,623,421		5,585,594			47,444		5,279		5,532,871		Commodity Portfolio	Monthly
CFM Master		18.82	%		148,578,532		15,089,867			361,197		7,425		14,721,245		Commodity Portfolio	Monthly
Winton Master		12.51	%		98,783,450		1,168,076			18,702		1,650		1,147,724		Commodity Portfolio	Monthly
AAA Master		10.25	%		80,949,560		4,328,120			81,740		13,398		4,232,982		Energy Portfolio	Monthly
Graham Master		11.08	%		87,454,721		7,143,988			98,592		4,942		7,040,454		Commodity Portfolio	Monthly
SandRidge Master		10.14	%		80,016,236		1,740,349			9,045		1,850		1,729,454		Energy Portfolio	Monthly

Total				$	769,374,582	$	40,909,363		$	688,183	$	50,006	$	40,171,174


	December 31, 2009					For the nine months ended September 30, 2009
	% of								Expenses				Net
	Partnership’s			Fair		Income							Income			Investment	Redemptions
Funds	Net Assets			Value		(Loss)			Brokerage Fees		Other		(Loss)			Objective	Permitted
Drury Master		13.02	%	$	102,802,718	$	11,249,850		$	101,971	$	26,604	$	11,121,275		Commodity Portfolio	Monthly
Willowbridge Master		9.01	%		71,165,944		(9,824,490	)		82,379		13,911		(9,920,780	)	Commodity Portfolio	Monthly
Aspect Master		12.62	%		99,623,421		(10,176,888	)		118,504		17,193		(10,312,585	)	Commodity Portfolio	Monthly
CFM Master		18.82	%		148,578,532		24,690,837			1,707,971		23,392		22,959,474		Commodity Portfolio	Monthly
Winton Master		12.51	%		98,783,450		(6,766,742	)		54,668		6,089		(6,827,499	)	Commodity Portfolio	Monthly
AAA Master		10.25	%		80,949,560		15,092,229			231,926		50,467		14,809,836		Energy Portfolio	Monthly
Graham Master		11.08	%		87,454,721		5,511,472			245,065		13,564		5,252,843		Commodity Portfolio	Monthly
Avant Master		0.00	%		—		246,615			2,975		1,254		242,386		Energy Portfolio	Monthly
SandRidge Master		10.14	%		80,016,236		4,969,809			22,927		5,809		4,941,073		Energy Portfolio	Monthly

Total				$	769,374,582	$	34,992,692		$	2,568,386	$	158,283	$	32,266,023

Tactical Diversified Futures Fund L.P.
Notes to Financial Statements
September 30, 2010
(Unaudited)

Financial Instrument Risks:

In the normal course of its business, the Partnership and the Funds are parties to financial instruments with off-balance sheet risk, including derivative financial instruments and derivative commodity instruments. These financial instruments may include forwards, futures, options and swaps, whose values are based upon an underlying asset, index or reference rate, and generally represent future commitments to exchange currencies or cash balances, to purchase or sell other financial instruments on specific terms at specified future dates, or, in the case of derivative commodity instruments, to have a reasonable possibility to be settled in cash, through physical delivery or with another financial instrument. These instruments may be traded on an exchange or over-the-counter (“OTC”). Exchange-traded instruments are standardized and include futures and certain forwards and option contracts. OTC contracts are negotiated between contracting parties and include forwards and certain options. Each of these instruments is subject to various risks similar to those related to the underlying financial instruments including market and credit risk. In general, the risks associated with OTC contracts are greater than those associated with exchange-traded instruments because of the greater risk of default by the counterparty to an OTC contract.

Market risk is the potential for changes in the value of the financial instruments traded by the Partnership/Funds due to market changes, including interest and foreign exchange rate movements and fluctuations in commodity or security prices. Market risk is directly impacted by the volatility and liquidity in the markets in which the related underlying assets are traded. The Partnership/Funds are exposed to a market risk equal to the value of futures and forward contracts purchased and unlimited liability on such contracts sold short.

Credit risk is the possibility that a loss may occur due to the failure of a counterparty to perform according to the terms of a contract. The Partnership’s/Funds’ risk of loss in the event of a counterparty default is typically limited to the amounts recognized in the Statements of Financial Condition and not represented by the contract or notional amounts of the instruments. The Partnership’s/Funds’ risk of loss is reduced through the use of legally enforceable master netting agreements with counterparties that permit the Partnership/Funds to offset unrealized gains and losses and other assets and liabilities with such counterparties upon the occurrence of certain events. The Partnership/Funds have credit risk and concentration risk as the sole counterparty or broker with respect to the Partnership’s/Funds’ assets is CGM or a CGM affiliate. Credit risk with respect to exchange-traded instruments is reduced to the extent that through CGM, the Partnership’s/Funds’ counterparty is an exchange or clearing organization.

As both a buyer and seller of options, the Funds pay or receive a premium at the outset and then bear the risk of unfavorable changes in the price of the contract underlying the option. Written options expose the Funds to potentially unlimited liability; for purchased options the risk of loss is limited to the premiums paid. Certain written put options permit cash settlement and do not require the option holder to own the reference asset. The Funds do not consider these contracts to be guarantees as described in ASC 460, Guarantees.

The General Partner monitors and attempts to control the Partnership’s/Funds’ risk exposure on a daily basis through financial, credit and risk management monitoring systems, and accordingly, believes that it has effective procedures for evaluating and limiting the credit and market risks to which the Partnership/Funds may be subject. These monitoring systems generally allow the General Partner to statistically analyze actual trading results with risk adjusted performance indicators and correlation statistics. In addition, on-line monitoring systems provide account analysis of futures, forwards and options positions by sector, margin requirements, gain and loss transactions and collateral positions.

The majority of these instruments mature within one year of the inception date. However, due to the nature of the Partnership’s/Funds’ businesses, these instruments may not be held to maturity.

Tactical Diversified Futures Fund L.P.
Notes to Financial Statements
September 30, 2010
(Unaudited)

7. Critical Accounting Policies:

Use of Estimates. The preparation of financial statements and accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses, and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. In making these estimates and assumptions, management has considered the effects, if any, of events occurring after the date of the Partnership’s Statements of Financial Condition through the date the financial statements were filed. As a result, actual results could differ from these estimates.

Statement of Cash Flows. The Partnership is not required to provide a Statement of Cash Flows as permitted by ASC 230, Statement of Cash Flows.

Partnership’s and the Funds’ Investments. All commodity interests (including derivative financial instruments and derivative commodity instruments) are held for trading purposes. The commodity interests are recorded on trade date and open contracts are recorded at fair value (as described below) at the measurement date. Investments in commodity interests denominated in foreign currencies are translated into U.S. dollars at the exchange rates prevailing at the measurement date. Gains or losses are realized when contracts are liquidated. Unrealized gains or losses on open contracts are included as a component of equity in trading account on the Statements of Financial Condition. Realized gains or losses and any change in net unrealized gains or losses from the preceding period are reported in the Statements of Income and Expenses and Changes in Partners’ Capital.

Partnership’s and the Funds’ Fair Value Measurements. The Partnership and the Funds adopted ASC 820 as of January 1, 2008 which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Partnership and the Funds did not apply the deferral allowed by ASC 820 for nonfinancial assets and nonfinancial liabilities measured at fair value on a nonrecurring basis.

The Partnership and the Funds consider prices for exchange-traded commodity futures, forwards and options contracts to be based on unadjusted quoted prices in active markets for identical assets (Level 1). The values of non exchange-traded forwards, swaps and certain options contracts for which market quotations are not readily available are priced by broker-dealers who derive fair values for those assets from observable inputs (Level 2). Investments in funds (other commodity pools) where there are no other rights or obligations inherent within the ownership interest held by the Partnership are priced based on the end of the day net asset value (Level 2). The value of the Partnership’s investments in the Funds reflects its proportional interest in the Funds. As of and for the periods ended September 30, 2010 and December 31, 2009, the Partnership and the Funds did not hold any derivative instruments that are priced at fair value using unobservable inputs through the application of management’s assumptions and internal valuation pricing models (Level 3).

Futures Contracts. The Partnership and the Funds trade futures contracts and exchange cleared swaps. Exchange cleared swaps are swaps that are traded as futures. A futures contract is a firm commitment to buy or sell a specified quantity of investments, currency or a standardized amount of a deliverable grade commodity, at a specified price on a specified future date, unless the contract is closed before the delivery date or if the delivery quantity is something where physical delivery cannot occur (such as the S&P 500 Index), whereby such contract is settled in cash. Payments (“variation margin”) may be made or received by the Partnership and the Funds each business day, depending on the daily fluctuations in the value of the underlying contracts, and are recorded as unrealized gains or losses by the Partnership and the Funds. When the contract is closed, the Partnership and the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Transactions in futures contracts require participants to make both initial margin deposits of cash or other assets and variation margin deposits, through the futures broker, directly with the exchange on which the contracts are traded. Realized gains (losses) and changes in unrealized gains (losses) on futures contracts are included in the Statements of Income and Expenses and Changes in Partners’ Capital.

Forward Foreign Currency Contracts. Foreign currency contracts are those contracts where the Funds agree to receive or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed future date. Foreign currency contracts are valued daily, and the Funds’ net equity therein, representing unrealized gain or loss on the contracts as measured by the difference between the forward foreign exchange rates at the dates of entry into the contracts and the forward rates at the reporting date, is included in the Statements of Financial Condition. Realized gains (losses) and changes in unrealized gains (losses) on foreign currency contracts are recognized in the period in which the contract is closed or the changes occur, respectively, and are included in the Statements of Income and Expenses and Changes in Partners’ Capital.

The Funds do not isolate that portion of the results of operations arising from the effect of changes in foreign exchange rates on investments from fluctuations from changes in market prices of investments held. Such fluctuations are included in net gain (loss) on investments in the Statements of Income and Expenses and Changes in Partners’ Capital.

London Metals Exchange Forward Contracts. Metal contracts traded on the London Metals Exchange (“LME”) represent a firm commitment to buy or sell a specified quantity of aluminum, copper, lead, nickel, tin or zinc. LME contracts traded by the Funds are cash settled based on prompt dates published by the LME. Payments (“variation margin”) may be made or received by the Funds each business day, depending on the daily fluctuations in the value of the underlying contracts, and are recorded as unrealized gains or losses by the Funds. A contract is considered offset when all long positions have been matched with a like number of short positions settling on the same prompt date. When the contract is closed at the prompt date, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Transactions in LME contracts require participants to make both initial margin deposits of cash or other assets and variation margin deposits, through the broker, directly with the LME. Realized gains (losses) and changes in unrealized gains (losses) on metal contracts are included in the Statements of Income and Expenses and Changes in Partners’ Capital.

Tactical Diversified Futures Fund L.P.
Notes to Financial Statements
September 30, 2010
(Unaudited)

Options. The Funds may purchase and write (sell) both exchange listed and over the counter options on commodities or financial instruments. An option is a contract allowing, but not requiring, its holder to buy (call) or sell (put) a specific or standard commodity or financial instrument at a specified price during a specified time period. The option premium is the total price paid or received for the option contract. When the Funds write an option, the premium received is recorded as a liability in the Statements of Financial Condition and marked to market daily. When the Funds purchase an option, the premium paid is recorded as an asset in the Statements of Financial Condition and marked to market daily. Realized gains (losses) and changes in unrealized gains (losses) on options contracts are included in the Statements of Income and Expenses and Changes in Partners’ Capital.

Income Taxes. Income taxes have not been provided as each partner is individually liable for the taxes, if any, on its share of the Partnership’s income and expenses.

ASC 740, Income Taxes, provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Partnership’s financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions with respect to tax at the Partnership level not deemed to meet the “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current year. The General Partner concluded that no provision for income tax is required in the Partnership’s financial statements.

The following is the major tax jurisdiction for the Partnership and the earliest tax year subject to examination: United States — 2007.

Subsequent Events. In 2009, the Partnership adopted ASC 855, Subsequent Events. The objective of ASC 855 is to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are filed. Management has assessed the subsequent events through the date of filing and has determined that there were no subsequent events requiring adjustment in the financial statements.

Recent Accounting Pronouncements. In January 2010, the FASB issued guidance, which, among other things, amends ASC 820, Fair Value Measurements and Disclosures, to require entities to separately present purchases, sales, issuances, and settlements in their reconciliation of Level 3 fair value measurements (i.e., to present such items on a gross basis rather than on a net basis), and which clarifies existing disclosure requirements regarding the level of disaggregation and the inputs and valuation techniques used to measure fair value for measurements that fall within either Level 2 or Level 3 of the fair value hierarchy. This guidance is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements which are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this guidance did not have a material impact on the Partnership’s financial statements.

In February 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2010-09 (“ASU 2010-09”), “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements,” which among other things amended ASC 855 to remove the requirement for an SEC filer to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between ASC 855 and the SEC’s requirements. All of the amendments in this update were effective upon issuance of this update. Management has included the provisions of these amendments in the financial statements.

Net Income (Loss) per Redeemable Unit and General Partner Unit Equivalents. Net income (loss) per unit is calculated in accordance with investment company guidance. See Note 2, “Financial Highlights”.

8. Subsequent Event:

In 2009, Morgan Stanley and Citigroup combined certain assets of the Global Wealth Management Group of Morgan Stanley & Co. Incorporated, including Demeter Management LLC (“Demeter”) and the Smith Barney division of CGM into a new joint venture, MSSB Holdings. As part of that transaction Ceres Managed Futures LLC (“Ceres” or the “General Partner”) was contributed to and, together with Demeter, became wholly-owned subsidiaries of MSSB Holdings. Demeter currently serves as commodity pool operator for various legacy Morgan Stanley sponsored commodity pools formed prior to the joint venture. Since their contribution to the joint venture, Demeter and Ceres have worked closely to align the operations and management of the commodity pools they oversee. As a result, MSSB Holdings, together with the unanimous support of the Boards of Directors of Demeter and Ceres, has determined that a combination of the assets and operations of Demeter and Ceres into a single commodity pool operator, Ceres, is in the best interest of limited partners and believes that this combination will achieve the intended benefits of the joint venture. Ceres will continue to be wholly-owned by MSSB Holdings. The targeted effective date of the combination is on or about December 1, 2010. Refer to Form 8-K filed on September 14, 2010 for additional information.

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

Liquidity and Capital Resources

The Partnership does not engage in the sale of goods or services. The Partnership’s assets are its (i) investment in Funds, (ii) equity in its trading account, consisting of cash and cash equivalents, and net unrealized appreciation on open futures contracts, and (iii) interest receivable. Because of the low margin deposits normally required in commodity futures trading, relatively small price movements may result in substantial losses to the Partnership. While substantial losses could lead to a material decrease in liquidity, no such illiquidity occurred during the third quarter of 2010.

The Partnership’s capital consists of the capital contributions of the partners as increased or decreased by gains or losses on trading and by expenses, interest income, redemptions of Redeemable Units and distributions of profits, if any.

For the nine months ended September 30, 2010, Partnership capital decreased 4.6% from $789,539,282 to $753,383,545. This decrease was attributable to the net loss from operations of $54,074,899, coupled with the redemptions of 56,143.3584 Redeemable Units resulting in an outflow of $64,883,838, which was offset by the addition of 70,565.9143 Redeemable Units totaling $82,803,000. Future redemptions could impact the amount of funds available for investment in commodity contract positions in subsequent periods.

Critical Accounting Policies

The Partnership and the Funds consider prices for exchange-traded commodity futures, forwards and options contracts to be based on unadjusted quoted prices in active markets for identical assets (Level 1). The values of non exchange-traded forwards, swaps and certain options contracts for which market quotations are not readily available are priced by broker-dealers who derive fair values for those assets from observable inputs (Level 2). Investments in funds (other commodity pools) where there are no other rights or obligations inherent within the ownership interest held by the Partnership are priced based on the end of the day net asset value (Level 2). The value of the Partnership’s investments in the Funds reflects its proportional interest in the Funds. As of and for the periods ended September 30, 2010 and December 31, 2009, the Partnership and the Funds did not hold any derivative instruments that are priced at fair value using unobservable inputs through the application of management’s assumptions and internal valuation pricing models (Level 3).

Results of Operations

During the third quarter of 2010, the Partnership’s net asset value per unit decreased 1.3% from $1,147.55 to $1,132.10 as compared to an increase of 2.6% in the same period of 2009. The Partnership experienced a net trading gain before brokerage fees and related fees in the third quarter of 2010 of $4,401,790. Gains were primarily attributable to the Partnership/Funds’ trading in U.S. and non-U.S. interest rates, livestock, metals and softs and were partially offset by losses in currencies, energy, grains and indices. The Partnership experienced a net trading gain before brokerage fees and related fees in the third quarter of 2009 of $38,866,523. Gains were primarily attributable to the Partnership/Funds’ trading in currencies, U.S. and non-U.S. interest rates, livestock, metals, softs, lumber and indices and were partially offset by losses in energy and grains.

The third quarter macro environment was marked by changes in market sentiment. While some doubted the credibility of the European bank stress test, it was well received by the market in July as it removed some of the worst fears through increased bank level balance sheet transparency. Fears that the recovery in the global economy may be stalling had a pivotal effect on markets during August. Economic releases in the U.S. continued to deteriorate; employment data suggested that the labor market recovery was slowing while subsequent news on manufacturing and retail sales was also disappointing. As the quarter came to an end in September, there was a sense of market optimism for the majority of commodity and stock indices as an overall rally was supported by favorable economic data not only in the U.S., but in emerging economies as well. U.S. data releases showed improvements in employment conditions, growth amongst manufacturers and stabilization in the housing sector. Elsewhere, Chinese industrial production rose to signal accelerating growth while the European Commission revised higher growth forecasts for the region’s economy. Losses were accumulated for the quarter as unprofitable trading in energy, equity indices and currencies offset gains from trading in fixed income, softs and metals.

In energy markets, losses were concentrated in discretionary trading in natural gas as prices unexpectedly rallied against bearish fundamentals in July. Further losses were recorded in crude oil and its products as oil complex prices reacted sharply to shifts in global economic sentiment, creating difficult trading conditions for trend followers. Losses were also realized in indices markets as reports in July from the U.S. earnings in the second quarter were received favorably despite mixed macroeconomic data releases and weakened U.S. consumer confidence. In currencies, losses were recorded in July and August as the U.S. dollar reversed sharply during the two months. In July, the U.S. dollar unexpectedly depreciated against most major currencies. The trend reversed in August as the currency sector incurred losses in long positions in the Canadian dollar, Australian dollar and British pounds as growing fears about global growth spurred investors to seek the “safe haven” currencies of the U.S. dollar, Swiss franc and Japanese yen.

During the Partnership’s nine months ended September 30, 2010, the net asset value per unit decreased 6.6% from $1,212.71 to $1,132.10 as compared to a decrease of 2.7% in the same period of 2009. The Partnership experienced a net trading loss before brokerage fees and related fees in the nine months ended September 30, 2010 of $8,056,933. Losses were primarily attributable to the Partnership/Funds’ trading in energy, grains, livestock, metals and indices and were partially offset by gains in currencies, U.S. and non-U.S. interest rates and softs. The Partnership experienced a net trading gain before brokerage fees and related fees in the nine months ended September 30, 2009 of $30,427,018. Gains were primarily attributable to the Partnership/Funds’ trading in currencies, livestock, metals and indices and were partially offset by losses in energy, grains, U.S. and non-U.S. interest rates, lumber and softs.

Commodity futures markets are highly volatile. The potential for broad and rapid price fluctuations increases the risks involved in commodity trading, but also increases the possibility of profit. The profitability of the Partnership/Funds depends on the existence of major price trends and the ability of the Advisors to correctly identify those price trends. Price trends are influenced by, among other things, changing supply and demand relationships, weather, governmental, agricultural, commercial and trade programs and policies, national and international political and economic events and changes in interest rates. To the extent that market trends exist and the Advisors are able to identify them, the Partnership expects to increase capital through operations.

Interest income on 80% of the average daily equity maintained in cash in the Partnership’s (or the Partnership’s allocable portion of a Fund’s) brokerage account was earned at the monthly average 30-day U.S. Treasury bill yield. CGM may continue to maintain the Partnership’s assets in cash and/or place up to all of the Partnership’s (or a Fund’s) assets in 90-day U.S. Treasury bills and pay the Partnership 80% of the interest (or the Partnership’s allocable share thereof) earned on the U.S. Treasury bills purchased. Twenty percent of the interest earned on U.S. Treasury bills purchased may be retained by CGM and/or credited to the General Partner. Interest income for the three months ended September 30, 2010 increased by $41,792 as compared to the corresponding period in 2009. The increase in interest income is primarily due to higher U.S. Treasury bill rates during the three months ended September 30, 2010, as compared to the corresponding period in 2009. Interest income for the nine months ended September 30, 2010 decreased $31,823 as compared to the corresponding period in 2009. The decrease is due to lower average daily equity for the nine months ended September 30, 2010, as compared to the corresponding period in 2009. Interest earned by the Partnership will increase the net asset value of the Partnership. The amount of interest income earned by the Partnership depends on the average daily equity in the Partnership’s and the Funds’ accounts and upon interest rates over which neither the Partnership nor CGM has control.

Brokerage fees are calculated as a percentage of the Partnership’s adjusted net asset value on the last day of each month and are affected by trading performance, additions and redemptions. Accordingly, they must be compared in relation to the fluctuations in the monthly net asset values. Brokerage fees for the three and nine months ended September 30, 2010 decreased $393,243 and $4,032,415, respectively as compared to the corresponding periods in 2009. The decrease in brokerage fees is due to a decrease in average net assets for the three and nine months ended September 30, 2010, as compared to the corresponding periods in 2009.

Management fees are calculated as a percentage of the Partnership’s adjusted net asset value as of the end of each month and are affected by trading performance, additions and redemptions. Management fees for the three and nine months ended September 30, 2010 decreased $204,182 and $1,351,797, respectively as compared to the corresponding periods in 2009. The decrease in management fees is due to a decrease in average net assets for the three and nine months ended September 30, 2010 as compared to the corresponding periods in 2009.

Incentive fees are based on the new trading profits generated by each Advisor at the end of the quarter as defined in the management agreement among the Partnership, the General Partner and each Advisor. There were no incentive fees earned for the three and nine months ended September 30, 2010. Trading performance for the three and nine months ended September 30, 2009 resulted in incentive fees of $2,963,733 and $5,601,417, respectively. An Advisor will not be paid incentive fees until such Advisor recovers any net loss incurred by the Advisor and earns additional new trading profits for the Partnership.

In allocating the assets of the Partnership among the trading advisors, the General Partner considers past performance, trading style, volatility of markets traded and fee requirements. The General Partner may modify or terminate the allocation of assets among the trading advisors and may allocate assets to additional advisors at any time.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Partnership/Funds are speculative commodity pools. The market sensitive instruments held by them are acquired for speculative trading purposes, and all or substantially all of the Partnership’s/Funds’ assets are subject to the risk of trading loss. Unlike an operating company, the risk of market sensitive instruments is integral, not incidental, to the Partnership’s/Funds’ main line of business.

The risk to the limited partners that have purchased interests in the Partnership is limited to the amount of their capital contributions to the Partnership and their share of the Partnership’s assets and undistributed profits. This limited liability is a consequence of the organization of the Partnership as a limited partnership under applicable law.

Market movements result in frequent changes in the fair value of the Partnership’s/Funds’ open positions and, consequently, in their earnings and cash flow. The Partnership’s/Funds’ market risk is influenced by a wide variety of factors, including the level and volatility of interest rates, exchange rates, equity price levels, the market value of financial instruments and contracts, the diversification effects of the Partnership’s/Funds’ open positions and the liquidity of the markets in which they trade.

The Partnership/Funds rapidly acquire and liquidate both long and short positions in a wide range of different markets. Consequently, it is not possible to predict how a particular future market scenario will affect performance, and the Partnership’s/Funds’ past performance is not necessarily indicative of their future results.

Value at Risk is a measure of the maximum amount which the Partnership/Funds could reasonably be expected to lose in a given market sector. However, the inherent uncertainty of the Partnership’s/Funds’ speculative trading and the recurrence in the markets traded by the Partnership/Funds of market movements far exceeding expectations could result in actual trading or non-trading losses far beyond the indicated Value at Risk or the Partnership’s/Funds’ experience to date (i.e., “risk of ruin”). In light of the foregoing as well as the risks and uncertainties intrinsic to all future projections, the inclusion of the quantification in this section should not be considered to constitute any assurance or representation that the Partnership’s/Funds’ losses in any market sector will be limited to Value at Risk or by the Partnership’s/Funds’ attempts to manage its market risk.

Exchange maintenance margin requirements have been used by the Partnership/Funds as the measure of their Value at Risk. Maintenance margin requirements are set by exchanges to equal or exceed the maximum losses reasonably expected to be incurred in the fair value of any given contract in 95%-99% of any one-day interval. Maintenance margin has been used rather than the more generally available initial margin, because initial margin includes a credit risk component, which is not relevant to Value at Risk.

Value at Risk tables represent a probabilistic assessment of the risk of loss in market risk sensitive instruments. With the exception of JWH, the Partnership’s advisors currently trade the Partnership’s assets indirectly in master fund managed accounts over which they have been granted limited authority to make trading decisions. JWH directly trades a managed account in the Partnership’s name. The first trading Value at Risk table reflects the market sensitive instruments held by the Partnership directly and through its investment in the Funds. The remaining trading Value at Risk tables reflect the market sensitive instruments held by the Partnership directly (i.e., in the managed account in the Partnership’s name traded by JWH) and indirectly by each Fund separately.

The following table indicates the trading Value at Risk associated with the Partnership’s open positions by market category as of September 30, 2010. As of September 30, 2010, the Partnership’s total capitalization was $753,383,545.


			% of Total
Market Sector	Value at Risk		Capitalization
Currencies	$	21,981,520		2.91	%
Energy		13,678,706		1.82	%
Grains		2,906,498		0.39	%
Interest Rates U.S.		7,104,659		0.94	%
Interest Rates Non-U.S.		11,879,061		1.58	%
Livestock		898,511		0.12	%
Metals		7,039,706		0.93	%
Softs		3,625,256		0.48	%
Indices		17,787,307		2.36	%

Total	$	86,901,224		11.53	%

The following tables indicate the trading Value at Risk associated with the Partnership’s direct investments and indirect investments in the Funds by market category as of September 30, 2010, the highest and lowest value at any point and the average value during the years. All open position trading risk exposures have been included in calculating the figures set forth below. There have been no material changes in the trading Value at Risk information previously disclosed in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2009. As of September 30, 2010, the Partnership’s Value at Risk for the portion of its assets that are traded directly by JWH was as follows:

September 30, 2010
(Unaudited)


						Three months ended September 30, 2010
			% of Total			High		Low		Average
Market Sector	Value at Risk		Capitalization			Value at Risk		Value at Risk		Value at Risk*
Currencies	$	941,600		0.12	%	$	941,600	$	332,000	$	781,673
Energy		194,960		0.03	%		530,500		135,730		359,887
Grains		310,000		0.04	%		545,000		13,875		401,250
Interest Rates U.S.		356,700		0.05	%		411,200		299,400		389,033
Interest Rates Non -U.S.		452,962		0.06	%		509,183		226,818		395,583
Metals		685,100		0.09	%		685,100		106,275		435,067
Softs		499,200		0.07	%		503,600		176,000		366,000
Indices		93,887		0.01	%		164,693		80,588		113,195

Total	$	3,534,409		0.47	%


*		Average of month-end Values at Risk

As of September 30, 2010, Drury Master’s total capitalization was $110,628,163. The Partnership owned approximately 89.7% of Drury Master. As of September 30, 2010, Drury Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to Drury for trading) was as follows:

September 30, 2010
(Unaudited)


						Three Months Ended September 30, 2010
			% of Total			High		Low		Average
Market Sector	Value at Risk		Capitalization			Value at Risk		Value at Risk		Value at Risk*
Currencies	$	5,066,856		4.58	%	$	6,643,389	$	1,699,038	$	3,381,473
Energy		1,312,020		1.19	%		2,550,600		634,893		1,401,082
Grains		790,060		0.71	%		1,502,215		534,516		1,052,253
Interest Rates U.S.		1,262,150		1.14	%		1,494,200		96,903		704,978
Interest Rates Non-U.S.		4,068,015		3.68	%		3,761,422		1,089,172		2,207,261
Metals		2,722,662		2.46	%		3,475,587		842,023		2,328,903
Softs		1,126,585		1.02	%		1,305,960		442,173		802,681
Indices		6,029,924		5.45	%		6,313,897		1,430,190		4,940,095

Total	$	22,378,272		20.23	%


*		Average of month-end Values at Risk

As of September 30, 2010, Willowbridge Master’s total capitalization was $217,578,187. The Partnership owned approximately 25.0% of Willowbridge Master. As of September 30, 2010, Willowbridge Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to Willowbridge for trading) was as follows:

September 30, 2010
(Unaudited)


						Three Months Ended September 30, 2010
			% of Total			High		Low		Average
Market Sector	Value at Risk		Capitalization			Value at Risk		Value at Risk		Value at Risk*

Currencies	$	4,332,223		2.00	%	$	7,096,121	$	940,854	$	4,094,533
Energy		1,020,000		0.47	%		6,539,400		480,000		2,750,750
Grains		1,304,750		0.60	%		3,762,750		510,840		1,211,150
Interest Rates U.S.		1,555,500		0.71	%		3,269,700		780,800		1,930,233
Interest Rates Non-U.S.		1,876,018		0.86	%		5,489,653		640,428		2,375,204
Livestock		108,800		0.05	%		108,800		44,800		99,900
Metals		3,379,005		1.55	%		3,379,005		1,105,260		2,121,300
Softs		2,284,000		1.05	%		3,388,150		799,500		1,454,633

Total	$	15,860,296		7.29	%


*		Average of month-end Values at Risk

As of September 30, 2010, Aspect Master’s total capitalization was $163,781,566. The Partnership owned approximately 65.3% of Aspect Master. As of September 30, 2010, Aspect Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to Aspect for trading) was as follows:

September 30, 2010

(Unaudited)


						Three Months Ended September 30, 2010
			% of Total			High		Low		Average
Market Sector	Value at Risk		Capitalization			Value at Risk		Value at Risk		Value at Risk*
Currencies	$	8,413,832		5.14	%	$	8,413,832	$	3,516,825	$	6,546,295
Energy		1,685,100		1.03	%		1,813,600		351,414		1,435,200
Grains		773,530		0.47	%		802,355		150,472		458,059
Interest Rates U.S.		1,608,400		0.98	%		2,333,350		1,483,850		1,827,650
Interest Rates Non-U.S.		4,208,419		2.57	%		6,063,200		4,200,308		5,039,144
Livestock		73,197		0.04	%		104,077		29,000		82,111
Metals		2,091,112		1.28	%		2,091,112		679,784		1,327,742
Softs		1,605,397		0.98	%		1,719,693		649,288		1,117,384
Indices		2,409,262		1.47	%		2,409,262		830,124		1,417,220

Total	$	22,868,249		13.96	%


*		Average of month-end Values at Risk

As of September 30, 2010, Winton Master’s total capitalization was $799,519,433. The Partnership owned approximately 15.8% of Winton Master. As of September 30, 2010, Winton Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to Winton for trading) was as follows:

September 30, 2010
(Unaudited)


						Three months ended September 30, 2010
			% of Total			High		Low		Average
Market Sector	Value at Risk		Capitalization			Value at Risk		Value at Risk		Value at Risk*
Currencies	$	12,513,875		1.57	%	$	13,529,797	$	5,424,505	$	9,313,786
Energy		2,057,205		0.26	%		3,640,200		236,988		1,971,144
Grains		3,529,016		0.44	%		3,529,016		556,164		2,253,529
Interest Rates U.S.		8,956,850		1.12	%		10,348,050		7,407,050		8,348,717
Interest Rates Non-U.S.		11,102,130		1.39	%		13,490,861		8,749,852		10,172,949
Livestock		401,450		0.05	%		401,450		190,900		286,400
Metals		6,530,911		0.82	%		6,530,911		3,939,668		4,957,860
Softs		1,283,742		0.16	%		1,283,742		708,094		1,055,530
Indices		12,569,037		1.56	%		12,569,037		2,382,812		6,125,469

Total	$	58,944,216		7.37	%


*		Average of month-end Values at Risk.

As of September 30, 2010, Graham Master’s total capitalization was $174,514,810. The Partnership owned approximately 58.2% of Graham Master. As of September 30, 2010, Graham Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to Graham for trading) was as follows:

September 30, 2010
(Unaudited)


						Three Months Ended September 30, 2010
			% of Total			High		Low		Average
Market Sector	Value at Risk		Capitalization			Value at Risk		Value at Risk		Value at Risk*
Currencies	$	8,922,437		5.12	%	$	8,922,437	$	996,231	$	6,525,133
Energy		1,320,584		0.76	%		1,989,347		513,863		1,374,939
Grains		461,350		0.26	%		524,700		124,875		334,678
Interest Rates U.S.		1,859,010		1.07	%		2,021,410		814,575		1,729,998
Interest Rates Non-U.S.		967,199		0.55	%		4,016,393		858,050		2,142,697
Livestock		73,950		0.04	%		74,200		1,400		48,683
Metals		1,291,316		0.74	%		1,611,112		731,751		1,086,730
Softs		248,433		0.14	%		558,957		248,433		290,765
Indices		8,412,921		4.82	%		8,412,921		1,137,775		3,918,076

Total	$	23,557,200		13.50	%


*		Average of month-end Values at Risk.

As of September 30, 2010, SandRidge Master’s total capitalization was $595,274,956. The Partnership owned approximately 17.2% of SandRidge Master. As of September 30, 2010, SandRidge Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to SandRidge for trading) was as follows:

September 30, 2010
(Unaudited)


						Three Months Ended September 30, 2010
			% of Total			High		Low		Average
Market Sector	Value at Risk		Capitalization			Value at Risk		Value at Risk		Value at Risk*
Energy	$	54,348,641		9.13	%	$	85,692,107	$	52,672,710	$	62,551,337

Total	$	54,348,641		9.13	%


*		Average of month-end Values at Risk.

Item 4. Controls and Procedures.

The Partnership’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Partnership on the reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods expected in the SEC’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Partnership in the reports it files is accumulated and communicated to management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of the General Partner, to allow for timely decisions regarding required disclosure and appropriate SEC filings.

Management is responsible for ensuring that there is an adequate and effective process for establishing, maintaining and evaluating disclosure controls and procedures for the Partnership’s external disclosures.

The General Partner’s CEO and CFO have evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2010 and, based on that evaluation, the General Partner’s CEO and CFO have concluded that at that date the Partnership’s disclosure controls and procedures were effective.

The Partnership’s internal control over financial reporting is a process under the supervision of the General Partner’s CEO and CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. These controls include policies and procedures that:

	•		pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Partnership;

	•		provide reasonable assurance that (i) transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and (ii) the Partnership’s receipts are handled and expenditures are made only pursuant to authorizations of the General Partner; and

	•		provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Partnership’s assets that could have a material effect on the financial statements.

There were no changes in the Partnership’s internal control over financial reporting process during the fiscal quarter ended September 30, 2010 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

Item 1A. Risk Factors.

There have been no material changes to the risk factors set forth under Part I, Item 1A. “Risk Factors” in the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and under Part II, Item 1A. “Risk Factors” in the Partnership’s Quarterly Report on Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010.

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

The public offering of Redeemable Units terminated on November 30, 2008.

For the three months ended September 30, 2010, there were additional sales of 13,773.6659 Redeemable Units totaling $15,481,000. The Redeemable Units were issued in reliance upon applicable exemptions from registration under Section 4(2) of the Securities Act of 1933, as amended, and Section 506 of Regulation D promulgated thereunder. The Redeemable Units were purchased by accredited investors as described in Regulation D.

Proceeds from the sale of additional Redeemable Units are used in the trading of commodity interests including futures contracts, swaps, options and forward contracts.

The following chart sets forth the purchases of Redeemable Units by the Partnership.

(d) Maximum Number

(c) Total Number

(or Approximate

of Redeemable Units

Dollar Value) of

Purchased as Part

Redeemable Units that

(a) Total Number

(b) Average

of Publicly

May Yet Be

of Redeemable

Price Paid per

Announced

Purchased Under the

Period

Units Purchased*

Redeemable Unit**

Plans or Programs

July 1, 2010 –
July 31, 2010

6,670.0078

1,101.82

N/A

August 1, 2010 –
August 31, 2010

5,312.3293

1,128.54

N/A

September 1, 2010 –
September 30, 2010

6,434.6263

1,132.10

N/A

18,416.9634

1,120.11


*		Generally, limited partners are permitted to redeem their Redeemable Units as of the end of each month on 10 days’ notice to the General Partner. Under certain circumstances, the General Partner can compel redemption, although to date the General Partner has not exercised this right. Purchases of Redeemable Units by the Partnership reflected in the chart above were made in the ordinary course of the Partnership’s business in connection with effecting redemptions for limited partners.

**		Redemptions of Redeemable Units are effected as of the last day of each month at the net asset value per Redeemable Unit as of that day.

Item 3. Defaults Upon Senior Securities. None.

Item 4. [Removed and Reserved]

Item 5. Other Information.

As of September 21, 2010, a portion of the Partnership’s assets was allocated to Sasco Energy Partners LLC, which was invested in CMF Sasco Master Fund L.P.

Item 6. Exhibits


	3.1		Certificate of Limited Partnership of the Partnership as filed in the office of the Secretary of State of the State of New York (filed as Exhibit 3.2 to the Registration on Form S-1 filed on December 20, 2002 and incorporated herein by reference).

	(a)		Certificate of Amendment to the Certificate of Limited Partnership as filed in the office of the Secretary of State of the State of New York, dated May 21, 2003 (filed as Exhibit 99.2 to the Form 8-K filed on November 3, 2009 and incorporated herein by reference).

	(b)		Certificate of Amendment to the Certificate of Limited Partnership as filed in the office of the Secretary of State of the State of New York, dated September 21, 2005 (filed as Exhibit 99.3 to the Form 8-K filed on November 3, 2009 and incorporated herein by reference).

	(c)		Certificate of Amendment to the Certificate of Limited Partnership as filed in the office of the Secretary of State of the State of New York, dated September 19, 2008 (filed as Exhibit 99.4 to the Form 8-K filed on November 3, 2009 and incorporated herein by reference).

	(d)		Certificate of Amendment to the Certificate of Limited Partnership as filed in the office of the Secretary of State of the State of New York, dated September 24, 2009 (filed as Exhibit 99.1 to the Form 8-K filed on September 30, 2009 and incorporated herein by reference).

	(e)		Certificate of Amendment to the Certificate of Limited Partnership as filed in the office of the Secretary of State of the State of New York, dated June 30, 2010 (filed as Exhibit 3.1(e) to the Form 8-K filed on July 2, 2010 and incorporated herein by reference).

	3.2		Limited Partnership Agreement (filed as Exhibit A to the Post-Effective Amendment No. 5 to the Registration on Form S-1 filed on April 22, 2008 and incorporated herein by reference).

	(a)		Amendment to the Limited Partnership Agreement, dated May 31, 2009 (filed as Exhibit 99.1 to the Form 8-K filed on November 3, 2009 and incorporated herein by reference).

	10.1		Amended and Restated Customer Agreement among the Partnership and Salomon Smith Barney Inc. (filed as Exhibit 10.1 to the Pre-Effective Amendment No. 2 to the Registration on Form S-1 filed on March 18, 2003 and incorporated herein by reference).

	10.2		Escrow Agreement among the Partnership, Salomon Smith Barney Inc. and JPMorgan Chase Bank (filed as Exhibit 10.3 to the Pre-Effective Amendment No. 1 to the Registration on Form S-1 filed on February 14, 2003).

	10.3		Management Agreement among the Partnership, the General Partner and Graham (filed as Exhibit 10.5 to the Registration on Form S-1 filed on December 20, 2002).

	(a)		Letter from the General Partner extending Management Agreement with Graham for 2009 (filed as Exhibit 10.3(a) to the Form 10-K filed on March 31, 2010 and incorporated herein by reference).

	10.4		Management Agreement among the Partnership, the General Partner and Willowbridge (filed as Exhibit 10.7 to the Registration on Form S-1 filed on December 20, 2002).

	(a)		Letter from the General Partner extending Management Agreement with Willowbridge for 2009 (filed as Exhibit 10.4(a) to the Form 10-K filed on March 31, 2010 and incorporated herein by reference).

	10.5		Management Agreement among the Partnership, the General Partner and Drury (filed as Exhibit 10.4 to the Pre-Effective Amendment No. 1 to the Registration on Form S-1 filed on February 14, 2003).

	(a)		Letter from the General Partner extending Management Agreement with Drury for 2009 (filed as Exhibit 10.5(a) to the Form 10-K filed on March 31, 2010 and incorporated herein by reference).

	10.6		Management Agreement among the Partnership, the General Partner and JWH (filed as Exhibit 10.6 to the Pre-Effective Amendment No. 2 to the Registration on Form S-1 filed on March 18, 2003).

	(a)		Letter from the General Partner extending Management Agreement with JWH for 2009 (filed as Exhibit 10.6(a) to the Form 10-K filed on March 31, 2010 and incorporated herein by reference).

	10.7		Management Agreement among the Partnership, the General Partner and Winton (filed as Exhibit 10.2 to the Form 10-K filed on March 16, 2005 and incorporated herein by reference).

	(a)		Letter from the General Partner extending Management Agreement with Winton for 2009 (filed as Exhibit 10.7(a) to the Form 10-K filed on March 31, 2010 and incorporated herein by reference).

	10.8		Management Agreement among the Partnership, the General Partner and CFM (filed as Exhibit 10.3 to the Form 10-K filed on March 16, 2005 and incorporated herein by reference).

	10.9		Management Agreement among the Partnership, the General Partner and Aspect (filed as Exhibit 10.4 to the Form 10-K filed on March 16, 2005 and incorporated herein by reference).


		Page
		Number

PART I - Financial Information:

Item 1.	Financial Statements:

	Statements of Financial Condition at September 30, 2010 (unaudited) and December 31, 2009	3

	Condensed Schedules of Investments at September 30, 2010 (unaudited) and December 31, 2009	4–5

	Statements of Income and Expenses and Changes in Partners’ Capital for the three and nine months ended September 30, 2010 and 2009 (unaudited)	6


	Notes to Financial Statements (unaudited)	7–19

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20–22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23–27

Item 4.	Controls and Procedures	28

PART II - Other Information		29–32
Exhibits
EX-31.1
EX-31.2
EX-32.1
EX-32.2


	(Unaudited)
	September 30,		December 31,
	2010		2009

Assets:

Investment in Funds, at fair value	$	724,288,825	$	769,374,582
Equity in trading account:
Cash		32,581,734		34,398,435
Cash margin		4,532,524		2,260,585
Net unrealized appreciation on open futures contracts		4,167,765		389,833

		765,570,848		806,423,435
Interest receivable		2,828		412

Total assets	$	765,573,676	$	806,423,847


Liabilities and Partners’ Capital:

Liabilities:
Accrued expenses:
Brokerage fees	$	3,508,880	$	3,696,108
Management fees		1,225,423		1,295,876
Incentive fees		—		643,364
Other		171,188		402,528
Redemptions payable		7,284,640		10,846,689

Total liabilities		12,190,131		16,884,565

Partners’ Capital:
General Partner, 7,513.5294 unit equivalents outstanding at September 30, 2010 and December 31, 2009		8,506,067		9,111,732
Limited Partners, 657,962.3858 and 643,539.8299 Redeemable Units outstanding at September 30, 2010 and December 31, 2009, respectively		744,877,478		780,427,550

Total partners’ capital		753,383,545		789,539,282

Total liabilities and partners’ capital	$	765,573,676	$	806,423,847

Net asset value per unit	$	1,132.10	$	1,212.71


	For the three months ended September 30, 2009
	Gain (Loss) from			Total Income
	Trading, net			(Loss)			Net Income (Loss)
Drury Master	$	14,026,369		$	14,048,678		$	13,992,367
Willowbridge Master		(20,085,700	)		(20,026,877	)		(20,139,642	)
Aspect Master		9,440,451			9,476,242			9,387,591
CFM Master		19,379,509			19,423,002			18,945,243
Winton Master		7,322,348			7,447,037			7,339,274
AAA Master		40,194,995			40,401,333			39,460,830
Graham Master		14,413,920			14,449,688			14,240,193
SandRidge Master		34,131,288			34,264,993			34,047,914

Total	$	118,823,180		$	119,484,096		$	117,273,770


	For the nine months ended September 30, 2009
	Gain (Loss) from			Total Income
	Trading, net			(Loss)			Net Income (Loss)
Drury Master	$	12,436,326		$	12,508,714		$	12,367,730
Willowbridge Master		(23,802,080	)		(23,622,469	)		(23,895,630	)
Aspect Master		(16,781,998	)		(16,658,459	)		(16,878,438	)
CFM Master		30,794,979			30,925,716			28,772,541
Winton Master		(29,310,166	)		(28,936,214	)		(29,217,064	)
AAA Master		143,718,324			144,327,480			141,598,562
Graham Master		10,826,683			10,942,253			10,429,707
Avant Master		2,359,038			2,375,401			2,302,189
SandRidge Master		106,906,561			107,255,829			106,581,046

Total	$	237,147,667		$	239,118,251		$	232,060,643


						Three months ended September 30, 2010
			% of Total			High		Low		Average
Market Sector	Value at Risk		Capitalization			Value at Risk		Value at Risk		Value at Risk*
Currencies	$	3,536,180		2.07	%	$	4,872,216	$	776,900	$	2,018,484
Energy		656,254		0.38	%		1,198,615		154,579		694,241
Grains		296,553		0.17	%		307,232		114,635		254,904
Interest Rates U.S.		2,161,550		1.27	%		3,706,516		113,327		2,660,491
Interest Rates Non -U.S.		2,886,668		1.69	%		2,771,094		315,476		2,658,684
Livestock		41,114		0.02	%		46,667		7,342		35,427
Metals		777,092		0.46	%		814,850		88,755		426,608
Softs		191,462		0.11	%		298,677		169,342		234,681
Indices		4,928,059		2.88	%		10,489,980		1,128,784		6,606,264

Total	$	15,474,932		9.05	%


	(a)		Letter from the General Partner extending Management Agreement with Aspect for 2009 (filed as Exhibit 10.9(a) to the Form 10-K filed on March 31, 2010 and incorporated herein by reference).

	10.11		Management Agreement among the Partnership, the General Partner and SandRidge (filed as Exhibit 10.1 to the Form 10-Q filed on May 15, 2009 and incorporated herein by reference).

	(a)		Letter from the General Partner extending Management Agreement with SandRidge for 2009 (filed as Exhibit 10.11(a) to the Form 10-K filed on March 31, 2010 and incorporated herein by reference).

	10.12		Second Amended and Restated Agency Agreement among the Partnership, the General Partner, CGM and MSSB dated July 29, 2010 (filed as exhibit 10.12 to the Form 8-K filed on August 3, 2010 and incorporated herein by reference).

	10.13		Management Agreement among the Partnership, the General Partner and Sasco Energy Partners LLC dated September 21, 2010 (filed as exhibit 10.13 to the Form 8-K filed on September 27, 2010 and incorporated herein by reference).

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents


	Number of					% of Partners
	Contracts		Fair Value			Capital
Futures Contracts Purchased
Currencies		332	$	761,981			0.10	%
Energy		28		19,174			0.00	*
Grains		200		1,037,450			0.14
Indices		24		10,326			0.00	*
Interest Rates — U.S.		279		20,625			0.00	*
Interest Rates Non — U.S.		143		106,525			0.01
Metals		152		1,444,285			0.19
Softs		292		715,836			0.10

Total futures contracts purchased				4,116,202			0.54


Futures Contracts Sold
Energy		30		79,570			0.01
Indices		6		(28,007	)		(0.00)	*

Total futures contracts sold				51,563			0.01


Investment in Funds
CMF Drury Capital Master Fund L.P.				99,267,511			13.18
CMF Willowbridge Argo Master Fund L.P.				54,377,254			7.22
CMF Aspect Master Fund L.P.				107,021,014			14.20
CMF Capital Fund Management Master Fund L.P.				132,967,960			17.65
CMF Winton Master L.P.				126,423,906			16.78
CMF Graham Capital Master Fund L.P.				101,610,629			13.49
CMF SandRidge Master Fund L.P.				102,620,551			13.62

Total investment in Funds				724,288,825			96.14

Total fair value			$	728,456,590			96.69	%


By:		Ceres Managed Futures LLC (General Partner)

By:		/s/ Walter Davis Walter Davis
		President and Director

Date:		November 12, 2010

By:		/s/ Jennifer Magro Jennifer Magro
		Chief Financial Officer, Secretary and Director
		(Principal Accounting Officer)

Date:		November 12, 2010


*		Due to rounding.


*		Due to rounding.