10-Q

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, 2012 or

o           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________to__________________

Commission File Number: 0-31563

MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

(Exact name of registrant as specified in its charter)

	Delaware	13-4084211
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Ceres Managed Futures LLC
522 Fifth Avenue, 14th Floor
New York, NY		10036
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (855) 672-4468

(Former name, former address and former fiscal year, if changed since last report)

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 o

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

Yes x  No o

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

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes 0  No T

MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 30, 2012

	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Statements of Financial Condition as of September 30, 2012 and December 31, 2011	2
	Condensed Schedule of Investments as of September 30, 2012	3
	Condensed Schedule of Investments as of December 31, 2011	4
	Statements of Income and Expenses for the Three and Nine Months Ended September 30, 2012 and 2011	5
	Statements of Changes in Partners’ Capital for the Nine Months Ended September 30, 2012 and 2011	6
	Notes to Financial Statements	7-27
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28-37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37-43
Item 4.	Controls and Procedures	44-45
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	46-49
Item 1A.	Risk Factors	49-50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50-51
Item 6.	Exhibits	51-52

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	September 30,	December 31,
	2012	2011
ASSETS	$	$
Investment in KR Master Fund	10,785,054	–
Investment in FL Master Fund	7,037,439	–
	17,822,493	–
Trading Equity:
Unrestricted cash	9,172,137	35,693,205
Restricted cash	–	125,600
Total cash	9,172,137	35,818,805
Net unrealized gain (loss) on open contracts (MS&Co.)	92,593	(88,387)
Options purchased (premiums paid $0 and $3,273, respectively)	–	1,534
Total Trading Equity	27,087,223	35,731,952
Interest receivable (MS&Co. & MSSB)	1,497	98
Total Assets	27,088,720	35,732,050
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Redemptions payable	915,495	724,150
Accrued brokerage fees (MS&Co.)	104,614	134,931
Accrued management fees	42,542	58,665
Total Liabilities	1,062,651	917,746
Partners’ Capital:
Limited Partners (3,235,549.963 and 3,983,851.059 Units, respectively)	25,740,644	34,396,076
General Partner (35,877.343 and 48,440.343 Units, respectively)	285,425	418,228
Total Partners’ Capital	26,026,069	34,814,304
Total Liabilities and Partners’ Capital	27,088,720	35,732,050
NET ASSET VALUE PER UNIT	7.96	8.63

The accompanying notes are an integral part of these financial statements.

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

CONDENSED SCHEDULE OF INVESTMENTS

September 30, 2012 (Unaudited)

Futures and Forward Contracts Purchased	Net unrealized gain on open contracts	% of       Partners’ Capital
	$
Foreign currency	40,858	0.16
Total Futures and Forward Contracts Purchased	40,858	0.16
Futures and Forward Contracts Sold
Foreign currency	4,083	0.02
Total Futures and Forward Contracts Sold	4,083	0.02
Unrealized Currency Gain	47,652	0.18
Net fair value
	92,593	0.36

The accompanying notes are an integral part of these financial statements.

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

CONDENSED SCHEDULE OF INVESTMENTS

December 31, 2011

Futures and Forward Contracts Purchased	Net unrealized gain/(loss) on open contracts	% of Partners’ Capital
	$
Foreign currency	(90,347)	(0.25)
Total Futures and Forward Contracts Purchased	(90,347)	(0.25)

Futures and Forward Contracts Sold
Foreign currency	(33,514)	(0.10)
Total Futures and Forward Contracts Sold	(33,514)	(0.10)
Unrealized Currency Gain	35,474	0.10
Net fair value	(88,387)	(0.25)
Options Contracts	Fair Value	% of Partners’ Capital
	$
Options purchased on Forward Contracts	1,534	– (1)

(1)  Amounts less than 0.005%

The accompanying notes are an integral part of these financial statements.

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

STATEMENTS OF INCOME AND EXPENSES

(Unaudited)

	For the Three Months Ended September  30,		For the Nine Months  Ended September 30,
	2012	2011	2012	2011
	$	$	$	$
INVESTMENT INCOME
Interest income (MS&Co. & MSSB)	5,039	1,379	12,548	14,048
EXPENSES
Brokerage fees (MS&Co.)	318,607	457,279	1,061,365	1,482,631
Management fees	129,835	198,817	432,478	644,622
Total Expenses	448,442	656,096	1,493,843	2,127,253
NET INVESTMENT LOSS	(443,403)	(654,717)	(1,481,295)	(2,113,205)
TRADING RESULTS
Trading profit (loss):
Net realized	(168,008)	110,272	(455,500)	(805,585)
Net change in unrealized	127,362	1,395,692	182,719	256,527
Realized gain on investment in KR
Master Fund	810,662	–	250,819	–
Realized loss on investment in
FL Master Fund	(114,312)	–	(1,545,644)	–
Unrealized appreciation
on investment in FL Master Fund	377,288	–	672,444	–
Unrealized depreciation on
investment in KR Master Fund	(339,193)	–	(184,954)	–
Total Trading Results	693,799	1,505,964	(1,080,116)	(549,058)
NET INCOME (LOSS)	250,396	851,247	(2,561,411)	(2,662,263)
NET INCOME (LOSS) ALLOCATION
Limited Partners	247,126	842,034	(2,528,609)	(2,632,380)
General Partner	3,270	9,213	(32,802)	(29,883)
NET INCOME (LOSS) PER UNIT *
Limited Partners	0.07	0.19	(0.67)	(0.54)
General Partner	0.07	0.19	(0.67)	(0.54)
	Units	Units	Units	Units
WEIGHTED AVERAGE NUMBER
OF UNITS OUTSTANDING	3,467,451.000	4,474,983.699	3,711,953.185	4,724,481.025

* Based on change in net asset value per Unit.

The accompanying notes are an integral part of these financial statements.

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

For the Nine Months Ended September 30, 2012 and 2011

(Unaudited)

	Units of
	Partnership	Limited	General
	Interest	Partners	Partner	Total
		$	$	$
Partners’ Capital,
December 31, 2011	4,032,291.402	34,396,076	418,228	34,814,304
Net Loss	–	(2,528,609)	(32,802)	(2,561,411)
Redemptions	(760,864.096)	(6,126,823)	(100,001)	(6,226,824)
Partners’ Capital,
September 30, 2012	3,271,427.306	25,740,644	285,425	26,026,069
Partners’ Capital,
December 31, 2010	5,020,573.947	47,504,374	517,432	48,021,806
Net Loss	–	(2,632,380)	(29,883)	(2,662,263)
Redemptions	(665,637.947)	(5,972,481)	(49,999)	(6,022,480)
Partners’ Capital,
September 30, 2011	4,354,936.000	38,899,513	437,550	39,337,063

The accompanying notes are an integral part of these financial statements.

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS

September 30, 2012

(Unaudited)

The unaudited financial statements contained herein include, in the opinion of management, all adjustments necessary for a fair presentation of the financial condition and results of operations of Morgan Stanley Smith Barney Spectrum Currency and Commodity L.P. (the “Partnership”).  The financial statements and condensed notes herein should be read in conjunction with the Partnership’s Annual Report on Form 10-K for the fiscal year ending December 31, 2011 (the “Form 10-K”).

1.  Organization

Morgan Stanley Smith Barney Spectrum Currency and Commodity L.P. is a Delaware limited partnership organized in 1999 to engage primarily in the speculative trading of futures contracts, options on futures and forward contracts, and forward contracts on physical commodities and other commodity interests, including, but not limited to, foreign currencies, financial instruments, metals, energy, and agricultural products (collectively, “Futures Interests”) (refer to Note 4, Financial Instruments).  The Partnership is one of the Morgan Stanley Spectrum series of funds, comprised of the Partnership, Morgan Stanley Smith Barney Spectrum Global Balanced L.P., Morgan Stanley Smith Barney Spectrum Select L.P., Morgan Stanley Smith Barney Spectrum Strategic L.P., and Morgan Stanley Smith Barney Spectrum Technical L.P. (collectively, the “Spectrum Series”).

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Ceres Managed Futures LLC, a Delaware limited liability company, acts as a general partner (“Ceres” or the “General Partner”) and commodity pool operator of the Partnership.  Ceres is a wholly-owned subsidiary of Morgan Stanley Smith Barney Holdings LLC (“MSSBH”).  MSSBH is majority-owned indirectly by Morgan Stanley and minority-owned indirectly by Citigroup Inc.  As of September 26, 2012, Morgan Stanley Smith Barney LLC (“MSSB”) is doing business as Morgan Stanley Wealth Management.  This entity, where the Partnership continues to maintain a cash account previously acted as a non-clearing commodity broker for the Partnership.  The clearing commodity broker is Morgan Stanley & Co. LLC (“MS&Co.”).  MS&Co. also acts as the counterparty on all trading of foreign currency forward contracts. Morgan Stanley Capital Group Inc. (“MSCG”) acts as the counterparty on all trading of options on foreign currency forward contracts.  Morgan Stanley Wealth Management is a principal subsidiary of MSSBH.  MS&Co. and MSCG are wholly-owned subsidiaries of Morgan Stanley.  The trading advisors to the Partnership are C-View International Limited (“C-View”), Flintlock Capital Asset Management, LLC (“Flintlock”) and Krom River Investment Management (Cayman) Limited (together with its affiliate, Krom River Trading AG) (“Krom River”) (each individually, a “Trading Advisor”, or collectively, the “Trading Advisors”).

Flintlock and Krom River manage the assets of the Partnership through its investments in FL Master Fund L.P. (“FL Master Fund”) and KR Master Fund L.P. (“KR Master Fund”), respectively.  Ceres is a general partner to FL Master Fund and KR Master Fund.

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2.   Financial Highlights

Financial Highlights for the three and nine months ended September 30, 2012 and 2011 were as follows:

 For the Three Months                                                       For the Nine Months                             

Ended September 30,                                                           Ended September 30, 

	2012	2011	2012	2011
Per Unit operating performance:
Net asset value at the beginning of the period:	$       7.89	$       8.84	$       8.63	$       9.57
Interest Income	–     (3)	–     (3)	–     (3)	–     (3)
Expenses	(0.13)	(0.15)	(0.41)	(0.45)
Realized/Unrealized Income (Loss) (1)	0.20	0.34	(0.26)	(0.09)
Net Income (Loss)	0.07	0.19	(0.67)	(0.54)
Net asset value, September 30:	$       7.96	$       9.03	$       7.96	$       9.03
Ratios to average net assets:
Net Investment Loss  (2)	(6.5)%	(6.6)%	(6.6)%	(6.7)%
Expenses before Incentive Fees (2)	6.6%	6.6%	6.7%	6.8%
Expenses after Incentive Fees (2)	6.6%	6.6%	6.7%	6.8%
Net Income (Loss)  (2)	3.7%	8.6%	(11.5)%	(8.5)%
Total return before incentive fees	0.9%	2.1%	(7.8)%	(5.6)%
Total return after incentive fees	0.9%	2.1%	(7.8)%	(5.6)%

(1) Realized/Unrealized Income (Loss) is a balancing amount necessary to reconcile the change in net asset value per Unit with the other per Unit information.

(2) Annualized (except for incentive fees if applicable).

(3) Amounts less than $0.005 per Unit.

3.  Related Party Transactions

The Partnership’s cash is on deposit with MS&Co. in Futures Interests trading accounts to meet margin requirements as needed.  Monthly MS&Co. pays the Partnership interest income on 100% of the average

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

daily equity maintained in cash in the Partnership’s account during each month at a rate equal to 80% of the monthly average of the 4-week U.S. Treasury bill discount rate.  For purposes of such interest payments, daily funds do not include monies due to the Partnership on or with respect to futures, forwards or options contracts that have not been received.  MS&Co. retains any interest earned in excess of the interest paid to the Partnership.  The Partnership pays brokerage fees to MS&Co.

4.  Financial Instruments

The Partnership trades Futures Interests.  Futures and forwards represent contracts for delayed delivery of an instrument at a specified date and price.  Futures Interests are open commitments until settlement date, at which time they are realized.  They are valued at fair value, generally on a daily basis, and the unrealized gains and losses on open contracts (the difference between contract trade price and market price) are reported in the Statements of Financial Condition as a net unrealized gain or loss on open contracts.  The resulting net change in unrealized gains and losses is reflected in the “Net change in unrealized” trading profit (loss), “Unrealized appreciation on investment in FL Master Fund” and “Unrealized appreciation on investment in KR Master Fund” for open contracts from one period to the next on the Statements of Income and Expenses.  The fair value of exchange-traded futures, options and forward contracts is determined by the various futures exchanges, and reflects the settlement price for each contract as of the close of business on the last business day of the reporting period.  The fair value of foreign currency forward contracts is extrapolated on a forward basis from the spot prices quoted as of approximately 3:00 P.M. (E.T.) of the last business day of the reporting period from various exchanges.  The fair value of non-exchange-traded foreign

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

currency option contracts is calculated by applying an industry standard model application for options valuation of foreign currency options, using as input the spot prices, interest rates, and option implied volatilities quoted as of approximately 3:00 P.M. (E.T.) on the last business day of the reporting period.  Risk arises from changes in the value of these contracts and the potential inability of counterparties to perform under the terms of the contracts.  There are numerous factors which may significantly influence the fair value of these contracts, including interest rate volatility.

The Partnership may invest in Master Funds.  The Partnership records its investments in Master Funds at fair value.

The Partnership may buy or write put and call options through listed exchanges and the over-the-counter market.  The buyer of an option has the right to purchase (in the case of a call option) or sell (in the case of a put option) a specified quantity of a specific Futures Interest on the underlying assets at a specified price prior to or on a specified expiration date.  The writer of an option is exposed to the risk of loss if the fair value of the Futures Interest on the underlying asset declines (in the case of a put option) or increases (in the case of a call option).  The writer of an option can never profit by more than the premium paid by the buyer but can potentially lose an unlimited amount.

Premiums received/premiums paid from writing/purchasing options are recorded as liabilities/assets on the Statements of Financial Condition and are subsequently adjusted to fair values.  The difference between the

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

fair value of the option and the premiums received/premiums paid is treated as an unrealized gain or loss within the Statements of Income and Expenses.

The fair value of exchange-traded contracts is based on the settlement price quoted by the exchange on the day with respect to which fair value is being determined.  If an exchange-traded contract could not have been liquidated on such day due to the operation of daily limits or other rules of the exchange, the settlement price will be equal to the settlement price on the first subsequent day on which the contract could be liquidated.

The Partnership’s contracts are accounted for on a trade-date basis and marked to market on a daily basis.  The Partnership accounts for its derivative investments as described in Note 5, Derivatives and Hedging as required by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”).  A derivative is defined as a financial instrument or other contract that has all three of the following characteristics:

1)   a) One or more “underlyings” and b) one or more “notional amounts” or payment provisions or both;

2)   Requires no initial net investment or a smaller initial net investment than would be required for other types of contracts that would be expected to have a similar response relative to changes in market factors; and

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3)   Terms that require or permit net settlement.

Generally, derivatives include futures, forwards, swaps or options contracts, and other financial instruments with similar characteristics such as caps, floors, and collars.

The net unrealized gains (losses) on open contracts, reported as a component of “Trading Equity” on the Statements of Financial Condition, and their longest contract maturities were as follows:

	Net Unrealized Gains (Losses) on Open Contracts			Longest Maturities
Date	Exchange-Traded	Off-Exchange-Traded	Total	Exchange-Traded	Off-Exchange-Traded
	$	$	$
Sep. 30, 2012	—	92,593	92,593	—	Oct. 2012
Dec. 31, 2011	—	(88,387)	(88,387)	—	Mar. 2012

In general, the risks associated with off-exchange-traded contracts are greater than those associated with exchange-traded contracts because of the greater risk of default by the counterparty to an off-exchange-traded contract.  The Partnership has credit risk associated with counterparty nonperformance.  As of the date of the financial statements, the credit risk associated with the instruments in which the Partnership trades is limited to the unrealized gain amounts reflected in the Partnership’s Statements of Financial Condition.  The net unrealized gains (losses) on open contracts is further disclosed gross by type of contract and corresponding fair value level in Note 6, Fair Value Measurements and Disclosures.

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The Partnership also has credit risk because MS&Co. and/or MSCG act as the futures commission merchants or the counterparties with respect to most of the Partnership’s assets. Exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts are fair valued on a daily basis, with variations in value settled on a daily basis. MS&Co., as a commodity futures broker for the Partnership’s exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts, is required, pursuant to regulations of the Commodity Futures Trading Commission (“CFTC”), to segregate from their own assets, and for the sole benefit of its commodity customers, total cash held by it with respect to exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts, including an amount equal to the net unrealized gains on all open exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts, which funds, in the aggregate, totaled $9,172,137 and $35,818,805 at September 30, 2012, and December 31, 2011, respectively.  With respect to the Partnership’s off-exchange-traded forward currency contracts and forward currency options contracts, there are no daily settlements of variation in value, nor is there any requirement that an amount equal to the net unrealized gains (losses) on such contracts be segregated.  However, the Partnership is required to meet margin requirements equal to the net unrealized loss on open forward currency contracts in the Partnership accounts with the counterparty, which is accomplished by daily maintenance of the cash balance in a custody account held at  MS&Co. With respect to those off-exchange-traded forward currency contracts, the Partnership is at risk to the ability of MS&Co., the sole counterparty on all such contracts, to perform. With respect to those off-exchange-traded forward currency options contracts, the Partnership is at risk to the ability of MSCG, the sole counterparty on all such contracts,

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

to perform.   The Partnership has a netting agreement with each counterparty.  The primary terms are based on industry standard master agreements.  These agreements, which seek to reduce both the Partnership’s and the counterparties’ exposure on off-exchange-traded forward currency contracts, including options on such contracts, should materially decrease the Partnership’s credit risk in the event of MS&Co.’s or MSCG’s bankruptcy or insolvency.

The General Partner monitors and attempts to control the Partnership’s 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 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, online monitoring systems provide account analysis of futures, forwards and options positions by sector, margin requirements, gain and loss transactions and collateral positions.

The futures, forwards and options traded by the Partnership involve varying degrees of related market risk.  Market risk is often dependent upon changes in the level or volatility of interest rates, exchange rates, and prices of financial instruments and commodities, factors that result in frequent changes in the fair value of the Partnership’s open positions, and consequently in its earnings, whether realized or unrealized, and cash flow.  Gains and losses on open positions of exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts are settled daily through variation margin.  Gains and

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

losses on off-exchange-traded forward currency contracts are settled upon termination of the contract.  Gains and losses on off-exchange-traded forward currency options contracts are settled on an agreed-upon settlement date.

5.  Derivatives and Hedging

The Partnership’s objective is to profit from speculative trading in Futures Interests.  Therefore, the Trading Advisors for the Partnership will take speculative positions in Futures Interests where they feel the best profit opportunities exist for their trading strategy.  As such, the average number of contracts outstanding in absolute quantities (the total of the open long and open short positions) has been presented as a part of the volume disclosure, as position direction is not an indicative factor in such volume disclosures.  With regard to foreign currency forward trades, each notional quantity amount has been converted to an equivalent contract based upon an industry convention.

The following tables summarize the valuation of the Partnership’s investments as of September 30, 2012 and December 31, 2011, respectively.

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The Effect of Trading Activities on the Statements of Financial Condition as of September 30, 2012:

Futures and Forward Contracts	Long Unrealized Gain	Long Unrealized Loss	Short Unrealized Gain	Short Unrealized Loss	Net   Unrealized Gain	Average number of contracts outstanding for the nine months    (absolute quantity)
	$	$	$	$	$
Foreign currency	74,102	(33,244)	20,720	(16,637)	44,941	1,563
Total	74,102	(33,244)	20,720	(16,637)	44,941
Unrealized currency gain					47,652
Total net unrealized gain on open contracts					92,593

		Average number of
		contracts outstanding
		for the nine months
		(absolute quantity)
Option Contracts at Fair Value	$
Options purchased	–	1
Options written	–	1

The Effect of Trading Activities on the Statements of Financial Condition as of December 31, 2011:

Futures and Forward Contracts	Long Unrealized Gain	Long Unrealized Loss	Short Unrealized Gain	Short Unrealized Loss	Net   Unrealized  Gain/(Loss)	Average number of contracts outstanding  for the year   (absolute quantity)
	$	$	$	$	$
Foreign currency	34,016	(124,363)	4,823	(38,337)	(123,861)	4,996
Total	34,016	(124,363)	4,823	(38,337)	(123,861)
Unrealized currency gain					35,474
Total net unrealized  loss on open contracts					(88,387)

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

		Average number of
		contracts outstanding
		for the year
		(absolute quantity)
Option Contracts at Fair Value	$
Options purchased	1,534	1
Options written	–	1

The following tables summarize the net trading results of the Partnership for the three and nine months ended September 30, 2012 and 2011, respectively.

The Effect of Trading Activities on the Statements of Income and Expenses for the Three and Nine Months Ended September 30, 2012 included in Total Trading Results:

	For the Three Months	For the Nine Months
	Ended September 30, 2012	Ended September 30, 2012
Type of Instrument	$	$
Commodity	682,995	(887,947)
Foreign currency	(4,452)	(204,347)
Unrealized currency gain	15,256	12,178
Total	693,799	(1,080,116)

Line Items on the Statements of Income and Expenses for the Three and Nine Months Ended September 30, 2012:

	For the Three Months	For the Nine Months
	Ended September 30, 2012	Ended September 30, 2012
Trading Results	$	$
Net realized	(168,008)	(455,500)
Net change in unrealized	127,362	182,719
Realized gain on investment in KR Master Fund	810,662	250,819
Realized loss on investment in FL Master Fund	(114,312)	(1,545,644)
Unrealized appreciation on investment in FL Master Fund	377,288	672,444
Unrealized depreciation on investment in KR Master Fund	(339,193)	(184,954)
Total Trading Results	693,799	(1,080,116)

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The Effect of Trading Activities on the Statements of Income and Expenses for the Three and Nine Months Ended September 30, 2011 included in Total Trading Results:

	For the Three Months	For the Nine Months
	Ended September 30, 2011	Ended September 30, 2011
Type of Instrument	$	$
Foreign currency	1,524,199	(512,236)
Unrealized currency loss	(18,235)	(36,822)
Total	1,505,964	(549,058)

Line Items on the Statements of Income and Expenses for the Three and Nine Months Ended September 30, 2011:

	For the Three Months	For the Nine Months
	Ended September 30, 2011	Ended September 30, 2011
Trading Results	$	$
Net realized	110,272	(805,585)
Net change in unrealized	1,395,692	256,527
Total Trading Results	1,505,964	(549,058)

6.  Fair Value Measurements and Disclosures

Effective January 1, 2012, the Partnership adopted Accounting Standards Update (“ASU”) 2011-04,  “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in the accounting principles generally accepted in the United States of America (“U.S. GAAP”) and International Financial Reporting Standards (“IFRS”).  The amendments within this ASU change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements to eliminate unnecessary wording differences between U.S. GAAP and IFRS.  However, some of the amendments clarify the FASB’s intent about the application of existing fair value measurement requirements and other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements.  This new guidance did not have a significant impact on the Partnership’s financial statements.

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Financial instruments are carried at fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  Assets and liabilities carried at fair value are classified and disclosed in the following three levels: Level 1 - unadjusted quoted market prices in active markets for identical assets and liabilities; Level 2 - inputs other than unadjusted quoted market prices that are observable for the asset or liability, either directly or indirectly (including unadjusted quoted market prices for similar investments, interest rates, credit risk); and Level 3 - unobservable inputs for the asset or liability (including the Partnership’s own assumptions used in determining the fair value of investments).

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.  The Partnership’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The Partnership’s assets and liabilities measured at fair value on a recurring basis are summarized in the following tables by the type of inputs applicable to the fair value measurements.

September 30, 2012	Unadjusted Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
	$	$	$	$
Assets
Investment in KR Master Fund	–	10,785,054	n/a	10,785,054
Investment in FL Master Fund	–	7,037,439	n/a	7,037,439
Forwards	–	94,822	n/a	94,822
Total Assets	–	17,917,315	n/a	17,917,315
Liabilities
Forwards	–	49,881	n/a	49,881
Total Liabilities	–	49,881	n/a	49,881
Unrealized currency gain				47,652
*Net fair value	–	17,867,434	n/a	17,915,086

December 31, 2011	Unadjusted Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
	$	$	$	$
Assets
Forwards	–	38,838	n/a	38,838
Options Purchased	–	1,534	n/a	1,534
Total Assets	–	40,372	n/a	40,372
Liabilities
Forwards	–	162,699	n/a	162,699
Total Liabilities	–	162,699	n/a	162,699
Unrealized currency gain				35,474
*Net fair value	–	(122,327)	n/a	(86,853)

* This amount comprises the “Total net unrealized gain (loss) on open contracts” “Investment in KR Master Fund”, “Investment in FL Master Fund” and “Options purchased” on the Statements of Financial Condition.

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

During the period January 1, 2012 to September 30, 2012, there were no Level 3 assets and liabilities and there were no transfers of assets or liabilities between Level 1 and Level 2.

Investment in FL Master Fund and KR Master Fund

On January 1, 2012, the assets allocated to Flintlock for trading were invested in FL Master Fund, a limited partnership organized under the partnership laws of the State of Delaware.  FL Master Fund was formed to permit accounts managed now or in the future by Flintlock using the 2x Flintlock Commodity Opportunities Partners, LP, a proprietary, systematic trading program, to invest together in one trading vehicle.  The General Partner is also the general partner for FL Master Fund.  Individual and pooled accounts currently managed by Flintlock, including the Partnership, are permitted to be limited partners of FL Master Fund.  The General Partner and Flintlock believe that trading through this structure should promote efficiency and economy in the trading process.

On January 1, 2012, the assets allocated to Krom River for trading were invested in the KR Master Fund, a limited partnership organized under the partnership laws of the State of Delaware.  KR Master was formed in order to permit commodity pools managed now or in the future by Krom River using the Commodity Program at 150% Leverage, a fundamental and technical trading system, to invest together in one trading vehicle.  The General Partner is also the general partner of KR Master Fund.  Individual and pooled accounts currently managed by Krom River, including the Partnership, are permitted to be limited partners of KR Master Fund.  The General Partner and Krom River believe that trading through this structure should promote efficiency and economy in the trading process.

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Summarized information reflecting the total assets, liabilities and capital of FL Master Fund and KR Master Fund is shown in the following tables.

                       September 30, 2012                                                                

	Total Assets	Total Liabilities	Total Capital
FL Master Fund	$32,315,024	$6,279,707	26,035,317
KR Master Fund	$117,357,253	$1,440,308	115,916,945
	$149,672,277	$7,720,015	141,952,262

Summarized information for the Partnership’s investment in FL Master Fund and KR Master Fund is shown in the following tables:

      September 30, 2012                                                          For the three months ended September 30, 2012

	% of Partnership  Net Assets	Fair Value	Partnership’s  pro rata Net Income	Investment Objective	Redemption  Permitted
	%	$	$
FL Master Fund	27.04	7,037,439	262,976	Commodity	Monthly
				Portfolio
KR Master Fund	41.44	10,785,054	471,471	Commodity	Monthly
				Portfolio

September 30, 2012                                                          For the nine months ended September 30, 2012

	% of Partnership  Net Assets	Fair Value	Partnership’s  pro rata Net Income (Loss)	Investment Objective	Redemption  Permitted
	%	$	$
FL Master Fund	27.04	7,037,439	(873,200)	Commodity	Monthly
				Portfolio
KR Master Fund	41.44	10,785,054	65,866	Commodity	Monthly
				Portfolio

The Partnership’s investment into FL Master Fund and KR Master Fund do not pay any management, incentive, or administrative fee.  These fees are paid by the Partnership.  The Partnership reimburses FL Master Fund and KR Master Fund for all brokerage related fees borne by FL Master Fund and KR Master Fund on behalf of the Partnership’s investment.

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

As of September 30, 2012, the Partnership owned approximately 26.94% and 9.30% of FL Master Fund and KR Master Fund, respectively.  It is the Partnership’s intention to continue to invest in FL Master Fund and KR Master Fund.  The performance of the Partnership is directly affected by the performance of FL Master Fund and KR Master Fund.

The tables below represent summarized Income Statement information for FL Master Fund and KR Master Fund for the three and nine months ended September 30, 2012, to meet the requirements of Regulation S-X rule 3-09, as follows:

For the Three Months Ended September 30, 2012	Investment             Income	Net                      Investment Loss	Total             Trading Results	Net               Income
	$	$	$	$
FL Master Fund	4,755	(204,696)	979,760	775,064
KR Master Fund	15,048	(173,873)	4,605,264	4,431,391

For the Nine Months Ended September 30, 2012	Investment             Income	Net                     Investment Loss	Total               Trading Results	Net              Income (Loss)
	$	$	$	$
FL Master Fund	12,552	(446,191)	(3,294,917)	(3,741,108)
KR Master Fund	39,080	(368,147)	901,800	533,653

7.  Other Pronouncements

In December 2011, the FASB issued ASU 2011-11, “Disclosures about Offsetting Assets and Liabilities”, which creates a new disclosure requirement about the nature of an entity’s rights of setoff and the related arrangements associated with its financial instruments and derivative instruments. Entities are required to disclose both gross information and net information about both instruments and

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MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Partnership should also provide the disclosures retrospectively for all comparative periods presented.  The Partnership is currently evaluating the impact that the pronouncement would have on the financial statements. 

In October 2011, the FASB issued a proposed ASU intended to improve and converge financial reporting by setting forth consistent criteria for determining whether an entity is an investment company.  Under longstanding U.S. GAAP, investment companies carry all of their investments at fair value, even if they hold a controlling interest in another company.  The primary changes being proposed by the FASB relate to which entities would be considered investment companies as well as certain disclosure and presentation requirements.  In addition to the changes to the criteria for determining whether an entity is an investment company, the FASB also proposes that an investment company be required to consolidate another investment company if it holds a controlling financial interest in the entity.  In August 2012, the FASB updated the proposed ASU to state that entities regulated under the Investment Company Act of 1940 should qualify to be investment companies within the proposed investment company guidance.  The Partnership will evaluate the impact that this proposed update would have on the financial statements once the pronouncement is issued.

- 25 -

MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8.  Restricted and Unrestricted Cash

As reflected on the Partnership’s Statements of Financial Condition, restricted cash equals the cash portion of assets on deposit to meet margin requirements plus the cash required to offset unrealized losses on foreign currency forwards and options contracts and offset unrealized losses on offset London Metal Exchange positions.  All of these amounts are maintained separately.  Cash that is not classified as restricted cash is therefore classified as unrestricted cash.

9.  Income Taxes

No provision for income taxes has been made in the accompanying financial statements, as partners are individually responsible for reporting income or loss based upon their respective share of the Partnership’s revenues or expenses for income tax purposes. The Partnership files U.S. federal and state tax returns.

This guidance issued by the FASB on income taxes clarifies the accounting for uncertainty in income taxes recognized in the Partnership’s financial statements, and prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken.  The Partnership has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements as of September 30, 2012 and December 31, 2011.  If applicable, the Partnership recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statements of Income and Expenses.  Generally,

- 26 -

MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY AND COMMODITY L.P.

NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

the 2009 through 2011 tax years remain subject to examination by U.S. federal and most state tax authorities.  No income tax returns are currently under examination.

10.  Subsequent Events

Management of Ceres performed its evaluation of subsequent events through the date of filing, and has determined that there were no subsequent events requiring adjustment of or disclosure in the financial statements other than disclosed below.

Effective the close of business on October 10, 2012, the General Partner terminated the management agreement dated as of November 1, 2010 and as amended on November 29, 2010, between Ceres, Flintlock and the Partnership.  Consequently Flintlock ceased all trading on behalf of the Partnership effective October 10, 2012.

On October 22, 2012, the General Partner, The Cambridge Strategy (Asset Management) Limited (“Cambridge”) and the Partnership entered into a management agreement pursuant to which, effective November 1, 2012, Cambridge would serve as a trading advisor to the Partnership and will trade its allocated portion of the Partnership’s net assets pursuant to Cambridge Asian Markets Alpha Programme.

- 27 -

Item 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

As of September 30, 2012, the percentage of assets allocated to each market sector was approximately as follows: Currency 34.61% and Commodity 65.39%.

Liquidity.  The Partnership deposits its assets with MS&Co. as its clearing commodity broker in separate futures, forward and options trading accounts established for each Trading Advisor.  Such assets are used as margin to engage in trading and may be used as margin solely for the Partnership’s trading. The assets are held in either non-interest bearing bank accounts or in securities and instruments permitted by the CFTC for investment of customer segregated or secured funds.  Since the Partnership’s sole purpose is to trade in futures, forwards and options, it is expected that the Partnership will continue to own such liquid assets for margin purposes.

The Partnership’s investment in futures, forwards and options may, from time to time, be illiquid.  Most U.S. futures exchanges limit fluctuations in prices during a single day by regulations referred to as “daily price fluctuation limits” or “daily limits.”  Trades may not be executed at prices beyond the daily limit.  If the price for a particular futures or options contract has increased or decreased by an amount equal to the daily limit, positions in that futures or options contract can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit. Futures prices have occasionally moved the daily limit for several consecutive days with little or no trading.  These market conditions could prevent the Partnership from promptly liquidating its futures or options contracts and result in restrictions on redemptions.

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There is no limitation on daily price moves in trading forward contracts on foreign currencies.  The markets for some world currencies have low trading volume and are illiquid, which may prevent the Partnership from trading in potentially profitable markets or prevent the Partnership from promptly liquidating unfavorable positions in such markets, subjecting it to substantial losses.  Either of these market conditions could result in restrictions on redemptions.  For the periods covered by this report, illiquidity has not materially affected the Partnership’s assets.

There are no known material trends, demands, commitments, events, or uncertainties at the present time that are reasonably likely to result in the Partnership’s liquidity increasing or decreasing in any material way.

As of September 30, 2012, approximately 65.39% of the Partnership’s total investments are futures contracts which are exchange-traded while approximately 34.61% are forward contracts which are off-exchange traded.

Capital Resources.  The Partnership does not have, nor does it expect to have, any capital assets.  Redemptions of units of limited partnership interest (“Unit(s)”) in the future will affect the amount of funds available for investments in futures, forwards and options in subsequent periods.  It is not possible to estimate the amount, and therefore the impact, of future outflows of Units.

There are no known material trends, favorable or unfavorable, that would affect, nor any expected material changes to, the Partnership’s capital resource arrangements at the present time.

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Off-Balance Sheet Arrangements and Contractual Obligations.  The Partnership does not have any off-balance sheet arrangements, nor does it have contractual obligations or commercial commitments to make future payments that would affect its liquidity or capital resources.

Results of Operations

General.  The Partnership’s results depend on the Trading Advisors and the ability of each Trading Advisor’s trading program to take advantage of price movements in the futures, forward and options markets.  C-View trades its C-View Limited Managed Account 3X Program at 2x leverage.  C-View’s program trades spot and forward foreign exchange in the interbank market, non-deliverable forwards and OTC currency options. C-View’s approach is discretionary, based on a combination of fundamental analysis, technical analysis and market psychology. The intention is to capture profits from short to medium-term price trends while maintaining profitability in ranging markets.

Flintlock’s trading program seeks to generate attractive risk-adjusted returns, while preserving capital and minimizing the correlation of the account’s returns to the U.S. commodity and equity markets.  Flintlock believes that this fundamental-focused strategy is effective in most business and economic climates.  In general, the market for thematic, pattern and event-driven parameters are used to form a fundamental view of global commodities.  Rigorous research and disciplined analysis are used to test and formulate a fundamental view of a certain commodity.  This fundamental view is then combined with technical indicators, market sentiment and flow analysis to gain a complete picture of a likely commodity price behavior.

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Krom River trades its Krom River Commodity Program on behalf of the Partnership.  The Krom River Commodity Program trades in around 20 different markets including base metals, precious metals, energy, agricultural and softs. The trade types include long volatility, directional and relative value. The trading instruments are exchange-listed futures and options, which are traded on both fundamental and technical basis. The Krom River Commodity Program does not trade over-the-counter instruments, nor take physical deliveries.

The following table sets forth the percentage and the amount of the Partnership’s net assets allocated to each Trading Advisor for the period ending September 30, 2012, and June 30, 2012, respectively, and the change during the applicable period.

Trading Advisor	Allocations as of  September 30,       2012 (%)	Allocations as of June 30, 2012 (%)	Allocations as of  September 30, 2012($)	Allocations as of June 30, 2012 ($)	Change during the period (%)
C-View	31.89	33.60	8,298,995	9,407,115	-11.78
Krom River	41.21	41.95	10,725,119	11,744,671	-8.68
Flintlock	26.90	24.45	7,001,955	6,843,585	2.31

The following presents a summary of the Partnership’s operations for the three and nine months ended September 30, 2012 and 2011, and a general discussion of its trading activities during each period.  It is important to note, however, that the Trading Advisors trade in various markets at different times and that prior activity in a particular market does not mean that such market will be actively traded by the Trading Advisors or will be profitable in the future.  Consequently, the results of operations of the Partnership are difficult to discuss other than in the context of the Trading Advisors’ trading activities on behalf of the Partnership during the period in question.  Past performance is no guarantee of future results.

- 31 -

The Partnership’s results of operations set forth in the financial statements on pages 2 through 27 of this report are prepared in accordance with U.S. GAAP, which require the use of certain accounting policies that affect the amounts reported in these financial statements, including the following: the contracts the Partnership trades are accounted for on a trade-date basis and marked to market on a daily basis.  The difference between their original contract value and market value is recorded on the Statements of Income and Expenses as “Net change in unrealized” trading profit (loss) and “Unrealized appreciation on investment” in FL Master Fund and KR Master Fund, respectively, for open (unrealized) contracts, and recorded as “Net realized” trading profit (loss) and “Realized loss on investment” in FL Master Fund and KR Master Fund, respectively, when open positions are closed out.  The sum of these amounts constitutes the Partnership’s trading results.  The market value of a futures contract is the settlement price on the exchange on which that futures contract is traded on a particular day.  The value of a foreign currency forward contract is based on the spot rate as of approximately 3:00 P.M. (E.T.) the close of the business day.  Interest income, as well as management fees, incentive fees, and brokerage fees of the Partnership are recorded on an accrual basis.

Ceres believes that, based on the nature of the operations of the Partnership, no assumptions relating to the application of critical accounting policies other than those presently used could reasonably affect reported amounts.

For the Three and Nine Months Ended September 30, 2012

The Partnership recorded total trading results including interest income totaling $698,838 and expenses totaling $448,442, resulting in net income of $250,396 for the three months ended September 30, 2012.  The

- 32 -

Partnership’s net asset value per Unit increased from $7.89 at June 30, 2012 to $7.96 at September 30, 2012.

The most significant trading gains were achieved within the metals sector, primarily during August and September, from long positions in gold and silver futures as prices advanced amid speculation the U.S. Federal Reserve will expand stimulus measures to boost the labor market. Within the agricultural markets, gains were achieved primarily during July from long positions in corn futures as prices rose as a heat wave and drought in the U.S. Midwest threatened to limit output in the U.S. Within the currency sector, gains were achieved primarily during September from long positions in the Indian rupee versus the U.S. dollar after the U.S. dollar declined amid the U.S. Federal Reserve announcement of bond buying to bolster the economy in a program of quantitative easing that tends to debase the currency. A portion of the Partnership’s gains during the quarter was offset by losses incurred within the energy sector, primarily during September, from short positions in natural gas futures as prices climbed higher on speculation U.S. government data may show a smaller-than-normal increase in stockpiles following production shutdowns due to Hurricane Isaac.

The Partnership recorded total trading results including interest income totaling $(1,067,568) and expenses totaling $1,493,843, resulting in a net loss of $2,561,411 for the nine months ended September 30, 2012.  The Partnership’s net asset value per Unit decreased from $8.63 at December 31, 2011 to $7.96 at September 30, 2012.

- 33 -

The most significant trading losses were incurred within the agricultural sector, primarily during September, from short positions in wheat futures as prices advanced as the U.S. Federal Reserve’s third round of stimulus measures to bolster the U.S. economy signaled increasing demand for crops amid shrinking supplies. Additional losses were incurred during April from short positions in soybean futures as prices advanced on concern that a freeze in South America and rain in Europe will curb oilseed supplies. Within the metals markets, losses were incurred primarily during March from long positions in gold and silver futures as prices moved lower amid a rise in the value of the U.S. dollar, which reduced demand for the precious metals. Additional losses were incurred during the second quarter from long positions in gold and silver futures. Within the energy sector, losses were incurred primarily during June and September. During June, losses were incurred from short positions in natural gas futures as prices advanced on forecasts of above-normal temperatures across the U.S. Prices continued to rise after a U.S. government report revealed a smaller-than-expected gain in inventories. During September, losses were incurred from short positions in natural gas futures as prices climbed higher on speculation U.S. government data may show a smaller-than-normal increase in stockpiles following production shutdowns due to Hurricane Isaac. A portion of the Partnership’s losses during the first nine months of the year was offset by gains achieved within the currency sector, primarily during the first quarter. During January, gains were recorded from long positions in the Canadian dollar and Japanese yen versus the U.S. dollar as the value of the U.S. dollar weakened following the U.S. Federal Reserve’s suggestion they would likely keep short-term interest rates low through 2014. During February, additional gains were incurred from short positions in the Japanese yen versus the U.S. dollar as the value of the Japanese yen fell against the U.S. dollar after the Bank of Japan said it would increase the size of its asset-purchase fund. During March, further gains were incurred from short positions in the Japanese yen and Australian dollar versus the U.S. dollar as concern over earnings in China reduced demand for these currencies.

- 34 -

For the Three and Nine Months Ended September 30, 2011

The Partnership recorded total trading results including interest income totaling $1,507,343 and expenses totaling $656,096, resulting in net income of $851,247 for the three months ended September 30, 2011.  The Partnership’s net asset value per Unit increased from $8.84 on June 30, 2011 to $9.03 at September 30, 2011.

The most significant trading gains were achieved, during September, primarily from short positions in the South African rand versus the U.S. dollar as the value of the South African rand weakened relative to the U.S. dollar on speculation the South African central bank will signal further rate cuts after the International Monetary Fund lowered its global growth estimate. Additionally, gains were achieved in September from short positions in the Mexican peso versus the U.S. dollar as the value of the Mexican peso fell relative to the U.S. dollar on speculation the worldwide economic slump will curb demand for Mexican exports and slow investment into the country. During July, gains were achieved from long positions in the Swiss franc and Japanese yen versus the U.S. dollar as the value of these currencies rose against the U.S. dollar due to increased demand for “safe-haven” currencies amid investor concern about a weakening global economy. A portion of these gains for the quarter was offset by losses that were incurred, primarily during August, from long positions in the Australian dollar, and New Zealand dollar versus the U.S. dollar as the value of the U.S. dollar was boosted higher against these “commodity currencies” by “safe haven” demand following central bank intervention in the Japanese yen amid concerns related to the European debt crisis. The values of the Australian dollar and New Zealand were also weighed down by declining commodity prices.

- 35 -

The Partnership recorded total trading results including interest income totaling $(535,010) and expenses totaling $2,127,253, resulting in a net loss of $2,662,263 for the nine months ended September 30, 2011.  The Partnership’s net asset value per Unit decreased from $9.57 on December 31, 2010 to $9.03 at September 30, 2011.

The most significant trading losses were incurred during May primarily from long positions in the South African rand versus the U.S. dollar as the value of this “commodity currency” fell in tandem with declining commodity prices. Additionally, losses were incurred during August from long positions in the Australian dollar, South African rand, and New Zealand dollar versus the U.S. dollar as the value of the U.S. dollar was boosted higher against these “commodity currencies” by “safe haven” demand following central bank intervention in the Japanese yen and amid concerns related to the European debt crisis. Losses were also incurred during March from long positions in the Japanese yen versus the U.S. dollar as the value of the Japanese yen fell relative to the U.S. dollar after the Bank of Japan and the G-7 successfully intervened in the foreign exchange markets to halt the yen’s rise. Additional losses were incurred during February from short positions in the South African rand, as the value of the U.S. dollar rose relative to this currency on optimism for the U.S. economy. A portion of the Partnership’s losses for the first nine months of the year was offset by gains, primarily during April, from long positions in the Swiss franc and Indian rupee versus the U.S. dollar as the value of these currencies rose against the U.S. dollar after better-than-expected corporate earnings reports and signs of global growth spurred demand for higher-yielding currencies. Additional gains were recorded during September from short positions in the Mexican peso versus the U.S. dollar as the value of the peso fell on speculation the worldwide economic slump will curb demand for Mexican exports and slow investment into that country. During

- 36 -

July, gains were achieved from long positions in the Swiss franc versus the U.S. dollar as the value of the franc rose against the U.S. dollar due to increased demand for “safe-haven” currencies amid investor concern about a weakening global economy.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Introduction

The Partnership is a commodity pool engaged primarily in the speculative trading of futures, forwards and options.  The market-sensitive instruments held by the Partnership are acquired for speculative trading purposes only and, as a result, all or substantially all of the Partnership’s assets are at risk of trading loss.  Unlike an operating company, the risk of market-sensitive instruments is inherent to the primary business activity of the Partnership.

The futures, forwards and options on such contracts traded by the Partnership involve varying degrees of related market risk.  Market risk is often dependent upon changes in the level or volatility of interest rates, exchange rates, and prices of financial instruments and commodities, factors that result in frequent changes in the fair value of the Partnership’s open positions, and consequently in its earnings, whether realized or unrealized, and cash flow.  Gains and losses on open positions of exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts are settled daily through variation margin.  Gains and losses on off-exchange-traded forward currency contracts and forward currency options contracts are settled upon termination of the contract.  Gains and losses on off-exchange-traded forward currency options contracts are settled upon an agreed upon settlement date.

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The Partnership’s total market risk may increase or decrease as it is influenced by a wide variety of factors, including, but not limited to, the diversification among the Partnership’s open positions, the volatility present within the markets, and the liquidity of the markets.

The face value of the market sector instruments held by the Partnership is typically many times the applicable margin requirements.  Margin requirements generally range between 2% and 15% of contract face value.  Additionally, the use of leverage causes the face value of the market sector instruments held by the Partnership typically to be many times the total capitalization of the Partnership.

The Partnership’s past performance is no guarantee of its future results.  Any attempt to numerically quantify the Partnership’s market risk is limited by the uncertainty of its speculative trading.  The Partnership’s speculative trading and use of leverage may cause future losses and volatility (i.e., “risk of ruin”) that far exceed the Partnership’s experience to date as discussed under the “Partnership’s Value at Risk in Different Market Sectors” section and significantly exceed the Value at Risk (“VaR”) tables disclosed.

Limited partners will not be liable for losses exceeding the current net asset value of their investment.

Quantifying the Partnership’s Trading Value at Risk

The following quantitative disclosures regarding the Partnership’s market risk exposures contain “forward-looking statements” within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of

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1933 and Section 21E of the Securities Exchange Act of 1934).  All quantitative disclosures in this section are deemed to be forward-looking statements for purposes of the safe harbor, except for statements of historical fact.

The Partnership accounts for open positions on the basis of fair value accounting principles.  Any loss in the market value of the Partnership’s open positions is directly reflected in the Partnership’s earnings and cash flow.

The Partnership’s risk exposure in the market sectors traded by the Trading Advisors is estimated below in terms of VaR.  Please note that the VaR model is used to numerically quantify market risk for historic reporting purposes only and is not utilized by either Ceres or the Trading Advisors in their daily risk management activities.

VaR is a measure of the maximum amount which the Partnership could reasonably be expected to lose in a given market sector.  However, the inherent uncertainty of the Partnership’s speculative trading and the recurrence in the markets traded by the Partnership of market movements far exceeding expectations could result in actual trading or non-trading losses far beyond the indicated VaR of the Partnership’s 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 losses in any market sector will be limited to VaR or by the Partnership’s attempts to manage its market risk.

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Exchange maintenance margin requirements have been used by the Partnership as the measure of its VaR.  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 VaR.

The Partnership’s Value at Risk in Different Market Sectors

The following tables indicate the trading VaR associated with the Partnership’s open positions by market category as of September 30, 2012 and December 31, 2011, and the highest, lowest and average values during the three months ended September 30, 2012 and for the twelve months ended December 31, 2011.  All open position trading risk exposures of the Partnership have been included in calculating the figures set forth below.  There has been no material change in the trading VaR information previously disclosed in the Form 10-K.

As of September 30, 2012, the Partnership’s total capitalization was approximately $26 million.

September 30, 2012                   

Primary Market		% of Total
Risk Category	VaR	Capitalization
Currency	$938,970	3.61%
Commodity	1,774,159	6.82%
Total	$2,713,129	10.43%

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      Three Months Ended September 30, 2012

Market Sector	High VaR $	Low VaR $	Average VaR* $
Currency	1,165,794	387,368	708,123
Commodity	2,281,300	317,832	1,249,211

* Average of month-end VaR

As of December 31, 2011, the Partnership’s total capitalization was approximately $35 million.

December 31, 2011

Primary Market		% of
Risk Category	VaR	Total Capitalization
Currency	$662,978	1.90%

Twelve Months Ended December 31, 2011

Market Sector	High VaR $	Low VaR $	Average VaR* $
Currency	$5,786,605	$556,613	$1,775,236
*Average of month-end VaR.

Limitations on Value at Risk as an Assessment of Market Risk

VaR models permit estimation of a portfolio’s aggregate market risk exposure, incorporating a range of varied market risks, reflect risk reduction due to portfolio diversification or hedging activities, and can cover a wide range of portfolio assets. However, VaR risk measures should be viewed in light of the methodology’s limitations, which include, but may not be limited to the following:

·   past changes in market risk factors will not always result in accurate predictions of the distributions and correlations of future market movements;

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·   changes in portfolio value caused by market movements may differ from those of the VaR model;

·   VaR results reflect past market fluctuations applied to current trading positions while future risk depends on future positions;

·   VaR using a one-day time horizon does not fully capture the market risk of positions that cannot be liquidated or hedged within one day; and

·   the historical market risk factor data used for VaR estimation may provide only limited insight into losses that could be incurred under certain unusual market movements.

Non-Trading Risk

The Partnership has non-trading market risk on its foreign cash balances not needed for margin.  These balances and any market risk they may represent are immaterial.

A decline in short-term interest rates would result in a decline in the Partnership’s cash management income. This cash flow risk is not considered to be material.

Materiality, as used throughout this section, is based on an assessment of reasonably possible market movements and any associated potential losses, taking into account the leverage, optionality, and multiplier features of the Partnership’s market-sensitive instruments, in relation to the Partnership’s net assets.

Qualitative Disclosures Regarding Primary Trading Risk Exposures

The following qualitative disclosures regarding the Partnership’s market risk exposures - except for (A) those disclosures that are statements of historical fact and (B) the descriptions of how the Partnership

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manages its primary market risk exposures - constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. The Partnership’s primary market risk exposures, as well as the strategies used and to be used by Ceres and the Trading Advisors for managing such exposures, are subject to numerous uncertainties, contingencies and risks, any one of which could cause the actual results of the Partnership’s risk controls to differ materially from the objectives of such strategies.  Government interventions, defaults and expropriations, illiquid markets, the emergence of dominant fundamental factors, political upheavals, changes in historical price relationships, an influx of new market participants, increased regulation, and many other factors could result in material losses, as well as in material changes to the risk exposures and the risk management strategies of the Partnership.  Investors must be prepared to lose all or substantially all of their investment in the Partnership.

Qualitative Disclosures Regarding Means of Managing Risk Exposure

The Partnership and the Trading Advisors, separately, attempt to manage the risk of the Partnership’s open positions in essentially the same manner in all market categories traded. Ceres attempts to manage market exposure by diversifying the Partnership’s assets among different market sectors and trading approaches through the selection of the commodity trading advisors and by daily monitoring of their performance.  In addition, the Trading Advisors establish diversification guidelines, often set in terms of the maximum margin to be committed to positions in any one market sector or market-sensitive instrument.

Ceres monitors and controls the risk of the Partnership’s non-trading instrument, cash. Cash is the only Partnership investment directed by Ceres, rather than the Trading Advisors.

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Item 4.     CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the management of Ceres, Ceres’ President (Ceres’ principal executive officer) and Chief Financial Officer (Ceres’ principal financial officer) have evaluated the effectiveness of the design and operation 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, 2012.  The Partnership’s disclosure controls and procedures are designed to provide reasonable assurance that information the Partnership is required to disclose in the reports that the Partnership files or submits under the Exchange Act are recorded, processed and summarized and reported within the time period specified in the applicable rules and forms.  Based on this evaluation, the President and Chief Financial Officer of Ceres have concluded that the disclosure controls and procedures of the Partnership were effective at September 30, 2012.

Changes in Internal Control over Financial Reporting

There have been no changes during the period covered by this quarterly report in the Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected or are reasonably likely to materially affect the Partnership’s internal control over financial reporting.

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Limitations on the Effectiveness of Controls

Any control system, no matter how well designed and operated, can provide reasonable (not absolute) assurance that its objectives will be met.  Furthermore, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

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PART II.  OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

Unless the context otherwise requires, for purposes of this section, the terms the “Company,” “we,” “us” and “our” mean Morgan Stanley and its consolidated subsidiaries. In addition to the matters described in the Form 10-K, those described in the Partnership’s Quarterly Report on Form 10-Q for the quarterly period ending June 30, 2012 (the “Second Quarter Form 10-Q”), and those described below, in the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with its activities as a global diversified financial services institution. Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. In some cases, the entities that would otherwise be the primary defendants in such cases are bankrupt or in financial distress.

The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding the Company’s business, including, among other matters, accounting and operational matters, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief.

The Company contests liability and/or the amount of damages as appropriate in each pending matter. Where available information indicates that it is probable a liability had been incurred at the date of the condensed consolidated financial statements and the Company can reasonably estimate the amount of that loss, the Company accrues the estimated loss by a charge to income.

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In many proceedings, however, it is inherently difficult to determine whether any loss is probable or even possible or to estimate the amount of any loss. The Company cannot predict with certainty if, how or when such proceedings will be resolved or what the eventual settlement, fine, penalty or other relief, if any, may be, particularly for proceedings that are in their early stages of development or where plaintiffs seek substantial or indeterminate damages. Numerous issues may need to be resolved, including through potentially lengthy discovery and determination of important factual matters, determination of issues related to class certification and the calculation of damages, and by addressing novel or unsettled legal questions relevant to the proceedings in question, before a loss or additional loss or range of loss or additional loss can be reasonably estimated for any proceeding. Subject to the foregoing, the Company believes, based on current knowledge and after consultation with counsel, that the outcome of such proceedings will not have a material adverse effect on the consolidated financial condition of the Company, although the outcome of such proceedings could be material to the Company’s operating results and cash flows for a particular period depending on, among other things, the level of the Company’s revenues or income for such period.

Over the last several years, the level of litigation and investigatory activity focused on residential mortgage and credit crisis related matters has increased materially in the financial services industry. As a result, the Company expects that it may become the subject of increased claims for damages and other relief regarding residential mortgages and related securities in the future and, while the Company has identified below certain proceedings that the Company believes to be material, individually or collectively, there can be no assurance that additional material losses will not be incurred from residential mortgage claims that have not yet been notified to the Company or are not yet determined to be material.

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The following developments have occurred with respect to certain matters previously reported in the Form 10-K or the Second Quarter Form 10-Q or concern new actions that have been filed since the Second Quarter Form 10-Q:

The Company

Residential Mortgage and Credit Crisis Related Matters.

Class Actions.

On September 12, 2012, the Company filed its answer to the third amended complaint in In re Morgan Stanley Pass-Through Certificates Litigation. On September 20, 2012, the plaintiffs filed a motion seeking to expand the offerings at issue in the litigation, relying on recent precedent from the United States Court of Appeals for the Second Circuit (“Second Circuit”). Defendants have opposed the motion. If the motion is granted, plaintiffs will be purporting to represent investors who purchased approximately $7.82 billion in mortgage pass through certificates issued in 2006 by thirteen trusts.

Other Litigation.

On August 17, 2012, the court in Abu Dhabi Commercial Bank, et al. v. Morgan Stanley & Co. Inc., et al. granted the Company’s motion for summary judgment with respect to the plaintiffs’ fraud claim, denied the Company’s motion for summary judgment with respect to the plaintiffs’ aiding and abetting fraud claim, and ordered plaintiffs to show cause why the negligent misrepresentation claim should not be dismissed. The court dismissed all or part of the claims of three of the fifteen plaintiffs based on lack of standing or reliance and plaintiffs have moved for reconsideration of the dismissal. On September 17, 2012, plaintiffs filed expert reports with the court alleging that they are seeking $713 million in compensatory damages on behalf of all fifteen plaintiffs. On October 5, 2012, the court ruled that

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plaintiffs sufficiently showed cause as to why the negligent misrepresentation claim against the Company should not be dismissed.

On October 2, 2012, the court in Cambridge Place Investment Management Inc. v. Morgan Stanley & Co., Inc. et al. denied, in substantial part, defendants’ motion to dismiss plaintiff’s amended complaints.

On October 11, 2012, defendants filed motions to dismiss the amended complaint in Federal Home Loan Bank of Boston v. Ally Financial, Inc. F/K/A GMAC LLC et al.

Item 1A.  RISK FACTORS

There have been no material changes from the risk factors previously referenced in Part II, Item 1A, Risk Factors in the Partnership’s Report on Form 10-Q for the quarter ended June 30, 2012 other than as set forth below.

Speculative position and trading limits may reduce profitability.

The CFTC and U.S. exchanges have established speculative position limits on the maximum net long or net short positions which any person may hold or control in particular futures and options on futures.  The trading instructions of an advisor may have to be modified, and positions held by the Partnership may have to be liquidated in order to avoid exceeding these limits.  Such modification or liquidation could adversely affect the operations and profitability of the Partnership by increasing transaction costs to liquidate positions and foregoing potential profits.

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In October 2011, the CFTC adopted new rules governing position limits.  In September 2012, these rules were vacated by the United States District Court for the District of Columbia and remanded to the CFTC for

further consideration.  It is possible, nevertheless, that these rules may take effect in some form via re-promulgation or a successful appeal by the CFTC of the District Court’s ruling.  The vacated rules established position limits on certain futures contracts and any economically equivalent futures, options and swaps.

Item 4.  MINE SAFETY DISCLOSURES

Not applicable.

Item 5.  OTHER INFORMATION

The registrant does not have a board of directors.  The registrant’s general partner, Ceres Managed Futures LLC, is managed by a board of directors.

Effective November 14, 2012, Mr. Damian George will be appointed a director of Ceres.

Damian George, age 45, has been a Director of the General Partner since November 2012.  Since June 2012, Mr. George has been the Chief Financial Officer and a principal of the General Partner and is an associate member of the National Futures Association.  Since August 2009, Mr. George has been

employed by Morgan Stanley Smith Barney LLC (“Morgan Stanley Smith Barney”), a financial services firm, where his responsibilities include oversight of budgeting, finance and Sarbanes-Oxley testing for the Alternative Investments–Managed Futures group.  Since August 2009, Mr. George has been registered as

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an associated person of Morgan Stanley Smith Barney.  From November 2005 through July 2009, Mr. George was employed by Citi Alternative Investments, a division of Citigroup Inc. (“Citigroup”), a

financial services firm, which administered Citigroup’s hedge fund and fund of funds business, where he served as Director and was responsible for budgeting, finance and Sarbanes-Oxley testing for the Hedge Fund Management group.  From November 2004 through July 2009, Mr. George was registered as an associated person of Citigroup Global Markets Inc.  Mr. George earned his Bachelor of Science degree in Accounting in May 1989 from Fordham University and his Master of Business Administration degree in International Finance in February 1998 from Fordham University.  Mr. George is a Certified Public Accountant.

Item 6. EXHIBITS

10.01 Management Agreement, dated as of October 22, 2012, among the General Partner, the Partnership, and the Cambridge Strategy (Asset Management) Limited.

10.02 First Amendment to Management Agreement among the General Partner, the Partnership, and the Cambridge Strategy (Asset Management) Limited, dated as of October 23, 2012.

31.01 Certification of President of Ceres Managed Futures LLC, the General Partner of the Partnership, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02 Certification of Chief Financial Officer of Ceres Managed Futures LLC, the General Partner of the Partnership, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.01 Certification of President of Ceres Managed Futures LLC, the General Partner of the Partnership, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.02 Certification of Chief Financial Officer of Ceres Managed Futures LLC, the General Partner of the Partnership, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS* XBRL Instance Document

101.SCH* XBRL Taxonomy Extension Schema Document

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101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB* XBRL Taxonomy Extension Label Document

101.PRE* XBRL Taxonomy Extension Presentation Document

101.DEF* XBRL Taxonomy Extension Definition Document

Notes to Exhibits List

*Submitted electronically herewith.

Pursuant to applicable securities laws and regulations, the Partnership is deemed to have complied with the reporting obligation relating to the submission of interactive data files in Exhibit 101 to this report and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Partnership has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fails to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Morgan Stanley Smith Barney Spectrum Currency and Commodity L.P.
	(Registrant)
	By:	Ceres Managed Futures LLC
		(General Partner)
November 13, 2012	By:	/s/Damian George
		Damian George
		Chief Financial Officer

The General Partner which signed the above is the only party authorized to act for the registrant.  The registrant has no principal executive officer, principal financial officer, controller, or principal accounting officer and has no Board of Directors.

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EX-10.01

EXECUTION VERSION

MANAGEMENT AGREEMENT

AGREEMENT made as of the 22nd day of October, 2012, is by and among CERES MANAGED FUTURES LLC, a Delaware limited liability company (“CMF”), MORGAN STANLEY SPECTRUM CURRENCY L.P., a Delaware limited partnership (the “Partnership”) andTHE CAMBRIDGE STRATEGY (ASSET MANAGEMENT) LIMITED, a limited liability company incorporated in England and Wales (“Cambridge” or the “Advisor”).

W I T N E S S E T H :

WHEREAS, CMF is the general partner of the Partnership, a limited partnership organized for the purpose of speculative trading of commodity interests, including futures contracts, options, forward contracts, swaps and other derivative instruments with the objective of achieving substantial capital appreciation, such trading to be conducted directly or through an investment in Cambridge Master Fund L.P., a Delaware limited partnership (the “Master Fund”) of which CMF is the general partner and Cambridge is the advisor; and

WHEREAS, the Amended and Restated Limited Partnership Agreement dated as of April 2, 2007, as amended by Amendment No. 1 to the Amended and Restated Limited Partnership Agreement dated as of May 31, 2009 (the “Partnership Agreement”), permits CMF to delegate to one or more commodity trading advisors CMF’s authority to make trading decisions for the Partnership, which advisors may or may not have any prior experience managing client funds; and

WHEREAS, the Advisor is authorized and regulated in the United Kingdom by the Financial Services Authority (“FSA”), is registered as an investment adviser with the U.S. Securities and Exchange Commission (“SEC”) and is exempt from registration as a commodity trading advisor with the Commodity Futures Trading Commission (“CFTC”); and

WHEREAS, CMF is registered as a commodity trading advisor and a commodity pool operator with the CFTC and is a member of the National Futures Association (“NFA”); and

WHEREAS, CMF, the Partnership and the Advisor wish to enter into this Agreement in order to set forth the terms and conditions upon which the Advisor will render and implement advisory services in connection with the conduct by the Partnership of its commodity trading activities during the term of this Agreement.

NOW, THEREFORE, the parties agree as follows:

1.DUTIES OF THE ADVISOR.  (a) For the period and on the terms and conditions of this Agreement, the Advisor shall have sole authority and responsibility, as one of the Partnership’s agents and attorneys-in-fact, for directing the investment and reinvestment of the assets and funds of the Partnership allocated to it from time to time by CMF in commodity interests, including commodity futures contracts, options, spot and forward contracts.  The Advisor may also engage in swap transactions and other derivative transactions on behalf of the Partnership with the prior written approval of CMF.  All such trading on behalf of the Partnership shall be in accordance with the trading strategies and trading policies set forth in Section 8(c) of the Partnership Agreement, and as such trading policies may be changed from time to time upon receipt by the Advisor of prior written notice of such change, and pursuant to the trading strategy selected by CMF to be utilized by the Advisor in managing the Partnership’s assets.  CMF has initially selected the Advisor’s Asian Markets Alpha Programme (the “Program”) to manage the Partnership’s assets allocated to it.  Any open positions or other investments at the time of receipt of such notice of a change in trading policy shall not be deemed to violate the changed policy and shall be closed or sold in the ordinary course of trading.  The Advisor may not deviate from the trading policies set forth in the Partnership Agreement without the prior written consent of the Partnership given by CMF.  The Advisor makes no representation or warranty that the trading to be directed by it for the Partnership will be profitable or will not result in losses.

(b)CMF acknowledges receipt of the description of the Program, attached hereto as Appendix A.  All trades made by the Advisor for the account of the Partnership, whether directly or indirectly through the Master Fund, shall be made through such commodity broker or brokers as CMF shall direct, and the Advisor shall have no authority or responsibility for selecting or supervising any such broker in connection with the execution, clearance or confirmation of transactions for the Partnership or for the negotiation of brokerage rates charged therefor.  However, the Advisor, with the prior written permission (by original, fax copy or email copy) of CMF, may direct any and all trades in commodity futures and options to a futures commission merchant or independent floor broker it chooses for execution with instructions to give-up the trades to the broker designated by CMF, provided that the futures commission merchant or independent floor broker and any give-up or floor brokerage fees are approved in advance by CMF.  All give-up or similar fees relating to the foregoing shall be paid by the Partnership after all parties have executed the relevant give-up agreements (by original, fax copy or email copy).

(c)The initial allocation of the Partnership’s assets to the Advisor will be made to the Program, as described in Appendix A, provided that CMF and the Partnership agree that, for so long as the Partnership trades through the Master Fund, the amount of leverage applied to the assets of the Partnership allocated to the Advisor by CMF shall be in accordance with the terms of the agreement by and among CMF, the Master Fund and the Advisor, dated as of September 1, 2012, as such agreement may be amended from time to time.  In the event the Advisor wishes to use a trading system or methodology other than or in addition to the Program in connection with its trading for the Partnership, either in whole or in part, it may not do so unless the Advisor gives CMF prior written notice of its intention to utilize such different trading system or methodology and CMF consents thereto in writing.  In addition, the Advisor will provide five days’ prior written notice to CMF of any change in the trading system or methodology to be utilized for the Partnership which the Advisor deems material.  If the Advisor deems such change in system or methodology or in markets traded to be material, the changed system or methodology or markets traded will not be utilized for the Partnership without the prior written consent of CMF, which shall not be unreasonably withheld or delayed.  In addition, the Advisor will notify CMF of any changes to the trading system or methodology that would require a change in the description of the trading strategy or methods described in Appendix A to be materially inaccurate.  Further, the Advisor will provide the Partnership with a current list of all commodity interests to be traded for the Partnership’s account and the Advisor will not trade any additional commodity interests for such account without providing notice thereof to CMF and receiving CMF’s written approval.  The Advisor also agrees to provide CMF, on a monthly basis, with a written report of the assets under the Advisor’s management together with all other matters deemed by the Advisor to be material changes to its business not previously reported to CMF.  The Advisor further agrees that it will convert foreign currency balances (not required to margin positions denominated in a foreign currency) to U.S. dollars no less frequently than monthly.  U.S. dollar equivalents in individual foreign currencies of more than $100,000 will be converted to U.S. dollars within one business day after such funds are no longer needed to margin foreign positions.

(d)The Advisor agrees to make all material disclosures to the Partnership regarding itself and its principals as defined in Part 4 of the CFTC’s regulations (“principals”), shareholders, directors, officers and employees, their trading performance and general trading methods, its customer accounts (but not the identities of or identifying information with respect to its customers) and otherwise as are required in the reasonable judgment of CMF in good faith to be made in any filings required by federal or state law or NFA rule or order.  Notwithstanding Sections 1(d) and 4(d) of this Agreement, the Advisor is not required to disclose the actual trading results of proprietary accounts of the Advisor or its principals unless CMF reasonably determines in good faith that such disclosure is required in order to fulfill its fiduciary obligations to the Partnership or the reporting, filing or other obligations imposed on it by federal or state law or NFA rule or order.  The Partnership and CMF acknowledge that the trading advice to be provided by the Advisor is a property right belonging to the Advisor and that they will keep all such advice confidential and they agree that in the event of a breach of such confidentiality by either one of them damages might not be a sufficient remedy and that as a result injunctive or other equitable relief may be obtained in respect of any such breach or anticipated breach.

(e)The Advisor understands and agrees that CMF may designate other trading advisors for the Partnership and apportion or reapportion to such other trading advisors the management of an amount of Net Assets of the Partnership (as defined in Section 3(b) hereof) as it shall determine in its absolute discretion.  The designation of other trading advisors and the apportionment or reapportionment of Net Assets of the Partnership to any such trading advisors pursuant to this Section 1 shall neither terminate this Agreement nor modify in any regard the respective rights and obligations of the parties hereunder.

(f)CMF may, from time to time, in its absolute discretion, select additional trading advisors and reapportion funds among the trading advisors for the Partnership as it deems appropriate.  CMF shall use its best efforts to make reapportionments, if any, as of the first day of a calendar month.  The Advisor agrees that it may be called upon at any time promptly to liquidate positions in CMF’s sole discretion so that CMF may reallocate the Partnership’s assets, meet margin calls on the Partnership’s account, fund redemptions, or for any other reason, except that CMF will not require the liquidation of specific positions by the Advisor.  CMF will use its best efforts to give two business days’ prior notice to the Advisor of any reallocations or liquidations.  For the avoidance of doubt, the Advisor will not be liable for any losses incurred in the Partnership’s account in respect of any such liquidation required by CMF pursuant to this Section 1(f).

(g)Except for the losses referred to in Section 1(f), the Advisor shall assume financial responsibility for any errors committed or caused by it in transmitting orders for the purchase or sale of commodity interests for the Partnership’s account including payment to the brokers of the floor brokerage commissions, exchange, NFA fees, and other transaction charges and give-up charges incurred by the brokers on such trades.  The Advisor’s errors shall include, but not be limited to, inputting improper trading signals or communicating incorrect orders to the commodity brokers.  The Advisor shall have an affirmative obligation to promptly notify CMF in accordance with the provisions of Section 8(a)(iii) of any errors with respect to the account, and the Advisor shall use its best efforts to identify and promptly notify CMF of any order or trade which the Advisor reasonably believes was not executed in accordance with its instructions to any broker utilized to execute orders for the Partnership.

2.INDEPENDENCE OF THE ADVISOR.  For all purposes herein, the Advisor shall be deemed to be an independent contractor and, unless otherwise expressly provided or authorized, shall have no authority to act for or represent the Partnership in any way and shall not be deemed an agent, promoter or sponsor of the Partnership, CMF, or any other trading advisor.  The Advisor shall not be responsible to the Partnership, CMF, any trading advisor or any limited partners or any other person whatsoever for any acts or omissions of any other trading advisor to the Partnership.

3.COMPENSATION.  (a) In consideration of and as compensation for all of the services to be rendered by the Advisor to the Partnership under this Agreement, the Partnership shall pay the Advisor (i) an incentive fee payable quarterly equal to 15% of New Trading Profits (as such term is defined below) earned by the Advisor for the Partnership (the “Incentive Fee”) and (ii) a monthly fee for professional management services equal to 1.5% per year of the month-end Net Assets of the Partnership allocated to the Advisor (computed monthly by multiplying the Partnership’s Net Assets allocated to the Advisor as of the last business day of each month by 1.5% and dividing the result thereof by 12) (the “Management Fee”).

(b)“Net Assets” of the Partnership shall have the meaning set forth in Section 7(d)(1) of the Partnership Agreement and, unless the Advisor consents in writing, without regard to further amendments thereto, provided that in determining the Net Assets of the Partnership on any date, no adjustment shall be made to reflect any distributions, redemptions, administrative fees or incentive fees accrued or payable as of the date of such determination.

(c)“New Trading Profits” shall mean the excess, if any, of Net Assets of the Partnership managed by the Advisor at the end of the fiscal period over Net Assets of the Partnership managed by the Advisor at the end of the highest previous fiscal period or Net Assets of the Partnership allocated to the Advisor at the date trading commences by the Advisor for the Partnership, whichever is higher, and as further adjusted to eliminate the effect on Net Assets of the Partnership resulting from new capital contributions, redemptions, reallocations or capital distributions, if any, made during the fiscal period decreased by interest or other income, not directly related to trading activity, earned on the Partnership’s assets during the fiscal period, whether the assets are held separately or in margin accounts.  Ongoing expenses shall be attributed to the Advisor based on the Advisor’s proportionate share of Net Assets of the Partnership.  Ongoing expenses shall not include expenses of litigation not involving the activities of the Advisor on behalf of the Partnership.  No Incentive Fee shall be paid to the Advisor until the end of the first full calendar quarter of the Advisor’s trading for the Partnership, which fee shall be based on New Trading Profits (if any) earned from the commencement of trading by the Advisor on behalf of the Partnership through the end of the first full calendar quarter of such trading.  Interest income earned, if any, will not be taken into account in computing New Trading Profits earned by the Advisor.  If Net Assets of the Partnership allocated to the Advisor are reduced due to redemptions, distributions or reallocations (net of additions), there will be a corresponding proportional reduction in the related loss carryforward amount that must be recouped before the Advisor is eligible to receive another Incentive Fee.

(d)Quarterly Incentive Fees and monthly Management Fees shall be paid within twenty (20) business days following the end of the period for which such fee is payable.  In the event of the termination of this Agreement as of any date which shall not be the end of a calendar quarter or a calendar month, as the case may be, the quarterly Incentive Fee shall be computed as if the effective date of termination were the last day of the then current quarter and the monthly Management Fee shall be prorated to the effective date of termination.  If, during any month, the Partnership does not conduct business operations or the Advisor is unable to provide the services contemplated herein for more than two successive business days, the monthly Management Fee shall be prorated by the ratio which the number of business days during which CMF conducted the Partnership’s business operations or utilized the Advisor’s services bears in the month to the total number of business days in such month.

(e)The provisions of this Section 3 shall survive the termination of this Agreement.

4.RIGHT TO ENGAGE IN OTHER ACTIVITIES.  (a) The services provided by the Advisor hereunder are not to be deemed exclusive.  CMF on its own behalf and on behalf of the Partnership acknowledges that, subject to the terms of this Agreement, the Advisor and its officers, directors, employees and shareholder(s), may render advisory, consulting and management services to other clients and accounts.  The Advisor and its officers, directors, employees and shareholder(s) shall be free to trade for their own accounts and to advise other investors and manage other commodity accounts during the term of this Agreement and to use the same information, computer programs and trading strategies, programs or formulas which they obtain, produce or utilize in the performance of services to CMF for the Partnership.  However, the Advisor represents, warrants and agrees that it believes the rendering of such consulting, advisory and management services to other accounts and entities will not require any material change in the Advisor’s basic trading strategies and will not affect the capacity of the Advisor to continue to render services to CMF for the Partnership of the quality and nature contemplated by this Agreement.

(b)If, at any time during the term of this Agreement, the Advisor is required to aggregate the Partnership’s commodity positions with the positions of any other person for purposes of applying CFTC- or exchange-imposed speculative position limits, the Advisor agrees that it will promptly notify CMF in writing if the Partnership’s positions are included in an aggregate amount which exceeds the applicable speculative position limit.  The Advisor agrees that, if its trading recommendations are altered because of the application of any speculative position limits, it will not modify the trading instructions with respect to the Partnership’s account in such manner as to affect the Partnership substantially disproportionately as compared with the Advisor’s other accounts.  The Advisor further represents, warrants and agrees that under no circumstances will it knowingly or deliberately use trading programs, strategies or methods for the Partnership that are inferior to strategies or methods employed for any other client or account and that it will not knowingly or deliberately favor any client or account managed by it over any other client or account in any manner, it being acknowledged, however, that different trading programs, strategies or methods may be utilized for differing sizes of accounts, accounts with different trading policies, accounts experiencing differing inflows or outflows of equity, accounts that commence trading at different times, accounts that have different portfolios or different fiscal years, accounts utilizing different executing brokers and accounts with other differences, and that such differences may cause divergent trading results.

(c)It is acknowledged that the Advisor and/or its officers, employees, directors and shareholder(s) presently act, and it is agreed that they may continue to act, as advisor for other accounts managed by them, and may continue to receive compensation with respect to services for such accounts in amounts which may be more or less than the amounts received from the Partnership.

(d)The Advisor agrees that it shall make such information available to CMF respecting the performance of the Partnership’s account as compared to the performance of other commodity trading accounts managed by the Advisor or its principals, if any, as shall be reasonably requested by CMF.  The Advisor presently believes and represents that existing speculative position limits will not materially adversely affect its ability to manage the Partnership’s account given the potential size of the Partnership’s account and the Advisor’s and its principals’ current accounts and all proposed accounts for which they have contracted to act as trading advisor.

5.TERM.  (a) This Agreement shall continue in effect until June 30, 2013.  CMF may, in its sole discretion, renew this Agreement for additional one-year periods upon notice to the Advisor not less than 30 days prior to the expiration of the previous period.  After June 30, 2013, CMF may terminate this Agreement at any month-end upon 30 days’ notice to the Advisor.  At any time during the term of this Agreement, CMF may elect immediately to terminate this Agreement upon five days’ notice to the Advisor if (i) the Net Asset Value per unit shall decline as of the close of business on any day to $4.00 or less; (ii) the Net Assets of the Partnership allocated to the Advisor (adjusted for redemptions, distributions, withdrawals or reallocations, if any) decline by 20% or more as of the end of a trading day from such Net Assets’ previous highest value; (iii) limited partners owning at least 50% of the outstanding units of the Partnership shall vote to require CMF to terminate this Agreement; (iv) the Advisor fails to comply with the terms of this Agreement; (v) CMF, in good faith, reasonably determines that the performance of the Advisor has been such that CMF’s fiduciary duties to the Partnership require CMF to terminate this Agreement; (vi) CMF reasonably believes that the application of speculative position limits will substantially affect the performance of the Partnership; or (vii) the Advisor fails to conform to the trading policies set forth in the Partnership Agreement as they may be changed from time to time.  At any time during the term of this Agreement, CMF may elect immediately to terminate this Agreement if (i) the Advisor merges, consolidates with another entity, sells a substantial portion of its assets, or becomes bankrupt or insolvent; (ii) David Russell Thompson dies, becomes incapacitated, leaves the employ of the Advisor, ceases to control the Advisor or is otherwise not managing the trading programs or systems of the Advisor; (iii) the Advisor’s registration with the FSA or any other regulatory authority, is terminated or suspended, or the Advisor is no longer entitled to rely on an exemption from registration with the CFTC as a commodity trading advisor; (iv) the Advisor fails to register as a commodity trading advisor with the CFTC and become a member of NFA on or before December 31, 2012; or (v) CMF reasonably believes that the Advisor has or may contribute to any material operational, business or reputational risk to CMF or CMF’s affiliates.  This Agreement will immediately terminate upon dissolution of the Partnership or upon cessation of trading by the Partnership prior to dissolution.

(b)The Advisor may terminate this Agreement by giving not less than 30 days’ notice to CMF (i) in the event that the trading policies of the Partnership as set forth in the Partnership Agreement are changed in such manner that the Advisor reasonably believes will adversely affect the performance of its trading strategies; (ii) after June 30, 2013; or (iii) in the event that CMF or the Partnership fails to comply with the terms of this Agreement.  The Advisor may immediately terminate this Agreement if (i) CMF’s registration as a commodity pool operator or its membership in NFA is terminated or suspended or (ii) the Partnership merges, consolidates with another entity, sells a substantial portion of its assets, or becomes bankrupt or insolvent.

(c)Except as otherwise provided in this Agreement, any termination of this Agreement in accordance with this Section 5 shall be without penalty or liability to any party, except for any fees due to the Advisor pursuant to Section 3 hereof.

6.INDEMNIFICATION.  (a)(i) In any threatened, pending or completed action, suit, or proceeding to which the Advisor was or is a party or is threatened to be made a party arising out of or in connection with this Agreement or the management of the Partnership’s assets by the Advisor or the offering and sale of units in the Partnership, CMF shall, subject to subsection (a)(iii) of this Section 6, indemnify and hold harmless the Advisor against any loss, liability, damage, fine, penalty, obligation, cost, expense (including, without limitation, attorneys’ and accountants’ fees, collection fees, court costs and other legal expenses), judgments and awards and amounts paid in settlement actually and reasonably incurred by it in connection with such action, suit, or proceeding if the Advisor acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Partnership, and provided that its conduct did not constitute negligence, bad faith, recklessness, intentional misconduct, or a breach of its fiduciary obligations to the Partnership as a commodity trading advisor, unless and only to the extent that the court or administrative forum in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, the Advisor is fairly and reasonably entitled to indemnity for such expenses which such court or administrative forum shall deem proper; and further provided that no indemnification shall be available from the Partnership if such indemnification is prohibited by Section 14 of the Partnership Agreement.  The termination of any action, suit or proceeding by judgment, order or settlement shall not, of itself, create a presumption that the Advisor did not act in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Partnership.

(ii)Without limiting subsection (i) above, to the extent that the Advisor has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsection (i) above, or in defense of any claim, issue or matter therein, CMF shall indemnify the Advisor against the expenses (including, without limitation, attorneys’ and accountants’ fees) actually and reasonably incurred by it in connection therewith.

(iii)Any indemnification under subsection (i) above, unless ordered by a court or administrative forum, shall be made by CMF only as authorized in the specific case and only upon a determination by independent legal counsel in a written opinion that such indemnification is proper in the circumstances because the Advisor has met the applicable standard of conduct set forth in subsection (i) above.  Such independent legal counsel shall be selected by CMF in a timely manner, subject to the Advisor’s approval, which approval shall not be unreasonably withheld.  The Advisor will be deemed to have approved CMF’s selection unless the Advisor notifies CMF in writing, received by CMF within five days of CMF’s telecopying to the Advisor of the notice of CMF’s selection, that the Advisor does not approve the selection.

(iv)In the event the Advisor is made a party to any claim, dispute or litigation or otherwise incurs any loss or expense as a result of, or in connection with, the Partnership’s or CMF’s activities or claimed activities unrelated to the Advisor, CMF shall indemnify, defend and hold harmless the Advisor against any loss, liability, damage, cost or expense (including, without limitation, attorneys’ and accountants’ fees) incurred in connection therewith.

(v)As used in this Section 6(a), the term “Advisor” shall include the Advisor, its principals, officers, directors, shareholder(s) and employees and the term “CMF” shall include the Partnership.

(b)(i) The Advisor agrees to indemnify, defend and hold harmless CMF, the Partnership and their affiliates against any loss, liability, damage, fine penalty, obligation, cost or expense (including, without limitation, attorneys’ and accountants’ fees, collection fees, court costs and other legal expenses), judgments and awards and amounts paid in settlement reasonably incurred by them (A) as a result of the material breach of any representations and warranties or covenants made by the Advisor in this Agreement, or (B) as a result of any act or omission of the Advisor relating to the Partnership if (i) there has been a final judicial or regulatory determination, or a written opinion of an arbitrator pursuant to Section 14 hereof, to the effect that such acts or omissions violated the terms of this Agreement in any material respect or involved negligence, bad faith, recklessness or intentional misconduct on the part of the Advisor (except as otherwise provided in Section 1(g)), or (ii) there has been a settlement of any action or proceeding with the Advisor’s prior written consent.

(ii)In the event CMF, the Partnership or any of their affiliates is made a party to any claim, dispute or litigation or otherwise incurs any loss or expense as a result of, or in connection with, the activities or claimed activities of the Advisor or its principals, officers, directors, shareholder(s) or employees unrelated to CMF’s or the Partnership’s business, the Advisor shall indemnify, defend and hold harmless CMF, the Partnership or any of their affiliates against any loss, liability, damage, fine, penalty, obligation, cost or expense (including, without limitation, attorneys’ and accountants’ fees, collection fees, court costs and other legal expenses), judgments, awards and amounts including amounts paid in settlement incurred in connection therewith.

(c)In the event that a person entitled to indemnification under this Section 6 is made a party to an action, suit or proceeding alleging both matters for which indemnification can be made hereunder and matters for which indemnification may not be made hereunder, such person shall be indemnified only for that portion of the loss, liability, damage, cost or expense incurred in such action, suit or proceeding which relates to the matters for which indemnification can be made.

(d)None of the indemnifications contained in this Section 6 shall be applicable with respect to default judgments, confessions of judgment or settlements entered into by the party claiming indemnification without the prior written consent, which shall not be unreasonably withheld or delayed, of the party obligated to indemnify such party.

(e)The provisions of this Section 6 shall survive the termination of this Agreement.

7.REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

(a)The Advisor represents and warrants that:

(i)All information with respect to the Advisor and its principals and the trading performance of any of them that has been provided to CMF, including, without limitation, the description of the Program contained in Appendix A, is complete and accurate in all material respects and such information does not contain any untrue statement of a material fact or omit to state a material fact which is necessary to make the statements and information not misleading.

(ii)The Advisor will be acting as a commodity trading advisor with respect to the Partnership and not as a securities investment adviser.  The Advisor is exempt from registration with the CFTC as a commodity trading advisor, is authorized and regulated by the FSA, is registered as an investment adviser with the SEC and is in compliance with any such other registration and licensing requirements as shall be necessary to enable it to perform its obligations hereunder.  The Advisor agrees to maintain and renew such registrations and licenses during the term of this Agreement.  The Advisor agrees that it will register as a commodity trading advisor with the CFTC and become a member of NFA on or before December 31, 2012.

(iii)The Advisor is a corporation duly organized, validly existing and in good standing under the laws of England and Wales and has full corporate power and authority to enter into this Agreement and to provide the services required of it hereunder.

(iv)The Advisor will not, by acting as a commodity trading advisor to the Partnership, breach or cause to be breached any undertaking, agreement, contract, statute, rule or regulation to which it is a party or by which it is bound.

(v)This Agreement has been duly and validly authorized, executed and delivered by the Advisor and is a valid and binding agreement enforceable in accordance with its terms.

(vi)At any time during the term of this Agreement that an offering memorandum or prospectus relating to the units is required to be delivered in connection with the offer and sale thereof, the Advisor agrees upon the request of CMF to promptly provide the Partnership with such information as shall be necessary so that, as to the Advisor and its principals, such offering memorandum or prospectus is accurate.

(b)CMF represents and warrants for itself and the Partnership that:

(i)CMF is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has full limited liability company power and authority to perform its obligations under this Agreement.

(ii)CMF and the Partnership have the capacity and authority to enter into this Agreement on behalf of the Partnership.

(iii)This Agreement has been duly and validly authorized, executed and delivered on CMF’s and the Partnership’s behalf and is a valid and binding agreement of CMF and the Partnership enforceable in accordance with its terms.

(iv)CMF will not, by acting as general partner to the Partnership and the Partnership will not, breach or cause to be breached any undertaking, agreement, contract, statute, rule or regulation to which it is a party or by which it is bound which would materially limit or affect the performance of its duties under this Agreement.

(v)CMF is registered as a commodity pool operator and is a member of NFA and is in compliance with any such other registration and licensing requirements as shall be necessary to enable it to perform its obligations hereunder, and it will maintain and renew such registrations and membership during the term of this Agreement.

(vi)The Partnership is a limited partnership duly organized and validly existing under the laws of the State of New York and has full limited partnership power and authority to enter into this Agreement and to perform its obligations under this Agreement.

(vii)The Partnership is a qualified eligible person as defined in CFTC Rule 4.7 under the Commodity Exchange Act.

8.COVENANTS OF THE ADVISOR, CMF AND THE PARTNERSHIP.

(a)The Advisor agrees as follows:

(i)In connection with its activities on behalf of the Partnership, the Advisor will comply with all applicable laws, including rules and regulations of the CFTC, NFA and/or the commodity exchange on which any particular transaction is executed.

(ii)The Advisor will promptly notify CMF of the commencement of any investigation, suit, action or proceeding involving the Advisor or any of its affiliates, officers, shareholder(s), employees, agents or representatives; regardless of whether such investigation, suit, action or proceeding also involves CMF.  The Advisor will provide CMF with copies of any correspondence (including, but not limited to, any notice or correspondence regarding the violation, or potential violation, of position limits) from or to the CFTC, NFA or any commodity exchange in connection with an investigation or audit of the Advisor’s business activities.

(iii)In the placement of orders for the Partnership’s account and for the accounts of any other client, the Advisor will utilize a pre-determined, systematic, fair and reasonable order entry system, which shall, on an overall basis, be no less favorable to the Partnership than to any other commodity trading account managed by the Advisor.  The Advisor acknowledges its obligation to review the Partnership’s positions, prices and equity in the account managed by the Advisor daily and within two business days to notify, in writing, the broker and CMF and the Partnership’s brokers of (A) any error committed by the Advisor or its principals or employees; (B) any trade which the Advisor believes was not executed in accordance with its instructions; and (C) any discrepancy with a value of $10,000 or more (due to differences in the positions, prices or equity in the account) between its records and the information reported on the account’s daily and monthly broker statements.

(iv)The Advisor will maintain a net worth of not less than $250,000 during the term of this Agreement.

(v)The Advisor will use its best efforts to close out all futures positions prior to any applicable delivery period, and will use its best efforts to avoid causing the Partnership to take delivery of any commodity.

(vi)CMF shall have the right for a period of 24 months following the date of this Agreement to allocate up to $150,000,000 in assets to the Advisor’s Program on behalf of any collective investment vehicle or account operated or managed by CMF and the Advisor represents that such allocation will not exceed the capacity limits of the Program.

(b)CMF agrees for itself and the Partnership that:

(i)CMF and the Partnership will comply with all applicable laws, including rules and regulations of the CFTC, NFA and/or the commodity exchange on which any particular transaction is executed.

(ii)CMF will promptly notify the Advisor of the commencement of any material suit, action or proceeding involving it or the Partnership, whether or not such suit, action or proceeding also involves the Advisor.

9.COMPLETE AGREEMENT.  This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof.

10.ASSIGNMENT.  This Agreement may not be assigned by any party without the express written consent of the other parties.

11.AMENDMENT.  This Agreement may not be amended except by the written consent of the parties.

12.NOTICES.  All notices, demands or requests required to be made or delivered under this Agreement shall be effective upon actual receipt and shall be made either by electronic mail (email) copy or in writing and delivered personally or by registered or certified mail or expedited courier, return receipt requested, postage prepaid, to the addresses below or to such other addresses as may be designated by the party entitled to receive the same by notice similarly given:

If to CMF or to the Partnership:

Ceres Managed Futures LLC

522 Fifth Avenue, 14th Floor

New York, New York  10036

Attention:  Walter Davis

Email:  walter.davis@morganstanleysmithbarney.com

If to the Advisor:

The Cambridge Strategy (Asset Management) Limited

Berger House

36-38 Berkley Square, 7th Floor

Mayfair, London W1J5AE

United Kingdom

Attention:  Tony Henry

Email:  legalnotices@thecambridgestrategy.com

13.GOVERNING LAW.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

14.ARBITRATION.  The parties agree that any dispute or controversy arising out of or relating to this Agreement or the interpretation thereof, shall be settled by arbitration in accordance with the rules, then in effect, of NFA or, if NFA shall refuse jurisdiction, then in accordance with the rules, then in effect, of the American Arbitration Association; provided, however, that the power of the arbitrator shall be limited to interpreting this Agreement as written and the arbitrator shall state in writing his reasons for his award, and further provided, that any such arbitration shall occur within the Borough of Manhattan in New York City.  Judgment upon any award made by the arbitrator may be entered in any court of competent jurisdiction.

15.NO THIRD PARTY BENEFICIARIES.  There are no third  party beneficiaries to this Agreement, except that certain persons not parties to this Agreement may have rights under Section 6 hereof.

16.COUNTERPARTS.  This Agreement may be executed in any number of counterparts, including via facsimile or email, each of which is an original and all of which when taken together evidence the same agreement.

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

17.CFTC DISCLOSURE NOTICE.  CMF, the Partnership and the Advisor agree that the following disclosure shall apply at such time as the Advisor obtains registration as a commodity trading advisor with the CFTC and files with NFA a claim of exemption pursuant to CFTC Rule 4.7(c):

PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS BROCHURE OR ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS BROCHURE OR ACCOUNT DOCUMENT.

IN WITNESS WHEREOF, this Agreement has been executed for and on behalf of the undersigned as of the day and year first above written.

CERES MANAGED FUTURES LLC

By /s/ Walter Davis

Walter Davis

President and Director

MORGAN STANLEY SPECTRUM CURRENCY L.P.

By:  Ceres Managed Futures LLC

  (General Partner)

By /s/ Walter Davis

Walter Davis

President and Director

THE CAMBRIDGE STRATEGY (ASSET MANAGEMENT) LIMITED

By /s/ David Russell Thompson

David Russell Thompson

Chief Investment Officer

- -

Appendix A

The Asian Markets Alpha Programme

The Advisor employs a series of systematic proprietary decision tools to identify trading opportunities in the global currency markets.  The process combines three types of trading strategies: a systematic technical strategy, a systematic fundamental strategy and a Market Information Strategy.  These trading tools are utilized in a set of systematic strategies which are combined into investment portfolios and are designed to perform across diverse market environments.  The Systematic Fundamental Strategy is used in the Asian currency section of the Advisor’s portfolios and reflects a predetermined set of positions designed to reflect ‘market’ views on the relative attractiveness of Asian currencies versus the US dollar.  Assets are allocated to the Systematic Fundamental Strategy based on a proprietary measure of volatility in the global currency markets (in highly volatile markets the allocation is reduced and when volatility is low the allocation is increased).  The Market Information Strategy leverages the experience and global network of the portfolio managers to understand and exploit the behavior of other market participants and to participate in hedging and investment flows. The Advisor believes that long run success is achieved through successful mitigation of downside returns with risk controlled at the portfolio, strategy and individual trade levels.

EX-10.02

EXECUTION COPY

FIRST AMENDMENT TO MANAGEMENT AGREEMENT

THIS FIRST AMENDMENT (this “Amendment”) to the Management Agreement dated as of October 22, 2012 (the “Management Agreement”), by and among Morgan Stanley Spectrum Currency L.P., a Delaware limited partnership (the “Partnership”), Ceres Managed Futures LLC, a Delaware limited liability company (“CMF”) and The Cambridge Strategy (Asset Management) Limited, a limited liability company incorporated in England and Wales (“Cambridge” or the “Advisor”), is made and entered into by the undersigned parties on October 23, 2012 (the “Effective Date”).

WHEREAS, all provisions contained in the Management Agreement remain in full force and effect and are modified only to the extent necessary to provide for the amendments set forth below;

WHEREAS, terms used and not otherwise defined herein have the meaning ascribed to such term in the Management Agreement;

WHEREAS, the undersigned parties desire to amend certain provisions of the Management Agreement; and

WHEREAS, pursuant to Section 11 of the Management Agreement, the undersigned parties may amend the Management Agreement by written consent;

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned parties hereto agree as follows:

1.           Section 3(a) of the Management Agreement is hereby deleted and replaced with the following:

“(a) In consideration of and as compensation for all of the services to be rendered by the Advisor to the Partnership under this Agreement, the Partnership shall pay the Advisor (i) an incentive fee payable quarterly equal to 15% of New Trading Profits (as such term is defined below) earned by the Advisor for the Partnership (the “Incentive Fee”) and (ii) a monthly fee for professional management services equal to 1.5% per year of the beginning of the month Net Assets of the Partnership allocated to the Advisor (computed monthly by multiplying the Partnership’s Net Assets allocated to the Advisor as of the opening of business on the first day of each calendar month, commencing with the month in which the Partnership begins to receive trading advice from the Advisor pursuant to this Agreement, by 1.5% and dividing the result thereof by 12) (the “Management Fee”).”

2.           Effective Date.                                This Amendment shall take effect as of the Effective Date.

3.           Counterparts and Facsimile Execution.                                                                This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute the same agreement.  Facsimile counterpart signature pages to this Amendment shall be acceptable and binding.

[Signatures to Follow]

IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to the Management Agreement to be duly executed and delivered as of the Effective Date.

MORGAN STANLEY SPECTRUM CURRENCY L.P.

By: Ceres Managed Futures LLC, its general partner

By:  _____________________________

Name:  Walter Davis

Title:    President

CERES MANAGED FUTURES LLC

By:  _____________________________

Name:  Walter Davis

Title:    President

THE CAMBRIDGE STRATEGY (ASSET MANAGEMENT) LIMITED

By:  _____________________________

Name:  David Russell Thompson

Title:  Chief Investment Officer

Signature Page to First Amendment to Management Agreement

EX-31.01

EXHIBIT 31.01

CERTIFICATIONS

I, Walter Davis, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Morgan Stanley Smith Barney Spectrum Currency and Commodity L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 13, 2012	By:	/s/Walter Davis
		Walter Davis
		President,
		Ceres Managed Futures LLC,
		General Partner of the registrant

EX-31.02

EXHIBIT 31.02

CERTIFICATIONS

I, Damian George certify that:

1. I have reviewed this quarterly report on Form 10-Q of Morgan Stanley Smith Barney Spectrum Currency and Commodity L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this  report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 13, 2012	By:	/s/  Damian George
		Damian George
		Chief Financial Officer,
		Ceres Managed Futures LLC,
		General Partner of the registrant

EX-32.01

EXHIBIT 32.01

CERTIFICATION OF PRESIDENT PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Morgan Stanley Smith Barney Spectrum Currency and Commodity L.P. (the “Partnership”) on Form 10-Q for the quarter ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Walter Davis, President of Ceres Managed Futures LLC, the General Partner of the Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

By:	/s/Walter Davis
Name:	Walter Davis
Title:	President  of
	Ceres Managed Futures LLC,
	General Partner of the registrant
Date:	November 13, 2012

EX-32.02

EXHIBIT 32.02

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Morgan Stanley Smith Barney Spectrum Currency and Commodity L.P. (the “Partnership”) on Form 10-Q for the quarter ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Damian George, Chief Financial Officer of Ceres Managed Futures LLC, the General Partner of the Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

By:	/s/  Damian George
Name:	Damian George
Title:	Chief Financial Officer of
	Ceres Managed Futures LLC,
	General Partner of the registrant
Date:	November 13, 2012

XML

Fair Value Measurements and Disclosures (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012		Sep. 30, 2012		Dec. 31, 2011
Assets and Liabilities Measured at Fair Value [Abstract]
Commodity Program Leverage	150.00%		150.00%
Summarized Information of Investments [Abstract]
Fair value	$ 17,822,493		$ 17,822,493		$ 0
KR Master Fund [Member]
Assets, Liabilities and Capital of Investments [Abstract]
Total Assets	117,357,253		117,357,253
Total Liabilities	1,440,308		1,440,308
Total Capital	115,916,945		115,916,945
Summarized Information of Investments [Abstract]
Percentage of partnership net assets (in hundredths)	41.44%		41.44%
Fair value	10,785,054		10,785,054		0
Partnerships's pro rata Net Income (Loss)	471,471		65,866
Investment Objective	Commodity Portfolio		Commodity Portfolio
Redemption Permitted	Monthly		Monthly
Percentage of partnership owned (in hundredths)	9.30%		9.30%
Income Statement Information for Investments [Abstract]
Investment income	15,048		39,080
Net investment loss	(173,873)		(368,147)
Total trading results	4,605,264		901,800
Net income	4,431,391		533,653
FL Master Fund [Member]
Assets, Liabilities and Capital of Investments [Abstract]
Total Assets	32,315,024		32,315,024
Total Liabilities	6,279,707		6,279,707
Total Capital	26,035,317		26,035,317
Summarized Information of Investments [Abstract]
Percentage of partnership net assets (in hundredths)	27.04%		27.04%
Fair value	7,037,439		7,037,439		0
Partnerships's pro rata Net Income (Loss)	262,976		(873,200)
Investment Objective	Commodity Portfolio		Commodity Portfolio
Redemption Permitted	Monthly		Monthly
Percentage of partnership owned (in hundredths)	26.94%		26.94%
Income Statement Information for Investments [Abstract]
Investment income	4,755		12,552
Net investment loss	(204,696)		(446,191)
Total trading results	979,760		(3,294,917)
Net income	775,064		(3,741,108)
Master Funds, Combined [Member]
Assets, Liabilities and Capital of Investments [Abstract]
Total Assets	149,672,277		149,672,277
Total Liabilities	7,720,015		7,720,015
Total Capital	141,952,262		141,952,262
Fair Value Measured on a Recurring Basis [Member]
Assets [Abstract]
Investment in KR	10,785,054		10,785,054
Investment in FL	7,037,439		7,037,439
Forwards	94,822		94,822		38,838
Options purchased					1,534
Total Assets	17,917,315		17,917,315		40,372
Liabilities [Abstract]
Forwards	49,881		49,881		162,699
Total Liabilities	49,881		49,881		162,699
Assets and Liabilities Measured at Fair Value [Abstract]
Unrealized currency gain	47,652		47,652		35,474
Net fair value	17,915,086	[1]	17,915,086	[1]	(86,853)	[1]
Fair Value Measured on a Recurring Basis [Member] | Unadjusted Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets [Abstract]
Investment in KR	0		0
Investment in FL	0		0
Forwards	0		0		0
Options purchased					0
Total Assets	0		0		0
Liabilities [Abstract]
Forwards	0		0		0
Total Liabilities	0		0		0
Assets and Liabilities Measured at Fair Value [Abstract]
Net fair value	0	[1]	0	[1]	0	[1]
Fair Value Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets [Abstract]
Investment in KR	10,785,054		10,785,054
Investment in FL	7,037,439		7,037,439
Forwards	94,822		94,822		38,838
Options purchased					1,534
Total Assets	17,917,315		17,917,315		40,372
Liabilities [Abstract]
Forwards	49,881		49,881		162,699
Total Liabilities	49,881		49,881		162,699
Assets and Liabilities Measured at Fair Value [Abstract]
Net fair value	17,867,434	[1]	17,867,434	[1]	(122,327)	[1]
Fair Value Measured on a Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets [Abstract]
Investment in KR
Investment in FL
Forwards
Options purchased
Total Assets
Liabilities [Abstract]
Forwards
Total Liabilities
Assets and Liabilities Measured at Fair Value [Abstract]
Net fair value		[1]		[1]		[1]

[1] This amount comprises the "Total net unrealized gain (loss) on open contracts" "Investment in KR Master Fund", "Investment in FL Master Fund" and "Options purchased" on the Statements of Financial Condition.

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Related Party Transactions

9 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions

3.  Related Party Transactions

The Partnership's cash is on deposit with MS&Co. in Futures Interests trading accounts to meet margin requirements as needed.  Monthly MS&Co. pays the Partnership interest income on 100% of the average

daily equity maintained in cash in the Partnership's account during each month at a rate equal to 80% of the monthly average of the 4-week U.S. Treasury bill discount rate.  For purposes of such interest payments, daily funds do not include monies due to the Partnership on or with respect to futures, forwards or options contracts that have not been received.  MS&Co. retains any interest earned in excess of the interest paid to the Partnership.  The Partnership pays brokerage fees to MS&Co.

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Financial Highlights

9 Months Ended

Sep. 30, 2012

Financial Highlights [Abstract]

Financial Highlights

2. Financial Highlights

Financial Highlights for the three and nine months ended September 30, 2012 and 2011 were as follows:

	For the Three Months Ended September 30,						For the Nine MonthsEnded September 30,
	2012			2011			2012			2011
Per Unit operating performance:
Net asset value at the beginning of the period:	$	7.89		$	8.84		$	8.63		$	9.57
Interest Income		–	(3)		–	(3)		–	(3)		–	(3)
Expenses		(0.13	)		(0.15	)		(0.41	)		(0.45	)
Realized/Unrealized Income (Loss) (1)		0.20			0.34			(0.26	)		(0.09	)
Net Income (Loss)		0.07			0.19			(0.67	)		(0.54	)
Net asset value, September 30:	$	7.96		$	9.03		$	7.96		$	9.03
Ratios to average net assets:
Net Investment Loss  (2)		(6.5	)%		(6.6	)%		(6.6	)%		(6.7	)%
Expenses before Incentive Fees (2)		6.6	%		6.6	%		6.7	%		6.8	%
Expenses after Incentive Fees (2)		6.6	%		6.6	%		6.7	%		6.8	%
Net Income (Loss)  (2)		3.7	%		8.6	%		(11.5	)%		(8.5	)%
Total return before incentive fees		0.9	%		2.1	%		(7.8	)%		(5.6	)%
Total return after incentive fees		0.9	%		2.1	%		(7.8	)%		(5.6	)%

(1) Realized/Unrealized Income (Loss) is a balancing amount necessary to reconcile the change in net asset value per Unit with the other per Unit information.

(2) Annualized (except for incentive fees if applicable).

(3) Amounts less than $0.005 per Unit.

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STATEMENTS OF FINANCIAL CONDITION (Unaudited) (USD $)	Sep. 30, 2012	Dec. 31, 2011
ASSETS
Investments in and Advances to Affiliates, Subsidiaries, Associates and Joint Ventures	$ 17,822,493	$ 0
Trading Equity:
Unrestricted cash	9,172,137	35,693,205
Restricted cash	0	125,600
Total cash	9,172,137	35,818,805
Net unrealized gain (loss) on open contracts (MS&Co.)	92,593	(88,387)
Options purchased (premiums paid $0 and $3,273, respectively)	0	1,534
Total Trading Equity	27,087,223	35,731,952
Interest receivable (MS&Co. & MSSB)	1,497	98
Total Assets	27,088,720	35,732,050
Liabilities:
Redemptions payable	915,495	724,150
Accrued brokerage fees (MS&Co.)	104,614	134,931
Accrued management fees	42,542	58,665
Total Liabilities	1,062,651	917,746
Partners' Capital:
Limited Partners (3,235,549.963 and 3,983,851.059 Units, respectively)	25,740,644	34,396,076
General Partner (35,877.343 and 48,440.343 Units, respectively)	285,425	418,228
Total Partners' Capital	26,026,069	34,814,304
Total Liabilities and Partners' Capital	27,088,720	35,732,050
NET ASSET VALUE PER UNIT (in dollars per unit)	$ 7.96	$ 8.63
KR Master Fund [Member]
ASSETS
Investments in and Advances to Affiliates, Subsidiaries, Associates and Joint Ventures	10,785,054	0
FL Master Fund [Member]
ASSETS
Investments in and Advances to Affiliates, Subsidiaries, Associates and Joint Ventures	$ 7,037,439	$ 0

XML

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (Unaudited) (USD $)	Total USD ($)	Unit Partnership Interest [Member]	Limited Partners [Member] USD ($)	General Partner [Member] USD ($)
Partner's Capital at Dec. 31, 2010	$ 48,021,806		$ 47,504,374	$ 517,432
Partner's Capital (in units) at Dec. 31, 2010		5,020,573.947
Increase (Decrease) in Partners' Capital [Roll Forward]
Net Loss	(2,662,263)		(2,632,380)	(29,883)
Redemptions	(6,022,480)		(5,972,481)	(49,999)
Redemptions (in units)		(665,637.947)
Partner's Capital at Sep. 30, 2011	39,337,063		38,899,513	437,550
Partner's Capital (in units) at Sep. 30, 2011		4,354,936.000
Partner's Capital at Dec. 31, 2011	34,814,304		34,396,076	418,228
Partner's Capital (in units) at Dec. 31, 2011		4,032,291.402
Increase (Decrease) in Partners' Capital [Roll Forward]
Net Loss	(2,561,411)		(2,528,609)	(32,802)
Redemptions	(6,226,824)		(6,126,823)	(100,001)
Redemptions (in units)		(760,864.096)
Partner's Capital at Sep. 30, 2012	$ 26,026,069		$ 25,740,644	$ 285,425
Partner's Capital (in units) at Sep. 30, 2012		3,271,427.306

XML

Related Party Transactions (Details)	9 Months Ended
	Sep. 30, 2012
Related Party Transactions [Abstract]
Cash holdings percentage for margin requirements used in interest income calculation (in hundredths)	100.00%
Percentage of monthly average of 4-week U.S. treasury bill discount rate as rate from partnership interest income (in hundredths)	80.00%

XML

Derivatives and Hedging (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Futures and Forward Contracts [Abstract]
Net unrealized gains (losses) on open contracts	$ 92,593		$ 92,593		$ (88,387)
Options Contracts at Fair Value [Abstract]
Options purchased	0		0		1,534
Options written	0		0		0
Effect of Trading Activities on Statements of Income [Abstract]
Trading results	693,799	1,505,964	(1,080,116)	(549,058)
Unrealized currency gain	15,256	(18,235)	12,178	(36,822)
Net realized	(168,008)	110,272	(455,500)	(805,585)
Net change in unrealized	127,362	1,395,692	182,719	256,527
Total Trading Results	693,799	1,505,964	(1,080,116)	(549,058)
Commodity [Member]
Effect of Trading Activities on Statements of Income [Abstract]
Trading results	682,995		(887,947)
Foreign Currency [Member]
Effect of Trading Activities on Statements of Income [Abstract]
Trading results	(4,452)	1,524,199	(204,347)	(512,236)
Futures and Forward Contracts [Member]
Futures and Forward Contracts [Abstract]
Net unrealized gains (losses) on open contracts	44,941		44,941		(123,861)
Unrealized currency gain	47,652		47,652		35,474
Futures and Forward Contracts [Member] | Foreign Currency [Member]
Futures and Forward Contracts [Abstract]
Net unrealized gains (losses) on open contracts	44,941		44,941		(123,861)
Average number of contracts outstanding	1,563		1,563		4,996
Futures and Forward Contracts [Member] | Options Purchased [Member]
Futures and Forward Contracts [Abstract]
Average number of contracts outstanding	1		1		1
Futures and Forward Contracts [Member] | Options Written [Member]
Futures and Forward Contracts [Abstract]
Average number of contracts outstanding	1		1		1
Futures and Forward Contracts [Member] | Long [Member]
Futures and Forward Contracts [Abstract]
Unrealized gain	74,102		74,102		34,016
Unrealized loss	(33,244)		(33,244)		(124,363)
Futures and Forward Contracts [Member] | Long [Member] | Foreign Currency [Member]
Futures and Forward Contracts [Abstract]
Unrealized gain	74,102		74,102		34,016
Unrealized loss	(33,244)		(33,244)		(124,363)
Futures and Forward Contracts [Member] | Short [Member]
Futures and Forward Contracts [Abstract]
Unrealized gain	20,720		20,720		4,823
Unrealized loss	(16,637)		(16,637)		(38,337)
Futures and Forward Contracts [Member] | Short [Member] | Foreign Currency [Member]
Futures and Forward Contracts [Abstract]
Unrealized gain	20,720		20,720		4,823
Unrealized loss	(16,637)		(16,637)		(38,337)
KR Master Fund [Member]
Effect of Trading Activities on Statements of Income [Abstract]
Realized gain (loss) on investment	810,662	0	250,819	0
Unrealized appreciation (depreciation) on investment	(339,193)	0	(184,954)	0
FL Master Fund [Member]
Effect of Trading Activities on Statements of Income [Abstract]
Realized gain (loss) on investment	(114,312)	0	(1,545,644)	0
Unrealized appreciation (depreciation) on investment	$ 377,288	$ 0	$ 672,444	$ 0

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Organization

9 Months Ended

Sep. 30, 2012

Organization [Abstract]

Organization

1.  Organization

Morgan Stanley Smith Barney Spectrum Currency and Commodity L.P. is a Delaware limited partnership organized in 1999 to engage primarily in the speculative trading of futures contracts, options on futures and forward contracts, and forward contracts on physical commodities and other commodity interests, including, but not limited to, foreign currencies, financial instruments, metals, energy, and agricultural products (collectively, "Futures Interests") (refer to Note 4, Financial Instruments).  The Partnership is one of the Morgan Stanley Spectrum series of funds, comprised of the Partnership, Morgan Stanley Smith Barney Spectrum Global Balanced L.P., Morgan Stanley Smith Barney Spectrum Select L.P., Morgan Stanley Smith Barney Spectrum Strategic L.P., and Morgan Stanley Smith Barney Spectrum Technical L.P. (collectively, the "Spectrum Series").

Ceres Managed Futures LLC, a Delaware limited liability company, acts as a general partner ("Ceres" or the "General Partner") and commodity pool operator of the Partnership.  Ceres is a wholly-owned subsidiary of Morgan Stanley Smith Barney Holdings LLC ("MSSBH").  MSSBH is majority-owned indirectly by Morgan Stanley and minority-owned indirectly by Citigroup Inc.  As of September 26, 2012, Morgan Stanley Smith Barney LLC ("MSSB") is doing business as Morgan Stanley Wealth Management.  This entity, where the Partnership continues to maintain a cash account previously acted as a non-clearing commodity broker for the Partnership.  The clearing commodity broker is Morgan Stanley & Co. LLC ("MS&Co.").  MS&Co. also acts as the counterparty on all trading of foreign currency forward contracts. Morgan Stanley Capital Group Inc. ("MSCG") acts as the counterparty on all trading of options on foreign currency forward contracts.  Morgan Stanley Wealth Management is a principal subsidiary of MSSBH.  MS&Co. and MSCG are wholly-owned subsidiaries of Morgan Stanley.  The trading advisors to the Partnership are C-View International Limited ("C-View"), Flintlock Capital Asset Management, LLC ("Flintlock") and Krom River Investment Management (Cayman) Limited (together with its affiliate, Krom River Trading AG) ("Krom River") (each individually, a "Trading Advisor", or collectively, the "Trading Advisors").

Flintlock and Krom River manage the assets of the Partnership through its investments in FL Master Fund L.P. ("FL Master Fund") and KR Master Fund L.P. ("KR Master Fund"), respectively.  Ceres is a general partner to FL Master Fund and KR Master Fund.

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STATEMENTS OF FINANCIAL CONDITION (Unaudited) (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Trading Equity:
Options purchased, premiums paid	$ 0	$ 3,273
Partners' Capital:
Limited Partners, Units (in units)	3,235,549.963	3,983,851.059
General Partner, Units (in units)	35,877.343	48,440.343

XML

Financial Highlights (Tables)

9 Months Ended

Sep. 30, 2012

Financial Highlights [Abstract]

Financial Information Additional Disclosure

Financial Highlights for the three and nine months ended September 30, 2012 and 2011 were as follows:

	For the Three Months Ended September 30,						For the Nine MonthsEnded September 30,
	2012			2011			2012			2011
Per Unit operating performance:
Net asset value at the beginning of the period:	$	7.89		$	8.84		$	8.63		$	9.57
Interest Income		–	(3)		–	(3)		–	(3)		–	(3)
Expenses		(0.13	)		(0.15	)		(0.41	)		(0.45	)
Realized/Unrealized Income (Loss) (1)		0.20			0.34			(0.26	)		(0.09	)
Net Income (Loss)		0.07			0.19			(0.67	)		(0.54	)
Net asset value, September 30:	$	7.96		$	9.03		$	7.96		$	9.03
Ratios to average net assets:
Net Investment Loss  (2)		(6.5	)%		(6.6	)%		(6.6	)%		(6.7	)%
Expenses before Incentive Fees (2)		6.6	%		6.6	%		6.7	%		6.8	%
Expenses after Incentive Fees (2)		6.6	%		6.6	%		6.7	%		6.8	%
Net Income (Loss)  (2)		3.7	%		8.6	%		(11.5	)%		(8.5	)%
Total return before incentive fees		0.9	%		2.1	%		(7.8	)%		(5.6	)%
Total return after incentive fees		0.9	%		2.1	%		(7.8	)%		(5.6	)%

(1) Realized/Unrealized Income (Loss) is a balancing amount necessary to reconcile the change in net asset value per Unit with the other per Unit information.

(2) Annualized (except for incentive fees if applicable).

(3) Amounts less than $0.005 per Unit.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	MORGAN STANLEY SMITH BARNEY SPECTRUM CURRENCY & COMMODITY L.P.
Entity Central Index Key	0001097396
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012

XML

Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Financial Instruments [Abstract]

Net Unrealized Gain (Loss) on Open Contracts

The net unrealized gains (losses) on open contracts, reported as a component of "Trading Equity" on the Statements of Financial Condition, and their longest contract maturities were as follows:

	Net Unrealized Gains (Losses) on Open Contracts			Longest Maturities
Date	Exchange-Traded	Off-Exchange-Traded	Total	Exchange-Traded	Off-Exchange-Traded
	$	$	$
Sep. 30, 2012	—	92,593	92,593	—	Oct. 2012
Dec. 31, 2011	—	(88,387)	(88,387)	—	Mar. 2012

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CONDENSED SCHEDULE OF INVESTMENTS (Unaudited) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Investment Holdings [Line Items]
Unrealized Currency Gain	$ 47,652	$ 35,474
Unrealized Currency Gain % of Partners' Capital (in hundredths)	0.18%	0.10%
Net fair value	92,593	(88,387)
Fair Value % of Partners' Capital (in hundredths)	0.36%	(0.25%)
Futures And Forward Contracts [Member] | Contracts Purchased [Member]
Investment Holdings [Line Items]
Net unrealized gain/(loss) on open contracts	40,858	(90,347)
% of Partners' Capital (in hundredths)	0.16%	(0.25%)
Futures And Forward Contracts [Member] | Contracts Purchased [Member] | Foreign Currency [Member]
Investment Holdings [Line Items]
Net unrealized gain/(loss) on open contracts	40,858	(90,347)
% of Partners' Capital (in hundredths)	0.16%	(0.25%)
Futures And Forward Contracts [Member] | Contracts Sold [Member]
Investment Holdings [Line Items]
Net unrealized gain/(loss) on open contracts	4,083	(33,514)
% of Partners' Capital (in hundredths)	0.02%	(0.10%)
Futures And Forward Contracts [Member] | Contracts Sold [Member] | Foreign Currency [Member]
Investment Holdings [Line Items]
Net unrealized gain/(loss) on open contracts	4,083	(33,514)
% of Partners' Capital (in hundredths)	0.02%	(0.10%)
Options Contracts [Member] | Contracts Purchased [Member] | Forward Contracts [Member]
Investment Holdings [Line Items]
Net fair value		$ 1,534
Fair Value % of Partners' Capital (in hundredths)		0.00%	[1]

[1] Amounts less than 0.005%

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Fair Value Measurements and Disclosures

9 Months Ended

Sep. 30, 2012

Fair Value Measurements and Disclosures [Abstract]

Fair Value Measurements and Disclosures

6.  Fair Value Measurements and Disclosures

Effective January 1, 2012, the Partnership adopted Accounting Standards Update ("ASU") 2011-04,

 "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in the accounting principles generally accepted in the United States of America ("U.S. GAAP") and International Financial Reporting Standards ("IFRS").  The amendments within this ASU change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements to eliminate unnecessary wording differences between U.S. GAAP and IFRS.  However, some of the amendments clarify the FASB's intent about the application of existing fair value measurement requirements and other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements.  This new guidance did not have a significant impact on the Partnership's financial statements.

Financial instruments are carried at fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  Assets and liabilities carried at fair value are classified and disclosed in the following three levels: Level 1 - unadjusted quoted market prices in active markets for identical assets and liabilities; Level 2 - inputs other than unadjusted quoted market prices that are observable for the asset or liability, either directly or indirectly (including unadjusted quoted market prices for similar investments, interest rates, credit risk); and Level 3 - unobservable inputs for the asset or liability (including the Partnership's own assumptions used in determining the fair value of investments).

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.  The Partnership's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.

The Partnership's assets and liabilities measured at fair value on a recurring basis are summarized in the following tables by the type of inputs applicable to the fair value measurements.

September 30, 2012	Unadjusted Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	$		$				$
Assets
Investment in KR Master Fund		–		10,785,054		n/a		10,785,054
Investment in FL Master Fund		–		7,037,439		n/a		7,037,439
Forwards		–		94,822		n/a		94,822
Total Assets		–		17,917,315		n/a		17,917,315
Liabilities
Forwards		–		49,881		n/a		49,881
Total Liabilities		–		49,881		n/a		49,881
Unrealized currency gain								47,652
*Net fair value		–		17,867,434		n/a		17,915,086

December 31, 2011	Unadjusted Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)	Total
	$		$			$		$
Assets
Forwards		–		38,838			n/a		38,838
Options Purchased		–		1,534			n/a		1,534
Total Assets		–		40,372			n/a		40,372
Liabilities
Forwards		–		162,699			n/a		162,699
Total Liabilities		–		162,699			n/a		162,699
Unrealized currency gain									35,474
*Net fair value		–		(122,327	)		n/a		(86,853	)

* This amount comprises the "Total net unrealized gain (loss) on open contracts" "Investment in KR Master Fund", "Investment in FL Master Fund" and "Options purchased" on the Statements of Financial Condition.

During the period January 1, 2012 to September 30, 2012, there were no Level 3 assets and liabilities and there were no transfers of assets or liabilities between Level 1 and Level 2.

Investment in FL Master Fund and KR Master Fund

On January 1, 2012, the assets allocated to Flintlock for trading were invested in FL Master Fund, a limited partnership organized under the partnership laws of the State of Delaware.  FL Master Fund was formed to permit accounts managed now or in the future by Flintlock using the 2x Flintlock Commodity Opportunities Partners, LP, a proprietary, systematic trading program, to invest together in one trading vehicle.  The General Partner is also the general partner for FL Master Fund.  Individual and pooled accounts currently managed by Flintlock, including the Partnership, are permitted to be limited partners of FL Master Fund.  The General Partner and Flintlock believe that trading through this structure should promote efficiency and economy in the trading process.

On January 1, 2012, the assets allocated to Krom River for trading were invested in the KR Master Fund, a limited partnership organized under the partnership laws of the State of Delaware.  KR Master was formed in order to permit commodity pools managed now or in the future by Krom River using the Commodity Program at 150% Leverage, a fundamental and technical trading system, to invest together in one trading vehicle.  The General Partner is also the general partner of KR Master Fund.  Individual and pooled accounts currently managed by Krom River, including the Partnership, are permitted to be limited partners of KR Master Fund.  The General Partner and Krom River believe that trading through this structure should promote efficiency and economy in the trading process.

Summarized information reflecting the total assets, liabilities and capital of FL Master Fund and KR Master Fund is shown in the following tables.

		September 30, 2012
	Total Assets	Total Liabilities	Total Capital
FL Master Fund	$32,315,024	$6,279,707	26,035,317
KR Master Fund	$117,357,253	$1,440,308	115,916,945
	$149,672,277	$7,720,015	141,952,262

Summarized information for the Partnership's investment in FL Master Fund and KR Master Fund is shown in the following tables:

                                                                             September 30, 2012                                                          For the three months ended September 30, 2012

	% of Partnership  Net Assets		Fair Value		Partnership's  pro rata Net Income		Investment Objective	Redemption  Permitted
	%		$					$
FL Master Fund		27.04		7,037,439		262,976	Commodity	Monthly
							Portfolio
KR Master Fund		41.44		10,785,054		471,471	Commodity	Monthly
							Portfolio

September 30, 2012                                                          For the nine months ended September 30, 2012

	% of Partnership  Net Assets		Fair Value		Partnership's  pro rata Net Income (Loss)			Investment Objective	Redemption  Permitted
	%		$						$
FL Master Fund		27.04		7,037,439		(873,200	)	Commodity	Monthly
								Portfolio
KR Master Fund		41.44		10,785,054		65,866		Commodity	Monthly
								Portfolio

The Partnership's investment into FL Master Fund and KR Master Fund do not pay any management, incentive, or administrative fee.  These fees are paid by the Partnership.  The Partnership reimburses FL Master Fund and KR Master Fund for all brokerage related fees borne by FL Master Fund and KR Master Fund on behalf of the Partnership's investment.

As of September 30, 2012, the Partnership owned approximately 26.94% and 9.30% of FL Master Fund and KR Master Fund, respectively.  It is the Partnership's intention to continue to invest in FL Master Fund and KR Master Fund.  The performance of the Partnership is directly affected by the performance of FL Master Fund and KR Master Fund.

The tables below represent summarized Income Statement information for FL Master Fund and KR Master Fund for the three and nine months ended September 30, 2012, to meet the requirements of Regulation S-X rule 3-09, as follows.

For the Three Months Ended September 30, 2012	Investment Income		Net  Investment Loss			Total Trading Results		Net Income
	$		$			$		$
FL Master Fund		4,755		(204,696	)		979,760		775,064
KR Master Fund		15,048		(173,873	)		4,605,264		4,431,391

For the Nine Months Ended September 30, 2012	Investment Income		Net  Investment Loss			Total Trading Results			Net Income (Loss)
	$		$			$			$
FL Master Fund		12,552		(446,191	)		(3,294,917	)		(3,741,108	)
KR Master Fund		39,080		(368,147	)		901,800			533,653

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Derivatives and Hedging

9 Months Ended

Sep. 30, 2012

Derivatives and Hedging [Abstract]

Derivatives and Hedging

5.  Derivatives and Hedging

The Partnership's objective is to profit from speculative trading in Futures Interests.  Therefore, the

Trading Advisors for the Partnership will take speculative positions in Futures Interests where they feel the best profit opportunities exist for their trading strategy.  As such, the average number of contracts

outstanding in absolute quantities (the total of the open long and open short positions) has been presented as a part of the volume disclosure, as position direction is not an indicative factor in such volume disclosures.  With regard to foreign currency forward trades, each notional quantity amount has been converted to an equivalent contract based upon an industry convention.

The following tables summarize the valuation of the Partnership's investments as of September 30, 2012 and December 31, 2011, respectively.

The Effect of Trading Activities on the Statements of Financial Condition as of September 30, 2012:

Futures and Forward Contracts	Long Unrealized Gain		Long Unrealized Loss			Short Unrealized Gain		Short Unrealized Loss			Net Unrealized Gain		Average number of contracts outstanding for the nine months (absolute quantity)
	$		$			$		$					$
Foreign currency		74,102		(33,244	)		20,720		(16,637	)		44,941		1,563
Total		74,102		(33,244	)		20,720		(16,637	)		44,941
Unrealized currency gain												47,652
Total net unrealized gain on open contracts												92,593

		Average number of
		contracts outstanding
		for the nine months
		(absolute quantity)
Option Contracts at Fair Value		$
Options purchased	–		1
Options written	–		1

The Effect of Trading Activities on the Statements of Financial Condition as of December 31, 2011:

Futures and Forward Contracts	Long Unrealized Gain		Long Unrealized Loss			Short Unrealized Gain		Short Unrealized Loss			Net Unrealized  Gain/(Loss)			Average number of contracts outstanding  for the year (absolute quantity)
	$		$			$		$						$
Foreign currency		34,016		(124,363	)		4,823		(38,337	)		(123,861	)		4,996
Total		34,016		(124,363	)		4,823		(38,337	)		(123,861	)
Unrealized currency gain												35,474
Total net unrealized  loss on open contracts												(88,387	)

		Average number of
		contracts outstanding
		for the year
		(absolute quantity)
Option Contracts at Fair Value		$
Options purchased	1,534		1
Options written	–		1

The following tables summarize the net trading results of the Partnership for the three and nine months ended September 30, 2012 and 2011, respectively.

The Effect of Trading Activities on the Statements of Income and Expenses for the Three and Nine Months Ended September 30, 2012 included in Total Trading Results:

	For the Three Months				For the Nine Months
	Ended September 30, 2012				Ended September 30, 2012
Type of Instrument				$	$
Commodity		682,995				(887,947	)
Foreign currency		(4,452	)			(204,347	)
Unrealized currency gain		15,256				12,178
Total		693,799				(1,080,116	)

Line Items on the Statements of Income and Expenses for the Three and Nine Months Ended September 30, 2012:

	For the Three Months				For the Nine Months
	Ended September 30, 2012				Ended September 30, 2012
Trading Results				$	$
Net realized		(168,008	)			(455,500	)
Net change in unrealized		127,362				182,719
Realized gain on investment in KR Master Fund		810,662				250,819
Realized loss on investment in FL Master Fund		(114,312	)			(1,545,644	)
Unrealized appreciation on investment in FL Master Fund		377,288				672,444
Unrealized depreciation on investment in KR Master Fund		(339,193	)			(184,954	)
Total Trading Results		693,799				(1,080,116	)

The Effect of Trading Activities on the Statements of Income and Expenses for the Three and Nine Months Ended September 30, 2011 included in Total Trading Results:

	For the Three Months				For the Nine Months
	Ended September 30, 2011				Ended September 30, 2011
Type of Instrument				$	$
Foreign currency		1,524,199				(512,236	)
Unrealized currency loss		(18,235	)			(36,822	)
Total		1,505,964				(549,058	)

Line Items on the Statements of Income and Expenses for the Three and Nine Months Ended September 30, 2011:

	For the Three Months			For the Nine Months
	Ended September 30, 2011			Ended September 30, 2011
Trading Results			$	$
Net realized		110,272			(805,585	)
Net change in unrealized		1,395,692			256,527
Total Trading Results		1,505,964			(549,058	)

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Financial Instruments (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Investment Holdings [Line Items]
Net unrealized gains (losses) on open contracts	$ 92,593	$ (88,387)
Cash held by acting commodity futures brokers administrating open contracts	9,172,137	35,818,805
Exchange-Traded [Member]
Investment Holdings [Line Items]
Net unrealized gains (losses) on open contracts	0	0
Off-Exchange-Traded [Member]
Investment Holdings [Line Items]
Net unrealized gains (losses) on open contracts	$ 92,593	$ (88,387)
Longest maturity date	Oct. 31, 2012	Mar. 31, 2012

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Derivatives and Hedging (Tables)

9 Months Ended

Sep. 30, 2012

Derivatives and Hedging [Abstract]

Schedule of Effect Trading Activities on the Statements of Financial Condition

The Effect of Trading Activities on the Statements of Financial Condition as of September 30, 2012:

Futures and Forward Contracts	Long Unrealized Gain		Long Unrealized Loss			Short Unrealized Gain		Short Unrealized Loss			Net Unrealized Gain		Average number of contracts outstanding for the nine months (absolute quantity)
	$		$			$		$					$
Foreign currency		74,102		(33,244	)		20,720		(16,637	)		44,941		1,563
Total		74,102		(33,244	)		20,720		(16,637	)		44,941
Unrealized currency gain												47,652
Total net unrealized gain on open contracts												92,593

		Average number of
		contracts outstanding
		for the nine months
		(absolute quantity)
Option Contracts at Fair Value		$
Options purchased	–		1
Options written	–		1

The Effect of Trading Activities on the Statements of Financial Condition as of December 31, 2011:

Futures and Forward Contracts	Long Unrealized Gain		Long Unrealized Loss			Short Unrealized Gain		Short Unrealized Loss			Net Unrealized  Gain/(Loss)			Average number of contracts outstanding  for the year (absolute quantity)
	$		$			$		$						$
Foreign currency		34,016		(124,363	)		4,823		(38,337	)		(123,861	)		4,996
Total		34,016		(124,363	)		4,823		(38,337	)		(123,861	)
Unrealized currency gain												35,474
Total net unrealized  loss on open contracts												(88,387	)

		Average number of
		contracts outstanding
		for the year
		(absolute quantity)
Option Contracts at Fair Value		$
Options purchased	1,534		1
Options written	–		1

Schedule of Effect Trading Activities on the Statements of Income and Expenses

The following tables summarize the net trading results of the Partnership for the three and nine months ended September 30, 2012 and 2011, respectively.

The Effect of Trading Activities on the Statements of Income and Expenses for the Three and Nine Months Ended September 30, 2012 included in Total Trading Results:

	For the Three Months				For the Nine Months
	Ended September 30, 2012				Ended September 30, 2012
Type of Instrument				$	$
Commodity		682,995				(887,947	)
Foreign currency		(4,452	)			(204,347	)
Unrealized currency gain		15,256				12,178
Total		693,799				(1,080,116	)

Line Items on the Statements of Income and Expenses for the Three and Nine Months Ended September 30, 2012:

	For the Three Months				For the Nine Months
	Ended September 30, 2012				Ended September 30, 2012
Trading Results				$	$
Net realized		(168,008	)			(455,500	)
Net change in unrealized		127,362				182,719
Realized gain on investment in KR Master Fund		810,662				250,819
Realized loss on investment in FL Master Fund		(114,312	)			(1,545,644	)
Unrealized appreciation on investment in FL Master Fund		377,288				672,444
Unrealized depreciation on investment in KR Master Fund		(339,193	)			(184,954	)
Total Trading Results		693,799				(1,080,116	)

The Effect of Trading Activities on the Statements of Income and Expenses for the Three and Nine Months Ended September 30, 2011 included in Total Trading Results:

	For the Three Months				For the Nine Months
	Ended September 30, 2011				Ended September 30, 2011
Type of Instrument				$	$
Foreign currency		1,524,199				(512,236	)
Unrealized currency loss		(18,235	)			(36,822	)
Total		1,505,964				(549,058	)

Line Items on the Statements of Income and Expenses for the Three and Nine Months Ended September 30, 2011:

	For the Three Months			For the Nine Months
	Ended September 30, 2011			Ended September 30, 2011
Trading Results			$	$
Net realized		110,272			(805,585	)
Net change in unrealized		1,395,692			256,527
Total Trading Results		1,505,964			(549,058	)

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Income Taxes

9 Months Ended

Sep. 30, 2012

Income Taxes [Abstract]

Income Taxes

9.  Income Taxes

No provision for income taxes has been made in the accompanying financial statements, as partners are

individually responsible for reporting income or loss based upon their respective share of the Partnership's revenues or expenses for income tax purposes. The Partnership files U.S. federal and state tax returns.

This guidance issued by the FASB on income taxes clarifies the accounting for uncertainty in income taxes recognized in the Partnership's financial statements, and prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken.  The Partnership has concluded that there are no significant uncertain tax positions

that would require recognition in the financial statements as of September 30, 2012 and December 31, 2011.  If applicable, the Partnership recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statements of Income and Expenses.  Generally, the 2009 through 2011 tax years remain subject to examination by U.S. federal and most state tax authorities.  No income tax returns are currently under examination.

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Other Pronouncements

9 Months Ended

Sep. 30, 2012

Other Pronouncements [Abstract]

Other Pronouncements

7.  Other Pronouncements

In December 2011, the FASB issued ASU 2011-11, "Disclosures about Offsetting Assets and Liabilities", which creates a new disclosure requirement about the nature of an entity's rights of setoff and the related arrangements associated with its financial instruments and derivative instruments. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Partnership should also provide the disclosures retrospectively for all comparative periods presented.  The Partnership is currently evaluating the impact that the pronouncement would have on the financial statements. 

In October 2011, the FASB issued a proposed ASU intended to improve and converge financial reporting by setting forth consistent criteria for determining whether an entity is an investment company.  Under longstanding U.S. GAAP, investment companies carry all of their investments at fair value, even if they hold a controlling interest in another company.  The primary changes being proposed by the FASB relate to which entities would be considered investment companies as well as certain disclosure and presentation requirements.  In addition to the changes to the criteria for determining whether an entity is an investment company, the FASB also proposes that an investment company be required to consolidate another investment company if it holds a controlling financial interest in the entity.  In August 2012, the FASB updated the proposed ASU to state that entities regulated under the Investment Company Act of 1940 should qualify to be investment companies within the proposed investment company guidance.  The Partnership will evaluate the impact that this proposed update would have on the financial statements once the pronouncement is issued.

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Restricted and Unrestricted Cash

9 Months Ended

Sep. 30, 2012

Restricted and Unrestricted Cash [Abstract]

Restricted and Unrestricted Cash

8. Restricted and Unrestricted Cash

As reflected on the Partnership's Statements of Financial Condition, restricted cash equals the cash portion of assets on deposit to meet margin requirements plus the cash required to offset unrealized losses on foreign

currency forwards and options contracts and offset unrealized losses on offset London Metal Exchange positions.  All of these amounts are maintained separately.  Cash that is not classified as restricted cash is therefore classified as unrestricted cash.

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Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

10.  Subsequent Events

Management of Ceres performed its evaluation of subsequent events through the date of filing, and has determined that there were no subsequent events requiring adjustment of or disclosure in the financial statements other than disclosed below.

Effective the close of business on October 10, 2012, the General Partner terminated the management agreement dated as of November 1, 2010 and as amended on November 29, 2010, between Ceres, Flintlock and the Partnership.  Consequently Flintlock ceased all trading on behalf of the Partnership effective October 10, 2012.

On October 22, 2012, the General Partner, The Cambridge Strategy (Asset Management) Limited ("Cambridge") and the Partnership entered into a management agreement pursuant to which, effective November 1, 2012, Cambridge would serve as a trading advisor to the Partnership and will trade its allocated portion of the Partnership's net assets pursuant to Cambridge Asian Markets Alpha Programme.

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Financial Highlights (Details) (USD $)	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011
Per Unit operating performance [Abstract]
Net asset value, period start (in dollars per unit)	$ 7.89		$ 8.84		$ 8.63		$ 9.57
Interest Income (in dollars per unit)	$ 0		$ 0		$ 0		$ 0
Expenses (in dollars per unit)	$ (0.13)		$ (0.15)		$ (0.41)		$ (0.45)
Realized/Unrealized Income (Loss) (in dollars per unit)	$ 0.20	[1]	$ 0.34	[1]	$ (0.26)	[1]	$ (0.09)	[1]
Net Income (Loss) (in dollars per unit)	$ 0.07	[2]	$ 0.19	[2]	$ (0.67)	[2]	$ (0.54)	[2]
Net asset value, period end (in dollars per unit)	$ 7.96		$ 9.03		$ 7.96		$ 9.03
Threshold value per outstanding limited partnership unit during the period, below which amount is not presented (in dollars per unit)	$ 0.005		$ 0.005		$ 0.005		$ 0.005
Ratios to average net assets [Abstract]
Net Investment Loss (in hundredths)	(6.50%)	[3]	(6.60%)	[3]	(6.80%)	[3]	(6.70%)	[3]
Expenses before Incentive Fees (in hundredths)	6.60%	[3]	6.60%	[3]	6.70%	[3]	6.80%	[3]
Expenses after Incentive Fees (in hundredths)	6.60%	[3]	6.60%	[3]	6.70%	[3]	6.80%	[3]
Net Income (Loss) (in hundredths)	3.70%	[3]	8.60%	[3]	(11.50%)	[3]	(8.50%)	[3]
Total return before incentive fees (in hundredths)	0.90%		2.10%		(7.80%)		(5.60%)
Total return after incentive fees (in hundredths)	0.90%		2.10%		(7.80%)		(5.60%)

[1] Realized/Unrealized Income (Loss) is a balancing amount necessary to reconcile the change in net asset value per Unit with the other per Unit information.

[2] Based on change in net asset value per Unit.

[3] Annualized (except for incentive fees if applicable).

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STATEMENTS OF INCOME AND EXPENSES (Unaudited) (USD $)	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011
INVESTMENT INCOME
Interest income (MS&Co. & MSSB)	$ 5,039		$ 1,379		$ 12,548		$ 14,048
EXPENSES
Brokerage fees (MS&Co.)	318,607		457,279		1,061,365		1,482,631
Management fees	129,835		198,817		432,478		644,622
Total Expenses	448,442		656,096		1,493,843		2,127,253
NET INVESTMENT LOSS	(443,403)		(654,717)		(1,481,295)		(2,113,205)
Trading profit (loss):
Net realized	(168,008)		110,272		(455,500)		(805,585)
Net change in unrealized	127,362		1,395,692		182,719		256,527
Total Trading Results	693,799		1,505,964		(1,080,116)		(549,058)
NET INCOME (LOSS)	250,396		851,247		(2,561,411)		(2,662,263)
NET INCOME (LOSS) ALLOCATION
Limited Partners	247,126		842,034		(2,528,609)		(2,632,380)
General Partner	3,270		9,213		(32,802)		(29,883)
NET INCOME (LOSS) PER UNIT
Limited Partners (in dollars per unit)	$ 0.07	[1]	$ 0.19	[1]	$ (0.67)	[1]	$ (0.54)	[1]
General Partner (in dollars per unit)	$ 0.07	[1]	$ 0.19	[1]	$ (0.67)	[1]	$ (0.54)	[1]
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING (in units)	3,467,451.000		4,474,983.699		3,711,953.185		4,724,481.025
KR Master Fund [Member]
Trading profit (loss):
Realized gain (loss) on investment	810,662		0		250,819		0
Unrealized appreciation (depreciation) on investment in Master Fund	(339,193)		0		(184,954)		0
FL Master Fund [Member]
Trading profit (loss):
Realized gain (loss) on investment	(114,312)		0		(1,545,644)		0
Unrealized appreciation (depreciation) on investment in Master Fund	$ 377,288		$ 0		$ 672,444		$ 0

[1] Based on change in net asset value per Unit.

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Financial Instruments

9 Months Ended

Sep. 30, 2012

Financial Instruments [Abstract]

Financial Instruments

4.  Financial Instruments

The Partnership trades Futures Interests.  Futures and forwards represent contracts for delayed delivery of an instrument at a specified date and price.  Futures Interests are open commitments until settlement date, at which time they are realized.  They are valued at fair value, generally on a daily basis, and the unrealized gains and losses on open contracts (the difference between contract trade price and market price) are reported in the Statements of Financial Condition as a net unrealized gain or loss on open contracts.  The resulting net change in unrealized gains and losses is reflected in the "Net change in unrealized" trading profit (loss), "Unrealized appreciation on investment in FL Master Fund" and "Unrealized appreciation on investment in KR Master Fund" for open contracts from one period to the next on the Statements of Income and Expenses.  The fair value of exchange-traded futures, options and forward contracts is determined by the various futures exchanges, and reflects the settlement price for each contract as of the close of business on the last business day of the reporting period.  The fair value of foreign currency forward contracts is extrapolated on a forward basis from the spot prices quoted as of approximately 3:00 P.M. (E.T.) of the last business day of the reporting period from various exchanges.  The fair value of non-exchange-traded foreign

currency option contracts is calculated by applying an industry standard model application for options valuation of foreign currency options, using as input the spot prices, interest rates, and option implied volatilities quoted as of approximately 3:00 P.M. (E.T.) on the last business day of the reporting period.  Risk arises from changes in the value of these contracts and the potential inability of counterparties to perform under the terms of the contracts.  There are numerous factors which may significantly influence the fair value of these contracts, including interest rate volatility.

The Partnership may invest in Master Funds.  The Partnership records its investments in Master Funds at fair value.

The Partnership may buy or write put and call options through listed exchanges and the over-the-counter market.  The buyer of an option has the right to purchase (in the case of a call option) or sell (in the case of a put option) a specified quantity of a specific Futures Interest on the underlying assets at a specified price prior to or on a specified expiration date.  The writer of an option is exposed to the risk of loss if the fair value of the Futures Interest on the underlying asset declines (in the case of a put option) or increases (in the case of a call option).  The writer of an option can never profit by more than the premium paid by the buyer but can potentially lose an unlimited amount.

Premiums received/premiums paid from writing/purchasing options are recorded as liabilities/assets on the Statements of Financial Condition and are subsequently adjusted to fair values.  The difference between the fair value of the option and the premiums received/premiums paid is treated as an unrealized gain or loss within the Statements of Income and Expenses.

The fair value of exchange-traded contracts is based on the settlement price quoted by the exchange on the day with respect to which fair value is being determined.  If an exchange-traded contract could not have been liquidated on such day due to the operation of daily limits or other rules of the exchange, the settlement price will be equal to the settlement price on the first subsequent day on which the contract could be liquidated.

The Partnership's contracts are accounted for on a trade-date basis and marked to market on a daily basis.  The Partnership accounts for its derivative investments as described in Note 5, Derivatives and Hedging as required by the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC").  A derivative is defined as a financial instrument or other contract that has all three of the following characteristics:

1)   a) One or more "underlyings" and b) one or more "notional amounts" or payment provisions or both;

2)   Requires no initial net investment or a smaller initial net investment than would be required for other types of contracts that would be expected to have a similar response relative to changes in market factors; and

3)   Terms that require or permit net settlement.

Generally, derivatives include futures, forwards, swaps or options contracts, and other financial instruments with similar characteristics such as caps, floors, and collars.

The net unrealized gains (losses) on open contracts, reported as a component of "Trading Equity" on the Statements of Financial Condition, and their longest contract maturities were as follows:

	Net Unrealized Gains (Losses) on Open Contracts			Longest Maturities
Date	Exchange-Traded	Off-Exchange-Traded	Total	Exchange-Traded	Off-Exchange-Traded
	$	$	$
Sep. 30, 2012	—	92,593	92,593	—	Oct. 2012
Dec. 31, 2011	—	(88,387)	(88,387)	—	Mar. 2012

In general, the risks associated with off-exchange-traded contracts are greater than those associated with exchange-traded contracts because of the greater risk of default by the counterparty to an off-exchange-traded contract.  The Partnership has credit risk associated with counterparty nonperformance.  As of the date of the financial statements, the credit risk associated with the instruments in which the Partnership trades is limited to the unrealized gain amounts reflected in the Partnership's Statements of Financial Condition.  The net unrealized gains (losses) on open contracts is further disclosed gross by type of contract and corresponding fair value level in Note 6, Fair Value Measurements and Disclosures.

The Partnership also has credit risk because MS&Co. and/or MSCG act as the futures commission merchants or the counterparties with respect to most of the Partnership's assets. Exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts are fair valued on a daily basis, with variations in value settled on a daily basis. MS&Co., as a commodity futures broker for the Partnership's exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts, is required, pursuant to regulations of the Commodity Futures Trading Commission ("CFTC"), to segregate from their own assets, and for the sole benefit of its commodity customers, total cash held by it with respect to exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts, including an amount equal to the net unrealized gains on all open exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts, which funds, in the aggregate, totaled $9,172,137 and $35,818,805 at September 30, 2012, and December 31, 2011, respectively.  With respect to the Partnership's off-exchange-traded forward currency contracts and forward currency options contracts, there are no daily settlements of variation in value, nor is there any requirement that an amount equal to the net unrealized gains (losses) on such contracts be segregated.  However, the Partnership is required to meet margin requirements equal to the net unrealized loss on open forward currency contracts in the Partnership accounts with the counterparty, which is accomplished by daily maintenance of the cash balance in a custody account held at  MS&Co. With respect to those off-exchange-traded forward currency contracts, the Partnership is at risk to the ability of MS&Co., the sole counterparty on all such contracts, to perform. With respect to those off-exchange-traded forward currency options contracts, the Partnership is at risk to the ability of MSCG, the sole counterparty on all such contracts, to perform.   The Partnership has a netting agreement with each counterparty.  The primary terms are based on industry standard master agreements.  These agreements, which seek to reduce both the Partnership's and the counterparties' exposure on off-exchange-traded forward currency contracts, including options on such contracts, should materially decrease the Partnership's credit risk in the event of MS&Co.'s or MSCG's bankruptcy or insolvency.

The General Partner monitors and attempts to control the Partnership's 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 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, online monitoring systems provide account analysis of futures, forwards and options positions by sector, margin requirements, gain and loss transactions and collateral positions.

The futures, forwards and options traded by the Partnership involve varying degrees of related market risk.  Market risk is often dependent upon changes in the level or volatility of interest rates, exchange rates, and prices of financial instruments and commodities, factors that result in frequent changes in the fair value of the Partnership's open positions, and consequently in its earnings, whether realized or unrealized, and cash flow.  Gains and losses on open positions of exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts are settled daily through variation margin.  Gains and losses on off-exchange-traded forward currency contracts are settled upon termination of the contract.  Gains and losses on off-exchange-traded forward currency options contracts are settled on an agreed-upon settlement date.

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Fair Value Measurements and Disclosures (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Measurements and Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Partnership's assets and liabilities measured at fair value on a recurring basis are summarized in the following tables by the type of inputs applicable to the fair value measurements.

September 30, 2012	Unadjusted Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	$		$				$
Assets
Investment in KR Master Fund		–		10,785,054		n/a		10,785,054
Investment in FL Master Fund		–		7,037,439		n/a		7,037,439
Forwards		–		94,822		n/a		94,822
Total Assets		–		17,917,315		n/a		17,917,315
Liabilities
Forwards		–		49,881		n/a		49,881
Total Liabilities		–		49,881		n/a		49,881
Unrealized currency gain								47,652
*Net fair value		–		17,867,434		n/a		17,915,086

December 31, 2011	Unadjusted Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)	Total
	$		$			$		$
Assets
Forwards		–		38,838			n/a		38,838
Options Purchased		–		1,534			n/a		1,534
Total Assets		–		40,372			n/a		40,372
Liabilities
Forwards		–		162,699			n/a		162,699
Total Liabilities		–		162,699			n/a		162,699
Unrealized currency gain									35,474
*Net fair value		–		(122,327	)		n/a		(86,853	)

* This amount comprises the "Total net unrealized gain (loss) on open contracts" "Investment in KR Master Fund", "Investment in FL Master Fund" and "Options purchased" on the Statements of Financial Condition.

Schedule of Assets, Liabilities and Capital Investments

Summarized information reflecting the total assets, liabilities and capital of FL Master Fund and KR Master Fund is shown in the following tables.

		September 30, 2012
	Total Assets	Total Liabilities	Total Capital
FL Master Fund	$32,315,024	$6,279,707	26,035,317
KR Master Fund	$117,357,253	$1,440,308	115,916,945
	$149,672,277	$7,720,015	141,952,262

Summary of Partnership's Investments

Summarized information for the Partnership's investment in FL Master Fund and KR Master Fund is shown in the following tables:

                                                                             September 30, 2012                                                          For the three months ended September 30, 2012

	% of Partnership  Net Assets		Fair Value		Partnership's  pro rata Net Income		Investment Objective	Redemption  Permitted
	%		$					$
FL Master Fund		27.04		7,037,439		262,976	Commodity	Monthly
							Portfolio
KR Master Fund		41.44		10,785,054		471,471	Commodity	Monthly
							Portfolio

September 30, 2012                                                          For the nine months ended September 30, 2012

	% of Partnership  Net Assets		Fair Value		Partnership's  pro rata Net Income (Loss)			Investment Objective	Redemption  Permitted
	%		$						$
FL Master Fund		27.04		7,037,439		(873,200	)	Commodity	Monthly
								Portfolio
KR Master Fund		41.44		10,785,054		65,866		Commodity	Monthly
								Portfolio

Income Statement Information of Investments

The tables below represent summarized Income Statement information for FL Master Fund and KR Master Fund for the three and nine months ended September 30, 2012, to meet the requirements of Regulation S-X rule 3-09, as follows.

For the Three Months Ended September 30, 2012	Investment Income		Net  Investment Loss			Total Trading Results		Net Income
	$		$			$		$
FL Master Fund		4,755		(204,696	)		979,760		775,064
KR Master Fund		15,048		(173,873	)		4,605,264		4,431,391

For the Nine Months Ended September 30, 2012	Investment Income		Net  Investment Loss			Total Trading Results			Net Income (Loss)
	$		$			$			$
FL Master Fund		12,552		(446,191	)		(3,294,917	)		(3,741,108	)
KR Master Fund		39,080		(368,147	)		901,800			533,653