UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





T
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934





For
the quarterly period ended September 30, 2009





OR





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




For the transition period
from        to




Commission file
number:000-53639





SAGE
FUND LIMITED PARTNERSHIP





(Exact name of registrant
as specified in its charter)





Maryland
            
            52-1937296(State
      of Incorporation)
            
            (IRS
      Employer Identification No.)





c/o
Steben & Company, Inc.


2099
Gaither Road, Suite 200


Rockville,
Maryland20850


(Address
of Principal Executive Office)(zip code)





(240)
631-9808


Registrant’s
Telephone Number, Including Area Code:








Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes T     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 during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).  Yes o     No
o





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





o  Large
      accelerated filer
            
            o  Accelerated
      filero  Non-accelerated
      filer
            
            T  Smaller
      Reporting Company





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





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: N/A







Table of Contents
 
 Part
      I:
              Financial
      Information
              1Item
      1.
              Financial
      Statements
              1Statements of Financial Condition September
      30, 2009 (Unaudited) and December 31, 2008
      (Audited)
              1Condensed Schedule of InvestmentsSeptember
      30, 2009 (Unaudited)
              2Condensed Schedule of InvestmentsDecember
      31, 2008 (Audited)
              4Statements of OperationsFor
      the Three and Nine Months Ended September 30, 2009 and 2008
      (Unaudited)
              6Statements of Cash FlowsFor
      the Nine Months Ended September 30, 2009 and 2008
      (Unaudited)
              7Statements of Changes in Partners' Capital (Net Asset
      Value)For
      the Nine Months Ended September 30, 2009 and 2008
      (Unaudited)
              8Notes to Financial Statements
(Unaudited)
              9Item
      2.
              Management's Discussion and Analysis of Financial Condition
      and Results of Operations
              18Item
      3.
              Quantitative and Qualitative Disclosures about Market
      Risk
              24Item
      4.
              Controls and Procedures
              24Part
      II:
              Other
      Information
              25Item
      1.
              Legal Proceedings
              25Item
      1A.
              Risk Factors
              25Item
      2.
              Unregistered Sales of Equity Securities and Use of
      Proceeds
              25Item
      3.
              Defaults upon Senior Securities
              25Item
      4.
              Submission of Matters to a Vote of Security
      Holders
              25Item
      5.
              Other Information
              25Item
      6.
              Exhibits
              25
  i
 Table of Contents
  SAGE
FUND LIMITED PARTNERSHIP
 STATEMENTS
OF FINANCIAL CONDITION
 September
30, 2009 (Unaudited) and December 31, 2008 (Audited)
 
 
 September
      30,
              
              
              December
      31,2009
              
              
              2008ASSETSEquity
      in broker trading accountsCash
              
              $
              15,283,742
              
              
              $
              11,443,872U.S.
      Government securities, at fair value (cost - $0 and
      $4,459,960)
              
              
              -
              
              
              
              4,498,180Net
      unrealized gain on open futures contracts
              
              
              6,826,684
              
              
              
              9,125,848Accrued
      interest
              
              
              2,294
              
              
              
              4,502Deposits
      with broker
              
              
              22,112,720
              
              
              
              25,072,402Cash
      and cash equivalents
              
              
              46,589,500
              
              
              
              16,302,018Commercial
      paper, at fair value (cost - $0 and $19,474,253)
              
              
              -
              
              
              
              19,576,904Government-sponsored
      enterprises, at fair value (cost - $8,039,111 and
    $9,036,740)
              
              
              8,062,370
              
              
              
              9,138,786Corporate
      notes, at fair value (cost - $0 and $3,965,000)
              
              
              -
              
              
              
              4,013,516General
      Partner 1 percent allocation
              
              
              47,220
              
              
              
              -Total
      assets
              
              $
              76,811,810
              
              
              $
              74,103,626LIABILITIES
      AND PARTNERS’ CAPITAL (NET ASSET VALUE)LIABILITIESAccounts
      payable - General Partner
              
              $
              139,063
              
              
              $
              125,530Commissions
      and other trading fees on open contracts
              
              
              6,719
              
              
              
              10,133General
      Partner management fee
              
              
              69,908
              
              
              
              65,047General
      Partner 1 percent allocation
              
              
              -
              
              
              
              210,560Advisor
      management fee
              
              
              124,793
              
              
              
              47,910Advisor
      incentive fee
              
              
              -
              
              
              
              2,303,426Selling
      Agents' fee
              
              
              190,658
              
              
              
              177,400Redemptions
      payable
              
              
              492,119
              
              
              
              2,852,196Subscriptions
      received in advance
              
              
              354,213
              
              
              
              1,513,541Total
      liabilities
              
              
              1,377,473
              
              
              
              7,305,743PARTNERS'
      CAPITAL (Net Asset Value)Class
      A Interests -  28,408.3780 units and 23,461.0047 units
      outstanding at September 30, 2009 and December 31, 2008
              
              $
              75,434,337
              
              
              $
              66,797,883Total
      partners' capital  (net asset value)
              
              
              75,434,337
              
              
              
              66,797,883Total
      liabilities and partners' capital (net asset value)
              
              $
              76,811,810
              
              
              $
              74,103,626
 
 
 The
accompanying notes are an integral part of these financial
statements.
  1
 Table of Contents
  SAGE
FUND LIMITED PARTNERSHIP
 CONDENSED
SCHEDULE OF INVESTMENTS
 September 30,
2009
 (Unaudited)
 
 GOVERNMENT-SPONSORED
      ENTERPRISESMaturity
                  
                  
                  
                  
                  
                  
                  %
      of NetFace Value
                  
                  Date
                  
                  Description
                  
                  Fair
      Value
                  
                  
                  Asset Value$8,000,000
                  
                  03/30/10
                  
                  Fed
      Home Ln Bank (FHLB) Bond (not callable), 1.100%
                  
                  $
                  8,062,370
                  
                  
                  
                  10.69
                  %Total
      Government-sponsored enterprises(cost - $8,039,111)
                  
                  $
                  8,062,370
                  
                  
                  
                  10.69
                  %LONG U.S. FUTURES CONTRACTSDescription
                  
                  Net
      unrealized gain
                    (loss)
      on open long
                    contracts
      (Fair
      Value)
                  
                  
                  %
      of Net
                    Asset ValueAgricultural
                  
                  $
                  626,442
                  
                  
                  
                  0.83
                  %Currency
                  
                  
                  334,072
                  
                  
                  
                  0.44
                  %Energy
                  
                  
                  (64,025
                  )
                  
                  
                  (0.08
                  %)Interest
      rate
                  
                  
                  632,100
                  
                  
                  
                  0.84
                  %MetalLME
      Copper US (74 contracts, October 2009 – January 2010)
                  
                  
                  1,327,650
                  
                  
                  
                  1.76
                  %Other**
                  
                  
                  958,616
                  
                  
                  
                  1.27
                  %Stock
      index
                  
                  
                  102,711
                  
                  
                  
                  0.14
                  %Total
      long U.S. futures contracts
                  
                  $
                  3,917,566
                  
                  
                  
                  5.20
                  %SHORT U.S. FUTURES
CONTRACTSDescription
                  
                  Net
      unrealized gain(loss) on open short
      contracts(Fair
      Value)
                  
                  
                  %
      of Net
                    Asset ValueAgricultural**
                  
                  $
                  767,446
                  
                  
                  
                  1.02
                  %Currency
                  
                  
                  2,000
                  
                  
                  
                  0.00
                  %Energy
                  
                  
                  (304,247
                  )
                  
                  
                  (0.40
                  %)Metal**
                  
                  
                  (1,036,075
                  )
                  
                  
                  (1.37
                  %)Total
      short U.S. futures contracts
                  
                  $
                  (570,876
                  )
                  
                  
                  (0.75
                  %)Total
      U.S. futures contracts
                  
                  $
                  3,346,690
                  
                  
                  
                  4.45
                  %
 
 **No
individual futures contract position constituted greater than 1 percent of net
asset value. Accordingly, the number of contracts and expiration dates are not
presented.
 
 
 The
accompanying notes are an integral part of these financial
statements.
  2
 Table of Contents
  SAGE
FUND LIMITED PARTNERSHIP
 CONDENSED
SCHEDULE OF INVESTMENTS (continued)
 September
30, 2009
 (Unaudited)
 
 LONG FOREIGN FUTURES
    CONTRACTSDescription
              
              Net
      unrealized gain(loss) on open long
                contracts(Fair
      Value)
              
              
              %
      of Net
                Asset
      ValueAgricultural
              
              $
              137,466
              
              
              
              0.18
              %Currency
              
              
              167,361
              
              
              
              0.22
              %Energy
              
              
              (1,774
              )
              
              
              0.00
              %Interest
      rateLIF
      3M EURIBOR (220 contracts, December 2009 – September 2011)
              
              
              990,296
              
              
              
              1.31
              %Other
              
              
              625,657
              
              
              
              0.83
              %Metal
              
              
              (108,094
              )
              
              
              (0.14
              %)Stock
      index
              
              
              88,504
              
              
              
              0.12
              %Total
      long foreign futures contracts
              
              $
              1,899,416
              
              
              
              2.52
              %SHORT FOREIGN FUTURES
    CONTRACTSDescription
              
              Net
      unrealized gain
                on
      open short contracts
                (Fair
      Value)
              
              
              %
      of Net
                Asset
      ValueAgricultural
              
              $
              108,895
              
              
              
              0.14
              %Currency**
              
              
              1,441,277
              
              
              
              1.91
              %Energy
              
              
              22,948
              
              
              
              0.03
              %Interest
      rate
              
              
              7,458
              
              
              
              0.01
              %Total
      short foreign futures contracts
              
              $
              1,580,578
              
              
              
              2.09
              %Total
      foreign futures contracts
              
              $
              3,479,994
              
              
              
              4.61
              %Net
      unrealized gain on open futures contracts
              
              $
              6,826,684
              
              
              
              9.06
              %
 
 **No
individual futures contract position constituted greater than 1 percent of net
asset value. Accordingly, the number of contracts and expiration dates are not
presented.
 
 
 The
accompanying notes are an integral part of these financial
statements.
  3
 Table of Contents
  SAGE
FUND LIMITED PARTNERSHIP
 CONDENSED
SCHEDULE OF INVESTMENTS
 December
31, 2008
 (Audited)
 
 U.S. GOVERNMENT
      SECURITIESMaturity
              
              
              
              
              
              %
      of NetFace Value
              
              Date
              Description
              
              Fair
      Value
              
              
              Asset
      Value$4,500,000
              
              01/08/09
              U.S.
      Treasury Bill, 1.82% *
              
              $
              4,498,180
              
              
              
              6.73
              %Total
      U.S. Government securities* (cost - $4,459,960)
              
              $
              4,498,180
              
              
              
              6.73
              %GOVERNMENT-SPONSORED
      ENTERPRISESMaturity
              
              
              
              
              
              
              %
      of NetFace Value
              
              Date
              Description
              
              Fair
      Value
              
              
              Asset
      Value$4,827,000
              
              01/02/09
              Fed
      Home Ln Discount Nt, 2.42%
              
              $
              4,826,675
              
              
              
              7.23
              %4,329,000
              
              02/23/09
              Fannie
      Discount Note, 2.65%
              
              
              4,312,111
              
              
              
              6.46
              %Total
      Government-sponsored enterprises (cost - $9,036,740)
              
              $
              9,138,786
              
              
              
              13.69
              %COMMERCIAL PAPERMaturity
              
              
              
              
              
              
              %
      of NetFace Value
              
              Date
              Description
              
              Fair
      Value
              
              
              Asset
      Value$4,113,000
              
              03/04/09
              Citigroup
      Funding Inc, 3.08%
              
              $
              4,091,183
              
              
              
              6.12
              %4,000,000
              
              03/06/09
              Royal
      Bk Of Scotland Grp, 2.65%
              
              
              3,981,155
              
              
              
              5.96
              %4,000,000
              
              05/04/09
              General
      Elec Cap Corp, 2.48%
              
              
              3,966,107
              
              
              
              5.94
              %3,800,000
              
              05/04/09
              Shell
      Intl Finance Bv, 2.08%
              
              
              3,772,995
              
              
              
              5.65
              %3,800,000
              
              05/04/09
              Societe
      Generale N Amer, 2.66%
              
              
              3,765,464
              
              
              
              5.64
              %Total
      commercial paper securities (cost - $19,474,253)
              
              $
              19,576,904
              
              
              
              29.31
              %CORPORATE NOTESMaturity
              
              
              
              
              
              
              %
      of NetFace Value
              
              Date
              Description
              
              Fair
      Value
              
              
              Asset
      Value$4,000,000
              
              03/25/09
              Bear
      Stearns Co. (JP Morgan Chase & Co.), 3.25%
              
              $
              4,013,516
              
              
              
              6.01
              %Total
      corporate notes (cost - $3,965,000)
              
              $
              4,013,516
              
              
              
              6.01
              %LONG U.S. FUTURES CONTRACTSNet
      unrealized gainDescription
              
              (loss)
      on open long
                contracts(Fair
      Value)
              
              
              %
      of Net
                Asset
      ValueAgricultural
              
              $
              61,815
              
              
              
              0.09
              %Currency
              
              
              18,953
              
              
              
              0.03
              %Interest
      rateEurodollar
      (372 contracts, March 2009 – June 2010)
              
              
              998,300
              
              
              
              1.50
              %Other
              
              
              415,789
              
              
              
              0.62
              %Metals
      **
              
              
              (761,359
              )
              
              
              (1.14
              %)Stock
      index
              
              
              26,400
              
              
              
              0.04
              %Total
      long U.S. futures contracts
              
              $
              759,898
              
              
              
              1.14
              %
 
 *Pledged
as collateral for the trading of futures contracts.
 **No
individual futures contract position constituted greater than 1 percent of net
asset value. Accordingly, the number of contracts and expiration dates are not
presented.
 
 
 The
accompanying notes are an integral part of these financial
statements.
  4
 Table of Contents
  SAGE
FUND LIMITED PARTNERSHIP
 CONDENSED
SCHEDULE OF INVESTMENTS (continued)
 December
31, 2008
 (Audited)
 
 SHORT U.S. FUTURES
      CONTRACTSDescription
              
              Net
      unrealized gain(loss) on open short
                contracts(Fair
      Value)
              
              
              %
      of Net
                Asset
      ValueAgricultural
      **
              
              $
              815,480
              
              
              
              1.22
              %Currency
              
              
              7,981
              
              
              
              0.01
              %Energy
              
              
              219,865
              
              
              
              0.33
              %MetalLME
      aluminum (73 contracts, January 2009 – April 2009)
              
              
              836,531
              
              
              
              1.25
              %Other
      **
              
              
              1,336,654
              
              
              
              2.00
              %Stock
      index
              
              
              (1,440
              )
              
              
              0.00
              %Total
      short U.S. futures contracts
              
              $
              3,215,071
              
              
              
              4.81
              %Total
      U.S. futures contracts
              
              $
              3,974,969
              
              
              
              5.95
              %LONG FOREIGN FUTURES
      CONTRACTSDescription
              
              Net
      unrealized gainon open long contracts
                (Fair
      Value)
              
              
              %
      of Net
                Asset
      ValueAgricultural
              
              $
              173,542
              
              
              
              0.26
              %Currency
              
              
              214,787
              
              
              
              0.32
              %Interest
      rateLIFE
      3M sterling (212 contracts, March 2009 – September 2010)
              
              
              766,971
              
              
              
              1.15
              %Other
      **
              
              
              1,836,502
              
              
              
              2.75
              %Stock
      index
              
              
              89,394
              
              
              
              0.13
              %Total
      long foreign futures contracts
              
              $
              3,081,196
              
              
              
              4.61
              %SHORT FOREIGN FUTURES
      CONTRACTSDescription
              
              Net
      unrealized gainon open short contracts
                (Fair
      Value)
              
              
              %
      of Net
                Asset
      ValueAgricultural
      **
              
              $
              729,135
              
              
              
              1.09
              %Currency
              
              
              382,938
              
              
              
              0.57
              %Energy
              
              
              373,418
              
              
              
              0.56
              %Metals
              
              
              584,192
              
              
              
              0.88
              %Total
      short foreign futures contracts
              
              $
              2,069,683
              
              
              
              3.10
              %Total
      foreign futures contracts
              
              $
              5,150,879
              
              
              
              7.71
              %Net
      unrealized gain on open futures contracts
              
              $
              9,125,848
              
              
              
              13.66
              %
 
 **No
individual futures contract position constituted greater than 1 percent of net
asset value. Accordingly, the number of contracts and expiration dates are not
presented.
 
 
 The
accompanying notes are an integral part of these financial
statements.
  5
 Table of Contents
  SAGE
FUND LIMITED PARTNERSHIP
 STATEMENTS
OF OPERATIONS
 For the
Three and Nine Months Ended September 30, 2009and 2008
 (Unaudited)
 _____________
 
 Three
      Months Ended
              
              
              Nine
      Months EndedSeptember
      30,
              
              
              September
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008TRADING
      GAIN (LOSS)Net
      realized gain (loss)
              
              $
              (216,204
              )
              
              $
              (4,570,588
              )
              
              $
              382,118
              
              
              $
              8,755,001Net
      change in unrealized gain (loss)
              
              
              3,086,479
              
              
              
              (4,859,304
              )
              
              
              (2,299,164
              )
              
              
              1,286,208Brokerage
      commissions
              
              
              (35,238
              )
              
              
              (57,309
              )
              
              
              (102,424
              )
              
              
              (153,445
              )Net
      gain (loss) from trading
              
              
              2,835,037
              
              
              
              (9,487,201
              )
              
              
              (2,019,470
              )
              
              
              9,887,764NET
      INVESTMENT LOSSIncomeInterest
      income
              
              
              39,913
              
              
              
              303,076
              
              
              
              367,077
              
              
              
              969,911ExpensesGeneral
      Partner management fee
              
              
              203,642
              
              
              
              135,633
              
              
              
              581,047
              
              
              
              381,839General
      Partner 1 percent allocation
              
              
              17,923
              
              
              
              (99,005
              )
              
              
              (47,220
              )
              
              
              42,663Advisor
      management fee
              
              
              184,599
              
              
              
              118,653
              
              
              
              507,324
              
              
              
              341,361Advisor
      incentive fee
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              4,568,568Selling
      Agents' fee
              
              
              555,387
              
              
              
              369,909
              
              
              
              1,584,673
              
              
              
              1,041,380Operating
      expenses
              
              
              267,165
              
              
              
              180,746
              
              
              
              738,626
              
              
              
              512,968Total
      expenses
              
              
              1,228,716
              
              
              
              705,936
              
              
              
              3,364,450
              
              
              
              6,888,779Operating
      expenses waived
              
              
              (128,103
              )
              
              
              (88,583
              )
              
              
              (342,052
              )
              
              
              (254,740
              )Net
      total expenses
              
              
              1,100,613
              
              
              
              617,353
              
              
              
              3,022,398
              
              
              
              6,634,039Net
      investment loss
              
              
              (1,060,700
              )
              
              
              (314,277
              )
              
              
              (2,655,321
              )
              
              
              (5,664,128
              )NET
      INCOME (LOSS)
              
              $
              1,774,337
              
              
              $
              (9,801,478
              )
              
              $
              (4,674,791
              )
              
              $
              4,223,636
 
 
 
 Class A UnitsThree Months Ended September
      30,
              
              
              Nine Months Ended September
    30,2009
              
              
              2008
              
              
              2009
              
              
              2008INCREASE
      (DECREASE) IN NET ASSET VALUE PER UNIT
              
              $
              61.94
              
              
              $
              (463.84
              )
              
              $
              (191.83
              )
              
              $
              219.89NET
      INCOME (LOSS) PER UNIT
                (based
      on weighted average number of units outstanding)
              
              $
              63.86
              
              
              $
              (432.06
              )
              
              $
              (181.14
              )
              
              $
              208.28WEIGHTED
      AVERAGE
                (number
      of units outstanding)
              
              
              27,785.0554
              
              
              
              22,685.6293
              
              
              
              25,807.5891
              
              
              
              20,278.5852
 
 
 The
accompanying notes are an integral part of these financial
statements.
  6
 Table of Contents
  SAGE
FUND LIMITED PARTNERSHIP
 STATEMENTS
OF CASH FLOWS
 For the
Nine Months Ended September 30,2009and 2008
 (Unaudited)
 __________
 
 2009
              
              
              2008Cash
      flows provided by (used in) operating activitiesNet
      income (loss)
              
              $
              (4,674,791
              )
              
              $
              4,223,636Adjustments
      to reconcile net income (loss) to net cash
      provided by (used in) operating activitiesNet
      change in unrealized (gain) loss
              
              
              2,299,164
              
              
              
              (1,286,208
              )Net
      proceeds of commercial paper
              
              
              19,576,904
              
              
              
              175,718Net
      purchases (proceeds) of investments in U.S. Government
      securities
              
              
              4,498,180
              
              
              
              (8,974,501
              )Net
      proceeds (purchases) of Government-sponsored enterprises
              
              
              1,076,416
              
              
              
              (14,106,368
              )Net
      proceeds from corporate notes
              
              
              4,013,516
              
              
              
              -Decrease
      in interest receivable
              
              
              2,208
              
              
              
              18,280Increase
      (decrease) in General Partner 1 percent allocation
              
              
              (257,780
              )
              
              
              53,380Increase
      (decrease) in accounts payable and accrued expenses
              
              
              (2,198,305
              )
              
              
              116,228Net
      cash provided by (used in) operating activities
              
              
              24,335,512
              
              
              
              (19,779,835
              )Cash
      flows provided by (used in) financing activitiesContributions
              
              
              17,750,511
              
              
              
              17,737,063Subscriptions
      received in advance
              
              
              354,213
              
              
              
              1,447,550Redemptions
              
              
              (8,312,884
              )
              
              
              (4,319,517
              )Net
      cash provided by financing activities
              
              
              9,791,840
              
              
              
              14,865,096Net
      increase (decrease) in cash and cash equivalents
              
              
              34,127,352
              
              
              
              (4,914,739
              )Cash
      and cash equivalentsBeginning
      of period
              
              
              27,745,890
              
              
              
              11,891,112End
      of period
              
              $
              61,873,242
              
              
              $
              6,976,373End
      of period cash and cash equivalents consists of:Cash
      in broker trading accounts
              
              $
              15,283,742
              
              
              $
              5,494,489Cash
      and cash equivalents
              
              
              46,589,500
              
              
              
              1,481,884Total
      end of period cash and cash equivalents
              
              $
              61,873,242
              
              
              $
              6,976,373Supplemental
      disclosure of cash flow information:Prior
      period redemptions paid
              
              $
              2,852,196
              
              
              $
              465,364Prior
      period subscriptions received in advance
              
              $
              1,513,541
              
              
              $
              2,355,689Supplemental
      schedule of non-cash financing activities:Redemptions
      payable
              
              $
              492,119
              
              
              $
              426,325
  The
accompanying notes are an integral part of these financial
statements.
  7
 Table of Contents
  SAGE
FUND LIMITED PARTNERSHIP
 STATEMENTS
OF CHANGES IN PARTNERS’ CAPITAL (NET ASSET VALUE)
 For the
Nine Months Ended September 30, 2009and 2008
 (Unaudited)
 __________
 Class
      A InterestsUnits
              
              
              AmountNine
      Months Ended September 30, 2009Balance
      at December  31, 2008
              
              
              23,461.0047
              
              
              $
              66,797,883Net
      loss for the nine months ended September 30, 2009
              
              
              -
              
              
              
              (4,674,791
              )Contributions
              
              
              7,145.5104
              
              
              
              19,264,052Redemptions
              
              
              (2,198.1371
              )
              
              
              (5,952,807
              )Balance
      at September 30, 2009
              
              
              28,408.3780
              
              
              $
              75,434,337Class
      A InterestsUnits
              
              
              AmountNine
      Months Ended September 30, 2008Balance
      at December 31, 2007
              
              
              17,073.6810
              
              
              $
              33,463,652Net
      income for the nine months ended September 30, 2008
              
              
              -
              
              
              
              4,223,636Contributions
              
              
              9,395.4562
              
              
              
              20,092,752Redemptions
              
              
              (1,926.3836
              )
              
              
              (4,280,478
              )Balance
      at September 30, 2008
              
              
              24,542.7536
              
              
              $
              53,499,562
 
 Net Asset Value Per UnitSeptember 30, 2009
              
              
              December 31, 2008
              
              
              September 30, 2008
              
              
              December 31, 2007Class A
              
              
              Class A
              
              
              Class A
              
              
              Class A$2,655.36
              
              
              $2,847.19
              
              
              $2,179.85
              
              
              $1,959.96
 
 
 The
accompanying notes are an integral part of these financial
statements.
  8
 Table of Contents
  SAGE FUND LIMITED PARTNERSHIP
 NOTES
TO FINANCIAL STATEMENTS
 (Unaudited)
 __________
 
 
 Note
      1:
              ORGANIZATION AND
      SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES
 
 General Description of the
Fund:
 
 Sage Fund
Limited Partnership (the “Fund”) is a Maryland limited partnership, which
operates as a commodity investment pool that commenced operations on August 2,
1995.  The Fund issues units of Limited Partnership Interests
(“Units”) in Class A, which represent units of fractional undivided beneficial
interest in and ownership of the Fund.  The Fund will automatically
terminate on December 31, 2025, unless terminated earlier as provided in the
Limited Partnership Agreement.
 
 The Fund
may invest the proceeds from its offerings of Units in the speculative trading
of futures contracts and other financial instruments traded in the United States
and internationally.
 
 The Fund
is a registrant with the U.S. Securities and Exchange Commission (“SEC”)
pursuant to the U.S. Securities Act of 1933, as amended, (the “’33 Act”) and the
U.S. Securities Exchange Act of 1934 (the “’34 Act”).  As a
registrant, the Fund is subject to the regulations of the SEC and the disclosure
requirements of the Act.  As a commodity pool, the Fund is subject to
the regulations of the U.S.  Commodity Futures Trading Commission, an
agency of the United States (“U.S.”) government which regulates most aspects of
the commodity futures industry; rules of the National Futures Association
(“NFA”), an industry self-regulatory organization; rules of Financial Industry
Regulatory Authority (“FINRA”), an industry self-regulatory organization; and
the requirements of commodity exchanges where the Fund executes
transactions.  Additionally, the Fund is subject to the requirements
of Futures Commission Merchants (brokers).
 
 Steben
& Company, Inc. (“Steben & Company”, the “General Partner” or the
“Commodity Pool Operator”), is a Maryland corporation registered with the CFTC
as a commodity pool operator and a commodities introducing broker, and is also
registered with the SEC as a registered investment advisor and a
broker-dealer.  The General Partner is a member of the NFA and FINRA.
The General Partner manages all aspects of the Fund’s business and serves as one
of the Fund’s Selling Agents.
 
 Altis
Partners (Jersey) Ltd. (the “Trading Advisor”) is the sole Trading
Advisor.  The Trading Advisor utilizes the Altis Global Futures
Portfolio (the “Trading Program”), a proprietary, systematic trading system that
deploys multiple trading strategies utilizing derivatives that seek to identify
and exploit directional moves in market behavior to a broad and diversified
range of global markets including (but not limited to) energies, metals,
agricultural commodities, currencies, equity indices, and interest rate
instruments.
  Significant
accounting policies are as follows:
 
 Use of
Estimates:
 
 The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting
period.  Actual results could differ from those
estimates.
 
 Revenue
Recognition:
 
 Futures
are recorded on a trade date basis, and gains or losses are realized when
contracts are liquidated. Unrealized gains and losses on open contracts (the
difference between contract trade price and fair value) are reported in the
statements of financial condition as net unrealized gain or loss, as there
exists a right of offset of any unrealized gains or losses.  Any
change in net unrealized gain or loss from the preceding period is reported in
the statements of operations.  Fair value of exchange-traded contracts
is based upon exchange settlement prices. Commercial paper, corporate notes,
U.S. Government securities and Government-sponsored enterprises are recorded at
amortized cost and interest is accrued and recorded through maturity, which
approximates fair value.
  9
 Table of Contents
  Cash and Cash
Equivalents:
 
 Cash
equivalents are highly liquid investments with an original maturity of three
months or less at the date of acquisition that are not held for sale in the
normal course of business. The Fund is at risk to the extent that it maintains
balances with such institutions in excess of insured limits; however, the Fund
does not believe it is exposed to any significant credit risk.  As of
September 30, 2009, significant cash balances held at Newedge USA, LLC, UBS
Financial Services, Inc. and Bank of America are $15,283,742, $45,441,365 and
$1,148,135, respectively.  As of December 31, 2008, significant cash
balances held at Newedge USA, LLC, UBS Financial Services, Inc. and Bank of
America are $11,443,872, $13,630,246 and $2,671,772, respectively.
  Brokerage
Commissions:
 
 Brokerage
commissions include other trading fees and are charged to expense when contracts
are opened and when the positions are closed.
 
 Ongoing Offering
Costs:
 
 Ongoing
offering costs in connection with the continuous offering of Class A Units are
charged to expense as incurred.
 
 Redemptions
Payable:
 
 Redemptions
payable represent redemptions approved by the General Partner prior to period
end, including those that are not effective until subsequent
periods.  These redemptions have been recorded using the period end
net asset value per unit.
 
 Income
Taxes:
  The Fund
prepares calendar year U.S. and applicable state tax returns.  The
Fund is not subject to federal income taxes as each partner is individually
liable for his or her allocable share of the Fund’s income, expenses and trading
gains or losses.  The Fund, however, may be required to file returns
in various state and local jurisdictions as a result of its operations or the
residency of its partners.  For the three and nine months ended
September 30, 2009 and 2008, and the year ended December 31, 2008, no income tax
liability for uncertain tax positions has been recognized in the accompanying
financial statements.  The 2006 through 2008 tax years generally
remain subject to examination by U.S. federal and most state tax
authorities.
 
 Fair Value of Financial
Instruments:
 
 The Fund
measures financial instruments at fair value, which is defined as the price that
would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date and sets out a
fair value hierarchy.  The fair value hierarchy gives the highest
priority to quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level
3).  Inputs are broadly defined as assumptions market participants
would use in pricing an asset or liability. The three levels of the fair value
hierarchy are described below:
 
 Level
1.  Unadjusted quoted prices in active markets for identical assets or
liabilities that the reporting entity has the ability to access at the
measurement date.
 
 Level
2.  Inputs other than quoted prices within Level 1 that are observable
for the asset or liability, either directly or indirectly.  A
significant adjustment to a Level 2 input could result in the Level 2
measurement becoming a Level 3 measurement.
 
 Level
3.  Inputs are unobservable for the asset or
liability.
  10
 Table of Contents
  The
following section describes the valuation techniques used by the Fund to measure
different financial instruments at fair value and includes the level within the
fair value hierarchy in which the financial instrument is
categorized.
 
 The
Fund’s investments in U.S. Government securities, commercial paper,
Government-sponsored enterprises and corporate notes are short-term in nature
with a duration of less than one year, and typically, the Fund holds these
investments through maturity. As such, interest income generated from these
investments is recorded in the statements of operations. The fair value of these
investments as obtained from cash management and clearing firms statements are
compared to amortized cost to verify that the carrying amounts approximates
their fair value.
 
 The
Fund’s cash management account holder and clearing firm (UBS and Newedge,
respectively) utilize pricing services to value U.S. Government securities,
commercial paper, Government-sponsored enterprises and corporate notes
investments. These pricing services utilize the market approach which uses
prices and other relevant information generated by market transactions involving
identical or comparable assets or liabilities. Valuation techniques consistent
with the market approach include matrix pricing. Matrix pricing, which is used
for Level 2 investments, is a mathematical technique used principally to value
debt securities without relying exclusively on quoted prices for the specific
securities, rather by relying on the securities’ relationship to other benchmark
quoted securities.
 
 U.S.
Government securities are actively traded on a daily basis and the pricing
services are able to obtain bid and ask quotes for identical assets by CUSIP.
Commercial paper, Government-sponsored enterprises and corporate notes
investments are also actively traded, however, the pricing services are only
able to obtain bid and ask quotes for similar assets. As such, U.S. Government
securities are classified within Level 1 and commercial paper,
Government-sponsored enterprises and corporate notes investments are classified
within Level 2.
 
 Fair
value of exchange-traded contracts is based upon exchange settlement prices. The
investments in money market funds and futures contracts are valued using quoted
market prices and are classified within Level 1. The Fund uses some or all, when
applicable, of these financial instruments as part of its trading activities.
The recorded values of commercial paper, Government-sponsored enterprises, U.S.
Government securities and corporate notes are based on amortized cost carrying
amounts due to the short-term maturity of the instruments and are classified
within Level 1 or 2; therefore, their carrying amounts approximate fair
values.
 
 The
following tables present the Fund’s fair value hierarchy for those assets and
liabilities measured at fair value on a recurring basis as of September 30, 2009
and December 31, 2008:
 
 September
      30, 2009Level
      1
              
              
              Level
      2
              
              
              TotalEquity
      in broker trading accountsFutures
      contracts
              
              $
              6,826,684
              
              
              
              
              
              $
              6,826,684Government-sponsored
      enterprises
              
              
              
              
              
              $
              8,062,370
              
              
              $
              8,062,370Cash
      and cash equivalentsMoney
      market funds
              
              $
              45,441,365
              
              
              
              
              
              
              $
              45,441,365
 
 December
      31, 2008Level
      1
              
              
              Level
      2
              
              
              TotalEquity
      in broker trading accountsFutures
      contracts
              
              $
              9,125,848
              
              
              
              
              
              $
              9,125,848U.S.
      Government securities
              
              $
              4,498,180
              
              
              
              
              
              $
              4,498,180Commercial
      paper
              
              
              
              
              
              $
              19,576,904
              
              
              $
              19,576,904Government-sponsored
      enterprises
              
              
              
              
              
              $
              9,138,786
              
              
              $
              9,138,786Corporate
      notes
              
              
              
              
              
              $
              4,013,516
              
              
              $
              4,013,516Cash
      and cash equivalentsMoney
      market funds
              
              $
              14,744,435
              
              
              
              
              
              
              $
              14,744,435
 
 There
were no Level 3 holdings as of September 30, 2009 and December 31, 2008 or
during the three and nine months ended September 30, 2009 and 2008,
respectively.
  11
 Table of Contents
  Derivative
Instruments:
 
 The Fund
adopted the provisions of the Derivatives and Hedging Topic of the Financial
Accounting Standards Board (“FASB”) Accounting Standards
Codification effective January 1, 2009.  As required, the Fund
presents qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of the gains and
losses on agreements.
 
 The
Fund’s derivative contracts are comprised of futures contracts. These derivative
contracts are recorded on the statements of financial condition as assets
measured at fair value and the related realized and unrealized gain (loss)
associated with these derivatives is recorded in the statements of operations.
The Fund has considered the counterparty credit risk related to all its futures
contracts and does not deem any counterparty credit risk material at this
time.  The Fund does not designate any derivative instruments as
hedging instruments.
 
 As of
September 30, 2009 and for the three and nine months ended September 30, 2009,
the Fund’s derivative contracts had the following impact on the statements of
financial condition and the statements of operations:
 
 Derivative
      Assets and LiabilitiesStatements
      of Financial Condition Location
              
              Assets
              
              
              Liabilities
              
              
              Net
              
              
              Number
      of ContractsFutures contractsAgricultural
              
              $
              1,710,486
              
              
              $
              (70,237
              )
              
              $
              1,640,249
              
              
              
              780Currency
              
              
              2,045,948
              
              
              
              (101,238
              )
              
              
              1,944,710
              
              
              
              438Energy
              
              
              43,003
              
              
              
              (390,101
              )
              
              
              (347,098
              )
              
              
              254Interest
      rate
              
              
              2,267,486
              
              
              
              (11,975
              )
              
              
              2,255,511
              
              
              
              1,172Metal
              
              
              2,343,217
              
              
              
              (1,201,120
              )
              
              
              1,142,097
              
              
              
              753Stock
      index
              
              
              365,098
              
              
              
              (173,883
              )
              
              
              191,215
              
              
              
              316Net
      unrealized gain on open futures contracts
              
              $
              8,775,238
              
              
              $
              (1,948,554
              )
              
              $
              6,826,684
              
              
              
              3,713
 
 
 RevenueThree
      Months
                Ended
      September 30, 2009
              
              
              Nine
      Months
                Ended
      September 30, 2009Statements
      of Operations Location
              
              Net
      realized gain (loss)
              
              
              Number
      of Contracts
              
              
              Net
      realized gain (loss)
              
              
              Number
      of ContractsFutures ContractsAgricultural
              
              $
              (723,291
              )
              
              
              1,173
              
              
              $
              (1,047,573
              )
              
              
              4,319Currency
              
              
              412,294
              
              
              
              588
              
              
              
              (668,662
              )
              
              
              1,709Energy
              
              
              (940,911
              )
              
              
              977
              
              
              
              (270,475
              )
              
              
              2,359Interest
      rate
              
              
              565,401
              
              
              
              1,234
              
              
              
              1,839,395
              
              
              
              4,745Metal
              
              
              (587,351
              )
              
              
              788
              
              
              
              1,099,121
              
              
              
              1,868Stock
      index
              
              
              1,061,638
              
              
              
              782
              
              
              
              (558,643
              )
              
              
              2,103Net
      realized gain (loss)
              
              $
              (212,220
              )
              
              
              5,542
              
              
              $
              393,163
              
              
              
              17,103
  12
 Table of Contents
 
 RevenueNet
      change in unrealized gain (loss)Statements
      of Operations Location
              
              Three
      Months
                Ended
      September 30, 2009
              
              
              Nine
      Months
                Ended
      September 30, 2009Futures contractsAgricultural
              
              $
              811,647
              
              
              $
              (139,723
              )Currency
              
              
              1,577,372
              
              
              
              1,320,051Energy
              
              
              (1,161,061
              )
              
              
              (940,381
              )Interest
      rate
              
              
              341,014
              
              
              
              (1,762,051
              )Metal
              
              
              1,447,112
              
              
              
              (853,921
              )Stock
      index
              
              
              70,395
              
              
              
              76,861Net
      change in unrealized gain (loss)
              
              $
              3,086,479
              
              
              $
              (2,299,164
              )
 
 Foreign Currency
Transactions:
 
 The
Fund’s functional currency is the U.S. dollar; however, it transacts business in
currencies other than the U.S. dollar.  Assets and liabilities
denominated in currencies other than the U.S. dollar are translated into U.S.
dollars at the rates in effect at the date of the statements of financial
condition.  Income and expense items denominated in currencies other
than the U.S. dollar are translated into U.S. dollars at the rates in effect
during the period. Gains and losses resulting from the translation to U.S.
dollars are reported in income currently as part of net trading gains and
losses.
 
 Reclassification:
 
 Certain
amounts in the 2008 financial statements have been reclassified to conform with
the 2009 presentation without affecting previously reported partners’ capital
(net asset value).
 
 Recently Adopted Accounting
Standards:
 
 The Fund
adopted FASB Accounting
Standards Codification (the “Codification”) on July 1,
2009.  The Codification is the single source of authoritative
nongovernmental U.S. generally accepted accounting principles
(“GAAP”).  The Codification does not change U.S. GAAP but combines all
authoritative standards into a comprehensive, topically organized online
database.  Effective with the Codification launch on July 1, 2009,
only one level of authoritative U.S. GAAP exists, other than guidance issued by
the SEC.  All other accounting literature excluded from the
Codification is considered non-authoritative.  The Codification
impacted the Fund’s financial statement disclosures by eliminating prior FASB
reference since all references to authoritative accounting literature are
now referenced in accordance with the Codification.
 
 The Fund
adopted the provisions of the Subsequent Events Topic of the Codification
effective June 30, 2009.  The Subsequent Event Topic establishes
general standards of and accounting for and disclosure of events that occur
after the balance sheet data but before financial statements are issued or
available to be issued.
 
 Note
      2:
              GENERAL
      PARTNER
 
 During
the nine months ended September 30, 2009 and 2008, the General Partner did not
maintain a capital balance in the Fund; however, the sole shareholder of the
General Partner had an investment in Class A Units.
 
 During
the nine months ended September 30, 2009 and 2008, the General Partner received
the following compensation:
 
 ·
              Class
      A Units incur a monthly management fee equal to 1/12 of 1.10 percent (1.10
      percent per annum) of the net asset value of the Class A Interests as of
      the last day of each month.
 
 ·
              Class
      A Units incur a monthly selling agents’ fee equal to 1/12 of 3.00 percent
      (3.00 percent per annum) of the net asset value of the Class A Interests
      as of the last day of each month.  The General Partner, in turn,
      pays the selling agents’ fees to the respective selling
      agents.  If the selling agents’ fees are not paid to the selling
      agent, or the General Partner was the selling agent, such portions of the
      selling agents’ fees are retained by the General
  Partner.
  13
 Table of Contents
  Pursuant
to the terms of the Limited Partnership Agreement, the General Partner receives
or pays 1 percent of any increase or decrease in the Fund’s net assets, as
defined.  Such amount is reflected as the General Partner 1 percent
allocation in the statements of financial condition and the statements of
operations.
 
 Note
      3:
              COMMODITY TRADING
      ADVISORS
 
 The Fund
has an Advisory Agreement with the Trading Advisor, pursuant to which the Fund
pays the Trading Advisor a monthly management fee equal to a certain percentage
per annum of allocated net assets (as defined in the Advisory Agreement) and a
quarterly incentive fee equal to a certain percentage of trading profits (as
defined in the Advisory Agreement).
 
 Note
      4:
              DEPOSITS WITH
      BROKERS
 
 The Fund
deposits funds with its futures broker, subject to U.S. Commodity Futures
Trading Commission regulations and various exchange and broker
requirements.  Margin requirements are satisfied by the deposit of
U.S. Government securities and cash with such broker.  The Fund earns
interest income on its assets deposited with the broker.
 
 Note
      5:
              OPERATING
      EXPENSES
 
 The Fund
is responsible for all of its operating expenses such as accounting, audit,
legal, administrative, marketing and offering expenses.  Operating
expenses also include salary and administrative costs incurred by the General
Partner relating to marketing and administration of the Fund, such as salaries
and commissions of General Partner marketing personnel, and administrative
employee salaries and related costs.  Pursuant to the terms of the
Limited Partnership Agreement, operating expenses that exceed 1 percent of the
average month-end net assets of the Fund are the responsibility of the General
Partner.  For the three and nine months ended September 30, 2009,
actual operating expenses exceeded this 1 percent (pro rated operating expense
limitation) of average month-end net assets of the Fund by $81,739 and $209,783,
respectively, with such amount included in operating expenses waived in the
statements of operations.  For the three and nine months ended
September 30, 2008, actual operating expenses exceeded this 1 percent (pro rated
operating expense limitation) of average month-end net assets of the Fund by
$58,066 and $170,095, respectively, with such amount included in operating
expenses waived in the statements of operations.  Additionally, during
the three and nine months ended September 30, 2009, the General Partner
voluntarily waived $46,364 and $132,269, respectively, of operating expenses of
the Fund, with such amounts also included in operating expenses waived in the
statements of operations.  During the three and nine months ended
September 30, 2008, the General Partner voluntarily waived $30,517 and $84,645,
respectively, of operating expenses of the Fund, with such amounts also included
in operating expenses waived in the statements of operations.  As of
September 30, 2009 and December 31, 2008, $139,063 and $125,530, respectively,
were payable to the General Partner for operating expenses not
waived.  Such amounts are presented as accounts payable – General
Partner in the statements of financial condition.
 
 Note
      6:
              SUBSCRIPTIONS,
      DISTRIBUTIONS, AND
REDEMPTIONS
 
 Investments
in the Fund are made by subscription agreement, subject to acceptance by the
General Partner. Units are sold at the net asset value per Class A Unit as of
the close of business on the last day of the month in which the subscription is
accepted. Investors whose subscriptions are accepted are admitted as Limited
Partners as of the beginning of the month following the month in which their
subscriptions were accepted. At September 30, 2009 and December 31, 2008, the
Fund had received subscriptions of $354,213 and $1,513,541, respectively, which
were additions to the Fund or returned, if applicable, subsequent to the
quarter-end and year-end.
 
 The Fund
is not required to make distributions, but may do so at the sole discretion of
the General Partner. A Limited Partner may request and receive redemption of
Class A Units owned at the end of any month, subject to 5 days written notice to
the General Partner and restrictions in the Limited Partnership
Agreement.
  14
 Table of Contents
  The
General Partner may require a Limited Partner to redeem from the Fund if the
General Partner deems the redemption (a) necessary to prevent or correct the
occurrence of a nonexempt prohibited transaction (see SA-4, “Investment by
Employee Benefit Plans”) under the Employee Retirement Income Security Act of
1974, as amended, or the Internal Revenue Code of 1986, as amended, or (b)
beneficial to the Fund or (c) necessary to comply state, federal, or other
self-regulatory organization regulations.
 
 Note
      7:
              TRADING ACTIVITIES AND
      RELATED RISKS
 
 The Fund
engages in the speculative trading of futures in the United States and
internationally. The Fund is exposed to both market risk, the risk arising from
changes in the fair value of the contracts, and credit risk, the risk of failure
by another party to perform according to the terms of a contract.
 
 Purchase
and sale of futures contracts requires margin deposits with the brokers.
Additional deposits may be necessary for any loss on contract value. The
Commodity Exchange Act requires a broker to segregate all customer transactions
and assets from such broker’s proprietary activities. A customer’s cash and
other property (for example, U.S. Government securities) deposited with a broker
are considered commingled with all other customer funds subject to the broker’s
segregation requirements. In the event of a broker’s insolvency, recovery may be
limited to a pro rata share of segregated funds available. It is possible that
the recovered amount could be less than (or none of) the total cash and other
property deposited. The Fund utilizes Newedge USA, LLC as its futures
broker.
 
 The Fund
has a substantial portion of its assets on deposit with financial institutions
in connection with its cash management activities. In the event of a financial
institution’s insolvency, recovery of Fund assets on deposit may be limited to
account insurance or other protection afforded such deposits.
 
 The Fund
utilizes UBS Financial Services, Inc. and Bank of America as cash management
securities brokers for the investment of some margin excess amounts into
short-term fixed income instruments including high grade commercial paper
(interest bearing with some credit risk), U.S. Government securities and
Government-sponsored enterprises (interest bearing and credit risk free) with
durations of less than one year. The Fund invests in certain commercial paper
issued by an affiliate of UBS Financial Services, Inc.
 
 For
futures contracts, risks arise from changes in the fair value of the contracts.
Theoretically, the Fund is exposed to a market risk equal to the value of
futures contracts purchased and unlimited liability on such contracts sold
short.
 
 In
addition to market risk, upon entering into commodity interest contracts there
is a credit risk that a counterparty will not be able to meet its obligations to
the Fund. The counterparty for futures and options on futures contracts traded
in the United States and on most non-U.S. futures exchanges is the clearinghouse
associated with such exchanges. In general, clearinghouses are backed by the
corporate members of the clearinghouse who are required to share any financial
burden resulting from the nonperformance by one of their members and, as such,
should significantly reduce this credit risk. In cases where the clearinghouse
is not backed by the clearing members, like some non-U.S. exchanges, it is
normally backed by a consortium of banks or other financial
institutions.
 
 The Fund
trades only with those counterparties that it believes to be creditworthy. All
positions of the Fund are valued each day at fair value. There can be no
assurance that any clearing member, clearinghouse or other counterparty will be
able to meet its obligations to the Fund.
 
 The net
unrealized gain on open futures contracts is comprised of the
following:
 
 Futures
      Contracts
                (exchange
      traded)September
      30, 2009
              
              
              December
      31, 2008Gross
      unrealized gains
              
              $
              8,775,238
              
              
              $
              10,893,343Gross
      unrealized losses
              
              
              (1,948,554
              )
              
              
              (1,767,495
              )Net
      unrealized gain on open futures contracts
              
              $
              6,826,684
              
              
              $
              9,125,848
  15
 Table of Contents
  The
General Partner has established procedures to actively monitor market risk and
minimize credit risk, although there can be no assurance that it will, in fact,
succeed in doing so. The Limited Partners bear the risk of loss only to the
extent of the fair value of their respective investments and, in certain
specific circumstances, distributions and redemptions received.
 
 Note
      8:
              INDEMNIFICATIONS
 
 In the
normal course of business, the Fund may enter into contracts and agreements that
contain a variety of representations and warranties and which provide general
indemnifications.  The Fund’s maximum exposure under these
arrangements cannot be estimated.  However, the Fund believes that it
is unlikely it will have to make material payments under these arrangements and
has not recorded any contingent liability in the financial statements for such
indemnifications.
 
 Note
      9:
              INTERIM
      FINANCIAL STATEMENTS
 
 The
statements of financial condition, including the condensed schedule of
investments, as of September 30, 2009, the statements of operations for the
three and nine months ended September 30, 2009 and 2008, the statements of cash
flows and changes in partners’ capital (net asset value) for the nine months
ended September 30, 2009 and 2008, and the accompanying notes to the financial
statements are unaudited.  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with U.S. generally accepted accounting principles may be omitted pursuant to
such rules and regulations.  In the opinion of management, such
financial statements and accompanying disclosures reflect all adjustments, which
were of a normal and recurring nature, necessary for a fair presentation of
financial position as September 30, 2009, results of operations for the three
and nine months ended September 30, 2009 and 2008, cash flows and changes in
partners’ capital (net asset value) for the nine months ended September 30, 2009
and 2008.  The results of operations for the three and nine months
ended September 30, 2009 and 2008 are not necessarily indicative of the results
to be expected for the full year or any other period.  These financial
statements should be read in conjunction with the audited financial statements
and the notes thereto included in our Form 10-K as filed with the U.S.
Securities and Exchange Commission.
 
 Note
      10:
              FINANCIAL
      HIGHLIGHTS
 
 The
following information presents per unit operating performance data and other
supplemental financial data for the three and nine months ended September 30,
2009 and 2008.  This information has been derived from information
presented in the financial statements.
  16
 Table of Contents
 
 Class
      A UnitsThree
      Months Ended September 30,
              
              
              Nine
      Months Ended September 30,2009
              
              
              2008
              
              
              2009
              
              
              2008Per
      Unit Performance(for a unit outstanding throughout the entire
      period)Net
      asset value per unit at beginning of period
              
              $
              2,593.42
              
              
              $
              2,643.69
              
              
              $
              2,847.19
              
              
              $
              1,959.96Income
      (loss) from operations:Gain
      (loss) from trading(1)
              
              
              100.12
              
              
              
              (449.99
              )
              
              
              (88.94
              )
              
              
              499.21Net
      investment loss(1)
              
              
              (38.18
              )
              
              
              (13.85
              )
              
              
              (102.89
              )
              
              
              (279.32
              )Total
      income (loss) from operations
              
              
              61.94
              
              
              
              (463.84
              )
              
              
              (191.83
              )
              
              
              219.89Net
      asset value per unit at end of period
              
              $
              2,655.36
              
              
              $
              2,179.85
              
              
              $
              2,655.36
              
              
              $
              2,179.85Total
      return
              
              
              2.39
              %
              
              
              (17.55
              %)
              
              
              (6.74
              %)
              
              
              11.22
              %Supplemental
      dataRatios
      to average net asset value:Expenses
      prior to advisor incentive fee (2) (3)
      (4)
              
              
              6.07
              %
              
              
              4.87
              %
              
              
              5.82
              %
              
              
              6.26
              %Advisor
      incentive fee (5)
              
              
              0.00
              %
              
              
              0.00
              %
              
              
              0.00
              %
              
              
              10.39
              %Total
      expenses
              
              
              6.07
              %
              
              
              4.87
              %
              
              
              5.82
              %
              
              
              16.65
              %Net
      investment loss (2) (3)
      (4) (6)
              
              
              (5.85
              %)
              
              
              (2.48
              %)
              
              
              (5.11
              %)
              
              
              (3.32
              %)
 
 Total
returns are calculated based on the change in value of a Class A Unit during the
period.  An individual partner’s total returns and ratios may vary
from the above total returns and ratios based on the timing of contributions and
redemptions.
 
 (1) The
net investment loss per unit is calculated by dividing the net investment loss
by the average number of Class A units outstanding during the
period.  Gain (loss) from trading is a balancing amount necessary to
reconcile the change in net asset value per unit with the other per unit
information.  Such balancing amount may differ from the calculation of
gain (loss) from trading per unit due to the timing of trading gains and losses
during the period relative to the number of units outstanding.
 
 (2) All
of the ratios under the supplemental data for Class A Units are computed net of
voluntary and involuntary waivers of operating expenses.  For the
three and nine months ended September 30, 2009, the ratios are net of the 0.71%
and 0.66% effect of the total waivers of operating expenses,
respectively.  For the three and nine months ended September 30, 2008,
the ratios are net of the 0.70% and 0.77% effect of the total waivers of
operating expenses, respectively. Both the nature and the amounts of the waivers
are more fully explained in Note 5.
 
 (3) The
net investment loss includes interest income, which is then reduced by all
expenses and excludes gain (loss) from trading activities and brokerage
commissions. The resulting amount is divided by the average net asset value for
the year.
 
 (4)
Ratios have been annualized.
 
 (5)
Ratios have not been annualized.
 
 (6) Ratio
excludes advisor incentive fee.
  17
 Table of Contents
  Note
      11:
              SUBSEQUENT
      EVENTS
 
 Subsequent
events were evaluated for disclosure through November 16, 2009, the date on
which the financial statements were issued.  There are no subsequent
events to disclose.
 
 Item
2.  Management's Discussion and Analysis of
Financial Condition and Results of Operations
 
 Reference
is made to Item 1, “Financial Statements,” the information contained therein is
essential to, and should be read in connection with the following
analysis.
 
 Introduction
 
 Sage Fund
Limited Partnership (the “Fund”) is a Maryland limited partnership which
operates as a commodity investment pool that commenced operations on August 2,
1995.  Beginning September 1, 2007, the Fund uses Altis Partners
(Jersey) Ltd. (the “Trading Advisor”), a commodity trading advisor, to engage in
the trading of futures contracts and other financial instruments on behalf of
the Fund.  Prior to that, the trading advisor was Sunrise Capital
Partners, LLC. The Fund may invest the proceeds from its offering of units in
the speculative trading of futures contracts and other financial instruments
traded in the United States and internationally.  Specifically, the
Fund primarily trades futures on six major market sectors - interest rates,
equity indices, energy products, currencies, metals and agricultural
commodities.  However, the Fund can trade other sectors such as livestock
as well.
 
 Recent
Global Financial Crisis
 
 There
were several events that led to significant volatility in global capital markets
during 2008 and continuing in 2009.  Following a series of global
announcements regarding failures in financial institutions including the
government take-over of Fannie Mae and Freddie Mac, equity markets fell and
credit markets experienced a sharp drop in liquidity.
 
 On
October 3, 2008, President Bush signed into law the Emergency Economic
Stabilization Act of 2008. The Act gave the U.S. Treasury certain powers to
assist troubled financial institutions, especially those with assets that may
have been affected by sub-prime mortgage exposure or credit default insurance
exposure.
 
 Despite
the increased volatility in the capital markets, the Fund was not adversely
impacted by these developments. In fact, as a result of the declining global
markets in 2008 and the first quarter of 2009, the Fund’s short positions in
equity indices were highly profitable. Additionally, the Fund’s short positions
in physical commodities and long positions in interest rate instruments were
also profitable in 2008 as commodity prices decreased and bond prices
increased.
 
 Critical
Accounting Policies
 
 The
preparation of the Fund’s financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
 
 Fair
value is defined as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date and sets out a fair value hierarchy.  The fair
value hierarchy gives the highest priority to quoted prices in active markets
for identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3).  Inputs are broadly defined as
assumptions market participants would use in pricing an asset or liability. The
three levels of the fair value hierarchy are described below:
 
 Level
1.  Unadjusted quoted prices in active markets for identical assets or
liabilities that the reporting entity has the ability to access at the
measurement date.
 
 Level
2.  Inputs, other than quoted prices within Level 1, that are
observable for the asset or liability, either directly or
indirectly.  A significant adjustment to a Level 2 input could result
in the Level 2 measurement becoming a Level 3 measurement.
 
 Level
3.  Inputs are unobservable for the asset or liability.
 
 The
Fund’s investments in U.S. Government securities, commercial paper,
Government-sponsored enterprises and corporate notes are short-term in nature,
with a duration of less than one year, and, typically, the Fund holds these
investments through maturity. As such, interest income generated from these
investments is recorded in the statements of operations. The fair value of these
investments as obtained from cash management and clearing firms statements are
compared to amortized cost to verify that the carrying amounts approximates
their fair value.
  18
 Table of Contents
  The
Fund’s cash management account holder and clearing firm (UBS and Newedge,
respectively) utilize pricing services to value U.S. Government securities,
commercial paper, Government-sponsored enterprises and corporate notes
investments. These pricing services utilize the market approach which uses
prices and other relevant information generated by market transactions involving
identical or comparable assets or liabilities. Valuation techniques consistent
with the market approach include matrix pricing. Matrix pricing, which is used
for Level 2 investments, is a mathematical technique used principally to value
debt securities without relying exclusively on quoted prices for the specific
securities, rather than relying on the securities’ relationship to other
benchmark quoted securities.
 
 U.S.
Government securities are actively traded on a daily basis and the pricing
services are able to obtain bid and ask quotes for identical assets by CUSIP.
Commercial paper, Government-sponsored enterprises and corporate notes
investments are also actively traded, however, the pricing services are only
able to obtain bid and ask quotes for similar assets. As such, U.S. Government
securities are classified within Level 1 and commercial paper,
Government-sponsored enterprises, and corporate notes investments are classified
within Level 2.
 
 Fair
value of exchange traded contracts is based upon exchange settlement prices. The
investments in money market funds and futures contracts are valued using quoted
market prices and are classified within Level 1. The Fund uses some or all, when
applicable, of these financial instruments as part of its trading
activities.  The recorded values of commercial paper,
Government-sponsored enterprises, U.S. Government securities and corporate notes
are based on amortized cost carrying amounts due to the short-term maturity of
the instruments and are classified within Level 1 or 2; therefore, their
carrying amounts approximate fair values.
 
 Futures
contracts are recorded on a trade date basis and gains or losses are realized
when contracts are liquidated. Unrealized gains or losses on open contracts (the
difference between contract trade price and fair value) are reported in the
statement of financial condition as net unrealized gain or loss, as there exists
a right of any offset of any unrealized gains or losses.  Fair value
of exchange-traded contracts is based upon exchange settlement prices. Any
change in net unrealized gain or loss from the preceding period is reported in
the statement of operations. Commercial paper, corporate notes, U.S. Government
securities and Government-sponsored enterprises are recorded at amortized cost
and interest is accrued and recorded through maturity, which approximates fair
value.
 
 For
purposes of both financial reporting and calculation of redemption value, net
asset value per unit is calculated by dividing the Net Assets by the number of
outstanding Units. The Fund’s Net Assets refers to the total assets of the Fund
(including without limitation all cash and cash equivalents (valued at cost),
any unrealized profits and losses, accrued interest and amortization of original
issue discount, and the fair value of all open futures positions and other
assets of the Fund, minus the total liabilities of the Fund, including without
limitation, one-half of the brokerage commissions that would be payable with
respect to the closing of each of the Fund’s open commodities interests
positions (if charged on a round-turn basis), or brokerage expenses (if charged
on a flat rate basis), and fees and expenses (including accrued Incentive Fees),
determined in accordance with U.S. generally accepted accounting principles
consistently applied under the accrual basis of accounting. Net income (loss) is
calculated for the Fund as a whole on a monthly basis. Once calculated, net
income (loss) is then allocated to the Limited Partners based on their unit
ownership as of the beginning of each month.
 
 As of
September 30, 2009, the aggregate capitalization of the Fund was $75,434,337.
The net asset value per unit of the Class A Units was $2,655.36 as of September
30, 2009.
 
 Liquidity
 
 Most
United States commodity exchanges limit fluctuations in futures contracts prices
during a single day by regulations referred to as “daily price fluctuation
limits” or “daily limits.” During a single trading day, no trades may be
executed at prices beyond the daily limit. Once the price of a futures contract
has reached the daily limit for that day, positions in that contract can neither
be taken nor liquidated. Futures prices have occasionally moved the daily limit
for several consecutive days with little or no trading. Similar occurrences
could prevent the Fund from promptly liquidating unfavorable positions and
subject the Fund to substantial losses which could exceed the margin initially
committed to such trades. In addition, even if futures prices have not moved the
daily limit, the Fund may not be able to execute futures trades at favorable
prices if little trading in such contracts is taking place. Other than these
limitations on liquidity, which are inherent in the Fund’s futures trading
operations, the Fund’s assets are expected to be highly liquid. Redemptions may
be made by a limited partner as of the last trading day of any month at the net
asset value of the redeemed Units (or portion thereof) on that date, on 5 days
prior written notice to the General Partner. Partial redemptions must be for at
least $1,000, unless such requirement is waived by the General Partner. In
addition, the Limited Partner, if making a partial redemption, must maintain at
least $10,000 or his original investment amount, whichever is less, in the Fund
unless such requirement is waived by the General Partner.  As of
September 30, 2009, illiquidity has not materially affected the Fund’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
Fund’s liquidity increasing or decreasing in any material way.
  19
 Table of Contents
  Extraordinary
expenses may include expenses related to taxes and litigation.  The
Fund has not paid any extraordinary expenses.
 
 Capital
Resources
 
 The Fund
intends to raise additional capital only through the sale of Units offered
pursuant to the continuing offering, and does not intend to raise any capital
through borrowing. Due to the nature of the Fund’s business, the Fund does not
contemplate making capital expenditures.  The Fund does not have, nor
does it expect to have, any capital assets. Redemptions, exchanges, and sales of
Units in the future will affect the amount of funds available for investments in
futures interests in subsequent periods. It is not possible to estimate the
amount, and therefore the impact, of future inflows and outflows of Units. There
are no known material trends, favorable or unfavorable, that would affect, nor
any expected material changes to, the Fund’s capital resource arrangements at
the present time.
 
 Market
Sectors
  As of
September 30, 2009 and December 31, 2008, as a percentage of net assets, the
Fund had exposure to the following market sectors:
 
 Sector
              
              Amount
                9/30/09
              
              
              %
      of Net
                Assets
                9/30/09
              
              
              Amount
                12/31/08
              
              
              %
      of Net
                Assets
                12/31/08Agriculture
              
              $
              1,780,723
              
              
              
              2.36
              %
              
              $
              2,608,795
              
              
              
              3.91
              %Currency
              
              
              2,147,186
              
              
              
              2.85
              %
              
              
              1,178,505
              
              
              
              1.76
              %Energy
              
              
              433,104
              
              
              
              0.57
              %
              
              
              703,395
              
              
              
              1.05
              %Interest
      rate
              
              
              2,279,461
              
              
              
              3.02
              %
              
              
              4,040,177
              
              
              
              6.05
              %Metal
              
              
              3,544,337
              
              
              
              4.70
              %
              
              
              3,992,969
              
              
              
              5.98
              %Stock
      index
              
              
              538,981
              
              
              
              0.71
              %
              
              
              136,998
              
              
              
              0.21
              %Total
              
              $
              10,723,792
              
              
              
              14.21
              %
              
              $
              12,660,839
              
              
              
              18.96
              %
 
 Contractual
Obligations
 
 Not
applicable.
 
 Off-Balance
Sheet Risk
  The term
“off-balance sheet risk” refers to an unrecorded potential liability that, even
though it does not appear on the balance sheet, may result in future obligation
or loss.  The Fund trades in futures contracts and is therefore a
party to financial instruments with elements of off-balance sheet market and
credit risk. In entering into these contracts there exists a risk to the Fund,
that such contracts may be significantly influenced by market conditions, such
as interest rate volatility, resulting in such contracts being less
valuable.  If the markets should move against all of the futures
interests positions of the Fund at the same time, and if the General Partner was
unable to offset futures interests positions of the Fund, the Fund could lose
all of its assets and the limited partners would realize a 100%
loss.  The General Partner minimizes market risk through
diversification of the portfolio and maintenance of a margin-to-equity ratio
that rarely exceeds 30%.
 
 In
addition to market risk, upon entering into futures contracts there is a credit
risk that counterparty will not be able to meet its obligations to the
Fund.  The counterparty for futures contracts traded in the United
States and on most foreign exchanges is the clearinghouse associated with such
exchange.  In general, clearinghouses are backed by the corporate
members of the clearinghouse who are required to share any financial burden
resulting from the non-performance by one of their members and, as such, should
significantly reduce this credit risk.  In cases where the
clearinghouse is not backed by the clearing members, like some foreign
exchanges, it is normally backed by a consortium of banks or other financial
institutions.
  20
 Table of Contents
  Results
of Operations
 
 The
returns for A Units for the nine months ended September 30, 2009 and 2008 were
(6.74%) and 11.22%, respectively. Further analysis of the trading gains and
losses is provided below.
 
 Past
results are not indicative of future performance.
 
 2009
 
 January
 
 The Fund
finished lower in January by 2.43% as losses in interest rate instruments,
foreign currencies, equity indices and metals offset gains in energy and
agricultural commodities. In contrast to the trends of the last few months, many
of the markets traded by the Fund were directionless.  General
optimism after the Obama transition along with government intervention into the
world’s financial markets seemed to dampen the steady declines in equity prices
experienced in recent quarters.  The energy sector was profitable,
driven by gains from crude oil and natural gas, whose prices continued to
decline on slowing demand and rising inventory levels. Interest rate instruments
edged lower during the month which went against the Fund’s long bond
positions.  In foreign currencies, the U.S. dollar strengthened as
risk adverse investors continued to seek the perceived safety of the U.S.
currency which benefited the Fund’s long U.S. dollar positions.  In
other foreign currencies though, the British pound strengthened against the
Australian dollar which went against the Fund’s short pound
positions.
 
 February
 
 The Fund
finished up 0.08% in the month of February.  February was a profitable
month for the Fund as most markets continued to trade within relatively narrow
price ranges.  Global equity markets continued to decline amid further
weak economic data and a deepening recession.  This decline benefited
the Fund’s short positions in equity indices. The energy sector finished with
modest profits from short positions in natural gas and heating
oil.  Agricultural commodities exhibited a small loss after a sharp
reversal in cocoa markets.  Foreign currencies experienced losses this
month due to the weakening of the Japanese yen relative to the U.S.
dollar.  The yen rose about 30% between August 2008 and the start of
February, then switched direction against the U.S. dollar and other major
currencies.
 
 March
 
 The Fund
finished lower in March by 2.72% as prices moved against established trends and
the Fund’s positions.  After equity markets reached a new 12 year low,
markets reversed and showed some signs of recovery.  The rising equity
indices, including the S&P 500, DAX and Nikkei 225 Index, moved against the
Fund’s short positions, resulting in losses for the Fund. The U.S. dollar fell
sharply following the U.S. Treasury Department’s announcement that it planned to
repurchase toxic assets, in an effort to help stimulate bank
lending.  Most foreign currencies strengthened against the U.S. dollar
moving against the Fund’s short foreign currency positions.  In the
interest rate instrument markets, prices settled higher adding some profit to
the Fund’s long positions in that sector.
 
 April
 
 The Fund
finished lower in April by 1.72% as most markets continued to move within narrow
trading ranges without exhibiting any significant trends.  One
exception was in the energy sector where natural gas prices continued in a
downward trend generating profits for the Fund’s short positions.  A
rally in global equities that began in March continued through April. The rising
equity prices generated profits for the Fund’s long positions in this sector
which helped to offset losses from other sectors.  The Fund’s biggest
losses came from interest rate instruments, where prices in medium to long term
bonds fell, which went against the Fund’s long positions.  Industrial
metals prices rose toward the end of the month, with aluminum, tin and nickel
moving against the Fund’s short positions creating some
losses.  Agricultural commodities ended flat for the
month.
  21
 Table of Contents
  May
 
 The Fund
finished up 1.27% in the month of May as profits realized from foreign
currencies, interest rate instruments, metals and agricultural commodities
offset losses incurred in the equity indices and energy sectors.  The
Fund's largest profits came from long positions in copper and gold which
continued to trend higher during the month.  The most significant
losses derived from the energy sector, which saw sharp price movements in
natural gas that went against the Fund's short positions.  The Fund's
long positions in crude oil generated profits that helped reduce losses
experienced from natural gas contracts. Interest rate instruments were mixed as
rising prices on short term interest rate instruments were profitable, while a
sell-off in longer term fixed income markets went against the Fund's long
positions.  Profits in foreign currencies came from the Fund's long
positions in the euro, British pound, Australian dollar and Canadian
dollar.
 
 June
 
 The Fund
finished lower in June by 3.64% as gains in equity indices, energies, foreign
currencies and agricultural commodities were offset by losses from interest rate
instruments and metals.  The most significant losses occurred in the
Fund’s short-term interest rate positions, where prices reversed from previous
longer term trends.  A sharp sell-off in Eurodollar, short sterling
and euribor contracts was fueled by speculation that global central banks may
begin to increase short-term interest rates to counteract potential inflationary
pressures.  The sudden drop in interest rate instrument prices went
against the Fund’s long positions.  Also in interest rates, weaker
than expected forecasts for Japan’s economy sent Japanese government bond (JGB)
prices higher, which was a reversal from the price trend in that market. The
higher prices generated losses in the Fund’s short JGB
positions.  Commodity markets rallied during the month which benefited
the Fund’s long positions in agricultural commodities, but resulted in losses
from short positions in the metals sector.  Long positions in the
energies were profitable as oil prices made new highs for the year.
 
 July
 
 So far,
2009 has proven to be a difficult year for managed futures
investments.  In contrast to the many steady trends of last year, this
year’s markets have been characterized by several price reversals that went
against established trends or by price movement without any sustained
direction.  This is not a new market phenomenon, but when it occurs it
has historically posed challenges for systematic trend following programs, which
the Fund utilizes.  Although these recent months have been
disappointing in the absolute sense, we have been satisfied with the Fund’s
Trading Advisor’s ability to manage through this difficult
environment.  In July the Fund declined by 0.76% as profits from
equity indices, interest rate instruments, metals and foreign currencies were
not sufficient to offset losses from energy and agricultural
commodities.  Equity markets were volatile as they initially fell
early in the month in response to poor economic data in the U.S.  By
mid-month increased optimism about the global economy pushed equity markets to
eight month highs.  The rising global equity prices generated profits
for the Fund’s long positions.  The Fund’s long positions in base
metals, including aluminum, nickel and copper, benefited from upward trends in
those markets that also gener­ated profits.  In energy markets
heating oil and gasoline prices continued to move sideways and generated losses
for the Fund’s positions in this sector.
 
 August
 
 The Fund
finished the month up by 1.46% as all major sectors posted a profit with the
exception of energy.  Performance was led by the agricultural
commodities sector as price increases in sugar, wheat and corn generated profits
for the Fund’s long positions.  Due to a drop in global supply, sugar
prices hit a 28-year high as heavy rains in India and Brazil dampened
inventory.  The Fund’s long positions in equity indices profited as
further signs of economic recovery pushed equity prices higher.  In
the metals sector, copper prices were also buoyed by growing confidence on an
economic turn around which generated profits from the Fund’s long
positions.  Globally, central banks indicated that near-term interest
rate hikes were unlikely.  In response, prices of short-term interest
rate instruments increased which benefited the Fund’s long
positions.  In the energy sector, natural gas prices have fallen 84%
in the last 13 months, which generated profits for the Fund’s short positions.
Those profits were offset, however, by losses from short positions in gasoline
and crude oil.
 
 September
 
 The Fund
finished the month up by 1.68% as profits from foreign currencies, interest rate
instruments and equity indices offset losses in the energy
sector.  Performance was led by the Fund’s long positions in foreign
currencies and short positions in the USD.  The USD declined to a
twelve-month low versus the Euro and an eight-month low versus the
yen.  In interest rate instruments, prices in both short-term
instruments and long-term bonds have been trending higher since mid-August as
central banks continue to signal that interest rates will remain
low.  The rise in instrument prices generated profits for the Fund's
long positions.  In the energy sector, natural gas rallied over 30%
from a seven year low despite strong inventory data.  The sudden
increase in gas prices went against the Fund’s short positions generating losses
for the Fund.
  22
 Table of Contents
  2008
 
 January
 
 The Fund
finished lower in January by 5.19% as losses from energy, equity indices,
foreign currencies and metals offset profits from global interest rate
instruments and agricultural commodities.  The largest losses for the
Fund came from the energy sector, as crude oil prices declined after hitting an
all time nominal high at the beginning of the month.  Lower prices in
crude oil and global stock indices went against the Fund’s long
positions.  Global interest rate instruments were profitable for the
Fund as rates trended lower on growing concerns of a possible U.S.
recession.  Later in the month, the Federal Reserve responded to the
sharp sell off in global equity prices with rate cuts totaling
1.25%.  This move by the Fed pushed short-term rates even lower which
benefited the Fund’s long positions in that sector.  Long positions in
the agricultural commodities sector were profitable as grain and soybean prices
continued an upward trend on strong global demand and declining inventory
levels.
 
 February
 
 The Fund
finished the month up by 22.93% with net profits in all nine major market
sectors. Physical commodities generated the largest profits as strong demand and
tight supplies in a number of commodities drove contract prices to record
highs.  In the agricultural commodities sector, the Fund’s long
positions in soybeans, wheat, coffee, corn and sugar were among the most
profitable.  Since the start of the year, wheat prices have climbed
21%, while soybeans and coffee were up 27% and 35% respectively.  In
the energy sector, light crude oil futures hit a new nominal high of $103.05
dollars per barrel.  The Fund gained from its long positions in
energy, especially crude oil, heating oil, gasoline and kerosene.  In
the metals sector, the Fund profited from its long positions in both precious
and industrial metals including gold, silver, aluminum, platinum and
copper.  Short positions in equity indices profited as global indices
weakened on fears of inflation and a weaker U.S. dollar. Bond prices were mostly
unchanged until the final days of the month, when prices jumped in reaction to
Fed news about further rate cuts. The net increase in bond prices benefited the
Fund’s long bond positions.
 
 March
 
 The Fund
finished lower in March by 6.78% as losses from agricultural products, energy
and metals offset profits from equity indices, foreign currencies and interest
rate instruments.  Financial markets reacted to two announcements by
the Federal Reserve that ultimately impacted several market
sectors.  The Fed cut the federal funds target interest rate by .75%
and it also announced it would provide guarantees to JP Morgan Chase for the
acquisition of Bear Stearns.  Following the announcements, the U.S.
dollar which had been trending lower over the past several months, suddenly
strengthened.  The stronger dollar triggered a rapid sell-off in
physical commodities including agricultural, metals and energy, with
agricultural commodities generating the largest losses.
 
 April
 
 The Fund
finished lower this month by 1.67% as profits from energy were offset by losses
from the other five major market sectors. Japanese government bonds fell on
reports that inflation in Japan had reached its highest level in a
decade.  By the end of the month, most domestic and international
interest rates had edged higher even after the FOMC announced a .25% rate cut.
Overall, the decline in bond prices went against the Fund’s long
positions.  Agricultural commodity prices continued to decline
resulting in losses for the Fund’s long positions in that
sector.  Wheat prices fell more than 6%, reaching five-month lows on
news that the government of Ukraine had eased export
restrictions.  Corn and soybean prices also moved lower. Long
positions in the energy sector posted gains as crude oil prices approached $120
per barrel.  Concerns over Saudi supplies, Nigerian production
disruptions and further evidence of continuing Chinese demand fueled the rise in
oil prices.
 
 May
 
 The Fund
finished higher this month by 11.43% with gains in most of the major market
sectors.  The energy sector generated significant profits as the
Fund’s long positions benefited from sustained upward trends in crude oil,
gasoline, heating oil and natural gas.  Analysts’ explanations for the
rise in prices were mixed, but steady demand, supply disruptions and a weak U.S.
dollar continued to be the most commonly stated factors.  While prices
for several energy contracts reached all time highs, other market sectors were
relatively quiet this month.  Agricultural commodities, metals and
stock indices all finished with modest profits for the month, with each sector
experiencing a mix of offsetting returns.  Short-term interest rate
instruments were profitable as the Fund’s short positions benefited from a rise
in short-term international interest rates.
  23
 Table of Contents
  June
 
 The
Fund’s systematic trading strategies generated profits of 13.31% for the month
from trends in all of the major market sectors in June.  Crude oil,
heating oil, gasoline and natural gas soared to new highs, producing significant
profits from the Fund’s long energy sector positions.  Higher energy
prices, weakness in the U.S. dollar and concerns over inflation drove stock
markets into bear market territory.  The falling equity prices
produced profits from the Fund’s short equity index positions. Agricultural
prices rose this month as severe flooding in the U.S. threatened summer crop
supplies.  The rising prices benefited the Fund’s long positions in
soybeans, corn and wheat.  The Fund also profited from long positions
in metals including copper, gold and zinc.
 
 July
 
 The Fund
finished lower in July by 18.73% as several key markets experienced sharp
reversals that moved against previously established long-term market
trends.  The most significant price reversals were experienced in the
energy and agricultural commodity sectors.  After reaching multi-month
highs in June, prices in crude oil, heating oil, gasoline and natural gas fell
sharply in July on signs of weaker demand and a rising U.S.
dollar.  Natural gas, which reached a 30-month high at the end of
June, fell more than 32% during July, creating losses for the Fund’s long
positions.  The stronger dollar also caused agricultural commodities
to reverse from strong upward trends.  Corn and soybeans fell more
than 15% during the month creating losses for the Fund’s long systematic
positions.  Interest rate instruments were directionless over the last
several weeks.  The Fund’s positions in that sector experienced losses
due to a lack of trends resulting in “whipsawing” of the Fund’s
positions.  The Fund’s traders reduced their risk in each of the
affected sectors by either reducing or getting out of positions.
 
 August
 
 The Fund
finished lower in August by 7.12% as profits from the energy sector were not
enough to offset losses in foreign currencies, agricultural commodities, metals
and equity indices.  The U.S. dollar continued to strengthen against
many foreign currencies including the Euro which fell sharply to its lowest
level against the U.S. dollar in the last six months.  Falling foreign
currency prices went against the Fund’s long positions.  Agricultural
commodities and precious metals experienced multiple price changes during the
month causing losing trades for the Fund.
 
 September
 
 The Fund
finished up 9.23% in the month of September.  The Fund was profitable
in September as gains from our positions in stock indices, metals, agricultural
commodities and interest rate instruments offset losses incurred in foreign
currencies and energy.  Increasing uncertainty in the global financial
markets created significant volatility in both the credit and equity
markets.  Lehman Brothers Holdings, Inc. filed for bankruptcy
protection, Merrill Lynch was acquired by Bank of America and Fannie Mae,
Freddie Mac, and AIG required government support to remain
viable.  Later in the month, the Dow Industrials suffered its worst
single day point drop ever, sparked by U.S lawmakers’ rejection of a proposed
$700 billion market bailout.  Over the course of the month, global
equity prices declined which benefited the Fund’s short equity indices
positions.  Investors sought the relative safety of government backed
interest rate instruments, causing prices to rise which generated profits for
the Fund’s long positions in interest rate instruments.  Agricultural
commodity and metals prices fell, benefiting the Fund’s short
positions.
 
 Item 3.  Quantitative and Qualitative Disclosures about Market Risk
 
 A smaller
reporting company, as defined by Rule 12b-2 of the Exchange Act, is not required
to provide the information under this item.
 
 Item
4. Controls and Procedures
 
 Evaluation
of Disclosure Controls and Procedures
 
 Under the
supervision and with the participation of the management of the General Partner,
including its Chief Executive Officer and Interim Chief Financial Officer, the
Fund evaluated the effectiveness of the design and operation of the Fund’s
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Exchange Act) as of December 31, 2008 (the “Evaluation Date”). Any control
system, no matter how well designed and operated, can provide only 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. Based upon our evaluation,
the Chief Executive Officer and Interim Chief Financial Officer of the General
Partner concluded that, as of the Evaluation Date, the Fund’s disclosure
controls and procedures were effective to provide reasonable assurance that they
are timely alerted to material information relating to the Fund required to be
disclosed in the Fund’s periodic SEC filings.
 
 Changes
in Internal Control Over Financial Reporting
 
 There has
been no change in internal control over financial reporting (as defined in the
Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the
Fund’s last fiscal quarter that has materially affected or is reasonably likely
to materially affect, the Fund’s internal control over financial
reporting.
  24
 Table of Contents
  PART
II-OTHER INFORMATION
 
 Item 1: Legal Proceedings.
 
 None
 
 Item 1A: Risk Factors.
 
 Not
Applicable.
 
 Item
2: Unregistered Sales of Equity Securities and Use of
Proceeds
 
 Between
July and September 2009, the Fund issued Class A Units at monthly closings as
set forth in the following chart. The Fund is privately offered and sold to
“accredited investors” as defined in U.S. Securities Exchange Act of 1933 Rule
501(a).
 
 Schedule
of Number of Units and Dollar Amount of Interests Issued
 (Contributions)
 (Class
A Units)
 
 Dollar
      Amount
              
              
              Number
      ofMonth
              
              of
      Interests
              
              
              Additional
      UnitsIssued
              
              
              IssuedJuly
      2009
              
              $2,102,626
              
              
              
              810.7525August
      2009
              
              $1,629,464
              
              
              
              633.0892September
      2009
              
              $1,419,232
              
              
              
              543.4577
 
 
 Item
3: Defaults Upon SeniorSecurities
 
 Not
applicable.
 
 Item
4: Submissions of Matters to a vote of Security
Holders.
 
 None
 
 Item
5: Other Information
 
 None
 
 Item
6: Exhibits.
 
 (a)   Exhibits
and Index.
 
 The
following exhibits filed herewith.
  25
 Table of Contents
 
 Exhibit
      No.
              Description
      of Document
              Page
      No.3.1!
              Certificate of Limited Partnership of Sage Fund
      Limited Partnership.3.2!
              Second Amended and Restated Limited Partnership
      Agreement of Sage Fund Limited Partnership.31.01
              Certification
      of Kenneth E. Steben, Chief Executive Officer,  pursuant to
      Rules 13a-14 and 15d-14 of the Securities Exchange Act of
      1934.
              E-231.02
              Certification
      of Yun T. Callahan, Controller and Interim Chief Financial Officer,
      pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of
      1934.
              E-332.01
              Certification
      of Kenneth E. Steben, Chief Executive Officer, pursuant to 18 U.S.C.
      Section 1350, as enacted by Section 906 of The Sarbanes-Oxley Act of
      2002.
              E-432.02
              Certification
      of Yun T. Callahan, Controller and Interim Chief Financial Officer,
      pursuant to 18 U.S.C. Section 1350, as enacted by Section 906 of The
      Sarbanes-Oxley Act of 2002.
              E-5
 ! Filed
with the Registrant’s Form 10 filed on April 27, 2009, and incorporated herein
by reference.
 
 (b)
Reports.
 
 None.
  26
 Table of Contents
  SIGNATURES
 
 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.
 
 SAGE
FUND
 LIMITED
PARTNERSHIP
 (Registrant)
 
 By:
              Steben
      & Company, Inc.General
      PartnerBy:
              /s/ Kenneth E. Steben
              
              November
      16, 2009Kenneth E. StebenChief Executive Officer(Principal Executive
    Officer)By:
              /s/ Yun Callahan
              
              November
      16, 2009Yun
      T. CallahanController
      and Interim Chief Financial Officer(Principal Financial
    Officer)




E-1