UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-Q




QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





For the
quarterly period ended September 30, 2010





Commission
file number:  000-53639




SAGE
FUND LIMITED PARTNERSHIP




Organized
      in Maryland
            IRS
      Employer Identification
  No.:  52-1937296





c/o
Steben & Company, Inc.


2099
Gaither Road, Suite 200, Rockville, Maryland 20850


(240)
631-7600




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


Yes [ X
]     No [   ]





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


Yes
[    ]     No
[   ]





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a 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):





[   ]  Large
      accelerated filer
            [   ]  Accelerated
      filer[   ]  Non-accelerated
      filer
            [X]  Smaller
      Reporting Company





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


Yes
[   ]     No [ X ]










Part
I:  Financial Information


Item
1.  Financial Statements





Sage
Fund Limited Partnership


Statements
of Financial Condition


September
30, 2010 (Unaudited) and December 31, 2009 (Audited)





September
      30,
              2010
            
            
            December
      31,
              2009AssetsEquity
      in broker trading accountsCash
            
            $
            21,264,386
            
            
            $
            15,489,732Net
      unrealized gain on open futures contracts
            
            
            2,546,843
            
            
            
            4,046,127Interest
      receivable
            
            
            3,372
            
            
            
            1,408Total
      equity in broker trading accounts
            
            
            23,814,601
            
            
            
            19,537,267Cash
      and cash equivalents
            
            
            50,302,168
            
            
            
            46,842,998Government
      sponsored enterprise notes, at fair value
            
            
            -
            
            
            
            8,075,134General
      Partner 1% allocation receivable
            
            
            -
            
            
            
            81,664Total
      assets
            
            $
            74,116,769
            
            
            $
            74,537,063Liabilities
      and Partners’ Capital (Net Asset Value)LiabilitiesTrading
      Advisor management fee payable
            
            $
            64,336
            
            
            $
            123,416Selling
      Agent fees payable - General Partner
            
            
            184,548
            
            
            
            183,853Administrative
      expenses payable - General Partner
            
            
            41,142
            
            
            
            138,147Commissions
      and other trading fees payable on open contracts
            
            
            30,156
            
            
            
            7,515General
      Partner management fee payable
            
            
            67,668
            
            
            
            67,413General
      Partner 1% allocation payable
            
            
            11,361
            
            
            
            -Redemptions
      payable
            
            
            275,276
            
            
            
            199,956Subscriptions
      received in advance
            
            
            165,813
            
            
            
            767,147Total
      liabilities
            
            
            840,300
            
            
            
            1,487,447Partners’
      Capital (Net Asset Value)Class
      A Interests – 28,478.2907 units and 28,805.7820 units
      outstandingat
      September 30, 2010 and December 31, 2009, respectively
            
            
            73,276,469
            
            
            
            73,049,616Total
      liabilities and partners' capital (net asset value)
            
            $
            74,116,769
            
            
            $
            74,537,063





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




1




Sage Fund Limited Partnership


Condensed
Schedule of Investments


September
30, 2010


(Unaudited)





Description
            
            Fair
      Value
            
            
            %
      of Partners’ Capital (Net Asset Value)Long
      U.S. Futures ContractsAgricultural
      (1)
            
            $
            732,791
            
            
            
            1.00
            %Currency
            
            
            640,378
            
            
            
            0.87
            %EnergyLT Crude (4 contracts, May 2011 – Jul 2011)
            
            
            7,770
            
            
            
            0.01
            %Other
            
            
            246,521
            
            
            
            0.34
            %Interest
      rate
            
            
            700,121
            
            
            
            0.96
            %MetalLME Aluminum U.S. (216 contracts, Oct 2010 – Dec 2010)
            
            
            655,338
            
            
            
            0.89
            %LME Copper U.S. (57 contracts, Oct 2010 – Dec 2010)
            
            
            858,412
            
            
            
            1.17
            %Other (1)
            
            
            1,656,514
            
            
            
            2.26
            %Stock
      index
            
            
            399,166
            
            
            
            0.54
            %Net
      unrealized gain on open long U.S. futures contracts
            
            
            5,897,011
            
            
            
            8.04
            %Short
      U.S. Futures ContractsAgricultural
            
            
            (87,785
            )
            
            
            (0.12
            )%Currency
            
            
            42,025
            
            
            
            0.06
            %EnergyLT Crude (217 contracts, Dec 2010 – Apr 2011)
            
            
            (786,410
            )
            
            
            (1.07
            )%Other
            
            
            64,609
            
            
            
            0.09
            %MetalLME
      Aluminum U.S. (246 contracts, Oct 2010 – Dec 2010)
            
            
            (1,850,439
            )
            
            
            (2.53
            )%LME
      Copper U.S. (57 contracts, Oct 2010 – Dec 2010)
            
            
            (474,731
            )
            
            
            (0.65
            )%Other
      (1)
            
            
            (1,103,350
            )
            
            
            (1.51
            )%Stock
      index
            
            
            (500
            )
            
            
            (0.00
            )%Net
      unrealized loss on open short U.S. futures contracts
            
            
            (4,196,581
            )
            
            
            (5.73
            )%Long
      Foreign Futures ContractsAgricultural
            
            
            12,986
            
            
            
            0.02
            %Currency
            
            
            661,932
            
            
            
            0.90
            %Energy
            
            
            1,619
            
            
            
            0.00
            %Interest
      rate
            
            
            657,067
            
            
            
            0.90
            %Metal
            
            
            25,562
            
            
            
            0.03
            %Stock
      index
            
            
            (185,541
            )
            
            
            (0.25
            )%Net
      unrealized gain on open long foreign futures contracts
            
            
            1,173,625
            
            
            
            1.60
            %Short
      Foreign Futures ContractsAgricultural
            
            
            3,898
            
            
            
            0.01
            %Currency
            
            
            (293,850
            )
            
            
            (0.40
            )%Energy
            
            
            (38,001
            )
            
            
            (0.05
            )%Interest
      rate
            
            
            20,926
            
            
            
            0.03
            %Metal
            
            
            (4,772
            )
            
            
            (0.01
            )%Stock
      index
            
            
            (15,413
            )
            
            
            (0.02
            )%Net
      unrealized loss on open short foreign futures contracts
            
            
            (327,212
            )
            
            
            (0.44
            )%Net unrealized gain on
      open futures
      contracts
            
            $
            2,546,843
            
            
            
            3.47
            %





(1)No
individual futures contract position constituted greater than one percent of
partners’ capital (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




Sage Fund Limited Partnership


Condensed
Schedule of Investments


December
31, 2009


(Audited)





Description
            
            Fair
      Value
            
            
            %
      of Partners’ Capital (Net Asset Value)Government
      Sponsored Enterprise NotesFace
      Value
            
            Maturity
      Date$
            8,000,000
            
            3/30/10
            
            Federal
      Home Loan Mortgage Corporation, 1.10%
            
            $
            8,075,134
            
            
            
            11.05
            %Total
      government sponsored enterprise notes
              (cost:  $8,039,111)
            
            $
            8,075,134
            
            
            
            11.05
            %Long
      U.S. Futures ContractsAgricultural
            
            $
            574,489
            
            
            
            0.79
            %Currency
            
            
            3,305
            
            
            
            0.00
            %Energy
            
            
            (126,660
            )
            
            
            (0.17
            )%Interest
      rate
            
            
            517,369
            
            
            
            0.71
            %MetalLME
      Copper U.S. (61 contracts, Jan 2010 – Mar 2010)
            
            
            1,045,669
            
            
            
            1.43
            %LME Aluminum U.S. (210 contracts, Jan 2010 – Apr
      2010)
            
            
            871,181
            
            
            
            1.19
            %Other (1)
            
            
            828,527
            
            
            
            1.13
            %Stock
      index
            
            
            179,911
            
            
            
            0.25
            %Net
      unrealized gain on open long U.S. futures contracts
            
            
            3,893,791
            
            
            
            5.33
            %Short
      U.S. Futures ContractsAgricultural
            
            
            4,528
            
            
            
            0.01
            %Currency
            
            
            531
            
            
            
            0.00
            %Energy
            
            
            (236,723
            )
            
            
            (0.32
            )%Interest
      rate
            
            
            54,234
            
            
            
            0.07
            %MetalLME Copper U.S. (41 contracts, Jan 2010 – Feb 2010)
            
            
            (413,731
            )
            
            
            (0.57
            )%LME Aluminum U.S. (115 contracts, Jan 2010 – Feb
    2010)
            
            
            (706,075
            )
            
            
            (0.97
            )%Other
            
            
            (435,521
            )
            
            
            (0.60
            )%Net
      unrealized loss on open short U.S. futures contracts
            
            
            (1,732,757
            )
            
            
            (2.38
            )%Long
      Foreign Futures ContractsAgricultural
            
            
            245,014
            
            
            
            0.34
            %Currency
            
            
            (59,087
            )
            
            
            (0.08
            )%Energy
            
            
            8,638
            
            
            
            0.01
            %Interest
      rateLIF 3M EURIBOR (193 contracts, Mar 2010 – Dec 2011)
            
            
            744,291
            
            
            
            1.02
            %Other
            
            
            227,206
            
            
            
            0.31
            %Metal
            
            
            207,659
            
            
            
            0.28
            %Stock
      index
            
            
            402,633
            
            
            
            0.55
            %Net
      unrealized gain on open long foreign futures contracts
            
            
            1,776,354
            
            
            
            2.43
            %Short
      Foreign Futures ContractsAgricultural
            
            
            (3,721
            )
            
            
            (0.01
            )%Currency
            
            
            147,081
            
            
            
            0.20
            %Energy
            
            
            (54,715
            )
            
            
            (0.07
            )%Interest
      rate
            
            
            20,094
            
            
            
            0.03
            %Net
      unrealized gain on open short foreign futures contracts
            
            
            108,739
            
            
            
            0.15
            %Net
      unrealized gain on open futures contracts
            
            $
            4,046,127
            
            
            
            5.53
            %





(1)No
individual futures contract position constituted greater than one percent of
partners’ capital (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




Sage Fund Limited Partnership


Statements
of Operations


For
the Three and Nine Months Ended September 30, 2010 and 2009


(Unaudited)





Three
      Months Ended
              September
      30,
            
            
            Nine
      Months Ended
              September
      30,2010
            
            
            2009
            
            
            2010
            
            
            2009Trading
      Gain (Loss)Net
      realized gain (loss)
            
            $
            3,960,971
            
            
            $
            (216,204
            )
            
            $
            5,804,341
            
            
            $
            382,118Net
      change in unrealized gain (loss)
            
            
            2,699,164
            
            
            
            3,086,479
            
            
            
            (1,499,284
            )
            
            
            (2,299,164
            )Brokerage
      commissions and trading expenses
            
            
            (66,281
            )
            
            
            (35,238
            )
            
            
            (160,006
            )
            
            
            (102,424
            )Net
      gain (loss) from trading
            
            
            6,593,854
            
            
            
            2,835,037
            
            
            
            4,145,051
            
            
            
            (2,019,470
            )Net
      Investment LossIncomeInterest
      income
            
            
            67,993
            
            
            
            39,913
            
            
            
            168,615
            
            
            
            367,077ExpensesTrading
      Advisor management fee
            
            
            185,806
            
            
            
            184,599
            
            
            
            553,554
            
            
            
            507,324Selling
      Agent fees
            
            
            534,649
            
            
            
            555,387
            
            
            
            1,622,481
            
            
            
            1,584,673Administrative
      expenses – General Partner
            
            
            209,622
            
            
            
            267,165
            
            
            
            665,811
            
            
            
            738,626General
      Partner management fee
            
            
            196,038
            
            
            
            203,642
            
            
            
            594,910
            
            
            
            581,047General
      Partner 1% allocation
            
            
            56,113
            
            
            
            17,923
            
            
            
            11,361
            
            
            
            (47,220
            )Total
      expenses
            
            
            1,182,228
            
            
            
            1,228,716
            
            
            
            3,448,117
            
            
            
            3,364,450Administrative
      expenses waived
            
            
            (75,592
            )
            
            
            (128,103
            )
            
            
            (259,175
            )
            
            
            (342,052
            )Net
      total expenses
            
            
            1,106,636
            
            
            
            1,100,613
            
            
            
            3,188,942
            
            
            
            3,022,398Net
      investment loss
            
            
            (1,038,643
            )
            
            
            (1,060,700
            )
            
            
            (3,020,327
            )
            
            
            (2,655,321
            )Net
      Income (Loss)
            
            $
            5,555,211
            
            
            $
            1,774,337
            
            
            $
            1,124,724
            
            
            $
            (4,674,791
            )











Three
      Months Ended
              September
      30,
            
            
            Nine
      Months Ended
              September
      30,2010
            
            
            2009
            
            
            2010
            
            
            2009Increase
      (decrease) in net asset value per Unit
            
            $
            193.28
            
            
            $
            61.94
            
            
            $
            37.12
            
            
            $
            (191.83
            )Net
      income (loss) per Unit
            
            $
            195.51
            
            
            $
            63.86
            
            
            $
            39.31
            
            
            $
            (181.14
            )(based
      on weighted average number of units outstanding)Weighted
      average number of Units outstanding
            
            
            28,414.5864
            
            
            
            27,785.0554
            
            
            
            28,608.8970
            
            
            
            25,807.5891





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


4




Sage Fund Limited Partnership


Statements
of Cash Flows


For
the Nine Months Ended September 30, 2010 and 2009


(Unaudited)





2010
            
            
            2009Cash
      flows from operating activitiesNet
      income (loss)
            
            $
            1,124,724
            
            
            $
            (4,674,791
            )Adjustments to reconcile net income
      (loss)to net cash provided byoperating
      activitiesNet change in
      unrealizedloss
            
            
            1,499,284
            
            
            
            2,299,164Changes
      inInterest
      receivable
            
            
            (1,964
            )
            
            
            2,208Government
      sponsored enterprise notes
            
            
            8,075,134
            
            
            
            1,076,416U.S.
      Treasury securities
            
            
            -
            
            
            
            4,498,180Commercial
      paper
            
            
            -
            
            
            
            19,576,904Corporate
      notes
            
            
            -
            
            
            
            4,013,516General
      Partner 1% allocation receivable/payable
            
            
            93,025
            
            
            
            (257,780
            )Trading
      Advisor management fee payable
            
            
            (59,080
            )
            
            
            76,883Trading
      Advisor incentive fee payable
            
            
            -
            
            
            
            (2,303,426
            )Selling
      Agent fees payable
            
            
            695
            
            
            
            13,258Administrative
      expenses payable – General Partner
            
            
            (97,005
            )
            
            
            13,533Commissions
      and other trading fees payable on open contracts
            
            
            22,641
            
            
            
            (3,414
            )General
      Partner management fee payable
            
            
            255
            
            
            
            4,861Net
      cash provided by operating activities
            
            
            10,657,709
            
            
            
            24,335,512Cash
      flows from financing activitiesSubscriptions
            
            
            4,188,906
            
            
            
            17,750,511Subscriptions
      received in advance
            
            
            165,813
            
            
            
            354,213Redemptions
            
            
            (5,778,604
            )
            
            
            (8,312,884
            )Net
      cash provided by (used in) financing activities
            
            
            (1,423,885
            )
            
            
            9,791,840Net
      increase in cash and cash equivalents
            
            
            9,233,824
            
            
            
            34,127,352Cash
      and cash equivalents, beginning of period
            
            
            62,332,730
            
            
            
            27,745,890Cash
      and cash equivalents, end of period
            
            $
            71,566,554
            
            
            $
            61,873,242End
      of period cash and cash equivalents consists ofCash
      in broker trading accounts
            
            $
            21,264,386
            
            
            $
            15,283,742Cash
      and cash equivalents
            
            
            50,302,168
            
            
            
            46,589,500Total
      end of period cash and cash equivalents
            
            $
            71,566,554
            
            
            $
            61,873,242Supplemental
      disclosure of cash flow informationPrior
      period redemptions paid
            
            $
            199,956
            
            
            $
            2,852,196Prior
      period subscriptions received in advance
            
            $
            767,147
            
            
            $
            1,513,541Supplemental
      schedule of non-cash financing activitiesRedemptions
      payable
            
            $
            275,276
            
            
            $
            492,119




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





5




Sage Fund Limited Partnership


Statements
of Changes in Partners’ Capital (Net Asset Value)


For
the Nine Months Ended September 30, 2010 and 2009


(Unaudited)





Units
            
            
            AmountNine
      Months Ended September 30, 2010Balance
      at December 31, 2009
            
            
            28,805.7820
            
            
            $
            73,049,616Net
      income
            
            
            
            
            
            
            1,124,724Subscriptions
            
            
            2,008.5251
            
            
            
            4,956,053Redemptions
            
            
            (2,336.0164
            )
            
            
            (5,853,924
            )Balance
      at September 30, 2010
            
            
            28,478.2907
            
            
            $
            73,276,469Nine
      Months Ended September 30, 2009Balance
      at December 31, 2008
            
            
            23,461.0047
            
            
            $
            66,797,883Net
      loss
            
            
            
            
            
            
            (4,674,791
            )Subscriptions
            
            
            7,145.5104
            
            
            
            19,264,052Redemptions
            
            
            (2,198.1371
            )
            
            
            (5,952,807
            )Balance
      at September 30, 2009
            
            
            28,408.3780
            
            
            $
            75,434,337







Net
      Asset Value Per UnitSeptember
      30, 2010
            
            December
      31, 2009
            
            September
      30, 2009
            
            December
      31, 2008$    2,573.06
            
            $    2,535.94
            
            $    2,655.36
            
            $    2,847.19





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


6





Sage Fund Limited Partnership


Notes
to Financial Statements


(Unaudited)




1.
            Organization
      and Summary of Significant Accounting
Policies





Description
of the Fund





Sage Fund
Limited Partnership (“Fund”) is a Maryland limited partnership, which operates
as a commodity investment pool that commenced operations on August 2,
1995.  The Fund issues Class A units of limited partner interests
(“Units”), 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 Second Amended
and Restated Limited Partnership Agreement (“Partnership
Agreement”).





The Fund
uses a commodity trading advisor to engage in the speculative trading of futures
contracts and other financial instruments traded in the United States (“U.S.”)
and internationally.





The Fund
is a registrant with the U.S. Securities and Exchange Commission (“SEC”)
pursuant to the U.S. Securities Exchange Act of 1934, as amended (“1934
Act”).  As a registrant, the Fund is subject to the regulations of the
SEC and the disclosure requirements of the 1934 Act.  As a commodity
pool, the Fund is subject to the regulations of the U.S. Commodity Futures
Trading Commission (“CFTC”), an agency of the 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 its futures broker.





Steben
& Company, Inc. (“General Partner”), is the general partner of the Fund and
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. (“Trading Advisor”) is the sole trading advisor for the
Fund.  The Trading Advisor uses the Altis Global Futures Portfolio
(“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 stock indices, currencies, interest rate instruments,
energy products, metals and agricultural commodities.





Significant
Accounting Policies





Financial
Accounting Standards Board Accounting Standards Codification




The Fund
follows accounting standards established by the Financial Accounting Standards
Board (“FASB”) to ensure consistent reporting of financial condition, results of
operation and cash flows in conformity with accounting principles generally
accepted in the U.S.  The accounting standards are embodied in the
FASB Accounting Standards Codification, which became effective for periods
ending on or after September 15, 2009.





Use
of Estimates




Preparing
financial statements in conformity with accounting principles generally accepted
in the U.S. requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying
notes.  Actual results could differ from those estimates.





Revenue
Recognition




Futures
contracts are recorded on a trade date basis, and gains or losses are realized
when contracts are liquidated.  Unrealized gains and losses on open
futures 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.  Interest income
earned on investments in commercial paper, corporate notes, U.S. Treasury
securities, government sponsored enterprise notes and other cash and cash
equivalent balances is recorded on an accrual basis.




7




Fair
Value of Financial Instruments




Financial
instruments are carried at fair value, the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between
market participants.  Assets and liabilities carried at fair value are
classified and disclosed in the following categories:





Level
      1 –
            Fair
      value is based on unadjusted quoted prices in active markets that are
      accessible at the measurement date for identical
      instruments.  Financial instruments utilizing Level 1 inputs
      include exchange-traded derivatives and money market
  funds.





Level
      2 –
            Fair
      value is based on quoted prices for similar instruments in active markets
      and inputs other than quoted prices that are observable for the financial
      instrument, such as interest rates and yield curves that are observable at
      commonly quoted intervals using a market approach.  Financial
      instruments utilizing Level 2 inputs include government sponsored
      enterprise notes.





Level
      3 –
            Fair
      value is based on valuation techniques in which one or more significant
      inputs are unobservable.  The Fund has no financial instruments
      utilizing Level 3 inputs.





U.S.
Treasury securities are recorded at amortized cost, which approximates fair
value based on bid and ask quotes for identical
instruments.  Commercial paper, government sponsored enterprise notes
and corporate notes are recorded at amortized cost plus accrued interest, which
approximates fair value based on bid and ask quotes for similar, but not
identical, instruments.  Accordingly, U.S. Treasury securities are
classified within Level 1, and commercial paper, government sponsored enterprise
notes and corporate notes are classified within Level 2.





The
investments in money market funds, included in cash and cash equivalents in the
statements of financial condition, and futures contracts, all of which are
exchange-traded, are valued using quoted market prices for identical assets and
are classified within Level 1.





Derivative
Instruments




Effective
January 1, 2009, the Fund adopted new guidance issued by FASB regarding
derivatives and hedging.  The Fund’s derivative contracts are
comprised of futures contracts.  These derivative contracts are
recorded in the statements of financial condition as assets measured at fair
value and the related realized and change in unrealized gain or 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.





Cash
and Cash Equivalents





Cash and
cash equivalents include highly liquid investments with original maturities of
three months or less at the date of acquisition that are not held for sale in
the normal course of business. At September 30, 2010, cash and cash equivalents
balances held at Newedge USA, LLC, UBS Financial Services, Inc. (“UBS”) and Bank
of America were $21,264,386, $8,665 and $50,293,503,
respectively.  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.





Brokerage
Commissions and Trading Expenses





Brokerage
commissions and trading expenses include brokerage and other trading fees, and
are charged to expense when contracts are opened and closed.





Redemptions
Payable





Redemptions
payable represent redemptions that meet the requirements of the Fund and have
been approved by the General Partner prior to period-end.  These
redemptions have been recorded using the period-end net asset value per
Unit.




8




Income
Taxes





The Fund
prepares calendar year U.S. and applicable state and local 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 evaluates the
tax positions taken or expected to be taken in the course of preparing the
Fund’s tax returns to determine whether the tax positions are
“more-likely-than-not” to be sustained “when challenged” or “when examined” by
the applicable tax authority.  Tax positions not deemed to meet the
more-likely-than-not threshold would be recorded as a tax benefit or expense and
asset or liability in the current year.  Management has determined
there are no material uncertain income tax positions through September 30,
2010.  With few exceptions, the Fund is no longer subject to U.S.
federal, or state and local income tax examinations by tax authorities for years
before 2007.





Foreign
Currency Transactions





The Fund
has certain investments denominated in foreign currencies.  The
purchase and sale of investments, and income and expenses are translated at the
rates of exchange prevailing on the respective dates of such
transactions.  The Fund does not isolate that portion of the results
of operations resulting from changes in foreign exchange rates on investments
from the fluctuations arising from changes in market prices of investments
held.  Such fluctuations are included with the net realized and
unrealized gain or loss on such investments.





Reclassification





Certain
reclassifications have been made in the 2009 financial statements and notes to
conform to the 2010 presentation, without affecting previously reported
partners’ capital (net asset value).





Subsequent
Events





The Fund
has evaluated subsequent events for potential recognition and/or disclosure
through the date the financial statements were issued.




2.
            Fair
      Value Disclosures





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





At
      September 30, 2010Level
      1
            
            
            Level
      2
            
            
            TotalEquity
      in broker trading accounts:Net
      unrealized gain on open futures contracts
            
            $
            2,546,843
            
            
            $
            --
            
            
            $
            2,546,843Cash
      and cash equivalents:Money
      market fund
            
            
            8,665
            
            
            
            --
            
            
            
            8,665Total
            
            $
            2,555,508
            
            
            $
            --
            
            
            $
            2,555,508





At
      December 31, 2009Level
      1
            
            
            Level
      2
            
            
            TotalEquity
      in broker trading accounts:Net
      unrealized gain on open futures contracts
            
            $
            4,046,127
            
            
            $
            --
            
            
            $
            4,046,127Cash
      and cash equivalents:Money
      market funds
            
            
            45,790,925
            
            
            
            --
            
            
            
            45,790,925Government
      sponsored enterprise notes
            
            
            --
            
            
            
            8,075,134
            
            
            
            8,075,134Total
            
            $
            49,837,052
            
            
            $
            8,075,134
            
            
            $
            57,912,186





There
were no Level 3 holdings at September 30, 2010 and December 31, 2009, or during
the periods then ended.




9




In
addition to the financial instruments listed above, substantially all of the
Fund’s other assets and liabilities are considered financial instruments and are
reflected at fair value, or at carrying amounts that approximate fair value
because of the short maturity of the instruments.




3.
            Derivative
      Instruments Disclosures





At
September 30, 2010, the Fund’s derivative contracts had the following impact on
the statements of financial condition:





Derivative
      Assets and Liabilities, at fair valueStatements
      of Financial Condition Location
            
            Assets
            
            
            Liabilities
            
            
            NetNet
      unrealized gain on open futures contractsAgricultural
            
            $
            1,127,273
            
            
            $
            (465,383
            )
            
            $
            661,890Currency
            
            
            1,845,995
            
            
            
            (795,510
            )
            
            
            1,050,485Energy
            
            
            1,040,134
            
            
            
            (1,544,026
            )
            
            
            (503,892
            )Interest
      rate
            
            
            1,513,553
            
            
            
            (135,439
            )
            
            
            1,378,114Metal
            
            
            3,213,298
            
            
            
            (3,450,764
            )
            
            
            (237,466
            )Stock
      index
            
            
            523,718
            
            
            
            (326,006
            )
            
            
            197,712Net
      unrealized gain on open futures contracts
            
            $
            9,263,971
            
            
            $
            (6,717,128
            )
            
            $
            2,546,843





At
September 30, 2010, there were 6,230 open futures contracts.




For the
three and nine months ended September 30, 2010, the Fund’s derivative contracts
had the following impact on the statements of operations:





Three
      Months Ended
              September
      30, 2010
            
            
            Nine
      Months Ended
              September
      30, 2010Types
      of Exposure
            
            Net
      realized gain (loss)
            
            
            Net
      change
              in
      unrealized
              gain
      (loss)
            
            
            Net
      realized gain (loss)
            
            
            Net
      change
              in
      unrealized
              gain
      (loss)Futures
      contractsAgricultural
            
            $
            331,629
            
            
            $
            505,349
            
            
            $
            73,980
            
            
            $
            (158,420
            )Currency
            
            
            (1,142,720
            )
            
            
            2,519,069
            
            
            
            730,679
            
            
            
            958,655Energy
            
            
            (952,669
            )
            
            
            (204,473
            )
            
            
            (3,068,787
            )
            
            
            (94,432
            )Interest
      rate
            
            
            6,595,078
            
            
            
            (2,155,969
            )
            
            
            11,107,757
            
            
            
            (185,080
            )Metal
            
            
            (668,903
            )
            
            
            230,771
            
            
            
            (217,082
            )
            
            
            (1,635,175
            )Stock
      index
            
            
            (262,226
            )
            
            
            1,804,417
            
            
            
            (2,806,472
            )
            
            
            (384,832
            )Total
      futures contracts
            
            $
            3,900,189
            
            
            $
            2,699,164
            
            
            $
            5,820,075
            
            
            $
            (1,499,284
            )





For the
three and nine months ended September 30, 2010, the number of futures contracts
closed was 11,698 and 24,154, respectively.




10




At
December 31, 2009, the Fund’s derivative contracts had the following impact on
the statements of financial condition:




Derivative
      Assets and Liabilities, at fair valueStatements
      of Financial Condition Location
            
            Assets
            
            
            Liabilities
            
            
            NetNet
      unrealized gain on open futures contractsAgricultural
            
            $
            1,039,795
            
            
            $
            (219,485
            )
            
            $
            820,310Currency
            
            
            462,740
            
            
            
            (370,910
            )
            
            
            91,830Energy
            
            
            21,087
            
            
            
            (430,547
            )
            
            
            (409,460
            )Interest
      rate
            
            
            1,915,783
            
            
            
            (352,589
            )
            
            
            1,563,194Metal
            
            
            3,170,299
            
            
            
            (1,772,590
            )
            
            
            1,397,709Stock
      index
            
            
            582,780
            
            
            
            (236
            )
            
            
            582,544Net
      unrealized gain on open futures contracts
            
            $
            7,192,484
            
            
            $
            (3,146,357
            )
            
            $
            4,046,127





At
December 31, 2009, there were 3,406 open futures contracts.





For the
three and nine months ended September 30, 2009, the Fund’s derivative contracts
had the following impact on the statements of operations:





Three
      Months Ended
              September
      30, 2009
            
            
            Nine
      Months Ended
              September
      30, 2009Types
      of Exposure
            
            Net
      realized gain (loss)
            
            
            Net
      change
              in
      unrealized
              gain
      (loss)
            
            
            Net
      realized gain (loss)
            
            
            Net
      change
              in
      unrealized gain (loss)Futures
      contractsAgricultural
            
            $
            (723,291
            )
            
            $
            811,647
            
            
            $
            (1,047,573
            )
            
            $
            (139,723
            )Currency
            
            
            412,294
            
            
            
            1,577,372
            
            
            
            (668,662
            )
            
            
            1,320,051Energy
            
            
            (940,911
            )
            
            
            (1,161,061
            )
            
            
            (270,475
            )
            
            
            (940,381
            )Interest
      rate
            
            
            565,401
            
            
            
            341,014
            
            
            
            1,839,395
            
            
            
            (1,762,051
            )Metal
            
            
            (587,351
            )
            
            
            1,447,112
            
            
            
            1,099,121
            
            
            
            (853,921
            )Stock
      index
            
            
            1,061,638
            
            
            
            70,395
            
            
            
            (558,643
            )
            
            
            76,861Total
      futures contracts
            
            $
            (212,220
            )
            
            $
            3,086,479
            
            
            $
            393,163
            
            
            $
            (2,299,164
            )





For the
three and nine months ended September 30, 2009, the number of futures contracts
closed was 5,542 and 17,103, respectively.




4.
            General
      Partner





At
September 30, 2010 and December 31, 2009, and for the periods then ended, the
General Partner did not maintain a capital balance in the Fund; however, the
beneficiary of the sole shareholder of the General Partner had an investment of
21.5210 Units.  At September 30, 2010 and December 31, 2009, this
investment was valued at $55,375 and $54,576, respectively.





The
General Partner earns the following compensation:





§
            General
      Partner management fee – the Fund incurs a monthly fee equal to 1/12th
      of 1.10% of the Fund’s month-end net asset value, payable in
      arrears.





§
            Selling
      Agent fees – the Fund incurs a monthly fee equal to 1/12th
      of 3.00% of the Fund’s month-end net asset value, payable in
      arrears.  The General Partner, in turn, pays selling agent fees
      to the respective selling agents.  If selling agent fees are not
      paid to the selling agents, or if the General Partner was the selling
      agent, such portions of the selling agent fees are retained by the General
      Partner.





Pursuant
to the terms of the Partnership Agreement, each year the General Partner
receives from the Fund 1% of any profit earned by the
Fund.  Conversely, the General Partner pays to the Fund 1% of any loss
incurred by the Fund.  Such amounts are reflected as General Partner
1% allocation receivable or payable in the statements of financial condition and
as General Partner 1% allocation in the statements of operations.




11




5.
            Trading
      Advisor





The Fund
has an agreement with the Trading Advisor, pursuant to which the Fund incurs a
management fee, payable monthly to the Trading Advisor in arrears, equal to
1/12th of 1%
of allocated net assets (as defined in the advisory agreement) and an incentive
fee, payable quarterly in arrears, equal to 25% of new trading profits (as
defined in the advisory agreement).




6.
            Deposits
      with Brokers





To meet
margin requirements, the Fund deposits funds with its futures broker, subject to
CFTC regulations and various exchange and broker requirements.  The
Fund earns interest income on its assets deposited with the
broker.  At September 30, 2010 and December 31, 2009, the Fund had
margin requirements of $14,225,812 and $6,228,904, respectively.




7.
            Administrative
      Expenses





The Fund
reimburses the General Partner for actual monthly administrative expenses paid
to various third-party service providers, including the General Partner, up to
1/12th of
0.75% of the Fund’s month-end net asset value, payable in
arrears.  Administrative expenses include accounting, audit, legal,
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, administrative employee salaries and
related costs.  Pursuant to the terms of the Partnership Agreement,
administrative expenses that exceed 1% of the average month-end net asset value
are the responsibility of the General Partner.





For the
three months ended September 30, 2010 and 2009, actual administrative expenses
exceeded the 1% administrative expense limitation of average month-end net asset
value of the Fund by $30,916 and $81,739, respectively.  For the nine
months ended September 30, 2010 and 2009, actual administrative expenses
exceeded the 1% administrative expense limitation of average month-end net asset
value of the Fund by $123,631 and $209,783, respectively.  Such
amounts were included in Administrative expenses waived in the statements of
operations.





Additionally,
during the three months ended September 30, 2010 and 2009, the General Partner
voluntarily waived $44,676 and $46,364, respectively, of administrative expenses
of the Fund.  During the nine months ended September 30, 2010 and
2009, the General Partner voluntarily waived $135,544 and $132,269,
respectively, of administrative expenses of the Fund.  Such amounts
were included in Administrative expenses waived in the statements of
operations.





At
September 30, 2010 and December 31, 2009, $41,142 and $138,147, respectively,
were payable to the General Partner for expenses incurred on behalf of the fund
and not waived by the General Partner.  Such amounts are presented as
Administrative expenses payable – General Partner in the statements of financial
condition.




8.
            Subscriptions,
      Distributions and Redemptions





Investments
in the Fund are made by subscription agreement and must be received within five
business days of the end of the month, subject to acceptance by the General
Partner.  The minimum investment is $10,000.  Units are sold
at the net asset value per 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, 2010 and December 31, 2009, the Fund
received advance subscriptions of $165,813 and $767,147, respectively, which
were recognized as subscriptions to the Fund or returned, if applicable,
subsequent to period-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 Units owned at the end of any month, subject to five business
days’ prior written notice to the General Partner and in certain circumstances,
restrictions in the Partnership Agreement.




12




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 non-exempt prohibited transaction under the Employee Retirement
Income Security Act of 1974, as amended, or the Internal Revenue Code of 1986,
as amended, (b) beneficial to the Fund, or (c) necessary to comply with
applicable government or self-regulatory organization regulations.




9.
            Trading
      Activities and Related Risks





The Fund
engages in the speculative trading of futures contracts in the U.S. and
internationally.  Trading futures contracts exposes the Fund to both
market risk, the risk arising from a change in the fair value of a contract, 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 futures
brokers.  Additional deposits may be necessary for any loss of
contract value.  The Commodity Exchange Act (“CEAct”) 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. Treasury 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 the total cash and other
property deposited. The Fund utilizes Newedge USA, LLC as its futures
broker.





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 the counterparty will not be able to meet its obligations
to the Fund.  The counterparty for futures and options on futures
contracts traded in the U.S. 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 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 non-U.S. exchanges, it is normally backed by a consortium of
banks or other financial institutions.  While the Fund trades only
with those counterparties that it believes to be creditworthy, there can be no
assurance that any clearing member, clearinghouse or other counterparty will be
able to meet its obligations to the Fund.





The Fund
utilizes UBS as its cash management securities broker for the investment of some
excess margin amounts into short-term fixed income instruments including
commercial paper, U.S. Treasury securities and government sponsored enterprise
notes with durations of less than one year.





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 specific
circumstances, distributions and redemptions received.




10.
            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.




11.
            Interim
      Financial Statements





The
statements of financial condition, including the condensed schedule of
investments, at September 30, 2010, the statements of operations for the three
and nine months ended September 30, 2010 and 2009, the statements of cash flows
and changes in partners’ capital (net asset value) for the nine months ended
September 30, 2010 and 2009 and the accompanying notes to the financial
statements are unaudited.  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the U.S. 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 to present fairly the
financial position at September 30, 2010, results of operations for the three
and nine months ended September 30, 2010 and 2009, cash flows and changes in
partners’ capital (net asset value) for the nine months ended September 30, 2010
and 2009.  The results of operations for the three and nine months
ended September 30, 2010 and 2009 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
SEC.





13




12.
            Financial
      Highlights





The
following information presents per Unit operating performance data and other
ratios for the three and nine months ended September 30, 2010 and 2009, assuming
the Unit was outstanding throughout the entire period:





Three Months
      Ended
              September
    30,
            
            
            Nine Months
      Ended
              September
    30,2010
            
            
            2009
            
            
            2010
            
            
            2009Per UnitOperatingPerformanceNet asset value perUnit at beginning ofperiod
            
            $
            2,379.78
            
            
            $
            2,593.42
            
            
            $
            2,535.94
            
            
            $
            2,847.19Income (loss)from operationsGain (loss)from trading(1)
            
            
            229.83
            
            
            
            100.12
            
            
            
            142.69
            
            
            
            (88.94
            )Net investment loss(1)
            
            
            (36.55
            )
            
            
            (38.18
            )
            
            
            (105.57
            )
            
            
            (102.89
            )Total income (loss)from
      operations
            
            
            193.28
            
            
            
            61.94
            
            
            
            37.12
            
            
            
            (191.83
            )Net asset value perUnit at end ofperiod
            
            $
            2,573.06
            
            
            $
            2,655.36
            
            
            $
            2,573.06
            
            
            $
            2,655.36Total return(5)
            
            
            8.12
            %
            
            
            2.39
            %
            
            
            1.46
            %
            
            
            (6.74
            )%OtherFinancialRatiosRatios to average net asset
      valueExpenses prior to General Partner
      1%allocation(2)
      (3)(4)
            
            
            6.02
            %
            
            
            5.97
            %
            
            
            5.93
            %
            
            
            5.91
            %General Partner 1%allocation(5)
            
            
            0.08
            %
            
            
            0.02
            %
            
            
            0.02
            %
            
            
            (0.07
            )%Total
    expenses
            
            
            6.10
            %
            
            
            5.99
            %
            
            
            5.95
            %
            
            
            5.84
            %Net investment loss(2)
      (3)(4) (6)
            
            
            (5.63
            )%
            
            
            (5.75
            )%
            
            
            (5.61
            )%
            
            
            (5.20
            )%





Total
returns are calculated based on the change in value of 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 subscriptions and
redemptions.





(1) The
net investment loss per Unit is calculated by dividing the net investment loss
by the average number of 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 Units are computed net of voluntary
and involuntary waivers of administrative expenses.  For the three
months ended September 30, 2010 and 2009 the ratios are net of 0.43% and 0.71%,
respectively, and for the nine months ended September 30, 2010 and 2009 the
ratios are net of 0.48% and 0.66%, respectively, of average net asset value
relating to the waivers of administrative expenses.  Both the nature
and the amounts of the waivers are more fully explained in Note 7.





(3) The
net investment loss includes interest income and excludes realized and
unrealized gain (loss) from trading activities as shown in the statements of
operations.  The total amount is then reduced by all expenses,
excluding brokerage commissions, which are included in net trading gain (loss)
in the statements of operations. The resulting amount is divided by the average
net asset value for the period.





(4) Ratios
have been annualized.





(5) Ratios
have not been annualized.





(6) Ratio
excludes General Partner 1% allocation.





14




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





Introduction





Using a
professional trading advisor, the Fund engages in the speculative trading of
futures contracts and other financial instruments.  The Fund primarily
trades futures contracts within six major market sectors:  stock
indices, currencies, interest rate instruments, energy products, metals and
agricultural commodities.





Liquidity





Most U.S.
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 five
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.




At
September 30, 2010, 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.




Capital
Resources





The Fund
intends to raise additional capital only through the sale of Units, and does not
intend to raise 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
contracts and other financial instruments in subsequent periods.  It
is not possible to estimate the amount, and therefore the impact, of future
capital inflows and outflows related to the sale and redemption 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.





Results
of Operations





The
returns for Units for the nine months ended September 30, 2010 and 2009, were
1.46% and (6.74)%, respectively.  Past performance is not necessarily
indicative of future results.  Further analysis of the trading gains
and losses is provided below.





2010





January




The Fund
ended the month 2.57% lower as losses from global equity indices, energy, and
metals offset profits from interest rate instruments, agricultural commodities
and currencies.  The Fund’s most significant losses came from global
equity indices.  The sector reversed from an upward trend that began
in March of 2009.  The stock market experienced a sharp sell-off after
investors reacted to the growing concern of weaker global economic growth and
the U.S. administration’s announcement to limit speculative trading by
banks.  The reversal in equity prices went against the Fund’s long
positions, which generated losses.  China announced it was taking
steps to limit bank lending in order to moderate its own growth.  The
news pushed commodity prices lower, especially in energy and industrial
metals.  The lower prices went against the Fund’s long positions in
those sectors.  Interest rate instrument prices were higher this
month, which helped recover some of the losses the sector generated in last
month’s trading.




15




February




The Fund
posted positive gains in February of 0.58% as profits from interest rate
instruments and currencies outweighed losses from agricultural commodities and
energies.  The most significant gains came from short-term interest
rate instrument prices, which trended higher following news of the Greek debt
crisis.  This news also placed downward pressure on foreign
currencies, especially the EU euro and British pound.  The rise in
interest rate instrument prices benefited the Funds’ long positions in that
sector, while falling European currencies generated profits for the Fund’s short
foreign currency positions.  In agricultural commodities, declining
prices went against the Fund’s long positions, including sugar, corn and
soybeans.





March




The Fund
finished 3.87% higher this month with profits in five of the six major market
sectors.  The Fund’s most significant gains came from the energy and
equity indices. In equity indices, many global indices, including the S&P
500, reached their highest level since the third quarter of
2008.  Although equity prices experienced a brief reversal between
late January and early February, the Fund’s trading systems maintained long
positions and profited from the upward trend that resumed during late February
and March.  In the energy sector, natural gas resumed a strong
downward trend that benefited the Fund’s short natural gas positions, while
crude oil prices climbed which benefited the Fund’s long oil
positions.  In the metals sector, the base metals including nickel,
copper, aluminum and zinc all profited on rising prices.





April




The Fund
ended the month up 0.30% as profits in energy, interest rate instruments and
currencies offset losses in agricultural commodities, stock indices and
metals.  The most significant gains came from the energy
sector.  Oil prices continued to rise, which benefited the Fund’s long
positions, while the Fund’s short positions in natural gas realized profits as
prices trended lower.  Rating agencies lowered credit ratings on
sovereign debt for Greece, Portugal and Spain.  In a flight to safety,
U.S. Treasury prices and the U.S. dollar rallied while European currencies and
debt instrument prices fell, generating profits for the Fund in each of those
markets.  U.S. equity markets continued to trend higher, but profits
from those markets were offset by losses from long positions in foreign equity
indices.





May




For the
month, the Fund was down 3.99%.  While disappointing, this wasn’t a
surprise given the sharp turnaround in the global stock and bond markets caused
by the sovereign debt crisis in Europe.  Losses in energy and equity
indices offset gains in interest rate instruments and metals.  Long
positions in the energy sector were responsible for the most significant losses
as commodity prices fell on heightened concerns over the European debt
crisis.  U.S. Treasury instrument prices trended higher, while equity
indices and energy prices fell in an apparent flight to safety.  While
the increase in the price of interest rate instruments was profitable for the
Fund’s long positions, the sharp reversals in both energy and equities went
against established upward trends in those markets, which generated
losses.  Base metal prices also reversed course, which resulted in a
loss.  Those losses, however, were tempered by gains in the Fund’s
long positions in gold, aluminum and zinc.





June




For the
month, the Fund was down 4.26% as profits in interest rate instruments were
offset by losses in equity indices, currencies, and commodities.  The
Fund’s most significant gains came from long posi­tions in the interest rate
instrument sector as concerns over the sovereign debt crisis in Europe and slow
eco­nomic growth in the U.S. continued to dominate market
sentiment.  U.S. Treasury yields and short-term interest rates fell,
which also generated strong profits in the sector.  Global indices
continued to drift lower which went against the Fund’s long
positions.  Over the past several weeks, the Fund’s long equity index
positions have been systematically reduced in response to the market
downturn.  In currencies, a sudden rise in the Euro and British Pound
went against the Fund’s short positions generating losses.





July




For the
month, the Fund was down 0.95% as profits from equity indices and interest rate
instruments were offset by losses in commodities.  The Fund’s most
sig­nificant gains came from its long positions in interest rate instruments
and global equity indices.  Although there were some positive signs in
global markets, including successful outcomes from stress tests at ma­jor
European banks, the combination of government stimulus spending declining or
ending in many coun­tries along with slow economic growth, has renewed fears
of deflation.  Global interest rates continued to edge lower creating
profits from rising interest rate instrument prices.  U.S. equity
prices enjoyed a modest rally this month, although global indices were more
mixed. By the end of the month, the Fund netted prof­its in that
sector.  Precious metals reversed from last month’s highs, including
gold which fell to a six-week low, going against the Fund’s long
positions.  Energy prices moved higher this month which went against
the Fund’s short positions.




16




August




The Fund
finished 6.89% higher this month with profits in interest rate instruments,
energy, metals and currencies.  The most significant gains came from
long positions in interest rate instruments.  Concerns over a weak
U.S. economy, along with perceived threats of a “double-dip” recession, sent
yields lower, including 10-year Treasury bonds and 10-year UK gilts which saw
their lowest level since March 2009.  Global stock indices continued
to move sideways without strong trends.  In the energy sector, the
Fund’s short positions in natural gas profited from its sustained downward
trend.  The metals sector benefited from long positions in precious
metals, including gold and platinum.





September




The Fund
finished 2.13% higher this month with profits in equity indices, agricultural
commodities, met­als and currencies offsetting losses in interest rate
instruments and energy.  The most significant gains came from long
positions in equity indices.  Global equity prices continued to move
higher in September which benefited the Fund’s positions.  Both
industrial and precious metals prices trended higher, generating profits for the
Fund’s long positions in gold, silver and copper.  Agricultural
prices, especially cotton, soybeans and corn, continued to trend higher which
added profits from the Fund’s long positions.  Early in the month,
interest rate instruments prices fell which generated early losses for the
sector.  However, prices rallied toward the end of the month after the
Fed’s com­ments on quantitative easing.  The late rally in
interest rate instruments benefited the Fund’s long positions, but it was not
enough to offset earlier losses.  In the energy sector, the Fund’s
short positions in natural gas profited from a sustained downward trend, but a
sharp rise in crude oil went against the Fund’s short posi­tions, resulting
in a net loss for the sector.




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 British 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 had risen approximately 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.




17




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.




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 prices higher, which was a
reversal from the price trend in that market. The higher prices generated losses
in the Fund’s short Japanese government bond 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




In July
the Fund declined 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 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 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 U.S. dollar.  The U.S. dollar
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.




18





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 the counterparty will not be able to meet its obligations to the
Fund.  The counterparty for futures contracts traded in the U.S. and
on most non-U.S. 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 non-U.S.
exchanges, it is normally backed by a consortium of banks or other financial
institutions.





Significant Accounting Estimates





Management
believes that the application of the accounting policy for the fair value of
financial instruments, which is significant to the Fund’s financial position and
results of operations, requires judgments and estimates on the part of
management.  A summary of all of the Fund’s significant accounting
policies are included in Note 1 to the Financial Statements.





The
Fund’s financial instruments are carried at fair value.  In
determining fair value, management uses inputs that are observable in active or
inactive markets for identical or similar instruments.  The Fund’s
investments in money market funds are valued based on published closing prices
for identical instruments.  Similarly, the fair value of
exchange-traded futures contracts are based on exchange settlement
prices.





In the
absence of an active market closing price, estimates are involved in determining
fair value.  The Fund’s cash management securities broker and futures
broker utilize third-party pricing services to value investments that do not
trade on active markets.  These third-party pricing services utilize a
market approach which uses prices and other relevant information generated by
market transactions involving identical or comparable assets or
liabilities.





Item 3.  Quantitative and Qualitative
Disclosures about Market Risk





Not required.




Item
4.  Controls and Procedures





The
General Partner of the Fund, with the participation of the Chief Executive
Officer and Chief Financial Officer, evaluated the effectiveness of the design
and operation of the Fund’s disclosure controls and procedures at September 30,
2010 (the “Evaluation Date”).  Based on their evaluation, the Chief
Executive Officer and Chief Financial Officer of the General Partner concluded
that, as of the Evaluation Date, the Fund’s disclosure controls and procedures
were effective.





There has been no change in internal
control over financial reporting that occurred during thenine months ended September 30,2010 that has materially
affected, or is reasonably likely to materially affect, the Fund’s internal
control over financial reporting.




19




Part II:  Other Information





Item
1.  Legal Proceedings.





None.





Item 1A. Risk
Factors.





Not
required.





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





There
were no sales of unregistered securities of the Fund during the nine months
ended September 30, 2010.  Under the Partnership Agreement, limited
partners may redeem their Units at the end of each calendar month at the then
current month-end net asset value per Unit.  Redemptions of Units
during the three months ended September 30, 2010 were as follows:





July
            
            
            August
            
            
            September
            
            
            TotalUnits
    redeemed
            
            
            93.8269
            
            
            
            313.7115
            
            
            
            106.9838
            
            
            
            514.5222Average net asset value perUnit
            
            $
            2,357.09
            
            
            $
            2,519.43
            
            
            $
            2,573.06
            
            
            $
            2,500.98





Item
3.  Defaults Upon Senior Securities





Not
applicable.





Item 4.  Reserved




Item 5.  Other Information





None.




20




Item 6.  Exhibits





The
following exhibits are filed herewith of incorporated by reference.





Exhibit
      No.
            Description
      of Exhibit1.1*
            Form
      of Selling Agreement.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.10.1*
            Form
      of Subscription Agreement.10.2**
            Advisory
      Agreement by and among the Fund, the General Partner and Altis Partners
      (Jersey) Limited dated August 8, 2007.10.3*
            Amendment
      to Advisory Agreement by and among the Fund, the General Partner and Altis
      Partners (Jersey) Limited dated August 27, 2007.10.4*
            Futures
      Account Agreement dated January 21, 2001 by and among the Fund, the
      General Partner and Carr Futures Inc. (subsequently, Newedge USA,
      LLC).10.5*
            Corporate
      Cash Account Management Agreement dated September 25, 2007 by and among
      the Fund, the General Partner and UBS Financial Services,
    Inc.31.01
            Certification
      of Chief Executive Officer of the General Partner in accordance with
      Section 302 of the Sarbanes-Oxley Act of 200231.02
            Certification
      of Chief Financial Officer of the General Partner in accordance with
      Section 302 of the Sarbanes-Oxley Act of 200232.01
            Certification
      of Chief Executive Officer of the General Partner in accordance with
      Section 906 of the Sarbanes-Oxley Act of 200232.02
            Certification
      of Chief Financial Officer of the General Partner in accordance with
      Section 906 of the Sarbanes-Oxley Act of
2002




*Filed with the
Registrant’s Form 10 filed on April 27, 2009, and incorporated herein by
reference.


** Filed
with the Registrant’s Amendment No. 2 Form 10 filed on July 31, 2009, and
incorporated herein by reference.




21


SIGNATURES





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





Date:  November
      10, 2010
            SAGE
      FUND LIMITED PARTNERSHIPBy:
            Steben
      & Company, Inc.General
      PartnerBy:
            /s/ Kenneth E.
      StebenName:
            Kenneth
      E. StebenTitle:
            President,
      Chief Executive Officer and Director of the General
  Partner(Principal
      Executive Officer)By:
            /s/ Carl A.
      SergerName:
            Carl
      A. SergerTitle:
            Chief
      Financial Officer and Director of the General Partner(Principal
      Financial and Accounting Officer)




22