UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549







FORM
10-K




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





For
the Fiscal Year Ended December 31, 2008
  OR


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





For
the transition period from ________ to _______




Commission
file number:  000-50728





FUTURES
PORTFOLIO FUND, LIMITED PARTNERSHIP


(Exact
name of registrant as specified in its charter)





Maryland
              
              52-1627106(State
      of Incorporation)
              
              (
      IRS Employer Identification No.)





c/o
Steben & Company, Inc.


2099
Gaither Road, Suite 200


Rockville,
Maryland20850


(Address
of Principal Executive Office)(zip code)





(240)
631-9808


Registrant’s
telephone number, including area code:








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





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.  o





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  o Yes 
   x
No


Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  o Yes 
   x
No





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


Large
      accelerated filer o
            
            Accelerated
      filer o
            
            Non-accelerated
      filer x





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





Aggregate
market value of the voting and non-voting common equity held by non-affiliates:
the registrant is a limited partnership; as of December 31, 2008, 108,989.0639
Class A units and 44,268.0740 Class B units with an aggregate value of
$547,011,351 and $285,973,913 respectively, were outstanding.





Securities
to be registered pursuant to Section 12(b) of the Act: NONE


Securities
to be registered pursuant to Section 12(g) of the Act:  Limited Partnership
Interests





Documents
Incorporated by Reference


Registrant's
Financial Statements for the year ended December 31, 2008 with Report of
Independent Registered Public Accounting Firm and the annual report to
security holders for the fiscal year ended December 31, 2008, is incorporated by
reference into Part II Item 8 and Part IV hereof and filed as an exhibit
herewith.










Table of
Contents





Part
      IItem 1: Business
                      3Item 1A: Risk Factors
                      8Item 1B: Unresolved Staff Comments
                      11Item 2: Properties
                      11Item 3: Legal Proceedings
                      11Item 4: Submission of Matters to a Vote of Security
      Holders
                      11Part
      IIItem 5: Markets for Registrant's Common Equity, Related
      Stockholder Matters and Issuer Purchases of Equity
      Securities
                      12Item 6: Selected Financial Data
                      14Item 7: Management's Discussion and Analysis of Financial
      Condition and Results of Operations
                      19Item 7A: Quantitative and Qualitative Disclosures About Market
      Risk
                      32Item 8: Financial Statements and Supplementary
      Data
                      37Item 9: Changes in and Disagreements with Accountants on
      Accounting and Financial Disclosure..
                      37Item 9A: Controls and Procedures
                      37Item 9B: Other Information
                      38Part
      IIIItem 10: Directors, Executive Officers, and Corporate
      Governance
                      39Item 11: Executive Compensation
                      41Item 12: Security Ownership of Certain Beneficial Owners and
      Management
                      42Item 13: Certain Relationships and Related
      Transactions
                      42Item 14: Principal Accounting Fees and
    Services
                      43Part
      IVItem 15: Exhibits, Financial Statement
      Schedules
                      44Signatures
                      45


Table of Contents




PART I




ITEM 1:  Business





(a)  General
development of business.





Futures
Portfolio Fund, Limited Partnership (“the Fund”) is a Maryland limited
partnership, formed on May 11, 1989, that utilizes professional trading advisors
to engage in the trading of commodity futures contracts, other commodity
interests, options, securities and forward contracts.  The Fund began
trading on January 2, 1990.  The Fund is an actively managed account
with speculative trading profits as its objective.





Under its
Limited Partnership Agreement (“Partnership Agreement”), the Fund has delegated
the exclusive management of all aspects of the business and administration of
the Fund to the Fund’s general partner, Steben & Company, Inc. (“Steben
& Company”, or the “General Partner”), a Maryland corporation organized in
February 1989.  Steben & Company is registered with the Commodity
Futures Trading Commission (“CFTC”) as a Commodity Pool Operator (“CPO”) and an
Introducing Broker and is a member of the National Futures Association (“NFA”)
in such capacities.  Steben & Company is registered with the
Securities and Exchange Commission (“SEC”) as a broker dealer and is a member of
FINRA in such capacity.  Steben & Company is registered with the
Securities & Exchange Commission as a registered investment
advisor.  The Fund is not a registered investment
company.





The Fund
will automatically terminate on December 31, 2025, unless terminated earlier as
provided in the Partnership Agreement.  The General Partner has no
present intention of withdrawing and intends to continue the Fund’s business as
long as it believes that it is in the best interest of the Partners to do
so.  In addition, certain events may occur which could result in early
termination.





The
Fund’s assets are allocated among accounts managed by professional commodity
trading advisors (the “Trading Advisors” or “Traders”).  While it is
not currently the case, portions of the Fund’s assets may be allocated to other
investment funds or pools at the discretion of the General Partner in order to
access the services of particular Trading Advisors.  The General
Partner is responsible for selecting and monitoring the Trading Advisors, and it
may add new Trading Advisors in the future, terminate the current Trading
Advisors, and will, in general, allocate and reallocate the Fund’s assets among
the Trading Advisors as it deems is in the best interests of the
Fund.





As of
December 31, 2008, the aggregate capitalization of the Fund was
$832,985,264.  The net asset value per limited partnership interest
(“Unit”) of the Class A Units was $5,018.96, and the net asset value of the
Class B Units was $6,460.05.





(b)  Financial
information about segments.





The
Fund’s business constitutes only one segment for financial reporting purposes,
i.e., a speculative “commodity pool.”  The Fund does not engage in
sales of goods or services.





(c)  Narrative
description of business.





General





The
purpose of the Fund is to engage in the speculative trading, buying, selling, or
otherwise acquiring, holding or disposing of commodities, including futures
contracts, option contracts, forward contracts, swaps and any other rights
pertaining thereto for such other purposes as may be incidental or related
thereto.


3
 Table of Contents


The Fund
trades speculatively in a fully diversified portfolio of U.S. and international
futures markets, including energy products, agricultural
products,  precious and base metals, stock market indices, interest
rates (short-term and long-term) and foreign currencies (majors, minors and
cross rates).  The Fund also trades currency forwards, as well as
options, swaps, and may trade forwards on markets other than currencies in the
future.





The Fund
trades on a variety of United States and foreign futures
exchanges.  Approximately 70-75% of the Fund’s trading is currently in
the form of exchange traded futures, and the balance is in off exchange currency
forwards.  100% of the Fund’s off-exchange trading takes place in the
highly liquid, institutionally-based currency forward markets, although other
types of forward contracts may be traded in the future.





As in the
case of its market sector allocations, the Fund’s commitments to different types
of markets - U.S. and non-U.S., regulated and non-regulated - differ
substantially from time to time, as well as over time, and may change at any
time if the Fund’s Trading Advisors, with the approval of the General Partner
determines such change to be in the best interests of the Fund.





General
Partner





The
General Partner manages all aspects of the Fund’s business, including selecting
the Fund’s Trading Advisors; allocating the Fund’s assets among them; possibly
investing a portion of the Fund’s assets in other investment pools; selecting
the Fund’s Futures Broker(s), account­ants and attorneys; computing the
Fund’s Net Assets; reporting to Limited Partners; directing the invest­ment
of Fund excess margin monies in interest-bearing instruments and/or cash; and
handling Partners’ redemptions of their Units. The Gen­eral Partner will
maintain office facil­i­ties for and furnish administrative and clerical
ser­vices to the Fund.  The General Partner will be reimbursed for
certain out of pocket expenses for the Fund, including clerical, accounting,
legal, postage and shipping, offering costs, printing and other expenses of the
Fund.  There have been no material administrative, civil or criminal
actions within the past five years against the general partner or its principals
and no such actions currently are pending.





Trading
Advisors and Allocations of the Fund





As of
December 31, 2008 the Trading Advisors of the Fund and the allocation of the
Fund’s assets are reflected as follows:





As
      a % of Total Allocations
                  As
      a % of Total Fund EquityAltis
      Partners (Jersey), Ltd
                  13%
                  14%Aspect
      Capital, Ltd
                  15%
                  17%BlueCrest
      Capital Management LLP
                  15%
                  17%Quantitative
      Investment Management, LLC
                  16%
                  18%Sunrise
      Capital Partners, LLC
                  12%
                  13%Transtrend
      BV
                  10%
                  11%Winton
      Capital Management, Ltd.
                  19%
                  22%





These
allocations are subject to change at the General Partner’s sole
discretion.





While
past performance is not indicative of future results, the General Partner
believes it is in the interests of the Fund to select those Trading Advisors who
have demonstrated ability during their trading history.  Consideration
is given to the consistency of past returns.  Also considered are each
Trading Advisor’s reputation, personnel, integrity and trading psychology, as
well as its overall trading skill, money management, administrative support and
the total amount of funds under management.  Finally, the General
Partner uses its discretion and judgment in applying each of the above factors
in making a final determination to include a particular Trading Advisor in the
Fund.


4
 Table of Contents


Charges





Each A
Unit is subject to the same ongoing charges as all other A
Units.  Each B Unit is subject to the same ongoing charges as all
other B Units.





Total
expenses, other than the Trader’s performance incentive fees, as a percentage of
the Fund's average month-end net assets for the years ended December 31, 2008,
2007 and 2006 were 6.08%, 6.06%, and 6.37%, respectively.





Recipient
                      Nature
      of Payment
                      Amount
      of PaymentSteben
      & Company, Inc.
                      Management
      Fee (asset-based)
                      A
      monthly management fee of 0.1625% per month (1.95% annually) for Class A
      units & 0.1625% (1.95% annually) for Class B units of Fund Net Assets
      at the end of each month.  Steben & Company may pay a
      portion of its monthly management fee on an ongoing basis to selected
      agents who have sold the Units, in return for their provision of ongoing
      services to the Limited Partners.
                        
                        The
      General Partner will receive an allocation pro rata from the other
      Partners of 1% of any increase (or decrease) in the Fund’s Net Assets,
      without regard to additions and withdrawals.Trading
      Advisors
                      Management
      Fees (asset-based)
                      The
      Trading Advisors will receive monthly management fees based upon the
      assets under their management as follows:
                        ·Altis
      Partners (Jersey), Ltd: 0.083%  monthly (1% per
      year)
                        ·Aspect
      Capital, Ltd: 0.167%  monthly (2% per year)
                        ·BlueCrest Capital Management, LLP: 0.167% monthly (2% per
      year)
                        ·Quantitative Investment Management, LLC: 0%  monthly (0%
      per year)
                        ·Sunrise
      Capital Partners, LLC: 0.083% monthly (1% per year)
                        ·Transtrend BV: 0.083% monthly (1% per year)
                        ·Winton
      Capital Management, Ltd:  0.167% monthly (2% per
      year)


5
 Table of Contents




Recipient
                                        Nature
      of Payment
                                        Amount
      of PaymentTrading
      Advisors
                                        Incentive
      Fees
                                        The
      Trading Advisors receive incentive fees for any “Net New Trading Profits”
      generated on the portion of the Fund the respective Trading Advisor
      manages as follows:·Altis
      Partners (Jersey), Ltd
                                        25%·Aspect
      Capital, Ltd:
                                        20%·BlueCrest Capital Management, LLP:
                                        20%·Quantitative Investment Management, LLC:
                                        30%·Sunrise
      Capital Partners, LLC:
                                        25%·Transtrend BV:
                                        25%·Winton
      Capital Management Ltd.:
                                        20%Commodity
      brokerage commissions and related fees
                                        Clearing
      Brokers
                                        Effective
      January 1, 2008, the Fund paid brokerage commissions on U.S. futures
      exchanges at the rate of $1.00 to $10.32 per “round-turn” futures
      transaction which includes NFA, execution, clearing and exchange
      fees.  Brokerage commissions will be higher for trades executed
      on some foreign exchanges.  Effective December 1, 2008, the Fund
      pays commissions at the rate of $1.02 to $10.80 per “round-turn”
      transaction.Newedge
      USA, LLC
                                        Forward
      Counterparty Execution
                                        A
      portion of the forward counterparty’s execution costs are included in the
      price of each forward contract purchased or sold, and, accordingly, such
      costs cannot be determined but are charged. Prime brokerage fees, combined
      with the futures broker’s charges, usually equal approximately 1% of the
      Fund’s net assets.  Newedge USA, LLC, the Fund’s primary
      forward counterparty charges a $20 per million per round turn service
      charge.Selling
      Agents
                                        Selling
      Agent Fees
                                        A
      monthly fee of 0.1667% (2% per year) of the net asset value for A units
      and 0.0167% (0.2% per year) of the net asset value for B units will be
      charged to the Fund and paid to the Selling Agents.  To the
      extent the General Partner is responsible for the sale of Units, or in
      cases where the Selling Agent does not receive this fee, the General
      Partner will retain these monthly fees.Steben
      & Company
                                        Professional
      Fees
                                        The
      Fund paid its accounting, audit, legal, administrative and offering
      expenses estimated at approximately 0.65% of the average month-end net
      asset value during 2008. However, if and to the extent these expenses
      (other than extraordinary costs, none of which are anticipated) exceed
      1.00% of the Fund’s average month-end net assets per calendar year, the
      General Partner will reimburse the Fund for such excess after the close of
      the applicable year.  These expenses during the years ended
      2008, 2007 and 2006 were 0.65%, 0.67%, and 0.75% of the Fund’s
      average net asset value, respectively.
                                          
                                          There
      may be extraordinary expenses (including any extraordinary legal and
      accounting fees) the Fund may have, although none are
      anticipated.
 
 6
 Table of Contents
  Regulation





Under the
Commodity Exchange Act, commodity exchanges and commodity futures trading are
subject to regulation by the CFTC. The NFA, a registered futures association
under the Commodity Exchange Act, is the only non-exchange self-regulatory
organization for commodity industry professionals. The CFTC has delegated to the
NFA responsibility for the registration of “commodity trading advisors,”
“commodity pool operators,” “futures commission merchants,” “introducing
brokers” and their respective “associated persons” and “floor brokers.” The
Commodity Exchange Act requires “commodity pool operators,” and “commodity
trading advisors” and “futures brokers” or “futures commission merchants” such
as the Fund’s futures broker to be registered and to comply with various
reporting and recordkeeping requirements. Steben & Company and the Fund’s
futures broker are members of the NFA. The CFTC may suspend a commodity pool
operator’s or trading advisor’s registration if it finds that its trading
practices tend to disrupt orderly market conditions, or as the result of
violations of the Commodity Exchange Act or rules and regulations promulgated
there under. In the event the General Partner’s registration as a commodity pool
operator were terminated or suspended, the General Partner would be unable to
continue to manage the business of the Fund.  Should the General
Partner’s registration be suspended, termination of the Fund might
result.





In
addition to such registration requirements, the CFTC and certain commodity
exchanges have established limits on the maximum net long and net short
positions which any person, including the Fund, may hold or control in
particular commodities. Most exchanges also limit the maximum changes in futures
contract prices that may occur during a single trading day. The Fund also trades
in dealer markets for forward contracts, which are not regulated by the CFTC.
Federal and state banking authorities also do not regulate forward trading or
forward dealers. In addition, the Fund trades on foreign commodity exchanges,
which are not subject to regulation by any U.S. government
enterprise.





(i)
through (xii) – not applicable.





(xiii)  The
Fund has no employees.





(d)  Financial Information about
Geographic Areas





The Fund
does not engage in material operations in foreign countries (although it does
trade from the United States in foreign currency forward contracts and on
foreign futures exchanges), nor is a material portion of its revenues derived
from foreign customers.





(e)  Available
Information





The Fund
files 10Q, 10K, 8K, Form 3, and Form 4, as required, with the SEC. The public
may read and copy any materials filed with the SEC at the SEC’s Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549.  Additional
information about the Reference Room may be obtained by calling the SEC at (800)
SEC-0330. Additional reports, proxy and information statements, and other
reports filed electronically with the SEC may be found at http://www.sec.gov.





(f)  Reports to Security
Holders





None.





(g)  Enforceability of Civil Liabilities
Against Foreign Persons





None.


7
 Table of Contents


ITEM 1A: Risk Factors





No Limitations on Trading
Policies.  The Fund’s partnership agreement places no
limitation on the trading policies the General Partner may pursue for the
Fund.





Potential Increase in
Leverage.  The General Partner may increase the leverage
utilized with a particular Trader by the use of notional funds (notional funds
are utilized when a Trader is instructed to trade an account according to its
trading system under the assumption that the account is larger than the actual
cash or securities on hand).  This additional leverage, while creating
additional profit potential which the General Partner feels may be appropriate
with certain Traders in light of the Fund’s multi-trader diversification, also
increases the risk of loss to the Fund.





Volatility.  The
volatility of the Fund is expected to be similar to what it has been in the
past, although it could be more or less volatile in the future depending upon
the volatility of the market, the success of the Traders and the degree of
notional funding utilized by the General Partner in its allocations to the
Traders.





Liquidity.  Although
the Fund offers monthly redemptions, the Fund may delay payment if special
circumstances require, such as a market emergency that prevents the liquidation
of commodity positions or a delay or default in payment to the Fund by the
Futures Broker or a counterparty.





Complex Fee
Structure.  Allocation to more than one Trader makes the Fund’s
fee structure more complex which in turn could diminish the pool’s profit
potential.





Fund Expenses Will Be
Substantial.  The Fund will be obli­gated to pay brokerage
commis­sions, the management fees to the Traders and other operating
expenses regardless of whether it realizes profits.  The Fund will
need to make substan­tial trading profits to avoid depletion of its assets
from these expenses.





Reliance on General
Partner.  The Fund’s success will depend significantly on the
General Partner’s ability to select successful Traders.





Dependence on Key
Personnel.  The General Partner is depen­dent on the
services of Mr. Steben and key management personnel.  If Mr. Steben’s
services became un­a­vailable, another principal of the firm or a new
principal (whose experience cannot be known at this time) will need to take
charge of the General Partner.





Reliance on the
Traders.  The Fund’s success depends largely on the ability of
its Traders.  There can be no assurance that their trading methods
will produce profits (or not generate losses).  Past performance is
not indicative of future results.





Reliance on Broker’s
Financial Condition.  If a Broker becomes insolvent, the Fund
might in­cur a loss of all or a portion of the funds it had deposited
directly or indirectly with the Broker.  There is no govern­ment
insurance for commodity broker­age accounts.  Such a loss could
occur if the Broker un­lawfully failed to segregate its customers’ funds or
if a custo­mer failed to pay a deficiency in its account.


8
 Table of Contents


Use of Money Market
Instruments. Prior to the issuance of Units at monthly closings, an
investor’s subscription proceeds are maintained in an escrow account at Bank of
America, which earns interest that will accrue to the benefit of the
investor.  The Fund also maintains an operating account at Bank of
America which earns interest that will accrue to the benefit of the
Fund.  In addition, a percentage of the Fund’s assets may be
maintained in a money market account with UBS Financial Services, Inc. which
earns interest that will accrue for the benefit of the Fund. These money market
accounts invest primarily in high quality short term money market
instruments.  Although these investments are considered to be high
quality, some of the securities utilized by the money market funds are neither
guaranteed by the U.S. Government nor supported by the full faith and credit of
the U.S. Government.  There is some default risk that an issuer of the
short term money market instruments utilized in the money market accounts may
fail to pay the interest and principal in a timely manner, or that negative
perceptions about the issuer’s ability to make such payments will cause the
price of these instruments to decline in value.





Investment in Other
Investment Pools.  The Fund may invest in other
pools.  The Fund expects to be liable to those pools (e.g., limited
partnerships) only for the amount of its investment plus any undistributed
profits.  However, there can be no assurance in this regard, and the
Fund might invest as a general partner if the situation warranted, and thus be
liable for additional amounts.





The
Fund’s policy of investment in pools (or similar investment vehicles), as
distinguished from direct participation in the markets through individual
managed accounts, has several potential disadvantages.  Those
investments may increase the Fund’s expenses, since the Fund will have to pay
its pro rata share of the expenses borne by the investors in the pools, and the
pools may have higher expenses than managed accounts.  The Fund will
generally be a minority investor in those pools and thus lack control over the
pools.  The pools might (a) change trading policies, strategies and
traders without prior notice to the Fund; (b) substantially restrict the ability
of their investors to withdraw their capital from the pools; (c) be new ventures
with little or no operating history; (d) be general rather than limited
partnerships, thus increasing the Fund’s liability; and/or (e) use aggressive
leveraging policies.





Use of Electronic
Trading. The Traders may utilize electronic trading while implementing
their strategies on behalf of the Fund’s account. Electronic trading differs
from traditional methods of trading.  Electronic system transactions
are subject to the rules and regulations of the exchanges offering the system or
listing the specific contracts.  Attributes of electronic trading may
vary widely among the various electronic trading systems with respect to order
requirements, processes and administration. There may also be differences
regarding conditions for access and reasons for termination and limitations on
the types of orders that may be placed into the system.  These factors
may present various risk factors with respect to trading on or using a specific
system.  Electronic trading systems may also possess particular risks
related to system access, varying response times and security
procedures.  Internet enabled systems may also have additional risks
associated with service providers and the delivery and monitoring of electronic
communications.





Electronic
trading may also be subject to risks associated with system or component
failure.  In the event of system or component failure, it is possible
that a Trader may not be able to initiate new orders, fill existing orders or
modify or cancel orders that were previously entered, as well as exit existing
positions.  System or component failure may also result in loss of
orders or order priority.  Some contracts offered on an electronic
trading system may also be traded electronically and through open outcry during
the same trading hours. Exchanges offering an electronic trading system which
lists contracts may have implemented rules to limit their liability, the
liability of futures brokers, as well as software and communication system
vendors and the damages that may be collected for system inoperability and
delays.  These limitations of liability provisions may vary among the
various exchanges.


9
 Table of Contents


Changes in Trading
Strategies.  The trading strategies of the Traders are
continually developing.  They are free to make any changes in their
trading strategies, without notice, if they feel that doing so will be in the
Fund’s best interest.  The General Partner will notify the Limited
Partners of any such changes that the General Partner considers being
material.  Changes in commodities or the markets traded shall not be
deemed a change in trading strategy.





Disadvantages of Periodic
Incentive Fees.  Because the Traders’ in­cen­tive fees
will be paid on a quarterly or monthly basis, they could receive incentive fees
for a period even though their trading for the year was
unprofitable.  Once an incen­tive fee is paid, they retain the fee
regardless of its subsequent performance, but no new incentive fees will be paid
until after any previous losses have been recovered.





Disadvantages of
Multi-Trader Structure.  The Fund’s use of multiple Traders to
conduct its trading has several potential disadvantages.





Each
Trader will be paid incentive fees solely on the basis of its trading for the
Fund.  The Fund therefore could have periods in which it pays fees to
one or more Traders even though the Fund as a whole has a loss for the period
(because the losses incurred by the Fund from unprofitable Traders exceed the
profits earned by the Fund from profitable Traders).





Because
the Traders trade independently of each other, they may establish offsetting
positions for the Fund.  For example, one Trader may sell 10 March
wheat contracts at the same time another Trader buys 10 March wheat
contracts.  The net effect for the Fund will be the incurring of two
brokerage commissions without the potential for earning a profit (or incurring a
loss).





Under
certain unusual circumstances, the Fund might have to direct a Trader to
liquidate positions in order to generate funds needed to meet margin calls, to
fund the redemption of Units, or to permit the reallocation of funds to another
Trader.  Such liquidations could disrupt the Trader’s trading system
or method.





Replacement of
Traders.  The General Partner has the authority to reallocate
the Fund’s assets among the Traders, terminate Traders and allocate assets to a
new Trader or Traders or invest the Fund’s assets in other investment funds or
commodity pools.





Disadvantages of Replacing
Traders.  Traders generally have to “make up” previous trading
losses incurred by the Fund on portions of the Fund the Traders are managing,
before they can earn an incentive fee.  How­ever, a Trader might
terminate its services to the Fund or the General Partner might decide to
replace a Trader when it has such a “loss carry-forward.”  The Fund
might have to pay a new trader higher advisory fees than are current­ly
being paid to the current Trader.  In addition, the Fund­ would
lose the potential benefit of not having to pay the Trader an incentive fee
during the time that the Trader was generating profits that made up for the
prior losses.  In addi­tion, the replacement trader would “start
from scratch;” that is, the Fund would have to pay the trader an incentive fee
for each dollar of profits it generated for the Fund, regardless of the Fund’s
previous experience.





Limited Partners Do Not
Participate in Management.  Limited Partners are not entitled
to partici­pate in the management of the Fund or the conduct of its
business.





Non-Transferability of
Units.  Investors may acquire Units only for investment and not
for resale, and the Units are transferable only with the Gen­eral Partner’s
discretionary con­sent, provided that the economic benefits of ownership of
a Limited Partner may be transferred or assigned without the consent of the
General Partner.  There will be no resale market for the
Units.  However, a Partner may redeem all or (subject to certain
limitations) any portion of their Units at the end of any month, on 15 days
written notice to the General Partner.


10
 Table of Contents


Possible Adverse Effect of
Large Redemptions.  The Traders’ trading strategies could be
disrupted by large redemptions by Limited Part­ners.  For example,
such redemptions could require the Traders to prematurely li­quidate
fu­tures positions they had established for the Fund.





Mandatory
Redemptions.  The General Partner may require a Limited Partner
to withdraw from the Fund if the General Partner deems the withdrawal (a)
necessary to prevent or correct the occurrence of a nonexempt prohibited
transaction under the Employee Retirement Income Security Act of 1974, as
amended, or the Internal Revenue Code of 1986, as amended, or (b) beneficial to
the Fund or (c) necessary to comply with the Investment Company Act of 1940,
(e.g., in the event of the death of a limited partner).





Indemnification.  The
Fund is required to indemnify the Gen­eral Partner, the Traders and the
Futures Broker, and their affiliates, against various liabilities they may incur
in providing services to the Fund, provided the indemnified party met the
standard of conduct specified in the applicable indem­nification
clause.  The Fund’s indemnification obligations could require the Fund
to make substantial indemnification payments.





Termination of
Fund.  The Fund will automatically terminate on December 31,
2025, unless terminated earlier as provided in the Partnership
Agreement.  For example, the General Part­ner can withdraw as the
general partner on 90 days prior written notice, which withdraw­al could
result in termination of the Fund.  The General Partner has no present
intention of withdrawing and intends to continue the Fund business as long as it
believes that it is in the best interest of all Partners to do so.  In
addition, certain events may occur which could result in early
termination.





Lack of
Regulation.  The Fund is not an Investment Company under the
federal securities laws.  Thus, Limited Partners will not have the
benefits of federal regulation of Invest­ment Companies.  In
addi­tion, this offering is not regis­tered with the Securities and
Exchange Commission or any state.





Conflicts of
Interest.  The Fund is subject to certain con­flicts of
interest.






ITEM 1B: Unresolved Staff Comments





Not
Applicable.






ITEM 2: Properties





The Fund
does not use any physical properties in the conduct of its business. Its assets
currently consist of futures and other contracts, cash and high grade short-term
fixed income securities (one year or under).






ITEM 3: Legal Proceedings





None.






ITEM 4: Submission of Matters to a Vote of Security
Holders





None.


11
 Table of Contents


PART II





ITEM 5: Markets for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities.





(a)
            Market
      information





Neither A
Units nor B Units of the Fund are publicly traded.  Both A Units and B
Units may be transferred or redeemed subject to the conditions imposed by the
Partnership Agreement.





(b)
            Holders





As of
February 28, 2009, there were 6,753 and 3,172 holders of A Units and B Units,
respectively.





(c)
            Dividends





The
General Partner has sole discretion in determining what distributions, if any,
the Fund will make to its limited partners.  The General Partner has
not made any distributions as of the date hereof.





(d)
            Securities Authorized for
      Issuance under Equity Compensation
Plans





None





(e)
            Recent Sales of Unregistered
      Securities, Use of Proceeds from Registered
    Securities





A and B
units are being offered on a continuous basis at subsequent closing dates at a
price equal to the net asset value per unit as of the close of business on each
applicable closing date, which is the first business day of each month. Sales of
the A Units and B Units during the fourth quarter 2008 were as
follows:





OCTOBER
                      
                      
                      NOVEMBER
                      
                      
                      DECEMBERA UNITSUnits
      sold
                      
                      
                      1,435.0862
                      
                      
                      
                      1,987.7719
                      
                      
                      
                      1,901.9820Net
      Asset Value / Unit
                      
                      $
                      4,275.0183
                      
                      
                      $
                      4,710.0300
                      
                      
                      $
                      4,894.0753B UNITSUnits
      sold
                      
                      
                      260.8615
                      
                      
                      
                      853.0418
                      
                      
                      
                      1,113.0313Net
      Asset Value / Unit
                      
                      $
                      5,477.6551
                      
                      
                      $
                      6,044.0501
                      
                      
                      $
                      6,289.7415


12
 Table of Contents


The
proceeds of the offering are deposited in the Fund’s bank and brokerage accounts
for the purpose of engaging in trading activities in accordance with the Fund’s
trading policies and its trading advisors' respective trading
strategies.





A and B
units are being repurchased on a continuous basis at subsequent closing dates at
a price equal to the net asset value per unit as of the close of business on
each applicable closing date, which is the last business day of each month.
Repurchases of the A Units and B Units during the fourth quarter 2008 were as
follows:





OCTOBER
                      
                      
                      NOVEMBER
                      
                      
                      DECEMBERA UNITSUnits
      repurchased
                      
                      
                      978.5450
                      
                      
                      
                      700.0224
                      
                      
                      
                      846.3466Net
      Asset Value / Unit
                      
                      $
                      4,710.0300
                      
                      
                      $
                      4,894.0753
                      
                      
                      $
                      5,018.9563B UNITSUnits
      repurchased
                      
                      
                      383.2233
                      
                      
                      
                      939.7914
                      
                      
                      
                      959.8433Net
      Asset Value / Unit
                      
                      $
                      6,044.0501
                      
                      
                      $
                      6,289.7415
                      
                      
                      $
                      6,460.0487


13
 Table of Contents




ITEM 6: Selected Financial Data.








For
      the Year
                    Ended
                    December
      31,
                    2008
                  
                  
                  For
      the Year
                    Ended
                    December
      31,
                    2007
                  
                  
                  For
      the Year
                    Ended
                    December
      31,
                    2006
                  
                  
                  For
      the Year
                    Ended
                    December
      31,
                    2005
                  
                  
                  For
      the Year
                    Ended
                    December
      31,
                    2004Income
      Statement Items:Gain(loss)
      from Trading – Realized and unrealized
                  
                  $
                  263,420,593
                  
                  
                  $
                  48,018,852
                  
                  
                  $
                  46,500,317
                  
                  
                  $
                  29,400,404
                  
                  
                  $
                  16,756,129Brokerage
      commissions
                  
                  
                  (1,866,008
                  )
                  
                  
                  (2,283,456
                  )
                  
                  
                  (1,715,388
                  )
                  
                  
                  (1,551,942
                  )
                  
                  
                  (1,346,001
                  )Gain
      from trading
                  
                  
                  261,554,585
                  
                  
                  
                  45,735,396
                  
                  
                  
                  44,784,929
                  
                  
                  
                  27,848,462
                  
                  
                  
                  15,410,128Interest
      income
                  
                  
                  19,068,236
                  
                  
                  
                  26,770,478
                  
                  
                  
                  22,657,865
                  
                  
                  
                  10,397,655
                  
                  
                  
                  1,863,091Expenses:General
      Partner management fee
                  
                  $
                  13,379,664
                  
                  
                  $
                  10,186,030
                  
                  
                  $
                  8,822,422
                  
                  
                  $
                  6,106,364
                  
                  
                  $
                  3,397,591General
      Partner 1 percent allocation
                  
                  
                  1,879,337
                  
                  
                  
                  250,318
                  
                  
                  
                  347,793
                  
                  
                  
                  127,493
                  
                  
                  $
                  21,822Trading
      Advisor management fees
                  
                  
                  11,318,439
                  
                  
                  
                  9,712,368
                  
                  
                  
                  8,858,211
                  
                  
                  
                  5,730,444
                  
                  
                  
                  2,517,558Advisor
      incentive fee
                  
                  
                  53,999,585
                  
                  
                  
                  16,604,111
                  
                  
                  
                  4,989,571
                  
                  
                  
                  6,384,615
                  
                  
                  
                  4,956,093Selling
      agents’ fee
                  
                  
                  9,479,794
                  
                  
                  
                  7,375,387
                  
                  
                  
                  6,385,159
                  
                  
                  
                  4,727,082
                  
                  
                  
                  2,733,183Net
      operating expenses
                  
                  
                  4,511,608
                  
                  
                  
                  3,596,134
                  
                  
                  
                  3,608,118
                  
                  
                  
                  2,548,276
                  
                  
                  
                  1,486,548Net
      income
                  
                  $
                  186,054,394
                  
                  
                  $
                  24,781,526
                  
                  
                  $
                  34,431,520
                  
                  
                  $
                  12,621,843
                  
                  
                  $
                  2,160,424Balance
      Sheet Items:Total
      assets
                  
                  $
                  899,233,549
                  
                  
                  $
                  562,253,689
                  
                  
                  $
                  525,148,484
                  
                  
                  $
                  400,445,406
                  
                  
                  $
                  263,976,749Total
      Partners’ capital
                  
                  $
                  832,985,264
                  
                  
                  $
                  545,106,985
                  
                  
                  $
                  504,060,093
                  
                  
                  $
                  376,392,113
                  
                  
                  $
                  254,801,257Class
      A Units:Net
      asset value per Unit
                  
                  $
                  5,018.96
                  
                  
                  $
                  3,867.65
                  
                  
                  $
                  3,725.59
                  
                  
                  $
                  3,489.13
                  
                  
                  $
                  3,429.59Increase
      in net asset value per Unit
                  
                  $
                  1,151.31
                  
                  
                  $
                  142.06
                  
                  
                  $
                  236.46
                  
                  
                  $
                  59.54
                  
                  
                  $
                  10.64Class
      B Units:Net
      asset value per Unit
                  
                  $
                  6,460.05
                  
                  
                  $
                  4,891.11
                  
                  
                  $
                  4,627.81
                  
                  
                  $
                  4,257.03
                  
                  
                  $
                  4,110.43Increase
      in net asset value per Unit
                  
                  $
                  1,568.94
                  
                  
                  $
                  263.30
                  
                  
                  $
                  370.78
                  
                  
                  $
                  146.60
                  
                  
                  $
                  87.76


14
 Table of Contents


FUTURES
PORTFOLIO FUND, LIMITED PARTNERSHIP


Supplementary
Summarized Quarterly Data


For
the First and Second Quarters for 2008 and 2007





March
      31, 2008
                  
                  
                  June
      30, 2008Class A
                    Interests
                  
                  
                  Class B
                    Interests
                  
                  
                  Class A
                    Interests
                  
                  
                  Class B
                    InterestsNet
      Income
                  
                  $
                  41,459,968
                  
                  
                  $
                  21,717,270
                  
                  
                  $
                  36,570,794
                  
                  
                  $
                  20,340,366Increase
      in Net Asset Value Per Unit
                  
                  $
                  436.97
                  
                  
                  $
                  576.74
                  
                  
                  $
                  365.06
                  
                  
                  $
                  488.78Net
      Asset Value Per Unit
                  
                  $
                  4,304.62
                  
                  
                  $
                  5,467.85
                  
                  
                  $
                  4,669.68
                  
                  
                  $
                  5,956.63Ending
      Net Asset Value
                  
                  $
                  403,378,844
                  
                  
                  $
                  204,458,548
                  
                  
                  $
                  448,482,374
                  
                  
                  $
                  246,401,160








March
      31, 2007
                  
                  
                  June
      30, 2007Class A
                    Interests
                  
                  
                  Class B
                    Interests
                  
                  
                  Class A
                    Interests
                  
                  
                  Class B
                    InterestsNet
      Income (Loss)
                  
                  $
                  (26,781,365
                  )
                  
                  $
                  (12,250,407
                  )
                  
                  $
                  52,861,529
                  
                  
                  $
                  26,208,096Increase
      (Decrease) in Net Asset Value Per Unit
                  
                  $
                  (286.85
                  )
                  
                  $
                  (337.44
                  )
                  
                  $
                  558.70
                  
                  
                  $
                  719.84Net
      Asset Value Per Unit
                  
                  $
                  3,438.74
                  
                  
                  $
                  4,290.37
                  
                  
                  $
                  3,997.44
                  
                  
                  $
                  5,010.21Ending
      Net Asset Value
                  
                  $
                  321,774,891
                  
                  
                  $
                  154,267,270
                  
                  
                  $
                  373,991,499
                  
                  
                  $
                  180,083,561


15
 Table of Contents




FUTURES
PORTFOLIO FUND, LIMITED PARTNERSHIP


Supplementary
Summarized Quarterly Data


For
the Third and Fourth Quarters for 2008 and 2007





September,
      2008
                  
                  
                  December,
      2008Class A
                    Interests
                  
                  
                  Class B
                    Interests
                  
                  
                  Class A
                    Interests
                  
                  
                  Class B
                    InterestsNet
      Income (Loss)
                  
                  $
                  (38,453,391
                  )
                  
                  $
                  (20,132,125
                  )
                  
                  $
                  80,571,632
                  
                  
                  $
                  43,979,880Increase
      (Decrease) in Net Asset Value Per Unit
                  
                  $
                  (394.66
                  )
                  
                  $
                  (478.97
                  )
                  
                  $
                  743.94
                  
                  
                  $
                  982.39Net
      Asset Value Per Unit
                  
                  $
                  4,275.02
                  
                  
                  $
                  5,477.66
                  
                  
                  $
                  5,018.96
                  
                  
                  $
                  6,460.05Ending
      Net Asset Value
                  
                  $
                  454,282,796
                  
                  
                  $
                  242,470,228
                  
                  
                  $
                  547,011,351
                  
                  
                  $
                  285,973,913








September,
      2007
                  
                  
                  December,
      2007Class A
                    Interests
                  
                  
                  Class B
                    Interests
                  
                  
                  Class A
                    Interests
                  
                  
                  Class B
                    InterestsNet
      Income (Loss)
                  
                  $
                  (41,814,715
                  )
                  
                  $
                  (19,437,527
                  )
                  
                  $
                  30,216,360
                  
                  
                  $
                  15,779,555Increase
      (Decrease) in Net Asset Value Per Unit
                  
                  $
                  (444.27
                  )
                  
                  $
                  (536.89
                  )
                  
                  $
                  314.48
                  
                  
                  $
                  417.79Net
      Asset Value Per Unit
                  
                  $
                  3,553.17
                  
                  
                  $
                  4,473.32
                  
                  
                  $
                  3,867.65
                  
                  
                  $
                  4,891.11Ending
      Net Asset Value
                  
                  $
                  339,417,709
                  
                  
                  $
                  167,999,274
                  
                  
                  $
                  364,289,314
                  
                  
                  $
                  180,817,671


16
 Table of Contents




Supplementary
Financial Information





Futures
      Portfolio Fund, Limited Partnership (Class A Units)NAV per Unit
                    
                    2008
                    
                    
                    2007
                    
                    
                    2006
                    
                    
                    2005
                    
                    
                    2004January
                    
                    $
                    3,921.97
                    
                    
                    $
                    3,827.77
                    
                    
                    $
                    3,530.23
                    
                    
                    $
                    3,202.63
                    
                    
                    $
                    3,486.39February
                    
                    $
                    4,375.39
                    
                    
                    $
                    3,594.35
                    
                    
                    $
                    3,467.04
                    
                    
                    $
                    3,215.17
                    
                    
                    $
                    3,801.30March
                    
                    $
                    4,304.62
                    
                    
                    $
                    3,438.74
                    
                    
                    $
                    3,600.18
                    
                    
                    $
                    3,256.96
                    
                    
                    $
                    3,800.61April
                    
                    $
                    4,173.52
                    
                    
                    $
                    3,625.90
                    
                    
                    $
                    3,659.24
                    
                    
                    $
                    3,164.24
                    
                    
                    $
                    3,477.92May
                    
                    $
                    4,388.14
                    
                    
                    $
                    3,838.15
                    
                    
                    $
                    3,567.64
                    
                    
                    $
                    3,256.47
                    
                    
                    $
                    3,442.62June
                    
                    $
                    4,669.68
                    
                    
                    $
                    3,997.44
                    
                    
                    $
                    3,516.64
                    
                    
                    $
                    3,359.43
                    
                    
                    $
                    3,255.89July
                    
                    $
                    4,237.20
                    
                    
                    $
                    3,651.43
                    
                    
                    $
                    3,398.67
                    
                    
                    $
                    3,319.98
                    
                    
                    $
                    3,206.99August
                    
                    $
                    4,101.05
                    
                    
                    $
                    3,322.12
                    
                    
                    $
                    3,400.31
                    
                    
                    $
                    3,270.90
                    
                    
                    $
                    3,129.38September
                    
                    $
                    4,275.02
                    
                    
                    $
                    3,553.17
                    
                    
                    $
                    3,360.44
                    
                    
                    $
                    3,353.14
                    
                    
                    $
                    3,131.05October
                    
                    $
                    4,710.03
                    
                    
                    $
                    3,851.68
                    
                    
                    $
                    3,474.10
                    
                    
                    $
                    3,393.57
                    
                    
                    $
                    3,299.78November
                    
                    $
                    4,894.08
                    
                    
                    $
                    3,776.43
                    
                    
                    $
                    3,498.74
                    
                    
                    $
                    3,543.88
                    
                    
                    $
                    3,449.68December
                    
                    $
                    5,018.96
                    
                    
                    $
                    3,867.65
                    
                    
                    $
                    3,725.59
                    
                    
                    $
                    3,489.13
                    
                    
                    $
                    3,429.59











Futures
      Portfolio Fund, Limited Partnership (Class B Units)NAV per Unit
                    
                    2008
                    
                    
                    2007
                    
                    
                    2006
                    
                    
                    2005
                    
                    
                    2004January
                    
                    $
                    4,967.20
                    
                    
                    $
                    4,761.78
                    
                    
                    $
                    4,313.61
                    
                    
                    $
                    3,845.00
                    
                    
                    $
                    4,108.34February
                    
                    $
                    5,550.35
                    
                    
                    $
                    4,477.84
                    
                    
                    $
                    4,242.72
                    
                    
                    $
                    3,864.82
                    
                    
                    $
                    4,486.70March
                    
                    $
                    5,467.85
                    
                    
                    $
                    4,290.37
                    
                    
                    $
                    4,412.22
                    
                    
                    $
                    3,920.90
                    
                    
                    $
                    4,492.74April
                    
                    $
                    5,309.22
                    
                    
                    $
                    4,530.63
                    
                    
                    $
                    4,491.29
                    
                    
                    $
                    3,814.89
                    
                    
                    $
                    4,117.57May
                    
                    $
                    5,591.51
                    
                    
                    $
                    4,803.19
                    
                    
                    $
                    4,385.40
                    
                    
                    $
                    3,931.95
                    
                    
                    $
                    4,081.99June
                    
                    $
                    5,956.63
                    
                    
                    $
                    5,010.21
                    
                    
                    $
                    4,329.23
                    
                    
                    $
                    4,062.34
                    
                    
                    $
                    3,866.47July
                    
                    $
                    5,413.02
                    
                    
                    $
                    4,583.36
                    
                    
                    $
                    4,190.24
                    
                    
                    $
                    4,020.63
                    
                    
                    $
                    3,814.21August
                    
                    $
                    5,246.89
                    
                    
                    $
                    4,176.22
                    
                    
                    $
                    4,198.52
                    
                    
                    $
                    3,967.04
                    
                    
                    $
                    3,727.61September
                    
                    $
                    5,477.66
                    
                    
                    $
                    4,473.32
                    
                    
                    $
                    4,155.47
                    
                    
                    $
                    4,072.85
                    
                    
                    $
                    3,735.31October
                    
                    $
                    6,044.05
                    
                    
                    $
                    4,856.38
                    
                    
                    $
                    4,302.46
                    
                    
                    $
                    4,128.12
                    
                    
                    $
                    3,942.68November
                    
                    $
                    6,289.74
                    
                    
                    $
                    4,768.60
                    
                    
                    $
                    4,339.43
                    
                    
                    $
                    4,317.40
                    
                    
                    $
                    4,128.13December
                    
                    $
                    6,460.05
                    
                    
                    $
                    4,891.11
                    
                    
                    $
                    4,627.81
                    
                    
                    $
                    4,257.03
                    
                    
                    $
                    4,110.43


17
 Table of Contents




FUTURES
PORTFOLIO FUND, LIMITED PARTNERSHIP (CLASS A UNITS)





Rate of Return
                    
                    2008
                    
                    
                    2007
                    
                    
                    2006
                    
                    
                    2005
                    
                    
                    2004January
                    
                    
                    1.40
                    
                    
                    
                    2.74
                    
                    
                    
                    1.18
                    
                    
                    
                    (6.62
                    )
                    
                    
                    1.97February
                    
                    
                    11.56
                    
                    
                    
                    (6.10
                    )
                    
                    
                    (1.79
                    )
                    
                    
                    0.39
                    
                    
                    
                    9.03March
                    
                    
                    (1.62
                    )
                    
                    
                    (4.33
                    )
                    
                    
                    3.84
                    
                    
                    
                    1.30
                    
                    
                    
                    (0.02
                    )April
                    
                    
                    (3.05
                    )
                    
                    
                    5.44
                    
                    
                    
                    1.64
                    
                    
                    
                    (2.85
                    )
                    
                    
                    (8.49
                    )May
                    
                    
                    5.14
                    
                    
                    
                    5.85
                    
                    
                    
                    (2.50
                    )
                    
                    
                    2.91
                    
                    
                    
                    (1.01
                    )June
                    
                    
                    6.42
                    
                    
                    
                    4.15
                    
                    
                    
                    (1.43
                    )
                    
                    
                    3.16
                    
                    
                    
                    (5.42
                    )July
                    
                    
                    (9.26
                    )
                    
                    
                    (8.66
                    )
                    
                    
                    (3.35
                    )
                    
                    
                    (1.17
                    )
                    
                    
                    (1.50
                    )August
                    
                    
                    (3.21
                    )
                    
                    
                    (9.02
                    )
                    
                    
                    0.05
                    
                    
                    
                    (1.48
                    )
                    
                    
                    (2.42
                    )September
                    
                    
                    4.24
                    
                    
                    
                    6.95
                    
                    
                    
                    (1.17
                    )
                    
                    
                    2.51
                    
                    
                    
                    0.05October
                    
                    
                    10.18
                    
                    
                    
                    8.40
                    
                    
                    
                    3.38
                    
                    
                    
                    1.21
                    
                    
                    
                    5.39November
                    
                    
                    3.91
                    
                    
                    
                    (1.95
                    )
                    
                    
                    0.71
                    
                    
                    
                    4.43
                    
                    
                    
                    4.54December
                    
                    
                    2.55
                    
                    
                    
                    2.42
                    
                    
                    
                    6.48
                    
                    
                    
                    (1.55
                    )
                    
                    
                    (0.58
                    )Year
                    
                    
                    29.77
                    
                    
                    
                    3.81
                    
                    
                    
                    6.78
                    
                    
                    
                    1.74
                    
                    
                    
                    0.31








FUTURES
PORTFOLIO FUND, LIMITED PARTNERSHIP (CLASS B UNITS)





Rate of Return
                    
                    2008
                    
                    
                    2007
                    
                    
                    2006
                    
                    
                    2005
                    
                    
                    2004January
                    
                    
                    1.56
                    
                    
                    
                    2.89
                    
                    
                    
                    1.33
                    
                    
                    
                    (6.48
                    )
                    
                    
                    2.13February
                    
                    
                    11.74
                    
                    
                    
                    (5.96
                    )
                    
                    
                    (1.64
                    )
                    
                    
                    0.54
                    
                    
                    
                    9.21March
                    
                    
                    (1.49
                    )
                    
                    
                    (4.19
                    )
                    
                    
                    4.00
                    
                    
                    
                    1.45
                    
                    
                    
                    0.13April
                    
                    
                    (2.90
                    )
                    
                    
                    5.60
                    
                    
                    
                    1.79
                    
                    
                    
                    (2.70
                    )
                    
                    
                    (8.35
                    )May
                    
                    
                    5.32
                    
                    
                    
                    6.02
                    
                    
                    
                    (2.36
                    )
                    
                    
                    3.07
                    
                    
                    
                    (0.86
                    )June
                    
                    
                    6.53
                    
                    
                    
                    4.31
                    
                    
                    
                    (1.28
                    )
                    
                    
                    3.32
                    
                    
                    
                    (5.28
                    )July
                    
                    
                    (9.13
                    )
                    
                    
                    (8.52
                    )
                    
                    
                    (3.21
                    )
                    
                    
                    (1.03
                    )
                    
                    
                    (1.35
                    )August
                    
                    
                    (3.07
                    )
                    
                    
                    (8.88
                    )
                    
                    
                    0.20
                    
                    
                    
                    (1.33
                    )
                    
                    
                    (2.27
                    )September
                    
                    
                    4.40
                    
                    
                    
                    7.11
                    
                    
                    
                    (1.03
                    )
                    
                    
                    2.67
                    
                    
                    
                    0.21October
                    
                    
                    10.34
                    
                    
                    
                    8.56
                    
                    
                    
                    3.54
                    
                    
                    
                    1.36
                    
                    
                    
                    5.55November
                    
                    
                    4.07
                    
                    
                    
                    (1.81
                    )
                    
                    
                    0.86
                    
                    
                    
                    4.59
                    
                    
                    
                    4.70December
                    
                    
                    2.71
                    
                    
                    
                    2.57
                    
                    
                    
                    6.65
                    
                    
                    
                    (1.40
                    )
                    
                    
                    (0.43
                    )Year
                    
                    
                    32.08
                    
                    
                    
                    5.69
                    
                    
                    
                    8.71
                    
                    
                    
                    3.57
                    
                    
                    
                    2.18


18
 Table of Contents




ITEM 7: Management’s Discussion and Analysis of Financial Condition
and Results of Operations.





Introduction





Futures
Portfolio Fund, Limited Partnership (“the Fund”) is a Maryland limited
partnership, formed on May 11, 1989 and began trading on January 2,
1990.  Utilizing professional trading advisors, the Fund invests the
proceeds from its offering of units in the speculative trading of futures,
swaps, options and over-the-counter contracts, including currency forwards
traded in the United States and internationally.  The Fund is an
actively managed account with speculative trading profits as its objective. The
Fund issues two different types of units; Class A units and Class B units which
represent units of fractional undivided beneficial interest in and ownership of
the Fund.





Recent
Global Financial Crisis





There
were several events that led to significant volatility in global capital markets
during 2008 and continuing in 2009.  Following a series of global
announcements regarding failures in financial institutions including the
government take-over of Fannie Mae and Freddie Mac, equity markets fell and
credit markets experienced a sharp drop in liquidity.  On October 3,
2008, President Bush signed into law the Emergency Economic Stabilization Act of
2008. The Act gave the U.S. Treasury certain powers to assist troubled financial
institutions, especially those with assets that may have been affected by
sub-prime mortgage exposure or credit default insurance exposure.





Despite
the increased volatility in the capital markets, the Fund was not adversely
impacted by these developments. In fact, as a result of the declining global
markets, the Fund’s short positions in equity indices were highly profitable.
Additionally, the Fund’s short positions in physical commodities and long
positions in interest rate instruments were also profitable as commodity prices
decreased and bond prices increased.





Critical
Accounting Policies





The
preparation of the Fund’s financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.





In
September 2006, the FASB issued Statement of Financial Accounting Standard No.
157, Fair Value
Measurement (“SFAS No. 157”). SFAS No. 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurement and also emphasizes that fair value is a market-based
measurement, not an entity-specific measurement. SFAS No. 157 is effective for
fiscal years beginning after November 15, 2007, except for nonfinancial assets
and nonfinancial liabilities that are recognized or disclosed at fair value in
the financial statements on a nonrecurring basis for which delayed application
is permitted until fiscal years beginning after November 15, 2008. The adoption
of SFAS No. 157 was effective for the Fund on January 1, 2008, and did not
impact our financial position, results of operations or cash
flows.


19
 Table of Contents


SFAS No.
157 defines fair value as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date and sets out a fair value hierarchy. The
fair value hierarchy gives the highest priority to quoted prices in active
markets for identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). Inputs are broadly defined under SFAS 157 as
assumptions market participants would use in pricing an asset or liability. The
three levels of the fair value hierarchy under SFAS 157 are described
below:





Level 1:
Unadjusted quoted prices in active markets for identical assets or liabilities
that the reporting entity has the ability to access at the measurement
date.





Level 2:
Inputs others than quoted prices within Level 1 that are observable for the
asset or liability, either directly or indirectly. A significant adjustment to a
Level 2 input could result in the Level 2 measurement becoming a Level 3
measurement.





Level 3:
Inputs are unobservable for the asset or liability.





The
following table presents the Fund’s fair value hierarchy for those assets and
liabilities measured at fair value on a recurring basis as of December 31,
2008:





Level 1
                  
                  
                  Level 2
                  
                  
                  TotalEquity
      in broker trading accountsFutures
      contracts
                  
                  $
                  34,492,682
                  
                  
                  $
                  -
                  
                  
                  $
                  34,492,682Forward
      currency contracts
                  
                  
                  -
                  
                  
                  
                  (1,202,959
                  )
                  
                  
                  (1,202,959
                  )U.S.
      Government securities
                  
                  
                  66,972,902
                  
                  
                  
                  -
                  
                  
                  
                  66,972,902Commercial
      paper
                  
                  
                  -
                  
                  
                  
                  140,590,377
                  
                  
                  
                  140,590,377Government-sponsored
      enterprises
                  
                  
                  -
                  
                  
                  
                  75,198,945
                  
                  
                  
                  75,198,945Corporate
      notes
                  
                  
                  -
                  
                  
                  
                  78,147,406
                  
                  
                  
                  78,147,406Cash
      and cash equivalentsMoney
      market funds
                  
                  
                  256,592,512
                  
                  
                  
                  -
                  
                  
                  
                  256,592,512





There
were no Level 3 holdings as of December 31, 2008.





Fair
value of exchange traded contracts is based upon exchange settlement prices.
Fair value of non-exchange traded contracts is based on third party quoted
dealer values of the Interbank market. The investments in money market funds and
futures contracts are valued using quoted market prices and are classified
within Level 1. The fair values of forward currency contracts are based upon an
underlying asset, index, or reference rate or a combination of these factors and
are classified within Level 2.  The Fund uses some, and when applicable,
all of these financial instruments as part of its trading
activities.  The recorded values of commercial paper,
Government-sponsored enterprises, U.S. Government Securities and corporate
notes are based on amortized cost carrying amounts due to the short-term
maturity of the instruments and are classified within Level 1 or 2. Therefore,
their carrying amounts approximate their fair values.





Futures,
options on futures, forward currency, and swap contracts are recorded on a trade
date basis, and gains or losses are realized when contracts are liquidated.
Unrealized gains and losses on open contracts (the difference between contract
trade price and fair value) are reported in the statements of financial
condition as a net gain or loss, as there exists a right of offset of unrealized
gains or losses in accordance with Financial Accounting Standards Board
Interpretation (“FASB”) No. 39 – Offsetting of
Amounts Related to Certain Contracts, as amended by FASB No. 39-1 – Amendment of FASB Interpretation No. 39 (“FIN
39-1”). Any change in net unrealized gain or loss from the preceding period is
reported in the statements of operations. Commercial paper, corporate notes,
U.S. Government securities and Government-sponsored enterprises are recorded at
amortized cost and interest is accrued and recorded through maturity, which
approximates fair value.  Fair value of exchange-traded contracts is
based upon settlement prices. Fair value of non-exchange traded contracts is
based upon third-party quoted dealer values on the Interbank
market.


20
 Table of Contents


For
purposes of both financial reporting and calculation of redemption value, net
asset value per Class A or Class B unit is calculated by dividing the net asset
value of Class A or Class B by the number or outstanding units of Class A or
Class B. All items of income or loss, except for the selling agents’ fees, are
allocated pro rata between Class A and Class B Interests. The selling agents’
fees applicable to each class of Interest are then charged to each class. All
items of income or loss allocated to each class of Interest are then allocated
pro rata to each Limited Partner within each class.





As of
December 31, 2008, the aggregate capitalization of the Fund was $832,985,264,
consisting of Class A units of $547,011,351 and Class B units of
$285,973,913.  The net asset value per unit of the Class A units was
$5,018.96 and the net asset value of the Class B units was $6,460.05 as of
December 31, 2008.





Liquidity





Most
United States commodity exchanges limit fluctuations in futures contracts prices
during a single day by regulations referred to as “daily price fluctuation
limits” or “daily limits.” During a single trading day, no trades may be
executed at prices beyond the daily limit. Once the price of a futures contract
has reached the daily limit for that day, positions in that contract can neither
be taken nor liquidated. Futures prices have occasionally moved the daily limit
for several consecutive days with little or no trading. Similar occurrences
could prevent the Fund from promptly liquidating unfavorable positions and
subject the Fund to substantial losses which could exceed the margin initially
committed to such trades. In addition, even if futures prices have not moved the
daily limit, the Fund may not be able to execute futures trades at favorable
prices if little trading in such contracts is taking place. Other than these
limitations on liquidity, which are inherent in the Fund’s futures trading
operations, the Fund’s assets are expected to be highly liquid. Redemptions may
be made by a Limited Partner as of the last business day of any month at the Net
Asset Value on such redemption date of the redeemed units (or portion thereof)
on that date, on 5 days’ prior written notice to the General Partner. Partial
redemptions must be for at least $1,000, unless such requirement is waived by
the General Partner. In addition, the Limited Partner, if making a partial
redemption, must maintain at least $10,000 or his original investment amount,
whichever is less, in the Fund unless such requirement is waived by the General
Partner.





Capital
Resources





The Fund
intends to raise additional capital only through the sale of Units offered
pursuant to the continuing offering, and does not intend to raise any capital
through borrowing. Due to the nature of the Fund’s business, the Fund does not
contemplate making capital expenditures.





Contractual
Obligations





The Fund
does not have any contractual obligations of the type contemplated by Regulation
S-K 303(a)(5).  The Fund’s sole business is trading futures and
forward currency contracts, both long (contracts to buy) and short (contracts to
sell).


21
 Table of Contents


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 and forward 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, market risk, 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 commodity trading advisors were unable to offset futures interest
positions of the Fund, the Fund could lose all of its assets and the Limited
Partners would realize a 100% loss.  Steben & Company, the General
Partner, minimizes market risk through diversification of the portfolio
allocations to multiple trading advisors, and maintenance of a margin-to-equity
ratio that rarely exceeds 30%.





In
addition to market risk, in entering into futures and forward contracts there is
a risk that the counterparty will not be able to meet its obligations to the
Fund.  The counterparty for futures contracts traded in the United
States and on most foreign exchanges is the clearinghouse associated with such
exchange.  In general, clearinghouses are backed by the corporate
members of the clearinghouse who are required to share any financial burden
resulting from the non-performance by one of their members and, as such, should
significantly reduce this risk.  In cases where the clearinghouse is
not backed by the clearing members, like some foreign exchanges, it is normally
backed by a consortium of banks or other financial institutions.





In the
case of forward contracts, which are traded on the inter-bank market rather than
on exchanges, the counterparty is generally a single bank or other financial
institution, rather than a group of financial institutions; thus there may be a
greater counterparty risk. Steben & Company utilizes only those
counterparties that it believes to be creditworthy for the Fund.  All
positions of the Fund are valued each day on a mark-to-market
basis.  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
will utilize high grade short-term commercial paper, which is an unsecured,
short-term debt instrument issued by a corporation with maturities rarely longer
than 270 days.  Commercial paper is not usually backed by any form of
collateral, so only firms with high-quality debt rating will be
used.  As commercial paper is not backed by the full faith and credit
of the U.S. Government, if the issuing corporation defaults on their obligations
to the Fund, the Fund bears the risk of loss of the amount expected to be
received.





Results
of Operations





The
returns for A units for the years ended December 31, 2008, 2007 and 2006 were
29.77%, 3.81%, and 6.78%, respectively. The returns for B units for the years
ended December 31, 2008, 2007 and 2006 were 32.08%, 5.69%, and 8.71%,
respectively. Further analysis of the trading gains and losses is provided
below.





Past
Results Are Not Indicative of Future Performance


22
 Table of Contents




2008





A Units
of the Fund were up 1.40% for the month of January 2008 and B Units were up
1.56%.  The Fund ended with a net gain in January as profits from
interest rate instruments, agricultural commodities and metals offset losses
from energy, equity indices and foreign currencies. Global interest rate
instruments were the most profitable sector for the Fund as rates trended lower
on growing concerns of a possible U.S. recession. Later in the month, the
Federal Reserve responded to a sharp sell off in global equity prices with a
total 1.25% rate cut that pushed short term rates even lower, benefiting the
Fund’s long positions in that sector. Long positions in agricultural commodities
were profitable as grain and soybean prices continued an upward trend on strong
global demand and declining inventory levels. The largest losses for the month
came from the energy sector, where crude oil prices declined after hitting an
all time nominal high at the beginning of the month. The fall in oil prices went
against the Fund’s long positions.





A Units of the Fund were
up 11.56% for the month of February 2008 and B Units were up
11.74%.The Fund finished the month with net profits in all
six major market sectors. Physical commodities generated the largest profits as
strong demand and tight supplies in a number of commodities drove contract
prices to record highs. In the agricultural commodities sector, the Fund’s long
positions in soybeans, wheat, coffee, corn and sugar were among the most
profitable. Since the start of the year, wheat prices have climbed 21%, while
soybeans and coffee were up 27% and 35% respectively. In the energy sector,
light crude oil futures hit a new nominal high of $103.05 dollars per barrel.
The Fund gained from its long positions in energy, especially crude oil, heating
oil, gasoline and kerosene. In the metals sector, the Fund profited from its
long positions in both precious and industrial metals including gold, silver,
aluminum, platinum and copper. Short positions in equity indices profited as
global indices weakened on fears of inflation and a weaker U.S. dollar. Bond
prices were mostly unchanged until the final days of the month, when prices
jumped in reaction to Fed news about further rate cuts. The net increase in bond
prices benefited the Fund’s long bond positions.





A Units of the Fund were
down 1.62% for the month of March 2008 and B Units were down
1.49%.The Fund finished lower in March as losses from
agricultural products and metals offset profits from equity indices, foreign
currencies, energy and interest rate instruments. Financial markets reacted to
two announcements by the Federal Reserve that ultimately impacted several market
sectors. The Fed cut the federal funds target interest rate by .75% and it also
announced it would provide guarantees to JP Morgan Chase for the acquisition of
Bear Stearns. Following the announcements, the U.S. dollar which had been
trending lower over the past several months, suddenly strengthened. The stronger
dollar triggered a rapid sell-off in physical commodities including
agricultural, metals and energy, with agricultural commodities generating the
largest losses. Overall the Fund ended the first quarter up 11.28% and up 25.15%
for the last 12 months.





A Units of the Fund were
down 3.05% for the month of April 2008 and B Units were down
2.90%.The Fund finished lower this month as profits from
energy were offset by losses from the other five major market sectors. Japanese
government bonds fell on reports that inflation in Japan had reached its highest
level in a decade. By the end of the month, most domestic and international
interest rates had edged higher even after the FOMC announced a .25% rate cut.
Overall, the decline in bond prices went against the Fund’s long positions.
Agricultural commodity prices continued to decline resulting in losses for the
Fund's long positions in that sector. Wheat prices fell more than 6%, reaching
five-month lows on news that the government of Ukraine had eased export
restrictions. Corn and soybean prices also moved lower. Long positions in the
energy sector posted gains as crude oil prices approached $120 per barrel.
Concerns over Saudi supplies, Nigerian production disruptions and further
evidence of continuing Chinese demand fueled the rise in oil
prices.


23
 Table of Contents


A Units of the Fund were
up 5.14% for the month of May 2008 and B Units were up
5.32%.The Fund finished higher this month with gains in most
of the major market sectors. The energy sector generated significant profits as
the Fund’s long positions benefited from sustained upward trends in crude oil,
gasoline, heating oil and natural gas. Analysts’ explanations for the rise in
prices were mixed, but steady demand, supply disruptions and a weak U.S. dollar
continued to be the most commonly stated factors. While prices for several
energy contracts reached all time highs, other market sectors were relatively
quiet this month. Foreign currencies, metals and stock indices all finished with
modest profits for the month, with each sector experiencing a mix of offsetting
returns. Short-term interest rate instruments were profitable as the Fund’s
short positions benefited from a rise in short term international interest
rates.





A Units of the Fund were
up 6.42% for the month of June 2008 and B Units were up
6.53%.The Fund’s systematic trading strategies generated
profits from trends in all of the major market sectors in June. Crude oil,
heating oil, gasoline and natural gas soared to new highs, producing significant
profits from the Fund’s long energy sector positions. Higher energy prices,
weakness in the U.S. dollar and concerns over inflation drove stock markets into
bear market territory. The falling equity prices produced profits from the
Fund’s short equity index positions. Agricultural prices rose this month as
severe flooding in the U.S. threatened summer crop supplies. The rising prices
benefited the Fund’s long positions in soybeans, corn and wheat. The Fund also
profited from long positions in metals including copper, gold and
zinc.





A Units
of the Fund were down 9.26% for the month of July 2008 and B Units were down
9.13%.  The Fund finished lower in July as several key markets
experienced sharp reversals that moved against previously established long term
market trends. The most significant price reversals were experienced in the
energy and agricultural commodity sectors. After reaching multi-month highs in
June, prices in crude oil, heating oil, gasoline and natural gas fell sharply in
July on signs of weaker demand and a rising U.S. dollar. Natural gas, which
reached a 30-month high at the end of June, fell more than 32% during July,
creating losses for the Fund’s long positions.  The stronger dollar
also caused agricultural commodities to reverse from strong upward trends. Corn
and soybeans fell more than 15% during the month creating losses for the Fund’s
long systematic positions. Interest rate instruments have been directionless
over the last several weeks. The Fund’s positions in that sector experienced
losses due to a lack of trends resulting in “whipsawing” of the Fund’s
positions. The Fund’s traders reduced their risk in each of the affected sectors
by either reducing or getting out of positions.





A Units
of the Fund were down 3.21% for the month of August 2008 and B Units were down
3.07%.  The Fund finished lower in August as profits from interest
rate instruments were not enough to offset losses in foreign currencies,
agricultural commodities, energies and metals. The U.S. dollar continued to
strengthen against any foreign currencies including the euro which fell sharply
to its lowest level against the U.S. dollar in the last six
months.  Falling foreign currency prices went against the Fund’s long
positions.  Agricultural commodities, energies and precious metals
experienced multiple price changes during the month causing losing trades for
the Fund.  The Fund’s long positions in interest rate instruments
profited as long term interest rates declined.





A Units
of the Fund were up 4.24% for the month of September 2008 and B Units were up
4.40%.  The Fund was profitable in September as gains from our
positions in stock indices, metals, agricultural commodities and interest rate
instruments offset losses incurred in foreign currencies and
energy.  Increasing uncertainty in the global financial markets
created significant volatility in both the credit and equity
markets.  Lehman Brothers Holdings, Inc. filed for bankruptcy
protection, Merrill Lynch was acquired by Bank of America and Fannie Mae,
Freddie Mac, and AIG required government support to remain viable. Later in the
month, the Dow Industrials suffered its worst single day point drop ever,
sparked by U.S lawmakers’ rejection of a proposed $700 billion market
bailout.  Over the course of the month, global equity prices declined
which benefited the Fund’s short equity indices positions.  Investors
sought the relative safety of government backed interest rate instruments,
causing prices to rise which generated profits for the Fund’s long positions in
interest rate instruments. Agricultural commodity and metals prices fell,
benefiting the Fund’s short positions.


24
 Table of Contents


A Units
of the Fund were up 10.18% for the month of October 2008 and B Units were up
10.34%.  October was a very profitable month for the Fund with gains
in all six major market sectors. As monetary authorities sought to restore
liquidity in the domestic and international credit markets, the fear of
prolonged economic weakness led to steep declines in global equity prices. The
downward trend in global equity prices benefited the Fund’s short positions in
equity indices. Demand for physical commodities declined as speculators grew
increasingly concerned about a global recession. The fall in demand led to lower
prices in metals, energy and agricultural commodities, all of which created
profits for the Fund’s short positions in those respective sectors. Strong
performance was also seen in interest rate instruments as major global central
banks joined in a coordinated effort to cut interest rates in order to restore
investor confidence. Rising interest rate instrument prices led to profits in
the Fund’s long positions. In currencies, long positions in the U.S. dollar were
mostly positive against other major foreign currencies.





A Units
of the Fund were up 3.91% for the month of November 2008 and B Units were up
4.07%. November was a profitable month for the Fund with gains in five
out of the six major market sectors traded. Interest rate instrument prices
continued to trend higher as international bond prices rallied on fears of a
prolonged global economic recession. In addition, investors shifted assets
toward the relative safe haven of medium to long term government securities,
while European and Asian central banks cut short term rates. The rising interest
rate instrument prices generated profits for the Fund’s long positions in that
sector. Short positions in stock indices were profitable as equity indices
continued to decline during the month. Commodity prices, especially energy
prices declined creating additional profits for the Fund’s short energy
positions. In currencies, the U.S. dollar strengthened, particularly against the
British pound and the Euro leading to profits in the Fund’s
contracts.





A Units
of the Fund were up 2.55% for the month of December 2008 and B Units were up
2.71%.December was a profitable month for the Fund as global trends
continued, resulting in gains in five out of the six major market sectors.
Interest rate instruments were the most profitable sector. The Fund’s long
interest rate instrument positions benefited as weaker than expected employment
data in the U.S. and further rate cuts by the U.S. Federal Reserve and other
central banks around the world fueled a continuing decline in long and short
term interest rates. In the energy sector, crude oil prices fell 18% in December
and approximately 70% since mid July. Falling oil, gasoline and natural gas
prices created profits for the Fund’s short positions. The Fund also profited
from falling metals prices, especially aluminum, copper and silver. In foreign
currencies, a stronger euro relative to the U.S. dollar and British pound also
created profits for the Fund.





2007





A Units of the Fund were
up 2.74% for the month of January 2007 and B Units were up
2.89%.In January the Fund generated profits in four out of
the six market sectors. The Fund’s strongest gains came from short positions in
interest rate instruments. Domestic housing, manufacturing and employment data
pointed to unexpected strength in the U.S. economy which dampened prospects for
rate cuts and pushed bond prices lower. International bond prices also fell
after the UK announced its surprise decision to raise its core interest rate.
The Fund’s long positions in equity indices posted gains on upward trends in
domestic and international stock indices. Short positions in crude oil and
related energy contracts were profitable as unseasonably warm winter weather in
the northern hemisphere continued to drive up oil inventories. The Bank of
Japan’s decision to hold its core interest rates steady surprised currency
markets, driving the yen lower against other foreign currencies including the
euro, British pound and U.S. dollar. Metals registered a small loss in January
with copper and zinc experiencing a fall in prices that moved against the Fund’s
long positions.


25
 Table of Contents


A Units of the Fund were
down 6.10% for the month of February 2007 and B Units were down
5.96%.Sharp price reversals in equity indices, currencies and
interest rate instruments in the last two days of the month changed the Fund’s
picture from a profitable position to disappointing losses. On February 27th,
shares in the Chinese stock market fell nearly 9%, which set off a wave of
selling in international equity markets. The worldwide sell-off erased earlier
gains from the Fund’s long positions in domestic and international equity
indices. The Fund’s most significant losses for the month came from short
positions in interest rate instruments. Earlier in the month, interest rates
began to decline, moving against the Fund’s short positions. Late in the month,
government bond prices accelerated higher as investors jumped from equities into
the relative “safety” of government bonds. The Japanese yen, which had been
declining, strengthened significantly against major currencies, including the
U.S. dollar. A rally in energy prices also went against the Fund’s short
positions. In the agricultural sector, long positions in the soy complex
produced some profit.





A Units of the Fund were
down 4.33% for the month of March 2007 and B Units were down
4.19%.The reversals that began at the end of last month
continued to affect the Fund’s performance in early March. The global sell-off
in international stock markets that began in the final days of February
stretched into the first three days of March, moving against the Fund’s long
equity indices positions. Concerns of a slowing Chinese economy changed the
demand outlook for physical commodities, including metals and certain
agricultural commodities. While commodities had been in a long uptrend, the
resulting shift in market sentiment caused prices of commodities to fall which
moved against the Fund’s long positions. Short positions in the Japanese yen
were particularly impacted as investors continued to buy Japanese yen and sell
other foreign currencies. In response to the increased market volatility, the
Fund’s trading programs systematically reduced contract positions in each market
sector. Eventually the market turmoil subsided and the Fund began a slow
recovery. The recovery was not sufficient to offset the earlier losses however,
and the Fund ended the month in negative territory.





A Units of the Fund were
up 5.44% for the month of April 2007 and B Units were up
5.60%.Favorable trends in five out of the Fund’s six market
sectors yielded profits for the Fund in April. The strongest profits came from
foreign currencies, where the U.S. dollar weakened against most foreign
currencies. Long positions in the euro, British pound, Australian dollar and New
Zealand dollar profited as the U.S. dollar weakened. The fall in the U.S. dollar
was fueled after release of the U.S. Federal Reserve Open Market Committee
suggested that U.S. interest rates would probably remain steady or be cut later
in the year. In equity indices, both domestic and international stock prices
continued to rally, which benefited the Fund’s long positions in that sector.
Prices for raw materials continued to trend higher, resulting in gains for the
Fund's long positions in the base metals markets, including copper and nickel.
Analysts renewed expectations of continued demand from China and worries about a
lack of supply. Late in the month, prices in precious metals fell sharply, which
offset some of the gains in the metals sector. In the Agricultural sector, a
fall in cocoa and soybean prices moved against the Fund’s long positions which
led to some losses in that sector.


26
 Table of Contents


A Units of the Fund were
up 5.85% for the month of May 2007 and B Units were up
6.02%.The Fund profited in May as stock indices, interest
rate instruments and foreign currencies offset losses from metals, agricultural
commodities and energy. The strongest gains came from interest rate instruments
as the Fund’s short positions benefited from a rise in global interest rates.
U.S. and international bond prices fell on strong economic data along with
continued inflationary concerns. The Fund’s long positions in stock indices
benefited from upward trends in both U.S. and international stock indices. Many
of the broad equity indices hit new highs, including the S&P 500 which hit
its highest level since March 2000. The Fund’s long positions in metals lost
ground this month as prices were generally down on concerns over the strength of
future Chinese imports. In agricultural commodities, the Fund’s long positions
in soybean and bean oil were the sector’s most profitable contracts, although
these gains were offset by losses from short positions in coffee.





A Units of the Fund were
up 4.15% for the month of June 2007 and B Units were up
4.31%.The Fund was profitable in June with gains from five of
the six major market sectors. Interest rate instruments and foreign currencies
generated the Fund’s strongest profits. A downward price trend in interest rate
instruments continued from prior months benefiting the Fund's short positions.
Stronger than expected U.S. retail sales and hawkish comments from the U.S.
Federal Reserve pushed U.S. interest rates higher. In Europe, news of short term
rate increases by the European Central Bank pushed international bond prices to
multi-year lows including the UK Gilt and the 10-Year German Bund. In related
moves, investors generally bought currencies in countries with rising interest
rates and sold currencies with lower yielding rates. As a result, the Fund’s
long positions in the euro, British pound, Australian and New Zealand dollar
profited along with its short positions in the Japanese yen.





A Units of the Fund were
down 8.66% for the month of July 2007 and B Units were down 8.52%.The
Fund finished down for the month as global equity markets and interest rates
reversed from previous trends. In previous months, the Fund’s long positions in
equity indices profited from record breaking upward trends in both domestic and
international equity indices. In July, growing concerns surrounding the
instability of the U.S. sub-prime mortgage market fueled reversals in equity
markets that went against the Fund’s long positions. In the final week of the
month equities sold off sharply, including the S&P 500, DAX, FTSE, CAC, Hang
Seng and Nikkei indices. The increased volatility in the equity markets sparked
a flight to safety in bonds that reversed previous downward trends in both
domestic and international interest rate instruments. The sudden move in
interest rates went against the Fund’s short positions creating losses for the
Fund. In foreign currencies, the Japanese yen rose sharply as investors unwound
their “carry” trades that also went against the Fund’s short yen positions.
Energies and metals finished in positive territory offsetting some of the losses
in the other sectors.





A Units of the Fund were
down 9.02% for the month of August 2007 and B Units were down 8.88%.The
Fund finished down in August as dramatic market reversals spilled over into
additional market sectors. The sectors that began reversing in late July
continued to move against their long term trends. Concerns about losses in the
sub-prime mortgage markets and liquidity shortages triggered sharp reversals in
energies, metals and foreign currencies. The global sell-off in equities that
began in mid-July, continued into August. As equity prices fell and credit
spreads widened, investors raised liquidity by selling long positions in other
market sectors including metals and energies. Prices in crude oil, heating oil,
copper and gold reversed from their previous trends, which went against the
Fund’s long positions. Carry trades, where investors had borrowed certain
foreign currencies at low interest rates and purchased higher yielding fixed
income instruments in other currencies, were abruptly unwound. This unwinding of
positions caused sharp devaluations of the Australian and New Zealand dollar and
strong appreciation of the Japanese yen. Each of these currency re-valuations
occurred simultaneously and went against the Fund’s positions. Although the
results for the month were disappointing, the trading systems responded
appropriately to the sudden market volatility. The systematic programs
significantly reduced the Fund’s open positions in the effected market sectors
and reduced risk.


27
 Table of Contents


A Units of the Fund were
up 6.95% for the month of September 2007 and B Units were up 7.11%.The
Fund had a strong finish to September with significant profits in four out of
the six market sectors. The Fund’s biggest profits came from long positions in
foreign currencies. The U.S. dollar fell against most major foreign currencies
following the Federal Reserve’s decision to cut interest rates by 50 basis
points. The Euro, Australian dollar and Canadian dollar posted the largest gains
against the dollar, which benefited the Fund's long foreign currency positions.
The weaker dollar also pushed several dollar-denominated commodities to record
highs. Wheat prices, which were already in an upward trend from rising demand
and low inventory levels, hit a record high of $9.39 a bushel on the Chicago
Board of Trade. Oil hit an all time high of $83.90 a barrel and gold climbed
$742.80 an ounce. The Fund profited from long positions in each of these
markets. World stock indices rallied on the Fed’s interest rate decision
benefiting the Fund’s long positions, with the strongest profits coming from the
Hang Seng stock index.





A Units of the Fund were
up 8.40% for the month of October 2007 and B Units were up 8.56%.Significant profits in four out of six market sectors led to another
strong month for the Fund. The biggest profits came from long positions in the
energy and foreign currency sectors. Tensions in the Middle East and a falling
U.S. dollar contributed to record price increases in the energy complex. By the
end of the month crude oil closed at an all-time nominal high of $94.53 a
barrel. Rising prices in energy benefited the Fund’s long crude oil and heating
oil positions. Expectations that the Federal Reserve might lower short-term
interest rates in the U.S. fueled selling pressure on the U.S. dollar that gave
rise to profits from long positions in the Australian dollar, euro, Canadian
dollar and British pound. World stock indices also continued to rise, benefiting
the Fund’s long positions in equity indices. In metals, the lower dollar
stimulated a rise in the price of precious metals. By the end of the month, gold
hit $795 an ounce; its highest level since January 1980. The upward trends in
precious metals created profits for the Fund’s long metals
positions.





A Units
of the Fund were down 1.95% for the month of November 2007 and B Units were down
1.81%. The Fund experienced a net loss in November as profits from interest rate
instruments and agricultural commodity sectors were offset by losses in
currencies, equity indices and metals. News surrounding sub-prime mortgage
problems continued to affect most financial markets. Long positions in
Eurodollars, international bonds and domestic bonds created the Fund’s largest
profits. Concerns that the credit market problems might slow capital spending
helped erode U.S. and international equity prices, which hurt the Fund’s net
long positions in those markets. As U.S. interest rates fell, the value of the
U.S. dollar declined against many foreign currencies, which led to losses in
that sector by the end of the month. Base metal prices fell this month on fears
of a slowing economy including copper which fell to its lowest level since March
2007. The fall in prices went against the long term upward trend in metals
creating losses for the Fund’s long positions.





A Units of the Fund were
up 2.42% for the month of December 2007 and B Units were up 2.57%.The
Fund generated a profit in December and closed out the year with a positive
return. Profits from agricultural commodities, energy and metals offset losses
from interest rate instruments, equity indices and foreign currencies.
Agricultural commodity prices continued to trend higher on growing global demand
and supply constraints. The rise in agricultural prices benefited the Fund’s
long commodity positions including soybeans, corn and wheat. Long energy
positions profited from rising prices, including light crude oil which ended the
year near $98 per barrel. Metals prices, including gold, zinc, copper and
aluminum trended higher, benefiting the Fund’s long positions in those
contracts. A sell-off in long term interest rate instruments this month went
against the Fund’s long positions. The sharp fall in prices came after the
Federal Reserve announced a smaller than anticipated interest rate
cut.


28
 Table of Contents


2006





A Units
of the Fund were up 1.18% for the month of January 2006 and B Units were up
1.33%.  In January, profits from metals, equity indices, energy and
agricultural commodities offset losses from interest rate instruments and
foreign currencies.  The Fund’s long positions in zinc, aluminum and
copper generated the strongest profits in the metals sector.  The
strong upward trends in metals from 2005 continued into January as capacity
constrained producers tried to keep pace with industrial
growth.  Global stock prices also continued their upward trends into
2006 benefiting the Fund’s long positions in equity indices.  Long
positions in the energy sector delivered good profits as the price for light
crude approached $70 per barrel.  Interest rate instruments were the
poorest performing sector this month.  Medium to long-term bond prices
declined which went against the Fund’s long positions.





A Units
of the Fund were down 1.79% for the month of February 2006 and B Units were down
1.64%.  Losses from energy, metals, foreign currencies and
agricultural commodities offset profits from equity indices and interest rate
instruments.  The Fund’s most significant losses came from long
positions in crude oil after the price of crude dropped nearly $10 per barrel
following stronger than expected inventory reports.  Prices rebounded
somewhat later in the month after reports of violence in Nigeria and an
attempted refinery bombing in Saudi Arabia.  Short positions in
natural gas produced positive returns as the price continued its strong downward
trend despite a short cold snap in North America.  Short positions in
the Japanese yen lost ground against several foreign currencies including the
U.S. dollar, euro, Swiss franc and British pound as the yen strengthened amid
speculation that Japanese interest rates might be raised sooner than
expected.  The best single market was in the interest rates sector,
where short positions in the Eurodollar profited from market expectations of
further U.S. interest rate hikes.





A Units
of the Fund were up 3.84% for the month of March 2006 and B Units were up
4.00%.  Profits in March came from interest rate instruments, equity
indices, metals and energy sectors.  The Fund’s most significant
profits came from short positions in interest rate
instruments.  Worldwide bond prices continued a downward trend that
gained momentum following comments from U.S. Federal Reserve and European
central bank officials that fueled expectations of further rate
hikes.  The Bank of Japan’s decision to drop its policy of
“quantitative easing” caused yields on the Japanese government bond to rise
sharply, while the yield on the U.S. 10-year Treasury note rose to its highest
level since the start of the rate-tightening cycle in June
2004.  Despite rising interest rates, long positions in equity indices
in U.S., European and Asian markets benefited from upward trends in those
markets.  Metals profits were from long positions in both base and
precious metals including silver, which reached a 22 year high.





A Units
of the Fund were up 1.64% for the month of April 2006 and B Units were up
1.79%.  The Fund’s most significant profits in April came from long
positions in metals and short positions in interest rate
instruments.  An upward trend in metals prices continued in April with
aluminum, copper, gold and silver reaching record highs.  The rise in
base metals prices were fueled by revised international growth forecasts such as
China, which reported a surprising first quarter growth of over
10%.  Tensions over Iran’s nuclear pursuits and fears of a potential
conflict between the U.S. and Iran helped push gold and silver prices
higher.  Iran’s threat to withhold critical oil exports drove crude
oil prices to record highs, benefiting the Fund’s long energy
positions.  The Fund’s short positions in long term interest rate
instruments profited after the release of key U.S. economic data sent bond
prices lower.  Statements from the U.S. Federal Reserve suggesting it
might be close to ending the rate tightening policy caused a sell-off in the
U.S. dollar. The falling dollar hurt the Fund’s short foreign currency
positions.


29
 Table of Contents


A Units
of the Fund were down 2.50% for the month of May 2006 and B Units were down
2.36%.  Price reversals across multiple market segments resulted in a
net loss for the Fund in May.  Equity market prices fell sharply on
inflation concerns and speculation on whether the U.S. Federal Reserve would
continue its rate tightening policy.  The trend reversals in domestic
and international stock indices, including the Nikkei, FTSE, S&P and CAC,
hurt the Fund’s long indices positions.  Prices in energy contracts
including light crude and heating oil fell from previous month’s highs as China
announced its intention to allow further appreciation in the value of the
Yuan.  The higher priced currency would make Chinese exports more
expensive and thus curb demand for raw materials.  Energy and other
commodity prices tumbled on the news, hurting the Fund’s long energy and metals
positions.  Despite a pull-back from record highs however, net profits
from metals prices remained positive.





A Units
of the Fund were down 1.43% for the month of June 2006 and B Units were down
1.28%.  Price reversals across several market sectors resulted in a
net loss for the Fund in June. Economists speculated that price reversals in
stock indices, metals and currencies were a consequence of short-term interest
rate increases by the world’s central banks. The Fund's short positions in the
U.S. dollar relative to some foreign currencies, including the British pound,
Euro and Australian dollar were negatively impacted by a rise in the U.S.
currency this month.  Base metal prices including copper, nickel, zinc
and aluminum fell on expectations of slower economic growth, hurting the Fund’s
long positions. International equity indices including the Nikkei 225, DAX, and
S&P 500 also moved lower and against the Fund’s long positions in those
contracts. Profits from short positions in interest rate instruments offset some
of the losses from the other sectors, although bond prices experienced
significant price volatility during the month. The energy sector held on to
modest profits as crude oil prices fell from earlier highs following positive
news in Iraq and some easing of political tensions over Iran’s nuclear
program.





AUnits of the Fund were
down 3.35% for the month of July 2006 and B Units were down
3.21%.  Sharp price fluctuations across several market sectors
resulted in a net loss for the Fund in July. The most significant losses came
from interest rate instruments. Domestic and international bond prices moved
higher reversing from their downward trends. This moved against the Fund’s short
bond positions. Weaker than expected U.S. employment and retail sales data
fueled speculation that the U.S. Federal Reserve might finally curtail its rate
tightening policy. By the end of the month, weak GDP growth figures gave
additional weight to that sentiment, sending domestic bond prices even higher.
Euro zone government bonds also reversed on weak regional economic data
announcements. Agricultural commodities including coffee and cocoa saw sharp
price declines that hurt the Fund’s long positions. Crude oil prices also had a
volatile month. WTI (West Texas Intermediate) hit an all-time high of US$79.45 a
barrel amid worries that the conflict between Israel and Lebanon could spread to
oil producing nations in the Middle East. Later in the month oil prices reversed
amid calmer sentiment, which hurt the Fund's long energy positions. Currencies
and metals finished the month in positive territory.





A Units
of the Fund were up 0.05% for the month of August 2006 and B Units were up
0.20%. The Fund finished positive in August after profits from foreign
currencies, equity indices, agricultural products and metals edged out losses
from energy and interest rate instruments. The Fund’s most significant profits
came from short positions in the Japanese yen and long positions in the British
Pound. The release of softer than expected inflation data from Japan sent the
yen lower against most major foreign currencies. Equity prices trended higher
across many international exchanges benefiting the Fund’s long positions in
indices. In agricultural products, the Fund’s short positions in soybeans
benefited from a downward price trend that began in July. Coffee prices rose
sharply throughout August on supply concerns that benefited the Fund’s long
positions. The Fund’s long energy positions lost ground this month as rising
inventory levels and lower risk to oil supplies pushed crude oil prices lower.
Unleaded gasoline prices also fell after reports of a milder than expected
Atlantic hurricane season suggested there would be fewer seasonal supply
disruptions. Bond prices continued to rally throughout August hurting the Fund’s
short positions in interest rate instruments.  Overall the Fund was up
an estimated 5.8% over the last 12 months.


30
 Table of Contents


A Units
of the Fund were down 1.17% for the month of September 2006 and B Units were
down 1.03%. The Fund finished lower in September after losses in energy, metals,
agricultural products and interest rate instruments offset gains from equity
indices. The Fund’s most significant losses came from long positions in crude
oil, heating oil and unleaded gas. Crude oil experienced its steepest decline in
more than a decade as high inventories, lower geopolitical tensions and a mild
hurricane season eased supply concerns. Oil prices fell about 20 percent in the
last two months which is the steepest decline since the Gulf War in 1991. Losses
from long positions in the metals sector came primarily from zinc, gold and
silver. Metal prices fell on general fears that a possible global economic
slowdown might curtail demand. Stock indices continued to rally this month on
positive economic data and indications of lower interest rates. The rising stock
indices benefited the Fund’s long indices positions.





A Units of the Fund were
up 3.38% for the month of October 2006 and B Units were up
3.54%.The Fund's profits in October came from stock indices,
currencies, metals and the energy sector.  Domestic and international
stock indices continued to rally this month benefiting the Fund’s long
positions.  U.S. stock indices posted a series of record highs
including the Dow Jones Industrial Average which passed through the 12,000 mark
for the first time.  The S&P 500 and NASDAQ indices continued
their upward trend as did the DAX, Nikkei and FTSE.  Short U.S. dollar
positions were also profitable for the Fund.  The dollar traded lower
after the U.S. Federal Reserve Bank announced it would leave short-term interest
rates at 5.25%.  The dollar fell to three-week lows against the yen
and euro.  The Fund profited from rising base metal prices including
lead, zinc, nickel and aluminum.  Gains in the energy sector came from
the Fund’s short crude and heating oil positions.  A broad downtrend
in energy prices persisted for much of the month amid market perceptions of
ample oil supplies.





A Units of the Fund were
up 0.71% for the month of November 2006 and B Units were up
0.86%.Profits from currencies, stock indices, and
agricultural commodities offset losses from energy, interest rate instruments
and metals.  The dollar fell against most major foreign currencies on
concerns of slowing growth in the U.S. economy.  The possibility of
easier U.S. monetary policy and rising European interest rates pushed the dollar
to nineteen-month lows against the euro and eighteen-month lows against the
British pound.  The Fund’s long positions in both the euro and British
pound profited.  Domestic and international stock indices continued to
rise which benefited the Fund’s long positions.  U.S. stock indices
posted a series of record highs including the Dow Jones Industrial Average which
passed through the 12,000 mark.  The S&P 500 and NASDAQ indices
also continued their upward trend along with the DAX, Nikkei and
FTSE.  In agricultural commodities, corn prices reached ten year highs
benefiting the Fund’s long corn positions.  The Fund’s short positions
in the energy sector were hurt by a price rally in crude oil late in the
month.  Cold weather in the western U.S. and news that Sudan and
Angola might join OPEC, pushed prices up to a two month high.





A Units of the Fund were
up 6.48% for the month of December 2006 and B Units were up
6.65%.In December, profits from currencies, equity indices,
energy and interest rate instruments offset small losses in metals and
agricultural products.  The Fund’s strongest gains in the month came
from short positions in the Japanese yen and Swiss franc as each currency fell
relative to the U.S. dollar.  The yen hit an eight-week low against
the U.S. dollar.  Long positions in international equity indices
finished higher as global equity markets continued an upward trend. The Dow
Jones Industrial Average hit a record close 22 times this year ending with its
best year since 2003 after gaining 16%. The Fund’s short positions in natural
gas contracts benefited from a sharp sell-off following a forecast released by
the National Weather Service. The forecast predicted a continuation of above
normal temperatures for most of the continental US, which put downward pressure
on natural gas, crude and heating oil prices. Metals registered a small loss for
December with long positions hurt by falling silver and copper
prices.


31
 Table of Contents


ITEM 7A: Quantitative and Qualitative Disclosures about Market
Risk.





Introduction





The Fund
is a speculative commodity pool. The market sensitive instruments held by it are
acquired for speculative trading purposes, and all or a substantial amount of
the Fund's assets are subject to the risk of trading loss. Unlike an operating
company, the risk of market sensitive instruments is integral, not incidental,
to the Fund's main line of business.





Market
movements result in frequent changes in the fair market value of the Fund's open
positions and, consequently, in its earnings and cash flow. The Fund's market
risk is influenced by a wide variety of factors, including the level and
volatility of exchange rates, interest rates, equity price levels, the market
value of financial instruments and contracts, the diversification effects among
the Fund's open positions and the liquidity of the markets in which it
trades.





The Fund
rapidly acquires and liquidates both long and short positions in a wide range of
different markets. Consequently, it is not possible to predict how a particular
future market scenario will affect performance, and the Fund's past performance
is not indicative of its future results.





Value at
Risk is a measure of the maximum amount which the Fund could reasonably be
expected to lose in a given market sector. However, the inherent uncertainty of
the Fund's speculative trading and the recurrence in the markets traded by the
Fund of market movements far exceeding expectations could result in actual
trading or non-trading losses far beyond the indicated Value at Risk or the
Fund's experience to date (i.e., "risk of ruin"). Risk of ruin is defined to be
no more than a 5% chance of losing 20% or more on a monthly basis. In light of
the foregoing as well as the risks and uncertainties intrinsic to all future
projections, the inclusion of the quantification included in this section should
not be considered to constitute any assurance or representation that the Fund's
losses in any market sector will be limited to Value at Risk or by the Fund's
attempts to manage its market risk.





Standard
of Materiality





Materiality
as used in this section, "Quantitative and Qualitative Disclosures about Market
Risk," is based on an assessment of reasonably possible market movements and the
potential losses caused by such movements, taking into account the leverage, and
multiplier features of the Fund's market sensitive instruments.


32
 Table of Contents


Quantifying
the Fund’s Trading Value at Risk





Quantitative
Forward-Looking Statements





The
following quantitative disclosures regarding the Fund's market risk exposures
contain "forward-looking statements" within the meaning of the safe harbor from
civil liability provided for such statements by the Private Securities
Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934). All quantitative
disclosures in this section are deemed to be forward-looking statements for
purposes of the safe harbor, except for statements of historical fact (such as
the dollar amount of maintenance margin required for market risk sensitive
instruments held at the end of the reporting period).





The
Fund's risk exposure in the various market sectors traded by the Fund’s Trading
Advisors is quantified below in terms of Value at Risk.  Due to
mark-to-market accounting, any loss in the fair value of the Fund's open
positions is directly reflected in the Fund's earnings (realized or
unrealized).





Exchange
maintenance margin requirements have been used by the Fund as the measure of its
Value at Risk.  Maintenance margin requirements are set by exchanges
to equal or exceed the maximum losses reasonably expected to be incurred in the
fair value of any given contract in 95% - 99% of any one-day
interval.  The maintenance margin levels are established by dealers
and exchanges using historical price studies as well as an assessment of current
market volatility and economic fundamentals to provide a probabilistic estimate
of the maximum expected near-term one-day price
fluctuation.  Maintenance margin has been used rather than initial
margin, because initial margin includes a credit risk component which is not
relevant to Value at Risk.





In the
case of market sensitive instruments which are not exchange-traded (which
includes currencies and some energy products and metals in the case of the
Fund), the margin requirements required by the forward counterparty is used as
Value at Risk.





In
quantifying the Fund's Value at Risk, 100% positive correlation in the different
positions held in each market risk category has been
assumed.  Consequently, the margin requirements applicable to the open
contracts have simply been aggregated to determine each trading category's
aggregate Value at Risk.  The diversification effects resulting from
the fact that the Fund's positions are rarely, if ever, 100% positively
correlated, have not been reflected.





Value at
Risk as calculated herein may not be comparable to similarly titled measures
used by others.





The
Fund’s Trading Value at Risk in Different Market Sectors





The
following tables indicate the trading Value at Risk associated with the Fund's
open positions by market category as of December 31, 2008 and December 31,
2007.  All open position trading risk exposures of the Fund have been
included in calculating the figures set forth below. As of December 31, 2008 and
2007, the Fund's total capitalization was $832,985,264 and $545,106,985,
respectively.


33
 Table of Contents


FISCAL
YEAR 2008





December
      31,2008
                    
                    
                    2008
                    
                    
                    2007
                    
                    
                    2007Market
      Sector
                    
                    Value at Risk
                    
                    
                    %
      of Total
                      Capitalization
                    
                    
                    Value at Risk
                    
                    
                    %
      of Total
                      CapitalizationAgricultural
                    
                    $
                    6,846,953
                    
                    
                    
                    0.82
                    %
                    
                    $
                    9,269,647
                    
                    
                    
                    1.70
                    %Currencies
                    
                    $
                    10,756,469
                    
                    
                    
                    1.29
                    %
                    
                    $
                    20,235,368
                    
                    
                    
                    3.71
                    %Energy
                    
                    $
                    6,615,912
                    
                    
                    
                    0.79
                    %
                    
                    $
                    14,281,139
                    
                    
                    
                    2.62
                    %Interest
      Rates
                    
                    $
                    25,543,322
                    
                    
                    
                    3.07
                    %
                    
                    $
                    16,934,317
                    
                    
                    
                    3.11
                    %Metals
                    
                    $
                    5,366,203
                    
                    
                    
                    0.64
                    %
                    
                    $
                    10,337,905
                    
                    
                    
                    1.90
                    %Stock
      Indices
                    
                    $
                    7,907,758
                    
                    
                    
                    0.95
                    %
                    
                    $
                    11,788,343
                    
                    
                    
                    2.16
                    %Total
                    
                    $
                    63,036,617
                    
                    
                    
                    7.57
                    %
                    
                    $
                    82,846,719
                    
                    
                    
                    15.20
                    %








Of the
29.77% return for the year ended December 31, 2008 for A Units, approximately
43.34% was due to trading gains (after commissions) and approximately 3.25% was
due to interest income, offset by approximately 16.82% in performance fees,
management fees, selling agent fees and operating costs borne by the
Fund.  Of the 32.08% return for the year ended December 31, 2008 for B
Units, approximately 43.70% was due to trading gains (after commissions) and
approximately 3.28% was due to interest income, offset by approximately 14.90%
in performance fees, management fees, selling agent fees and operating costs
borne by the Fund.





Material
Limitations on Value at Risk as an Assessment of Market Risk.





The face
value of the market sector instruments held by the Fund is typically many times
the applicable maintenance margin requirement (maintenance margin requirements
generally ranging between approximately 1% and 10% of contract face value) as
well as many times the capitalization of the Fund.  The magnitude of
the Fund's open positions creates a "risk of ruin" not typically found in most
other investment vehicles.  Because of the size of its positions,
certain market conditions - unusual, but historically recurring from time to
time - could cause the Fund to incur severe losses over a short period of
time.  The foregoing Value at Risk tables - as well as the past
performance of the Fund - gives no indication of this "risk of
ruin."





Non-Trading
Risk





The Fund
has non-trading market risk on its foreign cash balances not needed for
margin.  However, these balances (as well as the market risk they
represent) are immaterial.  The Fund also has non-trading market risk
as a result of investing a substantial portion of its available assets in
Government-sponsored enterprises and high grade commercial paper.  The
market risk represented by these investments is immaterial.


34
 Table of Contents


Qualitative
Disclosures Regarding Primary Trading Risk Exposures.





The
following qualitative disclosures regarding the Fund's market risk exposures -
except for (i) those disclosures that are statements of historical fact and (ii)
the descriptions of how the Fund manages its primary market risk exposures -
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act. The Fund's
primary market risk exposures as well as the strategies used and to be used by
the Fund’s Trading Advisors for managing such exposures are subject to numerous
uncertainties, contingencies and risks, any one of which could cause the actual
results of the Fund's risk controls to differ materially from the objectives of
such strategies. Government interventions, defaults and expropriations, illiquid
markets, the emergence of dominant fundamental factors, political upheavals,
changes in historical price relationships, an influx of new market participants,
increased regulation and many other factors could result in material losses as
well as in material changes to the risk exposures and the risk management
strategies of the Fund. There can be no assurance that the Fund's current market
exposure and/or risk management strategies will not change materially or that
any such strategies will be effective in either the short- or long-term.
Investors must be prepared to lose all or substantially all of their investment
in the Fund.





The
following were the primary trading risk exposures of the Fund as of December 31,
2008, by market sector.





Agricultural





The
Fund's agricultural exposure is primarily to soybeans, wheat, corn, coffee and
cotton.





Currencies





Exchange
rate risk is the principal market exposure of the Fund.  The Fund's
currency exposure is to exchange rate fluctuations, primarily fluctuations which
disrupt the historical pricing relationships between different currencies and
currency pairs.  These fluctuations are influenced by interest rate
changes as well as political and general economic conditions.  The
Fund trades various currencies, including cross-rates - i.e., positions between
two currencies other than the U.S. Dollar.  The General Partner does
not anticipate that the risk profile of the Fund's currency sector will change
significantly in the future.





Energy





The
Fund's primary energy market exposure is to gas and oil price movements, often
resulting from political developments, ongoing conflicts or production
interruptions in the Middle East and other oil producing
nations.  Crude oil, heating oil and unleaded gas are the dominant
energy market exposures of the Fund.  Oil and gas prices can be
volatile and substantial profits and losses have been and are expected to
continue to be experienced in this market.





Interest
Rates





Interest
rate risk is a significant market exposure of the Fund.  Interest rate
movements directly affect the price of the sovereign bond futures positions held
by the Fund and indirectly the value of its stock index and currency
positions.  Interest rate movements in one country as well as relative
interest rate movements between countries materially impact the Fund's
profitability.  The Fund's primary interest rate exposure is to
interest rate fluctuations in the United States, Japan, Great Britain, the
Economic Union, Sweden, Canada, Australia and New Zealand.  The
General Partner anticipates that interest rates fluctuations will remain the
primary market exposure of the Fund for the foreseeable future.


35
 Table of Contents


Metals





The
Fund's metals market exposure is primarily to fluctuations in the price of
aluminum, copper, gold, nickel and zinc.





Stock
Indices





The
Fund's primary equity exposure is to equity price risk in many countries other
than the U.S.  The stock index futures traded by the Fund are limited
to futures on broadly based indices.  The Fund is primarily exposed to
the risk of adverse price trends or static markets in the major U.S., European
and Japanese indices.  (Static markets would not cause major market
changes but would make it difficult for the Fund to avoid being "whipsawed" into
numerous small losses.)





Qualitative
Disclosures Regarding Non-Trading Risk Exposure.





The
following were the only non-trading risk exposures of the Fund as of December
31, 2008.





Foreign
Currency Balances





The
Fund's primary foreign currency balances are in Euros, Japanese Yen, British
Pounds, Australian Dollars, Hong Kong dollars and Canadian
dollars.  The Fund controls the non-trading risk of these balances by
regularly converting these balances back into dollars (no less frequently than
once a week).





U.S.
Government Securities, Government-Sponsored Enterprises, Commercial Paper
Securities and Corporate Notes





The Fund
utilizes UBS Financial Services, Inc. as its cash management securities brokers
for the investment of some margin excess amounts into short-term fixed income
instruments including high grade commercial paper (interest bearing with some
credit risk), Government-sponsored enterprises (interest bearing and credit risk
free) and corporate notes with durations no longer than one year. In addition,
U.S. Government securities are held with Newedge USA, LLC. Violent fluctuations
in prevailing interest rates could cause immaterial mark-to-market losses on the
Fund's short term investments; although substantially all of these short term
investments are held to maturity.





Qualitative
Disclosures Regarding Means of Managing Risk Exposure





The means
by which the Fund and the Fund’s Trading Advisors, severally, attempt to manage
the risk of the Fund's open positions is essentially the same in all market
categories traded.  The Fund’s Advisors apply risk management policies
to their respective trading which generally limit the total exposure that may be
taken.  In addition, the Trading Advisors generally follow proprietary
diversification guidelines (often formulated in terms of the balanced volatility
between markets and correlated groups).





The Fund
is unaware of any (i) anticipated known demands, commitments or capital
expenditures; (ii) material trends, favorable or unfavorable, in its capital
resources; or (iii) trends or uncertainties that will have a material effect on
operations.  From time to time, certain regulatory agencies have
proposed increased margin requirements on futures contracts.  Because
the Fund generally will use a small percentage of assets as margin, the Fund
does not believe that any increase in margin requirements, as proposed, will
have a material effect on the Fund's operations.


36
 Table of Contents


ITEM 8: Financial Statements and Supplementary Data.





Financial
statements meeting the requirements of Regulation S-X appear in Part IV of this
report. The supplementary financial information specified by Item 302 of
Regulation S-K is included in this report under the heading "Selected Financial
Data" above.





The
supplementary financial information (“information about oil and gas producing
activities”) specified by Item 302 of Regulation S-K is not
applicable.






ITEM 9: Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.





The Board
of Directors of Steben & Company, Inc., the General Partner for Futures
Portfolio Fund, LP (“Fund”) has engaged McGladrey & Pullen, LLP as the
independent registered public accounting firm for the fund for the years ended
December 31, 2008, 2007 and 2006.  On January 17, 2007, the General
Partner was notified that a majority of the partners of Altschuler, Melvoin and
Glasser LLP (AM&G) had become partners of McGladrey & Pullen, LLP and,
as a consequence, that AM&G had resigned and would no longer be the auditor
for the Fund.  McGladrey & Pullen, LLP was appointed as the Fund’s
new auditor.






ITEM 9A: Controls and Procedures





Evaluation
of Disclosure Controls and Procedures





Under the
supervision and with the participation of the management of the General Partner,
including its Chief Executive Officer and Chief Financial Officer, the Fund
evaluated the effectiveness of the design and operation of the Fund’s disclosure
controls and procedures (as defined in Rule 13(a)-15(e) under the Securities
Exchange Act of 1934, as amended) as of December 31, 2008 (the “Evaluation
Date”). Any control system, no matter how well designed and operated, can
provide only reasonable (not absolute) assurance that its objectives will be
met. Furthermore, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, have been detected. Based
upon our evaluation, the Chief Executive Officer and Chief Financial Officer of
the General Partner concluded that, as of the Evaluation Date, our disclosure
controls and procedures were effective to provide reasonable assurance that they
are timely alerted to the material information relating to the Fund required to
be included in the Fund’s periodic SEC filings.





Management’s
Annual Report on Internal Control over Financial Reporting





The
management of the General Partner is responsible for establishing and
maintaining adequate internal control over financial reporting by the
Fund.





The
General Partner’s internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States.
The Fund’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Fund; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with accounting principles generally accepted in the United States,
and that receipts and expenditures of the Fund are being made only in accordance
with authorizations of management of the Fund; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the Fund’s assets that could have a material effect on
the financial statements.


37
 Table of Contents


Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. All internal control systems, no matter how
well designed, have inherent limitations, including the possibility of human
error and the circumvention of overriding controls. Accordingly, even effective
internal control over financial reporting can provide only reasonable assurance
with respect to financial statement preparation. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.





Management
assessed the effectiveness of the Fund’s internal control over financial
reporting as of December 31, 2008, based on the framework set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control-Integrated Framework. Based on that assessment, management
concluded that, as of December 31, 2008, the Fund’s internal control over
financial reporting is effective based on the criteria established in Internal
Control-Integrated Framework.





This
annual report does not include an attestation report of the Fund’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Fund’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Fund to provide only management’s report in
this annual report.





Changes
in Internal Control Over Financial Reporting





There
were no significant changes made in our internal controls during the most
recently completed fiscal quarter or, to our knowledge, in other factors that
could significantly affect these controls subsequent to the date of their last
evaluation.






ITEM 9B: Other Information





None


38
 Table of Contents


PART III





ITEM 10: Directors, Executive Officers, and Corporate
Governance





10(a) and
10(b) Identification of Directors and Executive Officers





The Fund
itself has no directors or officers and has no employees.  It is
managed by the General Partner in its capacity as General
Partner.  The Kenneth E. Steben Revocable Trust dated January 29, 2008
(“Trust”) is the sole shareholder of the General Partner and Mr. Kenneth E.
Steben is the sole trustee and beneficiary of the Trust.  The
directors and executive officers of the General Partner are Kenneth E. Steben,
Michael D. Bulley, Barry R. Gainsburg, Ahmed S. Hassanein, and Neil D.
Menard.





Executive
Officers





Kenneth E.
Steben is the General Partner’s founder, President and Chief Executive
Officer.  Mr. Steben, along with Michael D. Bulley are responsible for
deciding on the Fund’s allocation to the Trading Advisor, or other trading
advisors in the future should they deem it in the best interest of the
Fund.  Mr. Steben is registered with the CFTC as an associated person
and with FINRA as a general securities principal.  Mr. Steben, born in
January 1955, received his Bachelors Degree in Interdisciplinary Studies, with a
concentration in Accounting in 1979 from Maharishi University of
Management.  Mr. Steben has been a licensed stockbroker since 1981 and
a licensed commodities broker since 1983. Mr. Steben holds his Series 3, 5, 7,
24, 63 and 65 FINRA and NFA licenses.  Mr. Steben is a Member of the
CPO/CTA Advisory Committee to the NFA.   Mr. Steben has been a
CFTC listed Principal, and registered as an Associated Person since March 15,
1989 and is a General Securities Principal of Steben & Company,
Inc.





Michael D.
Bulley is Senior Vice President of Research and Risk Management, and a
Director.  Mr. Bulley is a CAIASMdesignee
and Member of the Chartered Alternative Investment Analyst Association®.  Mr.
Bulley, along with Kenneth E. Steben are responsible for deciding on the Fund’s
allocation to the Trading Advisor, or other trading advisors in the future
should they deem it in the best interest of the Fund.  Mr. Bulley,
born in October 1957, received his Bachelors Degree in Electrical Engineering
from the University of Wisconsin – Madison in 1980 and his Masters in Business
Administration with a concentration in Finance from Johns Hopkins University in
1998.  Mr. Bulley joined Steben & Company in November 2002, and
holds Series 3, 7, 28 and 30 FINRA and NFA licenses.  Mr. Bulley has
been a CFTC listed Principal and registered as an Associated Person of Steben
& Company, Inc. since February 11, 2003 and December 23, 2002,
respectively.





Barry R.
Gainsburg is the General Partner’s General Counsel and Chief Compliance
Officer.  Mr. Gainsburg, born in July 1968, received his Bachelor of
Arts in Political Science from Johns Hopkins University in January 1990 and his
Juris Doctorate from Hofstra Law School in May 1993. Mr. Gainsburg joined Steben
& Company, Inc. in November 2007 and became listed with the CFTC as a
Principal and registered as an Associated Person of Steben & Company, Inc.
on December 4, 2007 and November 21, 2007, respectively.  Prior to
joining Steben & Company, Inc., Mr. Gainsburg was Director of Compliance at
John W. Henry & Company, Inc., a commodity trading advisor and commodity
pool operator, from March 2001 to November 2007, as well as its affiliates
Westport Capital Management Corporation, Global Capital Management Limited and
JWH Securities, Inc.  Mr. Gainsburg is admitted to practice law in the
states of New York and Florida. Mr. Gainsburg holds his Series 3, 7, 24 and 63
NFA and FINRA licenses.


39
 Table of Contents


Ahmed S.
Hassanein is Chief Operating Officer, Chief Financial Officer and a
Director.  Mr. Hassanein, born in May 1972, received his Bachelor of
Science in Accounting from the University of Maryland at College Park in 1994
and his Masters in Business Administration with a concentration in Finance from
Marymount University in 2000.  Prior to joining Steben & Company
in April 2007, Mr. Hassanein served in a number of key positions at Friedman,
Billings, Ramsey Group, Inc., a financial services firm that provides investment
banking, institutional brokerage and research, and asset management services in
the United States and Europe, from March 1997 to March 2007. Most recently, Mr.
Hassanein was Senior Vice President of the Asset Management Group where he was
responsible for the oversight of all finance, accounting, operational and
administration functions for the Alternative Asset, Mutual Fund and Private
Wealth Groups which, on a combined basis, managed approximately $2.5 billion in
assets. Prior to that, Mr. Hassanein was part of Friedman, Billings, Ramsey
Group, Inc.’s Principal Investing Group where he was responsible for the
administration, marketing and investor relations of two commercial paper
conduits with a combined program size of $17 billion. Before joining the
Principal Investing Group, Mr. Hassanein spent over six years in Friedman,
Billings, Ramsey Group, Inc.’s Finance Group where he was an integral part of
the firm’s Initial Public Offering in December 1997 and served in various
capacities including Corporate Controller. Mr. Hassanein is a Certified Public
Accountant, holds his Series 3, 7, 28 and 63 NFA and FINRA licenses and is a
registered representative and the Financial Operations Principal of Steben &
Company. Mr. Hassanein has been a CFTC listed Principal and registered as an
Associated Person of Steben & Company since December 4, 2007 and July 31,
2008, respectively.





Neil D.
Menard is Director of Sales and Marketing.  Mr. Menard, born in
August 1967, graduated from Colby College in 1989 with a BA in political
science.  Prior to joining Steben & Company in July of 2006, Mr.
Menard was the Director of Sales for Engagement Systems, LLC, a strategic
outsource solution for independent financial advisors from October 2004 to June
of 2006.  From June 2003 to October 2004, Mr. Menard served as the
Managing Director of New Business Development. Mr. Menard created sales and
selection systems for the new business development team and utilized these
processes to select independent investment advisors for SEI. Mr. Menard holds
his Series 3, 7, 24 and 63 FINRA and NFA licenses and is a General Securities
Principal.  Mr. Menard has been registered as an Associated Person and
a CFTC listed Principal of Steben & Company, Inc. since August 7, 2006 and
July 6, 2006, respectively.





Kenneth E. Steben
Revocable Trust Dated January 29, 2008, or the Trust, has been a CFTC
listed Principal of the General Partner since March 10, 2008.  The
Trust is the sole shareholder of the General Partner.  Kenneth E.
Steben is the sole beneficiary of the Trust and serves as its sole
trustee.  A biography of Mr. Steben is set forth above.





Since
February 29, 2004, Steben & Company acts as general partner to another
Maryland limited partnership, Sage Fund, L.P., whose units of limited
partnership interest are not registered with the SEC.  As of March 27,
2007, Steben & Company acts as the general partner of a Delaware limited
partnership, Aspect Global Diversified Fund LP, whose units of limited
partnership interest were registered with the SEC pursuant to a public offering
that was effective August 12, 2008. Because Steben & Company serves as the
sole general partner of both of these funds, the officers and directors of
Steben & Company effectively manage them as officers and directors of the
respective funds.





(c)  Identification
of certain significant employees





The
General Partner is dependent on the services of Mr. Steben and key management
personnel.  If Mr. Steben’s services became unavailable, another
principal of the firm or a new principal (whose experience cannot be known at
this time) will need to take charge of the General Partner.


40
 Table of Contents


(d)  Family
relationships





None.





(e)  Business
experience





See Item
10 (a) and (b) above.





(f)  Involvement
in certain legal proceedings





None.





(g)  Promoters
and control persons





Not
applicable.








Section
16 (A) Beneficial Ownership Reporting Compliance





Section
16 of the Securities Exchange Act of 1934, as amended, requires that reports of
beneficial ownership of limited partnership units and changes in such ownership
be filed with the Securities and Exchange Commission by Section 16 “reporting
persons.”  The Fund is required to disclose in this Annual Report on
Form 10K each reporting person whom it knows to have failed to file any required
reports under Section 16 on a timely basis during the fiscal year ended December
31, 2008.  During the fiscal year ended December 31, 2008, all
reporting persons complied with all Section 16(a) filing requirements applicable
to them.





Code
of Ethics





The
General Partner on behalf of the Fund has adopted a code of ethics, as of the
period covered by this report, which applies to the Fund’s principal executive
officer and principal financial officer or persons performing similar
functions.  A copy of the code of ethics is available without charge
upon request by calling 240-631-9808.






ITEM 11: Executive Compensation





The Fund
does not itself have any officers, directors or employees.  The Fund
pays management fees and performance fees to the General Partner, Steben &
Company.  The managing officers of Steben & Company are
remunerated by Steben & Company in their respective positions.  As
compensation for its services in managing the Fund, the General Partner will
receive a monthly management fee of 0.1625% of the month-end Net Assets of the
Fund (1.95% annually).  To the extent permitted by law, the General
Partner may also participate in Selling Agent commissions.  The
General Partner pays the selling agent’s fee to the respective selling
agent.  If the selling agent’s fee is not paid to the selling agent,
or the General Partner was the selling agent, such portion of the selling
agents’ fee is retained by the General Partner.





In
addition, the General Partner will receive an allocation pro rata from the other
Partners of 1% of any increase (or decrease) in the Fund’s Net Assets, without
regard to additions and withdrawals.  In cases where the Selling Agent
does not receive the continuing Selling Agent compensation as described herein,
this fee will be retained by the General Partner.


The
directors and managing officers receive no “other compensation” from the
Fund.  There are no compensation plans or arrangements relating to a
change in control of either the Fund or Steben & Company.




41
 Table of Contents




ITEM 12: Security Ownership of Certain Beneficial Owners and
Management.





The Fund
has no officers or directors.  Its affairs are managed by its General
Partner, Steben & Company, Inc. Set forth in the table below is information
regarding the beneficial ownership of the officers of the Fund’s General Partner
as of February 28, 2009.  There are no securities authorized for
issuance under an equity compensation plan.





(a)  Security
ownership of certain beneficial owners.





As of
February 28, 2009, no person or “group” is known to have been the beneficial
owner of more than 5% of the Units.





All of
the Fund’s general partner interest is held by the General Partner.





(b)  Security
ownership of management





As of
February 28, 2009, Steben & Company did not own any Units.  The
principals of Steben & Company, owned a total of 35.5269 B Units, the value
of which represents 0.0264% of the total value of the fund.





As of
February 28, 2009, the directors, executive officers, and principals of the
General Partner own beneficially Units as follows.





Name
                
                Value of Units
                
                
                Percentage of Limited
      PartnershipKenneth
      E. Steben
                
                $
                201,420
                
                
                
                0.0230
                %Michael
      D. Bulley
                
                
                1,454
                
                
                
                0.0002
                %Neil
      D. Menard
                
                
                28,470
                
                
                
                0.0032
                %Total
      directors and executive officers of the General Partner as a
      group
                
                $
                231,344
                
                
                
                0.0264
                %





(c)  Changes
in Control.





None.








ITEM 13: Certain Relationships and Related Transactions, and Director
Independence.





The Fund
allocated to the General Partner $13,379,664, $10,186,030 and $8,822,422 in
monthly management fees and $9,479,794, $7,375,387 and $6,385,159 in Selling
Agent commissions for the years ended December 31, 2008, 2007 and 2006,
respectively.  The General Partner in turn pays the Selling Agent
commissions to the Selling Agents except for units for which it served as the
Selling Agent or where there is currently no designated Selling
Agent.  The General Partners 1 percent allocation of income amounted
to $1,879,337, $250,318 and $347,793 for the years ended December 31, 2008, 2007
and 2006, respectively.





42
 Table of Contents




The Fund
will pay its accounting, audit, legal, administrative and offering expenses
estimated at approximately 0.65% per year.  However, if and to the
extent these expenses (other than extraordinary costs, none of which are
anticipated) exceed 1.00% of the Fund’s assets per calendar year, the General
Partner will reimburse the Fund for such excess after the close of the
applicable year.  For the years ended December 31, 2008, 2007 and
2006, the Fund paid approximately $4,429,151, $3,420,036 and $3,030,593,
respectively, to the General Partner for these expenses.





For the
years ended December 31, 2008, 2007 and 2006, actual operating expenses exceeded
(were below) 1.00% of average month-end net assets of the Fund by ($475,275),
($335,443) and $148,806, respectively. Additionally, for the years ended
December 31, 2008, 2007 and 2006, the General Partner voluntarily paid
$1,894,004, $1,383,324 and $1,112,845, respectively, of operating expenses of
the Fund.





The Fund
does not and will not make any loans to the General Partner, its affiliates, or
their respective officers, directors or employees.








ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES





The
following table sets forth the fees billed to the Fund for professional audit
services provided by McGladrey & Pullen, LLP, the Fund’s independent
registered public accountant, for the audit of the Fund’s annual financial
statements for the years ended December 31, 2008 and 2007, and fees billed
for other professional services rendered by McGladrey & Pullen, LLP and
RSM McGladrey, Inc. (an associated entity of McGladrey & Pullen, LLP)
during those years.





FEE CATEGORY
                                
                                2008
                                
                                
                                2007Audit
      Fees(1)
                                
                                $
                                160,000
                                
                                
                                $
                                180,350Audit-Related
      Fees
                                
                                
                                -
                                
                                
                                
                                -Tax
      Fees(2)
                                
                                
                                25,000
                                
                                
                                
                                41,500All
      Other Fees
                                
                                
                                -
                                
                                
                                
                                -TOTAL
      FEES
                                
                                $
                                185,000
                                
                                
                                $
                                221,850







(1)
            Audit
      fees consist of fees for professional services rendered for the audit of
      the Fund’s financial statements and review of financial statements
      included in the Fund’s quarterly reports, as well as services normally
      provided by the independent accountant in connection with statutory and
      regulatory filings or engagements.


(2)
            Tax
      fees consist of compliance fees for the preparation of original tax
      returns.





The Audit
Committee of the Fund’s General Partner, Steben & Company, pre-approves all
audit and permitted non-audit services of the Fund’s independent accountants,
including all engagement fees and terms. The Audit Committee of Steben &
Company approved all the services provided by McGladrey & Pullen, LLP
and RSM McGladrey, Inc. (collectively “McGladrey”) during 2008 and 2007 to the
Fund described above. The Audit Committee has determined that the payments made
to McGladrey for these services during 2008 and 2007 are compatible with
maintaining that firm’s independence.


43
 Table of Contents


PART IV




ITEM 15: Exhibits, Financial Statement Schedules.





(a)(1)                 Financial
Statements





Futures
Portfolio Fund, Limited Partnership


Report of
Independent Registered Public Accounting Firm


Statements
of Financial Condition as of December 31, 2008 and 2007


Condensed
Schedules of Investments as of December 31, 2008 and 2007


Statements
of Operations for the Years Ended December 31, 2008, 2007, and 2006


Statements
of Cash Flows for the Years Ended December 31, 2008, 2007, and 2006


Statements
of Changes in Partners’ Capital (Net Asset Value) for the Years Ended December
31, 2008, 2007, and 2006


Notes to
Financial Statements




Also
included herewith:
  (a)(2)                 Financial
statement schedules not included in this Form 10-K have been omitted for the
reason that they are not required or are not applicable or that equivalent
information has been included in the financial notes or statements
thereto.
  (b)  Exhibits.
  The
following exhibits are filed herewith.
  Exhibit
                              Number
                            
                            Description of Document1.1
                            
                            Form
      of Selling Agreement.*3.1
                            
                            Maryland
      Certificate of Limited Partnership.*4.1
                            
                            Limited
      Partnership Agreement.*10.1
                            
                            Form
      of Subscription Agreement. *16.1
                            
                            Letter
      regarding change in certifying accountant.*31.01
                            
                            Rule
      13a-14(a)/15d-14(a) Certification of Principal Executive
      Officer31.02
                            
                            Rule
      13a-14(a)/15d-14(a) Certification of Principal Financial
      Officer32.01
                            
                            Section
      1350 Certification of Principal Executive Officer32.02
                            
                            Section
      1350 Certification of Principal Financial
  Officer
 
  *
Incorporated by reference to the corresponding exhibit to the Registrant’s
registration statement (File no. 000-50728) filed on April 29, 2004 on Form 10
under the Securities Exchange Act of 1934 as amended.


44
 Table of Contents




SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the General
Partner of the Registrant in the capacities and on the date
indicated.
 
 Name
                        Title
                        Date/s/ Kenneth E. Steben
                          Kenneth
      E. Steben
                        President,
      Chief Executive Officer and Director
                        March
      31, 2009/s/ Ahmed S. Hassanein
                          Ahmed
      S. Hassanein
                        Chief
      Operating Officer, Chief Financial Officer and Director
                        March
      31, 2009/s/ Michael Bulley
                          Michael
      D. Bulley
                        Senior
      Vice President, Research & Risk Management and
Director
                        March
      31,
2009
 
 
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
 
 
 Dated
      March 31, 2009
                FUTURES
      PORTFOLIO 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


45
 Table of Contents




REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM











To the
Partners of


Futures
Portfolio Fund, Limited Partnership





We have
audited the accompanying statements of financial condition, including the
condensed schedules of investments, of Futures Portfolio Fund, Limited
Partnership (the “Fund”), as of December 31, 2008 and 2007, and the related
statements of operations, cash flows, and changes in partners’ capital (net
asset value) for each of the three years in the period ended December 31, 2008.
These financial statements are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Futures Portfolio Fund, Limited
Partnership as of December 31, 2008 and 2007, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
2008, in conformity with U.S. generally accepted accounting
principles.





We were
not engaged to examine management’s assessment of the effectiveness of Futures
Portfolio Fund, Limited Partnership’s internal control over financial reporting
as of December 31, 2008 included in the accompanying Management’s Annual Report
on Internal Control over Financial Reporting and, accordingly, we do not express
an opinion thereon.





/s/
McGladrey & Pullen, LLP





Chicago,
Illinois


March 30,
2009




F-1




Futures
Portfolio Fund, Limited Partnership


Statements
of Financial Condition


December
      31, 2008 and 2007








2008
                              
                              
                              2007AssetsEquity
      in broker trading accountsCash
                              
                              $
                              218,445,964
                              
                              
                              $
                              80,795,179U.S.
      Government securities, at fair value (cost - $66,403,849 and
      $48,771,500)
                              
                              
                              66,972,902
                              
                              
                              
                              49,838,000Interest
      receivable
                              
                              
                              28,073
                              
                              
                              
                              239,155Net
      unrealized gain on open futures contracts
                              
                              
                              34,492,682
                              
                              
                              
                              31,261,259Net
      unrealized loss on open forward currency contracts
                              
                              
                              (1,202,959
                              )
                              
                              
                              (973,940
                              )Deposits
      with brokers
                              
                              
                              318,736,662
                              
                              
                              
                              161,159,653Cash
      and cash equivalents
                              
                              
                              286,560,159
                              
                              
                              
                              4,742,633Commercial
      paper, at fair value (cost - $139,797,933 and
$392,780,866)
                              
                              
                              140,590,377
                              
                              
                              
                              396,351,403Government-sponsored
      enterprises, at fair value (cost - $74,304,142 and $0)
                              
                              
                              75,198,945
                              
                              
                              
                              -Corporate
      notes, at fair value (cost - $77,628,692 and $0)
                              
                              
                              78,147,406
                              
                              
                              
                              -Total
      assets
                              
                              $
                              899,233,549
                              
                              
                              $
                              562,253,689LiabilitiesAccounts
      payable — General Partner
                              
                              $
                              1,313,479
                              
                              
                              $
                              888,469Commissions
      and other trading fees on open contracts
                              
                              
                              60,314
                              
                              
                              
                              99,972General
      Partner management fee
                              
                              
                              1,374,743
                              
                              
                              
                              896,247General
      Partner 1 percent allocation
                              
                              
                              1,879,337
                              
                              
                              
                              250,318Advisor
      management fees
                              
                              
                              1,492,038
                              
                              
                              
                              1,353,970Advisor
      incentive fees
                              
                              
                              18,771,604
                              
                              
                              
                              4,301,628Selling
      agents’ fee
                              
                              
                              971,084
                              
                              
                              
                              646,034Redemptions
      payable
                              
                              
                              10,448,411
                              
                              
                              
                              4,753,938Subscriptions
      received in advance
                              
                              
                              29,937,275
                              
                              
                              
                              3,956,128Total
      liabilities
                              
                              
                              66,248,285
                              
                              
                              
                              17,146,704Partners'
      Capital (Net Asset Value)Class
      A Interests - 108,989.0639 units and 94,188.7078 units outstanding atDecember
      31, 2008 and 2007, respectively
                              
                              $
                              547,011,351
                              
                              
                              $
                              364,289,314Class
      B Interests -  44,268.0740 units and 36,968.6171 units
      outstanding atDecember
      31, 2008 and 2007, respectively
                              
                              
                              285,973,913
                              
                              
                              
                              180,817,671Total
      partners' capital (net asset value)
                              
                              
                              832,985,264
                              
                              
                              
                              545,106,985Total
      liabilities and partners' capital (net asset value)
                              
                              $
                              899,233,549
                              
                              
                              $
                              562,253,689






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


F-2
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Condensed
Schedule of Investments


December
      31, 2008




U.S.GovernmentSecurities





Face Value
                            
                            Maturity
      Date
                            Description
                            
                            FairValue
                            
                            
                            %
      of Net
                              Asset Value$
                            67,000,000
                            
                            01/08/09
                            U.S.
      Treasury Bill, 1.820% *
                            
                            $
                            66,972,902
                            
                            
                            
                            8.04
                            %Total
      U.S. Government  securities *
                              (cost
      - $66,403,849)
                            
                            $
                            66,972,902
                            
                            
                            
                            8.04
                            %




Government-Sponsored
Enterprises





Face Value
                            
                            Maturity
      Date
                            Description
                            
                            FairValue
                            
                            
                            %
      of Net
                              Asset Value$
                            75,204,000
                            
                            01/02/09
                            Fed
      Home Ln Discount Nt, 2.42%
                            
                            
                            75,198,945
                            
                            
                            
                            9.03
                            %Total
      Government-sponsored enterprises
                              (cost
      - $74,304,142)
                            
                            $
                            75,198,945
                            
                            
                            
                            9.03
                            %




Commercial
Paper





Face Value
                              
                              MaturityDate
                              Description
                              
                              FairValue
                              
                              
                              %
      of Net
                                Asset Value$
                              47,000,000
                              
                              03/06/09
                              Royal
      Bk Of Scotland Grp, 2.65%
                              
                              $
                              46,778,578
                              
                              
                              
                              5.62
                              %41,670,000
                              
                              03/10/09
                              Citigroup
      Funding Inc, 3.05%
                              
                              
                              41,429,934
                              
                              
                              
                              4.97
                              %5,000,000
                              
                              03/10/09
                              Citigroup
      Funding Inc, 2.43%
                              
                              
                              4,977,050
                              
                              
                              
                              0.60
                              %19,800,000
                              
                              05/04/09
                              Shell
      Intl Finance Bv, 2.08%
                              
                              
                              19,659,288
                              
                              
                              
                              2.36
                              %28,000,000
                              
                              05/04/09
                              Societe
      Generale N Amer, 2.66%
                              
                              
                              27,745,527
                              
                              
                              
                              3.33
                              %Total
      commercial paper securities (cost - $139,797,933)
                              
                              $
                              140,590,377
                              
                              
                              
                              16.88
                              %




Corporate
Notes





Face Value
                            
                            Maturity
      Date
                            Description
                            
                            FairValue
                            
                            
                            %
      of Net
                              Asset Value$
                            50,461,000
                            
                            03/25/09
                            Bear
      Stearns Co. (JP Morgan Chase & Co.), 3.25%
                            
                            $
                            50,631,503
                            
                            
                            
                            6.08
                            %27,500,000
                            
                            08/19/09
                            Proc
      & Gamb Intl F, 2.49%
                            
                            
                            27,515,903
                            
                            
                            
                            3.30
                            %Total
      corporate notes (cost - $77,628,692)
                            
                            $
                            78,147,406
                            
                            
                            
                            9.38
                            %






* Pledged
as collateral for the trading of futures contracts.






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


F-3
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Condensed
Schedule of Investments (continued)


December
      31, 2008




LongU.S.Futures
Contracts**





Description
                                
                                Net
      unrealized gain (loss) on open
                                  long contracts
                                
                                
                                %
      of Net
                                  Asset ValueAgricultural
                                
                                $
                                209,623
                                
                                
                                
                                0.03
                                %Currency
                                
                                
                                583,235
                                
                                
                                
                                0.07
                                %Energy
                                
                                
                                36,851
                                
                                
                                
                                0.00
                                %Interest
      rate
                                
                                
                                7,568,968
                                
                                
                                
                                0.91
                                %Metal
                                
                                
                                (5,458,382
                                )
                                
                                
                                (0.66
                                %)Stock
      index
                                
                                
                                283,733
                                
                                
                                
                                0.03
                                %Total
      long U.S. futures contracts
                                
                                $
                                3,224,028
                                
                                
                                
                                0.38
                                %





ShortU.S.Futures
Contracts**





Description
                              
                              Net
      unrealized gain (loss) on open
                                short contracts
                              
                              
                              %
      of Net
                                Asset ValueAgricultural
                              
                              $
                              203,129
                              
                              
                              
                              0.02
                              %Currency
                              
                              
                              (536,035
                              )
                              
                              
                              (0.06
                              %)Energy
                              
                              
                              1,136,871
                              
                              
                              
                              0.14
                              %Interest
      rate
                              
                              
                              (34,304
                              )
                              
                              
                              0.00
                              %Metal
                              
                              
                              12,050,348
                              
                              
                              
                              1.45
                              %Stock
      index
                              
                              
                              (100,242
                              )
                              
                              
                              (0.01
                              %)Total
      short U.S. futures contracts
                              
                              $
                              12,719,767
                              
                              
                              
                              1.54
                              %Total
      U.S. futures contracts
                              
                              $
                              15,943,795
                              
                              
                              
                              1.92
                              %





LongForeignFutures
Contracts**





Description
                              
                              Net
      unrealized gainon open
                                long contracts
                              
                              
                              %
      of Net
                                Asset ValueAgricultural
                              
                              $
                              526,077
                              
                              
                              
                              0.06
                              %Currency
                              
                              
                              386,518
                              
                              
                              
                              0.05
                              %Interest
      rate
                              
                              
                              13,673,497
                              
                              
                              
                              1.64
                              %Metal
                              
                              
                              132
                              
                              
                              
                              0.00
                              %Stock
      index
                              
                              
                              353,887
                              
                              
                              
                              0.04
                              %Total
      long foreign futures contracts
                              
                              $
                              14,940,111
                              
                              
                              
                              1.79
                              %






** No
individual futures or forward currency contract position constituted greater
than 1 percent of net asset value. Accordingly, the number of contracts and
expiration dates are not presented.






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


F-4
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Condensed
Schedule of Investments (continued)


December
      31, 2008





ShortForeignFutures
Contracts**





Description
                                      
                                      Net
      unrealized gain (loss) on open short
      contracts
                                      
                                      
                                      %
      of Net
                                        Asset ValueAgricultural
                                      
                                      $
                                      1,586,457
                                      
                                      
                                      
                                      0.19
                                      %Currency
                                      
                                      
                                      768,035
                                      
                                      
                                      
                                      0.09
                                      %Energy
                                      
                                      
                                      761,334
                                      
                                      
                                      
                                      0.09
                                      %Interest
      rate
                                      
                                      
                                      (443,162
                                      )
                                      
                                      
                                      (0.05
                                      %)Metal
                                      
                                      
                                      1,194,857
                                      
                                      
                                      
                                      0.14
                                      %Stock
      index
                                      
                                      
                                      (258,745
                                      )
                                      
                                      
                                      (0.03
                                      %)Total
      short foreign futures contracts
                                      
                                      $
                                      3,608,776
                                      
                                      
                                      
                                      0.43
                                      %Total
      foreign futures contracts
                                      
                                      $
                                      18,548,887
                                      
                                      
                                      
                                      2.22
                                      %Net
      unrealized gain on open futures contracts
                                      
                                      $
                                      34,492,682
                                      
                                      
                                      
                                      4.14
                                      %





U.S.Forward Currency
      Contracts**





Description
                            
                            Net
      unrealized gain (loss) on open long/short contracts
                            
                            
                            %
      of Net
                              Asset ValueLong
      forward currency contracts
                            
                            $
                            495,615
                            
                            
                            
                            0.06
                            %Short
      forward currency contracts
                            
                            
                            (1,697,447
                            )
                            
                            
                            (0.20
                            %)Total
      U.S. forward currency contracts
                            
                            $
                            (1,201,832
                            )
                            
                            
                            (0.14
                            %)





ForeignForward Currency
      Contracts**





Description
                            
                            Net
      unrealized gain (loss) on open long/short contracts
                            
                            
                            %
      of Net
                              Asset ValueLong
      forward currency contracts
                            
                            $
                            217,280
                            
                            
                            
                            0.03
                            %Short
      forward currency contracts
                            
                            
                            (218,407
                            )
                            
                            
                            (0.03
                            %)Total
      foreign forward currency contracts
                            
                            $
                            (1,127
                            )
                            
                            
                            0.00
                            %Net
      unrealized loss on open forwardcurrency
      contracts
                            
                            $
                            (1,202,959
                            )
                            
                            
                            (0.14
                            %)








** No
individual futures or forward currency contract position constituted greater
than 1 percent of net asset value. Accordingly, the number of contracts and
expiration dates are not presented.








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


F-5
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Condensed
Schedule of Investments


December
      31, 2007




U.S.GovernmentSecurities





Face Value
                        
                        Maturity
      Date
                        Description
                        
                        FairValue
                        
                        
                        %
      of Net
                          Asset Value$
                        10,000,000
                        
                        01/24/08
                        U.S.
      Treasury Bill, 4.860%
                        
                        $
                        9,967,600
                        
                        
                        
                        1.83
                        %8,000,000
                        
                        01/24/08
                        U.S.
      Treasury Bill, 4.860%
                        
                        
                        7,974,080
                        
                        
                        
                        1.46
                        %32,000,000
                        
                        01/24/08
                        U.S.
      Treasury Bill, 4.860%
                        
                        
                        31,896,320
                        
                        
                        
                        5.85
                        %Total
      U.S. Government securities *(cost
      - $48,771,500)
                        
                        $
                        49,838,000
                        
                        
                        
                        9.14
                        %





Commercial
Paper





Face Value
                        
                        MaturityDate
                        Description
                        
                        FairValue
                        
                        
                        %
      of Net
                          Asset Value$
                        35,180,000
                        
                        01/10/08
                        UBS
      Finance Delaware LLC, 5.19%
                        
                        $
                        35,134,354
                        
                        
                        
                        6.45
                        %26,083,000
                        
                        01/14/08
                        Societe
      Generale N Amer, 5.175%
                        
                        
                        26,034,257
                        
                        
                        
                        4.78
                        %26,714,000
                        
                        03/13/08
                        HSBC
      Finance Corp, 4.91%
                        
                        
                        26,451,669
                        
                        
                        
                        4.85
                        %22,533,000
                        
                        04/17/08
                        Calyon
      North America Inc, 4.705%
                        
                        
                        22,217,892
                        
                        
                        
                        4.08
                        %45,000,000
                        
                        04/24/08
                        Bank
      Of America Corp, 4.65%
                        
                        
                        44,337,375
                        
                        
                        
                        8.13
                        %45,195,000
                        
                        04/28/08
                        Morgan
      Stanley, 4.91%
                        
                        
                        44,467,637
                        
                        
                        
                        8.16
                        %20,456,000
                        
                        05/01/08
                        Citigroup
      Funding Inc, 4.58%
                        
                        
                        20,141,103
                        
                        
                        
                        3.69
                        %30,655,000
                        
                        05/01/08
                        General
      Elec Cap Corp, 4.47%
                        
                        
                        30,194,434
                        
                        
                        
                        5.54
                        %11,000,000
                        
                        05/01/08
                        UBS
      Finance Delaware LLC, 4.54%
                        
                        
                        10,832,146
                        
                        
                        
                        1.99
                        %17,990,000
                        
                        05/07/08
                        HSBC
      Finance Corp, 4.43%
                        
                        
                        17,708,851
                        
                        
                        
                        3.25
                        %15,264,000
                        
                        05/07/08
                        Societe
      Generale N Amer, 4.54%
                        
                        
                        15,019,530
                        
                        
                        
                        2.76
                        %43,035,000
                        
                        06/05/08
                        Merrill
      Lynch & Co, 4.89%
                        
                        
                        42,123,088
                        
                        
                        
                        7.73
                        %15,000,000
                        
                        06/09/08
                        General
      Elec Cap Corp, 4.53%
                        
                        
                        14,698,000
                        
                        
                        
                        2.70
                        %23,000,000
                        
                        06/10/08
                        Calyon
      North America Inc, 4.7%
                        
                        
                        22,516,553
                        
                        
                        
                        4.13
                        %25,000,000
                        
                        06/10/08
                        Credit
      Suisse New York, 4.7%
                        
                        
                        24,474,514
                        
                        
                        
                        4.49
                        %Total
      commercial paper securities (cost - $392,780,866)
                        
                        $
                        396,351,403
                        
                        
                        
                        72.73
                        %





LongU.S.Futures
Contracts**





Description
                                  
                                  Net
      unrealized gain (loss) on open long
      contracts
                                  
                                  
                                  %
      of Net
                                    Asset ValueAgricultural
                                  
                                  $
                                  9,905,656
                                  
                                  
                                  
                                  1.82
                                  %Currency
                                  
                                  
                                  (781,790
                                  )
                                  
                                  
                                  (0.14
                                  %)Energy
                                  
                                  
                                  8,299,334
                                  
                                  
                                  
                                  1.52
                                  %Interest
      rate
                                  
                                  
                                  3,876,269
                                  
                                  
                                  
                                  0.71
                                  %Metal
                                  
                                  
                                  (73,393
                                  )
                                  
                                  
                                  (0.01
                                  %)Stock
      index
                                  
                                  
                                  (467,033
                                  )
                                  
                                  
                                  (0.09
                                  %)Total
      long U.S. futures contracts
                                  
                                  $
                                  20,759,043
                                  
                                  
                                  
                                  3.81
                                  %








* Pledged
as collateral for the trading of futures contracts.


** No
individual futures or forward currency contract position constituted greater
than 1 percent of net asset value. Accordingly, the number of contracts and
expiration dates are not presented.








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


F-6
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Condensed
Schedule of Investments (continued)


December
      31, 2007





ShortU.S.Futures
Contracts**





Description
                                        
                                        Net
      unrealized gain (loss) on open short
      contracts
                                        
                                        
                                        %
      of Net
                                          Asset ValueAgricultural
                                        
                                        $
                                        203,954
                                        
                                        
                                        
                                        0.04
                                        %Currency
                                        
                                        
                                        (774,127
                                        )
                                        
                                        
                                        (0.14
                                        %)Energy
                                        
                                        
                                        (1,828,920
                                        )
                                        
                                        
                                        (0.34
                                        %)Interest
      rate
                                        
                                        
                                        (16,125
                                        )
                                        
                                        
                                        0.00
                                        %Metal
                                        
                                        
                                        4,049,987
                                        
                                        
                                        
                                        0.74
                                        %Stock
      index
                                        
                                        
                                        (119,263
                                        )
                                        
                                        
                                        (0.02
                                        %)Total
      short U.S. futures contracts
                                        
                                        $
                                        1,515,506
                                        
                                        
                                        
                                        0.28
                                        %Total
      U.S. futures contracts
                                        
                                        $
                                        22,274,549
                                        
                                        
                                        
                                        4.09
                                        %





LongForeignFutures
      Contracts**





Description
                              
                              Net
      unrealized gain (loss) on open long
      contracts
                              
                              
                              %
      of Net
                                Asset ValueAgricultural
                              
                              $
                              2,479,202
                              
                              
                              
                              0.45
                              %Currency
                              
                              
                              272,276
                              
                              
                              
                              0.05
                              %Energy
                              
                              
                              1,009,197
                              
                              
                              
                              0.19
                              %Interest
      rate
                              
                              
                              2,076,143
                              
                              
                              
                              0.38
                              %Metal
                              
                              
                              1,230,189
                              
                              
                              
                              0.23
                              %Stock
      index
                              
                              
                              651,010
                              
                              
                              
                              0.12
                              %Total
      long foreign futures contracts
                              
                              $
                              7,718,017
                              
                              
                              
                              1.42
                              %





ShortForeignFutures
Contracts**





Description
                                  
                                  Net
      unrealized gain (loss) on open short
      contracts
                                  
                                  
                                  %
      of Net
                                    Asset ValueAgricultural
                                  
                                  $
                                  (296,089
                                  )
                                  
                                  
                                  (0.05
                                  %)Currency
                                  
                                  
                                  (113,994
                                  )
                                  
                                  
                                  (0.02
                                  %)Energy
                                  
                                  
                                  (70,818
                                  )
                                  
                                  
                                  (0.01
                                  %)Interest
      rate
                                  
                                  
                                  715,526
                                  
                                  
                                  
                                  0.13
                                  %Metal
                                  
                                  
                                  9,768
                                  
                                  
                                  
                                  0.00
                                  %Stock
      index
                                  
                                  
                                  1,024,300
                                  
                                  
                                  
                                  0.19
                                  %Total
      short foreign futures contracts
                                  
                                  $
                                  1,268,693
                                  
                                  
                                  
                                  0.24
                                  %Total
      foreign futures contracts
                                  
                                  $
                                  8,986,710
                                  
                                  
                                  
                                  1.66
                                  %Net
      unrealized gain on open futures contracts
                                  
                                  $
                                  31,261,259
                                  
                                  
                                  
                                  5.75
                                  %








** No
individual futures or forward currency contract position constituted greater
than 1 percent of net asset value. Accordingly, the number of contracts and
expiration dates are not presented.








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


F-7
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Condensed
Schedule of Investments (continued)


December
      31, 2007





U.S.Forward Currency
Contracts**





Description
                          
                          Net
      unrealized gain (loss) on open long/short contracts
                          
                          
                          %
      of Net
                            Asset ValueLong
      forward currency contracts
                          
                          $
                          (1,774,645
                          )
                          
                          
                          (0.33
                          %)Short
      forward currency contracts
                          
                          
                          982,357
                          
                          
                          
                          0.18
                          %Total
      U.S. forward currency contracts
                          
                          $
                          (792,288
                          )
                          
                          
                          (0.15
                          %)





ForeignForward Currency
Contracts**





Description
                              
                              Net
      unrealized gain (loss) onopen long/short
      contracts
                              
                              
                              %
      of Net
                                Asset ValueLong
      forward currency contracts
                              
                              $
                              (39,572
                              )
                              
                              
                              (0.01
                              %)Short
      forward currency contracts
                              
                              
                              (142,080
                              )
                              
                              
                              (0.03
                              %)Total
      foreign forward currency contracts
                              
                              $
                              (181,652
                              )
                              
                              
                              (0.04
                              %)Net
      unrealized loss on open forwardcurrency
      contracts
                              
                              $
                              (973,940
                              )
                              
                              
                              (0.19
                              %)








** No
individual futures or forward currency contract position constituted greater
than 1 percent of net asset value. Accordingly, the number of contracts and
expiration dates are not presented.








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


F-8
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Statements
of Operations


Years
      Ended December 31, 2008, 2007 and
2006




2008
                                
                                
                                2007
                                
                                
                                2006Trading
      GainsNet
      realized gain
                                
                                $
                                260,418,189
                                
                                
                                $
                                47,377,804
                                
                                
                                $
                                18,594,300Net
      change in unrealized gain
                                
                                
                                3,002,404
                                
                                
                                
                                641,048
                                
                                
                                
                                27,906,017Brokerage
      commissions
                                
                                
                                (1,866,008
                                )
                                
                                
                                (2,283,456
                                )
                                
                                
                                (1,715,388
                                )Net
      gain from trading
                                
                                
                                261,554,585
                                
                                
                                
                                45,735,396
                                
                                
                                
                                44,784,929Net
      Investment LossIncomeInterest
      income
                                
                                
                                19,068,236
                                
                                
                                
                                26,770,478
                                
                                
                                
                                22,657,865ExpensesGeneral
      Partner management fee
                                
                                
                                13,379,664
                                
                                
                                
                                10,186,030
                                
                                
                                
                                8,822,422General
      Partner 1 percent allocation
                                
                                
                                1,879,337
                                
                                
                                
                                250,318
                                
                                
                                
                                347,793Advisor
      management fees
                                
                                
                                11,318,439
                                
                                
                                
                                9,712,368
                                
                                
                                
                                8,858,211Advisor
      incentive fee
                                
                                
                                53,999,585
                                
                                
                                
                                16,604,111
                                
                                
                                
                                4,989,571Selling
      agents’ fee
                                
                                
                                9,479,794
                                
                                
                                
                                7,375,387
                                
                                
                                
                                6,385,159Operating
      expenses
                                
                                
                                6,405,612
                                
                                
                                
                                4,979,458
                                
                                
                                
                                4,869,769Total
      expenses
                                
                                
                                96,462,431
                                
                                
                                
                                49,107,672
                                
                                
                                
                                34,272,925Operating
      expenses waived
                                
                                
                                (1,894,004
                                )
                                
                                
                                (1,383,324
                                )
                                
                                
                                (1,261,651
                                )Net
      total expenses
                                
                                
                                94,568,427
                                
                                
                                
                                47,724,348
                                
                                
                                
                                33,011,274Net
      investment loss
                                
                                
                                (75,500,191
                                )
                                
                                
                                (20,953,870
                                )
                                
                                
                                (10,353,409
                                )Net
      Income
                                
                                $
                                186,054,394
                                
                                
                                $
                                24,781,526
                                
                                
                                $
                                34,431,520







2008
                                            
                                            
                                            2007
                                            
                                            
                                            2006Class A
                                            
                                            
                                            Class B
                                            
                                            
                                            Class A
                                            
                                            
                                            Class B
                                            
                                            
                                            Class A
                                            
                                            
                                            Class BIncrease
      in Net Asset Value Per Unit
                                            
                                            $
                                            1,151.31
                                            
                                            
                                            $
                                            1,568.94
                                            
                                            
                                            $
                                            142.06
                                            
                                            
                                            $
                                            263.30
                                            
                                            
                                            $
                                            236.46
                                            
                                            
                                            $
                                            370.78Net
      Income Per Unit
                                              (based
      on weighted average number of units outstanding)
                                            
                                            $
                                            1,205.31
                                            
                                            
                                            $
                                            1,615.84
                                            
                                            
                                            $
                                            154.85
                                            
                                            
                                            $
                                            284.12
                                            
                                            
                                            $
                                            254.04
                                            
                                            
                                            $
                                            392.07






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


F-9
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Statements
of Cash Flows


Years
      Ended December 31, 2008, 2007 and
2006




2008
                                      
                                      
                                      2007
                                      
                                      
                                      2006Cash
      flows provided by (used in) operating activitiesNet
      income
                                      
                                      $
                                      186,054,394
                                      
                                      
                                      $
                                      24,781,526
                                      
                                      
                                      $
                                      34,431,520Adjustments
      to reconcile net income to net cash provided by (used in)
      operating activitiesNet
      change in unrealized gains
                                      
                                      
                                      (3,002,404
                                      )
                                      
                                      
                                      (641,048
                                      )
                                      
                                      
                                      (27,906,017
                                      )Net
      proceeds (purchases) of commercial paper
                                      
                                      
                                      255,761,026
                                      
                                      
                                      
                                      (206,718,438
                                      )
                                      
                                      
                                      (64,911,649
                                      )Net
      purchases of corporate notes
                                      
                                      
                                      (78,147,406
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Net purchases
      of investments in U.S. Government securities
                                      
                                      
                                      (17,134,902
                                      )
                                      
                                      
                                      (49,838,000
                                      )
                                      
                                      
                                      -Net
      proceeds (purchases) of investments in Government-sponsored
      enterprises
                                      
                                      
                                      (75,198,945
                                      )
                                      
                                      
                                      135,581,067
                                      
                                      
                                      
                                      (115,749,956
                                      )Decrease
      in interest receivable
                                      
                                      
                                      211,082
                                      
                                      
                                      
                                      429,291
                                      
                                      
                                      
                                      26,925Increase
      (decrease) in accounts payable and accrued expenses
                                      
                                      
                                      15,796,942
                                      
                                      
                                      
                                      2,431,332
                                      
                                      
                                      
                                      (78,769
                                      )Increase
      (decrease) in General Partner 1 percent allocation
                                      
                                      
                                      1,629,019
                                      
                                      
                                      
                                      (97,475
                                      )
                                      
                                      
                                      198,477Net
      cash provided by (used in) operating activities
                                      
                                      
                                      285,968,806
                                      
                                      
                                      
                                      (94,071,745
                                      )
                                      
                                      
                                      (173,989,469
                                      )Cash
      flows provided by (used in) financing activitiesContributions
      of units
                                      
                                      
                                      186,069,173
                                      
                                      
                                      
                                      86,364,306
                                      
                                      
                                      
                                      152,284,070Subscriptions
      received in advance
                                      
                                      
                                      29,937,275
                                      
                                      
                                      
                                      3,956,128
                                      
                                      
                                      
                                      6,574,568Redemption
      of units
                                      
                                      
                                      (82,506,943
                                      )
                                      
                                      
                                      (80,330,612
                                      )
                                      
                                      
                                      (68,706,788
                                      )Net
      cash provided by financing activities
                                      
                                      
                                      133,499,505
                                      
                                      
                                      
                                      9,989,822
                                      
                                      
                                      
                                      90,151,850Net
      increase (decrease) in cash and cash equivalents
                                      
                                      
                                      419,468,311
                                      
                                      
                                      
                                      (84,081,923
                                      )
                                      
                                      
                                      (83,837,619
                                      )Cash
      and cash equivalentsBeginning
      of year
                                      
                                      
                                      85,537,812
                                      
                                      
                                      
                                      169,619,735
                                      
                                      
                                      
                                      253,457,354End
      of year
                                      
                                      $
                                      505,006,123
                                      
                                      
                                      $
                                      85,537,812
                                      
                                      
                                      $
                                      169,619,735End
      of year cash and cash equivalents consists of:Cash
      in broker trading accounts
                                      
                                      $
                                      218,445,964
                                      
                                      
                                      $
                                      80,795,179
                                      
                                      
                                      $
                                      165,335,453Cash
      and cash equivalents
                                      
                                      
                                      286,560,159
                                      
                                      
                                      
                                      4,742,633
                                      
                                      
                                      
                                      4,284,282Total
      end of year cash and cash equivalents
                                      
                                      $
                                      505,006,123
                                      
                                      
                                      $
                                      85,537,812
                                      
                                      
                                      $
                                      169,619,735Supplemental
      schedule of non-cash financing activities:Redemptions
      payable
                                      
                                      $
                                      10,448,411
                                      
                                      
                                      $
                                      4,753,938
                                      
                                      
                                      $
                                      8,411,042








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


F-10
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


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


Years
      Ended December 31, 2008, 2007 and
2006




Class A Interests
                      
                      
                      Class B InterestsUnits
                      
                      
                      Amount
                      
                      
                      Units
                      
                      
                      Amount
                      
                      
                      TotalBalance
      at December 31, 2005
                      
                      
                      75,378.5969
                      
                      
                      $
                      263,005,434
                      
                      
                      
                      26,635.1317
                      
                      
                      $
                      113,386,679
                      
                      
                      $
                      376,392,113Net
      income
                      
                      
                      
                      
                      
                      
                      21,442,103
                      
                      
                      
                      
                      
                      
                      
                      12,989,417
                      
                      
                      
                      34,431,520Contributions
                      
                      
                      30,279.5071
                      
                      
                      
                      106,165,077
                      
                      
                      
                      14,353.8625
                      
                      
                      
                      61,862,531
                      
                      
                      
                      168,027,608Redemptions
                      
                      
                      (13,508.4970
                      )
                      
                      
                      (47,448,810
                      )
                      
                      
                      (6,255.2669
                      )
                      
                      
                      (27,342,338
                      )
                      
                      
                      (74,791,148
                      )Transfers
                      
                      
                      (517.2813
                      )
                      
                      
                      (1,779,681
                      )
                      
                      
                      418.1003
                      
                      
                      
                      1,779,681
                      
                      
                      
                      -Balance
      at December 31, 2006
                      
                      
                      91,632.3257
                      
                      
                      $
                      341,384,123
                      
                      
                      
                      35,151.8276
                      
                      
                      $
                      162,675,970
                      
                      
                      $
                      504,060,093Net
      income
                      
                      
                      
                      
                      
                      
                      14,481,809
                      
                      
                      
                      
                      
                      
                      
                      10,299,717
                      
                      
                      
                      24,781,526Contributions
                      
                      
                      16,692.1516
                      
                      
                      
                      61,337,528
                      
                      
                      
                      6,911.4374
                      
                      
                      
                      31,601,346
                      
                      
                      
                      92,938,874Redemptions
                      
                      
                      (13,602.7165
                      )
                      
                      
                      (50,952,284
                      )
                      
                      
                      (5,520.7112
                      )
                      
                      
                      (25,721,224
                      )
                      
                      
                      (76,673,508
                      )Transfers
                      
                      
                      (533.0530
                      )
                      
                      
                      (1,961,862
                      )
                      
                      
                      426.0633
                      
                      
                      
                      1,961,862
                      
                      
                      
                      -Balance
      at December 31, 2007
                      
                      
                      94,188.7078
                      
                      
                      $
                      364,289,314
                      
                      
                      
                      36,968.6171
                      
                      
                      $
                      180,817,671
                      
                      
                      $
                      545,106,985Net
      income
                      
                      
                      
                      
                      
                      
                      120,149,003
                      
                      
                      
                      
                      
                      
                      
                      65,905,391
                      
                      
                      
                      186,054,394Contributions
                      
                      
                      27,723.6530
                      
                      
                      
                      120,571,420
                      
                      
                      
                      12,536.8009
                      
                      
                      
                      69,453,881
                      
                      
                      
                      190,025,301Redemptions
                      
                      
                      (12,681.8275
                      )
                      
                      
                      (56,920,876
                      )
                      
                      
                      (5,427.0141
                      )
                      
                      
                      (31,280,540
                      )
                      
                      
                      (88,201,416
                      )Transfers
                      
                      
                      (241.4694
                      )
                      
                      
                      (1,077,510
                      )
                      
                      
                      189.6701
                      
                      
                      
                      1,077,510
                      
                      
                      
                      -Balance
      at  December 31, 2008
                      
                      
                      108,989.0639
                      
                      
                      $
                      547,011,351
                      
                      
                      
                      44,268.0740
                      
                      
                      $
                      285,973,913
                      
                      
                      $
                      832,985,264











Net
      Asset Value Per UnitDecember 31, 2008
                
                
                December 31, 2007
                
                
                December 31, 2006
                
                
                December 31, 2005Class
      A
                
                
                Class
      B
                
                
                Class
      A
                
                
                Class
      B
                
                
                Class
      A
                
                
                Class
      B
                
                
                Class
      A
                
                
                Class
      B$
                5,018.96
                
                
                $
                6,460.05
                
                
                $
                3,867.65
                
                
                $
                4,891.11
                
                
                $
                3,725.59
                
                
                $
                4,627.81
                
                
                $
                3,489.13
                
                
                $
                4,257.03








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


F-11
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Notes
      to the Financial Statements








Note
      1:
            ORGANIZATION AND
      SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES





General Description of the
Fund:





Futures
Portfolio Fund, Limited Partnership (the “Fund”) is a Maryland limited
partnership which operates as a commodity investment pool. The Fund utilizes
commodity trading advisors to engage in the trading of futures contracts,
forward currency contracts, swap contracts, and other financial
instruments.




The Fund
will automatically terminate on December 31, 2025, unless terminated earlier as
provided in the Limited Partnership Agreement.





Regulation:





The Fund
is a registrant with the Securities and Exchange Commission (“SEC”) pursuant to
the Securities Exchange Act of 1934 (the “Act”). As a registrant, the Fund is
subject to the regulations of the SEC and the informational requirements of the
Act. As a commodity pool, the Fund is subject to the regulations of the
Commodity Futures Trading Commission, an agency of the United States (“U.S.”)
government which regulates most aspects of the commodity futures industry; rules
of the National Futures Association, an industry self-regulatory organization;
and the requirements of commodity exchanges where the Fund executes
transactions. Additionally, the Fund is subject to the requirements of Futures
Commission Merchants (brokers) and Interbank market makers through which the
Fund trades.





Classes of
Interests:





The Fund
has two classes of limited partnership interests (“Interests”), Class A and
Class B. The General Partner may offer additional classes at its discretion.
Both Class A and Class B Interests are traded pursuant to identical trading
programs and differ only in respect to the selling agents’ fees. Class B
Interests are issued only at the General Partner’s discretion and are generally
intended for investors who are participating in fee based investment advisory
programs. All items of income or loss, except for the selling agents’ fees, are
allocated pro rata between Class A and Class B Interests. The selling agents’
fees applicable to each class of Interest are then charged to each class. All
items of income or loss allocated to each class of Interest are then allocated
pro rata to each Limited Partner within each class. For purposes of both
financial reporting and calculation of redemption value, net asset value per
Class A or Class B unit is calculated by dividing the net asset value of Class A
or Class B by the number or outstanding units of Class A or Class
B.


F-12
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Notes
      to the Financial Statements





Significant
accounting policies are as follows:





Use of
Estimates:





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.





Revenue
Recognition:





Futures,
options on futures, forward currency, and swap contracts are recorded on a trade
date basis, and gains or losses are realized when contracts are liquidated.
Unrealized gains and losses on open contracts (the difference between contract
trade price and fair value) are reported in the statements of financial
condition as a net gain or loss, as there exists a right of offset of unrealized
gains or losses in accordance with Financial Accounting Standards Board
Interpretation (“FASB”) No. 39 – Offsetting of Amounts Related to
Certain Contracts, as amended by FASB No. 39-1 – Amendment of FASB
Interpretation No. 39 (“FIN 39-1”). Any change in net unrealized gain or
loss from the preceding period is reported in the statement of operations.
Commercial paper, corporate notes, U.S. Government securities and
Government-sponsored enterprises are recorded at amortized cost and interest is
accrued and recorded through maturity, which approximates fair
value.  Fair value of exchange-traded contracts is based upon
settlement prices. Fair value of non-exchange traded contracts is based upon
third-party quoted dealer values on the Interbank market.





Cash and Cash
Equivalents:





Cash
equivalents are highly liquid investments with an original maturity of three
months or less at the date of acquisition that are not held for sale in the
normal course of business. The Fund is at risk to the extent that it maintains
balances with such institutions in excess of insured limits.  As of
December 31, 2008, significant cash balances held at Newedge USA, LLC, UBS
Financial Services, Inc. and Bank of America are $218,445,964, $204,886,354 and
$81,663,804, respectively.  As of December 31, 2007,
significant cash balances held at Newedge USA, LLC and Bank of America are
$80,795,179 and $4,683,674, respectively.





Brokerage
Commissions:





Brokerage
commissions include other trading fees and are charged to expense when contracts
are opened.





Redemptions
Payable:





Redemptions
payable represent redemptions approved by the General Partner prior to period
end, including those that are not effective until subsequent
periods.  These redemptions have been recorded using the period end
net asset value per unit in accordance with the provisions of Statement of
Financial Accounting Standards No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and
Equity.


F-13
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Notes
      to the Financial Statements





Income
Taxes:





The Fund prepares calendar
year U.S. and applicable state tax returns.  The Fund is not subject
to federal income taxes as each partner is individually liable for his or her
allocable share of the Fund’s income, expenses and trading gains or
losses.  The Fund, however, may be required to file returns in various
state and local jurisdictions as a result of its operations or the residency of
its partners. On January 1, 2007, the Fund adopted Financial
Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), Accounting
for Uncertainty in Income Taxes which defines the threshold for
recognizing the benefits of tax return positions in the financial statements as
“more-likely-than-not” to be sustained by the taxing authority. FIN 48 applies
to all tax positions accounted for under Statement of Financial Accounting
Standards No. 109, Accounting
for Income Taxes. For the years ended December 31, 2008 and 2007,
respectively, no income tax liability for uncertain tax positions has been
recognized in the accompanying financial statements.  The 2005
through 2008 tax years generally remain subject to examination by U.S. federal
and most state tax authorities.





Fair Value of Financial
Instruments:





In
September 2006, the FASB issued Statement of Financial Accounting Standards No.
157, Fair Value
Measurements (“SFAS No. 157”).  SFAS No. 157 defines fair
value, establishes a framework for measuring fair value and expands disclosures
about fair value measurement and also emphasizes that fair value is a
market-based measurement, not an entity-specific measurement.  SFAS
No. 157 is effective for fiscal years beginning after November 15, 2007, except
for nonfinancial assets and nonfinancial liabilities that are recognized or
disclosed at fair value in the financial statements on a nonrecurring basis for
which delayed application is permitted until fiscal years beginning after
November 15, 2008.  The adoption of SFAS No. 157 was effective for the
Fund on January 1, 2007, and did not impact our financial position, results of
operations or cash flows.





SFAS No.
157 defines fair value as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date and sets out a fair value
hierarchy.  The fair value hierarchy gives the highest priority to
quoted prices in active markets for identical assets or liabilities (Level 1)
and the lowest priority to unobservable inputs (Level 3).  Inputs are
broadly defined under SFAS 157 as assumptions market participants would use in
pricing an asset or liability. The three levels of the fair value hierarchy
under SFAS 157 are described below:





Level
1.  Unadjusted quoted prices in active markets for identical assets or
liabilities that the reporting entity has the ability to access at the
measurement date.





Level
2.  Inputs other than quoted prices within Level 1 that are observable
for the asset or liability, either directly or indirectly.  A
significant adjustment to a Level 2 input could result in the Level 2
measurement becoming a Level 3 measurement.





Level
3.  Inputs are unobservable for the asset or liability.





The
following section describes the valuation techniques used by the Fund to measure
different financial instruments at fair value and includes the level within the
fair value hierarchy in which the financial instrument is
categorized.


F-14
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Notes
      to the Financial Statements





The
following table presents the Fund’s fair value hierarchy for those assets and
liabilities measured at fair value on a recurring basis as of December 31,
2008:





Level 1
                    
                    
                    Level 2
                    
                    
                    TotalEquity
      in broker trading accountsFutures
      contracts
                    
                    $
                    34,492,682
                    
                    
                    $
                    -
                    
                    
                    $
                    34,492,682Forward
      currency contracts
                    
                    
                    -
                    
                    
                    
                    (1,202,959
                    )
                    
                    
                    (1,202,959
                    )U.S.
      Government securities
                    
                    
                    66,972,902
                    
                    
                    
                    -
                    
                    
                    
                    66,972,902Commercial
      paper
                    
                    
                    -
                    
                    
                    
                    140,590,377
                    
                    
                    
                    140,590,377Government-sponsored
      enterprises
                    
                    
                    -
                    
                    
                    
                    75,198,945
                    
                    
                    
                    75,198,945Corporate
      notes
                    
                    
                    -
                    
                    
                    
                    78,147,406
                    
                    
                    
                    78,147,406Cash
      and cash equivalentsMoney
      market funds
                    
                    
                    256,592,512
                    
                    
                    
                    -
                    
                    
                    
                    256,592,512





There
were no Level 3 holdings as of December 31, 2008.





Fair
value of exchange traded contracts is based upon exchange settlement prices.
Fair value of non-exchange traded contracts is based on third-party quoted
dealer values on the Interbank market. The investments in money market funds and
futures contracts are valued using quoted market prices and are classified
within Level 1. The fair values of forward currency contracts are based upon an
underlying asset, index, or reference rate or a combination of these factors and
are classified within Level 2. The Fund uses some, and when applicable, all of
these financial instruments as part of its trading activities. The recorded
values of commercial paper, Government-sponsored enterprises, U.S. Government
securities and corporate notes are based on amortized cost carrying amounts due
to the short-term maturity of the instruments and are classified within Level 1
or 2. Therefore, their carrying amounts approximate their fair
values.





Foreign Currency
Transactions:





The
Fund’s functional currency is the U.S. dollar; however, it transacts business in
currencies other than the U.S. dollar.  Assets and liabilities
denominated in currencies other than the U.S. dollar are translated into U.S.
dollars at the rates in effect at the date of the statement of financial
condition. Income and expense items denominated in currencies other than the
U.S. dollar are translated into U.S. dollars at the rates in effect during the
period. Gains and losses resulting from the translation to U.S. dollars are
reported in income currently as part of net trading gains and
losses.





Reclassification:





Certain
amounts in the 2007 and 2006 financial statements have been reclassified to
conform with the 2008 presentation.





Recently Adopted Accounting
Pronouncements:





In April
2007, the FASB issued Interpretation No. 39-1, Amendment of FASB Interpretation No.
39 (“FIN 39-1”).  FIN 39-1 defines “right of setoff” and
specifies what conditions must be met for a derivative contract to qualify for
this right of setoff.  It also addresses the applicability of a right
of setoff to derivative instruments and clarifies the circumstances in which it
is appropriate to offset amounts recognized for multiple derivative instruments
executed with the same counterparty under a master netting arrangement and fair
value amounts recognized for the right to reclaim cash collateral (a receivable)
or the obligation to return cash collateral (a payable) arising from the same
master netting arrangement as the derivative instruments.  This
interpretation is effective for fiscal years beginning after November 15,
2007.  The adoption of FIN 39-1 did not have a material impact on the
Fund’s financial statements.


F-15
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Notes
      to the Financial Statements





Recent Accounting
Pronouncements:





In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an Amendment of FASB Statement No.
133 (SFAS 161). SFAS 161 is intended to improve transparency in financial
reporting by requiring enhanced disclosures of an entity’s derivative
instruments and hedging activities and their effects on the entity’s financial
position, financial performance, and cash flows. SFAS 161 applies to all
derivative instruments within the scope of SFAS 133. It also applies to
non-derivative hedging instruments and all hedged items designated and
qualifying as hedges under SFAS 133. SFAS 161 amends the current qualitative and
quantitative disclosure requirements for derivative instruments and hedging
activities set forth in SFAS 133 and generally increases the level of
disaggregation that will be required in an entity’s financial statements. SFAS
161 requires qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of gains and
losses on derivative instruments, and disclosures about credit-risk related
contingent features in derivative agreements. SFAS 161 is effective
prospectively for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008. SFAS 161 is effective for the Fund in
its year ending December 31, 2009. As this pronouncement is only disclosure
related, it will not have an impact on the Fund’s financial position or results
of operations.





Note
      2:
            GENERAL
      PARTNER





The
General Partner of the Fund is Steben & Company, Inc., which conducts and
manages the business of the Fund.  During the years ended December 31,
2008, 2007 and 2006, the General Partner did not maintain a capital balance in
the Fund; however, the sole shareholder of the General Partner has an investment
in Class B Interests of the Fund.





During
the years ended December 31, 2008, 2007 and 2006, the General Partner received
the following compensation:





·
              Class
      A Interests incur a monthly management fee equal to 1/12 of 1.95 percent
      (1.95 percent per annum) of the net asset value of the Class A Interests
      as of the last day of each
month.


·
              Class
      A Interests incur a monthly selling agents’ fee equal to 1/12 of 2 percent
      (2.00 percent per annum) of the net asset value of the Class A Interests
      as of the last day of each month. The General Partner, in turn, pays the
      selling agents’ fees to the respective selling agents. If the selling
      agents’ fees are not paid to the selling agent, or the General Partner was
      the selling agent, such portions of the selling agents’ fees are retained
      by the General Partner.


·
              Class
      B Interests incur a monthly management fee equal to 1/12 of 1.95 percent
      (1.95 percent per annum) of the net asset value of the Class B Interests
      as of the last day of each
month.


·
              Class
      B Interests incur a monthly selling agents’ fee equal to 1/12 of 0.20
      percent (0.20 percent per annum) of the net asset value of the Class B
      Interests as of the last day of each month.  The General
      Partner, in turn, pays the selling agents’ fees to the respective selling
      agents.  If the selling agents’ fees are not paid to the selling
      agent, or the General Partner was the selling agent, such portions of the
      selling agents’ fees are retained by the General
  Partner.





Pursuant
to the terms of the Limited Partnership Agreement, the General Partner receives
1 percent of any increase or decrease in the Fund’s net assets, as
defined.  Such amount is reflected as the General Partner 1 percent
allocation in the statements of financial condition and the statements of
operations.


F-16
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Notes
      to the Financial Statements





Note
      3:
            COMMODITY TRADING
      ADVISORS





The Fund
has Advisory Agreements with various commodity trading advisors, pursuant to
which the Fund pays each commodity trading advisor a monthly or quarterly
management fee equal to 0 percent, 1 percent or 2 percent per annum of allocated
net assets (as separately defined in each respective Advisory Agreement) and a
quarterly or annual incentive fee equal to 20 percent, 25 percent or 30 percent
of net new Trading Profits (as separately defined in each respective Advisory
Agreement).





Note
      4:
            DEPOSITS WITH
      BROKERS




The Fund
deposits funds with brokers, subject to Commodity Futures Trading Commission
regulations and various exchange and broker requirements. Margin requirements
are satisfied by the deposit of U.S. Treasury bills and cash with such brokers.
The Fund earns interest income on its assets deposited with the
brokers.




Note
      5:
            OPERATING
      EXPENSES




The Fund
is responsible for all of its operating expenses such as accounting, audit,
legal, administrative, marketing and offering expenses.  Operating
expenses also include salary and administrative costs incurred by the General
Partner relating to marketing and administration of the Fund, such as salaries
and commissions of General Partner marketing personnel, and administrative
employee salaries and related costs.  Pursuant to the terms of the
Limited Partnership Agreement, operating expenses that exceed 1 percent of the
average month-end net assets of the Fund are the responsibility of the General
Partner.  For the years ended December 31, 2008, 2007 and 2006, actual
operating expenses exceeded (were below) this 1 percent (pro rated operating
expense limitation) of average month-end net assets of the Fund by ($475,275),
($335,443), and $148,806, respectively, with such excess amount included in
operating expenses waived in the statements of
operations.  Additionally, during the years ended December 31, 2008,
2007 and 2006, the General Partner voluntarily paid $1,894,004, $1,383,324 and
$1,112,845, respectively, of operating expenses of the Fund, with such amounts
also included in operating expenses waived in the statements of
operations.  As of December 31, 2008 and 2007, $1,313,749 and
$888,469, respectively, were payable to the General Partner for operating
expenses not waived.  Such amounts are presented as accounts payable
in the statements of financial condition.





Note
      6:
            SUBSCRIPTIONS,
      DISTRIBUTIONS, AND
REDEMPTIONS





Investments
in the Fund are made by subscription agreement, subject to acceptance by the
General Partner. Units are sold at the net asset value per Class A or Class B
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 December 31, 2008, 2007 and
2006, the Fund had received subscriptions of $29,937,275, $3,956,128, and
$6,574,568, respectively, which were effective subsequent to
year-end.





The Fund
is not required to make distributions, but may do so at the sole discretion of
the General Partner. A Limited Partner may request and receive redemption of
Class A or Class B units owned at the end of any month, subject to 15 days
written notice to the General Partner and restrictions in the Limited
Partnership Agreement.





The
General Partner may require a limited partner to redeem from the Fund if the
General Partner deems the redemption (a) necessary to prevent or correct the
occurrence of a nonexempt prohibited transaction (see SA-4, “Investment by
Employee Benefit Plans”) under the Employee Retirement Income Security Act of
1974, as amended, or the Internal Revenue Code of 1986, as amended, or (b)
beneficial to the Fund or (c) necessary to comply state, federal, or other
self-regulatory organization regulations.


F-17
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Notes
      to the Financial Statements





Note
      7:
            TRADING ACTIVITIES AND
      RELATED RISKS





The Fund
engages in the speculative trading of futures, swaps, options and
over-the-counter contracts, including currency forwards traded in the United
States and internationally (collectively, “derivatives”). The Fund is exposed to
both market risk, the risk arising from changes in the fair value of the
contracts, and credit risk, the risk of failure by another party to perform
according to the terms of a contract.





Purchase
and sale of futures contracts requires margin deposits with the brokers.
Additional deposits may be necessary for any loss on contract value. The
Commodity Exchange Act requires a broker to segregate all customer transactions
and assets from such broker’s proprietary activities. A customer’s cash and
other property (for example, U.S. Treasury Bills) deposited with a broker are
considered commingled with all other customer funds subject to the broker’s
segregation requirements. In the event of a broker’s insolvency, recovery may be
limited to a pro rata share of segregated funds available. It is possible that
the recovered amount could be less than (or none of) the total cash and other
property deposited. The Fund utilizes Newedge USA, LLC, as its futures broker
and Newedge Group (UK Branch) as its options broker and forwards
counterparty.





The Fund
trades forward currency contracts in unregulated markets between principals and
assumes the risk of loss from counterparty nonperformance. Accordingly, the
risks associated with forward currencies are generally greater than those
associated with exchange traded contracts because of the greater risk of
counterparty default. Additionally, the trading of forward currency contracts
typically involves delayed cash settlement.





The Fund
has a substantial portion of its assets on deposit with Interbank market makers
and other financial institutions in connection with its trading of forward
currency contracts and its cash management activities. In the event of an
Interbank market maker’s or financial institution’s insolvency, recovery of Fund
assets on deposit may be limited to account insurance or other protection
afforded such deposits.





The Fund
utilizes UBS Financial Services, Inc. as its cash management securities broker
for the investment of some margin excess amounts into short-term fixed income
instruments including high grade commercial paper (interest bearing with some
credit risk), U.S. Government securities and Government-sponsored enterprises
(interest bearing and credit risk free) with durations no longer than one year.
The Fund invests in certain commercial paper issued by an affiliate of UBS
Financial Services, Inc. Fluctuations in prevailing interest rates could cause
immaterial market-to-market losses on the Fund’s U.S. Government securities and
other fixed income instruments, although substantially all of the short-term
investments are held to maturity.





For
derivatives, risks arise from changes in the market value of the contracts.
Theoretically, the Fund is exposed to a market risk equal to the value of
futures and forward contracts purchased and unlimited liability on such
contracts sold short. As both a buyer and seller of options, the Fund pays or
receives a premium at the outset and then bears the risk of unfavorable changes
in the price of the contract underlying the option. Written options expose the
Fund to potentially unlimited liability; for purchased options the risk of loss
is limited to the premiums paid.





In
addition to market risk, in entering into commodity interest contracts there is
a credit risk that a counterparty will not be able to meet its obligations to
the Fund. The counterparty for futures and options on futures contracts traded
in the United States and on most non-U.S. futures exchanges is the clearinghouse
associated with such exchanges. In general, clearinghouses are backed by the
corporate members of the clearinghouse who are required to share any financial
burden resulting from the nonperformance by one of their members and, as such,
should significantly reduce this credit risk. In cases where the clearinghouse
is not backed by the clearing members, like some non-U.S. exchanges, it is
normally backed by a consortium of banks or other financial
institutions.


F-18
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Notes
      to the Financial Statements





In the
case of forward contracts, over-the-counter options contracts or swap contracts,
which are traded on the Interbank or other institutional market rather than on
exchanges, the counterparty is generally a single bank or other financial
institution, rather than a clearinghouse backed by a group of financial
institutions; thus, there likely will be greater counterparty credit risk. The
Fund trades only with those counterparties that it believes to be creditworthy.
All positions of the Fund are valued each day on a mark-to-market basis. There
can be no assurance that any clearing member, clearinghouse or other
counterparty will be able to meet its obligations to the Fund.





The
unrealized gain (loss) on open futures and forward currency contracts is
comprised of the following:





Futures
      Contracts
                      (exchange
      traded)
                    
                    
                    Forward
      Currency Contracts
                      (non-exchange
      traded)December
      31,
                      2008
                    
                    
                    December
      31,
                      2007
                    
                    
                    December
      31,
                      2008
                    
                    
                    December
      31,
                      2007Gross
      unrealized gains
                    
                    $
                    45,886,155
                    
                    
                    $
                    41,301,339
                    
                    
                    $
                    2,924,001
                    
                    
                    $
                    1,944,903Gross
      unrealized losses
                    
                    
                    (11,393,473
                    )
                    
                    
                    (10,040,080
                    )
                    
                    
                    (4,126,960
                    )
                    
                    
                    (2,918,843
                    )Net
      unrealized gain (loss)
                    
                    $
                    34,492,682
                    
                    
                    $
                    31,261,259
                    
                    
                    $
                    (1,202,959
                    )
                    
                    $
                    (973,940
                    )





The
General Partner has established procedures to actively monitor market risk and
minimize credit risk, although there can be no assurance that it will, in fact,
succeed in doing so. The Limited Partners bear the risk of loss only to the
extent of the fair value of their respective investments and, in certain
specific circumstances, distributions and redemptions received.





Note
      8:
            INDEMNIFICATIONS





In the
normal course of business, the Fund may enter into contracts and agreements that
contain a variety of representations and warranties and which provide general
indemnifications.  The Fund’s maximum exposure under these
arrangements cannot be estimated.  However, the Fund believes that it
is unlikely it will have to make material payments under these arrangements and
has not recorded any continent liability in the financial statements for such
indemnifications.


F-19
 Table of Contents


Futures
Portfolio Fund, Limited Partnership


Notes
      to the Financial Statements





Note
      9:
            FINANCIAL
      HIGHLIGHTS





The
following information presents per unit operating performance data and other
supplemental financial data for the years ended December 31, 2008, 2007 and
2006.  This information has been derived from information presented in
the financial statements.





2008
                      
                      
                      2007
                      
                      
                      2006Class
      A
                      
                      
                      Class
      B
                      
                      
                      Class
      A
                      
                      
                      Class
      B
                      
                      
                      Class
      A
                      
                      
                      Class
      BInterests
                      
                      
                      Interests
                      
                      
                      Interests
                      
                      
                      Interests
                      
                      
                      Interests
                      
                      
                      InterestsPer
      Unit Performance
                        (for a unit outstanding throughout the entire
      year)Net
      asset value per unit at beginning of year
                      
                      $
                      3,867.65
                      
                      
                      $
                      4,891.11
                      
                      
                      $
                      3,725.59
                      
                      
                      $
                      4,627.81
                      
                      
                      $
                      3,489.13
                      
                      
                      $
                      4,257.03Income
      from operations:Gain
      from trading (1)
                      
                      
                      1,676.14
                      
                      
                      
                      2,137.36
                      
                      
                      
                      314.98
                      
                      
                      
                      395.22
                      
                      
                      
                      340.44
                      
                      
                      
                      418.38Net
      investment loss (1)
                      
                      
                      (524.83
                      )
                      
                      
                      (568.42
                      )
                      
                      
                      (172.92
                      )
                      
                      
                      (131.92
                      )
                      
                      
                      (103.98
                      )
                      
                      
                      (47.60
                      )Total
      income from operations
                      
                      
                      1,151.31
                      
                      
                      
                      1,568.94
                      
                      
                      
                      142.06
                      
                      
                      
                      263.30
                      
                      
                      
                      236.46
                      
                      
                      
                      370.78Net
      asset value per unit at end of year
                      
                      $
                      5,018.96
                      
                      
                      $
                      6,460.05
                      
                      
                      $
                      3,867.65
                      
                      
                      $
                      4,891.11
                      
                      
                      $
                      3,725.59
                      
                      
                      $
                      4,627.81Total
      return
                      
                      
                      29.77
                      %
                      
                      
                      32.08
                      %
                      
                      
                      3.81
                      %
                      
                      
                      5.69
                      %
                      
                      
                      6.78
                      %
                      
                      
                      8.71
                      %Supplemental
      dataRatios
      to average net asset value:Expenses
      prior to advisor incentive fees (2),
      (3)
                      
                      
                      6.71
                      %
                      
                      
                      4.88
                      %
                      
                      
                      6.65
                      %
                      
                      
                      4.83
                      %
                      
                      
                      6.96
                      %
                      
                      
                      5.16
                      %Advisor
      incentive fees
                      
                      
                      8.10
                      %
                      
                      
                      8.10
                      %
                      
                      
                      3.24
                      %
                      
                      
                      3.22
                      %
                      
                      
                      1.14
                      %
                      
                      
                      1.12
                      %Total
      expenses
                      
                      
                      14.81
                      %
                      
                      
                      12.98
                      %
                      
                      
                      9.89
                      %
                      
                      
                      8.05
                      %
                      
                      
                      8.10
                      %
                      
                      
                      6.28
                      %Net
      investment loss (2),
      (3)
                      
                      
                      (11.95
                      %)
                      
                      
                      (10.13
                      %)
                      
                      
                      (4.68
                      %)
                      
                      
                      (2.85
                      %)
                      
                      
                      (2.96
                      %)
                      
                      
                      (1.10
                      %)





Total
returns are calculated based on the change in value of a Class A or Class B unit
during the year.  An individual partner’s total returns and ratios may
vary from the above total returns and ratios based on the timing of
contributions and redemptions.





(1) The
net investment loss per unit is calculated by dividing the net investment loss
by the average number of Class A or Class B units outstanding during the year.
Gain 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 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 are computed net of voluntary and
involuntary waivers of operating expenses.  For 2008, 2007 and 2006,
the ratios are net of approximately 0.35%, 0.33% and 0.25% respectively, of
average net asset value relating to the voluntary waiver of operating expenses.
Both the nature and the amounts of the waivers are more fully explained in Note
5.





(3) The
net investment loss includes interest income and excludes gains from trading
activities as shown on the statement of operations.  The total amount
is then reduced by all expenses, excluding brokerage commissions. The resulting
amount is divided by the average net asset value for the year.