UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-K





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


For the fiscal year ended December 31, 2010 or





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


For the transition period from __________________to__________________





Commission file number: 0-19511





MORGAN STANLEY SMITH BARNEY SPECTRUM SELECT L.P.(Exact name of registrant as specified in its charter)Delaware

13-3619290State or other jurisdiction of

incorporation or organization

(I.R.S. Employer

Identification No.)Ceres Managed Futures LLC522 Fifth Avenue, 14th FloorNew York, NY

10036(Address of principal executive offices)

(Zip Code)





Registrant’s telephone number, including area code

(212) 296-1999Securities registered pursuant to Section 12(b) of the Act:Title of each class

Name of each exchangeon which registeredNone

None


Securities registered pursuant to Section 12(g) of the Act:


Units of Limited Partnership Interest


(Title of Class)





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





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





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





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Registration S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)    Yes o  No o





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.404 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. x
 
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





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





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





State the aggregate market value of the Units of Limited Partnership Interest held by non-affiliates of the registrant.  The aggregate market value shall be computed by reference to the price at which Units were sold as of the last business day of the registrant’s most recently completed second fiscal quarter: $383,952,797 at June 30, 2010.





DOCUMENTS INCORPORATED BY REFERENCE


(See Page 1)










MORGAN STANLEY SMITH BARNEY SPECTRUM SELECT L.P.


INDEX TO ANNUAL REPORT ON FORM 10-K


December 31, 2010








DOCUMENTS INCORPORATED BY REFERENCE
.....................................................................
1





Part I.Item 1.
Business
2-6Item 1A.
Risk Factors
6-7Item 1B.
Unresolved Staff Comments
7Item 2.
Properties
7Item 3.
Legal Proceedings
7Item 4.
(Removed and Reserved)
7Part II.Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters  and Issuer Purchases of Equity Securities
8Item 6.
Selected Financial Data
9Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
10-30Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
31-42Item 8.
Financial Statements and Supplementary Data
42Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
42Item 9A.
Controls and Procedures
43-45Item 9B.
Other Information
45Part III.Item 10.
Directors, Executive Officers and Corporate Governance
46-54Item 11.
Executive Compensation
55Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
55Item 13.
Certain Relationships and Related Transactions, and Director Independence
55Item 14.
Principal Accountant Fees and Services
56Part IV.Item 15.
Exhibits, Financial Statement Schedules
57











DOCUMENTS INCORPORATED BY REFERENCE








Portions of the following documents are incorporated by reference as follows:











Documents Incorporated                                                                                                                                       Part of Form 10-K





Partnership’s Prospectus dated May 1, 2008                                                                                                                      I





Partnership’s Supplement to the Prospectus dated September 17, 2008                                                                        I





Annual Report to Morgan Stanley Smith Barney Spectrum Series


Limited Partners for the year ended December 31, 2010                                                                                          II, III, and IV































































































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PART I





Item 1.  BUSINESS





(a)  General Development of Business. Morgan Stanley Smith Barney Spectrum Select L.P. (the “Partnership”) is a Delaware limited partnership organized in 1991 to engage primarily in the speculative trading of futures contracts, options on futures and forward contracts, and forward contracts on physical commodities and other commodity interests, including, but not limited to, foreign currencies, financial instruments, metals, energy, and agricultural products (collectively, “Futures Interest”).  The Partnership commenced trading operations on August 1, 1991.  The Partnership is one of the Morgan Stanley Smith Barney Spectrum series of funds, comprised of the Partnership, Morgan Stanley Smith Barney Spectrum Currency L.P., Morgan Stanley Smith Barney Spectrum Global Balanced L.P., Morgan Stanley Smith Barney Spectrum Strategic L.P., and Morgan Stanley Smith Barney Spectrum Technical L.P. (collectively, the “Spectrum Series”).





The Partnership’s general partner is Ceres Managed Futures LLC (“Ceres” or the “General Partner”).  The non-clearing commodity broker is Morgan Stanley Smith Barney LLC (“MSSB”) as of May 1, 2010.  The clearing commodity brokers are Morgan Stanley & Co. Incorporated (“MS&Co.”) and Morgan Stanley & Co. International plc (“MSIP”).  MS&Co. also acts as the counterparty on all trading of foreign currency forward contracts.  Morgan Stanley Capital Group Inc. (“MSCG”) acts as the counterparty on all trading of options on foreign currency forward contracts.  MSIP serves as the commodity broker for trades on the London Metal Exchange.  Ceres is a wholly-owned subsidiary of





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Morgan Stanley Smith Barney Holdings LLC (“MSSBH”).  MSSBH is majority-owned indirectly by Morgan Stanley and minority-owned indirectly by Citigroup Inc. (“Citigroup”).  MSSB is the principal subsidiary of MSSBH.  MS&Co., MSIP, and MSCG are wholly-owned subsidiaries of Morgan Stanley.  The trading advisors to the Partnership are EMC Capital Management, Inc., Northfield Trading L.P., Rabar Market Research, Inc., Sunrise Capital Management, Inc. (“Sunrise Capital”), Graham Capital Management, L.P. (“Graham”), and Altis Partners (Jersey) Limited (each individually, a “Trading Advisor”, or collectively, the “Trading Advisors”).





Prior to December 1, 2010 the Partnership’s general partner was Demeter Management LLC (“Demeter”).  Demeter was a wholly-owned subsidiary of MSSBH.





In 2009, Morgan Stanley and Citigroup combined certain assets of the Global Wealth Management Group of MS&Co., including Demeter, and the Smith Barney division of Citigroup Global Markets Inc. into a new joint venture, MSSBH.  Since their contribution to the joint venture, Demeter and Ceres, the commodity pool operator for various legacy Citigroup sponsored commodity pools, worked closely together to align the operations and management of the commodity pools they oversee.





As a result, MSSBH, together with the unanimous support of the respective Boards of Directors of Demeter and Ceres, determined that a combination of the assets and operations of Demeter and Ceres into a single commodity pool operator, Ceres, is in the best interest of the limited partners and believes that this combination will achieve the intended benefits of the joint venture.  The effective date of the combination was December 1, 2010.





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On July 28, 2010, the Partnership received a settlement award payment in the amount of $337,120 from the Natural Gas Commodity Litigation Settlement Administrator.  This settlement represents the Partnership’s portion of the 2006 Net Settlement Fund and the 2007 Net Settlement Fund.  The proceeds from settlement was accounted for in the period it was received for the benefit of the partners in the Partnership.





After the Spectrum Series’ November 30, 2008 monthly close, Demeter (Ceres, effective December 1, 2010), no longer offers for purchase or exchange in units of limited partnership interest (“Unit(s)”) in the Spectrum Series.





The Partnership began the year at a net asset per Unit of $37.96 and returned 0.2% to $38.03 per Unit on December 31, 2010.  For a more detailed description of the Partnership’s business see        subparagraph (c).





(b)  Financial Information about Segments.  For financial information reporting purposes, the Partnership is deemed to engage in one industry segment, the speculative trading of futures, forwards and options on such contracts.  The relevant financial information is presented in Items 6 and 8.





(c)  Narrative Description of Business.  The Partnership is in the business of speculative trading of futures, forwards and options on such contracts pursuant to trading instructions provided by the Trading Advisors. For a detailed description of the different facets of the Partnership's business, see those portions of the Partnership's prospectus, dated May 1, 2008 (the “Prospectus”), and the





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Partnership’s supplement to the Prospectus, dated September 17, 2008, (the “Supplement”), incorporated by reference in this Form 10-K, set forth below.





Facets of Business1. Summary
1. “Summary” (Pages 1-10 of the Prospectus and Page S-1 of the Supplement).2. Futures, Options and Forwards Markets
2. “The Futures, Options and Forwards Markets” (Pages 198-202 of the Prospectus).3. Partnership’s Trading Arrangements and Policies
3. “Use of Proceeds” (Pages 31-33 of the Prospectus).  “The Trading Advisors” (Pages 83-172 of the Prospectus and Pages S-2 – S-4 ofthe Supplement).4. Management of the Partnership
4. “The Trading Advisors – Management Agreements” – (Page 83 of the Prospectus).  “The General Partner” (Pages 79-82 of the Prospectus and Page S-2 of the Supplement). “The Commodity Brokers” (Pages 174-175 of the Prospectus) and “The Limited Partnership Agreements” (Pages 180-183 of the Prospectus).5. Taxation of the Partnership’s Limited Partners
5. “Material Federal Income Tax Considerations” and “State and Local Income Tax Aspects” (Pages 190-196 of the Prospectus and pages S-4 – S-5 of the Supplement).





(d)  Financial Information about Geographic Areas.  The Partnership has not engaged in any operations in non-U.S. countries; however, the Partnership (through the commodity brokers) enters into forward contract transactions where non-U.S. banks are the contracting party and trades futures, forwards, and options on non-U.S. exchanges.











(e)  Available Information.  The Partnership files an annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to these reports with the Securities and Exchange Commission (“SEC”).  You may read and copy any document filed by the Partnership at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.  Please call the SEC at





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1-800-SEC-0330 for information on the Public Reference Room.  The Partnership does not maintain an internet website, however, the Partnership’s SEC filings are available to the public from the EDGAR database on the SEC’s website at “http://www.sec.gov”.  The Partnership’s CIK number is 0000873799.





Item 1A.  RISK FACTORS


The following risk factors 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 Section27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934).  All quantitative disclosures in “Quantifying the Partnership’s Trading Value at Risk” in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” are deemed to be forward-looking statements for purposes of the safe harbor, except for statements of historical fact.  The qualitative disclosures, except for (A) those disclosures that are statements of historical fact and


(B) the descriptions of how the Partnership manages its primary market risk exposure, in the “Qualitative Disclosure Regarding Primary Trading Risk Exposures” in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” are deemed to be forward-looking statements for purposes of the safe harbor.





Current limited partners of the Partnership are advised that effective December 1, 2008, Demeter (Ceres, effective December 1, 2010) no longer accepts any subscriptions for investments in the Partnership or any exchanges in from other Spectrum Series partnerships for Units of the Partnership.  Current limited partners of the Partnership will continue to be able to redeem Units of the Partnership.





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The Partnership is in the business of speculative trading of futures, forwards and options on such contracts.  For a detailed description of the risks that may affect the business of the Partnership or the limited partnership interests offered by the Partnership, see the discussion of the risk factors as set forth in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 7A. “Quantitative and Qualitative Disclosures About Market Risk”





Item 1B.  UNRESOLVED STAFF COMMENTS


Not applicable.





Item 2.  PROPERTIES


The Partnership’s executive and administrative offices are located within the offices of MS&Co.  The MS&Co. offices utilized by the Partnership are located at 522 Fifth Avenue, 14th Floor, New York, NY 10036.





Item 3.  LEGAL PROCEEDINGS


None.





Item 4.  (REMOVED AND RESERVED)




















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PART II





Item 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES








(a)  Market Information.  There is no established public trading market for Units of the Partnership.





(b)  Holders.  The number of holders of Units at December 31, 2010, was approximately 25,300.





(c)  Distributions. No distributions have been made by the Partnership since it commenced trading operations on August 1, 1991.  Ceres (Demeter, prior to December 1, 2010) has sole discretion to decide what distributions, if any, shall be made to investors in the Partnership.  Ceres currently does not intend to make any distributions of the Partnership’s profits.





(d)  Underwriter.  The managing underwriter for the Partnership was MS&Co.





(e)  Use of Proceeds.  All Units remaining unsold after the November 30, 2008 closing were deregistered with the SEC effective January 23, 2009.
































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Item 6.  SELECTED FINANCIAL DATA (in dollars)























For the Years Ended December 31,





2010
2009
2008
2007
2006$
$
$
$
$Total Trading Resultsincluding interest income
34,009,565
2,428,936
218,426,776
84,240,950
79,402,767Net Income (Loss)
(2,712,947)
(40,555,841)
153,644,867
37,920,143
31,117,372Net Income (Loss) PerUnit (Limited & GeneralPartners)
0.07
(2.84)
9.56
2.18
1.61Total Assets
421,279,811
471,841,125
636,444,887
533,911,805
555,435,805Total Limited Partners’Capital
404,921,242
459,902,047
599,790,920
517,496,723
537,667,844Net Asset Value Per Unit
38.03
37.96
40.80
31.24
29.06













































































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Item 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS





Liquidity.  The Partnership deposits its assets with MSSB as non-clearing commodity broker and MS&Co. and MSIP as clearing commodity brokers


in separate futures, forward and options trading accounts established for each Trading Advisor.  Such assets are used as margin to engage in trading


and may be used as margin solely for the Partnership’s trading.  The assets are held in either non-interest bearing bank accounts or in securities


and instruments permitted by the Commodity Futures Trading Commission for investment of customer segregated or secured funds.  Since the


Partnership’s sole purpose is to trade in futures, forwards and options, it is expected that the Partnership will continue to own such liquid assets for


margin purposes.





The Partnership’s investment in futures, forwards and options may, from time to time, be illiquid.  Most U.S. futures exchanges limit fluctuations in


prices during a single day by regulations referred to as “daily price fluctuations limits” or “daily limits”.  Trades may not be executed at prices beyond


the daily limit.  If the price for a particular futures or options contract has increased or decreased by an amount equal to the daily limit, positions in that


futures or options contract can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit.  Futures prices have


occasionally moved the daily limit for several consecutive days with little or no trading.  These market conditions could prevent the Partnership from


promptly liquidating its futures or options contracts and result in restrictions on redemptions.











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There is no limitation on daily price moves in trading forward contracts on foreign currencies.  The markets for some world currencies have low


trading volume and are illiquid, which may prevent the Partnership from trading in potentially profitable markets or prevent the Partnership from


promptly liquidating unfavorable positions in such markets, subjecting it to substantial losses.  Either of these market conditions could result in


restrictions on redemptions.  For the periods covered by this report, illiquidity has not materially affected the Partnership’s assets.





There are no known material trends, demands, commitments, events, or uncertainties at the present time that are reasonably likely to result in


the Partnership’s liquidity increasing or decreasing in any material way.





Capital Resources.  The Partnership does not have, nor does it expect to have, any capital assets.  Redemptions of Units in the future will affect the


amount of funds available for investments in futures, forwards and options in subsequent periods.  It is not possible to estimate the amount, and therefore


the impact, of future outflows of Units.  Effective December 1, 2008, Demeter (Ceres, effective December 1, 2010) no longer accepts any subscriptions for


Units of the Partnership or any exchanges in from other Spectrum Series partnerships for Units of the Partnership.





There are no known material trends, favorable or unfavorable, that would affect, nor any expected material changes to, the Partnership’s capital


resource arrangements at the present time.








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Results of Operations


General.  The Partnership’s results depend on the Trading Advisors and the ability of each Trading Advisor’s trading program to take advantage of


price movements in the futures, forwards and options markets.  The following presents a summary of the Partnership’s operations for each of the three


years in the period ended December 31, 2010, and a general discussion of its trading activities during each period.  It is important to note, however, that


the Trading Advisors trade in various markets at different times and that prior activity in a particular market does not mean that such market will be


actively traded by the Trading Advisors or will be profitable in the future.  Consequently, the results of operations of the Partnership are difficult to


discuss other than in the context of the Trading Advisors’ trading activities on behalf of the Partnership during the period in question.  Past performance


is no guarantee of future results.





The Partnership’s results of operations set forth in the financial statements are prepared in accordance with accounting principles generally accepted in


the United States of America (“U.S. GAAP”), which require the use of certain accounting policies that affect the amounts reported in these


financial statements, including the following:  the contracts the Partnership trades are accounted for on a trade-date basis and marked to market on a


daily basis. The difference between their original contract value and market value is recorded on the Statements of Operations as “Net change in


unrealized trading profit (loss)” for open (unrealized) contracts, and recorded as “Realized trading profit (loss)” when open positions are closed out.  The


sum of these amounts constitutes the Partnership’s trading results.  The market value of a futures contract is the settlement price on the exchange on


which that futures contract is traded on a particular day.  The value of a foreign currency forward contract is based on the spot rate as of approximately


3:00 P.M. (E.T.), the close of





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the business day.  Interest income, as well as management fees, incentive fees, and brokerage fees of the Partnership are recorded on an accrual basis.





Ceres (Demeter, prior to December 1, 2010) believes that, based on the nature of the operations of the Partnership, no assumptions relating to the


application of critical accounting policies other than those presently used could reasonably affect reported amounts.





The Partnership recorded total trading results including interest income totaling $34,009,565 and expenses totaling $36,722,512, resulting in a net loss


of $2,712,947 for the year ended December 31, 2010.  The Partnership’s net asset value per Unit increased from $37.96 at December 31, 2009, to $38.03


at December 31, 2010.  Total redemptions for the year were $52,681,240, and the Partnership’s ending capital was $409,250,860 at December 31, 2010,


a decrease of $55,394,187 from ending capital at December 31, 2009, of $464,645,047.





The most significant trading gains were experienced within the global interest rate sector from long positions in European, U.S., and Japanese


fixed-income futures. In this sector, prices increased during the first quarter on concerns that lending restrictions in China, possible reductions in


U.S. stimulus measures, and Greece’s fiscal struggles might stifle the global economic rebound. Prices were then pressured higher during the second


quarter amid an unexpected drop in U.S. consumer confidence, increased regulatory scrutiny of the financial industry, and the growing European debt


crisis. During the third quarter, prices continued to climb higher due to concern that European governments may struggle to repay their debt and





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Chinese economic growth may be slowing. Within the agricultural complex, gains were experienced primarily during September, October, and December


from long futures positions in the soybean complex and corn as prices increased after the U.S. Department of Agriculture said domestic and world


supplies of these crops would be smaller than forecast and adverse weather threatened crops in South America. Further gains were recorded in October


from long positions in sugar futures as prices rose amid worries that dry weather and port delays would curb shipments from Brazil, the world’s


biggest producer of sugar. Within the currency markets, gains were achieved primarily during September, October, and December. During September,


long positions in the Australian dollar versus the U.S. dollar and Canadian dollar resulted in gains as the value of the Australian dollar rose against


these currencies amid speculation that the Reserve Bank of Australia may raise interest rates in October. Gains were also achieved during October from


long positions in the Japanese yen, euro, and New Zealand dollar versus the U.S. dollar as the value of the U.S. dollar fell against these currencies after


a report revealed U.S. private-sector employment unexpectedly dropped in September, fueling worries that the U.S. Federal Reserve would


undertake additional quantitative easing. During December, short positions in the British pound versus the Australian dollar, Japanese yen, and Swiss


franc resulted in gains as the value of the British pound declined against these currencies following lower-than-expected mortgage approval figures in


the United Kingdom. In the metals markets, gains were recorded primarily during March from long futures positions in nickel, copper, and aluminum as


prices rose after China indicated it might boost state reserves of base metals. Throughout September, October, November, and December, long


futures positions in silver and gold resulted in additional gains for the metals sector as prices rose amid increased demand for the precious metals due


to a drop in the value of the U.S. dollar, with silver futures rallying to a 30-year high and gold prices reaching a





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new all-time high. A portion of the Partnership’s gains for the year was offset by losses recorded in the energy markets, primarily during January, from long futures positions in crude oil and its related products as prices declined amid speculation that China’s economic activity and energy demand may ease. Throughout May, long futures positions in crude oil and its related products resulted in additional losses as prices declined on continued worries that Europe’s debt troubles might slow down the global economic recovery and thereby weaken energy demand. Within the global stock index sector, losses were incurred primarily during January from long positions in European, U.S., and Pacific Rim equity index futures as prices moved lower amid disappointing U.S. corporate earnings reports and mounting concerns over sovereign debt defaults from a number of European countries. During May and June, further losses were incurred from long positions in European, U.S., and Japanese equity-index futures as prices moved lower on growing concerns that Greece’s sovereign debt crisis might spread throughout Europe. Additional losses were recorded during August from long positions in European and U.S. equity index futures as prices fell after the U.S. Federal Reserve said the pace of economic recovery is likely to be “more modest” than forecast and a report revealed U.S. productivity unexpectedly fell in the second quarter.





The Partnership recorded total trading results including interest income totaling $2,428,936 and expenses totaling $42,984,777, resulting in a net loss of $40,555,841 for the year ended December 31, 2009.  The Partnership’s net asset value per Unit decreased from $40.80 at December 31, 2008, to $37.96 at December 31, 2009.  Total redemptions for the year were $100,683,490, and the Partnership’s ending capital was $464,645,047 at December 31, 2009, a decrease of $141,239,331 from ending capital at December 31, 2008, of $605,884,378.





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The most significant trading losses of approximately 4.1% were incurred within the global interest rate sector, primarily during January, March, April, and June, from long positions in U.S., European, and Japanese fixed-income futures as prices dropped following news that debt sales might increase as governments around the world boosted spending in an effort to ease the deepening economic slump.  Newly established short positions in European, U.S., and Japanese fixed-income futures resulted in further losses, primarily during July, as prices moved higher on investor sentiment that the slow pace of the global economic recovery and signs of moderate inflation might lead central banks in these regions to maintain low interest rates in the near term. Additional losses were recorded during August from newly established long positions in European fixed-income futures as prices reversed lower at the beginning of the month amid a rise in the European equity markets, thus reducing demand for the relative “safety” of government bonds. During December, further losses were incurred from long positions in U.S. and European fixed-income futures as prices fell sharply amid concern that an unprecedented supply of government bonds might outweigh demand as governments around the world were issuing record amounts of debt to finance economic stimulus measures. Losses of approximately 1.4% were experienced in the energy sector primarily during July from short futures positions in crude oil and its related products as prices moved higher during the latter half of the month amid better-than-expected quarterly earnings reports and positive economic data. During August, newly established long futures positions in crude oil and its related products recorded additional losses as prices reversed lower due to above-average U.S. stockpiles.  Further losses were incurred during October from long futures positions in crude oil and its related products as prices reversed lower after government reports showed U.S. consumer spending dropped for the first time in seven months.  Additional losses of approximately 1.3% were recorded in the currency sector, primarily





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during March, from short positions in the Swiss franc and euro versus the U.S. dollar as the value of the U.S. dollar decreased relative to most of its rivals following the U.S. Federal Reserve’s surprise plans to begin a more aggressive phase of quantitative easing and economic stimulus spending.  Additional losses were recorded during June and July from long positions in the Swiss franc and euro versus the U.S. dollar as the value of the U.S. dollar reversed higher against these currencies following better-than-expected U.S. payrolls and durable goods data. Elsewhere, long positions in the Mexican peso versus the U.S. dollar incurred losses, primarily during July and August, as the value of the Mexican peso declined on concerns that Mexico might take longer to recover from a recession than investors previously estimated. Long positions in the British pound versus the U.S. dollar also experienced losses as the British pound fell during August and September on news that U.K. consumer confidence rose to the highest level in more than a year and Bank of England officials indicated inflation might remain low.  Lastly, losses were incurred from long positions in the Japanese yen versus the U.S. dollar primarily in December as the value of the U.S. dollar moved higher on speculation that the U.S. Federal Reserve might raise interest rates earlier than expected in the wake of positive economic data and consistent strength in the equity markets. Smaller losses of approximately 0.1% were recorded in the agricultural complex primarily during June as coffee futures prices reversed lower and fell throughout a majority of the third quarter amid expectations of higher global output due to favorable weather conditions in the world’s major growing regions, thus resulting in losses from long positions. Elsewhere, losses were recorded from long and short futures positions in the soybean complex as prices moved without consistent direction during July and August amid conflicting reports regarding supply and demand.  A portion of the Partnership’s losses was offset by gains of approximately 4.0% achieved within the metals complex, primarily during July and August, from long





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futures positions in copper as prices rose following news of an economic expansion in China during the second quarter of 2009, thereby spurring


speculation that China’s demand for base metals might rise.  In December, additional gains were recorded as prices of copper futures rose to a 15-month


high after workers at the world’s second-biggest copper mine in Chile voted to go on strike, thereby threatening the global supply.  Meanwhile, gains


were achieved from long positions in gold futures primarily during October and November as prices rose due to concerns of a rise in inflation, as well as


amid a drop in the value of the


U.S. dollar, which spurred demand for the precious metal as an alternative investment.  Lastly, gains of approximately 3.9% were recorded within the


global stock index markets throughout July, August, and September from long positions in European, U.S., and Hong Kong equity index futures as


prices increased due to positive economic data and increased merger and acquisition activity in the technology sector. Further gains were achieved


from long positions in European and U.S. global stock index futures as prices continued to increase throughout November and December after


positive economic data and strong corporate earnings reports reinforced optimism that the global economic recovery might be gaining momentum.





The Partnership recorded total trading results including interest income totaling $218,426,776 and expenses totaling $64,781,909, resulting in net income


of $153,644,867 for the year ended December 31, 2008.  The Partnership’s net asset value per Unit increased from $31.24 at December 31, 2007, to $40.80


at December 31, 2008.  Total redemptions and subscriptions for the year were $149,518,441 and $78,579,397, respectively, and the Partnership’s


ending capital was $605,884,378 at December 31, 2008, an increase of $82,705,823 from ending capital at December 31, 2007, of $523,178,555.





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The most significant trading gains of approximately 10.3% were experienced in the energy sector throughout a majority of the first half of the year from long futures positions in crude oil and its related products as prices moved consistently higher due to speculation that OPEC might cut production, ongoing geopolitical concerns in the Middle East, growing Asian fuel consumption, and strong demand for physical commodities as an inflation hedge.  Additional gains were recorded during the fourth quarter from newly established short futures positions in crude oil and its related products as prices sharply decreased on concerns that a substantial global economic slowdown would erode energy demand.  Additional gains of approximately 9.5% were recorded in the global stock index sector during January, February, March, and June from short positions in U.S., European, and Pacific Rim equity index futures as prices decreased during the first half of the year on concerns that a persistent U.S. housing slump, mounting losses linked to U.S. sub-prime mortgage investments, rising commodity prices, and a weakening job market might restrain consumer spending, erode corporate earnings, and curb global economic growth.  Additional gains were recorded during September and October as prices dropped sharply amid unprecedented U.S. financial market turmoil and growing concerns that efforts by central banks and governments around the world to support the financial system might not prevent a global recession.  Within the global interest rate sector, gains of approximately 7.7% were experienced primarily during January, May, June, October, and November from long positions in U.S. and European fixed-income futures as prices moved higher in a worldwide “flight-to-quality” following the aforementioned drop in the global equity markets, as well as worries regarding the fundamental health of the global economy and financial system.  Gains of approximately 5.5% were recorded in the agricultural markets primarily during January and February, from long





- 19 -







positions in wheat futures as prices increased to a record high amid diminishing stockpiles and consistently rising global demand. Further gains were achieved during January, February, and June from long positions in corn futures as prices moved higher on supply concerns and rising demand for alternative biofuels.  Meanwhile, long futures positions in the soybean complex resulted in gains primarily during June as prices increased after a government report showed a rise in demand for U.S. supplies.  During October, gains resulted from short futures positions in wheat and cotton as prices declined amid rising inventories and growing concerns that slowing global economic growth might reduce demand for these commodities.  Within the metals sector, gains of approximately 3.3% were achieved primarily during January and February from long positions in platinum and silver futures as prices moved higher amid continued uncertainty in the direction of the U.S. dollar and further “safe haven” buying due to weakness in global equity markets.  Meanwhile, gains were experienced, primarily during September, October, November, and December, from short futures positions in nickel, copper, zinc, aluminum, and tin as prices declined amid worries that a global economic recession might erode demand for base metals.  Finally, smaller gains of approximately 3.2% were recorded in the currency markets during February, March, and May from long positions in the Mexican peso and euro versus the U.S. dollar as the value of the U.S. dollar moved lower against these currencies during the first six months of the year amid speculation that signs of a slowing U.S. economy might spur the U.S. Federal Reserve to lower interest rates at a faster pace than other central banks around the world.  Short positions in the Korean won versus the U.S. dollar resulted in additional gains, primarily during March, as the value of the Korean won decreased relative to the U.S. dollar amid news of a widening Current-Account deficit out of Korea.  Further gains were experienced





- 20 -







during October and November from newly established short positions in the euro, British pound, and Mexican peso versus the U.S. dollar as the value of the U.S. dollar moved higher against most of its rivals in tandem with rising U.S. dollar-denominated Treasury bonds amid the aforementioned “flight-to-quality”.  Meanwhile, gains were experienced throughout the fourth quarter from long positions in the Japanese yen versus the U.S. dollar as the value of the Japanese yen increased after mounting fears of a global economic recession prompted investors to sell higher-yielding assets funded by loans in Japan.





For an analysis of unrealized gains and (losses) by contract type and a further description of 2010 trading results, refer to the Partnership’s Annual Report to Limited Partners for the year ended December 31, 2010, which is incorporated by reference to Exhibit 13.01 of this Form 10-K.





The Partnership’s gains and losses are allocated among its partners for income tax purposes.





Off-Balance Sheet Arrangements and Contractual Obligations.


The Partnership does not have any off-balance sheet arrangements, nor does it have contractual obligations or commercial commitments to make


future payments that would affect its liquidity or capital resources.





Market Risk.


The Partnership is a party to financial instruments with elements of off-balance sheet market and credit risk.  The Partnership trades futures contracts,


options on futures and forward contracts, and forward contracts on





- 21 -







physical commodities and other commodity interests, including, but not limited to, foreign currencies, financial instruments, metals, energy, and


agricultural products. In entering into these contracts, the Partnership is subject to the 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


positions held by the Partnership at the same time, and the Trading Advisors were unable to offset positions of the Partnership, the Partnership could lose


all of its assets and the limited partners would realize a loss equal to 100% of their capital account.





In addition to the Trading Advisors’ internal controls, the Trading Advisors must comply with the Partnership’s trading policies that include standards


for liquidity and leverage that must be maintained.  The Trading Advisors and Ceres (Demeter, prior to December 1, 2010) monitor the Partnership's


trading activities to ensure compliance with the trading policies and Ceres (Demeter, prior to December 1, 2010) can require the Trading Advisors to


modify positions of the Partnership if Ceres (Demeter, prior to December 1, 2010) believes they violate the Partnership's trading policies.





Credit Risk.


In addition to market risk, in entering into futures, forward and options contracts, there is a credit risk to the Partnership that the counterparty on a contract


will not be able to meet its obligations to the Partnership.  The ultimate counterparty or guarantor of the Partnership for futures, forward and options


contracts traded in the United States and most foreign exchanges on which the Partnership trades is the clearinghouse associated with such exchange.


In general, a clearinghouse is backed by the membership of the exchange and will act





- 22 -







in the event of non-performance by one of its members or one of its member’s customers, which should significantly reduce this credit risk.  There is


no assurance that a clearinghouse, exchange, or other exchange member will meet its obligations to the Partnership, and Ceres (Demeter, prior to December


1, 2010) and the commodity brokers will not indemnify the Partnership against a default by such parties. Further, the law is unclear as to whether a


commodity broker has any obligation to protect its customers from loss in the event of an exchange or clearinghouse defaulting on trades effected for


the broker’s customers.  In cases where the Partnership trades off-exchange forward contracts with a counterparty, the sole recourse of the Partnership will


be the forward contract’s counterparty.





Ceres (Demeter, prior to December 1, 2010) deals with these credit risks of the Partnership in several ways.  First, Ceres (Demeter, prior to December 1,


2010) monitors the Partnership’s credit exposure to each exchange on a daily basis.  The commodity brokers inform the Partnership, as with all of


their customers, of the Partnership’s net margin requirements for all of its existing open positions, and Ceres (Demeter, prior to December 1, 2010) has


installed a system which permits it to monitor the Partnership’s potential net credit exposure, exchange by exchange, by adding the unrealized trading gains


on each exchange, if any, to the Partnership’s margin liability thereon.





Second, the Partnership’s trading policies limit the amount of its net assets that can be committed at any given time to futures contracts and require a


minimum amount of diversification in the Partnership’s trading, usually over several different products and exchanges.  Historically, the Partnership’s


exposure to any one








- 23 -







exchange has typically amounted to only a small percentage of its total net assets and on those relatively few occasions where the Partnership’s


credit exposure climbs above such level, Ceres (Demeter, prior to December 1, 2010) deals with the situation on a case by case basis, carefully


weighing whether the increased level of credit exposure remains appropriate.  Material changes to the trading policies may be made only with the prior


written approval of the limited partners owning more than 50% of Units then outstanding.





Third, with respect to forward and options on forward contract trading, the Partnership trades with only those counterparties which Ceres (Demeter, prior


to December 1, 2010), together with MS&Co., has determined to be creditworthy.  The Partnership presently deals with MS&Co. as the sole counterparty


on all trading of foreign currency forward contracts and MSCG as the sole counterparty on all trading of options on foreign currency forward contracts.





For additional information, see the “Financial Instruments” section under “Notes to Financial Statements” in the Partnership’s Annual Report to


Limited Partners for the year ended December 31, 2010, which is incorporated by reference to Exhibit 13.01 of this Form 10-K.





Inflation has not been a major factor in the Partnership’s operations.

















- 24 -





Fair Value Measurements and Disclosures


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





In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, an investment’s level within the fair value hierarchy is based on the lowest


level of input that is significant to the fair value measurement.  The Partnership’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.





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














- 25 -







December 31, 2010
Unadjusted

Quoted Prices in Active Markets for Identical Assets

(Level 1)
Significant Other Observable Inputs

(Level 2)
Significant Unobservable Inputs

(Level 3)

Total$
$
$

$AssetsFutures
22,348,537
–
n/a

22,348,537Forwards
–
3,248,292
n/a

3,248,292Total Assets
22,348,537
3,248,292
n/a

25,596,829LiabilitiesFutures
4,839,789
–
n/a

4,839,789Forwards
–
218,049
n/a

218,049Total Liabilities
4,839,789
218,049
n/a

5,057,838Unrealized currency loss




(735,824)*Net fair value
17,508,748
3,030,243
n/a

19,803,167











December 31, 2009 **
Unadjusted

Quoted Prices in Active Markets for Identical Assets

(Level 1)
Significant Other Observable Inputs

(Level 2)
Significant Unobservable Inputs

(Level 3)

Total$
$
$

$AssetsFutures
20,671,980
–
n/a

20,671,980Forwards
–
854,319
n/a

854,319Total Assets
20,671,980
854,319
n/a

21,526,299LiabilitiesFutures
6,975,685
–
n/a

6,975,685Forwards
–
1,768,360
n/a

1,768,360Total Liabilities
6,975,685
1,768,360
n/a

8,744,045Unrealized currency loss




(766,953)* Net fair value
13,696,295
(914,041)
n/a

12,015,301





* This amount comprises of the net unrealized gain/(loss) on open contracts on the Statements of Financial Condition.





** The amounts have been reclassified from the December 31, 2009 prior year financial statements to conform to the current year presentation based on


new fair value guidance.








- 26 -







Derivatives and Hedging


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





The following tables summarize the valuation of the Partnership’s investments as required by the disclosures about Derivatives and Hedging as of December 31, 2010 and 2009, respectively.





The Effect of Trading Activities on the Statements of Financial Condition as of December 31, 2010:


Futures and Forward Contracts
Long Unrealized

Gain
Long Unrealized

Loss
Short Unrealized

Gain
Short Unrealized

Loss
Net   Unrealized

Gain/(Loss)
Average number of

contracts

outstanding

for the year (absolute quantity)$
$
$
$
$Commodity
13,583,270
(1,631,233)
—
(1,310,915)
10,641,122
5,409Equity
762,962
(500,929)
239,908
(5,232)
496,709
2,069Foreign currency
6,060,140
(193,557)
3,957,095
(524,581)
9,299,097
7,961Interest rate
662,741
(58,143)
330,713
(833,248)
102,063
7,714Total
21,069,113
(2,383,862)
4,527,716
(2,673,976)
20,538,991Unrealized currency loss




(735,824)Total net unrealized gain on open contracts




19,803,167























- 27 -







The Effect of Trading Activities on the Statements of Financial Condition as of December 31, 2009:


Futures and Forward Contracts
Long Unrealized

Gain
Long Unrealized

Loss
Short Unrealized

Gain
Short Unrealized

Loss
Net   Unrealized

Gain/(Loss)
*Average number of

contracts

outstanding

for the year (absolute quantity)$
$
$
$
$Commodity
13,176,127
(2,849,152)
344,940
(1,902,680)
8,769,235
5,839Equity
3,532,600
(108,030)
15,569
—
3,440,139
2,450Foreign currency
1,015,082
(2,350,882)
650,586
(215,980)
(901,194)
11,725Interest rate
2,444,830
(1,183,632)
346,565
(133,689)
1,474,074
8,812Total
20,168,639
(6,491,696)
1,357,660
(2,252,349)
12,782,254Unrealized currency loss




(766,953)Total net unrealized gain on open contracts




12,015,301





*The amounts have been reclassified from the December 31, 2009 prior year financial statements to conform to the current year presentation.








The following tables summarize the net trading results of the Partnership for the years ended December 31, 2010 and 2009 as required by the disclosures about Derivatives and Hedging.





The Effect of Trading Activities on the Statements of Operations for the year ended December 31, 2010 included in Total Trading Results:





Type of Instrument
$Commodity
10,078,791Equity
(14,372,116)Foreign currency
13,050,193Interest rate
24,513,376Unrealized currency gain
31,129Proceeds from Litigation
337,120Total
33,638,493








Line Items on the Statements of Operations for the year ended December 31, 2010:


Trading Results
$Realized
25,513,507Net change in unrealized
7,787,866Proceeds from Litigation
337,120Total Trading Results
33,638,493





- 28 -







The Effect of Trading Activities on the Statements of Operations for the years ended December 31, 2009 included in Total Trading Results:





Type of Instrument
$Commodity
10,512,655Equity
23,140,270Foreign currency
(11,446,352)Interest rate
(20,962,448)Unrealized currency gain
768,289Total
2,012,414








Line Items on the Statements of Operations for the year ended December 31, 2009:


Trading Results
$Realized
16,042,877Net change in unrealized
(14,030,463)Total Trading Results
2,012,414











Statement of Cash Flows


The Partnership is not required to provide a Statement of Cash Flows.





Other Pronouncements


Improving Disclosures about Fair Value Measurements


In January 2010, the Financial Accounting Standards Board (“FASB”) issued accounting guidance, under the FASB Accounting Standards


Codification(“ASC” or the “Codification”) which, among other things, amends fair value measurements and disclosures to require entities to


separately present purchases, sales, issuances, and settlements in their reconciliation of Level 3 fair value measurements (i.e., to present such items on a


gross basis rather than on a net basis), and which clarifies existing disclosure requirements regarding the level of disaggregation and the inputs and


valuation techniques used to measure fair value for measurements that fall within either Level 2 or Level 3 of the fair value hierarchy.  This guidance is





- 29 -







effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements


in the roll forward of activity in Level 3 fair value measurements which are effective for fiscal years beginning after December 15, 2010, and for interim


periods within those fiscal years.  The adoption of this guidance did not have a material impact on the Partnership’s financial statements.





Subsequent Events


Management of Ceres (“Management”) performed its evaluation of subsequent events and has determined that there were no subsequent events


requiring adjustment or disclosure in the financial statements other than those disclosed below.





Effective February 1, 2011, the monthly management fee payable by the Partnership to Sunrise Capital was reduced from 1⁄4 of 1% (a 3% annual rate) to 1/12


of 2% (a 2% annual rate)..





Effective February 1, 2011, the monthly incentive fee rate paid by the Partnership to Sunrise Capital equal to 15% was increased to a monthly incentive


fee rate equal to 20%.




















- 30 -







Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Introduction





The Partnership is a commodity pool engaged primarily in the speculative trading of futures, forwards and options. The market-sensitive instruments held


by the Partnership are acquired for speculative trading Unlike an operating company, the risk of market-sensitive instruments is inherent to the


primary business activity of the Partnership.





The futures, forwards and options on such contracts traded by the Partnership involve varying degrees of related market risk.  Market risk is


often dependent upon changes in the level or volatility of interest rates, exchange rates, and prices of financial instruments and commodities, factors that result in frequent changes in the fair value of the Partnership’s open positions, and consequently in its earnings, whether realized or unrealized, and cash flow.  Gains and losses on open positions of exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts are settled daily through variation margin.  Gains and losses on off-exchange-traded forward currency contracts and forward currency options contracts are settled upon termination of the contract.  Gains and losses on off-exchange-traded forward currency options contracts are settled upon an agreed upon settlement date.  However, the Partnership is required to meet margin requirements equal to the net unrealized loss on open forward currency contracts in the Partnership accounts with the counterparty, which is accomplished by daily maintenance of the cash balance in a custody account held at MSSB for the benefit of MS&Co.











- 31 -







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





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





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





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





Quantifying the Partnership’s Trading Value at Risk


The following quantitative disclosures regarding the Partnership’s market risk exposures contain “forward-looking statements” within the meaning of the safe harbor from civil liability provided for such





- 32 -







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.





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




he Partnership’s risk exposure in the market sectors traded by the Trading Advisors is estimated below in terms of VaR. The Partnership estimates VaR using a model based upon historical simulation (with a confidence level of 99%) which involves constructing a distribution of hypothetical daily changes in the value of a trading portfolio.  The VaR model takes into account linear exposures to risks including equity and commodity prices, interest rates, foreign exchange rates, and correlation among these variables. The hypothetical changes in portfolio value are based on daily percentage changes observed in key market indices or other market factors (“market risk factors”) to which the portfolio is sensitive.  The one-day 99% confidence level of the Partnership’s VaR corresponds to the negative change in portfolio value that, based on observed market risk factors, would have been exceeded once in 100 trading days, or one day in 100.  VaR typically does not represent the worst case outcome.  Ceres (Demeter, prior to December 1, 2010)  uses approximately four years of daily market data (1,000 observations) and re-values its portfolio (using delta-








- 33 -







gamma approximations) for each of the historical market moves that occurred over this time period.  This generates a probability distribution of


daily “simulated profit and loss” outcomes.  The VaR is the appropriate percentile of this distribution.  For example, the 99% one-day VaR would represent


the 10th worst outcome from Ceres’ (Demeter’s, prior to December 1, 2010) simulated profit and loss series.





The Partnership’s VaR computations are based on the risk representation of the underlying benchmark for each instrument or contract and do not


distinguish between exchange and non-exchange dealer-based instruments.  They are also not based on exchange and/or dealer-based maintenance


margin requirements.




VaR models, including the Partnership’s, are continually evolving as trading portfolios become more diverse and modeling techniques and


systems capabilities improve.  Please note that the VaR model is used to numerically quantify market risk for historic reporting purposes only and is


not utilized by either Ceres (Demeter, prior to December 1, 2010) or the Trading Advisors in their daily risk management activities.  Please further note that


VaR as described above may not be comparable to similarly-titled measures used by other entities.





The Partnership’s Value at Risk in Different Market Sectors


The following table indicates the VaR associated with the Partnership’s open positions as a percentage of total net assets by primary market risk category


at December 31, 2010 and 2009.  At December 31, 2010 and 2009, the Partnership’s total capitalization was approximately $409 million and $465


million, respectively.








- 34 -







Primary Market
December 31, 2010
December 31, 2009Risk Category
Value at Risk
Value at RiskEquity
(1.48)%
(2.24)%Currency
(1.01)
(0.68)Interest Rate
(0.25)
(0.38)Commodity
(3.93)
(2.38)Aggregate Value at Risk
(5.76)%
(4.43)%





The VaR for a market category represents the one-day downside risk for the aggregate exposures associated with this market category.  The Aggregate


Value at Risk listed above represents the VaR of the Partnership’s open positions across all the market categories, and is less than the sum of the VaRs for


all such market categories due to the diversification benefit across asset classes.





Because the business of the Partnership is the speculative trading of futures, forwards and options on such contracts, the composition of its


trading portfolio can change significantly over any given time period, or even within a single trading day.  Such changes could positively or


negatively materially impact market risk as measured by VaR.





The tables below supplement the December 31, 2010 and 2009 VaR set forth above by presenting the Partnership’s high, low, and average VaR, as


a percentage of total net assets for the four quarter-end reporting periods from January 1, 2010 through December 31, 2010 and January 1, 2009


through December 31, 2009, respectively.














- 35 -







December 31, 2010Primary Market Risk Category
High
Low
AverageEquity
(3.01)%
(0.46)%
(1.90)%Currency
(1.12)
(0.39)
(0.81)Interest Rate
(0.97)
(0.25)
(0.67)Commodity
(3.93)
(0.94)
(2.28)Aggregate Value at Risk
(5.76)%
(1.55)%
(4.19)%








December 31, 2009Primary Market Risk Category
High
Low
AverageEquity
(2.48)%
(0.23)%
(1.44)%Currency
(0.98)
(0.21)
(0.61)Interest Rate
(0.86)
(0.25)
(0.55)Commodity
(2.38)
(0.27)
(1.29)Aggregate Value at Risk
(4.43)%
(0.78)%
(2.72)%





Limitations on Value at Risk as an Assessment of Market Risk





VaR models permit estimation of a portfolio’s aggregate market risk exposure, incorporating a range of varied market risks, reflect risk reduction due


to portfolio diversification or hedging activities, and can cover a wide range of portfolio assets.  However, VaR risk measures should be viewed in light of


the methodology’s limitations, which include, but may not be limited to the following:





- 36 -





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


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


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


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


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





In addition, the VaR tables above, as well as the past performance of the Partnership, give no indication of the Partnership’s potential “risk of ruin”.





The VaR tables provided present the results of the Partnership’s VaR for each of the Partnership’s market risk exposures and on an aggregate basis


at December 31, 2010 and 2009, and for the four quarter-end reporting periods during calendar years 2010 and 2009.  VaR is not necessarily representative


of the Partnership’s historic risk, nor should it be used to predict the Partnership’s future financial performance or its ability to manage or monitor risk.


There can be no assurance that the Partnership’s actual losses on a particular day will not exceed the VaR amounts indicated above or that such losses


will not occur more than once in 100 trading days.








- 37 -







Non-Trading Risk


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


are immaterial.





The Partnership also maintains a substantial portion of its available assets in cash at MSSB; as of December 31, 2010, such amount is equal to


approximately 88% of the Partnership‘s net asset value.  A decline in short-term interest rates would result in a decline in the Partnership’s cash


management income. This cash flow risk is not considered to be material.





Materiality, as used throughout this section, is based on an assessment of reasonably possible market movements and any associated potential


losses, taking into account the leverage, optionality, and multiplier features of the Partnership’s market-sensitive instruments, in relation to the


Partnership’s net assets.





Qualitative Disclosures Regarding Primary Trading Risk Exposures


The following qualitative disclosures regarding the Partnership’s market risk exposures – except for (A) those disclosures that are statements of historical


fact and (B) the descriptions of how the Partnership manages its primary market risk exposures – constitute forward-looking statements within the meaning


of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act.  The Partnership’s primary market risk exposures, as well as


the strategies used and to be used by Ceres (Demeter, prior to


December 1, 2010) and the Trading Advisors for managing such exposures, are subject to numerous





- 38 -







uncertainties, contingencies and risks, any one of which could cause the actual results of the Partnership’s risk controls to differ materially from the
 objectives of such strategies. Government interventions, defaults and expropriations, illiquid markets, the emergence of dominant fundamental factors,
 political upheavals, changes in historical price relationships, an influx of new market participants, increased regulation, and many other factors could result
 in material losses, as well as in material changes to the risk exposures and the risk management strategies of the Partnership.  Investors must be prepared
 to lose all or substantially all of their investment in the Partnership.





The Trading Advisors, in general, tend to utilize system(s) to take positions when market opportunities develop, and Ceres (Demeter, prior to December


1, 2010) anticipates that the Trading Advisors will continue to do so.





The following were the primary trading risk exposures of the Partnership at December 31, 2010, by market sector. It may be anticipated, however, that


these market exposures will vary materially over time.





Equities.  The Partnership’s primary equity exposure is to equity price risk in the G-8 countries. The G-8 countries consist of Canada, the


Russian Federation, France, Germany, Japan, Italy, the United Kingdom, and the U.S.  The stock index futures traded by the Partnership are limited


to futures on broadly based indices. As of December 31, 2010, the Partnership’s primary exposures were in the S&P 500 (U.S.) and


DAX (Germany) stock indices. The Partnership is primarily exposed to the risk of adverse price trends or





- 39 -







static markets in the major North American, European, and Pacific Rim indices. (Static markets would not cause major market changes but would make it difficult for the Partnership to avoid being “whipsawed” into numerous small losses.)











Currencies.  The Partnership’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. Ceres does not anticipate that the risk profile of the Partnership’s currency sector will change significantly in the future.











Interest Rates.  Interest rate movements directly affect the price of the futures positions held by the Partnership 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 Partnership’s profitability. The Partnership’s primary interest rate exposure is to interest rate fluctuations in the U.S. and the other G-8 countries.  However, the Partnership also take futures positions on the government debt of smaller nations — e.g., Australia.





Commodity.


Energy.  The Partnership’s primary energy market exposure is to oil and natural gas price movements, often resulting from political developments in the Middle East and weather conditions. Energy prices can be volatile and substantial profits and losses, which have been


experienced in the past, are expected to continue to be experienced in these markets in the future.








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Grains. The Partnership’s trading risk exposure in the grains is primarily to agricultural price movements which are often directly affected by severe or unexpected weather conditions. The soybean complex and corn accounted for the majority of the Partnership’s grain exposure as of December 31, 2010.





Softs.  The Partnership’s trading risk exposure in the soft commodities is primarily to agricultural-related price movements which are often directly affected by severe or unexpected weather conditions. Coffee and sugar accounted for the bulk of the Partnership’s soft commodities exposure as of December 31, 2010.





Metals.  The Partnership’s primary metal market exposure is to fluctuations in the price of gold, silver, and copper.





Qualitative Disclosures Regarding Means of Managing Risk Exposure


The Partnership and the Trading Advisors, separately, attempt to manage the risk of the Partnership’s open positions in essentially the same manner in all market categories traded.  Ceres (Demeter, prior to December 1, 2010) attempts to manage market exposure by diversifying the Partnership’s assets among different market sectors and trading approaches through the selection of Commodity Trading Advisors and by daily monitoring their performance.  In addition, the Trading Advisors establish diversification guidelines, often set in terms of the maximum margin to be committed to positions in any one market sector or market-sensitive instrument.





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Ceres (Demeter, prior to December 1, 2010) monitors and controls the risk of the Partnership’s non-trading instrument, cash.  Cash is the only Partnership investment directed by Ceres (Demeter, prior to December 1, 2010), rather than the Trading Advisors.








Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


The financial statements are incorporated by reference to the Partnership's Annual Report, which is filed as Exhibit 13.01 hereto.





Supplementary data specified by Item 302 of Regulation S-K:


Summary of Quarterly Results (Unaudited)








Total Trading Results
Net
Net Income/Quarter Ended
including interest income
Income/(Loss)
(Loss) Per Unit2010March 31
$(12,258,341)
$(21,387,532)
$(1.74)June 30
(22,545,550)
(31,288,554)
(2.65)September 30
30,451,831
22,055,734
1.94December 31
38,361,625
27,907,405
2.52Total
$ 34,009,565
$(2,712,947)
$0.072009March 31
$(21,884,401)
$(34,297,947)
$(2.42)June 30
(10,445,856)
(20,889,883)
(1.59)September 30
27,758,217
17,928,023
1.41December 31
7,000,976
(3,296,034)
(0.24)Total
$  2,428,936
$(40,555,841)
$(2.84)








Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





None.


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Item 9A.  CONTROLS AND PROCEDURES


As of the end of the period covered by this annual report, the President and Chief Financial Officer of Ceres  have evaluated the effectiveness of


the Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act), and have judged such controls


and procedures to be effective.





Management’s Report on Internal Control Over Financial Reporting


Ceres (Demeter, prior to December 1, 2010) is responsible for the management of the Partnership.





Management is responsible for establishing and maintaining adequate internal control over financial reporting.  The internal control over financial reporting


is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes


in accordance with generally accepted accounting principles.





The Partnership’s internal control over financial reporting includes those policies and procedures that:





·
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Partnership;








·
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that the Partnership’s transactions are being made only in accordance with authorizations of Management and directors of Ceres (Demeter, prior to December 1, 2010); and


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





Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  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 Partnership’s internal control over financial reporting as of December 31, 2010.  In making this


assessment, Management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal


Control-Integrated Framework. Based on our assessment and those criteria, Management believes that the Partnership maintained effective internal


control over financial reporting as of December 31, 2010.





Changes in Internal Control over Financial Reporting


There have been no material changes during the period covered by this annual report in the Partnership’s internal control over financial reporting (as defined


in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected or are reasonably likely to affect the Partnership’s internal control


over financial reporting.








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Limitations on the Effectiveness of Controls


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





Item 9B.  OTHER INFORMATION


None.















































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PART III





Item 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





The Partnership has no officers or directors and its affairs are managed by its General Partner.  Investment decisions are made by the Advisors.





The officers and directors of the General Partner are Walter Davis (President and Chairman of the Board of Directors), Jennifer Magro (Chief Financial Officer and Director), Michael McGrath (Director), Douglas J. Ketterer (Director), Ian Bernstein (Director), Harry Handler (Director), Patrick T. Egan (Director) and Alper Daglioglu (Director). Each director holds office until the earlier of his or her death, resignation or removal.  Vacancies on the board of directors may be filled by either (i) the majority vote of the remaining directors or (ii) MSSBH, as the sole member of the General Partner.  The officers of the General Partner are designated by the General Partner’s board of directors.  Each officer will hold office until his or her successor is designated and qualified or until his or her death, resignation or removal.





Walter Davis, age 46, is President and Chairman of the Board of Directors of the General Partner (since June 2010).  Mr. Davis was registered as an associated person of the General Partner and listed as a principal in June 2010.  Mr. Davis is responsible for the oversight of the General Partner’s funds and accounts.  Prior to the combination of Demeter and Ceres effective December 1, 2010, Mr. Davis served as Chairman of the Board of Directors and President of Demeter, a registered commodity pool operator.  Mr. Davis was a principal and associated person of Demeter from May 2006 to December 2010 and July 2006 to December 2010, respectively.  Mr. Davis was an associated person of Morgan





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Stanley DW Inc., a financial services firm, from August 2006 to April 2007, when, because of the merger of Morgan Stanley DW Inc. into MS&Co., a global financial services firm, he became an associated person of MS&Co. (due to the transfer of his original registration as an associated person of Morgan Stanley DW Inc.).  Prior to becoming an associated person in August 2006, Mr. Davis was responsible for overseeing the sales and marketing of MS&Co.’s managed futures funds to high net worth and institutional investors on a global basis.  Mr. Davis withdrew as an associated person of MS&Co. in June 2009.  Mr. Davis has been an associated person of Morgan Stanley Smith Barney LLC since June 2009.  MSSB is registered as a broker-dealer with FINRA, an investment adviser with the SEC and a futures commission merchant with the CFTC.  Mr. Davis is a Managing Director of MSSB and the Director of MSSB’s managed futures department.  Prior to joining Morgan Stanley in September 1999, Mr. Davis worked for Chase Manhattan Bank’s Alternative Investment Group from January 1992 until September 1999, where his principal duties included marketing managed futures funds to high net worth investors, as well as developing and structuring managed futures funds.  Throughout his career, Mr. Davis has been involved with the development, management and marketing of a diverse array of commodity pools, hedge funds and other alternative investment vehicles.  Mr. Davis received an MBA in Finance and International Business from the Columbia University Graduate School of Business in 1992 and a BA in Economics from the University of the South in 1987.




















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Jennifer Magro, age 39, is Chief Financial Officer and Director of the General Partner (since October 2006 and May 2005, respectively).  Ms. Magro was listed as a principal in June 2005.  Ms. Magro served as Vice President and Secretary of the General Partner from August 2001 to December 2010 and June 2010 to December 2010, respectively.  She was also a Managing Director of Citi Alternative Investments (“CAI”), a division of Citigroup that administered its hedge fund and fund of funds business, and was Chief Operating Officer of CAI’s Hedge Fund Management Group from October 2006 to July 2009.  Ms. Magro is responsible for the financial, administrative and operational functions of the General Partner.  She is also responsible for the accounting and financial and regulatory reporting of the General Partner’s managed futures funds.  From March 1999 to July 2009, Ms. Magro was responsible for the accounting and financial and regulatory reporting of Citigroup’s managed futures funds.  She had similar responsibilities with CAI’s Hedge Fund Management Group (from October 2006 to July 2009).  Prior to joining the General Partner in January 1996, Ms. Magro was employed by Prudential Securities Inc., a securities brokerage services company, (from July 1994) as a staff accountant whose duties included the calculation of net asset values for commodity pools and real estate investment products.  Ms. Magro received a BS in Accounting from the State University of New York, Oswego in 1993.





Michael McGrath, age 41, has been a Director of the General Partner since June 2010.  Mr. McGrath was listed as a principal in June 2010.  Mr. McGrath was a principal and Director of Demeter from May 2006 until Demeter’s combination with the General Partner in December 2010.  Mr. McGrath is a Managing Director of MSSB and currently serves as the Head of Alternative Investments for the Global Wealth Management Group of MSSB.  He also serves on the Management Committee





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of the Global Wealth Management Group.  Prior to his current role, Mr. McGrath served as the Director of Product Management for the Consulting Services Group in Morgan Stanley as well as the Chief Operating Officer for Private Wealth Management North America and Private Wealth Management Latin America (the Americas) and the Director of Product Development for Morgan Stanley’s Global Wealth Management Group.  Mr. McGrath served as a Managing Director of Morgan Stanley from May 2004 until May 2009, when Mr. McGrath became a Managing Director of MSSB.  Mr. McGrath joined Morgan Stanley from Nuveen Investments, a publicly traded investment management company headquartered in Chicago, Illinois, where he worked from July 2001 to May 2004.  At Nuveen Investments, Mr. McGrath served as a Managing Director and oversaw the development of alternative investment products catering to high net worth investors.  Mr. McGrath received his BA degree from Saint Peters College in 1990, and currently serves on the school’s Board of Regents.  He received his MBA in Finance from New York University in 1996.





Douglas J. Ketterer, age 45, has been a Director of the General Partner since December 2010.  Mr. Ketterer was listed as a principal in December 2010.  Mr. Ketterer was a principal of Demeter from October 2003 until Demeter’s combination with the General Partner in December 2010.  Mr. Ketterer is a Managing Director and Head of the U.S. Private Wealth Management Group within MSSB.  Mr. Ketterer joined MS&Co. in March 1990 and has served in many roles in the corporate finance/investment banking, asset management, and wealth management divisions of the firm; most recently as Chief Operating Officer, Wealth Management Group and Head of the Products Group with responsibility for a number of departments (including, among others, the Alternative Investments








- 49 -







Group, Consulting Services Group, Annuities & Insurance Department and Retirement & Equity Solutions Group) which offered products and services through MS & Co.’s Global Wealth Management Group.  Mr. Ketterer received his MBA from New York University’s Leonard N. Stern School of Business and his BS in Finance from the University at Albany’s School of Business.





Ian Bernstein, age 48, is a Director of the General Partner.  Mr. Bernstein has been a Director, and listed as a principal of the General Partner since December 2010.  Mr. Bernstein held various positions, including Managing Director, within the Capital Markets group at Morgan Stanley DW Inc. from October 1984 to April 2007, when Morgan Stanley DW Inc. was merged into, its institutional affiliate, MS&Co. and became the Global Wealth Management Division of MS&Co.  Mr. Bernstein first served as a Managing Director with MS&Co. in March 2004, prior to its merger with Morgan Stanley DW Inc.  Since June 1, 2009, Mr. Bernstein has served as a Managing Director of Capital Markets at MSSB, a new broker-dealer formed as a result of a joint venture between Citigroup and Morgan Stanley.  The respective retail business of MS&Co. and Citigroup (formerly known as Smith Barney) was contributed to MSSB.  Mr. Bernstein has continued as Managing Director of both MSSB, the retail broker-dealer, and MS&Co., the institutional broker-dealer, up to the present.  Mr. Bernstein received his MBA from New York University’s Leonard N. Stern School of Business in 1988, and his BA from the University of Buckingham in 1980.

















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Harry Handler, age 51, has been a Director of the General Partner since December 2010.  Mr. Handler became registered as an associated person of the General Partner and listed as a principal in December 2010.  Mr. Handler was a principal and associated person of Demeter from May 2005 until Demeter’s combination with the General Partner in December 2010, and from April 2006 until December 2010, respectively.  He has been an associate member of the NFA since August 1985.  Mr. Handler was an associated person of Morgan Stanley DW Inc., a financial services firm, from February 1984 to April 2007, when, because of the merger of Morgan Stanley DW Inc. into MS&Co., he became an associated person of MS&Co. due to the transfer of his original registration as an associated person of Morgan Stanley DW Inc.  Mr. Handler withdrew as an associated person of MS&Co. in June 2009.  Mr. Handler has been an associated person of MSSB since June 2009.  Mr. Handler serves as an Executive Director at MSSB in the Global Wealth Management Group.  Mr. Handler works in the Capital Markets Division and is responsible for Electronic Equity and Securities Lending.  Additionally, Mr. Handler serves as Chairman of the Global Wealth Management Group’s Best Execution Committee.  In his prior position, Mr. Handler was a Systems Director in Information Technology, in charge of Equity and Fixed Income Trading Systems along with the Special Products, such as Unit Trusts, Managed Futures, and Annuities.  Prior to his transfer to the Information Technology Area, Mr. Handler managed the Foreign Currency and Precious Metals Trading Desk of Dean Witter, a financial services firm and predecessor company to Morgan Stanley, from July 1982 until January 1984.  He also held various positions in the Futures Division where he helped to build the Precious Metals Trading Operation at Dean Witter.  Before joining Dean Witter, Mr. Handler worked at Mocatta Metals, a precious metals trading firm and futures broker that was sold to Standard Charted Bank in the 1980’s, as an Assistant to the Chairman from March 1980 until June 1982.  His roles at





- 51 -







Mocatta Metals included positions on the Futures Order Entry Desk and the Commodities Exchange Trading Floor.  Additional work included building a computerized Futures Trading System and writing a history of the company.  Mr. Handler graduated on the Dean’s List from the University of Wisconsin-Madison with a BA degree and a double major in History and Political Science.





Patrick T. Egan, age 41, has been a Director of the General Partner since December 2010.  Mr. Egan became registered as an associated person of the General Partner and listed as a principal in December 2010.  Mr. Egan has been an associate member of the NFA since December 1997.  He has been an associated person of MSSB since November 2010.  Mr. Egan was an associated person of Morgan Stanley DW Inc., a financial services firm, from February 1998 to April 2007, when, because of the merger of Morgan Stanley DW Inc. into MS&Co., he became an associated person of MS&Co. due to the transfer of his original registration as an associated person of Morgan Stanley DW Inc.  Mr. Egan withdrew as an associated person of MS&Co. in November 2010.  Mr. Egan is an Executive Director at MSSB and currently serves as the Co-Chief Investment Officer for MSSB managed futures department.  Prior to his current role, Mr. Egan served as the Head of Due Diligence & Manager Research for Morgan Stanley’s managed futures department from October 2003 until the formation of MSSB in June 2009. From March 1993 through September 2003, Mr. Egan was an analyst and manager within the managed futures department for Morgan Stanley DW Inc., and its predecessor firm, Dean Witter Reynolds, Inc., a financial services firm, with his primary responsibilities being dedicated to the product development, due diligence, investment analysis and risk management of the firm’s commodity pools.  Mr. Egan began his career in August 1991, joining Dean Witter Intercapital, the asset management arm of Dean Witter Reynolds, Inc., until March 1993 when he joined the firm’s





- 52 -







managed futures department.  Mr. Egan received a Bachelor of Business Administration with a concentration in Finance from the University of Notre Dame in May 1991.  Mr. Egan is a former Director to the Managed Funds Association’s Board of Directors, a position he was elected to by industry peers for two consecutive two-year terms, from November 2004 to October 2006 and November 2006 to October 2008.





Alper Daglioglu, age 33, has been a Director, and listed as a principal of the General Partner since December 2010.  Mr. Daglioglu is an Executive Director at MSSB and the Co-Chief Investment Officer for MSSB’s managed futures department.  Mr. Daglioglu also serves on the Alternative Investments Product Review Committee of MSSB’s Alternative Investments Group.  Prior to his current role, Mr. Daglioglu was a Senior Analyst at the Product Origination Group within Morgan Stanley managed futures department from December 2003 until the formation of MSSB in June 2009.  In addition to his responsibilities within managed futures department, Mr. Daglioglu was also the lead investment analyst for Global Macro and Managed Futures strategies within Morgan Stanley Graystone Research Group from February 2007 to June 2009.  Mr. Daglioglu served as a consultant at the Product Origination Group within Morgan Stanley managed futures department from June 2003 to November 2003.  Mr. Daglioglu received a BS degree in Industrial Engineering from Galatasaray University in June 2000 and a MBA degree in Finance from the University of Massachusetts-Amherst’s Isenberg School of Management in May 2003.  Mr. Daglioglu was awarded a full merit scholarship and research assistantship at the Center for International Securities and Derivatives Markets during his graduate studies.  In this capacity, he worked with various major financial








- 53 -







institutions in performance monitoring, asset allocation and statistical analysis projects and specialized on alternative approaches to risk assessment for hedge funds and managed futures.  Mr. Daglioglu wrote and published numerous research papers on alternative investments.  Mr. Daglioglu is a Chartered Alternative Investment Analyst charterholder.







Section 16(a) Beneficial Ownership Reporting Compliance




To the Partnership’s knowledge, all required Section 16(a) filings during the fiscal year ended December 31, 2010, were timely and correctly made.







Code of Ethics


The Partnership has not adopted a code of ethics that applies to the Partnership’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.  The Partnership is operated by its general partner, Ceres (Demeter, prior to December 1, 2010).  The President, Chief Financial Officer, and each member of the Board of Directors of Ceres (Demeter, prior to December 1, 2010) are employees of Morgan Stanley or Morgan Stanley Smith Barney and are subject to the code of ethics adopted by Morgan Stanley, the text of which can be viewed on Morgan Stanley’s website at http://www.morganstanley.com/individual/ourcommitment/codeofconduct.html.





The Audit Committee


The Partnership is operated by its general partner, Ceres (Demeter, prior to December 1, 2010), and has no audit committee.  However, Demeter had a Disclosure Committee that met quarterly to review periodic filings made by the Partnership for which Demeter acted as the general partner.  Demeter’s Disclosure Committee reported directly to the Board of Directors of Demeter which served as its audit committee.





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Item 11.  EXECUTIVE COMPENSATION


The Partnership has no directors and executive officers.  As a limited partnership, the business of the Partnership is managed by Ceres (Demeter, prior to December 1, 2010), which is responsible for the administration of the business affairs of the Partnership but receives no compensation for such services.








Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND


MANAGEMENT AND RELATED STOCKHOLDER MATTERS





(a)  Security Ownership of Certain Beneficial Owners – At December 31, 2010, there were no persons known to be beneficial owners of more than 5 percent of the Units.





(b)  Security Ownership of Management – At December 31, 2010, Ceres owned 113,836.769 Units of general partnership interest, representing a 1.06 percent interest in the Partnership.





(c)
Changes in Control – None.








Item 13.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND


DIRECTOR INDEPENDENCE








Refer to Note 2 – “Summary of Significant Accounting Policies”, Note 4 – “Related Party Transactions”, and Note 5 – “Trading Advisors” of “Notes to Financial Statements”, in the accompanying Annual Report to Limited Partners for the year ended December 31, 2010, which is incorporated by reference to Exhibit 13.01 of this Form 10-K.  In its capacity as the Partnership’s retail commodity broker, MS&Co. received commodity brokerage fees (paid and accrued by the Partnership) of $24,726,203 for the year ended December 31, 2010.





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Item 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES


MS&Co. on behalf of the Partnership, pays all accounting fees.  The Partnership reimburses MS&Co. through the brokerage fees it pays, as discussed in the Notes to Financial Statements in the Annual Report to the Limited Partners for the year ended December 31, 2010.





(1)  Audit Fees.  The aggregate fees for professional services rendered by Deloitte & Touche LLP (“D&T”) in connection with their audit of the Partnership’s financial statements and review of the financial statements included in the Quarterly Reports on Form 10-Q and in connection with statutory and regulatory filings were approximately $60,411 for the year ended December 31, 2010, and $66,652 for the year ended December 31, 2009.





(2)  Audit-Related Fees.  None.





(3)  Tax Fees. The Partnership did not pay D&T any amounts in 2010 and 2009 for professional services in connection with tax compliance, tax advice, and tax planning.  The Partnership engaged another unaffiliated professional firm to provide services in connection with tax compliance, tax advice, and tax planning.





(4)  All Other Fees.  None.














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PART IV





Item 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES





1. Listing of Financial Statements


The following financial statements and report of independent registered public accounting firm, all appearing in the accompanying Annual Report to Limited Partners for the year ended December 31, 2010, are incorporated by reference to Exhibit 13.01 of this Form 10-K:


-
Report of Deloitte & Touche LLP, independent registered public accounting firm.





-
Statements of Financial Condition, including the Condensed Schedules of Investments, as of December 31, 2010 and 2009.





-
Statements of Operations and Changes in Partners' Capital for the years ended December 31, 2010, 2009, and 2008.





-           Notes to Financial Statements.








With the exception of the aforementioned information and the information incorporated in Items 7, 8, and 13, the Annual Report to Limited Partners for the year ended December 31, 2010, is not deemed to be filed with this report.





2. Listing of Financial Statement Schedules


No financial statement schedules are required to be filed with this report.





3. Exhibits


For the exhibits incorporated by reference or filed herewith to this report, refer to Exhibit Index on Pages E-1 to E-4.





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SIGNATURE








Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.








MORGAN STANLEY SMITH BARNEY SPECTRUM SELECT L.P.(Registrant)By:
Ceres Managed Futures LLC(General Partner)March 28, 2011
By:
/s/Walter DavisWalter Davis,President





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 registrant and in the capacities and on the dates indicated.





Ceres Managed Futures LLC





BY:
/s/
Walter Davis

March 28, 2011Walter Davis, President/s/
Jennifer Magro

March 28, 2011Jennifer Magro, Chief Financial Office, Director/s/
Ian Bernstein

March 28, 2011Ian Bernstein, Director/s/
Alper Daglioglu

March 28, 2011Alper Daglioglu, Director/s/
Patrick T. Egan

March 28, 2011Patrick T. Egan, Director/s/
Harry Handler

March 28, 2011Harry Handler, Director/s/
Douglas J. Ketterer

March 28, 2011Douglas J. Ketterer, Director/s/
Michael P. McGrath

March 28, 2011Michael P. McGrath, Director





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EXHIBIT INDEX


ITEM




3.01
Form of Amended and Restated Limited Partnership Agreement of the Partnership is incorporated by reference to Exhibit A of the Partnership’s Prospectus, dated May 1, 2008, filed with the Securities and Exchange Commission pursuant to Rule 424(b)(3) under the Securities Act of 1933 on May 8, 2008.




3.01(a)
Amendment No. 1 to the Amended and Restated Limited Partnership Agreement of the Partnership, dated May 31, 2009, is incorporated by reference to Exhibit 3.01(a) of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on June 4, 2009.




3.02
Certificate of Limited Partnership, dated March 19, 1991, is incorporated by reference to Exhibit 3.02 of the Partnership’s Registration Statement on Form S-1 (File No. 333-47829) filed with the Securities and Exchange Commission on March 12, 1998.




3.03
Certificate of Amendment of Certificate of Limited Partnership, dated April 28, 1998 (changing its name from Dean Witter Select Futures Fund L.P.), is incorporated by reference to Exhibit 3.03 of the Partnership's 10-K for fiscal year ended December 31, 1998, filed with the  Securities and Exchange Commission on March 31, 1999.




3.04
Certificate of Amendment of Certificate of Limited Partnership, dated April 6, 1999 (changing its name from Dean Witter Spectrum Select L.P.), is incorporated by reference to Exhibit 3.03 of the Partnership's Registration Statement on Form S-1 (File No. 333-68773) filed with the Securities and Exchange Commission on April 12, 1999.




3.05
Certificate of Amendment of Certificate of Limited Partnership, dated November 1, 2001 (changing its name from Morgan Stanley Dean Witter Spectrum Select L.P.), is incorporated by reference to Exhibit 3.01 of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on November 1, 2001.




3.06
Certificate of Amendment of Certificate of Limited Partnership, dated June 1, 2009, (changing the name and mailing address of the general partner of the Partnership), is incorporated by reference to Exhibit 3.06 of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on June 4, 2009.




3.07
Certificate of Amendment of Certificate of Limited Partnership, dated September 29, 2009 (changing its name from Morgan Stanley Spectrum Select L.P. to Morgan Stanley Smith Barney Spectrum Select L.P.), is incorporated by reference to Exhibit 3.07 of the Partnership’s form 8-K (File No. 0-19511) filed with the Securities and Exchcnage Commission on October 5, 2009.














E-1







10.01
Amended and Restated Management Agreement, dated as of June 1, 1998, among the Partnership, the General Partner, and Rabar Market Research, Inc. is incorporated by reference to Exhibit 10.01 of the Partnership's Form 10-K (File No. 0-19511) for fiscal year ended December 31, 1998, filed with the Securities and Exchange Commission on March 31, 1999.





10.01(a)
Amendment No. 1 to Amended and Restated Management Agreement among the Partnership, the General Partner, and Rabar Market Research, Inc., dated as of October 3, 2006, is incorporated by reference to Exhibit 10.01(a) of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on October 10, 2006.





10.02
Amended and Restated Management Agreement, dated as of June 1, 1998, among the Partnership, the General Partner, and EMC Capital Management, Inc., is incorporated by reference to Exhibit 10.02 of the Partnership's Form 10-K (File No. 0-19511) for fiscal year ended December 31, 1998, filed with the Securities and Exchange Commission on March 31, 1999.





10.02(a)
Amendment No. 1 to Amended and Restated Management Agreement among the Partnership, the General Partner, and EMC Capital Management, Inc., dated as of October 3, 2006, is incorporated by reference to Exhibit 10.02(a) of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on October 10, 2006.





10.03
Amended and Restated Management Agreement, dated as of June 1, 1998, among the Partnership, the General Partner, and Sunrise Capital Management, Inc., is incorporated by reference to Exhibit 10.03 of the Partnership's Form 10-K (File No. 0-19511) for fiscal year ended December 31, 1998, filed with the Securities and Exchange Commission on March 31, 1999.





10.03(a)
Amendment No. 1 to Amended and Restated Management Agreement among the Partnership, the General Partner, and Sunrise Capital Management Inc., dated as of December 7, 2010 is incorporated by reference to Exhibit 10.03(a) of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on January 3, 2011.





10.04
Management Agreement, dated as of January 1, 2004, among the Partnership, Demeter, and Graham Capital Management,  L.P., is incorporated by reference to Exhibit 10.04 of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on March 10, 2004.





10.07
Form of Subscription and Exchange Agreement and Power of Attorney to be executed by purchasers of Units is incorporated by reference to Exhibit B of the Partnership’s Prospectus, dated May 1, 2008, filed with the Securities and Exchange Commission pursuant to Rule 424(b)(3) under the Securities Act of 1933 on May 8, 2008.






















10.10
Escrow Agreement, dated as of July 25, 2007, among The Bank of New York, the General Partner, and Morgan Stanley & Co. Incorporated, is incorporated by reference to Exhibit 10.10 of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on July 31, 2007.





10.11
Form of Subscription Agreement Update Form to be executed by purchasers of Units is incorporated by reference to Exhibit C of the Partnership’s Prospectus, dated May 1, 2008, filed with the Securities and Exchange Commission pursuant to Rule 424(b)(3) under the Securities Act of 1933 on May 8, 2008.




10.12
Amended and Restated Customer Agreement between the Partnership and Morgan Stanley DW, dated as of October 16, 2000, is incorporated by reference to Exhibit 10.01 of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on November 1, 2001.





10.12(a)
Amendment No. 1 to the Amended and Restated Customer Agreement between the Partnership and Morgan Stanley DW Inc., dated July 1, 2005, is incorporated by reference to Exhibit 10.12(a) of the Partnership’s Form 10-Q (File No. 0-19511) filed with the Securities and Exchange Commission on August 10, 2005.





10.13
Commodity Futures Customer Agreement between MS&Co. and the Partnership, and acknowledged and agreed to by Morgan Stanley DW, dated as of June 6, 2000, is incorporated by reference to Exhibit 10.02 of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on November 1, 2001.





10.14
Customer Agreement between the Partnership and MSIP dated as of June 6, 2000, is incorporated by reference to Exhibit 10.04 of the Partnership’s Form 8-K (File No.


0-19511) filed with the Securities and Exchange Commission on November 1, 2001.





10.15
Foreign Exchange and Options Master Agreement between MS&Co. and the Partnership, dated as of April 30, 2000, is incorporated by reference to Exhibit 10.05 of the Partnership’s Form    8-K (File No. 0-19511) filed with the Securities and Exchange Commission on November 1, 2001.





10.16
Management Agreement, dated as of May 1, 2001, among the Partnership, the General Partner, and Northfield Trading L.P., is incorporated by reference to Exhibit 10.01 of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on April 25, 2001.





10.17
Securities Account Control Agreement between the Partnership and MS&Co., dated as of May 1, 2000, is incorporated by reference to Exhibit 10.03 of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on November 1, 2001.

























10.19
Management Agreement, dated as of October 9, 2007, among the Partnership, the General Partner, and Altis Partners (Jersey) Limited, is incorporated by reference to Exhibit 10.19 of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on October 15, 2007.





10.19(a)
Amendment No. 1 to Management Agreement among the Partnership, the General Partner, and Altis Partners (Jersey) Limited, dated as of July 28, 2008, is incorporated by reference to Exhibit 10.19 of the Partnership’s Form 8-K (File No. 0-19511) filed with the Securities and Exchange Commission on August 1, 2008.




13.01
December 31, 2010, Annual Report to Limited Partners is filed herewith.




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




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




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




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



























































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