SAGE FUND LP - FORM 10-K - March 25, 2011

Attached files

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EX-31.2 - SAGE FUND LP	v215644_ex31-2.htm
EX-32.1 - SAGE FUND LP	v215644_ex32-1.htm
EX-32.2 - SAGE FUND LP	v215644_ex32-2.htm
EX-31.1 - SAGE FUND LP	v215644_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

Commission file number: 000-53639

SAGE FUND LIMITED PARTNERSHIP

Organized in Maryland

IRS Employer Identification No.: 52-1937296

c/o Steben & Company, Inc.

2099 Gaither Road, Suite 200

Rockville, Maryland 20850

Telephone: (240) 631-7600

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

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ 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 ¨ 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 ¨

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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 definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ¨	Accelerated Filer ¨

Non-Accelerated Filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

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

Aggregate market value of the voting and non-voting common equity held by non-affiliates: N/A.

Table of Contents

Part I

Item 1.	Business	3
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	9
Item 2.	Properties	9
Item 3.	Legal Proceedings	9
Item 4.	[Removed and Reserved]	9

Part II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	9
Item 6.	Selected Financial Data	10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	16
Item 8.	Financial Statements and Supplementary Data	16
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	16
Item 9A.	Controls and Procedures	16
Item 9B.	Other Information	17

Part III

Item 10.	Directors, Executive Officers and Corporate Governance	17
Item 11.	Executive Compensation	18
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	19
Item 13.	Certain Relationships and Related Transactions, and Director Independence	19
Item 14.	Principal Accounting Fees and Services	19

Part IV

Item 15.	Exhibits and Financial Statement Schedules	20
Signatures		21

PART I

ITEM 1. Business

Sage Fund Limited Partnership (“Fund”) is a Maryland limited partnership, formed on August 2, 1995, originally under the name Telesis Futures Fund Limited Partnership, which was changed to Sage Fund Limited Partnership on December 16, 1998. The Fund is actively managed, with speculative trading profits as its objective. Using a professional trading advisor, the Fund engages in the speculative trading of futures contracts and other financial instruments traded in the United States (U.S.) and internationally. The Fund primarily trades futures contracts within six major market sectors: stock indices, currencies, interest rate instruments, energy products, metals and agricultural commodities. The Fund does not currently trade forward currency contracts, forwards on other items, swaps or options contracts, but may do so in the future. The Fund began trading on January 5, 1996.

The Fund’s fiscal year ends each December 31, and the Fund will automatically terminate on December 31, 2025, unless terminated earlier as provided in the Second Amended and Restated Limited Partnership Agreement (“Partnership Agreement”). At December 31, 2010, the aggregate capitalization of the Fund was $76,476,459. The net asset value per unit of Class A limited partner interests (“Units”) as of December 31, 2010 was $2,732.10.

The Fund’s assets are allocated to Altis Partners (Jersey) Ltd. (“Trading Advisor”). While it is not currently the case, a portion of the Fund’s assets may be allocated to other investment funds or pools at the discretion of Steben & Company, Inc. (“General Partner”), in order to access the services of other trading advisors. The General Partner is responsible for selecting and monitoring the Trading Advisor, and it may add new trading advisors in the future and/or terminate the current Trading Advisor, and will, in general, allocate the Fund’s assets among trading advisors as it deems is in the best interests of the Fund.

The Fund maintains its margin deposits and reserves in cash, short-term U.S. Treasury securities, U.S. government sponsored enterprise notes, registered U.S. money market funds and short-term investment grade commercial paper in accordance with Commodity Futures Trading Commission (“CFTC”) rules. All interest income earned by the Fund accrues to the Fund.

The Fund’s business constitutes only one segment for financial reporting purposes. The Fund does not engage in material operations in foreign countries (although it does trade on international futures markets), nor is a material portion of its revenues derived from foreign customers.

General Partner

Under the Partnership Agreement, management of all aspects of the Fund’s business and administration is carried out exclusively by the General Partner, a Maryland corporation organized in February 1989. The General Partner is registered with the CFTC as a commodity pool operator and introducing broker, and is also registered with the U.S. Securities and Exchange Commission (“SEC”) as an investment adviser and a broker dealer. The General Partner is a member of the National Futures Association (“NFA”) and the Financial Industry Regulatory Authority (“FINRA”).

The General Partner manages all aspects of the Fund’s business, including selecting and monitoring the Fund’s trading advisor(s); replacing the Trading Advisor if appropriate or adding other trading advisors; selecting the Fund’s futures broker(s), accountants and attorneys; computing the Fund’s net assets; reporting to limited partners; directing the investment of Fund excess margin monies in interest-bearing instruments and/or cash; and processing subscriptions and redemptions. The General Partner maintains office facilities for and furnishes administrative and clerical services to the Fund.

Trading Advisor

The Trading Advisor, Altis Partners (Jersey) Ltd., is registered with the CFTC as a commodity trading advisor and commodity pool operator, and is a member of the NFA. The Trading Advisor’s main office is located at Charles House, 2nd Floor, Charles Street, St. Helier, Jersey JE2 4SF, Channel Islands. The telephone number is +44 (0) 1534 787700.

The Trading Advisor is regulated in the State of Jersey, Channel Islands by the Jersey Financial Services Commission. The Trading Advisor is wholly owned by its four principals. The Trading Advisor engages primarily in the management of futures, options on futures and foreign exchange trading accounts for qualified investors. At December 31, 2010, the Trading Advisor had total assets under management of approximately $1.60 billion, with approximately $1.60 billion in the Global Futures Portfolio (“Trading Program”).

The Trading Program participates in over 140 worldwide futures markets over multiple maturities. It is a systematic, automated trading program that builds on the principals’ market experience and employs a proprietary advanced asset allocator. The advanced asset allocator was specifically developed to manage portfolios of derivative instruments in a robust and scalable manner. The portfolio management technology combines original, traditional and contrasting investment techniques into one complete and comprehensive trading system. The Global Futures Portfolio is designed to participate in broad sectors of the world economy. The Trading Advisor trades in financial and commodity futures worldwide. Market sectors traded include energy products, metals, grains, livestock, currencies, equity indices and interest rate instruments. The Trading Advisor may also trade in foreign exchange forwards and option contracts. The Trading Advisor intends to generally employ a margin-to-equity ratio of approximately 15% to 35%, but such ratio may be higher or lower at certain times.

The on-going development of the Trading Advisor’s strategy is a continuous process, and the trading strategy may therefore be modified from time to time. The Fund will be notified of changes, additions or deletions to the trading strategy that are deemed to be material by the Trading Advisor. The trading strategies utilized by the Trading Advisor for the Fund may differ from those used with respect to other accounts managed by the Trading Advisor or its own accounts. Trading decisions require the exercise of judgment by the Trading Advisor.

Selling Agents

The General Partner acts as a selling agent for the Fund, and has entered into selling agreements with certain other broker dealers registered under the U.S. Securities Exchange Act of 1934, as amended (“1934 Act”), and members of FINRA, to act as additional selling agents with respect to the Units. Selling agents are selected to assist in the making of offers and sales of Units. The selling agents offer the Units on a “best efforts” basis.

Futures Broker

During 2010, the Fund used Newedge USA, LLC (“NUSA”) as its futures broker. In March 2011, the Fund began using JP Morgan Futures Inc. (“JP Morgan”) as its futures broker. The General Partner may, in its discretion, have the Fund utilize other futures brokers or forward and swap counterparties if it deems it to be in the best interest of the Fund.

Newedge Group was formed on January 2, 2008 as a joint venture by Société Générale and Calyon to combine the brokerage activities previously carried by their respective subsidiaries which comprised the Fimat Group and the Calyon Financial Group of affiliated entities. Newedge Group (UK Branch) is a branch of Newedge Group and lead regulated in France as a bank by the CECEI (Banque de France) and supervised by Commission Bancaire and the Autorité des Marchés Financiers for the conduct of investment services, and regulated by the Financial Services Authority for the conduct of business in the UK.

Cash Management Securities Broker

The Fund utilizes UBS Financial Services, Inc. (“UBS”) as its cash management securities broker. The General Partner may, in its discretion, have the Fund utilize other cash management securities brokers if it deems it to be in the best interest of the Fund.

Description of Current Charges

Charges		Amount
General Partner Management Fee		The Fund incurs a monthly fee equal to 1/12th of 1.1% of the month-end net asset value of the Fund, payable in arrears.

General Partner 1% Allocation		Annually, the General Partner receives from the Fund 1% of any net income earned by the Fund. Conversely, the General Partner pays to the Fund 1% of any net loss incurred by the Fund.

Trading Advisor Management Fee		The Trading Advisor receives a monthly management fee equal to 1/12th of 1%, based upon the assets under its management, payable in arrears.

Trading Advisor Incentive Fee		The Trading Advisor receives a quarterly incentive fee equal to 25% of any net New Trading Profits (as defined below) generated by the Trading Advisor for the Fund, payable quarterly in arrears.

Charges		Amount
Brokerage Commissions		The Fund incurs brokerage commissions on U.S. futures exchanges currently at the rate of $1.32 to $28.02 per “round-turn” futures transaction (which includes NFA, execution, clearing and exchange fees). Brokerage commissions may be higher for trades executed on some foreign exchanges. The Fund will also pay the bid-ask spread on foreign currency transactions. The Fund’s average commission cost is $6.48 per round-turn transaction.

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

Administrative Expenses		The Fund reimburses the General Partner for actual monthly administrative expenses up to 1/12th of 0.75% of the Fund’s month-end net asset value, payable in arrears. However, expenses (other than extraordinary costs) that exceed 1.00 % of the average month-end net assets of the Fund are the responsibility of the General Partner.

		Administrative expenses include accounting, audit, legal, salary and administrative costs incurred by the General Partner relating to marketing and administration of the Fund; such as, salaries and commissions of General Partner marketing personnel, administrative employee salaries and related costs.

		The Fund may incur extraordinary expenses (including extraordinary legal and accounting fees), although none are anticipated.

New Trading Profits are equal to the sum of: (i) the net of all realized profits and losses during the quarter, plus (ii) the net of all unrealized profits and losses net of accrued brokerage commissions, NFA fees and give-up fees as of the quarter-end, minus: (iii) the net of all unrealized profits and losses on commodity positions open at the end of the previous quarter-end, and (iv) any cumulative net realized losses (which shall not include incentive fee expenses) from the Trading Advisor’s trading on behalf of the Fund carried forward from all previous quarters since the last quarter for which an incentive fee was payable to the Trading Advisor, and (v) any management fees paid or accrued to the Trading Advisor, and (vi) a certain percentage per annum reflecting an agreed upon portion of the General Partner management fee, selling agent fees and administrative expenses, and (vii) interest income.

New Trading Profits will be calculated on the basis of assets allocated to the Trading Advisor. In determining New Trading Profits, any trading losses generated by the Trading Advisor for the Fund in prior periods are carried forward, so that the incentive fee is paid only if and to the extent the profits generated by the Trading Advisor for the period exceed any losses (excluding losses relating to redeemed Units) from prior periods. The carry-forward loss is proportionally reduced if and to the extent the Fund reduces the amount of assets allocated to the Trading Advisor during a period that a carry-forward loss exists. Once an incentive fee is earned, it is retained by the Trading Advisor regardless of its subsequent performance. Because incentive fees are paid on a quarterly rather than annual basis, a fee could be paid to the Trading Advisor during a year in which the Fund’s performance was unprofitable on an annual basis.

Market Sectors

The Fund trades speculatively, through the allocation of its assets to the Trading Advisor, in the U.S. and international futures markets and may trade or hold forwards, swaps and options. Specifically, the Fund trades futures on interest rates, stock indices, energy products, currencies, metals and agricultural commodities. The Fund does not currently trade currency forwards, forwards on other items, swaps or options contracts, but may do so in the future.

Market Types

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

Conflicts of Interest

The General Partner and its principals have organized and are involved in other business ventures, and may have incentives to favor certain of these ventures over the Fund. The Fund will not share in the risks or rewards of such other ventures. However, such other ventures will compete for the General Partner’s and its principals’ time and attention, which might create other conflicts of interest. The Partnership Agreement does not require the General Partner to devote any particular amount of time to the Fund.

The General Partner or any of its affiliates or any person connected with it may invest in, directly or indirectly, or manage or advise other investment funds or accounts which invest in assets which may also be purchased or sold by the Fund. Neither the General Partner nor any of its affiliates nor any person connected with it is under any obligation to offer investment opportunities of which any of them becomes aware to the Fund or to account to the Fund in respect of (or share with the Fund or inform the Fund of) any such transaction or any benefit received by any of them from any such transaction, but will allocate such opportunities on an equitable basis between the Fund and other clients.

Incentive Fee to the Trading Advisor

Because the Trading Advisor is entitled to an incentive fee, the Trading Advisor may have an incentive to cause the Fund to make riskier or more speculative investments than it otherwise would.

Personal Trading

The Trading Advisor, the futures broker, the General Partner and the principals and affiliates thereof may trade commodity interests for their own account. In such trading, positions might be taken which are opposite those of the Fund, or that compete with the Fund’s trades.

Trades by the Trading Advisor and its Principals

The Trading Advisor and its principals may trade for their own accounts in addition to directing trading for client accounts. Therefore, the Trading Advisor and its principals may be deemed to have a conflict of interest concerning the sequence in which orders for transactions will be transmitted for execution. Additionally, a potential conflict may occur when the Trading Advisor and its principals, as a result of a neutral allocation system, testing a new trading system, trading their own proprietary account(s) more aggressively, or any other actions that would not constitute a violation of fiduciary duties, take positions in their own proprietary account(s) which are opposite, or ahead of, the position(s) taken for a client. Proprietary accounts, in trading a new or experimental system, may enter the same markets earlier than (either days before or on the same day) client accounts traded at the same or other futures commission merchants. Since the principals of the Trading Advisor trade futures and foreign exchange for their own accounts, there is potentially a conflict of interest between these principals and the Trading Advisor’s clients when allocating prices on trades that are executed by a futures commission merchant at multiple prices. In such instances, the Trading Advisor uses a non-preferential method of fill allocation. The clients of the Trading Advisor will not be permitted to inspect the personal trading records of the Trading Advisor or NUSA, or their respective principals, or the written policies relating to such trading. Client records are not available for inspection due to their confidential nature.

Effects of Speculative Position Limits

The CFTC and domestic exchanges have established speculative position limits on the maximum net long or net short futures position which any person, or group of persons, or group of persons acting in concert, may hold or control in particular futures contracts or options on futures traded on U.S. commodity exchanges. All commodity accounts owned or controlled by the Trading Advisor and its principals are combined for speculative position limits. Because speculative position limits allow the Trading Advisor and its principals to control only a limited number of contracts in any one commodity, the Trading Advisor and its principals are potentially subject to a conflict among the interests of all accounts the Trading Advisor and its principals control which are competing for shares of that limited number of contracts. There exists a conflict between the Trading Advisor’s interest in maintaining a smaller position in an individual client’s account in order to also provide positions in the specific commodity to other accounts under management and the personal accounts of the Trading Advisor and its principals. The General Partner does not believe, however, that the position limits are likely to impair the Trading Advisor’s trading for the Fund although it is possible the issue could arise in the future.

To the extent that position limits restrict the total number of commodity positions which may be held by the Fund and those other accounts, the Trading Advisor will allocate the orders equitably between the Fund and such other accounts. Similarly, where orders for the same commodity given on behalf of both the Fund and other accounts managed by the Trading Advisor cannot be executed in full, the Trading Advisor will equitably allocate between the Fund and such other accounts that portion of the total quantity able to be executed.

Other Activities of the Principals of the Advisor

Certain principals of the Trading Advisor are currently engaged, and expect in the future to be engaged, in other activities, some of which may involve other business activities in the futures industry. In addition, each principal of the Trading Advisor may be engaged in trading for his own personal account. The principals will have a conflict of interest between their obligations to devote all of their attention to client accounts and their interests in engaging in other activities. However, the principals of the Trading Advisor intend to devote substantial attention to the operation and activities of the Trading Advisor consistent with the division of responsibilities among them as is described herein.

Operation of Other Commodity Pools

The General Partner currently operates two other commodity pools and might have an incentive to favor those pools over the Fund.

Fiduciary Responsibility of the General Partner

The General Partner has a fiduciary duty to the Fund to exercise good faith and fairness in all dealings affecting the Fund. If a limited partner believes this duty has been violated, he may seek legal relief under applicable law, for himself and other similarly situated partners, or on behalf of the Fund. However, it may be difficult for limited partners to obtain relief because of the changing nature of the law in this area, the vagueness of standards defining required conduct and the broad discretion given the General Partner in the Partnership Agreement and the exculpatory provisions therein.

Selling Agents

The receipt by the selling agents and their registered representatives of continued sales commissions for outstanding Units may give them an incentive to advise limited partners to remain investors in the Fund. These payments cease to the extent the limited partners withdraw from the Fund.

The General Partner Serving as Selling Agent

The General Partner also serves as a selling agent for the Fund. As a result, the fees and other compensation received by the General Partner as selling agent have not been independently negotiated.

Futures Broker

The futures broker affects transactions for customers (including public and private commodity pools), including the Fund, who may compete with the Fund’s transactions including with respect to priorities or order entry. Since the identities of the purchaser and seller are not disclosed until after the trade, it is possible that the futures broker could effect transactions for the Fund in which the other parties to the transactions are the futures broker’s officers, directors, employees, customers or affiliates. Such persons might also compete with the Fund in making purchases or sales of commodities without knowing that the Fund is also bidding on such commodities. Since orders are filled in the order in which they are received by a particular floor broker, transactions for any of such persons might be executed when similar trades for the Fund are not executed or are executed at less favorable prices. However, in entering orders for the Fund and other customer accounts, including with respect to priorities of order entry and allocations of executed trades, CFTC regulations prohibit a futures commission merchant from utilizing its knowledge of one customer’s trades for its own or its other customer’s benefit.

Regulations

The Fund is a registrant with the SEC pursuant to the 1934 Act. As a registrant, the Fund is subject to the regulations of the SEC and the reporting requirements of the 1934 Act. As a commodity pool, the Fund is subject to the regulations of the CFTC, an agency of the U.S. government, which regulates most aspects of the commodity futures industry; rules of the NFA, an industry self-regulatory organization; and the requirements of commodity exchanges where the Fund executes transactions. Additionally, the Fund is subject to the requirements of futures commission merchants, futures broker and Interbank market makers through which the Fund trades.

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

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Reform Act”) was enacted in July 2010. The Reform Act includes provisions that comprehensively regulate the over-the-counter derivatives markets for the first time. The Reform Act will mandate that a substantial portion of over-the-counter derivatives must be executed in regulated markets and submitted for clearing to regulated clearinghouses. The mandates imposed by the Reform Act may result in the Fund bearing higher upfront and mark-to-market margin, less favorable trade pricing, and the possible imposition of new or increased fees.

The Reform Act also amended the definition of eligible contract participant, and the CFTC is interpreting that definition in such a manner that the Fund may no longer be permitted to engage in forward currency transactions by directly accessing the interbank market. Rather, when the Reform Act goes into effect in July 2011, the Fund may be limited to engaging in retail forex transactions which could limit the Fund’s potential forward currency counterparties to futures commission merchants and retail foreign exchange dealers. Thus, limiting the Fund’s potential forward currency counterparties could lead to the Fund bearing higher upfront and mark-to-market margin, less favorable trade pricing, and the possible imposition of new or increased fees. The retail forex markets could also be significantly less liquid than the interbank market. Moreover, the creditworthiness of the futures commission merchants and retail foreign exchange dealers with whom the Fund may be required to trade could be significantly weaker than the creditworthiness of the financial institutions with whom the Fund currently engages for its forward currency transactions. Although the impact of requiring the Fund to conduct forward currency transactions in the retail market could be substantial, the full scope is currently unknown and the ultimate effect could also be negligible.

Additionally, the CFTC and certain commodity exchanges have established limits on the maximum net long and net short positions which any person, including the Fund, may hold or control in particular commodities. Most exchanges also limit the maximum changes in futures contract prices that may occur during a single trading day. The Fund also trades in dealer markets for forward contracts, which are not regulated by the CFTC. Federal and state banking authorities do not regulate forward trading or forward dealers. In addition, the Fund trades on foreign commodity exchanges, which are not subject to regulation by any U.S. government agency. In January 2011, the CFTC proposed a separate position limits regime for 28 so-called “exempt” (i.e. metals and energy) and agricultural futures and options contracts and their economically equivalent swap contracts. Position limits in spot months are proposed to be 25% of the official estimated deliverable supply of the underlying commodity and in a non-spot month a percentage of the average aggregate 12-month rolling open interest in all months (swaps and futures) for each contract. The General Partner believes that the proposed limits are sufficiently large that if adopted, they should not restrict the Fund’s trading strategy.

Competition

The Fund operates in a competitive environment in which it faces several forms of competition, including, without limitation, the following:

The Fund competes with other commodity pools and other investment vehicles for investors.

The Trading Advisor may compete with other traders in the markets in establishing or liquidating positions on behalf of the Fund.

Available Information

The Fund files Forms 10-K, 10-Q, 8-K, 3 and 4, as required, with the SEC. The public may read and copy any materials filed with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Additional information about the Public Reference Room may be obtained by calling the SEC at (800) SEC-0330. Reports filed electronically with the SEC may be found at http://www.sec.gov.

Reports to Security Holders

None.

Enforceability of Civil Liabilities Against Foreign Persons

None.

Item 1A. Risk Factors

A smaller reporting company, as defined by Rule 12b-2 of the 1934 Act, is not required to provide the information under this item.

Item 1B. Unresolved Staff Comments

A smaller reporting company, as defined by Rule 12b-2 of the 1934 Act, is not required to provide the information under this item.

Item 2. Properties

The Fund does not use any physical properties in the conduct of its business. Its assets currently consist of futures and other contracts, cash and short-term fixed income securities with maturities of less than one year.

The General Partner’s principal business office is in Rockville, Maryland.

Item 3. Legal Proceedings

None.

Item 4. [Removed and Reserved]

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

There is no established public trading market for the Units of the Fund.

Units of the Fund are offered continuously to the public through selling agents on a best-efforts basis at their month-end net asset value per unit. The minimum investment is $10,000. Currently, Units are offered on the first day of each month at the net asset value per unit on the last day of the preceding month. Units are issued as of the commencement of business on the first business day of each month.

Holders

As of February 28, 2011, there were 943 holders of Units of the Fund.

Dividends

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

Securities Authorized for Issuance under Equity Compensation Plans

None.

Recent Sales of Unregistered Securities and Use of Proceeds from Registered Securities

There were no sales of unregistered securities of the Fund during the year ended December 31, 2010.

The proceeds from the sale of registered securities of the Fund are deposited in the Fund’s bank and brokerage accounts for the purpose of engaging in trading activities in accordance with the Fund’s trading policies and the Trading Advisor’s Trading Program.

Issuer Purchases of Equity Securities

Redemptions may be made by a limited partner as of the last trading day of any month at the net asset value of the redeemed Units (or portion thereof) on that date, on five days’ prior written notice to the General Partner. Partial redemptions must be for at least $1,000, unless such requirement is waived by the General Partner. In addition, if making a partial redemption, the limited partner must maintain at least $10,000 or his original investment amount, whichever is less, in the Fund unless such requirement is waived by the General Partner. The redemption of Units has no impact on the value of Units that remain outstanding, and Units are not reissued once redeemed.

Redemptions of Units during the fourth quarter of 2010 were as follows:

	October		November		December		Total
A Units
Units redeemed		27.9110		781.4080		155.2684		964.5874
Average net asset value per unit	$	2,692.55	$	2,579.76	$	2,732.10	$	2,607.55

Item 6. Selected Financial Data

A smaller reporting company, as defined by Rule 12b-2 of the 1934 Act, is not required to provide the information under this item.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Utilizing the Trading Advisor, the Fund invests the proceeds from its offering of Units in the speculative trading of futures contracts and other financial instruments traded in the U.S. and internationally.

Liquidity

At December 31, 2010, there are no known material trends, demands, commitments, events, or uncertainties at the present time that are reasonably likely to result in the Fund’s liquidity increasing or decreasing in any material way.

Capital Resources

The Fund intends to raise additional capital only through the sale of Units, and does not intend to raise any capital through borrowing. Due to the nature of the Fund’s business, the Fund does not contemplate making capital expenditures. The Fund does not have, nor does it expect to have, any capital assets. Redemptions, exchanges and sales of Units in the future will affect the amount of funds available for investments in futures contracts, forward currency contracts and other financial instruments in subsequent periods. It is not possible to estimate the amount, and therefore the impact, of future capital inflows and outflows related to the sale and redemption of Units. There are no known material trends, favorable or unfavorable, that would affect, nor any expected material changes to, the Fund’s capital resource arrangements at the present time.

Results of Operations

The returns for the Fund for the years ended December 31, 2010 and 2009 were 7.74% and (10.93%), respectively. Past performance is not indicative of expected future financial condition or results of operations. Further analysis of the trading gain and loss is provided below.

2010

January

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

February

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

March

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

April

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

May

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

June

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

July

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

August

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

September

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

October

The Fund finished higher in October by 4.64% with profits in four of the six major market sectors. The most significant gains came from long positions in global stock indices driven by upward trends in the DAX, S&P 500, Russell 2000 and FTSE 100. In currencies, the rise in the Japanese yen, Australian dollar, Mexican peso and New Zealand dollar were responsible for generating the most profits from that sector. The combination of rising Chinese agricultural imports, lower inventories and a weaker U.S. dollar helped push agricultural commodity prices higher, which benefited the Fund’s long positions. Corn prices climbed to 2-year high, soybeans reached their highest price since July 2008, and sugar prices hit a 30-year high. Precious metals also trended higher, adding additional profits from that sector.

November

The Fund finished lower in November by 4.19% as losses from interest rate instruments, currencies and agriculturals offset gains in metals and equity indices. The most significant losses came from the Fund’s long positions in interest rates, where price reversals caused by a rise in rates followed growing concerns over Irish sovereign debt in Europe and its threat to impact other EU nations including Portugal and Spain. In addition, there was a rise in short term U.S. interest rates that followed the Federal Reserve’s action of buying U.S. debt instruments in another round of quantitative easing. The net effect was that the fall in prices went against the Fund’s widely held long positions. The Irish debt crisis also pushed the euro lower relative to other foreign currencies, while the U.S. dollar reversed its downward direction. The sudden reversals in currencies went against the Fund’s positions, generating additional losses for the Fund. Metals, including gold, silver and copper, continued higher this month, generating profits for the Fund’s long positions.

December

Fund finished higher in December by 5.91% with most profits coming from the Fund’s positions in foreign currencies. Foreign currencies were profitable for the Fund, driven by trends in international cross currencies resulting from a decline in the euro and British pound combined with rising Australian dollar and Japanese yen prices. Strong upward trends in the metals markets also fueled profits for the Fund’s long positions in copper, silver, gold and aluminum. In agricultural commodities rising prices in coffee, soybeans, corn and sugar each contributed additional profits. Finally, there were some gains from the Fund’s long positions in equity indices as equity prices continued to trend higher for the past two quarters. Interest rate instrument prices went against the Fund’s long positions which generated losses.

2009

January

The Fund finished lower in January by 2.43%, as losses in interest rate instruments, foreign currencies, equity indices and metals offset gains in energy and agricultural commodities. Many of the markets traded by the Fund were directionless. General optimism after the Obama transition along with government intervention into the world’s financial markets seemed to dampen the steady declines in equity prices experienced in recent quarters. The energy sector was profitable, driven by gains from crude oil and natural gas, whose prices continued to decline on slowing demand and rising inventory levels. Interest rate instruments edged lower during the month which went against the Fund’s long bond positions. In foreign currencies, the U.S. dollar strengthened as risk adverse investors continued to seek the perceived safety of the U.S. currency which benefited the Fund’s long U.S. dollar positions. In other foreign currencies though, the British pound strengthened against the Australian dollar which went against the Fund’s short pound positions.

February

The Fund finished up 0.08% in the month of February. February was a profitable month for the Fund as most markets continued to trade within relatively narrow price ranges. Global equity markets continued to decline amid further weak economic data and a deepening recession. This decline benefited the Fund’s short positions in equity indices. The energy sector finished with modest profits from short positions in natural gas and heating oil. Agricultural commodities exhibited a small loss after a sharp reversal in cocoa markets. Foreign currencies experienced losses this month due to the weakening of the Japanese yen relative to the U.S. dollar. The yen rose about 30% between August 2008 and the start of February, then switched direction against the U.S. dollar and other major currencies.

March

The Fund finished lower in March by 2.72% as prices moved against established trends and the Fund’s positions. After equity markets reached a new 12 year low, markets reversed and showed some signs of recovery. The rising equity indices, including the S&P 500, DAX and Nikkei 225 Index, moved against the Fund’s short positions, resulting in losses for the Fund. The U.S. dollar fell sharply following the U.S. Treasury Department’s announcement that it planned to repurchase toxic assets, in an effort to help stimulate bank lending. Most foreign currencies strengthened against the U.S. dollar moving against the Fund’s short foreign currency positions. In the interest rate instrument markets, prices settled higher adding some profit to the Fund’s long positions in that sector.

April

The Fund finished lower in April by 1.72% as most markets continued to move within narrow trading ranges without exhibiting any significant trends. One exception was in the energy sector where natural gas prices continued in a downward trend generating profits for the Fund’s short positions. A rally in global equities that began in March continued through April. The rising equity prices generated profits for the Fund’s long positions in this sector which helped to offset losses from other sectors. The Fund’s biggest losses came from interest rate instruments, where prices in medium to long term bonds fell, which went against the Fund’s long positions. Industrial metals prices rose toward the end of the month, with aluminum, tin and nickel moving against the Fund’s short positions creating some losses. Agricultural commodities ended flat for the month.

May

The Fund finished up 1.27% in the month of May, as profits realized from foreign currencies, interest rate instruments, metals and agricultural commodities offset losses incurred in the equity indices and energy sectors. The Fund's largest profits came from long positions in copper and gold which continued to trend higher during the month. The most significant losses derived from the energy sector, which saw sharp price movements in natural gas that went against the Fund's short positions. The Fund's long positions in crude oil generated profits that helped reduce losses experienced from natural gas contracts. Interest rate instruments were mixed as rising prices on short term interest rate instruments were profitable, while a sell-off in longer term fixed income markets went against the Fund's long positions. Profits in foreign currencies came from the Fund's long positions in the euro, British pound, Australian dollar and Canadian dollar.

June

The Fund finished lower in June by 3.64%, as gains in equity indices, energies, foreign currencies and agricultural commodities were offset by losses from interest rate instruments and metals. The most significant losses occurred in the Fund’s short-term interest rate positions, where prices reversed from previous longer term trends. A sharp sell-off in Eurodollar, short sterling and euribor contracts was fueled by speculation that global central banks may begin to increase short-term interest rates to counteract potential inflationary pressures. The sudden drop in interest rate instrument prices went against the Fund’s long positions. Also in interest rates, weaker than expected forecasts for Japan’s economy sent Japanese government bond (JGB) prices higher, which was a reversal from the price trend in that market. The higher prices generated losses in the Fund’s short JGB positions. Commodity markets rallied during the month which benefited the Fund’s long positions in agricultural commodities, but resulted in losses from short positions in the metals sector. Long positions in the energies were profitable as oil prices made new highs for the year.

July

In July the Fund declined by 0.76%, as profits from equity indices, interest rate instruments, metals and foreign currencies were not sufficient to offset losses from energy and agricultural commodities. Equity markets were volatile as they initially fell early in the month in response to poor economic data in the U.S. By mid-month increased optimism about the global economy pushed equity markets to eight month highs. The rising global equity prices generated profits for the Fund’s long positions. The Fund’s long positions in base metals, including aluminum, nickel and copper, benefited from upward trends in those markets that also generated profits. In energy markets heating oil and gasoline prices continued to move sideways and generated losses for the Fund’s positions in this sector.

August

The Fund finished the month up by 1.46%, as all major sectors posted a profit with the exception of energy. Performance was led by the agricultural commodities sector as price increases in sugar, wheat and corn generated profits for the Fund’s long positions. Due to a drop in global supply, sugar prices hit a 28-year high as heavy rains in India and Brazil dampened inventory. The Fund’s long positions in equity indices profited as further signs of economic recovery pushed equity prices higher. In the metals sector, copper prices were also buoyed by growing confidence on an economic turn around which generated profits from the Fund’s long positions. Globally, central banks indicated that near-term interest rate hikes were unlikely. In response, prices of short-term interest rate instruments increased which benefited the Fund’s long positions. In the energy sector, natural gas prices fell 84% over the last 13 months, which generated profits for the Fund’s short positions. Those profits were offset, however, by losses from short positions in gasoline and crude oil.

September

The Fund finished the month up by 1.68%, as profits from foreign currencies, interest rate instruments and equity indices offset losses in the energy sector. Performance was led by the Fund’s long positions in foreign currencies and short positions in the U.S. dollar. The U.S. dollar declined to a twelve-month low versus the euro and an eight-month low versus the yen. In interest rate instruments, prices in both short-term instruments and long-term bonds have been trending higher since mid-August as central banks continue to signal that interest rates will remain low. The rise in instrument prices generated profits for the Fund's long positions. In the energy sector, natural gas rallied over 30% from a seven year low despite strong inventory data. The sudden increase in gas prices went against the Fund’s short positions generating losses for the Fund.

October

The Fund finished the month down 5.44%, as losses were seen in all market sectors except metals. The early weeks of the month were characterized by rising global equity and commodity prices and a declining U.S. dollar, which generated profits for Fund positions in their respective sectors. However, in the final week of October, uncertainty over global economic growth and central bank policies led to sharp price reversals in several market sectors. Falling prices in global indices went against the Fund’s long positions, while the sudden rise in the U.S. dollar generated losses for the Fund’s long positions in several foreign currencies, including the Canadian dollar, British pound and Japanese yen. Agricultural commodity prices also reversed course, including sugar, corn, soybeans and wheat, which generated losses. Rising metals prices were most profitable for the Fund, led by gold zinc and platinum.

November

The Fund finished up 3.88%, as profits were realized from five out of six market sectors. The largest profits came from the metals sector. Here, the Fund’s long positions in gold and silver generated the most significant profits as a weaker dollar pushed precious and base metal prices higher, including gold, which hit an all time high. In the interest rates sector, the Fund’s long positions in long- and short-term interest rate instruments benefited from upward price trends. Within the sector, the Fund’s long positions in eurodollars were most profitable. In foreign currencies, rising price trends in the Japanese yen and Australian dollar led to profits for our long positions in those currencies. Global equity prices trended higher, which generated profits for long positions in that sector, including the S&P 500, NASDAQ, FTSE and Japanese Topix indices.

December

The Fund finished down 2.78%, as losses from interest rate instruments, energy, and foreign currencies offset profits from equity indices, metals, and agricultural commodities. The Fund’s most significant losses came from its long positions in interest rate instruments. Early in the month, short-term interest rates rose suddenly on speculation that the Federal Reserve might speed up its timetable for increasing its target rate. In the energy sector, a long downward trend in natural gas prices unexpectedly reversed. Natural gas prices hit an 11-month high as government data showed lower than expected U.S. inventories. This sharp price increase went against the Fund’s short natural gas positions, which resulted in a loss. In equity indices, the Fund generated profits from its long positions as the stock market rally that began in early March continued through December.

Off-Balance Sheet Risk

The term off-balance sheet risk refers to an unrecorded potential liability that, even though it does not appear on the balance sheet, may result in future obligation or loss. The Fund trades in futures and forward currency contracts, and is therefore a party to financial instruments with elements of off-balance sheet market and credit risk. In entering into these contracts, there exists a risk to the Fund, market risk, that such contracts may be significantly influenced by market conditions, such as interest rate volatility, resulting in such contracts being less valuable. If the markets should move against all of the futures interests positions of the Fund at the same time, and if the commodity trading advisors were unable to offset futures interest positions of the Fund, the Fund could lose all of its assets and the limited partners would realize a 100% loss. The General Partner minimizes market risk through the maintenance of a margin-to-equity ratio that rarely exceeds 30%.

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

The Fund uses U.S. Treasury securities, U.S. government sponsored enterprise notes, corporate notes and investment grade commercial paper with maturities of less than one year. Investment grade commercial paper is an unsecured, short-term debt instrument issued by a corporation with maturities rarely longer than 270 days. Commercial paper is not usually backed by any form of collateral, so only firms with high-quality debt rating will be used. As commercial paper is not backed by the full faith and credit of the U.S. government, if the issuing corporation defaults on their obligations to the Fund, the Fund bears the risk of loss of the amount expected to be received.

Significant Accounting Estimates

A summary of the Fund’s significant accounting policies are included in Note 1 to the Financial Statements.

The Fund’s most significant accounting policy is the valuation of its assets invested in U.S. and foreign futures contracts and fixed-income investments. The majority of the Fund’s futures contracts are exchange-traded, with the fair value of these contracts based on exchange settlement prices. The fair value of money market funds is based quoted market prices for identical shares. Notes of U.S. government sponsored enterprises and commercial paper, which are stated at cost plus accrued interest, approximate fair value based on quoted market prices for similar assets in an active market. Given the valuation sources, there is little judgment or uncertainty involved in the valuation of these assets, and it is unlikely that materially different amounts would be reported under different valuation methodologies or assumptions.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company, as defined by Rule 12b-2 of the 1934 Act, is not required to provide the information under this item.

Item 8.

Financial Statements and Supplementary Data

Financial statements meeting the requirements of Regulation S-X appear in Part IV of this report.

A smaller reporting company, as defined by Rule 12b-2 of the 1934 Act, is not required to provide the supplementary data under this item.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the management of the General Partner, including its Chief Executive Officer and Chief Financial Officer, the Fund evaluated the effectiveness of the design and operation of the Fund’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the 1934 Act) as of December 31, 2010 (“Evaluation Date”). Any control system, no matter how well designed and operated, can provide only reasonable (not absolute) assurance that its objectives will be met. Furthermore, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer of the General Partner concluded that, as of the Evaluation Date, the Fund’s disclosure controls and procedures were effective in providing reasonable assurance that they are timely alerted to material information relating to the Fund required to be disclosed in the Fund’s periodic SEC filings.

Management’s Annual Report on Internal Control over Financial Reporting

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

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

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

Management assessed the effectiveness of the Fund’s internal control over financial reporting as of December 31, 2010, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on that assessment, management concluded that, as of December 31, 2010, the Fund’s internal control over financial reporting is effective based on the criteria established in Internal Control-Integrated Framework.

Changes in Internal Control Over Financial Reporting

There has been no change in internal control over financial reporting (as defined in the Rules 13a-15(f) and 15d-15(f) of the 1934 Act) that occurred during the Fund’s last fiscal quarter that has materially affected or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.

Item 9B.

Other Information

None.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

The Fund itself has no directors or officers and has no employees. It is managed by the General Partner in its capacity as General Partner. The Kenneth E. Steben Revocable Trust, dated January 29, 2008, (“Trust”) is the sole shareholder of the General Partner and Mr. Kenneth E. Steben is the sole trustee and beneficiary of the Trust. The principals, directors and executive officers of the General Partner are Kenneth E. Steben, Michael D. Bulley, Carl A. Serger, John H. Grady and Neil D. Menard. Their respective biographies are set forth below.

Kenneth E. Steben is the General Partner’s founder, President and Chief Executive Officer, and Chairman of the Board of Directors. Mr. Steben, along with Michael D. Bulley, is responsible for deciding on the Fund’s allocation to the Trading Advisor, or other trading advisors in the future should they deem it in the best interest of the Fund. Mr. Steben, born in January 1955, received his Bachelors Degree in Interdisciplinary Studies, with a concentration in Accounting in 1979 from Maharishi University of Management. Mr. Steben has been a licensed stockbroker since 1981 and a licensed commodities broker since 1983. Mr. Steben holds his Series 3, 5, 7, 24, 63 and 65 FINRA and NFA licenses. Mr. Steben has been a CFTC listed Principal, and registered as an Associated Person since March 15, 1989 and has been registered with FINRA as a general securities principal since September 18, 1986.

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

Carl A. Serger is Chief Financial Officer and a Director. Mr. Serger joined the General Partner in December of 2009 and has been listed as a CFTC Principal of the General Partner since February 2, 2010. Mr. Serger, born in March of 1960, graduated cum laude from Old Dominion University with a BS in Business Administration, and has a Technology Management Certification from the California Institute of Technology. Mr. Serger has over 20 years of accounting experience, including 10 years of audit experience. Prior to joining the General Partner, Mr. Serger was the CFO, Senior VP and Treasurer of Finetre Corporation, a financial technology platform company providing services to major brokerage firms, banks and insurance companies from December 1999 until its acquisition by Ebix, Inc. in October 2006. Mr. Serger remained with Ebix, a software company serving the financial services industry, as Senior VP and CFO until July 2007. From July 2007 to November 2007, he acted as an independent consultant to start up companies. From November 2007 until November 2009, Mr. Serger was the Senior VP, CFO and COO for Peracon, Inc., a leading electronic transactions platform for institutional commercial real estate transactions. Mr. Serger holds Series 28 FINRA and NFA licenses.

John H. Grady is General Counsel and Chief Operating Officer, and a Director. Mr. Grady joined the General Partner in December of 2009 and has been listed as a CFTC registered Principal and registered as an associated person of the General Partner since February 2010. Mr. Grady, born June 1961, received his JD from The University of Pennsylvania Law School in 1985 and received his Bachelor of Arts, magna cum laude, from Colgate University in 1982. Prior to joining the General Partner, Mr. Grady was President of Arcady Investment Consulting LLP, a consulting firm based in Philadelphia that served funds, advisers and brokerage firms from January 2009 to December 2009. Before that, Mr. Grady was a Senior Advisor to Coil Investment Group, a Norway-based investment firm from April 2008 to December 2008, and Chief Executive Officer of the Nationwide Funds Group from October 2006 to January 2008. From April 2004 to June 2006, Mr. Grady served as Chief Executive Officer of the Constellation Funds Group; prior to that, he was the Chief Operating Officer of Turner Investment Partners from February 2001 to March 2004. During the periods of June 2006 to October 2006 and February 2008 to April 2008, Mr. Grady was a consultant in a sole proprietorship. After graduating from law school, Mr. Grady was an attorney in private practice for over 15 years, and was a partner with Morgan, Lewis & Bockius LLP in the firm’s D.C. and Philadelphia offices from July 1993 to January 2001. Mr. Grady holds Series 3, 7, 24 and 63 FINRA and NFA licenses.

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

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

Since May 11, 1989, the General Partner has acted as a general partner to a Maryland limited partnership, Futures Portfolio Fund, Limited Partnership, whose units of limited partner interests are not registered for sale with the SEC. Since March 27, 2007, the General Partner has acted as a general partner of a Delaware limited partnership, Aspect Global Diversified Fund LP, whose units of limited partner interests are registered with the SEC pursuant to a public offering that was effective August 12, 2008. Since March 1, 2011, Steben & Company, Inc. has acted as a manager of a Delaware limited liability company, Steben Institutional Fund LLC. Because the General Partner serves as the sole general partner or manager of these funds, the officers and directors of the General Partner effectively manage the respective funds.

Significant Employees

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

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the U.S. Securities Exchange Act of 1934 requires that reports of beneficial ownership of limited partner interests and changes in such ownership be filed with the Securities and Exchange Commission by Section 16 “reporting persons.” The Fund is required to disclose in this Annual Report on Form 10-K each reporting person whom it knows to have failed to file any required reports under Section 16 (a) on a timely basis during the year ended December 31, 2010. During the year ended December 31, 2010, all reporting persons complied with all Section 16(a) filing requirements applicable to them.

Code of Ethics

The General Partner has adopted a code of ethics, as of the period covered by this report, which applies to the Fund’s principal executive officer and principal financial officer or persons performing similar functions. A copy of the code of ethics is available without charge upon request by calling 240-631-7600.

Item 11.

Executive Compensation

The Fund does not itself have any officers, directors or employees. The managing officers of the General Partner are remunerated by the General Partner in their respective positions. The directors and managing officers of the General Partner receive no other compensation from the Fund. There are no compensation plans or arrangements relating to a change in control of either the Fund or the General Partner.

As compensation for its services in managing the Fund, the General Partner earns the following compensation:

General Partner Management Fee – the Fund incurs a fee equal to 1/12th of 1.10% of the Fund’s month-end net assets, payable in arrears. During 2010 and 2009, the General Partner earned $804,011 and $783,251, respectively, in General Partner management fees.

Selling Agent Fees – the Fund incurs a selling agent fee equal to 1/12th of 3% of the outstanding month-end net asset value, payable in arrears. The General Partner pays the selling agent fees to the respective selling agents. If the selling agent fees are not paid to the selling agent, or the General Partner was the selling agent, such portions of the fees are retained by the General Partner. During 2010 and 2009, the General Partner earned $2,192,757 and $2,136,140, respectively, in Selling Agent fees.

Additionally, each year the General Partner receives from the Fund 1% of any net income earned by the Fund or pays to the Fund 1% of any net loss incurred by the Fund. For the year ended December 31, 2010, the General Partner received $56,532 from the General Partner 1% allocation. For the year ended December 31, 2009, the General Partner paid the Fund $81,664 for the General Partner 1% allocation.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

As of February 28, 2011, no person or “group” is known to have been the beneficial owner of more than 5% of the Units.

As of February 28, 2011, the General Partner did not own any Units of the Fund. As of February 28, 2011, the directors and executive officers of the General Partner beneficially owned Units as follows:

Name		Units Owned				Value of Units			Percentage of Limited Partnership
Michael D. Bulley			14.9571			$	37,672		Less than 1%

The address of each director and officer is c/o Steben & Company, Inc., 2099 Gaither Road, Suite 200, Rockville, Maryland 20850.

There has been no change of control of the Fund.

Item 13.

Certain Relationships and Related Transactions, and Director Independence

See “Item 1. Business” for a description of the relationships between the General Partner, the Fund, the Trading Advisor, the futures broker and the cash management securities broker. See “Item 11. Executive Compensation” and “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

Item 14.

Principal Accounting Fees and Services

The following table sets forth the fees billed to the Fund for professional audit services provided by McGladrey & Pullen, LLP, the Fund’s independent registered public accountant, for the audit of the Fund’s annual financial statements for the years ended December 31, 2010 and 2009, and fees billed for other professional services rendered by McGladrey & Pullen, LLP and RSM McGladrey, Inc. (an associated entity of McGladrey & Pullen, LLP) during those periods.

Fee Category	2010		2009
Audit fees(1)	$	77,500	$	136,300
Audit-related fees		—		—
Tax fees(2)		16,000		16,420
All other fees		—		—
Total fees	$	93,500	$	152,720

(1)

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

(2)

Tax fees consist of fees for the preparation of original tax returns.

The General Partner’s Board of Directors pre-approves all audit and permitted non-audit services of the Fund’s independent accountants, including all engagement fees and terms. The General Partner’s Board of Directors approved all the services provided by McGladrey & Pullen, LLP and RSM McGladrey, Inc. (collectively “McGladrey”) during 2010 and 2009 to the Fund described above. The General Partner’s Board of Directors has determined that the payments made to McGladrey for these services during 2010 and 2009 are compatible with maintaining that firm’s independence.

PART IV

Item 15.

Exhibits and Financial Statement Schedules

Financial Statements

Sage Fund Limited Partnership

Report of Independent Registered Public Accounting Firm

Statements of Financial Condition as of December 31, 2010 and 2009

Condensed Schedule of Investments as of December 31, 2010

Condensed Schedule of Investments as of December 31, 2009

Statements of Operations for the Years Ended December 31, 2010 and 2009

Statements of Cash Flows for the Years Ended December 31, 2010 and 2010

Statements of Changes in Partners’ Capital (Net Asset Value) for the Years Ended December 31, 2010 and 2009

Notes to Financial Statements

Exhibits

The following exhibits are filed herewith or incorporated by reference.

Exhibit Number		Description of Document
1.1*		Form of Selling Agreement.
3.1*		Certificate of Limited Partnership of Sage Fund Limited Partnership.
3.2*		Second Amended and Restated Limited Partnership Agreement of Sage Fund Limited Partnership.
10.1*		Form of Subscription Agreement.
10.2**		Advisory Agreement by and among the Fund, the General Partner and Altis Partners (Jersey) Limited dated August 8, 2007.
10.3*		Amendment to Advisory Agreement by and among the Fund, the General Partner and Altis Partners (Jersey) Limited dated August 27, 2007.
10.4*		Futures Account Agreement dated January 21, 2001 by and among the Fund, the General Partner and Carr Futures Inc. (subsequently, Newedge USA, LLC).
10.5*		Corporate Cash Account Management Agreement dated September 25, 2007 by and among the Fund, the General Partner and UBS Financial Services, Inc.
31.01		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
31.02		Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
32.01		Section 1350 Certification of Principal Executive Officer
32.02		Section 1350 Certification of Principal Financial Officer

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

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

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the General Partner of the Registrant in the capacities and on the date indicated.

Name	Title	Date

/s/ Kenneth E. Steben	President, Chief Executive Officer and Director of the General Partner	March 25, 2011
Kenneth E. Steben

/s/ Carl A. Serger	Chief Financial Officer and Director of the General Partner	March 25, 2011
Carl A. Serger

/s/ Michael D. Bulley	Senior Vice President, Research & Risk Management and Director of the	March 25, 2011
Michael D. Bulley	General Partner

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

Dated March 25, 2011	Sage Fund Limited Partnership

	By:	Steben & Company, Inc.
		General Partner

	By:	/s/ Kenneth E. Steben
	Name:	Kenneth E. Steben
	Title:	President, Chief Executive Officer and
		Director of the General Partner

Report of Independent Registered Public Accounting Firm

To the Partners of

Sage Fund Limited Partnership

We have audited the accompanying statements of financial condition, including the condensed schedules of investments, of Sage Fund Limited Partnership (the Fund) as of December 31, 2010 and 2009, and the related statements of operations, cash flows, and changes in partners’ capital (net asset value) for the years then ended. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Fund is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sage Fund Limited Partnership as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ McGladrey & Pullen, LLP

Chicago, Illinois

March 25, 2011

F-1

Sage Fund Limited Partnership

Statements of Financial Condition

December 31, 2010 and 2009

	2010		2009
Assets
Equity in broker trading accounts
Cash	$	21,054,325	$	15,489,732
Net unrealized gain on open futures contracts		4,619,366		4,046,127
Interest receivable		5,265		1,408
Total equity in broker trading accounts		25,678,956		19,537,267
Cash and cash equivalents		52,810,375		46,842,998
U.S. government sponsored enterprise notes, at fair value		-		8,075,134
General Partner 1% allocation receivable		-		81,664
Total assets	$	78,489,331	$	74,537,063

Liabilities and Partners’ Capital (Net Asset Value)
Liabilities
Trading Advisor management fee payable	$	64,642	$	123,416
Trading Advisor incentive fee payable		1,684		-
Selling Agent fees payable - General Partner		193,019		183,853
Administrative expenses payable - General Partner		44,012		138,147
Commissions and other trading fees payable on open contracts		16,047		7,515
General Partner management fee payable		70,774		67,413
General Partner 1% allocation payable		56,532		-
Redemptions payable		424,209		199,956
Subscriptions received in advance		1,141,953		767,147
Total liabilities		2,012,872		1,487,447
Partners’ Capital (Net Asset Value)
Class A Interests – 27,991.7912 units and 28,805.7820 units outstanding at December 31, 2010 and 2009, respectively		76,476,459		73,049,616
Total liabilities and partners' capital (net asset value)	$	78,489,331	$	74,537,063

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

F-2

Sage Fund Limited Partnership

Condensed Schedule of Investments

December 31, 2010

	Description	Fair Value			% of Partners’ Capital (Net Asset Value)
Long U.S. Futures Contracts
	Agricultural (1)	$	1,268,992			1.66	%
	Currency		458,322			0.60	%
	Energy		608,067			0.80	%
	Interest rate		188,147			0.25	%
	Metal
	LME Copper U.S. (54 contracts, Jan 2011 – Apr 2011)		1,121,063			1.47	%
	Other (1)		1,659,779			2.17	%
	Stock index		12,632			0.02	%
	Net unrealized gain on open long U.S. futures contracts		5,317,002			6.97	%

Short U.S. Futures Contracts
	Agricultural		(183,030	)		(0.24	)%
	Currency		(281,316	)		(0.37	)%
	Energy (1)		(1,150,945	)		(1.50	)%
	Interest rate		(59,969	)		(0.08	)%
	Metal
	LME Zinc U.S. (122 contracts, Jan 2011 – Apr 2011)		(898,888	)		(1.18	)%
	Other (1)		(1,849,621	)		(2.42	)%
	Stock index		1,800			0.00	%
	Net unrealized loss on open short U.S. futures contracts		(4,421,969	)		(5.79	)%
	Total U.S. Futures Contracts Net unrealized gain on open U.S. futures contracts		895,033			1.18	%

Long Foreign Futures Contracts
	Agricultural		384,170			0.50	%
	Currency		158,179			0.21	%
	Energy		311,379			0.41	%
	Interest rate		27,862			0.04	%
	Metal		96,460			0.13	%
	Stock index		(48,932	)		(0.06	)%
	Net unrealized gain on open long foreign futures contracts		929,118			1.23	%

Short Foreign Futures Contracts
	Agricultural		(65,886	)		(0.09	)%
	Currency (1)		3,036,326			3.97	%
	Interest rate		(225,376	)		(0.29	)%
	Stock index		50,151			0.07	%
	Net unrealized gain on open short foreign futures contracts		2,795,215			3.66	%
	Total Foreign Futures Contracts Net unrealized gain on open foreign futures contracts		3,724,333			4.89	%

	Net unrealized gain on open futures contracts	$	4,619,366			6.07	%

(1) No individual futures contract position constituted one percent or greater of partners’ capital (net asset value). Accordingly, the number of contracts and expiration dates are not presented.

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

F-3

Sage Fund Limited Partnership

Condensed Schedule of Investments

December 31, 2009

			Description	Fair Value			% of Partners’ Capital (Net Asset Value)

U.S. Government Sponsored Enterprise Notes
Face Value		Maturity Date
$	8,000,000	3/30/10	Federal Home Loan Mortgage Corporation, 1.10%	$	8,075,134			11.05	%
			Total U.S. government sponsored enterprise notes (cost: $8,039,111)	$	8,075,134			11.05	%

Long U.S. Futures Contracts
			Agricultural	$	574,489			0.79	%
			Currency		3,305			0.00	%
			Energy		(126,660	)		(0.17	)%
			Interest rate		517,369			0.71	%
			Metal
			LME Copper U.S. (61 contracts, Jan 2010 – Mar 2010)		1,045,669			1.43	%
			LME Aluminum U.S. (210 contracts, Jan 2010 – Apr 2010)		871,181			1.19	%
			Other (1)		828,527			1.13	%
			Stock index		179,911			0.25	%
			Net unrealized gain on open long U.S. futures contracts		3,893,791			5.33	%

Short U.S. Futures Contracts
			Agricultural		4,528			0.01	%
			Currency		531			0.00	%
			Energy		(236,723	)		(0.32	)%
			Interest rate		54,234			0.07	%
			Metal (1)		(1,555,327	)		(2.14	)%
			Net unrealized loss on open short U.S. futures contracts		(1,732,757	)		(2.38	)%
			Total U.S. Futures Contracts Net unrealized gain on open U.S. futures contracts		2,161,034			2.95	%

Long Foreign Futures Contracts
			Agricultural		245,014			0.34	%
			Currency		(59,087	)		(0.08	)%
			Energy		8,638			0.01	%
			Interest rate
			LIF 3M EURIBOR (193 contracts, Mar 2010 – Dec 2011)		744,291			1.02	%
			Other		227,206			0.31	%
			Metal		207,659			0.28	%
			Stock index		402,633			0.55	%
			Net unrealized gain on open long foreign futures contracts		1,776,354			2.43	%

Short Foreign Futures Contracts
			Agricultural		(3,721	)		(0.01	)%
			Currency		147,081			0.20	%
			Energy		(54,715	)		(0.07	)%
			Interest rate		20,094			0.03	%
			Net unrealized gain on open short foreign futures contracts		108,739			0.15	%
			Total Foreign Futures Contracts Net unrealized gain on open foreign futures contracts		1,885,093			2.58	%

			Net unrealized gain on open futures contracts	$	4,046,127			5.53	%

(1) No individual futures contract position constituted one percent or greater of partners’ capital (net asset value). Accordingly, the number of contracts and expiration dates are not presented.

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

F-4

Sage Fund Limited Partnership

Statements of Operations

Years Ended December 31, 2010 and 2009

	2010			2009
Trading Gain (Loss)
Net realized gain	$	9,355,296		$	791,915
Net change in unrealized gain (loss)		573,239			(5,079,721	)
Brokerage commissions and trading expenses		(218,886	)		(130,748	)
Net gain (loss) from trading		9,709,649			(4,418,554	)

Net Investment Loss
Income
Interest income		242,197			396,920
Expenses
Trading Advisor management fee		750,606			690,631
Trading Advisor incentive fee		1,684			-
Selling Agent fees – General Partner		2,192,757			2,136,140
Administrative expenses – General Partner		884,217			905,437
General Partner management fee		804,011			783,251
General Partner 1% allocation		56,532			(81,664	)
Total expenses		4,689,807			4,433,795
Administrative expenses waived		(334,653	)		(370,715	)
Net total expenses		4,355,154			4,063,080
Net investment loss		(4,112,957	)		(3,666,160	)
Net Income (Loss)	$	5,596,692		$	(8,084,714	)

	Class A Units
	2010		2009
Increase (decrease) in net asset value per unit for the year	$	196.16	$	(311.25	)

Net income (loss) per unit	$	196.42	$	(305.60	)
(based on weighted average number of units outstanding during the year)
Weighted average number of units outstanding		28,492.9034		26,454.9654

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

F-5

Sage Fund Limited Partnership

Statements of Cash Flows

Years Ended December 31, 2010 and 2009

	2010			2009
Cash flows from operating activities
Net income (loss)	$	5,596,692		$	(8,084,714	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Net change in unrealized (gain) loss		(573,239	)		5,079,721
Changes in
Interest receivable		(3,857	)		3,094
U.S. government sponsored enterprise notes		8,075,134			1,063,652
U.S. Treasury securities		-			4,498,180
Commercial paper		-			19,576,904
Corporate notes		-			4,013,516
General Partner 1% allocation receivable/payable		138,196			(292,224	)
Trading Advisor management fee payable		(58,774	)		75,506
Trading Advisor incentive fee payable		1,684			(2,303,426	)
Selling Agent fees payable – General Partner		9,166			6,453
Administrative expenses payable – General Partner		(94,135	)		12,617
Commissions and other trading fees payable on open contracts		8,532			(2,618	)
General Partner management fee payable		3,361			2,366
Net cash provided by operating activities		13,102,760			23,649,027

Cash flows from financing activities
Subscriptions		5,432,137			19,712,370
Subscriptions received in advance		1,141,953			767,147
Redemptions		(8,144,880	)		(9,541,704	)
Net cash provided by (used in) financing activities		(1,570,790	)		10,937,813

Net increase in cash and cash equivalents		11,531,970			34,586,840
Cash and cash equivalents, beginning of year		62,332,730			27,745,890
Cash and cash equivalents, end of year	$	73,864,700		$	62,332,730

End of year cash and cash equivalents consists of
Cash in broker trading accounts	$	21,054,325		$	15,489,732
Cash and cash equivalents		52,810,375			46,842,998
Total end of year cash and cash equivalents	$	73,864,700		$	62,332,730

Supplemental disclosure of cash flow information
Prior year redemptions paid	$	199,956		$	2,852,196
Prior year subscriptions received in advance	$	767,147		$	1,513,541

Supplemental schedule of non-cash financing activities
Redemptions payable	$	424,209		$	199,956

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

F-6

Sage Fund Limited Partnership

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

Years Ended December 31, 2010 and 2009

	Units			Amount

Balance at December 31, 2008		23,461.0047		$	66,797,883
Net loss					(8,084,714	)
Subscriptions		7,910.6855			21,225,911
Redemptions		(2,565.9082	)		(6,889,464	)
Balance at December 31, 2009		28,805.7820			73,049,616
Net income					5,596,692
Subscriptions		2,486.6130			6,199,284
Redemptions		(3,300.6038	)		(8,369,133	)
Balance at December 31, 2010		27,991.7912		$	76,476,459

	Net Asset Value Per Unit

December 31, 2008	$	2,847.19
December 31, 2009	$	2,535.94
December 31, 2010	$	2,732.10

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

F-7

Sage Fund Limited Partnership

Notes to Financial Statements

1.	Organization and Summary of Significant Accounting Policies

Description of the Fund

Sage Fund Limited Partnership (“Fund”) is a Maryland limited partnership, which operates as a commodity investment pool that commenced operations on August 2, 1995. The Fund issues Class A units of limited partner interests (“Units”), which represent Units of fractional undivided beneficial interest in and ownership of the Fund. The Fund will automatically terminate on December 31, 2025, unless terminated earlier as provided in the Second Amended and Restated Limited Partnership Agreement (“Partnership Agreement”).

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

The Fund is a registrant with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the U.S. Securities Exchange Act of 1934, as amended (“1934 Act”). As a registrant, the Fund is subject to the regulations of the SEC and the disclosure requirements of the 1934 Act. As a commodity pool, the Fund is subject to the regulations of the U.S. Commodity Futures Trading Commission (“CFTC”), an agency of the U.S. Government, which regulates most aspects of the commodity futures industry; rules of the National Futures Association (“NFA”), an industry self-regulatory organization; rules of Financial Industry Regulatory Authority (“FINRA”), an industry self-regulatory organization; and the requirements of commodity exchanges where the Fund executes transactions. Additionally, the Fund is subject to the requirements of its futures broker.

Steben & Company, Inc. (“General Partner”), is the general partner of the Fund and a Maryland corporation registered with the CFTC as a commodity pool operator and a commodities introducing broker, and is also registered with the SEC as a registered investment advisor and a broker dealer. The General Partner is a member of the NFA and FINRA. The General Partner manages all aspects of the Fund’s business and serves as one of the Fund’s selling agents.

Altis Partners (Jersey) Ltd. (“Trading Advisor”) is the sole trading advisor for the Fund. The Trading Advisor uses the Altis Global Futures Portfolio (“Trading Program”), a proprietary, systematic trading system that deploys multiple trading strategies utilizing derivatives that seek to identify and exploit directional moves in market behavior to a broad and diversified range of global markets including stock indices, currencies, interest rate instruments, energy products, metals and agricultural commodities.

Significant Accounting Policies

Accounting Principles

The Fund’s financial statements are prepared in conformity with U.S. generally accepted accounting principles (“GAAP”).

Use of Estimates

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

Revenue Recognition

Futures contracts are recorded on a trade date basis, and gains or losses are realized when contracts are liquidated. Unrealized gains and losses on open futures contracts (the difference between contract trade price and fair value) are reported in the statements of financial condition as net unrealized gain or loss, as there exists a right of offset of any unrealized gains or losses. Any change in net unrealized gain or loss from the preceding period is reported in the statements of operations. Interest income earned on investments in commercial paper, corporate notes, U.S. Treasury securities, U.S. government sponsored enterprise notes and other cash and cash equivalent balances is recorded on an accrual basis.

F-8

Fair Value of Financial Instruments

Financial instruments are recorded at fair value, the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Assets and liabilities recorded at fair value are classified within the fair value hierarchy based upon the level of judgment associated with the inputs used to measure their value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1 –

Fair value is based on unadjusted quoted prices for identical instruments in active markets. Financial instruments utilizing Level 1 inputs include exchange-traded derivatives and money market funds.

Level 2 –

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

Level 3 –

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

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Fund’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 Fund assesses the classification of the instruments at each measurement date, and any transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer in accordance with the Fund’s accounting policy regarding the recognition of transfers between levels of the fair value hierarchy. For the years ended December 31, 2010 and 2009, there were no such transfers between levels.

A description of the valuation techniques applied to the Fund’s major categories of assets and liabilities measured at fair value on a recurring basis follows.

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

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

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less at the date of acquisition that are not held for sale in the normal course of business. At December 31, 2010, cash and cash equivalents balances held at Newedge USA, LLC, UBS Financial Services, Inc. (“UBS”) and Bank of America were $21,054,325, $8,669 and $52,801,706, respectively. The Fund is at risk to the extent that it maintains balances with such institutions in excess of insured limits; however, the Fund does not believe it is exposed to any significant credit risk.

Brokerage Commissions and Trading Expenses

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

Redemptions Payable

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

F-9

Income Taxes

The Fund prepares calendar year U.S. and applicable state and local tax returns. The Fund is not subject to federal income taxes as each partner is individually liable for his or her allocable share of the Fund’s income, expenses and trading gains or losses. The Fund evaluates the tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained “when challenged” or “when examined” by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense and asset or liability in the current year. Management has determined there are no material uncertain income tax positions through December 31, 2010. With few exceptions, the Fund is no longer subject to U.S. federal, or state and local income tax examinations by tax authorities for years before 2007.

Foreign Currency Transactions

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

Reclassification

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

2.	Fair Value Disclosures

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

At December 31, 2010
	Level 1		Level 2		Total
Equity in broker trading accounts:
Net unrealized gain on open futures contracts*	$	4,619,366	$	—	$	4,619,366
Cash and cash equivalents:
Money market fund		8,669		—		8,669
Total	$	4,628,035	$	—	$	4,628,035

*See the condensed schedule of investments for further description.

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

*See the condensed schedule of investments for further description.

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

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

F-10

3. Derivative Instruments Disclosures

The Fund’s derivative contracts are comprised of future contracts, none of which are designated as hedging instruments. At December 31, 2010 and 2009, the Fund’s derivative contracts had the following impact on the statements of financial condition:

December 31, 2010	Derivative Assets and Liabilities, at fair value
Statements of Financial Condition Location	Assets		Liabilities			Net
Net unrealized gain on open futures contracts
Agricultural	$	1,692,012	$	(287,766	)	$	1,404,246
Currency		3,856,198		(484,687	)		3,371,511
Energy		948,198		(1,179,697	)		(231,499	)
Interest rate		376,551		(445,887	)		(69,336	)
Metal		2,923,850		(2,795,057	)		128,793
Stock index		174,685		(159,034	)		15,651
Net unrealized gain on open futures contracts	$	9,971,494	$	(5,352,128	)	$	4,619,366

At December 31, 2010, there were 5,918 open futures contracts.

December 31, 2009	Derivative Assets and Liabilities, at fair value
Statements of Financial Condition Location	Assets		Liabilities			Net
Net unrealized gain on open futures contracts
Agricultural	$	1,039,795	$	(219,485	)	$	820,310
Currency		462,740		(370,910	)		91,830
Energy		21,087		(430,547	)		(409,460	)
Interest rate		1,915,783		(352,589	)		1,563,194
Metal		3,170,299		(1,772,590	)		1,397,709
Stock index		582,780		(236	)		582,544
Net unrealized gain on open futures contracts	$	7,192,484	$	(3,146,357	)	$	4,046,127

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

For the years ended December 31, 2010 and 2009, the Fund’s derivative contracts had the following impact on the statements of operations:

	2010						2009
Types of Exposure	Net realized gain			Net change in unrealized gain (loss)			Net realized gain			Net change in unrealized gain (loss)
Futures contracts
Agricultural	$	2,048,515		$	583,936		$	(791,183	)	$	(959,662	)
Currency		1,770,813			3,279,681			665,348			(532,829	)
Energy		(4,308,346	)		177,961			(2,888,587	)		(1,002,743	)
Interest rate		8,126,210			(1,632,530	)		1,909,327			(2,454,368	)
Metal		1,611,675			(1,268,916	)		2,907,063			(598,309	)
Stock index		164,860			(566,893	)		(1,033,500	)		468,190
Total futures contracts	$	9,413,727		$	573,239		$	768,468		$	(5,079,721	)

For the years ended December 31, 2010 and 2009, the number of futures contracts closed was 37,677 and 21,695, respectively.

4.	General Partner

At December 31, 2010 and 2009, and for the years then ended, the General Partner did not maintain a capital balance in the Fund. At December 31, 2009, the beneficiary of the sole shareholder of the General Partner had an investment of 21.5210 Units, with a value of $54,576. During 2010, the beneficiary of the sole shareholder redeemed all of its investment.

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The General Partner earns the following compensation:

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

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

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

5.	Trading Advisor

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

6.	Deposits with Brokers

To meet margin requirements, the Fund deposits funds with its futures broker, subject to CFTC regulations and various exchange and broker requirements. The Fund earns interest income on its assets deposited with the broker. At December 31, 2010 and 2009, the Fund had margin requirements of $12,546,070 and $6,228,904, respectively.

7.	Administrative Expenses

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

For the years ended December 31, 2010 and 2009, actual administrative expenses exceeded the 1% administrative expense limitation of average month-end net asset value of the Fund by $151,467 and $192,588, respectively. Such amounts were included in Administrative expenses waived in the statements of operations.

Additionally, during the years ended December 31, 2010 and 2009, the General Partner voluntarily waived $183,186 and $178,127, respectively, of administrative expenses of the Fund. Such amounts were included in Administrative expenses waived in the statements of operations.

At December 31, 2010 and 2009, $44,012 and $138,147, respectively, were payable to the General Partner for expenses incurred on behalf of the fund and not waived by the General Partner. Such amounts are presented as Administrative expenses payable – General Partner in the statements of financial condition.

8.	Subscriptions, Distributions and Redemptions

Investments in the Fund are made by subscription agreement and must be received within five business days of the end of the month, subject to acceptance by the General Partner. The minimum investment is $10,000. Units are sold at the net asset value per Unit as of the close of business on the last day of the month in which the subscription is accepted. Investors whose subscriptions are accepted are admitted as limited partners as of the beginning of the month following the month in which their subscriptions were accepted. At December 31, 2010 and 2009, the Fund received advance subscriptions of $1,141,953 and $767,147, respectively, which were recognized as subscriptions to the Fund or returned, if applicable, subsequent to year-end.

F-12

The Fund is not required to make distributions, but may do so at the sole discretion of the General Partner. A limited partner may request and receive redemption of Units owned at the end of any month, subject to five business days’ prior written notice to the General Partner and in certain circumstances, restrictions in the Partnership Agreement.

The General Partner may require a limited partner to redeem from the Fund if the General Partner deems the redemption (a) necessary to prevent or correct the occurrence of a non-exempt prohibited transaction under the Employee Retirement Income Security Act of 1974, as amended, or the Internal Revenue Code of 1986, as amended, (b) beneficial to the Fund, or (c) necessary to comply with applicable government or self-regulatory organization regulations.

9.	Trading Activities and Related Risks

The Fund engages in the speculative trading of futures contracts in the U.S. and internationally. Trading futures contracts exposes the Fund to both market risk, the risk arising from a change in the fair value of a contract, and credit risk, the risk of failure by another party to perform according to the terms of a contract.

Purchase and sale of futures contracts requires margin deposits with futures brokers. Additional deposits may be necessary for any loss of contract value. The Commodity Exchange Act (“CEAct”) requires a broker to segregate all customer transactions and assets from such broker’s proprietary activities. A customer’s cash and other property (for example, U.S. Treasury securities) deposited with a broker are considered commingled with all other customer funds subject to the broker’s segregation requirements. In the event of a broker’s insolvency, recovery may be limited to a pro-rata share of segregated funds available. It is possible that the recovered amount could be less than the total cash and other property deposited. The Fund utilizes Newedge USA, LLC as its futures broker.

For futures contracts, risks arise from changes in the fair value of the contracts. Theoretically, the Fund is exposed to a market risk equal to the value of futures contracts purchased and unlimited liability on such contracts sold short.

In addition to market risk, upon entering into commodity interest contracts there is a credit risk that the counterparty will not be able to meet its obligations to the Fund. The counterparty for futures and options on futures contracts traded in the U.S. and on most non-U.S. futures exchanges is the clearinghouse associated with such exchanges. In general, clearinghouses are backed by the corporate members of the clearinghouse who are required to share any financial burden resulting from the non-performance by one of their members and, as such, should significantly reduce this credit risk. In cases where the clearinghouse is not backed by the clearing members, like some non-U.S. exchanges, it is normally backed by a consortium of banks or other financial institutions. While the Fund trades only with those counterparties that it believes to be creditworthy, there can be no assurance that any clearing member, clearinghouse or other counterparty will be able to meet its obligations to the Fund.

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

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

10.	Indemnifications

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

11.	Financial Highlights

The following information presents per unit operating performance data and other ratios for the years ended December 31, 2010 and 2009, assuming the unit was outstanding throughout the entire year:

F-13

	2010			2009
Per Unit Operating Performance
Net asset value per Unit at beginning of year	$	2,535.94		$	2,847.19
Income (loss) from operations
Gain (loss) from trading (1)		340.51			(172.67	)
Net investment loss (1)		(144.35	)		(138.58	)
Total income (loss) from operations		196.16			(311.25	)

Net asset value per Unit at end of year	$	2,732.10		$	2,535.94

Total return		7.74	%		(10.93	)%

Other Financial Ratios
Ratios to average net asset value
Expenses prior to Trading Advisor incentive fee and General Partner 1% allocation (2) (3)		5.94	%		5.91	%
Trading Advisor incentive fee (4)		0.00	%		0.00	%
General Partner 1% allocation		0.08	%		(0.12	)%
Total expenses		6.02	%		5.79	%

Net investment loss (2) (3)		(5.69	)%		(5.23	)%

Total returns are calculated based on the change in value of a Unit during the year. An individual partner’s total returns and ratios may vary from the above total returns and ratios based on the timing of subscriptions and redemptions.

(1) The net investment loss per Unit is calculated by dividing the net investment loss by the average number of Units outstanding during the year. Gain (loss) from trading is a balancing amount necessary to reconcile the change in net asset value per Unit with the other per Unit information. Such balancing amount may differ from the calculation of gain (loss) from trading per Unit due to the timing of trading gains and losses during the year relative to the number of Units outstanding.

(2) All of the ratios under Other Financial Ratios for Units are computed net of voluntary and involuntary waivers of administrative expenses. For the years ended December 31, 2010 and 2009, the ratios are net of 0.46% and 0.53%, respectively, of average net asset value relating to the waivers of administrative expenses. Both the nature and the amounts of the waivers are more fully explained in Note 7.

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

(4) Ratio represents less than 0.01% of the average net asset value.

F-14

Attached files

SAGE FUND LP Reports

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