NESTOR PARTNERS - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - NESTOR PARTNERS	Financial_Report.xls
EX-31.02 - EX-31.02 - NESTOR PARTNERS	c471-20140630ex310202977.htm
EX-31.01 - EX-31.01 - NESTOR PARTNERS	c471-20140630ex310126de8.htm
EX-32.01 - EX-32.01 - NESTOR PARTNERS	c471-20140630ex32013d641.htm
EX-32.03 - EX-32.03 - NESTOR PARTNERS	c471-20140630ex3203408c1.htm
EX-32.02 - EX-32.02 - NESTOR PARTNERS	c471-20140630ex3202e37c6.htm
EX-31.03 - EX-31.03 - NESTOR PARTNERS	c471-20140630ex310313f77.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended: June 30, 2014


☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 000-50725

NESTOR PARTNERS

(Exact name of registrant as specified in its charter)


NEW JERSEY		22-2149317
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

c/o MILLBURN RIDGEFIELD CORPORATION

411 West Putnam Avenue

Greenwich, Connecticut 06830

(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (203) 625-7554

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 ☒ 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 ☒ No ☐

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


Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☒

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

Yes ☐ No ☒

PART 1. FINANANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS



Nestor Partners
Financial statements
For the three and six months ended June 30, 2014 and 2013 (unaudited)

Statements of Financial Condition (a)						1
Condensed Schedules of Investments (a)						2
Statements of Operations (b)						6
Statements of Changes in Partners' Capital (c)						8
Statements of Financial Highlights (b)						9
Notes to the Financial Statements						10

(a) At June 30, 2014 and December 31, 2013 (unaudited)
(b) For the three and six months ended June 30, 2014 and 2013 (unaudited)
(c) For the six months ended June 30, 2014 and 2013 (unaudited)


Nestor Partners
Statements of Financial Condition (UNAUDITED)

		June 30, 2014		December 31, 2013
ASSETS

EQUITY IN TRADING ACCOUNTS:
Investments in U.S. Treasury notes − at fair value
(amortized cost $22,599,366 and $27,505,889)	$	22,602,304	$	27,509,188
Net unrealized appreciation on open futures and forward
currency contracts		3,713,429		3,134,932
Due from brokers		7,889,316		1,775,697
Cash denominated in foreign currencies (cost $0
and $3,316,796)		-		3,319,987

Total equity in trading accounts		34,205,049		35,739,804

INVESTMENTS IN U.S. TREASURY NOTES − at fair value
(amortized cost $84,167,117 and $82,000,337)		84,183,748		82,011,307

CASH AND CASH EQUIVALENTS		4,871,030		4,135,215

ACCRUED INTEREST RECEIVABLE		153,475		261,737

TOTAL	$	123,413,302	$	122,148,063

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES:
Capital contributions received in advance	$	100,000	$	225,000
Net unrealized depreciation on open futures and forward
currency contracts		116,546		215,372
Accrued brokerage fees		207,039		218,459
Due to brokers		-		1,698,720
Cash denominated in foreign currencies (cost -$664,175
and $0)		663,532		-
Accrued expenses		164,248		111,175
Capital withdrawals payable		485,697		2,323,360
Due to General Partner		-		333
Other liabilities		35,531		-

Total liabilities		1,772,593		4,792,419

PARTNERS' CAPITAL		121,640,709		117,355,644

TOTAL	$	123,413,302	$	122,148,063


See notes to financial statements (unaudited)


Nestor Partners
Condensed Schedule of Investments
June 30, 2014 (UNAUDITED)

Futures and Forward Currency Contracts	Net Unrealized Appreciation/ (Depreciation) as a % of Partners' Capital			Net Unrealized Appreciation/ (Depreciation)

FUTURES CONTRACTS
Long futures contracts:
Energies	(0.06)	%	$	(70,248)
Grains	(0.21)			(255,564)
Interest rates
5 Year U.S. Treasury Note (456 contracts, settlement date September 2014)	0.12			151,164
10 Year U.S. Treasury Note (222 contracts, settlement date September 2014)	0.09			106,047
30 Year U.S. Treasury Bond (127 contracts, settlement date September 2014)	0.09			114,375
Other	1.49			1,809,655

Total interest rates	1.79			2,181,241

Livestock	0.15			184,540
Metals	0.24			291,149
Softs	0.03			30,912
Stock indices	(0.00)			(6,673)

Total long futures contracts	1.94			2,355,357

Short futures contracts:
Energies	0.12			142,638
Grains	0.27			329,046
Interest rates	(0.00)			(1,347)
Livestock	(0.06)			(65,620)
Metals	(0.25)			(304,896)
Softs	0.01			12,440
Stock indices	0.05			64,260

Total short futures contracts	0.14			176,521

TOTAL INVESTMENTS IN FUTURES CONTRACTS − Net	2.08			2,531,878
FORWARD CURRENCY CONTRACTS
Total long forward currency contracts	1.32			1,596,920
Total short forward currency contracts	(0.44)			(531,915)

TOTAL INVESTMENTS IN FORWARD CURRENCY
CONTRACTS − Net	0.88			1,065,005

TOTAL	2.96	%	$	3,596,883

				(Continued)



Nestor Partners
Condensed Schedule of Investments
June 30, 2014 (UNAUDITED)

	U.S. TREASURY NOTES
	Face Amount	Description	Fair Value as a % of Partners' Capital			Fair Value

$	30,970,000	U.S. Treasury notes, 0.625%, 07/15/2014	25.47	%	$	30,977,259
	30,780,000	U.S. Treasury notes, 0.250%, 09/15/2014	25.32			30,793,226
	34,890,000	U.S. Treasury notes, 0.375%, 03/15/2015	28.74			34,962,233
	10,040,000	U.S. Treasury notes, 0.250%, 05/15/2015	8.26			10,053,334

		TOTAL INVESTMENTS IN U.S. TREASURY
		NOTES (amortized cost $106,766,483)	87.79	%	$	106,786,052

	See notes to financial statements (unaudited)					(Concluded)


Nestor Partners
Condensed Schedule of Investments
December 31, 2013

Futures and Forward Currency Contracts	Net Unrealized Appreciation/ (Depreciation) as a % of Partners' Capital			Net Unrealized Appreciation/ (Depreciation)

FUTURES CONTRACTS
Long futures contracts:
Energies	(0.06)	%	$	(73,768)
Grains	(0.29)			(340,967)
Interest rates	(0.79)			(926,200)
Livestock	0.02			20,440
Metals	1.28			1,510,274
Softs	(0.02)			(28,512)
Stock indices	2.55			2,992,958

Total long futures contracts	2.69			3,154,225
Short futures contracts:
Energies	(0.05)			(62,968)
Grains	0.24			278,024
Interest rates
5 Year U.S. Treasury Note (-246 contracts, settlement date March 2014)	0.00			4,438
10 Year U.S. Treasury Note (-44 contracts, settlement date March 2014)	0.01			5,672
Other	(0.05)			(58,963)

Total interest rates	(0.04)			(48,853)

Livestock	(0.01)			(6,250)
Metals	(0.44)			(521,505)
Softs	0.03			41,728
Stock indices	0.05			62,660

Total short futures contracts	(0.22)			(257,164)

TOTAL INVESTMENTS IN FUTURES CONTRACTS − Net	2.47			2,897,061
FORWARD CURRENCY CONTRACTS
Total long forward currency contracts	(0.09)			(106,168)
Total short forward currency contracts	0.11			128,667

TOTAL INVESTMENTS IN FORWARD CURRENCY
CONTRACTS − Net	0.02			22,499

TOTAL	2.49	%	$	2,919,560

				(Continued)



Nestor Partners
Condensed Schedule of Investments
December 31, 2013

	U.S. TREASURY NOTES
	Face Amount	Description	Fair Value as a % of Partners' Capital			Fair Value

$	34,890,000	U.S. Treasury notes, 1.250%, 03/15/2014	29.80	%	$	34,973,136
	10,040,000	U.S. Treasury notes, 1.000%, 05/15/2014	8.58			10,073,924
	32,970,000	U.S. Treasury notes, 0.625%, 07/15/2014	28.18			33,064,016
	31,380,000	U.S. Treasury notes, 0.250%, 09/15/2014	26.76			31,409,419

		TOTAL INVESTMENTS IN U.S. TREASURY
		NOTES (amortized cost $109,506,226)	93.32	%	$	109,520,495

	See notes to financial statements					(Concluded)


Nestor Partners
Statements of Operations (UNAUDITED)


		For the three months ended
		June 30, 2014		June 30, 2013
INVESTMENT INCOME:
Interest income	$	33,479	$	61,641

EXPENSES:
Brokerage fees		696,531		924,089
Administrative expenses		75,580		86,612
Custody fees and other expenses		9,471		7,555
Total expenses		781,582		1,018,256

NET INVESTMENT LOSS		(748,103)		(956,615)

NET REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on closed positions:
Futures and forward currency contracts		8,834,975		(13,113,677)
Foreign exchange translation		16,148		(84,052)
Net change in unrealized:
Futures and forward currency contracts		1,948,923		977,125
Foreign exchange translation		(4,278)		28,925
Net gains (losses) from U.S. Treasury notes:
Realized		-		3,903
Net change in unrealized		5,028		(16,156)
Total net realized and unrealized gains (losses)		10,800,796		(12,203,932)

NET INCOME (LOSS)		10,052,693		(13,160,547)
LESS PROFIT SHARE TO GENERAL PARTNER		33,702		(14,561)
NET INCOME (LOSS) AFTER PROFIT SHARE TO
GENERAL PARTNER	$	10,018,991	$	(13,145,986)

				(Continued)


Nestor Partners
Statements of Operations (UNAUDITED)



		For the six months ended
		June 30, 2014		June 30, 2013
INVESTMENT INCOME:
Interest income	$	66,845	$	126,315

EXPENSES:
Brokerage fees		1,406,586		1,855,362
Administrative expenses		148,664		177,782
Custody fees and other expenses		17,024		15,113

Total expenses		1,572,274		2,048,257

NET INVESTMENT LOSS		(1,505,429)		(1,921,942)

NET REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on closed positions:
Futures and forward currency contracts		12,996,187		(7,628,080)
Foreign exchange translation		(17,951)		(143,861)
Net change in unrealized:
Futures and forward currency contracts		677,323		119,537
Foreign exchange translation		(2,548)		19,173
Net gains (losses) from U.S. Treasury notes:
Realized		169		5,417
Net change in unrealized		5,300		(8,149)

Total net realized and unrealized gains (losses)		13,658,480		(7,635,963)


NET INCOME (LOSS)		12,153,051		(9,557,905)
LESS PROFIT SHARE TO GENERAL PARTNER		35,531		39
NET INCOME (LOSS) AFTER PROFIT SHARE TO
GENERAL PARTNER	$	12,117,520	$	(9,557,944)

See notes to financial statements (unaudited)				(Concluded)


Nestor Partners
Statements of Changes in Partners' Capital (UNAUDITED)

For the six months ended June 30, 2014:

		Limited Partners		Special Limited Partners		New Profit Memo Account		General Partner		Total

PARTNERS' CAPITAL-
January 1, 2014	$	61,875,986	$	53,263,359	$	-	$	2,216,299	$	117,355,644
Contributions		656,000		-		-		-		656,000
Withdrawals		(7,603,054)		(885,401)		-		-		(8,488,455)
Net income		5,751,718		6,136,852		-		264,481		12,153,051
General Partner's allocation:
New Profit-Accrued		(35,531)		-		-		-		(35,531)
PARTNERS' CAPITAL-
June 30, 2014	$	60,645,119	$	58,514,810	$	-	$	2,480,780	$	121,640,709


For the six months ended June 30, 2013:
		Limited Partners		Special Limited Partners		New Profit Memo Account		General Partner		Total

PARTNERS' CAPITAL-
January 1, 2013	$	81,662,298	$	58,343,188	$	-	$	3,037,871	$	143,043,357
Contributions		3,402,000		-		-		-		3,402,000
Withdrawals		(7,006,901)		(668,173)		-		-		(7,675,074)
Net loss		(5,910,684)		(3,468,903)		(4)		(178,314)		(9,557,905)
General Partner's allocation:
New Profit-Accrued		(39)		-		39		-		-
PARTNERS' CAPITAL-
June 30, 2013	$	72,146,674	$	54,206,112	$	35	$	2,859,557	$	129,212,378



See notes to financial statements (unaudited)


Nestor Partners
Statements of Financial Highlights (UNAUDITED)



For the three months ended June 30, 2014 and 2013	Limited Partners				Special Limited Partners
	2014		2013		2014		2013

Ratios to average capital:
Net investment loss (a)	(3.88)	%	(4.21)	%	(1.06)	%	(0.92)	%

Total expenses (a)	3.99	%	4.39	%	1.17	%	1.10	%
Profit share allocation (b)	0.06	%	(0.02)	%	0.00	%	0.00	%
Total expenses and profit share allocation	4.05	%	4.37	%	1.17	%	1.10	%

Total return before profit share allocation (b)	8.45	%	(9.46)	%	9.21	%	(8.72)	%
Less: profit share allocation (b)	0.06	%	(0.02)	%	0.00	%	0.00	%
Total return after profit share allocation	8.39	%	(9.44)	%	9.21	%	(8.72)	%

(a) annualized
(b) not annualized


For the six months ended June 30, 2014 and 2013	Limited Partners				Special Limited Partners
	2014		2013		2014		2013

Ratios to average capital:
Net investment income (loss) (a)	(3.93)	%	(4.14)	%	(1.10)	%	(0.84)	%

Total expenses (a)	4.04	%	4.32	%	1.21	%	1.02	%
Profit share allocation (b)	0.06	%	0.00	%	0.00	%	0.00	%
Total expenses and profit share allocation	4.10	%	4.32	%	1.21	%	1.02	%

Total return before profit share allocation (b)	10.07	%	(7.51)	%	11.64	%	(5.98)	%
Less: profit share allocation (b)	0.06	%	(0.00)	%	0.00	%	0.00	%
Total return after profit share allocation	10.01	%	(7.51)	%	11.64	%	(5.98)	%

(a) annualized
(b) not annualized

See notes to financial statements (unaudited)						(Concluded)

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited financial statements, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of Nestor Partners’ (the “Partnership”) financial condition at June 30, 2014 and December 31, 2013 and the results of its operations for the three and six months ended June 30, 2014 and 2013 (unaudited). These financial statements present the results of interim periods and do not include all disclosures normally provided in annual financial statements. It is suggested that these financial statements be read in conjunction with the audited financial statements and notes included in the Partnership's annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2013. The December 31, 2013 information has been derived from the audited financial statements as of December 31, 2013.

The preparation of financial statements in conformity with accounting principles generally accepted (“U.S. GAAP”) in the United States of America (the “U.S.”), as detailed in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“Codification”), requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements. Actual results could differ from these estimates.

The Partnership enters into contracts that contain a variety of indemnification provisions. The Partnership’s maximum exposure under these arrangements is unknown. The Partnership does not anticipate recognizing any loss related to these arrangements.

The Income Taxes topic of the Codification clarifies the accounting for uncertainty in tax positions. This requires that the Partnership recognize in its financial statements the impact of any uncertain tax positions. Based on a review of the Partnership’s open tax years, 2010 to 2013, the Millburn Ridgefield Corporation (the “General Partner”) has determined that no reserves for uncertain tax positions were required.

There have been no material changes with respect to the Partnership's critical accounting policies, off-balance sheet arrangements or disclosure of contractual obligations as reported in the Partnership's Annual Report on Form 10-K for fiscal year 2013.

2. FAIR VALUE

The Fair Value Measurements and Disclosures topic of the Codification defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The three levels of the fair value hierarchy are described below:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;

Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

In determining fair value, the Partnership separates its investments into two categories: cash instruments and derivative contracts.

Cash Instruments – The Partnership’s cash instruments are generally classified within Level 1 of the fair value hierarchy because they are typically valued using quoted market prices. The types of instruments valued based on quoted market prices in active markets include U.S. government obligations and an investment in a quoted short-term U.S. government securities money market fund. The General Partner does not adjust the quoted price for such instruments even in situations where the Partnership holds a large position and a sale could reasonably impact the quoted price.

Derivative Contracts – Derivative contracts can be exchange-traded or over-the-counter (“OTC”). Exchange-traded futures contracts are valued based on quoted closing settlement prices and typically fall within Level 1 of the fair value hierarchy.

Spot currency contracts are valued based on current market prices (“Spot Price”). Forward currency contracts are valued based on pricing models that consider the Spot Price, plus the financing cost or benefit (“Forward Point”). Forward Points from the quotation service providers are generally in periods of one month, two months, three months, six months, nine months and twelve months forward while the contractual forward delivery dates for the forward currency contracts traded by the Partnership may be in between these periods. The General Partner’s policy to determine fair value for forward currency contracts involves first calculating the number of months from the date the forward currency contract is being valued to its maturity date (“Months to Maturity”), then identifying the forward currency contracts for the two forward months that are closest to the Months to Maturity (“Forward Month Contracts”). Linear interpolation is then performed between the dates of these two Forward Month Contracts to calculate the interpolated Forward Point. Model inputs can generally be verified and model selection does not involve significant management judgment. Such instruments are typically classified within Level 2 of the fair value hierarchy.

During the three and six months ended June 30, 2014 and 2013, there were no transfers of assets or liabilities between Level 1 and Level 2. The following tables represent the Partnership’s investments by hierarchical level as of June 30, 2014 and December 31, 2013 in valuing the Partnership’s investments at fair value. At June 30, 2014 and December 31, 2013, the Partnership held no assets or liabilities in Level 3.


Financial assets at fair value as of June 30, 2014

		Level 1		Level 2		Total

U.S. Treasury Notes (1)	$	106,786,052	$	-	$	106,786,052
Short-Term Money Market Fund*		4,621,030		-		4,621,030
Exchange-Traded Futures Contracts
Energies		72,390		-		72,390
Grains		73,482		-		73,482
Interest rates		2,179,894		-		2,179,894
Livestock		118,920		-		118,920
Metals		(13,747)		-		(13,747)
Softs		43,352		-		43,352
Stock indices		57,587		-		57,587

Total exchange-traded futures contracts		2,531,878		-		2,531,878

Over-the-Counter Forward Currency Contracts		-		1,065,005		1,065,005

Total futures and forward currency contracts (2)		2,531,878		1,065,005		3,596,883

Total financial assets at fair value	$	113,938,960	$	1,065,005	$	115,003,965


Per line item in Statements of Financial Condition
(1)
Investments in U.S. Treasury notes held in equity trading accounts (as collateral)					$	22,602,304
Investments in U.S. Treasury notes						84,183,748
Total investments in U.S. Treasury notes					$	106,786,052

(2)
Net unrealized appreciation on open futures and forward currency contracts					$	3,713,429
Net unrealized depreciation on open futures and forward currency contracts						(116,546)
Total unrealized appreciation on open futures and forward currency contracts					$	3,596,883

*The short-term money market fund is included in Cash and Cash Equivalents on the Statements of Financial Condition.


Financial assets and liabilities at fair value as of December 31, 2013

		Level 1		Level 2		Total

U.S. Treasury Notes (1)	$	109,520,495	$	-	$	109,520,495
Short-Term Money Market Fund*		3,885,215		-		3,885,215
Exchange-Traded Futures Contracts
Energies		(136,736)		-		(136,736)
Grains		(62,943)		-		(62,943)
Interest rates		(975,053)		-		(975,053)
Livestock		14,190		-		14,190
Metals		988,769		-		988,769
Softs		13,216		-		13,216
Stock indices		3,055,618		-		3,055,618

Total exchange-traded futures contracts		2,897,061		-		2,897,061

Over-the-Counter Forward Currency Contracts		-		22,499		22,499

Total futures and forward currency contracts (2)		2,897,061		22,499		2,919,560

Total financial assets at fair value	$	116,302,771	$	22,499	$	116,325,270


Per line item in Statements of Financial Condition
(1)
Investments in U.S. Treasury notes held in equity trading accounts (as collateral)					$	27,509,188
Investments in U.S. Treasury notes						82,011,307
Total investments in U.S. Treasury notes					$	109,520,495

(2)
Net unrealized appreciation on open futures and forward currency contracts					$	3,134,932
Net unrealized depreciation on open futures and forward currency contracts						(215,372)
Total unrealized appreciation on open futures and forward currency contracts					$	2,919,560

*The short-term money market fund is included in Cash and Cash Equivalents on the Statements of Financial Condition.

3. DERIVATIVE INSTRUMENTS

The Derivatives and Hedging topic of the Codification requires qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements.

The Partnership’s market risk is influenced by a wide variety of factors, including the level and volatility of interest rates, exchange rates, equity price levels, the market value of financial instruments and contracts, the diversification effects among the Partnership’s open positions, and the liquidity of the markets in which it trades.

The Partnership engages in the speculative trading of futures and forward contracts on currencies, energies, grains, interest rates, livestock, metals, softs and stock indices. The following were the primary trading risk exposures of the Partnership at June 30, 2014, by market sector:

Agricultural (grains, livestock and softs) – The Partnership’s primary exposure is to agricultural price movements which are often directly affected by severe or unexpected weather conditions as well as supply and demand factors.

Currencies – Exchange rate risk is a principal market exposure of the Partnership. The Partnership’s currency exposure is to exchange rate fluctuations, primarily fluctuations which disrupt the historical pricing relationships between different currencies and currency pairs. The fluctuations are influenced by interest rate changes, as well as political and general economic conditions. The Partnership trades in a large number of currencies, including cross-rates—e.g., positions between two currencies other than the U.S. dollar.

Energies – The Partnership’s primary energy market exposure is to gas and oil price movements often resulting from political developments in the oil producing countries and economic conditions worldwide. Energy prices are volatile and substantial profits and losses have been and are expected to continue to be experienced in this market.

Interest rates – Interest rate movements directly affect the price of the sovereign bond futures positions held by the Partnership and indirectly the value of its stock index and currency positions. Interest rate movements in one country, as well as relative interest rate movements between countries, may materially impact the Partnership’s profitability. The Partnership’s primary interest rate exposure is to interest rate fluctuations in countries or regions, including Australia, Canada, Japan, Switzerland, the United Kingdom, the U.S. and the Eurozone. However, the Partnership also may take positions in futures contracts on the government debt of other nations. The General Partner anticipates that interest rates in these industrialized countries or areas, both long-term and short-term, will remain the primary interest rate market exposure of the Partnership for the foreseeable future.

Metals – The Partnership’s metals market exposure is to fluctuations in the price of aluminum, copper, gold, lead, nickel, platinum, silver, tin and zinc.

Stock indices – The Partnership’s equity exposure, through stock index futures, is to equity price risk in the major industrialized countries, as well as other countries.

The Derivatives and Hedging topic of the Codification requires entities to recognize in the Statements of Financial Condition all derivative contracts as assets or liabilities. Fair values of futures and forward currency contracts in an asset position by counterparty are recorded in the Statements of Financial Condition as “Net unrealized appreciation on open futures and forward currency contracts.” Fair values of futures and forward currency contracts in a liability position by counterparty are recorded in the Statements of Financial Condition as “Net unrealized depreciation on open futures and forward currency contracts.” The Partnership’s policy regarding fair value measurement is discussed in the Fair Value and Disclosures note, contained herein.

Since the derivatives held or sold by the Partnership are for speculative trading purposes, the derivative instruments are not designated as hedging instruments under the provisions of the Derivatives and Hedging guidance. Accordingly, all realized gains and losses, as well as any change in net unrealized gains or losses on open positions from the preceding period, are recognized as part of the Partnership’s trading gains and losses in the Statements of Operations.

The following tables present the fair value of open futures and forward currency contracts, held long or sold short, at June 30, 2014 and December 31, 2013. Fair value is presented on a gross basis even though the contracts are subject to master netting agreements and qualify for net presentation in the Statements of Financial Condition.


Fair Value of Futures and Forward Currency Contracts at June 30, 2014

										Net Unrealized
		Fair Value - Long Positions				Fair Value - Short Positions				Gain (Loss) on
Sector		Gains		Losses		Gains		Losses		Open Positions

Futures contracts:
Energies	$	272,004	$	(342,252)	$	178,937	$	(36,299)	$	72,390
Grains		70		(255,634)		329,261		(215)		73,482
Interest rates		2,331,886		(150,645)		-		(1,347)		2,179,894
Livestock		184,760		(220)		-		(65,620)		118,920
Metals		306,783		(15,634)		2,719		(307,615)		(13,747)
Softs		36,056		(5,144)		38,378		(25,938)		43,352
Stock indices		564,268		(570,941)		64,409		(149)		57,587
Total futures contracts		3,695,827		(1,340,470)		613,704		(437,183)		2,531,878

Forward currency contracts		1,853,397		(256,477)		34,253		(566,168)		1,065,005

Total futures and
forward currency contracts	$	5,549,224	$	(1,596,947)	$	647,957	$	(1,003,351)	$	3,596,883


Fair Value of Futures and Forward Currency Contracts at December 31, 2013

										Net Unrealized
		Fair Value - Long Positions				Fair Value - Short Positions				Gain (Loss) on
Sector		Gains		Losses		Gains		Losses		Open Positions

Futures contracts:
Energies	$	156,261	$	(230,029)	$	56,410	$	(119,378)	$	(136,736)
Grains		4,673		(345,640)		283,023		(4,999)		(62,943)
Interest rates		148,106		(1,074,306)		44,116		(92,969)		(975,053)
Livestock		22,330		(1,890)		3,780		(10,030)		14,190
Metals		1,644,571		(134,297)		58,546		(580,051)		988,769
Softs		5,479		(33,991)		53,863		(12,135)		13,216
Stock indices		3,010,177		(17,219)		72,260		(9,600)		3,055,618
Total futures contracts		4,991,597		(1,837,372)		571,998		(829,162)		2,897,061

Forward currency contracts		936,496		(1,042,664)		371,418		(242,751)		22,499

Total futures and
forward currency contracts	$	5,928,093	$	(2,880,036)	$	943,416	$	(1,071,913)	$	2,919,560

The effect of trading futures and forward currency contracts is represented on the Statements of Operations for the three and six months ended June 30, 2014 and 2013 as “Net realized gains (losses) on closed positions: Futures and forward currency contracts” and “Net change in unrealized: Futures and forward currency contracts.” These trading gains and losses are detailed below.

Trading gains (losses) of futures and forward currency contracts for the three and six months ended June 30, 2014 and 2013


Sector	Three months ended: June 30, 2014		Three months ended: June 30, 2013		Six months ended: June 30, 2014		Six months ended: June 30, 2013

Futures contracts:
Energies	$	769,317	$	(1,467,346)	$	1,105,694	$	(2,442,342)
Grains		(594,232)		379,190		228,221		162,306
Interest rates		5,056,773		(6,362,619)		8,059,681		(7,515,018)
Livestock		175,460		(28,480)		398,690		3,200
Metals		10,959		2,350,224		(1,439,866)		1,559,992
Softs		(16,418)		3,176		135,642		532,036
Stock indices		3,470,255		(1,672,700)		3,134,082		5,215,032

Total futures contracts		8,872,114		(6,798,555)		11,622,144		(2,484,794)

Forward currency contracts		1,911,784		(5,337,997)		2,051,366		(5,023,749)

Total futures and
forward currency contracts	$	10,783,898	$	(12,136,552)	$	13,673,510	$	(7,508,543)

The following table presents average notional value by sector of open futures and forward currency contracts for the six months ended June 30, 2014 and 2013 in U.S. dollars. The Partnership’s average net asset value for the six months ended June 30, 2014 and 2013 was approximately $119,000,000 and $142,000,000, respectively.

Average notional value by sector of futures and forward currency contracts for the six months ended June 30, 2014 and 2013



		2014				2013
Sector		Long positions		Short positions		Long positions		Short positions

Futures contracts:
Energies	$	43,187,540	$	16,434,889	$	17,410,549	$	20,557,149
Grains		12,834,349		10,423,528		8,169,015		10,682,996
Interest rates		336,815,868		16,597,615		280,198,782		40,909,316
Livestock		3,825,823		1,863,333		450,827		3,425,623
Metals		19,597,600		6,694,788		6,822,280		18,127,180
Softs		3,518,628		3,285,744		2,945,474		7,801,894
Stock indices		127,966,284		1,038,173		116,919,212		1,781,133

Total futures contracts		547,746,092		56,338,070		432,916,139		103,285,291

Forward currency contracts		149,971,988		12,659,725		141,448,915		70,579,501

Total futures and
forward currency contracts	$	697,718,080	$	68,997,795	$	574,365,054	$	173,864,792

Notional values in the interest rate sector were calculated by converting the notional value in local currency of open interest rate futures positions with maturities less than 10 years to 10-year equivalent fixed income instruments and translated to U.S. dollars at June 30, 2014 and 2013. The 10-year note is often used as a benchmark for many types of fixed-income instruments and the General Partner believes it is a more meaningful representation of notional values of the Partnership’s open interest rate positions.

The customer agreements between the Partnership, the futures clearing brokers, including Deutsche Bank Securities Inc. (a wholly-owned subsidiary of Deutsche Bank AG), and J.P. Morgan Securities LLC., as well as the FX prime brokers including Barclays Bank PLC, Deutsche Bank AG and Morgan Stanley & Co., LLC, gives the Partnership the legal right to net unrealized gains and losses on open futures and foreign currency contracts. The Partnership netted, for financial reporting purposes, the unrealized gains and losses on open futures and forward currency contracts on the Statements of Financial Condition as the criteria under ASC 210-20, “Balance Sheet,” were met. The Partnership ceased clearing trades through Barclays Capital Inc. during June 2014.

On January 1, 2013, the Partnership adopted Accounting Standard Update (“ASU”) 2011-11, “Disclosures about Offsetting Assets and Liabilities” and ASU 2013-01, “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.” ASU 2011-11 created a new disclosure requirement about the nature of an entity’s rights of setoff and the related arrangements associated with its financial instruments and derivative instruments, while ASU 2013-01 clarified the types of instruments and transactions that are subject to the offsetting disclosure requirements established by ASU 2011-11. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the Statement of Financial Position and instruments and transactions subject to an agreement similar to a master netting arrangement. The objective of these disclosures is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of the International Financial Reporting Standards. The new guidance did not have a significant impact on the Partnership’s financial statements.

Effective January 1, 2014, the Partnership adopted ASU 2013-08, “Financial Services – Investment Companies (Topic 946): Amendments to the Scope, Measurement and Disclosure Requirements.” ASU 2013-08 changes the approach to the investment company assessment, requires non-controlling ownership interests in other investment companies to be measured at fair value, and requires additional disclosures about the investment company’s status as an investment company. ASU 2013-08 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of this ASU did not have a material impact on the Partnership’s financial statements. Based on management’s assessment, the Partnership has been deemed to be an investment company since inception. It has all of the fundamental characteristics of an investment company. Although the Partnership does not possess all of the typical characteristics of an investment company, its activities are consistent with those of an investment company.


Offsetting derivative assets at June 30, 2014

Assets		Gross amounts of recognized assets		Gross amounts offset in the Statement of Financial Condition		Net amounts of assets presented in the Statement of Financial Condition
Futures contracts
Counterparty C	$	2,773,417	$	(909,820)	$	1,863,597
Counterparty D		1,536,114		(867,833)		668,281
Total futures contracts		4,309,531		(1,777,653)		2,531,878

Forward currency contracts
Counterparty F		1,029,380		(66,251)		963,129
Counterparty H		846,206		(627,784)		218,422
Total forward currency contracts		1,875,586		(694,035)		1,181,551

Total assets	$	6,185,117	$	(2,471,688)	$	3,713,429

Liabilities		Gross amounts of recognized liabilities		Gross amounts offset in the Statement of Financial Condition		Net amounts of liabilities presented in the Statement of Financial Condition
Forward currency contracts
Counterparty G	$	128,610	$	(12,064)	$	116,546
Total liabilities	$	128,610	$	(12,064)	$	116,546


				Amounts Not Offset in the Statement of Financial Condition
Counterparty		Net amounts of Assets presented in the Statement of Financial Condition		Financial Instruments		Collateral Received(1)(2)		Net Amount(3)(4)

Counterparty C	$	1,863,597	$	-	$	(1,863,597)	$	-
Counterparty D		668,281		-		(668,281)		-
Counterparty F		963,129		-		(963,129)		-
Counterparty H		218,422		-		(218,422)		-

Total	$	3,713,429	$	-	$	(3,713,429)	$	-
				Amounts Not Offset in the Statement of Financial Condition
Counterparty		Net amounts of Liabilities presented in the Statement of Financial Condition		Financial Instruments		Collateral Pledged(1)(2)		Net Amount(3)(4)

Counterparty G	$	116,546	$	-	$	(116,546)	$	-

Total	$	116,546	$	-	$	(116,546)	$	-

(1) Collateral received and pledged includes both cash and U.S. Treasury notes held at each respective broker.
(2) Collateral disclosed is limited to an amount not to exceed 100% of the net amount of assets presented in
the Statement of Financial Condition, for each respective counterparty.
(3) Net amount represents the amount that is subject to loss in the event of a counterparty failure as of June 30, 2014.
(4) Net amount represents the amounts owed by the Partnership to each counterparty as of June 30, 2014.


Offsetting derivative assets and liabilities at December 31, 2013

Assets		Gross amounts of recognized assets		Gross amounts offset in the Statement of Financial Condition		Net amounts of assets presented in the Statement of Financial Condition
Futures contracts
Counterparty A	$	1,439,459	$	(509,651)	$	929,808
Counterparty C		2,721,786		(1,302,169)		1,419,617
Counterparty D		1,402,350		(854,714)		547,636
Total futures contracts		5,563,595		(2,666,534)		2,897,061

Forward currency contracts
Counterparty F		428,000		(277,225)		150,775
Counterparty G		194,464		(107,368)		87,096
Total forward currency contracts		622,464		(384,593)		237,871

Total assets	$	6,186,059	$	(3,051,127)	$	3,134,932


Liabilities		Gross amounts of recognized liabilities		Gross amounts offset in the Statement of Financial Condition		Net amounts of liabilities presented in the Statement of Financial Condition
Forward currency contracts
Counterparty H	$	900,822	$	(685,450)	$	215,372
Total liabilities	$	900,822	$	(685,450)	$	215,372


				Amounts Not Offset in the Statement of Financial Condition
Counterparty		Net amounts of Assets presented in the Statement of Financial Condition		Financial Instruments		Collateral Received(1)(2)		Net Amount(3)(4)

Counterparty A	$	929,808	$	-	$	(929,808)	$	-
Counterparty C		1,419,617		-		(1,419,617)		-
Counterparty D		547,636		-		(547,636)		-
Counterparty F		150,775		-		(150,775)		-
Counterparty G		87,096		-		(87,096)		-

Total	$	3,134,932	$	-	$	(3,134,932)	$	-

				Amounts Not Offset in the Statement of Financial Condition
Counterparty		Net amounts of Liabilities presented in the Statement of Financial Condition		Financial Instruments		Collateral Pledged(1)(2)		Net Amount(3)(4)

Counterparty H	$	215,372	$	-	$	(215,372)	$	-

Total	$	215,372	$	-	$	(215,372)	$	-

(1) Collateral received and pledged includes both cash and U.S. Treasury notes held at each respective broker.
(2) Collateral disclosed is limited to an amount not to exceed 100% of the net amount of assets presented in
the Statement of Financial Condition, for each respective counterparty.
(3) Net amount represents the amount that is subject to loss in the event of a counterparty failure as of December 31, 2013.
(4) Net amount represents the amounts owed by the Partnership to each counterparty as of December 31, 2013.

CONCENTRATION OF CREDIT RISK

Credit risk is the possibility that a loss may occur due to the failure of a counterparty to perform according to the terms of a contract. Credit risk is normally reduced to the extent that an exchange or clearing organization acts as a counterparty to futures transactions since typically the collective credit of the members of the exchange is pledged to support the financial integrity of the exchange.

The General Partner seeks to minimize credit risk primarily by depositing and maintaining the Partnership’s assets at financial institutions and trading counterparties which the General Partner believes to be creditworthy. In addition, for OTC forward currency contracts, the Partnership

enters into master netting agreements with its counterparties. Collateral posted at the various counterparties for trading of futures and forward currency contracts includes cash and U.S. Treasury notes.

The Partnership’s forward currency trading activities are cleared by Barclays Bank PLC (“BB”), Deutsche Bank AG (“DB”) and Morgan Stanley & Co. LLC (“MS”). The Partnership’s concentration of credit risk associated with BB, DB or MS nonperformance includes unrealized gains inherent in such contracts, which are recognized in the Statements of Financial Condition plus the value of margin or collateral held by BB, DB and MS. The amount of such credit risk was $10,667,286 and $9,139,654 at June 30, 2014 and December 31, 2013, respectively.

4. PROFIT SHARE

The following table indicates the total profit share earned and accrued during the three and six months ended June 30, 2014 and 2013. Profit share earned (from Limited Partners’ redemptions) is credited to the New Profit Memo Account as defined in the Partnership’s Agreement of Limited Partnership.


	Three months ended:
	June 30,			June 30,
	2014			2013
Profit share earned	$	-		$	39
Reversal of profit share		(1,829)			(14,600)
Profit share accrued		35,531	(1)
Total profit share	$	33,702		$	(14,561)

	Six months ended:
	June 30,			June 30,
	2014			2013
Profit share earned	$	-		$	39
Profit share accrued		35,531	(1)		-
Total profit share	$	35,531		$	39

(1) Included in “Other liabilities” in the Statements of Financial Condition.

5. RELATED PARTY TRANSACTIONS

The Partnership pays administrative expenses for legal, audit and accounting services, up to 0.25 of 1% per annum of the Partnership's average month-end net assets. A portion of such expenses are paid to an affiliate of the General Partner, The Millburn Corporation (“TMC”), for providing accounting services to the Partnership. The following table indicates the portion relating to administrative expenses as well as the portion relating to legal and accounting services provided to the Partnership by TMC during the three and six months ended June 30, 2014 and 2013. The General Partner pays all administrative expenses in excess of 0.25 of 1% per annum of the Partnership's average month-end net assets.


	Three Months Ended June 30, 2014	Three Months Ended June 30, 2013	Six Months Ended June 30, 2014	Six Months Ended June 30, 2013
Administrative Expenses	$ 75,580	$ 86,612	$ 148,664	$ 177,782
Legal and Accounting Services Provided by TMC	$ 4,259	$ 10,283	$ 41,052	$ 59,357

Limited partnership interests (“Interests”) sold through selling agents engaged by the General Partner are generally subject to a 2.5% redemption charge for redemptions made prior to the end of the twelfth month following their sale. All redemption charges will be paid to the General Partner. At December 31, 2013, $333 was owed to the General Partner.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Reference is made to Item 1, "Financial Statements." The information contained therein is essential to, and should be read in connection with, the following analysis.

OPERATIONAL OVERVIEW

Due to the nature of the Partnership's business, its results of operations depend on the General Partner's ability to recognize and capitalize on trends and other profit opportunities in different sectors of the global capital and commodity markets. The General Partner's investment and trading methods are confidential so that substantially the only information that can be furnished regarding the Partnership's results of operations is contained in the performance record of its trading. Unlike operating businesses, general economic or seasonal conditions do not directly affect the

profit potential of the Partnership and its past performance is not necessarily indicative of future results. The General Partner believes, however, that there are certain market conditions, for example, markets with strong price trends, in which the Partnership has a better likelihood of being profitable than in others.

LIQUIDITY AND CAPITAL RESOURCES

Interests may be offered for sale as of the beginning, and may be redeemed as of the end, of each month.

The amount of capital raised for the Partnership should not have a significant impact on its operations, as the Partnership has no significant capital expenditure or working capital requirements other than for monies to pay trading losses, brokerage commissions and charges. Within broad ranges of capitalization, the General Partner’s trading positions should increase or decrease in approximate proportion to the size of the Partnership.

The Partnership raises additional capital only through the sale of Interests and capital is increased through trading profits (if any). The Partnership does not engage in borrowing.

The Partnership trades futures, forwards and spot contracts on interest rate instruments, agricultural commodities, currencies, metals, energy and stock indices, and forward contracts on currencies, and may trade options on the foregoing and swaps thereon. Risk arises from changes in the value of these contracts (market risk) and the potential inability of counterparties or brokers to perform under the terms of their contracts (credit risk). Market risk is generally measured by the face amount of the futures positions acquired and the volatility of the markets traded. The credit risk from counterparty non-performance associated with these instruments is the net unrealized gain, if any, on these positions plus the value of the margin or collateral held by the counterparty. The risks associated with exchange-traded contracts are generally perceived to be less than those associated with OTC transactions because exchanges typically (but not universally) provide clearinghouse arrangements in which the collective credit (in some cases limited in amount, in some cases not) of the members of the exchange is pledged to support the financial integrity of the exchange. In most OTC transactions, on the other hand, traders must rely (typically but not universally) solely on the credit of their respective individual counterparties. Margins which may be subject to loss in the event of a default are generally required in exchange trading and counterparties may require margin or collateral in the OTC markets.

The General Partner has procedures in place to control market risk, although there can be no assurance that they will, in fact, succeed in doing so. These procedures primarily focus on (1) real time monitoring of open positions; (2) diversifying positions among various markets; (3) limiting the assets committed as margin or collateral, generally within a range of 5% to 35% of an account’s net assets, though the amount may at any time be higher; (4) prohibiting pyramiding - that is, using unrealized profits in a particular market as margin for additional positions in the same market; and (5) changing the equity utilized for trading by an account solely on a controlled periodic basis, not automatically due to an increase in equity from trading profits. The General Partner attempts to control credit risk by causing the Partnership to deal exclusively with large, well capitalized financial institutions as brokers and counterparties.

The financial instruments traded by the Partnership contain varying degrees of off-balance sheet risk whereby changes in the market values of the futures, forwards and spot contracts or the Partnership’s satisfaction of the obligations may exceed the amount recognized in the Statements of Financial Condition of the Partnership.

Due to the nature of the Partnership’s business, substantially all its assets are represented by cash, cash equivalents and U.S. government obligations while the Partnership maintains its market exposure through open futures, forwards and spot currency contract positions.

The Partnership’s futures contracts are settled by offset and are cleared by the exchange clearinghouse function. Open futures positions are marked to market each trading day and the Partnership’s trading accounts are debited or credited accordingly. Options on futures contracts are settled either by offset or by exercise. If an option on a future is exercised, the Partnership is assigned a position in the underlying future which is then settled by offset. The Partnership’s spot and forward currency transactions conducted in the interbank market are settled by netting offsetting positions or payment obligations and by cash payments.

The value of the Partnership’s cash and financial instruments is not materially affected by inflation. Changes in interest rates, which are often associated with inflation, could cause the value of certain of the Partnership’s debt securities to decline, but only to a limited extent. More important, changes in interest rates could cause periods of strong up or down market price trends during which the Partnership’s profit potential generally increases. However, inflation can also give rise to markets which have numerous short price trends followed by rapid reversals, markets in which the Partnership is likely to suffer losses.

The Partnership’s assets are generally held as cash or cash equivalents, including U.S. government securities or securities issued by federal agencies (or, to a limited extent, foreign government securities in connection with trading on non-U.S. exchanges), other Commodity Futures Trading Commission authorized investments or bank held or certain other money market instruments (e.g., bankers acceptances and Eurodollar or other time deposits), which are used to margin the Partnership’s futures, forwards and spot currency positions and withdrawn, as necessary, to pay redemptions and expenses. Other than potential market-imposed limitations on liquidity, due, for example, to limited open interest in certain futures markets or to daily price fluctuation limits, which are inherent in the Partnership’s futures, forwards and spot trading, the Partnership’s assets are highly liquid and are expected to remain so.

During its operations for the three and six months ended June 30, 2014, the Partnership experienced no meaningful periods of illiquidity in any of the numerous markets traded by the General Partner.

CRITICAL ACCOUNTING ESTIMATES

The Partnership records its transactions in futures, forwards and spot contracts, including related income and expenses, on a trade date basis. Open futures contracts traded on an exchange are valued at fair value, which is based on the closing settlement price on the exchange where the futures contract is traded by the Partnership on the day with respect to which net assets are being determined. Open spot currency contracts are valued based on the current Spot Price. Open forward currency contracts are recorded at fair value, based on pricing models that consider the Spot Price and Forward Point. Spot Prices and Forward Points for open forward currency contracts are generally based on the average midpoint of bid/ask quotations at the last second ending at 3:00 P.M. New York time provided by widely used quotation service providers on the day with respect to which net assets are being determined. Forward Points from the quotation service providers are generally in periods of one month, two months, three months, six months, nine months and twelve months forward while the contractual forward delivery dates for the forward currency contracts traded by the Partnership may be in between these periods. The General Partner’s policy to determine fair value for forward currency contracts involves first calculating the number of Months to Maturity, then identifying the Forward Month Contracts. Linear interpolation is then performed between the dates of these two Forward Month Contracts to calculate the interpolated Forward Point. The General Partner will also compare the calculated price to the forward currency prices provided by dealers to determine whether the calculated price is fair and reasonable.

RESULTS OF OPERATIONS

Due to the nature of the Partnership’s trading, the results of operations for the interim periods presented should not be considered indicative of the results that may be expected for the entire year.



Periods ended June 30, 2014

Month Ending:				Total Partners' Capital

June 30, 2014			$	121,640,709
March 31, 2014				116,135,738
December 31, 2013				117,355,644


		Three Months		Six Months
Change in Partners' Capital	$	5,504,971	$	4,285,065
Percent Change		4.74%		3.65%

THREE MONTHS ENDED JUNE 30, 2014

The increase in the Partnership’s net assets of $5,504,971 was attributable to net income after profit share of $10,018,991 and contributions of $176,000, which were partially offset by withdrawals of $4,690,020.

Brokerage fees are calculated on the net asset value on the last day of each month and are affected by trading performance, subscriptions and redemptions. Brokerage fees for the three months ended June 30, 2014 decreased $227,558 relative to the corresponding period in 2013. The decrease was due to a decrease in average net assets of the Partnership during the three months ended June 30, 2014, relative to the corresponding period in 2013.

The Partnership pays administrative expenses for legal, audit and accounting services, up to 0.25 of 1% per annum of the Partnership’s average month-end net assets. Administrative expenses for the three months ended June 30, 2014 decreased $11,032 relative to the corresponding period in 2013. The decrease was due mainly to a decrease in the Partnership’s average net assets during the three months ended June 30, 2014, relative to the corresponding period in 2013.

Interest income is derived from cash and U.S. Treasury instruments held at the Partnership’s brokers and custodian. Interest income for the three months ended June 30, 2014 decreased $28,162 relative to the corresponding period in 2013. This decrease was due predominantly to a decrease in average net assets during the three months ended June 30, 2014 relative to the corresponding period in 2013.

During the three months ended June 30, 2014, the Partnership experienced net realized and unrealized gains of $10,800,796 from its trading operations (including foreign exchange translations and U.S. Treasury notes). Brokerage fees of $696,531, administrative expenses of $75,580, custody fees and other expenses of $9,471 and an accrued profit share to the General Partner of $33,702 were incurred. Interest income of $33,479 partially offset the Partnership's expenses resulting in net income after profit share to the General Partner of $10,018,991. An analysis of the trading gain (loss) by sector is as follows:


Sector	% Gain (Loss)
Currencies		1.64	%
Energies		0.68	%
Grains		(0.47)	%
Interest rates		4.42	%
Livestock		0.18	%
Metals		0.05	%
Softs		0.02	%
Stock indices		3.02	%

Trading Gain		9.54	%

SIX MONTHS ENDED JUNE 30, 2014

The increase in the Partnership’s net assets of $4,285,065 was attributable to net income after profit share of $12,117,520 and contributions of $656,000, which were partially offset by withdrawals of $8,488,455.

Brokerage fees are calculated on the net asset value on the last day of each month and are affected by trading performance, subscriptions and redemptions. Brokerage fees for the six months ended June 30, 2014 decreased $448,776 relative to the corresponding period in 2013. The decrease was due a decrease in average net assets of the Partnership during the six months ended June 30, 2014, relative to the corresponding period in 2013.

The Partnership pays administrative expenses for legal, audit and accounting services, up to 0.25 of 1% per annum of the Partnership’s average month-end net assets. Administrative expenses for the six months ended June 30, 2014 decreased $29,118 relative to the corresponding period in 2013. The decrease was due mainly to a decrease in the Partnership’s average net assets during the six months ended June 30, 2014, relative to the corresponding period in 2013.

Interest income is derived from cash and U.S. Treasury instruments held at the Partnership’s brokers and custodian. Interest income for the six months ended June 30, 2014 decreased $59,470 relative to the corresponding period in 2013. This decrease was due predominantly to a decrease in average net assets during the six months ended June 30, 2014 relative to the corresponding period in 2013.

During the six months ended June 30, 2014, the Partnership experienced net realized and unrealized gains of $13,658,480 from its trading operations (including foreign exchange translations and U.S. Treasury notes). Brokerage fees of $1,406,586, administrative expenses of $148,664, custody fees and other expenses of $17,024 and an accrued profit share to the General Partner of $35,531 were incurred. Interest income of $66,845 partially offset the Partnership's expenses resulting in net income after profit share to the General Partner of $12,117,520. An analysis of the trading gain (loss) by sector is as follows:


Sector	% Gain (Loss)
Currencies		1.78	%
Energies		0.99	%
Grains		0.24	%
Interest rates		7.10	%
Livestock		0.36	%
Metals		(1.18)	%
Softs		0.14	%
Stock indices		2.74	%

Trading Gain		12.17	%

MANAGEMENT DISCUSSION – 2014

Three months ended June 30, 2014

The Partnership registered a gain during the second quarter largely due to profits from long interest rate and equity futures positions, and from short U.S. dollar trades. Long energy positions were also profitable but those gains were offset by losses from trading agricultural commodities. Finally, trading of metal futures was flat.

A further easing of monetary policy by the European Central Bank in early June, persistently accommodative monetary policy elsewhere in the developed world, stubbornly low inflation worldwide, and some flight to safety demand pushed government bond prices higher. Consequently, long positions in U.S., German, U.K., Canadian, French, Italian, Australian and Japanese note and bond future were profitable, especially in April and May. On the other hand, a long position in short-term British interest rate futures was unprofitable after Bank of England Governor Carney hinted that official British rates might rise sooner than previously expected.

Against this easy money background and with economic growth rebounding from a weather induced first quarter slowdown, long positions in German, Spanish, Dutch, French, U.S., British, Indian, Taiwanese, Singaporean, and South African equity futures were profitable. Also, with volatility plummeting to historically low levels, a short VIX trade produced a gain.

Higher interest rates and/or stronger growth prospects in certain countries weighed on the U.S. dollar. In particular, short dollar trades against the New Zealand dollar, British pound, Australian dollar, Korean won and Brazilian real were profitable. Short dollar trades against the currencies of Colombia, Israel, Mexico, Singapore and Switzerland also registered gains. On the other hand, long dollar positions relative to the Canadian dollar and Japanese yen were unprofitable, as was trading of the Swedish and Norwegian currencies.

The expanding turmoil in the Middle East pushed energy prices higher, particularly in May and June, and long positions in Brent crude, WTI crude and RBOB gasoline were profitable, and outpaced small losses from trading heating oil and London gas oil.

Grain prices were volatile during the quarter, rising early on due to dry weather in the U.S. and concern about the impact of the Russia-Ukraine confrontation and falling later due to improved weather conditions and better USDA crop forecasts. As a result, long positions in corn, wheat, soybeans, and soybean meal were unprofitable. Meanwhile, trading of cattle was marginally profitable, and trading of soft commodities was flat.

A long nickel trade benefitted from the Indonesian export ban that drove prices higher; a long palladium trade was profitable as labor turmoil in South Africa and Russian tensions boosted prices; and a long gold trade was positive due to flight to safety demand. Losses were incurred from trading aluminum, copper, lead and silver.

Three months ended March 31, 2014

After a quarter of significant market volatility, the Partnership produced a profit, predominantly due to gains from long interest rate futures positions. There were also fractional profits from trading agricultural commodities, energy and currencies, but these were largely offset by the losses from trading metals.

Shifting perceptions about U.S. and Chinese growth prospects, the future course of Federal Reserve monetary policy, political and economic turmoil in several emerging economies—including Turkey, India, Indonesia, and Thailand, and the impact of the Russia/Ukraine-Crimea situation kept markets off balance during the quarter.

Given persistent concerns about worldwide growth, social and political unrest in numerous emerging markets and a lack of inflationary impulses in the developed world, it should come as no surprise that a flight to safety and quality would push up note and bond prices. Consequently, long positions in German, French, Italian, Japanese, Canadian and U.S. note and bond futures were profitable. Long positions in U.S. and German short term interest rate futures also registered gains. On the other hand, trading Australian and British note and bond futures was unprofitable.

Equity prices were particularly volatile during the quarter as the markets digested weather related growth problems in the U.S., slowing Chinese growth, the outlook for U.S. quantitative easing, and Chinese policy efforts to wring excess debt and capacity out of the economy without threatening too many corporate defaults or bankruptcies. Losses from trading of and long positions in Chinese, Hong Kong, Korean, Japanese, Singaporean and Australian equity futures slightly outweighed the gains from long U.S., German, Spanish and Canadian equity futures positions.

Foreign exchange markets were rattled by the political and economic turmoil in many emerging markets, by monetary policy developments in China and the U.S., as well as by growth concerns. Short U.S. dollar positions against sterling, the Indian rupee, the New Zealand dollar, and the Swiss franc were profitable, as were long dollar trades against Chile and Russia and a long New Zealand/short Canada trade. These gains were partially offset by losses on: short dollar trades against the euro, Czech koruna, Polish zloty and Korean won; a long U.S. short Singapore dollar position; long euro trades versus Australia and Turkey; and trading the Australian dollar relative to the yen and pound sterling.

Turning to agricultural commodities, long positions in soybeans, soybean meal, corn, coffee, cocoa, cotton and livestock, and a short wheat trade were profitable. Meanwhile, short sugar and soybean oil trades produced small losses.

Metal trading was unprofitable due to losses from long copper, lead, gold and silver trades and from a short aluminum position. A long nickel trade produced a partially offsetting profit.

Energy trading was marginally profitable as gains from a long WTI crude position and trading of natural gas outweighed the losses from long Brent crude and London gas oil positions.


Periods ended June 30, 2013

Month Ending:				Total Partners' Capital

June 30, 2013			$	129,212,378
March 31, 2013				143,440,502
December 31, 2012				143,043,357


		Three Months		Six Months
Change in Partners' Capital	$	(14,228,124)	$	(13,830,979)
Percent Change		-9.92%		-9.67%

THREE MONTHS ENDED JUNE 30, 2013

The decrease in the Partnership’s net assets of $14,228,124 was attributable to withdrawals of $3,361,177, and net loss before profit share to General Partner of $13,160,547, which was partially offset by contributions of $2,279,000 and a reversal of accrued profit share to the General Partner of $14,600.

Brokerage fees are calculated on the net asset value on the last day of each month and are affected by trading performance, subscriptions and redemptions. Brokerage fees for the three months ended June 30, 2013 decreased $39,149 relative to the corresponding period in 2012. The decrease was due a decrease in average net assets of the Partnership during the three months ended June 30, 2013, relative to the corresponding period in 2012.

The Partnership pays administrative expenses for legal, audit and accounting services, up to 0.25 of 1% per annum of the Partnership’s average month-end net assets. Administrative expenses for the three months ended June 30, 2013 decreased $11,019 relative to the corresponding period in 2012. The decrease was due mainly to a decrease in the Partnership’s average net assets during the three months ended June 30, 2013, relative to the corresponding period in 2012.

Interest income is derived from cash and U.S. Treasury instruments held at the Partnership’s brokers and custodian. Interest income for the three months ended June 30, 2013 increased $11,775 relative to the corresponding period in 2012. This increase was due predominantly to an increase in short-term Treasury yields during the three months ended June 30, 2013 relative to the corresponding period in 2012.

During the three months ended June 30, 2013, the Partnership experienced net realized and unrealized losses of $12,203,932 from its trading operations (including foreign exchange translations and U.S. Treasury notes). Brokerage fees of $924,089, administrative expenses of $86,612, custody fees and other expenses of $7,555 and a reversal of total profit share to the General Partner of $14,561 were incurred. Interest income of $61,641 partially offset the Partnership's expenses resulting in net loss after profit share to the General Partner of $13,145,986. An analysis of the trading gain (loss) by sector is as follows:


Sector	% Gain (Loss)
Currencies		(3.65)	%
Energies		(1.01)	%
Grains		0.27	%
Interest rates		(4.42)	%
Livestock		(0.02)	%
Metals		1.70	%
Softs		0.01	%
Stock indices		(1.35)	%

Trading Loss		(8.47)	%

SIX MONTHS ENDED JUNE 30, 2013

The decrease in the Partnership’s net assets of $13,830,979 was attributable to withdrawals of $7,675,074 and a net loss before profit share to General Partner of $9,557,905, which was partially offset by contributions of $3,402,000.

Brokerage fees are calculated on the net asset value on the last day of each month and are affected by trading performance, subscriptions and redemptions. Brokerage fees for the six months ended June 30, 2013 decreased $8,584 relative to the corresponding period in 2012. The decrease was due a decrease in average net assets of the Partnership during the six months ended June 30, 2013, relative to the corresponding period in 2012.

The Partnership pays administrative expenses for legal, audit and accounting services, up to 0.25 of 1% per annum of the Partnership’s average month-end net assets. Administrative expenses for the six months ended June 30, 2013 decreased $16,286 relative to the corresponding period in 2012. The decrease was due mainly to a decrease in the Partnership’s average net assets during the six months ended June 30, 2013, relative to the corresponding period in 2012.

Interest income is derived from cash and U.S. Treasury instruments held at the Partnership’s brokers and custodian. Interest income for the six months ended June 30, 2013 increased $22,404 relative to the corresponding period in 2012. This increase was due predominantly to an increase in short-term Treasury yields during the six months ended June 30, 2013 relative to the corresponding period in 2012.

During the six months ended June 30, 2013, the Partnership experienced net realized and unrealized losses of $7,635,963 from its trading operations (including foreign exchange translations and U.S. Treasury notes). Brokerage fees of $1,855,362, administrative expenses of $177,782, custody fees and other expenses of $15,113 and an earned profit share allocation to the General Partner of $39 were incurred. Interest income of $126,315 partially offset the Partnership's expenses resulting in net loss after profit share to the General Partner of $9,557,944. An analysis of the trading gain (loss) by sector is as follows:


Sector	% Gain (Loss)
Currencies		(3.42)	%
Energies		(1.67)	%
Grains		0.13	%
Interest rates		(5.23)	%
Livestock		(0.01)	%
Metals		1.15	%
Softs		0.38	%
Stock indices		3.41	%

Trading Loss		(5.26)	%

MANAGEMENT DISCUSSION – 2013

Three months ended June 30, 2013

The Partnership net asset value declined sharply as losses from trading financial futures, currency forwards, and, to a lesser extent, energy futures outdistanced the gains from trading metals and agricultural commodity futures.

Market dynamics shifted dramatically during the second quarter. Global markets were roiled by concerns about an earlier than expected Federal Reserve exit from its quantitative easing program and about slowing Chinese growth amid a credit squeeze sanctioned by the People’s Bank of China.

During the first four months of 2013, long interest rate futures positions had been profitable and, in fact, the low yield on the U.S. ten-year note for 2013 was hit on May 2 at 1.63%. Subsequently, however, testimony before Congress by Federal Reserve Chairman Bernanke and comments by several other Federal Reserve officials raised concerns that the quantitative easing policy might be ended or at least tapered off sooner than had previously been expected. In addition, favorable U.S. employment data and housing market statistics and several other solid economic reports pointed to continued U.S. growth. In response, yields on U.S. notes and bonds reversed abruptly and moved sharply higher. There was also a sympathetic move higher in yields on Canadian, European and Australian notes and bonds. Finally, in Japan, the aggressive monetary policy change announced in April seemed to trigger a shift of funds out of Japanese government bonds to equities domestically or to higher yielding investments offshore, which led to rising Japanese government bond yields. Sizable losses were suffered on long positions in U.S., German, British, Canadian, Australian and Japanese interest rate futures. By quarter-end, U.S., Australian, Canadian and British note and bond positions

had been reversed to short positions, and German note and bond positions were mixed. Long positions in short-term interest rate futures for the U.S., Canada, Australia, Germany and the United Kingdom were also unprofitable, and were reduced or reversed.

Foreign exchange trading was unprofitable. The abrupt upward turn in U.S. interest rates also triggered an upturn in the U.S. dollar, and short U.S. dollar trades versus a number of currencies posted losses. A number of commodity currencies fell sharply after Chinese economic reports came in weaker than anticipated, further dampening the growth prospects of those countries. Thus, short U.S. dollar trades against the currencies of New Zealand, Australia, Canada and Mexico generated losses and were reduced or reversed. Short U.S. dollar trades against Chile, Switzerland, Sweden, Poland and the Euro also were unprofitable and were reduced or reversed. Long Australian dollar trades versus the Euro, yen and pound sterling produced losses. Short Euro trades relative to Poland, Sweden and Turkey, and trading the Swiss franc against the Norwegian krone produced losses as well. Meanwhile, long U.S. dollar trades against the Japanese yen, Indian rupee, Indonesian rupiah, Turkish lira and South African rand were profitable. On the other hand, long U.S. dollar trades relative to the British Pound Sterling, Czech koruna and Norwegian krone were unprofitable.

The threat of an early end to the liquidity from quantitative easing, higher interest rates and worries about slower Chinese growth prompted an equity selloff, leading to losses on long equity futures positions. Losses were widespread, including European, Asian, North American and South African indices. A short CBOE VIX trade was unprofitable as well. Long positions in Japanese indices were profitable.

Energy trading was unprofitable as small short positions in Brent crude oil, WTI crude oil, and RBOB gasoline registered marginal losses when prices drifted higher in the wake of increasing unrest in the Middle East. Trading of natural gas was unprofitable.

Short positions in gold, silver, aluminum, copper and nickel produced profits that far outdistanced losses from trading lead and zinc.

Trading of agricultural commodities was marginally profitable. Profits from short coffee, sugar soybean oil and cattle positions, and from a long soybean position marginally outweighed the losses from a long cotton trade and short corn and hog trades.

Three months ended March 31, 2013

The Partnership produced a profit during the quarter predominantly due to gains from long equity positions. There was also a fractional gain from trading soft commodities. Currency trading was nearly flat. On the other hand, trading of interest rate, energy, metal and agricultural commodity futures generated losses.

During the quarter, market participants were encouraged by an improvement in U.S. economic conditions, by signs that China’s growth was recovering after having bottomed in the third quarter of 2012, by continued monetary ease worldwide, and by evidence that some grudging progress was being made on the banking and fiscal problems that have plagued developed economies in recent years. At times, however, this enthusiasm was dampened by a variety of factors including: ongoing debate about the future direction of monetary policies and quantitative easing; discussion about the efficacy of continued austerity in the developed world; the possible impact of the U.S. sequestration; talk of political scandals in Spain; labor unrest in Greece; the unexpected Italian election results; and the Cypriot crisis.

With U.S. manufacturing, housing and employment data remaining positive, long positions in U.S. equity futures were profitable as well as a short position in the VIX index. Long positions in Japanese equity futures were profitable in the wake of the Bank of Japan’s accommodative rhetoric. Long Swedish, German, Dutch, Australian, South African, Singaporean and Taiwanese equity index trades were also positive. On the other hand, long positions in Italian, Spanish, Chinese, Korean and Hong Kong equity futures produced partially offsetting losses.

Currency trading was mixed and essentially flat for the quarter. Long U.S. and Australian dollar trades against the Japanese yen were quite profitable as Japan’s leaders forged ahead with promises of monetary accommodation. Long Australian positions relative to British Pound Sterling and the Euro, and long U.S. dollar and Euro trades against the South African rand also posted gains. Finally, short Euro trades versus Romanian Leu, Swedish Krone and Turkish Lira, and short U.S. dollar trades versus Chilean and Mexican Peso and Israeli Shekel were profitable. On the other hand, short U.S. dollar trades versus the currencies of the United Kingdom, Canada, Colombia, South Korea, Singapore, Norway, Poland and Switzerland registered losses and were reduced as were short Euro trades against the currencies of Norway, Poland, Hungary and the Czech Republic.

In January when growth prospects brightened and risk aversion dissipated, interest rates rose and long positions in German, U.S., Australian, Canadian, British and French note and bond futures—which had been highly profitable for the last two years—produced losses and were reduced. In late February and March, increasing worry increased the purchase of government securities, and the long—though reduced—positions produced profits that fell short of earlier losses. For the quarter, long U.S. note and bond positions were profitable, as was a long JGB trade. On the other hand, trading of German, British, Canadian and Australian interest rate futures was unprofitable.

Trading of commodities was fractionally unprofitable. Among soft commodities, short positions in coffee and sugar were profitable due to the weight of abundant supplies on price. Also, a long cotton trade produced a gain. In grains, the losses from trading corn and the soybean complex outdistanced the gain from a short wheat position. Energy prices were volatile during the quarter and the losses from trading crude oil, heating oil and London gas oil were greater than the profits from a long RBOB gasoline position and from trading natural gas. In metals, profits from short copper and aluminum positions fell short of the losses from long gold, silver, platinum, zinc, lead and nickel trades.

OFF-BALANCE SHEET ARRANGEMENTS

The Partnership does not engage in off-balance sheet arrangements with other entities.

CONTRACTUAL OBLIGATIONS

The Partnership does not enter into any contractual obligations or commercial commitments to make future payments of a type that would be typical for an operating company or that would affect its liquidity or capital resources. The Partnership’s sole business is trading futures, forward currency, spot, option and swap contracts, both long (contracts to buy) and short (contacts to sell). The Partnership may also engage in trading swaps. All such contracts are settled by offset, not delivery. Substantially all such contracts are for settlement within four months of the trade date and substantially all such contracts are held by the Partnership for less than four months before being offset or rolled over into new contracts with similar maturities. The financial statements present a Condensed Schedule of Investments setting forth the Partnership’s open futures and forward currency contracts, both long and short, at June 30, 2014.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4. CONTROLS AND PROCEDURES

The General Partner, with the participation of its principal executive officers and principal financial officer, has evaluated the effectiveness of the design and operation of its disclosure controls and procedures with respect to the Partnership as of the end of the period covered by this quarterly report, and, based on their evaluation, have concluded that these disclosure controls and procedures are effective. There were no changes in the General Partner's internal controls over financial reporting during the quarter ended June 30, 2014 that have materially affected, or are reasonably likely to materially affect, the General Partner's internal controls over financial reporting with respect to the Partnership.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

None.

ITEM 1A. Risk Factors

Not required.

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

(a) Pursuant to the Partnership's Agreement of Limited Partnership, the Partnership may sell Interests at the beginning of each calendar month. On April 1, 2014, May 1, 2014 and June 1, 2014 the Partnership sold Interests to new and existing limited partners of $50,000, $90,000 and $36,000, respectively. There were no underwriting discounts or commissions in connection with the sales of the Interests described above.

Each of the foregoing Interests were offered and sold only to “accredited investors” as defined in Rule 501(a) under the Securities Act of 1933 as amended (the “1933 Act”), in reliance on the exemption from registration provided by Rule 506(b) under the 1933 Act.

(c) Pursuant to the Partnership’s Agreement of Limited Partnership, Limited Partners may redeem their Interests at the end of each calendar month at the then current month-end net asset value. The redemption of Interests has no impact on the value of Interests that remain outstanding, and Interests are not reissued once redeemed.


The following table summarizes Interests redeemed during the three months ended June 30, 2014:

Date of Withdrawal	Limited Partners	Special Limited Partners	Total

April 30, 2014	$ (3,279,441)	$ (388,279)	$ (3,667,720)
May 31, 2014	(536,499)	(104)	(536,603)
June 30, 2014	(395,633)	(90,064)	(485,697)
Total	$ (4,211,573)	$ (478,447)	$ (4,690,020)

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not Applicable.

ITEM 5. Other Information

None.

ITEM 6. Exhibits

The following exhibits are included herewith:


31.01		Rule 13(a)-14(a)/15(d)-14(a) Certification of Co-Chief Executive Officer
31.02		Rule 13(a)-14(a)/15(d)-14(a) Certification of Co-Chief Executive Officer
31.03		Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer
32.01		Section 1350 Certification of Co-Chief Executive Officer
32.02		Section 1350 Certification of Co-Chief Executive Officer
32.03		Section 1350 Certification of Chief Financial Officer

101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

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


By:	Millburn Ridgefield Corporation,	/s/ Michael W. Carter
	General Partner	Michael W. Carter
		Vice-President
Date: August 13, 2014		(Principal Accounting Officer)

Attached files

NESTOR PARTNERS Reports

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