News Column

MILLBURN MULTI-MARKETS FUND L.P. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

August 13, 2014

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



The Partnership invests substantially all of its assets in the Master Fund. Due to the nature of the Master Fund'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 Master Fund'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 Master Fund, 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 Master Fund has a better likelihood of being profitable than in others.

LIQUIDITY AND CAPITAL RESOURCES

Units 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 and the Master Fund have 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 Master Fund (in which the Partnership participates).

The Partnership raises additional capital only through the sale of Units and capital is increased through trading profits (if any). Neither the Partnership nor the Master Fund engages in borrowing.

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The Master Fund trades futures and forward contracts, and may trade swap, spot and options contracts, on interest rates, commodities, currencies, metals, energy and stock indices. 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 to be 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 at exchange, though the amount may at any time be substantially 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 Master Fund contain varying degrees of off-balance sheet risk whereby changes in the market values of the futures, forward and spot contracts or the Master Fund's satisfaction of the obligations may exceed the amount recognized in the Statements of Financial Condition of the Master Fund.

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

The Master Fund'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 Master Fund'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 Master Fund is assigned a position in the underlying future which is then settled by offset. The Master Fund'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 Master Fund'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 Master Fund'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 Master Fund'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 Master Fund is likely to suffer losses.

The Master Fund's assets are generally held as cash or cash equivalents, including U.S. government securities or securities issued by federal agencies, 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 Master Fund's futures, forward 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 Master Fund's futures, forward and spot trading, the Master Fund's assets are highly liquid and are expected to remain so. During its operations through June 30, 2014, the Partnership, through its investment in the Master Fund, experienced no meaningful periods of illiquidity in any of the numerous markets traded by the General Partner.

CRITICAL ACCOUNTING ESTIMATES



The Master Fund records its transactions in futures, forward 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 Master Fund on the day with respect to which net assets are being determined. 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 Master Fund 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.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, such as accrual of expenses, that affect the amounts and disclosures reported in the financial statements. Based on the nature of the business and operations of the Partnership, the General Partner believes that the estimates utilized in preparing the Partnership's financial statements are appropriate and reasonable, however actual results could differ from these estimates. The estimates used do not provide a range of possible results that would require the exercise of subjective judgment. The General Partner further believes that, based on the nature of the business and operations of the Partnership, no other reasonable assumptions relating to the application of the Partnership's critical accounting estimates other than those currently used would likely result in materially different amounts from those reported.

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The General Partner has paid expenses incurred in connection with the organization of the Partnership and the initial offering of the Units. The Master Fund, on behalf of the Partnership, is reimbursing the General Partner for these costs in 60 equal monthly installments of $3,199 which began on August 1, 2009. However, to the extent that for any month the $3,199 exceeds 1/12 of 0.05% (0.05% per annum) of the Partnership's month-end net asset value, such excess will not be reimbursed by the Partnership but will be absorbed by the General Partner. As of June 30, 2014, pursuant to this calculation $36,987 has been borne by the General Partner and will not be reimbursed by the Partnership.

RESULTS OF OPERATIONS Due to the nature of the Partnership's trading, through its investment in the Master Fund, 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 Total Partners' Capital of the Month Ending: Partnership June 30, 2014 $ 114,129,379 March 31, 2014 112,088,982 December 31, 2013 134,225,312 Three Months Six Months Change in Partners' Capital $ 2,040,397$ (20,095,933 ) Percent Change 1.82 % (14.97 )%



THREE MONTHS ENDED JUNE 30, 2014

The increase in the Partnership's net assets of $2,040,397 was attributable to contributions of $362,000 and net income through its investment in the Master Fund of $8,478,489, which was partially offset by withdrawals of $6,800,092.

Management fees, through the Partnership's investment in the Master Fund, are calculated on the net asset value on the last day of each month and are affected by trading performance, subscriptions and redemptions. Management fees, through the Partnership's investment in the Master Fund, for the three months ended June 30, 2014 decreased $360,187 relative to the corresponding period in 2013. The decrease was due to a decrease in the average net asset value of the Partnership during the three months ended June 30, 2014, relative to the corresponding period in 2013.

The Partnership, through its investment in the Master Fund, bears all trade-related commission and clearing charges due to third-party brokers. Brokerage commissions, through the Partnership's investment in the Master Fund, for the three months ended June 30, 2014 decreased $181,705 relative to the corresponding period in 2013. The decrease was due mainly to a decrease in trading volume at the Master Fund, relative to the corresponding period in 2013.

Selling commissions and platform fees are calculated on the net asset value on the last day of each month and are affected by trading performance, subscriptions and redemptions. Selling commissions and platform fees for the three months ended June 30, 2014 decreased $306,914 relative to the corresponding period in 2013. The decrease was due to a decrease in the average net asset value of commission paying investors of the Partnership during the three months ended June 30, 2014, relative to the corresponding period in 2013.

The Partnership, through its investment in the Master Fund, pays administrative expenses for legal, audit and accounting services. Administrative expenses, net of amounts borne by the General Partner, through the Partnership's investment in the Master Fund, for the three months ended June 30, 2014 decreased $90,557 relative to the corresponding period in 2013. The decrease was due mainly to a decrease in the Partnership's net asset value during the three months ended June 30, 2014, relative to the corresponding period in 2013.

Interest income, through the Partnership's investment in the Master Fund, is derived from cash and U.S. Treasury instruments held at the Master Fund's brokers and custodian. Interest income, through the Partnership's investment in the Master Fund, for the three months ended June 30, 2014 decreased $52,920 relative to the corresponding period in 2013. This decrease was due primarily to a decrease in the Partnership's net asset value during the three months ended June 30, 2014 relative to the corresponding period in 2013.

For the three months ended June 30, 2014, the Partnership, through its investment in the Master Fund, achieved net realized and unrealized gains of $9,804,144 from trading operations (including foreign exchange transactions and translations). Management fees of $568,263, brokerage commissions of $110,165, selling commissions and platform fees of $515,505, administrative and operating expenses of $155,230 and custody fees and other expenses of $9,268 were paid or accrued. Interest income of $32,776 partially offset the Master Fund expenses allocated to the Partnership resulting in net income of $8,478,489.

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An analysis of the Master Fund's trading gain (loss) by sector is as follows:

% Gain Sector (Loss) Currencies 1.67 % Energies 0.71 % Grains (0.76 )% Interest rates 4.37 % Livestock 0.16 % Metals 0.09 % Softs (0.26 )% Stock indices 2.73 % Trading gain 8.71 %



Six months ended June 30, 2014

The decrease in the Partnership's net assets of $20,095,933 was attributable to withdrawals of $31,168,852 which was partially offset by contributions of $698,900 and net income through its investment in the Master Fund of $10,374,019.

Management fees, through the Partnership's investment in the Master Fund, are calculated on the net asset value on the last day of each month and are affected by trading performance, subscriptions and redemptions. Management fees, through the Partnership's investment in the Master Fund, for the six months ended June 30, 2014 decreased $781,651 relative to the corresponding period in 2013. The decrease was due to a decrease in the average net asset value of the Partnership during the six months ended June 30, 2014, relative to the corresponding period in 2013.

The Partnership, through its investment in the Master Fund, bears all trade-related commission and clearing charges due to third-party brokers. Brokerage commissions, through the Partnership's investment in the Master Fund, for the six months ended June 30, 2014 decreased $303,861 relative to the corresponding period in 2013. The decrease was due to a decrease in the average net asset value of the Partnership as well as a decrease in trading volume at the Master Fund, relative to the corresponding period in 2013.

Selling commissions and platform fees are calculated on the net asset value on the last day of each month and are affected by trading performance, subscriptions and redemptions. Selling commissions and platform fees for the six months ended June 30, 2014 decreased $621,374 relative to the corresponding period in 2013. The decrease was due to a decrease in the average net asset value of commission paying investors of the Partnership during the six months ended June 30, 2014, relative to the corresponding period in 2013.

The Partnership, through its investment in the Master Fund, pays administrative expenses for legal, audit and accounting services. Administrative expenses, net of amounts borne by the General Partner, through the Partnership's investment in the Master Fund, for the six months ended June 30, 2014 decreased $196,837 relative to the corresponding period in 2013. The decrease was due mainly to a decrease in the Partnership's net asset value during the six months ended June 30, 2014, relative to the corresponding period in 2013.

Interest income, through the Partnership's investment in the Master Fund, is derived from cash and U.S. Treasury instruments held at the Master Fund's brokers and custodian. Interest income, through the Partnership's investment in the Master Fund, for the six months ended June 30, 2014 decreased $105,594 relative to the corresponding period in 2013. This decrease was due to a decrease in the Partnership's net asset value during the six months ended June 30, 2014 relative to the corresponding period in 2013.

For the six months ended June 30, 2014, the Partnership, through its investment in the Master Fund, achieved net realized and unrealized gains of $13,165,822 from trading operations (including foreign exchange transactions and translations). Management fees of $1,194,827, brokerage commissions of $251,058, selling commissions and platform fees of $1,076,010, administrative and operating expenses of $324,783 and custody fees and other expenses of $16,160 were paid or accrued. Interest income of $71,035 partially offset the Master Fund expenses allocated to the Partnership resulting in net income of $10,374,019.

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An analysis of the Master Fund's trading gain (loss) by sector is as follows:

% Gain Sector (Loss) Currencies 1.83 % Energies 1.03 % Grains (0.05 )% Interest rates 6.81 % Livestock 0.53 % Metals (1.14 )% Softs 0.15 % Stock indices 2.44 % Trading gain 11.60 % MANAGEMENT DISCUSSION - 2014



Three months ended June 30, 2014

The Partnership, through its investment in the Master Fund, 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 more than 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, Hong Kong 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 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. Long cotton and palm oil trades produced losses, as did trading of sugar. Meanwhile, trading of cattle was marginally profitable.

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 a 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, through its investment in the Master Fund, produced a profit, predominantly due to gains from long interest rate futures positions. There were also 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, about the future course of Federal Reserve monetary policy, about political and economic turmoil in several emerging economies-including Turkey, India, Indonesia, and Thailand, and about the impact of the Russia/Ukraine-Crimea situation kept markets off balance during the quarter.

Given persistent concerns about worldwide growth, and 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.

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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 that 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, Turkey and Hungary; a short euro trade versus the Polish zloty; 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 Total Partners' Capital of the Month Ending: Partnership June 30, 2013 $ 172,491,457 March 31, 2013 199,887,747 December 31, 2012 228,943,314 Three Months Six Months Change in Partners' Capital $ (27,369,290 )$ (56,451,857 ) Percent Change (13.71 )% (24.66 )%



Three months ended June 30, 2013

The decrease in the Partnership's net assets of $27,396,290 was attributable to withdrawals of $13,325,578 and a net loss through its investment in the Master Fund of $17,948,570 which was partially offset by contributions of $3,877,858.

Management fees, through the Partnership's investment in the Master Fund, are calculated on the net asset value on the last day of each month and are affected by trading performance, subscriptions and redemptions. Management fees, through the Partnership's investment in the Master Fund, for the three months ended June 30, 2013 decreased $218,667 relative to the corresponding period in 2012. The decrease was due to a decrease in the average net asset value of the Partnership during the three months ended June 30, 2013, relative to the corresponding period in 2012.

The Partnership, through its investment in the Master Fund, bears all trade-related commission and clearing charges due to third-party brokers. Brokerage commissions, through the Partnership's investment in the Master Fund, for the three months ended June 30, 2013 increased $100,026 relative to the corresponding period in 2012. The increase was due mainly to an increase in the in trading volume at the Master Fund, relative to the corresponding period in 2012.

Selling commissions and platform fees are calculated on the net asset value on the last day of each month and are affected by trading performance, subscriptions and redemptions. Selling commissions and platform fees for the three months ended June 30, 2013 decreased $17,177 relative to the corresponding period in 2012. The decrease was due to a decrease in the average net asset value of the Partnership during the three months ended June 30, 2013, relative to the corresponding period in 2012.

The Partnership, through its investment in the Master Fund, pays administrative expenses for legal, audit and accounting services. Administrative expenses, net of amounts borne by the General Partner, through the Partnership's investment in the Master Fund, for the three months ended June 30, 2013 decreased $54,811 relative to the corresponding period in 2012. The decrease was due mainly to a decrease in the Partnership's net asset value during the three months ended June 30, 2013, relative to the corresponding period in 2012.

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Interest income, through the Partnership's investment in the Master Fund, is derived from cash and U.S. Treasury instruments held at the Master Fund's brokers and custodian. Interest income, through the Partnership's investment in the Master Fund, for the three months ended June 30, 2013 increased $5,809 relative to the corresponding period in 2012. This increase was due primarily to an increase in the effective interest rate of U.S. Treasury Notes held by the Partnership through its investment in the Master Fund, which was partially offset by a decrease in the Partnership's net asset value during the three months ended June 30, 2013 relative to the corresponding period in 2012.

For the three months ended June 30, 2013, the Partnership, through its investment in the Master Fund, achieved net realized and unrealized losses of $15,735,497 from trading operations (including foreign exchange transactions and translations). Management fees of $928,450, brokerage commissions of $291,870, selling commissions and platform fees of $822,419, administrative and operating expenses of $245,787 and custody fees and other expenses of $10,243 were paid or accrued. Interest income of $85,696 partially offset the Master Fund expenses allocated to the Partnership resulting in a net loss of $17,948,570.

An analysis of the Master Fund's trading gain (loss) by sector is as follows:

% Gain Sector (Loss) Currencies (3.11 )% Energies (1.00 )% Grains 0.16 % Interest rates (4.33 )% Livestock (0.13 )% Metals 1.92 % Softs (0.07 )% Stock indices (1.48 )% Trading loss (8.04 )%



Six months ended June 30, 2013

The decrease in the Partnership's net assets of $56,451,857 was attributable to withdrawals of $54,791,800 and a net loss through its investment in the Master Fund of $14,016,935 which was partially offset by contributions of $12,356,878.

Management fees, through the Partnership's investment in the Master Fund, are calculated on the net asset value on the last day of each month and are affected by trading performance, subscriptions and redemptions. Management fees, through the Partnership's investment in the Master Fund, for the six months ended June 30, 2013 decreased $323,673 relative to the corresponding period in 2012. The decrease was due to a decrease in the average net asset value of the Partnership during the six months ended June 30, 2013, relative to the corresponding period in 2012.

The Partnership, through its investment in the Master Fund, bears all trade-related commission and clearing charges due to third-party brokers. Brokerage commissions, through the Partnership's investment in the Master Fund, for the six months ended June 30, 2013 increased $203,760 relative to the corresponding period in 2012. The increase was due mainly to an increase in the trading volume at the Master Fund, relative to the corresponding period in 2012.

Selling commissions and platform fees are calculated on the net asset value on the last day of each month and are affected by trading performance, subscriptions and redemptions. Selling commissions and platform fees for the six months ended June 30, 2013 increased $18,304 relative to the corresponding period in 2012. The increase was due to an increase in the average net asset value of commission paying investors of the Partnership during the six months ended June 30, 2013, relative to the corresponding period in 2012.

The Partnership, through its investment in the Master Fund, pays administrative expenses for legal, audit and accounting services. Administrative expenses, net of amounts borne by the General Partner, through the Partnership's investment in the Master Fund, for the six months ended June 30, 2013 decreased $81,081 relative to the corresponding period in 2012. The decrease was due mainly to a decrease in the Partnership's net asset value during the six months ended June 30, 2013, relative to the corresponding period in 2012.

Interest income, through the Partnership's investment in the Master Fund, is derived from cash and U.S. Treasury instruments held at the Master Fund's brokers and custodian. Interest income, through the Partnership's investment in the Master Fund, for the six months ended June 30, 2013 increased $17,430 relative to the corresponding period in 2012. This increase was due primarily to an increase in the effective interest rate of U.S. Treasury Notes held by the Partnership, through its investment in the Master Fund, which was partially offset by a decrease in the Partnership's net asset value during the six months ended June 30, 2013, relative to the corresponding period in 2012.

For the six months ended June 30, 2013, the Partnership, through its investment in the Master Fund, achieved net realized and unrealized losses of $9,422,480 from trading operations (including foreign exchange transactions and translations). Management fees of $1,976,478, brokerage commissions of $554,919, selling commissions and platform fees of $1,697,384, administrative and operating expenses of $521,620 and custody fees and other expenses of $20,683 were paid or accrued. Interest income of $176,629 partially offset the Master Fund expenses allocated to the Partnership resulting in a net loss of $14,016,935.

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An analysis of the Master Fund's trading gain (loss) by sector is as follows:

% Gain Sector (Loss) Currencies (2.92 )% Energies (1.35 )% Grains 0.08 % Interest rates (5.32 )% Livestock (0.38 )% Metals 1.34 % Softs 0.23 % Stock indices 2.90 % Trading loss (5.42 )% MANAGEMENT DISCUSSION - 2013



Three months ended June 30, 2013

The net asset value of the Partnership, through its investment in the Master Fund, declined sharply as losses from trading financial futures, currency forwards and, to a lesser extent, energy futures outdistanced the gains from trading metals. Trading of agricultural commodity futures was nearly flat.

Market dynamics shifted dramatically during the second quarter. Global markets were roiled by concerns about the 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 Ben 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 Japanese equities 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 long note and bond positions had been reversed to short positions and German note and bond positions were mixed rather than all long. 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 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 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 the currencies of Chile, Switzerland, Sweden, Poland and the Eurozone also were unprofitable and were reduced or reversed. Long Australian dollar trades versus the euro, Japanese yen and British pound sterling produced losses. Short euro trades relative to the currencies of Poland, Sweden and Turkey produced losses as did trading the Swiss franc against the Norwegian krone. Meanwhile, long dollar trades against the yen, Indian rupee, Turkish lira and South African rand were profitable. On the other hand, long U.S. dollar trades relative to the 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 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, heating 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 unprofitable. Profits from short coffee, sugar soybean oil and cattle positions and from a long soybean position fell short of the losses from a long cotton trade and a short hog trade.

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Three months ended March 31, 2013

The Partnership, through its investment in the Master Fund, produced a profit during the quarter predominantly due to gains from long stock index positions. There was also a fractional gain from trading soft commodity futures. Currency trading was nearly flat. 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 was 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 marginally positive for the quarter. Long U.S. and Australian dollar trades against the yen were quite profitable as Japan's leaders forged ahead with promises of monetary accommodation. A long Australian position relative to British pound sterling and long U.S. dollar and euro trades against the South African rand also posted gains. Finally, short Euro trades versus the currencies of Romania, Sweden and Turkey and short U.S. dollar trades versus the currencies of Chile, Mexico and Israel were profitable. On the other hand, short U.S. dollar trades versus the currencies of the United Kingdom, Canada, Colombia, Korea, Singapore, Norway, Poland, Switzerland and the Eurozone registered losses and were reduced as were short euro trades against 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, a long Japanese government bond trade was profitable. On the other hand, trading of German, British, Canadian, Australian and U.S. interest rate futures was unprofitable.

Trading of commodities was fractionally unprofitable. Among soft commodities, short positions in coffee, sugar, and crude palm oil were profitable due to the weight of abundant supplies on price. Also, a long cotton trade produced a gain. Meanwhile, short cocoa and robusta coffee trades posted losses. In grains, the losses from trading corn and the soybean complex outdistanced the gain from a short wheat position. Long cattle and hog positions generated losses and were reversed. 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. In metals, the profit from a short aluminum position fell short of the losses from long gold, silver, platinum, zinc, lead and nickel trades.

OFF-BALANCE SHEET ARRANGEMENTS

Neither the Partnership nor the Master Fund engages in off-balance sheet arrangements with other entities.

CONTRACTUAL OBLIGATIONS



Neither the Partnership nor the Master Fund enters 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, through its investment in the Master Fund, is trading futures, forward currency, spot and swap contracts, both long (contracts to buy) and short (contacts to sell). The Partnership, through its investment in the Master Fund, 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 Master Fund for less than four months before being offset or rolled over into new contracts with similar maturities. The financial statements of the Master Fund present a condensed schedule of investments setting forth open futures, forward and other contracts at June 30, 2014 and December 31, 2013.


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Source: Edgar Glimpses


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