Nestor Partners 10-Q 2008 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended: September 30, 2008

or

¨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)

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

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

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

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x Small 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 x

Nestor Partners

Financial statements

For the three and nine months ended September 30, 2008 and 2007 (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 (unaudited)	11

(a) At September 30, 2008 (unaudited) and December 31, 2007

(b) For the three and nine months ended September 30, 2008 and 2007 (unaudited)

(c) For the nine months ended September 30, 2008 and 2007 (unaudited)

PART 1. FINANANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Nestor Partners

Statements of Financial Condition

	September 30
	2008		December 31
	(UNAUDITED)		2007
ASSETS
Equity in trading accounts:
Investments in U.S. Treasury notes−at market value (amortized cost $17,586,262 and $40,392,047)	$	17,625,842	$	40,599,095
Net unrealized appreciation on open futures and forward currency contracts		3,093,154		3,362,537
Due from brokers		2,695,127		3,413,463
Cash denominated in foreign currencies (cost $660,372 and $2,232,905)		607,894		2,222,407
Total equity in trading accounts		24,022,017		49,597,502
INVESTMENTS IN U.S. TREASURY NOTES−at market value (amortized cost $133,334,287 and $94,729,231)		133,564,813		95,111,960
CASH AND CASH EQUIVALENTS		5,835,663		13,731,232
ACCRUED INTEREST RECEIVABLE		1,929,657		1,142,553
TOTAL	$	165,352,150	$	159,583,247
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Capital contributions received in advance	$	28,100	$	2,120,500
Unrealized depreciation on open forward currency contracts		19,162		318,479
Accrued brokerage fees		305,992		292,980
Accrued expenses		595,289		287,840
Capital withdrawals payable		816,996		4,527,184
Total liabilities		1,765,539		7,546,983
PARTNERS' CAPITAL		163,586,611		152,036,264
TOTAL	$	165,352,150	$	159,583,247

See notes to financial statements

1

Nestor Partners

Condensed Schedule of Investments

September 30, 2008 (UNAUDITED)

Futures and Forward Currency Contracts	% of Partners' Capital			Net Unrealized Appreciation/ (Depreciation)
FUTURES CONTRACTS:
Long futures contracts:
Energies		0.35	%	$	577,907
Grains		(0.68	)		(1,108,875	)
Interest rates		0.12			197,090
Metals		(1.87	)		(3,059,471	)
Softs		(0.05	)		(84,770	)
Total long futures contracts		(2.13	)		(3,478,119	)
Short futures contracts:
Energies		(0.33	)		(546,027	)
Grains		0.72			1,180,606
Interest rates		(0.05	)		(85,316	)
Livestock		0.11			187,350
Metals		1.99			3,259,399
Softs		0.62			1,006,102
Stock indices		0.77			1,256,714
Total short futures contracts		3.83			6,258,828
TOTAL INVESTMENTS IN FUTURES CONTRACTS-Net		1.70			2,780,709
FORWARD CURRENCY CONTRACTS:
Total long forward currency contracts		(0.38	)		(620,110	)
Total short forward currency contracts		0.56			913,393
TOTAL INVESTMENTS IN FORWARD CURRENCY
CONTRACTS-Net		0.18			293,283
TOTAL		1.88	%	$	3,073,992

(Continued)

2

Nestor Partners

Condensed Schedule of Investments

September 30, 2008 (UNAUDITED)

U.S. Treasury Notes

Face Amount		Description		% of Partners' Capital			Value
$	74,250,000		U.S. Treasury notes, 3.125%, 10/15/2008		45.43	%	$	74,319,610
39,640,000			U.S. Treasury notes, 3.875%, 05/15/2009		24.55			40,166,468
36,190,000			U.S. Treasury notes, 3.625%, 07/15/2009		22.44			36,704,577
			Total investments in U.S. Treasury notes (amortized cost $150,920,549)		92.42	%	$	151,190,655

(Concluded)

See notes to financial statements

3

Nestor Partners

Condensed Schedule of Investments

December 31, 2007

Futures and Forward Currency Contracts	% of Partners' Capital			Net Unrealized Appreciation/ (Depreciation)
FUTURES CONTRACTS:
Long futures contracts:
Energies		0.45	%	$	691,028
Grains		1.04			1,588,727
Interest rates		(0.18	)		(278,280	)
Metals		0.04			63,836
Softs		0.09			136,331
Stock indices		0.16			225,186
Total long futures contracts		1.60			2,426,828
Short futures contracts:
Energies		(0.03	)		(40,850	)
Interest rates		0.40			613,247
Livestock		0.10			152,100
Metals		0.07			102,133
Softs		(0.07	)		(111,978	)
Stock indices		0.10			153,914
Total short futures contracts		0.57			868,566
TOTAL INVESTMENTS IN FUTURES CONTRACTS-Net		2.17			3,295,394
FORWARD CURRENCY CONTRACTS:
Total long forward currency contracts		0.03			40,033
Total short forward currency contracts		(0.20	)		(291,369	)
TOTAL INVESTMENTS IN FORWARD CURRENCY
CONTRACTS-Net		(0.17	)		(251,336	)
TOTAL		2.00	%	$	3,044,058

(Continued)

4

Nestor Partners

Condensed Schedule of Investments

December 31, 2007

U.S. Treasury Notes

Face Amount		Description		% of Partners' Capital			Value
$	34,640,000		U.S. Treasury notes, 3.000%, 02/15/2008		22.78	%	$	34,634,588
34,640,000			U.S. Treasury notes, 2.625%, 05/15/2008		22.73			34,553,400
33,685,000			U.S. Treasury notes, 3.250%, 08/15/2008		22.15			33,674,473
32,900,000			U.S. Treasury notes, 3.125%, 10/15/2008		21.60			32,848,594
			Total investments in U.S. Treasury notes (amortized cost $135,121,278)		89.26	%	$	135,711,055

(Concluded)

See notes to financial statements

5

Nestor Partners

Statements of Operations (UNAUDITED)

	For the three months ended
	September 30			September 30
	2008			2007
INVESTMENT INCOME:
Interest income	$	1,059,029		$	1,960,789
EXPENSES:
Brokerage fees		921,090			846,601
Administrative expenses		100,634			94,272
Custody fees		7,959			6,515
Total expenses		1,029,683			947,388
NET INVESTMENT INCOME		29,346			1,013,401
NET REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on closed positions:
Futures and forward currency contracts		(4,430,520	)		(20,577,716	)
Foreign exchange translation		1,788			29,246
Net change in unrealized:
Futures and forward currency contracts		(3,797,456	)		1,608,965
Foreign exchange translation		(42,972	)		41,630
Net gains from U.S. Treasury notes:
Net change in unrealized		15,245			436,461
Total net realized and unrealized losses		(8,253,915	)		(18,461,414	)
NET LOSS		(8,224,569	)		(17,448,013	)
LESS PROFIT SHARE TO GENERAL PARTNER		(1,175,445	)		(2,431,439	)
NET LOSS AFTER PROFIT SHARE TO
GENERAL PARTNER	$	(7,049,124	)	$	(15,016,574	)

See notes to financial statements (Continued)

6

Nestor Partners

Statements of Operations (UNAUDITED)

	For the nine months ended
	September 30			September 30
	2008			2007
INVESTMENT INCOME:
Interest income	$	3,929,702		$	5,556,686
EXPENSES:
Brokerage fees		2,778,314			2,660,089
Administrative expenses		307,449			288,548
Custody fees		21,464			17,386
Total expenses		3,107,227			2,966,023
NET INVESTMENT INCOME		822,475			2,590,663
NET REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) on closed positions:
Futures and forward currency contracts		17,243,651			13,549,280
Foreign exchange translation		(190,494	)		23,752
Net change in unrealized:
Futures and forward currency contracts		29,934			185,936
Foreign exchange translation		(41,980	)		40,465
Net gains (losses) from U.S. Treasury notes:
Net change in unrealized		(319,671	)		489,351
Total net realized and unrealized gains		16,721,440			14,288,784
NET INCOME		17,543,915			16,879,447
LESS PROFIT SHARE TO GENERAL PARTNER		1,962,655			2,019,981
NET INCOME AFTER PROFIT SHARE TO
GENERAL PARTNER	$	15,581,260		$	14,859,466

See notes to financial statements (Concluded)

7

Nestor Partners

Statements of Changes in Partners' Capital (UNAUDITED)

For the nine months ended September 30, 2008:

	Limited Partners			Special  Limited  Partners			New Profit  Memo Account		General  Partner			Total
PARTNERS' CAPITAL-
January 1, 2008	$	88,400,217		$	59,065,781		$	-	$	4,570,266		$	152,036,264
Contributions		6,469,565			603,998			-		-			7,073,563
Withdrawals		(8,344,038	)		(3,723,093	)		-		(1,000,000	)		(13,067,131	)
Transfers		(378,101	)		378,101								-
Net income		9,244,915			7,662,900			1,335		634,765			17,543,915
General Partner's allocation:
New Profit-Accrued		(1,839,364	)		(123,291	)		1,962,655		-			-
Transfer of New Profit Memo
Account to General Partner		-			-			-		-			-
PARTNERS' CAPITAL-
September 30, 2008	$	93,553,194		$	63,864,396		$	1,963,990	$	4,205,031		$	163,586,611

For the nine months ended September 30, 2007:

	Limited Partners			Special  Limited  Partners			New Profit  Memo Account			General  Partner		Total
PARTNERS' CAPITAL-
January 1, 2007	$	93,445,531		$	50,222,014		$	-		$	4,034,296	$	147,701,841
Contributions		2,106,500			107,810			-			-		2,214,310
Withdrawals		(17,953,468	)		(907,475	)		-			-		(18,860,943	)
Net income (loss)		9,729,838			6,609,194			(5,159	)		545,574		16,879,447
General Partner's allocation:
New Profit-Accrued		(1,920,598	)		(99,383	)		2,019,981			-		-
Transfer of New Profit Memo
Account to General Partner		-			-			-			-		-
PARTNERS' CAPITAL-
September 30, 2007	$	85,407,803		$	55,932,160		$	2,014,822		$	4,579,870	$	147,934,655

See notes to financial statements

8

Nestor Partners

Statements of Financial Highlights (UNAUDITED)

For the three months ended September 30, 2008	Limited Partners			Special  Limited Partners
Ratios to average capital:
Net investment income (loss) (a)		(1.18	)%		1.78	%
Total expenses (a)		3.82	%		0.82	%
Profit share allocation (b)		(1.09	)%		(0.24	)%
Total expenses and profit share allocation		2.73	%		0.58	%
Total return before profit share allocation (b)		(5.06	)%		(4.36	)%
Profit share allocation (b)		0.89	%		0.21	%
Total return after profit share allocation		(4.17	)%		(4.15	)%

For the three months ended September 30, 2007	Limited Partners			Special  Limited Partners
Ratios to average capital:
Net investment income (a)		1.57	%		4.33	%
Total expenses (a)		3.65	%		0.80	%
Profit share allocation (b)		(2.36	)%		(0.51	)%
Total expenses and profit share allocation		1.29	%		0.29	%
Total return before profit share allocation (b)		(10.41	)%		(9.79	)%
Profit share allocation (b)		1.73	%		0.40	%
Total return after profit share allocation		(8.68	)%		(9.39	)%

(a) annualized
(b) not annualized	(Continued)

9

Nestor Partners

Statements of Financial Highlights (UNAUDITED)

For the nine months ended September 30, 2008	Limited Partners			Special  Limited Partners
Ratios to average capital:
Net investment income (loss) (a)		(0.58	)%		2.36	%
Total expenses (a)		3.81	%		0.82	%
Profit share allocation (b)		1.95	%		0.19	%
Total expenses and profit share allocation		5.76	%		1.01	%
Total return before profit share allocation (b)		10.15	%		12.71	%
Profit share allocation (b)		(2.02	)%		(0.19	)%
Total return after profit share allocation		8.13	%		12.52	%

For the nine months ended September 30, 2007	Limited Partners			Special  Limited Partners
Ratios to average capital:
Net investment income (a)		1.17	%		3.92	%
Total expenses (a)		3.69	%		0.86	%
Profit share allocation (b)		2.05	%		0.18	%
Total expenses and profit share allocation		5.74	%		1.04	%
Total return before profit share allocation (b)		10.88	%		13.20	%
Profit share allocation (b)		(2.14	)%		(0.19	)%
Total return after profit share allocation		8.74	%		13.01	%

(a) annualized

(b) not annualized

See notes to financial statements (Concluded)

10

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

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” or “Registrant”) financial condition at September 30, 2008 (unaudited) and December 31, 2007 and the results of its operations for the three and nine months ended September 30, 2008 and 2007 (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, 2007. The December 31, 2007 information has been derived from the audited financial statements as of December 31, 2007.

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 Millburn Ridgefield Corporation (the “General Partner”), The Millburn Corporation (“TMC”), for providing accounting services to the Partnership. The Partnership incurred administrative expenses of $100,634 and $307,449 during the three and nine months ended September 30, 2008, respectively, of which $68,459 and $205,097 relates to legal and accounting services provided to the Partnership by TMC. 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.

Interests sold through Selling Agents engaged by the General Partner are generally subject to a redemption charge up to 2.5% for redemptions made prior to the end of the twelfth month following their sale. All redemption charges will be paid to the General Partner. There were no charges due to the General Partner at September 30, 2008.

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (“FIN 48”) which clarifies the accounting for uncertainty in tax positions. FIN 48 requires that the Partnership recognize in its financial statements the impact of a tax position and if that position is more likely than not of being sustained on audit based on the technical merits of the position. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006 with the cumulative effect of the change in accounting principle recorded as an adjustment to opening partner capital. The General Partner has evaluated the impact of adopting FIN 48 on the Partnership’s financial statements. The Partnership is treated as a limited partnership for federal and state income tax reporting purposes and therefore the unitholders are responsible for the payment of taxes. Accordingly, FIN 48 did not have an impact on the Partnership.

In September 2006, the FASB issued FAS 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The provisions of FAS 157 are effective for fiscal years beginning after November 15, 2007. The Partnership adopted this pronouncement on January 1, 2008. The three levels of the fair value hierarchy under FAS 157 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.

11

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

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 a short-term U.S. government money market fund. The General Partner of the Partnership 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.

OTC derivatives or forward currency contracts are valued based on pricing models that consider the current market prices (“Spot Prices”) plus the time value of money (“Forward Points”) and contractual prices of the underlying financial instruments. The Forward Points from the quotation service providers are generally in periods of one month, two months, three months and six months forward while the contractual forward delivery dates for the foreign forward currency contracts traded by the Partnership may be in between these periods. The General Partner’s policy is to calculate the Forward Points for each contract being valued by determining the number of days from the date the forward currency contract is being valued to its maturity date and then using straight-line interpolation to calculate the valuation of Forward Points for the applicable forward currency contract. 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 following table sets forth by level within the fair value hierarchy:

Financial Assets at Fair Value as of September 30, 2008

	Level 1		Level 2		Total
U.S. Treasury Notes	$	151,190,655	$	0	$	151,190,655
Short-Term Money Market Fund		5,535,663		0		5,535,663
Exchange-Traded Futures Contracts		2,780,709		0		2,780,709
Over-the-Counter Forward Currency Contracts		0		293,283		293,283
Total financial assets at fair value	$	159,507,027	$	293,283	$	159,800,310

Recently Issued Pronouncements

In March 2008, FAS 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FAS 133, was issued and is effective for fiscal years beginning after November 15, 2008. FAS 161 amends and expands the disclosure requirements of FAS 133 in order to provide financial statement users an understanding of a company’s use of derivative instruments, how derivative instruments are accounted for under FAS 133 and related interpretations and how these instruments affect a company’s financial position, performance and cash flows. FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. Management is currently evaluating the adoption of FAS 161 on the Part’s financial statement disclosures.

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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 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 some operating businesses, general economic or seasonal conditions do not directly affect the profit potential of the Partnership. 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

The Partnership raises additional capital only through the sale of interests. Partner capital may also be increased by trading profits, if any. The Partnership does not engage in borrowing. Interests may be offered for sale as of the beginning of each month.

The Partnership trades futures and forward contracts on interest rates, commodities, currencies, metals, energies, livestock and stock indices. Due to the nature of the Partnership's business, substantially all its assets are represented by cash and United States government obligations while the Partnership maintains its market exposure through open futures and forward contract positions.

The Partnership's assets are generally held as cash, cash equivalents or U.S. Government obligations which are used to margin or collateralize the Partnership's futures and forward positions and are withdrawn, as necessary, to pay redemptions and expenses. Other than potential market-imposed limitations on liquidity due to, for example, daily price fluctuation limits which are inherent in the Partnership's futures and forward trading, the Partnership's assets are highly liquid and are expected to remain so.

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 2007.

PROFIT SHARE

The following table indicates the total profit share earned and accrued during the three and nine months ended September 30, 2008 and 2007. Profit share earned (from Limited Partners’ redemptions) is credited to the New Profit memo account as defined in the Partnership’s Partnership Agreement.

13

	Three months ended:
	Sep 30, 2008			Sep 30, 2007
Profit share earned	$	60,232		$	23,146
Reversal of profit share (1)		(3,048,663	)		(4,307,329	)
Profit share accrued (2)		1,812,986			1,852,744
Total profit share	$	(1,175,445	)	$	(2,431,439	)

	Nine months ended:
	Sep 30, 2008		Sep 30, 2007
Profit share earned	$	149,669	$	167,237
Profit share accrued (2)		1,812,986		1,852,744
Total profit share	$	1,962,655	$	2,019,981

(1) At July 1

(2) At September 30

RESULTS OF OPERATIONS

During its operations for the three and nine months ending September 30, 2008, the Partnership experienced no meaningful periods of illiquidity in any of the numerous markets traded by the General Partner.

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

Periods ended September 30, 2008
Month Ending:	Total Partners' Capital
September 30, 2008	$	163,586,611
June 30, 2008		172,404,499
December 31, 2007		152,036,264
	Three Months			Nine Months
Change in Partners' Capital	$	(8,817,888	)	$	11,550,347
Percent Change		-5.11	%		7.60	%

14

THREE MONTHS ENDED SEPTEMBER 30, 2008

The decrease in the Partnership’s net assets of $8,817,888 was attributable to net loss (before profit share) of $8,224,569 and withdrawals of $1,137,738, which was partially offset by contributions of $544,419.

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 September 30, 2008 increased $74,489 relative to the corresponding period in 2007. The increase in brokerage fees was due primarily to an increase in the average net assets of the limited partners during the three months ended September 30, 2008, relative to the corresponding period in 2007.

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 September 30, 2008 increased $6,362 relative to the corresponding period in 2007. The increase was due mainly to an increase in the Partnership's average net assets during the three months ended September 30, 2008, relative to the corresponding period in 2007.

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 September 30, 2008 decreased $901,760 relative to the corresponding period in 2007. This decrease was due mainly to a significant decrease in short-term Treasury yields during the three months ended September 30, 2008, relative to the corresponding period in 2007.

During the three months ended September 30, 2008, the Partnership experienced net realized and unrealized losses of $8,253,915 from its trading operations (including foreign exchange translations and U.S. Treasury notes). Brokerage fees of $921,090, administrative expenses of $100,634, custody fees of $7,959 were incurred. Interest income of $1,059,029 and a reversal of accrued profit share allocation to the General Partner of $1,175,445 offset the Partnership's expenses resulting in a net loss after profit share to General Partner of $7,049,124. Analysis of the trading gain (loss) by sector is as follows:

Sector	% Gain/ (Loss)
Currencies		-2.43	%
Energies		-2.02	%
Grains		-1.44	%
Interest Rates		0.22	%
Livestock		-0.08	%
Metals		-1.54	%
Softs		-0.05	%
Stock Indices		2.48	%
Trading Gain/(Loss)		-4.86	%

NINE MONTHS ENDED SEPTEMBER 30, 2008

The increase in the Partnership’s net assets of $11,550,347 was attributable to net income (before profit share) of $17,543,915 and contributions of $7,073,563, which was partially offset by withdrawals of $13,067,131.

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 nine months ended September 30, 2008 increased $118,225 relative to the corresponding period in 2007. The increase was due primarily to an increase in the average net assets of the special limited partners and limited partners during the nine months ended September 30, 2008, relative to the corresponding period in 2007.

15

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 nine months ended September 30, 2008 increased $18,901 relative to the corresponding period in 2007. The increase was due mainly to an increase in the Partnership's average net assets during the nine months ended September 30, 2008, relative to the corresponding period in 2007.

Interest income is derived from cash and U.S. Treasury instruments held at the Partnership's brokers and custodian. Interest income for the nine months ended September 30, 2008 decreased $1,626,984 relative to the corresponding period in 2007. This decrease was due mainly to a significant decrease in short-term Treasury yields during the nine months ended September 30, 2008, relative to the corresponding period in 2007.

During the nine months ended September 30, 2008, the Partnership experienced net realized and unrealized gains of $16,721,440 from its trading operations (including foreign exchange translations and U.S. Treasury notes). Brokerage fees of $2,778,314, administrative expenses of $307,449, custody fees of $21,464 and an accrued profit share allocation to the General Partner of $1,962,655 were incurred. Interest income of $3,929,702 offset the Partnership's expenses resulting in a net gain after profit share to General Partner of $15,581,260 analysis of the trading gain (loss) by sector is as follows:

Sector	% Gain/ (Loss)
Currencies		2.42	%
Energies		3.34	%
Grains		1.56	%
Interest Rates		0.46	%
Livestock		0.34	%
Metals		-0.01	%
Softs		-0.42	%
Stock Indices		3.25	%
Trading Gain/(Loss)		10.94	%

MANAGEMENT DISCUSSION – 2008

Three months ended September 30, 2008

For the three-month period ended September 30, 2008, the Partnership's Limited Partners and Special Limited Partners had negative returns, net of all fees, of 4.17% and 4.15%, respectively, as negative results in July and August were only partially offset by a gain in September. Trading of currency, energy, metal and grain futures was unprofitable. Equity futures and interest rate trading produced a profit, while trading of soft and livestock futures had little impact on quarterly performance.

16

As the ongoing financial and economic turmoil triggered by the U.S. housing and mortgage crises and subsequent credit crunch exploded with international ramifications, worldwide inflation and growth dynamics changed markedly. Concerns about stagflation with the worst growth slowdown in the U.S. were replaced by worries about global deflation, recession and perhaps even depression as the world’s financial system seized up and nearly ground to a halt. In particular, September was a tumultuous month in world financial markets. Extraordinary events were too numerous to list completely but included the government seizures of Fannie and Freddie, the government bailout and substantial takeover of AIG Insurance, the bankruptcy of Lehman Brothers, “breaking the buck” by a major institutional money market fund, the rescue and sale of Washington Mutual and Wachovia in the U.S. and several major financial institutions in Europe and the initial defeat by the U.S. House of Representatives of the administration’s and Treasury secretary’s $700 billion bailout plan.

In this environment, an unwinding of risky trades and a flight to safety occurred, triggering reversals in a number of previously existing trends.

The U.S. dollar, which had been in a multi-year bear market, staged a strong rally. Losses were taken on short dollar positions against a variety of currencies, and many of those positions were switched to long dollar trades by quarter-end. In cross rate trading, losses were due to an unwinding of carry trades. Long positions in Aussie, New Zealand and Canadian dollars against lower yielding units were unprofitable.

Perceptions of weakening demand due to a global economic slowdown, increasing supplies, and the dollar rally contributed to a generalized weakening of commodity prices. Falling energy prices led to losses on long energy positions. Precious and industrial metal prices fell significantly. Long positions in gold, silver, platinum, copper and aluminum were unprofitable and subsequently reversed to short positions. Short positions in nickel and zinc were profitable. Trading of agricultural commodities resulted in moderate losses. Long positions in corn, and the soybean complex produced losses before being reversed to short positions. A long position in cocoa and trading of coffee and rubber also generated losses. On the other hand, short positions in wheat, cotton, sugar, and live cattle were profitable.

Not surprisingly, short stock index futures positions across a wide swath of global equity markets were quite profitable.

Finally, as inflation concerns gave way to deflation fears, the trend toward higher interest rates, evident in the first half of 2008, was interrupted in July and reversed to a declining trend by the end of the quarter. Long positions in U.S. and Japanese interest rate futures produced gains, but most of these gains were offset by losses on short positions in European interest rate futures that were later reversed to long positions. Trading of Australian interest rate futures was marginally profitable.

Three months ended June 30, 2008

For the three-month period ended June 30, 2008, the Partnership's Limited Partners and Special Limited Partners had positive returns, net of all fees, of 6.84% and 9.01%, respectively. Energy trading accounted for a large portion of the gain, and significant profits were registered from currency, metals, equity, and grain trading as well. Meanwhile, trading of interest rate futures, and to a lesser extent, livestock and soft commodities futures were unprofitable.

Energy prices continued their upward thrust with crude oil hitting successive new all-time highs throughout the second quarter. Strong demand, including fundamental, investment and speculative components, along with low inventories, periodic supply disruptions, and geopolitical uncertainties underpinned energy price surges. Consequently, long positions in crude oil, gasoline, heating oil, kerosene, London gas oil, and natural gas were profitable. Near quarter-end, the high volatility in the energy markets resulted in further significant reductions in energy positions.

17

In currency trading, the dollar was under pressure due to the ongoing financial and economic turmoil triggered by the housing and mortgage crises and subsequent credit crunch. The easier Federal Reserve monetary policy that has ensued also weighed on the U.S. currency. Therefore, short dollar positions against a number of higher yield currencies including the Aussie and Singapore dollars, Brazilian real and Mexican peso, and Eastern European currencies were profitable. A long dollar trade versus the Korean won also produced a gain. On the other hand, short dollar positions against the New Zealand dollar and Chilean peso were unprofitable, as was a long dollar position against the South African rand. In non-dollar cross rate trading, short euro positions relative to the Eastern European currencies and a long Aussie dollar/short Canadian dollar trade were profitable.

Equity markets declined rather broadly during the quarter and short positions in European and U.S. equity indices generated profits. Meanwhile, long positions in South African, Hong Kong and Chinese indices resulted in losses.

Industrial metals prices were mixed. Short positions in zinc, nickel and lead, and long positions in tin, copper and aluminum were profitable. Long positions in precious metals had no appreciable effect on performance this quarter.

In grains, long positions in the soybean complex and corn were profitable, and more than offset the modest loss from trading wheat.

As the quarter began, the portfolio was positioned for a continuation of the lower interest rate trend. However, as inflation concerns spread even though economic activity remained questionable, market participants came to believe that monetary easing was at an end. Hence during April and May losses were sustained on long positions in U.S., European, and Japanese short, medium, and long term interest rate instruments. In response numerous positions were reduced and/or reversed. In June, interest rate trading was profitable largely due to short futures positions but still ended up with a loss for the quarter.

In soft commodities, the losses from trading sugar and cotton outweighed the gains from long cocoa and coffee trades. Short positions in livestock were unprofitable as the market expected herd liquidation due to high feed prices to abate and on positive export news.

Three months ended March 31, 2008

For the three-month period ended March 31, 2008, the Partnership's Limited Partners and Special Limited Partners had positive returns, net of all fees, of 5.60% and 7.69%, respectively. Trading of dollar currency positions, and interest rate, grain, energy, metal and livestock futures were profitable. On the other hand, fractional losses were sustained from trading of cross currency positions, and stock index and soft commodity futures.

As the credit crisis spread and deepened, imperiling growth and employment prospects worldwide, central banks in the developed countries made more money available against a broader range of collateral for longer periods to a wider group of financial firms than ever before. In the U.S., increasing evidence of stress in the economy prompted the Federal Reserve to announce dramatic cuts in the federal funds and discount rates, providing much-needed liquidity and also facilitating a sale of embattled Bear Stearns to J.P. Morgan Chase.

In this environment, the U.S. dollar was under persistent pressure, falling to an all-time low against the euro and multi-year lows against a number of currencies including the yen, Swiss franc, Brazilian real and Columbian peso. As a result, short dollar positions were broadly profitable. Meanwhile, non-dollar cross rate trading was fractionally unprofitable.

18

As interest rates eased in a number of countries, long positions in U.S., Canadian and Japanese long-term and short-term interest rate futures were profitable, and outweighed losses on short positions in Australian interest rate futures. A long position in short-term euro rate futures was unprofitable as the ECB continued to resist calls for rate reductions due to inflation worries.

Agricultural markets, which have had a legendary run-up with several markets setting all-time records, were quite profitable, even though there was a significant sell-off in March. Grain prices have been underpinned by strong demand from the developing world that is experiencing an economic boom and by tight supplies. The USDA projects U.S. wheat inventories as the lowest for the end of the marketing year since 1948, and global wheat stockpiles headed for a 30-year low. Also, demand for corn and oilseeds was boosted by increased use of ethanol and diesel from vegetable oils. Indeed, some governments are restricting or taxing exports to retain domestic supplies. Consequently, long positions in wheat, corn, and the soybean complex were profitable. Further, short positions in livestock were profitable as high feed prices motivated producer selling.

Energy prices were firm and crude oil prices reached record levels due to strong global demand and tight supplies. The weakening U.S. dollar also buttressed energy and other commodity prices. Long positions in crude and London gas oil led to energy sector profits.

Precious metals prices advanced as the dollar fell, particularly early in the quarter and profits on long positions in gold, silver and platinum outweighed losses from trading of industrial metals.

High volatility and lack of well defined persistent trends kept equity futures positions reduced during the quarter, and gains and losses for individual equity futures netted to a marginal loss for the sector.

Periods ended September 30, 2007

Month Ending:	Total Partners' Capital
September 30, 2007	$	147,934,655
June 30, 2007		170,516,023
December 31, 2006		147,701,841

	Three Months			Nine Months
Change in Partners' Capital	$	(22,581,368	)	$	232,814
Percent Change		-13.24	%		0.16	%

THREE MONTHS ENDED SEPTEMBER 30, 2007

The decrease in the Partnership’s net assets of $22,581,368 was attributable to net loss (before profit share) of $17,448,013 and withdrawals of $6,290,979, which was partially offset by subscriptions of $1,157,624.

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 September 30, 2007 decreased $192,469 relative to the corresponding period in 2006.

19

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 September 30, 2007 decreased $18,463 relative to the corresponding period in 2006. The decrease was due mainly to a decrease in the Partnership's average net assets during the three months ended September 30, 2007, relative to the corresponding period in 2006.

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 September 30, 2007 decreased $220,075 relative to the corresponding period in 2006. This decrease was due mainly to a decrease in average net assets during the period, which was partially offset by an increase in short-term Treasury yields.

During the three months ended September 30, 2007, the Partnership experienced net realized and unrealized losses of $18,461,414 from its trading operations (including foreign exchange translations and U.S. Treasury notes). Brokerage fees of $846,601, administrative expenses of $94,272 and custody fees of $6,515 were incurred. Interest income of $1,960,789 and a reversal of accrued profit share to General Partner of $2,431,439 offset the Partnership's expenses resulting in a net loss after profit share to General Partner of $15,016,574. An analysis of the trading gain (loss) by sector is as follows:

Sector	% Gain/ (Loss)
Currencies		-3.65	%
Energies		0.29	%
Grains		2.72	%
Interest Rates		-6.79	%
Livestock		0.01	%
Metals		0.33	%
Softs		-1.06	%
Stock Indices		-3.24	%
Trading Gain/(Loss)		-11.39	%

NINE MONTHS ENDED SEPTEMBER 30, 2007

The increase in the Partnership’s net assets of $232,814 was attributable to net income (before profit share) of $16,879,447 and contributions of $2,214,310, which was partially offset by withdrawals of $18,860,943.

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 nine months ended September 30, 2007 decreased $712,017 relative to the corresponding period in 2006.

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 nine months ended September 30, 2007 decreased $59,451 relative to the corresponding period in 2006. The decrease was due mainly to a decrease in the Partnership's average net assets during the nine months ended September 30, 2007, relative to the corresponding period in 2006.

Interest income is derived from cash and U.S. Treasury instruments held at the Partnership's brokers and custodian. Interest income for the nine months ended September 30, 2007 decreased $578,911 relative to the corresponding period in 2006. This decrease was due mainly to a decrease in average net assets during the period, which was partially offset by an increase in short-term Treasury yields.

During the nine months ended September 30, 2007, the Partnership experienced net realized and unrealized gains of $14,288,784 from its trading operations (including foreign exchange translations and U.S. Treasury notes). Brokerage fees of $2,660,089, administrative expenses of $288,548, custody fees of $17,386 and accrued profit share to General Partner of $2,019,981 were incurred. Interest income of $5,556,686 offset the Partnership's expenses resulting in a net gain after profit share to General Partner of $14,859,466. An analysis of the trading gain (loss) by sector is as follows:

20

Sector	% Gain/ (Loss)
Currencies		3.75	%
Energies		-0.96	%
Grains		2.46	%
Interest Rates		0.41	%
Livestock		-0.11	%
Metals		1.20	%
Softs		-0.44	%
Stock Indices		2.98	%
Trading Gain/(Loss)		9.29	%

MANAGEMENT DISCUSSION - 2007

Three months ended September 30, 2007

For the three-month period ended September 30, 2007, the Partnership's Limited Partners and Special Limited Partners had negative returns, net of all fees, of 8.68% and 9.39%, respectively. Over half of the loss was in trading interest rate futures with the balance of the decline split rather evenly between currency forward and stock index futures trading. Grain trading was positive and to a lesser extent so was trading of energy and metal futures.

The Partnership’s positions at the beginning of the three months ended September 30, 2007 reflected several well established themes: solid global growth, high worldwide liquidity, a gradual tightening of monetary policies worldwide, and a diminution of the dollar’s role in world trade and reserve management. Our technical models were short interest rate futures on government and short-term debt reflecting rising interest rates; short the dollar, except against low interest rate currencies like the yen and Swiss franc; long high interest rate currencies and short lower interest rate currencies (the carry trade); long global equity indices; long precious and industrial metals; moderately long energy markets except short natural gas; and long grains and mixed in other agricultural markets.

During July and August fallout from the blowup of the U.S. subprime mortgage market spread around the world and triggered a sharp and widespread drying up of liquidity, a broad based contraction of “risk oriented” trades, and a flight to quality and liquidity in the debt markets. In particular, government and short-term interest rate instruments were bought, global equities were sold; the dollar was in demand; carry trades in non-U.S. currencies were unwound; and concerns that global growth would slow resulted in metal and energy prices declining. These actions took place almost simultaneously and produced countertrend movements in most markets in the portfolio. The diversification normally provided from trading 120 markets in nine sectors was ineffective as the markets became almost universally correlated and the Partnership experienced losses in both July and August.

While the Federal Reserve was reticent to act initially, the Fed did cut the fed funds and discount rates aggressively, and this action along with massive injections of liquidity by the Fed and the European and Japanese central banks helped to stabilize world financial markets so that many of the trends, which had been disrupted in July and August, reasserted themselves in September and the Partnership was profitable for the month of September. Hence, in September short dollar positions, long stock index positions, long energy positions, and long precious and industrial metals positions were profitable. In addition, in September a profitable bull market in grains accelerated as drought conditions in Australia and the Ukraine and strong global demand sent wheat to all time highs above $9 per bushel, and other grains rallied as well. Interest rate trading, on the other hand, remained unprofitable.

Three months ended June 30, 2007

For the three-month period ended June 30, 2007, the Partnership's Limited Partners and Special Limited Partners had positive returns, net of all fees, of 17.34% and 21.65%, respectively. Significant profits were registered from trading of interest rate and stock index futures and currency forwards. Trading of non-financial markets did not have a material impact on the quarterly return.

Robust worldwide economic growth, abundant worldwide liquidity, and corporate buyouts and buybacks supported global equity markets. Consequently, long positions in European, Asian, U.S., Australian, Canadian and South African equity futures were profitable.

21

Global interest rates moved higher throughout the quarter. Strong growth, inflation concerns, reserve diversification away from government securities by sovereign wealth funds, and tighter monetary policies—for example, in China, India, Europe, and the United Kingdom—contributed to upward pressure on interest rates. Short positions in European, Australian, Canadian and U.S. interest rates futures were profitable.

In the currency sector, the so-called carry trade, where high yielding currencies are purchased and low yielding currencies are sold produced gains. Also, strong international economic growth relative to weakening U.S. growth contributed to a dollar decline, bringing good returns on short dollar positions.

Energy prices were volatile reflecting geopolitical uncertainties involving Iran, Nigeria and Saudi Arabia and ongoing refinery worries. Therefore, the Partnership was lightly positioned and results were marginally profitable during the period.

Metal trading was flat, as gains from a long lead position offset losses elsewhere in the sector.

Finally, trading of grains was fractionally unprofitable, while soft commodities trading was fractionally profitable, due to a short sugar trade.

Three months ended March 31, 2007

For the three-month period ended March 31, 2007, the Partnership's Limited Partners and Special Limited Partners had positive returns, net of all fees, of 1.47% and 2.52%, respectively. Trading of interest rate, currency and metals futures was profitable, and to a lesser extent soft commodity futures. On the other hand, losses were sustained in trading energy, grain, stock indices and livestock futures. Prices were quite volatile during the period, and the Partnership posted gains in January and March, but suffered a loss in February.

Profits from currency trading derived primarily from shorting the U.S. dollar against currencies with higher interest rates, such as the Brazilian real, the Indian rupee, and the Turkish lira. Long British sterling positions against the low yielding Swiss and Swedish currencies, and a short euro trade versus the Hungarian forint were also profitable.

Market interest rates rose during the quarter as Central Banks worldwide, including England, Japan, China, India, the ECB, Norway and Switzerland, used official interest rate increases and quantitative measures to tighten monetary policy. Consequently, solid profits were generated by short positions in British, German, Australian, and Swiss notes and bonds, and from a short position in British short rates. With inflation still virtually nonexistent in Japan, a long position in Japanese government bonds was also profitable.

Continuing strong worldwide demand for base metals pushed prices higher, producing profits on long nickel, lead and tin positions. Nickel prices were also boosted by labor unrest at Canadian mines that produce a significant amount of the world's supply at a time when inventories are at multi-year lows. On the other hand, a long zinc trade was unprofitable.

Stock markets worldwide were highly volatile throughout the January-March period. The Partnership maintained long positions in its U.S., European, Asian, and South African stock indices, and there was a marginal loss for the quarter. Strong worldwide growth, attractive corporate profits, and heavy and high profile merger and acquisition activity underpinned equity index prices. However, there were significant, albeit short-lived, stock sell-offs late in February and again late in March. The first occurred when reports, which were later denied, surfaced that Chinese officials were considering new taxes on capital gains and new restrictions on the use of borrowed funds for stock investing. The second happened due to protectionism concerns when the U.S. Commerce Department imposed tariffs on Chinese glossy paper.

Energy prices were extremely volatile during the quarter. For example, crude prices briefly fell below $50 per barrel in January before recovering to end the month near $58 per barrel. Thereafter, crude vacillated in a range between $56 and $63 per barrel. On balance, short positions across the energy complex resulted in losses.

Trading in grains, soft commodities and livestock in the aggregate produced minimal profit/loss impact during the quarter.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Value at Risk is a measure of the maximum amount which the Partnership could reasonably be expected to lose in a given market sector. However, the inherent uncertainty of the Partnership's speculative trading and the occurrence in the markets traded by the Partnership of market movements far exceeding expectations could result in actual trading or non-trading losses far beyond the indicated or the Partnership's experience to date (i.e., "risk of ruin"). In light of the foregoing as well as the risks and uncertainties intrinsic to all future projections, the inclusion of the quantification included in this section should not be considered to constitute any assurance or representation that the Partnership's losses in any market sector will be limited to Value at Risk or by the Partnership's attempts to manage its market risk.

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

Quantifying the Partnership's Trading Value at Risk

Quantitative Forward-Looking Statements

The following quantitative disclosures regarding the Partnership's market risk exposures contain "forward-looking statements" within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934). All quantitative disclosures in this section are deemed to be forward-looking statements for purposes of the safe harbor, except for statements of historical fact.

The Partnership's risk exposure in the various market sectors traded by the General Partner is quantified below in terms of Value at Risk. Due to the Partnership's mark-to-market accounting, any loss in the fair value of the Partnership's open positions is directly reflected in the Partnership's earnings (realized or unrealized) and cash flow (at least in the case of exchange-traded contracts in which profits and losses on open positions are settled daily through variation margin).

Exchange maintenance margin requirements for equivalent or similar futures positions have been used by the Partnership as the measure of its Value at Risk. Maintenance margin requirements are set by exchanges to equal or exceed 95-99% of the maximum one-day losses in the fair value of any given contract incurred during the time period over which historical price fluctuations are researched for purposes of establishing margin levels. The maintenance margin levels are established by dealers and exchanges using historical price studies as well as an assessment of current market volatility (including the implied volatility of the options on a given futures contract) and economic fundamentals to provide a probabilistic estimate of the maximum expected near-term one-day price fluctuation.

The fair value of the Partnership's futures and forward positions does not have any optionality component. However, the General Partner may also trade commodity options on behalf of the Partnership. The Value at Risk associated with options would be reflected in the margin requirement attributable to the instrument underlying each option.

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

23

In the case of contracts denominated in foreign currencies, the Value at Risk figures include foreign margin amounts converted into U.S. Dollars.

The Partnership's Trading Value at Risk in Different Market Sectors

The following table indicates the average, highest and lowest amounts of trading Value at Risk associated with the Partnership's open positions by market category for each quarter-end during the period ended September 30, 2008. During the nine months ended September 30, 2008, the Partnership's average total capitalization was approximately $163,445,000.

Market Sector	Average Value at Risk		% of Average Capitalization			Highest Value at Risk		Lowest Value at Risk
Currencies	$	2.8		1.7	%	$	4.0	$	1.4
Energies		1.5		.9	%		2.2		0.2
Grains		0.4		0.2	%		0.7		0.2
Interest rates		1.4		0.8	%		1.7		0.9
Livestock		0.2		0.1	%		0.3		0.2
Metals		2.1		1.3	%		2.6		1.8
Softs		0.9		0.6	%		1.4		0.6
Stock indices		3.2		2.0	%		5.7		1.8
Total	$	12.5		7.6	%

Average, highest and lowest Value at Risk amounts relate to the quarter-end amounts for the nine months ended September 30, 2008. Average capitalization is the average of the Partnership's capitalization at the end of each of the nine months ended September 30, 2008. Dollar amounts represent millions of dollars.

ITEM 4. CONTROLS AND PROCEDURES

Millburn Ridgefield Corporation, the General Partner of the Partnership, with the participation of the General Partner's Co-Chief Executive Officers and Chief 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 significant changes in the General Partner's internal controls with respect to the Partnership or in other factors applicable to the Partnership that could materially affect these controls subsequent to the date of their evaluation.

ITEM 4T. CONTROLS AND PROCEDURES

There were no changes in the General Partner’s internal control over financial reporting during the quarter ended September 30, 2008 that have materially affected, or are reasonably likely to materially affect, the General Partner’s internal control over financial reporting with respect to the Partnership.

24

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings - None

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

(a) Pursuant to the Partnership's Declaration of Partnership and Partnership Agreement, the Partnership may sell Limited Partnership Interests ("Interests") at the beginning of each calendar month. On July 1, 2008, August 1, 2008 and September 1, 2008, the Partnership sold Interests to existing and new limited partners in the amount of $28,000, $203,000 and $303,280, respectively. On July 1, 2008, August 1, 2008 and September 1, 2008, the Partnership sold Interests to an existing special limited partner in the amount of $2,096, $580 and $7,463, respectively. There were no underwriting discounts or commissions in connection with the sales of the Interests described above.

(c) Pursuant to the Partnership's Declaration of Partnership and Partnership Agreement, investors 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 September 30, 2008: 

Date of Withdrawal	Limited Partners			Special Limited Partners			Total
July 31, 2008	$	(148,359	)	$	-		$	(148,359	)
August 31, 2008		(172,385	)		-			(172,385	)
September 30, 2008		(796,994	)		(20,000	)		(816,994	)
Total	$	(1,117,738	)	$	(20,000	)	$	(1,137,738	)

ITEM 3. Defaults Upon Senior Securities - None

ITEM 4. Submission of Matters to a Vote of Security Holders - None

ITEM 5. Other Information - None

ITEM 6. (a) Exhibits -

The following exhibits are incorporated by reference from the exhibit of the same number and description filed with the Partnership's Registration Statement (file # 000-50725) filed on April 29, 2005 on Form 10 under the Securities Act of 1934 and declared effective June 28, 2005.

3.01 Amended and Restated Certificate of Limited Partnership of Nestor Partners

3.02 Amended and Restated Agreement of Limited Partnership of Nestor Partners

10.01 Acknowledgement of Separate Risk Disclosure Statements and Customer Agreement between Merrill Lynch Futures Inc. and Nestor Partners

10.02 Customer Agreement between Warburg Dillon Reed LLC and Nestor Partners

10.03 Futures and Options Agreement for Institutional Customers between DeutscheMorgan Grenfell Inc. and Nestor Partners

10.04 Form of Selling Agreement

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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

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,
	General Partner

Date: November 13, 2008

/s/ Tod A. Tanis

Tod A. Tanis

Vice-President

(principal accounting officer)

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