UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2013~~2014

OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 000-22491

DIVERSIFIED MULTI-ADVISOR FUTURES FUND L.P. II

(Exact name of registrant as specified in its charter)

New York

13-3769020

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

c/o Ceres Managed Futures LLC

522 Fifth Avenue — 14th Floor

New York, New York 10036

(Address of principal executive offices) (Zip Code)

(855) 672-4468

(Registrant’s telephone number, including area code)

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

Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes X No

Indicate by check mark 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		Smaller reporting company

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

Yes No X

As of ~~October~~July 31, ~~2013~~2014, 1210,~~031~~369.~~9554~~6254 Limited Partnership Redeemable Units were outstanding.

DIVERSIFIED MULTI-ADVISOR FUTURES FUND L.P. II

FORM 10-Q

INDEX

		PageNumber
PART I - Financial Information:
Item 1.	Financial Statements:
	Statements of Financial Condition at September 30, 2013 (unaudited) and December 31, 2012	3
	Statements of Financial Condition at June 30, 2014 (unaudited) and December 31, 2013	3
	Condensed Schedules of Investments at September 30, 2013 (unaudited) and December 31, 2012	4–5
	Schedules of Investments at June 30, 2014 (unaudited) and December 31, 2013	4–5
	Statements of Income and Expenses and Changes in Partners’ Capital for the three and nine months ended September 30, 2013 and 2012 (unaudited)	6
	Statements of Income and Expenses and Changes in Partners’ Capital for the three and six months ended June 30, 2014 and 2013 (unaudited)	6
	Notes to Financial Statements (unaudited)	7–1819
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920-2122
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2223-2627
Item 4.	Controls and Procedures	2728
PART II - Other Information
Item 1.	Legal Proceedings	2829-3235
Item 1A.	Risk Factors	3336
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3437
Item 5.	Other Information	3537
Item 6.	Exhibits	3638-3741

PART I

Item 1. Financial Statements

Diversified Multi-Advisor Futures Fund L.P. II

Statements of Financial Condition

	(Unaudited)September 30,2013		December 31,2012
	(Unaudited)June 30,2014		December 31,2013
Assets:
Investment in Funds, at fair value	$	1614,~~899~~321,~~363~~526	$	1216,~~034~~799,~~895~~476
Equity in trading account:
Cash		6569,~~501~~130		666,~~882,148~~703
Cash margin		—		76,517
Total assets	$	14,390,656	$	16,866,179
Total trading equity		16,964,864		18,993,560
Interest receivable		—		291
Total assets	$	16,964,864	$	18,993,851
Liabilities and Partners’ Capital:
Liabilities:
Net unrealized depreciation on open forward contracts	$	—	$	76,517
Accrued expenses:
Brokerage fees		84,824		94,586
Ongoing selling agent fees	$	35,977		84,331
Management fees		2420,~~372~~327		3124,~~256~~339
Other		7165,~~679~~369		6973,~~996~~552
Redemptions payable		81218,~~225~~111		~~176~~186,~~656~~725
Total liabilities		~~262~~339,~~100~~784		~~449~~368,~~011~~947
Partners’ Capital:
General Partner, 142.3844 and 196.3844 unit equivalents at September 30, 2013 and December 31, 2012, respectively		193,862		275,510
General Partner, 142.3844 unit equivalents at June 30, 2014 and December 31, 2013		188,703		196,412
Limited Partners, 12,125.1384 and 13,022.4684 Redeemable Units outstanding at September 30, 2013 and December 31, 2012, respectively		16,508,902		18,269,330
Limited Partners, 10,459.6084 and 11,816.8964 Redeemable Units outstanding at June 30, 2014 and December 31, 2013, respectively		13,862,169		16,300,820
Total partners’ capital		1614,~~702~~050,~~764~~872		1816,~~544~~497,~~840~~232
Total liabilities and partners’ capital	$	1614,~~964~~390,~~864~~656	$	1816,~~993~~866,~~851~~179
Net asset value per unit	$	1,~~361~~325.5430	$	1,~~402~~379.9145

See accompanying notes to financial statements.

Diversified Multi-Advisor Futures Fund L.P. II

~~Condensed~~ Schedule of Investments

~~September~~June 30, ~~2013~~2014

(Unaudited)

	Fair Value		% of Partners’Capital
Investment in Funds
CMF Willowbridge Master Fund L.P.	$	87,~~791~~229,~~024~~942		5251.6346	%
CMF Graham Capital Master Fund L.P.		2,~~294~~321,~~678~~471		1316.7452
CMF Eckhardt Master Fund L.P.		54,~~813~~770,~~661~~113		3433.8195
Total Investment in Funds, at fair value	$	1614,~~899~~321,~~363~~526		101.1893	%

See accompanying notes to financial statements.

Diversified Multi-Advisor Futures Fund L.P. II

~~Condensed~~ Schedule of Investments

December 31, ~~2012~~2013

	Number ofContracts		Fair Value			% of Partners’Capital
Investment in Funds	Fair Value		% of Partners’Capital
Unrealized Appreciation on Open Forward Contracts
CMF Willowbridge Master Fund L.P.	$	8,466,061		51.32	%
Metals		329	$	894,398			4.82	%
CMF Graham Capital Master Fund L.P.		2,488,503		15.08
Total unrealized appreciation on open forward contracts				894,398			4.82
CMF Eckhardt Master Fund L.P.		5,844,912		35.43
Unrealized Depreciation on Open Forward Contracts
Total Investment in Funds, at fair value	$	16,799,476		101.83	%
Metals		319		(970,915	)		(5.24	)
Total unrealized depreciation on open forward contracts				(970,915	)		(5.24	)
Investment in Funds
CMF Willowbridge Master Fund L.P.				2,832,717			15.28
CMF Graham Capital Master Fund L.P.				2,711,863			14.62
CMF Eckhardt Master Fund L.P.				4,751,594			25.62
CMF SandRidge Master Fund L.P.				1,738,721			9.38
Total Investment in Funds				12,034,895			64.90
Net fair value			$	11,958,378			64.48	%

See accompanying notes to financial statements.

Diversified Multi-Advisor Futures Fund L.P. II

Statements of Income and Expenses and Changes in Partners’ Capital

(Unaudited)

	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
	Three Months EndedJune 30,						Six Months EndedJune 30,
	2013			2012			2013			2012
	2014			2013			2014			2013
Investment Income:
Interest income	$	—		$	992		$	—		$	2,588
Interest income from investment in Funds	$	482		$	887		$	1,477		$	3,114
Interest income from investment in Funds		638			1,700			3,752			4,380
Total investment income (loss)		482			887			1,477			3,114
Total investment income (loss)		638			2,692			3,752			6,968
Expenses:
Brokerage fees including clearing fees		276,476			349,621			876,675			1,104,786
Clearing fees allocated from Funds		16,039			22,236			35,743			41,952
Management fees		73,436			106,374			231,755			331,072
Ongoing selling agent fees		110,639			277,507			349,707			558,247
Other		60,964			7,696			142,097			110,011
Management fees		62,377			80,119			131,013			158,319
Total expenses		410,876			463,691			1,250,527			1,545,869
Other		55,358			55,181			131,124			81,133
Net investment income (loss)		(410,238	)		(460,999	)		(1,246,775	)		(1,538,901	)
Total expenses		244,413			435,043			647,587			839,651
Net investment income (loss)		(243,931	)		(434,156	)		(646,110	)		(836,537	)
Trading Results:
Net gains (losses) on trading of commodity interests and investment in Funds:
Net realized gains (losses) on closed contracts		—			~~269,590~~—			~~(76,517~~—	)		(~~393~~76,~~936~~517	)
Net realized gains (losses) on investment in Funds		79300,~~978~~400			~~484~~57,~~619~~915			~~682~~222,~~265~~055			1602,~~535,906~~287
Change in net unrealized gains (losses) on open contracts		—			~~(154,195~~—	)		~~76,517~~—			~~(227~~76,~~191~~517	)
Change in net unrealized gains (losses) on investment in Funds		(170,~~030~~126	)		64161,~~812~~372			72(212,~~439~~528	)		~~(280~~242,~~043~~469	)
Total trading results		~~(90~~470,~~052~~526	)		~~664~~219,~~826~~287			~~754~~9,~~704~~527			~~634~~844,~~736~~756
Net income (loss)		~~(500~~226,~~290~~595	)		~~203~~(214,~~827~~869	)		(~~492~~636,~~071~~583	)		~~(904~~8,~~165~~219	)
Redemptions — General Partner		—			—			~~(75,725~~—	)		—(75,725	)
Redemptions — Limited Partners		(~~283~~877,~~995~~561	)		(~~382~~658,~~583~~066	)		(1,~~274~~809,~~280~~777	)		(1990,~~691,258~~285	)
Net increase (decrease) in Partners’ Capital		(~~784~~650,~~285~~966	)		(~~178~~872,~~756~~935	)		(12,~~842~~446,~~076~~360	)		(21,~~595~~057,~~423~~791	)
Partners’ Capital, beginning of period		1714,~~487~~701,~~049~~838			2018,~~787~~359,~~317~~984			1816,~~544~~497,~~840~~232			2318,~~203~~544,~~984~~840
Partners’ Capital, end of period	$	1614,~~702~~050,~~764~~872		$	2017,~~608~~487,~~561~~049		$	1614,~~702~~050,~~764~~872		$	2017,~~608~~487,~~561~~049
Net asset value per unit (12,267.5228 and 13,655.7658 units outstanding at September 30, 2013 and 2012, respectively)	$	1,361.54		$	1,509.15		$	1,361.54		$	1,509.15
Net asset value per unit (10,601.9928 and 12,476.5938 units outstanding at June 30, 2014 and 2013, respectively)	$	1,325.30		$	1,401.59		$	1,325.30		$	1,401.59
Net income (loss) per unit*	$	~~(40~~20.0507	)	$	14(18.0629	)	$	(4154.3715	)	$	(631.0032	)
Weighted average units outstanding		1210,~~403~~980.~~2678~~7591			1312,~~805~~733.~~8208~~9321			1211,~~747~~356.~~3571~~9671			1412,~~276~~919.~~7984~~4018

*	Based on change in net asset value per unit.

See accompanying notes to financial statements.

Diversified Multi-Advisor Futures Fund L.P. II

Notes to Financial Statements

~~September~~June 30, ~~2013~~2014

(Unaudited)

1. General:

Diversified Multi-Advisor Futures Fund L.P. II (the “Partnership”) is a limited partnership organized on May 10, 1994 under the partnership laws of the State of New York to engage, directly or indirectly, in the speculative trading of a diversified portfolio of commodity interests including futures, ~~contracts~~options on futures, forwards, options on forwards, ~~swaps~~spot and ~~forward~~swap contracts, cash commodities and any other rights or interest pertaining thereto including interest in commodity pools. The sectors traded include currencies, energy, grains, indices, metals, softs, livestock, lumber and U.S. and non-U.S. interest rates. The commodity interests that are traded by the Partnership directly and through its investment in the Funds (as defined in Note 5 “Investment in Funds”) are volatile and involve a high degree of market risk. The Partnership was authorized to sell up to 100,000 redeemable units of limited partnership interest (“Redeemable Units”) during its initial offering period. The Partnership no longer offers Redeemable Units for sale.

Ceres Managed Futures LLC, a Delaware limited liability company, acts as the general partner (the “General Partner”) and commodity pool operator of the Partnership. The General Partner is wholly owned by Morgan Stanley Smith Barney Holdings LLC (“MSSB Holdings”). MSSB Holdings is ultimately owned by Morgan Stanley. Morgan Stanley is a publicly held company whose shares are listed on the New York Stock Exchange. Morgan Stanley is engaged in various financial services and other businesses. Prior to June 28, 2013, Morgan Stanley indirectly owned a majority equity interest in MSSB Holdings and Citigroup Inc. indirectly owned a minority equity interest in MSSB Holdings. Prior to July 31, 2009, the date as of which MSSB Holdings became its owner, the General Partner was wholly owned by Citigroup Financial Products Inc., a wholly owned subsidiary of Citigroup Global Markets Holdings Inc., the sole owner of which is Citigroup Inc.

As of ~~September~~June 30, ~~2013~~2014 all trading decisions are made for the Partnership by Graham Capital Management L.P. (“Graham”), Willowbridge Associates Inc. (“Willowbridge”) and Eckhardt Trading Company (“Eckhardt”) (each an “Advisor” and collectively, the “Advisors”), each of which is a registered commodity trading advisor. References herein to “Advisors” may also include, as relevant, SandRidge Capital L.P. (“SandRidge”). Each Advisor is allocated a portion of the Partnership’s assets to manage. The Partnership invests the portion of its assets allocated to each of the Advisors indirectly through investments in master funds.

During the six months ended June 30, 2014, the Partnership’s/Funds’ commodity broker was Morgan Stanley and Co. LLC (“MS&Co.”), a registered futures commission merchant. During the prior periods included in this report, Citigroup Global Markets Inc. (“CGM”) also served as a commodity broker.

During the second quarter of 2013, CMF Graham Capital Master Fund L.P. (“Graham Master”) entered into a foreign exchange brokerage account agreement with MS&Co. During the second quarter of 2013, Graham Master also entered into a futures brokerage account agreement with MS&Co. Graham Master commenced foreign exchange trading through an account at MS&Co. on or about May 1, 2013 and futures trading through an account at MS&Co. on or about June 17, 2013. During the third quarter of 2013, CMF Willowbridge Master Fund L.P. entered into a futures brokerage account agreement with MS&Co. and commenced futures trading through an account at MS&Co. on or about July 29, 2013. During the fourth quarter of 2013, CMF Eckhardt Master Fund L.P. entered into a futures brokerage account agreement with MS&Co. and commenced futures trading through an account at MS&Co. on or about October 4, 2013. Effective September 4, 2013, the Partnership entered into a futures brokerage account with MS&Co. and began transferring the brokerage account of the Partnership from CGM to MS&Co. The Partnership, through its investment in the Funds, pays MS&Co. trading fees for the clearing and, where applicable, execution of transactions.

Effective October 1, 2013, the Partnership ceased paying a brokerage fee to CGM and CGM ceased acting as a selling agent for the Partnership. Also effective October 1, 2013, the Partnership entered into a selling agreement with Morgan Stanley Smith Barney LLC (d/b/a Morgan Stanley Wealth Management). Pursuant to the selling agreement, Morgan Stanley Wealth Management received a selling agent fee equal to 1/2 of 1% (6% per year) of the Partnership’s month-end net assets. The selling agent fee received by Morgan Stanley Wealth Management will be shared with the properly registered/licensed financial advisers of Morgan Stanley Wealth Management who sold redeemable units in the Partnership.

Effective April 1, 2014, the monthly ongoing selling agent fee was reduced from an annual rate of 6.0% to an annual rate of 3.0%. Effective April 1, 2014, the management fee paid to Graham was reduced from an annual rate of 2.0% to an annual rate of 1.75%. Effective July 1, 2014, the management fees paid to Eckhardt was reduced from an annual rate of 2.0% to an annual rate of 1.0%.

Diversified Multi-Advisor Futures Fund L.P. II

Notes to Financial Statements

June 30, 2014

(Unaudited)

Certain prior period amounts have been reclassified to conform to current period presentation. Amounts reported separately on the Statements of Income and Expenses and changes in Partners’ Capital as ongoing selling agent fees and clearing fees were previously combined and presented as brokerage fees, including clearing fees.

The General Partner and each limited partner share in the profits and losses of the Partnership in proportion to the amount of Partnership interest owned by each, except that no limited partner shall be liable for obligations of the Partnership in excess of its initial capital contribution and profits, if any, net of distributions and losses, if any.

The accompanying financial statements and accompanying notes are unaudited but, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the Partnership’s financial condition at ~~September~~ June 30, ~~2013~~2014 and December 31, ~~2012~~2013, and the results of its operations and changes in partners’ capital for the three and ~~nine~~six months ended ~~September~~ June 30, ~~2013~~2014 and ~~2012~~2013. These financial statements present the results of interim periods and do not include all disclosures normally provided in annual financial statements. You should read these financial statements together with the financial statements and notes included in the Partnership’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) for the year ended December 31, ~~2012~~2013.

The preparation of financial statements and accompanying notes in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses, and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. As a result, actual results could differ from these estimates.

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

Diversified Multi-Advisor Futures Fund L.P. II

Notes to Financial Statements

~~September~~June 30, ~~2013~~2014

(Unaudited)

2. Financial Highlights:

Changes in the net asset value per unit for the three and ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013 were as follows:

	Three Months EndedSeptember 30,						Nine Months Ended September 30,
	Three Months EndedJune 30,						Six Months EndedJune 30,
	2013			2012			2013			2012
	2014			2013			2014			2013
Net realized and unrealized gains (losses) 1	$	~~(29~~30.2573	)	$	22(7.1274	)	$	(1231.2427	)	$	~~(32~~17.7101	)
Interest Income		0.05			0.19			0.28			0.49
Interest income		0.04			0.07			0.12			0.23
Expenses 2		(10.8570	)		(810.2562	)		(2923.4100	)		(3018.7856	)
Increase (decrease) for the period		~~(40~~20.0507	)		14(18.0629	)		(4154.3715	)		(631.0032	)
Net asset value per unit, beginning of period		1,~~401~~305.5923			1,~~495~~419.0988			1,~~402~~379.9145			1,~~572~~402.1591
Net asset value per unit, end of period	$	1,~~361~~325.5430		$	1,~~509~~401.1559		$	1,~~361~~325.5430		$	1,~~509~~401.1559

1 Includes ~~brokerage~~ongoing selling agent fees and clearing fees. Net realized and unrealized gains (losses) excluding ongoing selling agent fees for the three months ended June 30, 2014 and 2013 and for the six months ended June 30, 2014 and 2013 were $42.28, $15.80, $2.33 and $63.48, respectively.

2 Excludes ~~brokerage~~ongoing selling agent fees and clearing fees. Total expenses, including ongoing selling agent fees for the three months ended June 30, 2014 and 2013 and for the six months ended June 30, 2014 and 2013 were $(22.25), $(34.16), $(56.60) and $(65.03), respectively.

	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
	Three Months EndedJune 30,						Six Months EndedJune 30,
	2013			2012			2013			2012
	2014			2013			2014			2013
Ratios to Average Net Assets: 3
Ratios to average net assets: 3
Net investment income (loss)		(9.6.8	)%		(89.76	)%		(98.36	)%		(9.32	)%
Incentive fees		—	%		—	%		—	%		—	%
Net investment income (loss) before incentive fees 4		(9.6.8	)%		(89.76	)%		(98.36	)%		(9.32	)%
Operating expenses		9.6.8	%		89.86	%		98.46	%		9.43	%
Incentive fees		—	%			%		—	%			%
Total expenses		9.6.8	%		89.86	%		98.46	%		9.43	%
Total return:
Total return before incentive fees		(21.95	)%		0(1.93	)%		(23.9	)%		(4.0.1	)%
Incentive fees		—	%		—	%		—	%		—	%
Total return after incentive fees		(21.95	)%		0(1.93	)%		(23.9	)%		(4.0.1	)%

³	Annualized (other than incentive fees).

⁴	Interest income less total expenses.

The above ratios may vary for individual investors based on the timing of capital transactions during the period. Additionally, these ratios are calculated for the limited partner class using the limited partners’ share of income, expenses and average net assets.

3.9 ~~Trading Activities:~~

The Partnership was formed for the purpose of trading contracts in a variety of commodity interests, including derivative financial instruments and derivative commodity instruments. The results of the Partnership’s trading activities are shown in the Statements of Income and Expenses and Changes in Partners’ Capital.

During the second quarter of 2013, CMF Graham Capital Master Fund L.P. (“Graham Master”) entered into a futures brokerage account agreement and a foreign exchange brokerage account agreement with Morgan Stanley & Co. LLC (“MS&Co”), a registered futures commission merchant. Graham Master commenced foreign exchange trading through an account at MS&Co on or about May 1, 2013 and futures trading through an account at MS&Co on or about June 17, 2013. During the third quarter of 2013, CMF Willowbridge Master Fund L.P. also entered into a futures brokerage account agreement with MS&Co and commenced futures trading through an account at MS&Co on or about July 29, 2013. Effective September 4, 2013, the Partnership entered into a futures brokerage account agreement with MS&Co and began transferring the brokerage account of the Partnership from CGM to MS&Co. The Partnership, through its investment in the Funds, will pay MS&Co trading fees for the clearing and, where applicable, execution of transactions. See Part II, Item 5 for additional information.

The customer agreements between the Partnership and Citigroup Global Markets, Inc. (“CGM”) and the Partnership and MS&Co. and the Funds and CGM and the Funds and MS&Co, as applicable, give the Partnership and the Funds, respectively, the legal right to net unrealized gains and losses on open futures contracts and open forward contracts. The Partnership and the Funds net, for financial reporting purposes, the unrealized gains and losses on open futures and on open forward contracts on the Statements of Financial Condition as the criteria under Accounting Standards Codification (“ASC”) 210-20, “Balance Sheet,” have been met.

All of the commodity interests owned by the Partnership are held for trading purposes. All of the commodity interests owned by the Funds are held for trading purposes. The monthly average number of futures contracts traded directly by the Partnership during the three months ended September 30, 2012 was 780. The monthly average number of futures contracts traded directly by the Partnership during the nine months ended September 30, 2012 was 803. The monthly average number of metals forward contracts traded directly by the Partnership during the three months ended September 30, 2012 was 481. The monthly average number of metals forward contracts traded directly by the Partnership during the nine months ended September 30, 2013 and 2012 was 73 and 567, respectively.

Diversified Multi-Advisor Futures Fund L.P. II

Notes to Financial Statements

~~September~~June 30, ~~2013~~2014

(Unaudited)

~~Brokerage~~3. ~~fees~~Trading ~~are~~Activities: ~~calculated as a percentage of the Partnership’s adjusted net asset value on the last day of each month and are affected by trading performance and redemptions.~~

OnThe ~~January 1, 2013, the~~ Partnership ~~adopted~~was ~~Accounting~~formed ~~Standards~~for ~~Update (“ASU”) 2011-11, “Disclosure about Offsetting Assets and Liabilities” and ASU 2013-01, “Clarifying~~ the ~~Scope~~purpose of ~~Disclosures~~trading ~~about~~contracts ~~Offsetting~~in ~~Assets and Liabilities”. ASU 2011-11 created~~ a ~~new~~variety ~~disclosure requirement about the nature~~ of ancommodity ~~entity’s~~interests, ~~rights~~including derivative ~~to setoff and the related arrangements associated with its~~ financial instruments and derivative commodity instruments,. ~~while~~The ~~ASU~~results ~~2013-01 clarified the types~~ of ~~instruments and transactions that are subject to~~ the ~~offsetting~~Partnership’s ~~disclosure~~trading ~~requirements~~activities ~~established by ASU 2011-11. Entities~~ are ~~required~~shown ~~to disclose both gross information and net information about both instruments and transactions eligible for offset~~ in the ~~statement~~Statements of ~~financial~~Income ~~position~~ and ~~instruments~~Expenses and ~~transactions~~Changes ~~subject~~in to an agreement similar to a master netting arrangement. The objective of these disclosures is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of International Financial Reporting Standards (“IFRS”). The new guidance did not have a significant impact on the PartnershipPartners’s ~~financial statements~~Capital.

~~There~~The ~~were~~customer noagreement ~~direct~~among ~~investments~~the atPartnership, ~~September~~each 30of the Funds and MS&Co. gives, ~~2013~~and the customer agreements between the Partnership and CGM and the Funds and CGM gave, the Partnership and the Funds the legal right to net unrealized gains and losses on open futures contracts and open forward contracts. The Partnership and the Funds net, for financial reporting purposes, the ~~following~~unrealized ~~table~~gains ~~summarizes~~and losses on open futures and on open forward contracts on the ~~valuation~~Statements of Financial Condition as the ~~Partnership’s~~criteria ~~direct~~under ~~investments~~Accounting asStandards ofCodification ~~December~~(“ASC”) 31210-20, ~~2012.~~“Balance Sheet,” have been met.

December 31, 2012	Gross AmountsRecognized		Gross AmountsOffset in theStatement ofFinancialCondition			Net AmountsPresented in theStatement ofFinancialCondition
Assets
Forwards	$	759,648	$	(160,837	)	$	598,811
Total assets	$	759,648	$	(160,837	)	$	598,811
Liabilities
Forwards	$	134,750	$	(810,078	)	$	(675,328	)
Total liabilities	$	134,750	$	(810,078	)	$	(675,328	)
Net unrealized depreciation on open forward contracts						$	(76,517	)
Total net unrealized gain (loss) on total contracts						$	(76,517	)

All of the commodity interests owned by the Partnership are held for trading purposes.

~~The~~Brokerage ~~following~~fees ~~table~~previously ~~indicates~~paid ~~the~~to ~~gross~~CGM ~~fair~~were ~~values~~calculated ofas ~~derivative~~a ~~instruments~~percentage of ~~futures~~the ~~and~~Partnership’s ~~forward~~adjusted net asset value on the last day ~~contracts~~of ~~traded~~each ~~directly~~month and were affected by trading performance and redemptions. Trading and transaction fees are based on the ~~Partnership~~number asof ~~separate~~trades ~~assets~~executed by the Advisors and ~~liabilities~~the asPartnership’s ownership of ~~December 31,~~the ~~2012~~Funds.

	December 31, 2012
Assets
Forward Contracts
Metals	$	894,398
Total unrealized appreciation on open forward contracts	$	894,398
Liabilities
Forward Contracts
Metals	$	(970,915	)
Total unrealized depreciation on open forward contracts	$	(970,915	)
Net unrealized depreciation on open forward contracts	$	(76,517	)*

* This amount is in “Net unrealized depreciation on open forward contracts” on the Statements of Financial Condition.

Diversified Multi-Advisor Futures Fund L.P. II

Notes to Financial Statements

~~September~~June 30, ~~2013~~2014

(Unaudited)

The following table indicates the trading gains and losses, by market sector, on derivative instruments traded directly by the Partnership for the three and nine months ended September 30, 2012.

Sector	Three Months EndedSeptember 30, 2012Gain (loss) from trading			Nine Months EndedSeptember 30, 2012Gain (loss) from trading
Currencies	$	(62,311	)	$	(226,826	)
Energy		36,899			147,289
Grains		106,335			(44,325	)
Indices		(35,795	)		(278,648	)
Interest Rates U.S.		15,492			11,324
Interest Rates Non-U.S.		150,057			166,623
Livestock		(5,780	)		(5,193	)
Softs		(36,694	)		(17,335	)
Metals		(52,808	)		(374,036	)
Total	$	115,395	**	$	(621,127	)**

** This amount is in “Total trading results” on the Statements of Income and Expenses and Changes in Partners’ Capital.

4. Fair Value Measurements:

Partnership’s and the Funds’ Investments. All commodity interests (including derivative financial instruments and derivative commodity instruments) are held for trading purposes. The commodity interests are recorded on trade date and open contracts are recorded at fair value (as described below) at the measurement date. Investments in commodity interests denominated in foreign currencies are translated into U.S. dollars at the exchange rates prevailing at the measurement date. Gains or losses are realized when contracts are liquidated. Unrealized gains or losses on open contracts are included as a component of equity in trading account on the Statements of Financial Condition. Net realized gains or losses and any change in net unrealized gains or losses from the preceding period are reported in the Statements of Income and Expenses and Changes in Partners’ Capital.

Partnership’s and the Funds’ Fair Value Measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to fair values derived from unobservable inputs (Level 3). The level in the fair value hierarchy within which the fair value measurement in its entirety falls shall be determined based on the lowest level input that is significant to the fair value measurement in its entirety. Management has concluded that based on available information in the marketplace, the ~~Partnership’s and the~~ Funds’ Level 1 assets and liabilities are actively traded.

GAAP also requires the use of judgment in determining if a formerly active market has become inactive and in determining fair values when the market has become inactive. Management has concluded that based on available information in the marketplace, there has not been a significant decrease in the volume and level of activity in the Partnership’s and the Funds’ Level 2 assets and liabilities.

The Partnership and the Funds will separately present purchases, sales, issuances and settlements in their reconciliation of Level 3 fair value measurements (i.e., to present such items on a gross basis rather than on a net basis), and make disclosures regarding the level of disaggregation ~~and~~as well as the inputs and valuation techniques used to measure fair value for measurements that fall within either Level 2 or Level 3 of the fair value hierarchy as required under GAAP.

1011

Diversified Multi-Advisor Futures Fund L.P. II

Notes to Financial Statements

~~September~~June 30, ~~2013~~2014

(Unaudited)

On October 1, 2012, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2012-04 “Technical Corrections and Improvements,” which makes minor technical corrections and clarifications to ASC 820, “Fair Value Measurements and Disclosures.” When the FASB issued Statement 157 (codified in ASC 820), it conformed the use of the term “fair value” in certain pre-Codification standards but not others. ASU 2012-04 conforms the term’s use throughout the ASC “to fully reflect the fair value measurement and disclosure requirements” of ASC 820. ASU 2012-04 also amends the requirements that must be met for an investment company to qualify for the exemption from presenting a statement of cash flows. Specifically, it eliminates the requirements that substantially all of an entity’s investments be carried at “market value” and that the investments be highly liquid. Instead, it requires substantially all of the entity’s investments to be carried at “fair value” and classified as Level 1 or Level 2 measurements under ASC 820. ~~The amendments are effective for fiscal periods beginning after December 15, 2012. The adoption of this ASU did not have a material impact on the Partnership’s financial statements.~~

The Partnership and the Funds consider prices for exchange-traded commodity futures, forwards, swaps and options contracts to be based on unadjusted quoted prices in active markets for identical assets and liabilities (Level 1). The values of non-exchange-traded forwards, swaps and certain options contracts for which market quotations are not readily available are priced by broker-dealers who derive fair values for those assets from observable inputs (Level 2). Investments in Funds (other commodity pools) where there are no rights or obligations inherent within the ownership interest held by the Partnership are priced based on the end of the day net asset value (Level 2). The value of the Partnership’s investments in the Funds reflects its proportional interest in the Funds. As of and for the periods ended ~~September~~June 30, ~~2013~~ 2014 and December 31, ~~2012~~2013, the Partnership and the Funds did not hold any derivative instruments that were priced at fair value using unobservable inputs through the application of management’s assumptions and internal valuation pricing models (Level 3). During the ~~nine~~six months ended ~~September~~ June 30, ~~2013~~2014 and for the year ended December 31, ~~2012~~2013, there were no transfers of assets or liabilities between Level 1 or Level 2.

	September 30, 2013		Quoted Prices inActive Markets forIdentical Assetsand Liabilities(Level 1)			Significant OtherObservable Inputs(Level 2)		SignificantUnobservableInputs(Level 3)
	June 30, 2014		Quoted Prices inActive Markets forIdentical Assetsand Liabilities(Level 1)			Significant OtherObservable Inputs(Level 2)		SignificantUnobservableInputs(Level 3)
Assets
Investment in Funds	$	1614,~~899~~321,~~363~~526	$	—		$	1614,~~899~~321,~~363~~526	$	—
Net fair value	$	1614,~~899~~321,~~363~~526	$	—		$	1614,~~899~~321,~~363~~526	$	—
	December 31, 2012		Quoted Prices inActive Markets forIdentical Assetsand Liabilities(Level 1)			Significant OtherObservable Inputs(Level 2)		SignificantUnobservableInputs(Level 3)
	December 31, 2013		Quoted Prices inActive Markets forIdentical Assetsand Liabilities(Level 1)			Significant OtherObservable Inputs(Level 2)		SignificantUnobservableInputs(Level 3)
Assets
Investment in Funds	$	1216,~~034~~799,~~895~~476	$	—		$	1216,~~034~~799,~~895~~476	$	—
Forwards		894,398		894,398			—		—
Net fair value	$	16,799,476	$	—		$	16,799,476	$	—
Total assets		12,929,293		894,398			12,034,895		—
Liabilities
Forwards	$	970,915	$	970,915		$	—	$	—
Total liabilities		970,915		970,915			—		—
Net fair value	$	11,958,378	$	(76,517	)	$	12,034,895	$	—

1112

Diversified Multi-Advisor Futures Fund L.P. II

Notes to Financial Statements

~~September~~June 30, ~~2013~~2014

(Unaudited)

5. Investment in Funds:

~~The~~On July 1, 2005, the assets allocated to ~~Capital~~Willowbridge ~~Funds~~for ~~Management~~trading SAwere invested in CMF Willowbridge Master Fund L.P. (formerly, the Willowbridge Argo Master Fund L.P.) (“~~CFM~~Willowbridge Master”), ~~for~~a ~~trading~~limited ~~were~~partnership ~~invested~~organized ~~directly~~under ~~pursuant~~the topartnership laws of the State of New York. The Partnership purchased 10,980.9796 units of Willowbridge Master with ~~CFM’s~~cash ~~Discus~~equal (to $9,895,326 and a contribution of open commodity futures and forward positions with a fair value of $1,085,654.5x ~~Leverage)~~Willowbridge ~~Program~~Master permits accounts managed by Willowbridge using its W/Praxis Futures Trading Approach, a proprietary, discretionary ~~systematic~~ trading system, to invest together in one trading vehicle. The General Partner is also the general partner of Willowbridge Master. Individual and pooled accounts currently managed by Willowbridge, including the Partnership, ~~terminated~~are permitted ~~its~~to ~~direct~~be ~~allocation~~limited partners of Willowbridge Master. The General Partner and Willowbridge believe that trading through this structure should promote efficiency and economy in the trading process. The General Partner and Willowbridge agreed that Willowbridge will trade the Partnership’s assets allocated to ~~CFM~~Willowbridge onat ~~December~~a ~~31,~~level ~~2012~~that ~~for~~is ~~cash~~up ~~equal~~to 3 times the amount of assets allocated. Prior to $6January 1,~~746~~ 2013,~~935~~ Willowbridge traded the Partnership’s assets pursuant to its Argo Trading System.

On ~~July~~April 1, ~~2005~~2006, the assets allocated to ~~Willowbridge~~Graham for trading were invested in CMF ~~Willowbridge~~Graham ~~Master~~Capital ~~Fund L.P. (formerly, the Willowbridge Argo~~ Master Fund L.P.) (“~~Willowbridge~~Graham Master”), a limited partnership organized under the partnership laws of the State of New York. The Partnership purchased 1011,~~980~~192.~~9796~~9908 units of ~~Willowbridge~~Graham Master with cash equal to ~~$9,895,326~~ ~~and a contribution of open commodity futures and forward positions with a fair value of~~ $111,~~085~~192,~~654~~991. ~~Willowbridge~~Graham Master ~~was~~permits ~~formed in order to permit~~ accounts managed by Graham ~~Willowbridge~~ using its ~~W/Praxis~~K4D-15V ~~Futures Trading Approach~~Program, a proprietary, ~~discretionary~~systematic trading system, to invest together in one trading vehicle. The General Partner is also the general partner of ~~Willowbridge~~Graham Master. Individual and pooled accounts currently managed by ~~Willowbridge~~Graham, including the Partnership, are permitted to be limited partners of ~~Willowbridge~~Graham Master. The General Partner and ~~Willowbridge~~Graham believe that trading through this structure should promote efficiency and economy in the trading process. The General Partner and Willowbridge agreed that Willowbridge will trade the Partnership’s assets allocated to Willowbridge at a level that is up to 3 times the amount of assets allocated. Prior to January 1, 2013, Willowbridge traded the Partnership’s assets pursuant to its Argo Trading System.

On April 1, ~~2006~~2008, the assets allocated to ~~Graham~~Eckhardt for trading were invested in CMF ~~Graham~~ ~~Capital~~Eckhardt Master Fund L.P. (“~~Graham~~Eckhardt Master”), a limited partnership organized under the partnership laws of the State of New York. The Partnership purchased 117,~~192~~000.~~9908~~0000 units of ~~Graham~~Eckhardt Master with cash equal to $117,~~192~~000,~~991~~000. ~~Graham~~ Eckhardt Master ~~was~~permits ~~formed in order to permit~~ accounts managed by ~~Graham~~Eckhardt using its ~~K4D-15V~~Standard Program-Higher Leveraged, a proprietary, systematic trading system, to invest together in one trading vehicle. The General Partner is also the general partner of ~~Graham~~Eckhardt Master. Individual and pooled accounts currently managed by ~~Graham~~Eckhardt, including the Partnership, are permitted to be limited partners of ~~Graham~~Eckhardt Master. The General Partner and ~~Graham~~Eckhardt believe that trading through this structure should promote efficiency and economy in the trading process. ~~The General Partner and Graham agreed that Graham will trade the Partnership’s assets allocated to Graham at a level that is up to 1.5 times the amount of assets allocated.~~

On April 1, 2008, the assets allocated to Eckhardt for trading were invested in CMF Eckhardt Master Fund L.P. (“Eckhardt Master”), a limited partnership organized under the partnership laws of the State of New York. The Partnership purchased 7,000.0000 units of Eckhardt Master with cash equal to $7,000,000. Eckhardt Master was formed in order to permit accounts managed by Eckhardt using its Standard Program-Higher Leveraged, a proprietary, systematic trading system, to invest together in one trading vehicle. The General Partner is also the general partner of Eckhardt Master. Individual and pooled accounts currently managed by Eckhardt, including the Partnership, are permitted to be limited partners of Eckhardt Master. The General Partner and Eckhardt believe that trading through this structure should promote efficiency and economy in the trading process.

On June 1, 2009, the assets allocated to SandRidge for trading were invested in the CMF SandRidge Master Fund L.P. (“SandRidge Master”), a limited partnership organized under the partnership laws of the State of New York. The Partnership purchased 2,086.0213 units of SandRidge Master with cash equal to $4,288,986. Effective January 31, 2013, the Partnership fully redeemed its investment in SandRidge Master for cash equal to $5,701,761.

The General Partner is not aware of any material changes to any of the trading programs discussed above during the fiscal quarter ended ~~September~~June 30, ~~2013~~2014.

Willowbridge Master’s, Graham Master’s and Eckhardt Master’s (collectively, the “Funds”) ~~and the Partnership’s~~ trading of futures, forwards, swaps and options contracts, if applicable, on commodities is done primarily on U.S. and foreign commodity exchanges. References to “Funds” included in this report may also include, as relevant, reference to SandRidge Master. During the ~~reporting~~the ~~period~~three and six months ended June 30, 2014, the Funds ~~and the Partnership~~ engaged in such trading through commodity brokerage accounts maintained with ~~CGM and/or~~ MS&Co. During prior periods included in this report, asthe ~~applicable~~Funds also engaged in such trading through commodity brokerage accounts maintained with CGM.

A limited partner of the Funds may withdraw all or part of ~~their~~ its capital contribution and undistributed profits, if any, from the Funds in multiples of the net asset value per unit as of the end of any day (the “Redemption Date”) after a request for redemption has been made to the general partner of the Funds at least 3three days in advance of the Redemption Date. The units are classified as a liability when the limited partner elects to redeem and informs the Funds.

Management and incentive fees are charged at the Partnership level. All trading, exchange, clearing, user, give-up, floor brokerage and National Futures Association fees (collectively, the “clearing fees”) are borne by the ~~Partnership~~Funds ~~directly~~ and ~~through~~allocated ~~its~~to ~~investment~~their inlimited partners including the ~~Funds~~Partnership. All other fees are charged at the Partnership level.

1213

Diversified Multi-Advisor Futures Fund L.P. II

Notes to Financial Statements

~~September~~June 30, ~~2013~~2014

(Unaudited)

As of ~~September~~June 30, ~~2013~~2014, the Partnership owned approximately 9.15%, 4.04% and 3243.97%, of Willowbridge Master, Graham Master and Eckhardt Master, respectively. As of December 31, ~~2012~~2013, the Partnership owned approximately 78.29%, 34.2%, ~~25.8%~~ and 033.62%, of Willowbridge Master, Graham Master, ~~Eckhardt Master~~ and ~~SandRidge~~Eckhardt Master, respectively. It is the Partnership’s intention to continue to invest in the Funds. The performance of the Partnership is directly affected by the performance of the Funds. Expenses to investors as a result of the investment in the Funds are approximately the same and redemption rights are not affected.

Summarized information reflecting the total assets, liabilities and capital of the Funds is shown in the following tables.

September 30, 2013

June 30, 2014

Total Assets

Total Liabilities

Total Capital

Willowbridge Master

9877,~~891~~867,~~556~~555

1,~~963~~765,~~978~~021

9676,~~927~~102,~~578~~534

Graham Master

5852,~~251~~654,~~527~~694

~~223~~23,~~401~~354

5852,~~028~~631,~~126~~340

Eckhardt Master

1710,~~727~~929,~~140~~182

4522,~~618~~687

1710,~~681~~906,~~522~~495

Total

174,870,223

2,232,997

172,637,226

December 31, 2013

December 31, 2012

Total Assets

Total Liabilities

Total Capital

Willowbridge Master

3995,~~742~~699,~~467~~725

~~485~~7,~~385~~316,065

3988,~~257~~383,~~082~~660

Graham Master

8559,~~313~~948,~~676~~792

~~377~~2,~~625~~996,936

8456,~~936~~951,~~051~~856

Eckhardt Master

1817,~~542~~660,~~577~~024

~~112~~4,~~971~~548,609

1813,~~429~~111,~~606~~415

SandRidge Master

294,670,281

2,521,288

292,148,993

Total

438,269,001

3,497,269

434,771,732

Summarized information reflecting the net investment income (loss), total trading results and net income (loss) for the Funds is shown in the following tables.

	For the three months ended September 30, 2013
	For the three months ended June 30, 2014
	Net InvestmentIncome (Loss)			Total TradingResults			Net Income(Loss)
	Net Investment			Total Trading			Net Income
Willowbridge Master	$	(168,584	)	$	(3,203,058	)	$	(3,371,642	)
	Income (Loss)			Results			(Loss)
Graham Master		(47,611	)		2,254,670			2,207,059
Willowbridge Master	$	(103,816	)	$	1,170,549		$	1,066,733
Eckhardt Master		(38,644	)		342,869			304,225
Graham Master		(39,026	)		4,311,690			4,272,664
Total	$	(254,839	)	$	(605,519	)	$	(860,358	)
Eckhardt Master		(38,699	)		447,898			409,199
	For the nine months ended September 30, 2013
	Net InvestmentIncome (Loss)			Total TradingResults			Net Income(Loss)
Willowbridge Master	$	(409,377	)	$	9,714,029		$	9,304,652
Graham Master		(188,406	)		6,025,178			5,836,772
Eckhardt Master		(130,612	)		(1,033,229	)		(1,163,841	)
SandRidge Master		(68,488	)		129,650			61,162
Total	$	(796,883	)	$	14,835,628		$	14,038,745
	For the three months ended September 30, 2012
	Net InvestmentIncome (Loss)			Total TradingResults			Net Income(Loss)
Willowbridge Master	$	(25,369	)	$	1,523,607		$	1,498,238
Graham Master		(76,849	)		1,524,964			1,448,115
Eckhardt Master		(28,830	)		1,967,793			1,938,963
SandRidge Master		(212,727	)		(19,078,252	)		(19,290,979	)
Total	$	(343,775	)	$	(14,061,888	)	$	(14,405,663	)
	For the nine months ended September 30, 2012
	Net InvestmentIncome (Loss)			Total TradingResults			Net Income(Loss)
Willowbridge Master	$	(76,478	)	$	2,997,608		$	2,921,130
Graham Master		(337,956	)		566,270			228,314
Eckhardt Master		(118,720	)		3,074,933			2,956,213
SandRidge Master		(592,387	)		29,005,472			28,413,085
Total	$	(1,125,541	)	$	35,644,283		$	34,518,742


	For the three months ended June 30, 2013
	Net Investment Income (Loss)			Total Trading Results			Net Income (Loss)
Willowbridge Master	$	(131,517	)	$	10,840,412		$	10,708,895
Graham Master		(67,902	)		(3,765,050	)		(3,832,952	)
Eckhardt Master		(49,056	)		(1,990,468	)		(2,039,524	)


	For the six months ended June 30, 2014
	Net Investment			Total Trading			Net Income
	Income (Loss)			Results			(Loss)
Willowbridge Master	$	(213,278	)	$	(1,038,561	)	$	(1,251,839	)
Graham Master		(114,708	)		(1,495,600	)		(1,610,308	)
Eckhardt Master		(80,741	)		454,416			373,675


	For the six months ended June 30, 2013
	Net Investment Income (Loss)			Total Trading Results			Net Income (Loss)
Willowbridge Master	$	(240,793	)	$	12,917,087		$	12,676,294
Graham Master		(140,795	)		3,770,508			3,629,713
Eckhardt Master		(91,968	)		(1,376,098	)		(1,468,066	)
SandRidge Master		(68,488	)		129,650			61,162

Diversified Multi-Advisor Futures Fund L.P. II

Notes to Financial Statements

~~September~~June 30, ~~2013~~2014

(Unaudited)

Summarized information reflecting the Partnership’s investment in, and the operations of, the Funds is shown in the following tables.

	September 30, 2013					For the three months ended September 30, 2013
	June 30, 2014					For the three months ended June 30, 2014
	% ofPartnership’s			Fair		Income			Expenses				Net Income			Investment	Redemptions
	% of Partnership’s			Fair		Income			Expenses				Net Income			Investment	Redemptions
Funds	Net Assets			Value		(Loss)			~~Brokerage~~Clearing Fees		Other		(Loss)			Objective	Permitted
Willowbridge Master		5251.6346	%	$	87,~~791~~229,~~024~~942	$	~~(290~~84,~~953~~553	)	$	137,~~881~~395	$	12,~~770~~310	$	~~(306~~74,~~604~~848	)	Commodity Portfolio	Monthly
Graham Master		1316.7452	%		2,~~294~~321,~~678~~471		89189,~~102~~524			1,~~418~~319		~~547~~475		87187,~~137~~730		Commodity Portfolio	Monthly
Eckhardt Master		3433.8195	%		54,~~813~~770,~~661~~113		~~112~~196,~~437~~931			57,~~906~~325		69,~~948~~844		99179,~~583~~762		Commodity Portfolio	Monthly
Total				$	1614,~~899~~321,~~363~~526	$	~~(89~~471,~~414~~008	)	$	2116,~~205~~039	$	912,~~265~~629	$	~~(119~~442,~~884~~340	)
	September 30, 2013					For the nine months ended September 30, 2013
	% ofPartnership’s			Fair		Income			Expenses				Net Income			Investment	Redemptions
Funds	Net Assets			Value		(Loss)			Brokerage Fees		Other		(Loss)			Objective	Permitted
Willowbridge Master		52.63	%	$	8,791,024	$	887,876		$	32,808	$	7,150	$	847,918		Commodity Portfolio	Monthly
Graham Master		13.74	%		2,294,678		236,292			5,960		1,927		228,405		Commodity Portfolio	Monthly
Eckhardt Master		34.81	%		5,813,661		(368,411	)		24,094		19,380		(411,885	)	Commodity Portfolio	Monthly
SandRidge Master		0.00	%		—		2,699			295		1,214		1,190		Energy Portfolio	Monthly
Total				$	16,899,363	$	758,456		$	63,157	$	29,671	$	665,628
	December 31, 2012					For the three months ended September 30, 2012
	% ofPartnership’s			Fair		Income			Expenses				Net Income			Investment	Redemptions
Funds	Net Assets			Value		(Loss)			Brokerage Fees		Other		(Loss)			Objective	Permitted
Willowbridge Master		15.28	%	$	2,832,717	$	110,110		$	748	$	1,537	$	107,825		Commodity Portfolio	Monthly
Graham Master		14.62	%		2,711,863		34,269			2,015		718		31,536		Commodity Portfolio	Monthly
Eckhardt Master		25.62	%		4,751,594		518,062			4,788		3,584		509,690		Commodity Portfolio	Monthly
SandRidge Master		9.38	%		1,738,721		(111,310	)		1,014		498		(112,822	)	Energy Portfolio	Monthly
Total				$	12,034,895	$	551,131		$	8,565	$	6,337	$	536,229
	December 31, 2012					For the nine months ended September 30, 2012
	% ofPartnership’s			Fair		Income			Expenses				NetIncome			Investment	Redemptions
Funds	Net Assets			Value		(Loss)			Brokerage Fees		Other		(Loss)			Objective	Permitted
Willowbridge Master		15.28	%	$	2,832,717	$	225,022		$	2,231	$	4,184	$	218,607		Commodity Portfolio	Monthly
Graham Master		14.62	%		2,711,863		(9,750	)		9,677		1,757		(21,184	)	Commodity Portfolio	Monthly
Eckhardt Master		25.62	%		4,751,594		803,670			19,871		12,935		770,864		Commodity Portfolio	Monthly
SandRidge Master		9.38	%		1,738,721		241,301			3,013		1,585		236,703		Energy Portfolio	Monthly
Total				$	12,034,895	$	1,260,243		$	34,792	$	20,461	$	1,204,990


	December 31, 2013					For the three months ended June 30, 2013
	% of Partnership’s			Fair		Income			Expenses				Net Income			Investment	Redemptions
Funds	Net Assets			Value		(Loss)			Clearing Fees		Other		(Loss)			Objective	Permitted
Willowbridge Master		51.32	%	$	8,466,061	$	1,014,433		$	10,059	$	2,665	$	1,001,709		Commodity Portfolio	Monthly
Graham Master		15.08	%		2,488,503		(141,925	)		2,300		662		(144,887	)	Commodity Portfolio	Monthly
Eckhardt Master		35.43	%		5,844,912		(652,334	)		9,877		6,526		(668,737	)	Commodity Portfolio	Monthly

Total				$	16,799,476	$	220,174		$	22,236	$	9,853	$	188,085


	June 30, 2014					For the six months ended June 30, 2014
	% of Partnership’s			Fair		Income			Expenses				Net Income			Investment	Redemptions
Funds	Net Assets			Value		(Loss)			Clearing Fees		Other		(Loss)			Objective	Permitted
Willowbridge Master		51.46	%	$	7,229,942	$	(123,529	)	$	16,372	$	4,087	$	(143,988	)	Commodity Portfolio	Monthly
Graham Master		16.52	%		2,321,471		(64,778	)		2,874		2,381		(70,033	)	Commodity Portfolio	Monthly
Eckhardt Master		33.95	%		4,770,113		199,311			16,497		19,671		163,143		Commodity Portfolio	Monthly

Total				$	14,321,526	$	11,004		$	35,743	$	26,139	$	(50,878	)


	December 31, 2013					For the six months ended June 30, 2013
	% of Partnership’s			Fair		Income			Expenses				Net Income			Investment	Redemptions
Funds	Net Assets			Value		(Loss)			Clearing Fees		Other		(Loss)			Objective	Permitted
Willowbridge Master		51.32	%	$	8,466,061	$	1,178,829		$	18,927	$	5,380	$	1,154,522		Commodity Portfolio	Monthly
Graham Master		15.08	%		2,488,503		147,190			4,542		1,380		141,268		Commodity Portfolio	Monthly
Eckhardt Master		35.43	%		5,844,912		(480,848	)		18,188		12,432		(511,468	)	Commodity Portfolio	Monthly
SandRidge Master		0.00	%		—		2,699			295		1,214		1,190		Energy Portfolio	Monthly

Total				$	16,799,476	$	847,870		$	41,952	$	20,406	$	785,512

Diversified Multi-Advisor Futures Fund L.P. II

Notes to Financial Statements

~~September~~June 30, ~~2013~~2014

(Unaudited)

6. Financial Instrument Risks:

In the normal course of business, the Partnership (through its investments in the Funds) ~~and~~is ~~the~~a ~~Funds~~party ~~are parties~~ to ~~financial~~ financial instruments with off-balance sheet risk, including derivative financial instruments and derivative commodity instruments. These financial instruments may include forwards, futures, options and swaps, ~~whose~~ whose values are based upon an underlying asset, index, or reference rate, and generally represent future commitments to exchange currencies or cash balances, to purchase or sell other financial instruments at specific terms at specified future dates, or, in the case of derivative commodity instruments, to have a reasonable possibility to be settled in cash, through physical delivery or with another financial instrument. These instruments may be traded on an exchange, a swap -execution facility or over-the-counter (“OTC”). Exchange-traded instruments include futures and certain standardized forward, option and swap contracts. Certain swap contracts may also be traded on a swap execution facility or OTC. OTC contracts are negotiated between contracting parties and also include certain forward, and option contracts. Specific market movements of commodities or futures contracts underlying an option cannot accurately be predicted. The purchaser of an option may lose the entire premium paid for the option. The writer or seller of an option has unlimited risk. Each of these instruments is subject to various risks similar to those relating to the underlying financial instruments including market and credit risk. In general, the risks associated with OTC contracts are greater than those associated with exchange-traded instruments because of the greater risk of default by the counterparty to an OTC contract. The General Partner estimates that at any given time approximately 810.64% to 1632.40% of the ~~Partnership’s/~~Fund’s contracts are traded OTC.

The risk to the limited partners that have purchased Redeemable Units is limited to the amount of their share of the Partnership’s net assets and undistributed profits. This limited liability is a result of the organization of the Partnership as a limited partnership under New York law.

Market risk is the potential for changes in the value of the financial instruments traded by the ~~Partnership/~~Funds due to market changes, including interest and foreign exchange rate movements and fluctuations in commodity or security prices. Market risk is directly impacted by the volatility and liquidity in the markets in which the related underlying assets are traded. The ~~Partnership/~~Funds are exposed to a market risk equal to the value of futures and forward contracts purchased and unlimited liability on such contracts sold short.

Credit risk is the possibility that a loss may occur due to the failure of a counterparty to perform according to the terms of a contract. The Partnership’s/Funds’ risk of loss in the event of a counterparty default is typically limited to the amounts recognized in the Statements of Financial Condition and is not represented by the contract or notional amounts of the instruments. The Partnership’s/Funds’ risk of loss is reduced through the use of legally enforceable master netting agreements with counterparties that permit the Partnership/Funds to offset unrealized gains and losses and other assets and liabilities with such counterparties upon the occurrence of certain events. The Partnership/Funds had credit risk and concentration risk during the reporting period and prior periods included in this report, as CGM and/or MS&Co. or their affiliates were the sole counterparties or brokers with respect to the Partnership’s/Funds’ assets. Credit risk with respect to exchange-traded instruments is reduced to the extent that, through CGM/MS&Co., the Partnership’s/Funds’ counterparty is an exchange or clearing organization. The Partnership/Funds continue to be subject to such risks with respect to MS&Co.

As both a buyer and seller of options, the Funds pay or receive a premium at the outset and then bear the risk of unfavorable changes in the price of the contract underlying the option. Written options expose the Funds to potentially unlimited liability; for purchased options, the risk of loss is limited to the premiums paid. Certain written put options permit cash settlement and do not require the option holder to own the reference asset. The Funds do not consider these contracts to be guarantees.

The General Partner monitors and attempts to control the Partnership’s/Funds’ risk exposure on a daily basis through financial, credit and risk management monitoring systems, and accordingly, believes that it has effective procedures for evaluating and limiting the credit and market risks to which the Partnership/Funds may be subject. These monitoring systems generally allow the General Partner to statistically analyze actual trading results with risk adjusted performance indicators and correlation statistics. In addition, on-line monitoring systems provide account analysis of futures, forwards and options ~~positions~~contracts by sector, margin requirements, gain and loss transactions and collateral positions.

The majority of these financial instruments mature within one year of the inception date. However, due to the nature of the ~~Partnership’s/~~Funds’ business, these instruments may not be held to maturity.

1516

Diversified Multi-Advisor Futures Fund L.P. II

Notes to Financial Statements

~~September~~June 30, ~~2013~~2014

(Unaudited)

7. Critical Accounting Policies:

Use of Estimates. The preparation of financial statements and accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses, and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. As a result, actual results could differ from these estimates.

Partnership’s and the Funds’ Investments. All commodity interests held by the Partnership and the Funds (including derivative financial instruments and derivative commodity instruments) are held for trading purposes. The commodity interests are recorded on trade date and open contracts are recorded at fair value (as described below) at the measurement date. Investments in commodity interests denominated in foreign currencies are translated into U.S. dollars at the exchange rates prevailing at the measurement date. Gains or losses are realized when contracts are liquidated. Unrealized gains or losses on open contracts are included as a component of equity in trading account on the Statements of Financial Condition. Net realized gains or losses and any change in net unrealized gains or losses from the preceding period are reported in the Statements of Income and Expenses and Changes in Partners’ Capital.

The Partnership and the Funds will separately present purchases, sales, issuances, and settlements in its reconciliation of Level 3 fair value measurements (i.e., to present such items on a gross basis rather than on a net basis), and make disclosures regarding the level of disaggregation ~~and~~as well as the inputs and valuation techniques used to measure fair value for measurements that fall within either Level 2 or Level 3 of the fair value hierarchy as required under GAAP.

The Partnership and the Funds consider prices for exchange-traded commodity futures, forwards, swaps and options contracts to be based on unadjusted quoted prices in active markets for identical assets and liabilities (Level 1). The values of non-exchange-traded forwards, swaps and certain options contracts for which market quotations are not readily available are priced by broker-dealers who derive fair values for those assets and liabilities from observable inputs (Level 2). Investments in funds (other commodity pools) where there are no other rights or obligations inherent within the ownership interest held by the Partnership are priced based on the end of the day net asset value (Level 2). The value of the Partnership’s investments in the Funds reflects its proportional interest in the Funds. As of and for the periods ended ~~September~~June 30, ~~2013~~ ~~and~~2014 and December 31, ~~2012~~2013, the Partnership and the Funds did not hold any derivative instruments that were priced at fair value using unobservable inputs through the application of management’s assumptions and internal valuation pricing ~~models~~ models (Level 3). During the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and for the year ended December 31, ~~2012~~2013, there were no transfers of assets or liabilities between Level 1 and Level 2.

1617

Diversified Multi-Advisor Futures Fund L.P. II

Notes to Financial Statements

~~September~~June 30, ~~2013~~2014

(Unaudited)

Futures Contracts. The ~~Partnership and the~~ Funds trade futures contracts. A futures contract is a firm commitment to buy or sell a specified quantity of investments, currency or a standardized amount of a deliverable grade commodity, at a specified price on a specified future date, unless the contract is closed before the delivery date or if the delivery quantity is something where physical delivery cannot occur (such as the S&P 500 Index), whereby such contract is settled in cash. Payments (“variation margin”) may be made or received by the ~~Partnership and the~~ Funds each business day, depending on the daily fluctuations in the value of the underlying contracts, and are recorded as unrealized gains or losses by the ~~Partnership and the~~ Funds. When the contract is closed, the ~~Partnership and the~~ Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Transactions in futures contracts require participants to make both initial margin deposits of cash or other assets and variation margin deposits, through the futures broker, directly with the exchange on which the contracts are traded. Net realized gains (losses) and changes in net unrealized gains (losses) on futures contracts are included in the Statements of Income and Expenses and Changes in Partners’ Capital.

Forward Foreign Currency Contracts. Forward foreign currency contracts are those contracts where the Funds agree to receive or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed future date. Forward foreign currency contracts are valued daily, and the Funds’ net equity therein, representing unrealized gain or loss on the contracts as measured by the difference between the forward foreign exchange rates at the dates of entry into the contracts and the forward rates at the reporting date, is included in the Statements of Financial Condition. Net realized gains (losses) and changes in net unrealized gains (losses) on forward foreign currency contracts are recognized in the period in which the contract is closed or the changes occur, respectively, and are included in the Statements of Income and Expenses and Changes in Partners’ Capital.

The Partnership and the Funds do not isolate that portion of the results of operations arising from the effect of changes in foreign exchange rates on investments from fluctuations due to changes in market prices of investments held. Such fluctuations are included in net income (loss) on investments in the Statements of Income and Expenses and Changes in Partners’ Capital.

London Metals Exchange Forward Contracts. Metal contracts traded on the London Metals Exchange (“LME”) represent a firm commitment to buy or sell a specified quantity of aluminum, copper, lead, nickel, tin or zinc. LME contracts traded by the ~~Partnership/~~Funds are cash settled based on prompt dates published by the LME. Payments (“variation margin”) may be made or received by the ~~Partnership/~~Funds each business day, depending on the daily fluctuations in the value of the underlying contracts, and are recorded as unrealized gains or losses by the ~~Partnership/~~ Funds. A contract is considered offset when all long positions have been matched with a like number of short positions settling on the same prompt date. When the contract is closed at the prompt date, the ~~Partnership/~~Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Transactions in LME contracts require participants to make both initial margin deposits of cash or other assets and variation margin deposits, through the broker, directly with the LME. Net realized gains (losses) and changes in net unrealized gains (losses) on metal contracts are included in the Statements of Income and Expenses and Changes in Partners’ Capital.

Options. The Funds may purchase and write (sell) both exchange listed and OTC options on commodities or financial instruments. An option is a contract allowing, but not requiring, its holder to buy (call) or sell (put) a specific or standard commodity or financial instrument at a specified price during a specified time period. The option premium is the total price paid or received for the option contract. When the Funds write an option, the premium received is recorded as a liability in the Statements of Financial Condition and marked to market daily. When the Funds purchase an option, the premium paid is recorded as an asset in the Statements of Financial Condition and marked to market daily. Net realized gains (losses) and changes in net unrealized gains (losses) on options contracts are included in the Statements of Income and Expenses and Changes in Partners’ Capital.

1718

Diversified Multi-Advisor Futures Fund L.P. II

Notes to Financial Statements

~~September~~June 30, ~~2013~~2014

(Unaudited)

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

Income Taxes. Income taxes have not been provided as each partner is individually liable for the taxes, if any, on its share of the Partnership’s income and expenses.

GAAP provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements and requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Partnership’s financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions with respect to tax at the Partnership level not deemed to meet the “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current year. The General Partner concluded that no provision for income tax is required in the Partnership’s financial statements.

The Partnership files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The 2010 through ~~2012~~2013 tax years remain subject to examination by U.S. federal and most state tax authorities. The General Partner does not believe that there are any uncertain tax positions that require recognition of a tax liability.

Subsequent Events. The General Partner evaluates events that occur after the balance sheet date but before financial statements are issued. The General Partner has assessed the subsequent events through the date of issuance and has determined that, other than that referenced in Note 3 to the financial statements, there were no subsequent events requiring adjustment of or disclosure in the financial statements.

Recent Accounting Pronouncements. In June 2013, the FASB issued ASU 2013-08, “Financial Services — Investments Companies (Topic 946): Amendments to the Scope, Measurement and Disclosure Requirements”. ASU 2013-08 changes the approach to the investment company assessment, requires non-controlling ownership interests in other investment companies to be measured at fair value, and requires additional disclosures about the investment company’s status as an investment company. The amendments are effective for interim and annual reporting periods beginning after December 15, 2013. The Partnership is currently evaluating the impact this pronouncement would have on the financial statements .

Net Income (Loss) per unit. Net income (loss) per unit is calculated in accordance with investment company guidance. See Note 2, “Financial Highlights.”

18Subsequent Events. The General Partner evaluates events that occur after the balance sheet date but before financial statements are issued. The General Partner has assessed the subsequent events through the date of issuance and has determined that other than that referenced in Note 1 to the Financial Statements, there were no subsequent events requiring adjustment of or disclosure in the financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Liquidity and Capital Resources

The Partnership does not engage in sales of goods or services. ~~The~~Its ~~Partnership’s~~only assets are its ~~(i) investment~~investments in the Funds, ~~(ii)~~ and cash. The Funds’ only assets are their equity in ~~its~~ trading ~~account~~accounts, consisting of cash ~~net~~and cash margin, net unrealized appreciation on open futures contracts, net unrealized appreciation on forward contracts and options purchased. Because of the low margin deposits normally required in commodity futures trading, relatively small price movements may result in substantial losses to the Partnership. While substantial losses could lead to a material decrease in liquidity, no such illiquidity occurred during the ~~third~~second quarter of ~~2013~~2014.

The Partnership’s capital consists of the capital contributions of the partners as increased or decreased by realized and/or unrealized gains or losses on trading and by expenses, interest income, redemptions of Redeemable Units and distributions of profits, if any.

For the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014, Partnership capital decreased 914.98% from $1816,~~544~~497,~~840~~232 to $1614,~~702~~050,~~764~~872. This decrease was attributable to the redemptions of ~~897~~1,357.~~3300~~2880 Redeemable Units resulting in an outflow of $1,~~274~~809,~~280 and 54.0000 General Partner unit equivalents totaling $75~~777,~~725,~~ coupled with a net loss of $~~492~~636,~~071~~583. Future redemptions could impact the amount of funds available for investment in ~~commodity~~Funds ~~contract positions~~ in subsequent periods.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Management believes that the estimates and assumptions utilized in preparing the financial statements are reasonable. Actual results could differ from those estimates. The Partnership’s significant accounting policies are described in detail in Note 7 of the Financial Statements.

The Partnership and the Funds record all investments at fair value in their financial statements, with changes in fair value reported as a component of net realized gains (losses) and change in net unrealized gains (losses) in the Statements of Income and Expenses and Changes in Partners’ Capital.

1920

Results of Operations

During the Partnership’s ~~third~~second quarter of ~~2013~~2014, the net asset value per unit ~~decreased~~increased 21.95% from $1,~~401~~305.5923 to $1,~~361~~325.5430 as compared to ana ~~increase~~decrease of 01.93% in the ~~third~~second quarter of ~~2012~~2013. The Partnership experienced a net trading ~~loss~~gain ~~(comprised of net realized gains (losses) on closed positions and investment in Funds and change in net unrealized gains (losses) on open positions and investment in Funds)~~ before ~~brokerage~~ fees and ~~related fees~~expenses in the ~~third~~second quarter of ~~2013~~2014 of $90470,~~052~~526. ~~Losses~~Gains were primarily attributable to the ~~Partnership’s and the~~ Funds’ trading of commodity futures in ~~currencies,~~U.S. ~~energy,~~and non-U.S. interest rates, ~~metals~~ and ~~softs~~indices and were partially offset by ~~gains~~ losses in ~~grains~~currencies, ~~U.S. interest rates~~grains, ~~livestock~~metals and ~~indices~~softs. The Partnership experienced a net trading gain ~~(comprised of net realized gains (losses) on closed positions and investment in Funds and change in net unrealized gains (losses) on open positions and investment in Funds)~~ before ~~brokerage~~ fees and ~~related~~expenses ~~fees~~ in the ~~third~~second quarter of ~~2012~~2013 of $~~664~~219,~~826~~287. Gains were primarily attributable to the ~~Master~~Funds’s trading of commodity futures in ~~currencies,~~ grains, ~~U.S. and non-U.S. interest rates~~indices, metals and ~~indices~~softs and were partially offset by losses in currencies, energy, ~~livestock~~U.S. and ~~softs~~non-U.S. interest rates and livestock.

The most significant ~~losses~~ gains were ~~incurred~~achieved within the ~~currency~~global interest rate sector primarily during ~~July~~May from ~~short~~long positions in ~~the Canadian dollar and Japanese yen against the~~ U.S. ~~dollar.~~fixed ~~Federal~~income ~~Open~~futures ~~Market~~as ~~Committee~~prices ~~Chairman~~moved ~~Ben~~higher ~~Bernanke’s~~amid ~~dovish~~expectation ~~reassurances~~that ~~pushed back concerns regarding~~Federal ~~the~~Reserve ~~tapering~~Chairperson ofJanet ~~quantitative~~Yellen ~~easing~~was ~~programs,~~backing ~~causing~~away ~~the~~from ~~U.S.~~a ~~dollar~~six-month totime ~~decrease~~frame infor ~~value~~lifting ~~and~~interest ~~Canadian dollar to strengthen~~rates. ~~Meanwhile,~~Additional ~~the~~gains ~~yen~~were ~~advanced~~experienced ~~after~~during ~~Japanese~~May ~~retail~~from ~~sales~~long ~~fell~~Australian ~~and~~fixed ~~Chinese~~income ~~industrial~~futures ~~companies~~as ~~reported~~prices ~~slowing~~moved ~~profits, boosting~~higher ~~demand~~following ~~for~~ the ~~relative~~release ~~“safety”~~ of ~~the~~Reserve Bank ~~Asian~~of ~~currency.~~Australia Inmeeting ~~August~~minutes, ~~additional~~which ~~losses~~signaled ~~were recorded from long euro positions versus~~ the ~~U.S.~~central ~~dollar~~bank aswill ~~speculation~~likely ~~resurfaced~~maintain ~~that~~record-low ~~the~~interest Urates.S. ~~Federal~~Additional ~~Reserve~~gains ~~may~~in ~~taper~~this ~~its~~sector ~~quantitative easing~~were ~~programs,~~recorded ~~which~~during ~~lowered~~April. ~~the~~Within ~~value of~~ the ~~euro~~global ~~versus~~stock ~~the~~index ~~U.S.~~sector, ~~dollar.~~gains ~~Within~~were ~~the~~experienced ~~metals~~primarily during ~~sector,~~May ~~losses~~and ~~were~~June ~~recorded~~ from ~~short~~long ~~positions~~European, inAsian, ~~precious~~ and ~~industrial~~U.S. ~~metal~~equity index futures positions as ~~industrial metals~~ prices increased ~~due~~as toglobal ~~improving macro-~~economic data inmet ~~China~~expectations, ~~while~~geopolitical ~~uncertainty~~risks ~~over~~eased ~~the~~and ~~fate~~speculation ofthat central banks’ monetary ~~stimulus~~policies ~~programs~~would remain accommodative in the Unear future.S. ~~bolstered~~A ~~the~~portion ~~precious~~of ~~metals~~the ~~“safe~~Partnership’s ~~haven”~~gains ~~appeal.~~for In the ~~global~~quarter ~~interest~~was ~~rate~~offset ~~sector,~~by losses ~~were~~recorded ~~primarily~~within ~~recorded~~the agricultural complex predominantly in ~~August~~May from long ~~European~~coffee ~~fixed income~~ futures positions as prices ~~declined~~decreased indue ~~response~~ to ~~increasing~~lower expectations ~~yields~~of incrop ~~U.S.~~damage ~~bonds~~in ~~and~~Brazil, ~~signs~~caused ofby ansevere ~~improving~~drought ~~global~~earlier ~~economy~~this year. ~~Losses~~Additional losses were ~~also~~recorded ~~experienced~~during May from long positions in ~~Australian~~corn ~~bonds and short-term rate~~ futures ~~following~~ ~~less-dovish~~as ~~Reserve~~prices ~~Bank~~declined ofas ~~Australia~~spring ~~comments~~plantings ~~that~~in ~~accompanied~~the anU.S. ~~interest~~accelerated ~~rate~~due ~~cut~~to ~~decision~~mild ~~early~~weather throughout in the ~~month~~Midwest. ~~Losses~~Within ~~were~~the ~~recorded~~currency inmarkets, ~~the~~losses ~~energy~~were ~~sector~~recorded primarily during ~~September~~May from long ~~crude~~euro ~~oil~~positions ~~and~~versus ~~gasoline~~the ~~futures~~U.S. dollar as ~~prices~~the ~~declined~~value ~~after tensions~~of in the ~~Middle~~euro ~~East~~declined ~~eased~~after manufacturing and onbusiness ~~concerns~~confidence asignaled ~~shutdown~~uneven ofeconomic growth, ~~the~~bolstering ~~U.S.~~bets ~~government~~on ~~may~~further ~~reduce~~European ~~demand~~Central byBank ~~the~~stimulus ~~world’s~~in ~~largest~~June. ~~oil~~Additional ~~consumer.~~losses Ain ~~portion~~this ofsector ~~the~~were ~~Partnership’s~~recorded ~~losses~~from ~~was~~positions ~~offset~~in bythe ~~gains~~Japanese ~~achieved~~yen, ~~within~~Swiss ~~the~~franc, ~~global~~and ~~stock~~Canadian ~~index sector~~dollar. ~~during~~Within ~~July~~the ~~and~~metals ~~September~~sector, ~~from~~losses ~~long~~were ~~positions~~experienced in ~~U.S.~~the first ~~and~~half ~~European~~of ~~equity~~May ~~index~~from short copper futures positions as prices ~~advanced~~increased onfollowing ~~news~~reports ofthat ~~positive~~inventories ~~employment figures~~ in ~~Europe~~China, ~~and~~ the ~~U.S. Federal Reserve~~world’s ~~September~~largest ~~decision~~buyer toof ~~not~~industrial ~~curtail~~metals, ~~its~~were ~~monthly~~rapidly ~~bond purchasing program~~declining. ~~Within~~Additional ~~the~~losses ~~agricultural~~in ~~complex,~~this ~~gains~~sector were ~~experienced~~recorded ~~primarily~~ in June ~~August~~ from ~~long~~short ~~soybean~~precious metals futures positions as prices increased amid ~~hot~~regional ~~weather~~instability in the ~~U.S.~~Middle ~~and~~East, ~~concern~~which prompted investors to take more of ~~lower~~a ~~crop~~defensive ~~yields~~posture and increased demand for “safe-haven assets”.

During the Partnership’s ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014, the net asset value per unit decreased 23.9% from $1,~~402~~379.9145 to $1,~~361~~325.5430 as compared to a decrease of 4.0.1% during the ~~nine~~six months ended ~~September~~June 30, ~~2012~~2013. The Partnership experienced a net trading gain ~~(comprised of net realized gains (losses) on closed positions and investment in Funds and change in net unrealized gains (losses) on open positions and investment in Funds)~~ before ~~brokerage~~ fees and ~~related~~expenses ~~fees~~in ~~during~~ the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 of $~~754~~9,~~704~~527. Gains were primarily attributable to the ~~Partnership’s and the~~ Funds’ trading of commodity futures in grains and non-U.S. interest rates, ~~grains, indices, metals~~ and ~~softs and~~ were partially offset by losses in ~~currencies,~~ energy, ~~livestock and non-~~U.S. interest rates indices, livestock, metals, and softs. The Partnership experienced a net trading gain ~~(comprised of net realized gains (losses) on closed positions and investment in Funds and change in net unrealized gains (losses) on open positions and investment in Funds)~~ before ~~brokerage~~ fees and ~~related~~expenses ~~fees during~~ in the ~~nine~~six months ended ~~September~~June 30, ~~2012~~2013 of $~~634~~844,~~736~~756. Gains were primarily attributable to the ~~Master~~Funds’s trading of commodity futures in ~~energy~~currencies, grains, ~~and~~indices, ~~U.S.~~metals and ~~non-U.S.~~softs ~~interest rates~~ and were partially offset by losses in ~~currencies~~energy, ~~livestock,~~U.S. ~~metals,~~and ~~softs~~non-U.S. interest rates and ~~indices~~livestock.

The most significant losses were recorded within the global ~~interest~~stock ~~rate~~index sector during January~~, May and August~~ from long positions in ~~European~~ ~~and~~ U.S., ~~fixed~~European, ~~income~~and Asian equity index futures as prices declined ~~amid~~following ~~positive~~softer-than-expected economic data ~~and~~in ~~speculation central banks across Europe and~~ the U.S. ~~may~~and ~~curtail~~China, ~~their~~along ~~asset~~with ~~purchase~~political ~~programs.~~and ~~Within~~economic ~~the~~headwinds ~~energy~~facing ~~complex,~~emerging ~~losses~~markets. ~~were~~Additional ~~incurred~~losses ~~primarily~~ in ~~February,~~this ~~May,~~sector ~~June~~were ~~and~~incurred ~~September.~~from Inlong ~~February,~~equity ~~lower~~index ~~prices~~futures ~~due~~positions toas ~~sluggish~~prices ~~global~~declined ~~demand,~~in athe ~~stronger~~first ~~U.S.~~half ~~dollar,~~of ~~and~~March anamid ~~increased~~unrest ~~production~~in ofRussian-Ukrainian ~~crude~~relations ~~oil~~and inweak ~~the~~Chinese ~~United~~economic ~~States~~data. ~~resulted~~In inthe ~~losses~~metals ~~for~~sector, ~~the~~losses ~~Partnership’s~~were ~~long~~recorded ~~positions.~~in AsJanuary ~~prices~~from ~~rose~~long positions in ~~May~~copper ~~and~~futures ~~June,~~as ~~losses~~prices ~~came~~declined ~~from~~on ~~short~~concern ~~positions~~that inslowing ~~gas~~economic ~~oil~~growth ~~and~~will ~~Brent~~curb ~~crude~~demand ~~oil~~from ~~after~~China, ~~concern~~the ~~that~~world’s ~~escalating~~largest ~~Middle~~user ~~East~~of ~~tensions~~the ~~will~~metal. ~~disrupt~~Additional ~~supplies.~~losses Inin ~~September,~~this ~~losses~~sector were recorded during March from long ~~crude~~positions ~~oil~~in gold ~~and gasoline~~ futures as prices declined after ~~Middle~~Russian-Ukrainian ~~East~~ tensions ~~eased~~began ~~and~~to onease ~~concerns~~and aas ~~shutdown of~~ the ~~U.S.~~Fed’s ~~government~~tone ~~may~~indicated ~~reduce~~further ~~demand~~tightening byof ~~the~~its ~~world’s~~monetary ~~largest oil consumer~~policy. Within the ~~currency~~energy ~~sector~~complex, losses were ~~primarily~~recorded ~~during~~in ~~June~~the ~~through~~first ~~August~~half asof ~~the~~March ~~U.S.~~from ~~dollar~~long ~~whipsawed~~futures ~~from~~positions ~~uncertainly~~in ~~surrounding~~crude ~~tapering~~oil ~~the~~and its refined products as prices fell amid a larger-than-expected increase in U.S. ~~Federal~~crude ~~Reserve’s~~oil ~~quantitative~~stockpiles ~~easing~~and ~~programs~~slower economic growth within China. AsIn athe ~~result~~agricultural sector, losses were recorded ~~from~~primarily ~~positions~~ in ~~the~~May ~~Euro,~~from long ~~Australian~~coffee ~~dollar,~~futures ~~and~~positions ~~Canadian~~as ~~dollar.~~prices Adecreased ~~portion~~due ofto ~~the~~lower ~~Partnership’s losses~~expectations ~~during~~of ~~the~~crop ~~first~~damage ~~nine~~in ~~months~~Brazil, ofcaused ~~the~~by ~~year~~severe ~~was~~drought ~~offset~~earlier bythis ~~gains~~year. ~~achieved~~Additional ~~within~~losses ~~the~~were ~~global~~recorded ~~stock~~during ~~index~~May ~~markets~~ from long ~~futures~~ positions ~~during~~in ~~the~~corn ~~majority~~futures ofand ~~the~~in ~~year.~~June ~~Global~~from ~~stock~~long soybean ~~index~~ futures ~~prices~~positions ~~have~~as ~~been~~prices ~~pushed~~decreased upas bywarm, anwet ~~aggressive Japanese~~weather ~~stimulus~~improved ~~package~~growing conditions, araising ~~stabilizing~~the ~~euro-zone~~outlook ~~and~~for ~~continued~~record ~~growth~~crops in ~~Chinese~~the ~~and~~ U.S. ~~economies.~~The ~~Within~~Partnership’s losses during the ~~metals~~first ~~complex,~~six ~~gains~~months of the year were partially offset by gains experienced inwithin the ~~second~~global ~~quarter~~interest rate sector primarily during May from ~~short~~long positions in ~~gold~~U.S. ~~and~~fixed ~~silver~~income futures as prices ~~fell~~moved ~~sharply~~higher ~~on fears~~amid ~~Cyprus~~expectation ~~and~~that ~~other~~Federal ~~crisis-hit~~Reserve ~~countries~~Chairperson ~~may~~Janet beYellen ~~forced~~is tobacking ~~sell~~away ~~their~~from ~~gold~~a ~~reserves~~six-month ~~and~~time frame onfor ~~speculation~~lifting ~~the~~interest Urates.S. ~~Federal~~Additional ~~Reserve~~gains ~~may~~were ~~scale~~experienced ~~back~~during ~~its~~May ~~monetary~~from ~~stimulus~~long ~~program.~~Australian ~~Within~~fixed ~~the~~income ~~agricultural~~futures ~~complex,~~as ~~short~~prices ~~positions~~moved inhigher ~~sugar~~following ~~futures resulted~~the inrelease ~~gains~~of ~~during~~Reserve ~~May~~Bank asof ~~prices~~Australia ~~moved~~meeting ~~lower~~minutes, onwhich ~~forecasts~~signaled ofthe ~~large~~central ~~crop~~bank ~~yields~~will likely inmaintain ~~Brazil~~record-low ~~and~~interest ~~Thailand~~rates. Additional gains ~~were~~in ~~recorded~~this insector ~~May~~were ~~and~~experienced ~~August~~in January from long ~~soybean~~ positions in European fixed income futures as prices increased ~~after~~as ~~concern~~investors ~~unfavorable~~sought ~~weather~~the ~~may~~relative safety of interest rate instruments amid ~~damage~~growing ~~the~~uncertainties ~~soybean~~in ~~crop~~emerging markets.

2021

Commodity futures markets are highly volatile. The potential for broad and rapid price fluctuations increases the risks involved in commodity trading, but also increases the possibility of profit. The profitability of the Partnership/Funds depends on the existence of major price trends and the ability of the Advisors to correctly identify those price trends. Price trends are influenced by, among other things, changing supply and demand relationships, weather, governmental, agricultural, commercial and trade programs and policies, national and international political and economic events and changes in interest rates. To the extent that market trends exist and the Advisors are able to identify them, the Partnership expects to increase capital through operations.

Interest income on 80% of the ~~Partnership’s~~average daily ~~average~~ equity maintained in cash in the Partnership’s (or the Partnership’s allocable portion of a Fund’s) brokerage account during each month was earned at a 30-day U.S. Treasury bill rate determined weekly by CGM ~~and/or MS&Co, as applicable,~~ based on the average non-competitive yield on 3-month U.S. Treasury bills maturing in 30 days or at the monthly average of the 4-week U.S. Treasury bill discount rate, as applicable. Interest income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014, decreased by $~~2,054~~405 and $31,~~216~~637, respectively, as compared to the corresponding periods in ~~2012~~2013. The decrease in interest income was primarily due to lower U.S. Treasury bill rates and lower average daily equity during the three and ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014, as compared to the corresponding periods in ~~2012~~2013. Interest earned by the Partnership will increase the net asset value of the Partnership. The amount of interest income earned by the Partnership depends on the average daily equity in the Partnership’s /Funds’ accounts and upon interest rates over which neither the Partnership, the Funds nor CGM/MS&Co has control.

~~Brokerage~~Ongoing selling agent/brokerage fees are calculated as a percentage of the Partnership’s net asset value as of the end of the month and are affected by trading performance and redemptions. Accordingly, they must be compared in relation to the fluctuations in the monthly net asset values. ~~Brokerage~~Ongoing selling agent/brokerage fees for the three and ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014, decreased by $73166,~~145~~ 868 and $~~228~~208,~~111~~540, respectively, as compared to the corresponding periods in ~~2012~~2013. The decrease in ongoing selling agent/brokerage fees is due to lower average net assets and also a reduction in the monthly ongoing selling fee rate during the three and ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014, as compared to the corresponding periods in ~~2012~~ 2013.

~~Management~~Certain clearing fees are ~~calculated~~based on the ~~portion~~number of ~~the~~trades ~~Partnership’s~~executed ~~net~~by ~~asset~~the ~~value~~Advisors ~~allocated~~for ~~to each Advisor at~~ the ~~end~~ ~~of the month and are affected by trading performance and redemptions~~Partnership/Funds. Accordingly, they must be compared in relation to the ~~fluctuations~~number inor ~~the~~trades ~~monthly~~executed ~~net~~during ~~asset~~the ~~values~~period. ~~Management~~Clearing fees for the three and ~~nine~~six months ended ~~September~~ June 30, ~~2013~~ 2014 decreased by $326,~~938~~197 and $996,~~317~~209, respectively, as compared to the corresponding periods in ~~2012~~2013. The decrease in ~~management~~clearing fees is primarily due to ~~lower~~a ~~average~~decrease ~~net~~in ~~assets~~the number of trades during the three and ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014, as compared to the corresponding periods in ~~2012~~2013.

~~Incentive~~Management fees are ~~based~~calculated on the ~~new~~portion ~~trading~~of ~~profits~~the ~~generated~~Partnership’s bynet asset value allocated to each Advisor asat ~~defined~~the inend of the ~~advisory~~ ~~agreement~~month ~~among~~and ~~the~~are ~~Partnership,~~affected ~~the~~by ~~General~~trading ~~Partner~~performance and ~~each Advisor~~redemptions. Accordingly, ~~There~~they ~~were~~must nobe ~~incentive~~compared in relation to the fluctuations in the monthly net asset values. Management fees for the three and ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 decreased by $17,742 and ~~2012.~~$27,306, Torespectively, as compared to the ~~extent~~corresponding periods anin ~~Advisor~~2013. ~~incurs~~The adecrease ~~loss~~in ~~for~~management ~~the~~fees ~~Partnership,~~is ~~the~~due ~~Advisor will~~to ~~not~~lower beaverage ~~paid~~net ~~incentive~~assets ~~fees~~and ~~until~~also ~~such~~a ~~Advisor~~reduction ~~recovers~~of ~~any~~Graham’s ~~net~~annual ~~loss~~management ~~incurred~~fee byrate during the ~~Advisor~~three and ~~earns~~six ~~additional~~months ~~new~~ended ~~trading~~June 30, ~~profits~~2014, ~~for~~as compared to the ~~Partnership~~corresponding periods in 2013.

Incentive fees are based on the new trading profits generated by each Advisor as defined in the advisory agreement among the Partnership, the General Partner and each Advisor. There were no incentive fees earned for the three and six months ended June 30, 2014 and 2013. To the extent an Advisor incurs a loss for the Partnership, the Advisor will not be paid incentive fees until such Advisor recovers any net loss incurred by the Advisor and earns additional new trading profits for the Partnership.

In allocating the assets of the Partnership among the Advisors, the General Partner considers each Advisor’s past performance, trading style, volatility of markets traded and fee requirements. The General Partner may modify or terminate the allocation of assets among the Advisors and may allocate assets to additional advisors at any time.

As of ~~September~~June 30, ~~2013~~2014 and ~~June~~March 3031, ~~2013~~2014, the Partnership’s assets were allocated among the trading Advisors in the following approximate percentages:

Advisor	~~September~~June 30, ~~2013~~2014			~~June~~March 3031, ~~2013~~2014
Graham Capital Management, L.P.	$	2,~~286~~102,~~106~~021	1415%	$	2,~~251~~165,~~763~~983	1315%
Willowbridge Associates, Inc.	$	87,~~648~~202,~~936~~153	5251%	$	97,~~228~~430,~~317~~188	5350%
Eckhardt Trading Company	$	54,~~767~~746,~~722~~698	34%	$	65,~~006~~105,~~969~~667	3435%

2122

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Partnership and the Funds are speculative commodity pools. The market sensitive instruments held by the Partnership and the Funds are acquired for speculative trading purposes, and all or substantially all of the Partnership’s and the Funds’ assets are subject to the risk of trading loss. Unlike an operating company, the risk of market sensitive instruments is integral, not incidental, to the Partnership’s and the Funds’ main line of business.

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

Market movements result in frequent changes in the fair value of the Partnership’s and the Funds’ open positions and, consequently, in their earnings and cash balances. The Partnership’s and the Funds’ market risk is influenced by a wide variety of factors, including the level and volatility of interest rates, exchange rates, equity price levels, the market value of financial instruments and contracts, the diversification effects among the Partnership’s and the Funds’ open contracts and the liquidity of the markets in which they trade.

The Partnership and the Funds rapidly acquire and liquidate both long and short positions in a wide range of different markets. Consequently, it is not possible to predict how a particular future market scenario will affect performance, and the Partnership’s and the Funds’ past performance is not necessarily indicative of their future results.

“Value at Risk” is a measure of the maximum amount which the Partnership and the Funds could reasonably be expected to lose in a given market sector. However, the inherent uncertainty of the Partnership’s and the Funds’ speculative trading and the recurrence in the markets traded by the Partnership and the Funds of market movements far exceeding expectations could result in actual trading or non-trading losses far beyond the indicated Value at Risk or the Partnership’s and the Funds’ 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 in this section should not be considered to constitute any assurance or representation that the Partnership’s and the Funds’ losses in any market sector will be limited to Value at Risk or by the Partnership’s and the Funds’ attempts to manage their market risk.

Exchange margin requirements have been used by the Partnership and the Funds as the measure of their Value at Risk. Margin requirements are set by exchanges to equal or exceed the maximum losses reasonably expected to be incurred in the fair value of any given contract in 95%-99% of any one-day interval. The 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.

Value at Risk tables represent a probabilistic assessment of the risk of loss in market risk sensitive instruments. The Advisors currently trade the Partnership’s assets indirectly in master fund managed accounts established in the name of the masters over which they have been granted limited authority to make trading decisions. The first two trading Value at Risk tables reflect the market sensitive instruments held by the Partnership indirectly, through its investment in the Funds, as of ~~September~~June 30, ~~2013 and~~2014 and December 31, ~~2012~~2013. The remaining trading Value at Risk tables reflect the market sensitive instruments held by each Fund separately. There have been no material changes in the trading Value at Risk information previously disclosed in the Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2012~~2013.

The following tables indicate the trading Value at Risk associated with the Partnership’s open positions by market category as of September 30, 2013 and December 31, 2012. As of September 30, 2013, the Partnership’s total capitalization was $16,702,764.

September 30, 2013

Market Sector	Value at Risk		% of TotalCapitalization
Currencies	$	401,991		2.41	%
Energy		81,827		0.49	%
Grains		56,660		0.34	%
Indices		335,764		2.01	%
Interest Rates U.S.		177,218		1.06	%
Interest Rates Non-U.S.		119,218		0.71	%
Metals		45,663		0.27	%
Softs		29,261		0.18	%
Total	$	1,247,602		7.47	%
As of December 31, 2012, the Partnership’s total capitalization was $18,544,840. December 31, 2012
Market Sector	Value at Risk		% of TotalCapitalization
Currencies	$	385,082		2.08	%
Energy		74,579		0.40	%
Grains		50,119		0.27	%
Indices		294,290		1.59	%
Interest Rates U.S.		67,595		0.36	%
Interest Rates Non-U.S.		145,799		0.79	%
Metals		74,986		0.40	%
Softs		14,239		0.08	%
Total	$	1,106,689		5.97	%

The following tables indicate the trading Value at Risk associated with the Partnership’s ~~investments~~open inpositions ~~the Funds~~ by market category asthrough ofits ~~September~~investments ~~30,~~in ~~2013~~the ~~and December 31~~Funds, ~~2012~~as ~~and~~of ~~the~~June ~~highest and lowest value at any point and the average value during the three months ended September~~ 30, ~~2013~~2014 and ~~for the twelve months ended~~ December 31, ~~2012~~2013. ~~All~~As ~~open position trading risk exposures~~ of ~~the~~June ~~Funds~~30, ~~have~~2014, ~~been included in calculating~~ the ~~figures~~Partnership’s ~~set~~total ~~forth~~capitalization ~~below~~was $14,050,872.

AsJune ~~of September~~ 30, ~~2013,~~2014 Willowbridge Master’s total capitalization was $96,927,578. The Partnership owned approximately 9.1% of Willowbridge Master. As of September 30, 2013, Willowbridge Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to Willowbridge for trading) was as follows:

September 30, 2013


Market Sector	Value at Risk		% of Total Capitalization
Currencies	$	427,439		3.04	%
Energy		177,263		1.26	%
Grains		16,180		0.12	%
Indices		381,545		2.71	%
Interest Rates U.S.		450,585		3.21	%
Interest Rates Non-U.S.		190,195		1.35	%
Metals		128,831		0.92	%
Softs		14,479		0.10	%

Total	$	1,786,517		12.71	%

						Three months ended September 30, 2013
As of December 31, 2013, the Partnership’s total capitalization was $16,497,232 December 31, 2013
Market Sector	Value at Risk		% of TotalCapitalization			~~High Value at Risk~~		~~LowValue at Risk~~		AverageValue at Risk*
Currencies	$	~~872~~583,~~850~~241		03.9054	%	$	~~4,401,508~~	$	~~323,400~~	$	~~1,540,038~~
Interest Rates U.S.		1,746,391		1.80	%		3,564,310		232,320		1,638,460
Energy		172,370		1.05	%
Total	$	2,619,241		2.70	%
Grains		61,735		0.37	%
Indices		301,947		1.83	%
Interest Rates U.S.		105,284		0.64	%
Interest Rates Non-U.S.		201,410		1.22	%
Metals		143,527		0.87	%
Softs		20,119		0.12	%
Total	$	1,589,633		9.64	%

* Average of month-end Values at Risk.

As of December 31, 2012, Willowbridge Master’s total capitalization was $39,257,082 and there were no amounts at risk. The Partnership owned approximately 7.2% of Willowbridge Master.

As of September 30, 2013, Graham Master’s total capitalization was $58,028,126. The Partnership owned approximately 4.0% of Graham Master. As of September 30, 2013, Graham Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to Graham for trading) was as follows:

September 30, 2013

						Three months ended September 30, 2013
Market Sector	Value at Risk		% of TotalCapitalization			High Value at Risk		LowValue at Risk		AverageValue at Risk*
Currencies	$	3,052,535		5.26	%	$	5,177,696	$	2,692,964	$	3,801,057
Energy		1,176,296		2.03	%		1,447,490		398,490		1,229,839
Grains		710,115		1.22	%		746,819		572,004		674,852
Indices		3,804,492		6.56	%		3,867,614		1,786,311		3,501,816
Interest Rates U.S.		314,881		0.54	%		500,125		219,252		393,014
Interest Rates Non-U.S.		764,522		1.32	%		1,574,911		449,052		1,088,807
Metals		1,112,794		1.92	%		1,979,210		756,560		1,193,904
Softs		441,646		0.76	%		449,032		345,785		436,466
Total	$	11,377,281		19.61	%

* Average of month-end Values at Risk.

AsThe offollowing ~~December 31,~~tables ~~2012,~~indicate ~~Graham~~the ~~Master’s~~trading ~~total~~Value ~~capitalization~~at ~~was~~Risk ~~$84,936,051.~~associated ~~The~~with the Partnership’s ~~owned~~investments ~~approximately~~in ~~3.2%~~the ofFunds ~~Graham~~by ~~Master.~~market Ascategory as of June 30, 2014 and December 31, ~~2012,~~2013 ~~Graham~~and ~~Master’s~~the ~~Value~~highest atand ~~Risk~~lowest ~~for~~value ~~its~~at ~~assets~~any ~~(including~~point and the ~~portion~~average ofvalue during the ~~Partnership’s~~three ~~assets~~months ~~allocated~~ended toJune ~~Graham~~30, 2014 and for the twelve months ended December 31, 2013. All open position trading) ~~was~~risk asexposures ~~follows:~~ of the Funds have been included in calculating the figures set forth below.

~~December 31~~As of June 30, ~~2012~~2014, Willowbridge Master’s total capitalization was $76,102,534. The Partnership owned approximately 9.5% of Willowbridge Master. As of June 30, 2014, Willowbridge Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to Willowbridge for trading) was as follows:

						Twelve months ended December 31, 2012
Market Sector	Value at Risk		% of TotalCapitalization			HighValue at Risk		LowValue at Risk		AverageValue at Risk*
Currencies	$	4,886,499		5.75	%	$	5,242,762	$	2,153,005	$	3,676,056
Energy		879,022		1.04	%		3,576,694		328,716		1,612,982
Grains		707,500		0.83	%		1,548,650		617,775		806,449
Indices		4,894,230		5.76	%		8,403,330		3,650,988		5,248,562
Interest Rates U.S.		727,200		0.86	%		2,173,050		190,045		1,283,420
Interest Rates Non-U.S.		2,250,303		2.65	%		5,723,015		2,250,303		3,953,113
Metals		1,161,998		1.37	%		2,984,515		661,356		1,671,237
Softs		372,412		0.44	%		999,000		372,412		653,258
Total	$	15,879,164		18.70	%

June 30, 2014

* Annual average based on month-end Value at Risk.


						Three Months Ended June 30, 2014
Market Sector	Value at Risk		% of Total Capitalization			High Value at Risk		Low Value at Risk		Average Value at Risk*
Currencies	$	515,488		0.68	%	$	6,674,480	$	30,418	$	366,907
Indices		408,788		0.54	%		1,860,183		90,393		136,263
Interest Rates U.S.		3,740,206		4.91	%		6,033,472		1,106,362		3,907,728

Total	$	4,664,482		6.13	%

As of September 30, 2013, Eckhardt Master’s total capitalization was $17,681,522. The Partnership owned approximately 32.9% of Eckhardt Master. As of September 30, 2013, Eckhardt Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to Eckhardt for trading) was as follows:

September 30, 2013

						Three months ended September 30, 2013
Market Sector	Value at Risk		% of TotalCapitalization			HighValue at Risk		Low Value at Risk		AverageValue at Risk*
Currencies	$	609,303		3.44	%	$	628,962	$	198,502	$	388,188
Energy		105,700		0.60	%		348,390		91,000		208,580
Grains		85,882		0.49	%		119,000		39,342		79,507
Indices		558,006		3.16	%		558,006		253,635		495,819
Interest Rates U.S.		17,330		0.10	%		225,825		17,330		125,494
Interest Rates Non -U.S.		269,413		1.52	%		542,186		139,390		274,089
Metals		3,500		0.02	%		51,600		3,500		3,700
Softs		35,244		0.20	%		67,026		34,031		47,284
Total	$	1,684,378		9.53	%

*	Average of month-end Values at Risk.

As of December 31, ~~2012~~2013, ~~Eckhardt~~Willowbridge Master’s total capitalization was $1888,~~429~~383,~~606~~660. The Partnership owned approximately ~~25.~~8.9% of ~~Eckhardt~~ Willowbridge Master. As of December 31, ~~2012~~2013, ~~Eckhardt~~ Willowbridge Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to ~~Eckhardt~~Willowbridge for trading) was as follows:

December 31, ~~2012~~2013

						Twelve months ended December 31, 2012
						Twelve Months Ended December 31, 2013
Market Sector	Value at Risk		% of TotalCapitalization			HighValue at Risk		LowValue at Risk		AverageValue at Risk*
Currencies	$	~~886~~3,~~487~~210,939		43.8163	%	$	14,~~330~~945,~~124~~148	$	~~345~~148,~~179~~500	$	1,861,~~941~~929
Energy		~~146~~726,~~250~~752		0.7982	%		72,~~866~~264,~~490~~273		4946,~~900~~200		~~261~~424,~~682~~936
Grains		106,507		0.58	%		244,448		45,898		169,313
Indices		684,033		0.77	%		6,842,689		21,635		594,408
Indices		533,624		2.90	%		675,308		8,000		432,089
Interest Rates U.S.		537,550		0.61	%		3,564,310		8,280		911,307
Interest Rates U.S.		171,800		0.93	%		626,375		109,035		357,245
Interest Rates Non-U.S.		289,287		0.33	%		1,216,176		2,178		337,625
Interest Rates Non-U.S.		286,004		1.55	%		923,168		137,819		510,969
Total	$	5,448,561		6.16	%
Metals		146,521		0.80	%		316,501		25,650		153,467
Softs		9,000		0.05	%		111,543		5,800		45,908
Total	$	2,286,193		12.41	%

* Annual average ~~based~~ of month-end ~~Value~~Values at Risk.

As of June 30, 2014, Graham Master’s total capitalization was $52,631,340. The Partnership owned approximately 4.4% of Graham Master. As of June 30, 2014, Graham Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to Graham for trading) was as follows:

June 30, 2014


						Three Months Ended June 30, 2014
Market Sector	Value at Risk		% of Total Capitalization			High Value at Risk		Low Value at Risk		Average Value at Risk*
Currencies		$4,192,725		7.97	%		$6,396,381		$4,192,725		$5,146,840
Energy		1,072,954		2.04	%		1,106,141		161,238		736,723
Grains		367,732		0.70	%		594,374		268,571		452,518
Indices		4,267,882		8.11	%		4,267,882		2,232,582		3,530,307
Interest Rates U.S.		641,949		1.22	%		817,740		401,116		670,342
Interest Rates Non-U.S.		1,542,388		2.93	%		1,742,463		1,317,501		1,569,516
Metals		914,573		1.74	%		1,483,092		716,778		967,823
Softs		265,707		0.50	%		310,127		153,249		248,176

Total		$13,265,910		25.21	%

*	Average of month-end Values at Risk.

As of December 31, ~~2012~~2013, ~~SandRidge~~Graham Master’s total capitalization was $~~292~~56,~~148~~951,~~993~~856. ~~The~~ The Partnership owned approximately 04.62% of ~~SandRidge~~Graham Master. As of December 31, ~~2012~~2013, ~~SandRidge~~Graham Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to ~~SandRidge~~Graham for trading) was as follows:

December 31, ~~2012~~2013

						Twelve months ended December 31, 2012
						Twelve Months Ended December 31, 2013
Market Sector	Value at Risk		% of TotalCapitalization			HighValue at Risk		LowValue at Risk		AverageValue at Risk*
Energy	$	1,452,965		0.50	%	$	21,675,334	$	1,452,965	$	12,063,026
Currencies	$	5,451,393		9.57	%	$	6,263,455	$	2,692,964	$	3,780,586
Total	$	1,452,965		0.50	%
Energy		918,449		1.61	%		1,447,490		398,490		924,600
Grains		707,595		1.24	%		746,819		350,474		585,416
Indices		3,480,698		6.11	%		5,882,185		1,786,311		4,253,445
Interest Rates U.S.		579,675		1.02	%		947,075		219,252		551,160
Interest Rates Non-U.S.		1,218,251		2.14	%		2,659,126		449,052		1,491,188
Metals		2,082,858		3.66	%		2,293,849		545,530		1,461,478
Softs		284,243		0.50	%		511,259		231,428		390,411
Total	$	14,723,162		25.85	%

*	Annual average based on month-end Value at Risk.

As of June 30, 2014, Eckhardt Master’s total capitalization was $10,906,495. The Partnership owned approximately 43.7% of Eckhardt Master. As of June 30, 2014, Eckhardt Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to Eckhardt for trading) was as follows:

June 30, 2014


						Three Months Ended June 30, 2014
Market Sector	Value at Risk		% of Total Capitalization			High Value at Risk		Low Value at Risk		Average Value at Risk*
Currencies	$	443,908		4.07	%	$	717,364	$	290,342	$	480,515
Energy		297,605		2.73	%		390,610		156,802		243,651
Indices		354,516		3.25	%		373,050		161,695		280,892
Interest Rates U.S.		153,362		1.40	%		297,325		74,605		216,037
Interest Rates Non -U.S.		279,931		2.57	%		386,144		186,526		311,805
Metals		202,723		1.86	%		202,723		98,632		157,963
Softs		6,380		0.06	%		35,444		6,350		16,765

Total	$	1,738,425		15.94	%

*	Average of month-end Values at Risk.

As of December 31, 2013, Eckhardt Master’s total capitalization was $13,111,415. The Partnership owned approximately 33.2% of Eckhardt Master. As of December 31, 2013, Eckhardt Master’s Value at Risk for its assets (including the portion of the Partnership’s assets allocated to Eckhardt for trading) was as follows:

December 31, 2013


						Twelve Months Ended December 31, 2013
Market Sector	Value at Risk		% of Total Capitalization			High Value at Risk		Low Value at Risk		Average Value at Risk*
Currencies	$	206,353		1.56	%		945,143	$	169,533	$	409,579
Energy		208,175		1.59	%		353,000		7,260		170,684
Grains		96,435		0.74	%		200,679		38,539		110,010
Indices		285,778		2.18	%		755,546		242,799		526,016
Interest Rates U.S.		99,686		0.76	%		597,942		11,717		196,733
Interest Rates Non-U.S.		374,990		2.86	%		586,137		116,551		351,504
Metals		168,816		1.29	%		213,999		1,665		55,945
Softs		24,642		0.19	%		88,897		6,000		41,824

Total	$	1,464,875		11.17	%

*	Annual average based of month-end Value at Risk.

Item 4. Controls and Procedures

The Partnership’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Partnership on the reports that it files or submits under the Securities Exchange Act of 1934, (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods expected in the SEC’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Partnership in the reports it files is accumulated and communicated to management, including the President and Chief Financial Officer (“CFO”) of the General Partner, to allow for timely decisions regarding required disclosure and appropriate SEC filings.

The General Partner is responsible for ensuring that there is an adequate and effective process for establishing, maintaining and evaluating disclosure controls and procedures for the Partnership’s external disclosures.

The General Partner’s President and CFO have evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September~~June 30, ~~2013~~2014 and, based on that evaluation, the ~~General~~ General Partner’s President and CFO have concluded that, at that date, the Partnership’s disclosure controls and procedures were effective.

The Partnership’s internal control over financial reporting is a process under the supervision of the General Partner’s President and CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. These controls include policies and procedures that:

•

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

•

provide reasonable assurance that (i) transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and (ii) the Partnership’s receipts are handled and expenditures are made only pursuant to authorizations of the General Partner; and

•

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

There were no changes in the Partnership’s internal control over financial reporting process during the fiscal quarter ended ~~September~~ June 30, ~~2013~~2014 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

2728

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

This section describes the major pending legal proceedings, other than ordinary routine litigation incidental to the business, to which MS&Co or its subsidiaries is a party or to which any of their property is subject. There are no material legal proceedings pending against the Partnership ornor the General Partner.

The following information supplements and amends the discussion set forth under Part I, Item 3 “Legal Proceedings” in the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, as updated by the Partnership’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.

On June 1, 2011, Morgan Stanley & Co. Incorporated converted from a Delaware corporation to a Delaware limited liability company. As a result of that conversion, Morgan Stanley & Co. Incorporated is now named Morgan Stanley & Co. LLC.

MS&Co. is a wholly-owned, indirect subsidiary of Morgan Stanley ~~(“MS”)~~, a Delaware holding company. MSMorgan Stanley files periodic reports with the Securities and Exchange Commission as required by the Exchange Act, which include current descriptions of material litigation and material proceedings and investigations, if any, by governmental and/or regulatory agencies or self-regulatory organizations concerning MSMorgan Stanley and its subsidiaries, including MS&Co. As a consolidated subsidiary of MSMorgan Stanley, MS&Co. does not file its own periodic reports with the SEC that contain descriptions of material litigation, proceedings and investigations. As a result, weplease refer ~~you~~ to the “Legal Proceedings” section of MSMorgan Stanley’s SEC 10-K filings for 2013, 2012, 2011, 2010, ~~2009,~~ and ~~2008~~2009.

In addition to the matters described in those filings, in the normal course of business, each of MSMorgan Stanley and MS&Co. has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions, and other litigation, arising in connection with its activities as a global diversified financial services institution. Certain of the legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. Each of MSMorgan Stanley and MS&Co. is also involved, from time to time, in investigations and proceedings by governmental and/or regulatory agencies or self-regulatory organizations, certain of which may result in adverse judgments, fines or penalties. The number of these investigations and proceedings has increased in recent years with regard to many financial services institutions, including MSMorgan Stanley and MS&Co.

MS&Co. is a Delaware ~~corporation~~limited liability company with its main business office located at 1585 Broadway, New York, New York 10036. Among other registrations and memberships, MS&Co. is registered as a futures commission merchant and is a member of ~~the National Futures Association~~NFA.

~~There~~On ~~have~~May 7, ~~been~~2009, noMS&Co. ~~material~~was ~~administrative~~named as a defendant in a purported class action lawsuit brought under Sections 11, ~~civil~~12 orand ~~criminal~~15 ~~actions~~of the ~~within~~Securities Act of 1933, as amended, which is now styled In re Morgan Stanley Mortgage Pass-Through Certificates Litigation and is pending in the ~~past~~United ~~five~~States ~~years~~District ~~against~~Court ~~MS&Co~~for orthe ~~any~~Southern District of ~~its~~New ~~individual~~York (“SDNY”). The ~~principals~~third amended complaint, filed on September 30, 2011, alleges, among other things, that the registration statements and nooffering ~~such~~documents ~~actions~~related ~~are~~to ~~currently~~the ~~pending~~offerings of certain mortgage pass-through certificates in 2006 contained false and misleading information concerning the pools of residential loans that backed these securitizations. The plaintiffs seek, ~~except~~among asother relief, class certification, unspecified compensatory and rescissionary damages, costs, ~~follows~~interest and fees. On July 22, 2014, the parties reached an agreement in principle to settle the litigation. The settlement is subject to court approval.

On June 2, 2009, MS executed a final settlement with the Office of the New York State Attorney General (“NYAG”) in connection with its investigation relating to the sale of auction-rate securities (“ARS”). MS agreed, among other things to: (1) repurchase at par illiquid ARS that were purchased by certain retail clients prior to February 13, 2008; (2) pay certain retail clients that sold ARS below par the difference between par and the price at which the clients sold the securities; (3) arbitrate, under special procedures, claims for consequential damages by certain retail clients; (4) refund refinancing fees to certain municipal issuers of ARS; and (5) pay a total penalty of $35 million. On August 13, 2008, MS reached an agreement in principle on substantially the same terms with the Office of the Illinois Secretary of State, Securities Department (on behalf of a task force of other states under the auspices of the North American Securities Administrators Association) that would settle their investigations into the same matters.

On June 5, 2012, MS&Co consented to and became the subject of an Order Instituting Proceedings Pursuant to Sections 6(c) and 6(d) of the Commodity Exchange Act, as amended, Making Findings and Imposing Remedial Sanctions by the Commodity Futures Trading Commission (the “CFTC”) to resolve allegations related to the failure of a salesperson to comply with exchange rules that prohibit off-exchange futures transactions unless there is an Exchange for Related Position (“EFRP”). Specifically, the CFTC found

that from April 2008 through October 2009, MS&Co violated Section 4c(a) of the Commodity Exchange Act and Commission Regulation 1.38 by executing, processing and reporting numerous off-exchange futures trades to the Chicago Mercantile Exchange (“CME”) and Chicago Board of Trade (“CBOT”) as EFRPs in violation of CME and CBOT rules because those trades lacked the corresponding and related cash, OTC swap, OTC option, or other OTC derivative position. In addition, the CFTC found that MS&Co violated CFTC Regulation 166.3 by failing to supervise the handling of the trades at issue and failing to have adequate policies and procedures designed to detect and deter the violations of the Act and Regulations. Without admitting or denying the underlying allegations and without adjudication of any issue of law or fact, MS&Co. accepted and consented to entry of findings and the imposition of a cease and desist order, a fine of $5,000,000, and undertakings related to public statements, cooperation and payment of the fine. MS&Co entered into corresponding and related settlements with the CME and CBOT in which the CME found that MS&Co violated CME Rules 432.Q and 538 and fined MS&Co $750,000 and CBOT found that MS&Co violated CBOT Rules 432.Q and 538 and fined MS&Co $1,000,000.

On March 15, 2010, the Federal Home Loan Bank of San Francisco filed two complaints against MS&Co and other defendants in the Superior Court of the State of California. These actions are styled Federal Home Loan Bank of San Francisco v. Credit Suisse Securities (USA) LLC, et al., and Federal Home Loan Bank of San Francisco v. Deutsche Bank Securities Inc. et al., respectively. Amended complaints filed on June 10, 2010 allege that defendants made untrue statements and material omissions in connection with the sale to plaintiff of a number of mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The amount of certificates allegedly sold to plaintiff by MS&Co in these cases was approximately $704 million and $276 million, respectively. The complaints raise claims under both the federal securities laws and California law and seek, among other things, to rescind the plaintiff’s purchase of such certificates. On July 29, 2011 and September 8, 2011, the court presiding over both actions sustained defendants’ demurrers with respect to claims brought under the Securities Act of 1933, as amended, and overruled defendants’ demurrers with respect to all other claims. At September 25, 2013, the current unpaid balance of the mortgage pass-through certificates at issue in these cases was approximately $326 million, and the certificates had incurred actual losses of approximately $4 million. Based on currently available information, MS&Co believes it could incur a loss for this action up to the difference between the $326 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co, plus pre- and post-judgment interest, fees and costs. MS&Co may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On July 9, 2010 and February 11, 2011, Cambridge Place Investment Management Inc. filed two separate complaints against MS&Co and other defendants in the Superior Court of the Commonwealth of Massachusetts, both styled Cambridge Place Investment Management Inc. v. Morgan Stanley & Co., Inc., et al. The complaints assert claims on behalf of certain clients of plaintiff’s affiliates and allege that defendants made untrue statements and material omissions in the sale of a number of mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly issued by MS&Co or sold to plaintiff’s affiliates’ clients by MS&Co in the two matters was approximately $263 million. Plaintiff filed amended complaints on October 14, 2011, which raise claims under the Massachusetts Uniform Securities Act and seek, among other things, to rescind the plaintiff’s purchase of such certificates. Defendants’ motions to dismiss the amended complaints, with respect to plaintiff’s standing to bring suit and for failure to state a claim upon which relief can be granted were denied in March and October 2012, respectively. At September 25, 2013, the current unpaid balance of the mortgage pass-through certificates at issue in these cases was approximately $105 million, and the certificates had incurred actual losses of approximately $109 million. Based on currently available information, MS&Co believes it could incur a loss for these actions of up to the difference between the $105 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co, plus pre-and post-judgment interest, fees and costs. MS&Co may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On ~~July 15~~December 23, ~~2010~~2009, ~~China~~the ~~Development~~Federal ~~Industrial~~Home Loan Bank ~~(“CDIB”)~~of Seattle filed a ~~complaint~~ complaint against MS&Co~~, which is styled China Development Industrial Bank v~~. ~~Morgan~~and ~~Stanley~~another &defendant ~~Co. Incorporated et al., which is pending~~ in the ~~Supreme~~Superior Court of the State of ~~New York~~Washington, ~~New~~styled ~~York~~Federal ~~County~~Home ~~(“Supreme~~Loan ~~Court~~Bank of ~~NY,~~Seattle ~~NY County”)~~v. ~~The~~Morgan ~~complaint~~Stanley & ~~relates~~Co. toInc., aet ~~$275~~al. The ~~million~~amended ~~credit~~complaint, ~~default~~filed ~~swap~~on September 28, ~~referencing~~2010, ~~the~~alleges ~~super~~that ~~senior~~defendants ~~portion~~made ofuntrue ~~the~~statements ~~STACK~~and ~~2006-1~~material ~~CDO.~~omissions ~~The~~in ~~complaint~~the ~~asserts~~sale ~~claims~~to ~~for~~plaintiff ~~common~~of ~~law~~certain ~~fraud,~~mortgage ~~fraudulent~~pass-through ~~inducement~~certificates ~~and~~backed ~~fraudulent~~by ~~concealment~~securitization ~~and~~trusts ~~alleges that~~containing ~~MS&Co~~residential ~~misrepresented~~mortgage ~~the~~loans. ~~risks~~The total amount of ~~the~~certificates ~~STACK~~allegedly ~~2006-1~~sold ~~CDO~~ to ~~CDIB,~~plaintiff ~~and~~by ~~that~~ MS&Co. ~~knew~~was ~~that~~approximately ~~the~~$233 ~~assets~~million. The ~~backing~~complaint ~~the~~raises ~~CDO~~claims ~~were~~under ~~of poor quality when it entered into~~ the ~~credit~~Washington ~~default~~State ~~swap~~Securities ~~with~~Act ~~CDIB.~~and ~~The complaint~~ seeks, ~~compensatory~~among ~~damages related~~other things, to rescind the ~~approximately~~plaintiff’s purchase ~~$228~~of ~~million~~such ~~that~~certificates. On ~~CDIB~~October 18, ~~alleges~~2010, itdefendants ~~has~~filed ~~already~~a ~~lost~~motion ~~under~~to dismiss the ~~credit~~action. ~~default~~By ~~swap,~~orders ~~rescission~~dated June of23, ~~CDIB’s~~2011 ~~obligation~~and toJuly 18, ~~pay~~2011, the ancourt ~~additional~~denied ~~$12~~defendants’ ~~million,~~omnibus motion ~~punitive~~to ~~damages,~~dismiss plaintiff’s ~~equitable~~amended ~~relief,~~complaint ~~fees~~ and ~~costs.~~on August ~~On February 28~~15, 2011, the court ~~presiding over this action~~ denied MS&Co.’s individual motion to dismiss the amended complaint. ~~and~~At ~~on March 21~~June 25, ~~2011~~2014, ~~MS&Co~~the ~~appealed~~current ~~that~~unpaid ~~order.~~balance Onof ~~July~~the 7,mortgage ~~2011,~~pass-through ~~the~~certificates ~~appellate~~at issue ~~court~~in ~~affirmed~~these ~~the~~cases ~~lower~~was ~~court’s~~approximately ~~decision~~$55 ~~denying~~million, and the ~~motion to~~certificates ~~dismiss~~had not yet incurred actual losses. Based on currently available information, MS&Co. believes it could incur a loss offor this action up to ~~approximately~~the ~~$240~~difference between the $55 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co., or upon sale, plus pre- and post-judgment interest, fees and costs. MS&Co. may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On ~~October~~ March 15, 2010, the Federal Home Loan Bank of ~~Chicago~~San Francisco filed atwo ~~complaint~~complaints against MS&Co. and other defendants in the ~~Circuit~~Superior Court of the State of ~~Illinois~~California. These actions are styled Federal Home Loan Bank of ~~Chicago~~ San Francisco v. Credit Suisse Securities (USA) LLC, et al., and Federal Home Loan Bank of ~~America~~San Francisco v. ~~Funding~~Deutsche ~~Corporation~~Bank Securities Inc. et al., ~~The~~respectively. ~~complaint~~Amended ~~alleges~~complaints filed on June 10, 2010 allege that defendants made untrue statements and material omissions in connection with the sale to plaintiff of a number of mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The ~~total~~ amount of certificates allegedly sold to plaintiff by MS&Co. in ~~this~~these ~~action~~cases was approximately $~~203~~ 704 million and $276 million, respectively. The ~~complaint~~complaints ~~raises~~raise claims under ~~Illinois~~ both the federal securities laws and California law and ~~seeks~~seek, among other things, to rescind the plaintiff’s purchase of such certificates. On ~~March 24~~August 11, 2011, ~~the~~plaintiff’s ~~court~~claims ~~granted~~brought ~~plaintiff~~under ~~leave~~the toSecurities ~~file~~Act anof 1933, as amended, ~~complaint~~were dismissed with prejudice. The defendants’ ~~motion~~filed toanswers ~~dismiss~~ to the amended ~~complaint~~complaints ~~was~~on ~~denied~~October 7, on2011. ~~September~~On 19February 9, 2012, defendants’ demurrers with respect to all other claims were overruled. On December 20, 2013, plaintiff’s negligent misrepresentation claims were dismissed with prejudice. A bellwether trial is currently scheduled to begin in January 2015. MS&Co. ~~filed~~is ~~its~~not ~~answer~~a ondefendant ~~December~~in 21connection with the securitizations at issue in that trial. On May 23, ~~2012~~2014, plaintiff and the defendants in the bellwether trial filed motions for summary adjudication. At ~~September~~ June 25, ~~2013~~2014, the current unpaid balance of the mortgage pass-through certificates at issue in ~~this action~~these cases was approximately $98301 million, and ~~certain~~the certificates had incurred actual losses of approximately $16 million. Based on currently available information, MS&Co. believes it could incur a loss infor this action up to the difference between the $98301 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co., or upon sale, plus pre- and post-judgment interest, fees and costs. MS&Co. may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On July 18, 2011, the Western and Southern Life Insurance Company and certain affiliated companies filed a complaint against MS&Co and other defendants in the Court of Common Pleas in Ohio, styled Western and Southern Life Insurance Company, et al. v. Morgan Stanley Mortgage Capital Inc., et al. An amended complaint was filed on April 2, 2012 and alleges that defendants made untrue statements and material omissions in the sale to plaintiffs of certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The amount of the certificates allegedly sold to plaintiffs by MS&Co was approximately $153 million. The amended complaint raises claims under the Ohio Securities Act, federal securities laws, and common law and seeks, among other things, to rescind the plaintiffs’ purchases of such certificates. On May 21, 2012, MS&Co filed a motion to dismiss the amended complaint, which motion was denied on August 3, 2012. The court has set a trial date in May 2015. At September 25, 2013, the current unpaid balance of the mortgage pass-through certificates at issue in this action was approximately $119 million, and the certificates had incurred actual losses of approximately $1 million. Based on currently available information, MS&Co believes it could incur a loss in this action up to the difference between the $119 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co, plus post-judgment interest, fees and costs. MS&Co may be entitled to an offset for interest received by the plaintiff prior to a judgment.

On September 2, 2011, the Federal Housing Finance Agency (“FHFA”), as conservator for Fannie Mae and Freddie Mac, filed 17 complaints against numerous financial services companies, including MS&Co. A

On October 15, 2010, the Federal Home Loan Bank of Chicago filed a complaint against MS&Co. and other defendants ~~was~~in the Circuit ~~filed~~Court inof the ~~Supreme~~State ~~Court~~ of ~~NY,~~Illinois styled Federal ~~Housing~~Home ~~Finance~~Loan ~~Agency,~~Bank ~~as Conservator~~ of Chicago v. Bank ~~Morgan~~of ~~Stanley~~America Funding Corporation et al. The complaint alleges that defendants made untrue statements and material omissions in ~~connection with~~ the sale to ~~Fannie~~plaintiff ~~Mae~~of a ~~and~~number ~~Freddie Mac~~ of ~~residential~~ mortgage pass-through certificates ~~with~~backed anby ~~original~~securitization ~~unpaid~~trusts ~~balance~~containing residential mortgage loans. The total amount of certificates allegedly sold to plaintiff by MS&Co. in this action was approximately $11203 ~~billion~~million. The complaint raises claims under Illinois ~~federal and state securities laws and common~~ law and seeks, among other things, to ~~rescission~~rescind the ~~and~~plaintiff’s ~~compensatory~~purchase ~~and~~of ~~punitive damages~~such certificates. On ~~September 26~~March 24, 2011, ~~defendants removed~~ the ~~action~~court togranted ~~the~~plaintiff ~~United~~leave ~~States~~to ~~District~~file ~~Court for~~an ~~the~~amended ~~Southern District of New York~~complaint. ~~On July 13, 2012,~~ MS& Co. filed aits ~~motion~~answer toon ~~dismiss the complaint~~December 21, ~~which~~2012. ~~motion~~On ~~was~~December 13, ~~denied~~2013, inthe ~~large~~court ~~part~~entered onan ~~November~~order ~~19,~~dismissing ~~2012.~~all ~~Trial~~claims isrelated ~~currently scheduled~~ to ~~begin~~one of inthe ~~January~~securitizations ~~2015~~at issue. At ~~September~~ June 25, ~~2013~~2014, the current unpaid balance of the mortgage pass-through certificates at issue in this action was approximately $~~2.8 billion~~56 million, and the certificates had not yet incurred actual losses ~~of approximately $68 million~~. Based on currently available information, MS&Co. believes it could incur a loss in this action up to the difference between the $~~2.8~~56 ~~billion~~million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co., or upon sale, plus pre- and post-judgment interest, fees and costs. MS&Co. may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On ~~April~~ October 25, ~~2012~~2010, ~~Metropolitan Life Insurance Company and certain affiliates filed a complaint against~~ MS&Co., ~~and~~ certain affiliates in ~~the~~and ~~Supreme~~Pinnacle ~~Court~~Performance ofLimited, NYa ~~styled~~special ~~Metropolitan~~purpose ~~Life Insurance Company~~vehicle, etwere named ~~al.~~as v.defendants ~~Morgan~~in ~~Stanley,~~a etpurported ~~al.~~class Anaction ~~amended~~related ~~complaint~~to ~~was~~securities ~~filed~~issued onby ~~June~~the ~~29,~~special ~~2012~~purpose ~~and~~vehicle ~~alleges~~in ~~that~~Singapore, ~~defendants~~commonly ~~made~~referred ~~untrue~~to ~~statements~~as ~~and~~Pinnacle ~~material~~Notes. ~~omissions~~The ~~in the~~case ~~sale~~is tostyled ~~plaintiffs~~Ge ofDandong, ~~certain~~et ~~mortgage~~al. ~~pass-through~~v. ~~certificates~~Pinnacle ~~backed~~Performance byLtd., ~~securitization~~et ~~trusts~~al. ~~containing~~and is ~~residential~~pending ~~mortgage~~in ~~loans~~the SDNY. ~~The~~An ~~total~~amended ~~amount~~complaint ofwas ~~certificates~~filed ~~allegedly~~on ~~sponsored~~October 22, ~~underwritten~~2012. ~~and/or~~The ~~sold~~court bydenied ~~MS&Co.~~defendants’ ~~was approximately~~motion ~~$758~~to ~~million.~~dismiss ~~The~~the amended complaint ~~raises~~on ~~common law claims of fraud~~August 22, ~~fraudulent~~2013 ~~inducement,~~ and ~~aiding~~granted ~~and~~class ~~abetting~~certification ~~fraud~~on ~~and seeks~~October 17, ~~among~~2013. ~~other things~~On October 30, ~~rescission~~2013, ~~compensatory~~defendants ~~and/or~~filed ~~rescissionary~~a ~~damages,~~petition asfor ~~well~~permission asto ~~punitive damages,~~appeal ~~associated~~the ~~with plaintiffs~~court’s ~~purchases~~decision ofgranting ~~such~~class ~~certificates~~certification. On ~~September 21~~January 31, ~~2012~~2014, ~~MS&Co~~plaintiffs filed a ~~motion~~second ~~to dismiss the~~ amended complaint,. ~~which~~The ~~was~~second ~~granted~~amended incomplaint ~~part~~alleges ~~and~~that ~~denied~~the defendants engaged in ~~part on July 16, 2013. Defendants filed~~ a ~~notice~~fraudulent ~~of appeal~~scheme ofto ~~that~~defraud ~~decision~~investors onby ~~August~~structuring ~~16, 2013. Following that decision,~~ the ~~total~~Pinnacle ~~amount~~Notes ofto ~~certificates~~fail ~~allegedly sponsored, underwritten~~ and~~/or~~ ~~sold~~benefited bysubsequently ~~MS&Co~~from ~~was~~the ~~approximately~~securities’ ~~$656 million~~failure. AtIn ~~September 25~~addition, ~~2013,~~ the ~~current~~second ~~unpaid~~amended ~~balance~~complaint ofalleges that the securities’ ~~mortgage~~offering ~~pass-through~~materials ~~certificates~~contained ~~remaining~~material atmisstatements ~~issue~~or inomissions ~~this~~regarding ~~case~~the ~~was~~securities’ ~~approximately~~underlying ~~$324~~assets ~~million,~~ and the ~~certificates~~alleged ~~incurred~~conflicts ~~actual losses~~ of ~~approximately~~interest ~~$35~~between ~~million. Based on currently available information, MS&Co believes it could incur a loss up to~~ the ~~difference~~defendants ~~between~~and the ~~$324~~investors. ~~million~~The ~~unpaid~~second ~~balance~~amended ofcomplaint ~~these~~asserts ~~certificates~~common ~~(plus~~law ~~any~~claims of ~~losses~~fraud, ~~incurred)~~aiding and ~~their~~abetting ~~fair~~fraud, ~~market~~fraudulent ~~value~~inducement, ataiding ~~the~~and ~~time~~abetting offraudulent ainducement, ~~judgment~~and ~~against~~breach ~~MS&Co,~~of ~~plus~~the ~~pre-~~implied ~~and~~covenant ~~post-judgment~~of ~~interest,~~good ~~fees~~faith and ~~costs~~fair dealing. ~~MS&Co~~ ~~may~~On beJuly 17, ~~entitled~~2014, tothe beparties ~~indemnified~~reached ~~for~~an ~~some~~agreement ofin ~~these~~principle ~~losses and~~ to ansettle the ~~offset~~litigation. ~~for~~The ~~interest~~settlement ~~received~~is bysubject ~~the plaintiff prior~~ to acourt ~~judgment~~approval.

On April 25 20, ~~2012~~2011, ~~The~~the ~~Prudential~~Federal ~~Insurance~~Home ~~Company~~Loan Bank of ~~America and certain affiliates~~ Boston filed a complaint against MS&Co. and ~~certain~~other ~~affiliates~~defendants in the Superior Court of the ~~State~~Commonwealth of ~~New~~Massachusetts ~~Jersey~~ styled ~~The~~ ~~Prudential~~Federal ~~Insurance~~Home ~~Company~~Loan Bank of ~~America,~~Boston ~~et al.~~ v. ~~Morgan~~Ally ~~Stanley~~Financial, Inc. F/K/A GMAC LLC et al. An ~~The~~amended complaint was filed on June 19, 2012 and alleges that defendants made untrue statements and material omissions in ~~connection with~~ the sale to ~~plaintiffs~~plaintiff of certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly ~~sponsored,~~issued ~~underwritten~~by ~~and/~~MS&Co. or sold to plaintiff by MS&Co. iswas approximately $1385 ~~billion~~million. The amended complaint raises claims ~~under~~ under the ~~New~~Massachusetts ~~Jersey~~ Uniform Securities ~~Law~~Act, asthe ~~well~~Massachusetts asConsumer Protection ~~common~~Act ~~law claims of negligent misrepresentation, fraud~~ and ~~tortious~~common ~~interference with contract~~ law and seeks, among other things, ~~compensatory~~to ~~damages,~~rescind ~~punitive~~the ~~damages, rescission and rescissionary damages associated with plaintiffs~~plaintiff’s ~~purchases~~purchase of such certificates. On ~~October 16~~May 26, ~~2012~~2011, ~~plaintiffs~~defendants ~~filed~~removed anthe ~~amended~~case ~~complaint~~to ~~which,~~the ~~among~~United ~~other~~States ~~things,~~District ~~increases~~Court for the ~~total~~District ~~amount~~ of ~~the~~Massachusetts. On ~~certificates~~October 11, at2012, ~~issue~~defendants byfiled ~~approximately~~motions ~~$80 million~~to dismiss the amended complaint, ~~adds~~which ~~causes~~was ofgranted ~~action~~in ~~for~~part ~~fraudulent~~and ~~inducement,~~denied ~~equitable~~in ~~fraud~~part on September 30, ~~aiding~~2013. ~~and~~The ~~abetting~~defendants ~~fraud,~~filed ~~and~~an ~~violations~~answer ofto the ~~New~~amended ~~Jersey~~complaint ~~RICO~~on ~~statute~~December 16, ~~and~~2013. ~~includes~~On July 16, a2014, ~~claim~~plaintiff ~~for~~voluntarily ~~treble~~dismissed ~~damages~~its claims against MS&Co. Onwith ~~March~~respect ~~15,~~to ~~2013,~~one ~~defendants’~~of ~~motion~~the tosecuritizations ~~dismiss~~at ~~was denied~~issue. At ~~September~~ June 25, ~~2013~~2014, the current unpaid balance of the mortgage pass-through certificates at issue in this action was approximately $~~663~~ 67 million, and the certificates had not yet incurred actual losses. Based on currently available information, MS&Co. believes it could incur a loss in this action up to the difference between the $67 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co., or upon sale, plus pre- and post-judgment interest, fees and costs. MS&Co. may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On July 5, 2011, Allstate Insurance Company and certain of its affiliated entities filed a complaint against MS&Co. in the Supreme Court of the State of New York, New York County (“Supreme Court of NY, NY County”), styled Allstate Insurance Company, et al. v. Morgan Stanley, et al. An amended complaint was filed on September 9, 2011 and alleges that defendants made untrue statements and material omissions in the sale to plaintiff of certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly issued and/or sold to plaintiffs by MS&Co. was approximately $104 million. The complaint raises common law claims of fraud, fraudulent inducement, aiding and abetting fraud and negligent misrepresentation and seeks, among other things, compensatory and/or recessionary damages associated with plaintiffs’ purchases of such certificates. On March 15, 2013, the court denied in substantial part the defendants’ motion to dismiss the amended complaint, which order MS&Co. appealed on April 11, 2013. On May 3, 2013, MS&Co. filed its answer to the amended complaint. At June 25, 2014, the current unpaid balance of the mortgage pass-through certificates at issue in this action was approximately $99 million, and the certificates had not yet incurred actual losses. Based on currently available information, MS&Co. believes it could incur a loss in this action up to the difference between the $~~663~~99 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co., or upon sale, plus pre- and post-judgment interest, fees and costs. MS&Co. may be entitled to ~~be indemnified for some of these losses and to~~ an offset for interest received by the plaintiff prior to a judgment.

~~Additional~~On ~~lawsuits~~July 18, ~~containing~~2011, ~~claims~~the ~~similar~~Western toand ~~those~~Southern ~~described~~Life ~~above~~Insurance ~~may~~Company beand certain affiliated companies filed ina ~~the~~complaint against ~~future~~MS&Co. Inand other defendants in the ~~course~~Court of ~~its~~Common ~~business~~Pleas in Ohio, styled Western and Southern Life Insurance Company, et al. v. Morgan Stanley Mortgage Capital Inc., et al. An amended complaint was filed on April 2, 2012 and alleges that defendants made untrue statements and material omissions in the sale to plaintiffs of certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The amount of the certificates allegedly sold to plaintiffs by MS&Co. was approximately $153 million. The amended complaint raises claims under the Ohio Securities Act, asfederal asecurities ~~major~~laws, ~~futures~~and ~~commission~~common ~~merchant~~law and ~~broker-dealer~~seeks, among other things, to rescind the plaintiffs’ purchases of such certificates. MS&Co. filed its answer on August 17, 2012. Trial is ~~party~~currently scheduled to ~~various~~begin ~~civil~~in ~~actions~~July 2015. At June 25, ~~claims~~2014, ~~and~~the ~~routine~~current ~~regulatory~~unpaid ~~investigations~~balance ~~and~~of ~~proceedings~~the ~~that~~mortgage pass-through certificates at issue in this action was approximately $113 million, and the ~~General~~certificates had incurred ~~Partner~~actual losses of approximately $2 million. Based on currently available information, MS&Co. believes doit ~~not~~could ~~have~~incur a ~~material~~loss ~~effect~~in onthis action up to the ~~business~~difference between the $113 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co., or upon sale, plus post-judgment interest, fees and costs. MS&Co. may ~~establish~~be ~~reserves~~entitled ~~from~~to ~~time~~an tooffset ~~time~~for ininterest ~~connections~~received ~~with~~by ~~such~~the ~~actions~~plaintiff prior to a judgment.

~~Item~~On November 1A4, 2011, the Federal Deposit Insurance Corporation (“FDIC”), as receiver for Franklin Bank S.S.B., ~~Risk~~filed ~~Factors~~two complaints against MS&Co. in the District Court of the State of Texas. Each was styled Federal Deposit Insurance Corporation, as Receiver for Franklin Bank S.S.B. v. Morgan Stanley & Company LLC F/K/A Morgan Stanley & Co. Inc. and alleged that MS&Co. made untrue statements and material omissions in connection with the sale to plaintiff of mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The amount of certificates allegedly underwritten and sold to the plaintiff by MS&Co. in these cases was approximately $67 million and $35 million, respectively. The complaints each raised claims under both federal securities law and the Texas Securities Act and each seeks, among other things, compensatory damages associated with plaintiff’s purchase of such certificates. On March 20, 2012, MS&Co. filed answers to the complaints in both cases. On June 7, 2012, the two cases were consolidated. On January 10, 2013, MS&Co. filed a motion for summary judgment and special exceptions with respect to plaintiff’s claims. On February 6, 2013, the FDIC filed an amended consolidated complaint. On February 25, 2013, MS&Co. filed a motion for summary judgment and special exceptions, which motion was denied in substantial part on April 26, 2013. On May 3, 2013, the FDIC filed a second amended consolidated complaint. Trial is currently scheduled to begin in November 2014. At June 25, 2014, the current unpaid balance of the mortgage pass-through certificates at issue in this action was approximately $46 million, and the certificates had incurred actual losses of approximately $5 million. Based on currently available information, MS&Co. believes it could incur a loss in this action up to the difference between the $46 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co., plus pre- and post-judgment interest, fees and costs. MS&Co. may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

~~There~~On ~~have~~April 25, ~~been~~2012, noThe ~~material~~Prudential ~~changes~~Insurance toCompany of America and certain affiliates filed a complaint against MS&Co. and certain affiliates in the ~~risk~~Superior ~~factors~~Court ~~set~~of ~~forth~~the ~~under~~State ~~Part~~of 1New Jersey styled The Prudential Insurance Company of America, ~~Item~~et 1Aal. ~~“Risk~~v. ~~Factors”~~Morgan Stanley, et al. The complaint alleges that defendants made untrue statements and material omissions in connection with the ~~Partnership’s~~ ~~Annual~~sale ~~Report~~to onplaintiffs ~~Form~~of 10certain mortgage pass-Kthrough ~~for~~certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly sponsored, underwritten and/or sold by MS&Co. is approximately $1 billion. The complaint raises claims under the ~~fiscal~~New ~~year~~Jersey ~~ended~~Uniform ~~December~~Securities 31Law, ~~2012~~as well as common law claims of negligent misrepresentation, fraud and tortious ~~under~~interference ~~Part~~with IIcontract and seeks, ~~Item~~among 1Aother things, compensatory damages, punitive damages, rescission and rescissionary damages associated with plaintiffs’ purchases of such certificates. ~~“Risk~~On ~~Factors”~~October 16, in2012, plaintiffs filed an amended complaint which, among other things, increases the ~~Partnership’s~~total ~~Quarterly~~amount ~~Reports~~of onthe ~~Form~~certificates 10at -issue Qby approximately $80 million, adds causes of action for fraudulent inducement, equitable fraud, aiding and abetting fraud, and violations of the ~~quarters~~New ~~ended~~Jersey Racketeer Influenced and Corrupt Organizations Act, and includes a claim for treble damages. On March 15, 312013, the court denied the defendants’ motion to dismiss the amended complaint. On April 26, 2013, ~~and~~the defendants filed an answer to the amended complaint. On June 5, 2014, the defendants filed a renewed motion to dismiss the amended complaint. At June 25, 2014, the current unpaid balance of the mortgage pass-through certificates at issue 30in this action was approximately $623 million, ~~2013~~and the certificates had not yet incurred actual losses. Based on currently available information, MS&Co. believes it could incur a loss in this action up to the difference between the $623 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co., or upon sale, plus pre- and post-judgment interest, fees and costs. MS&Co. may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On February 14, 2013, Bank Hapoalim B.M. filed a complaint against MS&Co. and certain affiliates in the Supreme Court of NY, styled Bank Hapoalim B.M. v. Morgan Stanley et al. The complaint alleges that defendants made material misrepresentations and omissions in the sale to plaintiff of certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly sponsored, underwritten and/or sold by MS&Co. to plaintiff was approximately $141 million. The complaint alleges causes of action against MS&Co. for common law fraud, fraudulent concealment, aiding and abetting fraud, and negligent misrepresentation, and seeks, among other things, compensatory and punitive damages. On April 22, 2014, the defendants’ motion to dismiss was denied in substantial part. At June 25, 2014, the current unpaid balance of the mortgage pass-through certificates at issue in this action was approximately $75 million, and the certificates had not yet incurred actual losses. Based on currently available information, MS&Co. believes it could incur a loss in this action up to the difference between the $75 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co., or upon sale, plus pre- and post-judgment interest, fees and costs.

On May 3, 2013, plaintiffs in Deutsche Zentral-Genossenschaftsbank AG et al. v. Morgan Stanley et al. filed a complaint against MS&Co., certain affiliates, and other defendants in the Supreme Court of NY. The complaint alleges that defendants made material misrepresentations and omissions in the sale to plaintiffs of certain mortgage pass-through certificates backed by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly sponsored, underwritten and/or sold by MS&Co. to plaintiff was approximately $694 million. The complaint alleges causes of action against MS&Co. for common law fraud, fraudulent concealment, aiding and abetting fraud, negligent misrepresentation, and rescission and seeks, among other things, compensatory and punitive damages. On June 10, 2014, the court denied defendants’ motion to dismiss. On July 10, 2014, MS&Co. filed a renewed motion to dismiss with respect to two certificates at issue in the case. At June 25, 2014, the current unpaid balance of the mortgage pass-through certificates at issue in this action was approximately $284 million, and the certificates had incurred actual losses of approximately $52 million. Based on currently available information, MS&Co. believes it could incur a loss in this action up to the difference between the $284 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co., or upon sale, plus pre- and post-judgment interest, fees and costs. MS&Co. may be entitled to be indemnified for some of these losses.

On September 23, 2013, plaintiffs in National Credit Union Administration Board v. Morgan Stanley & Co. Inc., et al. filed a complaint against MS&Co. and certain affiliates in the SDNY. The complaint alleges that defendants made untrue statements of material fact or omitted to state material facts in the sale to plaintiffs of certain mortgage pass-through certificates issued by securitization trusts containing residential mortgage loans. The total amount of certificates allegedly sponsored, underwritten and/or sold by MS&Co. to plaintiffs was approximately $417 million. The complaint alleges causes of action against MS&Co. for violations of Section 11 and Section 12(a)(2) of the Securities Act of 1933, as amended, violations of the Texas Securities Act, and violations of the Illinois Securities Law of 1953 and seeks, among other things, rescissory and compensatory damages. The defendants filed a motion to dismiss the complaint on November 13, 2013. On January 22, 2014, the court granted defendants’ motion to dismiss with respect to claims arising under the Securities Act of 1933, as amended, and denied defendants’ motion to dismiss with respect to claims arising under Texas Securities Act and the Illinois Securities Law of 1953. On April 28, 2014, the court granted in part and denied in part plaintiff’s motion to strike certain of the defendants’ affirmative defenses. On July 11, 2014, the defendants filed a motion for reconsideration of the court’s order on the motion to dismiss the complaint or, in the alternative, for certification of interlocutory appeal and a stay of all proceedings. At June 25, 2014, the current unpaid balance of the mortgage pass-through certificates at issue in this action was approximately $215 million, and the certificates had incurred actual losses of approximately $26 million. Based on currently available information, MS&Co. believes it could incur a loss in this action up to the difference between the $215 million unpaid balance of these certificates (plus any losses incurred) and their fair market value at the time of a judgment against MS&Co., or upon sale, plus pre- and post-judgment interest, fees and costs. MS&Co. may be entitled to be indemnified for some of these losses and to an offset for interest received by the plaintiff prior to a judgment.

On July 23, 2014, the SEC approved a settlement by MS&Co. and certain affiliates to resolve an investigation related to certain subprime residential mortgage-backed security transactions sponsored and underwritten by those entities in 2007. Pursuant to the settlement, MS&Co. and certain affiliates were charged with violating Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, as amended, agreed to pay disgorgement and penalties in an amount of $275 million and neither admitted nor denied the SEC’s findings.

Additional lawsuits containing claims similar to those described above may be filed in the future. In the course of its business, MS&Co., as a major futures commission merchant, is party to various civil actions, claims and routine regulatory investigations and proceedings that the General Partner believes do not have a material effect on the business of MS&Co. MS&Co. may establish reserves from time to time in connections with such actions.

Item 1A. Risk Factors

There have been no material changes to the risk factors set forth under Part 1, Item 1A. “Risk Factors” in the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and under Part II, Item 1A. “Risk Factors” in the Partnership’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.

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

The Partnership no longer offers Redeemable Units for sale.

The following chart sets forth the purchases of Redeemable Units by the Partnership.

Period	(a) Total Number of Shares (or Units) Purchased*		(b) Average Price Paid per Share (or Unit)**		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
July 1, 2013 – July 31, 2013		70.5640	$	1,368.15		N/A		N/A
April 1, 2014 – April 30, 2014		351.9040	$	1,316.35		N/A		N/A
August 1, 2013 – August 31, 2013		78.8500	$	1,347.22		N/A		N/A
May 1, 2014 – May 31, 2014		145.3350	$	1,350.13		N/A		N/A
September 1, 2013 – September 30, 2013		59.6570	$	1,361.54		N/A		N/A
June 1, 2014 – June 30, 2014		164.5750	$	1,325.30		N/A		N/A
		209.0710	$	1,358.37
		661.8140	$	1,325.99

Generally, limited partners are permitted to redeem their Redeemable Units as of the end of each month on three business days’ notice to the General Partner. Under certain circumstances, the General Partner can compel redemption, although to date the General Partner has not exercised this right. Purchases of Redeemable Units by the Partnership reflected in the chart above were made in the ordinary course of the Partnership’s business in connection with effecting redemptions for limited partners.

**	Redemptions of Redeemable Units are effected as of the last day of each month at the net asset value per Redeemable Unit as of that day. No fee will be charged for redemptions.

Item 3. Defaults Upon Senior Securities — None.

Item 4. Mine Safety Disclosures — Not Applicable.

Item 5. Other Information

~~Eckhardt~~Effective October ~~Master~~1, ~~entered~~2014, inthe amonthly ~~futures~~ongoing ~~account~~selling ~~agreement~~agent ~~with~~fee ~~MS&Co~~will ~~and~~be ~~commenced~~reduced ~~trading~~from ~~through~~ an ~~account~~annual atrate ~~MS&Co~~of on3.00% orto ~~about October~~an 4,annual ~~2013.~~rate of 2.00%.

~~Effective~~37 October 1, 2013, the Partnership ceased paying a brokerage fee to CGM. Also effective October 1, 2013, the Partnership entered into a selling agreement with Morgan Stanley Smith Barney LLC (d/b/a Morgan Stanley Wealth Management). Pursuant to the selling agreement, Morgan Stanley Wealth Management will receive a selling agent fee equal to 1/2 of 1% (6% per year) of the Partnership’s month-end net assets. The selling agent fee received by Morgan Stanley Wealth Management will be shared with the properly registered/licensed financial advisers of Morgan Stanley Wealth Management who sold redeemable units in the Partnership.

Item 6. Exhibits

Exhibit

3.1(a)		Certificate of Limited Partnership dated May 10, 1994 (filed as Exhibit 3.1(a) to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 filed on November 16, 2009 and incorporated herein by reference).
(b)		Certificate of Amendment of the Certificate of Limited Partnership dated July 31, 1995 (filed as Exhibit 3.1(b) to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 filed on November 16, 2009 and incorporated herein by reference).
(c)		Certificate of Amendment of the Certificate of Limited Partnership dated October 1, 1999 (filed as Exhibit 3.1(c) to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 filed on November 16, 2009 and incorporated herein by reference).
(d)		Certificate of Change of the Certificate of Limited Partnership effective January 31, 2000 (filed as Exhibit 3.1(d) to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 filed on November 16, 2009 and incorporated herein by reference).
(e)		Certificate of Amendment of the Certificate of Limited Partnership dated May 21, 2003 (filed as Exhibit 3.1(e) to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 filed on November 16, 2009 and incorporated herein by reference).
(f)		Certificate of Amendment of the Certificate of Limited Partnership dated September 21, 2005 (filed as Exhibit 3.1(f) to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 filed on November 16, 2009 and incorporated herein by reference).
(g)		Certificate of Amendment of the Certificate of Limited Partnership dated September 19, 2008 (filed as Exhibit 3.1(g) to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 filed on November 16, 2009 and incorporated herein by reference).
(h)		Certificate of Amendment of the Certificate of Limited Partnership dated September 28, 2009 (filed as Exhibit 99.1 to the Current Report on Form 8-K filed on September 30, 2009 and incorporated herein by reference).
(i)		Certificate of Amendment of the Certificate of Limited Partnership dated April 12, 2010 (filed as Exhibit 3.1(i) to the Current Report on Form 8-K/A filed on April 14, 2010 and incorporated herein by reference).
(j)		Certificate of Amendment of the Certificate of Limited Partnership dated June 30, 2010 (filed as Exhibit 3.1 to the Current Report on form 8-K filed on July 2, 2010 and incorporated herein by reference).
(k)		Certificate of Amendment of the Certificate of Limited Partnership dated September 2, 2011 (filed as Exhibit 3.1 to the Current Report on Form 8-K filed on September 7, 2011 and incorporated herein by reference).
(1)		Certificate of Amendment of the Certificate of Limited Partnership dated August 7, 2013 (filed as Exhibit 3.1(Ll) to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 filed on August 14, 2013 and incorporated herein by reference).
3.2		Limited Partnership Agreement (attached as Exhibit A to the Registration Statement on Form S-1 filed on May 29, 1996 and incorporated herein by reference).
(m)		Certificate of Amendment of the Certified of Limited Partnership dated March 26, 2014 (filed as Exhibit 3.1(m) to the Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed on March 28, 2014 and incorporated herein by reference).
10.1(a)		Customer Agreement between the Partnership and Smith Barney (filed as Exhibit 10.1 to the Registration Statement on Form S-1 filed on May 29, 1996 and incorporated herein by reference).
(b)		Commodity Futures Customer Agreement between the Partnership and MS & Co., effective September 4, 2013 (filed herewith).
10.2		Form of Subscription Agreement (attached as Exhibit B to the Registration Statement on Form S-1 filed on May 29, 1996 and incorporated herein by reference).
10.3		Form of Escrow Agreement (filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 filed on November 16, 2009 and incorporated herein by reference).
10.4(a)		Management Agreement among the Partnership, the General Partner and Willowbridge (filed as Exhibit 10.7 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1997 filed on March 30, 1998 and incorporated herein by reference).

3638

(b)		Letter extending Management Agreement with Willowbridge from June 30, 2012 through June 30, 2013 (filed as Exhibit 10.4(b) to the Annual Report on Form 10-K for the fiscal year ended December 31, 2012 filed on March 27, 2013 and incorporated herein by reference).
3.2		Limited Partnership Agreement (attached as Exhibit A to the Registration Statement on Form S-1 filed on May 29, 1996 and incorporated herein by reference).
10.1(a)		Customer Agreement between the Partnership and Smith Barney (filed as Exhibit 10.1 to the Registration Statement on Form S-1 filed on May 29, 1996 and incorporated herein by reference).
(b)		Commodity Futures Customer Agreement between the Partnership and MS & Co., effective September 4, 2013 (filed as Exhibit 10.1(b) to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 filed on November 14, 2013 and incorporated herein by reference).
10.2		Form of Subscription Agreement (attached as Exhibit B to the Registration Statement on Form S-1 filed on May 29, 1996 and incorporated herein by reference).
10.3		Form of Escrow Agreement (filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 filed on November 16, 2009 and incorporated herein by reference).
10.4(a)		Management Agreement among the Partnership, the General Partner and Willowbridge Associates, Inc. (filed as Exhibit 10.7 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1997 filed on March 30, 1998 and incorporated herein by reference).
(b)		Letter extending Management Agreement with Willowbridge Associates Inc. from June 30, 2013 through June 30, 2014 (filed as Exhibit 10.4(b) to the Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed on March 28, 2014 and incorporated herein by reference).
(c)		Amendment to the Management Agreement dated January 1, 2013, by and among the Partnership, Ceres Managed Futures LLC and Willowbridge Associates Inc. (filed as an exhibit to the Current Report on Form 8-K filed on January 7, 2013 and incorporated herein by reference).
10.6(a)		Management Agreement among the Partnership, the General Partner and Graham Capital Management L.P. (filed as Exhibit 10.21 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2000 filed on March 29, 2001 and incorporated herein by reference).
(b)		Letter extending Management Agreement with Graham Capital Management L.P. from June 30, ~~2012~~2013 through June 30, ~~2013~~2014 (filed as Exhibit 10.6(b) to the Annual Report on Form 10-K for the fiscal year ended December 31, ~~2012~~2013 filed on March 2728, ~~2013~~2014 and incorporated herein by reference).
10.7(a)		Amended and Restated Management Agreement among the Partnership, the General Partner and CFM (filed as Exhibit 10.7A to the Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed on March 30, 2012 and incorporated herein by reference).
(c)		Amendment No. 1 to the Management Agreement among the Partnership, the General Partner and Graham Capital Management, L.P. effective April 1, 2014 (filed as Exhibit 10.6(c) to the Quarterly Report on Form 10-Q for the Quarterly period ended March 31, 2014 filed on May 14, 2014 and incorporated herein by reference).
(b)		Letter extending Management Agreement with CFM from June 30, 2012 through June 30, 2013 (filed as Exhibit 10.7(b) to the Annual Report on Form 10-K for the fiscal year ended December 31, 2012 filed on March 27, 2013 and incorporated herein by reference).
10.8(a)		Management Agreement among the Partnership, the General Partner and Eckhardt Trading Company (filed as Exhibit 10 to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008 filed on August 14, 2008 and incorporated herein by reference).
10.8(a)		Management Agreement among the Partnership, the General Partner and Eckhardt (filed as Exhibit 10 to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008 filed on August 14, 2008 and incorporated herein by reference).
(b)		Letter extending Management Agreement with Eckhardt Trading Company from June 30, 2013 through June 30, 2014 (filed as Exhibit 10.8(b) to the Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed on March 28, 2014 and incorporated herein by reference).
(b)		Letter extending Management Agreement with Eckhardt Trading Company from June 30, 2012 through June 30, 2013 (filed as Exhibit 10.8(b) to the Annual Report on Form 10-K for the fiscal year ended December 31, 2012 filed on March 27, 2013 and incorporated herein by reference).
(c)		Amendment No. 1 to the Management Agreement among the Partnership, the General Partner and Eckhardt Trading Company dated July 25, 2014 and effective July 1, 2014 (filed herewith).
10.9(a)		Management Agreement among the Partnership, the General Partner and SandRidge Capital, L.P. (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on June 2, 2009 and incorporated herein by reference).
(b)		Letter extending Management Agreement with SandRidge from June 30, 2012 through June 30, 2013 (filed as Exhibit 10.9(b) to the Annual Report on Form 10-K for the fiscal year ended December 31, 2012 filed on March 27, 2013 and incorporated herein by reference).
10.10(a)		Alternative Investment Selling Agreement between the Partnership, the General Partner and Morgan Stanley Wealth Management, effective October 1, 2013 (filed as Exhibit 10.10 to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 filed on November 14, 2013 and incorporated herein by reference).
10.10		Alternative Investment Selling Agreement between the Partnership, the General Partner and Morgan Stanley Wealth Management, effective October 1, 2013 (filed herewith).
(b)		Letter from the General Partner amending Alternative Investment Selling Agent Agreement between the Partnership, the General Partner and Morgan Stanley Wealth Management, effective April 1, 2014 (filed as Exhibit 10.10(b) to the Quarterly Report on Form 10-Q for the Quarterly period ended March 31, 2014 filed on May 14, 2014 and incorporated herein by reference).
31.1		Rule 13a-14(a)/15d-14(a) Certification (Certification of President and Director) (filed herewith).
(c)		Letter from the General Partner amending Alternative Investment Selling Agent Agreement between the Partnership, the General Partner and Morgan Stanley Wealth Management dated as of August 8, 2014 and effective October 1, 2014 (filed herewith).
31.2		Rule 13a-14(a)/15d-14(a) Certification (Certification of Chief Financial Officer) (filed herewith).
32.1		Section 1350 Certification (Certification of President and Director) (filed herewith).
32.2		Section 1350 Certification (Certification of Chief Financial Officer) (filed herewith).
101. INS		XBRL Instance Document.
101. SCH		XBRL Taxonomy Extension Schema Document.
101. CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101. LAB		XBRL Taxonomy Extension Label Linkbase Document.
101. PRE		XBRL Taxonomy Extension Presentation Linkbase Document.
101. DEF		XBRL Taxonomy Extension Definition Linkbase Document.

3739



31.1		Rule 13a-14(a)/15d-14(a) Certification (Certification of President and Director) (filed herewith).

31.2		Rule 13a-14(a)/15d-14(a) Certification (Certification of Chief Financial Officer) (filed herewith).

32.1		Section 1350 Certification (Certification of President and Director) (filed herewith).

32.2		Section 1350 Certification (Certification of Chief Financial Officer) (filed herewith).

101. INS		XBRL Instance Document.

101. SCH		XBRL Taxonomy Extension Schema Document.

101. CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101. LAB		XBRL Taxonomy Extension Label Linkbase Document.

101. PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

101. DEF		XBRL Taxonomy Extension Definition Linkbase Document.

SIGNATURES

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

Diversified Multi-Advisor Futures Fund L.P. II

By:		Ceres Managed Futures LLC
		(General Partner)
By:		/s/ Alper Daglioglu
		Alper Daglioglu
		President and Director
Date: November 14, 2013
Date: August 13, 2014
By:		/s/ ~~Alice~~Steven ~~Lonero~~Ross
		Alice Lonero
		Steven Ross
		Chief Financial Officer
		(Principal Accounting Officer)
Date: November 14, 2013
Date: August 13, 2014

Table of Contents

Table of Contents

Table of Contents

Filing Compare · DIVERSIFIED MULTI-ADVISOR FUTURES FUND L.P. II