Polaris Futures Fund L.P. - FORM 10-Q

Attached files

file	filename
EX-32.01 - EXHIBIT - Polaris Futures Fund L.P.	hvex3201.htm
EX-32.02 - EXHIBIT - Polaris Futures Fund L.P.	hvex3202.htm
EX-31.01 - EXHIBIT - Polaris Futures Fund L.P.	hvex3101.htm
EX-31.02 - EXHIBIT - Polaris Futures Fund L.P.	hvex3102.htm

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 30, 2010 or

o 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: 000-53115

	MANAGED FUTURES PROFILE HV, L.P.
	(Exact name of registrant as specified in its charter)

	Delaware	20-8528957
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Demeter Management LLC
522 Fifth Avenue, 14th Floor
New York, NY		10036
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code

(212) 296-1999

522 Fifth Avenue, 13th Floor, New York, NY 10036

(Former name, former address and former fiscal year, if changed since last report)

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 o

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 o No o

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.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes 0 No T

MANAGED FUTURES PROFILE HV, L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 30, 2010

	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Statements of Financial Condition as of September 30, 2010 and December 31, 2009	2

	Statements of Operations for the Three and Nine Months Ended September 30, 2010 and 2009	3

	Statements of Changes in Partners’ Capital for the Nine Months Ended September 30, 2010 and 2009	4

	Notes to Financial Statements	5-20

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21-31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32-46

Item 4.	Controls and Procedures	46-47

	PART II. OTHER INFORMATION

Item 1A.	Risk Factors	48

Item 2.	Unregistered Sales of Securities and Use of Proceeds	48

Item 6.	Exhibits	48

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MANAGED FUTURES PROFILE HV, L.P.

STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	September 30,	December 31,
	2010	2009
ASSETS	$	$

Investments in Affiliated Trading Companies:
Investment in BHM I, LLC	52,227,789	44,391,791
Investment in Aspect I, LLC	41,311,896	37,034,120
Investment in Altis I, LLC	40,948,731	34,773,430
Investment in WNT I, LLC	39,782,785	36,488,601
Investment in Boronia I, LLC	22,674,916	20,677,046

Total Investments in Affiliated Trading Companies, at fair value (cost $172,484,648 and $159,771,827, respectively)	196,946,117	173,364,988
Subscriptions receivable	4,139,815	5,901,540

Total Assets	201,085,932	179,266,528

LIABILITIES

Redemptions payable	3,338,909	1,495,273
Payable to Affiliated Trading Companies	304,254	3,971,593

Total Liabilities	3,643,163	5,466,866

PARTNERS’ CAPITAL
Class A (89,333.272 and 78,373.994 Units, respectively)	114,986,220	97,264,166
Class B (19,346.326 and 18,794.498 Units, respectively)	25,296,784	23,606,083
Class C (36,558.276 and 35,719.371 Units, respectively)	48,560,663	45,405,413
Class D* (3,072.942 and 3,072.942 Units, respectively)	4,113,696	3,929,404
Class Z (3,272.269 and 2,760.791 Units, respectively)	4,485,406	3,594,596

Total Partners’ Capital	197,442,769	173,799,662

Total Liabilities and Partners’ Capital	201,085,932	179,266,528

NET ASSET VALUE PER UNIT
Class A	1,287.16	1,241.03
Class B	1,307.58	1,256.01
Class C	1,328.31	1,271.17
Class D*	1,338.68	1,278.71
Class Z	1,370.73	1,302.02

* Class D Units were issued beginning on March 1, 2009.

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

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MANAGED FUTURES PROFILE HV, L.P.

STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2010	2009	2010	2009
	$	$	$	$
EXPENSES
Ongoing Placement Agent fees	750,999	564,529	2,187,347	1,499,106
General Partner fees	465,103	356,249	1,357,865	941,650
Administrative fees	186,041	142,500	543,146	376,660

Total Expenses	1,402,143	1,063,278	4,088,358	2,817,416

NET INVESTMENT LOSS	(1,402,143)	(1,063,278)	(4,088,358)	(2,817,416)

REALIZED/NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON
INVESTMENTS
Realized	320,767	–	1,001,500	318,858
Net change in unrealized appreciation (depreciation) on investments	14,804,458	5,281,938	10,868,308	(750,639)

Total Realized/Net Change in Unrealized Appreciation (Depreciation) on Investments	15,125,225	5,281,938	11,869,808	(431,781)

NET INCOME (LOSS)	13,723,082	4,218,660	7,781,450	(3,249,197)

NET INCOME (LOSS) ALLOCATION
Class A	7,816,531	2,221,283	4,279,521	(1,950,032)
Class B	1,804,572	568,304	1,024,220	(520,587)
Class C	3,492,528	1,227,629	2,076,829	(673,139)
Class D	295,129	118,104	184,292	(78,262)
Class Z	314,322	83,340	216,588	(27,177)

NET INCOME (LOSS) PER UNIT*
Class A	88.69	34.87	46.13	(35.47)
Class B	91.59	36.23	51.57	(36.34)
Class C	94.55	38.20	57.14	(25.00)
Class D	96.04	38.43	59.97	(25.47)
Class Z	100.66	41.22	68.71	(15.75)

	Units	Units	Units	Units
WEIGHTED AVERAGE NUMBER
OF UNITS OUTSTANDING
Class A	87,945.271	63,707.515	84,366.587	54,976.197
Class B	19,901.609	15,685.826	19,490.834	14,325.965
Class C	37,022.270	32,139.328	36,172.806	26,920.460
Class D	3,072.942	3,072.942	3,072.942	3,072.942
Class Z	3,142.603	2,021.848	3,049.660	1,725.900

* Based on the change in Net Asset value per Unit.

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

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MANAGED FUTURES PROFILE HV, L.P.

STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

For the Nine Months Ended September 30, 2010 and 2009

(Unaudited)

	Class A	Class B	Class C	Class D	Class Z	Total
	$	$	$	$	$	$
Partners’ Capital,
December 31, 2009	97,264,166	23,606,083	45,405,413	3,929,404	3,594,596	173,799,662

Subscriptions	22,624,064	3,601,784	9,134,376	–	835,507	36,195,731

Net Income	4,279,521	1,024,220	2,076,829	184,292	216,588	7,781,450

Redemptions	(9,181,531)	(2,935,303)	(8,055,955)	–	(161,285)	(20,334,074)

Partners’ Capital,
September 30, 2010	114,986,220	25,296,784	48,560,663	4,113,696	4,485,406	197,442,769

Partners’ Capital,
December 31, 2008	59,691,122	16,690,009	31,437,299	–	1,906,887	109,725,317

Subscriptions	41,302,953	10,288,489	26,143,098	3,994,825	2,198,951	83,928,316

Net Loss	(1,950,032)	(520,587)	(673,139)	(78,262)	(27,177)	(3,249,197)

Redemptions	(12,242,159)	(5,960,202)	(14,117,891)	–	(933,959)	(33,254,211)

Partners’ Capital,
September 30, 2009	86,801,884	20,497,709	42,789,367	3,916,563	3,144,702	157,150,225

	Class A	Class B	Class C	Class D	Class Z	Total
	Units	Units	Units	Units	Units	Units
Beginning Units,
December 31, 2009	78,373.994	18,794.498	35,719.371	3,072.942	2,760.791	138,721.596

Subscriptions	18,389.151	2,905.626	7,204.634	–	637.836	29,137.247

Redemptions	(7,429.873)	(2,353.798)	(6,365.729)	–	(126.358)	(16,275.758)

Ending Units,
September 30, 2010	89,333.272	19,346.326	36,558.276	3,072.942	3,272.269	151,583.085

Beginning Units,
December 31, 2008	46,349.723	12,869.463	24,072.194	–	1,439.906	84,731.286

Subscriptions	33,399.252	8,239.012	20,721.477	3,072.942	1,709.863	67,142.546

Redemptions	(9,794.894)	(4,765.923)	(11,043.004)	–	(722.051)	(26,325.872)

Ending Units,
September 30, 2009	69,954.081	16,342.552	33,750.667	3,072.942	2,427.718	125,547.960

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

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS

September 30, 2010

(Unaudited)

The unaudited financial statements contained herein include, in the opinion of management, all adjustments necessary for a fair presentation of the financial condition and results of operations of Managed Futures Profile HV, L.P. (“Profile HV” or the “Partnership”). The financial statements and condensed notes herein should be read in conjunction with the Partnership’s Annual Report on Form 10-K for the fiscal year ending December 31, 2009.

1. Organization

Managed Futures Profile HV, L.P. was formed on February 22, 2007, under the Delaware Revised Uniform Limited Partnership Act, as a multi-advisor commodity pool created to profit from the speculative trading of domestic and foreign futures contracts, forward contracts, foreign exchange commitments, options on physical commodities and futures contracts, spot (cash) commodities and currencies, exchange of futures contracts on physicals transactions and futures contracts transactions, and any rights pertaining thereto (collectively, “Futures Interests”) (refer to Note 4. Financial Instruments of the Trading Companies) through its investments in affiliated trading companies (each a “Trading Company”, or collectively the “Trading Companies”). Profile HV is one of the partnerships in the Managed Futures Multi-Strategy Profile Series, comprised of Profile HV, Managed Futures Profile LV, L.P., and Managed Futures Profile MV, L.P. (collectively, the "Profile Series").

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The Partnership allocates substantially all of its assets to multiple affiliated Trading Companies, each of which allocates substantially all of its assets to the trading program of an unaffiliated commodity trading advisor which makes investment decisions for each respective Trading Company.

The Partnership commenced trading operations on August 1, 2007, in accordance with the terms of its Limited Partnership Agreement (the “Limited Partnership Agreement”). The non-clearing commodity broker for the Trading Companies is Morgan Stanley Smith Barney LLC (“MSSB”) as of May 1, 2010. The clearing commodity broker for each Trading Company is Morgan Stanley & Co. Incorporated ("MS&Co."). Morgan Stanley & Co. International plc ("MSIP") acts as each Trading Company’s clearing commodity broker to the extent it trades on the London Metal Exchange (collectively, MS&Co. and MSIP are referred to as the "Commodity Brokers"). Each Trading Company’s over-the-counter foreign exchange spot, options, and forward contract counterparties are MS&Co. and/or Morgan Stanley Capital Group Inc. ("MSCG") to the extent a Trading Company trades options on over-the-counter foreign currency forward contracts.

The financial statements of the Partnership have been prepared using the "Fund of Funds" approach and accordingly all revenue and expense information from the Trading Companies is reflected as a net change in unrealized appreciation (depreciation) on investments on the Statements of Operations. The Partnership maintains sufficient cash balances on hand to satisfy ongoing operating expenses for the Partnership. The Trading Companies and their trading advisors (each individually, a "Trading Advisor" or collectively, the "Trading Advisors") for the Partnership at September 30, 2010, are as follows:

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Trading Company	Trading Advisor

Morgan Stanley Smith Barney Altis I, LLC
(“Altis I, LLC”)	Altis Partners (Jersey) Limited
Morgan Stanley Smith Barney Aspect I, LLC
(“Aspect I, LLC”)	Aspect Capital Limited
Morgan Stanley Smith Barney BHM I, LLC
(“BHM I, LLC”)	Blenheim Capital Management, L.L.C.
Morgan Stanley Smith Barney Boronia I, LLC
(“Boronia I, LLC”)	Boronia Capital Pty. Ltd.
Morgan Stanley Smith Barney WNT I, LLC
(“WNT I, LLC”)	Winton Capital Management Limited

Demeter Management LLC (“Demeter”), the general partner of the Partnership and the trading manager of each Trading Company, is a wholly-owned subsidiary of Morgan Stanley Smith Barney Holdings LLC (“MSSBH”). MSSBH is majority-owned indirectly by Morgan Stanley and minority-owned indirectly by Citigroup Inc. MS&Co., MSIP, and MSCG are wholly-owned subsidiaries of Morgan Stanley.

Demeter may reallocate the Partnership’s assets to the different Trading Companies at its sole discretion.

Units of limited partnership interest ("Units") of the Partnership are being offered in four share classes in a private placement pursuant to Regulation D under the Securities Act of 1933, as amended. Depending on the aggregate amount invested in the Partnership, limited partners receive class A, B, C or D Units in the Partnership (each a "Class" and collectively the "Classes"). Certain limited partners who are not subject to the ongoing placement agent fee are deemed to hold Class Z Units. Demeter received Class Z Units with respect to its investment in the Partnership.

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Demeter is not required to maintain any investment in the Partnership, and may withdraw any portion of its interest in the Partnership at any time, as permitted by the Limited Partnership Agreement. In addition, Class Z shares are only being offered to certain individuals affiliated with Morgan Stanley at Demeter’s sole discretion. Class Z Unit holders are not subject to paying the ongoing placement agent fee.

2. Related Party Transactions

The cash held by each Trading Company is on deposit with MS&Co., MSIP, and MSSB in futures interest trading accounts to meet margin requirements as needed. MSSB pays each Trading Company at each month end interest income on 100% of its average daily funds held at MSSB. Assets deposited with MS&Co. as margin are credited with interest income at a rate approximately equivalent to what MS&Co. pays or charges other customers on such assets deposited as margin. Assets not deposited as margin with MS&Co. are credited with interest income at a rate equal to the monthly average of the 4-week U.S. Treasury bill discount rate less 0.15% during such month but in no event less than zero. For purposes of such interest payments, net assets do not include monies owed to the Trading Companies on Futures Interests. MS&Co. and MSSB will retain any excess interest not paid to each Trading Company.

The Partnership pays monthly administrative fees and general partner fees to Demeter. The Partnership pays to MSSB, the principal subsidiary of MSSBH, ongoing placement agent fees on a monthly basis equal to a percentage of the net asset value of a limited partners’ Units as of the beginning of each month.

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. Income Taxes

No provision for income taxes has been made in the accompanying financial statements, as limited partners are individually responsible for reporting income or loss based upon their respective share of the Partnership’s revenues or expenses for income tax purposes. The Partnership files U.S. federal and state tax returns.

The guidance issued by the Financial Accounting Standards Board (“FASB”) on income taxes clarifies the accounting for uncertainty in income taxes recognized in the Partnership's financial statements, and prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken. The Partnership has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements as of September 30, 2010. If applicable, the Partnership recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statements of Operations. Generally, the 2007 through 2009 tax years remain subject to examination by U.S. federal and most state tax authorities.

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. Financial Instruments of the Trading Companies

The Trading Advisors trade Futures Interests on behalf of the Trading Companies. Futures and forwards represent contracts for delayed delivery of an instrument at a specified date and price. Futures Interests are open commitments until settlement date, at which time they are realized. They are valued at fair value, generally on a daily basis, and the unrealized gains and losses on open contracts (the difference between contract trade price and market price) are reported in the Statements of Financial Condition as net unrealized gains or losses on open contracts. The resulting net change in unrealized gains and losses is reflected in the net change in unrealized trading profit (loss) from one period to the next on the Statements of Operations. The fair value of exchange-traded futures, options and forwards contracts is determined by the various futures exchanges, and reflects the settlement price for each contract as of the close of business on the last business day of the reporting period. The fair value of foreign currency forward contracts is extrapolated on a forward basis from the spot prices quoted as of approximately 3:00 P.M. (E.T.) of the last business day of the reporting period. The fair value of non-exchange-traded foreign currency option contracts is calculated by applying an industry standard model application for options valuation of foreign currency options using as inputs, the spot prices, interest rates, and option implied volatilities quoted as of approximately 3:00 P.M. (E.T.) on the last business day of the reporting period. Risk arises from changes in the value of these contracts and the potential inability of counterparties to perform under the terms of the contracts. There are numerous factors which may significantly influence the fair value of these contracts, including interest rate volatility.

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The fair value of exchange-traded contracts is based on the settlement price quoted by the exchange on the day with respect to which fair value is being determined. If an exchange-traded contract could not have been liquidated on such day due to the operation of daily limits or other rules of the exchange, the settlement price will be equal to the settlement price on the first subsequent day on which the contract could be liquidated. The fair value of off-exchange-traded contracts is based on the fair value quoted by the counterparty.

The Trading Companies’ contracts are accounted for on a trade-date basis and marked to market on a daily basis. The Trading Companies account for their derivative investments as required by the Derivatives and Hedging as required by the FASB Accounting Standards Codification (“ASC” or the “Codification”). A derivative is defined as a financial instrument or other contract that has all three of the following characteristics:

1)	a) One or more underlyings and b) notional amounts or payment provisions or both;

2)	Requires no initial net investment or a smaller initial net investment than would be required for other types of contracts that would be expected to have a similar response relative to changes in market factors; and

3)	Terms that require or permit net settlement.

Generally, derivatives include futures, forwards, swaps or options contracts, and other financial instruments with similar characteristics such as caps, floors, and collars.

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The futures, forwards and options traded by the Trading Advisors on behalf of the Trading Companies involve varying degrees of related market risk. Market risk is often dependent upon changes in the level or volatility of interest rates, exchange rates, and prices of financial instruments and commodities, factors that result in frequent changes in the fair value of the Trading Companies’ open positions, and consequently in their earnings, whether realized or unrealized, and cash flow. Gains and losses on open positions of exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts are settled daily through variation margin. Gains and losses on off-exchange-traded forward currency contracts are settled upon termination of the contract. Gains and losses on off-exchange-traded forward currency options contracts are settled upon an agreed upon settlement date. However, the Trading Companies are required to meet margin requirements equal to the net unrealized loss on open forward currency contracts in the Trading Companies’ accounts with the counterparty, which is accomplished by daily maintenance of the cash balance in a custody account held at MSSB for the benefit of MS&Co.

5. Fair Value Measurements and Disclosures

Financial instruments are carried at fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Assets and liabilities carried at fair value are classified and disclosed in the following three levels: Level 1 - unadjusted quoted market prices in active markets for identical assets and liabilities; Level 2 – inputs other than unadjusted quoted market prices that are observable for the asset or liability, either directly or indirectly (including unadjusted quoted market prices for similar investments, interest rates, credit risk); and Level 3 - unobservable inputs for the asset or liability (including the Partnership’s own assumptions used in determining the fair value of investments).

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Partnership’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.

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

September 30, 2010

Assets	Unadjusted Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
		$			$
Investment in BHM I, LLC	–	52,227,789	n/a		52,227,789
Investment in Aspect I, LLC	–	41,311,896	n/a		41,311,896
Investment in Altis I, LLC	–	40,948,731	n/a		40,948,731
Investment in WNT I, LLC	–	39,782,785	n/a		39,782,785
Investment in Boronia I, LLC	–	22,674,916	n/a		22,674,916

December 31, 2009

Assets	Unadjusted Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
		$		$
Investment in BHM I, LLC	–	44,391,791	n/a	44,391,791
Investment in Aspect I, LLC	–	37,034,120	n/a	37,034,120
Investment in Altis I, LLC	–	34,773,430	n/a	34,773,430
Investment in WNT I, LLC	–	36,488,601	n/a	36,488,601
Investment in Boronia I, LLC	–	20,677,046	n/a	20,677,046

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The Partnership’s assets identified as "Investments in Affiliated Trading Companies" reflected on the Statements of Financial Condition represents the Partnership’s pro rata share of each Trading Company’s net asset value. The net assets of each Trading Company is equal to the total assets of the Trading Company (including, but not limited to all cash and cash equivalents, accrued interest and amortization of original issue discount, and the fair value of all open Futures Interests contract positions and other assets) less all liabilities of the Trading Company (including, but not limited to, brokerage commissions that would be payable upon the closing of open Futures Interest positions, management fees, incentive fees, and extraordinary expenses), determined in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

At September 30, 2010, the Partnership’s investment in the Trading Companies represented approximately: BHM I, LLC 26.45%; Aspect I, LLC 20.92%; Altis I, LLC 20.74%; WNT I, LLC 20.15%; and Boronia I, LLC 11.48% of Profile HV’s Partners’ Capital, respectively.

At December 31, 2009, the Partnership’s investment in the Trading Companies represented approximately: BHM I, LLC 25.54%; Aspect I, LLC 21.31%; Altis I, LLC 20.01%; WNT I, LLC 20.99%; and Boronia I, LLC 11.90% of Profile HV’s Partners’ Capital, respectively,

The tables below represent summarized Income Statement information for the Trading Companies that the Partnership invests in for the three and nine months ended September 30, 2010 and 2009, respectively, in accordance with Rule 3-09 of Regulation S-X, as follows:

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

For the Three Months Ended September 30, 2010	Investment Income/(Loss)	Net Investment Loss	Total Trading Results	Net Income
	$	$	$	$
BHM I, LLC	(2,803)	(547,319)	21,112,737	20,565,418
Aspect I, LLC	543	(506,839)	3,596,776	3,089,937
Altis I, LLC	6,218	(268,346)	4,145,199	3,876,853
WNT I, LLC	680	(578,036)	1,633,243	1,055,207

For the Nine Months Ended September 30, 2010	Investment Income/(Loss)	Net Investment Loss	Total Trading Results	Net Income
	$	$	$	$
BHM I, LLC	(8,953)	(1,148,221)	3,537,021	2,388,800
Aspect I, LLC	(1,554)	(1,134,985)	5,810,540	4,675,555
Altis I, LLC	26,831	(581,748)	3,666,669	3,084,921
WNT I, LLC	1,028	(1,348,774)	5,423,990	4,075,216

For the Three Months Ended September 30, 2009	Investment Income	Net Investment Loss	Total Trading Results	Net Income
	$	$	$	$
BHM I, LLC	260	(800,261)	12,503,844	11,703,583
Aspect I, LLC	–	(266,001)	2,447,955	2,181,954
Altis I, LLC	3,924	(136,332)	1,149,073	1,012,741
WNT I, LLC	–	(245,221)	569,709	324,488

For the Nine Months Ended September 30, 2009	Investment Income	Net Investment Loss	Total Trading Results	Net Income/(Loss)
	$	$	$	$
BHM I, LLC	24,887	(1,315,565)	31,067,772	29,752,207
Aspect I, LLC	5,958	(694,365)	(2,342,538)	(3,036,903)
Altis I, LLC	26,371	(324,887)	(794,440)	(1,119,327)
WNT, LLC	5,056	(650,239)	(1,899,105)	(2,549,344)

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. Other Pronouncements

(a) Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles

In June 2009, the FASB issued accounting guidance to establish the FASB Codification. ASC established the exclusive authoritative reference for U.S. GAAP for use in financial statements except for Securities and Exchange Commission (“SEC”) rules and interpretive releases, which are also authoritative U.S. GAAP for SEC registrants. The Codification supersedes all existing non-SEC accounting and reporting standards. The Codification became the single source of authoritative U.S. GAAP and is effective for financial statements issued for interim and annual periods ending after September 15, 2009.

(b) Fair Value Measurements

In April 2009, the FASB issued additional guidance relating to Fair Value Measurements for determining fair value and requires new disclosures regarding the categories of fair value instruments, as well as the inputs and valuation techniques utilized to determine fair value and any changes to the inputs and valuation techniques during the period. It is effective for the interim and annual periods ending after June 15, 2009 and the adoption did not have a material impact on the Partnership’s financial statements.

In April 2009, the FASB issued new guidance that requires fair value disclosures of financial instruments on a quarterly basis, as well as new disclosures regarding the methodology and significant assumptions

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

underlying the fair value measures and any changes to the methodology and assumptions during the reporting period.

This guidance is effective for the interim and annual periods ending after June 15, 2009. The adoption of this guidance did not have a material impact on the Partnership’s financial statements.

(d) Subsequent Events

In May 2009, the FASB issued accounting guidance to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. In February 2010, the FASB issued Accounting Standard Update, Subsequent Events – Amendments to Certain Recognition and Disclosures Requirements, which was effective immediately, and amends the previous guidance on subsequent events and no longer requires SEC filers to disclose the date through which subsequent events have been evaluated. Management performed its evaluation of subsequent events and has determined that there were no subsequent events requiring adjustment in the financial statements. The nature of the subsequent event effective on or about December 1, 2010 is disclosed in the Subsequent Event section on pages 19 and 20.

(e) Investment in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)

In September 2009, the FASB issued updated guidance on Fair Value Measurement and Disclosures-Overall

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

for the fair value measurement of investments in certain entities that calculate net asset value per share or its equivalent. The updated guidance permits, as a practical expedient, a reporting entity to measure the fair value of an investment that is within the scope of the updated guidance on the basis of the net asset value per share of the investment or its equivalent. Additionally, the updated guidance requires disclosures by major category of investment about the attributes of the investments within the scope of the amendments, such as the nature of any restrictions on redemptions, any unfunded commitments and the investment strategies of the investees. The updated guidance is effective for interim and annual periods ending after December 15, 2009. The adoption of this guidance did not have a material impact on the financial statements of the Partnership.

(f) Improving Disclosures about Fair Value Measurements

In January 2010, the FASB issued guidance, which, among other things, amends fair value measurements and disclosures to require entities to 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 which clarifies existing disclosure requirements regarding the level of disaggregation and 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. This guidance is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this guidance did not have a material impact on the Partnership’s financial statements.

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MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(g) Consolidation of Variable Interest Entities

In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for variable interest entities. It contains new criteria for determining the primary beneficiary, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a variable interest entity. It also contains a new requirement that any term, transaction, or arrangement that does not have a substantive effect on an entity’s status as a variable interest entity, a company’s power over a variable interest entity, or a company’s obligation to absorb losses or its right to receive benefits of an entity must be disregarded. The amendment is effective for annual periods after November 15, 2009, and interim periods thereafter. Effective February 25, 2010, the FASB has decided to indefinitely defer the application of this amendment for certain entities. Management believes that the Partnership meets the criteria for the indefinite deferral of the application of this guidance.

(h) Statement of Cash Flows

The Partnership is not required to provide a Statement of Cash Flows as permitted by ASC 230.

7. Subsequent Event

In 2009, Morgan Stanley and Citigroup Inc. combined certain assets of the Global Wealth Management Group of MS&Co., including Demeter, and the Smith Barney division of Citigroup Global Markets Inc. into a new joint venture, MSSBH. Since their contribution to the joint venture, Demeter and Ceres Managed Futures LLC (“Ceres”), the commodity pool operator for various legacy Citigroup Inc. sponsored

- 19 -

MANAGED FUTURES PROFILE HV, L.P.

NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

commodity pools, have worked closely together to align the operations and management of the commodity pools they oversee.

As a result, MSSBH, together with the unanimous support of the Boards of Directors of Demeter and Ceres, has determined that a combination of the assets and operations of Demeter and Ceres into a single commodity pool operator, Ceres, is in the best interest of the limited partners and believes that this combination will achieve the intended benefits of the joint venture. Ceres will continue to be wholly owned by MSSBH. The targeted effective date of the combination is on or about December 1, 2010. Refer to the 8-K filed on September 14, 2010, for additional information.

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Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity. MS&Co. and its affiliates act as custodians of each Trading Company’s assets pursuant to customer agreements and foreign exchange customer agreement. The Partnership allocates substantially all of its assets to multiple Trading Companies. Such assets are deposited in the Trading Companies’ trading accounts with MS&Co. or its affiliates. The funds in such accounts are available for margin and are used to engage in Futures Interest trading pursuant to instructions provided by the Trading Advisors. The assets are held in either non-interest bearing bank accounts or in securities and instruments permitted by the Commodity Futures Trading Commission for investment of customer segregated or secured funds. Since the Partnership’s sole purpose is to trade Futures Interests indirectly through the investment in the Trading Companies, it is expected that the Trading Companies will continue to own such liquid assets for margin purposes.

The Trading Companies investment in Futures Interests may, from time to time, be illiquid. Most U.S. futures exchanges limit fluctuations in prices during a single day by regulations referred to as "daily price fluctuation limits" or "daily limits". Trades may not be executed at prices beyond the daily limit. If the price for a particular futures or options contract has increased or decreased by an amount equal to the daily limit, positions in that futures or options contract can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit. Futures prices have occasionally moved the daily limit for several consecutive days with little or no trading. These market conditions could prevent the Trading Companies from promptly liquidating their futures or options contracts and result in restrictions on redemptions.

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There is no limitation on daily price moves in trading forward contracts on foreign currencies. The markets for some world currencies have low trading volume and are illiquid, which may prevent the Trading Companies from trading in potentially profitable markets or prevent the Trading Companies from promptly liquidating unfavorable positions in such markets, subjecting them to substantial losses. Either of these market conditions could result in restrictions on redemptions. For the periods covered by this report, illiquidity has not materially affected the Partnership’s assets.

There are no known material trends, demands, commitments, events, or uncertainties at the present time that are reasonably likely to result in the Partnership’s liquidity increasing or decreasing in any material way.

Capital Resources. The Partnership does not have, nor does it expect to have, any capital assets. Redemptions, exchanges, and sales of Units in the future will affect the amount of funds available for investments in Futures Interests in subsequent periods. It is not possible to estimate the amount, and therefore the impact, of future inflows and outflows of Units.

There are no known material trends, favorable or unfavorable, that would affect, nor any expected material changes to, the Partnership’s capital resource arrangements at the present time.

Results of Operations

General. The Partnership’s results depend on the Trading Advisors and the ability of each Trading Advisor’s trading program to take advantage of price movements in the futures, forward and options markets. The following presents a summary of the Partnership’s operations for the three and nine month periods ended

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September 30, 2010 and 2009, and a general discussion of its trading activities during each period. It is important to note, however, that the Trading Advisors trade in various markets at different times and that prior activity in a particular market does not mean that such market will be actively traded by the Trading Advisors or will be profitable in the future. Consequently, the results of operations of the Partnership are difficult to discuss other than in the context of the Trading Advisors’ trading activities on behalf of the Partnership during the period in question. Past performance is no guarantee of future results.

The Partnership’s results of operations set forth in the financial statements on pages 2 through 20 of this report are prepared in accordance with U.S. GAAP, which requires the use of certain accounting policies that affect the amounts reported in these financial statements, including the following: the contracts the Trading Companies trade are accounted for on a trade-date basis and marked to market on a daily basis. The difference between their original contract value and fair value is recorded on the Statements of Operations as “Net change in unrealized gain (loss)” for open contracts, and recorded as “Realized trading gain (loss)” when open positions are closed out. The sum of these amounts constitutes the Trading Company’s trading results. The fair value of a futures contract is the settlement price on the exchange on which that futures contract is traded on a particular day. The value of a foreign currency forward contract is based on the spot rate as of approximately 3:00 P.M. (E.T.) of the business day.

For the Three and Nine Months Ended September 30, 2010

The Partnership recorded total realized/net change in unrealized appreciation on investments of $15,125,225 and expenses totaling $1,402,143, resulting in net income of $13,723,082 for the three months ended September 30, 2010. The Partnership’s net asset value per Unit by share Class is provided in the table below.

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Share Class	NAV at 9/30/10	NAV at 6/30/10

A	$1,287.16	$1,198.47
B	$1,307.58	$1,215.99
C	$1,328.31	$1,233.76
D	$1,338.68	$1,242.64
Z	$1,370.73	$1,270.07

The most significant trading gains of approximately 3.0% were achieved within the global interest rate sector, primarily during July and August. In July, gains were recorded from long positions in U.S. fixed-income futures as prices rose on speculation that the U.S. Federal Reserve might resume purchases of U.S. Treasuries if the economy slows. During August, long positions in European, U.S., and Australian fixed-income futures experienced gains as prices climbed higher due to concern that European governments may struggle to repay their debt, while reports added to evidence that Chinese economic growth may be slowing. Prices continued to move higher after reports on manufacturing in the New York region, U.S. home-builder confidence, and Japanese Gross Domestic Product fueled worries over the global economy and spurred demand for the relative “safety” of government bonds. Gains of approximately 3.0% were achieved within the metals complex, primarily during September, from long positions in gold and silver futures as prices rose amid increased demand for the precious metals as an alternative investment due to a drop in the value of the U.S. dollar. Additional gains were recorded from long futures positions in copper and aluminum as prices moved higher after industrial output beat analyst estimates in China, the world’s biggest metals user. Within the agricultural complex, gains of approximately 2.4% were experienced primarily during September due to long positions in corn futures after prices advanced to the highest level in almost two years as freezing weather threatened crops in China and Canada and a prolonged drought slowed planting in Russia. Additional gains were recorded from long positions in cotton futures as prices increased on signs that global demand may outpace limited supplies. Within the currency markets, gains of approximately 0.8% were achieved primarily

- 24 -

during September from long positions in the Australian dollar versus the U.S. dollar as the value of the Australian dollar appreciated to a 26-month high against the U.S. dollar amid speculation that the Reserve Bank of Australia may raise interest rates in October. Further gains were experienced in September from long positions in the Swiss franc, euro, and South African rand versus the U.S. dollar as the value of the U.S. dollar fell against these currencies amid renewed optimism regarding the global economic recovery, which reduced demand for the U.S. dollar as a “safe haven” currency. A portion of the Partnership’s gains for the quarter was offset by losses of approximately 0.9% incurred within the energy sector, primarily during July, due to short positions in natural gas futures as prices rose after reports showed a smaller-than-forecast inventory increase due to above-average temperatures in the U.S. Additional losses were recorded in September from short futures positions in crude oil and its related products as prices rose after positive economic indicators from the U.S., Asia, and Europe restored confidence that the economic recovery may stimulate energy demand. Furthermore, oil prices increased after a pipeline that carries Canadian crude oil to refineries in the U.S. Midwest was closed due to a leak.

The Partnership recorded total realized/net change in unrealized appreciation on investments of $11,869,808 and expenses totaling $4,088,358, resulting in net income of $7,781,450 for the nine months ended September 30, 2010. The partnership’s net asset value per Unit by share Class is provided in the table below.

Share Class	NAV at 9/30/10	NAV at 12/31/09

A	$1,287.16	$1,241.03
B	$1,307.58	$1,256.01
C	$1,328.31	$1,271.17
D	$1,338.68	$1,278.71
Z	$1,370.73	$1,302.02

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The most significant trading gains of approximately 9.3% were recorded within the global interest rate sector throughout the majority of the first nine months of 2010 from long positions in U.S., European, and Japanese fixed-income futures. Prices in this sector increased during the first quarter on concerns that lending restrictions in China, possible reductions in U.S. stimulus measures, and Greece’s fiscal struggles might stifle the global economic rebound, thereby boosting demand for the relative “safety” of government bonds. Prices were then pressured higher during the second quarter amid an unexpected drop in U.S. consumer confidence, increased regulatory scrutiny of the financial industry, and the growing European debt crisis. During the third quarter, prices continued to climb higher due to concern that European governments may struggle to repay their debt and Chinese economic growth may be slowing. Within the currency markets, gains of approximately 2.6% were experienced primarily during February from short positions in the British pound, euro, and Swiss franc versus the U.S. dollar as the value of these currencies declined against the U.S. dollar amid concerns that Greece’s fiscal struggles might begin to spread and that the nation’s debt rating may be downgraded again. In May, short positions in the euro, British pound, and Swiss franc versus the U.S. dollar resulted in gains as the value of these currencies fell relative to the U.S. currency after reports of political discord in Europe reignited worries about the stability of the region’s economy. During September, gains were achieved from long positions in the Australian dollar versus the U.S. dollar as the value of the Australian dollar appreciated to a 26-month high against the U.S. dollar amid speculation that the Reserve Bank of Australia may raise interest rates in October. Gains of approximately 1.3% were recorded within the metals complex, primarily during March, from long futures positions in nickel, copper, aluminum, and zinc as prices rose after China indicated it might boost state reserves of base metals this year. During September, long positions in gold and silver futures resulted in gains as prices rose amid increased demand for the precious metals as an alternative investment due to a drop in the value of the U.S. dollar. Additional gains

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were recorded in September from long futures positions in copper and aluminum as prices moved higher after industrial output beat analyst estimates in China, the world’s biggest metals user. A portion of the Partnership’s gains for the first nine months of the year was offset by losses of approximately 2.5% incurred within the global stock index markets, primarily during January, May, June, and August. During January, long positions in U.S., European, and Pacific Rim equity index futures incurred losses as prices reversed sharply lower amid disappointing U.S. corporate earnings reports, concerns regarding U.S. President Barack Obama’s proposed limits on risk-taking by banks, and speculation that China might raise interest rates. Losses were experienced during May and June from long positions in U.S., European, and Pacific Rim equity index futures as prices moved lower on growing concerns that Greece’s sovereign debt crisis might spread throughout Europe. Prices also fell due to concerns over weakening growth in China and a slump in U.S. consumer confidence. Additional losses were recorded during August due to newly established long positions in European, U.S., and Pacific Rim equity index futures as prices fell after the U.S. Federal Reserve said the pace of economic recovery is likely to be “more modest” than forecast and a report revealed U.S. productivity unexpectedly fell in the second quarter. Within the energy markets, losses of approximately 2.2% were recorded primarily during January and May from long futures positions in crude oil and its related products as prices declined on continued worries that a slow down in the global economic recovery may weaken energy demand. During June, newly established short futures positions in crude oil and its related products resulted in losses as prices reversed higher following news that crude inventories dropped the most in six months. Additional losses were incurred during September from short futures positions in crude oil and its related products as prices rose after positive economic indicators from the U.S., Asia, and Europe restored confidence that the economic recovery may stimulate energy demand. Furthermore, oil prices increased after a pipeline that carries Canadian crude oil to refineries in the U.S. Midwest was closed due to a leak. Within

- 27 -

the agricultural complex, losses of approximately 0.2% were incurred primarily during February and March from long positions in sugar futures as prices moved lower on speculation that Brazil, the world’s largest sugar producer, might increase exports and record high prices might dissuade purchases. Smaller losses were experienced during May from long positions in cocoa futures as prices moved lower amid news that cocoa processing, an indication of demand, is far below levels of two years ago.

For the Three and Nine Months Ended September 30, 2009

The Partnership recorded total realized/net change in unrealized appreciation on investments of $5,281,938 and expenses totaling $1,063,278, resulting in net income of $4,218,660 for the three months ended September 30, 2009. The Partnership’s net asset value per Unit by share Class is provided in the table below.

Share Class	NAV at 9/30/09	NAV at 6/30/09

A	$1,240.84	$1,207.16
B	$1,254.25	$1,218.69
C	$1,267.81	$1,230.34
D	$1,274.53	$1,236.10
Z	$1,295.33	$1,253.94

The most significant trading gains of approximately 2.4% were experienced in the agricultural sector throughout a majority of the quarter from long futures positions in sugar as prices moved sharply higher amid speculation that a global production deficit may continue for two consecutive years, triggered by increasing demand from India, the world’s largest consumer. Sugar prices continued to climb throughout August, reaching a 28-year high, on deepening concerns that unfavorable weather in producing countries and rising import demand might worsen the global supply shortfall. Elsewhere, gains were achieved, primarily during July and September, from long positions in cocoa futures as prices moved higher on supply concerns due to

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news of a smaller-than-average crop this year and after reports showed inventories reached a seven-month low. Within the metals complex, gains of approximately 0.9% were recorded primarily during July and August from long futures positions in zinc and copper as prices rose following news of an economic expansion in China during the second quarter of 2009, thereby spurring speculation that China’s demand for base metals might rise. Lastly, gains in the metals markets were also experienced from long positions in palladium futures as prices rose during July and August amid increased demand. Additional gains of 0.8% were experienced in the global interest rate sector throughout a majority of the quarter from long positions in short-term European and U.S. interest rate futures as prices increased on investor sentiment that signs of moderate inflation, as well as the U.S. Federal Reserve’s commitment to its quantitative easing program, would result in the U.S. Federal Reserve, European Central Bank, and the Bank of England holding interest rates steady in the near term. Within the currency sector, gains of approximately 0.7% were recorded throughout a majority of the quarter from long positions in the Australian dollar and New Zealand dollar versus the U.S. dollar and British pound as the value of the Australian dollar and New Zealand dollar moved higher in the wake of stronger gold prices. Furthermore, the U.S. dollar and British pound fell on the aforementioned speculation that the U.S. Federal Reserve and Bank of England might keep borrowing rates low in the near term. Smaller gains of approximately 0.5% were achieved in the global equity index sector throughout a majority of the quarter from long positions in European, U.S., Australian, and Hong Kong equity index futures as prices increased due to positive economic data and increased merger and acquisition activity in the technology sector. A portion of the Partnership’s gains for the quarter was offset by losses of approximately 1.0% within the energy sector during July from short futures positions in crude oil and its related products as prices moved higher during the latter half of the month amid better-than-expected quarterly earnings reports and positive economic data, which spurred optimism that energy demand might

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rebound. During August, newly established long futures positions in crude oil and its related products recorded additional losses as prices reversed lower due to above-average U.S. stockpiles.

The Partnership recorded total realized/net change in unrealized depreciation on investments of $(431,781) and expenses totaling $2,817,416, resulting in a net loss of $3,249,197 for the nine months ended September 30, 2009. The Partnership’s net asset value per Unit by share Class is provided in the table below.

Share Class	NAV at 9/30/09	NAV at 12/31/08

A	$1,240.84	$1,287.84
B	$1,254.25	$1,296.87
C	$1,267.81	$1,305.96
D	$1,274.53	n/a
Z	$1,295.33	$1,324.31

The most significant trading losses of approximately 1.6% were incurred in the energy sector, primarily during March, May, and July, from short futures positions in crude oil and its related products as prices reversed higher on optimism that a possible rebound in global economic growth might boost energy demand. During August, newly established long futures positions in crude oil and its related products recorded additional losses as prices reversed lower due to above-average U.S. stockpiles. Within the currency sector, losses of approximately 1.5% were recorded primarily during March and April from short positions in the British pound, euro, and Swiss franc versus the U.S. dollar as the value of the U.S. dollar decreased relative to most of its rivals following the U.S. Federal Reserve’s surprise plans to begin a more aggressive phase of quantitative easing and economic stimulus spending. Meanwhile, additional losses were recorded, primarily during February and March, from long positions in the Japanese yen versus the U.S. dollar as the value of the Japanese yen reversed lower against most of its rivals amid speculation that the Bank of Japan might

- 30 -

intervene to weaken the currency. Further losses were recorded during June from long positions in the British pound, euro, Swiss franc, and Japanese yen versus the U.S. dollar as the value of the U.S. dollar reversed higher against these currencies amid speculation that the U.S. Federal Reserve might raise interest rates. A portion of the Partnership’s losses during the first nine months of the year was offset by gains of approximately 1.8% experienced in the agricultural complex, primarily during March, April, May, June, and July, from long futures positions in sugar as prices moved sharply higher amid speculation that a global production deficit might continue for two consecutive years, triggered by increasing demand from India, the world’s largest consumer. Sugar prices continued to climb throughout August and September reaching a 28-year high, on deepening concerns that unfavorable weather in producing countries and rising import demand may worsen the global supply shortfall. Elsewhere, gains were achieved, primarily during July and September, from long positions in cocoa futures as prices moved higher on supply concerns due to news of a smaller-than-average crop this year and after reports showed inventories reached a seven-month low. Within the metals sector, gains of approximately 1.0% were achieved during March, April, May, June, July, and August from long futures positions in copper and zinc as prices rose amid speculation that economic stimulus plans in the U.S. and China might help boost demand for base metals. Elsewhere in the metals complex, long positions in palladium futures resulted in gains during March, April, May, July, and August as prices climbed higher amid news of a possible strike at a South African producer. Smaller gains of approximately 0.1% were experienced in the global stock index sector throughout a majority of the third quarter from long positions in European and Hong Kong equity index futures as prices increased due to positive economic data and increased merger and acquisition activity in the technology sector.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Introduction

All of the Partnership’s assets are subject to the risk of trading loss through its investments in the Trading Companies, each of which invests substantially all of its assets in the trading program of an unaffiliated Trading Advisor. The market-sensitive instruments held by the Trading Companies are acquired for speculative trading purposes, and substantially all of the respective Trading Companies’ 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 Trading Companies’ main line of business.

The futures, forwards and options traded by the Trading Companies involve varying degrees of related market risk. Market risk is often dependent upon changes in the level or volatility of interest rates, exchange rates and prices of financial instruments and commodities. These factors result in frequent changes in the fair value of the Trading Companies’ open positions, and consequently in their earnings, whether realized or unrealized, and cash flow. Gains and losses on open positions of exchange-traded futures, exchange-traded forward, and exchange-traded futures-styled options contracts are settled daily through variation margin. Gains and losses on off-exchange-traded forward currency contracts and forward currency options contracts are settled upon termination of the contract. However, the Trading Companies are required to meet margin requirements equal to the unrealized loss on open forward currency contracts in the Trading Companies’ accounts with the counterparty, which is accomplished by daily maintenance of the cash balance in a custody account held at MSSB for the benefit of MS&Co.

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The total market risk of the respective Trading Companies may increase or decrease as it is influenced by a wide variety of factors, including, but not limited to, the diversification among the Trading Companies’ open positions, the volatility present within the markets, and the liquidity of the markets.

The face value of the market sector instruments held by the Trading Companies is typically many times the applicable margin requirements. Margin requirements generally range between 2% and 15% of contract face value. Additionally, the use of leverage causes the face value of the market sector instruments held by the Trading Companies typically to be many times the total capitalization of the Trading Companies.

The Partnership’s and the Trading Companies’ past performance are no guarantee of their future results. Any attempt to numerically quantify the Trading Companies’ market risk is limited by the uncertainty of their

speculative trading. The Trading Companies’ speculative trading and use of leverage may cause future losses and volatility (i.e., "risk of ruin") that far exceed the Trading Companies’ experiences to date disclosed under the "Trading Companies’ Value at Risk in Different Market Sectors" section and significantly exceed the Value at Risk ("VaR") tables disclosed below.

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

Quantifying the Trading Companies’ Trading Value at Risk

The following quantitative disclosures regarding the Trading Companies’ market risk exposures contain "forward-looking statements" within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 21E of the Securities

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Exchange Act of 1934). All quantitative disclosures in this section are deemed to be forward-looking statements for purposes of the safe harbor, except for statements of historical fact.

The Trading Companies account for open positions on the basis of mark to market accounting principles. Any loss in the market value of the Trading Companies’ open positions is directly reflected in the Trading Companies’ earnings and cash flow.

The Trading Companies’ risk exposure in the market sectors traded by the Trading Advisors is estimated below in terms of VaR. VaR for a particular market sector is estimated by Demeter using a model based upon historical simulation (with a confidence level of 99%) which involves constructing a distribution of hypothetical daily changes in the value of a trading portfolio. The VaR model takes into account linear exposures to risks including equity and commodity prices, interest rates, foreign exchange rates, and correlation among these variables. The hypothetical daily changes in the value of a Trading Company’s portfolio are based on daily percentage changes observed in key market indices or other market factors ("market risk factors") to which the portfolio is sensitive. The one-day 99% confidence level of the Trading Companies’ VaR corresponds to the reliability of the expectations that the Trading Company’s trading losses in one day will not exceed the maximum loss indicated by the VaR. The 99% one-day confidence level is not an indication of probability of such losses, nor does VaR typically represent the worst case outcome. Demeter uses approximately four years of daily market data and re-values its portfolio for each of the historical market moves that occurred over this period. This enables Demeter to generate a distribution of daily "simulated profit and loss" outcomes.

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The Trading Companies’ VaR computations are based on the risk representation of the underlying benchmark for each instrument or contract and do not distinguish between exchange and non-exchange dealer-based instruments. They are also not based on exchange and/or dealer-based maintenance margin requirements. VaR models, including the models used by Morgan Stanley and Demeter, are continually evolving as trading portfolios become more diverse and modeling techniques and systems capabilities improve. Please note that the VaR model is used to quantify market risk for historic reporting purposes only and is not utilized by either Demeter or the Trading Advisors in their daily risk management activities. Please further note that VaR as described above may not be comparable to similarly-titled measures used by other entities.

The Trading Companies’ Value at Risk in Different Market Sectors

As of September 30, 2010 and 2009, Altis I, LLC’s total capitalization was $40,948,731 and $33,344,528, respectively. The Partnership owned 100% and 100%, respectively, of Altis I, LLC.

Altis I, LLC

	September 30, 2010	September 30, 2009
Primary Market Risk Category	VaR	VaR

Currency	(1.75)%	(0.74)%
Interest Rate	(1.08)	(0.69)
Equity	(3.93)	(2.23)
Commodity	(2.98)	(1.01)
Aggregate Value at Risk	(4.41)%	(2.54)%

As of September 30, 2010 and 2009, Aspect I, LLC’s total capitalization was $51,527,784 and $44,225,925, respectively. The Partnership owned approximately 80% and 78%, respectively, of Aspect I, LLC.

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Aspect I, LLC

	September 30, 2010	September 30, 2009
Primary Market Risk Category	VaR	VaR

Currency	(1.34)%	(0.61)%
Interest Rate	(1.65)	(1.34)
Equity	(1.01)	(1.64)
Commodity	(1.32)	(0.90)
Aggregate Value at Risk	(2.84)%	(2.16)%

As of September 30, 2010 and 2009, BHM I, LLC’s total capitalization was $139,008,925 and $139,469,947, respectively. The Partnership owned approximately 38% and 27%, respectively, of BHM I, LLC.

BHM I, LLC

	September 30, 2010	September 30, 2009
Primary Market Risk Category	VaR	VaR

Currency	(0.06)%	(0.02)%
Interest Rate	(0.34)	(0.98)
Commodity	(3.90)	(3.59)
Aggregate Value at Risk	(4.45)%	(4.12)%

As of September 30, 2010 and 2009, Boronia I, LLC’s total capitalization was $36,950,842 and $35,734,820, respectively. The Partnership owned approximately 61% and 53%, respectively, of Boronia I, LLC.

Boronia I, LLC

	September 30, 2010	September 30, 2009
Primary Market Risk Category	VaR	VaR

Currency	(0.57)%	(0.46)%
Interest Rate	(0.36)	(1.42)
Equity	(1.56)	(0.72)
Commodity	(2.57)	(0.86)
Aggregate Value at Risk	(3.94)%	(1.93)%

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As of September 30, 2010 and 2009, WNT I, LLC’s total capitalization was $50,566,222 and $42,792,826, respectively. The Partnership owned approximately 79% and 77%, respectively, of WNT I, LLC.

WNT I, LLC

	September 30, 2010	September 30, 2009
Primary Market Risk Category	VaR	VaR

Currency	(0.57)%	(0.82)%
Interest Rate	(1.13)	(0.79)
Equity	(0.91)	(0.94)
Commodity	(0.94)	(0.39)
Aggregate Value at Risk	(1.79)%	(1.48)%

The VaR for a market category represents the one-day downside risk for the aggregate exposures associated with this market category. The Aggregate Value at Risk listed above represents the VaR of the respective Trading Companies’ open positions across all the market categories, and is less than the sum of the VaRs for all such market categories due to the diversification benefit across asset classes.

Because the business of the Trading Companies is the speculative trading of futures, forwards and options, the composition of its trading portfolio can change significantly over any given time period, or even within a single trading day. Such changes could positively or negatively materially impact market risk as measured by VaR.

The table below supplements the quarter-end VaR set forth above by presenting the Trading Companies’ high, low, and average VaR, as a percentage of total net assets for the four quarter-end reporting periods from October 1, 2009 through September 30, 2010 and October 1, 2008 through September 30, 2009, respectively.

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September 30, 2010

Altis I, LLC Primary Market Risk Category	High	Low	Average

Currency	(1.75)%	(0.75)%	(1.23)%
Interest Rate	(1.57)	(0.46)	(0.96)
Equity	(3.93)	(1.55)	(2.42)
Commodity	(2.98)	(1.16)	(1.87)
Aggregate Value at Risk	(4.41)%	(2.43)%	(3.31)%

Aspect I, LLC Primary Market Risk Category	High	Low	Average

Currency	(1.34)%	(0.33)%	(0.70)%
Interest Rate	(1.65)	(1.21)	(1.35)
Equity	(2.14)	(0.22)	(1.35)
Commodity	(2.18)	(0.76)	(1.42)
Aggregate Value at Risk	(3.57)%	(1.56)%	(2.77)%

BHM I, LLC Primary Market Risk Category	High	Low	Average

Currency	(0.37)%	(0.06)%	(0.22)%
Interest Rate	(1.04)	(0.16)	(0.58)
Commodity	(3.90)	(2.52)	(3.17)
Aggregate Value at Risk	(4.45)%	(2.41)%	(3.51)%

Boronia I, LLC Primary Market Risk Category	High	Low	Average

Currency	(0.81)%	(0.48)%	(0.62)%
Interest Rate	(2.08)	(0.36)	(1.16)
Equity	(2.01)	(1.12)	(1.49)
Commodity	(2.57)	(0.69)	(1.47)
Aggregate Value at Risk	(4.30)%	(2.35)%	(3.49)%

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WNT I, LLC Primary Market Risk Category	High	Low	Average

Currency	(0.72)%	(0.52)%	(0.61)%
Interest Rate	(1.13)	(0.34)	(0.73)
Equity	(2.15)	(0.13)	(1.24)
Commodity	(1.12)	(0.58)	(0.85)
Aggregate Value at Risk	(2.84)%	(1.45)%	(2.11)%

September 30, 2009

Altis I, LLC Primary Market Risk Category	High	Low	Average

Currency	(0.94)%	(0.35)%	(0.60)%
Interest Rate	(1.14)	(0.53)	(0.81)
Equity	(2.23)	(0.13)	(0.74)
Commodity	(1.44)	(0.69)	(1.08)
Aggregate Value at Risk	(2.54)%	(1.27)%	(1.89)%

Aspect I, LLC Primary Market Risk Category	High	Low	Average

Currency	(0.61)%	(0.13)%	(0.36)%
Interest Rate	(1.34)	(0.54)	(0.98)
Equity	(1.64)	(0.04)	(0.52)
Commodity	(0.90)	(0.45)	(0.64)
Aggregate Value at Risk	(2.16)%	(0.96)%	(1.42)%

BHM I, LLC Primary Market Risk Category	High	Low	Average

Currency	(0.11)%	(0.02)%	(0.05)%
Interest Rate	(0.98)	(0.24)	(0.53)
Commodity	(3.59)	(1.44)	(2.66)
Aggregate Value at Risk	(4.12)%	(1.49)%	(2.86)%

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Boronia I, LLC Primary Market Risk Category	High	Low	Average

Currency	(0.46)%	(0.08)%	(0.24)%
Interest Rate	(1.42)	(0.59)	(1.06)
Equity	(0.72)	(0.10)	(0.44)
Commodity	(1.05)	(0.44)	(0.74)
Aggregate Value at Risk	(1.93)%	(1.18)%	(1.44)%

WNT I, LLC Primary Market Risk Category	High	Low	Average

Currency	(0.87)%	(0.18)%	(0.56)%
Interest Rate	(0.79)	(0.37)	(0.51)
Equity	(0.94)	(0.05)	(0.39)
Commodity	(0.39)	(0.20)	(0.27)
Aggregate Value at Risk	(1.48)%	(0.57)%	(0.87)%

Limitations on Value at Risk as an Assessment of Market Risk

VaR models permit estimation of a portfolio’s aggregate market risk exposure, incorporating a range of varied market risks, reflect risk reduction due to portfolio diversification or hedging activities, and can cover a wide range of portfolio assets. However, VaR risk measures should be viewed in light of the methodology’s limitations, which include, but may not be limited to the following:

·	past changes in market risk factors will not always result in accurate predictions of the distributions and correlations of future market movements;

·	changes in portfolio value caused by market movements may differ from those of the VaR model;

·	VaR results reflect past market fluctuations applied to current trading positions while future risk depends on future positions;

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·	VaR using a one-day time horizon does not fully capture the market risk of positions that cannot be liquidated or hedged within one day; and

·	the historical market risk factor data used for VaR estimation may provide only limited insight into losses that could be incurred under certain unusual market movements.

In addition, the VaR tables above, as well as the past performance of the Partnership and the Trading Companies, give no indication of the Partnership’s potential “risk of ruin.”

The VaR tables provided present the results of the Partnership’s VaR for each of the Trading Companies’ market risk exposures and on an aggregate basis at September 30, 2010 and 2009 and for the four quarter-end reporting periods from October 1, 2009 through September 30, 2010 and from October 1, 2008 through September 30, 2009, respectively. VaR is not necessarily representative of the Trading Companies’ historic risk, nor should it be used to predict the Partnership or the Trading Companies’ future financial performance or their ability to manage or monitor risk. There can be no assurance that the Trading Companies’ actual losses on a particular day will not exceed the VaR amounts indicated above or that such losses will not occur more than once in 100 trading days.

Non-Trading Risk

The Trading Companies have non-trading market risk on their foreign cash balances not needed for margin. These balances and any market risk they may represent are immaterial.

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The Trading Companies also maintain a substantial portion of their available assets in cash at MSSB; as of September 30, 2010, such amount was equal to:

·	approximately 92% of BHM I, LLC’s net assets.

·	approximately 89% of Aspect I, LLC’s net assets.

·	approximately 78% of Altis I, LLC’s net assets.

·	approximately 93% of WNT I, LLC’s net assets.

·	approximately 92% of Boronia I, LLC’s net assets.

A decline in short-term interest rates would result in a decline in the Trading Companies’ cash management income. This cash flow risk is not considered to be material.

Materiality, as used throughout this section, is based on an assessment of reasonably possible market movements and any associated potential losses, taking into account the leverage, optionality, and multiplier features of the Trading Companies’ market-sensitive instruments, in relation to the Trading Companies’ net assets.

Qualitative Disclosures Regarding Primary Trading Risk Exposures

The following qualitative disclosures regarding the Partnership’s market risk exposures – except for (A) those disclosures that are statements of historical fact and (B) the descriptions of how the Partnership manages its primary market risk exposures – constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. The Partnership’s primary market risk exposures, as well as the strategies used and to be used by Demeter and the Trading Advisors for managing such exposures, are subject

to numerous uncertainties, contingencies and risks, any one of which could cause the actual results of the

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Partnership’s risk controls to differ materially from the objectives of such strategies. Government interventions, defaults and expropriations, illiquid markets, the emergence of dominant fundamental factors, political upheavals, changes in historical price relationships, an influx of new market participants, increased regulation, and many other factors could result in material losses, as well as in material changes to the risk exposures and the risk management strategies of the Partnership.

The Trading Advisor for each Trading Company, in general, tends to utilize its trading system(s) to take positions when market opportunities develop, and Demeter anticipates that the Trading Advisors will continue to do so.

Investors must be prepared to lose all or substantially all of their investment in the Partnership.

The following were the primary trading risk exposures of the Partnership at September 30, 2010, by market sector. It may be anticipated, however, that these market exposures will vary materially over time.

Equity. At September 30, 2010, the Partnership had market exposure to the global stock index sector, primarily to equity price risk in the G-7 countries. The G-7 countries consist of France, the U.S., the United Kingdom, Germany, Japan, Italy, and Canada. The stock index futures traded by the Partnership are by law limited to futures on broadly-based indices. At September 30, 2010, the Partnership’s primary exposures were to the S&P 500 (U.S.), DAX (Germany), FTSE 100 (United Kingdom), Hang Seng (Hong Kong), Nasdaq 100 (U.S.), Canadian S&P 60 (Canada), H-Shares (Hong Kong), SPI 200 (Australia), Nikkei 225 (Japan), Taiwan (Taiwan), Euro Stoxx 50 (Europe), S&P Midcap (U.S.), OMX 30 (Sweden), CAC 40 (France), Dow Jones Industrials

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(U.S.), and Topix (Japan) stock indices. The Partnership is primarily exposed to the risk of adverse price trends or static markets in the North American, European, and Pacific Rim stock indices. Static markets would not cause major market changes but would make it difficult for the Partnership to avoid trendless price movements, resulting in numerous small losses.

Interest Rate. At September 30, 2010, the Partnership had market exposure to the global interest rate sector. This exposure was primarily spread across the U.S., European, Japanese, Australian, and Canadian interest rate sectors. Interest rate movements directly affect the price of the sovereign bond futures positions held by the Partnership and indirectly affect the value of its stock index and currency positions. Interest rate movements in one country, as well as relative interest rate movements between countries, materially impact the Partnership’s profitability. The Partnership’s interest rate exposure is generally to interest rate fluctuations in the U.S. and the other G-7 countries. However, the Partnership also takes futures positions in the government debt of smaller countries – e.g., Australia. Demeter anticipates that the G-7 countries’ and Australian interest rates will remain the primary interest rate exposures of the Partnership for the foreseeable future. The speculative futures positions held by the Partnership may range from short to long-term instruments. Consequently, changes in short, medium, or long-term interest rates may have an effect on the Partnership.

Currency. At September 30, 2010, the Partnership had market exposure to the currency sector. The Partnership’s currency exposure is to exchange rate fluctuations, primarily fluctuations which disrupt the historical pricing relationships between different currencies and currency pairs. Interest rate changes, as well as political and general economic conditions influence these fluctuations. The Partnership trades a number of currencies including cross-rate – i.e., positions between two currencies other than the U.S. dollar. At September 30, 2010,

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the Partnership’s major exposures were to the Australian dollar, Japanese yen, British pound, euro, Canadian dollar, New Zealand dollar, Swiss franc, Polish zloty, and Swedish krona currency crosses, as well as to outright U.S. dollar positions. Outright positions consist of the U.S. dollar vs. other currencies. These other currencies include major and minor currencies. Demeter does not anticipate that the risk associated with the Partnership’s currency trades will change significantly in the future.

Commodity.

Energy. The largest market exposure of the Partnership at September 30, 2010 was to the energy sector. The Partnership’s primary energy exposure was to futures contracts in crude oil and its related products, as well as in natural gas. Price movements in these markets result from geopolitical developments, particularly in the Middle East, as well as weather patterns, and other economic fundamentals. Oil and gas prices can be volatile and significant profits and losses, which have been experienced in the past, are expected to continue to be experienced in these markets in the future.

Metals.

The second largest market exposure of the Partnership at September 30, 2010, was to the metals sector. The Partnership’s metals exposure was to fluctuations in the price of precious metals, such as gold, silver, palladium, and platinum. The Partnership also had exposure to base metals, such as copper, aluminum, nickel, zinc, and lead. Economic forces, supply and demand inequalities, geopolitical factors and market expectations influence price movements in these markets.

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Soft Commodities and Agriculturals. The third largest market exposure of the Partnership at September 30, 2010, was to the soft commodities and agricultural sectors. Most of the exposure was to corn, soybeans, sugar, cocoa, wheat, coffee, cotton, soybean oil, soybean meal, live cattle, and rubber markets. Supply and demand inequalities, severe weather disruptions, and market expectations affect price movements in these markets.

Qualitative Disclosures Regarding Non-Trading Risk Exposure

The following was the only non-trading risk exposure of the Partnership at September 30, 2010:

Foreign Currency Balances. The Partnership’s primary foreign currency balances at September 30, 2010, were in euros, Australian dollars, Japanese yen, British pounds, Swiss francs, Canadian dollars, Swedish kronor, Hong Kong dollars, Czech korunas, Singapore dollars, New Zealand dollars, Norwegian kroner, and Hungarian forint. The Partnership controls the non-trading risk of foreign currency balances by regularly converting them back into U.S. dollars upon liquidation of their respective positions.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the management of Demeter, at the time this quarterly report was filed, Demeter’s President (Demeter’s principal executive officer) and Chief Financial Officer (Demeter’s principal financial officer) have evaluated the effectiveness of the design and operation 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 30, 2010. The Partnership’s disclosure controls and procedures are designed

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to provide reasonable assurance that information the Partnership is required to disclose in the reports that the Partnership files or submits under the Exchange Act are recorded, processed and summarized and reported within the time period specified in the applicable rules and forms. Based on this evaluation, the President and Chief Financial Officer of Demeter have concluded that the disclosure controls and procedures of the Partnership were effective at September 30, 2010.

Changes in Internal Control over Financial Reporting

There have been no changes during the period covered by this quarterly report in the Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have

materially affected or are reasonably likely to materially affect the Partnership’s internal control over financial reporting.

Limitations on the Effectiveness of Controls

Any control system, no matter how well designed and operated, can provide reasonable (not absolute) assurance that its objectives will be met. Furthermore, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

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PART II. OTHER INFORMATION

Item 1A. RISK FACTORS

There have been no material changes from the risk factors previously referenced in the Partnership’s Report on Form 10-K for the fiscal year ended December 31, 2009.

Item 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

Units of the Partnership are sold to persons and entities who are accredited investors as the term is defined in Rule 501(a) of Regulation D.

The aggregate proceeds of securities sold in all share Classes to the limited partners, from inception through September 30, 2010, was $244,044,449. Since inception, the Partnership received $1,637,000 in consideration from the sale of Units to Demeter.

Item 6. EXHIBITS

31.01

Certification of President of Demeter Management LLC, the general partner of the Partnership, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02

Certification of Chief Financial Officer of Demeter Management LLC, the general partner of the Partnership, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.01

Certification of President of Demeter Management LLC, the general partner of the Partnership, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.02

Certification of Chief Financial Officer of Demeter Management LLC, the general partner of the Partnership, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURE

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.

	Managed Futures Profile HV, L.P.
	(Registrant)

	By:	Demeter Management LLC
		(General Partner)

November 12, 2010	By:
		Christian Angstadt
		Chief Financial Officer

The General Partner which signed the above is the only party authorized to act for the registrant. The registrant has no principal executive officer, principal financial officer, controller, or principal accounting officer and has no Board of Directors.

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Polaris Futures Fund L.P. - FORM 10-Q - November 12, 2010

Attached files

Polaris Futures Fund L.P. Reports