SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 3)

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006

Commission File number 0-16898

ProFutures Diversified Fund, L.P.

(Exact name of Partnership as specified in charter)

Delaware		75-2197831
(State of organization)		(I.R.S. Employer Identification No.)

ProFutures, Inc.

11719 Bee Cave Road

Suite 200

Austin, Texas 78738

(Address of principal executive offices)

Partnership's telephone number

(800) 348-3601

Securities registered pursuant to Section 12(b) of the Act

Title of each class.		Name of each exchange on which registered.


Securities registered pursuant to Section 12(g) of the Act

Units of Limited Partnership Interest

-------------------------------------

(Title of Class)

Indicate by check mark whether the Partnership (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 Partnership 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporation by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A.

[X]

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

Large accelerated filer [ ] Accelerated Filer [ ] Non-accelerated filer [X]

State the aggregate market value of the voting and non-voting stock held by non-affiliates computed by reference to the price at which the stock was last sold, or the average bid and asked prices of such stock, as of the last business day of the registrant's most recently completed second fiscal quarter. (See definition of affiliate in Rule 405, 17 CFR 230.405.)

Not applicable

Page 1

DOCUMENTS INCORPORATED BY REFERENCE

Registrant’s Financial Statements for the Years ended December 31, 2006, 2005 and 2004 with Reports of Independent Registered Public Accounting Firms, the annual report to securities holders for the fiscal year ended December 31, 2006, is incorporated by reference into Part IV hereof and filed as an exhibit herewith. Portions of the Registrant's Prospectus dated July 31, 1994 and Supplement dated January 31, 1995 Post-Effective Amendment No. 3 dated June 23, 1995 also are incorporated by reference in Part IV of this Form 10-K/A.

Page 2

EXPLANATORY NOTE

The Partnership is filing this Form 10-K/A to include the amended Report of Independent Registered Public Accounting Firm of KBA Group LLP, which was amended to comply with Regulation S-X.

Except as required to reflect the item described above, no attempt has been made in this Form 10-K/A to modify or update disclosures in the original report on Form 10-K, the disclosures in the Partnership’s Form 10-K/A filed with the Securities and Exchange Commission on April 26, 2007 or the Partnership’s Form 10-K/A filed with the Securities and Exchange Commission on August 23, 2007 (together, the “Previous Forms 10-K”). This Form 10-K/A does not reflect events occurring after the filing of the Previous Forms 10-K or modify or update any related disclosures. Information not affected by the amendment is unchanged and reflects the disclosure made at the time of the filing of the Previous Forms 10-K. Accordingly, this form 10-K/A should be read in conjunction with the Previous Forms 10-K and the Fund’s filings made with the Securities and Exchange Commission subsequent to the filing of the Previous Forms 10-K.

Page 3

PART IV

Item 15.

Exhibits and Financial Statement Schedules.

(a)(1)

Financial Statements.

The following are included with the 2006 Report of Independent Registered Public Accounting Firm, a copy of which is filed herewith as Exhibit 13.1

Affirmation of ProFutures, Inc.

Report of Independent Registered Public Accounting Firm

Statements of Financial Condition

Condensed Schedules of Investments

Statements of Operations

Statements of Changes in Partners’ Capital

Notes to Financial Statements

(a)(2)

Schedules are omitted for the reason that all required information is contained in the financial statements included in (a)(1) above or are not applicable.

(a)(3)

Exhibits as required by Item 601 of Regulation S-K.

*1.1	Form of Selling Agreement between the Partnership and ProFutures Financial Group, Inc.
*1.2	Form of Additional Selling Agents Agreement between ProFutures Financial Group, Inc. and certain Additional Selling Agents.
*3.1	Agreement of Limited Partnership (attached to the Prospectus as Exhibit A).
*3.2	Subscription Agreement and Power of Attorney (attached to the Prospectus as Exhibit B).
*3.3	Request for Redemption Form (attached to the Prospectus as Exhibit C).
*5.1	Opinion of Counsel as to the legality of the Units.
*8.1	Tax Opinion of Counsel.
*10.4	Form of Consulting Agreement between the Registrant and Kenmar Global Strategies Inc.
*10.6	Form of Amended and Restated Stock Subscription Agreement by and between ABN AMRO Incorporated and ProFutures, Inc.

(b)

Exhibits.

13.1

2006 Report of Independent Registered Public Accounting Firm.

_________________

The foregoing forms of exhibits were filed in the April 6, 1987 Registration Statement No. 33-13008 and/or Post-Effective Amendment No. 1 thereto filed March 11, 1988, and/or the June 5, 1991 Registration Statement No. 33-41073, and/or Pre-Effective Amendment No. 1 thereto filed August 8, 1991, and/or Post-Effective Amendment No. 1 thereto filed March 26, 1992; and/or the October 14, 1992 Registration Statement No. 33-53324, and/or the November 17, 1992 Pre-effective Amendment No. 1 thereto and/or the July 2, 1993 Registration Statement No. 33-65596, and/or the Pre-Effective Amendment No. 1 thereto filed August 16, 1993, and Supplement dated December 3, 1993, Post-Effective Amendment No. 2 thereto filed June 30, 1994 and Supplement dated January 31, 1995, and/or Post-Effective Amendment No. 3 dated June 23 1995; and/or Form 10-K for the year ended 2001; and/or Form 10-Q for the quarter ended June 30, 2002. Accordingly, such exhibits are incorporated herein by reference and notified herewith.

Page 4

31.01

Certification of Gary D. Halbert, President, pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.

31.02

Certification of Debi B. Halbert, Chief Financial Officer, pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.

32.01

Certification of Gary D. Halbert, President, pursuant to 18 U.S.C. Section 1350 as enacted by Section 906 of The Sarbanes-Oxley Act of 2002.

32.02

Certification of Debi B. Halbert, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 as enacted by Section 906 of The Sarbanes-Oxley Act of 2002.

(c)

Financial Statement Schedules.

Not Applicable or information included in the financial statements.

Page 5

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	PROFUTURES DIVERSIFIED FUND, L.P.
	(Partnership)



December 4, 2007	By /s/ GARY D. HALBERT
Date		Gary D. Halbert, President and Director
		ProFutures, Inc.
		General Partner



December 4, 2007	By /s/ DEBI B. HALBERT
Date		Debi B. Halbert, Chief Financial Officer,
		Treasurer and Director
		ProFutures, Inc.
		General Partner

Page 6

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.



December 4, 2007	By /s/ GARY D. HALBERT
Date		Gary D. Halbert, President and Director
		ProFutures, Inc.
		General Partner



December 4, 2007	By /s/ DEBI B. HALBERT
Date		Debi B. Halbert, Chief Financial Officer,
		Treasurer and Director
		ProFutures, Inc.
		General Partner

Page 7

PROFUTURES DIVERSIFIED FUND, L.P.

ANNUAL REPORT

December 31, 2006

PROFUTURES DIVERSIFIED FUND, L.P.

______________________

TABLE OF CONTENTS

______________________

	PAGES


Affirmation of the Commodity Pool Operator	1

Report of Independent Registered Public Accounting Firm	2

Report of Independent Registered Public Accounting Firm	3

Financial Statements

Statements of Financial Condition	4

Condensed Schedules of Investments	5

Statements of Operations	7

Statements of Changes in Partners’ Capital (Net Asset Value)	8

Notes to Financial Statements	9 – 16

PROFUTURES DIVERSIFIED FUND, L.P.

AFFIRMATION OF THE COMMODITY POOL OPERATOR

_______________

To the best of the knowledge and belief of the undersigned, the information contained in the Annual Report for the year ended December 31, 2006 is accurate and complete.

	/s/ Gary D. Halbert
	Gary D. Halbert, President
	ProFutures, Inc.
	PROFUTURES DIVERSIFIED FUND, L.P.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners

ProFutures Diversified Fund, L.P.

We have audited the accompanying statements of financial condition of ProFutures Diversified Fund, L.P., including the condensed schedules of investments, as of December 31, 2006 and 2005, and the related statements of operations and changes in partners’ capital (net asset value) for the years ended December 31, 2006 and 2005. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ProFutures Diversified Fund, L.P. as of December 31, 2006 and 2005, and the results of its operations and the changes in its net asset values for the years ended December 31, 2006 and 2005, in conformity with accounting principles generally accepted in the United States of America.

/s/ KBA Group LLP

Dallas, Texas

December 3, 2007

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners

ProFutures Diversified Fund, L.P.

We have audited the accompanying statement of operations and changes in partners’ capital (net asset value) of ProFutures Diversified Fund, L.P. for the year ended December 31, 2004. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and the changes in net asset value of ProFutures Diversified Fund, L.P. for the year ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

/s/ ARTHUR F. BELL, JR. & ASSOCIATES, L.L.C.

Hunt Valley, Maryland

March 24, 2005

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PROFUTURES DIVERSIFIED FUND, L.P.

STATEMENTS OF FINANCIAL CONDITION

December 31, 2006 and 2005

____________________

	2006			2005
ASSETS
Equity in broker trading accounts
Cash	$	13,325,595		$	22,398,315
Option premiums (received) paid		(63,125	)		23,550
Unrealized gain (loss) on open contracts		483,877			(761,849	)

Deposits with broker		13,746,347			21,660,016

Cash		3,204			2,648
Cash deposits in forward trading collateral accounts		5,412,319			10,674,912
Net premiums paid on options on forward currency contracts		3,294			-
Unrealized gain (loss) on open forward currency contracts		371,164			(326,881	)
Investment in Winton Futures Fund, L.P. (US)		9,338,122			-

Total assets	$	28,874,450		$	32,010,695

LIABILITIES
Accounts payable	$	54,006		$	51,071
Commissions and other trading fees on open contracts		5,951			40,880
Incentive fees payable		62,651			296,921
Management fees payable (includes $89,607 and $98,289 payable to the General Partner at December 31, 2006 and 2005, respectively)		238,977			280,502
Redemptions payable		338,753			400,683

Total liabilities		700,338			1,070,057

PARTNERS’ CAPITAL (Net Asset Value)
General Partner - 187 units outstanding at December 31, 2006 and 2005		592,117			560,244
Limited Partners – 8,716 and 10,147 units outstanding at December 31, 2006 and 2005		27,581,995			30,380,394

Total partners’ capital (Net Asset Value)		28,174,112			30,940,638

	$	28,874,450		$	32,010,695

See accompanying notes.

- 4 -

PROFUTURES DIVERSIFIED FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS

December 31, 2006 and 2005

____________________

LONG FUTURES CONTRACTS	2006						2005
Description	Value			% of Net Asset Value			Value			% of Net Asset Value

Agricultural	$	(480	)		(0.00	)%	$	119,327			0.38	%
Currency		38			0.00	%		(35,303	)		(0.11	)%
Energy		(99,060	)		(0.35	)%		(93,005	)		(0.30	)%
Interest rate		(50,146	)		(0.18	)%		293,053			0.95	%
Metal (1)		(18,666	)		(0.07	)%		15,167,433			49.01	%
Stock index		193,440			0.69	%		(26,086	)		(0.08	)%

Total long futures contracts	$	25,126			0.09	%	$	15,425,419			49.85	%

SHORT FUTURES CONTRACTS
Description
Agricultural	$	213			0.00	%	$	(89,987	)		(0.29	)%
Currency		62,245			0.22	%		(30,428	)		(0.10	)%
Energy		18,760			0.07	%		(33,372	)		(0.11	)%
Interest rate		333,242			1.18	%		185,871			0.60	%
Metal (2)		33,416			0.12	%		(16,231,246	)		(52.45	)%
Stock index		-			0.00	%		16,694			0.05	%

Total short futures contracts	$	447,876			1.59	%		(16,182,468	)		(52.30	)%
Total futures contracts	$	473,002			1.68	%	$	(757,049	)		(2.45	)%

PURCHASED OPTIONS ON FUTURES CONTRACTS
Agricultural options	$	-			0.00	%	$	5,550			0.02	%
Energy options		-			0.00	%		13,200			0.04	%

Total purchased options on futures contracts (premiums paid - $0 and $23,550, respectively)	$	-			0.00	%	$	18,750			0.06	%

WRITTEN OPTIONS ON FUTURES CONTRACTS
Stock index	$	(52,250	)		(0.19	)%	$	-			0.00	%

Total written options on futures contracts (premiums received - $63,125 and $0, respectively)	$	(52,250	)		(0.19	)%	$	-			0.00	%

(1)

As of December 31, 2005, there were certain long metal futures contracts with an aggregate value above 5% of Net Asset Value, consisting of 903 LME aluminum futures contracts, expiration dates 1/06 - 12/09, at a value of $4,729,465 (15.28% of Net Asset Value) and 715 LME copper futures contracts, expiration dates 1/06 - 12/08, at a value of $9,524,486 (30.78% of Net Asset Value).

(2)

As of December 31, 2005, there were certain short metal futures contracts with an aggregate value above 5% of Net Asset Value, consisting of 883 LME aluminum futures contracts, expiration dates 1/06 - 12/09, at a value of $(5,296,278) (17.12% of Net Asset Value) and 708 LME copper futures contracts, expiration dates 1/06 - 12/08, at a value of $(10,252,843) (33.14% of Net Asset Value).

See accompanying notes.

- 5 -

PROFUTURES DIVERSIFIED FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2006 and 2005

____________________

FORWARD CURRENCY CONTRACTS	2006						2005
Description	Value			% of Net Asset Value			Value			% of Net Asset Value

Long forward currency contracts	$	(255,674	)		(0.91	)%	$	(333,740	)		(1.08	)%
Short forward currency contracts		625,493			2.22	%		6,859			0.02	%
Total forward currency contracts	$	369,819			1.31	%	$	(326,881	)		(1.06	)%

PURCHASED OPTIONS ON FORWARD CURRENCY CONTRACTS
Purchased options on forward currency contracts (premiums paid - $7,747 and $0, respectively)	$	8,911			0.03	%	$	0			0	%

WRITTEN OPTIONS ON FORWARD CURRENCY CONTRACTS
Written options on forward currency contracts (premiums received - $4,453 and $0, respectively)	$	(4,272	)		(0.02	)%	$	0			0	%

INVESTMENT IN WINTON FUTURES FUND, L.P. (US)
Description

Winton Futures Fund, L.P. (US) – Class B Interests Investment Objective To achieve capital appreciation bytrading U.S. and Non U.S. futures contracts Redemption Provisions Monthly, with 15 days notice	$	9,338,122			33.14	%	$	0			0	%

See accompanying notes.

- 6 -

PROFUTURES DIVERSIFIED FUND, L.P.

STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2006, 2005 and 2004

_______________


	2006			2005			2004
TRADING GAINS (LOSSES)
Gain (loss) from futures and options on futures trading
Realized	$	2,245,198		$	6,184,059		$	6,744,693
Change in unrealized		1,245,726			(1,275,765	)		(1,502,106	)
Brokerage commissions		(778,830	)		(1,141,416	)		(856,269	)

Gain from futures and options on futures trading		2,712,094			3,766,878			4,386,318
Realized gain from investment in physical commodities		-			580,729			-

Gain (loss) from trading of forward currency contracts and options on forward currency contracts
Realized		(691,720	)		1,320,214			805,336
Change in unrealized		698,045			(47,561	)		(882,202	)

Gain (loss) from forward currency contracts and options on forward currency contracts		6,325			1,272,653			(76,866	)
Change in unrealized gain from investment in Winton Futures Fund, L.P. (US)		398,122			-			-

Total trading gains		3,116,541			5,620,260			4,309,452

NET INVESTMENT INCOME (LOSS)
Income
Interest income		1,292,259			882,295			442,893

Expenses
Incentive fees		530,112			849,102			1,138,118
Management fees (includes $1,128,704, $1,201,191, $1,050,783 charged by the General Partner for the years ended December 31, 2006, 2005, and 2004, respectively)		1,944,002			2,118,910			2,160,170
Operating expenses		325,870			268,468			202,142

Total expenses		2,799,984			3,236,480			3,500,430

Net investment (loss)		(1,507,725	)		(2,354,185	)		(3,057,537	)

NET INCOME	$	1,608,816		$	3,266,075		$	1,251,915

NET INCOME PER GENERAL AND LIMITED PARTNER UNIT
(based on weighted average number of units outstanding during the year of 9,746, 11,174 and 12,454, respectively)	$	165.07		$	292.29		$	100.52

INCREASE IN NET ASSET VALUE PER GENERAL AND LIMITED PARTNER UNIT	$	170.33		$	294.10		$	101.44

See accompanying notes.

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PROFUTURES DIVERSIFIED FUND, L.P.

STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL (NET ASSET VALUE)

For the Years Ended December 31, 2006, 2005 and 2004

_______________

	Total
	Number of			Partners' Capital
	Units			General			Limited			Total
Balances at December 31, 2003		12,941		$	584,564		$	33,041,117		$	33,625,681
Net income for the year ended December 31, 2004					22,820			1,229,095			1,251,915

Redemptions		(1,059	)		-			(2,795,943	)		(2,795,943	)

Balances at December 31, 2004		11,882			607,384			31,474,269			32,081,653
Net income for the year ended December 31, 2005					52,860			3,213,215			3,266,075

Redemptions		(1,548	)		(100,000	)		(4,307,090	)		(4,407,090	)

Balances at December 31, 2005		10,334			560,244			30,380,394			30,940,638
Net income for the year ended December 31, 2006					31,873			1,576,943			1,608,816

Redemptions		(1,431	)		-			(4,375,342	)		(4,375,342	)

Balances at December 31, 2006		8,903		$	592,117		$	27,581,995		$	28,174,112

	Net Asset Value Per Unit

				December 31,
	2006			2005			2004

	$	3,164.35		$	2,994.02		$	2,699.92

See accompanying notes.

- 8 -

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General Description of the Partnership

ProFutures Diversified Fund, L.P. (the Partnership) is a Delaware limited partnership, which operates as a commodity investment pool. The Partnership engages in the speculative trading of futures contracts, options on futures contracts, physical commodities, interbank forward currency contracts and options on interbank forward currency contracts. The Partnership closed to investors in 1995 and will terminate at the end of December 2012, at which time the remaining assets will be distributed.

Regulation

As a registrant with the Securities and Exchange Commission, the Partnership is subject to the regulatory requirements under the Securities Act of 1933 and the Securities Exchange Act of 1934. As a commodity investment pool, the Partnership is subject to the regulations of the Commodity Futures Trading Commission, an agency of the United States (U.S.) government which regulates most aspects of the commodity futures industry; rules of the National Futures Association, an industry self-regulatory organization; and the requirements of commodity exchanges, Futures Commission Merchants (brokers), and interbank market makers through which the Partnership trades.

Method of Reporting

The Partnership’s financial statements are presented in accordance with accounting principles generally accepted in the United States of America, which require the use of certain estimates made by the Partnership’s management.

For purposes of both financial reporting and calculation of redemption value, Net Asset Value per Unit is calculated by dividing Net Asset Value by the total number of units outstanding.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the estimates and assumptions utilized.

Cash and Cash Equivalents

Cash and cash equivalents includes cash and investments in money market mutual funds.

- 9 -

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Futures and Forward Currency Contracts

Transactions are accounted for on the trade date. Gains or losses are realized when contracts are liquidated. Unrealized gains or losses on open contracts (the difference between contract trade price and market price) are reflected in the statement of financial condition as a net gain or loss, as there exists a right of offset of unrealized gains or losses in accordance with Financial Accounting Standards Board Interpretation No. 39 – “Offsetting of Amounts Related to Certain Contracts.” Any change in net unrealized gain or loss from the preceding period is reported in the statement of operations.

Physical Commodities

Physical commodities are stated at the market price on the valuation date. Transactions are recorded on the trade date. Realized gains and losses from physical commodity transactions are determined using the identified cost method. Any change in net unrealized gain or loss from the preceding period is reported in the statement of operations. Storage fees, sales commissions and delivery charges are reflected as an adjustment to cost or proceeds at the time of the transaction.

Income Taxes

The Partnership prepares calendar year U.S. and applicable state information tax returns and reports to the partners their allocable shares of the Partnership’s income, expenses and trading gains or losses.

Foreign Currency Transactions

The Partnership’s functional currency is the U.S. dollar; however, it transacts business in currencies other than the U.S. dollar. Assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollars at the rates in effect at the date of the statement of financial condition. Income and expense items denominated in currencies other than the U.S. dollar are translated into U.S. dollars at the rates in effect during the period. Gains and losses resulting from the translation to U.S. dollars are reported in income currently.

Investment in Winton Futures Fund, L.P. (US)

The Partnership’s investment in Winton Futures Fund, L.P. (US) is reported in the statement of financial condition at fair value. Fair value ordinarily is the value determined by Winton Futures Fund, L.P. (US) in accordance with its valuation policies and as reported by their management at the time of the Partnership’s valuation. Generally, the fair value of the Partnership’s investment in Winton Futures Fund, L.P. (US) represents the amount that the Partnership could reasonably expect to receive from Winton Futures Fund, L.P. (US) if the Partnership’s investment was redeemed at the time of valuation, based on information reasonably available at the time the valuation is made and that the Partnership believes to be reliable.

- 10 -

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Redemptions of Units

Redemptions payable at December 31, 2006 represents redemptions approved by the General Partner prior to January 1, 2007, which are not effective until January 2, 2007.

Brokerage Commissions

Brokerage commissions include other trading fees and are charged to expense when contracts are opened.

Statements of Cash Flows

The Partnership has elected not to provide statements of cash flows as permitted by Statement of Financial Accounting Standards No. 102 – “Statement of Cash Flows – Exemption of Certain Enterprises and Classification of Cash Flows from Certain Securities Acquired for Resale.”

Recently Issued Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48 (FIN 48) entitled “Accounting For Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109.” FIN 48 prescribes the minimum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity before being measured and recognized in the financial statements. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. The implementation of FIN 48 is not expected to have a material impact on the Partnership’s financial statements.

In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (FAS 157). FAS 157 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America, and expands disclosures about fair value measurements. While FAS 157 does not require any new fair value measurements, for some entities, the application of FAS 157 may change current practice. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The implementation of FAS 157 is not expected to have a material impact on the Partnership’s financial statements.

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PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Note 2.

GENERAL PARTNER

The General Partner of the Partnership is ProFutures, Inc., which conducts and manages the business of the Partnership. The Agreement of Limited Partnership requires the General Partner to contribute to the Partnership an amount in the aggregate equal to at least the greater of (i) 3% of the aggregate initial capital contributions of all partners or $100,000, whichever is less, or (ii) 1% of the aggregate initial capital contributions of all partners.

The Agreement of Limited Partnership also requires that the General Partner maintain in the aggregate a net worth at least equal to (i) the lesser of $250,000 or 15% of the aggregate initial capital contributions of any limited partnerships for which it acts as general partner and which are capitalized at less than $2,500,000; and (ii) 10% of the aggregate initial capital contributions of any limited partnerships for which it acts as general partner and which are capitalized at greater than $2,500,000.

Effective October 22, 2004, ProFutures, Inc. has a callable stock subscription agreement with Man Financial Inc. (MFI), the Partnership’s broker, whereby MFI has subscribed to purchase (up to $7,000,000, subject to conditions set forth in the stock subscription agreement dated October 22, 2004) the number of shares of common stock of ProFutures, Inc. necessary to maintain the General Partner’s net worth requirements. Prior to October 22, 2004, ProFutures, Inc. had a callable stock subscription agreement with ABN AMRO Incorporated (ABN), the Partnership’s prior broker, whereby ABN had subscribed to purchase (up to $7,000,000, subject to the conditions set forth in the stock subscription agreement as amended effective May 20, 2002) the number of shares of common stock of ProFutures, Inc. necessary to maintain the General Partner’s net worth requirements.

The Partnership pays the General Partner a monthly management fee of 1/4 of 1% (3% annually) of month-end Net Asset Value. The General Partner receives an additional monthly management fee of .0625% (.75% annually) of the Partnership’s month-end Net Asset Value for consulting services rendered to the Partnership.

Total management fees earned by ProFutures, Inc. for the years ended December 31, 2006, 2005 and 2004 were $1,128,704, $1,201,191 and $1,050,783, respectively. Management fees payable to ProFutures, Inc. as of December 31, 2006 and 2005 were $89,607 and $98,289, respectively.

Note 3.

CONSULTANTS

On October 25, 2004, the Partnership entered into a consulting agreement effective November 1, 2004, with Altegris Investments, Inc. (Altegris), whereby Altegris will recommend the selection and termination of the Partnership’s trading advisors and the allocation and reallocation of the Partnership’s assets. Pursuant to the consulting agreement, Altegris receives a monthly consulting fee equal to .0208% (.25% annually) of the Partnership’s month-end Net Asset Value. The consulting fee (included in management fees in the statement of operations) earned by Altegris for the years ended December 31, 2006, 2005 and 2004 were $75,247, $80,079 and $13,651, respectively.

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PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Note 3.

CONSULTANTS (CONTINUED)

Prior to October 15, 2004, Kenmar Global Strategies Inc. (Kenmar) assisted the General Partner in making decisions about which commodity trading advisors to hire, the allocations among the advisors and the day-to-day monitoring and risk management of the Partnership’s trading activities. Kenmar received a monthly management fee of 1/12 of 1% (1% annually) of month-end Net Asset Value. Effective October 15, 2004, ProFutures, Inc. terminated the consulting agreement between Kenmar and the Partnership. Accordingly, Kenmar was paid a pro rated monthly management fee for the period October 1, 2004 through October 15, 2004. Management fees earned by Kenmar totaled $266,317 for the year ended December 31, 2004.

Note 4.

COMMODITY TRADING ADVISORS

The Partnership has trading advisory contracts with several commodity trading advisors to furnish investment management services to the Partnership. The trading advisors receive management fees ranging from 1% to 2% annually of Allocated Net Asset Value (as defined in each respective trading advisory contract). In addition, the trading advisors receive quarterly incentive fees ranging from 20% to 25% of Trading Profits (as defined). Total management fees earned by the trading advisors amounted to $740,051, $837,640 and $829,419 for the years ended December 31, 2006, 2005 and 2004, respectively. Total incentive fees earned by the trading advisors amounted to $530,112, $849,102 and $1,138,118 for the years ended December 31, 2006, 2005 and 2004, respectively.

Note 5.

DEPOSITS WITH BROKER

The Partnership deposits funds with MFI (ABN prior to October 2004) to act as broker, subject to Commodity Futures Trading Commission regulations and various exchange and broker requirements. Margin requirements are satisfied by the deposit of cash with such broker. Accordingly, assets used to meet margin and other broker or regulatory requirements are partially restricted. The Partnership earns interest income on its assets deposited with the broker.

Note 6.

INVESTMENT IN WINTON FUTURES FUND, L.P. (US)

On November 1, 2006, the Partnership invested in Class B Interests of Winton Futures Fund, L.P. (US) (the “Winton Fund”). This investment is subject to the terms of the Agreement of Limited Partnership of the Winton Fund. The General Partner of the Winton Fund is Altegris Portfolio Management, Inc., an affiliate of Altegris Investments, Inc.

Summarized information for this investment for the period ended December 31, 2006 is as follows:

Net Asset Value
December 31, 2005	$	0
Additions		9,000,000
Income		398,122
Redemptions		(60,000	)
Net Asset Value
December 31, 2006	$	9,338,122

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PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Note 6.

INVESTMENT IN WINTON FUTURES FUND, L.P. (US) (CONTINUED)

Class B Interests of the Winton Fund are charged management fees of 1.75% annually and incentive fees of 20% of trading profits. For 2006, the Partnership’s proportionate share of management fees and incentive fees charged by the Winton Fund were approximately $27,000 and $91,000, respectively.

As of December 31, 2006, the Partnership’s investment in the Winton Fund represents 16.34% of the total net asset value of the Winton Fund.

The Partnership may redeem any or all of its investment in the Winton Fund at the end of any calendar month on 15 days prior written notice.

Note 7.

SUBSCRIPTIONS, DISTRIBUTIONS AND REDEMPTIONS

Investments in the Partnership were made by subscription agreement, subject to acceptance by the General Partner. The Partnership’s most recent offering of Units of Limited Partnership Interest terminated on April 30, 1995.

The Partnership is not required to make distributions, but may do so at the sole discretion of the General Partner. A Limited Partner may request and receive redemption of units owned, subject to restrictions in the Agreement of Limited Partnership.

Note 8.

TRADING ACTIVITIES AND RELATED RISKS

The Partnership engages in the speculative trading of U.S. and foreign futures contracts, options on U.S. and foreign futures contracts, physical commodities, forward currency contracts and options on forward currency contracts (collectively, “derivatives”). The Partnership is exposed to both market risk, the risk arising from changes in the market value of the contracts, and credit risk, the risk of failure by another party to perform according to the terms of a contract.

Purchase and sale of futures and options on futures contracts and physical commodities requires margin deposits with the broker. Additional deposits may be necessary for any loss on contract value. The Commodity Exchange Act requires a broker to segregate all customer transactions and assets from such broker’s proprietary activities. A customer’s cash and other property (for example, U.S. Treasury bills) deposited with a broker are considered commingled with all other customer funds subject to the broker’s segregation requirements. In the event of a broker’s insolvency, recovery may be limited to a pro rata share of segregated funds available. It is possible that the recovered amount could be less than total cash and other property deposited.

For derivatives, risks arise from changes in the market value of the contracts. Theoretically, the Partnership is exposed to a market risk equal to the notional contract value of futures and forward currency contracts purchased and unlimited liability on such contracts sold short. As both a buyer and seller of options, the Partnership pays or receives a premium at the outset and then bears the risk of unfavorable changes in the price of the contract underlying the option. Written options expose the Partnership to potentially unlimited liability, and purchased options expose the Partnership to a risk of loss limited to the premiums paid. The Partnership is also exposed to market risk on physical commodities equal to the market value of physical commodities owned.

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PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Note 8.

TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)

The Partnership has a portion of its assets on deposit with a financial institution in connection with its trading of forward currency contracts and its cash management activities. Cash deposited with brokers and dealers in securities and other financial institutions in connection with the Partnership’s trading of forward currency and other derivative contracts are partially restricted due to deposit or margin requirements. In the event of a financial institution’s insolvency, recovery of Partnership assets on deposit may be limited to account insurance or other protection afforded such deposits. Since forward currency contracts are traded in unregulated markets between principals, the Partnership also assumes the risk of loss from counterparty nonperformance.

The Partnership’s investment in Winton Futures Fund, L.P. (US) is subject to the market and credit risks of futures contracts held or sold short by Winton Futures Fund, L.P. (US). The Partnership bears the risk of loss only to the extent of the market value of its respective investment and, in certain specific circumstances, distributions and redemptions received.

The General Partner has established procedures to actively monitor market risk and minimize credit risk, although there can be no assurance that it will, in fact, succeed in doing so. The General Partner’s basic market risk control procedures consist of continuously monitoring the trading activity of the various commodity trading advisors, with the actual market risk controls being applied by Altegris (Kenmar prior to October 15, 2004), as a consultant, and the advisors themselves. The General Partner seeks to minimize credit risk primarily by depositing and maintaining the Partnership’s assets at financial institutions and brokers, which the General Partner believes to be creditworthy. The Limited Partners bear the risk of loss only to the extent of the market value of their respective investments and, in certain specific circumstances, distributions and redemptions received.

Note 9.

INDEMNIFICATIONS

In the normal course of business, the Partnership enters into contracts and agreements that contain a variety of representations and warranties and which provide general indemnifications. The Partnership’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Partnership that have not yet occurred. The Partnership expects the risk of any future obligation under these indemnifications to be remote.

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PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Note 10.

FINANCIAL HIGHLIGHTS

The following information presents per unit operating performance data and other supplemental financial data for the years ended December 31, 2006, 2005 and 2004. This information has been derived from information presented in the financial statements.

	2006			2005			2004
Per Unit Performance
(for a unit outstanding throughout the entire year)

Net asset value per unit at beginning of year	$	2,994.02		$	2,699.92		$	2,598.48

Income (loss) from operations:
Total trading gains ⁽¹⁾		325.03			504.78			346.95
Net investment (loss) ⁽¹⁾		(154.70	)		(210.68	)		(245.51	)

Total income from operations		170.33			294.10			101.44

Net asset value per unit at end of year	$	3,164.35		$	2,994.02		$	2,699.92

Total Return		5.69	%		10.89	%		3.90	%

Supplemental Data

Ratios to average net asset value:⁽²⁾
Expenses prior to incentive fees		7.63	%		7.60	%		7.19	%
Incentive fees		1.78	%		2.70	%		3.47	%
Total expenses		9.41	%		10.30	%		10.66	%
Net investment (loss) ⁽³⁾		(3.29	)%		(4.79	)%		(5.85	)%

Total returns are calculated based on the change in value of a unit during the year. An individual partner’s total returns and ratios may vary from the above total returns and ratios based on the timing of redemptions.

_______________

⁽¹⁾

The net investment (loss) per unit is calculated by dividing the net investment (loss) by the average number of units outstanding during the year. Total trading gains is a balancing amount necessary to reconcile the change in net asset value per unit with the other per unit information. Such balancing amount may differ from the calculation of total trading gains per unit due to the timing of trading gains and losses during the year relative to the number of units outstanding.

⁽²⁾

Excludes the Partnership’s proportionate share of expenses and net investment income (loss) from Winton Futures Fund, L.P. (US).

⁽³⁾

Excludes incentive fee.

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PROFUTURES DIVERSIFIED FUND L P 10-K/A