SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] Quarterly Report Under Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the quarterly period ended March 31, 2010

Commission File Number 0-16898

PROFUTURES DIVERSIFIED FUND, L.P.

(Exact name of Partnership)

Delaware		75-2197831
(State of incorporation or 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

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 o	Smaller Reporting Company x

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

Yes o

No x

TABLE OF CONTENTS

	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements	2 – 10
Item 1. Notes to Financial Statements	11 – 28
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29 - 33
Item 3. Quantitative and Qualitative Disclosures About Market Risk	33
Item 4T. Controls and Procedures	33

PART II – OTHER INFORMATION
Item 1. Legal Proceedings	34
Item 1A. Risk Factors	34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34 – 35
Item 3. Defaults Upon Senior Securities	35
Item 4. (Removed and Reserved)	35
Item 5. Other Information	35
Item 6. Exhibits	35
Signatures	36
Rule 13a–14(a)/15d–14(a) Certifications	37 - 38
Section 1350 Certifications	39 - 40

-1-

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

PROFUTURES DIVERSIFIED FUND, L.P.

STATEMENTS OF FINANCIAL CONDITION

March 31, 2010 (Unaudited) and December 31, 2009 (Audited)

_________________

	March 31,		December 31,
	2010		2009
ASSETS
Equity in broker trading accounts
Cash	$	3,267,585	$	4,181,743
Net unrealized gain (loss) on open futures contracts		14,634		267,330
Deposits with broker		3,282,219		4,449,073
Cash		1,097		577
Investments in other commodity pools		7,291,871		9,275,174
Redemption receivable from other commodity pools		1,925,559		600,000
Total assets	$	12,500,746	$	14,324,824
LIABILITIES
Accounts payable	$	81,635	$	43,635
Commissions and other trading fees payable		752		1,524
Management fees payable (includes $38,743
and $44,594 payable to the General Partner at
March 31, 2010 and December 31, 2009, respectively)		62,015		70,642
Redemptions payable		172,047		532,984
Total liabilities		316,449		648,785
PARTNERS’ CAPITAL (Net Asset Value)
Partners’ Capital (Non-restricted units):
General Partner –184 units outstanding at March 31, 2010 and December 31, 2009, respectively		426,008		464,548
Limited Partners – 5,071 and 5,225 units outstanding at March 31, 2010 and December 31, 2009, respectively		11,758,289		13,211,491
Total partners’ capital (net asset value)		12,184,297		13,676,039
	$	12,500,746	$	14,324,824

See accompanying notes.

-2-

PROFUTURES DIVERSIFIED FUND, L.P.

CONDENSED SCHEDULES OF INVESTMENTS

March 31, 2010 (Unaudited) and December 31, 2009 (Audited)

_______________

	March 31, 2010						December 31, 2009

	Fair Value			% of Net Asset Value			Fair Value			% of Net Asset Value
LONG FUTURES CONTRACTS(1)
Description
U.S.
Agricultural	$	(28,533	)		(0.24	)%	$	138,381			1.01	%
Currency		1,975			0.02	%		42,046			0.31	%
Energy		11,790			0.10	%		1,740			0.01	%
Interest rate		0			0.00	%		(716	)		(0.01	)%
Metal		0			0.00	%		7,675			0.06	%
Stock index		(2,398	)		(0.02	)%		6,475			0.05	%
Total U.S. long futures contracts	$	(17,166	)		(0.14	)%	$	195,601			1.43	%
Foreign
Agricultural	$	0			0.00	%	$	15,597			0.11	%
Interest rate		0			0.00	%		(34,360	)		(0.25	)%
Stock index		3,078			0.03	%		14,396			0.11	%
Total foreign long futures contracts	$	3,078			0.03	%	$	(4,367	)		(0.03	)%
SHORT FUTURES CONTRACTS(1)
Description
U.S.
Agricultural	$	46,758			0.38	%	$	(330	)		0.00	%(2)
Currency		0			0.00	%		8,650			0.06	%
Energy		21,450			0.18	%		17,045			0.12	%
Interest rate		0			0.00	%		20,125			0.15	%
Stock index		(39,790	)		(0.33	)%		26,390			0.19	%
Total U.S. short futures contracts	$	28,418			0.23	%	$	71,880			0.52	%
Foreign
Stock index	$	304			0.00	%(2)	$	4,216			0.03	%
Total foreign short futures contracts	$	304			0.00	%	$	4,216			0.03	%
Total futures contracts	$	14,634			0.12	%	$	267,330			1.95	%

(1)	No individual futures contract position constitutes greater than 5% of the Partnership’s Net Asset Value at March 31, 2010 or December 31, 2009. Accordingly, the number of contracts and expiration dates are not presented.

(2)	Represents less than 0.01% of the Partnership’s Net Asset Value.

See accompanying notes.

-3-

PROFUTURES DIVERSIFIED FUND, L.P.

CONDENSED SCHEDULES OF INVESTMENTS (CONTINUED)

March 31, 2010 (Unaudited) and December 31, 2009 (Audited)

_______________

	March 31, 2010					December 31, 2009

	Fair Value		% of Net Asset Value			Fair Value		% of Net Asset Value
INVESTMENTS IN OTHER COMMODITY POOLS
Valhalla Synergy Fund LLC
Investment Objective
To achieve capital appreciation by trading U.S. and
Non U.S. futures and forward currency contracts
Redemption Provisions
Quarterly, with 45 days notice	$	0		0.00	%	$	2,097,074		15.33	%
Winton Futures Fund, L.P. (US) – Institutional Interests(1)
Investment Objective
To achieve capital appreciation by trading U.S. and
Non U.S. futures contracts and fixed income securities
Redemption Provisions
Monthly, with 15 days notice		5,810,643		47.69	%		7,178,100		52.49	%
APM – QIM Futures Fund, L.P. – Institutional Interests(1)
Investment Objective
To achieve capital appreciation by trading U.S. and
Non U.S. futures contracts and fixed income securities
Redemption Provisions
Monthly, with 15 days notice		1,481,228		12.16	%		0		0.00	%
Total investments in other commodity pools	$	7,291,871		59.85	%	$	9,275,174		67.82	%

(1)	The General Partner of Winton Futures Fund, L.P. (US) and APM – QIM Futures Fund, L.P. is Altegris Portfolio Management, Inc., an affiliate of Altegris Investments, Inc.

See accompanying notes.

-4-

PROFUTURES DIVERSIFIED FUND, L.P.

CONDENSED SCHEDULES OF INVESTMENTS (CONTINUED)

March 31, 2010 (Unaudited) and December 31, 2009 (Audited)

_______________

Proportional Share of Investments of Other Commodity Pools as of March 31, 2010(1)

U.S. Government Agency Bonds and Notes

Face Value	Description	Range of Maturity Dates	Fair Value	% of Net Asset Value
$1,644,301	Federal Home Loan Bank (0.10 – 1.50%)	04/2010 to 04/2012	$ 1,646,468	13.51 %
$ 851,537	Federal National Mortgage Association	04/2010 to 03/2012	$ 851,718	6.99 %
	(0.14 – 2.00%)

(1)	Represents the Partnership’s proportional share of other commodity pool’s individual underlying investments which exceed 5% of the Partnership’s Net Asset Value at March 31, 2010.

See accompanying notes.

-5-

PROFUTURES DIVERSIFIED FUND, L.P.

CONDENSED SCHEDULES OF INVESTMENTS (CONTINUED)

March 31, 2010 (Unaudited) and December 31, 2009 (Audited)

_______________

Proportional Share of Investments of Other Commodity Pools as of December 31, 2009(1)
Description	Investment Objective	Redemption Provisions	Fair Value	% of Net Asset Value

Valhalla Synergy Master Fund Ltd.	To achieve capital appreciation through the speculative trading of commodities, commodity futures contracts, options on futures contracts and commodities, and spot and forward contracts traded in U.S. and non-U.S. markets.	Quarterly – with no minimum notice period	$ 2,066,615	15.11 %
U.S. Government Agency Bonds and Notes
Face Value	Description	Range of Maturity Dates	Fair Value	% of Net Asset Value
$1,177,398	Federal Home Loan Bank (1.05 – 1.50%)	08/2010 to 12/2011	$ 1,180,073	8.63 %
$1,061,817	Federal National Mortgage Association	07/2010 to 12/2011	$ 1,063,867	7.78%
	(1.20 – 2.00%)
Open Long and Short Futures Contracts
No. of Contracts	Description	Range of Expiration Dates	Fair Value	% of Net Asset Value
	Long Futures Contracts
	U.S.
	Metals
142	Aluminum	01/2010 to 12/2011	$ 2,375,053	17.37 %
244	Copper	01/2010 to 12/2011	$ 11,279,002	82.47 %

	Short Futures Contracts
	U.S.
	Metals
160	Aluminum	01/2010 to 12/2011	$ (2,572,554)	(18.81)%
284	Copper	01/2010 to 12/2011	$(11,679,752)	(85.40)%
Purchased Options on Futures Contracts
No. of Contracts	Description	Expiration Date	Fair Value	% of Net Asset Value
	U.S.
	Metals
9	Aluminum	02/2010	$ 42,523	0.31 %
4	Copper	02/2010	$ 50,854	0.37 %
Written Options on Futures Contracts
No. of Contracts	Description	Expiration Date	Fair Value	% of Net Asset Value
	U.S.
	Metals
9	Aluminum	02/2010	$ (39,157)	(0.29)%
4	Copper	02/2010	$ (46,121)	(0.34)%

Physical Inventory
	Description		Fair Value	% of Net Asset Value
	U.S.
	Metals
	Aluminum		$ 983,804	7.19 %

(1)

Represents the Partnership’s proportional share of other commodity pools' individual underlying investments and open futures contracts and options on futures contracts which exceed 5% of the Partnership’s Net Asset Value at December 31, 2009. In certain situations, open futures contracts and options on futures contracts that are less than 5% of the Partnership’s Net Asset Value at December 31, 2009 may be presented to better indicate the Partnership’s net exposure to a particular underlying commodity.

See accompanying notes.

-6-

PROFUTURES DIVERSIFIED FUND, L.P.

STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2010 and 2009

(Unaudited)

_________________

	Three Months Ended March 31,
	2010			2009			2009			2009
	Total			Non-restricted			Side pocket/restricted			Total
TRADING AND INVESTING GAINS (LOSSES)
Net gain (loss) from futures trading
Realized	$	(591,220	)	$	(386,612	)	$	0		$	(386,612	)
Change in unrealized		(252,696	)		(280,041	)		0			(280,041	)
Brokerage commissions		(56,431	)		(42,173	)		0			(42,173	)
Gain (loss) from futures trading		(900,347	)		(708,826	)		0			(708,826	)
Income (loss) from investments in other
commodity pools		22,256			(174,573	)		19,515			(155,058	)
Total trading and investing gains (losses)		(878,091	)		(883,399	)		19,515			(863,884	)
NET INVESTMENT INCOME (LOSS)
Income
Interest income		137			1,149			0			1,149
Expenses
Incentive fees		0			55,689			0			55,689
Management fees (includes $119,976, $171,529, $7,714and $179,243 charged by the General Partner for the three months ended March 31, 2010 and 2009, respectively)		167,099			222,772			7,714			230,486
Interest expense		374			0			0			0
Operating expenses		84,023			89,302			3,707			93,009
Total expenses		251,496			367,763			11,421			379,184
Net investment income (loss)		(251,359	)		(366,614	)		(11,421	)		(378,035	)
NET INCOME (LOSS)	$	(1,129,450	)	$	(1,250,013	)	$	8,094		$	(1,241,919	)
NET INCOME (LOSS) PER GENERAL AND
LIMITED PARTNER UNIT
(based on weighted average number of units outstanding during the period of 5,380, 6,091 and 462, respectively)	$	(209.92	)	$	(205.22	)	$	17.52			N/A	(1)

INCREASE (DECREASE) IN NET ASSET VALUE PER GENERAL AND LIMITED PARTNER UNIT	$	(209.78	)	$	(204.99	)	$	17.54			N/A	(1)

(1)	A total net income (loss) per general and limited partner Unit and a total for the increase (decrease) in Net Asset Value per general and limited partner Unit are not presented as the amounts are instead shown for each separate class of Units.

See accompanying notes.

-7-

PROFUTURES DIVERSIFIED FUND, L.P.

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

For the Three Months Ended March 31, 2010 and 2009

(Unaudited)

_________________


	Total Number of			Partners’ Capital
	Units			General			Limited			Total
Balances at
December 31, 2009		5,409		$	464,548		$	13,211,491		$	13,676,039
Net (loss) for the three
months ended March 31, 2010					(38,540	)		(1,090,910	)		(1,129,450	)
Redemptions		(154	)		0			(362,292	)		(362,292	)
Balances at
March 31, 2010		5,255		$	426,008		$	11,758,289		$	12,184,297





				Net Asset Value Per Unit
				March 31, 2010			December 31, 2009
				$	2,318.83		$	2,528.61

See accompanying notes.

-8-

PROFUTURES DIVERSIFIED FUND, L.P.

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

(CONTINUED)

For the Three Months Ended March 31, 2010 and 2009

(Unaudited)

_________________

	Total
	Number of			Partners’ Capital
	Units			General			Limited			Total
Non-restricted units
Balances at
December 31, 2008		5,859		$	543,779		$	17,851,493		$	18,395,272
Net (loss) for the three
months ended March 31, 2009					(37,038	)		(1,212,975	)		(1,250,013	)
Redemptions		(96	)		0			(284,372	)		(284,372	)
Transfer from side pocket/restricted(1)		361			32,444			1,078,335			1,110,779
Balances at
March 31, 2009		6,124		$	539,185		$	17,432,481		$	17,971,666


Side pocket/restricted units
Balances at
December 31, 2008		415		$	32,232		$	1,073,525		$	1,105,757
Net income for the three
months ended March 31, 2009					212			7,882			8,094
Redemptions(2)		(1	)		0			(3,072	)		(3,072	)
Transfer to non-restricted(1)		(414	)		(32,444	)		(1,078,335	)		(1,110,779	)
Balances at
March 31, 2009(3)		0		$	0		$	0		$	0
Total Partners’ Capital (Net Asset Value)
at March 31, 2009				$	539,185		$	17,432,481		$	17,971,666



	Net Asset Value Per Unit
	Non-restricted units						Side pocket/restricted units
	March 31,			December 31,			March 31,			December 31,
		2009			2008			2009			2008
	$	2,934.87		$	3,139.86			N/A	(3)	$	2,663.73

(1)

Effective February 28, 2009, the managing member of SHK distributed the remaining portion of the Partnership’s investment in SHK to the Partnership, which was paid to the Partnership on March 16, 2009. As a result, the remaining units held in the side pocket/restricted units were transferred and converted to non-restricted units at the February 28, 2009 non-restricted net asset value per unit.

(2)	Represents the portion of the February 28, 2009 distribution from SHK related to partners who have completely redeemed from the Partnership and did not hold non-restricted units.

(3)	The side pocket/restricted unit class was terminated effective February 28, 2009. The side pocket/restricted net asset value per unit at February 28, 2009, prior to the termination, was $2,681.27.

See accompanying notes.

-9-

PROFUTURES DIVERSIFIED FUND, L.P.

STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2010 and 2009

(Unaudited)

_________________

	March 31,
	2010			2009
OPERATING ACTIVITIES
Net (loss)	$	(1,129,450	)	$	(1,241,919	)
Adjustment to reconcile net (loss) to net cash provided by (used in) operating activities:
Change in unrealized gain on open futures contracts		252,696			280,042
(Income) loss from investment in other commodity pools, net		(22,256	)		155,058
Change in operating assets and liabilities
(Increase) decrease in cash deposits with broker		914,158			(231,662	)
Additions to investments in other commodity pools		(1,500,000	)		(1,000,000	)
Redemptions from other commodity pools		2,180,000			2,651,000
Increase in accounts payable		38,000			3,217
(Decrease) in commissions and other trading fees payable		(772	)		(148	)
(Decrease) in incentive fees payable		0			(129,808	)
(Decrease) in management fees payable		(8,627	)		(71,564	)
Net cash provided by (used in) Operating Activities		723,749			414,216
FINANCING ACTIVITIES
Redemptions paid		(723,229	)		(416,327	)
Net cash provided by (used in) Financing Activities		(723,229	)		(416,327	)
Net cash increase (decrease) for the period		520			(2,111	)
Cash at beginning of the period		577			3,533
Cash at end of the period	$	1,097		$	1,422

See accompanying notes.

-10-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

_________________

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, United States (U.S.) Government agency obligations, corporate notes and repurchase agreements, directly and through its investments in other commodity pools. 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 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 and futures commission merchants (brokers) through which the Partnership trades.

Method of Reporting

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 U.S. generally accepted accounting principles (U.S. GAAP) 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.

Fair Value of Financial Instruments

Substantially all of the Partnership’s assets and liabilities are considered financial instruments and are reflected at fair value, or at carrying amounts that approximate fair value because of the short maturity of the instruments.

Fair value, as defined in the Fair Value Measurements and Disclosures Topic of the Codification, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and sets out a fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Inputs are broadly defined under the Fair Value Measurements and Disclosures Topic of the Codification as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy are described below:

-11-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments (continued)

Level 1.

Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2.

Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. A significant adjustment to a Level 2 input could result in the Level 2 measurement becoming a Level 3 measurement.

Level 3.

Inputs are unobservable for the asset or liability.

The Partnership uses futures contracts as part of its trading activities. The fair values of futures contracts are based upon exchange settlement prices. These contracts are classified as Level 1 of the fair value hierarchy. The fair values of Level 1 financial instruments at March 31, 2010 (Unaudited) and December 31, 2009 (Audited), consisted of the following:

	March 31,		December 31,
	2010		2009
Futures contracts	$	14,634	$	267,330

The Partnership’s investments in other commodity pools are reported in the statement of financial condition at fair value. Fair value ordinarily represents the Partnership’s proportionate share of each other commodity pool’s net asset value determined for each commodity pool in accordance with such commodity pool’s 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 a commodity pool represents the amount that the Partnership could reasonably expect to receive from such commodity pool if the Partnership’s investment was redeemed at the time of valuation (generally the net asset value of the commodity pool), based on information reasonably available at the time the valuation is made and that the Partnership believes to be reliable. The Partnership records its proportionate share of other commodity pools’ income or loss in the statement of operations.

Accounting Standards Update No. 2009-12 (ASU 2009-12), Fair Value Measurements and Disclosures (Topic 820), Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), provides that if the reporting entity has the ability to redeem its investment in another commodity pool at net asset value at the measurement date, the investment shall be categorized as a Level 2 fair value measurement, and if the reporting entity cannot redeem its investment in another commodity pool at net asset value at the measurement date but the investment may be redeemable at a future date, the reporting entity shall consider the length of time until the investment will be redeemable in determining whether it will be categorized as a Level 2 or Level 3 fair value measurement. Accordingly, in accordance with the provisions of ASU 2009-12, the Partnership’s investments in other commodity pools are categorized as Level 2 fair value measurements. The fair values of Level 2 investments in other commodity pools at March 31, 2010 (Unaudited) and December 31, 2009 (Audited), consisted of the following:

	March 31,		December 31,
	2010		2009
Investments in other commodity pools	$	7,291,871	$	9,275,174

-12-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments (continued)

The amount of income from investments in other commodity pools included in net income (loss) for the three months ended March 31, 2010 and 2009 is reported as income (loss) from investments in other commodity pools as a single amount in the Statements of Operations, as the Partnership accounts for its investments in other commodity pools pursuant to the equity method of accounting.

Futures Contracts

Transactions are accounted for on the trade date. Gains or losses are realized when contracts are liquidated. Net unrealized gains or losses on open contracts (the difference between contract trade price and quoted 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. Any change in net unrealized gain or loss from the preceding period is reported in the statement of operations. Brokerage commissions on futures contracts include other trading fees and are charged to expense when contracts are opened. Fair value of exchange-traded contracts is based upon exchange settlement prices.

Income Taxes

The Partnership is not subject to federal income taxes. The Partnership prepares and files 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 and investing gains or losses. The Partnership has elected an accounting policy to classify interest and penalties, if any, as interest expense. Management has determined that there are no material uncertain income tax positions through March 31, 2010. The 2007 through 2009 tax years generally remain subject to examination by U.S. federal and most state tax authorities.

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 trading and investing in gains (losses) in the statements of operations.

Redemptions of Units

Redemptions payable represent redemptions approved by the General Partner prior to the period end, including those that are not effective until subsequent periods. These redemptions have been recorded as redemptions and redemptions payable, using the period end Net Asset Value per unit, in accordance with the provisions of the Distinguishing Liabilities from Equity Topic of the Codification. Redemptions that are not effective until subsequent periods are treated as next month’s redemptions using the net asset value of the following month end. The change in redemptions payable from the previous reporting period due to change in net asset value is reported in net income and then allocated.

-13-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Derivative Instruments

The Partnership’s business is the speculative trading of U.S. and foreign futures contracts and other commodity-related contracts, (collectively, derivatives) pursuant to the trading and investment methodology of the General Partner. The Partnership also invests in other commodity pools and is indirectly exposed to the speculative trading of U.S. and foreign futures contracts, physical commodities and securities within those other commodity pools. The Partnership does not designate any derivative instruments as hedging instruments under the Derivatives and Hedging Topic of the Codification nor are the derivative instruments used for other risk management purposes. Due to the speculative nature of the Partnership’s derivative trading activity, the Partnership is subject to the risk of substantial losses from derivatives trading.

The following tables summarize quantitative information required by the Derivatives and Hedging Topic of the Codification. The fair value of derivative contracts is presented as an asset if in a gain position and a liability if in a loss position. Fair value is presented on a gross basis in the table below even though the derivative contracts qualify for net presentation in the statement of financial condition:

Derivatives not designed as hedging instruments as of March 31, 2010:

	Assets Derivatives*		Liability Derivatives*
Type of Contract	Fair Value		Fair Value			Net
Agricultural contracts	$	46,945	$	(28,720	)	$	18,225
Currency contracts		5,300		(3,325	)		1,975
Energy contracts		33,240		0			33,240
Stock index contracts		4,152		(42,958	)		(38,806	)
	$	89,637	$	(75,003	)	$	14,634

Derivatives not designed as hedging instruments as of December 31, 2009:

	Assets Derivatives*		Liability Derivatives*
Type of Contract	Fair Value		Fair Value			Net
Agricultural contracts	$	168,857	$	(15,209	)	$	153,648
Currency contracts		57,146		(6,450	)		50,696
Energy contracts		19,325		(540	)		18,785
Interest rate contracts		24,242		(39,193	)		(14,951	)
Metal contracts		38,200		(30,525	)		7,675
Stock index contracts		52,282		(805	)		51,477
	$	360,052	$	(92,722	)	$	267,330

The fair values of all asset and liability derivatives, including agricultural, currency, energy, interest rate, metal and stock index contracts, are included in equity in broker trading accounts on the statement of financial condition.

-14-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Derivative Instruments (continued)

Trading Revenue for the							Trading Revenue for the
Three Months Ended March 31, 2010 and 2009							Three Months Ended March 31, 2010 and 2009


Type of Contract	2010			2009			Line Item in Statement of Operations	2010			2009

Agricultural contracts	$	(203,190	)	$	(398,258	)	Realized	$	(591,220	)	$	(386,612	)
Currency contracts		(75,051	)		(20,672	)
Energy contracts		(165,359	)		(42,291	)
Interest rate contracts		(56,796	)		(264,676	)	Change in unrealized		(252,696	)		(280,041	)
Metal contracts		(12,277	)		(23,817	)
Stock index contracts		(331,243	)		83,061
	$	(843,916	)	$	(666,653	)		$	(843,916	)	$	(666,653	)

For the three months ended March 31, 2010 and 2009, the monthly average number of futures contracts bought and sold was approximately 3,600 and 2,500, respectively.

Interim Financial Statements

The unaudited condensed financial statements of ProFutures Diversified Fund, L.P., as of March 31, 2010 and for the three month periods ended March 31, 2010 and 2009, have been prepared by us pursuant to the rules and regulations of the SEC. The information included reflects all adjustments (consisting only of normal recurring accruals and adjustments), which are, in the opinion of management; necessary to fairly state the operating results for the respective periods. However, these operating results are not necessarily indicative of the results expected for the full fiscal year. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to SEC rules and regulations. The notes to the unaudited condensed financial statements should be read in conjunction with the notes to the financial statements contained in our 2009 Annual Report on Form 10-K filed with the SEC on April 15, 2010.

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.

-15-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 2.

GENERAL PARTNER (CONTINUED)

ProFutures, Inc. has a callable stock subscription agreement with MF Global Ltd. (MFG), the Partnership’s broker, whereby MFG 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.

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 three months ended March 31, 2010 and 2009 were $119,976 and $179,243, respectively. Management fees payable to ProFutures, Inc. as of March 31, 2010 and December 31, 2009 were $38,743 and $44,594, respectively.

Note 3.

CONSULTANTS

The Partnership maintains a consulting agreement with Altegris Investments, Inc. (the CTA Consultant) and Altegris Portfolio Management, Inc. (the CPO Consultant), collectively (the Consultants), whereby the Consultants recommend the selection and termination of the Partnership’s trading advisors and other commodity pools and the allocation and reallocation of the Partnership’s assets. The CPO Consultant is the general partner of Winton Futures Fund, L.P. (US) and APM-QIM Futures Fund, L.P. Pursuant to the consulting agreement, the Consultants receive a monthly consulting fee equal to .0208% (.25% annually) of the Partnership’s month-end Net Asset Value (as defined in the Consulting Agreement). Certain net assets of the Partnership invested with managers affiliated with the Consultants are excluded from the month-end Net Asset Value when computing the consulting fees due to the Consultants. In addition, the net assets of the Partnership invested with a certain commodity trading advisor are excluded from the month-end Net Asset Value when computing the consulting fees due to the Consultants since the Consultants earn a percentage of such commodity trading advisor’s incentive fee.

The consulting fee (included in management fees in the statements of operations) earned by the Consultants for the three months ended March 31, 2010 and 2009 totaled $1,562 and $3,055, respectively. The consulting fee payable (included in management fees payable in the statements of financial condition) to the Consultants as of March 31, 2010 and December 31, 2009 was $451 and $617, respectively. In addition to the monthly consulting fee, the Consultants earn commissions for introducing the Partnership to certain commodity trading advisors and other commodity pools based on the number of trades entered on behalf of the Partnership.

-16-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 4.

COMMODITY TRADING ADVISORS

The Partnership has trading advisory contracts with commodity trading advisors to furnish investment management services to the Partnership. These trading advisors typically receive management fees ranging from 0% to 2% annually of Allocated Net Asset Value (as defined in each respective trading advisory agreement). In addition, the commodity trading advisors typically receive quarterly incentive fees ranging from 20% to 25% of Trading Profits (as defined). Total management fees earned by the trading advisors amounted to $45,561 and $48,189 for the three months ended March 31, 2010 and 2009, respectively. Total incentive fees earned by the trading advisors amounted to $0 and $55,689 for the three months ended March 31, 2010 and 2009, respectively.

As of March 31, 2010, the Partnership has allocated notional funds to CTAs equal to approximately 46% of the Partnership’s cash and/or other margin - qualified assets. This percentage may be higher or lower at any given time. The management fees paid to a CTA, if any, are a percentage of the nominal account size of the account if an account had been notionally funded. The nominal account size is equal to a specific amount of funds initially allocated to a CTA which increases by profits and decreases by losses in the account, but not by additions to or withdrawals of actual funds from the account. Some, but not all, CTAs are expected to be allocated notional funds, and not all of the CTAs allocated notional funds are expected to be paid management fees. Further, the amount of cash and/or other margin-qualified assets in an account managed by a CTA will vary greatly at various times in the course of the Partnership’s business, depending on the General Partner’s general allocation strategy and pertinent margin requirements for the trading strategies undertaken by a CTA.

Note 5.

SUBSCRIPTIONS, DISTRIBUTIONS AND REDEMPTIONS

Limited Partners have the right to redeem units as of any month-end upon ten (10) days' prior written notice to the Partnership. Redemptions will be made on the last day of the month for an amount equal to the net asset value per unit, as defined, represented by the units to be redeemed. The right to obtain redemptions is also contingent upon the Partnership's having assets sufficient to discharge its liabilities on the redemption date and may be delayed if the General Partner determines that earlier liquidation of commodity interest positions to meet redemption payments would be detrimental to the Partnership or non-redeeming Limited Partners.

Under certain circumstances, including, but not limited to, the inability to liquidate commodity positions or a delay in payments due the Partnership from commodity brokers, banks, commodity pools or other persons, the Partnership may in turn delay payment to partners requesting redemption of units. In that event, payment for redemption of such units will be made to Limited Partners as soon thereafter as is practicable. As discussed more fully in Note 7, the General Partner established a side pocket/restricted unit class for the Partnership’s interest in SHK Diversified LLC (SHK). A partner could not redeem units from the side pocket/restricted unit class until management of SHK distributed proceeds from the Partnership’s investment in SHK to the Partnership. Effective February 28, 2009, SHK distributed the entire amount of the Partnership’s investment in SHK to the Partnership. As a result, all of the units held in the side pocket/restricted units were transferred and converted to non-restricted units at the February 28, 2009 non-restricted Net Asset Value per unit or were paid their pro rata share of the proceeds if they did not hold non-restricted units.

-17-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 6.

DEPOSITS WITH BROKER

The Partnership deposits funds with MFG 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. All assets with MFG are subject to being collateralized for any amounts due to MFG to meet margin and other broker or regulatory requirements. The Partnership earns interest income on cash deposited with the broker.

Note 7.

INVESTMENTS IN OTHER COMMODITY POOLS

The Partnership invests in other commodity pools, which are subject to the terms of the respective limited partnership agreements and offering memoranda of such other commodity pools, which may, among other things, delay or suspend withdrawal rights under certain circumstances. The Partnership has no outstanding commitments related to its investments in other commodity pools.

Summarized information for these investments is as follows:

	SHK Diversified LLC			Valhalla Synergy Fund LLC			Winton Futures Fund, L.P. (US)			APM – QIM Futures Fund, L.P.			Totals
Net Asset Value
December 31, 2009	$	0		$	2,097,074		$	7,178,100		$	0		$	9,275,174
Additions		0			0			0			1,500,000			1,500,000
Income (loss)		0			(171,515	)		212,543			(18,772	)		22,256
Redemptions		0			(1,925,559	)		(1,580,000	)		0			(3,505,559	)
Net Asset Value
March 31, 2010	$	0		$	0		$	5,810,643		$	1,481,228		$	7,291,871
Net Asset Value
December 31, 2008	$	1,315,743		$	2,740,835		$	8,527,355		$	0		$	12,583,933
Additions		0			0			1,000,000			0			1,000,000
Income (loss)		19,515			31,822			(206,395	)		0			(155,058	)
Redemptions		(1,335,258	)		0			0			0			(1,335,258	)
Net Asset Value
March 31, 2009	$	0		$	2,772,657		$	9,320,960		$	0		$	12,093,617

-18-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 7.

INVESTMENTS IN OTHER COMMODITY POOLS (CONTINUED)

SHK Diversified LLC

As of January 31, 2008, the managing member of SHK Diversified LLC (SHK) temporarily suspended future redemptions. SHK’s managing member indicated to investors that this action was taken due to a decline in the liquidity of the markets traded by SHK combined with a significant number of requests for redemptions. On April 28, 2008, the Partnership submitted a request for full redemption from SHK. Effective December 31, 2008, SHK declared for distribution approximately half ($1,315,742) of the Partnership’s investment in SHK to the Partnership which was paid to the Partnership on January 15, 2009. Effective February 28, 2009, SHK declared for distribution the entire remaining portion ($1,335,258) of the Partnership’s investment in SHK to the Partnership which was paid to the Partnership on March 16, 2009.

The Partnership’s proportionate share in the earnings (losses) of SHK of $19,515 is included in the net (loss) for the three month period ended March 31, 2009.

The General Partner established a side pocket/restricted unit class for the Partnership’s interest in SHK until such time as these funds could be released and valued with a reasonable degree of certainty. Investor units attributed to SHK were segregated into the side pocket while units not attributed to SHK continued to be available for redemption. Redemptions were paid in cash for the portion of the Partnership’s net assets not attributed to SHK while the net assets attributed to SHK were held in the side pocket. The side pocket/restricted unit class also bore its proportionate share of the Partnership’s expenses, as well as all expenses directly related to this class’ establishment and operation. Effective February 28, 2009, the side pocket/restricted unit class was terminated after all proceeds were received from the Partnership’s investment in SHK.

Investors in SHK are charged management fees of 6.00% per annum and a profit share of 25% of trading profits. For the two months ended February 28, 2009, the Partnership’s proportionate share of management fees and profit share charged by SHK were approximately, $6,700 and $0, respectively.

-19-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 7.

INVESTMENTS IN OTHER COMMODITY POOLS (CONTINUED)

SHK Diversified LLC (Continued)

Condensed financial information for the period January 1, 2009 to February 28, 2009 is as follows:

	Two Months Ended
	February 28, 2009
Statement of Operations	(Unaudited)
Trading gains (losses)
Realized	$	(10,063,882	)
Change in unrealized		10,768,533
Brokerage commissions		(89,581	)
Total trading gains (losses)		615,070
Net investment income (loss)
Interest and dividend income		13,459
Expenses
Incentive fee		0
Management and other fees		126,078
Operating expenses		48,631
Total expenses		174,709
Net investment (loss)		(161,250	)
Net income	$	453,820

Management of the Partnership believes the accounting principles utilized by SHK are consistent in all material respects with those utilized by the Partnership.

Valhalla Synergy Fund LLC

Valhalla Synergy Fund LLC invests substantially all of its assets through a “master-feeder” structure into Valhalla Synergy Master Fund Ltd. (the Master Fund), a Cayman Islands exempted company. Valhalla Synergy Fund LLC pays to the manager of the Master Fund a management fee of 2.00% per annum and an annual profit participation allocation of 20% of trading profits. For the three months ended March 31, 2010, the Partnership’s proportionate share of management fees and profit participation allocation charged by the Master Fund were approximately $9,807 and $0, respectively. For the three months ended March 31, 2009, the Partnership’s proportionate share of management fees and profit participation allocation charged by the Master Fund were approximately $13,793 and $7,955, respectively.

Valhalla Synergy Fund LLC condensed financial information primarily consists of their investment in the Master Fund and income or loss allocated from the Master Fund to Valhalla Synergy Fund LLC.

Valhalla Synergy Fund LLC net assets at December 31, 2009 are $35,682,748. Total net income (loss) for the three months ended March 31, 2010 and 2009 is $(3,136,677) and $576,408, respectively.

-20-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 7.

INVESTMENTS IN OTHER COMMODITY POOLS (CONTINUED)

Valhalla Synergy Fund LLC (Continued)

The Partnership’s investment in Valhalla Synergy Fund LLC represents approximately 5.88% of the investee fund’s net asset value as of December 31, 2009. The Partnership fully redeemed its investment in Valhalla Synergy Fund LLC effective March 31, 2010.

Management of the Partnership believes the accounting principles utilized by Valhalla Synergy Fund LLC are consistent in all material respects with those utilized by the Partnership.

Winton Futures Fund, L.P. (US) – Institutional Interests

Institutional Interests of Winton Futures Fund, L.P. (US) are charged management fees of 1.75% annually and incentive fees of 20% of trading profits. For the three months ended March 31, 2010, the Partnership’s proportionate share of management fees and incentive fees charged by Winton Futures Fund, L.P. (US) were approximately $28,600 and $0, respectively. For the three months ended March 31, 2009, the Partnership’s proportionate share of management fees and incentive fees charged by Winton Futures Fund, L.P. (US) were approximately $40,000 and $0, respectively.

The CPO Consultant is the General Partner of Winton Futures Fund, L.P. (US).

-21-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 7.

INVESTMENTS IN OTHER COMMODITY POOLS (CONTINUED)

Winton Futures Fund, L.P. (US) – Institutional Interests (continued)

Condensed financial information as of March 31, 2010 and December 31, 2009 and for the three month periods ended March 31, 2010 and 2009 is as follows:

	March 31,		December 31,
	2010		2009
Statements of Financial Condition	(Unaudited)		(Audited)
Assets
Equity in Newedge USA, LLC account
Cash	$	72,946,876	$	57,157,995
Unrealized gain on open commodity futures contracts		22,077,977		2,751,248
Long options (cost – $32,210 and $31,080)		22,675		15,760
Unrealized gain on open forward contracts		71,789		3,227
Interest receivable		500		0
		95,119,817		59,928,230
Cash and cash equivalents		13,877,278		3,733,271
Investment securities at value
(cost – $472,497,546 and $469,559,059)		472,730,266		469,934,981
Interest receivable		724,621		719,323
Total assets	$	582,451,982	$	534,315,805
Liabilities
Short options (proceeds – $62,354 and $68,320)	$	43,212	$	36,220
Payable for securities purchased		7,710,000		0
Accounts payable		262,916		249,209
Commissions payable		568,391		611,622
Management fee payable		835,079		822,084
Administrative fee payable		82,260		77,788
Service fees payable		480,258		420,136
Incentive fee payable		1,809,175		249,171
Redemptions payable		4,330,128		3,504,884
Subscriptions received in advance		13,879,027		12,878,915
Total liabilities		30,000,446		18,850,029
Total partners’ capital (Net Asset Value)		552,451,536		515,465,776
	$	582,451,982	$	534,315,805

-22-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 7. INVESTMENTS IN OTHER COMMODITY POOLS (CONTINUED)

Winton Futures Fund, L.P. (US) – Institutional Interests (continued)

	Three Months Ended
	March 31,	March 31,
	2010	2009
Statements of Operations	(Unaudited)	(Unaudited)

Gains (loss) on trading of derivatives contracts
Realized	$	6,564,944		$	1,054,224
Change in unrealized		19,388,118			(5,772,261	)
Brokerage commissions		(1,978,355	)		(493,455	)
Gain (loss) from trading derivatives		23,974,707			(5,211,492	)
Gain (loss) on trading of securities
Realized		7,686			(8,188	)
Change in unrealized		(143,202	)		112,767
Gain (loss) from trading securities		(135,516	)		104,579
Foreign currency translation (losses)		(308,000	)		(1,305,143	)
Total trading gains (losses)		23,531,191			(6,412,056	)
Net investment income (loss)
Income
Interest income		909,334			426,743
Expenses
Incentive fee		1,809,175			4,718
Management and other fees		3,981,691			2,145,559
Operating expenses		347,948			236,074
Total expenses		6,138,814			2,386,351
Net investment (loss)		(5,229,480	)		(1,959,608	)
Net income (loss)	$	18,301,711		$	(8,371,664	)

Management of the Partnership believes the accounting principles utilized by Winton Futures Fund, L.P. (US) are consistent in all material respects with those utilized by the Partnership.

The Partnership’s investment in Winton Futures Fund, L.P. (US) represents approximately 1.05% and 1.39% of the investee fund’s net asset value as of March 31, 2010 and December 31, 2009, respectively.

APM – QIM Futures Fund, L.P. – Institutional Interests

On March 1, 2010, the Partnership invested $1,500,000 in Institutional Interests of APM – QIM Futures Fund, L.P. Institutional Interests of APM – QIM Futures Fund, L.P. are charged management fees of 0.75% annually and incentive fees of 30% of trading profits. For the one month ended March 31, 2010, the Partnership’s proportionate share of management fees and incentive fees charged by APM – QIM Futures Fund, L.P. were approximately $900 and $0, respectively.

-23-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 7. INVESTMENTS IN OTHER COMMODITY POOLS (CONTINUED)

APM – QIM Futures Fund, L.P. – Institutional Interests (continued)

The CPO Consultant is the General Partner of APM – QIM Futures Fund, L.P.

Condensed financial information as of March 31, 2010 and for the one month ended March 31, 2010 is as follows:

	March 31,
	2010
Statement of Financial Condition	(Unaudited)

Assets
Equity in Newedge USA, LLC account
Cash	$	4,430,361
Unrealized gain on open commodity futures contracts		43,624
		4,473,985
Cash and cash equivalents		8,679,900
Investment securities at value
(cost – $45,928,917)		45,888,950
Receivable from General Partner		70,826
Interest receivable		41,235
Total assets	$	59,154,896
Liabilities
Payable for securities purchased	$	2,180,000
Accounts payable		48,853
Commissions payable		18,116
Management fee payable		45,995
Administrative fee payable		10,680
Service fees payable		38,556
Redemptions payable		1,121,210
Subscriptions received in advance		8,225,035
Total liabilities		11,688,445
Total partners’ capital (Net Asset Value)		47,466,451
	$	59,154,896

-24-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 7. INVESTMENTS IN OTHER COMMODITY POOLS (CONTINUED)

APM – QIM Futures Fund, L.P. – Institutional Interests (continued)

	One Month Ended
	March 31,
	2010
Statement of Operations	(Unaudited)

(Loss) on trading of commodity futures
Realized	$	(401,329	)
Change in unrealized		(63,546	)
Brokerage commissions		(61,586	)
(Loss) from trading futures		(526,461	)
(Loss) on trading of securities
Change in Unrealized		(57,340	)
Foreign currency translation (losses)		(838	)
Total trading (losses)		(584,639	)
Net investment income (loss)
Income
Interest income		19,064
Expenses
Management and other fees		95,231
Operating expenses		20,215
Total expenses		115,446
Net investment (loss)		(96,382	)
Net (loss)	$	(681,021	)

Management of the Partnership believes the accounting principles utilized by APM – QIM Futures Fund, L.P. are consistent in all material respects with thos utilized by the Partnership.

The Partnership’s investment in APM – QIM Futures Fund, L.P. represents approximately 3.12% of the investee fund’s net asset value as of March 31, 2010.

-25-

PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 8.

MARKET AND CREDIT RISKS

The Partnership is exposed to both market risk, the risk arising from changes in the fair value of the contracts, and credit risk, the risk of failure by another party to perform according to the terms of a contract.

As the Partnership deposits substantially all of its assets with MFG, the Partnership has a concentration of credit risk with MFG. The following details the maximum amount of loss the Partnership would incur due to the complete failure by MFG to perform according to the terms of the applicable contractual agreements, with such maximum amount of loss being based on the gross fair value of the financial instruments held by MFG:

	March 31, 2010		December 31, 2009
Broker
MFG	$	3,357,222	$	4,541,795

The above maximum amounts of risk of loss of financial instruments does not take into account adverse market movements subsequent to March 31, 2010 and December 31, 2009, respectively, or the fact that the maximum amount of risk of loss on certain financial instruments is potentially unlimited. Accordingly, the maximum amount of risk of loss subsequent to March 31, 2010 could be materially greater.

Purchase and sale of futures and options on futures contracts requires margin deposits with the broker. Additional deposits may be necessary for any loss on contract fair 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 fair value of the contracts. Theoretically, the Partnership is exposed to a market risk equal to the notional contract value of futures contracts purchased and unlimited liability on such contracts sold short. The Partnership is also indirectly exposed to market risk on physical commodities equal to the fair value of physical commodities owned.

The Partnership has a portion of its assets on deposit with a financial institution in connection with its cash management activities. 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.

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PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 8.

MARKET AND CREDIT RISKS (CONTINUED)

The Partnership’s investments in other commodity pools are subject to the market and credit risks of futures contracts, forward currency contracts and other derivative contracts held or sold short by these commodity pools. The Partnership bears the risk of loss only to the extent of the fair value of its respective investment and, in certain specific circumstances, distributions and redemptions received. The General Partner has established risk management procedures to monitor investments in other commodity pools and seeks to minimize risk primarily by investing in commodity pools, which the General Partner and the CPO Consultant believe are reliable and creditworthy. However, there can be no assurance that any commodity pool invested in will be able to meet its obligations to the Partnership.

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 the CTA 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 fair 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.

Note 10.

SUBSEQUENT EVENTS

The General Partner has evaluated subsequent events through the date the financial statements were issued. There are no subsequent events to be disclosed.

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PROFUTURES DIVERSIFIED FUND, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

_________________

Note 11.

FINANCIAL HIGHLIGHTS

The following information presents performance data and other supplemental financial data for the three months ended March 31, 2010 and 2009. This information has been derived from information presented in the financial statements.

	Three months ended March 31,
							Side pocket
				Non-restricted			restricted
	2010			2009			2009
	(Unaudited)			(Unaudited)			(Unaudited)
Per Unit Performance
(for a unit outstanding throughout the entire period)
Net asset value per unit at beginning of period	$	2,528.61		$	3,139.86		$	2,663.73
Income (loss) from operations:
Total trading and investing gains (losses)(1)		(163.04	)		(144.80	)		42.27
Net investment (loss)(1)		(46.74	)		(60.19	)		(24.73	)
Total income (loss) from operations		(209.78	)		(204.99	)		17.54
Net asset value per unit at end of period	$	2,318.83		$	2,934.87		$	2,681.27	(7)
Total Return(4)		(8.30	)%		(6.53	)%		0.66	%
Supplemental Data
Ratios to average net asset value:(2)
Expenses prior to incentive fees (3), (6)		7.67	%		6.58	%		5.53	%
Incentive fees(4)		0.00	%		0.29	%		0.00	%
Total expenses		7.67	%		6.87	%		5.53	%
Net investment income (loss)(3), (5), (6)		(7.67	)%		(6.55	)%		(5.53	)%

Total returns are calculated based on the change in value of a unit during the period. 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 period. Total trading and investing gains (losses) 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 and investing gains (losses) per unit due to the timing of trading and investing gains and losses during the period relative to the number of units outstanding.

(2)

Excludes the Partnership’s proportionate share of expenses and net investment income (loss) from investments in other commodity pools.

(3)

Annualized.

(4)

Not annualized.

(5)

Excludes incentive fees.

(6)

Excludes brokerage commissions.

(7)

Prior to termination of the side pocket/restricted unit class effective February 28, 2009.

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

Reference is made to Item 1, “Financial Statements.” The information contained therein is essential to, and should be read in conjunction with, the following analysis.

The Partnership commenced trading on August 3, 1987. The success of the Partnership is dependent on the ability of independent Commodity Trading Advisors (“CTAs”) and commodity trading advisors that are utilized via investing in commodity pools (collectively, the “Advisors”) to generate profits through speculative trading sufficient to produce substantial capital appreciation after payment of all fees and expenses. Future results will depend in large part upon the futures markets in general, the performance of the Advisors for the Partnership and the amount of redemptions and changes in interest rates. Due to the highly leveraged nature of futures trading, small price movements may result in substantial losses. Because of the nature of these factors and their interaction, it is impossible to predict future operating results.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Management believes that the estimates utilized in preparing the financial statements are reasonable and prudent; however, actual results could differ from those estimates. The Partnership’s significant accounting policies are described in detail in Note 1 to the Financial Statements.

The Partnership records all investments at fair value in its financial statements in accordance with Fair Value Measurements and Disclosures of the Accounting Standards Codification (ASC), with changes in fair value reported as a component of realized and change in unrealized trading gain (loss) and gain (loss) from investments in other commodity pools in the Statements of Operations. Generally, fair values are based on market prices; however, in certain circumstances, estimates are involved in determining fair value in the absence of an active market closing price (e.g., swap and forward contracts which are traded in the inter-bank market).

The fair value of exchange-traded contracts is based upon exchange settlement prices. The fair value of the Partnership’s investments in other commodity pools are ordinarily determined by each commodity pool in accordance with such commodity pool’s 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 a commodity pool represents the amount that the Partnership could reasonably expect to receive from such commodity pool if the Partnership’s investment was redeemed at the time of valuation (generally the net assets value of the commodity pool), based on information reasonably available at the time the valuation is made and that the Partnership believes to be reliable.

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A. LIQUIDITY: Approximately 26% of the Partnership’s assets are highly liquid, such as cash and open futures contracts. It is possible that extreme market conditions or daily price fluctuation limits at certain exchanges could adversely affect the liquidity of open futures contracts. There are no restrictions on the liquidity of these assets except for amounts on deposit with the brokers needed to meet margin requirements on open futures contracts. The other estimated 74% of the Partnership’s assets is invested in other commodity pools which are subject to certain restrictions. The restrictions on withdrawals from these commodity pools typically include a 15 to 45 day written notice for withdrawals, monthly or quarterly redemptions and the commodity pools’ ability to limit or suspend redemptions.

As of January 31, 2008, the managing member of SHK Diversified LLC (“SHK”) temporarily suspended future redemptions. SHK’s managing member indicated to investors that this action was taken due to a decline in the liquidity of the markets traded by SHK combined with a significant number of requests for redemptions. Because of the uncertainty in valuing the Partnership’s investment in SHK, the General Partner established a side pocket for the Partnership’s interest in SHK effective April 30, 2008, to continue until such time as the investment could be valued with certainty. Investor units attributed to SHK were segregated into a side pocket while units not attributed to SHK continued to be available for redemption in cash. On April 28, 2008, the Partnership submitted a request for full redemption from SHK. The side pocket/restricted share class was allocated its proportionate share of the Partnership’s expenses, as well as all expenses directly related to the class’ establishment and operation. Effective, December 31, 2008, SHK paid the Partnership approximately half of the Partnership’s redemption proceeds, equal to $1,315,742, which was paid to the Partnership on January 15, 2009. Effective February 28, 2009, SHK paid the Partnership the remaining half of the Partnership’s redemption proceeds equal to $1,335,258, which was paid to the Partnership on March 16, 2009. The side pocket/restricted share class was subsequently canceled with existing Units either redeemed or converted to non-restricted shares. As of February 28, 2009 there are no restricted or side pocketed units.

B. CAPITAL RESOURCES: Since the Partnership’s business is the purchase and sale of various commodity interests, it will make few, if any, capital expenditures.

The Partnership’s offering of Units of Limited Partnership Interest terminated in 1995.

C. RESULTS OF OPERATIONS: The Partnership’s net income (loss) for the three months ended March 31, 2010 and 2009 is as follows:

	2010			2009

Three months ended March 31,	$	(1,129,450	)	$	(1,241,919	)
Non-Restricted		(1,129,450	)		(1,250,013	)
Restricted					8,094

As of March 31, 2010, 5,255 Units are outstanding, including 184 General Partner Units, with an aggregate Net Asset Value of $12,184,297 ($2,318.83 per Unit). This represents a decrease in Net Asset Value of ($1,491,742) compared with December 31, 2009. The

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decrease was caused by a combination of partner redemptions and trading losses for the period.

As of March 31, 2009, 6,124 Units were outstanding, including 184 General Partner Units, with an aggregate Net Asset Value of $17,971,666 ($2,934.87 per Unit). This represented a decrease in Net Asset Value of ($1,529,363) compared with December 31, 2008. The decrease was caused by a combination of partner redemptions and trading losses for the period. Effective December 31, 2008, one-half of the 878 Restricted Units from a side pocket were either converted to Non-Restricted Units or redeemed. Effective February 28, 2009, the second half of the Restricted Units were either converted to Non-Restricted Units or redeemed. As of February 28, 2009 we no longer have Restricted Units or a side-pocket.

First Quarter 2010

The Partnership had losses for the quarter in the stock indexes, energy, certain agricultural commodities and metals; gains were limited to interest rates and currencies.

The Partnership had a loss of 5.16% in January. The Partnership had losses in the stock indexes, energy, metals and currencies; gains were in interest rates and certain agricultural commodities.

The Partnership had a loss of 0.48% in February. The Partnership had gains in the stock indexes, interest rates, currencies and metals; losses were in certain agricultural commodities and energy.

The Partnership had a loss of 2.85% in March. The Partnership had losses in the stock indexes, certain agricultural commodities and interest rates; gains were in energy, metals and currencies.

The Partnership ended the quarter with a loss of 8.30%.

First Quarter 2009

The Partnership had losses for the quarter in interest rates, currencies, certain agricultural commodities, metals and energy; gains were limited to the stock indexes.

The Partnership had a loss of 0.23% in January. The Partnership had losses in interest rates and certain agricultural commodities; gains were in stock indexes, currencies, energy and metals.

The Partnership had a loss of 1.65% in February. The Partnership had losses in currencies, interest rates, energy, metals, stock indexes and certain agricultural commodities; gains were in certain agricultural commodities.

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The Partnership had a loss of 4.74% in March. The Partnership had losses in every sector traded, in currencies, certain agricultural commodities, interest rates, stock indexes, metals and energy.

The Partnership ended the quarter with a loss of 6.53%.

D. OFF-BALANCE SHEET ARRANGEMENTS: Off-balance sheet risk refers to an unrecorded potential liability that, even though it does not appear on the balance sheet, may result in future obligation or loss. The Partnership trades in futures and other commodity interest contracts and is therefore a party to financial instruments with elements of off-balance sheet market and credit risk. In entering into these contracts, the Partnership faces the market risk that these contracts may be significantly influenced by market conditions, such as interest rate volatility, resulting in such contracts being less valuable. If the markets should move against all of the commodity interest positions of the Partnership at the same time, and if the Partnership were unable to offset positions, the Partnership could lose all of its assets and the limited partners would realize a 100% loss. The Partnership minimizes market risk through real-time monitoring of open positions, diversification of the portfolio and maintenance of a margin-to-equity ratio that rarely exceeds 25%. All positions of the Partnership are valued each day on a mark-to-market basis.

In addition to market risk, in entering into commodity interest contracts there is a credit risk that a counterparty will not be able to meet its obligations to the Partnership. The counterparty for futures and options on futures contracts traded in the United States and on most non-U.S. futures exchanges is the clearing organization associated with such exchange. In general, clearing organizations are backed by the corporate members of the clearing organization who are required to share any financial burden resulting from the non-performance by one of their members and, as such, should significantly reduce this credit risk.

In cases where the clearing organization is not backed by the clearing members, like some non-U.S. exchanges, it is normally backed by a consortium of banks or other financial institutions.

In the case of forward contracts, over-the-counter options contracts or swap contracts, which are traded on the interbank or other institutional market rather than on exchanges, the counterparty is generally a single bank or other financial institution, rather than a central clearing organization backed by a group of financial institutions. As a result, there likely will be greater counterparty credit risk in these transactions. The Partnership trades only with those counterparties that it believes to be creditworthy. Nonetheless, the clearing member, clearing organization or other counterparty to these transactions may not be able to meet its obligations to the Partnership, in which case the Partnership could suffer significant losses on these contracts.

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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.

E. CONTRACTUAL OBLIGATIONS: None.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Partnership is a Smaller Reporting Company as defined by Rule 229.10(f)(1) and therefore this item is not required.

Item 4T. Controls and Procedures.

ProFutures, Inc., as General Partner of ProFutures Diversified Fund, L.P., with the participation of the General Partner’s President and Chief Financial Officer, has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) with respect to the Partnership as of the end of the period covered by this quarterly report. Based on their evaluation, the President and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting:

There were no changes in the General Partner’s internal control over financial reporting applicable to the Partnership identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting applicable to the Partnership.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

The Partnership is a Smaller Reporting Company as defined by Rule 229.10(f)(1) and therefore this item is not required.

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

(a) None.

(b) Not applicable.

(c) Effective April 1, 2008, investor units attributed to the investment in SHK were segregated into and held in a side pocket due to SHK’s temporary suspension of redemptions, while units not attributed to SHK continued to be available for redemption in cash. Effective February 28, 2009, SHK paid the Partnership the balance of the Partnership’s redemption proceeds. The side pocket/Restricted share class was subsequently cancelled with existing Units either redeemed or converted to Non-Restricted shares.

Pursuant to the Partnership’s Limited Partnership Agreement, partners may redeem their Limited Partnership Units at the end of each calendar month at the then current Net Asset Value per Unit. The redemption of Units has no impact on the value of Units that remain outstanding, and Units are not reissued once redeemed.

The right to obtain redemption is contingent upon the Partnership’s having property sufficient to discharge its liabilities on the redemption date and may be delayed if the General partner determines that early liquidation of the commodity interest positions to meet redemption payments would be detrimental to the Partnership or non-redeeming Limited Partners.

Under certain circumstances, including but not limited to, the inability to liquidate commodity positions or a delay in payment due the Partnership from commodity brokers, banks, commodity pools or other persons, the Partnership may in turn delay payment to Partners requesting redemption units. In that event, payment for redemption of such units will be made to Limited Partners as soon as thereafter is practicable.

The following table summarizes the redemptions, excluding those that are not effective until subsequent periods, by partners during the three months ended March 31, 2010 for Non-Restricted Units:

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MONTH	UNITS REDEEMED	NAV PER UNIT
January 31, 2010	9	2,398.19
February 28, 2010	73	2,386.74
March 31, 2010	48	2,318.83
TOTAL	130

Item 3. Defaults Upon Senior Securities.

None.

Item 4. (Removed and Reserved).

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibits filed herewith:

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.

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SIGNATURES

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

	PROFUTURES DIVERSIFIED FUND, L.P.
	(Registrant)

May 17, 2010	By /s/ GARY D. HALBERT
Date		Gary D. Halbert, President and Director
		ProFutures, Inc.
		General Partner


May 17, 2010	By /s/ DEBI B. HALBERT
Date		Debi B. Halbert, Chief Financial Officer,
		Treasurer and Director
		ProFutures, Inc.
		General Partner

PROFUTURES DIVERSIFIED FUND L P 10-Q