UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549

	FORM 10-Q


[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2008 or

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to

Commission File Number 0-18314

	MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

	(Exact name of registrant as specified in its charter)

		Delaware						     13-3541588
(State or other jurisdiction of		   		  (I.R.S. Employer
incorporation or organization)			       Identification No.)


Demeter Management Corporation
522 Fifth Avenue, 13th Floor
New York, NY							      	10036
(Address of principal executive offices)	  	         (Zip Code)

Registrant?s telephone number, including area code       (212) 296-1999



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

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

Yes    X       	No__________

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_______ 		Accelerated filer_______
Non-accelerated filer   X   		Smaller reporting company_______

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


	<page> <table> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

	INDEX TO QUARTERLY REPORT ON FORM 10-Q

	September 30, 2008

<caption>


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

				<c>
	Consolidated Statements of Financial Condition as of
	September 30, 2008 (Unaudited) and December 31, 2007...........2

	Consolidated Statements of Operations for the Three and Nine
	Months Ended September 30, 2008 and 2007 (Unaudited)...........3

	Consolidated Statements of Changes in Partners? Capital for
the Nine Months Ended September 30, 2008 and 2007 (Unaudited)..4

	Consolidated Statements of Cash Flows for the Nine Months
	Ended September 30, 2008 and 2007 (Unaudited)..................5

	Condensed Consolidated Schedules of Investments as of
	September 30, 2008 (Unaudited) and December 31, 2007...........6

	Notes to Consolidated Financial Statements (Unaudited)......7-15

Item 2.	Management?s Discussion and Analysis of
			Financial Condition and Results of Operations........16-31

Item 3.	Quantitative and Qualitative Disclosures About
			Market Risk..........................................31-45

Item 4.	Controls and Procedures.................................45

Item 4T.	Controls and Procedures.................................45


PART II. OTHER INFORMATION

Item 1A.Risk Factors............................................46

Item 5.	Other Information....................................46-47

Item 6.	Exhibits.............................................47-48

</table>


<page> <table> PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

117:   MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<caption>
	                     September 30,	     December 31,
                            2008      	    2007
	                      $	    $
	                        (Unaudited)
ASSETS

	<c>	<c>
Trading Equity:
	Unrestricted cash	6,963,170	10,672,528
    Restricted cash					                     	  523,174	       794,923

	     Total cash	     7,486,344	   11,467,451

	Net unrealized gain on open contracts (MS&Co.)	238,149	175,590
	Net unrealized loss on open contracts (MSIP)	         (52,900)	         (1,445)

	     Total net unrealized gain on open contracts	         185,249	       174,145

	     Total Trading Equity	7,671,593	11,641,596

Interest receivable (MS&Co.)	            5,898	        27,058

	     Total Assets	     7,677,491	  11,668,654

LIABILITIES AND PARTNERS? CAPITAL

Liabilities

Redemptions payable	720,415	135,954
Accrued administrative expenses	107,998	108,641
Accrued brokerage fees (MS&Co.)	25,232	38,533
Accrued management fees  	          6,308	          9,633

   Total Liabilities       	      859,953	      292,761

Minority Interest	      (12,249)	              294

Partners? Capital

Limited Partners (3,911.616 and
    5,967.302 Units, respectively)	6,646,233	11,173,321
General Partner (108.030 Units)	      183,554	        202,278

	     Total Partners? Capital	   6,829,787  	   11,375,599

	     Total Liabilities and Partners? Capital	    7,677,491	   11,668,654


NET ASSET VALUE PER UNIT 	      1,699.10	       1,872.42


<fn>
	The accompanying notes are an integral part
	of these consolidated financial statements.
</table>


<page> <table> 	MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
	CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

<caption>
               For the Three Months                      For the Nine Months
               Ended September 30,                     Ended September 30,

84:
         2008  	              2007   	        2008  	    2007
             $	                       $		            $	 	$

	             <c>	   <c>			<c>			<c>
INVESTMENT INCOME
	Interest income (MS&Co.)	     28,557		    128,958	    118,739		          427,419

EXPENSES
	Brokerage fees (MS&Co.)	80,451	122,944	285,766	390,142
	Administrative expenses	      27,000	      39,000	      85,000	     103,000
	Management fees	20,114	30,736   	    71,442	97,535
	Transaction fees and costs	     16,441	      18,685	     46,449	      42,925

		   Total Expenses 	   144,006	    211,365	    488,657	    633,602

NET INVESTMENT LOSS 	   (115,449)	     (82,407)	   (369,918)	   (206,183)

TRADING RESULTS
Trading profit (loss):
	Realized	109,866	(124,699)	(608,405)	(63,003)
	Net change in unrealized	    (19,127)	     153,740	        11,104	     314,473

		   Total Trading Results	     90,739	       29,041	   (597,301) 	     251,470

NET INCOME (LOSS) BEFORE
 MINORITY INTEREST	(24,710)	(53,366)	(967,219)	45,287

Less: Minority Interest	        (422)	           (571)        	     (12,543)	           530

NET INCOME (LOSS)	    (24,288)	    (52,795)	       (954,676)	      44,757

NET INCOME (LOSS) ALLOCATION

	Limited Partners	(23,596)	(52,087)	  (935,952)	43,774
	General Partner 	(692)	(708)		     (18,724)	       983


NET INCOME (LOSS) PER UNIT

	Limited Partners                   (6.41)        (6.55)             	(173.32)	 9.10
	General Partner                                                   	(6.41)	(6.55)                	(173.32)	         9.10


			                                                                          Units     	             Units	Units	         Units
WEIGHTED AVERAGE NUMBER
	OF UNITS OUTSTANDING                                   4,539.748		    6,454.443		5,226.821    	6,776.800


<fn>

The accompanying notes are an integral part
of these consolidated financial statements. </table>


<page> <table> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
	CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS? CAPITAL
	For the Nine Months Ended September 30, 2008 and 2007
	(Unaudited)

<caption>



	  Units of
	   Partnership	Limited	General
	   Interest   	Partners	Partner	   Total
		$	$	   $

	<c>	<c>	<c>	<c>
Partners? Capital,
	December 31, 2006	   7,333.135	13,798,864	          206,321	              14,005,185

Net Income                   	?		43,774	983	44,757

Redemptions	   (980.017)	 (1,858,606)                ?      	  (1,858,606)

Partners? Capital,
	September 30, 2007	    6,353.118	  11,984,032	  207,304	  12,191,336





Partners? Capital,
	December 31, 2007	   6,075.332	11,173,321	          202,278	              11,375,599

Net Loss                   	?		(935,952)	(18,724)	(954,676)

Redemptions	   (2,055.686)	 (3,591,136)                ?       	  (3,591,136)

Partners? Capital,
	September 30, 2008	    4,019.646	  6,646,233	  183,554	  6,829,787







<fn>










The accompanying notes are an integral part
	of these consolidated financial statements.
</table>


	<page> <table> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
	CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)



<caption>

	          For the Nine Months  Ended September 30,

	      2008     	      2007
	      $	      $


CASH FLOWS FROM OPERATING ACTIVITIES

			<c>	<c>
Net income (loss)	(954,676)	44,757
Noncash item included in net income (loss):
	Net change in unrealized	(11,104)	(314,473)

(Increase) decrease in operating assets:
	Restricted cash	271,749	(74,780)
	Interest receivable (MS&Co.)	21,160	20,112

Decrease in operating liabilities:
	Accrued administrative expenses	(643)	(13,354)
	Accrued brokerage fees (MS&Co.)	(13,301)	(6,283)
	Accrued management fees	       (3,325)	            (1,571)

Net cash used for operating activities	    (690,140)	        (345,592)


CASH FLOWS FROM FINANCING ACTIVITIES

Cash paid for redemptions of Units	(3,006,675)	(1,922,365)
Increase (decrease) in minority interest	      (12,543)	                530

Net cash used for financing activities	  (3,019,218)	    (1,921,835)

Net decrease in unrestricted cash	(3,709,358)	(2,267,427)

Unrestricted cash at beginning of period	  10,672,528	    13,545,110

Unrestricted cash at end of period	    6,963,170	    11,277,683





<fn>






	The accompanying notes are an integral part
	of these consolidated financial statements.
</table>


<page> <table> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS
September 30, 2008 (Unaudited) and December 31, 2007

<caption>


Futures and Forward Contracts
Long
Unrealized
Gain/(Loss)

Percentage of
  Net Assets
      Short
  Unrealized
 Gain/(Loss)

Percentage of
  Net Assets
       Net
  Unrealized
  Gain/(Loss)

$
%
$
%
$

 September 30, 2008, Partnership Net Assets:  $6,829,787





<c>
<c>
<c>
<c>
<c>
Commodity
   (53,985)
       (0.79)
   144,909
       2.12
     90,924
Equity
   (8,113)
       (0.12)
     12,292
       0.18
       4,179
Foreign currency
   6,518
     0.10
      (7,958)
      (0.12)
      (1,440)
Interest rate
      1,155
        0.02
    (17,844)
      (0.26)
    (16,689)






     Grand Total:
   (54,425)
       (0.79)
   131,399
       1.92
     76,974

     Unrealized Currency Gain





   108,275

     Total Net Unrealized Gain



    185,249


 December 31, 2007, Partnership Net Assets: $11,375,599









Commodity
     36,831
        0.32
      (2,953)
      (0.03)
     33,878
Equity
   77,062
        0.68
      (8,416)
      (0.07)
     68,646
Foreign currency
     ?
     ?
       4,126
       0.04
       4,126
Interest rate
     41,660
        0.36
      (7,908)
      (0.07)
     33,752






     Grand Total:
   155,553
        1.36
    (15,151)
      (0.13)
   140,402

     Unrealized Currency Gain





     33,743

     Total Net Unrealized Gain



    174,145




<fn>







The accompanying notes are an integral part
of these consolidated financial statements. </table>
<page> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2008

(Unaudited)

The unaudited consolidated financial statements contained herein
include, in the opinion of management, all adjustments necessary
for a fair presentation of the financial condition and results of
operations of Morgan Stanley Principal Plus Fund L.P. (the
"Partnership").  The consolidated financial statements and
condensed notes herein should be read in conjunction with the
Partnership?s December 31, 2007, Annual Report on Form 10-K.

1.  Organization
Morgan Stanley Principal Plus Fund L.P. is a Delaware limited
partnership organized in 1989 to engage primarily in the
speculative trading of futures contracts, options on futures
contracts, and forward contracts on physical commodities and other
commodity interests (collectively, "Futures Interests").

The Partnership?s general partner is Demeter Management
Corporation ("Demeter").  The commodity brokers are Morgan Stanley
& Co. Incorporated ("MS&Co.") and Morgan Stanley & Co.
International plc ("MSIP").  MS&Co. also acts as the counterparty
on all trading of foreign currency forward contracts.  MSIP serves
as the commodity broker for trades on the London Metal Exchange.

<page> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


Demeter, MS&Co., and MSIP are wholly-owned subsidiaries of Morgan
Stanley.  The trading advisor to the Partnership is SSARIS
Advisors, LLC (the "Trading Advisor").  Morgan Stanley Principal
Plus Fund Management L.P. (the "Trading Company") was established
solely to trade in Futures Interests on behalf of the Partnership.

2.  Related Party Transactions
The Partnership?s and Trading Company?s cash is on deposit with
MS&Co. and MSIP in futures, forward, and options trading accounts
to meet margin requirements as needed.  MS&Co. pays monthly
interest income on 100% and 90% of the Partnership?s and the
Trading Company?s, respectively, average daily Net Assets for the
month at a rate equal to the monthly average yield on the 4-week
U.S. Treasury bill discount rate during such month.  The Trading
Company pays brokerage fees to MS&Co.

3.  Income Taxes
No provision for income taxes has been made in the accompanying
financial statements, as partners are individually responsible
for reporting income or loss based upon their respective share of
the Partnership?s revenues or expenses for income tax purposes.
The Partnership files U.S. federal and state tax returns.  The
2004 through 2007 tax years generally remain subject to
examination by U.S. federal and most state tax authorities.
<page> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



4.  Financial Instruments
The Partnership trades Futures Interests.  Futures and forwards
represent contracts for delayed delivery of an instrument at a
specified date and price.  Risk arises from changes in the value
of these contracts and the potential inability of counterparties
to perform under the terms of the contracts.  There are numerous
factors which may significantly influence the market value of
these contracts, including interest rate volatility.


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


The Partnership?s contracts are accounted for on a trade-date
basis and marked to market on a daily basis.  The Partnership
accounts for its derivative investments in accordance with the
provisions of Statement of Financial Accounting Standards No.

<page> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133").  SFAS No. 133 defines a derivative
as a financial instrument or other contract that has all three of
the following characteristics:

1)	One or more underlying notional amounts or payment
provisions;
2)	Requires no initial net investment or a smaller initial net
investment than would be required relative to changes in
market factors;
3)	Terms require or permit net settlement.



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


The net unrealized gains on open contracts, reported as a
component of "Trading Equity" on the Consolidated Statements of
Financial Condition, and their longest contract maturities were as
follows:





<page> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<table> <caption>
	Net Unrealized Gains
	on Open Contracts	Longest Maturities
		Off-			Off-
	Exchange-	Exchange-		Exchange-	Exchange-
Date	 Traded 	 Traded 	Total	 Traded 	 Traded
	  $	   $	  $

	<c>	<c>	<c>	<c>	<c>
Sep. 30, 2008	185,249	-  	185,249    Mar. 2009       -
Dec. 31, 2007	174,145	-  	174,145    	Jun. 2008       -
</table>
The Partnership has credit risk associated with counterparty non-
performance.  As of the date of the consolidated financial
statements, the credit risk associated with the instruments in
which the Partnership trades is limited to the amounts reflected
in the Partnership?s Consolidated Statements of Financial
Condition.


The Partnership also has credit risk because MS&Co. and MSIP act
as the futures commission merchants or the counterparties, with
respect to most of the Partnership?s assets. Exchange-traded
futures, exchange-traded forward, and exchange-traded futures-
styled options contracts are marked to market on a daily basis,
with variations in value settled on a daily basis.  MS&Co. and
MSIP, each acting as a commodity broker for the Partnership?s
exchange-traded futures, exchange-traded forward, and exchange-
traded futures-styled options contracts, are required, pursuant to
regulations of the Commodity Futures Trading Commission ("CFTC"),

<page> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

to segregate from their own assets, and for the sole benefit of
their commodity customers, all funds held by them with respect to
exchange-traded futures, exchange-traded forward, and exchange-
traded futures-styled options contracts, including an amount
equal to the net unrealized gains (losses) on all open exchange-
traded futures, exchange-traded forward, and exchange-traded
futures-styled options contracts, which  funds, in the aggregate,
totaled $7,671,593 and $11,641,596 at September 30, 2008, and
December 31, 2007, respectively.  With respect to the
Partnership?s off-exchange-traded forward currency contracts,
there are no daily settlements of variation in value, nor is
there any requirement that an amount equal to the net unrealized
gains (losses) on such contracts be segregated.  However, the
Partnership is required to meet margin requirements equal to the
net unrealized loss on open forward currency contracts in the
Partnership accounts with the counterparty, which is accomplished
by daily maintenance of the cash balance in a custody account
held at MS&Co.  With respect to those off-exchange-traded forward
currency contracts, the Partnership is at risk to the ability of
MS&Co., the sole counterparty on all such contracts, to perform.
The Partnership has a netting agreement with MS&Co.   This
agreement, which seeks to reduce both the Partnership?s and
MS&Co.?s exposure to off-exchange-traded forward currency


<page> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



contracts, should materially decrease the Partnership?s credit
risk in the event of MS&Co.?s bankruptcy or insolvency.




5.  New Accounting Developments

In September 2006, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No.
157 ("SFAS 157"), "Fair Value Measurements".  SFAS 157 requires
use of a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value into three
levels: Level 1 - quoted market prices in active markets for
identical assets and liabilities; Level 2 - inputs other than
quoted market prices that are observable for the asset or
liability, either directly or indirectly (including quoted prices
for similar investments, interest rates, credit risk); and Level
3 - unobservable inputs for the asset or liability (including the
Partnership?s own assumptions used in determining the fair value
of investments).

Demeter evaluated the impact of adopting SFAS 157 on the
Partnership?s financial statements.  The Partnership adopted SFAS
157 as of January 1, 2008.  Based on its analysis, the effect of
applying SFAS 157 to the investments included in the financial
statements does not have a material impact on the Partnership?s
financial statements.
<page> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


The following table summarizes the Valuation of the Partnership?s
investments by the above SFAS 157 fair value hierarchy as of
September 30, 2008: <table> <caption>



Assets
Quoted Prices in
Active Markets for
  Identical Assets
        (Level 1)
Significant Other
   Observable
      Inputs
     (Level 2)
Significant
  Unobservable
   Inputs
 (Level 3)




      Total


<c>
<c>
 <c>

<c>	<c>
Unrealized gain on open contracts
       $185,249

      n/a
 n/a

$$   	       $185,249

</table>
In March 2008, the FASB issued SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities ("SFAS 161").  SFAS
161 is intended to improve financial reporting about derivative
instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand how those
instruments and activities are accounted for; how and why they are
used; and their effects on a Partnership?s financial position,
financial performance, and cash flows.  SFAS 161 is effective for
financial statements issued for fiscal years beginning after
November 15, 2008, and interim periods within those fiscal years.
The Partnership is currently evaluating the impact that the
adoption of SFAS No. 161 will have on its financial statement
disclosures.

6.  Restricted and Unrestricted Cash
As reflected on the Partnership?s Consolidated Statements of
Financial Condition, restricted cash equals the cash portion of

<page> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)


assets on deposit to meet margin requirements plus the cash
required to offset unrealized losses on foreign currency forwards
and options and offset losses on offset London Metal Exchange
positions.  All of these amounts are maintained separately.  Cash
that is not classified as restricted cash is therefore classified
as unrestricted cash.




<page>
Item 2.	MANAGEMENT?S DISCUSSION AND ANALYSIS OF FINANCIAL
	CONDITION AND RESULTS OF OPERATIONS


Liquidity.  The Partnership deposits its assets with MS&Co. and
MSIP as commodity brokers in separate futures, forward, and
options trading accounts established for the Trading Advisor.
Such assets are used as margin to engage in trading and may be
used as margin solely for the Partnership?s trading. The assets
are held in either non-interest bearing bank accounts or in
securities and instruments permitted by the CFTC for investment of
customer segregated or secured funds.  Since the Partnership?s
sole purpose is to trade in futures, forwards, and options, it is
expected that the Partnership will continue to own such liquid
assets for margin purposes.

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

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

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

Capital Resources.  The Partnership does not have, nor does it
expect to have, any capital assets.  Redemptions of units of
limited partnership interest ("Unit(s)") in the future will affect
the amount of funds available for investments in futures,
forwards, and options in subsequent periods.  It is not possible
to estimate the amount, and therefore the impact, of future
outflows of Units.
<page> There are no known material trends, favorable or
unfavorable, that would affect, nor any expected material changes
to, the Partnership?s capital resource arrangements at the present
time.

Off-Balance Sheet Arrangements and Contractual Obligations.  The
Partnership does not have any off-balance sheet arrangements, nor
does it have contractual obligations or commercial commitments to
make future payments that would affect its liquidity or capital
resources.

Results of Operations
General.  The Partnership?s results depend on the Trading Advisor
and the ability of the Trading Advisor?s trading program to take
advantage of price movements in the futures, forward, and options
markets.  The following presents a summary of the Partnership?s
operations for the three and nine month periods ended September
30, 2008 and 2007, and a general discussion of its trading
activities during each period.  It is important to note, however,
that the Trading Advisor trades in various markets at different
times and that prior activity in a particular market does not mean
that such market will be actively traded by the Trading Advisor or
will be profitable in the future. Consequently, the results of
operations of the Partnership are difficult to discuss other than
in the context of the Trading Advisor?s trading activities on
<page> behalf of the Partnership during the period in question.
Past performance is no guarantee of future results.

The Partnership?s results of operations set forth in the
financial statements on pages 2 through 15 of this report are
prepared in accordance with accounting principles generally
accepted in the United States of America, which require the use
of certain accounting policies that affect the amounts reported
in these financial statements, including the following: The
contracts the Partnership trades are accounted for on a trade-
date basis and marked to market on a daily basis. The difference
between their cost and market value is recorded on the
Consolidated Statements of Operations as "Net change in
unrealized trading gain (loss)" for open (unrealized) contracts,
and recorded as "Realized trading gain (loss)" when open
positions are closed out.  The sum of these amounts constitutes
the Partnership?s trading results.  The market value of a futures
contract is the settlement price on the exchange on which that
futures contract is traded on a particular day.  The value of a
foreign currency forward contract is based on the spot rate as of
the close of business.  Interest income, as well as management
fees, incentive fees, brokerage fees, administrative expenses,
and transaction fees and costs of the Partnership are recorded on
an accrual basis.

<page> Demeter believes that, based on the nature of the
operations of the Partnership, no assumptions relating to the
application of critical accounting policies other than those
presently used could reasonably affect reported amounts.

For the Three and Nine Months Ended September 30, 2008
The Partnership recorded total trading results including interest
income totaling $119,296, expenses totaling $144,006, and
minority interest of $(422), resulting in a net loss of $24,288
for the three months ended September 30, 2008.  The Partnership?s
net asset value per Unit decreased from $1,705.51 at June 30,
2008, to $1,699.10 at September 30, 2008.

The most significant trading losses of approximately 2.5% were
recorded in the agricultural sector primarily during July from
long futures positions in the soybean complex and corn as prices
reversed lower amid news that favorable weather in U.S. growing
regions might boost crop prospects. Elsewhere, long positions in
sugar futures resulted in losses as prices declined during July
and August on concerns that a recent slide in energy prices would
erode demand for ethanol made from sugar cane. Additional losses
were incurred during August from long positions in feeder cattle
futures as prices moved lower after the U.S. Department of
Agriculture reported a larger-than-expected increase in supplies,
while both short and long futures positions in wheat also
resulted in losses as prices moved without consistent direction
<page> throughout the month. Losses of approximately 1.6% were
incurred within the global stock index sector, primarily during
September, from long positions in European and U.S. equity index
futures as prices moved sharply lower amid unprecedented U.S.
financial market volatility and turmoil following news of the
collapse of a major U.S. investment bank and the government
rescue of a U.S. insurance giant. Furthermore, U.S. equity
markets plunged on Monday, September 29, 2008, after the U.S.
House of Representatives rejected the Economic Stabilization Act
of 2008, which would have allowed the U.S. Treasury to purchase
troubled mortgage-backed securities from U.S. financial
institutions. Within the currency sector, losses of approximately
0.8% were recorded, primarily during September, from both short
and long positions in the Mexican peso versus the U.S. dollar as
the value of the Mexican peso moved without consistent direction
amid uncertainty regarding the future of the Mexican economy.
Additional losses were experienced during August and September
from long positions in the British pound versus the Japanese yen
and euro as the value of the British pound moved lower against
these currencies amid weaker-than-expected economic data out of
the U.K. and speculation that the Bank of England would cut
interest rates in the near future. Smaller losses of
approximately 0.1% were recorded within the metals sector during
July and August from long positions in zinc, lead, and copper
futures as prices moved lower amid speculation that slowing
economic growth would reduce demand for the base metals. Newly
<page> established short positions in zinc and lead futures
incurred further losses as prices reversed higher during
September amid speculation that China's manufacturing activity
would increase following the conclusion of the 2008 Summer
Olympics in Beijing, thus boosting demand for base metals. A
portion of the Partnership?s losses in the third quarter was
offset by gains of approximately 3.3% experienced in the global
interest rate sector, primarily during July and August, from long
positions in Japanese and Australian fixed-income futures as
prices moved higher following reports showing continued weak
economic data out of the world?s largest economies. Long
positions in long-term European fixed-income futures also
resulted in gains as prices moved higher during August and
September amid a global ?flight-to-safety? on worries regarding
the fundamental health of the U.S. financial system and its
impact on the global economy. Further gains of approximately 1.5%
were achieved in the energy sector, primarily during July, from
short positions in natural gas futures as prices decreased amid
rising inventories. Additional gains were achieved during
September from short futures positions in crude oil and its
related products as prices declined amid news that Hurricane
Gustav had not significantly damaged oil facilities in the Gulf
of Mexico and fears that stalling global economic growth would
curtail energy demand.

<page> The Partnership recorded total trading results including
interest income totaling $(478,562), expenses totaling $488,657,
and minority interest of $(12,543), resulting in a net loss of
$954,676 for the nine months ended September 30, 2008.  The
Partnership?s net asset value per Unit decreased from $1,872.42 at
December 31, 2007, to $1,699.10 at September 30, 2008.



The most significant trading losses of approximately 7.9% were
experienced in the global stock index sector throughout the first
quarter from long positions in European and U.S. equity index
futures as prices moved lower on concerns that a persistent U.S.
housing slump, mounting losses linked to U.S. sub-prime mortgage
investments, and a weakening job market would restrain consumer
spending and curb global economic growth. During June, additional
losses were incurred from long positions in European, U.S., and
Australian equity index futures as prices continued to move lower
on concerns that record commodity prices and additional subprime-
related writedowns would erode corporate earnings and slow the
rate of global economic growth. Furthermore, during September,
losses were incurred from long positions in European and U.S.
equity index futures as prices moved sharply lower amid
unprecedented U.S. financial market volatility and turmoil
following news of the collapse of a major U.S. investment bank
and the government rescue of a U.S. insurance giant. Losses of
approximately 1.9% were incurred within the currency sector from
long positions in the euro versus the Norwegian krone, Australian
<page> dollar, and British pound as the value of the euro
declined against these currencies during February, April, August,
and September amid weak economic data throughout the Euro-Zone.
Elsewhere in the currency sector, losses were also recorded,
primarily during February and April, from short positions in the
British pound versus the Swiss franc and euro as the value of the
British pound strengthened against these currencies amid
speculation that the Bank of England would slow the pace of
interest rate cuts amid concerns of accelerating global
inflation. Lastly, losses were recorded, primarily during
September, from both short and long positions in the Mexican peso
versus the U.S. dollar as the value of the Mexican peso moved
without consistent direction amid uncertainty regarding the
future of the Mexican economy. Within the global interest rate
sector, losses of approximately 1.4% were incurred, primarily
during February, April, and May, from long positions in U.S. and
European fixed-income futures as prices declined amid speculation
that the U.S. Federal Reserve and European Central Bank would not
reduce borrowing costs as much as previously expected due to
accelerating global inflation. U.S. interest rate futures prices
also moved lower during September after news of a major U.S.
government intervention in the financial sector eased concerns
that the credit crisis would continue to deteriorate the growth
of the global economy.  Further losses of approximately 0.4% were
experienced within the agricultural complex, primarily during
August, from long positions in feeder cattle futures as prices
<page> moved lower after the U.S. Department of Agriculture
reported a larger-than-expected increase in supplies. Elsewhere,
both short and long futures positions in wheat resulted in losses
as prices moved without consistent direction throughout August
due to conflicting data regarding supply and demand. Losses also
resulted from long positions in orange juice futures as prices
fell during July amid reports of abundant inventories. Smaller
losses of approximately 0.2% were recorded within the metals
markets, primarily during March, July, and August, from long
positions in zinc and copper futures as prices decreased amid
speculation that a slumping U.S. economy would lead to a decline
in global demand for base metals. Newly established short
positions in zinc and lead futures incurred further losses as
prices reversed higher during September amid speculation that
China's manufacturing activity would increase following the
conclusion of the 2008 Summer Olympics in Beijing, thus boosting
demand for base metals. A portion of the Partnership?s losses in
the first nine months of the year was offset by gains of
approximately 4.4% experienced in the energy sector, primarily
during the second quarter, from long futures positions in crude
oil and its related products as prices moved sharply higher due
to a drop in OPEC output, supply threats in Nigeria and Iraq,
growing Asian fuel consumption, and an unexpected decline in
domestic inventories. Additional gains were achieved during
September from newly established short futures positions in crude
oil and its related products as prices declined amid news that
<page> Hurricane Gustav had significantly damaged oil facilities
in the Gulf of Mexico and fears that stalling global economic
growth would curtail energy demand. Further gains were also
achieved, primarily during July, from short positions in natural
gas futures as prices decreased amid rising inventories.

For the Three and Nine Months Ended September 30, 2007
The Partnership recorded total trading results including interest
income totaling $157,999, expenses totaling $211,365, and
minority interest of $571, resulting in a net loss of $52,795 for
the three months ended September 30, 2007.  The Partnership?s net
asset value per Unit decreased from $1,925.50 at June 30, 2007,
to $1,918.95 at September 30, 2007.

The most significant trading losses of approximately 2.6% were
recorded in the global stock index sector primarily during July
and August from long positions in European and U.S. equity index
futures as prices fell sharply amid speculation that a widening
credit crunch, sparked by U.S. sub-prime mortgage losses, would
erode global economic growth and corporate earnings.  Elsewhere,
losses of approximately 0.3% were incurred in the agricultural
markets primarily during August from long positions in live
cattle futures as prices fell amid concerns that a decline in the
U.S. economy and further losses in the equity markets would cause
a decline in consumer demand.  Elsewhere in the agricultural
complex, short positions in corn futures resulted in additional
losses during August as prices increased amid fears that
<page> persistent dry weather in global growing regions would
significantly decrease supply.  Further losses of approximately
0.3% were experienced in the metals markets primarily during
August from both short and long positions in copper and zinc
futures as prices moved without consistent direction amid
conflicting data regarding supply and demand.  A portion of the
Partnership?s losses in the third quarter was offset by gains of
approximately 2.4% experienced in the global interest rate sector
primarily during August from long positions in U.S., German, and
Japanese fixed-income futures as prices increased in a worldwide
"flight-to-quality" after volatility in global equity markets,
spurred by losses in the U.S. sub-prime mortgage sector, cause
investors to seek the "safe haven" of government bonds.  During
September, smaller gains were recorded from long positions in
U.S. interest rate futures as prices moved higher leading up to
and after the U.S. Federal Reserve?s decision to cut interest
rates at its September 18, 2007, meeting.  Further gains of
approximately 0.7% were experienced in the currency sector during
August from long positions in the Australian dollar versus the
New Zealand dollar as the value of the Australian dollar moved
higher against the New Zealand dollar after the Australian Bureau
of Statistics reported that retail sales in Australia had climbed
more-than-expected in July.  Additional gains were recorded
during September from outright short positions in the U.S. Dollar
Index, as well as from long positions in the euro and British
pound versus the U.S. dollar, as the value of the U.S. dollar
<page> moved lower relative to most of its major rivals amid the
aforementioned interest rate cut by the U.S. Federal Reserve.
Furthermore, the value of the U.S. dollar was pulled lower amid
speculation that the U.S. Federal Reserve would continue to
reduce interest rates in the near term in order to spur economic
growth after the recent collapse of the sub-prime mortgage
market. Lastly, short positions in the euro versus the Norwegian
krone resulted in gains during September as the value of the
Norwegian krone moved higher in tandem with rising energy prices.
Smaller gains of approximately 0.1% were recorded in the energy
markets primarily during July from long futures positions in
Brent crude oil as prices moved higher amid worries that supplies
of European North Sea oil would dwindle.

The Partnership recorded total trading results including interest
income totaling $678,889, expenses totaling $633,602, and
minority interest of $530, resulting in net income of $44,757 for
the nine months ended September 30, 2007.  The Partnership?s net
asset value per Unit increased from $1,909.85 at December 31,
2006, to $1,918.95 at September 30, 2007.

The most significant trading gains of approximately 3.5% were
experienced in the global interest rate sector during May and
June from short positions in European fixed-income futures as
prices trended lower amid consistently strong consumer sentiment
and unemployment data out of Germany and the United Kingdom.
<page> Elsewhere, gains were recorded from short positions in
Japanese government bond futures primarily during June as prices
moved lower on weaker demand for Japanese yen-denominated assets.
 During August, newly established long positions in U.S., German,
and Japanese fixed-income futures resulted in gains as prices
increased in a continuation of a worldwide "flight-to-quality"
after volatility in global equity markets, spurred by losses in
the U.S. sub-prime mortgage sector, caused investors to seek the
"safe haven" of government bonds.  During September, smaller
gains were recorded from long positions in U.S. interest rate
futures as prices moved higher leading up to and after the U.S.
Federal Reserve?s decision to cut interest rates at its September
18, 2007,  meeting.  Additional gains of approximately 0.7% were
recorded in the metals markets during February, March, and April
from long positions in nickel and copper futures as prices moved
higher on speculation that low stockpiles would create a supply
shortage in the future and after the International Monetary
Fund's strong global growth forecasts bolstered sentiment that
demand for base metals would increase in 2007.  Further gains
were recorded from newly established short positions in nickel
futures as prices moved lower during June on news that China
would cut stainless steel output.  Elsewhere, short positions in
silver futures resulted in gains during March and June as prices
fell amid speculative selling.  Gains of approximately 0.4% were
recorded in the energy markets during March, April, and July from
long futures positions in Brent crude oil and gasoline as prices
<page> increased amid concerns of rising geopolitical tension in
the Middle East and worries that supplies of European North Sea
oil were dwindling.  Finally, gains of approximately 0.4% were
experienced in the currency sector primarily during April, May,
and September from outright short positions in the U.S. Dollar
Index, as well as from long positions in the euro and British
pound versus the U.S. dollar, as the value of the euro moved
higher after the Ifo Institute stated that German business
sentiment had climbed to the second highest on record in April
and the value of the British pound moved higher as consistently
strong economic data out of the United Kingdom increased
speculation that the Bank of England would increase interest
rates.  In addition, the value of the U.S. dollar moved lower
relative to most of its major rivals leading up to and after the
U.S. Federal Reserve?s decision to cut interest rates at its
September 18, 2007, meeting.  A portion of the Partnership?s
gains in the first nine months of the year was offset by losses
of approximately 2.7% recorded in the global stock index sector
during February and early March from long positions in U.S.,
European, and Pacific Rim stock index futures as prices reversed
sharply lower after a massive sell-off in the global equity
markets that began on February 27, 2007, following comments from
former U.S. Federal Reserve Chairman Alan Greenspan that the U.S.
economy could be due for a recession.  In addition, concerns that
tighter credit conditions in China and Japan might dampen global
growth first sent Chinese stock markets plunging before the sell-
<page> off spread to other equity markets.  During July and
August, long positions in European and U.S. equity index futures
resulted in further losses as prices fell sharply amid
speculation that a widening credit crunch, sparked by U.S. sub-
prime mortgage losses, would erode global economic growth and
corporate earnings.  Additional losses of approximately 0.7% were
recorded in the agricultural markets from both short and long
positions in lean hog futures as prices moved without consistent
direction during January, March, and May amid conflicting news
regarding  supply and demand.  Meanwhile, long positions in corn
futures resulted in losses during January as prices declined due
to speculative selling.  Further losses were incurred from newly
established short positions in corn futures as prices moved
higher during May, June, and August amid lower production and
fears that persistent dry weather in global growing regions would
significantly decrease supply.

Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards, and options.  The
market-sensitive instruments held by the Partnership are acquired
for speculative trading purposes only and, as a result, all or
substantially all of the Partnership?s assets are at risk of
trading loss.  Unlike an operating company, the risk of market-
<page> sensitive instruments is inherent to the primary business
activity of the Partnership.

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

The Partnership?s total market risk may increase or decrease as
it is influenced by a wide variety of factors, including, but not
limited to, the diversification among the Partnership?s open
positions, the volatility present within the markets, and the
liquidity of the markets.
<page> The face value of the market sector instruments held by
the Partnership is typically many times the applicable margin
requirements.  Margin requirements generally range between 2% and
15% of contract face value.  Additionally, the use of leverage
causes the face value of the market sector instruments held by
the Partnership typically to be many times the total
capitalization of the Partnership.

The Partnership?s past performance is no guarantee of its future
results.  Any attempt to numerically quantify the Partnership?s
market risk is limited by the uncertainty of its speculative
trading.  The Partnership?s speculative trading and use of
leverage may cause future losses and volatility (i.e., "risk of
ruin") that far exceed the Partnership?s experience to date under
the "Partnership?s Value at Risk in Different Market Sectors"
section and significantly exceed the Value at Risk ("VaR") tables
disclosed.

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

Quantifying the Partnership?s Trading Value at Risk
The following quantitative disclosures regarding the Partner-
ship?s market risk exposures contain "forward-looking statements"
within the meaning of the safe harbor from civil liability
provided for such statements by the Private Securities Litigation
<page> Reform Act of 1995 (set forth in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934).  All quantitative disclosures in this section are
deemed to be forward-looking statements for purposes of the safe
harbor, except for statements of historical fact.

The Partnership accounts for open positions on the basis of mark
to market accounting principles.  Any loss in the market value of
the Partnership?s open positions is directly reflected in the
Partnership?s earnings and cash flow.

The Partnership?s risk exposure in the market sectors traded by
the Trading Advisor is estimated below in terms of VaR. The
Partnership estimates VaR using a model based upon historical
simulation (with a confidence level of 99%) which involves
constructing a distribution of hypothetical daily changes in the
value of a trading portfolio.  The VaR model takes into account
linear exposures to risk including equity and commodity prices,
interest rates, foreign exchange rates, and correlation among
these variables.  The hypothetical changes in portfolio value are
based on daily percentage changes observed in key market indices
or other market factors ("market risk factors") to which the
portfolio is sensitive.  The one-day 99% confidence level of the
Partnership?s VaR corresponds to the negative change in portfolio
value that, based on observed market risk factors, would have been
exceeded once in 100 trading days, or one day in 100.  VaR
<page> typically does not represent the worst case outcome.
Demeter uses approximately four years of daily market data (1,000
observations) and re-values its portfolio (using delta-gamma
approximations) for each of the historical market moves that
occurred over this time period.  This generates a probability
distribution of daily "simulated profit and loss" outcomes.  The
VaR is the appropriate percentile of this distribution.  For
example, the 99% one-day VaR would represent the 10th worst
outcome from Demeter?s simulated profit and loss series.

The Partnership?s VaR computations are based on the risk
representation of the underlying benchmark for each instrument or
contract and do not distinguish between exchange and non-exchange
dealer-based instruments.  They are also not based on exchange
and/or dealer-based maintenance margin requirements.

VaR models, including the Partnership?s, are continually evolving
as trading portfolios become more diverse and modeling techniques
and systems capabilities improve.  Please note that the VaR model
is used to numerically quantify market risk for historic
reporting purposes only and is not utilized by either Demeter or
the Trading Advisor in their daily risk management activities.
Please further note that VaR as described above may not be
comparable to similarly-titled measures used by other entities.


<page>
The Partnership?s Value at Risk in Different Market Sectors
The following table indicates the VaR associated with the
Partnership?s open positions as a percentage of total Net Assets
by primary market risk category at September 30, 2008 and 2007.
At September 30, 2008 and 2007, the Partnership?s total
capitalization was approximately $7 million and $12 million,
respectively.
Primary Market           September 30, 2008    September 30, 2007
Risk Category	  	        Value at Risk         Value at Risk

Interest Rate                   (1.53)%           	(0.93)%
Equity                          (0.15)                	(0.86)
Currency                        (0.12)            	(0.17)
Commodity                       (0.93)            	(0.28)
Aggregate Value at Risk         (2.03)%           	(1.52)%


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

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

The table below supplements the quarter-end VaR set forth above
by presenting the Partnership?s high, low, and average VaR, as a
percentage of total Net Assets for the four quarter-end reporting
periods from October 1, 2007, through September 30, 2008.

Primary Market Risk Category        High      Low      Average
Interest Rate	(1.53)%	(0.43)%	(0.96)%
Equity	(0.94)	(0.06)	(0.44)
Currency	(0.15)	(0.09)	(0.12)
Commodity	(1.12)	(0.31)	(0.69)
Aggregate Value at Risk	(2.03)%	(1.10)%	(1.45)%


Limitations on Value at Risk as an Assessment of Market Risk

VaR models permit estimation of a portfolio?s aggregate market
risk exposure, incorporating a range of varied market risks,
reflect risk reduction due to portfolio diversification or hedging
activities, and can cover a wide range of portfolio assets.
However, VaR risk measures should be viewed in light of the
methodology?s limitations, which include, but may not be limited
to the following:
*	past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
<page>
*	changes in portfolio value caused by market movements may
differ from those of the VaR model;
*	VaR results reflect past market fluctuations applied to
current trading positions while future risk depends on future
positions;
*	VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
*	the historical market risk factor data used for VaR
estimation may provide only limited insight into losses that
could be incurred under certain unusual market movements.

In addition, the VaR tables above, as well as the past performance
of the Partnership, give no indication of the Partnership?s
potential "risk of ruin".

The VaR tables provided present the results of the Partnership?s
VaR for each of the Partnership?s market risk exposures and on an
aggregate basis at September 30, 2008 and 2007, and for the four
quarter-end reporting periods from October 1, 2007, through
September 30, 2008.  VaR is not necessarily representative of the
Partnership?s historic risk, nor should it be used to predict the
Partnership?s future financial performance or its ability to
manage or monitor risk.  There can be no assurance that the
Partnership?s actual losses on a particular day will not exceed
<page> the VaR amounts indicated above or that such losses will
not occur more than once in 100 trading days.

Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances.  These balances and any market risk they may represent
are immaterial.

The Partnership also maintains a substantial portion of its
available assets in cash at MS&Co.; as of September 30, 2008, such
amount was equal to approximately 104% of the Partnership?s net
asset value.  A decline in short-term interest rates would result
in a decline in the Partnership?s cash management income.  This
cash flow risk is not considered to be material.

Materiality, as used throughout this section, is based on an
assessment of reasonably possible market movements and any
associated potential losses, taking into account the leverage,
optionality, and multiplier features of the Partnership?s market-
sensitive instruments, in relation to the Partnership?s Net
Assets.

Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership?s
market risk exposures - except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
<page> Partnership manages its primary market risk exposures -
constitute forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. The Partnership?s primary market risk
exposures, as well as the strategies used and to be used by
Demeter and the Trading Advisor for managing such exposures, are
subject to numerous uncertainties, contingencies and risks, any
one of which could cause the actual results of the Partnership?s
risk controls to differ materially from the objectives of such
strategies.  Government interventions, defaults and
expropriations, illiquid markets, the emergence of dominant
fundamental factors, political upheavals, changes in historical
price relationships, an influx of new market participants,
increased regulation, and many other factors could result in
material losses, as well as in material changes to the risk
exposures and the risk management strategies of the Partnership.
Investors must be prepared to lose all or substantially all of
their investment in the Partnership.

The following were the primary trading risk exposures of the
Partnership at September 30, 2008, by market sector.  It may be
anticipated, however, that these market exposures will vary
materially over time.

Interest Rate.  The largest market exposure of the Partnership at
September 30, 2008, was to the global interest rate sector.
<page> Exposure was primarily spread across the European, U.S.,
Japanese, Australian, and New Zealand interest rate sectors.
Interest rate movements directly affect the price of the
sovereign bond futures positions held by the Partnership and
indirectly affect the value of its stock index and currency
positions.  Interest rate movements in one country, as well as
relative interest rate movements between countries, materially
impact the Partnership?s profitability. The Partnership?s
interest rate exposure is generally to interest rate fluctuations
in the U.S. and the other G-7 countries? interest rates.  The G-7
countries consist of France, the U.S., the United Kingdom,
Germany, Japan, Italy, and Canada.  However, the Partnership also
takes futures positions in the government debt of smaller
countries ? e.g., Australia and New Zealand.  Demeter anticipates
that the G-7 countries? interest rates, as well as Australian and
New Zealand interest rates, will remain the primary interest rate
exposures of the Partnership for the foreseeable future.  The
speculative futures positions held by the Partnership range from
short to long-term instruments.  Consequently, changes in short,
medium, or long-term interest rates may have an effect on the
Partnership.

Equity.  At September 30, 2008, the Partnership had market
exposure to the global stock index sector, primarily to equity
price risk in the G-7 countries.  The stock index futures traded
by the Partnership are by law limited to futures on broadly-based
<page> indices.  At September 30, 2008, the Partnership?s primary
exposures were to the DAX (Germany), NIKKEI 225 (Japan), S&P 500
(U.S.), SPI 200 (Australia), NASDAQ 100 (U.S.), FTSE 100 (United
Kingdom), and CAC 40 (France) stock indices.  The Partnership is
primarily exposed to the risk of adverse price trends or static
markets in the U.S., Japanese, European, and Australian stock
indices.  Static markets would not cause major market changes,
but would make it difficult for the Partnership to avoid
trendless price movements, resulting in numerous small losses.
Currency.  At September 30, 2008, the Partnership had market
exposure to the currency sector.  Exposure was to exchange rate
fluctuations, primarily fluctuations which disrupt the historical
pricing relationships between different currencies and currency
pairs.  Interest rate changes as well as political and general
economic conditions influence these fluctuations. The Partnership
trades a large number of currencies, including cross-rates -
i.e., positions between two currencies other than the U.S.
dollar. At September 30, 2008, the Partnership?s major exposures
were to euro, Australian dollar, and Norwegian krone currency
crosses, as well as to outright U.S. dollar positions. Outright
positions consist of the U.S. dollar vs. other currencies.  These
other currencies include major and minor currencies.  Demeter
does not anticipate that the risk associated with the
Partnership?s currency trades will change significantly in the
future.

<page>
Commodity.
Soft Commodities and Agriculturals.  The second largest
market exposure of the Partnership at September 30, 2008,
was to the markets that comprise these sectors.  Most of the
exposure was to the live cattle, soybean meal, corn,
soybeans, coffee, sugar, lean hogs, cotton, rapeseed, wheat,
feeder cattle, orange juice, and soybean oil markets.
Supply and demand inequalities, severe weather disruptions,
and market expectations affect price movements in these
markets.

Energy.  The third largest market exposure of the
Partnership at September 30, 2008, was to the energy sector.
The Partnership?s energy exposure was shared primarily by
futures contracts in crude oil and its related products, as
well as natural gas. Price movements in these markets result
from geopolitical developments, particularly in the Middle
East, as well as weather patterns, and other economic
fundamentals.  Significant profits and losses, which have
been experienced in the past, are expected to continue to be
experienced in the future.

Metals.  At September 30, 2008, the Partnership had market
exposure to the metals sector.  The Partnership?s metals
exposure was to fluctuations in the price of base metals,
<page> such as copper, nickel, aluminum, and zinc, as well as
precious metals, such as silver and gold. Economic forces,
supply and demand inequalities, geopolitical factors, and
market expectations influence price movements in these
markets.  The Trading Advisor utilizes its trading systems to
take positions when market opportunities develop, and Demeter
anticipates that the Trading Advisor will continue to do so.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at September 30, 2008:

Foreign Currency Balances.  The Partnership?s primary
foreign currency balances at September 30, 2008, were in
euros, British pounds, Australian dollars, Canadian dollars,
Norwegian kroner, Hong Kong dollars, Japanese yen, New
Zealand dollars, and Swiss francs.  The Partnership controls
the non-trading risk of foreign currency balances by
regularly converting them back into U.S. dollars upon
liquidation of their respective positions.

Qualitative Disclosures Regarding Means of Managing Risk Exposure
The Partnership and the Trading Advisor, separately, attempt to
manage the risk of the Partnership?s open positions in essentially
the same manner in all market categories traded.  Demeter attempts
to manage market exposure by diversifying the Partnership?s assets
<page> among different market sectors through the selection of a
Commodity Trading Advisor and by daily monitoring its performance.
In addition, the Trading Advisor establishes diversification
guidelines, often set in terms of the maximum margin to be
committed to positions in any one market sector or market-
sensitive instrument.

Demeter monitors and controls the risk of the Partnership?s non-
trading instrument, cash.  Cash is the only Partnership investment
directed by Demeter, rather than the Trading Advisor.

Item 4.  CONTROLS AND PROCEDURES
	As of the end of the period covered by this quarterly report, the
President and Chief Financial Officer of Demeter, the general
partner of the Partnership, have evaluated the effectiveness of
the Partnership?s disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) of the Exchange Act), and have
judged such controls and procedures to be effective.

Changes in Internal Control over Financial Reporting
There have been no material changes during the period covered by
this quarterly report in the Partnership?s internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
of the Exchange Act) or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.

<page>
Item 4T.  CONTROLS AND PROCEDURES
Not applicable.




<page> PART II.  OTHER INFORMATION


Item 1A.  RISK FACTORS

Information regarding risk factors appears in Item 2.
"Management?s Discussion and Analysis of Financial Condition and
Results of Operations" and Item 3. "Quantitative and Qualitative
Disclosures about Market Risk" of this Form 10-Q.  There have been
no other material changes from the risk factors previously
referenced in the Partnership?s Report on Form 10-K for the fiscal
year ended December 31, 2007, and the Partnership?s Reports on
Form 10Q for the quarters ended March 31, 2008 and June 30, 2008.


Item 5.  OTHER INFORMATION
Limited Partners of the Partnership are advised that Demeter has
determined to withdraw from the Partnership effective November 30,
2008, and thereafter will commence dissolution of the Partnership
pursuant to the Partnership?s Limited Partnership Agreement.  In
connection with such withdrawal, Demeter terminated trading for
the Partnership effective October 31, 2008.  Following termination
of trading for the Partnership, all Partnership assets will be
paid interest at the rate equal to the average yield on 4-week
U.S. Treasury Bills, with your share of interest credited to your
Units.  The management and brokerage fees on any assets remaining
in the Partnership after October 31, 2008, will be waived, given
the absence of any further futures trading by the Partnership.

<page> Through November 30, 2008, qualified Limited Partners may,
under certain conditions, redeem some or all of their interest in
the Partnership and use the proceeds of such redemption to
purchase an interest in another Morgan Stanley managed futures
partnership for which Demeter is the general partner (an offering
in any such managed futures partnership is by prospectus or
offering memorandum only).  Otherwise, Limited Partners may simply
redeem their interest in the Partnership and receive the proceeds
of such redemption in cash.  Whether you exchange or redeem your
Partnership Units, there will be no minimum holding period
requirement or redemption charge.  Limited Partners who do not
redeem their interest in the Partnership prior to November 30,
2008, should be aware that final distribution of any remaining
Partnership assets is anticipated to be made on or about December
15, 2008.

Item 6.  EXHIBITS

31.01	Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.02	Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
32.01	Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.


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

























<page>
SIGNATURE



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




                      Morgan Stanley Principal Plus Fund L.P.
                      (Registrant)

                      By:   Demeter Management Corporation
                            (General Partner)

November 13, 2008     By:  /s/Christian Angstadt
                              Christian Angstadt
                              Chief Financial Officer




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