Morgan Stanley Managed Futures
BHM I, LLC

   Financial Statements with
   Report of Independent Auditors

For the Year ended December 31,
2008 and the Period from August 1,
2007 (commencement of operations)
to December 31, 2007













THE ENCLOSED TRADING COMPANY FINANCIAL STATEMENTS AND
FOOTNOTE DISCLOSURE ARE PRESENTED PURSUANT TO REGULATION S-X.














<page> Morgan Stanley Managed Futures BHM I LLC
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members of Morgan Stanley Managed Futures BHM I, LLC:
We have audited the accompanying statements of financial
condition of Morgan Stanley Managed Futures BHM I, LLC (the
?Trading Company?), including the condensed schedules of
investments, as of December 31, 2008 and 2007, and the related
statements of operations, changes in members? capital, and cash
flows for the year ended December 31, 2008, and for the period
from August 1, 2007 (commencement of operations) to December 31,
2007. These financial statements are the responsibility of the
Trading Company?s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. The Trading Company is not
required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audits included
consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Trading Company?s internal control
over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of Morgan Stanley
Managed Futures BHM I, LLC, at December 31, 2008 and 2007, and
the results of its operations, changes in members? capital, and
cash flows for the year ended December 31, 2008, and for the
period from August 1, 2007 (commencement of operations) to
December 31, 2007, in conformity with accounting principles
generally accepted in the United States of America.

/s/ Deloitte & Touche LLP
New York, New York
March 30, 2009



<page> <table> Morgan Stanley Managed Futures BHM I, LLC
Statements of Financial Condition
<caption>
	                                          December 31,
                                                      2008      	           2007
	$	 $

	<c>	<c>
ASSETS

Trading Equity:
	Unrestricted cash	113,591,970	  7,038,210
	Restricted cash	     9,838,695	           120,806

	     Total cash	  123,430,665	        7,159,016

	Net unrealized gain on open contracts (MS&Co.)	        5,529,200	       687,184
	Net unrealized gain (loss) on open contracts (MSIP)	         1,855,890	              (126,586)

          Total net unrealized gain on open contracts	         7,385,090	          560,598

 	Options purchased (premiums paid $2,002,078
             and $11,597, respectively)	     2,622,329	            14,337

	     Total Trading Equity	133,438,084	7,733,951

Interest receivable (MS&Co.)	           39,255	           18,977
Expense reimbursements	           20,402                              ?

	     Total Assets	  133,497,741	        7,752,928

LIABILITIES AND MEMBERS? CAPITAL

LIABILITIES
Withdrawals payable 	19,671,490     	1,457,373
Options written (premiums received $1,299,709
  and $3,083, respectively)				    	  2,450,282		         2,767
Accrued management fees	39,656	12,076
Accrued administrative fees 	            6,940	             2,113
Accrued incentive fee	            ?    			47,635

	     Total Liabilities	   22,168,368	      1,521,964

MEMBERS? CAPITAL
Managing Member	?      	?
Non-Managing Members	  111,329,373	    6,230,964

	Total Members? Capital	  111,329,373	    6,230,964

	Total Liabilities and Members? Capital	     133,497,741	    7,752,928


<fn>



The accompanying notes are an integral part of these financial statements.
</table>
<page> <table>
Morgan Stanley Managed Futures BHM I, LLC
Statements of Operations
<caption>
                                                                                                            For the Period from
                                                                                                               August 1, 2007
                                                                                                                (commencement of
	                                                                     For the Year Ended          operations) to
    	                            December 31, 2008       December 31, 2007
	                              $                                    $



		<c>	<c>
INVESTMENT INCOME
	 Interest income (MS&Co.)	    241,409			          89,805

EXPENSES
     Incentive fees                 		    	     650,367		    101,108
     Management fees                  		    	     373,663		      53,785
     Brokerage, clearing and transaction fees                289,646      		        9,281
	Administrative fees                                                    65,391		                     9,412

 	     Total Expenses                                                1,379,067 		                 173,586

     Expenses reimbursements                                    (247,297)		                     ?

          Net Expenses                                                  1,131,770    	  	                 173,586

NET INVESTMENT LOSS                                         (890,361)		                 (83,781)

TRADING RESULTS
Trading profit (loss):
	Realized                                                              10,495,780		                  (2,000)
	Net change in unrealized                                      6,291,114        	               563,654

         Total Trading Results                                     16,786,894	 	               561,654

NET INCOME                                                          15,896,533		               477,873


NET INCOME  ALLOCATION
Managing Member                                                       ?                               102,373
 Non-Managing Members                                        15,896,533		              375,500



<fn>







The accompanying notes are an integral part of these financial statements.
</table>
<page>  <table>
Morgan Stanley Managed Futures BHM I, LLC
Statements of Changes in Members? Capital
For the Year Ended December 31, 2008 and for the Period
From August 1, 2007 (commencement of operations) to December 31, 2007

<caption>

	        Managing	      Non-Managing
	       Member       	     Members  	    Total
                                  $                                  $                            $

	<c>	<c>	<c>
Members? Capital,
	Initial Contribution,
	August 1, 2007	             2,980,000	2,070,794	    5,050,794

Capital Contributions                                                  ?    		3,784,670		    3,784,670

Net Income	       102,373	       375,500	       477,873

Capital Withdrawals                                 	        (3,082,373) 	   	                 ?     	             (3,082,373)

Members? Capital,
	December 31, 2007	                                                ?	6,230,964	    6,230,964

Capital Contributions                                                  ?    		118,631,822		118,631,822

Net Income	                                                                 ?	15,896,533	  15,896,533

Capital Withdrawals                                 	                ?  	    	       (29,429,946)	          (29,429,946)

Members? Capital,
  December 31, 2008               ?  	             111,329,373 	         111,329,373





<fn>












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

</table>
<page> <table>
Morgan Stanley Managed Futures BHM I, LLC
Statements of Cash Flows
<caption>
                                                          						             For the Period from
264:  			    August 1, 2007
                                                                       (commencement of
                                For the Year Ended	     operations) to
	                 December 31, 2008      December 31, 2007
                                              $		                  $

	<c>		<c>
CASH FLOWS FROM OPERATING ACTIVITIES

Net income 	15,896,533		                     477,873
Noncash item included in net income:
	Net change in unrealized	    (6,291,114)	   (563,654)

Increase in operating assets:
	Restricted cash	                                                        (9,717,889)                      (120,806)
	Net premiums paid for options purchased	          (1,990,481)		   	  (11,597)
	Interest receivable (MS&Co.)	                                                                          (20,278)	  	  (18,977)
	Expense reimbursements                              (20,402)                              ?

Increase (decrease) in operating liabilities:
	Net premiums received for options written	                                                 1,296,626		           3,083
	Accrued management fees	                                                                              27,580		   12,076
	Accrued administrative fees 	                                                                              4,827	      	     2,113
	Accrued incentive fees 	                                                                                   (47,635)	  	 		   47,635

Net cash used for operating activities                    (862,233)	                      (172,254)


CASH FLOWS FROM FINANCING ACTIVITIES

Initial contributions	                              	?	                            5,050,794
Capital contributions 	                                      118,631,822                     	 3,784,670
Capital withdrawals	                                          (11,215,829)                  (1,625,000)

Net cash provided by financing activities             107,415,993                      7,210,464

Net increase in unrestricted cash	        106,553,760	                     7,038,210

Unrestricted cash at beginning of period	            7,038,210	                      ?

Unrestricted cash at end of period   	         113,591,970	                     7,038,210



<fn>





The accompanying notes are an integral part of these financial statements.
</table>
<page> <table>
Morgan Stanley Managed Futures BHM I, LLC
Condensed Schedules of Investments
December 31, 2008 and 2007
        <caption>





Futures and Forward Contracts
       Long
  Unrealized
  Gain/(Loss)

Percentage of
  Members? Capital
    Short
Unrealized
   Gain/(Loss)

 Percentage of
   Members? Capital
    Net
Unrealized
Gain/(Loss)


<c>
<c>
<c>
<c>
<c>

$
%
   $
%
$

December 31, 2008, Members? Capital: $111,329,373



Commodity
 (2,034,724)
       (1.83)
  5,606,951
        5.04*
  3,572,227
Equity
         3,628
             ?
             ?
             ?
       3,628
Foreign Currency
    (911,827)
       (0.82)
     352,630
        0.31
   (559,197)
Interest rate
  5,884,920
        5.29*
    (739,021)
       (0.66)
 5,145,899






     Grand Total:
  2,941,997
        2.64
     5,220,560
        4.69
 8,162,557

     Unrealized Currency Loss





   (777,467)

     Total Net Unrealized Gain   7,385,090


 Fair Value
             $
   Percentage of
 Members? Capital
            %



Options purchased on Futures Contracts
     2,622,329
        2.36



Options purchased on Forward Contracts
             ?
           ?



Options written on Futures Contracts
    (2,450,282)
        (2.20)



Options written on Forward Contracts
             ?
           ?













December 31, 2007, Members? Capital: $6,230,964



Commodity
     562,380
        9.03*
      (33,090)
       (0.53)
  529,290
Foreign currency
       12,120
        0.19
         5,113
        0.08
     17,233
Interest rate
       21,034
        0.34
        (7,535)
       (0.12)
     13,499






     Grand Total:
     595,534
        9.56
      (35,512)
       (0.57)
    560,022

     Unrealized Currency Gain





          576

     Total Net Unrealized Gain





   560,598


  Fair Value
              $
   Percentage of
Members?  Capital
           %



Options purchased on Futures Contracts
          14,337
       0.23



Options purchased on Forward Contracts
              ?
          ?



Options written on Futures Contracts
          (2,767)
       (0.04)



Options written on Forward Contracts
              ?
          ?



<fn>

*No single contract?s value exceeds 5% of the Members? Capital.

The accompanying notes are an integral part of these financial statements.
</table>
<page>
Morgan Stanley Managed Futures BHM I, LLC
Notes to Financial Statements (continued)

1. Summary of Significant Accounting Policies

Organization ? Morgan Stanley Managed Futures BHM I, LLC (?BHM I,
LLC? or the ?Trading Company?) was formed on March 26, 2007, as a
Delaware limited liability company under the Delaware Limited
Liability Company Act (the ?Act?), to facilitate investments by
Morgan Stanley managed futures funds. The Trading Company
commenced operations on August 1, 2007. Demeter Management
Corporation (?Demeter?) is the trading manager of the Trading
Company. Demeter has retained Blenheim Capital Management, L.L.C.
(?BHM? or the ?Trading Advisor?) to engage in the speculative
trading of domestic and foreign futures contracts, forward
contracts, foreign exchange commitments, options on physical
commodities and on futures contracts, spot (cash) commodities and
currencies, exchange of futures contracts for physicals
transactions and futures contracts transactions, and any rights
pertaining thereto  (collectively, ?Futures Interests?) on behalf
of the Trading Company. Each member (each investor in the Trading
Company, a ?Member?) invests its assets in the Trading Company,
which allocates substantially all of its assets in the trading
program of BHM, an unaffiliated Trading Advisor to make
investment decisions for the Trading Company.  As of December 31,
2008, Morgan Stanley Managed Futures HV, L.P. (a Delaware limited
partnership) and Morgan Stanley Spectrum Strategic, L.P. (a
Delaware limited partnership) were the Members of the Trading
Company.

   The Trading Company may buy or write put and call options
through listed exchanges and the over-the-counter market.  The
buyer of an option has the right to purchase (in the case of a
call option) or sell (in the case of a put option) a specific
quantity of a specific Futures Interest or underlying asset at a
specified price prior to or on a specified expiration date.  The
writer of an option is exposed to the risk of loss if the market
price of a Futures Interest or underlying asset declines (in the
case of a put option) or increases (in the case of a call
option).  The writer of an option can never profit by more than
the premium paid by the buyer but can lose an unlimited amount.

   Premiums received/premiums paid from writing/purchasing
options are recorded as liabilities/assets on the Statements of
Financial Condition and are subsequently adjusted to fair values.
The difference between the fair value of the options and the
premiums received/premiums paid is treated as an unrealized gain
or loss.





<page>
Morgan Stanley Managed Futures BHM I, LLC
Notes to Financial Statements (continued)

1. Summary of Significant Accounting Policies (cont?d)

   On January 1, 2008, the portion of Morgan Stanley Spectrum
Strategic L.P.?s assets which are managed by BHM was initially
invested as capital in the Trading Company. There was no material
change to the investors in the Trading Company as a result of the
investment in the Trading Company.

   The commodity brokers for the Trading Company 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 the foreign currency forward contracts. Morgan
Stanley Capital Group  Inc. (?MSCG?) acts as the counterparty on
all trading of the options on foreign currency forward contracts.
MS&Co. and its affiliates act as the custodians of the Trading
Company?s assets. Demeter, MS&Co., MSIP, and MSCG are wholly-
owned subsidiaries of Morgan Stanley.

Use of Estimates ? The financial statements are prepared in
accordance with accounting principles generally accepted in the
United States of America, which require management to make
estimates and assumptions that affect the reported amounts in the
financial statements and related disclosures.  Management
believes that the estimates utilized in the preparation of the
financial statements are prudent and reasonable. Actual results
could differ from those estimates.

Revenue Recognition ? Futures Interests are open commitments
until settlement date, at which time they are realized.  They are
valued at fair value, generally on a daily basis, and the
unrealized gains and losses on open contracts (the difference
between contract trade price and market price) are reported in
the Statements of Financial Condition as a net unrealized gain or
loss on open contracts.  The resulting net change in unrealized
gains and losses is reflected in the change in unrealized trading
profit (loss) on open contracts from one period to the next on
the Statements of Operations.  The fair value of exchange-traded
futures, options and forwards contracts is determined by the
various futures exchanges, and reflects the settlement price for
each contract as of the close of business on the last business
day of the reporting period.  The fair value of foreign currency
forward contracts is extrapolated on a forward basis from the
spot prices quoted as of approximately 3:00 P.M. (E.T.) of the
last business day of the reporting period. The fair value of non-
exchange-traded foreign currency option contracts is calculated
by applying an industry standard model application for options
valuation of foreign currency options, using as input, the spot
prices, interest rates, and option implied volatilities quoted as
of approximately 3:00 P.M. (E.T.) on the last business day of the
reporting period. Monthly, MS&Co. credits the Trading Company

<page>
Morgan Stanley Managed Futures BHM I, LLC
Notes to Financial Statements (continued)

1. Summary of Significant Accounting Policies (cont?d)

Revenue Recognition ? (cont?d)  with interest income on 100% of
its average daily funds held at MS&Co.  Assets deposited with
MS&Co. as margin will be credited with interest income at a rate
approximately equivalent to what MS&Co. pays or charges other
customers on such assets deposited as margin.  Assets not
deposited as margin with MS&Co. will be credited with interest
income at the rate equal to the monthly average of the 4-week
U.S. Treasury bill discount rate less 0.15% during such month but
in no event less than zero.  For purposes of such interest
payments, Net Assets do not include monies owed to the
Partnership on Futures Interests.

   The Trading Company?s functional currency is the U.S. dollar;
however, the Trading Company may transact 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 Statements of
Financial Condition. Income and expense items denominated in
currencies other than the U.S. dollar are translated into U.S.
dollars at the rates in effect during the period. Gains and
losses resulting from the translation to U.S. dollars are
reported in income currently.

Members? Capital - The Members? capital of the Trading Company is
equal to the total assets of the Trading Company (including, but
not limited to, all cash and cash equivalents, accrued interest
and amortization of original issue discount, and the fair value
of all open Futures Interests contract positions and other
assets) less all liabilities of the Trading Company (including,
but not limited to, management fees, incentive fees, and
extraordinary expenses), determined in accordance with generally
accepted accounting principles.

Trading Equity ? The Trading Company?s asset ?Trading Equity,?
reflected on the Statements of Financial Condition, consists of
(a) cash on deposit with MS&Co. and MSIP to be used as margin for
trading; (b) net unrealized gains or losses on futures and
forward contracts, which are valued at fair value and calculated
as the difference between original contract value and fair value;
and, if any, (c) options purchased at fair value. Options written
at fair value are recorded in ?Liabilities?.








<page>
Morgan Stanley Managed Futures BHM I, LLC
Notes to Financial Statements (continued)

1. Summary of Significant Accounting Policies (cont?d)


Trading Equity (cont?d) ? The Trading Company, in its normal
course of business, enters into various contracts with MS&Co. and
MSIP acting as its commodity brokers. Pursuant to brokerage
agreements with MS&Co. and MSIP, to the extent that such trading
results in unrealized gains or losses, these amounts are offset
and reported on a net basis on the Trading Company?s Statements
of Financial Condition.

   The Trading Company has offset its fair value amounts
recognized for forward contracts executed with the same
counterparty as allowable under the terms of the master netting
agreement with MS&Co., as the counterparty on such contracts.
The Trading Company has consistently applied its right to offset.


Restricted and Unrestricted Cash ? The Trading Company?s cash is
on deposit with MS&Co. and MSIP in futures interests trading
accounts to meet margin requirements as needed.  As reflected on
the Trading Company?s Statements of Financial Condition,
restricted cash equals the cash portion of assets on deposit to
meet margin requirements plus the cash required to offset
unrealized losses on foreign currency forwards and options
contracts 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.

Brokerage, Clearing and Transaction Fees ? The Trading Company
pays brokerage, clearing and transaction fees to MS&Co.
Brokerage fees and transaction costs are paid as they are
incurred on a half-turn basis at 100% of the rates MS&Co. charges
retail commodity customers and parties that are not clearinghouse
members.  In addition, the Trading Company pays transactional and
clearing fees as they are incurred.

   Effective January 1, 2008, Morgan Stanley Spectrum Strategic
L.P. ("DWSS") became a Member of the Trading Company. DWSS pays
to MS & Co. a monthly brokerage fee at a flat rate of 1/12 of 6%
per month (a 6% annual rate) of the Net Assets of DWSS allocated
to BHM as of the first day of each month.  Such fee includes the
brokerage fees that are charged to the Trading Company,
therefore, the Trading Company receives monthly expense
reimbursements on brokerage fees and other transaction fees and
costs incurred during such month, based on the beginning of the
month Members' capital allocation percentage of DWSS in the
Trading Company.


<page>
Morgan Stanley Managed Futures BHM I, LLC
Notes to Financial Statements (continued)

1. Summary of Significant Accounting Policies (cont?d)

Administrative Fee ? The Trading Company accrues and pays MS&Co.
a monthly fee to cover all administrative and operating expenses
(the ?Administrative Fee?). The monthly Administrative Fee is
equal to 1/12 of 0.35% (a 0.35% annual rate) of the beginning of
the month Members? capital of the Trading Company.

   The DWSS investment into the Trading Company does not pay any
administrative fee to MS&Co. as that is handled at the DWSS
partnership level.

Capital Contributions ? Capital contributions by the Members may
be made monthly pending Demeter?s approval.  Such capital
contributions will increase each Member?s pro rata share of the
Trading Company?s Members? capital.

   Demeter initially invested capital directly in the Trading
Company. As of December 31, 2007, Demeter has redeemed all seed
capital investments in the Trading Company. All seed capital
investments by Demeter in the Trading Company participated on the
same terms as the investments made by the Members in the Trading
Company.

Capital Withdrawals ? Each Member may withdraw all or a portion
of its capital as of the last business day of the month. The
request for withdrawal must be received in writing by Demeter at
least three business days prior to the end of such month. Such
capital withdrawals will decrease each Member?s pro rata share of
the Trading Company?s Members? capital.  Demeter may require the
withdrawal of a capital account under certain circumstances, as
defined in the operating agreement.

Distributions ? Distributions, other than capital withdrawals,
are made on a pro-rata basis at the sole discretion of Demeter.
No distributions have been made to date. Demeter does not intend
to make any distributions of the Trading Company?s profits.












<page>
Morgan Stanley Managed Futures BHM I, LLC
Notes to Financial Statements (continued)

1. Summary of Significant Accounting Policies (cont?d)

Income Taxes ? No provision for income taxes has been made in the
accompanying financial statements, as Members are individually
responsible for reporting income or loss based upon their pro
rata share of  the Trading Company?s revenue and expenses for
income tax purposes. The Trading Company files U.S. federal and
state tax returns.

   Management has continued to evaluate the application of
Financial Accounting Standards Board (the ?FASB?) Interpretation
No. 48, ? Accounting for Uncertainty in Income Taxes ? an
interpretation of FASB Statement No. 109? (FIN 48), to the
Trading Company, and has determined that FIN 48 does not have a
material impact on the Trading Company?s financial statements.
The 2007 and 2008 tax years remain subject to examination by
federal and most state tax authorities.

Dissolution of the Trading Company ? The Trading Company shall be
dissolved upon the first of the following events to occur:
    (1)	The sole determination of Demeter; or
    (2)	The written consent of the Members holding not less
than a majority interest in capital with or without
cause; or
(3)	The occurrence of any other event that causes the
dissolution of the limited liability company under the
Act.



















<page>
Morgan Stanley Managed Futures BHM I, LLC
Notes to Financial Statements (continued)

1. Summary of Significant Accounting Policies (cont?d)

New Accounting Developments ? In March 2008, the Financial
Accounting Standards Board (the ?FASB?) issued Statement of
Financial Accounting Standards (?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 Trading Company?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 Trading Company is currently evaluating
the impact of the adoption of SFAS 161.

    In September 2008, the FASB issued FASB Staff Position
(?FSP?) Financial Accounting Standards (?FAS?) No. 133-1 and FIN
45-4, Disclosures about Credit Derivatives and Certain
Guarantees: An Amendment of FASB Statement No. 133 and FASB
Interpretation No. 45; and Clarification of the Effective Date of
FASB Statement No. 161 (?FSP FAS No. 133-1 and FIN 45-4?). FSP
FAS No. 133-1 and FIN 45-4 is intended to improve disclosures
about credit derivatives by requiring more information about the
potential adverse effects of changes in credit risk on the
financial position, financial performance, and cash flows of the
sellers of credit derivatives. The FSP is effective for financial
statements issued for reporting periods ending after November 15,
2008. The Trading Company is currently evaluating the impact of
adopting FSP FAS No. 133-1 and FIN 45-4.

   In October 2008, the FASB issued FSP FAS No. 157-3,
Determining the Fair Value of a Financial Asset When the Market
for That Asset is Not Active (?FSP FAS No. 157-3?). FSP FAS No.
157-3 clarifies the application of SFAS No. 157 in a market that
is not active and provides an example to illustrate key
considerations in determining the fair value of a financial asset
when the market for the financial asset is not active. FSP FAS
No. 157-3 is effective upon issuance, including prior periods for
which financial statements have not been issued. The issuance of
FSP FAS No. 157-3 did not have a material impact on the Trading
Company?s financial statements.







<page>
Morgan Stanley Managed Futures BHM I, LLC
Notes to Financial Statements (continued)

2. Trading Advisor

   Demeter retains BHM to make all trading decisions for the
Trading Company.

   Fees paid to BHM by the Trading Company consist of a
management fee and an incentive fee as follows:

Management Fee ? The Trading Company pays BHM a monthly
management fee based on a percentage of Members? Capital as
described in the advisory agreement among the Trading Company,
Demeter, and BHM.

Incentive Fee ? The Trading Company pays BHM a quarterly
incentive fee equal to 20% of the New Trading Profits earned by
each Member.  Such fee is accrued on a monthly basis, but is not
payable until the end of each calendar quarter.

   New Trading Profits represent the amount by which profits from
Futures Interests trading exceed losses after management fees,
brokerage fees and transaction costs, and administrative fees are
deducted. When BHM experiences losses with respect to the
Members? capital as of the end of a calendar quarter, BHM must
recover such losses before it is eligible for an incentive fee in
the future. Losses are reduced for capital withdrawn from the
Trading Company.

   The DWSS investment into the Trading Company does not pay any
management or incentive fees to BHM as those are handled at the
DWSS partnership level.

3. Financial Instruments

   The Trading Company 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 fair value of these contracts, including interest
rate volatility.









<page>
Morgan Stanley Managed Futures BHM I, LLC
Notes to Financial Statements (continued)

3. Financial Instruments (cont?d)

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

   The exchange-traded contracts are accounted for on a trade-
date basis and fair-valued on a daily basis.  The off-exchange-
traded contracts are monthly fair valued.

   The Trading Company accounts for its derivative investments in
accordance with the provisions of SFAS No. 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, swaps or
options contracts, and other financial instruments with similar
characteristics such as caps, floors, and collars.
















<page>
Morgan Stanley Managed Futures BHM I, LLC
Notes to Financial Statements (continued)

3. Financial Instruments (cont?d)

   The net unrealized gains (losses) on open contracts at
December 31, reported as a component of ?Trading Equity? on the
Statements of Financial Condition, and their longest contract
maturities were as follows:
<table> <caption>
		      Net Unrealized Gains/(Losses)
			             on Open Contracts			        Longest Maturities
				         Off-					      Off-
	 	      Exchange-	    Exchange-			   Exchange-	 Exchange-
Year		        Traded	      Traded                   Total	   Traded	    Traded

			<c>		<c>		<c>		<c>		<c>
2008   		     $8,319,704        $(934,614)	  $ 7,385,090	    Dec. 2012	    Sep. 2009
2007        	     $   555,278	  $     5,320	  $    560,598	    Jun. 2010	    Nov. 2008
</table>

In September 2006, the FASB issued SFAS No. 157 ("SFAS 157"),
"Fair Value Measurements". Fair value is the amount that would be
recovered when an asset is sold or an amount paid to transfer a
liability, in an ordinary transaction between market participants
at the measurement date (exit price). Market price observability
is impacted by a number of factors, including the types of
investments, the characteristics specific to the investment, and
the state of the market price (including the existence and the
transparency of transactions between market participants).
Investments with readily available actively quoted prices in an
ordinary market will generally have a higher degree of market
price observability and a lesser degree of judgment used in
measuring fair value.

   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 ? unadjusted quoted market
prices in active markets for identical assets and liabilities;
Level 2 - inputs other than unadjusted quoted market prices that
are observable for the asset or liability, either directly or
indirectly (including quoted prices for similar investments,
interest rates, credit risk); and Level 3 - unobservable inputs
for the asset or liability (including the Trading Company?s own
assumptions used in determining the fair value of investments).

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

<page> <table>

Morgan Stanley Managed Futures BHM I, LLC
Notes to Financial Statements (concluded)


3. Financial Instruments (cont?d)

    The Trading Company adopted SFAS 157 as of January 1, 2008.
The adoption of SFAS 157 did not have a material impact on the
Trading Company?s financial statements.

   The following table summarizes the valuation of the Trading
Company?s investments by the above SFAS 157 fair value hierarchy
as of December 31, 2008: <caption>





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>
  Assets
Net unrealized gain (loss) on open
contracts

                        $8,319,704

 $(934,614)

    n/a


                     $7,385,090
Options purchased
                        $2,622,329
?
 n/a

                     $2,622,329






Liabilities





Options written
                       $2,450,282
?
   n/a

                     $2,450,282

</table>

4. Investment Risk
   The Members? investments in the Trading Company expose the
Members to various types of risks that are associated with
Futures Interests trading and markets in which the Trading
Company invests. The significant types of financial risks which
the Trading Company is exposed to are market risk, liquidity
risk, and counterparty risk.

   The rapid fluctuations in the market prices of Futures
Interests in which the Trading Company invests make the Members?
investments volatile. If BHM incorrectly predicts the direction
of prices in the Futures Interests in which it invests, large
losses may occur.

   Illiquidity in the markets in which the Trading Company
invests may cause less favorable trade prices.  Although BHM will
generally purchase and sell actively traded contracts where last
trade price information and quoted prices are readily available,
the prices at which a sale or purchase occur may differ from the
prices expected because there may be a delay between receiving a
quote and executing a trade, particularly in circumstances where
a market has limited trading volume and prices are often quoted
for relatively limited quantities.


<page>

Morgan Stanley Managed Futures BHM I, LLC
Notes to Financial Statements (continued)

4. Investment Risk (cont?d)

        The credit risk on Futures Interests arises from the
potential inability of counterparties to perform under the terms
of the contracts.  The Trading Company has credit risk because
MS&Co., MSIP, and/or MSCG act as the commodity brokers and/or the
counterparties with respect to most of the Trading Company?s
assets.  The Trading Company?s exposure to credit risk associated
with counterparty nonperformance is typically limited to the cash
deposits with, or other form of collateral held by, the
counterparty. The Trading Company?s assets deposited with MS&Co.
or its affiliates are segregated or secured in accordance with
the Commodity Exchange Act and the regulations of the Commodity
Futures Trading Commission (the ?CFTC?) and are expected to be
largely held in non-interest bearing bank accounts at a U.S. bank
or banks, but may also be invested in any other instruments
approved by the CFTC for investment of customer funds. 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. With
respect to the Trading Company?s off-exchange-traded forward
currency contracts and forward currency options 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 Trading
Company is required to meet margin requirements equal to the net
unrealized loss on open forward currency contracts in the Trading
Company accounts with the counterparty, which is accomplished by
daily maintenance of the cash balance in a custody account held
at MS&Co. The Trading Company had assets on deposit with MS&Co.
and MSIP, each acting as a commodity broker for the Trading
Company?s trading of Futures Interests, totaling $131,750,369 and
$7,714,294 at December 31, 2008, and 2007, respectively. With
respect to those off-exchange-traded forward currency contracts,
the Trading Company is at risk to the ability of MS&Co., the sole
counterparty on all such contracts, to perform. With respect to
those off-exchange-traded forward currency options contracts, the
Trading Company is at risk to the ability of MSCG, the sole
counterparty on all such contracts, to perform. The Trading
Company has a netting agreement with each counterparty. These
agreements, which seek to reduce both the Trading Company?s and
the counterparties? exposure on off-exchange-traded forward
currency contracts, including options on such contracts, should
materially decrease the Trading Company?s credit risk in the
event of MS&Co.?s or MSCG?s bankruptcy or insolvency.



<page> <table>


Morgan Stanley Managed Futures BHM I, LLC
Notes to Financial Statements (continued)
<caption>


5. Financial Highlights


For the Period from


   August 1, 2007


(commencement of

    For the Year Ended
   operations) to

 December 31,  2008
     December 31, 2007


<c>
<c>
RATIOS TO AVERAGE MEMBERS? CAPITAL: (2)





      Net Investment Loss
                (0.70)%
         (1.53)%  (1)
      Expenses before Incentive Fees
                 0.38 %
          2.89 %  (1)
      Expenses after Incentive Fees
                 0.88 %
          4.82 %  (1)
      Net Income
               12.43 %
          9.61 %  (1)



TOTAL RETURN BEFORE INCENTIVE FEES
               18.12 %
          7.91 %  (3)
TOTAL RETURN AFTER INCENTIVE FEES
               17.52 %
          6.21 %  (3)



 INCEPTION-TO-DATE RETURN
               24.82 %

 COMPOUND ANNUALIZED RETURN
               16.91 %


<fn>

           (1)	Ratios have been annualized, with the exception of incentive fees and the net income ratio.
           (2)	The calculation is based on non-managing Members? allocated income and expenses and average non-
managing Members? Capital.
(3)	Total return has not been annualized and is calculated for the non-managing Members based on the
average non-managing Members? Capital.


    </table>