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, 2006 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 0-23577


	MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.

	(Exact name of registrant as specified in its charter)

		Delaware						     13-3461507
(State or other jurisdiction of		     		 (I.R.S. Employer
incorporation or organization)			      Identification No.)


Demeter Management Corporation
330 Madison Avenue, 8th Floor
New York, NY                   		   		          10017
(Address of principal executive offices)            	  (Zip Code)

Registrant?s telephone number, including area code  	(212) 905-2700















(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, or a non-accelerated filer.  See definition
of ?accelerated filer and large accelerated filer? in Rule 12b-2 of the
Exchange Act.  (Check one):

Large accelerated filer___Accelerated filer___Non-accelerated filer  X


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 DIVERSIFIED FUTURES FUND L.P.

(formerly, Dean Witter Diversified Futures Fund
Limited Partnership)

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 30, 2006

<caption>



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

				<c>
		Statements of Financial Condition as of September 30, 2006
		(Unaudited) and December 31, 2005..........................2

		Statements of Operations for the Three and Nine Months
		Ended September 30, 2006 and 2005 (Unaudited)..............3

		Statements of Changes in Partners? Capital for the
		Nine Months Ended September 30, 2006 and 2005 (Unaudited)..4

		Statements of Cash Flows for the Nine Months Ended
		September 30, 2006 and 2005 (Unaudited)....................5

		Notes to Financial Statements (Unaudited)...............6-14

Item 2.	Management?s Discussion and Analysis of
			Financial Condition and Results of Operations.......15-31

Item 3.	Quantitative and Qualitative Disclosures about
			Market Risk.........................................31-41

Item 4.	Controls and Procedures................................41


PART II. OTHER INFORMATION

Item 1A.Risk Factors...........................................42

Item 5.	Other Information...................................42-44

Item 6.	Exhibits...............................................44

</table>


<page> <table> PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

	MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
(formerly, Dean Witter Diversified Futures Fund Limited Partnership)
	STATEMENTS OF FINANCIAL CONDITION
<caption>
			September 30,	December 31,
			        2006        	        2005
			$	$
			(Unaudited)
ASSETS

		<c>	<c>
Equity in futures interests trading accounts:
	Unrestricted cash	33,927,690	34,746,433
	Restricted cash	       684,134	    2,710,691

	     Total cash	   34,611,824	  37,457,124

     Net unrealized gain on open contracts (MSIL)	 67,364    	       709,610
     Net unrealized gain (loss) on open contracts (MS&Co.)	      (961,817)	    1,179,435

		Total net unrealized gain (loss) on open contracts	      (894,453)	    1,889,045

		Total Trading Equity	33,717,371	39,346,169

Interest receivable (Morgan Stanley DW)	      127,211	        100,340

		Total Assets	  33,844,582	  39,446,509

LIABILITIES AND PARTNERS? CAPITAL

Liabilities

Redemptions payable	618,253	745,648
Administrative expenses payable	58,067	127,837
Accrued management fees (VK Capital)	        27,906	        101,453

		Total Liabilities	      704,226	        974,938

Partners? Capital

Limited Partners (31,714.511 and
	37,999.829 Units, respectively)	32,779,385	38,064,633
General Partner (349.245 and
     406.245 Units, respectively)	      360,971	        406,938

		Total Partners? Capital	   33,140,356	   38,471,571

		Total Liabilities and Partners? Capital	   33,844,582	   39,446,509
NET ASSET VALUE PER UNIT	                                                             1,033.58	       1,001.71
<fn>
	The accompanying notes are an integral part
	of these financial statements.
</table>


<page> <table> 	MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
(formerly, Dean Witter Diversified Futures Fund Limited Partnership)
	STATEMENTS OF OPERATIONS
(Unaudited)

<caption>

                     For the Three Months                        	For the Nine Months
                  Ended September 30,                        Ended September 30,


                     2006   	               2005    	        2006   	    2005
                   $	                      $	             $	  $

	<c>		<c>		<c>			<c>
INVESTMENT INCOME
	Interest income (Morgan Stanley DW)	    351,558       		      283,909	      1,005,318	  	     777,813

EXPENSES
	Brokerage commissions (Morgan Stanley DW)	374,920	530,931	1,242,394		1,854,436
	Management fees (VK Capital)	      143,004	    341,754	559,653 		     1,124,789
	Transaction fees and costs	22,589	        25,683	76,417		       97,992
	Administrative expenses	     21,000	          29,000    	       76,000		        102,000

		   Total Expenses 	   561,513	      927,368	   1,954,464		    3,179,217

NET INVESTMENT LOSS 	   (209,955)	     (643,459)	    (949,146)		  (2,401,404)

TRADING RESULTS
Trading profit (loss):
	Realized	2,068,004	3,633,323	5,128,672		(3,696,791)
	Net change in unrealized	  (2,483,734)	   (4,791,306) 	  (2,783,498)		   (6,038,760)

	           Total Trading Results	     (415,730)	   (1,157,983)	   2,345,174		   (9,735,551)

NET INCOME (LOSS)	               (625,685)	   (1,801,442)	   1,396,028		 (12,136,955)

NET INCOME (LOSS) ALLOCATION

	Limited Partners	(618,176)	  (1,778,119)	1,383,744		(11,984,235)
	General Partner 	(7,509)	(23,323)	12,284		(152,720)


NET INCOME (LOSS) PER UNIT

	Limited Partners            (17.78)                   (40.86)                31.87               (258.98)
	General Partner             (17.78)                   (40.86)                31.87               (258.98)

<fn>






	The accompanying notes are an integral part
	of these financial statements.
</table>
<page> <table>  MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
(formerly, Dean Witter Diversified Futures Fund Limited Partnership)
	STATEMENTS OF CHANGES IN PARTNERS? CAPITAL
For the Nine Months Ended September 30, 2006 and 2005
(Unaudited)


<caption>


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

			<c>	<c>	<c>	<c>
Partners? Capital,
December 31, 2004	47,700.181	60,558,644	762,650 	61,321,294

Net Loss                                                                     ?    	     	(11,984,235)	(152,720)	(12,136,955)

Redemptions	   (5,714.344)	       (6,004,665)     	    (77,911)	   (6,082,576)

Partners? Capital,
September 30, 2005	    41,985.837	   42,569,744	      532,019	 43,101,763





Partners? Capital,
December 31, 2005	38,406.074	38,064,633	406,938 	38,471,571

Net Income                                                                 ?    	     	 1,383,744	12,284	1,396,028

Redemptions	   (6,342.318)	       (6,668,992)     	    (58,251)	   (6,727,243)

Partners? Capital,
September 30, 2006	    32,063.756	   32,779,385	      360,971	 33,140,356







<fn>





The accompanying notes are an integral part
	of these financial statements.
</table>
<page> <table> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
(formerly, Dean Witter Diversified Futures Fund Limited Partnership)
	STATEMENTS OF CASH FLOWS
(Unaudited)


<caption>



				     For the Nine Months Ended September 30,

				        2006        	        2005
				$	$


CASH FLOWS FROM OPERATING ACTIVITIES

			<c>	<c>
Net income (loss)	1,396,028	(12,136,955)
Noncash item included in net income (loss):
	Net change in unrealized	2,783,498	6,038,760

(Increase) decrease in operating assets:
	Restricted cash	2,026,557	(576,765)
	Interest receivable (Morgan Stanley DW)    	                                       (26,871)	(22,994)
	Due from Morgan Stanley DW 	                            ?        	1,576

Decrease in operating liabilities:
	Administrative expenses payable  	 (69,770)                         (19,910)
	Accrued management fees (VK Capital)                (73,547)                       (38,244)

Net cash provided by (used for) operating activities	   6,035,895	    (6,754,532)


CASH FLOWS FROM FINANCING ACTIVITIES

Cash paid for redemptions of Units	    (6,854,638)	     (5,800,813)

Net cash used for financing activities	   (6,854,638)	   (5,800,813)

Net decrease in unrestricted cash	(818,743)	(12,555,345)

Unrestricted cash at beginning of period	   34,746,433	   52,556,192

Unrestricted cash at end of period	   33,927,690	   40,000,847




<fn>

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

</table>


<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
         (formerly, Dean Witter Diversified Futures Fund
Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

September 30, 2006

(Unaudited)


The unaudited financial statements contained herein include, in
the opinion of management, all adjustments necessary for a fair
presentation of the results of operations and financial condition
of Morgan Stanley Diversified Futures Fund L.P. (formerly known
as Dean Witter Diversified Futures Fund Limited Partnership)
(the ?Partnership?).  The financial statements and condensed notes
herein should be read in conjunction with the Partnership?s
December 31, 2005 Annual Report on Form 10-K.  Certain prior year
amounts relating to cash balances were reclassified on the
Statements of Financial Condition and the related Statements of
Cash Flows to conform to 2006 presentation.  Such reclass-
ifications have no impact on the Partnership?s reported net income
(loss).

1.  Organization
Morgan Stanley Diversified Futures Fund L.P. (formerly known as
Dean Witter Diversified Futures Fund Limited Partnership) is a
Delaware limited partnership organized in 1987 to engage primarily
in the speculative trading of futures and forward contracts on
physical commodities and other commodity interests, including, but
not limited to, foreign currencies, financial instruments, metals,

<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
        (formerly, Dean Witter Diversified Futures Fund
                       Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


energy, and agricultural products.  Effective November 1, 2006,
the Partnership may trade options on futures contracts.

Effective July 20, 2006, Dean Witter Diversified Futures Fund
Limited Partnership was renamed to Morgan Stanley Diversified
Futures Fund L.P.



The Partnership?s general partner is Demeter Management
Corporation (?Demeter?). The non-clearing commodity broker is
Morgan Stanley DW Inc. (?Morgan Stanley DW?).  The clearing
commodity brokers are Morgan Stanley & Co. Incorporated (?MS &
Co.?) and Morgan Stanley & Co. International Limited (?MSIL?).
Prior to September 15, 2006, the trading manager was VK Capital
Inc. (?VK Capital?).  Demeter, Morgan Stanley DW, MS & Co., MSIL,
and VK Capital are wholly-owned subsidiaries of Morgan Stanley.

Demeter terminated the management agreement with VK Capital as of
September 15, 2006.  Consequently, VK Capital ceased all futures
interest trading on behalf of the Partnership as of September 15,
2006 and trading terminated within the Partnership as of such
date.


<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
        (formerly, Dean Witter Diversified Futures Fund
                       Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


On October 9, 2006, Demeter entered into a management agreement
with Hyman Beck & Company Inc. (?Hyman Beck? or the ?Trading
Advisor?), to serve as the sole Trading Advisor to the Partnership
effective November 1, 2006, and trades the Net Assets of the
Partnership pursuant to its Global Portfolio trading program.

2.  Related Party Transactions
The Partnership?s cash is on deposit with Morgan Stanley DW, MS &
Co., and MSIL in futures and forwards trading accounts to meet
margin requirements as needed.  Monthly, through September 15,
2006, Morgan Stanley DW paid the Partnership interest income equal
to 80% of its average daily Net Assets for the month at a
prevailing rate on U.S. Treasury bills.  The Partnership paid
brokerage commissions to Morgan Stanley DW.  Management fees and
incentive fees (if any) incurred by the Partnership were paid to
VK Capital.

Effective September 16, 2006 through October 31, 2006, Morgan
Stanley DW paid the Partnership interest income equal to 100% of
its average daily Net Assets of the month at the rate equal to the
prevailing rate for U.S. Treasury bills.  Given the absence of
futures interest trading within the Partnership during this

<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
        (formerly, Dean Witter Diversified Futures Fund
                       Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

period, the Partnership did not pay any brokerage commissions,
management fees, and incentive fees.

Effective November 1, 2006, Morgan Stanley DW pays the Partnership
interest income equal to 80% of its average daily Net Assets for
the month at a prevailing rate for U.S. Treasury bills.

Effective November 1, 2006, the Partnership resumed paying
brokerage commissions to Morgan Stanley DW.

3.  Financial Instruments
The Partnership trades futures and forward contracts on physical
commodities and other commodity interests, including, but not
limited to, foreign currencies, financial instruments, metals,
energy, and agricultural products.  Effective November 1, 2006,
the Partnership may trade options on futures contracts.  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.



<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
        (formerly, Dean Witter Diversified Futures Fund
                       Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


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. 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;




<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
        (formerly, Dean Witter Diversified Futures Fund
                       Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)



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(losses) on open contracts, reported as a
component of ?Equity in futures interests trading accounts? on the
Statements of Financial Condition, and their longest contract
maturities were as follows:

                   Net Unrealized Gains/(Losses)
                          on Open Contracts                Longest Maturities

                 Exchange-  Off-Exchange-              Exchange- Off-Exchange-
Date              Traded       Traded        Total      Traded      Traded
                     $           $             $

Sep. 30, 2006     (210,632)	 (683,821)	  (894,453)	 Dec. 2006	  Dec. 2006
Dec. 31, 2005    1,240,235	  648,810	 1,889,045	 Sep. 2006    Mar. 2006


The Partnership has credit risk associated with counterparty non-
performance.  As of the date of the financial statements, the
credit risk associated with the instruments in which the

<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
        (formerly, Dean Witter Diversified Futures Fund
                       Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Partnership trades is limited to the amounts reflected in the
Partnership?s Statements of Financial Condition.



The Partnership also has credit risk because Morgan Stanley DW, MS
& Co., and MSIL act as the futures commission merchants or the
counterparties, with respect to most of the Partnership?s assets.
Exchange-traded futures and forward contracts are marked to market
on a daily basis, with variations in value settled on a daily
basis.  Morgan Stanley DW, MS & Co., and MSIL, each as a futures


commission merchant for the Partnership?s exchange-traded futures
and forward contracts, are required, pursuant to regulations of
the Commodity Futures Trading Commission (?CFTC?), 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 and forward contracts, including an amount equal to the
net unrealized gains (losses) on all open futures and forward
contracts, which funds, in the aggregate, totaled $34,401,192 and
$38,697,359 at September 30, 2006 and December 31, 2005,
respectively. With respect to the Partnership?s off-exchange-
traded forward currency contracts, there are no daily exchange-
required settlements of variation in value, nor is there any
requirement that an amount equal to the net unrealized gains
(losses) on open forward contracts be segregated.  However, the
<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
        (formerly, Dean Witter Diversified Futures Fund
                       Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Partnership is required to meet margin requirements equal to the
net unrealized loss on open contracts in the Partnership accounts
with the counterparty, which is accomplished by daily maintenance
of the cash balance in a custody account held at Morgan Stanley DW
for the benefit of 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 on off-exchange-traded
forward currency contracts, should materially decrease the
Partnership?s credit risk in the event of MS & Co.?s bankruptcy or
insolvency.

4.  New Accounting Developments
In July 2006, the FASB issued FASB Interpretation No. 48,
?Accounting for Uncertainty in Income Taxes, an interpretation of
FASB Statement No. 109? (?FIN 48?). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in a
company?s financial statements and prescribes a recognition
threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to
be taken in an income tax return. FIN 48 also provides guidance on

<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
        (formerly, Dean Witter Diversified Futures Fund
                       Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

derecognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition. FIN 48 is effective
for the Partnership as of January 1, 2007. The Partnership is cur-
rently evaluating the potential impact of adopting FIN 48.

In September 2006, the FASB issued SFAS No. 157, ?Fair Value
Measurements? (?SFAS No. 157?). SFAS No. 157 defines fair value,
establishes a framework for measuring fair value and expands
disclosures about fair value measurements. SFAS No. 157 is
effective for the Partnership as of January 1, 2008 . The Partner-
ship is currently evaluating the potential impact of adopting SFAS
No. 157.





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


Liquidity.  The Partnership deposits its assets with Morgan
Stanley DW as non-clearing broker, and MS & Co. and MSIL as
clearing brokers in separate futures and forwards trading accounts
established for the Trading Manager.  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 and forwards, it is expected that the Partnership will
continue to own such liquid assets for margin purposes.

The Partnership?s investment in futures and forwards 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 contract has increased or decreased
by an amount equal to the daily limit, positions in that futures
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 from promptly liquidating its futures
contracts and result in restrictions on redemptions.
<page> 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 and
forwards in subsequent periods.  It is not possible to estimate
the amount, and therefore the impact, of future outflows of Units.

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


<page> 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 Manager
and the ability of the Trading Manager?s trading programs to take
advantage of price movements in the futures and forwards markets.
The following presents a summary of the Partnership?s operations
for the three and nine month periods ended September 30, 2006 and
2005, and a general discussion of its trading activities during
each period.  It is important to note, however, that the Trading
Manager 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 Manager 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 Manager?s trading activities on
behalf of the Partnership during the period in question. Past
performance is no guarantee of future results.

The Partnership?s results of operations set forth in the financial
statements on pages 2 through 14 of this report are prepared in
accordance with accounting principles generally accepted in the
United States of America, which require the use of certain <page>
<page> 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 Statements
of Operations as ?Net change in unrealized trading profit (loss)?
for open (unrealized) contracts, and recorded as ?Realized trading
profit (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 foreign currency forward contracts is based on
the spot rate as of the close of business.  Interest income, as
well as management fees, incentive fees, brokerage commissions,
and transaction fees and costs of the Partnership are recorded on
an accrual basis.

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, 2006
The Partnership recorded total trading results including interest
income totaling $(64,172) and expenses totaling $561,513,
resulting in a net loss of $625,685 for the three months ended
September 30, 2006.  The Partnership?s net asset value per Unit
<page> decreased from $1,051.36 at June 30, 2006 to $1,033.58 at
September 30, 2006.

The most significant trading losses of approximately 2.2% were
incurred within the currency markets from short and long U.S.
dollar positions against the euro, Swiss franc, Swedish krona,
Australian dollar, and Singapore dollar. Short positions in the
U.S. dollar against the euro, Swiss franc, and Swedish krona
incurred losses during early July as the U.S. dollar
strengthened following narrower-than-expected May U.S. trade
deficit data. Furthermore, the value of the euro moved lower
after the European Central Bank decided to keep interest rates
unchanged. Additional losses were recorded toward the end of
July from newly established short positions in the Swiss franc
and Swedish krona, as well as existing short positions in the
Australian dollar, versus the U.S. dollar as the value of the
U.S. dollar moved lower on fears of a slowing economy and
weaker-than-expected U.S. Gross Domestic Product growth. Further
losses in the currency markets were incurred from short
positions in the U.S. dollar versus the Swiss franc, euro,
Australian dollar, and Singapore dollar as the U.S. dollar
reversed higher at the end of August and into September after
revisions to U.S. quarterly productivity data showed unit labor
costs rose last year at the fastest pace since 1990. Additional
losses of approximately 0.5% were recorded in the agricultural
complex from short positions in coffee futures as prices
increased during August, hitting seven-year highs, on concerns
<page> of tight supplies and increased demand.  Elsewhere in the
agricultural complex, short positions in corn futures incurred
losses as prices rose during July and August on reports of low
inventories and high demand amid an increase in ethanol
production. A portion of the Partnership?s overall losses for
the quarter was offset by gains of approximately 0.4%
experienced in the global interest rate sector, primarily during
August, from long positions in long-term Japanese and U.S.
fixed-income futures as prices increased on higher demand amid
concerns of a slowing global economy and news that Iran would
continue its nuclear research program. Japanese fixed-income
futures prices increased after lower-than-expected inflation
data dampened expectations for an interest rate hike by the Bank
of Japan in the near-future, while U.S. interest rate futures
prices were supported higher by government reports showing a
slowdown in the U.S. economy and soft inflation data.  Elsewhere
in the global interest rate sector, short positions in short-
term British fixed-income futures experienced gains as prices
fell after an unexpected interest rate hike by the Bank of
England.

The Partnership recorded total trading results including interest
income totaling $3,350,492 and expenses totaling $1,954,464,
resulting in net income of $1,396,028 for the nine months ended
September 30, 2006.  The Partnership?s net asset value per Unit
increased from $1,001.71 at December 31, 2005 to $1,033.58 at
September 30, 2006.
<page> The most significant trading gains of approximately 9.4%
were experienced from long futures positions in base and
precious metals.  Copper, aluminum, zinc, and nickel futures
prices strengthened throughout a majority of the year amid weak
supplies, forecasts for continued buying in China, and
acceleration in demand from Japan, Europe, and the U.S.  Within
the precious metals markets, gold and silver futures prices
moved higher on persistent demand from foreign central banks.
Additional gains of approximately 3.3% were recorded in the
global interest rate sector, primarily during March and April,
from short positions in European and U.S. fixed-income futures.
Rising equity prices and strong economic growth pressured
European fixed-income futures prices lower, while U.S. fixed-
income futures prices declined following the release of
stronger-than-expected economic data. Additional gains were
recorded in the global interest rate sector during August from
long positions in long-term Japanese and U.S. fixed-income
futures as prices increased on higher demand amid concerns of a
slowing global economy and news that Iran would continue its
nuclear research program. Japanese fixed-income futures prices
also increased after lower-than-expected inflation data dampened
expectations for an interest rate hike by the Bank of Japan in
the near-future, while U.S. interest rate futures prices were
supported higher by government reports showing a slowdown in the
U.S. economy and soft inflation data.  A portion of these gains
for the first nine months of the year was offset by losses of
approximately 3.5% incurred in the energy futures markets during
<page> February from long positions in crude oil futures as
prices declined after Chinese government authorities announced
that China would place an emphasis on prospecting alternative
energy sources in the future, reports of larger-than-expected
supplies from the International Energy Agency, and mild weather
in the U.S. Northeast.  Additional losses were incurred in the
energy markets during May from long futures positions in crude
oil and its related products as prices fell on renewed optimism
that the standoff between Iran and the West could be resolved
diplomatically.  In June, short futures positions in crude oil
and its related products incurred losses as prices reversed
higher amid reports from the U.S. Department of Energy showing
lower-than-expected levels of domestic gasoline inventories and
fears of supply disruptions in the Gulf of Mexico. Losses of
approximately 2.9% were experienced within the currency sector
from long U.S. dollar positions versus the Australian dollar and
Japanese yen as the U.S. dollar?s value reversed lower during
January on expectations that the U.S. Federal Reserve?s interest
rate tightening campaign might soon come to an end.  Also
pressuring the value of the U.S. dollar lower was speculation
that several major central banks would diversify some of their
assets away from the U.S. dollar.   Further losses in the
currency sector were experienced during February from short U.S.
dollar positions relative to the Australian dollar and Japanese
yen as the value of the U.S. dollar reversed higher after
declining U.S. unemployment and increased wage inflation data
led investors to predict that U.S. interest rates would continue
<page> to increase.  The value of the Australian dollar also
moved lower in the wake of a temporary decline in gold prices.
During June, long positions in the Japanese yen versus the U.S.
dollar recorded further losses as the U.S. dollar reversed
higher against most of its rivals amid diplomatic developments
made between the U.S. and Iran regarding Iran?s nuclear research
program, as well as the news of the confirmed death of insurgent
leader Abu Musab al-Zarqawi in Iraq.  Furthermore, the value of
the U.S. dollar continued to move higher in the days leading up
to the U.S. Federal Reserve?s 17th consecutive interest rate
hike.   Meanwhile, the value of the Japanese yen declined during
the first half of June relative to the U.S. dollar after
comments from Bank of Japan Governor Toshihiko Fukui implied
that the Bank of Japan will not raise interest rates in the
near-term, thus continuing Japan?s ?zero-interest-rate policy?.
Losses were also experienced during July and May from short
positions in the British pound versus the euro and U.S. dollar
as the British pound strengthened on solid housing and consumer-
price data out of the United Kingdom. During July and September,
losses were recorded from long and short positions in the U.S.
dollar against the Australian dollar, Swiss franc, and euro as
the value of the U.S. dollar fluctuated amid uncertainty
regarding the future of the U.S. Federal Reserve?s interest rate
policy. In the global stock index sector, losses of
approximately 1.9% were recorded from long positions in U.S.,
European, and Hong Kong stock index futures as prices declined
during May due to inflation concerns and uncertainty regarding
<page> future interest rate policy.  Further losses in the
global stock index sector were incurred during June from short
positions in U.S. and Hong Kong stock index futures as prices
reversed higher on hopes of a pause in the U.S. interest rate
tightening campaign. Smaller losses of approximately 1.0% were
incurred in the agricultural complex during May from short
positions in corn futures as prices rose on news of strong
demand and bullish export data.  Additional losses were incurred
as prices continued to increase during July and August on
reports of low inventories and as demand remained high amid an
increase in ethanol production. Elsewhere in the agricultural
complex, losses were recorded, primarily during February, from
long positions in coffee futures as prices declined on news of
crop growth and higher harvest rates from Brazil, the world?s
largest coffee producer. In addition, losses were recorded in
August from short positions in coffee futures as prices
increased on concerns of tight supplies amid speculation of
lower production and increased demand.  Meanwhile, losses were
experienced from both long and short positions in cocoa futures
as prices moved without consistent direction throughout a
majority of the year amid conflicting news regarding supply and
demand.

For the Three and Nine Months Ended September 30, 2005
The Partnership recorded total trading results including interest
income totaling $(874,074) and expenses totaling $927,368,
resulting in a net loss of $1,801,442 for the three months ended
<page> September 30, 2005.  The Partnership?s net asset value per
Unit decreased from $1,067.44 at June 30, 2005 to $1,026.58 at
September 30, 2005.

The most significant trading losses of approximately 8.1% were
recorded within the currency markets during August from long
U.S. dollar positions against the euro, Japanese yen, and Swiss
franc, as the value of the U.S. dollar declined amid higher
crude oil prices, lower durable goods orders data, the U.S.
trade imbalance, and economic warnings from U.S. Federal Reserve
Chairman Alan Greenspan.  The Japanese yen?s value was pushed
higher early in the month amid expectations for improvements in
the Japanese economy, while the value of the euro was
strengthened by strong signals of euro-zone economic
improvement.  Elsewhere in the currency markets, losses were
experienced from long positions in the euro versus the British
pound cross-rate as the value of the pound reversed higher
against the euro.  Smaller losses were incurred from long
positions in the Singapore dollar against the U.S. dollar as the
value of the Singapore dollar finished lower.  During September,
losses were incurred from short U.S. dollar positions against
the Japanese yen, euro, and Swiss franc, as the value of the
U.S. dollar increased during the month.  The main driver of the
U.S. dollar strength was expectations that the U.S. Federal
Reserve would most likely continue to raise interest rates.  In
addition, the value of the euro was pulled lower after the
release of lower 2005 and 2006 growth estimates for the European
<page> economy and news that Germany?s incumbent Chancellor,
Gerhard Schroeder, refused to concede defeat to the opposition
leader, Angela Merkel, in the days after the election.
Additional losses of approximately 7.5% were recorded in the
global interest rate futures markets throughout the quarter from
both long and short positions in European, Japanese, U.S., and
Australian fixed-income futures as prices moved without
consistent direction amid conflicting economic data, uncertainty
regarding the future interest rate policy of the United States
and the European Union, and volatility in energy prices.
Smaller losses of approximately 0.3% were recorded in the metals
markets, primarily during July and August, from positions in
aluminum and gold as prices moved in a choppy manner amid
conflicting news regarding supply and demand and volatility in
the U.S. dollar.  A portion of the Partnership?s overall losses
for the quarter was offset by gains of approximately 7.4% in the
energy markets during August from long positions in natural gas
and crude oil as prices climbed higher after Hurricane Katrina
struck the U.S. Gulf Coast, resulting in heavily damaged or
destroyed refineries and production facilities.  Further gains
were experienced during September from long positions in natural
gas as prices continued to strengthen in response to concern for
the long-term effects on supplies in the Gulf of Mexico after
Hurricane Katrina.  Also pushing prices higher was anticipation
of strong demand in the coming winter months and fears for the
approach of Hurricane Rita and the additional damage it could
have caused to output in the Gulf of Mexico.  Additional gains
<page> of approximately 5.1% were experienced in the global
stock index futures markets, primarily during July and
September, from long positions in European and Pacific Rim
equity index futures as prices increased on strong corporate
earnings, a decline in oil prices, and signs that the global
economy could move forward despite Hurricane Katrina's
devastation of the U.S. Gulf Coast.  In the agricultural
markets, gains of approximately 0.2% were recorded during August
and September from short positions in coffee futures as prices
trended lower amid news of lower global consumption and a strong
crop from Brazil and Colombia.

The Partnership recorded total trading results including interest
income totaling $(8,957,738) and expenses totaling $3,179,217,
resulting in a net loss of $12,136,955 for the nine months ended
September 30, 2005.  The Partnership?s net asset value per Unit
decreased from $1,285.56 at December 31, 2004 to $1,026.58
at September 30, 2005.

The most significant trading losses of approximately 20.7% were
recorded in the currency markets from positions in the euro
relative to the British pound and the U.S. dollar.  During
January, long positions in the euro versus the British pound and
the U.S. dollar incurred losses as the value of the euro
reversed sharply lower in what many analysts described as a
?corrective? move after its strong upward trend during the
fourth quarter of 2004.  This decline in the value of the euro
<page> was attributed to weak economic data out of the European
Union and a rebound in the value of its main rival, the U.S.
dollar.  Additional losses were recorded during February and
March from both long and short positions in the euro against
these currencies as the value of the euro moved without
consistent direction amid conflicting economic data out of
Germany, the European Union?s largest economy.  Elsewhere in the
currency markets, losses resulted from positions in the
Singapore dollar, Swedish krona, South African rand, and Swiss
franc relative to the U.S dollar, primarily during February and
March, as the value of the U.S. dollar moved in a trendless
range amid speculation that China would re-value its currency,
negative comments by U.S. Federal Reserve Chairman Alan
Greenspan about the considerable U.S. Current-Account deficit
and the U.S. Federal Reserve's announcement of a quarter-point
increase in the federal funds rate.  During August, further
losses were incurred in currencies from long U.S. dollar
positions against the euro, Swedish krona, and Swiss franc, as
the value of the U.S. dollar declined amid higher crude oil
prices, lower durable goods orders data, the U.S. trade
imbalance, and economic warnings from U.S. Federal Reserve
Chairman Alan Greenspan.  Smaller losses in August were
experienced from long positions in the euro versus the British
pound cross-rate as the value of the pound reversed higher
against the euro.  Finally, during September, losses were
incurred from short U.S. dollar futures positions against the
euro, Swiss franc, and Swedish krona, as the value of the U.S.
<page> dollar increased during the month on expectations that
the U.S. Federal Reserve would most likely continue to raise
interest rates.   Additional losses of approximately 3.9% were
recorded in the global interest rate futures markets during
March from short European interest rate futures positions as
prices reversed higher amid strength in the euro toward the
beginning of the month as investors feared that continued
strength in the currency could restrict foreign exports.  Prices
were also pushed higher on the expectations that Europe would
continue to maintain a low-interest rate environment, as well as
economic concerns stemming from surging energy prices.  Further
losses were experienced during February from long positions in
long-term U.S. interest rate futures as prices declined in
response to strong global economic data and congressional
testimony by U.S. Federal Reserve Chairman Alan Greenspan, which
supported Wall Street expectations for additional interest rate
hikes.  During the third quarter, losses were recorded from both
long and short positions in U.S., Australian, and European
fixed-income futures as prices moved without consistent
direction amid conflicting economic data, uncertainty regarding
the future interest rate policy of the United States and the
European Union, and volatility in energy prices.  Within the
agricultural complex, losses of approximately 2.6% were recorded
from both long and short positions in corn during March, April,
May, and June as prices moved without consistent direction
throughout most of the year due to conflicting news regarding
supply and demand and weather related factors in the U.S. <page>
growing regions.  Elsewhere in the agricultural markets, losses
were experienced from short positions in cotton futures during
January as prices moved higher early in the month due to
speculative buying and news of a decrease in supply.  Further
losses were incurred from long positions in cotton futures
during May as prices declined on news of weak demand in China
and technically-based selling.  Smaller losses were experienced
during February, March, and September from positions in cocoa
futures.  Within the metals markets, losses of approximately
1.5% were recorded during April, June, July, and August from
both long and short positions in gold and aluminum futures as
prices moved in a choppy manner amid conflicting news regarding
supply and demand and volatility in the U.S. dollar.  A portion
of these losses for the first nine months of the year was offset
by gains of approximately 7.0% in the global stock index futures
markets during May, June, July, and September from long
positions in European equity index futures as prices moved
higher on strength in the technology sector, strong corporate
earnings, and weakness in the euro, as investors expressed
confidence that a weaker euro would boost European exports.
Elsewhere in the global equity index markets, gains were
recorded during September from long positions in Australian
stock index futures as prices moved significantly higher on news
of the largest ever annual jobs gain, an improvement in that
country?s Current-Account deficit, and strong retail sales data.
Additional gains of approximately 2.6% were experienced in the
energy markets during May from long positions in natural gas
<page> futures as prices drifted higher on the heels of higher
crude oil prices.  During August, further gains resulted from
long positions in natural gas as prices climbed higher after
Hurricane Katrina struck the U.S. Gulf Coast, resulting in
heavily damaged or destroyed production facilities.  Additional
gains were experienced during September from long positions in
natural gas as prices continued to strengthen throughout the
month in response to concern for the long-term effects on
supplies in the Gulf of Mexico after Hurricane Katrina.  Also
pushing prices higher was anticipation of strong demand in the
coming winter months and fears for the approach of Hurricane
Rita and the additional damage it could have caused to output in
the Gulf of Mexico.

Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Introduction

The Partnership is a commodity pool engaged primarily in the
speculative trading of futures and forwards.  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-
sensitive instruments is inherent to the primary business activity
of the Partnership.

The futures and forwards traded by the Partnership involve
varying degrees of related market risk.  Market risk is often
<page> 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 and forward 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 contracts
in the Partnership accounts with the counterparty, which is
accomplished by daily maintenance of the cash balance in a
custody account held at Morgan Stanley DW for the benefit of 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.

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
<page> 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 Partnership?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 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.

<page> 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 Manager 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
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
<page> 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 Manager in their daily risk management activities.
Please further note that VaR as described above may not be
comparable to similarly-titled measures used by other entities.

The 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, 2006 and 2005.
The Partnership?s VaR at September 30, 2006 was zero for all
market categories because its open positions have been offset.
At September 30, 2006 and 2005, the Partnership?s total
capitalization was approximately $33 million and $43 million,
respectively.
<page>


Primary Market         September 30, 2006     September 30, 2005
Risk Category	  	      Value at Risk          Value at Risk

Equity					  -	%			  (2.89)%

Interest Rate				  - 			  	  (1.30)

Currency		  		    	  -				  (1.15)

Commodity					  -			   	  (0.62)

Aggregate Value at Risk	    	  - 	%	  	 	  (3.07)%

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

The table below supplements the quarter-end VaR set forth above
by presenting the Partnership?s high, low, and average VaR, as a
percentage of total Net Assets for the four quarter-end reporting
periods from October 1, 2005 through September 30, 2006.

<page>
Primary Market Risk Category        High      Low      Average
Equity		    				(1.12)%	  -	% 	 (0.40)%

Interest Rate					(1.78)	  - 		 (0.79)

Currency						(0.52)	  -		 (0.33)

Commodity						(1.17)	  -		 (0.60)


Aggregate Value at Risk			(2.55)%	  -  %	 (1.22)%



Limitations on Value at Risk as an Assessment of Market Risk
VaR models permit estimation of a portfolio?s aggregate market
risk exposure, incorporating a range of varied market risks,
reflect risk reduction due to portfolio diversification or hedging
activities, and can cover a wide range of portfolio assets.
However, VaR risk measures should be viewed in light of the
methodology?s limitations, which include, but may not be limited
to the following:
*	past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
*	changes in portfolio value caused by market movements may
differ from those of the VaR model;
*	VaR results reflect past market fluctuations applied to current
trading positions while future risk depends on future
positions;
*	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
<page>
*	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, 2005, and for the four quarter-
end reporting periods from October 1, 2005 through September 30,
2006.  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 the VaR amounts
indicated above or that such losses will not occur more than once
in 100 trading days.

Non-Trading Risk
At September 30, 2006, there was no non-trading risk exposure
because the Partnership did not have any foreign currency
balances.

<page> The Partnership also maintains a substantial portion of
its available assets in cash at Morgan Stanley DW; as of
September 30, 2006, such amount is equal to approximately 98% 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
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 Manager 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
<page> risk controls to differ materially from the objectives of
such strategies. Government interventions, defaults and
expropria-tions, 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.

As of the termination of trading within the Partnership on
September 15, 2006, the Partnership was no longer exposed to
market risk until trading resumed on November 1, 2006.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
At September 30, 2006, there was no non-trading risk exposure
because the Partnership did not have any foreign currency
balances.

Qualitative Disclosures Regarding Means of Managing Risk Exposure
The Partnership and the Trading Manager, 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
among different market sectors and trading approaches, and by
monitoring the performance of the Trading Manager daily.  In
<page> addition, the Trading Manager 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 Manager.

Item 4.  CONTROLS AND PROCEDURES
(a)	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.


(b)	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> 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, 2005 and the Partnership?s Reports on Form
10-Q for the quarters ended March 31, 2006 and June 30, 2006.

Item 5.  OTHER INFORMATION
Management.  On September 22, 2006, the following individual was
elected as a Director of Demeter.  Jacques Chappuis, age 37, is a
Director of Demeter, and will be a principal of Demeter, pending
approval by and registration with the National Futures
Association.  Mr. Chappuis is a Managing Director of Morgan
Stanley and Head of Alternative Investments for the Global Wealth
Management Group.  Prior to joining Morgan Stanley in 2006, Mr.
Chappuis was Head of Alternative Investments for Citigroup?s
Global Wealth Management Group and prior to that a Managing
Director at Citigroup Alternative Investments.  Before joining
Citigroup, Mr. Chappuis was a consultant at the Boston Consulting
Group, where he focused on the financial services sector, and a
corporate finance Associate at Bankers Trust Company.  Mr.
Chappuis received a B.A. degree in finance from Tulane University
<page> in 1991 and an MBA in finance, with honors, from the
Columbia University Graduate School of Business in 1998.

On November 6, 2006, Mr. Kevin Perry resigned his position as
Chief Financial Officer of Demeter effective November 7, 2006.

On November 7, 2006, the Board of Directors of Demeter appointed
Mr. Lee Horwitz as the Chief Financial Officer of Demeter.  Lee
Horwitz, age 55, is the Chief Financial Officer of Demeter, and
will be a principal of Demeter, pending approval by and
registration with the National Futures Association.  Mr. Horwitz
currently serves as an Executive Director and Controller within
the Global Wealth Management Group at Morgan Stanley.  Mr.
Horwitz joined Morgan Stanley in March 1984 and has held a
variety of positions throughout Morgan Stanley?s organization
during his tenure.  Mr. Horwitz received a B.A. degree from
Queens College and an MBA from Rutgers University.  Mr. Horwitz
is a Certified Public Accountant.

Other.  Effective July 20, 2006, Dean Witter Diversified Futures
Fund Limited Partnership was renamed to Morgan Stanley
Diversified Futures Fund L.P.

Effective November 1, 2006, the monthly management fee will be
paid to Hyman Beck and will be accrued daily at a rate of 1/12 of
1.5% (a 1.5% annual rate) of beginning of the month Net Assets.

<page> Effective November 1, 2006, the Partnership will pay to
Hyman Beck a quarterly incentive fee of 20% of the trading profits
earned by the Partnership as of the end of each calendar quarter.
The initial incentive fee period will begin November 1, 2006, the
date the Partnership begins to receive trading advice from Hyman
Beck and continue until the end of the calendar quarter, December
31, 2006.  Each subsequent incentive fee will be calculated
through the end of each calendar quarter.  The Partnership will
pay an incentive fee based upon the performance of the Partnership
beginning November 1, 2006, without regard to any losses
previously incurred by the Partnership.

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.
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 Diversified Futures Fund L.P.
                      (Registrant)

                      By:   Demeter Management Corporation
                            (General Partner)

November 14, 2006     By:/s/Lee Horwitz
                            Lee Horwitz
                            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.


















MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
        (formerly, Dean Witter Diversified Futures Fund
                       Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
(formerly, Dean Witter Diversified Futures Fund
Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)