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 June 30, 2008 or

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

Commission File Number 0-23577


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

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












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

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

Yes    X       	No___________


Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.  See the definitions of ?large accelerated filer?,
?accelerated filer? and ?smaller reporting company? in Rule 12b-2 of the
Exchange Act.

Large accelerated filer_______ 		Accelerated filer_______
Non-accelerated filer   X   		Smaller reporting company_______

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


<page> <table> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

June 30, 2008


<caption>


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

		Statements of Operations for the Three and Six Months
		Ended June 30, 2008 and 2007 (Unaudited)...................3

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

		Statements of Cash Flows for the Six Months Ended
		June 30, 2008 and 2007 (Unaudited).........................5

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

		Notes to Financial Statements (Unaudited)...............7-16

Item 2.	Management?s Discussion and Analysis of
			Financial Condition and Results of Operations.......17-30

Item 3.	Quantitative and Qualitative Disclosures About
			Market Risk.........................................31-43

Item 4.	Controls and Procedures.............................43-44

Item 4T.	Controls and Procedures................................44


PART II. OTHER INFORMATION

Item 1A.Risk Factors...........................................45

Item 5.	Other Information...................................45-46

Item 6.	Exhibits............................................46-47
</table>


<page> <table> PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

	MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
	STATEMENTS OF FINANCIAL CONDITION
<caption>
			June 30,	December 31,
			        2008        	        2007
			$	$
			(Unaudited)
ASSETS

		<c>	<c>
Trading Equity:
	Unrestricted cash	20,425,243	19,830,358
	Restricted cash	      799,791	    1,879,193

	     Total cash	   21,225,034	   21,709,551

     Net unrealized gain on open contracts (MS&Co.)	370,517	261,807
     Net unrealized gain on open contracts (MSIP)	              53,918	         11,898

		Total net unrealized gain on open contracts	424,435	273,705

	Options purchased (proceeds paid $380,970
           and $1,448,845, respectively)	          375,648	               1,131,684

		Total Trading Equity	22,025,117	23,114,940

Interest receivable (MS&Co.)	                    27,209	         42,623

		Total Assets	    22,052,326	  23,157,563

LIABILITIES AND PARTNERS? CAPITAL

Liabilities

Options written (premiums received $408,287
    and $1,415,459, respectively)				                   375,648	 	   1,131,684
Redemptions payable	343,169	338,077
Accrued management fees 	27,099          	         27,464
Administrative expenses payable	           15,000	         14,000

		Total Liabilities	      760,916	    1,511,225

Partners? Capital

Limited Partners (20,831.931 and
	23,320.265 Units, respectively)	21,047,667	21,400,179
General Partner (241.245 and
      268.245 Units, respectively)	       243,743	       246,159

		Total Partners? Capital	    21,291,410	  21,646,338

		Total Liabilities and Partners? Capital	    22,052,326	  23,157,563

NET ASSET VALUE PER UNIT	                                         1,010.36                	         917.66
<fn>
	The accompanying notes are an integral part
	of these financial statements.  </table>
- 2 -


<page> <table>  	MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
	STATEMENTS OF OPERATIONS
(Unaudited)

<caption>
                       For the Three Months                        	For the Six Months
  	            Ended June 30,                               Ended June 30,


                          2008   	               2007    	        2008   	    2007
                              $	                   $	             $	  $

	<c>	                      <c>	                      <c>	             	<c>
INVESTMENT INCOME
	Interest income (MS&Co.)	    70,577		       278,673   	    174,510	       580,404

EXPENSES
	Brokerage commissions (MS&Co.)	111,968	490,553	286,984		870,096
	Management fees	86,010	109,400  	174,330 	    	    223,011
	Administrative expenses	15,000	     18,000	30,000		      30,000
	Transaction fees and costs	5,909	     13,144	16,761 	           	24,992
	Incentive fees	          ?     	    319,068    	          ?     		     319,068

		   Total Expenses 	    218,887	   950,165	    508,075		 1,467,167

NET INVESTMENT LOSS 	   (148,310)	  (671,492)	       (333,565)	             (886,763)

TRADING RESULTS
Trading profit (loss):
	Realized	(2,266,678)	3,745,417	2,361,963		2,048,201
	Net change in unrealized	     864,792	    (308,925)	    211,433	 	     639,104

	           Total Trading Results	   (1,401,886)	  3,436,492	   2,573,396		  2,687,305

NET INCOME (LOSS)	   (1,550,196)	  2,765,000	    2,239,831		  1,800,542

NET INCOME (LOSS) ALLOCATION

	Limited Partners	(1,533,674)	2,735,479	2,213,118	  	1,781,731
	General Partner 	(16,522)	29,521	26,713		18,811

NET INCOME (LOSS) PER UNIT

	Limited Partners   (68.48)                 100.33                   92.70                  67.30
	General Partner    (68.48)                 100.33                   92.70                  67.30


	                                     Units                   Units                   Units	Units
WEIGHTED AVERAGE NUMBER
	OF UNITS OUTSTANDING                            21,861.794		27,220.744		22,487.041	28,032.063



<fn>

The accompanying notes are an integral part
of these financial statements.
</table>
- 3 -
<page> <table> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
STATEMENTS OF CHANGES IN PARTNERS? CAPITAL
For the Six Months Ended June 30, 2008 and 2007
(Unaudited)

<caption>


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

			<c>	<c>	<c>	<c>
Partners? Capital,
December 31, 2006	29,629.631	30,865,627	341,508 	31,207,135

Net Income                                                              ?    	            1,781,731	               18,811	1,800,542

Redemptions	   (2,964.329)	       (3,097,572)             (30,606)       (3,128,178)

Partners? Capital,
June 30, 2007	    26,665.302	   29,549,786	             329,713	 29,879,499




Partners? Capital,
December 31, 2007	23,588.510	21,400,179	246,159 	21,646,338

Net Income                                                              ?    	            2,213,118	               26,713	2,239,831

Redemptions	   (2,515.334)	       (2,565,630)             (29,129)	   (2,594,759)

Partners? Capital,
June 30, 2008	    21,073.176	   21,047,667	             243,743	 21,291,410





<fn>









The accompanying notes are an integral part
	of these financial statements.
</table>
- 4 -
 <page> <table> 	MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
	STATEMENTS OF CASH FLOWS
(Unaudited)


<caption>



				        For the Six Months Ended June 30,

				                  2008        	             2007
				         $	     $


CASH FLOWS FROM OPERATING ACTIVITIES

			<c>	<c>
Net income	2,239,831	1,800,542
Noncash item included in net income:
	Net change in unrealized	(211,433)	(639,104)

(Increase) decrease in operating assets:
	Restricted cash	 1,079,402	10,056
	Proceeds paid for options purchased	1,067,875	(2,047,406)
     Interest receivable (MS&Co.)		 		                     15,414	         	         18,417
     Due from MS&Co.		 			                          ?      		       (83,817)

Increase (decrease) in operating liabilities:
	Premiums received for options written                                            (1,007,172)                      1,761,819
	Accrued management fees	                                       (365)     	(2,269)
	Administrative expenses payable             1,000                            (34,707)
	Accrued incentive fee 	                 ?                  	         254,193


Net cash provided by operating activities	   3,184,552	     1,037,724


CASH FLOWS FROM FINANCING ACTIVITIES

Cash paid for redemptions of Units	  (2,589,667)	    (3,209,866)

Net cash used for financing activities	   (2,589,667)	    (3,209,866)

Net increase (decrease) in unrestricted cash	    594,885	        (2,172,142)

Unrestricted cash at beginning of period	   19,830,358	   30,147,827

Unrestricted cash at end of period	   20,425,243	   27,975,685



<fn>
The accompanying notes are an integral part
	of these financial statements.
</table>
- 5 -
<page> <table> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
CONDENSED SCHEDULES OF INVESTMENTS
June 30, 2008 (Unaudited) and December 31, 2007


				<caption>


Futures and Forward Contracts
Long
Unrealized
Gain/(Loss)

  Percentage of
     Net Assets
    Short
Unrealized
Gain/(Loss)

Percentage of
   Net Assets
      Net
Unrealized
Gain/(Loss)

 $
 %
 $
%
$

June 30, 2008, Partnership Net Assets:  $21,291,410





<c>
<c>
<c>
<c>
<c>
Commodity
       70,846
        0.33
      (1,894)
      (0.01)
     68,952
Equity
    (89,773)
       (0.42)
    78,982
       0.37
   (10,791)
Foreign currency
     237,017
        1.11
   (136,692)
      (0.64)
    100,325
Interest rate
               ?
        ?
    268,833
       1.26
    268,833






     Grand Total:
     218,090
        1.02
    209,229
       0.98
   427,319

     Unrealized Currency Loss





      (2,884)

     Total Net Unrealized Gain


  Fair Value
             $
Percentage of
   Net Assets
          %



Options purchased on Futures Contracts
           ?
          ?



Options purchased on Forward Contracts
    375,648
       1.76



Options written on Futures Contracts
           ?
          ?



Options written on Forward Contracts
   (375,648)
      (1.76)






   424,435

December 31, 2007, Partnership Net Assets:  $21,646,338









Commodity
        4,079
        0.02
    258,330
       1.19
  262,409
Equity
         ?
          ?
    70,228
       0.33
  70,228
Foreign currency
      45,314
        0.21
   (159,957)
      (0.74)
   (114,643)
Interest rate
     (11,061)
       (0.05)
      36,751
       0.17
      25,690






     Grand Total:
      38,332
        0.18
    205,352
       0.95
   243,684

     Unrealized Currency Gain





    30,021

     Total Net Unrealized Gain


  Fair Value
  $
Percentage of
   Net Assets
          %



Options purchased on Futures Contracts
              ?
         ?



Options purchased on Forward Contracts
      1,131,684
        5.23



Options written on Futures Contracts
              ?
         ?



Options written on Forward Contracts
     (1,131,684)
       (5.23)






   273,705
<fn>
The accompanying notes are an integral part
of these financial statements.
</table>
-	6 ?
<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
NOTES TO FINANCIAL STATEMENTS

June 30, 2008

(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. (the
?Partnership?).  The financial statements and condensed notes
herein should be read in conjunction with the Partnership?s
December 31, 2007, Annual Report on Form 10-K.

1.  Organization
Morgan Stanley Diversified Futures Fund L.P. is a Delaware limited
partnership organized in 1987 to engage primarily in the
speculative trading of futures contracts, options on futures and
forward contracts, and forward contracts on physical commodities
and other commodity interests, including, but not limited to,
foreign currencies, financial instruments, metals, energy, and
agricultural products (collectively, ?Futures Interests?).

The Partnership may buy or write put and call options through
listed exchanges and the over-the-counter market.  The buyer has
the right to purchase (in the case of a call option) or sell (in
the case of a put option) a specified quantity of a specific
Futures Interest or underlying asset at a specified price prior to

- 7 -
<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

or on a specified expiration date.  The writer of an option is
exposed to the risk of loss if the market price of the 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/proceeds paid from writing/purchasing options
are recorded as liabilities/assets on the Statements of Financial
Condition and are subsequently adjusted to current values.  The
difference between the current value of an option and the premium
received/paid is treated as an unrealized gain or loss.

The Partnership?s general partner is Demeter Management
Corporation (?Demeter?). The commodity brokers are Morgan Stanley
& Co. Incorporated (?MS&Co.?) and Morgan Stanley & Co.
International plc (?MSIP?).  MS&Co. also acts as the counterparty
on all trading of foreign currency forward contracts.  Morgan
Stanley Capital Group Inc. ("MSCG") acts as the counterparty on
all trading of options on foreign currency forward contracts.
MSIP serves as the commodity broker for trades on the London Metal
Exchange. Demeter, MS&Co., MSIP, and MSCG are wholly-owned
subsidiaries of Morgan Stanley. Hyman Beck & Company Inc. (the
?Trading Advisor?) is the trading advisor to the Partnership.

- 8 -
<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


2.  Related Party Transactions
The Partnership?s cash is on deposit with MS&Co. and MSIP in
futures, forward, and options trading accounts to meet margin
requirements as needed.  Monthly, MS&Co. pays the Partnership
interest income on 80% of the Partnership?s average daily Net
Assets for the month at a rate equal to the monthly average yield
on the 4-week U.S. Treasury bill discount rate during such month.
The Partnership pays brokerage commissions to MS&Co.

3.  Income Taxes
No provision for income taxes has been made in the accompanying
financial statements, as partners are individually responsible
for reporting income or loss based upon their respective share of
the Partnership?s revenues or expenses for income tax purposes.
The Partnership files U.S. federal and state tax returns.  The
2004 through 2007 tax years generally remain subject to
examination by U.S. federal and most state tax authorities.

4.  Financial Instruments
The Partnership trades Futures Interests.  Futures and forwards
represent contracts for delayed delivery of an instrument at a
specified date and price.  Risk arises from changes in the value
of these contracts and the potential inability of counterparties
to perform under the terms of the contracts. There are numerous

- 9 -
<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

factors which may significantly influence the market value of
these contracts, including interest rate volatility.

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

The Partnership?s contracts are accounted for on a trade-date
basis and marked to market on a daily basis.  The Partnership
accounts for its derivative investments in accordance with the
provisions of Statement of Financial Accounting Standards No. 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;
- 10 -
<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
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 ?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

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

			<c>		<c>		<c>		<c>		<c>
Jun. 30, 2008 	324,106	 100,329	  424,435	 Mar. 2009	  Sep. 2008
Dec. 31, 2007     388,364	(114,659)	  273,705	 Sep. 2008    Aug. 2008
</table>
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
Partnership trades is limited to the amounts reflected in the
Partnership?s Statements of Financial Condition.

-	11 ?
<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


The Partnership also has credit risk because MS&Co., MSIP, and/or
MSCG act as the futures commission merchants or the counter-
parties, with respect to most of the Partnership?s assets.
Exchange-traded futures, exchange-traded forward, and exchange-
traded futures-styled options contracts are marked to market on a
daily basis, with variations in value settled on a daily basis.
MS&Co. and MSIP, each acting as a commodity broker for the
Partnership?s exchange-traded futures, exchange-traded forward,
and exchange-traded futures-styled options contracts, are
required, pursuant to regulations of the Commodity Futures
Trading Commission (?CFTC?), to segregate from their own assets,
and for the sole benefit of their commodity customers, all funds
held by them with respect to exchange-traded futures, exchange-
traded forward, and exchange-traded futures-styled options
contracts, including an amount equal to the net unrealized gains
(losses) on all open exchange-traded futures, exchange-traded
forward, and exchange-traded futures-styled options contracts,
which funds, in the aggregate, totaled $21,549,140 and
$22,097,915 at June 30, 2008, and December 31, 2007,
respectively. With respect to the Partnership?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.

                               - 12 -
<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


However, the Partnership is required to meet margin requirements
equal to the net unrealized loss on open forward currency
contracts in the Partnership accounts with the counterparty, which
is accomplished by daily maintenance of the cash balance in a
custody account held at MS&Co.  With respect to those off-
exchange-traded forward currency contracts, the Partnership is at
risk to the ability of MS&Co., the sole counterparty on all such
contracts, to perform.  With respect to those off-exchange-traded
forward currency options contracts, the Partnership is at risk to
the ability of MSCG, the sole counterparty on all such contracts,
to perform.  The Partnership has a netting agreement with each
counterparty. These agreements, which seek to reduce both the
Partnership?s and the counterparties? exposure on off-exchange-
traded forward currency contracts, including options on such
contracts, should materially decrease the Partnership?s credit
risk in the event of MS&Co.?s or MSCG?s bankruptcy or insolvency.

5.  New Accounting Developments
In September 2006, the Financial Accounting Standards Board
(?FASB?) issued Statement of Financial Accounting Standards No.
157 (?SFAS 157?), ?Fair Value Measurements?.  SFAS 157 requires
use of a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value into three
levels: Level 1 ? quoted market prices in active markets for
                              - 13 ?

<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

Demeter evaluated the impact of adopting SFAS 157 on the
Partnership?s financial statements.  The Partnership adopted SFAS
157 as of January 1, 2008.  Based on its analysis, the effect of
applying SFAS 157 to the investments included in the financial
statements does not have a material impact on the Partnership?s
financial statements.

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



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




      Total


 <c>
<c>
 <c>

<c>
Unrealized gain on open contracts
    $   324,106
      $   100,329
 n/a

   $     424,435
Options purchased
        ?
       375,648
 n/a

     375,648






Liabilities





Options written
        ?
    $    375,648
 n/a

 $     375,648






</table>

-	14 ?
<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


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

6.  Restricted and Unrestricted Cash
As reflected on the Partnership?s 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
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.


- 15 -


<page> MORGAN STANLEY DIVERSIFIED FUTURES FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)


7.  Reclassifications

Certain prior year amounts relating to options on the Statements
of Cash Flows and Condensed Schedules of Investments for December
31, 2007 were reclassified to conform to 2008 presentation.
Certain prior year amounts on the Statements of Operations were
reclassified to conform to 2008 presentation. Such
reclassifications have no impact on the Partnership?s reported net
income (loss).

















- 16 -
<page> Item 2.	MANAGEMENT?S DISCUSSION AND ANALYSIS OF FINANCIAL
	CONDITION AND RESULTS OF OPERATIONS


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

The Partnership?s investment in futures, forwards, and options
may, from time to time, be illiquid.  Most U.S. futures exchanges
limit fluctuations in prices during a single day by regulations
referred to as ?daily price fluctuations limits? or ?daily
limits?.  Trades may not be executed at prices beyond the daily
limit.  If the price for a particular futures or options contract
has increased or decreased by an amount equal to the daily limit,
positions in that futures or options contract can neither be taken
nor liquidated unless traders are willing to effect trades at or
within the limit.  Futures prices have occasionally moved the
daily limit for several consecutive days with little or no
trading.  These market conditions could prevent the Partnership
                               - 17 -
<page> from promptly liquidating its futures or options contracts
and result in restrictions on redemptions.

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

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

Capital Resources.  The Partnership does not have, nor does it
expect to have, any capital assets.  Redemptions of units of
limited partnership interest (?Unit(s)?) in the future will affect
the amount of funds available for investments in futures,
forwards, and options in subsequent periods.  It is not possible
to estimate the amount, and therefore the impact, of future
outflows of Units.

- 18 -
<page> There are no known material trends, favorable or
unfavorable, that would affect, nor any expected material changes
to, the Partnership?s capital resource arrangements at the
present time.

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

Results of Operations
General.  The Partnership?s results depend on the Trading Advisor
and the ability of the Trading Advisor?s trading program to take
advantage of price movements in the futures, forward, and options
markets.  The following presents a summary of the Partnership?s
operations for the three and six month periods ended June 30,
2008 and 2007, and a general discussion of its trading activities
during each period.  It is important to note, however, that the
Trading Advisor trades in various markets at different times and
that prior activity in a particular market does not mean that
such market will be actively traded by the Trading Advisor or
will be profitable in the future.  Consequently, the results of
operations of the Partnership are difficult to discuss other than
in the context of the Trading Advisor?s trading activities on
behalf of the Partnership during the period in question. Past
performance is no guarantee of future results.
- 19 -
<page> The Partnership?s results of operations set forth in the
financial statements on pages 2 through 16 of this report are
prepared in accordance with accounting principles generally
accepted in the United States of America, which require the use of
certain accounting policies that affect the amounts reported in
these financial statements, including the following:  The
contracts the Partnership trades are accounted for on a trade-date
basis and marked to market on a daily basis.  The difference
between their cost and market value is recorded on the Statements
of Operations as ?Net change in unrealized trading gain (loss)?
for open (unrealized) contracts, and recorded as ?Realized trading
gain (loss)? when open positions are closed out.  The sum of these
amounts constitutes the Partnership?s trading results.  The market
value of a futures contract is the settlement price on the
exchange on which that futures contract is traded on a particular
day. The value of a foreign currency forward contract is based on
the spot rate as of the close of business.  Interest income, as
well as management fees, incentive fees, brokerage 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.


- 20 -
<page> For the Three and Six Months Ended June 30, 2008
The Partnership recorded total trading results including interest
income totaling $(1,331,309) and expenses totaling $218,887,
resulting in a net loss of $1,550,196 for the three months ended
June 30, 2008.  The Partnership?s net asset value per Unit
decreased from $1,078.84 at March 31, 2008, to $1,010.36 at June
30, 2008.

The most significant trading losses of approximately 3.1% were
experienced within the global stock index sector, primarily
during April and May, from short positions in European, U.S., and
Pacific Rim equity index futures as prices increased following
the release of better-than-expected corporate earnings reports
and better-than-forecast economic data out of the U.S. and
Germany.  During June, newly established long positions in
European, U.S., and Pacific Rim equity index futures resulted in
additional losses as prices reversed lower on concerns that
surging commodity prices and additional subprime-related
writedowns would erode corporate earnings and slow global
economic growth.  Within the currency sector, losses of
approximately 2.2% were recorded, primarily during April and May,
from long positions in the Japanese yen versus the U.S. dollar
and British pound as the value of the Japanese yen declined
against these currencies after a rally in the global equity
markets prompted investors to resume carry trade positions.
Elsewhere, short positions in the New Zealand dollar versus U.S.
dollar experienced further losses as the value of the New Zealand
                             - 21 -
<page> dollar moved higher against the U.S. dollar in May amid
speculation that the Reserve Bank of New Zealand would leave
interest rates unchanged in June.  Additional losses of
approximately 0.8% were recorded within the global interest rate
sector, primarily during April, from long positions in U.S. and
Japanese fixed-income futures as prices decreased amid the
aforementioned rebound in the global equity markets, which
reduced demand for the ?safe haven? of government bonds.
Furthermore, prices of U.S. and Japanese interest rate futures
moved lower on speculation that the U.S. Federal Reserve and Bank
of Japan would not reduce borrowing costs as much as previously
expected due to concerns of accelerating global inflation.
Smaller losses of approximately 0.5% were incurred within the
metals markets, primarily during April and May, from long futures
positions in gold and silver as prices dropped amid speculative
selling and a temporary rise in the value of the U.S. dollar.  A
portion of the Partnership?s losses for the quarter was offset by
gains of approximately 0.3% within the agricultural sector,
primarily during April, from long futures positions in soybean
oil as prices increased after a government report showed a rise
in demand for U.S. supplies following labor disputes that slowed
exports from Argentina and Brazil.  Meanwhile, long positions in
cocoa futures resulted in further gains as prices moved higher
amid speculation that crops in the Ivory Coast, the world?s
largest producer, were developing more slowly than anticipated.

- 22 -
<page> The Partnership recorded total trading results including
interest income totaling $2,747,906 and expenses totaling
$508,075, resulting in net income of $2,239,831 for the six month
ended June 30, 2008.  The Partnership?s net asset value per Unit
increased from $917.66 at December 31, 2007, to $1,010.36 at June
30, 2008.

The most significant trading gains of approximately 6.6% were
experienced within the currency sector, primarily during January,
February, March, and June, from long positions in the euro,
Japanese yen, and Swiss franc versus the U.S. dollar as the value
of the U.S. dollar moved lower against these currencies due to
disappointing economic data in the U.S., which fueled persistent
concerns of a possible U.S. recession.  Within the global
interest rate sector, gains of approximately 5.5% were recorded,
primarily during January and February, from long positions in
U.S., German, and Japanese interest rate futures as prices
increased in a ?flight-to-quality? following a sharp decline in
the global equity markets and concerns that an economic slowdown
in the United States might weaken the global economy.  During
May, newly established short positions in European fixed-income
futures resulted in additional gains as prices declined after
government reports revealed accelerating inflation in the Euro-
Zone. Smaller gains of approximately 2.7% were experienced within
the global stock index sector, primarily during January,
February, and March, from short positions in European, Pacific
Rim, and U.S. equity index futures as prices decreased on
                             - 23 ?
<page> concerns that a persistent U.S. housing slump, mounting
losses linked to U.S. subprime mortgage investments, and a
weakening job market would restrain consumer spending and curb
global economic growth.  A portion of the Partnership?s gains for
the first six months of the year was offset by losses of
approximately 3.5% in the metals markets, primarily during the
first quarter, from short futures positions in aluminum, copper,
and zinc as prices increased in January and February due to news
of weak global supplies amid rising demand from China and India.
During March, additional losses were incurred from newly
established long positions in aluminum futures as prices reversed
lower amid speculation that a slumping U.S. economy would lead to
a decline in global demand for base metals.  Additional losses of
approximately 0.4% were recorded within the energy sector,
primarily during January, from short positions in natural gas
futures as prices moved higher amid forecasts for colder weather
and expectations of a decline in U.S. inventories.  Elsewhere,
long futures positions in crude oil resulted in smaller losses,
primarily during January, as prices reversed lower due to fears
that a possible economic recession in the U.S. would curb demand
from the world's largest energy consumer.






- 24 -
<page> For the Three and Six Months Ended June 30, 2007
The Partnership recorded total trading results including interest
income totaling $3,715,165 and expenses totaling $950,165,
resulting in net income of $2,765,000 for the three months ended
June 30, 2007.  The Partnership?s net asset value per Unit
increased from $1,020.21 at March 31, 2007, to $1,120.54 at June
30, 2007.

The most significant trading gains of approximately 6.5% were
experienced in the global interest rate sector, primarily during
May and June, from short positions in European fixed-income
futures as prices fell sharply lower due to a report that showed
real Gross Domestic Product in the Euro-Zone increased more-than-
expected in the first quarter of 2007.  In addition, prices were
pressured lower after reports showed German investor confidence
rose during May and Italian retail sales were stronger-than-
expected during April.  Finally, European fixed-income futures
prices plunged toward the end of May after news that Germany's
unemployment rate held at a six-year low, while French
unemployment dropped to the lowest level in 24 years.  Meanwhile,
gains were also recorded from short positions in Canadian and
Australian interest rate futures during May as prices declined
amid strength in regional equity markets and consistently strong
economic data out of Canada and Australia.  Additional gains were
recorded from short positions in U.S. fixed-income futures
throughout the quarter as prices moved lower after the
                             - 25 -


<page> Philadelphia Federal Reserve's index of regional
manufacturing increased more-than-expected in April and the
Federal Reserve Bank of Richmond President Jeffrey Lacker stated
there were still inflationary concerns present in the U.S.
economy.  Additional gains of approximately 2.4% were experienced
in the currency sector throughout the quarter primarily from
short positions in the Japanese yen versus the U.S. dollar,
British pound, and euro as the value of the Japanese yen weakened
against its major rivals amid expectations that strengthening
global equity markets might give investors more confidence to buy
higher-yielding assets financed with money borrowed in Japan,
thereby continuing the carry-trade.  Additionally, the value of
the Japanese yen moved lower after news that the Tankan survey
was weaker-than- expected, leading investors to believe that the
Bank of Japan would not raise interest rates.  Further gains were
recorded from long positions in the Australian dollar, British
pound, euro, and New Zealand dollar versus the U.S. dollar as
strong economic data out of Australia, the United Kingdom,
European Union, and New Zealand added to growing investor
sentiment that the respective Central Banks of these countries
would raise interest rates in order to combat inflation, thus
pushing the value of those currencies higher relative to the U.S.
dollar.  Lastly, gains were recorded from long positions in the
Canadian dollar versus the U.S. dollar as the value of the
Canadian dollar strengthened in tandem with rising commodities
prices and speculation that the Bank of Canada might continue
raising interest rates.  Within the global stock index sector,
gains of approximately 1.3% were
                               - 26 -


<page> recorded primarily during April and May from long
positions in European and U.S. equity index futures as prices
rose due to the aforementioned strong economic data in the Euro-
Zone and United States, as well as consistently strong corporate
earnings amid increased global merger and acquisition activity.
Smaller gains of approximately 0.3% were recorded in the
agricultural markets, primarily during April, from short
positions in cotton futures as prices dropped to a five-month low
after U.S. exporters reported a decrease in Chinese demand.
Additional gains were recorded during April from short positions
in sugar futures as prices moved lower after India, the world?s
second-biggest producer of sugar, produced a record output of
this commodity.  Elsewhere, long positions in cocoa futures
resulted in gains during June as prices increased amid concerns
that there might be a world production deficit due to dry weather
in Western Africa.  A portion of the Partnership?s gains in the
second quarter was offset by losses of approximately 1.7%
recorded within the metals sector during April from short
positions in copper and zinc futures as prices rose on
speculation that strengthening global equity markets would spur
an increase in global demand for base metals.  During May, long
positions in gold futures resulted in further losses as prices
declined due to speculation selling.  Additional losses were
recorded from long positions in aluminum futures during May and
June as prices decreased after the Chinese government announced
that it would raise export taxes for base metals and on
speculation that rising production and inventories might create a
global surplus.
- 27 -


<page> The Partnership recorded total trading results including
interest income totaling $3,267,709 and expenses totaling
$1,467,167, resulting in net income of $1,800,542 for the six
months ended June 30, 2007.  The Partnership?s net asset value per
Unit increased from $1,053.24 at December 31, 2006, to $1,120.54
at June 30, 2007.

The most significant trading gains of approximately 5.3% were
recorded in the global interest rate sector throughout a
majority of the year from short positions in European fixed-
income futures as prices trended lower amid consistently strong
consumer sentiment and unemployment data out of Germany, France,
and the United Kingdom.  Elsewhere, additional gains were
recorded from short positions in Australian and Canadian fixed-
income futures as prices declined amid strength in regional
equity markets and consistently strong economic data out of
Australia and Canada. Additional gains of approximately 1.0%
were experienced in the global stock index sector from long
positions in European equity index futures as prices increased
during April due to the aforementioned strong economic data in
the Euro-Zone, as well as consistently strong corporate earnings
amid increased global merger and acquisition activity.
Additional gains of approximately 0.8% were experienced in the
agricultural markets during March, April, and June from long
positions in cocoa futures after political unrest in the Ivory
Coast, the world?s biggest cocoa grower, raised concerns that
fighting might resume in the country and cut production.
                             - 28 -
<page> Meanwhile, gains were recorded from short positions in
sugar futures as prices decreased after India, the world?s
second-biggest producer of sugar, produced a record output of
this commodity.  Smaller gains of approximately 0.6% were
recorded in the currency markets during April, May, and June
from short positions in the Japanese yen versus the U.S. dollar,
British pound, and euro as the value of the Japanese yen
weakened against most of its major rivals amid expectations that
strengthening global equity markets might give investors more
confidence to buy higher-yielding assets financed with money
borrowed in Japan, thereby continuing the carry-trade.
Elsewhere, gains were recorded from long positions in the
Canadian dollar versus the U.S. dollar during May and June as
the value of the Canadian dollar strengthened in tandem with
rising commodities prices and speculation that the Bank of
Canada might raise interest rates.  A portion of the
Partnership?s gains in the first six months of the year was
offset by losses of approximately 2.3% recorded in the metals
markets throughout a majority of the year from positions in
copper, aluminum, and zinc futures.  During February, March, and
April, short positions in copper futures experienced losses as
prices moved higher on continued speculation that low stockpiles
might create a supply shortage in the future and after the
International Monetary Fund?s strong global growth forecasts
bolstered sentiment that global demand for base metals might
increase in 2007.  Further losses were recorded from long

- 29 -


<page> positions in aluminum futures during May and June as
prices decreased after an announcement by the Chinese government
that it would raise export taxes for base metals and on
speculation that rising production and inventories might create
a global surplus.   Lastly, short and long positions in zinc
futures incurred losses during the second quarter as prices
moved without consistent direction due to conflicting data
regarding supply and demand.



















- 30 -
<page>
Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Introduction

The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards, and options.  The
market-sensitive instruments held by the Partnership are acquired
for speculative trading purposes only and, as a result, all or
substantially all of the Partnership?s assets are at risk of
trading loss.  Unlike an operating company, the risk of market-
sensitive instruments is inherent to the primary business activity
of the Partnership.

The futures, forwards, and options on such contracts traded by
the Partnership involve varying degrees of related market risk.
Market risk is often dependent upon changes in the level or
volatility of interest rates, exchange rates, and prices of
financial instruments and commodities, factors that result in
frequent changes in the fair value of the Partnership?s open
positions, and consequently in its earnings, whether realized or
unrealized, and cash flow. Gains and losses on open positions of
exchange-traded futures, exchange-traded forward, and exchange-
traded futures-styled options contracts are settled daily through
variation margin.  Gains and losses on off-exchange-traded
forward currency contracts and forward currency options contracts
are settled upon termination of the contract.  However, the
Partnership is required to meet margin requirements equal to the
net unrealized loss on open forward currency contracts in the
                              - 31 -
<page> Partnership accounts with the counterparty, which is
accomplished by daily maintenance of the cash balance in a
custody account held at MS&Co.

The Partnership?s total market risk may increase or decrease as
it is influenced by a wide variety of factors, including, but not
limited to, the diversification among the Partnership?s open
positions, the volatility present within the markets, and the
liquidity of the markets.

The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements.  Margin requirements generally range between 2% and
15% of contract face value.  Additionally, the use of leverage
causes the face value of the market sector instruments held by
the Partnership typically to be many times the total
capitalization of the Partnership.

The Partnership?s past performance is no guarantee of its future
results.  Any attempt to numerically quantify the Partnership?s
market risk is limited by the uncertainty of its speculative
trading.  The Partnership?s speculative trading and use of
leverage may cause future losses and volatility (i.e., ?risk of
ruin?) that far exceed the Partnership?s experience to date under
the ?Partnership?s Value at Risk in Different Market Sectors?
section and significantly exceed the Value at Risk (?VaR?) tables
disclosed.
- 32 -
<page> 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.

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

The Partnership?s risk exposure in the market sectors traded by
the Trading Advisor is estimated below in terms of VaR.  The
Partnership estimates VaR using a model based upon historical
simulation (with a confidence level of 99%) which involves
constructing a distribution of hypothetical daily changes in the
value of a trading portfolio. The VaR model takes into account
linear exposures to risk including equity and commodity prices,
interest rates, foreign exchange rates, and correlation among
                             - 33 -
<page> 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 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
                             - 34 -
<page> reporting purposes only and is not utilized by either
Demeter or the Trading Advisor in their daily risk management
activities.  Please further note that VaR as described above may
not be comparable to similarly-titled measures used by other
entities.

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 June 30, 2008, and 2007.  At
June 30, 2008, and 2007, the Partnership?s total capitalization
was approximately $21 million and $30 million, respectively.

Primary Market            June 30, 2008          June 30, 2007
Risk Category	  	      Value at Risk          Value at Risk

Currency					(0.89)%		   	    (0.78)%

Interest Rate				(0.57)			    (0.90)

Equity				     (0.53)			    (0.63)

Commodity				    	(0.38)			    (0.38)

Aggregate Value at Risk	 	(0.98)%		    	    (1.37)%


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.

- 35 -
<page> Because the business of the Partnership is the speculative
trading of futures, forwards, and options on such contracts, 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 July 1, 2007, through June 30, 2008.

Primary Market Risk Category        High      Low      Average
Currency						(1.68)%	(0.61)%	(1.01)%

Interest Rate					(1.16)	(0.57)	(0.74)

Equity						(0.53)	(0.09)	(0.29)

Commodity						(0.75)	(0.38)	(0.57)


Aggregate Value at Risk			(2.57)%	(0.98)%	(1.52)%



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:
-	36 ?
<page>
*	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
*	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 June 30, 2008 and 2007, and for the four
quarter-end reporting periods from July 1, 2007, through June 30,
2008.  VaR is not necessarily representative of the Partnership?s
historic risk, nor should it be used to predict the Partnership?s
future financial performance or its ability to manage or monitor
                             - 37 -
<page> 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
The Partnership has non-trading market risk on its foreign cash
balances.  These balances and any market risk they may represent
are immaterial.

The Partnership also maintains a substantial portion of its
available assets in cash at MS&Co.; as of June 30, 2008,
such amount was equal to approximately 96% 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
                             - 38 -
<page> 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 Advisor for managing such exposures, are
subject to numerous uncertainties, contingencies and risks, any
one of which could cause the actual results of the Partnership?s
risk controls to differ materially from the objectives of such
strategies. Government interventions, defaults and 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.

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

Currency.   The largest market exposure of the Partnership at
June 30, 2008, was to the currency sector.  The Partnership?s
                            - 39 -
<page> currency exposure is to exchange rate fluctuations,
primarily fluctuations which disrupt the historical pricing
relationships between different currencies and currency pairs.
Interest rate changes, as well as political and general economic
conditions influence these fluctuations.  The Partnership trades
a large number of currencies, including cross-rates - i.e.,
positions between two currencies other than the U.S. dollar.  At
June 30, 2008, the Partnership?s major exposures were to the
British pound, Japanese yen, and euro currency crosses, as well
as to outright U.S. dollar positions.  Outright positions consist
of the U.S. dollar vs. other currencies.  These other currencies
include major and minor currencies.  Demeter does not anticipate
that the risk associated with the Partnership?s currency trades
will change significantly in the future.

Interest Rate.  The third largest market exposure of the
Partnership at June 30, 2008, was to the global interest rate
sector.  This Exposure was primarily spread across European,
U.S., Japanese, and Australian interest rate sectors.  Interest
rate movements directly affect the price of the sovereign bond
futures positions held by the Partnership and indirectly affect
the value of its stock index and currency positions.  Interest
rate movements in one country, as well as relative interest rate
movements between countries, materially impact the Partnership?s
profitability.  The Partnership?s primary interest rate exposure
is generally to interest rate fluctuations in the U.S. and the
other G-7 countries.  The G-7 countries consist of France, the
                              - 40 -
<page> U.S., the United Kingdom, Germany, Japan, Italy, and
Canada.  However, the Partnership also takes futures positions in
the government debt of smaller countries ? e.g., Australia.
Demeter anticipates that the G-7 countries? interest rates will
remain the primary interest rate exposure of the Partnership for
the foreseeable future.  The speculative futures positions held
by the Partnership may range from short to long-term instruments.
Consequently, changes in short, medium, or long-term interest
rates may have an effect on the Partnership.

Equity.  At June 30, 2008, the Partnership had market exposure to
the global stock index sector, primarily to equity price risk in
the G-7 countries.  The stock index futures traded by the
Partnership are by law limited to futures on broadly?based
indices.  At June 30, 2008, the Partnership?s primary exposures
were to the NIKKEI 225 (Japan), CAC 40 (France), FTSE 100 (United
Kingdom), DAX (Germany), and S&P 500 (U.S.) stock indices.  The
Partnership is exposed to the risk of adverse price trends or
static markets in the U.S., European, and Pacific Rim stock
indices.  Static markets would not cause major market changes,
but would make it difficult for the Partnership to avoid
trendless price movements, resulting in numerous small losses.

Commodity.
Soft Commodities and Agriculturals.  The second largest
market exposure of the Partnership at June 30, 2008, was to
the markets that comprise these sectors.  Most of the
                          - 41 -
<page> exposure was to the coffee, sugar, cocoa, soybean oil,
and wheat markets.  Supply and demand inequalities, severe
weather disruptions, and market expectations affect price
movements in these markets.

Metals.	  At June 30, 2008, the Partnership had market
exposure to the metals sector.  The Partnership's metals
exposure was to fluctuations in the price of base metals,
such as zinc.  Economic forces, supply and demand
inequalities, geopolitical factors, and market expectations
influence price movements in these markets.  The Trading
Advisor utilizes the trading system(s) to take positions when
market opportunities develop, and Demeter anticipates that
the Trading Advisor will continue to do so.

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

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

- 42 -


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

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

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

Changes in Internal Control Over Financial Reporting
There have been no material changes during the period covered by
this quarterly report in the Partnership?s internal control over
                            - 43 -


<page> 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.

Item 4T.  CONTROLS AND PROCEDURES
Not applicable.















-	44 -
<page> PART II.  OTHER INFORMATION
Item 1A. RISK FACTORS
Information regarding risk factors appears in Item 2.
?Management?s Discussion and Analysis of Financial Condition and
Results of Operations? and Item 3. ?Quantitative and Qualitative
Disclosures about Market Risk? of this Form 10-Q.  There have been
no other material changes from the risk factors previously
referenced in the Partnership?s Report on Form 10-K for the fiscal
year ended December 31, 2007, and the Partnership?s Report on Form
10-Q for the quarter ended March 31, 2008.

Item 5.  OTHER INFORMATION
Limited Partners of the Partnership are advised that Demeter has
determined to withdraw from the Partnership effective November 30,
2008, and thereafter will commence dissolution of the Partnership
pursuant to the Partnership?s Limited Partnership Agreement.  In
connection with such withdrawal, Demeter will terminate trading
for the Partnership effective October 31, 2008, unless it becomes
necessary or is prudent to do so beforehand.  Following
termination of trading for the Partnership, all Partnership assets
will be paid interest at the rate equal to the average yield on 4-
week U.S. Treasury Bills, with your share of interest credited to
your Units.  The management and brokerage fees on any assets
remaining in the Partnership after October 31, 2008, will be
waived, given the absence of any further futures trading by the
Partnership.
- 45 -
<page> Through November 30, 2008, qualified Limited Partners may,
under certain conditions, redeem some or all of their interest in
the Partnership and use the proceeds of such redemption to
purchase an interest in another Morgan Stanley managed futures
partnership for which Demeter is the general partner (an offering
in any such managed futures partnership is by prospectus or
offering memorandum only).  Otherwise, Limited Partners may simply
redeem their interest in the Partnership and receive the proceeds
of such redemption in cash.  Whether you exchange or redeem your
Partnership Units, there will be no minimum holding period
requirement or redemption charge.  Limited Partners who do not
redeem their interest in the Partnership prior to November 30,
2008, should be aware that final distribution of any remaining
Partnership assets is anticipated to be made on or about December
15, 2008.

Mr. Michael Durbin became listed as a principal of Demeter by the
National Futures Association on June 5, 2008.

Mr. Jose Morales became listed as a principal of Demeter by the
National Futures Association on June 23, 2008.

Item 6.  EXHIBITS
31.01	Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

- 46 ?
<page>
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.





















- 47 -


<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)

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





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













- 48 -


? 6 ?