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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarter ended: June 30, 2007

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: 0-26004



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DIVERSIFIED FUTURES TRUST I

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 13-3780260                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|900 King Street, Suite 100, Rye Brook, New York                |  | 10573                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(914) 307-7000

(Registrants telephone number, including area code)

N/A

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



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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 (ad defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



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DIVERSIFIED FUTURES TRUST I

INDEX TO QUARTERLY REPORT ON FORM 10Q

JUNE 30, 2007



|                               |  |                                                                                                                                                                                                |  |     
|------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                               |  |                                                                                                                                                                                                |  | Page
|PART I  FINANCIAL INFORMATION |  | 1                                                                                                                                                                                             
|                               |  |                                                                                                                                                                                               
|Item 1.                        |  | Financial Statements                                                                                                                                                                           |  | 1   
|                               |  |                                                                                                                                                                                               
|                               |  | Diversified Futures Trust I:                                                                                                                                                                   |  | 1   
|                               |  |                                                                                                                                                                                               
|                               |  | Statements of Financial Conditionas of June 30, 2007 (Unaudited) and December 31, 2006                                                                                                         |  | 2   
|                               |  |                                                                                                                                                                                               
|                               |  | Condensed Schedules of Investmentsas of June 30, 2007 (Unaudited) and December 31, 2006                                                                                                        |  | 3   
|                               |  |                                                                                                                                                                                               
|                               |  | Statements of Operations (Unaudited)for the Periods April 1, 2007 to June 30, 2007 and April 1, 2006 to June 30, 2006and January 1, 2007 to June 30, 2007 and January 1, 2006 to June 30, 2006 |  | 4   
|                               |  |                                                                                                                                                                                               
|                               |  | Statements of Changes in Trust Capital (Unaudited)for the Periods January 1, 2007 to June 30, 2007and January 1, 2006 to June 30, 2006                                                         |  | 5   
|                               |  |                                                                                                                                                                                               
|                               |  | Notes to Financial Statements (Unaudited)                                                                                                                                                      |  | 6   
|                               |  |                                                                                                                                                                                               
|                               |  | WCM Pool LLC:                                                                                                                                                                                  |  | 14  
|                               |  |                                                                                                                                                                                               
|                               |  | Statement of Financial Condition as of June 30, 2007 (Unaudited)                                                                                                                               |  | 15  
|                               |  |                                                                                                                                                                                               
|                               |  | Condensed Schedule of Investments as of June 30, 2007 (Unaudited)                                                                                                                              |  | 16  
|                               |  |                                                                                                                                                                                               
|                               |  | Statements of Operations (Unaudited)for the Periods April 1, 2007 to June 30, 2007 and January 1, 2007 to June 30, 2007                                                                        |  | 17  
|                               |  |                                                                                                                                                                                               
|                               |  | Statement of Changes in Members Capitalfor the Period January 1, 2007 to June 30, 2007 (Unaudited)                                                                                            |  | 18  
|                               |  |                                                                                                                                                                                               
|                               |  | Notes to Financial Statements (Unaudited)                                                                                                                                                      |  | 19  
|                               |  |                                                                                                                                                                                               
|Item 2.                        |  | Managements Discussion and Analysis ofFinancial Condition and Results of Operations                                                                                                           |  | 26  
|                               |  |                                                                                                                                                                                               
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                     |  | 38  
|                               |  |                                                                                                                                                                                               
|Item 4.                        |  | Controls and Procedures                                                                                                                                                                        |  | 38  
|                               | 
|PART II  OTHER INFORMATION    |  | 38                                                                                                                                                                                            
|                               |  |                                                                                                                                                                                               
|Item 1.                        |  | Legal Proceedings                                                                                                                                                                              |  | 38  
|                               |  |                                                                                                                                                                                               
|Item 1.A.                      |  | Risk Factors                                                                                                                                                                                   |  | 38  
|                               |  |                                                                                                                                                                                               
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                    |  | 38  
|                               |  |                                                                                                                                                                                               
|Item 3.                        |  | Defaults Upon Senior Securities                                                                                                                                                                |  | 38  
|                               |  |                                                                                                                                                                                               
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                                                                                                                            |  | 39  
|                               |  |                                                                                                                                                                                               
|Item 5.                        |  | Other Information                                                                                                                                                                              |  | 39  
|                               |  |                                                                                                                                                                                               
|Item 6.                        |  | Exhibits:                                                                                                                                                                                      |  | 39  





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PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

FINANCIAL STATEMENTS TO FOLLOW]



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DIVERSIFIED FUTURES TRUST I

FINANCIAL STATEMENTS

June 30, 2007



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DIVERSIFIED FUTURES TRUST I

STATEMENTS OF FINANCIAL CONDITION

June 30, 2007 (Unaudited) and December 31, 2006



|                                                                                                                         |  |               |            |                  |   |            |  
|------------------------------------------------------------------------------------------------------------------------ |  | ------------- | ---------- | ---------------- | - | ---------- | -
|                                                                                                                         |  | June 30, 2007 |            | December 31,2006 |  
|ASSETS                                                                                                                   |  |               |            |                  |   |            |  
|Cash in commodity trading accounts                                                                                       |  | $             | 642        |                  | $ | 14,297,622 |  
|Net unrealized loss on open futures contracts                                                                            |  |               | 0          |                  |   | (4,160     | )
|Net unrealized gain on open forward contracts                                                                            |  |               | 0          |                  |   | 76,103     |  
|Redemption receivable                                                                                                    |  |               | 1,116,986  |                  |   | 0          |  
|Investment in WCM Pool LLC (100.45% and 0.00% of net asset value, respectively)                                          |  |               | 11,379,651 |                  |   | 0          |  
|                                                                                                                         |  |               |            |                  |   |            |  
|Total assets                                                                                                             |  | $             | 12,497,279 |                  | $ | 14,369,565 |  
|                                                                                                                         |  |               |            |                  |   |            |  
|LIABILITIES                                                                                                              |  |               |            |                  |   |            |  
|Redemptions payable                                                                                                      |  | $             | 1,132,998  |                  | $ | 1,330,406  |  
|Management fees payable                                                                                                  |  |               | 0          |                  |   | 23,867     |  
|Commissions payable                                                                                                      |  |               | 35,332     |                  |   | 36,168     |  
|                                                                                                                         |  |               |            |                  |   |            |  
|Total liabilities                                                                                                        |  |               | 1,168,330  |                  |   | 1,390,441  |  
|                                                                                                                         |  |               |            |                  |   |            |  
|TRUST CAPITAL                                                                                                            |  |               |            |                  |   |            |  
|Limited interests (49,644.878 and 57,632.560 interests outstanding) at June 30, 2007 and December 31, 2006,
respectively |  |               | 11,203,475 |                  |   | 12,835,254 |  
|General interests (556 and 646 interests outstanding) at June 30, 2007 and December 31, 2006, respectively               |  |               | 125,474    |                  |   | 143,870    |  
|                                                                                                                         |  |               |            |                  |   |            |  
|Total trust capital                                                                                                      |  |               | 11,328,949 |                  |   | 12,979,124 |  
|                                                                                                                         |  |               |            |                  |   |            |  
|Total liabilities and trust capital                                                                                      |  | $             | 12,497,279 |                  | $ | 14,369,565 |  
|                                                                                                                         |  |               |            |                  |   |            |  



|                                                 |  |                  |       
|------------------------------------------------ |  | ---------------- | ------
|Net Asset Value per Limited and General Interest
|June 30, 2007                                    |  | December 31,2006
|$225.67                                          |  | $                | 222.71
|                                                 |  |                  |       

See accompanying notes.



-2-



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DIVERSIFIED FUTURES TRUST I

CONDENSED SCHEDULES OF INVESTMENTS

June 30, 2007 (Unaudited) and December 31, 2006



|                                                   |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  
|-------------------------------------------------- |  | ---------------------------------------------- | - | ----------------- | ------------------------ | - | ---------------------------------------------- | ----- | -- | ------------------------ | - | -------- | -
|                                                   |  | June 30, 2007                                  |   | December 31, 2006 |                         
|                                                   |  | NetUnrealizedGain (Loss)as a % ofTrust Capital |   |                   | NetUnrealizedGain (Loss) |   | NetUnrealizedGain (Loss)as a % ofTrust Capital |       |    | NetUnrealizedGain (Loss) |  
|Futures and Forward Contracts                      |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  
|Futures contracts purchased:                       |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  
|Commodities                                        |  | 0.00                                           | % |                   | $                        | 0 |                                                | 0.37  | %  |                          | $ | 47,853   |  
|                                                   |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  
|Net unrealized gain on futures contracts purchased |  | 0.00                                           | % |                   |                          | 0 |                                                | 0.37  | %  |                          |   | 47,853   |  
|                                                   |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  
|Futures contracts sold:                            |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  
|Commodities                                        |  | 0.00                                           | % |                   |                          | 0 |                                                | (0.40 | )% |                          |   | (52,013  | )
|                                                   |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  
|Net unrealized loss on futures contracts sold      |  | 0.00                                           | % |                   |                          | 0 |                                                | (0.40 | )% |                          |   | (52,013  | )
|                                                   |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  
|Net unrealized loss on futures contracts           |  | 0.00                                           | % |                   | $                        | 0 |                                                | (0.03 | )% |                          | $ | (4,160   | )
|                                                   |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  
|Forward contracts purchased:                       |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  
|Net unrealized gain on forward contracts purchased |  | 0.00                                           | % |                   | $                        | 0 |                                                | 1.49  | %  |                          | $ | 192,679  |  
|                                                   |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  
|Forward contracts sold:                            |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  
|Net unrealized loss on forward contracts sold      |  | 0.00                                           | % |                   |                          | 0 |                                                | (0.90 | )% |                          |   | (116,576 | )
|                                                   |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  
|Net unrealized gain on forward contracts           |  | 0.00                                           | % |                   | $                        | 0 |                                                | 0.59  | %  |                          | $ | 76,103   |  
|                                                   |  |                                                |   |                   |                          |   |                                                |       |    |                          |   |          |  

See accompanying notes.



-3-



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DIVERSIFIED FUTURES TRUST I

STATEMENTS OF OPERATIONS

For the Three Months and Six Months Ended June 30, 2007 and 2006

(Unaudited)



|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|-------------------------------------------------------------------- |  | -------------------------- | --------- | - | ------------------------- | - | -------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                                     |  | Three Months EndedJune 30, |           |   | Six Months Ended June 30, |  
|                                                                     |  | 2007                       |           |   | 2006                      |   |          | 2007 |  |   | 2006     |  
|NET LOSS FROM TRUST OPERATIONS                                       |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|REVENUES                                                             |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|Realized                                                             |  | $                          | (5        | ) |                           | $ | (43,177  | )    |  | $ | 52,470   |   |  | $ | (194,796 | )
|Change in unrealized                                                 |  |                            | 0         |   |                           |   | (136,024 | )    |  |   | (71,943  | ) |  |   | 78,742   |  
|Interest income                                                      |  |                            | 145       |   |                           |   | 191,858  |      |  |   | 22,921   |   |  |   | 374,180  |  
|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|Total revenues                                                       |  |                            | 140       |   |                           |   | 12,657   |      |  |   | 3,448    |   |  |   | 258,126  |  
|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|EXPENSES                                                             |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|Brokerage commissions                                                |  |                            | 215,415   |   |                           |   | 307,973  |      |  |   | 441,216  |   |  |   | 631,923  |  
|Management fees                                                      |  |                            | 0         |   |                           |   | 78,984   |      |  |   | 0        |   |  |   | 162,453  |  
|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|Total expenses                                                       |  |                            | 215,415   |   |                           |   | 386,957  |      |  |   | 441,216  |   |  |   | 794,376  |  
|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|NET LOSS FROM TRUST OPERATIONS                                       |  |                            | (215,275  | ) |                           |   | (374,300 | )    |  |   | (437,768 | ) |  |   | (536,250 | )
|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|NET INCOME ALLOCATED FROM WCM POOL LLC:                              |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|REVENUES                                                             |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|Realized                                                             |  |                            | 1,489,813 |   |                           |   | 0        |      |  |   | 192,807  |   |  |   | 0        |  
|Change in unrealized                                                 |  |                            | 110,350   |   |                           |   | 0        |      |  |   | 339,208  |   |  |   | 0        |  
|Interest income                                                      |  |                            | 130,595   |   |                           |   | 0        |      |  |   | 254,139  |   |  |   | 0        |  
|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|Total revenues                                                       |  |                            | 1,730,758 |   |                           |   | 0        |      |  |   | 786,154  |   |  |   | 0        |  
|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|EXPENSES                                                             |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|Brokerage commissions and other transaction fees                     |  |                            | 11,563    |   |                           |   | 0        |      |  |   | 35,243   |   |  |   | 0        |  
|Management fee                                                       |  |                            | 62,692    |   |                           |   | 0        |      |  |   | 124,340  |   |  |   | 0        |  
|Incentive fee                                                        |  |                            | 80,318    |   |                           |   | 0        |      |  |   | 80,318   |   |  |   | 0        |  
|General and administrative                                           |  |                            | 5,310     |   |                           |   | 0        |      |  |   | 10,798   |   |  |   | 0        |  
|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|Total expenses                                                       |  |                            | 159,883   |   |                           |   | 0        |      |  |   | 250,699  |   |  |   | 0        |  
|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|NET INCOME ALLOCATED FROM WCM POOL LLC                               |  |                            | 1,570,875 |   |                           |   | 0        |      |  |   | 535,455  |   |  |   | 0        |  
|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|NET INCOME (LOSS)                                                    |  | $                          | 1,355,600 |   |                           | $ | (374,300 | )    |  | $ | 97,687   |   |  | $ | (536,250 | )
|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|NET INCOME (LOSS) PER WEIGHTED AVERAGE LIMITED AND GENERAL INTEREST  |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|Net income (loss) per weighted average Limited and General Interest  |  | $                          | 25.12     |   |                           | $ | (5.47    | )    |  | $ | 1.75     |   |  | $ | (7.65    | )
|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  
|Weighted average number of Limited and General Interests outstanding |  |                            | 53,966    |   |                           |   | 68,371   |      |  |   | 55,814   |   |  |   | 70,077   |  
|                                                                     |  |                            |           |   |                           |   |          |      |  |   |          |   |  |   |          |  

See accompanying notes.



-4-



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DIVERSIFIED FUTURES TRUST I

STATEMENTS OF CHANGES IN TRUST CAPITAL

For the Six Months Ended June 30, 2007 and 2006

(Unaudited)



|                                                  |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  
|------------------------------------------------- |  | ---------- | - |  | ---------------- | ---------- | - | ---------------- | - | ------- | ----- |  | - | ---------- | -
|                                                  |  | Interests  |   |  | LimitedInterests |            |   | GeneralInterests |   |         | Total | 
|Six months ended June 30, 2007                    |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  
|Trust capital at December 31, 2006                |  | 58,278.560 |   |  | $                | 12,835,254 |   |                  | $ | 143,870 |       |  | $ | 12,979,124 |  
|Net income for the six months ended June 30, 2007 |  | 0.000      |   |  |                  | 97,147     |   |                  |   | 540     |       |  |   | 97,687     |  
|Redemptions                                       |  | (8,077.682 | ) |  |                  | (1,728,926 | ) |                  |   | (18,936 | )     |  |   | (1,747,862 | )
|                                                  |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  
|Trust capital at June 30, 2007                    |  | 50,200.878 |   |  | $                | 11,203,475 |   |                  | $ | 125,474 |       |  | $ | 11,328,949 |  
|                                                  |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  
|Six months ended June 30, 2006                    |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  
|Trust capital at December 31, 2005                |  | 72,350.736 |   |  | $                | 16,635,191 |   |                  | $ | 177,537 |       |  | $ | 16,812,728 |  
|Net loss for the six months ended June 30, 2006   |  | 0.000      |   |  |                  | (530,588   | ) |                  |   | (5,662  | )     |  |   | (536,250   | )
|Redemptions                                       |  | (5,733.186 | ) |  |                  | (1,298,453 | ) |                  |   | (8,285  | )     |  |   | (1,306,738 | )
|                                                  |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  
|Trust capital at June 30, 2006                    |  | 66,617.550 |   |  | $                | 14,806,150 |   |                  | $ | 163,590 |       |  | $ | 14,969,740 |  
|                                                  |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  

See accompanying notes.



-5-



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DIVERSIFIED FUTURES TRUST I

NOTES TO FINANCIAL STATEMENTS

(Unaudited)



|Note 1. | ORGANIZATION
|------- | ------------



| | A. | General Description of the Trust
| | -- | --------------------------------

Diversified Futures
Trust I (the Trust) was organized under the Delaware Statutory Trust Act on May 18, 1994 and will continue until December 31, 2020 unless terminated sooner under the provisions of the Second Amended and Restated Declaration of
Trust and Trust Agreement (the Trust Agreement). The Trust was formed to engage in the speculative trading of commodity futures and forward contracts. The Trusts trustee is Wilmington Trust Company.

Effective January 1, 2007, Preferred Investment Solutions Corp., the Managing Owner (Preferred or Managing Owner),
terminated the Trading Advisor Agreements with Aspect Capital Limited and Graham Capital Management, L.P. Effective January 1, 2007, the Trust contributed its net assets to WCM Pool LLC (the Company) and received a Voting Membership
Interest in the Company. The Company was formed to function as an aggregate trading vehicle. At June 30, 2007, the sole members of the Company are the Trust, Diversified Futures Fund L.P. (DFF), Futures Strategic Trust
(FST) and Kenmar Global Trust (KGT). Preferred is the General Partner or Managing Owner of DFF, FST and KGT and has been delegated administrative authority over the operations of the Company. The Company engages in the
speculative trading of futures contracts. The financial statements of the Company, including the condensed schedule of investments, are included in Section II of these financial statements and should be read in conjunction with the Trusts
financial statements.



| | B. | Regulation
| | -- | ----------

As a registrant with the Securities and
Exchange Commission, the Trust is subject to the regulatory requirements under the Securities Act of 1933 and the Securities Exchange Act of 1934. As a commodity pool, the Trust is subject to the regulations of the Commodity Futures Trading
Commission, an agency of the United States (U.S.) government which regulates most aspects of the commodity futures industry; rules of the National Futures Association, an industry self-regulatory organization; and the requirements of the various
commodity exchanges where the Trust executes transactions. Additionally, the Trust is subject to the requirements of the futures commission merchants (brokers) and interbank market makers through which the Company trades.



| | C. | The Offering
| | -- | ------------

On January 5, 1995, the Trust
completed its initial offering having raised $25,262,800 from the sale of 249,628 limited interests (Limited Interests) and 3,000 general interests (General Interests) (collectively, the Interests). Additional
interests were offered and sold monthly at the then current net asset value (NAV) per Interest until the continuous offering period expired on August 31, 1996. Additional contributions raised during the continuous offering period
resulted in additional proceeds to the Trust of $41,129,100 from the sale of 299,640 Limited Interests and 1,628 General Interests. General Interests were sold exclusively to the Managing Owner.

The Managing Owner is required to maintain at least a 1% interest in the Trust so long as it is acting as the Managing Owner.



-6-



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DIVERSIFIED FUTURES TRUST I

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)



|Note 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|------- | ------------------------------------------



| | A. | Basis of Accounting
| | -- | -------------------

The statement of financial
condition, including the condensed schedule of investments, as of June 30, 2007, and the statements of operations for the three months and six months ended June 30, 2007 and 2006 and the statements of changes in trust capital for the six
months ended June 30, 2007 and 2006, are unaudited. In the opinion of Preferred, the financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to state fairly the financial position of the Trust as
of June 30, 2007 and the results of its operations for the three months and six ended June 30, 2007 and 2006. The operating results for the interim periods may not be indicative of the results expected for the full year.

The financial statements of the Trust are prepared in accordance with accounting principles generally accepted in the United States of America. Such
principles require the Managing Owner to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Commodity futures and forward
transactions are reflected in the accompanying statements of financial condition on trade date. Net unrealized gain or loss on open contracts (the difference between contract trade price and market price) is reflected in the statement of financial
condition in accordance with Financial Accounting Standards Board Interpretation No. 39  Offsetting of Amounts Related to Certain Contracts. The market value of futures (exchange-traded) contracts is based upon the closing
quotation on the various futures exchanges on which the contract is traded. The fair value of swap and forward (non-exchange traded) contracts is extrapolated on a forward basis from the spot prices. Any change in net unrealized gain or loss during
the current period is reported in the statement of operations. Realized gains and losses on commodity transactions are recognized in the period in which the contracts are closed.

The weighted average number of Limited and General Interests outstanding was computed for purposes of disclosing net income (loss) per weighted average
Limited and General Interest. The weighted average Limited and General Interests are equal to the number of interests outstanding at period end, adjusted proportionately for interests redeemed based on their respective time outstanding during such
year.

The Trust has elected not to provide a Statement of Cash Flows as permitted by Statement of Financial Accounting Standards
(SFAS) No. 102, Statement of Cash Flows  Exemption of Certain Enterprises and Classification of Cash Flows from Certain Securities Acquired for Resale.

Consistent with standard business practices in the normal course of business, the Trust has provided general indemnifications to the Managing Owner, its
Trading Advisor and others when they act, in good faith, in the best interests of the Trust. The Trust is unable to develop an estimate of the maximum potential amount of future payments that could potentially result from any hypothetical future
claim, but expects the risk of having to make any payments under these general business indemnifications to be remote.



-7-



---

DIVERSIFIED FUTURES TRUST I

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)



|Note 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|------- | ------------------------------------------------------



| | A. | Basis of Accounting (Continued)
| | -- | -------------------------------

In July 2006, the
Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109, which clarifies the
accounting for uncertainty in tax positions. FIN 48 requires that the Trust recognize in its financial statements, the impact of a tax position if that position is more likely than not of being sustained on audit, based on the technical merits of
the position. The provisions of FIN 48 were effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. Preferred as
Managing Owner of the Trust evaluated the impact of adopting FIN 48 on the Trusts financial statements. In Preferreds opinion, the adoption of FIN 48 had no material impact on the Trust, as the Trusts tax position is based on
established tax precedence for the tax treatment of investment partnerships as flow through tax entities.

In September 2006, the FASB
issued SFAS No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of SFAS No. 157 are effective for
fiscal years beginning after November 15, 2007. The Managing Owner is currently evaluating the impact of adopting SFAS No. 157 on the Trusts financial statements. At this time, the impact to the Trusts financial statements has
not been determined.

Cash represents amounts deposited with clearing brokers, a portion of which are restricted for purposes of meeting
margin requirements, which typically range from 0% to 35% of the notional amounts of the derivatives traded. The Trust receives interest on all cash balances held by the clearing brokers at prevailing rates.



| | B. | Income Taxes
| | -- | ------------

The Trust is treated as a partnership for
Federal income tax purposes. As such, the Trust is not required to provide for, or pay, any Federal or state income taxes. Income tax attributes that arise from its operations are passed directly to the individual Interest holders. The Trust may be
subject to other state and local taxes in jurisdictions in which it operates.



| | C. | Investment in WCM Pool LLC
| | -- | --------------------------

The investment in the Company
is reported in the Trusts statement of financial condition at the net asset value as reported by the Company. The Trust records its proportionate share of the Companys income or loss in the statement of operations. Valuation of futures
contracts by the Company is discussed in the notes to the Companys financial statements included in Section II of this report.



-8-



---

DIVERSIFIED FUTURES TRUST I

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)



|Note 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|------- | ------------------------------------------------------



| | D. | Profit and Loss Allocation, Distributions and Redemptions
| | -- | ---------------------------------------------------------

Net income or loss for both financial and tax reporting purposes is allocated monthly to all interest holders on a pro rata basis on each interest holders number of interests outstanding during the month.

Distributions (other than redemptions of interests) are made at the sole discretion of the Managing Owner on a pro rata basis in accordance with the
respective capital accounts of the interest holders. The Managing Owner has not and does not intend to make any distributions.

The Trust
Agreement provides that an Interest holder may redeem its Interests as of the last business day of any calendar quarter at the then current NAV per interest.



| | E. | Foreign currency transaction
| | -- | ----------------------------

The Trusts functional
currency is the U.S. dollar; however, it transacts business in currencies other than the U.S. dollar. Assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollars at the rates in effect at the date of
the statement of financial condition. Income and expense items denominated in currencies other than U.S. dollars are translated into U.S. dollars at the rates in effect during the period. Gains and losses resulting from the translation to U.S.
dollars are reported in operations currently.



|Note 3. | FEES
|------- | ----



| | A. | Organizational and General and Administrative Costs
| | -- | ---------------------------------------------------

Preferred pays all administrative costs for services it performs for the Trust. Administrative costs include, but are not limited to, those discussed in Note 4 below.



| | B. | Management and Incentive Fees
| | -- | -----------------------------

Pursuant to the advisory
agreements, Appleton, Graham and Aspect were paid a monthly management fee equal to 1/6 of 1% (a 2% annual rate) and an incentive fee of 20% of the New High Net Trading Profits on the portion of Trust assets allocated to each. Effective
January 1, 2007, the Trust pays its pro-rata share of management and incentive fees as disclosed in Note 2(c) through its investment in the Company.



| | C. | Commissions
| | -- | -----------

The Managing Owner, on behalf of the Trust,
entered into a brokerage agreement with Prudential Financial Derivatives LLC (PFD) to act as commodity broker for the Trust. Under the terms of the agreement, the Trust pays the Managing Owner commissions at a flat rate of approximately
0.65 of 1% per month (7.75% per annum) of the Trusts NAV as of the first day of each month. Under the agreement, PFDs execution costs (including floor brokerage expenses, clearing and exchange fees) will be paid out of the total
fees paid by the Trust to the Managing Owner.



-9-



---

DIVERSIFIED FUTURES TRUST I

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)



|Note 4. | RELATED PARTIES
|------- | ---------------

The Managing Owner or third
parties engaged by the Managing Owner perform services for the Trust which include, but are not limited to: brokerage services; accounting and financial management; registrar, transfer and assignment function; investor communications; printing and
other administrative services. Except for costs related to brokerage services, Preferred pays all the costs of these services as well as the Trusts routine operational, administrative, legal and auditing costs.

The costs charged to the Trust for brokerage services for the six months ended June 30, 2007 and 2006 were $476,459 and $631,923, respectively, and
for the three months ended June 30, 2007 and 2006 were $226,978 and $307,973, respectively.



|Note 5. | INVESTMENT IN WCM POOL LLC
|------- | --------------------------

Effective
January 1, 2007, the Trust invested its assets in WCM Pool LLC. The Trusts investment in WCM Pool LLC represents approximately 53.16% of the net asset value of the Company at June 30, 2007. The investment in the Company is subject to
the Organization Agreement of the Company.

Summarized information for the Trusts investment in the Company is as follows:



|             |  |                                  |   |             |   |            |  |            |         |  |                              |            |   |  |   |           
|------------ |  | -------------------------------- | - | ----------- | - | ---------- |  | ---------- | ------- |  | ---------------------------- | ---------- | - |  | - | ----------
|             |  | Net Asset ValueDecember 31, 2006 |   | Investments |   | Gain       |  | Redemption |         |  | Net Asset ValueJune 30, 2007
|WCM Pool LLC |  | $                                | 0 |             | $ | 12,966,087 |  | $          | 535,455 |  | $                            | (2,121,891 | ) |  | $ | 11,379,651
|             |  |                                  |   |             |   |            |  |            |         |  |                              |            |   |  |   |           

The Trust may make additional contributions to, or redemptions from, the Company on a monthly
basis.



|Note 6. | DERIVATIVE INSTRUMENTS AND ASSOCIATED RISKS
|------- | -------------------------------------------

The
Trusts investment in the Company is subject to the market and credit risks of the futures contracts, options on futures contracts, forward currency contracts and other financial instruments held or sold short by the Company. The Trust bears
the risk of loss only to the extent of the market value of its investments and, in certain specific circumstances, distributions and redemptions received.

The Trust has cash on deposit with financial institutions. In the event of a financial institutions insolvency, recovery of cash on deposit may be limited to account insurance or other protection afforded such
deposits. The Managing Owner has established procedures to actively monitor market risk and minimize credit risk, although there can be no assurance that it will, in fact, succeed in doing so. The unitholders bear the risk of loss only to the extent
of the market value of their respective investments and, in certain specific circumstances, distributions and redemptions received.



-10-



---

DIVERSIFIED FUTURES TRUST I

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)



|Note 6. | DERIVATIVE INSTRUMENTS AND ASSOCIATED RISKS (CONTINUED)
|------- | -------------------------------------------------------

The Trusts futures commission merchant in accepting orders for the purchase or sale of domestic futures contracts, is required by Commodity Futures Trading Commission (CFTC) regulations to separately account for and
segregate as belonging to the Trust all assets of the Trust relating to domestic futures trading and is not to commingle such assets with its other assets. At June 30, 2007 and December 31, 2006, such segregated assets totaled $620 and
$8,808,029, respectively. Part 30.7 of the CFTC regulations also requires the Trusts futures commission merchant to secure assets of the Trust related to foreign futures trading which totaled $407 and $993,947 at June 30, 2007 and
December 31, 2006, respectively. There are no segregation requirements for assets related to forward trading.



-11-



---

DIVERSIFIED FUTURES TRUST I

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)



|Note 7. | FINANCIAL HIGHLIGHTS
|------- | --------------------

The following information
presents per interest performance data and other supplemental financial data for the three months and six months ended June 30, 2007 and 2006. This information has been derived from information presented in the financial statements.



|                                                                                         |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|---------------------------------------------------------------------------------------- |  | --------------------------- | ------ | -- | ------------------------- | - | ------ | ----------- |  | - | ----------- | -- |  | - | ------ | --
|                                                                                         |  | Three Months Ended June 30, |        |    | Six Months Ended June 30, |  
|                                                                                         |  | 2007                        |        |    | 2006                      |   |        | 2007        |  |   | 2006        |   
|                                                                                         |  | (Unaudited)                 |        |    | (Unaudited)               |   |        | (Unaudited) |  |   | (Unaudited) |   
|Per Interest Performance                                                                 |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|(for an interest outstanding throughout the entire period)                               |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|                                                                                         |  |                             |        |   
|Net asset value, beginning of period                                                     |  | $                           | 201.12 |    |                           | $ | 230.14 |             |  | $ | 222.71      |    |  | $ | 232.38 |   
|                                                                                         |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|Net realized and change in net unrealized gain (loss) on commodity transactions (1), (5) |  |                             | 29.08  |    |                           |   | (2.58  | )           |  |   | 10.40       |    |  |   | (1.67  | ) 
|Interest income (1), (5)                                                                 |  |                             | 2.42   |    |                           |   | 2.81   |             |  |   | 4.96        |    |  |   | 5.34   |   
|Expenses (1), (5)                                                                        |  |                             | (6.95  | )  |                           |   | (5.66  | )           |  |   | (12.40      | )  |  |   | (11.34 | ) 
|                                                                                         |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|Net increase (decrease) for the period                                                   |  |                             | 24.55  |    |                           |   | (5.43  | )           |  |   | 2.96        |    |  |   | (7.67  | ) 
|                                                                                         |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|Net asset value, end of period                                                           |  | $                           | 225.67 |    |                           | $ | 224.71 |             |  | $ | 225.67      |    |  | $ | 224.71 |   
|                                                                                         |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|Total Return (3)                                                                         |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|Total return before incentive fees                                                       |  |                             | 12.90  | %  |                           |   | (2.36  | )%          |  |   | 1.99        | %  |  |   | (3.30  | )%
|Incentive fees                                                                           |  |                             | (0.69  | )% |                           |   | 0.00   | %           |  |   | (0.66       | )% |  |   | 0.00   | % 
|                                                                                         |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|Total return after incentive fees                                                        |  |                             | 12.21  | %  |                           |   | (2.36  | )%          |  |   | 1.33        | %  |  |   | (3.30  | )%
|                                                                                         |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|Supplemental Data                                                                        |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|                                                                                         |  |                             |        |   
|Ratios to average net asset value: (5)                                                   |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|Net investment loss before incentive fees (2),
(4)                                       |  |                             | (5.65  | )% |                           |   | (4.98  | )%          |  |   | (5.50       | )% |  |   | (5.21  | )%
|Incentive fees (3)                                                                       |  |                             | (0.69  | )% |                           |   | 0.00   | %           |  |   | (0.66       | )% |  |   | 0.00   | % 
|Net investment loss after incentive fees                                                 |  |                             | (6.34  | )% |                           |   | (4.98  | )%          |  |   | (6.16       | )% |  |   | (5.21  | )%
|                                                                                         |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|Interest income (4)                                                                      |  |                             | 4.50   | %  |                           |   | 4.90   | %           |  |   | 4.56        | %  |  |   | 4.64   | % 
|                                                                                         |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|Incentive fees (3)                                                                       |  |                             | 0.69   |    |                           |   | 0.00   |             |  |   | 0.66        | %  |  |   | 0.00   | % 
|Other expenses (4)                                                                       |  |                             | 10.15  | %  |                           |   | 9.88   | %           |  |   | 10.06       | %  |  |   | 9.86   | % 
|                                                                                         |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   
|Total net expenses                                                                       |  |                             | 10.84  | %  |                           |   | 9.88   | %           |  |   | 10.72       | %  |  |   | 9.86   | % 
|                                                                                         |  |                             |        |    |                           |   |        |             |  |   |             |    |  |   |        |   

Total returns are calculated based on the change in value of an interest during the period. An
individual interestholders total returns and ratios may vary from the above total returns and ratios based on the timing of redemptions.

---

|(1) | Interest income per interest and expenses per interest are calculated by dividing
interest income and expenses by the weighted average number of interests outstanding during the period. Net realized and change in net unrealized gain (loss) on commodity transactions is a balancing amount necessary to reconcile the change in net
asset value per interest with the other per interest information.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents interest income less total expenses (exclusive of incentive fees).
|--- | -----------------------------------------------------------------------------

|(3) | Not annualized.
|--- | ---------------

|(4) | Annualized.
|--- | -----------

|(5) | Includes the Trusts proportionate share of income and expenses of WCM Pool
LLC for the three months and six months ended June 30, 2007.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------



-12-



---

---

SECTION II



---



---

WCM POOL LLC

FINANCIAL STATEMENTS

June 30, 2007



---

WCM POOL LLC

STATEMENT OF FINANCIAL CONDITION

June 30, 2007 (Unaudited)



|                                         |  |   |           
|---------------------------------------- |  | - | ----------
|ASSETS                                   |  |   |           
|Equity in broker trading accounts        |  |   |           
|Cash in commodity trading accounts       |  | $ | 22,780,075
|Interest receivable                      |  |   | 81,952    
|Net unrealized gain on open contracts    |  |   | 539,361   
|                                         |  |   |           
|Total assets                             |  | $ | 23,401,388
|                                         |  |   |           
|LIABILITIES                              |  |   |           
|Accrued expenses                         |  | $ | 17,234    
|Commissions payable                      |  |   | 3,529     
|Management fee payable                   |  |   | 38,933    
|Incentive fee payable                    |  |   | 238,634   
|Redemptions payable                      |  |   | 1,698,268 
|                                         |  |   |           
|Total liabilities                        |  |   | 1,996,598 
|                                         |  |   |           
|MEMBERS CAPITAL (Net Asset Value)       |  |   |           
|Member DFF LP                            |  |   | 3,305,453 
|Member DFT I                             |  |   | 11,379,651
|Member KGT                               |  |   | 2,013,915 
|Member FST                               |  |   | 4,705,771 
|                                         |  |   |           
|Total members capital (Net Asset Value) |  |   | 21,404,790
|                                         |  |   |           
|Total liabilities and members capital   |  | $ | 23,401,388
|                                         |  |   |           

See accompanying notes.



-15-



---

WCM POOL LLC

CONDENSED SCHEDULE OF INVESTMENTS

June 30, 2007 (Unaudited)



|                                                   |  |                                                     |    |  |                          |          |  
|-------------------------------------------------- |  | --------------------------------------------------- | -- |  | ------------------------ | -------- | -
|                                                   |  | Net UnrealizedGain (Loss) as a % ofMembers Capital |    |  | NetUnrealizedGain (Loss) |         
|Futures contracts purchased:                       |  |                                                     |    |  |                          |          |  
|Commodities                                        |  | (0.49                                               | )% |  | $                        | (104,567 | )
|Currencies                                         |  | 0.90                                                | %  |  |                          | 193,527  |  
|Stock indices                                      |  | 0.36                                                | %  |  |                          | 76,716   |  
|                                                   |  |                                                     |    |  |                          |          |  
|Net unrealized gain on futures contracts purchased |  | 0.77                                                | %  |  |                          | 165,676  |  
|                                                   |  |                                                     |    |  |                          |          |  
|Futures contracts sold:                            |  |                                                     |    |  |                          |          |  
|Commodities                                        |  | (0.07                                               | )% |  |                          | (15,964  | )
|Currencies                                         |  | 0.53                                                | %  |  |                          | 114,070  |  
|Interest rates                                     |  | 1.29                                                | %  |  |                          | 275,579  |  
|                                                   |  |                                                     |    |  |                          |          |  
|Net unrealized gain on futures contracts sold      |  | 1.75                                                | %  |  |                          | 373,685  |  
|                                                   |  |                                                     |    |  |                          |          |  
|Net unrealized gain on futures contracts           |  | 2.52                                                | %  |  | $                        | 539,361  |  
|                                                   |  |                                                     |    |  |                          |          |  

See accompanying notes.



-16-



---

WCM POOL LLC

STATEMENTS OF OPERATIONS

For the Three Months and Six Months Ended June 30, 2007

(Unaudited)



|                      |  |                                 |           |                               |   |          
|--------------------- |  | ------------------------------- | --------- | ----------------------------- | - | ---------
|                      |  | Three Months EndedJune 30, 2007 |           | Six Months EndedJune 30, 2007
|REVENUES              |  |                                 |           |                               |   |          
|Realized              |  | $                               | 2,746,110 |                               | $ | 877,449  
|Change in unrealized  |  |                                 | 206,110   |                               |   | 539,361  
|Interest income       |  |                                 | 240,884   |                               |   | 418,310  
|                      |  |                                 |           |                               |   |          
|Total revenues        |  |                                 | 3,193,104 |                               |   | 1,835,120
|                      |  |                                 |           |                               |   |          
|EXPENSES              |  |                                 |           |                               |   |          
|Brokerage commissions |  |                                 | 21,329    |                               |   | 55,311   
|Management fee        |  |                                 | 115,641   |                               |   | 204,152  
|Incentive fee         |  |                                 | 238,634   |                               |   | 238,634  
|Operating expenses    |  |                                 | 9,793     |                               |   | 17,673   
|                      |  |                                 |           |                               |   |          
|Total expenses        |  |                                 | 385,397   |                               |   | 515,770  
|                      |  |                                 |           |                               |   |          
|NET INCOME            |  | $                               | 2,807,707 |                               | $ | 1,319,350
|                      |  |                                 |           |                               |   |          

See accompanying notes.



-17-



---

WCM POOL LLC

STATEMENT OF CHANGES IN MEMBERS CAPITAL (NET ASSET VALUE)

For the Six Months Ended June 30, 2007

(Unaudited)



|                                                  |  |                  |           |   |              |   |            |           |  |   |           |   |  |       |           |   |  |   |            |  
|------------------------------------------------- |  | ---------------- | --------- | - | ------------ | - | ---------- | --------- |  | - | --------- | - |  | ----- | --------- | - |  | - | ---------- | -
|                                                  |  | Members Capital |          
|                                                  |  | MemberDFF LP     |           |   | Member DFT I |   |            | MemberKGT |  |   | MemberFST |   |  | Total |          
|Six months ended June 30, 2007                    |  |                  |           |   |              |   |            |           |  |   |           |   |  |       |           |   |  |   |            |  
|Balances at January 1, 2007                       |  | $                | 0         |   |              | $ | 0          |           |  | $ | 0         |   |  | $     | 0         |   |  | $ | 0          |  
|Additions                                         |  |                  | 3,636,164 |   |              |   | 12,966,087 |           |  |   | 2,143,975 |   |  |       | 5,002,950 |   |  |   | 23,749,176 |  
|Net income for the six months ended June 30, 2007 |  |                  | 153,007   |   |              |   | 535,455    |           |  |   | 97,801    |   |  |       | 533,087   |   |  |   | 1,319,350  |  
|Redemptions                                       |  |                  | (483,718  | ) |              |   | (2,121,891 | )         |  |   | (227,861  | ) |  |       | (830,266  | ) |  |   | (3,663,736 | )
|                                                  |  |                  |           |   |              |   |            |           |  |   |           |   |  |       |           |   |  |   |            |  
|Balances at June 30, 2007                         |  | $                | 3,305,453 |   |              | $ | 11,379,651 |           |  | $ | 2,013,915 |   |  | $     | 4,705,771 |   |  | $ | 21,404,790 |  
|                                                  |  |                  |           |   |              |   |            |           |  |   |           |   |  |       |           |   |  |   |            |  

See accompanying notes.



-18-



---

WCM POOL LLC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)



|Note 1. | ORGANIZATION
|------- | ------------



| | A. | General Description of the Company
| | -- | ----------------------------------

WCM Pool LLC (the
Company) is a limited liability company organized under the laws of Delaware on November 20, 2006 and commenced operations on January 1, 2007. The Company will terminate on December 31, 2056 unless terminated sooner under
the provisions of the Organization Agreement. The Company was formed to engage in the speculative trading of a diversified portfolio of futures contracts, options on futures contracts and forward currency contracts and may, from time to time, engage
in cash and spot transactions. Preferred Investment Solutions Corp. (Preferred) is the Managing Member of the Company. The Company currently consists of four members: Diversified Futures Fund L.P. (Member DFF LP), Diversified
Futures Trust I (Member DFT I), Futures Strategic Trust (Member FST) and Kenmar Global Trust (Member KGT) (collectively, the Members). Preferred is also the Managing Owner or General Partner of each of
the Members. Upon making the initial capital contribution, each Member received Voting Membership Interests.

The Company is a Member
managed limited liability company that is not registered in any capacity with, or subject directly to regulation by the Commodity Futures Trading Commission or the United States Securities and Exchange Commission.



| | B. | The Trading Advisor
| | -- | -------------------

The Company entered into an advisory
agreement with Winton Capital Management Limited (the Trading Advisor) to make the trading decisions for the Company. The Trading Advisor manages approximately 100% of the assets of the Company pursuant to its Diversified Program
Portfolio.



|Note 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|------- | ------------------------------------------



| | A. | Basis of Accounting
| | -- | -------------------

The statement of financial
condition, including the condensed schedule of investments, as of June 30, 2007 and the statements of operations for the three months and six months ended June 30, 2007, and the statement of changes in members capital (net asset
value) for the six months ended June 30, 2007, are unaudited. In the opinion of Preferred, such financial statements reflect all adjustments, which were of a normal and recurring nature, necessary for a fair presentation of financial position
as of June 30, 2007, and the results of operations for the three months and six months ended June 30, 2007. The operating results for these interim periods may not be indicative of the results expected for a full year.

The financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America, which
require the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.



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WCM POOL LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)



|Note 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|------- | ------------------------------------------------------



| | A. | Basis of Accounting (Continued)
| | -- | -------------------------------

Commodity futures and
foreign exchange transactions are reflected in the accompanying statement of financial condition on the trade date. Net unrealized gain or loss on open contracts (the difference between contract trade price and market price) is reflected in the
financial statements in accordance with Financial Accounting Standards Board Interpretation No. 39  Offsetting of Amounts Related to Certain Contracts. The market value of futures (exchange-traded) contracts is based upon the
closing quotation on the various futures exchanges on which the contract is traded. The values which will be used by the Company for open forward positions will be provided by its administrator, who obtains market quotes from data vendors and third
parties. Any change in net unrealized gain or loss during the current period is reported in the statement of operations. Realized gains and losses on transactions are recognized in the period in which the contracts are closed. Brokerage commissions
include other trading fees and are charged to expense when incurred.

The Company has elected not to provide a Statement of Cash Flows as
permitted by Statement of Financial Accounting Standards (SFAS) No. 102, Statement of Cash Flows  Exemption of Certain Enterprises and Classification of Cash Flows from Certain Securities Acquired for Resale.

Consistent with standard business practices in the normal course of business, the Company has provided general indemnifications to its
Trading Advisor and others when they act, in good faith, in the best interests of the Company. The Company is unable to develop an estimate of the maximum potential amount of future payments that could potentially result from any hypothetical future
claim, but expects the risk of having to make any payments under these general business indemnifications to be remote.

In July 2006, the
Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109 (FIN 48), which clarifies the
accounting for uncertainty in tax positions. FIN 48 requires that the Company recognize in its financial statements, the impact of a tax position if that position is more likely than not of being sustained on audit, based on the technical merits of
the position. The provisions of FIN 48 were effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. Preferred as
Managing Owner of the Company evaluated the impact of adopting FIN 48 on the Companys financial statements. In Preferreds opinion, the adoption of FIN 48 had no material impact on the Company, as the Companys tax position is based
on established tax precedence for the tax treatment of investment partnerships as flow through tax entities.



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WCM POOL LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)



|Note  2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|-------- | ------------------------------------------------------



| | A. | Basis of Accounting (Continued)
| | -- | -------------------------------

In September 2006, the
FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of SFAS No. 157 are effective
for fiscal years beginning after November 15, 2007. The Managing Owner is currently evaluating the impact of adopting SFAS No. 157 on the Companys financial statements. At this time, the impact to the Companys financial
statements has not been determined.

Cash represents amounts deposited with clearing brokers, a portion of which are restricted for
purposes of meeting margin requirements, which typically range from 0% to 35% of the notional amounts of the derivatives traded. The Company receives interest at prevailing interest rates on all cash balances held by the clearing brokers.



| | B. | Income Taxes
| | -- | ------------

The Company is treated as a partnership for
Federal income tax purposes. As such, the Company is not required to provide for, or pay, any Federal or state income taxes. Income tax attributes that arise from its operations are passed directly to the Members. The Company may be subject to other
state and local taxes in jurisdictions in which it operates.



| | C. | Capital Accounts
| | -- | ----------------

The Company accounts for
subscriptions, allocations and redemptions on a per member capital account basis.

The Company allocates profits and losses, prior to
calculation of the incentive fee, for both financial and tax reporting purposes to its Members monthly on a pro rata basis based on each Members pro rata capital in the Company during the month. Each Member is then charged with the applicable
incentive fee. Distributions (other than redemptions of capital) may be made at the sole discretion of the Members on a pro rata basis in accordance with the Members respective capital balances. The Company has not and does not presently
intend to make any distributions.



| | D. | Foreign Currency Transactions
| | -- | -----------------------------

The Companys
functional currency is the U.S. dollar; however, it transacts business in currencies other than the U.S. dollar. Assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollars at the rates in effect at
the date of the statement of financial condition. Income and expense items denominated in currencies other than U.S. dollars are translated into U.S. dollars at the rates in effect during the period. Gains and losses resulting from the translation
to U.S. dollars are reported in operations currently.



|Note  3. | FEES
|-------- | ----



| | A. | Operating Expenses
| | -- | ------------------

Operating expenses of the Company are
paid for by the Company.



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WCM POOL LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)



|Note  3. | FEES (CONTINUED)
|-------- | ----------------



| | B. | Management and Incentive Fees
| | -- | -----------------------------

The Company pays the
Trading Advisor a management fee at an annual rate of 2% of the Companys Net Assets determined as of the close of business each month. For purposes of determining the management fee, any distributions, redemptions or reallocation of assets
made as of the last day of the month shall be added back to the assets and there shall be no reduction for (i) the management fees calculated or (ii) any accrued but unpaid incentive fees due the Trading Advisor.

Additionally, the Members of the Company pay the Trading Advisor a quarterly incentive fee of 20% (the Incentive Fee) of New High Net
Trading Profits (as defined in the Advisory Agreement). For the three and six months ended June 30, 2007, the Trading Advisor earned incentive fees of $238,634 and $238,634, respectively, of which $238,634 remains payable at June 30,
2007.



|Note  4. | INCOME TAXES
|-------- | ------------

There have been no differences
between the tax basis and book basis of Members capital since inception of the Company.



|Note  5. | DEPOSITS WITH COMMODITY BROKER
|-------- | ------------------------------

The Company
deposits funds with a commodity broker subject to CFTC regulations and various exchange and commodity broker requirements. Margin requirements are satisfied by the deposit of cash with such commodity broker. The Company earns interest income on
assets deposited with the commodity broker.



|Note  6. | SUBSCRIPTIONS, DISTRIBUTIONS AND REDEMPTIONS
|-------- | --------------------------------------------

Investments in the Company are made subject to the terms of the Organization Agreement.

The Company is not required to make
distributions, but could do so at the discretion of the Members. A Member can request and receive redemption of capital, subject to the terms in the Organization Agreement.



|Note  7. | DERIVATIVE INSTRUMENTS AND ASSOCIATED RISKS
|-------- | -------------------------------------------

The
Company is exposed to various types of risks associated with the derivative instruments and related markets in which it invests. These risks include, but are not limited to, risk of loss from fluctuations in the value of derivative instruments held
(market risk) and the inability of counterparties to perform under the terms of the Companys investment activities (credit risk).



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WCM POOL LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)



|Note  7. | DERIVATIVE INSTRUMENTS AND ASSOCIATED RISKS (CONTINUED)
|-------- | -------------------------------------------------------

Market Risk

Trading in futures and forward contracts (including foreign exchange) involves entering into contractual
commitments to purchase or sell a particular commodity at a specified date and price. The gross or face amount of the contracts, which is typically many times that of the Companys net assets being traded, significantly exceeds the
Companys future cash requirements since the Company intends to close out its open positions prior to settlement. As a result, the Company is generally subject only to the risk of loss arising from the change in the value of the contracts. As
such, the Company considers the fair value of its derivative instruments to be the net unrealized gain or loss on the contracts. The market risk associated with the Companys commitments to purchase commodities is limited to the
gross or face amount of the contract held. However, when the Company enters into a contractual commitment to sell commodities, it must make delivery of the underlying commodity at the contract price and then repurchase the contract at prevailing
market prices or settle in cash. Since the repurchase price to which a commodity can rise is unlimited, entering into commitments to sell commodities exposes the Company to unlimited risk.

Market risk is influenced by a wide variety of factors, including government programs and policies, political and economic events, the level and
volatility of interest rates, foreign currency exchange rates, the diversification effect among the derivative instruments the Company holds and the liquidity and inherent volatility of the markets in which the Company trades.

Credit Risk

When entering into
futures or forward contracts, the Company is exposed to credit risk that the counterparty to the contract will not meet its obligations. The counterparty for futures contracts traded on United States and most foreign futures exchanges is the
clearinghouse associated with the particular exchange. In general, a clearinghouse is backed by its corporate members who are required to share any financial burden resulting from the non-performance by one of their members and, as such, should
significantly reduce this credit risk. In cases where the clearinghouse is not backed by the clearing members (i.e., some foreign exchanges), it is normally backed by a consortium of banks or other financial institutions. On the other hand, there is
concentration risk on forward transactions entered into by the Company, as the Companys forward broker is the sole counterparty. The Company has entered into a master netting agreement with its forward broker and, as a result, when applicable,
presents unrealized gains and losses on open forward positions as a net amount in the statements of financial condition. The amount at risk associated with counterparty non-performance of all of the Companys contracts is the net unrealized
gain included in the statement of financial condition; however, counterparty non-performance on only certain of the Companys contracts may result in greater loss than non-performance on all of the Companys contracts. There can be no
assurance that any counterparty, clearing member or clearinghouse will meet its obligations to the Company.



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WCM POOL LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)



|Note  7. | DERIVATIVE INSTRUMENTS AND ASSOCIATED RISKS (CONTINUED)
|-------- | -------------------------------------------------------

Credit Risk (Continued)

Preferred attempts to minimize both credit and market risks by requiring the Company and its
Trading Advisor to abide by various trading limitations and policies. Preferred monitors compliance with these trading limitations and policies, which include, but are not limited to, executing and clearing all trades with creditworthy
counterparties; limiting the amount of margin or premium required for any one commodity or all commodities combined; and generally limiting transactions to contracts which are traded in sufficient volume to permit the taking and liquidating of
positions. Additionally, pursuant to the Advisory Agreement among the Company, Preferred and the Trading Advisor, the Company shall automatically terminate the Trading Agreement, if the net asset value allocated to the Trading Advisor declines by
40% from the value at the beginning of any year or since the effective date of the Advisory Agreement. The decline in net asset value is after giving effect for distributions, subscriptions and redemptions.

The Companys futures commission merchant, in accepting orders for the purchase or sale of domestic futures contracts, is required by Commodity
Futures Trading Commission (CFTC) regulations to separately account for and segregate as belonging to the Company all assets of the Company relating to domestic futures trading and is not allowed to commingle such assets with its other
assets. At June 30, 2007, such segregated assets totaled $20,106,220. Part 30.7 of the CFTC regulations also requires the Companys futures commission merchant to secure assets of the Company related to foreign futures trading which
totaled $198,086 at June 30, 2007. There are no segregation requirements for assets related to forward trading.

As of June 30,
2007, all open futures contracts mature within eighteen months.



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WCM POOL LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)



|Note  8. | FINANCIAL HIGHLIGHTS
|-------- | --------------------

The following information
presents the financial highlights of the Company for the three months and six months ended June 30, 2007. This information has been derived from information presented in the financial statements.



|                                    |  |                                              |    |  |                                            |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|----------------------------------- |  | -------------------------------------------- | -- |  | ------------------------------------------ | -- |  | --------- | -- |  | --------- | -- |  | ------------ | -- |  | ----------- | -- |  | --------- | -- |  | --------- | --
|                                    |  | Three Months Ended June 30, 2007 (Unaudited) |    |  | Six Months Ended June 30, 2007 (Unaudited) |   
|                                    |  | MemberDFF LP                                 |    |  | MemberDFT I                                |    |  | MemberKGT |    |  | MemberFST |    |  | MemberDFF LP |    |  | MemberDFT I |    |  | MemberKGT |    |  | MemberFST |   
|Total return (1),(4)                |  |                                              |    |  |                                            |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Total return before incentive fee   |  | 14.54                                        | %  |  | 14.54                                      | %  |  | 14.54     | %  |  | 14.65     | %  |  | 5.31         | %  |  | 5.31        | %  |  | 5.31      | %  |  | 14.65     | % 
|Incentive fee                       |  | (0.75                                        | )% |  | (0.73                                      | )% |  | (0.82     | )% |  | (2.79     | )% |  | (0.63        | )% |  | (0.62       | )% |  | (0.70     | )% |  | (2.79     | )%
|                                    |  |                                              |    |  |                                            |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Total return after incentive fee    |  | 13.79                                        | %  |  | 13.81                                      | %  |  | 13.72     | %  |  | 11.86     | %  |  | 4.68         | %  |  | 4.69        | %  |  | 4.61      | %  |  | 11.86     | % 
|                                    |  |                                              |    |  |                                            |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Ratios to average net asset values: |  |                                              |    |  |                                            |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Expenses prior to incentive fee (2) |  | 2.67                                         | %  |  | 2.69                                       | %  |  | 2.65      | %  |  | 2.73      | %  |  | 2.76         | %  |  | 2.77        | %  |  | 2.76      | %  |  | 2.73      | % 
|Incentive fee (1)                   |  | 0.69                                         | %  |  | 0.68                                       | %  |  | 0.75      | %  |  | 2.60      | %  |  | 0.66         | %  |  | 0.65        | %  |  | 0.76      | %  |  | 2.60      | % 
|                                    |  |                                              |    |  |                                            |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Total expenses and incentive fee    |  | 3.36                                         | %  |  | 3.37                                       | %  |  | 3.40      | %  |  | 5.33      | %  |  | 3.42         | %  |  | 3.42        | %  |  | 3.52      | %  |  | 5.33      | % 
|                                    |  |                                              |    |  |                                            |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Net investment income (2), (3)      |  | 1.72                                         | %  |  | 1.73                                       | %  |  | 1.71      | %  |  | 1.75      | %  |  | 1.36         | %  |  | 1.36        | %  |  | 1.38      | %  |  | 1.75      | % 
|                                    |  |                                              |    |  |                                            |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   

Total returns and ratios to average net asset value are calculated for Members capital
taken as a whole. An individual Members total returns and ratios may vary from the above returns and ratios based on the timing of additions and redemptions.



---

|(1) | Not annualized.
|--- | ---------------

|(2) | Annualized.
|--- | -----------

|(3) | Represents interest income
less total expenses (exclusive of incentive fee).
|--- | ----------------------------------------------------------------------------

|(4) | Includes realized and
unrealized gains (losses) on securities transactions.
|--- | ---------------------------------------------------------------------------



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

This report on Form
10Q (the Report) for the quarter ending June 30, 2007 (Second Quarter 2007) includes forward-looking statements that reflect the current expectations of Preferred Investment Solutions Corp.
(Preferred or the Managing Owner), the managing owner of Diversified Futures Trust I (Registrant), about the future results, performance, prospects and opportunities of Registrant. The
Managing Owner has tried to identify these forward-looking statements by using words such as may, will, expect, anticipate, believe, intend, should,
estimate or the negative of those terms or similar expressions. These forward-looking statements are based on information currently available to the Managing Owner and are subject to a number of risks, uncertainties and other factors,
both known, such as those described in this Report, and unknown, that could cause Registrants actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking
statements.

You should not place undue reliance on any forward-looking statements. Except as expressly required by the Federal securities laws, the
Managing Owner undertakes no obligation to publicly update or revise any forward-looking statements or the risks, uncertainties or other factors described in this Report, as a result of new information, future events or changed circumstances or for
any other reason after the date of this Report.

Introduction

General

Diversified Futures Trust I (Registrant), a Delaware business trust,
was organized under the Delaware Statutory Trust Act on May 18, 1994 and will terminate on December 31, 2020 unless terminated sooner under the provisions of the Second Amended and Restated Declaration of Trust and Trust Agreement (the
Trust Agreement). Registrants trustee is Wilmington Trust Company. The Registrant was formed to engage in the speculative trading of commodity futures and forward contracts. The Registrants fiscal year for book and tax
purposes ends on December 31.

The Registrant is engaged solely in the business of commodity futures and forward trading; therefore, presentation of
industry segment information is not applicable.

On February 3, 2003, the Managing Owner and the Registrant entered into an advisory agreement (the
Appleton Advisory Agreement) with Appleton Capital Management Ltd. (Appleton) to manage approximately 20% of Registrants assets. On February 7, 2003, the Managing Owner and Registrant entered into an
advisory agreement (the Graham Advisory Agreement) with Graham Capital Management, L.P. (Graham) to manage approximately 40% of Registrants assets. On February 14, 2003, the Managing Owner and
Registrant entered into an advisory agreement (the Aspect Advisory Agreement) with Aspect Capital Limited (Aspect) to manage approximately 40% of Registrants assets. Registrant terminated the Appleton
Advisory Agreement, Graham Advisory Agreement and Aspect Advisory Agreement effective December 31, 2006.

Prior to January 1, 2007 (including
Second Quarter 2006 and Second Quarter 2005), all trading decisions for Registrant were made by Appleton, Graham and Aspect.

Effective January 1,
2007, Registrant became a member of, and allocated all of its assets to, WCM Pool LLC (the Trading Vehicle), a Delaware limited liability company, and received a voting membership interest in the Trading Vehicle and became party
to the Trading Vehicles Organization Agreement. The Trading Vehicle was formed to function as an aggregate trading vehicle for its members. Registrant, Futures Strategic Trust, Diversified Futures Fund, L.P. and Kenmar Global Trust are the
sole members of the Trading Vehicle. Preferred is the managing owner/general partner of each of these Trading Vehicle members and has been delegated administrative authority over the operations of the Trading Vehicle. The Trading Vehicle engages in
the speculative trading of futures and forwards contracts. The Trading Vehicle has entered into an advisory agreement (the Trading Vehicle Advisory Agreement) with Winton Capital Management Limited (Winton),
whereby Winton makes the trading decisions for the Trading Vehicle and, in turn, Registrant, pursuant to Wintons Diversified Program.



-26-



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The term Trading Advisor, as used herein, refers either to Appleton, Graham, Aspect or Winton,
depending upon the applicable period discussed. The term Trading Advisory Agreement, as used herein, refers either to the Appleton Advisory Agreement, Graham Advisory Agreement, Aspect Advisory Agreement or Trading Vehicle
Advisory Agreement, depending upon the applicable period discussed.

Managing Owner and its Affiliates

Preferred has been the managing owner of Registrant since October 1, 2004. Prior to that date, Prudential Securities Futures Management Inc.
served as managing owner of Registrant. The term Managing Owner, as used herein, refers either to Prudential Securities Futures Management Inc. or Preferred, depending upon the applicable period discussed.

The Managing Owner is required to maintain at least a 1% interest in Registrant so long as it is acting as Registrants Managing Owner.

Competition

The Managing Owner
and its affiliates have formed, and may continue to form, various entities to engage in the speculative trading of futures and forward contracts that have certain of the same investment policies as Registrant.

Registrant does not currently, and does not intend in the future to, solicit the sale of additional Interests. As such, Registrant does not compete with other entities
to attract new fund participants. However, to the extent that a Trading Advisor recommends similar or identical trades to Registrant and other accounts that it manages, Registrant may compete with those accounts, as well as with other market
participants, for the execution of the same or similar trades.

Employees

Registrant has no employees. Management and administrative services for Registrant are performed by the Managing Owner or third parties pursuant to the Trust Agreement,
as further discussed in Notes 3 and 4 to Registrants financial statements included in its annual report for the year ended December 31, 2006 (Registrants 2006 Annual Report), which is filed as an exhibit to
Registrants Form 10-K for the fiscal year ended December 31, 2006.

Critical Accounting Policies

Preparation of the financial statements and related disclosures in compliance with accounting principles generally accepted in the United States of America requires the
application of appropriate accounting rules and guidance. Applying these policies requires the Managing Owner to make judgments, estimates and assumptions in connection with the preparation of Registrants financial statements. Actual results
may differ from the estimates used.

The Managing Owner has evaluated Registrants financial statements and related disclosures and has determined
that the policies discussed below are critical accounting policies because they involve estimates, judgments and assumptions that are particularly complex, subjective or uncertain. For a further discussion of Registrants significant accounting
policies, see Note 2 to Registrants financial statements for the year ended December 31, 2006, which is filed as an exhibit to Registrants annual report on Form 10K for the fiscal year ended December 31, 2006.

The valuation of Registrants investments that are not traded on a United States or internationally recognized futures exchange is a critical accounting policy. The
market values of futures (exchange traded) contracts is verified by Registrants administrator, which obtains valuation data from third party data providers such as Bloomberg and Reuters and compares those prices with Registrants clearing
broker. The market value of currency swap and forward (non-exchange traded) contracts is extrapolated on a forward basis from the spot prices quoted as of 3 PM on the last business day of the reporting



-27-



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period. All values assigned by the administrator and confirmed by the Managing Owner are final and conclusive as to all of Registrants unitholders.

As such, if actual results vary from estimates used, they are not anticipated to have a material impact on the financial statements and related
disclosures.

Registrant records all investments at fair value in its financial statements, with changes in fair value reported as a component of Trading
Profits (Losses) in the Statements of Operations. Generally, fair values are based on quoted market prices; however, in certain circumstances, significant judgments and estimates are involved in determining fair value in the absence of an active
market closing price.

New Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN
48), which clarifies the accounting for uncertainty in tax positions. FIN 48 requires that Registrant recognize in its financial statements the impact of a tax position if that position is more likely than not of being sustained on audit
based on the technical merits of the position. The provisions of FIN 48 were effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening
retained earnings. The Managing Owner evaluated the impact of adopting FIN 48 on Registrants financial statements. In the Managing Owners opinion, the adoption of FIN 48 had no material impact on Registrant, as Registrants tax
position is based on established tax precedence for the tax treatment of investment partnerships as flow through tax entities.

In September 2006, the FASB
issued Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value
measurements. The provisions of SFAS No. 157 are effective for fiscal years beginning after November 15, 2007. The Managing Owner is currently evaluating the impact of adopting SFAS No. 157 on Registrants financial statements.
At this time, the impact to Registrants financial statements has not been determined.

Liquidity and Capital Resources

Registrant commenced operations on January 5, 1995 with gross proceeds of $25,262,800 allocated to commodities trading. Additional contributions raised through the
continuous offering of limited interests (Limited Interests) and general interests (General Interests and, together with the Limited Interests, Interests) of beneficial ownership in Registrant
through August 31, 1996 resulted in additional gross proceeds to Registrant of $41,129,100. The continuous offering period ended on August 31, 1996.

For Second Quarter 2007, the period January 1, 2007 to June 30, 2007 (Year-To-Date 2007), the period April 1, 2006 to June 30, 2006 (Second Quarter 2006), the period January 1,
2006 to June 30, 2006 (Year-To-Date 2006), the period March 31, 2005 to June 30, 2005 (Second Quarter 2005) and the period January 1, 2005 to June 30, 2005 (Year-To-Date
2005) there were no subscriptions of Limited Interests or General Interests.

Interests in Registrant may be redeemed on a quarterly basis.
Redemptions of Limited Interests for Second Quarter 2007, Year-To-Date 2007 and for the period from January 5, 1995 (commencement of operations) to June 30, 2007 were $1,125,625, $1,728,926 and $88,425,231, respectively. Redemptions of
Limited Interests for Second Quarter 2006, Year-To-Date 2006 and for the period from January 5, 1995 (commencement of operations) to June 30, 2006 were $525,606, $1,298,453 and $84,866,678, respectively. Redemptions of Limited Interests
for Second Quarter 2005, Year-To-Date 2005 and for the period from January 5, 1995 (commencement of operations) to June 30, 2005 were $870,118, $1,412,579 and $82,172,644, respectively.

Redemptions of General Interests for Second Quarter 2007, Year-To-Date 2007 and for the period from January 5, 1995 (commencement of operations) to June 30,
2007 were $7,673, $18,936 and $750,400, respectively. Redemptions of General Interests for Second Quarter 2006, Year-To-Date 2006 and for the



-28-



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period from January 5, 1995 (commencement of operations) to June 30, 2006 were $0, $8,285 and $713,430, respectively. Redemptions of General
Interests for Second Quarter 2005, Year-To-Date 2005 and for the period from January 5, 1995 (commencement of operations) to June 30, 2005 were $0, $0 and $680,801, respectively.

Future redemptions will impact the amount of funds available for investment in commodity contracts in subsequent periods.

At June 30, 2007, 100% of Registrants net assets were allocated to commodities trading through its investment in the Trading Vehicle. A significant portion of
Registrants net assets invested in the Trading Vehicle was held in cash, which was used as margin for trading in commodities. In as much as the sole business of Registrant is to trade in commodities, Registrant continues to own such liquid
assets to be used as margin. The clearing broker credits the Trading Vehicle (and, in turn, Registrant, as a member of the Trading Vehicle) with interest income earned on its accounts with the clearing broker during each month.

The commodities contracts may be subject to periods of illiquidity because of market conditions, regulatory considerations and other reasons. For example, commodity
exchanges limit fluctuations in certain commodity futures contract prices during a single day by regulations referred to as daily limits. During a single day, no trades may be executed at prices beyond the daily limit. Once the price of
a futures contract for a particular commodity has increased or decreased by an amount equal to the daily limit, positions in the commodity can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit.
Commodity futures prices have occasionally moved the daily limit for several consecutive days with little or no trading. Such market conditions could prevent the Trading Vehicle (and, in turn, Registrant) from promptly liquidating its commodity
futures positions.

Since Registrants business is to trade futures and forward contracts (through its investment in the Trading Vehicle), its capital
is at risk due to changes in the value of these contracts (market risk) or the inability of counterparties to perform under the terms of the contracts (credit risk). Registrants exposure to market risk is influenced by a number of factors
including the volatility of interest rates and foreign currency exchange rates, the liquidity of the markets in which the contracts are traded and the relationships among the contracts held. The inherent uncertainty of Registrants speculative
trading as well as the development of drastic market occurrences could result in losses considerably beyond Registrants experience to date and could ultimately lead to a loss of all of substantially all of investors capital. The Managing
Owner attempts to minimize these risks by requiring Registrant, the Trading Vehicle and the Trading Advisor to abide by various trading limitations and policies, which include limiting margin amounts, trading only in liquid markets and permitting
the use of stop loss provisions. For a further discussion of the credit and market risks associated with Registrants futures and forward contracts, see Note 6 to Registrants financial statements for the year ended December 31, 2006,
which is filed as an exhibit to Registrants annual report on Form 10K for the fiscal year ended December 31, 2006.

Registrant does not have,
nor does it expect to have, any capital assets.

Market Overview

Following is a market overview for Second Quarter 2007 and Second Quarter 2006:

Second
Quarter 2007

In the US, generally tame inflation readings in the second quarter appeared to lessen the pressure on the US Federal Reserve
(Fed) and the most recent Federal Open Market Committee (FOMC) statement pointed to relatively balanced risks. The Fed Chairman, Ben Bernanke, former chairman Alan Greenspan and others have issued statements
that the subprime situation, while clearly a concern, should not prove to be a major contagion.

Inflation news was encouraging, with Core Consumer Prices
rising well within the Feds comfort zone. The headline Producer Price Indexs (PPI) rise was slightly worrisome, but the more-closely-watched



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Core PPIs rise was more benign. Industrial Production was flat overall while Capacity Utilization dipped slightly. Retail sales jumped in May, with the
largest gain in sixteen months. Gasoline, auto supplies, building supplies and clothing led the charge as consumers still appeared mostly undaunted. Leading indicators increased slightly in May, suggesting the economy is weathering the housing and
gasoline price storm. On the manufacturing side, the Philly Fed Index saw its highest reading in two years.

Overall, the employment picture in the second
quarter continued to look quite healthy. Nonfarm payrolls rose in May while the unemployment rate is forecast to remain unchanged. Average hourly earnings rose slightly.

Housing persists as the US economys primary risk. During the second quarter, signs of slight improvements seen in May were absent in June. For the first five months of the year, both housing permits and housing
starts were off more than 25%. The South, considered the engine of growth for the housing sector, provided the weakest performance during the second quarter. The Home Builders Confidence Index fell to a sixteen-year low in June. Existing home sales
also fell slightly and existing home inventories rose. Prices in the ten largest US cities are declining at the fastest pace in sixteen years.

Predictions
for third quarter Gross Domestic Product (GDP), a measure of economic growth, are seen higher. The International Monetary Fund issued a report stating that the US economy remained close to the 2% annualized GDP stall
speed. However, while the inflation picture might dictate against a Fed rate cut, this economic growth scenario is seen by many to counter a rate hike.

Foreign interest rate yields have been rising across the board. The European Union (EU), Great Britain, Switzerland and New Zealand all raised rates in the second quarter. The Reserve Bank of Australia remained unchanged,
but its statements were seen as hawkish. Many market participants view the Bank of Japan to remain on hold after its recent first quarter increase.

Currencies:The US dollar saw a record low against the euro during the second quarter. Rising European interest rates encouraged demand for the euro. EU economic data for the most part continue to indicate solid growth and a modest
inflation threat. Central bank diversification into the euro was also a positive factor. The British pound sterling also rose against the dollar during the quarter. Inflation concerns, capacity constraints and elevated housing prices have led the
Bank of England to maintain a hawkish tone, including a second quarter rate hike and expectations of more to come during the third quarter. The countrys new prime minister, Gordon Brown, was quickly tested by a series of terror attacks, but
the pound showed little reaction.

During the quarter, the Japanese yen was pressured by the US dollar and also on a carry trade basis against the
Australian and New Zealand dollars. Japanese economic data has been moderate, with little hint of inflation. The Peoples Bank of China continues to drain liquidity and increase interest rates gradually. It has made mild concessions to the US, but is
moving slowly regarding reform. The Chinese yuan had its strongest quarter since the dollar link was eliminated in 2005. The Australian dollar continues to be firm, and recent upward GDP revisions have rekindled inflation fears. New Zealand raised
rates to 8.00% in May, citing consumer inflation. The Canadian dollar reached a thirty-year high against the US Dollar in the second quarter.

Energies:After trading between $60 and $65 for much of the second quarter, crude broke out to the upside in June, topping $70 for the first time in nine months. Concerns surrounding product availability, refinery utilization, geopolitical factors
including Venezuelan nationalization, Nigerian unrest, Irans nuclear program and Hamas aggression, along with a terror threat in the UK, all served to push prices higher. In addition, refinery utilization at the end of June stood well under
the seasonal norm.

Heating oil mirrored crudes June breakout and ended the quarter over 5% higher. Distillate inventories are now substantially
below last seasons levels. A series of refinery outages that have been slow to get back on line have placed supplies at dangerously low levels, particularly with the peak hurricane season not yet reached. Distillate fuel demand is up almost 4%
from 2006 levels. Reformulated gasoline prices



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rose over 10% during the quarter overall and prices at the pump peaked in late May. Consumer resistance seemed limited during the second quarter.

Trading patterns were volatile and natural gas prices fell over 16% during the second quarter as supply built and the weather held extremely benign.

Grains:Corn prices were extremely volatile during the quarter. The June USDA Supply and Demand Report caused prices to increase, only to drop on the heels of a
bullish Planted Acreage Report, which inferred that more acres of corn would be planted in the season ahead than in any other period since the mid 1940s, when the US attempted to feed post-war Europe. Wheat prices reached their highest prices
in more than a decade during the last trading session of the second quarter. This strength came as a result of a continually tightening global demand, which has been exacerbated by the worst drought seen in Australia in more than 100 years. The USDA
Planted Acreage Report showed that as a result of higher prices, more than a 5% increase in wheat had been sown this season, consistent with the Intentions Report. From the Intentions Report, and the data gleaned from the estimates of other crops,
it is apparent that corn acreage was increased at the expense of beans and cotton and that wheat plantings were consistent. Soybean prices were volatile during the quarter, rocked by the Planted Acreage Report that revealed that soybean acreage had
been reduced by approximately 15%. Cotton prices climbed steadily during the quarter due to a tightening supply/demand scenario. The Report also revealed that cotton acreage would be cut by 27% from the previous season.

Indices:US stocks ended the quarter higher overall, but off their highs late reached during the quarter. Strength in foreign equities, hectic M&A activity,
forecast earnings and solid global growth lent support. The recent spike to 5.32% in the benchmark 10-Year note could prove to be a high for an extended period and many market participants feel that the latest FOMC minutes suggest that the Fed will
remain on hold for an extended period. The summer season is upon the market, M&A activity appears to have slowed somewhat and the markets continue to watch the subprime sector with caution.

In Europe, it was a good quarter for the three largest indices, the German DAX, French CAC and UK FTSE, and for the region in general. All three major industries scored
seven-year highs during the second quarter while closing somewhat below those levels. Even the specter of higher interest rates from the European Central Bank and the Bank of England failed to meaningfully diminish enthusiasm, but the weaker US
markets and the terror issue in the UK did weigh on market psychology during the final days of June as the euro bourses turned in a mixed June performance.

Asian equity indices also scored second quarter gains and, like Europe, attracted significant foreign capital flows. The Shanghai market was particularly volatile during the quarter but had a clear upside bias as it ended June. Japan was
aided by decent economic data as well as low inflation and the prospect of no imminent rate hike from the Bank of Japan. The Hang Seng finished higher and the Australian All Ordinaries were able to withstand hawkish comments from the Reserve Bank of
Australia and soar to record levels.

Interest Rates:June proved a volatile month for US treasuries, on the back of substantial risk aversion
mentality. They became the asset of choice as subprime issues, including the Bear Stearns/Merrill Lynch situation took center stage. However, generally tame inflation readings appeared to lessen pressure on the Fed and the most recent FOMC statement
pointed to relatively balanced risks.

Sharply higher foreign rates were a factor in rising yields, but that lessened to some degree in the final weeks of
the quarter. The EU, UK and Switzerland all hiked rates in the second quarter. The Reserve Bank of Australia sounded hawkish as the quarter ended. The Bank of Japan remained unchanged, after raising rates in the first quarter. Yields on the 10-year
German Bund hit a new high during the quarter.

Metals:Volatile copper prices closed well over their first quarter close. A series of labor
problems in Chile, Peru, Mexico and Canada were particularly supportive in the final half of June. LME spreads remain in backwardation, indicating supply tightness. Refined consumption continues to grow faster than production. Aluminum prices were
quiet during the quarter. In contrast, nickel prices were quite volatile, plunging over 20% in June alone, after being one of the top performers of the Dow Jones/AIG Index.



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Warehouse stocks are still low, but they have been steadily rising and stainless steel demand has decreased somewhat. Zinc prices continue to fall, down over
20% for the year to date, despite overall strong global demand. Lead prices were higher in the second quarter on tight inventories and strong demand. China, the worlds largest lead producer, imposed a 10% tax on overseas sales. Tin prices
finished the quarter slightly off their mid-March eighteen-year high. Gold prices were defensive during most of the second quarter, down slightly overall. Heavy selling from European central banks was a particular negative. Volatility was a
watchword for silver during the quarter as funds moved in and out of the metal with most of the activity on the sell side during the final half of June as indicated in CFTC data. Platinum finished up slightly overall for the quarter. Global
industrial demand has been solid, with strong jewelry demand and an increase in autocatalytic usage spurred by a growing diesel market. Palladium also ended the quarter slightly higher. South African labor concerns lent support to prices.

Softs:An increased sugar supply from Brazil was the latest bearish report for the commodity. Last years high prices, which encouraged
increased production, are now taking their toll on prices. Coffee prices also fell during the second quarter, due to similarly rising inventories and favorable Brazilian weather. Cocoa prices rose to a four-year high after an attack on the prime
minister of the Ivory Coast, pointing out how severe the countrys unrest is and restoring the war premium that had temporarily been lost in the cocoa market. Live cattle prices fell slightly during the second quarter and are down
slightly year to date. Lower corn prices were noted in May and June, after cattle ranchers suffered with high feed prices for much of the year. An easing in the hype surrounding ethanol helped push corn prices lower. Cattle is now in peak-demand
barbeque season and exports continue to be strong. Inventories are ample but show some evidence of decline. Live hog prices were volatile in the second quarter and ended the first half of the year down over 5% overall.

Second Quarter 2006

News from
the Federal Reserve (Fed) and its new chairman, Ben Bernanke, dominated the markets in the second quarter of 2006. Chairman Bernanke appears fully committed to fighting inflation and has quickly eliminated speculation that he
might take a softer stance than his predecessor. The Fed continued to raise rates throughout the quarter. The Fed minutes have repeatedly stated that the Federal Open Market Committees (FOMC) actions will be data dependent
and to this point that means the rate hike cycle is likely to continue at least for one addition meeting. As global liquidity and geopolitical concerns arose during the second quarter, U.S. Treasury yields found safe haven support.

Inflation and housing were again the major factors within the U.S. economic landscape. As gasoline prices continued to rise, inflation data drew particular attention.
The housing market was somewhat mixed and the outlook remains uncertain. Despite these factors, final first quarter Gross Domestic Product (GDP) was revised upwards to 5.3% from the original 4.6%. However, the impact of a weaker
housing sector and high gasoline and energy prices may be starting to take a toll, as the preliminary GDP for the second quarter was lower than expected at 2.5%.

The Eurozone continued to experience economic improvement in the second quarter. However, like the U.S., the third quarter may present a somewhat less buoyant picture. The euro turned in a strong quarter benefiting from central bank
currency diversification. Interest rates were a primary focus as the European Central Bank (ECB) hiked rates by 25 basis points to 2.75% at its June meeting with further increases anticipated later in the year. An ongoing pattern
of improved economic data was noted, particularly from Germany. In the U.K., the Bank of England (BOE) made no rate changes; economic data was fairly decent but showed some strain as the third quarter began.

In Japan, speculation that the Bank of Japan (BOJ) would finally end its zero interest rate policy proved correct as they imposed a 0.25%
rate during the first week of July. Japan was at the forefront of the short-lived liquidity crisis, which instigated a sell-off in global assets during the second quarter, and their equity market fell approximately 9%. Other Asian equity markets saw
a similar fate with Korea, Hong Kong and Shanghai also experiencing weakness. Despite the temporary disruption, overall economic data from Japan, and the region in general, showed an improved tone. Chinas growth continues to be strong, as
second quarter GDP rose to a 10 year high of 11.2%. The Bank of China raised interest rates in April in an attempt to harness growth and its inflationary implications. Further rate hikes are expected.



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The Canadian economy has been moving at a brisk pace all year and the Bank of Canada has steadily raised rates. However,
the statement at the conclusion of its most recent meeting suggests that a pause may be on the horizon. The Canadian dollar strengthened in the second quarter of 2006 and Canadas economic fortunes seem bright.

Currencies:Interest rates were the primary drivers of the currency sector in the second quarter of 2006. The U.S. dollar suffered against the euro as the ECB
appears to be at the beginning of its rate hike cycle and the Fed appears to be close to the end. Additionally, a continued pattern of improving economic data in the Eurozone was noted throughout the quarter, particularly from Germany, the leading
driver of the regions growth. The euro also benefited from central bank currency diversification away from the U.S. dollar as the global reserve currency, as Russia, China, Sweden, and the United Arab Emirates were prominent in this trend,
which is expected to continue. Despite this pressure, the U.S. dollar attracted flight to safety support in mid June when the Korean missile crisis emerged.

In Japan, the focus was also on interest rates, as market participants attempted to discern when the BOJ would end its long standing zero interest rate policy. The BOJ drained liquidity throughout the quarter in preparation for
this eventuality. The Japanese economy continues to improve, as highlighted by one of the most watched economic indicators, the Tankan Report, which was released at the end of June and the second quarter saw the definitive conclusion of the
nations deflationary era. The yen was pressured a bit in late June by the scandal surrounding BOJ Governor Fukui.

The Chinese yuan traded at 7.999
to the U.S. dollar in late June compared to 8.017 at the end of the first quarter and has gained slightly over 1% since its 2.1% revaluation in July 2005. Recent comments from Bank of China officials have hinted at a potentially faster pace, but the
markets have lent little credence to this statement.

Energies:The energy sector was volatile in the second quarter of 2006. Crude ended the
quarter around $74 per barrel, up approximately 8.5% from the end of the previous quarter. Geopolitical uncertainty regarding Iran, North Korea and Nigeria were supportive of crude. Additional support is coming from increased demand from China and
India. The price at the pump for unleaded gasoline remains high, but demand continued to display a relatively inelastic pattern. The only component of the sector that fell was natural gas. With plenty of supply, moderate temperatures and a slow
start to the hurricane season, prices of natural gas continued their downward slide.

Grains:The sector was mixed for the quarter. On the
production side of the equation, weather played the single largest role in corn prices for the second quarter. On a week-by-week basis, as chances for seasonally beneficial precipitation ebbed and flowed, corn prices moved higher and lower
respectively. The start of the period found the corn market firmly ensconced in an uptrend that began at the end of calendar year 2005, but prices fell off sharply in June after the release of a U.S. Department of Agriculture (USDA)
Supply/Demand Report that raised questions about the demand for corn. The decline in corn prices, along with many other commodity markets, may have had its roots in a consumption-restricting announcement made by the Chinese government. The statement
made was that internal growth needed to be slowed, in light of a too-rapidly expanding economy. The graphic profile of the wheat market is almost identical as that seen in corn. For most of the second quarter, soybean prices moved sideways. Due to
Chinas dependence on Brazilian soybean imports, the tightening credit situation in China will likely not have as great a bearing on U.S. soybean prices.

Indices:By and large, global equity indices were lower in the second quarter of 2006 versus the first quarter of 2006. For most of the quarter, U.S. stocks suffered from the uncertainty surrounding the interest rate environment and
from fears that the U.S. economy was slowing, mainly due to higher energy prices and a softer housing sector. The S&P 500 ended the quarter down 1.9% and the NASDAQ ended the quarter down 7.2%. Going forward U.S. equities are likely to remain
highly sensitive to any events that might alter the outlook for the Fed, particularly inflation related data.

European markets had been strong for most of
the year prior to the sell-off in May. Foreign money flows into Europe slowed significantly in May and were still at a somewhat reduced level in June. The German



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DAX ended the quarter down 4.8%, the French CAC 40 was down 4.9% and the British FTSE was down 2.2%.

Asian markets were very volatile, particularly in May and June, as a liquidity crunch was experienced in Japan and in various other sectors around the region.
Indications of higher interest rates in Japan, Korea and China in coming months provided a negative tone, but the flow of economic data took on a positive tone and bodes well for the rest of the year. Japans Nikkei was down 9.1% for the
quarter and Koreas Kospi was down 4.7%. Australias All Ordinaries closed out the quarter down approximately 1%, but the strength in resource issues aided this market and the outlook for Australia is positive.

Interest Rates:U.S. Treasuries were in a rally mode for much of May and June as the markets evaluated the new Fed under Ben Bernanke. The FOMC appeared to be
taking on a more aggressively anti-inflationary tone as the quarter progressed, with the Chairman and numerous Fed Governors focusing on the threat of inflation. After closing out the first quarter at 4.85%, the yield on the 10-year Treasury Note
moved over 5.26% in mid June on the market view that that the Fed would continue to raise rates through the August meeting and possibly beyond. The softer tone of the statement accompanying the 25 basis point rate hike at the end of June caught the
markets by surprise. While still recognizing the risk of inflation, the Fed gave greater credence to the potential for some economic slowing, and appeared to put into question the prospect of a further rate hike in August. As June concluded, the
yield on the 10-year Treasury Note stood at 5.145%.

Outside of the U.S., the ECB raised rates 25 basis points in June to 2.75%. Statements by ECB
President Jean Claude Trichet regarding inflation were mixed throughout the quarter, but were leaning towards the tightening side as June ended and additional ECB rate hikes are expected later this summer. Trichet has emphasized that inflation will
remain elevated and that there is a risk of a surge in consumer prices. European data, particularly from Germany remains buoyant. The 10-year German Bund was yielding 4.07% at the end of June while the 30-year stood at 4.31%.

In the first week of July, the BOJ officially ended its zero interest rate policy by imposing a 0.25% rate, finally putting an end to the speculation that
was rampant throughout the second quarter. Other Asian banks, including the Bank of Korea, raised rates in June and there are growing indications that the Bank of China will embark on a tightening bias to temper the expected 10% plus GDP growth and
its inflationary potential. The Bank of Canada raised rates another 25 basis points but the accompanying statement hinted at a pause. The Reserve Bank of Australia held rates at 5.75% but there is speculation of an increase.

Metals:Gold had been in an upside surge for the entire year until things finally came to an end, at least temporarily, in late May. Global liquidity tightness,
particularly in the Far East, which impacted other commodities as well as the equity and fixed income markets, served as a clear negative for gold and essentially put an end to the rally. Geopolitical concerns surrounding Iran, Iraq and Korea have
been supportive for gold and are likely to aid the bull case in coming weeks. In addition, reserve asset diversification is likely to persist. Russia, China and Sweden, along with the United Arab Emirates and other petro-nations were active in that
regard during the second quarter. Petrodollars have been flowing into gold for much of the year, although that slowed somewhat in June. Silver followed a similar pattern to gold, retaining its dependent relationship with the yellow metal.

The entire base metal complex was very volatile during the second quarter. Copper ended the quarter up 37% from the previous quarter, as labor and
production problems in Mexico, Chile and Zambia added to the bullish scenario. With China forecast to see 10% plus GDP growth in 2006, the demand side of the equation still looks strong, as it does for most of Asia as well as the U.S. and Europe.
Mines still lack the ability to significantly ramp up production, giving copper a solid fundamental base. After surging nearly 17% in May, zinc lost 15% in June but it is still up more than 75% for the year. Fundamentally, zinc presents the
strongest picture among all the base metals as it faces a significant production deficit. Nickel rallied strongly for the quarter as well. While its fundamentals have improved, as stainless steel demand increased, the recent highs are vastly ahead
of reasonable value.



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Softs:The sector was mixed for the second quarter, with several markets experiencing significant sell-offs in
May. Sugar had been extremely firm in the first quarter through mid second quarter, before undergoing a correction in May. Following a weak performance in May, which saw sugar decline over 11%, prices rebounded in June. However, the outlook is
uncertain, as the weather in Brazils sugar producing areas has been crop friendly after a period of dry conditions. Coffee prices also fell in May, losing 10%. Brazilian weather has been excellent, which weighed on sentiment throughout the
second quarter. The harvest has been moving at a brisk pace and at 35% complete for the season, is ahead of schedule. The second quarter saw cocoa prices trend higher. The Ivory Coast was the focus after the disarmament process broke down yet again.
Cattle scored gains in May and June as the USDA announced an agreement with Japan to restart U.S. beef exports to that nation. Hogs also put in a strong June, as Far Eastern demand remained brisk.

Sector Performance

Due to the nature of Registrants trading
activities, a period-to-period comparison of its trading results is not meaningful. However, a discussion of Registrants trading results for the major sectors in which Registrant traded for Second Quarter 2007 and Second Quarter 2006 are
presented below.

Second Quarter 2007

Currencies: (+) Losses were experienced in the Czech koruna and South African rand. Gains were made in the Swiss franc, Mexican peso, Polish zloty, euro, Hungarian forint, Brazilian real, Canadian dollar,
New Zealand dollar, British pound versus U.S. dollar and Japanese yen, Australian dollar, Japanese yen versus U.S. dollar and euro.

Energies:
(+)Losses were experienced in crude oil, gas oil and heating oil. Gains were made in gasoline and natural gas.

Grains: (+)Losses
were experienced in corn, canola oil and cotton. Gains were made in wheat, soybean oil, soybean meal and soybeans.

Indices: (+) Gains were
experienced in the S&P MIB 30, the Russell 2000, the Amsterdam Index, the Australian All Ordinaries, the Mid-Cap 400, the S&P TSE 60, the Dow Jones Industrial Average, the Taiwan Index, the Nasdaq 100, the FTSE 100, the CAC 40, the Hang
Seng, the Nikkei, the DAX, the S&P 500 and the DJ Stoxx 50 indices.

Interest Rates: (+)Losses were experienced in Japanese Government
Bonds, U.S. 10-year and 5-year Treasury Notes, Euroyen, Australian Bank Bills and U.S. Treasury Bonds. Gains were made in Canadian Bonds, New Zealand 3-month Treasury Bills, Australian 3-year Bonds, Canadian Bank Acceptances, U.S. 2-year Treasury
Notes, Euroswiss, British Gilt, German 2-year Bonds, German Bobl, Eurodollar, Short Sterling, German Bunds and Euribor.

Meats: (+)Losses were
experienced in cattle. Gains were made in hogs.

Metals: (-)Losses were experienced in nickel, gold, aluminum, zinc, copper, silver and platinum.
Gains were made in lead.

Softs: (+)Gains were experienced in cocoa, coffee and sugar.

Second Quarter 2006

Currencies: (-)Long positions in the euro and the British pound, short positions in the Swiss franc, and long and short positions in both the Australian dollar and the Japanese yen were the largest contributors to the loss in the
second quarter of 2006.



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Energies: (-) Losses experienced on long positions in Brent crude, crude oil, heating oil, and unleaded gas, as
well as long and short positions in natural gas, resulted in a loss for the second quarter of 2006.

Grains: (-)The sector was down for the second
quarter of 2006, with a majority of the losses from long and short positions in corn and wheat, as well as short positions in soybean meal.

Indices:
(-) Long positions in the FTSE 100 and the IBEX 35, and long and short positions in the NASDAQ, the Japanese Nikkei and the S&P 500, contributed to losses in the second quarter.

Interest Rates: (+)The interest rate sector was up for the second quarter of 2006. Short positions in the German Bund, Eurodollar, British Gilt and Short Sterling led to the sectors profits for the
quarter.

Metals: (+) The metals sector was positive for the second quarter of 2006, with long positions in gold, copper, aluminum, nickel,
zinc and silver providing the largest profits.

Softs: (-)The sector was negative for the second quarter of 2006 primarily due to short positions
in cocoa, live cattle and live hogs, and long and short positions in sugar.

Results of Operations

The net asset value (Net Asset Value) per Interest as of June 30, 2007 was $225.67, an increase of 1.33% from the December 31, 2006 Net Asset
Value per Interest of $222.71 and an increase of 12.21% from the March 31, 2007 Net Asset Value per Interest of $201.12. The Net Asset Value per Interest as of June 30, 2006 was $224.71, a decrease of 3.30% from the December 31, 2005
Net Asset Value per Interest of $232.38 and a decrease of 2.36% from the March 31, 2006 Net Asset Value per Interest of $230.14. The Net Asset Value per Interest as of June 30, 2005 was $223.80, a decrease of 5.83% from the
December 31, 2004 Net Asset Value per Interest of $237.65 and an increase of 1.24% from the March 31, 2005 Net Asset Value per interest of $221.06. Past performance is not necessarily indicative of future results.

Registrants trading gains before commissions and related fees during Second Quarter 2007 and Year-To-Date 2007 were approximately $1,600,000 and $513,000,
respectively. Registrants trading losses before commissions and related fees during Second Quarter 2006 and Year-To-Date 2006 were approximately $(179,000) and $(116,000), respectively. Registrants trading gains (losses) before
commissions and related fees during Second Quarter 2005 and Year-To-Date 2005 were approximately $527,000 and $(540,000), respectively.

Registrants
average net assets decreased during Second Quarter 2007 and Year-To-Date 2007 in comparison to Second Quarter 2006 and Year-To-Date 2006 primarily due to effect of redemptions. Registrants average net assets decreased for the Second Quarter
2006 and Year-To-Date 2006 compared to Second Quarter 2005 and Year-To-Date 2005 due to the effect of redemptions. Registrants average net assets for Second Quarter 2005 and Year-To-Date 2005 decreased in comparison to Second Quarter of 2004
and Year-To-Date 2004 due to due to the effect of redemptions.

Interest income is earned on the Registrants account with the clearing broker at
competitive interest rates and, therefore, varies weekly according to interest rates, trading performance and redemptions. Interest income during Second Quarter 2007 and Year-To-Date 2007 was approximately $131,000 and $277,000, respectively, a
decrease of approximately $61,000 and $97,000, respectively, as compared to Second Quarter 2006 and Year-To-Date 2006, primarily due to reduced average net asset levels. Interest income during Second Quarter 2006 and Year-To-Date 2006 increased by
approximately $60,000 and $126,000, respectively, as compared to Second Quarter 2005 and Year-To-Date 2005, primarily due to higher interest rates. Interest income during Second Quarter 2005 and Year-To-Date 2005 increased by $77,000 and $131,000,
respectively, as compared to Second Quarter 2004 and Year-To-Date 2004, primarily due to higher interest rates.

Commissions are calculated on
Registrants Net Asset Value at the end of each month and therefore, vary according to monthly trading performance and redemptions. Other transaction fees consist of



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National Futures Association fees, exchange and clearing fees as well as floor brokerage costs and give-up charges, which are based on the number of trades
the Trading Advisor executes, as well as which exchange, clearing firm or bank on, or through, which the contract is traded. Commissions and other transaction fees during the Second Quarter 2007 and Year-To-Date 2007 were approximately $227,000 and
$476,000, respectively, a decrease of approximately $81,000 and $155,000, respectively, as compared to Second Quarter 2006 and Year-To-Date 2006, primarily due to reduced average net asset levels. Commissions and other transaction fees during Second
Quarter 2006 and Year-To-Date 2006 decreased by approximately $35,000 and $76,000, respectively, as compared to Second Quarter 2005 and Year-To-Date 2005, primarily due to a decrease in average net asset levels. Commissions and other transaction
fees during Second Quarter 2005 and Year-To-Date 2005 decreased by approximately $91,000 and $200,000, respectively, as compared to Second Quarter 2004 and Year-To-Date 2004, primarily due to a decrease in average net asset levels.

Management fees are calculated on the net asset value of Registrants investment in the Trading Vehicle at the end of each month, and therefore, are affected by
monthly trading performance and redemptions. Management fees during Second Quarter 2007 and Year-To-Date 2007 were approximately $63,000 and $124,000, respectively, a decrease of approximately $16,000 and $38,000, respectively, as compared to Second
Quarter 2006 and Year-To-Date 2006, primarily due to reduced average net asset levels. Management fees during Second Quarter 2006 and Year-To-Date 2006 decreased by approximately $10,000 and $18,000, respectively, as compared to Second Quarter 2005
and Year-To-Date 2005, primarily due to a decrease in average net asset levels. Management fees during Second Quarter 2005 and Year-To-Date 2005 decreased by $16,000 and $49,000, respectively, as compared to Second Quarter 2004 and Year-To-Date
2004, primarily due to a decrease in average net asset levels.

Incentive fees are based on the New High Net Trading Profits (as defined in the
Advisory Agreement) generated by the Trading Advisor, are accrued monthly and are ultimately determined as of the close of business on the last business day of each calendar quarter. Incentive fees during Second Quarter 2007 and Year-To-Date 2007
were approximately $80,000 and $80,000, respectively. No incentive fees were earned during Second Quarter 2006, Year-To-Date 2006, Second Quarter 2005 or Year-To-Date 2005.

Inflation

Inflation has had no material impact on the operations or on the financial condition of Registrant from
inception through June 30, 2007.

Off-Balance Sheet Arrangements and Contractual Obligations

As of June 30, 2007, Registrant had not utilized special purpose entities to facilitate off-balance sheet financing arrangements and has no loan guarantee
arrangements or off-balance sheet arrangements of any kind other than agreements entered into in the normal course of business, which may include indemnification provisions related to certain risks service providers, such as our accountants,
undertake in performing services which are in the best interests of Registrant. While Registrants exposure under such indemnification provisions cannot be estimated, these general business indemnifications are not expected to have a material
impact on Registrants financial position.

Registrants contractual obligations are with the Managing Owner and the Trading Vehicle and, as a
result of its investment in the Trading Vehicle, with the Trading Advisor and the Trading Vehicles commodity broker. Management fees payable by Registrant to the Trading Advisor and the Managing Owner are calculated as a fixed percentage of
Registrants Net Asset Value. Incentive fees payable by the Trading Vehicle to the Trading Advisor are at a fixed rate, calculated as a percentage of the Trading Vehicles New High Net Trading Profits. As such, the Managing
Owner cannot anticipate the amounts to be paid for future periods as Net Asset Values and New High Net Trading Profits are not known until a future date. Commissions payable to the Trading Vehicles commodity broker are based on a
cost per executed trade and, as such, the Managing Owner cannot anticipate the amount that will be required under the brokerage agreement, as the level of executed trades are not known until a future date. These agreements are effective for one-year
terms, renewable automatically for additional one-year terms unless terminated. Additionally, these agreements may be terminated by either party thereto for various



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reasons. For a further discussion of Registrants contractual obligations, see Notes 1, 3 and 4 to Registrants financial statements for the year
ended December 31, 2006, which is filed as an exhibit to Registrants annual report on Form 10K for the fiscal year ended December 31, 2006.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Information regarding quantitative and qualitative
disclosures about market risk is not required pursuant to Item 305(e) of Regulation S-K.

Item 4. Controls and Procedures

As of the end of the period covered by this Report, the Managing Owner carried out an
evaluation, under the supervision and with the participation of certain officers of the Managing Owner, including the Managing Owners Co-Chief Executive Officers and Director of Fund Administration (who, in these capacities, function as the
Co-Chief Executive Officers and Principal Financial/Accounting Officer, respectively, of Registrant), of the design and operation of Registrants disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the
Securities and Exchange Act of 1934, as amended (the Exchange Act)). Based upon that evaluation, the Managing Owners Co-Chief Executive Officers and Director of Fund Administration concluded that Registrants disclosure
controls and procedures are effective.

In designing and evaluating Registrants disclosure controls and procedures (as defined in Rules 13a-15(e) or
15d-15(e) of the Exchange Act), the Managing Owner recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the desired control objectives, as Registrants are
designed to do, and the Managing Owner necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Registrant believes that its disclosure controls and procedures provide such
reasonable assurance.

There have not been any changes in Registrants internal controls over financial reporting (as defined in Rules 13a 
15(f) and 15d  15(f) under the Exchange Act) during the fiscal quarter to which this Report relates that have materially affected, or are reasonably likely to materially affect, Registrants internal controls over financial reporting.

PART II  OTHER INFORMATION

Item 1. Legal Proceedings

There are no legal proceedings pending by or against Registrant or the Managing Owner, or to
which Registrant or Managing Owner was a party during the period covered by this Report.

Item 1.A. Risk Factors

There have been no changes from risk factors as previously disclosed in Registrants Form
10-K for the fiscal year ended December 31, 2006.

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

None

Item 3. Defaults Upon Senior Securities

None



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Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits:



|     |  |                                                                                                                                       
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification pursuant to Exchange Act Rules 13a-14 and 15d-14 (filed herewith)                                                       
|     | 
|31.2 |  | Certification pursuant to Exchange Act Rules 13a-14 and 15d-14 (filed herewith)                                                       
|     | 
|32.1 |  | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|     | 
|32.2 |  | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.



|                            |  |                                       |  |                                          |  |  |  |                       |  | 
|--------------------------- |  | ------------------------------------- |  | ---------------------------------------- |  |  |  | --------------------- |  | 
|DIVERSIFIED FUTURES TRUST I |  |                                       |  |                                          |  | 
|                            |  |                                       |  |                                         
|By:                         |  | Preferred Investment Solutions Corp., |  |                                          |  |  |  |                      
|                            |  | its managing owner                    |  |                                          |  |  |  |                      
|                            |  |                                       |  |                                         
|                            |  | By:                                   |  | /s/ Kenneth A. Shewer                    |  |  |  | Date: August 14, 2007
|                            |  | Name:                                 |  | Kenneth A. Shewer                        |  |  |  |                       |  | 
|                            |  | Title:                                |  | Co-Chief Executive Officer               |  |  |  |                       |  | 
|                            |  |                                       |  | (Principal Executive Officer)            |  |  |  |                       |  | 
|                            |  |                                       |  |                                         
|                            |  | By:                                   |  | /s/ David K. Spohr                       |  |  |  | Date: August 14, 2007
|                            |  | Name:                                 |  | David K. Spohr                           |  |  |  |                       |  | 
|                            |  | Title:                                |  | Senior Vice President and                |  |  |  |                       |  | 
|                            |  |                                       |  | Director of Fund Administration          |  |  |  |                       |  | 
|                            |  |                                       |  | (Principal Financial/Accounting Officer) |  |  |  |                       |  |