UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(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, 2008

or



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

For the transition period from  to

Commission File Number: 0-26004





DIVERSIFIED FUTURES TRUST I

(Exact name of registrant as specified in its
charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|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)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of accelerated filer, large
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                           |  |                             
|-------------------------- |  | ----------------------------
|Large accelerated filer   ̈ |  | Accelerated filer   ̈        
|Non-accelerated filer  x   |  | Smaller Reporting Company   ̈

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









---

DIVERSIFIED FUTURES TRUST I

INDEX TO QUARTERLY REPORT ON FORM 10-Q

JUNE 30, 2008



|                               |  |                                                                                                                 |  |     
|------------------------------ |  | --------------------------------------------------------------------------------------------------------------- |  | ----
|                               |  |                                                                                                                 |  | Page
|PART I  FINANCIAL INFORMATION |  | 3                                                                                                              
|                               |  |                                                                                                                
|Item 1.                        |  | Financial Statements                                                                                            |  | 3   
|                               |  |                                                                                                                
|                               |  | Diversified Futures Trust I:                                                                                    |  |     
|                               |  |                                                                                                                
|                               |  | Condensed Statements of Financial Condition as of June 30, 2008 (Unaudited) and December 31, 2007               |  | 5   
|                               |  |                                                                                                                
|                               |  | Condensed Statements of Operations (Unaudited) for the Three Months and Six Months Ended June 30, 2008 and 2007 |  | 6   
|                               |  |                                                                                                                
|                               |  | Condensed Statements of Changes in Trust Capital (Unaudited) for the Six Months Ended June 30, 2008 and 2007    |  | 7   
|                               |  |                                                                                                                
|                               |  | Notes to Condensed Financial Statements (Unaudited)                                                             |  | 8   
|                               |  |                                                                                                                
|                               |  | WCM Pool LLC:                                                                                                   |  |     
|                               |  |                                                                                                                
|                               |  | Condensed Statements of Financial Condition as of June 30, 2008 (Unaudited) and December 31, 2007               |  | 18  
|                               |  |                                                                                                                
|                               |  | Condensed Schedules of Investments as of June 30, 2008 (Unaudited) and December 31, 2007                        |  | 19  
|                               |  |                                                                                                                
|                               |  | Condensed Statements of Operations (Unaudited) for the Three Months and Six Months Ended June 30, 2008 and 2007 |  | 20  
|                               |  |                                                                                                                
|                               |  | Condensed Statements of Changes in Members Capital (Unaudited) for the Six Months Ended June 30, 2008 and 2007 |  | 21  
|                               |  |                                                                                                                
|                               |  | Notes to Condensed Financial Statements (Unaudited)                                                             |  | 22  
|                               |  |                                                                                                                
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                           |  | 30  
|                               |  |                                                                                                                
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                      |  | 43  
|                               |  |                                                                                                                
|Item 4.                        |  | Controls and Procedures                                                                                         |  | 43  
|                               | 
|PART II  OTHER INFORMATION    |  | 44                                                                                                             
|                               |  |                                                                                                                
|Item 1.                        |  | Legal Proceedings                                                                                               |  | 44  
|                               |  |                                                                                                                
|Item 1.A.                      |  | Risk Factors                                                                                                    |  | 44  
|                               |  |                                                                                                                
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                     |  | 44  
|                               |  |                                                                                                                
|Item 3.                        |  | Defaults Upon Senior Securities                                                                                 |  | 44  
|                               |  |                                                                                                                
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                                             |  | 44  
|                               |  |                                                                                                                
|Item 5.                        |  | Other Information                                                                                               |  | 44  
|                               |  |                                                                                                                
|Item 6.                        |  | Exhibits:                                                                                                       |  | 44  



---

PART I  FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK;

FINANCIAL STATEMENTS TO FOLLOW]



3



---

DIVERSIFIED FUTURES TRUST I

FINANCIAL STATEMENTS

June 30,
2008



4



---

DIVERSIFIED FUTURES TRUST I

CONDENSED STATEMENTS OF FINANCIAL CONDITION

June 30, 2008 (Unaudited) and December 31, 2007







|                                                                                                                         |  |              |            |                  |   |           
|------------------------------------------------------------------------------------------------------------------------ |  | ------------ | ---------- | ---------------- | - | ----------
|                                                                                                                         |  | June 30,2008 |            | December 31,2007
|ASSETS                                                                                                                   |  |              |            |                  |   |           
|Cash                                                                                                                     |  | $            | 21,505     |                  | $ | 5,805     
|Redemptions receivable from WCM Pool LLC                                                                                 |  |              | 221,282    |                  |   | 304,479   
|Investment in WCM Pool LLC, at fair value (100.11% and 100.53% of net asset value, respectively)                         |  |              | 11,952,568 |                  |   | 11,055,308
|Receivable from Managing Owner                                                                                           |  |              | 1,663      |                  |   | 0         
|                                                                                                                         |  |              |            |                  |   |           
|Total assets                                                                                                             |  | $            | 12,197,018 |                  | $ | 11,365,592
|                                                                                                                         |  |              |            |                  |   |           
|LIABILITIES                                                                                                              |  |              |            |                  |   |           
|Redemptions payable                                                                                                      |  | $            | 222,100    |                  | $ | 302,152   
|Commissions payable                                                                                                      |  |              | 35,977     |                  |   | 66,250    
|                                                                                                                         |  |              |            |                  |   |           
|Total liabilities                                                                                                        |  |              | 258,077    |                  |   | 368,402   
|                                                                                                                         |  |              |            |                  |   |           
|TRUST CAPITAL (Net Asset Value)                                                                                          |  |              |            |                  |   |           
|Limited Interests (44,815.854 and 46,189.067 interests outstanding) at June 30, 2008 and December 31, 2007,
respectively |  |              | 11,815,293 |                  |   | 10,883,382
|General Interests (469 and 483 interests outstanding) at June 30, 2008 and December 31, 2007, respectively               |  |              | 123,648    |                  |   | 113,808   
|                                                                                                                         |  |              |            |                  |   |           
|Total trust capital (Net Asset Value)                                                                                    |  |              | 11,938,941 |                  |   | 10,997,190
|                                                                                                                         |  |              |            |                  |   |           
|Total liabilities and trust capital                                                                                      |  | $            | 12,197,018 |                  | $ | 11,365,592
|                                                                                                                         |  |              |            |                  |   |           

Net Asset Value per Limited and General Interest



|              |  |                  
|------------- |  | -----------------
|June 30, 2008 |  | December 31, 2007
|$ 263.64      |  | $235.63          
|              |  |                  

See accompanying notes.



-2-



5



---

DIVERSIFIED FUTURES TRUST I

CONDENSED STATEMENTS OF OPERATIONS

For
the Three Months and Six Months Ended June 30, 2008 and 2007

(Unaudited)







|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|----------------------------------------------------------------------------------- |  | -------------------------- | -------- | - | ------------------------ | - | --------- | ---- |  | - | --------- | - |  | - | -------- | -
|                                                                                    |  | Three Months EndedJune 30, |          |   | Six Months EndedJune 30, |  
|                                                                                    |  | 2008                       |          |   | 2007                     |   |           | 2008 |  |   | 2007      |  
|NET LOSS FROM TRUST OPERATIONS                                                      |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|REVENUES                                                                            |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|Realized                                                                            |  | $                          | 0        |   |                          | $ | (5        | )    |  | $ | 0         |   |  | $ | 52,470   |  
|Change in unrealized                                                                |  |                            | 0        |   |                          |   | 0         |      |  |   | 0         |   |  |   | (71,943  | )
|Interest income                                                                     |  |                            | 0        |   |                          |   | 145       |      |  |   | 32        |   |  |   | 22,921   |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|Total revenues                                                                      |  |                            | 0        |   |                          |   | 140       |      |  |   | 32        |   |  |   | 3,448    |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|EXPENSES                                                                            |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|Brokerage commissions                                                               |  |                            | 222,191  |   |                          |   | 215,415   |      |  |   | 438,492   |   |  |   | 441,216  |  
|General and administrative                                                          |  |                            | 159      |   |                          |   | 0         |      |  |   | 159       |   |  |   | 0        |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|Total expenses                                                                      |  |                            | 222,350  |   |                          |   | 215,415   |      |  |   | 438,651   |   |  |   | 441,216  |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|WCM Pool LLC administrative expenses borne by the Managing Owner and its affiliates |  |                            | (4,980   | ) |                          |   | 0         |      |  |   | (13,094   | ) |  |   | 0        |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|Net expenses                                                                        |  |                            | 217,370  |   |                          |   | 215,415   |      |  |   | 425,557   |   |  |   | 441,216  |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|NET LOSS FROM TRUST OPERATIONS                                                      |  |                            | (217,370 | ) |                          |   | (215,275  | )    |  |   | (425,525  | ) |  |   | (437,768 | )
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|NET INCOME ALLOCATED FROM WCM POOL LLC:                                             |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|REVENUES                                                                            |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|Realized                                                                            |  |                            | 243,943  |   |                          |   | 1,489,813 |      |  |   | 1,984,326 |   |  |   | 192,807  |  
|Change in unrealized                                                                |  |                            | 526,679  |   |                          |   | 110,350   |      |  |   | 237,631   |   |  |   | 339,208  |  
|Interest income                                                                     |  |                            | 41,032   |   |                          |   | 130,595   |      |  |   | 93,280    |   |  |   | 254,139  |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|Total revenues                                                                      |  |                            | 811,654  |   |                          |   | 1,730,758 |      |  |   | 2,315,237 |   |  |   | 786,154  |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|EXPENSES                                                                            |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|Brokerage commissions and other transaction fees                                    |  |                            | 4,888    |   |                          |   | 11,563    |      |  |   | 10,992    |   |  |   | 35,243   |  
|Management fees                                                                     |  |                            | 59,889   |   |                          |   | 62,692    |      |  |   | 120,062   |   |  |   | 124,340  |  
|Incentive fees                                                                      |  |                            | 136,632  |   |                          |   | 80,318    |      |  |   | 409,087   |   |  |   | 80,318   |  
|General and administrative                                                          |  |                            | 23,675   |   |                          |   | 5,310     |      |  |   | 46,455    |   |  |   | 10,798   |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|Total expenses                                                                      |  |                            | 225,084  |   |                          |   | 159,883   |      |  |   | 586,596   |   |  |   | 250,699  |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|NET INCOME ALLOCATED FROM WCM POOL LLC                                              |  |                            | 586,570  |   |                          |   | 1,570,875 |      |  |   | 1,728,641 |   |  |   | 535,455  |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|NET INCOME                                                                          |  | $                          | 369,200  |   |                          | $ | 1,355,600 |      |  | $ | 1,303,116 |   |  | $ | 97,687   |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|NET INCOME PER WEIGHTED AVERAGE LIMITED AND GENERAL INTEREST                        |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|Net income per weighted average Limited and General Interest                        |  | $                          | 8.04     |   |                          | $ | 25.12     |      |  | $ | 28.18     |   |  | $ | 1.75     |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  
|Weighted average number of Limited and General Interests outstanding                |  |                            | 45,917   |   |                          |   | 53,966    |      |  |   | 46,240    |   |  |   | 55,814   |  
|                                                                                    |  |                            |          |   |                          |   |           |      |  |   |           |   |  |   |          |  

See accompanying notes.



-3-



6



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DIVERSIFIED FUTURES TRUST I

CONDENSED STATEMENTS OF CHANGES IN TRUST CAPITAL

For the Six Months Ended June 30, 2008 and 2007

(Unaudited)







|                                                  |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  
|------------------------------------------------- |  | ---------- | - |  | ---------------- | ---------- | - | ---------------- | - | ------- | ----- |  | - | ---------- | -
|                                                  |  | Interests  |   |  | LimitedInterests |            |   | GeneralInterests |   |         | Total | 
|Six months ended June 30, 2008                    |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  
|Trust capital at December 31, 2007                |  | 46,672.067 |   |  | $                | 10,883,382 |   |                  | $ | 113,808 |       |  | $ | 10,997,190 |  
|Redemptions                                       |  | (1,387.213 | ) |  |                  | (357,786   | ) |                  |   | (3,579  | )     |  |   | (361,365   | )
|Net income for the six months ended June 30, 2008 |  |            |   |  |                  | 1,289,697  |   |                  |   | 13,419  |       |  |   | 1,303,116  |  
|                                                  |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  
|Trust capital at June 30, 2008                    |  | 45,284.854 |   |  | $                | 11,815,293 |   |                  | $ | 123,648 |       |  | $ | 11,938,941 |  
|                                                  |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  
|Six months ended June 30, 2007                    |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  
|Trust capital at December 31, 2006                |  | 58,278.560 |   |  | $                | 12,835,254 |   |                  | $ | 143,870 |       |  | $ | 12,979,124 |  
|Redemptions                                       |  | (8,077.682 | ) |  |                  | (1,728,926 | ) |                  |   | (18,936 | )     |  |   | (1,747,862 | )
|Net income for the six months ended June 30, 2007 |  |            |   |  |                  | 97,147     |   |                  |   | 540     |       |  |   | 97,687     |  
|                                                  |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  
|Trust capital at June 30, 2007                    |  | 50,200.878 |   |  | $                | 11,203,475 |   |                  | $ | 125,474 |       |  | $ | 11,328,949 |  
|                                                  |  |            |   |  |                  |            |   |                  |   |         |       |  |   |            |  

See accompanying notes.



-4-



7



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DIVERSIFIED FUTURES TRUST I

NOTES TO CONDENSED 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., and 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. 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 and forward 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 (CFTC), 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 executed 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 from the sale of limited interests (Limited Interests) and 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. 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.



-5-



8



---

DIVERSIFIED FUTURES TRUST I

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)







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



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

The statement of financial condition
as of June 30, 2008, and the statements of operations for the three months and six months ended June 30, 2008 and 2007 and the statements of changes in trust capital for the six months ended June 30, 2008 and 2007 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, 2008 and the results of its operations for
the three months and six months ended June 30, 2008 and 2007. The operating results for the interim periods may not be indicative of the results expected for the full year.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Trusts annual report on Form 10-K filed with the
Securities and Exchange Commission for the year ended December 31, 2007.

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 (FASB) 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.

For the six months ended June 30, 2008 and 2007, the
Trust indirectly earned income or loss through its investments in the Company (see Note 2).

The weighted average number of Limited and
General Interests outstanding was computed for purposes of disclosing net income 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.



-6-



9



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DIVERSIFIED FUTURES TRUST I

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)







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



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

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.

In July 2006, the 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. In connection with the adoption of FIN 48, the Trust has elected an accounting policy to classify interest and penalties related to unrecognized tax benefits as interest
expense. Preferred as Managing Owner of the Trust evaluated the impact of adopting FIN 48 on the Trusts financial statements. The adoption of FIN 48 had no material impact on the Trust, as the Trusts tax positions are 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 (SFAS 157), Fair Value Measurements. SFAS 157 requires use of a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels: quoted
market prices in active markets for identical assets and liabilities (Level 1), inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly (Level 2), and unobservable inputs for the asset or
liability (Level 3). SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.

The
Trust adopted SFAS 157 in the first quarter of 2008. Based on an analysis by Preferred, the effect of applying SFAS 157 to the investments included in these financial statements did not result in a change to the fair value of the Trusts
investments. Approximately $0 or 0.00% of the Trusts investments at June 30, 2008 are classified as Level 1 or Level 2 and $11,952,568 or 100.00% are classified as Level 3 using the fair value hierarchy of SFAS 157. Approximately $0 or
0.00% of the Trusts investments at December 31, 2007 are classified as Level 1 or Level 2 and $11,055,308 or 100.00% are classified as Level 3 using the fair value hierarchy of SFAS 157.



-7-



10



---

DIVERSIFIED FUTURES TRUST I

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)







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



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

The following table
summarizes the assets and liabilities measured at fair value using the fair value hierarchy of SFAS 157:



|                                          |  |         |   |         |   |         |  |       |            |  |   |           
|----------------------------------------- |  | ------- | - | ------- | - | ------- |  | ----- | ---------- |  | - | ----------
|June 30, 2008                             |  | Level 1 |   | Level 2 |   | Level 3 |  | Total
|Assets:                                   |  |         |   |         |   |         |  |       |            |  |   |           
|Investment in WCM Pool LLC, at fair value |  | $       | 0 |         | $ | 0       |  | $     | 11,952,568 |  | $ | 11,952,568
|                                          |  |         |   |        
|December 31, 2007                         |  | Level 1 |   | Level 2 |   | Level 3 |  | Total
|Assets:                                   |  |         |   |         |   |         |  |       |            |  |   |           
|Investment in WCM Pool LLC, at fair value |  | $       | 0 |         | $ | 0       |  | $     | 11,055,308 |  | $ | 11,055,308

A table presenting the changes in the Level 3 fair value category for the six months ended
June 30, 2008 and 2007 is provided in Note 5 of the Trusts financial statements. Of the $1,728,641 and $535,455 gains for the six months ended June 30, 2008 and 2007, respectively, reported as Level 3 investments in Note 5, $237,631
and $339,208, respectively, represent a change in unrealized allocated from the Company on the Trusts condensed statements of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of SFAS 115, or SFAS 159. This statement provides companies with an option to
report selected financial assets and liabilities at fair value. This statement is effective for fiscal years beginning after November 15, 2007 with early adoption permitted.

The Trust adopted SFAS 159 during the first quarter of 2008, and it did not have a material effect on the Trusts financial statements, as the Trust
did not elect the fair value option for any eligible financial assets or liabilities.

Cash represents amounts deposited with a bank and
clearing broker, a portion of which is 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 at prevailing rates on all cash
balances held by the bank and clearing broker, as well as its pro rata share of interest income from the Company.



| | 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.



-8-



11



---

DIVERSIFIED FUTURES TRUST I

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)







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



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

The investment in the Company
is reported in the Trusts statements 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. Through its
investment in the Company, the Trust pays its pro-rata share of the 2% annual management fee (accrued and paid monthly) and a 20% incentive fee on New High Net Trading Profits (accrued monthly and paid quarterly) as defined in the advisory
agreement. Valuation of futures and forward contracts by the Company is discussed in the notes to the Companys financial statements included in Section II of this report.



| | 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 made 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 under the caption Realized in the statements of operations.



| | F. | Interest Income
| | -- | ---------------

Interest income is recorded on an
accrual basis.



|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. The Trust pays for its pro-rata allocation of expenses incurred by the
Company except for the Spectrum Global Fund Administration administrative fee.



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

The Trust pays its
pro-rata share of management and incentive fees as disclosed in Note 2(c) through its investment in the Company.



-9-



12



---

DIVERSIFIED FUTURES TRUST I

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)







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



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

The Trust deducts the cost of its pro-rata
share of commissions allocated from the Company in calculation of the Managing Owners 7.75% per annum commission.



|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, 2008 and 2007 were $438,492 and $441,216, respectively, and
for the three months ended June 30, 2008 and 2007 were $222,191 and $215,415, respectively.



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

Effective
January 1, 2007, the Trust invested its assets in the Company. The Trusts investment in the Company represents approximately 57.73% and 54.86% of the net asset value of the Company at June 30, 2008 and December 31, 2007,
respectively. 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, 2007 |            | Investments |   | Gain*      |  | Redemptions |           |  | Net Asset ValueJune 30, 2008
|WCM Pool LLC            |  | $                                | 11,055,308 |             | $ | 0          |  | $           | 1,728,641 |  | $                            | (831,381   | ) |  | $ | 11,952,568
|                        |  |                                  |            |             |   |            |  |             |           |  |                              |            |   |  |   |           
|                        |  |                                  |            |             |  
|                        |  | Net Asset ValueDecember 31, 2006 |            | Investments |   | Gain*      |  | Redemptions |           |  | Net Asset ValueJune 30, 2007
|WCM Pool LLC            |  | $                                | 0          |             | $ | 12,966,087 |  | $           | 535,455   |  | $                            | (2,121,891 | ) |  | $ | 11,379,651
|                        |  |                                  |            |             |   |            |  |             |           |  |                              |            |   |  |   |           
|                       
|*  Included in earnings |  |                                  |            |             |   |            |  |             |           |  |                              |            |   |  |   |           

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

Certain expenses allocated to the Trust from the Company are reimbursed by the Managing Owner at the Trust level.



-10-



13



---

DIVERSIFIED FUTURES TRUST I

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)







|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 a financial institution. 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 interestholders 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.

The Trusts futures commission merchant in accepting orders for the purchase or sale of domestic futures contracts, is required by 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, 2008 and December 31, 2007, such segregated assets totaled $0 and $1,042, 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 $0 and $0 at June 30, 2008 and December 31, 2007, respectively. There are no segregation requirements
for assets related to forward trading.



-11-



14



---

DIVERSIFIED FUTURES TRUST I

NOTES TO CONDENSED 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, 2008 and 2007. This information has been derived from information presented in the financial statements.



|                                                                                    |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|----------------------------------------------------------------------------------- |  | -------------------------- | ------ | -- | ------------------------ | - | ------ | ----------- |  | - | ----------- | -- |  | - | ------ | --
|                                                                                    |  | Three Months EndedJune 30, |        |    | Six Months EndedJune 30, |  
|                                                                                    |  | 2008                       |        |    | 2007                     |   |        | 2008        |  |   | 2007        |   
|                                                                                    |  | (Unaudited)                |        |    | (Unaudited)              |   |        | (Unaudited) |  |   | (Unaudited) |   
|Per Interest Performance (for an Interest outstanding throughout the entire period) |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Net asset value, beginning of period                                                |  | $                          | 255.64 |    |                          | $ | 201.12 |             |  | $ | 235.63      |    |  | $ | 222.71 |   
|                                                                                    |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Net realized and change in net unrealized gain on commodity transactions(1),
(5)    |  |                            | 16.75  |    |                          |   | 29.08  |             |  |   | 47.88       |    |  |   | 10.40  |   
|Interest income(1), (5)                                                             |  |                            | 0.89   |    |                          |   | 2.42   |             |  |   | 2.02        |    |  |   | 4.96   |   
|Expenses(1), (5)                                                                    |  |                            | (9.64  | )  |                          |   | (6.95  | )           |  |   | (21.89      | )  |  |   | (12.40 | ) 
|                                                                                    |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Net increase for the period                                                         |  |                            | 8.00   |    |                          |   | 24.55  |             |  |   | 28.01       |    |  |   | 2.96   |   
|                                                                                    |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Net asset value, end of period                                                      |  | $                          | 263.64 |    |                          | $ | 225.67 |             |  | $ | 263.64      |    |  | $ | 225.67 |   
|                                                                                    |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Total Return(3)                                                                     |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Total return before incentive fees                                                  |  |                            | 4.29   | %  |                          |   | 12.90  | %           |  |   | 15.40       | %  |  |   | 1.99   | % 
|Incentive fees                                                                      |  |                            | (1.16  | )% |                          |   | (0.69  | )%          |  |   | (3.51       | )% |  |   | (0.66  | )%
|                                                                                    |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Total return after incentive fees                                                   |  |                            | 3.13   | %  |                          |   | 12.21  | %           |  |   | 11.89       | %  |  |   | 1.33   | % 
|                                                                                    |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Supplemental Data                                                                   |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Ratios to average net asset value:(5)                                               |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Net investment loss before incentive fees(2), (4)                                   |  |                            | (9.01  | )% |                          |   | (5.65  | )%          |  |   | (8.75       | )% |  |   | (5.50  | )%
|Incentive fees(3)                                                                   |  |                            | (1.16  | )% |                          |   | (0.69  | )%          |  |   | (3.51       | )% |  |   | (0.66  | )%
|                                                                                    |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Net investment loss after incentive fees                                            |  |                            | (10.17 | )% |                          |   | (6.34  | )%          |  |   | (12.26      | )% |  |   | (6.16  | )%
|                                                                                    |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Interest income(4)                                                                  |  |                            | 1.40   | %  |                          |   | 4.50   | %           |  |   | 1.60        | %  |  |   | 4.56   | % 
|                                                                                    |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Incentive fees(3)                                                                   |  |                            | 1.16   | %  |                          |   | 0.69   | %           |  |   | 3.51        | %  |  |   | 0.66   | % 
|Other expenses(4)                                                                   |  |                            | 10.41  | %  |                          |   | 10.15  | %           |  |   | 10.35       | %  |  |   | 10.06  | % 
|                                                                                    |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   
|Total net expenses                                                                  |  |                            | 11.57  | %  |                          |   | 10.84  | %           |  |   | 13.86       | %  |  |   | 10.72  | % 
|                                                                                    |  |                            |        |    |                          |   |        |             |  |   |             |    |  |   |        |   

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 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, 2008 and 2007.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------



-12-



15



---



SECTION II







16



---

WCM POOL LLC

FINANCIAL STATEMENTS

June 30, 2008



17



---

WCM POOL LLC

CONDENSED STATEMENTS OF FINANCIAL CONDITION

June 30, 2008 (Unaudited) and December 31, 2007







|                                        |  |              |            |                  |   |           
|--------------------------------------- |  | ------------ | ---------- | ---------------- | - | ----------
|                                        |  | June 30,2008 |            | December 31,2007
|ASSETS                                  |  |              |            |                  |   |           
|Cash and cash equivalents               |  | $            | 20,522,091 |                  | $ | 20,525,950
|Interest receivable                     |  |              | 27,910     |                  |   | 47,642    
|Net unrealized gain on open contracts   |  |              | 850,734    |                  |   | 434,983   
|                                        |  |              |            |                  |   |           
|Total assets                            |  | $            | 21,400,735 |                  | $ | 21,008,575
|                                        |  |              |            |                  |   |           
|LIABILITIES                             |  |              |            |                  |   |           
|Accrued expenses                        |  | $            | 56,663     |                  | $ | 33,955    
|Management fees payable                 |  |              | 35,816     |                  |   | 70,084    
|Incentive fees payable                  |  |              | 237,702    |                  |   | 174,235   
|Redemptions payable                     |  |              | 365,745    |                  |   | 580,258   
|                                        |  |              |            |                  |   |           
|Total liabilities                       |  |              | 695,926    |                  |   | 858,532   
|                                        |  |              |            |                  |   |           
|MEMBERS CAPITAL (Net Asset Value)      |  |              |            |                  |   |           
|Member DFF LP                           |  |              | 3,312,092  |                  |   | 3,165,178 
|Member DFT I                            |  |              | 11,952,568 |                  |   | 11,055,308
|Member KGT                              |  |              | 1,408,290  |                  |   | 1,732,978 
|Member FST                              |  |              | 4,031,859  |                  |   | 4,196,579 
|                                        |  |              |            |                  |   |           
|Total members capital(Net Asset Value) |  |              | 20,704,809 |                  |   | 20,150,043
|                                        |  |              |            |                  |   |           
|Total liabilities and members capital  |  | $            | 21,400,735 |                  | $ | 21,008,575
|                                        |  |              |            |                  |   |           

See accompanying notes.



-2-



18



---

WCM POOL LLC

CONDENSED SCHEDULES OF INVESTMENTS

June 30, 2008 (Unaudited) and December 31, 2007







|                                                    |  |                                                   |    |  |                          |         |   |                                                   |       |    |                          |   |         |  
|--------------------------------------------------- |  | ------------------------------------------------- | -- |  | ------------------------ | ------- | - | ------------------------------------------------- | ----- | -- | ------------------------ | - | ------- | -
|                                                    |  | June 30, 2008                                     |    |  | December 31, 2007        |        
|Open Futures Contracts                              |  | NetUnrealizedGain (Loss)as a % ofMembers Capital |    |  | NetUnrealizedGain (Loss) |         |   | NetUnrealizedGain (Loss)as a % ofMembers Capital |       |    | NetUnrealizedGain (Loss) |  
|Futures contracts purchased:                        |  |                                                   |    |  |                          |         |   |                                                   |       |    |                          |   |         |  
|Commodities                                         |  | 1.57                                              | %  |  | $                        | 324,420 |   |                                                   | 1.82  | %  |                          | $ | 367,154 |  
|Currencies                                          |  | 0.52                                              | %  |  |                          | 108,579 |   |                                                   | (0.24 | )% |                          |   | (49,036 | )
|Interest rates                                      |  | 0.11                                              | %  |  |                          | 23,692  |   |                                                   | 0.57  | %  |                          |   | 115,021 |  
|Stock indicies                                      |  | (0.05                                             | )% |  |                          | (10,867 | ) |                                                   | 0.09  | %  |                          |   | 17,163  |  
|                                                    |  |                                                   |    |  |                          |         |   |                                                   |       |    |                          |   |         |  
|Net unrealized gain on futurescontracts purchased   |  | 2.15                                              | %  |  |                          | 445,824 |   |                                                   | 2.24  | %  |                          |   | 450,302 |  
|                                                    |  |                                                   |    |  |                          |         |   |                                                   |       |    |                          |   |         |  
|Futures contracts sold:                             |  |                                                   |    |  |                          |         |   |                                                   |       |    |                          |   |         |  
|Commodities                                         |  | 0.03                                              | %  |  |                          | 6,933   |   |                                                   | (0.01 | )% |                          |   | (1,873  | )
|Currencies                                          |  | 0.06                                              | %  |  |                          | 11,908  |   |                                                   | (0.05 | )% |                          |   | (9,014  | )
|Interest rates                                      |  | 0.69                                              | %  |  |                          | 141,478 |   |                                                   | (0.04 | )% |                          |   | (8,288  | )
|Stock indicies                                      |  | 1.18                                              | %  |  |                          | 244,591 |   |                                                   | 0.02  | %  |                          |   | 3,856   |  
|                                                    |  |                                                   |    |  |                          |         |   |                                                   |       |    |                          |   |         |  
|Net unrealized gain (loss) on futurescontracts sold |  | 1.96                                              | %  |  |                          | 404,910 |   |                                                   | (0.08 | )% |                          |   | (15,319 | )
|                                                    |  |                                                   |    |  |                          |         |   |                                                   |       |    |                          |   |         |  
|Net unrealized gain on open contracts               |  | 4.11                                              | %  |  | $                        | 850,734 |   |                                                   | 2.16  | %  |                          | $ | 434,983 |  
|                                                    |  |                                                   |    |  |                          |         |   |                                                   |       |    |                          |   |         |  

See accompanying notes.



-3-



19



---

WCM POOL LLC

CONDENSED STATEMENTS OF OPERATIONS

For
the Three Months and Six Months Ended June 30, 2008 and 2007

(Unaudited)







|                      |  |                            |           |                          |   |           |  |      |           |  |   |          
|--------------------- |  | -------------------------- | --------- | ------------------------ | - | --------- |  | ---- | --------- |  | - | ---------
|                      |  | Three Months EndedJune 30, |           | Six Months EndedJune 30,
|                      |  | 2008                       |           | 2007                     |   | 2008      |  | 2007
|REVENUES              |  |                            |           |                          |   |           |  |      |           |  |   |          
|Realized              |  | $                          | 420,831   |                          | $ | 2,746,110 |  | $    | 3,552,998 |  | $ | 877,449  
|Change in unrealized  |  |                            | 922,093   |                          |   | 206,110   |  |      | 415,751   |  |   | 539,361  
|Interest income       |  |                            | 72,590    |                          |   | 240,884   |  |      | 167,146   |  |   | 418,310  
|                      |  |                            |           |                          |   |           |  |      |           |  |   |          
|Total revenues        |  |                            | 1,415,514 |                          |   | 3,193,104 |  |      | 4,135,895 |  |   | 1,835,120
|                      |  |                            |           |                          |   |           |  |      |           |  |   |          
|EXPENSES              |  |                            |           |                          |   |           |  |      |           |  |   |          
|Brokerage commissions |  |                            | 8,663     |                          |   | 21,329    |  |      | 19,678    |  |   | 55,311   
|Management fees       |  |                            | 106,155   |                          |   | 115,641   |  |      | 214,786   |  |   | 204,152  
|Incentive fees        |  |                            | 237,702   |                          |   | 238,634   |  |      | 730,712   |  |   | 238,634  
|Operating expenses    |  |                            | 42,003    |                          |   | 9,793     |  |      | 83,134    |  |   | 17,673   
|                      |  |                            |           |                          |   |           |  |      |           |  |   |          
|Total expenses        |  |                            | 394,523   |                          |   | 385,397   |  |      | 1,048,310 |  |   | 515,770  
|                      |  |                            |           |                          |   |           |  |      |           |  |   |          
|NET INCOME            |  | $                          | 1,020,991 |                          | $ | 2,807,707 |  | $    | 3,087,585 |  | $ | 1,319,350
|                      |  |                            |           |                          |   |           |  |      |           |  |   |          

See accompanying notes.



-4-



20



---

WCM POOL LLC

CONDENSED STATEMENTS OF CHANGES IN MEMBERS CAPITAL (NET ASSET VALUE)

For the Six Months Ended June 30, 2008 and 2007

(Unaudited)







|                                                  |  |                  |           |   |             |   |            |           |  |   |           |   |  |       |           |   |  |   |            |  
|------------------------------------------------- |  | ---------------- | --------- | - | ----------- | - | ---------- | --------- |  | - | --------- | - |  | ----- | --------- | - |  | - | ---------- | -
|                                                  |  | Members Capital |          
|                                                  |  | MemberDFF LP     |           |   | MemberDFT I |   |            | MemberKGT |  |   | MemberFST |   |  | Total |          
|Six months ended June 30, 2008                    |  |                  |           |   |             |   |            |           |  |   |           |   |  |       |           |   |  |   |            |  
|Balances at December 31, 2007                     |  | $                | 3,165,178 |   |             | $ | 11,055,308 |           |  | $ | 1,732,978 |   |  | $     | 4,196,579 |   |  | $ | 20,150,043 |  
|Redemptions                                       |  |                  | (343,711  | ) |             |   | (831,381   | )         |  |   | (563,185  | ) |  |       | (794,542  | ) |  |   | (2,532,819 | )
|Net income for the six months ended June 30, 2008 |  |                  | 490,625   |   |             |   | 1,728,641  |           |  |   | 238,497   |   |  |       | 629,822   |   |  |   | 3,087,585  |  
|                                                  |  |                  |           |   |             |   |            |           |  |   |           |   |  |       |           |   |  |   |            |  
|Balances at June 30, 2008                         |  | $                | 3,312,092 |   |             | $ | 11,952,568 |           |  | $ | 1,408,290 |   |  | $     | 4,031,859 |   |  | $ | 20,704,809 |  
|                                                  |  |                  |           |   |             |   |            |           |  |   |           |   |  |       |           |   |  |   |            |  
|Six months ended June 30, 2007                    |  |                  |           |   |             |   |            |           |  |   |           |   |  |       |           |   |  |   |            |  
|Balances at December 31, 2006                     |  | $                | 0         |   |             | $ | 0          |           |  | $ | 0         |   |  | $     | 0         |   |  | $ | 0          |  
|Additions                                         |  |                  | 3,636,164 |   |             |   | 12,966,087 |           |  |   | 2,143,975 |   |  |       | 5,002,950 |   |  |   | 23,749,176 |  
|Redemptions                                       |  |                  | (483,718  | ) |             |   | (2,121,891 | )         |  |   | (227,861  | ) |  |       | (830,266  | ) |  |   | (3,663,736 | )
|Net income for the six months ended June 30, 2007 |  |                  | 153,007   |   |             |   | 535,455    |           |  |   | 97,801    |   |  |       | 533,087   |   |  |   | 1,319,350  |  
|                                                  |  |                  |           |   |             |   |            |           |  |   |           |   |  |       |           |   |  |   |            |  
|Balances at June 30, 2007                         |  | $                | 3,305,453 |   |             | $ | 11,379,651 |           |  | $ | 2,013,915 |   |  | $     | 4,705,771 |   |  | $ | 21,404,790 |  
|                                                  |  |                  |           |   |             |   |            |           |  |   |           |   |  |       |           |   |  |   |            |  

See accompanying notes.



-5-



21



---

WCM POOL LLC

NOTES TO CONDENSED 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 or Managing Member) 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). Member DFFLP, Member DFT I and Member KGT contributed their net assets to the Company effective January 1, 2007, while Member FST invested in the Company on April 1, 2007. 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 (CFTC) 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, 2008, and the statements of operations for the three months and six months ended June 30, 2008 and 2007 and the statements of changes in members capital (net
asset value) for the six months ended June 30, 2008 and 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, 2008, and the results of operations for the three months and six months ended June 30, 2008 and 2007. The operating results for these interim periods may not be indicative of the results expected for a
full year.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have been omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in Member DFT Is annual
report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2007.



-6-



22



---

WCM POOL LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)







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



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

The financial statements
of the Company are prepared in accordance with accounting principles generally accepted in the United States of America, which requires the Managing Member 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 these estimates.

Commodity futures and foreign exchange transactions are reflected in the accompanying statements 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 (FASB) 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
statements 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 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. In connection with the adoption of FIN 48, the Company has elected an accounting policy to classify interest and penalties related to
unrecognized tax benefits as interest expense. Preferred, as Managing Member of the Company, evaluated the impact of adopting FIN 48 on the Companys financial statements. The adoption of FIN 48 had no material impact on the Company, as the
Companys tax positions are based on established tax precedence for the tax treatment of investment partnerships as flow through tax entities.



-7-



23



---

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 (SFAS 157), Fair Value Measurements. SFAS 157 requires use of a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels:
quoted market prices in active markets for identical assets and liabilities (Level 1), inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly (Level 2), and unobservable inputs for the
asset or liability (Level 3). SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.

The Company adopted SFAS 157 in the first quarter of 2008. Preferred, as Managing Member of the Company, evaluated the impact adoption of SFAS 157 did have on the Companys financial statements. Based on an analysis by Preferred, the
effect of applying SFAS 157 to the investment portfolio included in these financial statements will not result in a change to the fair value of the Companys investments. Of its net unrealized gain, approximately $850,734 or 100.00% of the
Companys investments at June 30, 2008 are classified as Level 1 and $0 or 0.00% as Level 2 or Level 3 using the fair value hierarchy of SFAS 157. Of its net unrealized gain, approximately $434,983 or 100.00% of the Companys
investments at December 31, 2007 are classified as Level 1 and $0 or 0.00% as Level 2 or Level 3 using the fair value hierarchy of SFAS 157.

The following table summarizes the assets and liabilities measured at fair value using the fair value hierarchy of SFAS 157:



|                                      |  |         |         |         |   |         |  |       |   |  |   |        
|------------------------------------- |  | ------- | ------- | ------- | - | ------- |  | ----- | - |  | - | -------
|June 30, 2008                         |  | Level 1 |         | Level 2 |   | Level 3 |  | Total
|Assets:                               |  |         |         |         |   |         |  |       |   |  |   |        
|Net unrealized gain on open contracts |  | $       | 850,734 |         | $ | 0       |  | $     | 0 |  | $ | 850,734
|                                      |  |         |         |        
|December 31, 2007                     |  | Level 1 |         | Level 2 |   | Level 3 |  | Total
|Assets:                               |  |         |         |         |   |         |  |       |   |  |   |        
|Net unrealized gain on open contracts |  | $       | 434,983 |         | $ | 0       |  | $     | 0 |  | $ | 434,983

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities, including an amendment of SFAS 115, or SFAS 159. This statement provides companies with an option to report selected financial assets and liabilities at fair value. This statement is effective for fiscal years
beginning after November 15, 2007 with early adoption permitted.

The Company adopted SFAS 159 during the first quarter of 2008, and
it did not have a material effect on the Companys financial statements, as the Company did not elect the fair value option for any eligible financial assets or liabilities.

Cash represents amounts deposited with a bank and clearing broker, a portion of which is 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 broker and bank.



-8-



24



---

WCM POOL LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)







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



| | 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 statements 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 under the caption Realized in the statements of operations.



| | E. | Interest Income
| | -- | ---------------

Interest income is recorded on an
accrual basis.



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



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

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



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

The Company accrues and
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 Company accrues monthly and pays 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 six months ended June 30, 2008 and 2007, the Trading Advisor earned incentive fees of $730,712 and $238,634, respectively, of which $237,702 remains
payable at June 30, 2008.



-9-



25



---

WCM POOL LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)







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

There have been no differences
between the tax basis and book basis of assets, liabilities or 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 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 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).

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.



-10-



26



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WCM POOL LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)







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



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.

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 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, 2008 and December 31, 2007, such segregated assets totaled $16,862,096 and $17,941,562, respectively. 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 $321,843 and $48,961 at June 30, 2008 and December 31, 2007, respectively. There are no segregation requirements for assets related to
forward trading.

As of June 30, 2008, all open futures contracts mature within eighteen months.



-11-



27



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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, 2008 and 2007. This information has been derived from information presented in the financial statements.



|                                    |  |                                            |    |  |                                          |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|----------------------------------- |  | ------------------------------------------ | -- |  | ---------------------------------------- | -- |  | --------- | -- |  | --------- | -- |  | ------------ | -- |  | ----------- | -- |  | --------- | -- |  | --------- | --
|                                    |  | Three Months EndedJune 30, 2008(Unaudited) |    |  | Six Months EndedJune 30, 2008(Unaudited) |   
|                                    |  | MemberDFF LP                               |    |  | MemberDFT I                              |    |  | MemberKGT |    |  | MemberFST |    |  | MemberDFF LP |    |  | MemberDFT I |    |  | MemberKGT |    |  | MemberFST |   
|Total return(1),(4)                 |  |                                            |    |  |                                          |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Total return before incentive fees  |  | 6.21                                       | %  |  | 6.21                                     | %  |  | 6.21      | %  |  | 6.21      | %  |  | 19.89        | %  |  | 19.88       | %  |  | 19.88     | %  |  | 19.89     | % 
|Incentive fees                      |  | (1.18                                      | )% |  | (1.18                                    | )% |  | (1.18     | )% |  | (1.18     | )% |  | (3.97        | )% |  | (3.96       | )% |  | (3.97     | )% |  | (3.97     | )%
|                                    |  |                                            |    |  |                                          |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Total return after incentive fees   |  | 5.03                                       | %  |  | 5.03                                     | %  |  | 5.03      | %  |  | 5.03      | %  |  | 15.92        | %  |  | 15.92       | %  |  | 15.91     | %  |  | 15.92     | % 
|                                    |  |                                            |    |  |                                          |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Ratios to average net asset values: |  |                                            |    |  |                                          |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Expenses prior to incentive fees(2) |  | 3.02                                       | %  |  | 3.00                                     | %  |  | 3.06      | %  |  | 3.06      | %  |  | 3.05         | %  |  | 3.04        | %  |  | 3.10      | %  |  | 3.08      | % 
|Incentive fees(1)                   |  | 1.16                                       | %  |  | 1.16                                     | %  |  | 1.14      | %  |  | 1.09      | %  |  | 3.52         | %  |  | 3.50        | %  |  | 3.65      | %  |  | 3.49      | % 
|                                    |  |                                            |    |  |                                          |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Total expenses and incentive fees   |  | 4.18                                       | %  |  | 4.16                                     | %  |  | 4.20      | %  |  | 4.15      | %  |  | 6.57         | %  |  | 6.54        | %  |  | 6.75      | %  |  | 6.57      | % 
|                                    |  |                                            |    |  |                                          |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Net investment loss(2), (3)         |  | (1.62                                      | )% |  | (1.61                                    | )% |  | (1.65     | )% |  | (1.65     | )% |  | (1.45        | )% |  | (1.44       | )% |  | (1.44     | )% |  | (1.46     | )%
|                                    |  |                                            |    |  |                                          |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   



-12-



28



---

WCM POOL LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)







|Note 8. | FINANCIAL HIGHLIGHTS (CONTINUED)
|------- | --------------------------------



|                                    |  |                                            |    |  |                                          |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|----------------------------------- |  | ------------------------------------------ | -- |  | ---------------------------------------- | -- |  | --------- | -- |  | --------- | -- |  | ------------ | -- |  | ----------- | -- |  | --------- | -- |  | --------- | --
|                                    |  | Three Months EndedJune 30, 2007(Unaudited) |    |  | Six Months EndedJune 30, 2007(Unaudited) |   
|                                    |  | MemberDFF LP                               |    |  | MemberDFT I                              |    |  | MemberKGT |    |  | MemberFST |    |  | MemberDFF LP |    |  | MemberDFT I |    |  | MemberKGT |    |  | MemberFST |   
|Total return(1),(4)                 |  |                                            |    |  |                                          |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Total return before incentive fees  |  | 14.54                                      | %  |  | 14.54                                    | %  |  | 14.54     | %  |  | 14.65     | %  |  | 5.31         | %  |  | 5.31        | %  |  | 5.31      | %  |  | 14.65     | % 
|Incentive fees                      |  | (0.75                                      | )% |  | (0.73                                    | )% |  | (0.82     | )% |  | (2.79     | )% |  | (0.63        | )% |  | (0.62       | )% |  | (0.70     | )% |  | (2.79     | )%
|                                    |  |                                            |    |  |                                          |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Total return after incentive fees   |  | 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 fees(2) |  | 2.67                                       | %  |  | 2.69                                     | %  |  | 2.65      | %  |  | 2.73      | %  |  | 2.76         | %  |  | 2.77        | %  |  | 2.76      | %  |  | 2.73      | % 
|Incentive fees(1)                   |  | 0.69                                       | %  |  | 0.68                                     | %  |  | 0.75      | %  |  | 2.60      | %  |  | 0.66         | %  |  | 0.65        | %  |  | 0.76      | %  |  | 2.60      | % 
|                                    |  |                                            |    |  |                                          |    |  |           |    |  |           |    |  |              |    |  |             |    |  |           |    |  |           |   
|Total expenses and incentive fees   |  | 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 are calculated based on the change in value of members capital during the
period. An individual members total returns and ratios may vary from the above total 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 fees).
|--- | -----------------------------------------------------------------------------

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



-13-



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

This report on Form 10-Q (the Report) for the quarter ending June 30, 2008 (Second Quarter 2008) 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

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. Registrant was formed to engage in the speculative trading of commodity futures and forward contracts. Registrants fiscal year for book and tax
purposes ends on December 31.

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

Managing Owner and its Affiliates

Preferred has been the managing owner of Registrant since October 1, 2004. The term Managing Owner, as used herein, refers to Preferred.

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.

The Trading Advisor and the Trading Vehicle

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. The Advisory Agreement may be terminated for various reasons, including at the discretion of the Trading Vehicle. Registrant has allocated 100% of the proceeds from the initial and continuous offering of Registrant to the
Trading Vehicle. Registrant, through its investment in the Trading Vehicle, pays a monthly management fee equal to 0.16667% (2% annually) of the assets allocated to the Trading Advisor. Registrant, through its investment in the Trading Vehicle, pays
Winton an incentive fee of 20% of New High Net Trading Profits (as defined in the Advisory Agreement) generated by the Trading Vehicle. Incentive fees will accrue monthly and be paid quarterly in arrears.



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The term Trading Advisor, as used herein, refers to Winton Capital Management Limited
(Winton). The term Trading Advisory Agreement, as used herein, refers to the Trading Vehicle Advisory Agreement.

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, 2007 (Registrants 2007 Annual Report), which is filed as an exhibit to Registrants Form 10-K for the fiscal year ended December 31, 2007.

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, 2007, which is filed as an exhibit to Registrants annual report on Form 10-K for the fiscal year ended December 31, 2007.

The
valuation of Registrants investments that are not traded on a United States (US) 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 4 PM on the last business day of the reporting 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.

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



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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. In connection with the adoption of FIN 48,
Registrant has elected an accounting policy to classify interest and penalties related to unrecognized tax benefits as interest expense. 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 positions are 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 (SFAS 157), Fair Value Measurements. SFAS 157 requires use of a
fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels: quoted market prices in active markets for identical assets and liabilities (Level 1), inputs other than quoted market prices that
are observable for the asset or liability, either directly or indirectly (Level 2), and unobservable inputs for the asset or liability (Level 3). SFAS 157 is effective for financial statements issued for fiscal years beginning after
November 15, 2007.

Registrant adopted SFAS 157 in the first quarter of 2008. Based on an analysis by the Managing Owner, the effect of applying SFAS
157 to the investments included in Registrants financial statements did not result in a change to the fair value of Registrants investments. Approximately $0 or 0.00% of the Registrants investments at June 30, 2008 are
classified as Level 1 or Level 2 and $11,952,568 or 100.00% are classified as Level 3 using the fair value hierarchy of SFAS 157. Approximately $0 or 0.00% of Registrants investments at December 31, 2007 are classified as Level 1 or Level
2 and $11,055,308 or 100.00% are classified as Level 3 using the fair value hierarchy of SFAS 157. A table presenting the changes in the Level 3 fair value category for the six months ended June 30, 2008 and 2007 is provided in Note 5 of the
Registrants financial statements. Of the $1,728,641 and $535,455 gains for the six months ended June 30, 2008 and 2007, respectively, reported as Level 3 investments in Note 5, $237,631 and $339,208, respectively, represent a change in
unrealized allocated from the Trading Vehicle on the Registrants condensed statements of operations.

In February 2007, the FASB issued SFAS
No. 159 (SFAS 159), The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of SFAS 115 or SFAS 159. This statement provides companies with an option to report selected financial
assets and liabilities at fair value. This statement is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Registrant adopted SFAS 159 during the first quarter of 2008, and it did not have a material
effect on the Registrants financial statements, as the Registrant did not elect the fair value option for any eligible financial assets or liabilities.

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 2008, the period January 1, 2008 to June 30, 2008 (Year-To-Date 2008), the period April 1, 2007 to June 30,
2007 (Second Quarter 2007) and the period January 1, 2007 to June 30, 2007 (Year-To-Date 2007) 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 2008 and Year-To-Date 2008 were $222,100 and $357,786,
respectively. Redemptions of Limited Interests for Second Quarter 2007 and Year-To-Date 2007 were $1,125,625 and $1,728,926, respectively.

Redemptions of
General Interests for Second Quarter 2008 and Year-To-Date 2008 were $0 and $3,579, respectively. Redemptions of General Interests for Second Quarter 2007 and Year-To-Date 2007 were $7,673 and $18,936, respectively.

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



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At June 30, 2008, 100.11% 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 (through its investment in the Trading Vehicle), Registrant continues to own such liquid assets to be used as margin. The clearing broker and bank credit the Trading Vehicle (and, in turn, Registrant, as a member of the Trading
Vehicle) with interest income on 100% of its average daily equity maintained in its accounts with the clearing broker and bank during each month at competitive interest rates.

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 or 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 through its investment in the Trading Vehicle, see Note 7 to Registrants financial statements for the year ended
December 31, 2007, which is filed as an exhibit to Registrants annual report on Form 10-K for the fiscal year ended December 31, 2007.

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

Market Overview

Following is a market overview for Second Quarter 2008, Second Quarter 2007 and Second Quarter 2006:

Second Quarter 2008

While the US may
not be in the official definition of recession, the tone of the economy was clearly recessionary like in the second quarter 2008, to an even greater degree than in the first quarter. Liquidity problems persisted and concern
surrounding the viability of a number of financial institutions pervaded the atmosphere even after the Federal Reserve (Fed) bailout of Bear Stearns & Co. Inc in mid March. Inflation jitters appeared to increase
throughout the quarter as crude oil surged over $140 per barrel (pb) and food costs increased significantly.

The spread between 10-year
treasury notes and inflation-indexed securities, which measures the expected rate of inflation, steadily increased to over 2.5% at the end of June from roughly 2.3% in March. On a slightly positive note, the overall condition and liquidity within
the credit markets appeared to improve at least marginally. The Federal Open Market Committee (FMOC) appeared to end its rate cut cycle at its June meeting. However, at this point the FMOC does not appear ready to
initiate imminent rate increases as reflected in the statement from the June meeting, where the Fed displayed a clear concern for inflationary pressures but at the same time warned of a weakening economy and existing threats to global
liquidity. Treasury yields moved steadily higher for much of the quarter before falling back slightly during the final half of June.

The employment
picture worsened dramatically as the quarter developed, including an approximate 62,000 decline in June non-farm payroll as the unemployment rate rose to 5.5% versus 5.1% from the first quarter. In addition, weekly unemployment claims surged at the
end of June. As for housing, it remains in a highly depressed state with



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no indication of a bottom in 2008. Manufacturing was mostly challenged with regional data from the New York, Chicago and Philly Fed showing
weakness throughout the quarter. On the inflation front, both the Consumer Price Index and Producer Price Index rose during the quarter. The core measures of these indices were slightly more controlled but the energy component stoked inflationary
fears. The first quarter Gross Domestic Product was revised up to 1.0% from 0.9% and the second quarter appeared to be tracking between 0.5% and 1.2% at the close of the period.

Currencies:The US dollar remained under pressure during much of June but towards the close of the quarter the dollar displayed some modest strength as both the Treasury and the Fed aggressively
nudged a strong dollar policy. There were hints of intervention but none has been forthcoming. Overall for the quarter the euro was still up, closing the quarter over $1.58. The British pound rose to $1.99 as both the euro and pound appear to have
put in tops. The Bank of Japan seems to be in a steady holding pattern. The Peoples Bank of China extended its long running tight monetary policy and the dollar saw further gains to the yuan in June, extending its streak to twelve consecutive
quarters of gains to the yuan. The Canadian dollar rose slightly in the second quarter while the Australian dollar was near a twenty-five year high. Meanwhile, the New Zealand dollar was down for the quarter, taking it to a slight year to date loss.

Energies:It was yet another record quarter for the energy sector. Front month crude hit a record high trading level on June 30 over $143 pb
and ended the quarter up over 37%. The de-leveraging pressure noted in the first quarter was noticeably absent in the second quarter, while geopolitical concerns surrounding Nigeria, Israel/Iran and Venezuela persisted. However, supply/demand
fundamentals held strong and Congress has not yet engaged in any meaningful legislation to curb speculation. China lifted some subsidies on petroleum in an effort to curb consumption. Reformulated gasoline rose despite clear evidence of at least
modest demand destruction in the US. Gasoline futures have risen over 30% for the year to date within the Dow Jones AIG Index. Heating oil advanced to end the period and has surged over 50% year to date. Refining margins remain lean, lessening
incentive to produce. The price of domestic natural gas surged from the first quarter and has rallied over 70% for the year. The Department of Energys natural gas supplies are down from last year and are below the five year average.

Agriculturals:Through the April and May planting period, the corn market traded within a modest range. Excessive precipitation across the central
corn and bean belt resulted in planting delays, which in turn allowed prices to rally to a new, all time record high. For the entire second quarter, soybean prices moved higher in opposition to the Chicago Board of Trade Open Interest report. Prices
closed the quarter approximately 50% higher while open interest fell. Global soybean demand remains practically insatiable, especially from the Peoples Republic of China. Wheat prices continued to return rocketing gains, a result of rampant corn
prices and questionable crop prospects. In addition, the break in the record-setting Australian drought is as responsible as any single event in easing the global concerns of a feed grain shortage. Cotton prices gyrated wildly throughout the second
quarter, while moving in a generally lower direction.

Indices:It was a difficult quarter for equities across the globe and the US was certainly no
exception as it extended first quarter losses. Many of the same factors that weighed on sentiment in the first quarter were operative again in the second quarter. Financials were particularly weak as credit/liquidity concerns pervaded the
atmosphere. Surging petroleum prices were an almost daily drag. The technology sector outperformed most other sectors and airlines and other energy sensitive area were challenged. This resulted in a second quarter loss of over 7% for the Dow
Jones Industrial Index, taking the losses to over 14% year to date. The S&P 500 fell approximately 3% during the quarter as is down over 13% for the year. The NASDAQ fell just under 1% during the three months.

European equities had their worst quarterly performance in six years during the first quarter and the second quarter was another debacle. A hawkish European Central Bank
(ECB) and mostly lackluster economic data from Germany, France, Italy and the UK kept prices on the defensive. In addition, the credit crunch and liquidity concerns were even more apparent during the second quarter with little
sign of improvement. The German DAX lost over 2% to end the quarter following a 19% slide from the first quarter. The French CAC fell more than 6% after losing nearly 16% in the first quarter. Londons FTSE continued to struggle in the second
quarter and posted an approximate 2% loss following the over 11% loss from the first quarter. Weakness in financials was particularly negative for the UK market. The Bank of England was not nearly as hawkish as the ECB and many market
participants are looking for a rate cut later in the year.

Volatility continued to dominate the Asian equity markets during the period. Lackluster
economic data within Japan and Asia in general weighed on sentiment and the weakness in US markets also served as a drag. In Hong Kong, the Hang Seng Index fell over 3% and in South Korea the Kospi Index slumped over 6%, with particular weakness in
the end of the quarter. The New Zealand All Ordinaries Index experienced losses of almost 12% for quarter.



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Metals:Geopolitical factors, concerns surrounding the global financial system, inflation fears and plunging
global equities enticed demand for gold and metals in general. Gold saw a mixed picture during April and May but rebounded to gain approximately 4% in June, resulting in a slight overall gain for the quarter. As usual, silver followed suit on
its parasitic role and ended the quarter with overall positive performance. Platinum prices increased as well and closed the quarter with a year-to-date gain above 35%.

With growing evidence of global economic malaise, base metals turned in mixed performance for the quarter. Global exchange warehouse inventories remain low for copper but the metal ended with positive quarterly
performance. Aluminum finished June with strong performance for the quarter; however, zinc, nickel, lead and tin had overall negative performance for the period.

Softs and Livestock:Sugar advanced during the quarter with better than a 16% overall gain in June. Soaring input costs and years of low prices have led to lower production and some analysts are forecasting even lower production in
2009. The weak dollar was supportive of sugar, as well as other softs, throughout most of the quarter. Cocoa prices roared, closing up over 35%. Poor quality crops in much of West Africa, including the Ivory Coast, have helped support the rally. In
addition, political tensions growing once again in the Ivory Coast, which produces about 40% of the worlds cocoa, are threatening to thwart production. Coffee posted solid gains during the quarter as well.

After lagging badly in the first quarter, live cattle prices joined the commodity train with an approximate 15% surge in the second quarter. Improved demand, shrinking
supplies and high corn prices, which curbed herd size, were all attributable to the overall positive performance. Live hog prices capped the quarter with improved prices but are still down over 16% year to date within the Dow Jones AIG Index.

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 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.



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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 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.



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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. 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



37



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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.

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



38



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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 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.



39



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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.

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 2008, Second
Quarter 2007 and Second Quarter 2006 are presented below.

Second Quarter 2008

Currencies: (+) This sector experienced a majority of its gains in the Australian dollar, Brazilian real, Mexican peso and euro versus yen cross. The majority
of losses were experienced in the Japanese yen, New Zealand dollar and South African rand.

Energies: (+)This sector experienced gains in
gasoline, heating oil, brent crude, crude oil, gas oil and natural gas. There were no losses incurred for the quarter overall.

Grains:
(+)This sector experienced gains in corn, soybeans, soybean oil, bean oil and canola oil. Losses were seen in cotton and wheat.

Indices:
(+)This sector experienced a majority of its gains in the DJ Stoxx 50, All Ordinaries, the DAX and the S&P 500. The majority of losses were made in the Nikkei, Taiwan SIMEX and the CAC 40.

Interest Rates: (-)This sector experienced a majority of its losses in US Treasury Notes, Eurodollars and Australian Bonds. The majority of gains were incurred
in Euribor, Short Sterling and German Bonds.

Meats: (-)This sector experienced losses in feeder cattle, live cattle and live hogs. There were no
gains in this sector for the quarter overall.

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

Softs: (+)This sector experienced gains in coffee and cocoa. Losses were seen in sugar.

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.



40



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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.

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, 2008 was $263.64, an increase of 11.89% from the December 31, 2007 Net Asset Value per Interest of $235.63 and an increase of 3.13% from the March 31, 2008
Net Asset Value per Interest of $255.64. The 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. Past performance is not necessarily indicative of future results.

Registrants trading
gains before commissions and related fees during Second Quarter 2008 and Year-To-Date 2008 were approximately $771,000 and $2,222,000, respectively. 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.



41



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The Registrants average net asset level increased during the Second Quarter 2008 in comparison to Second Quarter
2007 primarily due to positive trading performance offset partially by redemptions. The Registrants average net asset level decreased during the Year-To-Date 2008 in comparison to Year-To-Date 2007 primarily due to the effect of redemptions
offset partially by positive trading performance. Registrants average net asset level decreased during Second Quarter 2007 and Year-To-Date 2007 in comparison to Second Quarter 2006 and Year-To-Date 2006 primarily due to the effect of
redemptions.

Interest income is earned on the average daily equity maintained with the clearing broker or bank at competitive interest rates and,
therefore, varies monthly according to interest rates, trading performance and redemptions. Interest income during Second Quarter 2008 and Year-To-Date 2008 was approximately $41,000 and $93,000, respectively, a decrease of approximately $90,000 and
$184,000, respectively, as compared to Second Quarter 2007 and Year-To-Date 2007, primarily due to declining interest rates and the effect of redemptions discussed above. 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 discussed above.

Commissions are calculated on Registrants Net Asset Value at the beginning of each month and therefore, vary according to monthly trading
performance and redemptions. Other transaction fees consist of National Futures Association, 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 2008 and Year-To-Date 2008 were approximately $227,000 and $449,000, respectively, a
decrease of approximately $0 and $27,000, respectively, as compared to Second Quarter 2007 and Year-To-Date 2007, primarily due to the effect of redemptions discussed above. 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
discussed above.

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 trading performance and redemptions. Management fees during the Second Quarter 2008 and Year-To-Date 2008 were approximately $60,000 and $120,000, respectively, a decrease of approximately $3,000 and $4,000,
respectively, as compared to Second Quarter 2007 and Year-To-Date 2007, primarily due to the effect of redemptions discussed above. Management fees during the 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 discussed above.

Incentive fees, which 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 2008 and Year-To-Date 2008 were approximately $137,000 and $409,000, respectively. Incentive
fees during Second Quarter 2007 and Year-To-Date 2007 were approximately $80,000 and $80,000, respectively.

General and administrative expenses during
Second Quarter 2008 and Year-To-Date 2008 were approximately $19,000 and $34,000, respectively. General and administrative expenses during Second Quarter 2007 and Year-To-Date 2007 were approximately $5,000 and $11,000, respectively. These expenses
charged to Registrant by its investment in the Trading Vehicle include accounting, audit, tax, and legal fees, as well as printing and postage costs related to reports sent to limited owners.

Inflation

Inflation has had no material impact on the operations or
on the financial condition of Registrant from inception through June 30, 2008.

Off-Balance Sheet Arrangements and Contractual Obligations

As of June 30, 2008, 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



42



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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 (through its investment in the Trading Vehicle) and the Managing Owner are calculated as a fixed percentage of the Trading Vehicle
and Registrants Net Asset Value, respectively. Incentive fees payable by the Registrant to the Trading Advisor (through its investment in the Trading Vehicle) 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 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, 2007, which is filed as an exhibit to Registrants annual report on Form 10-K
for the fiscal year ended December 31, 2007.



|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
|------- | -----------------------

Evaluation of Disclosure Controls
and Procedures

Registrants disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities and Exchange Act of 1934, as amended (the Exchange Act)) are designed to ensure that information required to be disclosed by Registrant in reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the SEC), and that such information is accumulated and communicated to Registrants management,
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), as
appropriate to allow for timely decisions regarding required disclosure.

In designing and evaluating Registrants disclosure controls and procedures,
the Managing Owner recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and
procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

The Managing Owners management, 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), has evaluated the effectiveness of Registrants disclosure controls and procedures as of the end of the period covered by this report. Based upon such evaluation, the Managing
Owners Co-Chief Executive Officers and Director of Fund Administration have concluded that, as of the end of such period, Registrants disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There
have been no 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 Second Quarter 2008 that have materially affected, or are reasonably
likely to materially affect, Registrants internal controls over financial reporting.



43



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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, 2007.



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

None



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None



|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)

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY.]



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 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 12, 2008
|Name:                       |  | Kenneth A. Shewer                                                                                 
|Title:                      |  | Co-Chief Executive Officer (Principal
Executive Officer)                                          
|                            |  |                                                                                                    | 
|By:                         |  | /s/ David K. Spohr                                                                                 |  |  |  | Date: August 12, 2008
|Name:                       |  | David K. Spohr                                                                                     |  |  |  |                      
|Title:                      |  | Senior Vice President and Director of Fund
Administration (Principal Financial/Accounting Officer) |  |  |  |