UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number: 811-10593

Morgan Stanley Institutional Fund of Hedge Funds LP

(Exact Name of Registrant as specified in Charter)

One Tower Bridge

100 Front Street, Suite 1100

West Conshohocken, Pennsylvania 19428-2881

(Address of principal executive offices)

Barry Fink, Esq.

Morgan Stanley Investment Management Inc.

1221 Avenue of the Americas

New York, NY 10020

(Name and address of agent for service)

Registrant’s Telephone Number, including Area Code: (610) 260-7600

Date of fiscal year end: December 31

Date of reporting period: September 30, 2004

Item 1. Schedule of Investments.

The Registrant’s schedule of investments as of the close of the reporting period prepared pursuant to Rule 12-12 of Regulation S-X is as follows:

	MORGAN STANLEY ALTERNATIVE INVESTMENT PARTNERS LP
Morgan Stanley Institutional Fund of Hedge Funds LP
Schedule of Investments (Unaudited)
September 30, 2004
Description	First Acquisition Date	Cost		Fair Value		Percent of Partners’ Capital
Investment Funds
Closed End Funds
Laxey Investors, L.P.	9/1/2004	$	5,000,000	$	5,025,733	0.40	%
Western Investment Institutional Partners, L.P.	4/1/2004		2,000,000		2,088,024	0.17
Western Investment Hedged Partners, L.P.	11/1/2003		5,000,000		5,371,711	0.42
Total Closed End Funds			12,000,000		12,485,467	0.99
Convertible Arbitrage
Alta Partners, L.P.	7/1/2002		11,375,000		15,118,655	1.20
KBC Convertible Opportunities, L.P.	7/1/2002		21,000,000		25,756,030	2.04
Lydian Partners II, L.P.	7/1/2002		23,750,000		28,852,713	2.28
Triborough Partners, LLC	7/1/2002		8,250,000		8,008,407	0.63
Total Convertible Arbitrage			64,375,000		77,735,805	6.15
Credit Trading and Capital Structure Arbitrage
Artesian Credit Arbitrage Total Return Fund, L.P.	4/1/2004		10,000,000		10,337,581	0.82
AXA Kappa	12/1/2003		5,000,000		4,662,046	0.36
Blue Mountain Credit Alternatives Fund, L.P.	6/1/2004		5,500,000		5,569,220	0.44
D.E. Shaw Laminar Fund, LLC	7/1/2002		28,750,000		42,643,609	3.37
Fir Tree Recovery Fund, L.P.	7/1/2002		15,500,000		21,381,363	1.69
Hammerman Capital Partners, L.P.	7/1/2002		8,500,000		13,416,553	1.06
KBC Credit Arbitrage Fund	1/1/2003		10,000,000		11,764,908	0.93
KBC Return Enhancement Fund	9/1/2003		20,000,000		18,874,806	1.49
Mariner Relative Value Fund, L.P.	9/1/2003		13,000,000		13,952,875	1.10
OZF Credit Opportunities Fund, L.P.	7/1/2002		20,750,000		28,918,198	2.29
Pequot Credit Opportunities Fund, L.P.	7/1/2003		18,250,000		19,366,058	1.53
Trilogy Financial Partners, L.P.	1/1/2003		8,000,000		9,570,477	0.76
Total Credit Trading and Capital Structure Arbitrage			163,250,000		200,457,695	15.84

1

MORGAN STANLEY ALTERNATIVE INVESTMENT PARTNERS LP
Morgan Stanley Institutional Fund of Hedge Funds LP
Schedule of Investments (Unaudited) (continued)
September 30, 2004
Description	First Acquisition Date	Cost		Fair Value			Percent of Partners’ Capital
Investment Funds (continued)
Fixed Income Arbitrage
Endeavour Fund I, LLC	3/1/2004	$	14,450,000	$	15,192,643		1.20	%
FrontPoint Fixed Income Opportunities Fund, L.P.	7/1/2002		24,750,000		27,467,130		2.17
The Precept Foreign Fund II, Ltd.	8/1/2004		5,000,000		4,950,805		0.39
Vega Relative Value Fund, Ltd.	7/1/2002		24,750,000		30,558,636		2.42
Total Fixed Income Arbitrage			68,950,000		78,169,213		6.18
Long Only Distressed
Avenue Asia Investments, L.P.	7/1/2002		18,100,000		24,733,205		1.96
Avenue Europe Investments, L.P.	8/1/2004		8,000,000		8,241,350		0.65
ORN European Distressed Debt Fund, LLC	11/1/2003		9,131,840		10,398,529		0.82
Total Long Only Distressed			35,231,840		43,373,084		3.43
Long-Short
Amici Associates, L.P.	5/1/2004		5,000,000		5,276,466		0.42
Atlas Capital, L.P.	8/1/2004		6,000,000		6,059,424		0.48
Bryn Mawr Capital, L.P.	10/1/2002		9,987,725		11,329,659		0.90
Delta Institutional, L.P.	3/1/2004		5,000,000		5,069,961		0.40
Durban Capital, L.P.	7/1/2004		4,250,000		4,366,226		0.35
Elm Ridge Capital Partners, L.P.	7/1/2004		4,000,000		4,090,731		0.32
Frontpoint Healthcare Fund, L.P.	5/1/2003		7,000,000		8,207,336		0.65
Gotham Asset Management, L.P.	8/1/2003		14,500,000		16,102,357		1.27
Intrepid Capital Fund, L.P.	7/1/2004		2,500,000		2,529,201		0.20
Karsch Capital II, L.P.	5/1/2004		5,000,000		5,054,537		0.40
KiCap Network Fund, L.P.	1/1/2003		15,000,000		15,724,698		1.24
Lancer Partners, L.P.	7/1/2002		15,625,000		0	(a)	0.00
Maverick Fund USA, Ltd.	7/1/2002		21,875,000		24,798,174		1.96
Satellite FS Hedged Equity Partners, L.P.	8/1/2004		6,000,000		6,034,842		0.48
Tiger Consumer Partners, L.P.	9/1/2003		5,000,000		4,912,628		0.39
Tiger Technology, L.P.	1/1/2003		6,500,000		8,479,733		0.67
Trivium Institutional Onshore Fund, L.P.	6/1/2004		10,058,188		10,237,413		0.81
Total Long-Short			143,295,913		138,273,385		10.94

2

MORGAN STANLEY ALTERNATIVE INVESTMENT PARTNERS LP
Morgan Stanley Institutional Fund of Hedge Funds LP
Schedule of Investments (Unaudited) (continued)
September 30, 2004
Description	First Acquisition Date	Cost		Fair Value			Percent of Partners’ Capital
Investment Funds (continued)
Mortgage Arbitrage
Ellington Mortgage Partners, L.P.	7/1/2002	$	28,750,000	$	36,455,389		2.88	%
Highland Opportunity Fund, L.P.	8/1/2002		21,000,000		22,748,595		1.80
Metacapital Fixed Income Relative Value Fund, L.P.	7/1/2003		9,000,000		9,821,489		0.78
Parmenides Fund, L.P.	9/1/2003		10,000,000		11,928,074		0.94
Safe Harbor Fund, L.P.	7/1/2002		18,750,000		7,930,208	(b)	0.63
Structured Servicing Holdings, L.P.	7/1/2002		17,825,940		24,875,239		1.97
Total Mortgage Arbitrage			105,325,940		113,758,995		9.00
Multi-Strategy
AQR Absolute Return Instit. Fund, L.P.	7/1/2002		24,750,000		26,971,200		2.13
Brevan Howard, L.P.	8/1/2004		23,000,000		22,862,913		1.81
Citadel Wellington Partners, L.P.	7/1/2002		55,250,000		67,044,108		5.30
Deephaven Market Neutral Fund, LLC	7/1/2002		33,000,000		39,908,172		3.16
HBK Fund, L.P.	7/1/2002		36,661,678		43,866,000		3.47
Jet Capital Arbitrage and Event Fund I, L.P.	1/1/2003		18,000,000		18,873,746		1.49
K Capital II, L.P.	1/1/2003		22,000,000		23,598,501		1.87
Nisswa Fund, L.P.	7/1/2002		16,875,000		16,370,845		1.29
Onyx Capital Fund, L.P.	4/1/2003		13,500,000		12,234,461		0.97
OZ Domestic Partners, L.P.	7/1/2002		37,500,000		48,176,580		3.81
Q Funding III, L.P.	7/1/2002		9,912,040		17,300,720		1.37
Sagamore Hill Partners, L.P.	7/1/2002		26,750,000		30,975,637		2.45
Severn River Capital Partners, L.P.	8/1/2004		5,000,000		4,957,185		0.39
The Animi Fund, L.P.	10/1/2003		20,000,000		21,444,853		1.70
Tiburon Fund, L.P.	8/1/2002		34,000,000		35,896,264		2.84
Total Multi-Strategy			376,198,718		430,481,184		34.05

3

MORGAN STANLEY ALTERNATIVE INVESTMENT PARTNERS LP
Morgan Stanley Institutional Fund of Hedge Funds LP
Schedule of Investments (Unaudited) (continued)
September 30, 2004
Description	First Acquisition Date	Cost		Fair Value		Percent of Partners’ Capital
Investment Funds (continued)
Risk Arbitrage
Empyrean Capital Fund, L.P.	7/1/2004	$	2,500,000	$	2,506,524	0.20	%
European Merger Fund, LLC	7/1/2002		11,250,000		11,584,467	0.92
Gruss Arbitrage Partners, L.P.	7/1/2002		6,250,000		6,736,242	0.53
Total Risk Arbitrage			20,000,000		20,827,233	1.65
Statistical Arbitrage
Altus Fund, L.P.	7/1/2002		6,250,000		5,823,213	0.46
Glacis Domestic Fund, LLC	10/1/2003		18,000,000		16,654,090	1.32
IKOS, L.P. Equity Class	7/1/2002		25,206,130		28,073,319	2.22
Thales Fund, L.P.	7/1/2002		4,562,255		5,023,105	0.40
Ventus Fund Limited	1/1/2003		12,000,000		11,891,412	0.93
Total Statistical Arbitrage			66,018,385		67,465,139	5.33
Total Investments in Investment Funds			1,054,645,796		1,183,027,200	93.56
Purchased Options
Iboxx CDX Swaption expires 12/20/04			958,815		166,350	0.01
Iboxx CDX Swaption expires 12/20/04			1,034,060		110,469	0.01
Total Purchased Options			1,992,875		276,819	0.02
Short-Term Investments
State Street Euro Dollar Time Deposit 1.25% due 10/01/04			43,394,374		43,394,374	3.43

4

MORGAN STANLEY ALTERNATIVE INVESTMENT PARTNERS LP
Morgan Stanley Institutional Fund of Hedge Funds LP
Schedule of Investments (Unaudited) (continued)
September 30, 2004
Description	Cost		Fair Value		Percent of Partners’ Capital
Total Investments in Investment Funds, Options, and Short-Term Investments	$	1,100,033,045	$	1,226,698,393	97.01	%
Other Assets, less Liabilities				37,775,852	2.99
Total Partners’ Capital			$	1,264,474,245	100.00	%

Detailed information about the Investment Funds’ portfolios in not available.

(a) Fair valued at value other than that provided by the Investment Fund manager.

(b) In liquidation.

5

Item 2. Controls and Procedures

(a) The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Registrant in the form N-Q was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of the report.

(b) There were no changes or corrective actions during the Registrant’s last fiscal quarter with regard to significant deficiencies or material weaknesses in the Registrant’s internal controls over financial reporting or in other factors that could materially affect the Registrant’s internal controls over financial reporting.

Item 3. Exhibits

(a) Certifications of Principal Executive Officer and Principal Financial Officer attached to the report as part of EX-99. CERT.

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused his report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) Morgan Stanley Institutional Fund of Hedge Funds LP

By:	/s/ Ronald E. Robison
Name:	Ronald E. Robison
Title:	Principal Executive Officer
Date:	November 29, 2004

Pursuant to the requirement of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ Ronald E. Robison
Name:	Ronald E. Robison
Title:	Principal Executive Officer
Date:	November 29, 2004
By:	/s/ James Garrett
Name:	James Garrett
Title:	Principal Financial Officer
Date:	November 29, 2004