UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549

	FORM 10-K

[X]	Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the year ended December 31, 2006 or

[ ]	Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from ________________to___________________

Commission File Number 0-18314

	MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

(Exact name of registrant as specified in its Limited Partnership Agreement)

		DELAWARE		        				13-3541588
(State or other jurisdiction of			   	   (I.R.S. Employer
incorporation or organization)			 	         Identification No.)

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

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

Securities registered pursuant to Section 12(b) of the Act:
									  Name of each exchange
   Title of each class  						   on which registered

		None								    None

Securities registered pursuant to Section 12(g) of the Act:

40  Units of Limited Partnership Interest
41:
	(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.  Yes          No  X

Indicate by check mark if the registrant
is not required to file reports pursuant
to Section 13 or Section 15(d) of the Act.  Yes          No  X

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 if disclosure of
 delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein,
 and will not be contained, to the best of
registrant?s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of
 this Form 10-K or any amendment of this
Form 10-K. [X]

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

Large accelerated filer___  Accelerated filer____  Non-accelerated filer   X

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

State the aggregate market value of the Units of Limited Partnership Interest
held by non-affiliates of the registrant.  The aggregate market value shall be
computed by reference to the price at which Units were sold as of the last
business day of the registrant?s most recently completed second fiscal quarter:
$14,864,984 at June 30, 2006.

	DOCUMENTS INCORPORATED BY REFERENCE
	(See Page 1)


<page> <table> MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
(formerly, Dean Witter Principal Plus Fund L.P.)
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 2006
<caption>
                              Page No.

							<c>
DOCUMENTS INCORPORATED BY REFERENCE. . . . . . . . . . . . . 	. . . . . 1

Part I .

	Item 1. 	Business . . . . . . . . . . . . . . . . . . . . . . . . 2-6

	Item 1A.	Risk Factors . . . . . . . . . . . . . . . . . . . . . . 6-7

	Item 1B.	Unresolved Staff Comments. . . . . . . . . . . . . . . . . 7

	Item 2. 	Properties . . . . . . . . . . . . . . . . . . . . . . . 7-8

	Item 3. 	Legal Proceedings . . . . . . . . . . . . . . . . . . . . .8

	Item 4. 	Submission of Matters to a Vote of Security Holders . . .  8
Part II.

	Item 5. 	Market for Registrant's Partnership Units
			and Related Security Holder Matters . . . . . . . . . . .  9

	Item 6. 	Selected Financial Data . . . . . . . . . . . . . . . . . 10

	Item 7. 	Management's Discussion and Analysis of Financial
				Condition and Results of Operations . . . . . . . . . .11-33

	Item 7A.	Quantitative and Qualitative Disclosures About
				Market Risk . . . . . . . . . . . . . . . . . . . . .  33-48

	Item 8. 	Financial Statements and Supplementary Data . . . . . . . 48
117:
	Item 9.		Changes in and Disagreements with Accountants on
			Accounting and Financial Disclosure . . . . . . . . . . . 48

	Item 9A.		Controls and Procedures . . . . . . . . . . . . . . . .49-51

	Item 9B.	Other Information . . . . . . . . . . . . . . . . . . . . 52
Part III.

	Item 10.		Directors, Executive Officers and Corporate
			Governance . . . . . . . . . . . . . . . . . . . . . . 53-60

	Item 11.	Executive Compensation . . . . . . . . . . . . . . . . . .61

	Item 12.		Security Ownership of Certain Beneficial Owners
				and Management and Related Security Holder Matters.. . . .61

	Item 13.	Certain Relationships and Related Transactions,
			and Director Independence . . . . . . . . . .  . . . . 61-62

	Item 14.		Principal Accountant Fees and Services. . . . . . . . .62-63
Part IV.
	Item 15.		Exhibit and Financial Statement Schedules. . . . . . . 64-65

</table>






148:


<page>


	DOCUMENTS INCORPORATED BY REFERENCE


Portions of the following documents are incorporated by reference
as follows:


	        Documents Incorporated	         Part of Form 10-K

	Partnership's Prospectus dated
	November 8, 1995    	      I

	Annual Report to Morgan Stanley
	Principal Plus Fund L.P.
(formerly, Dean Witter Principal
	Plus Fund L.P.) Limited Partners
	for the year ended December 31,
	2006                                    II, III, and IV








180:


183:










- 1 -
<page> PART I
Item 1.  BUSINESS

(a) General Development of Business.  Morgan Stanley Principal Plus
Fund L.P. (formerly known as Dean Witter Principal Plus Fund L.P.)
(the "Partnership") is a Delaware limited partnership organized in
1989 to engage primarily in the speculative trading of futures
contracts, options on futures contracts, and forward contracts on
physical commodities and other commodity interests (collectively,
?Futures Interests?). The Partnership commenced trading operations
on February 14, 1990.

Effective July 20, 2006, Dean Witter Principal Plus Fund L.P. was
renamed to Morgan Stanley Principal Plus Fund L.P.

The Partnership?s general partner is Demeter Management Corporation
(?Demeter?).  The non-clearing commodity broker is Morgan Stanley
DW Inc. (?Morgan Stanley DW?).  The clearing commodity brokers are
Morgan Stanley & Co. Incorporated (?MS&Co.?) and Morgan Stanley &
Co. International Limited (?MSIL?).  MS&Co. acts as the
counterparty on all of the foreign currency forward contracts.  In
2007, Morgan Stanley intends to merge Morgan Stanley DW into MS&Co.
 Upon completion of the merger, the surviving entity, MS&Co., will
be the Partnership?s principal U.S. commodity broker?dealer.
Demeter, Morgan Stanley DW, MS&Co.,
                                - 2 -
<page> and MSIL are wholly-owned subsidiaries of Morgan Stanley.
The trading advisor to the Partnership is SSARIS Advisors, LLC (the
?Trading Advisor?).  Morgan Stanley Principal Plus Fund Management
L.P. (formerly known as Dean Witter Principal Plus Fund Management
L.P.) (the ?Trading Company?) was established solely to trade in
Futures Interests on behalf of the Partnership.

Effective October 5, 2006, Dean Witter Principal Plus Fund
Management L.P. was renamed to Morgan Stanley Principal Plus Fund
Management L.P.

From February 1, 1996, through August 31, 2003 (the ?Guarantee
Period?), the Partnership had approximately 80% of its assets
invested in zero-coupon United States Treasury Securities (the
?Yield Pool?) and its remaining assets were invested in Futures
Interests.

The investment in the Yield Pool was made in order to ensure a
guaranteed net asset value per limited partnership interest
(?Unit(s)?) of $1,961.00 as of the end of the Guarantee Period,
which occurred on August 31, 2003.  At the end of the Guarantee
Period the net asset value per Unit was $2,058.58, greater than the
guaranteed net asset value of at least $1,961.00 per Unit.  The
zero-coupon U.S. Treasury Securities matured and the Yield
                               - 3 -
<page> Pool was liquidated on August 31, 2003.  The proceeds from
its  liquidation were invested in and will continue to be used in
the trading of Futures Interests without any guarantee with respect
to the net asset value per Unit at any future date.

The Partnership began the year at a net asset value per Unit of
$1,895.39 and returned 0.8% to $1,909.85 on December 31, 2006. For
a more detailed description of the Partnership's business, see
subparagraph (c).

(b) Financial Information about Segments.  For financial infor-
mation reporting purposes, the Partnership is deemed to engage in
one industry segment, the speculative trading of futures, forwards,
and options.  The relevant financial information is presented in
Items 6 and 8.

(c) Narrative Description of Business.  The Partnership is in the
business of speculative trading of futures, forwards, and options
pursuant to trading instructions provided by the Trading Advisor.
For a detailed description of the different facets of the
Partnership's business, see those portions of the Partnership's
prospectus, dated November 8, 1995 (the ?Prospectus?), incor-
porated by reference in this Form 10-K, set forth below.

- 4 -
<page>
	Facets of Business
	1.	Summary	1.	"Summary of the Prospectus"
		(Pages 2-14 of the
		 Prospectus).

	2.	Commodity Markets	2.	"The Futures, Options, and
				 Forward Markets" (Pages
				 51-56 of the Prospectus).

	3.	Partnership's Commodity	3.	?Trading Policies? (Page
		Trading Arrangements and		 62 of the Prospectus). ?The
  		Policies		 Trading Advisor (Pages 58-
				 62 of the Prospectus).
				?The Yield Pool? (Page 63
				 of the Prospectus).  ?The
				 Trading Company? (Pages
				 63-64 of the Prospectus).

	4.	Management of the Part-	4.	"The Management Agree-
		nership		 ment?(Pages 66-67 of the
				 Prospectus).  ?The General
				 Partner? (Pages 48-50 of
				 the Prospectus) and
				"the Commodity Broker?
				(Pages 64-65 of the
				 Prospectus).  ?The
 Partnership Agreement?
(Pages 70-73 of the
 Prospectus).

	5.	Taxation of the Partner-	5. 	?Material Federal Income
  	ship?s Limited Partners		 Tax  Aspects? and "State
				 and Local Income Tax
                        		 Aspects" (Pages 77-86 of
				 the Prospectus).

(d) Financial Information about Geographic Areas.  The Partnership
has not engaged in any operations in foreign countries; however,
the Partnership (through the commodity brokers) enters into forward
contract transactions where foreign banks are the contracting party
and trades in futures, forwards, and options on foreign exchanges.
- 5 -
<page> (e) Available Information.  The Partnership files an
annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and all amendments to these reports
with the Securities and Exchange Commission (?SEC?).  You may
read and copy any document filed by the Partnership at the SEC?s
Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for information on
the Public Reference Room.  The Partnership does not maintain an
internet website, however, the SEC maintains a website that
contains annual, quarterly, and current reports, proxy statements,
and other information that issuers (including the Partnership) file
electronically with the SEC.  The SEC?s website address is
http://www.sec.gov.

Item 1A.  RISK FACTORS
The following risk factors contain forward-looking statements
within the meaning of the safe harbor from civil liability provided
for such statements by the Private Securities Litigation Reform Act
of 1995 (set forth in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934).  All
quantitative disclosures in ?Quantifying the Partnership?s Trading
Value at Risk? in Item 7A ?Quantitative and Qualitative Disclosures
About Market Risk? are deemed to be forward-looking statements for
purposes of the safe harbor, except for statements
                                - 6 -
<page> of historical fact.  The qualitative disclosures, except for
(A) those disclosures that are statements of historical fact and
(B) the descriptions of how the Partnership manages its primary
market risk exposure, in the ?Qualitative Disclosure Regarding
Primary Trading Risk Exposures? in Item 7A ?Quantitative and
Qualitative Disclosures About Market Risk? are deemed to be forward
looking statements for purposes of the safe harbor.

The Partnership is in the business of speculative trading of
futures, forwards, and options.  For a detailed description of the
risks that may affect the business of the Partnership, see the
discussion of risk factors as set forth in Item 7 ?Management?s
Discussion and Analysis of Financial Condition and Results of
Operations? and Item 7A ?Quantitative and Qualitative Disclosures
About Market Risk?.

Item 1B.  UNRESOLVED STAFF COMMENTS
Not applicable.

Item 2.  PROPERTIES
The Partnership?s executive and administrative offices are located
within the offices of Morgan Stanley DW. The Morgan Stanley DW


- 7 -
<page> offices utilized by the Partnership are located at 330
Madison Avenue, 8th Floor, New York, NY  10017.

Item 3.  LEGAL PROCEEDINGS
None.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
















- 8 -


<page>	PART II


Item 5.  MARKET FOR REGISTRANT'S PARTNERSHIP UNITS AND RELATED
         SECURITY HOLDER MATTERS



(a) Market Information.  There is no established public trading
market for Units of the Partnership.

(b) Holders.  The number of holders of Units at December 31,
2006, was approximately 993.

(c) Distributions.  No distributions have been made by the
Partnership since it commenced operations on February 14, 1990.
Demeter has sole discretion to decide what distributions, if any,
shall be made to investors in the Partnership.  Demeter currently
does not intend to make any distributions of the Partnership?s
profits.








- 9 -


<page> <table>
Item 6.  SELECTED FINANCIAL DATA (in dollars)






			<caption>

	      	                 For the Years Ended December 31,
               2006          2005         2004         2003         2002 _


					<c>			<c>		<c>		<c>		<c>
Total Trading Results
including interest
income and change in
value of Yield Pool	 	 1,055,932 	    315,385      318,224   1,166,605	   1,960,508


Net Income (Loss)	 	   	   117,359	   (808,754)  (1,060,662)   (606,538)     110,813


Net Income (Loss)
for Tax and Net Asset
Valuation 			   	   117,359  	   (808,754)	  (1,060,662)    307,485	     827,229


Net Income (Loss)
Per Unit for Tax and
Net Asset Valuation
(Limited & General
Partners) 			     	     14.46  	     (74.61)	     (83.17)	      21.71 	       47.99


Total Assets 			14,304,353	 17,393,538   23,076,078	 27,321,957   35,535,999


Total Limited
Partners' Capital			13,798,864	 16,716,099   21,965,072	 26,207,748   33,867,872


Net Asset Value Per
Unit 				 	  1,909.85	   1,895.39     1,970.00	   2,053.17     2,031.46












	- 10 -
</table>

<page>
Item 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
	  AND RESULTS OF OPERATIONS


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

The Partnership?s investment in futures, forwards, and options may,
from time to time, be illiquid.  Most U.S. futures exchanges limit
fluctuations in prices during a single day by regulations referred
to as ?daily price fluctuations limits? or ?daily limits?.  Trades
may not be executed at prices beyond the daily limit.  If the price
for a particular futures or options contract has increased or
decreased by an amount equal to the daily limit, positions in that
futures or options contract can neither be taken

- 11 -
<page> nor liquidated unless traders are willing to affect trades
at or within the limit.  Futures prices have occasionally moved the
daily limit for several consecutive days with little or no trading.
 These market conditions could prevent the Partnership from
promptly liquidating its futures or options contracts and result in
restrictions on redemptions.

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

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


- 12 -
<page> Capital Resources.  The Partnership does not have, nor does
it expect to have, any capital assets.  Redemptions of Units in the
future will affect the amount of funds available for investments in
futures, forwards, and options in subsequent periods.  It is not
possible to estimate the amount, and therefore the impact, of
future outflows of Units.

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

Results of Operations
General.  The Partnership's results depend on the Trading Advisor
and the ability of the Trading Advisor's trading program to take
advantage of price movements in the futures, forwards, and options
markets.  The following presents a summary of the Partnership's
operations for each of the three years in the period ended December
31, 2006, and a general discussion of its trading
activities during each period.  It is important to note, however,
that the Trading Advisor trades in various markets at different
times and that prior activity in a particular market does not mean
that such market will be actively traded by the Trading Advisor or
will be profitable in the future. Consequently, the results of
operations of the Partnership are difficult to discuss other than
                               - 13 -
<page> in the context of the Trading Advisor's trading activities
on behalf of the Partnership during the period in question.  Past
performance is no guarantee of future results.

The Partnership?s results of operations set forth in the Financial
Statements are prepared in accordance with accounting principles
generally accepted in the United States of America, which require
the use of certain accounting policies that affect the amounts
reported in these Financial Statements, including the following:
The contracts the Partnership trades are accounted for on a trade-
date basis and marked to market on a daily basis. The difference
between their cost and market value is recorded on the Consolidated
Statements of Operations as ?Net change in unrealized trading
profit (loss)? for open (unrealized) contracts, and recorded as
?Realized trading profit (loss)? when open positions are closed
out.  The sum of these amounts, along with the ?Proceeds from
Litigation Settlement?, constitutes the Partnership?s trading
results. The market value of a futures
contract is the settlement price on the exchange on which that
futures contract is traded on a particular day.  The value of a
foreign currency forward contract is based on the spot rate as of
the close of business.  Prior to August 31, 2003, the difference
between the cost of the zero-coupon U.S. Treasury Securities and
its market value was recorded as ?Change in value of Yield Pool?.
                               - 14 -
<page> Interest income, as well as management fees, incentive fees,
brokerage fees, administrative expenses, and transaction fees and
costs of the Partnership are recorded on an accrual basis.

Demeter believes that, based on the nature of the operations of the
Partnership, no assumptions relating to the application of critical
accounting policies other than those presently used could
reasonably affect reported amounts.

The Partnership recorded total trading results including interest
income totaling $1,055,932 and expenses totaling $938,074, and
minority interest of $499, resulting in net income of $117,359 for
the year ended December 31, 2006.  The Partnership?s net asset
value per Unit increased from $1,895.39 at December 31, 2005, to
$1,909.85 at December 31, 2006.  Total redemptions for the year
were $3,033,032 and the Partnership?s ending capital was
$14,005,185 at December 31, 2006, a decrease of $2,915,673 from
ending capital at December 31, 2005, of $16,920,858.

The most significant trading gains of approximately 3.6% were
recorded in the global stock index sector during January and March
from long positions in U.S. and European equity index futures as
prices trended higher on strong corporate earnings and solid
economic data.  During August and September, additional gains were
                                - 15 -
<page> experienced from long positions in U.S. and European equity
index futures as prices advanced after a report by the U.S.
Conference Board reporting a stronger than expected rebound in
consumer confidence, as well as data showing increased merger and
acquisition activity and solid corporate earnings in Europe.
During October, gains continued from long positions in U.S. and
European stock index futures as prices moved higher amid declining
energy prices and stronger than expected third quarter earnings.
In addition, U.S. equity index futures prices rose after the U.S.
Federal Reserve?s decision to hold interest rates steady.  Finally,
gains were experienced during December from long positions in U.S.
and European equity index futures as prices continued to move
higher amid optimism about the future of the global economy.
Further gains of approximately 0.9% were experienced within the
metals markets, primarily during January and March, from long
futures positions in copper, nickel, and zinc as prices
strengthened amid weak supplies, forecasts for continued buying by
China, and acceleration in global demand.  During October, long
positions in zinc futures resulted in further gains as prices rose
amid labor protests in producer countries and news that
inventories, tracked by the London Metal Exchange, had declined
more than expected.  Additional gains were recorded in December
from short positions in copper futures as prices dropped after
industrial output unexpectedly fell in the Euro-Zone
                                - 16 ?
<page> countries, signaling reduced demand for the metal.  Smaller
gains of approximately 0.1% were recorded in the currency markets,
primarily from short positions in the South African rand against
the U.S. dollar as the rand trended lower during the second quarter
amid falling commodities prices, news that South Africa?s Current-
Account deficit had widened to a 24-year high, and  expectations
that the country?s Gross Domestic Product growth would be weaker
than expected.  During September, short positions in the Norwegian
krone versus the euro resulted in additional gains as the value of
the Norwegian krone moved lower on investor concern that a
prolonged decline in oil prices might negatively affect the
Norwegian economy.  In addition, gains were experienced during the
fourth quarter from short positions in the Australian dollar versus
the New Zealand dollar as the value of the New Zealand dollar
climbed higher as investors flocked to the higher yields available
on the nation's government bonds.  A portion of the Partnership?s
overall gains for the year was offset by trading losses of
approximately 1.6% in the global interest rate sector from short
and long positions in European and U.S. fixed-income futures as
prices moved without consistent direction amid uncertainty
regarding the future of global interest rate policy. Additional
losses were incurred from short positions in European interest rate
futures as prices reversed higher during the second
quarter after weakness in the equity markets created strong demand
                               - 17 ?
<page> for the safe-haven of fixed-income investments.  European
interest rate futures prices were also pushed higher after the May
?ZEW? Institute survey showed investor confidence in Germany had
fallen for a fourth straight month.  Losses were extended in
October and December from long positions in U.S. and European
fixed-income futures as prices moved lower amid overall strength in
the equity markets and speculation of further interest rate hikes
by the U.S. Federal Reserve and European Central Bank.  Further
losses of approximately 0.4% were recorded in the energy markets
during March from short positions in gas oil futures as prices
moved higher on fears of supply disruptions fueled by news of
geopolitical tensions in Nigeria.  In May, newly established long
positions in gas oil futures experienced additional losses as
prices fell after supply data from the U.S. Department of Energy
showed crude oil inventory levels were at an eight-year high.  Gas
oil prices continued to fall into June on news of the death of
Iraqi insurgent leader Abu Musab al-Zarqawi and positive steps
taken regarding the nuclear standoff between the U.S. and Iran,
resulting in additional losses from long positions.  During October
and November, short positions in natural gas futures
incurred losses as prices reversed higher on speculation of
increased demand after weather forecasts called for colder weather
in the U.S. Northeast.  During December, losses were recorded from
long positions in gas oil futures as prices weakened due to
                               - 18 -
<page> uncertainty regarding OPEC?s plan to cut production, a lower
demand forecast, and mild winter temperatures across the U.S.
Northeast.  Smaller losses of approximately 0.3% were incurred
during July in the agricultural markets from long positions in
orange juice futures as prices moved lower after the U.S.
Department of Agriculture reported an increase in orange juice
production.  Additional losses were incurred from newly established
short positions in orange juice futures as prices reversed higher
towards the end of the month on concerns regarding poor harvest due
to hot weather and labor shortages.  Finally, losses were incurred
from both short and long positions in corn and lean hog futures as
prices moved without consistent direction throughout a majority of
the year due to conflicting news regarding supply and demand.

The Partnership recorded total trading results including interest
income totaling $315,385 and expenses totaling $1,134,384, and
minority interest of $10,245, resulting in a net loss of $808,754
for the year ended December 31, 2005.  The Partnership?s net asset
value per Unit decreased from $1,970.00 at December 31, 2004, to
$1,895.39 at December 31, 2005.  Total redemptions for the year
were $4,538,899 and the Partnership?s ending capital was
$16,920,858 at December 31, 2005, a decrease of $5,347,653 from
ending capital at December 31, 2004, of $22,268,511.
- 19 -
<page> The most significant trading losses of approximately 1.6%
were recorded in the currency markets primarily during the first
and third quarters.  During the first quarter, losses stemmed
from long positions in the Singapore dollar versus the U.S.
dollar as the U.S. dollar advanced due to expectations that the
Chinese government would announce postponement of Chinese yuan
re-valuation.  Additional losses resulted during January from
short U.S. dollar positions versus the South African rand and
euro after the U.S. dollar?s value reversed sharply higher amid
conflicting economic data, improvements in U.S. trade deficit
data, and speculation for higher U.S. interest rates.  During
February, short positions in the Singapore dollar and euro versus
the U.S. dollar experienced losses as the U.S. dollar?s value
declined amid news of disappointing U.S. economic data and
proposed U.S. dollar reductions in foreign central bank currency
reserves.  Additional losses resulted during March from long
positions in the Singapore dollar and euro versus the U.S.
dollar, as well as from outright short positions in the U.S.
dollar index, after the value of the U.S. dollar reversed sharply
higher supported by market expectations for, and the eventual
increase in the U.S. federal funds rate by the U.S. Federal
Reserve.  The value of the U.S. dollar strengthened further
following the release of a larger than expected increase in
February consumer prices.  During the latter half of August and
                               - 20 -
<page> September, losses were incurred from long positions in the
New Zealand dollar as the value of the New Zealand dollar
declined on fears for an economic slow down in New Zealand.
Smaller losses were incurred from long positions in the euro
versus the U.S. dollar in September as the value of the euro was
pulled down after the release of lower 2005 and 2006 growth
estimates for the European economy and news that Germany?s
incumbent Chancellor, Gerhard Schroeder, refused to concede
defeat to the opposition leader, Angela Merkel, in the days after
the election.  During July and August, losses were recorded from
positions in the Singapore dollar relative to the U.S. dollar as
the value of the Singapore dollar moved in a trendless pattern.
Finally in December, losses were incurred from short U.S. dollar
positions against the New Zealand dollar after the New Zealand
dollar?s value declined amid weaker than expected economic growth
data combined with a lack of confidence for further interest rate
hikes from the Reserve Bank of New Zealand.  Within the global
interest rates futures markets, losses of approximately 0.5% were
recorded during July, August, and September from positions in
U.S. fixed-income futures as prices moved without consistent
direction amid conflicting economic data, uncertainty regarding
the future interest rate policy of the U.S., and volatility in
energy prices.  Further losses were experienced during November
from short positions in U.S. interest rate futures as prices
                              - 21 -
<page> increased towards the beginning of the month after strong
demand at government debt auctions.  Later in November, U.S.
fixed-income futures prices were pressured higher on reduced
inflation fears and expectations that the U.S. Federal Reserve
could potentially end its cycle of hiking interest rates in early
2006. Smaller losses in the global interest rate futures markets
were recorded from positions in Canadian, Australian, and
Japanese fixed-income futures.  Smaller losses of approximately
0.3% were experienced in the agricultural markets from long
positions in corn held during the first quarter after prices
declined amid a stronger U.S. dollar and technically-based
selling.  In December, losses were recorded from short futures
positions in corn after prices advanced on reports of strong
demand and news of weaker than expected supplies.  Additional
losses resulted from long futures positions in cocoa held during
the third quarter as prices moved lower on hopes for political
stability in the Ivory Coast.  A portion of the Partnership?s
overall losses for the year was offset by gains of approximately
0.7% recorded in the global stock index markets, during July and
August from long positions in Japanese equity index futures as
prices trended higher on optimism about the future of the
Japanese economy.  During September, long Japanese stock index
futures positions experienced gains as prices increased sharply
on positive comments from Bank of Japan Governor Toshihiko Fukui,
                              - 22 -
<page> who said the Japanese economy was in the process of
emerging from a soft patch.  Smaller Partnership gains of
approximately 0.3% were experienced in the energy markets
primarily during March, August, and September from long futures
positions in natural gas.  During March, natural gas prices move
higher in tandem with crude oil prices, after OPEC oil ministers
stated that there were no plans to raise output at the March 16
meeting.  Also strengthening natural gas prices was a report by
the Energy Information Administration stating that U.S.
inventories of gasoline and heating oil measured significantly
lower than expected.  During the third quarter, gains were
recorded as natural gas prices climbed higher on supply and
demand concerns after Hurricane Katrina struck the Gulf of
Mexico.  In the metals markets, gains of approximately 0.1%
occurred from long positions in copper futures as prices trended
higher throughout a majority of the year amid persistent demand
from China.

The Partnership recorded total trading results including interest
income totaling $318,224 and expenses totaling $1,391,404, and
minority interest of $12,518, resulting in a net loss of $1,060,662
for the year ended December 31, 2004.  The Partnership?s net asset
value per Unit decreased from $2,053.17 at December 31, 2003, to
$1,970.00 at December 31, 2004.  Total redemptions for the year
                               - 23 -
<page> were $3,194,825 and the Partnership?s ending capital was
$22,268,511 at December 31, 2004, a decrease of $4,255,487 from
ending capital at December 31, 2003, of $26,523,998.

The most significant trading losses of approximately 1.0% were
recorded in the currency markets during the first nine months of
the year. During the first quarter, long cross-rate positions in
the Swiss franc versus the Japanese yen resulted in losses as the
yen?s value reversed higher due to speculation that the Bank of
Japan was relaxing its efforts to weaken the yen.  Long positions
in the U.S. dollar index were also unprofitable as the U.S.
dollar?s value declined due to a reduction in Bank of Japan
intervention activity.  During the second quarter, losses were
incurred from long positions in the Japanese yen versus the U.S.
dollar as the U.S. dollar surged following the release of
stronger than expected U.S. jobs data.  The yen also came under
pressure from weakening efforts by Japanese government currency
market interventions.  Losses were also incurred from short U.S.
dollar positions against the South African rand as the U.S.
dollar benefited from rising U.S. interest rates and the
perception that the U.S. economy was experiencing a sustainable
recovery.  During the third quarter, short cross-rate positions
in the Australian dollar versus the Japanese yen incurred losses
as the Australian currency reversed higher amid speculation for
                              - 24 -
<page> increases in Australian interest rates.  During August,
losses were experienced from short positions in the Japanese yen
versus the U.S. dollar, Swiss franc, Australian dollar, and the
euro as the value of the yen moved higher due to higher Japanese
equity prices and the release of positive Japanese economic data.
During September, short positions in the Mexican peso versus the
U.S. dollar resulted in losses as the U.S. dollar reversed lower
amid perceptions that the U.S. Federal Reserve had reformed its
outlook regarding aggressive increases in interest rates.  Long
positions in the Japanese yen versus the U.S. dollar also
incurred losses during September as the yen declined from Japan?s
swelling national debt and a reversal of the U.S. dollar?s value
in response to a hike in U.S. interest rates.  Additional losses
of approximately 0.7% were recorded in the metals markets from
positions in base metals.  Long futures positions in nickel
experienced losses as prices fell due to a strengthening of the
U.S. dollar during January.  Additionally, short nickel futures
positions during May experienced losses as prices increased due
to a weaker U.S. dollar and strong Asian demand.  During the
third quarter, further sector losses resulted from long nickel
futures positions after prices declined amid a slowdown in demand
from China.  Smaller losses resulted from long futures positions
in nickel during the fourth quarter as prices weakened amid
concerns for demand and an advancing U.S. dollar.  In the
                               - 25 -
<page> agricultural markets, losses of approximately 0.6% were
incurred from positions in soybean oil, sugar, and cocoa.  Short
futures positions in soybean oil generated losses after prices
reversed higher amid news of reduced supply, strong Chinese
export demand, and rumors that U.S. soybean crops were possibly
infected by a damaging fungus.  Long futures positions in sugar
incurred losses during October and November as prices for the
commodity moved lower in response to technically-based selling
and news of weaker demand.  Elsewhere in the agricultural
complex, losses were experienced from positions in cocoa as a
result of ?whipsawing? in prices due to supply and demand
concerns throughout a majority of the year.  A portion of the
Partnership?s overall losses for the year was offset by gains of
approximately 1.9% achieved in the global stock index markets,
primarily during the fourth quarter from long positions in S&P
500 Index futures as prices advanced in response to a decline in
oil prices, positive consumer sentiment, and an increase in
corporate earnings.  Additional gains of approximately 0.5% were
recorded in the global interest rates markets during the first,
third, and fourth quarters of the year from long positions in
U.S. and European interest rate futures.  During the first
quarter, long positions benefited from a rally in bond prices
sparked by low inflation and reduced concerns for increases in
interest rates.  Long positions also profited during the third
                               - 26 ?
<page> quarter as prices trended higher in response to a surge in
oil prices, a drop in equity prices, and a conflicted economic
picture generated by U.S. economic reports.  Further gains from
long positions in European interest rates were recorded in the
fourth quarter as prices continued to trend higher for the
aforementioned reasons, in addition to the rise in the value of
the euro, which created strong demand for euro-denominated
investments.  Smaller gains of approximately 0.3% were
experienced in the energy markets.  During a majority of the
year, long positions in crude oil behaved well as prices trended
higher due to consistent news of tight supply, continuing
geopolitical concerns in the Middle East, concerns that top
Russian oil producer, Yukos, might break up or stop selling oil,
production disruptions in the Gulf of Mexico, growing civil
unrest in Nigeria, and the threat of a national strike in Norway.

For an analysis of unrealized gains and (losses) by contract type
and a further description of 2006 trading results, refer to the
Partnership?s Annual Report to Limited Partners for the year ended
December 31, 2006, which is incorporated by reference to Exhibit
13.01 of this Form 10-K.

The Partnership's gains and losses are allocated among its partners
for income tax purposes.
- 27 -
<page> Off-Balance Sheet Arrangements and Contractual
Obligations.    The Partnership does not have any off-balance
sheet arrangements, nor does it have contractual obligations or
commercial commitments to make future payments that would affect
its liquidity or capital resources.

Market Risk.
The Partnership is a party to financial instruments with elements
of off-balance sheet market and credit risk.  The Partnership
trades Futures Interests.  In entering into these contracts, the
Partnership is subject to the market risk that such contracts may
be significantly influenced by market conditions, such as
interest rate volatility, resulting in such contracts being less
valuable.  If the markets should move against all of the
positions held by the Partnership at the same time, and the
Trading Advisor was unable to offset positions of the
Partnership, the Partnership could lose all of its assets and
limited partners would realize a 100% loss.

In addition to the Trading Advisor's internal controls, the Trading
Advisor must comply with the Partnership?s trading
policies that include standards for liquidity and leverage that
must be maintained.  The Trading Advisor and Demeter monitor the
Partnership's trading activities to ensure compliance with the
                                 - 28 -
<page> trading policies and Demeter can require the Trading Advisor
to modify positions of the Partnership if Demeter believes they
violate the Partnership's trading policies.

Credit Risk.
In addition to market risk, in entering into futures, forward, and
options contracts, there is a credit risk to the Partnership that
the counterparty on a contract will not be able to meet its
obligations to the Partnership. The ultimate counterparty or
guarantor of the Partnership for futures, forward, and options
contracts traded in the United States and most foreign exchanges on
which the Partnership trades is the clearinghouse associated with
such exchange.  In general, a clearinghouse is backed by the
membership of the exchange and will act in the event of non-
performance by one of its members or one of its member?s
customers, which should significantly reduce this credit risk.
There is no assurance that a clearinghouse, exchange, or other
exchange member will meet its obligations to the Partnership, and
Demeter and the commodity brokers will not indemnify the
Partnership against a default by such parties. Further, the law is
unclear as to whether a commodity broker has any obligation to
protect its customers from loss in the event of an exchange or
clearinghouse defaulting on trades affected for the broker?s

- 29 -
<page> customers.  In cases where the Partnership trades off-
exchange forward contracts with a counterparty, the sole recourse
of the Partnership will be the forward contract?s counterparty.

Demeter deals with these credit risks of the Partnership in
several ways.  First, Demeter monitors the Partnership?s credit
exposure to each exchange on a daily basis.  The commodity
brokers inform the Partnership, as with all their customers, of
the Partnership?s net margin requirements for all its existing
open positions, and Demeter has installed a system which permits
it to monitor the Partnership?s potential net credit exposure,
exchange by exchange, by adding the unrealized trading gains on
each exchange, if any, to the Partnership?s margin liability
thereon.

Second, the Partnership?s trading policies limit the amount of its
Net Assets that can be committed at any given time to futures
contracts and require a minimum amount of diversification in the
Partnership?s trading, usually over several different products and
exchanges.  Historically, the Partnership?s exposure to any one
exchange has typically amounted to only a small percentage of its
total Net Assets and on those relatively few occasions where the
Partnership?s credit exposure climbs above such level, Demeter
deals with the situation on a case by case basis, carefully
                                - 30 -
<page> weighing whether the increased level of credit exposure
remains appropriate.  Material changes to the trading policies may
be made only with the prior written approval of the limited
partners owning more than 50% of Units then outstanding.

Third, with respect to forward contract trading, the Partnership
trades with only those counterparties which Demeter, together
with Morgan Stanley DW, have determined to be creditworthy.  The
Partnership presently deals with MS&Co. as the sole counterparty
on forward contracts.

For additional information, see the ?Financial Instruments?
section under ?Notes to Consolidated Financial Statements? in the
Partnership?s Annual Report to Limited Partners for the
year ended December 31, 2006, which is incorporated by reference
to Exhibit 13.01 of this Form 10-K.

Inflation has not been a major factor in the Partnership?s
operations.

New Accounting Developments.
In July 2006, The Financial Accounting Standards Board (?FASB?)
issued Interpretation No. 48, ?Accounting for Uncertainty in
Income Taxes ? an interpretation of FASB Statement 109? (?FIN
48?).  FIN 48 clarifies the accounting for income taxes by
                             - 31 -
<page> prescribing the minimum recognition threshold a tax position
must meet before being recognized in the financial statements.  FIN
48 is effective for fiscal years beginning after December 15, 2006.
The impact to the Partnership?s Financial Statements, if any, is
currently being assessed.

In September 2006, the FASB issued SFAS No. 157, ?Fair Value
Measurements? (?SFAS No. 157?). SFAS No. 157 defines fair value,
establishes a framework for measuring fair value, and expands
disclosures about fair value measurements. SFAS No. 157 is
effective for the Partnership as of January 1, 2008. The impact to
the Partnership?s Financial Statements, if any, is currently being
assessed.

In September 2006, the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 108, ?Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements? (?SAB No. 108?) to provide guidance
on how the effects of the carryover or reversal of prior year
unrecorded misstatements should be considered in quantifying a
current year misstatement.  SAB No. 108 requires a company to
apply an approach that considers the amount by which the current
year income statement is misstated (?rollover approach?) and an
approach that considers the cumulative amount by which the current
year balance sheet is misstated (?iron-curtain approach?).  Prior
to the issuance of SAB No. 108, many companies applied either the
                               - 32 -
<page> rollover or iron-curtain approach, for purposes of assessing
materiality of misstatements.  SAB No. 108 is effective for the
Partnership as of January 1, 2007.  Upon adoption, SAB No. 108
allows a one-time cumulative effect adjustment against Partners?
Capital for those prior year misstatements that were not material
under the Partnership?s prior approach, but are deemed material
under the SAB No. 108 approach.  Demeter does not expect the
adoption of SAB No. 108 to have a material impact on the
Partnership?s Financial Statements.


Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Introduction

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

The futures, forwards, and options traded by the Partnership
involve varying degrees of related market risk.  Market risk is
often dependent upon changes in the level or volatility of interest
rates, exchange rates, and prices of financial
                               - 33 -
<page> instruments and commodities, factors that result in frequent
changes in the fair value of the Partnership?s open positions, and
consequently in its earnings, whether realized or unrealized, and
cash flow.  Gains and losses on open positions of exchange-traded
futures, exchange-traded forward, and exchange-traded futures-
styled options contracts are settled daily through variation
margin.  Gains and losses on off-exchange-traded forward currency
contracts are settled upon termination of the contract.  However,
the Partnership is required to meet margin requirements equal to
the net unrealized loss on open forward currency contracts in the
Partnership accounts with the counterparty, which is accomplished
by daily maintenance of the cash balance in a custody account held
at Morgan Stanley DW for the benefit of MS&Co.

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

The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements.  Margin requirements generally range between 2% and
15% of contract face value.  Additionally, the use of leverage
                                - 34 -
<page> causes the face value of the market sector instruments held
by the Partnership typically to be many times the total
capitalization of the Partnership.

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

Limited partners will not be liable for losses exceeding the
current net asset value of their investment.

Quantifying the Partnership?s Trading Value at Risk
The following quantitative disclosures regarding the Partner-
ship?s market risk exposures contain ?forward-looking statements?
within the meaning of the safe harbor from civil liability
provided for such statements by the Private Securities Litigation
Reform Act of 1995 (set forth in Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of
                            - 35 -
<page> 1934).  All quantitative disclosures in this section are
deemed to be forward-looking statements for purposes of the safe
harbor, except for statements of historical fact.

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

The Partnership?s risk exposure in the market sectors traded by the
Trading Advisor is estimated below in terms of VaR. The Partnership
estimates VaR using a model based upon historical simulation (with
a confidence level of 99%) which involves constructing a
distribution of hypothetical daily changes in the value of a
trading portfolio.  The VaR model takes into account linear
exposures risks including equity and commodity prices, interest
rates, foreign exchange rates, and correlation among these
variables.  The hypothetical changes in portfolio
value are based on daily percentage changes observed in key market
indices or other market factors (?market risk factors?) to which
the portfolio is sensitive.  The one-day 99% confidence level of
the Partnership?s VaR corresponds to the negative change in
portfolio value that, based on observed market risk factors, would
have been exceeded once in 100 trading days, or one day in 100.
                              - 36 -
<page> VaR typically does not represent the worst case outcome.
Demeter uses approximately four years of daily market data (1,000
observations) and re-values its portfolio (using delta-gamma
approximations) for each of the historical market moves that
occurred over this time period.  This generates a probability
distribution of daily ?simulated profit and loss? outcomes.  The
VaR is the appropriate percentile of this distribution.  For
example, the 99% one-day VaR would represent the 10th worst outcome
from Demeter?s simulated profit and loss series.

The Partnership?s VaR computations are based on the risk
representation of the underlying benchmark for each instrument or
contract and do not distinguish between exchange and non-exchange
dealer-based instruments.  They are also not based on exchange
and/or dealer-based maintenance margin requirements.

VaR models, including the Partnership?s, are continually evolving
as trading portfolios become more diverse and modeling techniques
and systems capabilities improve.  Please note that the VaR model
is used to numerically quantify market risk for historic reporting
purposes only and is not utilized by either Demeter or the Trading
Advisor in their daily risk management activities.  Please further
note that VaR as described above may not be comparable to
similarly-titled measures used by other entities.
- 37 -
<page> The Partnership?s Value at Risk in Different Market Sectors
The following table indicates the VaR associated with the
Partnership?s open positions as a percentage of total Net Assets
by primary market risk category at December 31, 2006 and 2005.
At December 31, 2006 and 2005, the Partnership?s total
capitalization was approximately $14 million and $17 million,
respectively.

Primary Market 	  December 31, 2006	   December 31, 2005
Risk Category	  	    Value at Risk	     Value at Risk
Equity				   (0.91)%		   (1.37)%
Interest Rate		  	   (0.90)			   (0.89)
Currency		 	        (0.14)    		   (0.05)
Commodity		  		   (0.20) 		   (0.12)
Aggregate Value at Risk 	   (1.41)%			   (1.51)%

The VaR for a market category represents the one-day downside risk
for the aggregate exposures associated with this market category.
The Aggregate Value at Risk listed above represents the VaR of the
Partnership?s open positions across all the market categories, and
is less than the sum of the VaRs for all such market categories due
to the diversification benefit across asset classes.

Because the business of the Partnership is the speculative
trading of futures, forwards, and options, the composition of its
trading portfolio can change significantly over any given time
                              - 38 -
<page> period, or even within a single trading day.  Such changes
could positively or negatively materially impact market risk as
measured by VaR.

The table below supplements the December 31, 2006, VaR set forth
above by presenting the Partnership?s high, low, and average VaR,
as a percentage of total Net Assets for the four quarter-end
reporting periods from January 1, 2006, through December 31,
2006.

Primary Market Risk Category      High        Low        Average
Equity                     	   (1.56)%	(0.57)%	   (1.04)%
Interest Rate				   (1.38)		(0.35)	   (0.88)
Currency  				   (0.22)		(0.04)	   (0.12)
Commodity 				   (0.20)		(0.12)	   (0.17)
Aggregate Value at Risk          (2.10)%	(0.75)%	   (1.40)%


Limitations on Value at Risk as an Assessment of Market Risk
VaR models permit estimation of a portfolio?s aggregate market risk
exposure, incorporating a range of varied market risks, reflect
risk reduction due to portfolio diversification or hedging
activities, and can cover a wide range of portfolio assets.
However, VaR risk measures should be viewed in light of the
methodology?s limitations, which include, but may not be limited to
the following:
-	39 ?
<page>
*	past changes in market risk factors will not always result
in accurate predictions of the distributions and
correlations of future market movements;
*	changes in portfolio value caused by market movements may
differ from those of the VaR model;
*	VaR results reflect past market fluctuations applied to
current trading positions while future risk depends on
future positions;
*	VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
*	the historical market risk factor data used for VaR
estimation may provide only limited insight into losses that
could be incurred under certain unusual market movements.

In addition, the VaR tables above, as well as the past performance
of the Partnership, give no indication of the Partnership?s
potential ?risk or ruin?.

The VaR tables provided present the results of the Partnership?s
VaR for each of the Partnership?s market risk exposures and on an
aggregate basis at December 31, 2005, and for the four
quarter-end reporting periods during calendar year 2006.  VaR is
                                - 40 ?
<page> not necessarily representative of the Partnership?s historic
risk, nor should it be used to predict the Partnership?s future
financial performance or its ability to manage or monitor risk.
There can be no assurance that the Partnership?s actual losses on
a particular day will not exceed the VaR amounts indicated above
or that such losses will not occur more than once in 100 trading
days.

Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances.  These balances and any market risk they may represent
are immaterial.

The Partnership also maintains a substantial portion of its
available assets in cash at Morgan Stanley DW; as of December 31,
2006, such amount is equal to approximately 97% of the
Partnership?s net asset value.  A decline in short-term
interest rates would result in a decline in the Partnership?s
cash management income. This cash flow risk is not considered to
be material.

Materiality, as used throughout this section, is based on an
assessment of reasonably possible market movements and any
associated potential losses, taking into account the leverage,
                              - 41 -
<page> optionality, and multiplier features of the Partnership?s
market-sensitive instruments, in relation to the Partnership?s
Net Assets.

Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership?s
market risk exposures ? except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
Partnership manages its primary market risk exposures ? constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act. The
Partnership?s primary market risk exposures, as well as the
strategies used and to be used by Demeter and the Trading Advisor
for managing such exposures, are subject to numerous uncertainties,
contingencies and risks, any one of which could cause the actual
results of the Partnership?s risk controls to
differ materially from the objectives of such strategies.
Government interventions, defaults and expropriations, illiquid
markets, the emergence of dominant fundamental factors, political
upheavals, changes in historical price relationships, an influx of
new market participants, increased regulation, and many other
factors could result in material losses, as well as in material
changes to the risk exposures and the risk management strategies

- 42 -
<page> of the Partnership. Investors must be prepared to lose all
or substantially all of their investment in the Partnership.

The following were the primary trading risk exposures of the
Partnership at December 31, 2006 by market sector.  It may be
anticipated, however, that these market exposures will vary
materially over time.

Equity.  The largest market exposure of the Partnership at
December 31, 2006, was to the global stock index sector,
primarily to equity price risk in the G-7 countries.  The G-7
countries consist of France, the U.S., Britain, Germany, Japan,
Italy, and Canada.  The stock index futures traded by the
Partnership are by law limited to futures on broadly-based
indices.  At December 31, 2006, the Partnership?s primary
exposures were to the S&P 500 (U.S.), NIKKEI 225 (Japan), DAX
(Germany), SPI 200 (Australia), and RUSSELL 2000 (U.S.) stock
indices. The Partnership is primarily exposed to the risk of
adverse price trends or static markets in the U.S., European,
Japanese, and Australian stock indices.  Static markets would not
cause major market changes, but would make it difficult for the
Partnership to avoid trendless price movements, resulting in
numerous small losses.

- 43 -
<page> Interest Rate.  The second largest market exposure of the
Partnership at December 31, 2006, was to the global interest rate
sector.  Exposure was primarily spread across the New Zealand,
U.S., and European interest rate sectors.  Interest rate
movements directly affect the price of the sovereign bond futures
positions held by the Partnership and indirectly affect the value
of its stock index and currency positions.  Interest rate
movements in one country, as well as relative interest rate
movements between countries, materially impact the Partnership?s
profitability.  The Partnership?s interest rate exposure is
generally to interest rate fluctuations in the U.S. and the other
G-7 countries? interest rates.  However, the Partnership also
takes futures positions in the government debt of smaller
countries ? e.g., New Zealand.  Demeter anticipates that the G-7
countries interest rates, as well as New Zealand interest rates,
will remain the primary interest rate exposures of the
Partnership for the foreseeable future.  The speculative futures
positions held by the Partnership range from short to long-term
instruments.  Consequently, changes in short, medium, or long-
term interest rates may have an effect on the Partnership.

Currency.  At December 31, 2006, the Partnership had market
exposure to the currency sector.  Exposure was to exchange rate
fluctuations, primarily fluctuations which disrupt the historical
                             - 44 -
<page> pricing relationships between different currencies and
currency pairs.  Interest rate changes, as well as political and
general economic conditions influence these fluctuations.  The
Partnership trades a large number of currencies, including cross-
rates - i.e., positions between two currencies other than the
U.S. dollar.  At December 31, 2006, the Partnership?s major
exposures were to the euro and Norwegian krone currency crosses,
as well as outright U.S. dollar positions.  Outright positions
consist of the U.S. dollar vs. other currencies.  These other
currencies include major and minor currencies.  Demeter does not
anticipate that the risk associated with the Partnership?s
currency trades will change significantly in the future.

Commodity.
Soft Commodities and Agriculturals.  The third largest
market exposure of the Partnership at December 31, 2006, was
to the markets that comprise these sectors.  Most of the
exposure was to the soybean meal, live cattle, soybeans,
lean hogs, cotton, orange juice, corn, coffee, and wheat
markets.  Supply and demand inequalities, severe weather
disruptions, and market expectations affect price movements
in these markets.


- 45 -
<page> Energy.  At December 31, 2006, the Partnership had
market exposure to the energy sector.  The Partnership?s
energy exposure was shared primarily by futures contracts in
oil related products and natural gas.  Price movements in
these markets result from geopolitical developments,
particularly in the Middle East, as well as weather
patterns, and other economic fundamentals.  Significant
profits and losses, which have been experienced in the past,
are expected to continue to be experienced in the future.
Natural gas has exhibited volatility in prices resulting
from weather patterns and supply and demand factors and will
likely continue in this choppy pattern.

Metals.  At December 31, 2006, the Partnership had market
exposure in the metals sector.  The Partnership?s metals
exposure was to fluctuations in the price of base metals, such
as copper and precious metals, such as gold.  Economic forces,
supply and demand inequalities, geopolitical factors, and
market expectations influence price movements in these
markets.  The Trading Advisor utilizes the trading system(s)
to take positions when market opportunities develop, and
Demeter anticipates that the Partnership will continue to do
so.

- 46 -
<page>
Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at December 31, 2006:

Foreign Currency Balances.  The Partnership?s primary
foreign currency balances at December 31, 2006, were in
Japanese yen, Hong Kong dollars, British pounds, euros,
Norwegian kroner, New Zealand dollars, South African rand,
and Canadian dollars.  The Partnership controls the non-
trading risk of foreign currency balances by regularly
converting them back into U.S. dollars upon liquidation of
their respective positions.

Qualitative Disclosures Regarding Means of Managing Risk Exposure
The Partnership and the Trading Advisor, separately, attempt to
manage the risk of the Partnership?s open positions in
essentially the same manner in all market categories traded.
Demeter attempts to manage market exposure by diversifying the
Partnership?s assets among different market sectors and trading
approaches, and by monitoring the performance of the Trading
Advisor daily.  In addition, the Trading Advisor establishes
diversification guidelines, often set in terms of the maximum
margin to be committed to positions in any one market sector or
market-sensitive instrument.
- 47 -
<page> Demeter monitors and controls the risk of the
Partnership?s non-trading instrument, cash.  Cash is the only
Partnership investment directed by Demeter, rather than the
Trading Advisor.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements are incorporated by reference
to the Partnership's Annual Report, which is filed as Exhibit 13.01
hereto.


Supplementary data specified by Item 302 of Regulation S-K:

Summary of Quarterly Results (Unaudited)

          Total Trading Results
Quarter	     including 		   	     	    Net Income/(Loss)
Ended 	  interest income   Net Income/(Loss)      Per Unit

2006
March 31 	    $  303,629	       $    56,802	   	 $   6.77
June 30           86,432	          (147,323)		   (19.19)
September 30     438,098	           207,297	  	    27.09
December 31	  227,773	               583	  	    (0.21)

Total		    $1,055,932        $   117,359	 	 $  14.46

2005
March 31 	    $ (461,433)	       $  (754,614)	   	 $ (68.50)
June 30          424,660	           134,772		    13.27
September 30      26,425	          (250,659)	  	   (25.60)
December 31	  325,733	            61,747	  	     6.22

Total		    $  315,385        $  (808,754)	 	 $ (74.61)
Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
- 48 -
<page>
Item 9A.  CONTROLS AND PROCEDURES
(a)	As of the end of the period covered by this annual report, the
President and Chief Financial Officer of Demeter, the general
partner of the Partnership, have evaluated the effectiveness
of the Partnership?s disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the
Exchange Act), and have judged such controls and procedures to
be effective.

(b)	There have been no material changes during the period covered
by this annual report in the Partnership?s internal control
over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act) or in other factors that could
significantly affect these controls subsequent to the date of
their evaluation.


Management?s Report on Internal Control Over Financial Reporting
Demeter is responsible for the management of the Partnership.

Management of Demeter (?Management?) is responsible for
establishing and maintaining adequate internal control over
financial reporting.  The internal control over financial reporting
is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
                                - 49 -
<page> Financial Statements for external purposes in accordance
with generally accepted accounting principles.

The Partnership?s internal control over financial reporting
includes those policies and procedures that:

*	Pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Partnership;

*	Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of Financial Statements in
accordance with generally accepted accounting principles, and
that the Partnership?s transactions are being made only in
accordance with authorizations of Management and directors;
and

*	Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of
the Partnership?s assets that could have a material effect on
the Financial Statements.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
                               - 50 -
<page> Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Partnership?s
internal control over financial reporting as of December 31,
2006.  In making this assessment, Management used the criteria
set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated Framework.
Based on our assessment and those criteria, Management believes
that the Partnership maintained effective internal control over
financial reporting as of December 31, 2006.

Deloitte & Touche LLP, the Partnership?s independent registered
public accounting firm, has issued an attestation report on
Management?s assessment of the Partnership?s internal control over
financial reporting and on the effectiveness of the Partnership?s
internal control over financial reporting.  This report, which
expresses an unqualified opinion on Management?s assessment and on
the effectiveness of the Partnership?s internal control over
financial reporting, appears under ?Report of Independent
Registered Public Accounting Firm? in the Partnership?s Annual
Report to Limited Partners for the year ended December 31, 2006.

- 51 -
<page> Item 9B.  OTHER INFORMATION
None.
























- 52 -
<page> PART III

Item 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

There are no directors or executive officers of the Partnership.
The Partnership is managed by Demeter, its general partner.

Directors and Officers of the General Partner
The directors and executive officers of Demeter are as follows:

Effective May 1, 2006, Mr. Walter Davis, age 41, is a Director,
Chairman of the Board of Directors, and President of Demeter.  Mr.
Davis is an Executive Director of Morgan Stanley and the Director
of Morgan Stanley?s Managed Futures Department.  Prior to joining
Morgan Stanley in 1999, Mr. Davis worked for Chase Manhattan Bank?s
Alternative Investment Group.  Throughout his career, Mr. Davis has
been involved with the development, management, and marketing of a
diverse array of commodity pools, hedge funds, and other
alternative investment funds.  Mr. Davis received an MBA in Finance
and International Business from the Columbia University Graduate
School of Business in 1992 and a B.A. in Economics from the
University of the South in 1987.

Effective December 5, 2002, Mr. Frank Zafran, age 51, is a Director
of Demeter.  Mr. Zafran is a Managing Director of Morgan Stanley
and, in November 2005, was named Managing Director of Wealth
Solutions. Previously, Mr. Zafran was Chief Administrative Officer
of Morgan Stanley?s Client Solutions Division. Mr. Zafran
                              - 53 -
<page> joined the firm in 1979 and has held various positions in
Corporate Accounting and the Insurance Department, including Senior
Operations Officer ? Insurance Division, until his appointment in
2000 as Director of Retirement Plan Services, responsible for all
aspects of 401(k) Plan Services, including marketing, sales, and
operations.  Mr. Zafran received a B.S. degree in Accounting from
Brooklyn College, New York.

Effective March 31, 2003, Mr. Douglas J. Ketterer, age 41, is a
Director of Demeter.  Mr. Ketterer is a Managing Director of Morgan
Stanley and is head of Morgan Stanley?s Managed Money Group.  The
Managed Money Group is comprised of a number of departments
(including the Alternative Investments Group, Consulting Services
Group, and Mutual Fund Department) which offer products and
services through Morgan Stanley?s Global Wealth Management Group.
Mr. Ketterer joined Morgan Stanley in 1990 and has served in many
roles in the corporate finance/investment banking, asset
management, and distribution divisions of the firm. Mr. Ketterer
received his MBA from New York University?s Leonard N. Stern School
of Business and his B.S. in Finance from the University at Albany?s
School of Business.

Effective May 1, 2005, Mr. Harry Handler, age 48, is a Director of
Demeter. Mr. Handler serves as an Executive Director of Morgan
Stanley?s Global Wealth Management Group.  Mr. Handler works in
Morgan Stanley?s Capital Markets Division as Equity Risk Officer.
                             - 54 -
<page> Additionally, Mr. Handler also serves as Chairman of the
Morgan Stanley DW Best Execution Committee and manages the Global
Wealth Management Group?s Stock Lending business.  In his prior
position, Mr. Handler was a Systems Director in Information
Technology, in charge of Equity and Fixed Income Trading Systems
along with the Special Products, such as Unit Trusts, Managed
Futures, and Annuities.  Prior to his transfer to the Information
Technology Area, Mr. Handler managed the Foreign Currency and
Precious Metals Trading Desk for Dean Witter, a predecessor company
to Morgan Stanley.  He also held various positions in the Futures
Division where he helped to build the Precious Metals  Trading
Operation of Dean Witter.  Before joining Dean Witter, Mr. Handler
worked at Mocatta Metals as an Assistant to the Chairman. His roles
at Mocatta Metals included stints on the Futures Order Entry Desk
and the Commodities Exchange Trading Floor.  Additional work
included building a computerized Futures Trading System and writing
a history of the company.  Mr. Handler graduated on the Dean?s List
from the University of Wisconsin-Madison with a B.A. degree and a
double major in History and Political Science.

Effective May 1, 2006, Mr. Richard D. Gueren, age 45, is a Director
of Demeter.  Mr. Gueren is Executive Director, Retail
Options and Transactional Futures at Morgan Stanley.  He is
responsible for marketing the options product to the firm?s
approximately 400 offices and 8,000 Financial Advisors.  Mr. Gueren
first joined Dean Witter in August 1986, as a member of the
                             - 55 -
<page> Options Strategy/Trading team.  In 1997, Dean Witter merged
with Morgan Stanley.  Mr. Gueren is the firm?s Senior Registered
Options Principal.  He is a member of several Morgan Stanley
committees, including the firm?s National Error Committee and Best
Execution Committee.  He is an advisory member to the Credit & Risk
Committee.  Mr. Gueren is also an active member of several exchange
and industry committees, including the Retail Advisory committees
for the Chicago Board Options Exchange, the American Stock
Exchanges, the Philadelphia Stock Exchange, the Pacific Stock
Exchange, and the International Securities Exchange. Mr. Gueren is
also an Industry Arbitrator for the NASD and has been seated on
numerous industry cases over the past eight years. He has also been
asked to testify as an expert witness regarding
options on numerous occasions.  Mr. Gueren holds a Bachelor of
Science in Economics from the University of Hartford.

Effective May 1, 2006, Mr. Michael P. McGrath, age 38, is a
Director of Demeter.  Mr. McGrath is a Managing Director and the
Director of Product Development for Morgan Stanley?s Global Wealth
Management Group. In this role, Mr. McGrath oversees the flow of
new products and services being offered through Global Wealth
Management in the United States.  He coordinates the firm?s New
Product Committee as well as being a voting member on the
committee.  He is also a voting member of the Global Wealth
Management Alternative Investments Due Diligence Committee, the
Global Wealth Management Insurance Due Diligence Committee, and
                               - 56 -
<page> the Portfolio Architect Oversight Committee, and is a member
of the Global Advisor Research Due Diligence Committee.  Mr.
McGrath joined Morgan Stanley in 2004, after three years with
Nuveen Investments, a publicly traded investment management company
headquartered in Chicago, Illinois.  At Nuveen, Mr. McGrath served
as a Managing Director and oversaw the development of alternative
investment products catering to the ultra-high net worth investor.
Mr. McGrath received his B.A. degree from Saint Peters College in
1990 and his MBA in Finance from New York University in 1996.

Effective May 1, 2006, Mr. Andrew Saperstein, age 39, is a Director
of Demeter.  Mr. Saperstein is Chief Operating Officer of National
Sales for Morgan Stanley?s Global Wealth Management Group, and
serves as a member of the group?s Executive Committee.
One of the largest businesses of its kind in the world with $640
billion in client assets, the Global Wealth Management Group
provides a range of wealth management products and services to
individuals, businesses, and institutions.  These include brokerage
and investment advisory services, financial and wealth planning,
credit and lending, banking and cash management, annuities and
insurance, retirement and trust.  Prior to joining Morgan Stanley
in March 2006, Mr. Saperstein was with Merrill Lynch as First Vice
President and Chief Operating Officer of the Direct Division, and
served as a member of the Global Private Client Executive
Committee.  In this capacity, he was responsible
                              - 57 -
<page> for the oversight of the online brokerage unit and the
Financial Advisory Center, including the Retail Client Relationship
Management group, the Services, Operations and Technology group,
the Client Acquisition team, and the Business Development and
Analysis team.  Mr. Saperstein joined Merrill Lynch in November
2001.  Prior to Merrill Lynch, Mr. Saperstein was a partner in the
Financial Institutions group of McKinsey & Co.  Additionally, he
served as co-leader of both the North American Asset Management and
Brokerage Practice and North American Recruiting. Mr. Saperstein
graduated cum laude from Harvard Law School and summa cum laude
from the Wharton School/College of Arts and Sciences at the
University of Pennsylvania with a dual degree in Economics and
Finance.

Effective September 22, 2006, Mr. Jacques Chappuis, age 37, is a
Director of Demeter.  Mr. Chappuis is a Managing Director of
Morgan Stanley and Head of Alternative Investments of Morgan
Stanley?s Global Wealth Management Group.  Prior to joining
Morgan Stanley in 2006, Mr. Chappuis was Head of Alternative
Investments for Citigroup?s Global Wealth Management Group and
prior to that, a Managing Director at Citigroup Alternative
Investments.  Before joining Citigroup, Mr. Chappuis was a
consultant at the Boston Consulting Group, where he focused

- 58 -
<page> on the financial services sector, and a corporate finance
Associate at Bankers Trust Company.  Mr. Chappuis received an MBA
in Finance, with honors, from the Columbia University Graduate
School of Business in 1998 and a B.A. in finance from Tulane
University in 1991.

Effective November 6, 2006, Mr. Lee Horwitz, age 55, is the Chief
Financial Officer of Demeter and a Principal of Demeter.  Mr.
Horwitz currently serves as an Executive Director within Morgan
Stanley?s Financial Control Group.  Mr. Horwitz joined Morgan
Stanley in March 1984 and has held a variety of positions
throughout Morgan Stanley?s organization during his tenure.  Mr.
Horwitz received a B.A. degree from Queens College and an MBA
from Rutgers University.  Mr. Horwitz is a Certified Public
Accountant.

All of the foregoing directors have indefinite terms.

Effective May 1, 2006, Mr. Jeffrey A. Rothman resigned his position
as a Director of Demeter.

Effective May 1, 2006, Mr. Richard A. Beech resigned his position
as a Director of Demeter.

- 59 -
<page> Effective May 1, 2006, Ms. Shelley Hanan resigned her
position as a Director of Demeter.

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

The Audit Committee
The Partnership is operated by its general partner, Demeter, and
has no audit committee and, thus, no audit committee financial
expert.

Code of Ethics
The Partnership has not adopted a code of ethics that applies to
the Partnership?s principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions.  The Partnership is operated by its
general partner, Demeter.  The President, Chief Financial Officer,
and each member of the Board of Directors of Demeter are employees
of Morgan Stanley and are subject to the code of ethics adopted by
Morgan Stanley, the text of which can be viewed on Morgan Stanley?s
website at http://www.morganstanley.com/ourcommitment/ code of
conduct.html.



- 60 -
<page>
Item 11.  EXECUTIVE COMPENSATION
The Partnership has no directors and executive officers.  As a
limited partnership, the business of the Partnership is managed by
Demeter, which is responsible for the administration of the
business affairs of the Partnership but receives no compensation
for such services.


Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED SECURITY HOLDER MATTERS


(a)  Security Ownership of Certain Beneficial Owners - At December
31, 2006, there were no persons known to be beneficial owners of
more than 5 percent of the Units.

(b)	Security Ownership of Management - At December 31, 2006,
Demeter owned 108.030 Units of general partnership interest,
representing a 1.47 percent interest in the Partnership.


(c)	Changes in Control ? None.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
		DIRECTOR INDEPENDENCE
Refer to Note 2 - "Related Party Transactions" of "Notes to
Consolidated Financial Statements", in the accompanying Annual
Report to Limited Partners for the year ended December 31, 2006,
                              - 61 ?
<page> which is incorporated by reference to Exhibit 13.01 of this
Form 10-K.  In its capacity as the Partnership's retail commodity
broker, Morgan Stanley DW received commodity brokerage fees (paid
and accrued by the Partnership) of $619,616 for the year ended
December 31, 2006.

Item 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Partnership pays all accounting fees as discussed in Note 1  to
the Consolidated Financial Statements, ?Operating Expenses?, in the
Annual Report to the Limited Partners for the year ended December
31, 2006.

(1)	Audit Fees.  The aggregate fees for professional services
rendered by Deloitte & Touche LLP in connection with their audit
of the Partnership?s Consolidated Financial Statements and review
of the Consolidated Financial Statements included in our
Quarterly Reports on Form 10-Q, audit of Management?s assessments
on the effectiveness of the internal control over financial
reporting, and in connection with statutory and regulatory
filings were approximately $50,307 for the year ended December
31, 2006, and $47,597 for the year ended December 31, 2005.

(2)	Audit-Related Fees.  None.

- 62 -
<page>
(3)	 Tax Fees.  The Partnership did not pay Deloitte & Touche LLP
any amounts in 2006 and 2005 for professional services in
connection with tax compliance, tax advice, and tax planning.  The
Partnership engaged another unaffiliated professional firm to
provide services in connection with tax compliance, tax advice, and
tax planning.

(4)  All Other Fees.  None.


Because the Partnership has no audit committee, the Board of
Directors of Demeter, its general partner, functions as the audit
committee with respect to the Partnership.  The Board of Directors
of Demeter has not established pre-approval policies and procedures
with respect to the engagement of audit or permitted non-audit
services rendered to the Partnership.  Consequently, all audit and
permitted non-audit services provided by Deloitte & Touche LLP are
approved by the Board of Directors of Demeter and communicated to
Morgan Stanley.











- 63 -


	<page>
PART IV
Item 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1.  Listing of Financial Statements
The following Financial Statements and report of independent
registered public accounting firm, all appearing in the
accompanying Annual Report to Limited Partners for the year
ended December 31, 2006, are incorporated by reference to
Exhibit 13.01 of this Form 10-K:
-	Report of Deloitte & Touche LLP, independent registered
public accounting firm, for the years ended December 31,
2006, 2005, and 2004.

-	Consolidated Statements of Financial Condition, including
the Consolidated Schedules of Investments, as of December
31, 2006 and 2005.

-	Consolidated Statements of Operations, Consolidated
Statements of Changes in Partners? Capital, and
Consolidated Statements of Cash Flows for the years ended
December 31, 2006, 2005, and 2004.

-	Notes to Consolidated Financial Statements.

With the exception of the aforementioned information and the
information incorporated in Items 7, 8, and 13, the Annual
Report to Limited Partners for the year ended December 31,
2006, is not deemed to be filed with this report.



- 64 -
<page>
2.  Listing of Financial Statement Schedules
No Financial Statement schedules are required to be filed with
this report.

3.  Exhibits
For the exhibits incorporated by reference or filed herewith to
this report, refer to Exhibit Index on Pages E-1 to E-2.
















- 65 -




<page> SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

					MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
						(Registrant)

					BY:  Demeter Management Corporation,
						General Partner

March 23, 2007			BY: /s/	Walter Davis
					 		Walter Davis,
							President


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

Demeter Management Corporation.

BY: /s/ 	Walter Davis	                    		March 23, 2007
	  	Walter Davis, President

    /s/    Frank Zafran       	             		March 23, 2007
           Frank Zafran, Director

    /s/    Douglas J. Ketterer   	             		March 23, 2007
           Douglas J. Ketterer, Director

    /s/    Harry Handler		           		March 23, 2007
	    	Harry Handler, Director

    /s/ 	Richard Gueren        		         		March 23, 2007
	 	Richard Gueren, Director

    /s/	Michael McGrath		                 	March 23, 2007
	  	Michael McGrath, Director

    /s/  	Andrew Saperstein	                 	March 23, 2007
	    	Andrew Saperstein, Director

    /s/  	Jacques Chappuis		                 	March 23, 2007
	    	Jacques Chappuis, Director

    /s/  	Lee Horwitz			                 	March 23, 2007
	    	Lee Horwitz, Chief Financial Officer






- 66 -


<page>


EXHIBIT INDEX

ITEM

3.01		Amended and Restated Limited Partnership Agreement of the
Partnership, dated as of August 29, 1995, is incorporated by
reference to Exhibit 3.01 and Exhibit 3.02 of the
Partnership's Registration Statement (File No. 33-95414) on
Form S-1.

3.02		Certificate of Limited Partnership, dated August 24, 1989, is
filed herewith.

	3.02(a)Certificate of Amendment to the Certificate of Limited
Partnership, dated July 20, 2006 (changing its name from Dean
Witter Principal Plus Fund L.P.), is incorporated by
reference to Exhibit 3.02 of the Partnership's Form 8-K (File
No. 0-18314) filed with the Securities and Exchange
Commission on July 26, 2006.

10.01	Amended and Restated Management Agreement among the
Partnership, Demeter, and SSARIS Advisors, LLC (formerly
known as RXR, Inc.), dated as of December 29, 1995, is
incorporated by reference to Exhibit 10.02 of the
Partnership's Registration Statement (File No. 33-95414) on
Form S-1.

10.03	Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW, dated as of June 22, 2000,
is incorporated by reference to Exhibit 10.01 of the
Partnership?s Form 8-K (File No. 0-18314) filed with the
Securities and Exchange Commission on November 13, 2001.

10.04	Commodity Futures Customer Agreement between MS&Co. and the
Partnership, and acknowledged and agreed to by Morgan Stanley
DW, dated as of May 1, 2000, is incorporated by reference to
Exhibit 10.02 of the Partnership?s Form 8-K (File No. 0-
18314) filed with the Securities and Exchange Commission on
November 13, 2001.

10.05	Customer Agreement between the Partnership and MSIL, dated as
of May 1, 2000, is incorporated by reference to Exhibit 10.04
of the Partnership?s Form 8-K (File No. 0-18314) filed with
the Securities and Exchange Commission on November 13, 2001.




E-1


<page>
10.06	Foreign Exchange and Options Master Agreement between MS&Co.
and the Partnership, dated as of April 30, 2000, is
incorporated by reference to Exhibit 10.05 of the
Partnership?s Form 8-K (File No. 0-18314) filed with the
Securities and Exchange Commission on November 13, 2001.

 10.07	Securities Account Control Agreement among the
Partnership, MS&Co., and Morgan Stanley DW, dated as of
May 1, 2000, is incorporated by reference to Exhibit 10.03
of the Partnership?s Form 8-K (File No. 0-18314) filed
with the Securities and Exchange Commission on November
13, 2001.

	13.01	December 31, 2006, Annual Report to Limited Partners is
filed herewith.

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

31.02	Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.

32.01	Certification of President of Demeter Management Corpor-
ation, the general partner of the Partnership, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.

32.02	Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



	E-2

<PAGE>

                                                                      Principal
                                                                           Plus
                                                                           Fund

            December 31, 2006
            Annual Report

    [LOGO] Morgan Stanley

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

HISTORICAL FUND PERFORMANCE

Presented below is the percentage change in Net Asset Value per Unit from the
start of each calendar year the Fund has traded. Also provided is the
inception-to-date return and the compound annualized return since inception for
the Fund. Past performance is no guarantee of future results.

<TABLE>
<CAPTION>
                                                                                                                  INCEPTION-
                                                                                                                   TO-DATE
                   1990      1991 1992 1993 1994  1995 1996  1997 1998 1999  2000 2001 2002 2003 2004  2005  2006   RETURN
FUND                %         %    %    %    %     %    %     %    %    %     %    %    %    %    %     %     %       %
-----------------------------------------------------------------------------------------------------------------------------
<S>            <C>           <C>  <C>  <C>  <C>   <C>  <C>   <C>  <C>  <C>   <C>  <C>  <C>  <C>  <C>   <C>   <C>  <C>
Principal Plus
 Fund.........      7.5      10.4 9.4  11.6 (8.6) 18.0 (5.3) 15.4 10.5 (3.8) 7.0  2.1  2.4  1.1  (4.1) (3.8) 0.8     91.0
               (10 1/2 mos.)
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
                COMPOUND
               ANNUALIZED
                 RETURN
FUND               %
-------------------------
<S>            <C>
Principal Plus
 Fund.........    3.9

-------------------------
</TABLE>

<PAGE>

DEMETER MANAGEMENT CORPORATION

330 Madison Avenue, 8th Floor
New York, NY 10017
Telephone (212) 905-2700

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
ANNUAL REPORT
2006

Dear Limited Partner:

  This marks the seventeenth annual report for the Morgan Stanley Principal
Plus Fund L.P. (formerly Dean Witter Principal Plus Fund L.P.) (the "Fund").
The Fund began the year at a Net Asset Value per Unit of $1,895.39 and returned
0.8% to $1,909.85 on December 31, 2006. The Fund has increased by 91.0% since
it began trading in February 1990 (a compound annualized return of 3.9%).

  Detailed performance information for the Fund is located in the body of the
financial report. We provide a trading results by sector chart that portrays
trading gains and trading losses for the year in each sector in which the Fund
participates.

  The trading results by sector chart indicates the year's composite percentage
returns generated by the specific assets dedicated to trading within each
market sector in which the Fund participates. Please note that there is not an
equal amount of assets in each market sector, and the specific allocations of
assets by the Fund to each sector will vary over time within a predetermined
range. Below the chart is a description of the factors that influenced trading
gains and trading losses within the Fund during the year.

  Should you have any questions concerning this report, please feel free to
contact Demeter Management Corporation, 330 Madison Avenue, 8th Floor, New
York, NY 10017, or your Morgan Stanley Financial Advisor.

  I hereby affirm, that to the best of my knowledge and belief, the information
contained in this report is accurate and complete. Past performance is no
guarantee of future results.

Sincerely,

/s/ Walter J. Davis
Walter J. Davis
Chairman of the Board of Directors and President
Demeter Management Corporation,
General Partner of
Morgan Stanley Principal Plus Fund L.P.

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

                                        [CHART]

                   YTD               ROR
-----------------------------------------
Currencies        0.10%
Interest Rates   -1.57%
Stock Indices     3.57%
Energies         -0.44%
Metals            0.88%
Agriculturals    -0.30%


Note:Includes trading results and commissions but does not include other fees
     or interest income.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
..  The most significant trading gains were recorded in the global stock index
   sector during January and March from long positions in U.S. and European
   equity index futures as prices trended higher on strong corporate earnings
   and solid economic data. During August and September, additional gains were
   experienced from long positions in U.S. and European equity index futures as
   prices advanced after a report by the U.S. Conference Board reported a
   stronger than expected rebound in consumer confidence, as well as data
   showing increased merger and acquisition activity and solid corporate
   earnings in Europe. During October, gains continued from long positions in
   U.S. and European stock index futures as prices moved higher amid declining
   energy prices and stronger than expected third quarter earnings. In
   addition, U.S. equity index futures prices rose after the U.S. Federal
   Reserve's decision to hold interest rates steady. Finally, gains were
   experienced during December from long positions in U.S. and European equity
   index futures as prices continued to move higher amid optimism about the
   future of the global economy.

..  Further gains were experienced within the metals markets, primarily during
   January and March, from long futures positions in copper, nickel, and zinc
   as prices strengthened amid weak supplies, forecasts for continued buying by
   China, and acceleration in global demand. During October, long positions in
   zinc futures resulted in further gains as prices rose amid labor protests in
   producer countries and news that inventories, tracked by the London Metal
   Exchange, had declined more than expected. Additional gains were recorded in
   December from short positions in copper futures as prices dropped after
   industrial output unexpectedly fell in the Euro-Zone countries, signaling
   reduced demand for the metal.

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.
FACTORS INFLUENCING ANNUAL TRADING GAINS: (continued)


..  Smaller gains were recorded in the currency markets, primarily from short
   positions in the South African rand against the U.S. dollar as the rand
   trended lower during the second quarter amid falling commodities prices,
   news that South Africa's Current-Account deficit had widened to a 24-year
   high, and expectations that the country's Gross Domestic Product growth
   would be weaker than expected. During September, short positions in the
   Norwegian krone versus the euro resulted in additional gains as the value of
   the Norwegian krone moved lower on investor concern that a prolonged decline
   in oil prices might negatively affect the Norwegian economy. In addition,
   gains were experienced during the fourth quarter from short positions in the
   Australian dollar versus the New Zealand dollar as the value of the New
   Zealand dollar climbed higher as investors flocked to the higher yields
   available on the nation's government bonds.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
..  Trading losses were recorded in the global interest rate sector from short
   and long positions in European and U.S. fixed-income futures as prices moved
   without consistent direction amid uncertainty regarding the future of global
   interest rate policy. Additional losses were incurred from short positions
   in European interest rate futures as prices reversed higher during the
   second quarter after weakness in the equity markets created strong demand
   for the safe-haven of fixed-income investments. European interest rate
   futures prices were also pushed higher after the May "ZEW" Institute survey
   showed investor confidence in Germany had fallen for a fourth straight
   month. Losses were extended in October and December from long positions in
   U.S. and European fixed-income futures as prices moved lower amid overall
   strength in the equity markets and speculation of further interest rate
   hikes by the U.S. Federal Reserve and European Central Bank.

..  Further losses were recorded in the energy markets during March from short
   positions in gas oil futures as prices moved higher on fears of supply
   disruptions fueled by news of geopolitical tensions in Nigeria. In May,
   newly established long positions in gas oil futures experienced additional
   losses as prices fell after supply data from the U.S. Department of Energy
   showed crude oil inventory levels were at an eight-year high. Gas oil prices
   continued to fall into June on news of the death of Iraqi insurgent leader
   Abu Musab al-Zarqawi and positive steps taken regarding the nuclear standoff
   between the U.S. and Iran, resulting in additional losses from long
   positions. During October and November, short positions in natural gas
   futures incurred losses as prices reversed higher on speculation of
   increased demand after weather forecasts called for colder weather in the
   U.S. Northeast. During December, losses were recorded from long positions in
   gas oil futures as prices weakened due to uncertainty regarding OPEC's plan
   to cut production, a lower demand forecast, and mild winter temperatures
   across the U.S. Northeast.

..  Smaller losses were incurred during July in the agricultural markets from
   long positions in orange juice futures as prices moved lower after the U.S.
   Department of Agriculture reported an increase in orange juice production.
   Additional losses were incurred from newly established short positions in
   orange juice futures as prices reversed higher towards the end of the month
   on concerns regarding poor harvest due to hot weather and labor shortages.
   Finally, losses were incurred from both short and long positions in corn and
   lean hog futures as prices moved without consistent direction throughout a
   majority of the year due to conflicting news regarding supply and demand.

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

  Demeter Management Corporation ("Demeter"), the general partner of Morgan
Stanley Principal Plus Fund L.P. (formerly Dean Witter Principal Plus Fund
L.P.) (the "Partnership"), is responsible for the management of the Partnership.

  Management of Demeter ("Management") is responsible for establishing and
maintaining adequate internal control over financial reporting. The internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles.

  The Partnership's internal control over financial reporting includes those
policies and procedures that:

..  Pertain to the maintenance of records that, in reasonable detail, accurately
   and fairly reflect the transactions and dispositions of the assets of the
   Partnership;

..  Provide reasonable assurance that transactions are recorded as necessary to
   permit preparation of financial statements in accordance with generally
   accepted accounting principles, and that the Partnership's transactions are
   being made only in accordance with authorizations of Management and
   directors; and

..  Provide reasonable assurance regarding prevention or timely detection of
   unauthorized acquisition, use or disposition of the Partnership's assets
   that could have a material effect on the financial statements.

  Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

<PAGE>

  Management assessed the effectiveness of the Partnership's internal control
over financial reporting as of December 31, 2006. In making this assessment,
Management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control--Integrated
Framework. Based on our assessment and those criteria, Management believes that
the Partnership maintained effective internal control over financial reporting
as of December 31, 2006.

  Deloitte & Touche LLP, the Partnership's independent registered public
accounting firm, has issued an audit report on Management's assessment of the
Partnership's internal control over financial reporting and on the
effectiveness of the Partnership's internal control over financial reporting.
This report, which expresses unqualified opinions on Management's assessment
and on the effectiveness of the Partnership's internal control over financial
reporting, appears under "Report of Independent Registered Public Accounting
Firm" on the following page.

/s/ Walter J. Davis
Walter J. Davis
President
Demeter Management Corporation

/s/ Lee Horwitz
Lee Horwitz
Chief Financial Officer
Demeter Management Corporation

New York, New York
March 9, 2007

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Limited Partners and the General Partner:

  We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that Morgan
Stanley Principal Plus Fund L.P. (formerly Dean Witter Principal Plus Fund
L.P.) (the "Partnership") maintained effective internal control over financial
reporting as of December 31, 2006, based on criteria established in Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. The Partnership's management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of the Partnership's internal
control over financial reporting based on our audit.

  We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinions.

  A company's internal control over financial reporting is a process designed
by, or under the supervision of, the company's principal executive and
principal financial officers, or persons performing similar functions, and
effected by the company's board of directors, management, and other personnel
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company's internal
control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly

<PAGE>

reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the company's assets that could have a material effect on the financial
statements.

  Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

  In our opinion, management's assessment that the Partnership maintained
effective internal control over financial reporting as of December 31, 2006, is
fairly stated, in all material respects, based on the criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Also in our opinion, the Partnership
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2006, based on the criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

  We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated financial
statements as of and for the year ended December 31, 2006 of the Partnership
and our report dated March 9, 2007 expressed an unqualified opinion on those
financial statements.

/s/ Deloitte & Touche LLP

New York, New York
March 9, 2007


<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Limited Partners and the General Partner:

  We have audited the accompanying consolidated statements of financial
condition of Morgan Stanley Principal Plus Fund L.P. (formerly Dean Witter
Principal Plus Fund L.P.) (the "Partnership") and its subsidiary Morgan Stanley
Principal Plus Fund Management L.P. (formerly Dean Witter Principal Plus Fund
Management L.P.) (the "Trading Company"), including the consolidated schedules
of investments, as of December 31, 2006 and 2005, and the related consolidated
statements of operations, changes in partners' capital, and cash flows for each
of the three years in the period ended December 31, 2006. These consolidated
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.

  We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

  In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Partnership and
the Trading Company at December 31, 2006 and 2005, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2006, in conformity with accounting principles
generally accepted in the United States of America.

  As discussed in Note 1, in 2006 and 2005, the Partnership modified its
classification of cash within the statements of cash flows.

<PAGE>

  We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the
Partnership's internal control over financial reporting as of December 31,
2006, based on the criteria established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated March 9, 2007 expressed an unqualified opinion
on management's assessment of the effectiveness of the Partnership's internal
control over financial reporting and an unqualified opinion on the
effectiveness of the Partnership's internal control over financial reporting.

/s/ Deloitte & Touche LLP

New York, New York
March 9, 2007

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                     DECEMBER 31,
                                                ---------------------
                                                   2006       2005
                                                ---------- ----------
                                                    $          $
<S>                                             <C>        <C>
                               ASSETS
Equity in futures interests trading accounts:
  Unrestricted cash                             13,545,110 16,730,219
  Restricted cash                                  681,672    720,459
                                                ---------- ----------
    Total cash                                  14,226,782 17,450,678
                                                ---------- ----------
  Net unrealized gain on open contracts
   (MSIL)                                           11,335     11,578
  Net unrealized gain (loss) on open contracts
   (MS&Co.)                                         10,199   (122,269)
                                                ---------- ----------
    Total net unrealized gain (loss) on open
     contracts                                      21,534   (110,691)
                                                ---------- ----------
    Total Trading Equity                        14,248,316 17,339,987
Interest receivable (Morgan Stanley DW)             56,037     53,551
                                                ---------- ----------
    Total Assets                                14,304,353 17,393,538
                                                ========== ==========

                  LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES

Redemptions payable                                137,293    277,078
Accrued administrative expenses                     99,434    120,879
Accrued brokerage fees (Morgan Stanley DW)          47,350     57,576
Accrued management fees                             11,838     14,393
                                                ---------- ----------
    Total Liabilities                              295,915    469,926
                                                ---------- ----------
Minority Interest                                    3,253      2,754
                                                ---------- ----------

PARTNERS' CAPITAL

Limited Partners (7,225.105 and 8,819.337
 Units, respectively)                           13,798,864 16,716,099
General Partner (108.030 Units)                    206,321    204,759
                                                ---------- ----------
    Total Partners' Capital                     14,005,185 16,920,858
                                                ---------- ----------
    Total Liabilities and Partners' Capital     14,304,353 17,393,538
                                                ========== ==========

NET ASSET VALUE PER UNIT                          1,909.85   1,895.39
                                                ========== ==========
</TABLE>

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

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                          FOR THE YEARS ENDED
                                              DECEMBER 31,
                                    -------------------------------
                                      2006       2005       2004
                                    --------  ---------  ----------
                                       $          $          $
<S>                                 <C>       <C>        <C>
INVESTMENT INCOME
Interest income (Morgan Stanley DW)  670,065    533,955     286,825
                                    --------  ---------  ----------
EXPENSES
Brokerage fees (Morgan Stanley DW)   619,616    777,878     985,617
Management fees                      154,904    194,470     246,404
Administrative expenses              115,000    125,000     117,000
Transaction fees and costs            48,554     37,036      42,383
                                    --------  ---------  ----------
   Total Expenses                    938,074  1,134,384   1,391,404
                                    --------  ---------  ----------
NET INVESTMENT LOSS                 (268,009)  (600,429) (1,104,579)
                                    --------  ---------  ----------
TRADING RESULTS
Trading profit (loss):
  Realized                           253,642     43,091     703,588
  Net change in unrealized           132,225   (268,415)   (679,302)
                                    --------  ---------  ----------
                                     385,867   (225,324)     24,286
Proceeds from Litigation Settlement    --         6,754       7,113
                                    --------  ---------  ----------
   Total Trading Results             385,867   (218,570)     31,399
                                    --------  ---------  ----------
NET INCOME (LOSS) BEFORE
 MINORITY INTEREST                   117,858   (818,999) (1,073,180)
Less: Minority interest                  499    (10,245)    (12,518)
                                    --------  ---------  ----------
NET INCOME (LOSS)                    117,359   (808,754) (1,060,662)
                                    ========  =========  ==========

NET INCOME (LOSS) ALLOCATION:
Limited Partners                     115,797   (798,146) (1,047,851)
General Partner                        1,562    (10,608)    (12,811)

NET INCOME (LOSS) PER UNIT:
Limited Partners                       14.46     (74.61)     (83.17)
General Partner                        14.46     (74.61)     (83.17)
</TABLE>

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

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004

<TABLE>
<CAPTION>
                    UNITS OF
                   PARTNERSHIP  LIMITED    GENERAL
                    INTEREST    PARTNERS   PARTNER     TOTAL
                   ----------- ----------  -------  ----------
                                   $          $          $
<S>                <C>         <C>         <C>      <C>
Partners' Capital,
December 31, 2003  12,918.544  26,207,748  316,250  26,523,998
Net loss               --      (1,047,851) (12,811) (1,060,662)
Redemptions        (1,614.743) (3,194,825)    --    (3,194,825)
                   ----------  ----------  -------  ----------
Partners' Capital,
December 31, 2004  11,303.801  21,965,072  303,439  22,268,511
Net loss               --        (798,146) (10,608)   (808,754)
Redemptions        (2,376.434) (4,450,827) (88,072) (4,538,899)
                   ----------  ----------  -------  ----------
Partners' Capital,
December 31, 2005   8,927.367  16,716,099  204,759  16,920,858
Net income             --         115,797    1,562     117,359
Redemptions        (1,594.232) (3,033,032)    --    (3,033,032)
                   ----------  ----------  -------  ----------
Partners' Capital,
December 31,2006    7,333.135  13,798,864  206,321  14,005,185
                   ==========  ==========  =======  ==========
</TABLE>

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

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                FOR THE YEARS ENDED DECEMBER 31,
                               ----------------------------------
                                  2006        2005        2004
                               ----------  ----------  ----------
                                   $           $           $
<S>                            <C>         <C>         <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES
Net income (loss)                 117,359    (808,754) (1,060,662)
Noncash items included in
 net income (loss):
  Net change in unrealized       (132,225)    268,415     679,302
(Increase) decrease in
 operating assets:
  Restricted cash                  38,787     484,122     161,154
  Interest receivable
   (Morgan Stanley DW)             (2,486)    (16,803)    (16,580)
  Net option premiums              --          --         (11,000)
Increase (decrease) in
 operating liabilities:
  Accrued administrative
   expenses                       (21,445)      1,323     (92,407)
  Accrued brokerage fees
   (Morgan Stanley DW)            (10,226)    (18,946)    (13,845)
  Accrued management fees          (2,555)     (4,737)     (3,462)
                               ----------  ----------  ----------
Net cash used for operating
 activities                       (12,791)    (95,380)   (357,500)
                               ----------  ----------  ----------

CASH FLOWS FROM
 FINANCING ACTIVITIES
Increase (decrease) in
 minority interest                    499     (10,246)    (12,518)
Cash paid for redemptions of
 Units                         (3,172,817) (4,841,180) (3,062,985)
                               ----------  ----------  ----------
Net cash used for financing
 activities                    (3,172,318) (4,851,426) (3,075,503)
                               ----------  ----------  ----------

Net decrease in unrestricted
 cash                          (3,185,109) (4,946,806) (3,433,003)

Unrestricted cash at beginning
 of period                     16,730,219  21,677,025  25,110,028
                               ----------  ----------  ----------

Unrestricted cash at end of
 period                        13,545,110  16,730,219  21,677,025
                               ==========  ==========  ==========
</TABLE>

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

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

CONSOLIDATED SCHEDULES OF INVESTMENTS

DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                    LONG UNREALIZED  PERCENTAGE   SHORT UNREALIZED  PERCENTAGE   NET UNREALIZED
FUTURES AND FORWARD CONTRACTS:        GAIN/(LOSS)   OF NET ASSETS   GAIN/(LOSS)    OF NET ASSETS  GAIN/(LOSS)
------------------------------      --------------- ------------- ---------------- ------------- --------------
2006 PARTNERSHIP NET ASSETS:
$14,005,185                                $              %              $               %             $
<S>                                 <C>             <C>           <C>              <C>           <C>
Commodity                                 6,542          0.05          28,610           0.20          35,152
Equity                                    6,338          0.05            --              --            6,338
Foreign currency                         (5,450)        (0.04)           (788)         (0.01)         (6,238)
Interest rate                           (59,578)        (0.43)         77,876           0.56          18,298
                                       --------         -----         -------          -----        --------
 Grand Total:                           (52,148)        (0.37)        105,698           0.75          53,550
                                       ========         =====         =======          =====
 Unrealized Currency Loss                                                                            (32,016)
                                                                                                    --------
 Total Net Unrealized Gain per
   Statement of Financial Condition                                                                   21,534
                                                                                                    ========
2005 PARTNERSHIP NET ASSETS:
$16,920,858
Commodity                                17,855          0.10          (1,214)         (0.01)         16,641
Equity                                 (107,292)        (0.63)           --              --         (107,292)
Foreign currency                          6,082          0.04          (8,136)         (0.05)         (2,054)
Interest rate                            (4,676)        (0.03)         33,910           0.21          29,234
                                       --------         -----         -------          -----        --------
 Grand Total:                           (88,031)        (0.52)         24,560           0.15         (63,471)
                                       ========         =====         =======          =====
 Unrealized Currency Loss                                                                            (47,220)
                                                                                                    --------
 Total Net Unrealized Loss per
   Statement of Financial Condition                                                                 (110,691)
                                                                                                    ========
</TABLE>
  The accompanying notes are an integral part of these consolidated financial
                                  statements.

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION.   Morgan Stanley Principal Plus Fund L.P. (formerly Dean Witter
Principal Plus Fund L.P.) (the "Partnership") is a limited partnership
organized to engage primarily in the speculative trading of futures contracts,
options on futures contracts, and forward contracts on physical commodities,
and other commodity interests (collectively, "Futures Interests").

  Effective July 20, 2006, Dean Witter Principal Plus Fund L.P. was renamed to
Morgan Stanley Principal Plus Fund L.P.

  The Partnership's general partner is Demeter Management Corporation
("Demeter"). The non-clearing commodity broker is Morgan Stanley DW Inc.
("Morgan Stanley DW"). The clearing commodity brokers are Morgan Stanley & Co.
Incorporated ("MS&Co.") and Morgan Stanley & Co. International Limited
("MSIL"). MS&Co. acts as the counterparty on all of the foreign currency
forward contracts. In 2007, Morgan Stanley intends to merge Morgan Stanley DW
into MS&Co. Upon completion of the merger, the surviving entity, MS&Co., will
be the Partnership's principal U.S. commodity broker-dealer. Demeter, Morgan
Stanley DW, MS&Co., and MSIL are wholly-owned subsidiaries of Morgan Stanley.
The trading advisor to the Partnership is SSARIS Advisors, LLC ("SSARIS") (the
"Trading Advisor"). Morgan Stanley Principal Plus Fund Management L.P.
(formerly known as Dean Witter Principal Plus Fund Management L.P.) (the
"Trading Company") was established solely to trade in Futures Interests on
behalf of the Partnership.

  Effective October 5, 2006, Dean Witter Principal Plus Fund Management L.P.
was renamed to Morgan Stanley Principal Plus Fund Management L.P.

  Demeter is required to maintain a 1% minimum interest in the equity of the
Partnership and income (losses) are shared by Demeter and the limited partners
based upon their proportional ownership interests.

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)


USE OF ESTIMATES.  The financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, which
require management to make estimates and assumptions that affect the reported
amounts in the financial statements and related disclosures. Management
believes that the estimates utilized in the preparation of the financial
statements are prudent and reasonable. Actual results could differ from those
estimates.

PRINCIPLES OF CONSOLIDATION.  The consolidated financial statements include the
accounts of the Partnership and the Trading Company. All intercompany balances
have been eliminated.

  The ownership by Demeter in the Trading Company represents a minority
interest in the Partnership. Demeter's share of the Trading Company's profits
or losses is deducted from consolidated results of operations.

REVENUE RECOGNITION.  Futures Interests are open commitments until settlement
date, at which time they are realized. They are valued at market on a daily
basis and the resulting net change in unrealized gains and losses is reflected
in the change in unrealized trading profit (loss) on open contracts from one
period to the next on the Consolidated Statements of Operations. Monthly,
Morgan Stanley DW pays interest income on 100% and 90% of the Partnership's and
the Trading Company's, respectively, average daily Net Assets as defined in the
Limited Partnership Agreement for the month at the prevailing rate on U.S.
Treasury bills. For purposes of such interest payments, Net Assets do not
include monies owed to the Partnership and the Trading Company on Futures
Interests.

  The Partnership'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 Consolidated
Statements of Financial Condition. Income and expense items denominated in
currencies other than the U.S. dollar 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 income currently.

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)


NET INCOME (LOSS) PER UNIT.  Net income (loss) per unit of limited partnership
interest ("Unit(s)") is computed using the weighted average number of Units
outstanding during the period.

NEW ACCOUNTING DEVELOPMENTS.  In July 2006, the Financial Accounting Standards
Board ("FASB") issued Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes - an interpretation of FASB Statement 109" ("FIN 48"). FIN 48
clarifies the accounting for income taxes by prescribing the minimum
recognition threshold a tax position must meet before being recognized in the
financial statements. FIN 48 is effective for fiscal years beginning after
December 15, 2006. The impact to the Partnership's Financial Statements, if
any, is currently being assessed.

  In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements.
SFAS No. 157 is effective for the Partnership as of January 1, 2008. The impact
to the Partnership's Financial Statements, if any, is currently being assessed.

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)


  In September 2006, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements" ("SAB No. 108") to provide guidance on how the effects of the
carryover or reversal of prior year unrecorded misstatements should be
considered in quantifying a current year misstatement. SAB No. 108 requires a
company to apply an approach that considers the amount by which the current
year income statement is misstated ("rollover approach") and an approach that
considers the cumulative amount by which the current year balance sheet is
misstated ("iron-curtain approach"). Prior to the issuance of SAB No. 108, many
companies applied either the rollover or iron-curtain approach for purposes of
assessing materiality of misstatements. SAB No. 108 is effective for the
Partnership as of January 1, 2007. Upon adoption, SAB No. 108 allows a one-time
cumulative effect adjustment against Partners' Capital for those prior year
misstatements that were not material under the Partnership's prior approach,
but that are deemed material under the SAB No. 108 approach. Demeter does not
expect the adoption of SAB No. 108 to have a material impact on the
Partnership's Financial Statements.

EQUITY IN FUTURES INTERESTS TRADING ACCOUNTS.  The Partnership's asset "Equity
in futures interests trading accounts," reflected on the Consolidated
Statements of Financial Condition, consists of (A) cash on deposit with Morgan
Stanley DW, MS&Co., and MSIL to be used as margin for trading; (B) net
unrealized gains or losses on open contracts, which are valued at market and
calculated as the difference between original contract value and market value;
and (C) net option premiums, which represent the net of all monies paid and/or
received for such option premiums.
  The Partnership, in the normal course of business, enters into various
contracts with MS&Co. and MSIL acting as its commodity brokers. Pursuant to
brokerage agreements with MS&Co. and MSIL, to the extent that such trading
results in unrealized gains or losses, the amounts are offset and reported on a
net basis on the Partnership's Consolidated Statements of Financial Condition.
  The Partnership has offset the fair value amounts recognized for forward
contracts executed with the same counterparty as allowable under the terms of
its master netting agreement with MS&Co., the sole counterparty on such
contracts. The Partnership has consistently applied its right to offset.

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)


BROKERAGE FEES AND RELATED TRANSACTION FEES AND COSTS.  The monthly brokerage
fee is equal to  1/3 of 1% per month (a 4% annual rate) of the Partnership's
adjusted month-end Net Assets. Transaction fees and costs are accrued on a
half-turn basis. In 2006, 2005, and 2004, the brokerage fees charged were the
equivalent of a roundturn commission charge of approximately $70, $120, and
$119, respectively, per contract traded.

OPERATING EXPENSES.  The Partnership bears all operating expenses related to
its trading activities. These include filing fees, clerical, administrative,
auditing, accounting, mailing, printing, and other incidental operating
expenses as permitted by the Limited Partnership Agreement. In addition, the
Partnership incurs a monthly management fee and may incur an incentive fee.
Demeter bears all other operating expenses.
REDEMPTIONS.  Limited partners may redeem some or all of their Units at 100% of
the Net Asset Value per Unit as of the last day of any month upon five business
days advance notice by redemption form to Demeter.
DISTRIBUTIONS.  Distributions, other than redemptions of Units, will be made on
a pro-rata basis at the sole discretion of Demeter. No distributions have been
made to date. Demeter does not intend to make any distributions of the
Partnership's profits.
INCOME TAXES.  No provision for income taxes has been made in the accompanying
consolidated financial statements, as partners are individually responsible for
reporting income or loss based upon their respective share of the Partnership's
revenues and expenses for income tax purposes.
DISSOLUTION OF THE PARTNERSHIP.  The Partnership will terminate on December 31,
2025, or at an earlier date if certain conditions set forth in the Limited
Partnership Agreement occur.
  The Trading Company may terminate operations if its Net Assets decline to 5%
or less of consolidated Partnership Net Assets, and will terminate operations
if its Net Assets decline to less than 3% of consolidated Partnership Net
Assets. At December 31, 2006 and 2005, the Trading Company had Net Assets of
$14,098,880 and $14,051,580, respectively, which represented 101% and 83%
respectively, of the consolidated Partnership's Net Assets at the respective
dates.

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

LITIGATION SETTLEMENT.  The Partnership received notification of a preliminary
entitlement to payment from the Sumitomo Copper Litigation Settlement
Administrator, and the Partnership received settlement award payments in the
amount of $7,113 during July 2004, and $6,754 during November 2005. Any amounts
received are accounted for in the period received, for the benefit of the
limited partners at the date of receipt.
RECLASSIFICATIONS.  Certain prior year amounts relating to cash balances were
reclassified on the Consolidated Statements of Cash Flows to conform to 2006
and 2005 presentation. Such reclassifications have no impact on the
Partnership's reported net income (loss).

--------------------------------------------------------------------------------
2. RELATED PARTY TRANSACTIONS
The Trading Company pays a monthly brokerage fee to Morgan Stanley DW as
described in Note 1. The Partnership's and Trading Company's cash is on deposit
with Morgan Stanley DW, MS&Co., and MSIL in futures interests trading accounts
to meet margin requirements as needed. Morgan Stanley DW pays interest on these
funds as described in Note 1. Pursuant to the Limited Partnership Agreement,
Demeter initially invested $200,000 of General Partnership Interest in the
Trading Company.

--------------------------------------------------------------------------------
3. TRADING ADVISOR
Compensation to SSARIS consists of a management fee and an incentive fee as
follows:

MANAGEMENT FEE.  The Partnership pays a monthly management fee equal to  1/12
of 1% per month (a 1% annual rate) of the Partnership's Adjusted Net Assets, as
defined in the Limited Partnership Agreement, as of the last day of each month.

INCENTIVE FEE.  The Partnership pays an annual incentive fee to SSARIS equal to
15% of the "New Appreciation", as defined in the Limited Partnership Agreement,
of the Trading Company's Net Assets as of the end of each annual incentive
period ending December 31. Such incentive fee is accrued in each month in which
New Appreciation occurs. In those months in which New Appreciation is negative,
previous accruals, if any, during the incentive period are reduced.

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)


--------------------------------------------------------------------------------
4. FINANCIAL INSTRUMENTS
The Partnership trades Futures Interests. Futures and forwards represent
contracts for delayed delivery of an instrument at a specified date and price.
Risk arises from changes in the value of these contracts and the potential
inability of counterparties to perform under the terms of the contracts. There
are numerous factors which may significantly influence the market value of
these contracts, including interest rate volatility.
  The market value of exchange-traded contracts is based on the settlement
price quoted by the exchange on the day with respect to which market value is
being determined. If an exchange-traded contract could not have been liquidated
on such day due to the operation of daily limits or other rules of the
exchange, the settlement price shall be the settlement price on the first
subsequent day on which the contract could be liquidated. The market value of
off-exchange-traded contracts is based on the fair market value quoted by the
counterparty.
  The Partnership's contracts are accounted for on a trade-date basis and
marked to market on a daily basis. The Partnership accounts for its derivative
investments in accordance with the provisions of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS No. 133"). SFAS No. 133 defines a derivative as a
financial instrument or other contract that has all three of the following
characteristics:

(1)One or more underlying notional amounts or payment provisions;

(2)Requires no initial net investment or a smaller initial net investment than
   would be required relative to changes in market factors;

(3)Terms require or permit net settlement.

  Generally, derivatives include futures, forward, swaps or options contracts,
and other financial instruments with similar characteristics such as caps,
floors, and collars.

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

  The net unrealized gains (losses) on open contracts at December 31, reported
as a component of "Equity in futures interests trading accounts" on the
Consolidated Statements of Financial Condition, and their longest contract
maturities were as follows:

<TABLE>
<CAPTION>
         NET UNREALIZED GAINS/
      (LOSSES) ON OPEN CONTRACTS   LONGEST MATURITIES
     ----------------------------  -------------------
                 OFF-                          OFF-
     EXCHANGE- EXCHANGE-           EXCHANGE- EXCHANGE-
YEAR  TRADED    TRADED     TOTAL    TRADED    TRADED
---- --------- --------- --------  --------- ---------
         $         $         $
<S>  <C>       <C>       <C>       <C>       <C>
2006   21,534     --       21,534  Jun. 2007    --
2005 (114,913)   4,222   (110,691) Mar. 2006 Mar. 2006
</TABLE>

  The Partnership has credit risk associated with counterparty nonperformance.
As of the date of the financial statements, the credit risk associated with the
instruments in which the Partnership trades is limited to the amounts reflected
on the Partnership's Consolidated Statements of Financial Condition.
  The Partnership also has credit risk because Morgan Stanley DW, MS&Co., and
MSIL act as the futures commission merchants or the counterparties, with
respect to most of the Partnership's assets. Exchange-traded futures,
exchange-traded forward, and exchange-traded futures-styled options contracts
are marked to market on a daily basis, with variations in value settled on a
daily basis. Morgan Stanley DW, MS&Co., and MSIL, each as a futures commission
merchant for the Partnership's exchange-traded futures, exchange-traded
forward, and exchange-traded futures-styled options contracts, are required,
pursuant to regulations of the Commodity Futures Trading Commission, to
segregate from their own assets, and for the sole benefit of their commodity
customers, all funds held by them with respect to exchange-traded futures,
exchange-traded forward, and exchange-traded futures-styled options contracts,
including an amount equal to the net unrealized gains (losses) on all open
exchange-traded futures, exchange-traded forward, and exchange-traded
futures-styled options contracts, which funds, in the aggregate, totaled
$14,248,316 and $17,335,765 at December 31, 2006 and 2005, respectively. With
respect to the Partnership's off-exchange-traded forward currency contracts,
there are no daily settlements of variation in value, nor is there any
requirement that an amount equal to the net unrealized gains (losses) on such
con-

<PAGE>

MORGAN STANLEY PRINCIPAL PLUS FUND L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(concluded)

tracts be segregated. However, the Partnership is required to meet margin
requirements equal to the net unrealized loss on open forward currency
contracts in the Partnership accounts with the counterparty, which is
accomplished by daily maintenance of the cash balance in a custody account held
at Morgan Stanley DW for the benefit of MS&Co. With respect to those
off-exchange-traded forward currency contracts, the Partnership is at risk to
the ability of MS&Co., the sole counterparty on all such contracts, to perform.
The Partnership has a netting agreement with MS&Co. This agreement, which seeks
to reduce both the Partnership's and MS&Co.'s exposure on off-exchange-traded
forward currency contracts, should materially decrease the Partnership's credit
risk in the event of MS&Co.'s bankruptcy or insolvency.

--------------------------------------------------------------------------------
5. FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
                                       2006       2005       2004
                                    ---------  ---------  ---------
<S>                                 <C>        <C>        <C>
PER UNIT OPERATING
 PERFORMANCE:
NET ASSET VALUE, JANUARY 1:         $1,895.39  $1,970.00  $2,053.17
                                    ---------  ---------  ---------
NET OPERATING RESULTS:
   Interest Income                      83.24      53.13      23.42
   Expenses                           (116.53)   (112.88)   (113.62)
   Realized Profit                      31.38      10.16      60.90
   Unrealized Profit (Loss)             16.43     (26.71)    (55.47)
   Proceeds from Litigation
    Settlement                             --       0.67       0.58
                                    ---------  ---------  ---------
   Income (Loss) before Minority
    Interest                            14.52     (75.63)    (84.19)
   Less: Minority Interest               0.06      (1.02)     (1.02)
                                    ---------  ---------  ---------
   Net Income (Loss)                    14.46     (74.61)    (83.17)
                                    ---------  ---------  ---------
NET ASSET VALUE,
 DECEMBER 31:                       $1,909.85  $1,895.39  $1,970.00
                                    =========  =========  =========
FOR THE CALENDAR YEAR:
RATIOS TO AVERAGE NET
 ASSETS:
   Net Investment Loss                 (1.8)%     (3.2)%     (4.6)%
   Expenses before Incentive Fees       6.2 %      6.0 %      5.7 %
   Expenses after Incentive Fees        6.2 %      6.0 %      5.7 %
   Net Income (Loss)                    0.8 %     (4.3)%     (4.4)%
TOTAL RETURN BEFORE
 INCENTIVE FEES                         0.8 %     (3.8)%     (4.1)%
TOTAL RETURN AFTER
 INCENTIVE FEES                         0.8 %     (3.8)%     (4.1)%

INCEPTION-TO-DATE RETURN               91.0 %
COMPOUND ANNUALIZED
 RETURN                                 3.9 %
</TABLE>

<PAGE>


                    Demeter Management Corporation
                    330 Madison Avenue, 8th Floor
                    New York, NY 10017

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