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

	FORM 10-Q


[X]	Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2006 or

[ ]	Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from               to__________________

Commission File Number 0-25603

	MORGAN STANLEY CHARTER GRAHAM L.P.

	(Exact name of registrant as specified in its charter)


		Delaware						     13-4018068
(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





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

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

Yes    X       	No___________

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

Large accelerated filer___Accelerated filer____Non-accelerated filer X

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


<page> <table> 	MORGAN STANLEY CHARTER GRAHAM L.P.

	INDEX TO QUARTERLY REPORT ON FORM 10-Q

	June 30, 2006

<caption>


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

				<c>
		Statements of Financial Condition as of June 30, 2006
 		(Unaudited) and December 31, 2005..........................2

		Statements of Operations for the Three and Six Months
		Ended June 30, 2006 and 2005 (Unaudited)...................3

		Statements of Changes in Partners? Capital for the
Six Months Ended June 30, 2006 and 2005 (Unaudited)........4

		Statements of Cash Flows for the Six Months
		Ended June 30, 2006 and 2005 (Unaudited)...................5

		Notes to Financial Statements (Unaudited)...............6-12

Item 2.	Management?s Discussion and Analysis of
			Financial Condition and Results of Operations.......13-28

Item 3.	Quantitative and Qualitative Disclosures about
			Market Risk.........................................29-42

Item 4.	Controls and Procedures................................42



PART II. OTHER INFORMATION

Item 1A.	Risk Factors...........................................43

Item 2.	Unregistered Sales of Equity Securities and
			Use of Proceeds.....................................43-44

Item 5.	Other Information......................................44

Item 6.	Exhibits............................................44-45
</table>


<page> <table> PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

	MORGAN STANLEY CHARTER GRAHAM L.P.
	STATEMENTS OF FINANCIAL CONDITION
<caption>
	June 30,	December 31,
	      2006       	      2005
	$	$
	(Unaudited)
ASSETS

	<c>	<c>
Equity in futures interests trading accounts:
	Unrestricted cash	420,772,021	396,726,923
	Restricted cash	   11,710,187	    29,685,072

	     Total cash	 432,482,208	  426,411,995

	Net unrealized gain (loss) on open contracts (MS&Co.)	1,571,686	     (1,496,739)
   	Net unrealized gain (loss) on open contracts (MSIL)	            (78,571)	       4,355,496

	     Total net unrealized gain on open contracts	    1,493,115	      2,858,757

	     Total Trading Equity	433,975,323	429,270,752

Subscriptions receivable	7,754,559	8,958,985
Interest receivable (Morgan Stanley DW)	     1,650,400	      1,331,130

	     Total Assets	   443,380,282	  439,560,867

LIABILITIES AND PARTNERS? CAPITAL

Liabilities

Redemptions payable	5,979,383	15,313,368
Accrued brokerage fees (Morgan Stanley DW)	2,190,184	2,194,515
Accrued management fees	        730,062	         731,505

	     Total Liabilities	    8,899,629	   18,239,388

Partners? Capital

Limited Partners (21,894,800.527 and
      22,414,234.236 Units, respectively)	429,720,991	416,811,790
General Partner (242,510.501 Units)	     4,759,662	    4,509,689

         Total Partners? Capital	   434,480,653	 421,321,479

         Total Liabilities and Partners? Capital	   443,380,282	 439,560,867

NET ASSET VALUE PER UNIT	             19.63	            18.60
<fn>
	The accompanying notes are an integral part
	of these financial statements.
</table>


<page> <table>	MORGAN STANLEY CHARTER GRAHAM L.P.
	STATEMENTS OF OPERATIONS
(Unaudited)

<caption>

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


                         2006   	         2005    	        2006   	    2005
                            $	           $	            $	       $

	<c>	<c>		<c>  	<c>
INVESTMENT INCOME
	Interest income (Morgan Stanley DW)	   4,925,743		     2,893,610 		   9,092,539	        5,450,125

EXPENSES
	Brokerage fees (Morgan Stanley DW)	6,550,474	6,644,357	12,837,350	13,778,735
	Management fees	   2,183,491      	    2,126,196	     4,279,117	   4,409,197

		Total Expenses 	   8,733,965	     8,770,553		 17,116,467	   18,187,932

NET INVESTMENT LOSS 	  (3,808,222)	   (5,876,943)	  (8,023,928)	  (12,737,807)

TRADING RESULTS
Trading profit (loss):
	Realized	22,197,875	(41,679,888)	32,282,689	(87,518,160)
	Net change in unrealized	   (9,882,841)	   30,029,106 		   (1,365,642)	     20,706,981

		Total Trading Results	   12,315,034	  (11,650,782)		   30,917,047	  (66,811,179)

NET INCOME (LOSS)	      8,506,812		  (17,527,725)	   22,893,119	 (79,548,986)

NET INCOME (LOSS) ALLOCATION

	Limited Partners	8,413,749	  (17,332,269)	22,643,146	(78,682,941)
	General Partner 	                                93,063	                 (195,456)	249,973	(866,045)


NET INCOME (LOSS) PER UNIT

	Limited Partners                                                     0.39	                         (0.76) 	    1.03 	(3.61)
	General Partner                                                      0.39	                         (0.76) 	    1.03 	(3.61)




<fn>




	The accompanying notes are an integral part
	of these financial statements.
</table>
<page> <table>  MORGAN STANLEY CHARTER GRAHAM L.P.
	STATEMENTS OF CHANGES IN PARTNERS? CAPITAL
	For the Six Months Ended June 30, 2006 and 2005
	(Unaudited)


<caption>


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

	<c>		<c>			<c>		<c>
Partners? Capital,
	December 31, 2004	21,497,776.200	471,290,914	5,146,964	476,437,878

Offering of Units	3,959,544.147          74,453,770	   480,000	74,933,770

Net Loss                                                               ?	    	(78,682,941)	 (866,045)	(79,548,986)

Redemptions	   (2,010,869.012)	   (36,908,239)	         ?     	  (36,908,239)

Partners? Capital,
   June 30, 2005	 23,446,451.335	 430,153,504	  4,760,919	 434,914,423




Partners? Capital,
	December 31, 2005	22,656,744.737	416,811,790	4,509,689	421,321,479

Offering of Units	2,580,379.341          50,368,075	      ?     	50,368,075

Net Income                                                               ?	    	22,643,146	 249,973	22,893,119

Redemptions	   (3,099,813.050)	   (60,102,020)	         ?     	  (60,102,020)

Partners? Capital,
   June 30, 2006	 22,137,311.028	 429,720,991	  4,759,662	 434,480,653



<fn>






The accompanying notes are an integral part
	of these financial statements.
</table>


<page> <table> 	MORGAN STANLEY CHARTER GRAHAM L.P.
	STATEMENTS OF CASH FLOWS
(Unaudited)

<caption>

	For the Six Months Ended June 30,

	  2006   	    2005
	$	$


CASH FLOWS FROM OPERATING ACTIVITIES

			<c>	<c>
Net income (loss)	22,893,119	(79,548,986)
Noncash item included in net income (loss):
	Net change in unrealized	1,365,642	(20,706,981)

(Increase) decrease in operating assets:
	Restricted cash	17,974,885	27,205,763
	Interest receivable (Morgan Stanley DW)	   (319,270)	(223,725)

Decrease in operating liabilities:
	Accrued brokerage fees (Morgan Stanley DW)	(4,331)	(171,714)
	Accrued management fees	           (1,443)	            (54,947)

Net cash provided by (used for) operating activities	    41,908,602	   (73,500,590)


CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from offering of Units	51,572,501	82,528,080
Cash paid for redemptions of Units 	    (69,436,005)	    (33,772,722)

Net cash provided by (used for) financing activities	    (17,863,504)	     48,755,358

Net increase (decrease) in unrestricted cash	24,045,098	(24,745,232)

Unrestricted cash at beginning of period	   396,726,923	   381,380,031

Unrestricted cash at end of period	                                                 420,772,021	   356,634,799



<fn>




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

</table>


<page> MORGAN STANLEY CHARTER GRAHAM L.P.
NOTES TO FINANCIAL STATEMENTS

June 30, 2006
(Unaudited)

The unaudited financial statements contained herein include, in
the opinion of management, all adjustments necessary for a fair
presentation of the results of operations and financial condition
of Morgan Stanley Charter Graham L.P. (the ?Partnership?).  The
financial statements and condensed notes herein should be read in
conjunction with the Partnership?s December 31, 2005 Annual Report
on Form 10-K.  Certain prior year amounts relating to cash
balances were reclassified on the Statements of Financial
Condition and the related Statements of Cash Flows to conform to
2006 presentation. Such reclassifications have no impact on the
Partnership?s reported net income (loss).

1.  Organization
Morgan Stanley Charter Graham L.P. is a Delaware limited
partnership organized in 1998 to engage primarily in the
speculative trading of futures contracts, options on futures
contracts, and forward contracts on physical commodities and other
commodity interests, including, but not limited to, foreign
currencies, financial instruments, metals, energy, and
agricultural products. The Partnership is one of the Morgan


<page> MORGAN  STANLEY CHARTER GRAHAM L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Stanley Charter Series of funds, comprised of three continuously-
offered limited partnerships; the Partnership, Morgan Stanley
Charter Millburn L.P., and Morgan Stanley Charter MSFCM L.P., and
effective as of May 1, 2006, one closed-end partnership, Morgan
Stanley Charter Campbell 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?).
Demeter, Morgan Stanley DW, MS & Co., and MSIL are wholly-owned
subsidiaries of Morgan Stanley.  Graham Capital Management, L.P.
(the ?Trading Advisor?) is the trading advisor to the Partnership.

2.  Related Party Transactions
The Partnership?s cash is on deposit with Morgan Stanley DW, MS &
Co., and MSIL in futures, forwards, and options trading accounts
to meet margin requirements as needed.  Monthly, Morgan Stanley DW
pays the Partnership interest income equal to 100% of its average
daily funds held at Morgan Stanley DW at a rate equal to that
earned by Morgan Stanley DW on its U.S. Treasury bill investments.
In addition, Morgan Stanley DW pays the Partnership interest

<page> MORGAN  STANLEY CHARTER GRAHAM L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

received from MS & Co. and MSIL with respect to such Partnership?s
assets deposited as margin.  The Partnership pays brokerage fees
to Morgan Stanley DW.

3.  Financial Instruments
The Partnership trades futures contracts, options on futures
contracts, and forward contracts on physical commodities and other
commodity interests, including, but not limited to, foreign
currencies, financial instruments, metals, energy, and
agricultural products.  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

<page> MORGAN  STANLEY CHARTER GRAHAM L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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 CHARTER GRAHAM L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The net unrealized gains on open contracts, reported as a
component of ?Equity in futures interests trading accounts? on the
Statements of Financial Condition, and their longest contract
maturities were as follows:

                         Net Unrealized Gains
	           on Open Contracts	Longest Maturities

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

Jun. 30, 2006   1,298,005	  195,110	 1,493,115	Dec. 2007	 Sep. 2006
Dec. 31, 2005     786,903	2,071,854	 2,858,757	Jun. 2007	 Mar. 2006

The Partnership has credit risk associated with counterparty non-
performance.  As of the date of the financial statements, the
credit risk associated with the instruments in which the
Partnership trades is limited to the amounts reflected in the
Partnership?s Statements of Financial Condition.

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, forward, and 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.,


<page> MORGAN  STANLEY CHARTER GRAHAM L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

and MSIL, each as a futures commission merchant for the
Partnership?s exchange-traded futures, forward, and futures-
styled options contracts, are required, pursuant to regulations
of the Commodity Futures Trading Commission (?CFTC?), to
segregate from their own assets, and for the sole benefit of
their commodity customers, all funds held by them with respect to
exchange-traded futures, forward, and futures-styled options
contracts, including an amount equal to the net unrealized gains
(losses) on all open futures, forward, and futures-styled options
contracts, which funds, in the aggregate, totaled $433,780,213
and $427,198,898 at June 30, 2006 and December 31, 2005,
respectively.  With respect to the Partnership?s off-exchange-
traded forward currency contracts, there are no daily exchange-
required settlements of variation in value, nor is there any
requirement that an amount equal to the net unrealized gains
(losses) on open forward contracts be segregated.  However, the
Partnership is required to meet margin requirements equal to the
net unrealized loss on open 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

<page> MORGAN STANLEY CHARTER GRAHAM L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

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.


<page> Item 2.  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 CFTC for investment of customer
segregated or secured funds.  Since the Partnership?s sole purpose
is to trade in futures, forwards, and options, it is expected that
the Partnership will continue to own such liquid assets for margin
purposes.

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

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

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

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

Results of Operations
General.  The Partnership?s results depend on the Trading Advisor
and the ability of the Trading Advisor?s trading programs to take
advantage of price movements in the futures, forwards, and options
markets.  The following presents a summary of the Partnership?s
operations for the three and six month periods ended June 30, 2006
and 2005 and a general discussion of its trading activities during
each period.  It is important to note, however, that the Trading
Advisor trades in various markets at different times and that
prior activity in a particular market does not mean that such
market will be actively traded by the Trading Advisor or will be
profitable in the future. Consequently, the results of operations
of the Partnership are difficult to discuss other than in the
<page> 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 on pages 2 through 12 of this report are
prepared in accordance with accounting principles generally
accepted in the United States of America, which require the use
of certain accounting policies that affect the amounts reported
in these financial statements, including the following:  The
contracts the Partnership trades are accounted for on a trade-
date basis and marked to market on a daily basis.  The difference
between their cost and market value is recorded on the Statements
of Operations as ?Net change in unrealized trading profit (loss)?
for open (unrealized) contracts, and recorded as ?Realized
trading profit (loss)? when open positions are closed out.  The
sum of these amounts constitutes the Partnership?s trading
results.  The market value of a futures contract is the
settlement price on the exchange on which that futures contract
is traded on a particular day.  The value of foreign currency
forward contracts is based on the spot rate as of the close of
business.  Interest income, as well as management fees, incentive
fees, and brokerage fees expenses of the Partnership are recorded
on an accrual basis.
<page> 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.

For the Three and Six Months Ended June 30, 2006
The Partnership recorded total trading results including interest
income totaling $17,240,777 and expenses totaling $8,733,965,
resulting in net income of $8,506,812 for the three months ended
June 30, 2006. The Partnership?s net asset value per Unit
increased from $19.24 at March 31, 2006 to $19.63 at June 30,
2006.

The most significant trading gains of approximately 5.7% were
recorded in the global interest rate futures markets from short
positions in German, British, U.S., and Japanese fixed-income
futures.  Within European markets, rising equity prices and
strong economic growth increased speculation that the European
Central Bank would accelerate its interest-rate tightening
campaign, thus pushing prices for German and British debt futures
lower.  Similarly, U.S. interest rate futures prices moved lower
following the release of stronger-than-expected economic data.
Elsewhere in the global interest rate futures markets, short
positions in Japanese fixed-income futures experienced gains as
prices dropped amid growing speculation that the Bank of Japan
would end its ?ultra-easy? monetary policy and begin to increase
<page> interest rates.  Within the metals markets, a gain of
approximately 2.6% was recorded throughout the quarter from long
positions in copper, nickel, and aluminum futures, as well as
long positions in the precious metals, such as gold.  Base metals
prices rallied sharply to record highs amid an increase in
industrial demand from strong global economic growth and limited
production ability.  Gold prices rallied to 26-year highs,
boosted by continued geopolitical concerns regarding Iran?s
nuclear program, inflation concerns due to high oil prices, and
strong global economic growth.  A portion of these gains was
offset by losses of approximately 2.8% within the currency
markets during April from long positions in the U.S. dollar, as
the value of the U.S. dollar declined against the Australian
dollar, Swiss franc, and euro.  This reversal in the value of the
U.S. dollar was attributed to news that foreign central banks
would diversify their currency reserves away from the U.S.
dollar.  The U.S. dollar also weakened on worries regarding the
U.S. trade deficit and speculation that the U.S. Federal Reserve
may be near the end of its cycle in interest rate increases.
During June, long positions in the euro versus the U.S. dollar
recorded losses as the U.S. dollar reversed higher against most
of its rivals due to diplomatic developments made between the
U.S. and Iran regarding Iran?s nuclear research program, as well
as the news of the confirmed death of insurgent leader Abu Musab
al-Zarqawi in Iraq. Furthermore, the value of the U.S. dollar
continued to move higher in the days leading up to the U.S.
<page> Federal Reserve?s 17th consecutive rate hike on June 29.
Additional losses of approximately 2.3% were incurred in the
global equity indices markets during May from long positions in
U.S., European, and Japanese stock index futures as equity prices
closed lower during the month.  U.S. and European stock indices
incurred losses as prices declined due to inflation concerns and
uncertainty regarding future interest rate policy.  Meanwhile,
Japanese equity markets suffered from a heavy sell-off as
investors expressed concerns that the Japanese economy, which is
heavily dependent on exports, could be significantly impacted by
a global economic slowdown.  Further losses were incurred during
June from short positions in Japanese stock index futures as
prices reversed higher due to solid economic data and strong
investor sentiment for the region.  Smaller losses of
approximately 1.0% were incurred in the agricultural markets
during May from short positions in corn futures as prices settled
higher on technically-based buying.  Long positions in wheat
futures also experienced losses as prices moved lower during the
first half of June on favorable weather forecasts across the U.S.
wheat belt and reports from the U.S. Department of Agriculture
showing improved crop conditions.  Elsewhere in the agricultural
complex, losses were incurred from short positions in soybean
meal futures as prices ended higher in June after the prospect of
hotter and drier weather was viewed as an increasing threat to
inventories.

<page> The Partnership recorded total trading results including
interest income totaling $40,009,586 and expenses totaling
$17,116,467, resulting in net income of $22,893,119 for the six
months ended June 30, 2006.  The Partnership?s net asset value
per Unit increased from $18.60 at December 31, 2005 to $19.63 at
June 30, 2006.

The most significant trading gains of approximately 8.5% were
recorded in the global interest rate sector from short positions
in German, British, and U.S. fixed-income futures.  Within
European markets, rising equity prices and strong economic growth
increased speculation that the European Central Bank would
accelerate its interest-rate tightening campaign, thus pushing
prices for German and British fixed-income futures prices lower
during April.  Similarly, U.S. interest rate futures moved lower
following the release of stronger-than-expected economic data.
Additional gains of approximately 2.9% were experienced in the
metals markets throughout a majority of the year from long
copper, nickel, and aluminum futures positions, as well as long
positions in precious metals, such as gold.  Base metals prices
rallied sharply to record highs amid an increase in industrial
demand from strong global economic growth and limited production
ability.  Gold prices rallied to 26-year highs, boosted by
continued geopolitical concerns regarding Iran?s nuclear program
and inflation concerns due to high oil prices.  Within the global
stock index futures markets, gains of approximately 2.9% were
<page> recorded from long positions in European stock index
futures as prices trended higher during the first quarter on
strong corporate earnings and solid economic data out of the
European Union, Australia, Japan, and the United States.  A
portion of these gains for the first six months of the year was
offset by losses of approximately 5.8% in the currency markets
from long U.S. dollar positions versus the Swiss franc, euro, and
New Zealand dollar as the U.S. dollar?s value reversed lower
against these currencies.  This reversal in the value of the U.S.
dollar was attributed to news that foreign central banks would
diversify their currency reserves away from the U.S. dollar.  The
U.S. dollar also weakened on worries regarding the U.S. trade
deficit and speculation that the U.S. Federal Reserve may be near
the end of its cycle in interest rate increases.  During June,
long positions in the euro versus the U.S. dollar recorded losses
as the U.S. dollar reversed higher against most of its rivals due
to diplomatic developments made between the U.S. and Iran
regarding Iran?s nuclear research program, as well as the news of
the confirmed death of insurgent leader Abu Musab al-Zarqawi in
Iraq. Furthermore, the value of the U.S. dollar continued to move
higher in the days leading up to the U.S. Federal Reserve?s 17th
consecutive rate hike on June 29.  Within the agricultural
markets, losses of approximately 1.6% were recorded from long
positions in wheat futures as prices fell on forecasts for above-
average rainfall in the U.S. growing regions.  Additional losses
in the agricultural complex were incurred from short positions in
<page> soybean meal futures as prices ended higher in June on
technically-based buying.  Finally, smaller losses were incurred
from short positions in corn futures as prices moved higher on
news of strong demand and bullish export data.  Smaller losses of
approximately 0.4% were experienced in the energy markets during
the first quarter from long futures positions in crude oil and
its related products as prices declined after Chinese government
authorities announced that China would place an emphasis on
prospecting alternative energy sources in the future, reports of
larger-than-expected supplies from the International Energy
Agency, and mild weather in the U.S. Northeast.

For the Three and Six Months Ended June 30, 2005
The Partnership recorded total trading results including interest
income totaling $(8,757,172) and expenses totaling $8,770,553,
resulting in a net loss of $17,527,725 for the three months ended
June 30, 2005. The Partnership?s net asset value per Unit
decreased from $19.31 at March 31, 2005 to $18.55 at June 30,
2005.

The most significant trading losses of approximately 3.9% were
recorded in the global stock index futures markets, primarily
during April from long positions in Japanese and European stock
index futures as global equity prices declined sharply towards
the beginning of the month on concerns for economic growth.
Consistently weak economic data out of Japan, Germany, and <page>
France, as well as weaker-than-expected U.S. Gross Domestic
Product data, resulted in prices continuing their decline
throughout the second half of April, resulting in additional
losses from long positions.  Additional losses of approximately
3.9% were incurred in the energy markets during April from long
futures positions in crude oil and its related products as prices
reversed lower after U.S. government data pointed to greater
production activity by refiners and rising supplies.  Prices were
also pressured lower by the release of slower demand growth
forecasts by the International Energy Agency.  Elsewhere in the
energy sector, losses resulted from long positions in natural gas
as prices declined in tandem with crude oil prices.  During June,
losses were incurred early in the month from short positions in
natural gas futures as prices reversed higher on supply worries
after a tropical storm entered the Gulf of Mexico.  Additionally,
losses were experienced from short positions in crude oil futures
early in the month as prices increased due to news of weak supply
from the Energy Information Administration.  In the metals
markets, Partnership losses of approximately 1.9% were recorded
primarily during April from long positions in aluminum, copper,
and zinc as prices fell due to news of an increase in supply and
fears that a slowing global economy will weaken demand.  Further
losses were experienced during June from both long and short
positions in gold futures amid significant volatility in market
prices.  Smaller losses of approximately 0.8% were incurred in
the agricultural complex, from long positions in cotton futures
<page> during May as prices declined on news of weak demand in
China, and technically-based selling.  Elsewhere in the
agricultural markets losses were incurred during May and June
from long positions in coffee futures as prices decreased after
the International Coffee Organization stated that supplies are
currently sufficient to meet world demand.  A portion of the
Partnership?s losses for the quarter were offset by gains of
approximately 6.0% in the global interest rate futures markets
during April from long positions in the European bond futures as
prices increased amid a steady stream of weak economic data from
the major countries of the European Union.  Additional gains were
recorded during May from long positions in European interest rate
futures as prices increased early in the month as investors
sought the safe-haven of fixed-income investments due to
speculation that several hedge funds may have experienced
significant losses.  Prices then continued to strengthen after
European Central Bank representatives publicly rejected calls for
increases in European interest rates and after French voters
rejected the European Union constitution. In June, gains were
recorded from long positions in European interest rate futures as
prices moved higher throughout the month due to European Central
Bank officials? decision to keep key interest rates unchanged.
Later in the month, long positions in European interest rate
futures experienced further gains as prices continued to move
higher after the Swedish Central Bank made a sharper cut in
interest rates than had been expected.  In the currency markets,
<page> gains of approximately 2.4% were recorded during May and
June from short positions in the euro, Swiss franc, and Japanese
yen as the value of the U.S. dollar moved steadily higher after
China downplayed rumors of a move toward a flexible exchange
rate, the rejection of the European Union constitution by French
voters, data indicating a slowing in the euro-zone and Japanese
economies, and the ninth consecutive quarter-point interest rate
hike by the U.S. Federal Reserve.

The Partnership recorded total trading results including interest
income totaling $(61,361,054) and expenses totaling $18,187,932,
resulting in a net loss of $79,548,986 for the six months ended
June 30, 2005.  The Partnership?s net asset value per Unit
decreased from $22.16 at December 31, 2004 to $18.55 at June 30,
2005.

The most significant trading losses of approximately 5.8% were
recorded in the global stock index futures markets during January
from long positions in U.S. equity index futures as prices
finished the month lower amid weak consumer confidence data,
concerns regarding U.S. interest rate policy, and the potential
for corporate profit growth to slow down.  Then in March, losses
were experienced from long positions in U.S. and Pacific Rim
stock index futures after equity prices moved lower early in the
month amid concerns about the growing U.S. trade deficit,
weakness in the U.S. dollar, inflation fears, and a surge in
<page> crude oil prices.  In April, losses were incurred from
long positions in Japanese stock index futures as prices declined
sharply towards the beginning of the month on concerns for
economic growth.  Consistently weak economic data out of Japan,
Germany, and France, as well as weaker-than-expected U.S. Gross
Domestic Product data, resulted in prices continuing their
decline throughout the second half of April, resulting in
additional losses from long positions.  Losses of approximately
4.6% were incurred in the currency markets from positions in the
euro relative to the Japanese yen, the U.S. dollar, and the
British pound.  During January long positions in the euro versus
most its rivals incurred losses as the value of the euro reversed
sharply lower in what many analysts described as a ?corrective?
move after its strong upward trend during the fourth quarter of
2004. This decline in the value of the euro was attributed to
weak economic data out of the European Union.  Further losses
were recorded during January from positions in the euro against
the Japanese yen and the British pound as the value of the euro
moved erratically against these currencies.  Elsewhere in the
currency markets, losses resulted from positions in the South
African rand, New Zealand dollar, and the Australian dollar
relative to the U.S. dollar primarily during January, as the
value of the U.S. dollar moved erratically amid speculation that
U.S. interest rates were likely to continue to rise and fears
that the re-valuation of the Chinese yuan was farther away than
expected. In the energy markets, losses of approximately 4.3%
<page> were incurred during January from short positions in crude
oil as prices moved higher amid speculation that OPEC would move
to cut production.  Prices were also strengthened by forecasts
for cold winter weather in the Northeastern U.S.  During April,
long positions in crude oil resulted in additional losses as
prices reversed sharply lower after the U.S. government data
pointed to greater production activity by refiners and rising
supplies.  Prices were also pressured lower by the release of
slower demand growth forecasts by the International Energy
Agency.  Elsewhere in the energy sector, losses resulted from
long positions in natural gas as prices dropped throughout the
month in tandem with crude oil prices.  Additional losses in the
energy markets were experienced during June from short positions
in natural gas futures as prices reversed higher on supply.
Losses were experienced from short positions in crude oil futures
early in the month as prices increased due to news of weak supply
from the Energy Information Administration.  Additional losses of
approximately 1.4% were incurred in the agricultural complex
primarily during April from long futures positions in wheat as
prices fell in response to favorable weather in growing regions,
improved crop conditions, and reduced foreign demand.  Smaller
agricultural losses were incurred from long positions in cotton
futures during May as prices declined on news of weak demand in
China and technically-based selling.  Losses of approximately
1.3% were recorded in the metals markets, primarily during
January and April from long positions in aluminum futures as
<page> prices weakened on renewed strength in the U.S. dollar,
lower equity prices, and news of a drop in Chinese demand.
Further losses were experienced during April and June from both
long and short positions in gold futures amid significant
volatility in market prices.  A portion of these losses for the
first six months of the year was offset by gains of approximately
3.0% recorded in the global interest rate futures markets during
January from long positions in European bond futures as prices
moved higher due to conflicting economic data out of the European
Union and uncertainty in the equity markets.  During May, further
gains were recorded from long positions in European interest rate
futures as prices increased early in the month as investors
sought the safe-haven of fixed-income investments due to
speculation that several hedge funds may have experienced
significant losses.  Prices then continued to strengthen after
European Central Bank representatives publicly rejected calls for
increases in European interest rates and French voters rejected
the European Union constitution.  In June, gains were recorded
from long positions in European interest rate futures as prices
trended higher throughout the month due to European Central Bank
officials? decision to keep key interest rates unchanged and the
release of weak economic data.  Later in the month, long
positions in European interest rate futures experienced further
gains as prices continued to move higher after the Swedish
Central Bank made a sharper cut in interest rates than had been
expected.
<page> Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards, and options.  The
market-sensitive instruments held by the Partnership are acquired
for speculative trading purposes only and, as a result, all or
substantially all of the Partnership?s assets are at risk of
trading loss.  Unlike an operating company, the risk of market-
sensitive instruments is inherent to the primary business
activity of the Partnership.

The futures, forwards, and options traded by the Partnership
involve varying degrees of related market risk.  Market risk is
often dependent upon changes in the level or volatility of
interest rates, exchange rates, and prices of financial
instruments and commodities, factors that result in frequent
changes in the fair value of the Partnership?s open positions,
and consequently in its earnings, whether realized or unrealized,
and cash flow.  Gains and losses on open positions of exchange-
traded futures, forwards, and options 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 contracts in the
Partnership accounts with the counterparty, which is accomplished
<page> 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
causes the face value of the market sector instruments held by
the Partnership to typically be many times the total
capitalization of the Partnership.

The Partnership?s past performance is no guarantee of its future
results.  Any attempt to numerically quantify the Partnership?s
market risk is limited by the uncertainty of its speculative
trading.  The Partnership?s speculative trading and use of
leverage may cause future losses and volatility (i.e., ?risk of
ruin?) that far exceed the Partnership?s experience to date under
the ?Partnership?s Value at Risk in Different Market Sectors?
section and significantly exceed the Value at Risk (?VaR?) tables
disclosed.
<page> Limited partners will not be liable for losses exceeding
the current net asset value of their investment.

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

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

The Partnership?s risk exposure in the market sectors traded by
the Trading Advisor is estimated below in terms of VaR.  The
Partnership estimates VaR using a model based upon historical
simulation (with a confidence level of 99%) which involves
constructing a distribution of hypothetical daily changes in the
value of a trading portfolio.  The VaR model takes into account
linear exposures to risks including equity and commodity prices,
<page> 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.  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.

<page> 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.

The Partnership?s Value at Risk in Different Market Sectors
The following table indicates the VaR associated with the
Partnership?s open positions as a percentage of total Net Assets
by primary market risk category at June 30, 2006 and 2005.  At
June 30, 2006 and 2005, the Partnership?s total capitalization
was approximately $434 million and $435 million, respectively.

Primary Market	June 30, 2006	June 30, 2005
Risk Category	 Value at Risk 	 Value at Risk

Interest Rate	(0.69)%	(5.24)%
Currency	(0.37)	(3.57)
Equity	(0.13)	(3.72)
Commodity 	(0.27)	(0.23)
Aggregate Value at Risk	        (0.75)%	(5.39)%

The VaR for a market category represents the one-day downside risk
for the aggregate exposures associated with this market category.
<page> 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
period, or even within a single trading day, which could
positively or negatively materially impact market risk as
measured by VaR.

The table below supplements the quarter-end VaR set forth above
by presenting the Partnership?s high, low, and average VaR, as a
percentage of total Net Assets for the four quarter-end reporting
periods from July 1, 2005 through June 30, 2006.

Primary Market Risk Category	High	Low	Average
Interest Rate	(3.49)%	(0.09)%	(1.17)%

Currency	(1.15)	(0.37)	(0.87)

Equity	 (3.32)	(0.13)	(2.04)

Commodity	(0.61)	(0.05)	(0.31)

Aggregate Value at Risk	(6.04)%	(0.75)%	(3.17)%




Limitations on Value at Risk as an Assessment of Market Risk
<page> 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:
*	past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
*	changes in portfolio value caused by market movements may
differ from those of the VaR model;
*	VaR results reflect past market fluctuations applied to current
trading positions while future risk depends on future
positions;
*	VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
*	the historical market risk factor data used for VaR estimation
may provide only limited insight into losses that could be
incurred under certain unusual market movements.

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

<page> The VaR tables provided present the results of the
Partnership?s VaR for each of the Partnership?s market risk
exposures and on an aggregate basis at June 30, 2005, and for the
four quarter-end reporting periods from July 1, 2005 through June
30, 2006.  VaR is not necessarily representative of the
Partnership?s historic risk, nor should it be used to predict the
Partnership?s future financial performance or its ability to
manage or monitor 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 June 30,
2006, such amount is equal to approximately 95% 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.

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

Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership?s
market risk exposures - except for (A) those disclosures that are
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
<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 June 30, 2006, by market sector.  It may be
anticipated, however, that these market exposures will vary
materially over time.

Interest Rate. The largest market exposure of the Partnership at
June 30, 2006 was to the global interest rate sector.  Exposure
was primarily spread across the European, U.S., Japanese, and
Australian interest rate sectors.  Interest rate movements
directly affect the price of the sovereign bond futures positions
held by the Partnership and indirectly affect the value of its
stock index and currency positions.  Interest rate movements in
one country, as well as relative interest rate movements between
countries, materially impact the Partnership?s profitability. The
Partnership?s interest rate exposure is generally to interest
rate fluctuations in the U.S. and the other G-7 countries.  The
G-7 countries consist of France, the U.S., Britain, Germany,
Japan, Italy, and Canada.  However, the Partnership also takes
futures positions in the government debt of smaller nations -
e.g., Australia.  Demeter anticipates that the G-7 countries and
Australian interest rates will remain the primary interest rate
exposure of the Partnership for the foreseeable future.  The
speculative futures positions held by the Partnership may range
<page> 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 June 30, 2006, the second largest market exposure
of the Partnership was to the currency sector.  The Partnership?s
currency exposure is to exchange rate fluctuations, primarily
fluctuations which disrupt the historical pricing relationships
between different currencies and currency pairs.  Interest rate
changes, as well as political and general economic conditions
influence these fluctuations.  The Partnership trades a number of
currencies, including cross-rates - i.e., positions between two
currencies other than the U.S. dollar.  At June 30, 2006, the
Partnership?s major exposures were to the euro, Canadian dollar,
Australian dollar, Japanese yen, Swiss franc, and British pound
currency crosses, as well as to outright U.S. dollar positions.
Outright positions consist of the U.S. dollar vs. other
currencies.  These other currencies include major and minor
currencies.  Demeter does not anticipate that the risk associated
with the Partnership?s currency trades will change significantly
in the future.

Equity.  At June 30, 2006, the Partnership had market exposure to
the global stock index sector, primarily to equity price risk in
the G-7 countries.  The stock index futures traded by the
Partnership are by law limited to futures on broadly-based <page>
indices.  The Partnership?s primary market exposures were to the
S&P 500 (U.S.), Euro Stoxx 50 (Europe), DAX (Germany), CAC 40
(France), NASDAQ 100 (U.S.), RUSSELL 2000 (U.S.), TOPIX (Japan),
and Hang Seng (China) stock indices.  The Partnership is
typically exposed to the risk of adverse price trends or static
markets in the European, U.S., Chinese, and Japanese stock
indices. Static markets would not cause major market changes, but
would make it difficult for the Partnership to avoid trendless
price movements, resulting in numerous small losses.

Commodity.
Soft Commodities and Agriculturals.  The third largest
market exposure of the Partnership at June 30, 2006 was to
the markets that comprise these sectors.  Most of the
exposure was to the coffee, cotton, soybean meal, wheat, and
corn markets. Supply and demand inequalities, severe weather
disruptions, and market expectations affect price movements
in these markets.

Energy.  At June 30, 2006, the Partnership had market
exposure to the energy sector.  The Partnership?s energy
exposure was shared primarily by futures contracts in crude
oil and its 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.  <page>
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.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at June 30, 2006:

Foreign Currency Balances. The Partnership?s primary foreign
currency balances at June 30, 2006 were in British pounds,
Japanese yen, Hong Kong dollars, Australian dollars, Swiss
francs, euros, and Swedish kronas.  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 <page>
guidelines, often set in terms of the maximum margin to be
committed to positions in any one market sector or market-
sensitive instrument.
Demeter monitors and controls the risk of the Partnership?s non-
trading instrument, cash.  Cash is the only Partnership
investment directed by Demeter, rather than the Trading Advisor.

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

    (b)	There have been no material changes during the period
covered by this quarterly 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.




<page> <table> PART II.  OTHER INFORMATION
Item 1A. RISK FACTORS
There have been no material changes from the risk factors
previously referenced in the Partnership?s Report on Form 10-K for
the fiscal year ended December 31, 2005 and the Partnership?s
Report on Form 10-Q for the quarter ended March 31, 2006.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
        PROCEEDS
<caption>
					SEC
Registration Statement on Form S-1  Units Registered   Effective Date        File Number

                                         <c>                  <c>                      <c>

Initial Registration	3,000,000.000		November 6, 1998	333-60115
Additional Registration	6,000,000.000		March 27, 2000	333-91563
Additional Registration	2,000,000.000		July 29, 2002	  333-85076
Additional Registration	9,000,000.000		February 26, 2003	333-103166
Additional Registration	  30,000,000.000		April 28, 2004	333-113876
Total Units Registered          50,000,000.000

Units sold through 6/30/06	      34,289,128.040
Units unsold through 6/30/06	    15,710,871.960
</table>
The managing underwriter for the Partnership is Morgan Stanley DW.

Units are continuously sold at monthly closings at a purchase
price equal to 100% of the net asset value per Unit as of the
close of business on the last day of each month.

The aggregate price of the Units sold through June 30, 2006 was
$640,105,514.

<page> Since no expenses are chargeable against the proceeds, 100%
of the proceeds of the offering have been applied to the working
capital of the Partnership for use in accordance with the ?Use of
Proceeds? section of the prospectus included as part of the above
referenced Registration Statements.

Item 5.  OTHER INFORMATION

Management.  In connection with the election of new directors to
the Board of Directors of Demeter, the following information
updates the disclosures in the Partnership?s Form 8-K filed on
March 27, 2006 and Form 8-K filed on April 5, 2006:

On May 11, 2006, the National Futures Association approved Mr.
Walter Davis, Mr. Michael McGrath, and Mr. Andrew Saperstein as
directors of Demeter.

On July 20, 2006, the National Futures Association approved Mr.
Walter Davis as an associated person of Demeter.

Item 6.  EXHIBITS

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

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












<page>

SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.



                     Morgan Stanley Charter Graham L.P.
                     (Registrant)

                     By: Demeter Management Corporation
                         (General Partner)

August 14, 2006      By: /s/ Kevin Perry
                             Kevin Perry
                             Chief Financial Officer





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