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 September 30, 2006 or

[ ]	TRANSTION 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

	September 30, 2006

<caption>


PART I. FINANCIAL INFORMATION

				<c>
Item 1. Financial Statements

		Statements of Financial Condition as of September 30, 2006
 		(Unaudited) and December 31, 2005..........................2

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

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

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

		Notes to Financial Statements (Unaudited)...............6-13

Item 2.	Management?s Discussion and Analysis of
			Financial Condition and Results of Operations.......14-31

Item 3.	Quantitative and Qualitative Disclosures about
			Market Risk.........................................31-45

Item 4.	Controls and Procedures................................45



PART II. OTHER INFORMATION

Item 1A.	Risk Factors...........................................46

Item 2.	Unregistered Sales of Equity Securities and
			Use of Proceeds.....................................46-47

Item 5.	Other Information...................................47-48

Item 6.	Exhibits............................................48-49
</table>


<page> <table> PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

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

	<c>	<c>
Equity in futures interests trading accounts:
	Unrestricted cash	373,627,579	396,726,923
	Restricted cash	    41,285,009	    29,685,072

	     Total cash	  414,912,588	  426,411,995

	Net unrealized gain (loss) on open contracts (MS&Co.)	6,146,013	     (1,496,739)
   	Net unrealized gain (loss) on open contracts (MSIL)	             (813,061)	       4,355,496

	     Total net unrealized gain on open contracts	      5,332,952	      2,858,757

	     Total Trading Equity	420,245,540	429,270,752

Subscriptions receivable	6,713,390	8,958,985
Interest receivable (Morgan Stanley DW)	      1,741,115	      1,331,130

	     Total Assets	  428,700,045	  439,560,867

LIABILITIES AND PARTNERS? CAPITAL

Liabilities

Redemptions payable	6,644,849	15,313,368
Accrued brokerage fees (Morgan Stanley DW)	2,066,880	2,194,515
Accrued management fees	         688,960	         731,505

	     Total Liabilities	      9,400,689	   18,239,388

Partners? Capital

Limited Partners (21,969,249.706 and
      22,414,234.236 Units, respectively)	414,721,399	416,811,790
General Partner (242,510.501 Units)	      4,577,957	    4,509,689

         Total Partners? Capital	    419,299,356	 421,321,479

         Total Liabilities and Partners? Capital	   428,700,045	 439,560,867

NET ASSET VALUE PER UNIT	              18.88	            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 Nine Months
  	       Ended September 30,     	                  Ended September 30,


                                  2006   	         2005    	        2006   	    2005
                                     $	                 $		            $	 	 $

	<c>	<c>			<c>			<c>
INVESTMENT INCOME
	Interest income (Morgan Stanley DW)	   5,397,356		    3,419,874 		  14,489,895	       8,869,999

EXPENSES
	Brokerage fees (Morgan Stanley DW)	6,357,821	6,458,636	19,195,171	20,237,371
	Management fees	   2,119,275      	    2,152,879	    6,398,392	     6,562,076

		Total Expenses 	    8,477,096	     8,611,515		 25,593,563	    26,799,447

NET INVESTMENT LOSS 	   (3,079,740)	   (5,191,641)	 (11,103,668)	  (17,929,448)

TRADING RESULTS
Trading profit (loss):
	Realized	(17,343,367)	21,898,474	14,939,322	(65,619,686)
	Net change in unrealized	    3,839,837	   (8,903,462) 		    2,474,195	      11,803,519

		Total Trading Results	  (13,503,530)	  12,995,012		  17,413,517	  (53,816,167)

NET INCOME (LOSS)	   (16,583,270)		    7,803,371	    6,309,849	 (71,745,615)

NET INCOME (LOSS) ALLOCATION

	Limited Partners	(16,401,565)	     7,719,132	                6,241,581	(70,963,809)
	General Partner 	                 (181,705) 	                    84,239                     68,268		(781,806)


NET INCOME (LOSS) PER UNIT

	Limited Partners	(0.75)                        0.33 	    0.28	 	(3.28)
	General Partner	(0.75)                        0.33 	    0.28	 	(3.28)




<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 Nine Months Ended September 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	5,536,588.513	103,453,470	480,000	103,933,470

Net Loss                                                                  ?	  	(70,963,809)	(781,806)	(71,745,615)

Redemptions	  (3,586,471.803)	   (65,988,833)	         ?     	  (65,988,833)

Partners? Capital,
   September 30, 2005	 23,447,892.910	 437,791,742	  4,845,158	 442,636,900




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

Offering of Units	3,440,991.912	66,594,771	?    	66,594,771

Net Income                                                                ?	  	6,241,581	68,268	6,309,849

Redemptions	  (3,885,976.442)	   (74,926,743)	         ?     	  (74,926,743)

Partners? Capital,
   September 30, 2006	 22,211,760.207	 414,721,399	  4,577,957	 419,299,356



<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 Nine Months Ended September 30,

	  2006   	    2005
	$	$


	<c>	<c>
CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)	6,309,849	(71,745,615)
Noncash item included in net income (loss):
	Net change in unrealized	(2,474,195)	(11,803,519)

(Increase) decrease in operating assets:
	Restricted cash	(11,599,937)	56,184,120
	Interest receivable (Morgan Stanley DW)	(409,985)   	(435,101)

Decrease in operating liabilities:
	Accrued brokerage fees (Morgan Stanley DW)	(127,635)	(189,160)
	Accrued management fees	        (42,545)	         (31,904)

Net cash used for operating activities	   (8,344,448)	   (28,021,179)


CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from offering of Units	68,840,366	110,255,310
Cash paid for redemptions of Units 	   (83,595,262)	    (60,200,895)

Net cash provided by (used for) financing activities	   (14,754,896)	     50,054,415

Net increase (decrease) in unrestricted cash	(23,099,344)	22,033,236

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

Unrestricted cash at end of period	                                                 373,627,579	   403,413,267



<fn>




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

</table>


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

September 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 the Partnership,
Morgan Stanley Charter WCM L.P. (formerly known as Morgan Stanley
Charter Millburn L.P.), Morgan Stanley Charter Aspect L.P.
(formerly known as Morgan Stanley Charter MSFCM L.P.), and Morgan
Stanley Charter Campbell L.P. which effective as of May 1, 2006,
no longer accepts subscriptions and exchanges of units of limited
partnership interest (?Unit(s)?) from any other Charter Series of
Funds for Units of Morgan Stanley Charter Campbell L.P.

Morgan Stanley Charter WCM L.P. and Morgan Stanley Charter Aspect
L.P. did not accept any subscriptions for investment or exchanges
from other Charter Series of Funds for the September 30, 2006 and
October 31, 2006 month-end closings.

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.


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

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

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

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

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
	$	$	 $

Sep. 30, 2006   4,155,765	1,177,187	 5,332,952	Mar. 2008	 Dec. 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.

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

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.,
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 $419,068,353
and $427,198,898 at September 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

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

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.

4.  New Accounting Developments
In July 2006, the FASB issued FASB Interpretation No. 48,
?Accounting for Uncertainty in Income Taxes, an interpretation of
FASB Statement No. 109? (?FIN 48?). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in a
company?s financial statements and prescribes a recognition
threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to
be taken in an income tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting

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

in interim periods, disclosure and transition. FIN 48 is effective
for the Partnership as of January 1, 2007. The Partnership is cur-
rently evaluating the potential impact of adopting FIN 48.

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 Part-
nership is currently evaluating the potential impact of adopting
SFAS No. 157.






<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>
<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 does it
expect to have, any capital assets.  Redemptions, exchanges, and
sales 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 inflows and outflows of Units.
<page> 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 nine month periods ended September
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 context of the Trading Advisor?s trading activities on
<page> 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 13 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 Nine Months Ended September 30, 2006
The Partnership recorded total trading results including interest
income totaling $(8,106,174) and expenses totaling $8,477,096,
resulting in a net loss of $16,583,270 for the three months ended
September 30, 2006. The Partnership?s net asset value per Unit
decreased from $19.63 at June 30, 2006 to $18.88 at September 30,
2006.

The most significant trading losses of approximately 3.9% were
recorded in the global interest rate futures markets, primarily
during July and August, from short positions in U.S. and European
fixed-income futures as prices rallied amid geopolitical concerns
after North Korea conducted long-range missile tests, terrorist
bombings aboard commuter trains in Bombay, India, and fears of an
escalating conflict between Israel and Lebanon.  During July,
prices were also boosted by U.S. Federal Reserve Chairman Ben
Bernanke?s testimony before Congress, which eased fears of
accelerating inflation and suggested that interest rate increases
would possibly come to a pause at the August U.S. Federal Reserve
meeting.  Elsewhere in the global interest rate sector, German
and British fixed-income futures were pressured higher on news
<page> that the European Central Bank and the Bank of England
kept interest rates unchanged. During August, prices continued to
increase on concerns of a slowing global economy and news that
Iran will continue its nuclear research program. U.S. interest
rate futures prices were also pressured higher by government
reports showing a slowdown in the U.S. economy.  Elsewhere in the
global interest rate sector, German fixed-income futures prices
rose after the ?ZEW? report showed investor confidence in Germany
fell to its lowest level since June 2001, while British fixed-
income futures prices increased on weaker-than-expected
industrial data out of the United Kingdom.  In the currency
markets, losses of approximately 0.8% were recorded, primarily
during July, from long positions in the euro versus the U.S.
dollar as the U.S. dollar strengthened against its major rivals
following narrower-than-expected May U.S. trade deficit data,
while the value of the euro moved lower after the European
Central Bank decided to keep interest rates unchanged.  Elsewhere
in the currency sector, short positions in the New Zealand dollar
versus the U.S. dollar recorded losses during July as the value
of the New Zealand dollar increased on consistently strong
economic data out of New Zealand. Further losses were incurred
from short positions in the Mexican peso at the beginning of July
as the value of the peso gained sharply on the U.S. dollar after
Felipe Calderon was declared the winner of Mexico?s Presidential
election. Newly established long positions in the peso incurred
additional losses at the end of the month as the peso weakened
<page> against the U.S. dollar, weighed down by fears of a
slowing U.S. economy. During August, losses were incurred from
short positions in the New Zealand dollar as the value of the New
Zealand dollar moved higher amid recent reports showing a solid
economy, which increased speculation that the Reserve Bank of New
Zealand would continue to raise interest rates in the near-
future. Finally, during September, short positions in the U.S.
dollar against the euro, Australian dollar, New Zealand dollar,
and Mexican peso recorded losses as the U.S. dollar reversed
higher after revisions to U.S. quarterly productivity data showed
unit labor costs rose last year at the fastest pace since 1990.
Additional losses of approximately 0.2% were incurred in the
energy sector, during July, from short positions in natural gas
futures as prices moved higher amid hot weather across much of
the U.S. and news of a decline in domestic supplies. Losses of
approximately 0.2% were also experienced in the metals markets,
primarily during July and September, from long positions in
nickel, zinc, and copper futures as prices were pressured lower
on concerns of decreasing demand amid an economic slowdown in
China and speculation of a weak U.S. housing market. A portion of
the Partnership?s overall losses for the quarter was offset by
gains of approximately 1.8% experienced in the global stock index
futures markets during September from long positions in European
equity index futures as prices climbed higher amid falling oil
prices. Furthermore, Spanish equity index futures prices moved
significantly higher on merger and acquisition activity in the
<page> utility sector, while French equity index futures prices
gained on revised statistics showing the French economy grew at
its fastest pace in five-and-a-half years. In addition, European
equity markets were supported higher after the European Central
Bank decided to leave interest rates unchanged. Smaller gains of
approximately 0.1% were experienced within the agricultural
complex during July and August from short positions in soybean
meal futures as prices fell sharply amid slow export sales,
drought-breaking rains and cooler temperatures in the U.S.
Midwest. Elsewhere in the agricultural complex, short positions
in sugar futures experienced gains as prices were pressured lower
following U.S. Department of Agriculture data, which showed
ethanol-production using sugarcane is more costly than expected,
as well as from low physical demand and high inventories.

The Partnership recorded total trading results including interest
income totaling $31,903,412 and expenses totaling $25,593,563,
resulting in net income of $6,309,849 for the nine months ended
September 30, 2006.  The Partnership?s net asset value per Unit
increased from $18.60 at December 31, 2005 to $18.88 at September
30, 2006.

The most significant trading gains of approximately 4.7% were
recorded in the global stock index futures markets from long
positions in European stock index futures as prices trended
higher during the first quarter on strong corporate earnings and
<page> solid economic data out of the European Union, Australia,
Japan, and the United States. European equity index futures
prices also climbed higher during September amid falling oil
prices. Furthermore, Spanish equity index futures prices moved
significantly higher on merger and acquisition activity in the
utility sector, while French equity index futures markets gained
on revised statistics showing the French economy grew at its
fastest pace in five-and-a-half years. In addition, European
equity markets were supported higher after the European Central
Bank decided to leave interest rates unchanged. Elsewhere in the
global stock index sector, long positions in Hong Kong equity
index futures experienced gains as prices trended higher
throughout the first six months of the year on strong corporate
earnings and solid economic data. Hong Kong equity index futures
prices also increased further during July on an optimistic
economic outlook for the region after Gross Domestic Product in
China surged to 10.9% in the first half of the year. Additional
gains of approximately 4.2% were incurred in the global interest
rate futures markets during March and April from short positions
in German, British, and U.S. fixed-income futures as prices fell
on strength in the equity markets and investor sentiment that
global interest rates would continue to rise in order to combat
inflation.  Additional gains of approximately 2.7% were
experienced in the metals sector throughout the first half of the
year from long copper, nickel, aluminum, and gold futures
positions.  Base metals prices rallied sharply to record highs
<page> amid an increase in industrial demand from strong global
economic growth and limited production ability. Gold prices rose
to 26-year highs in May, boosted by continued geopolitical
concerns regarding Iran?s nuclear program and inflation concerns
due to high oil prices. A portion of these gains for the first
nine months of the year was offset by losses of approximately
6.5% recorded in the currency sector from long U.S. dollar
positions versus the euro, Swiss franc, and Australian dollar as
the U.S. dollar?s value reversed lower on 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 was 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 news confirming the 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 interest rate hike on June
29. Additional losses were also incurred during March from long
positions in the Mexican peso versus the U.S. dollar as the value
of the peso weakened on political uncertainty in Mexico.
Additional losses of approximately 1.5% were incurred in the
agricultural complex from long positions in wheat futures as
<page> prices fell during March on forecasts for above-average
rainfall in U.S. growing regions. Prices also moved lower during
the first half of June on favorable weather forecasts across the
U.S. growing regions and reports from the U.S. Department of
Agriculture showing improved crop conditions. Elsewhere in the
agricultural complex, losses were recorded during January from
short positions in coffee futures as prices increased sharply
early in the month amid news of a smaller crop in Brazil.
Additional losses were experienced from newly established long
positions in coffee futures during February as prices reversed
lower. Smaller losses of approximately 0.6% were incurred in the
energy sector 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 winter weather in
the U.S. Northeast.

For the Three and Nine Months Ended September 30, 2005
The Partnership recorded total trading results including interest
income totaling $16,414,886 and expenses totaling $8,611,515,
resulting in net income of $7,803,371 for the three months ended
September 30, 2005. The Partnership?s net asset value per Unit
increased from $18.55 at June 30, 2005 to $18.88 at September 30,
2005.
<page>
The most significant trading gains of approximately 10.0% were
recorded in the global stock index futures markets, primarily
during July and September from long positions in Japanese and
European equity index futures. During July, long positions
benefited as prices increased on positive economic data out of
the U.S. and Japan.  Prices continued to strengthen after China
reformed its U.S. dollar currency peg policy, leading market
participants to conclude that a revaluation in the Chinese yuan
would likely ease trade tensions between China, the U.S, Europe,
and Japan.  Finally, strong corporate earnings out of the
European Union and the U.S. resulted in optimistic investor
sentiment and pushed prices higher.  During September, long
positions in Japanese stock index futures experienced gains as
prices moved sharply higher on positive comments from Bank of
Japan Governor Toshihiko Fukui, who said the Japanese economy was
in the process of emerging from a soft patch as demonstrated by
rising production, improving business sentiment, and a sustained
upturn in consumer spending.  Additional sector gains in
September resulted from long positions in European stock index
futures as oil prices declined and investors embraced signs that
the global economy could move forward despite Hurricane Katrina's
devastation of the U.S. Gulf Coast.  In the energy markets, gains
of approximately 5.2% were recorded during August from long
futures positions in natural gas, unleaded gasoline, and crude
oil as prices climbed higher throughout the month on supply and
<page> demand concerns.  After Hurricane Katrina struck the Gulf
of Mexico, prices advanced further to touch record highs amid
concern for heavily damaged, or even possibly destroyed,
refineries and production facilities. Smaller gains of
approximately 0.4% were experienced in the metals markets, from
long positions in copper as prices trended higher throughout the
quarter amid consistent strong demand from China.  A portion of
the Partnership?s overall gains for the quarter was offset by
losses of approximately 9.4% in the global interest rate futures
markets from both long and short positions in the U.S. and
European 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 the European
Union and volatility in energy prices.  Additional losses of
approximately 2.9% were recorded within the currency markets
during August from short positions in the euro versus the U.S.
dollar, British pound, Japanese yen, and the Australian dollar as
the value of the euro advanced against its major rivals in
response to strong signals of euro-zone economic improvement and
enthusiasm for a positive reading of an index of business
confidence in Germany, which had previously risen for two
consecutive months.  Elsewhere in the currency markets, losses
were recorded during July and August from short positions in the
South African rand against the U.S. dollar as the value of the
South African rand moved higher on strong economic data out of
South Africa.  Finally, losses were recorded from long positions
<page> in the British pound against the Swiss franc during July
as the value of the pound dropped against all its major rivals on
geopolitical concerns after a terror attack on the London public
transportation system.


The Partnership recorded total trading results including interest
income totaling $(44,946,168) and expenses totaling $26,799,447,
resulting in a net loss of $71,745,615 for the nine months ended
September 30, 2005.  The Partnership?s net asset value per Unit
decreased from $22.16 at December 31, 2004 to $18.88 at September
30, 2005.

The most significant trading losses of approximately 7.4% were
recorded 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 of
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 British pound as the value of the euro moved
erratically against these currencies.  Additional losses were
incurred during August from short positions in the euro versus
the U.S. dollar, British pound, and Japanese yen as the value of
<page> the euro advanced against its major rivals in response to
strong signals of euro-zone economic improvement and enthusiasm
for a positive reading of an index of business confidence in
Germany, which had previously risen for two consecutive months.
Elsewhere in the currency markets, losses resulted from positions
in the South African rand, New Zealand dollar, and 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 on fears
that the revaluation of the Chinese yuan was farther away than
expected. Additional losses of approximately 6.7% were incurred
in the global interest rate futures markets during February from
long positions in long-term U.S. and European interest rate
futures as prices declined in response to strong global economic
data and congressional testimony by U.S. Federal Reserve Chairman
Alan Greenspan, which supported Wall Street expectations for
additional interest rate hikes.  In April, further losses were
recorded from short positions in U.S. interest rate futures as
prices reversed higher in a ?flight-to-quality? amid weakness in
the equity markets due to concerns for the sustainability of a
healthy global economy.  Finally, losses were experienced
throughout the third quarter from both long and short positions
in the U.S. and European 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 the European Union, and volatility in energy prices.  <page>
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.  Elsewhere in the agricultural complex, 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.  Smaller losses were experienced from positions in
soybean meal futures as prices moved in a trendless pattern
through a majority of the year.  Within the metals markets,
losses of approximately 0.9% were recorded during January and
April from long positions in aluminum futures as prices weakened
on renewed strength in the U.S. dollar, lower equity prices, and
news of a drop in Chinese demand.   Then in July, additional
losses were incurred from short positions in aluminum as prices
reversed higher.  Further losses in the metals markets 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 nine months of
the year was offset by gains of approximately 3.6% recorded in
the global stock index futures markets during February from long
positions in European and Japanese equity index futures as equity
prices moved higher early in the month amid the successful
elections in Iraq and lower-than-expected unemployment data out
of the U.S.  Equity prices in Japan were also pressured higher
when positive economic data painted a brighter picture of the Far
<page> East Region?s economy.  In June, further gains were
recorded from long positions in European equity index futures as
prices rallied on the perception that weakness in the euro could
stimulate the European economy by making exports more attractive
to foreign buyers.  Prices were also bolstered by strong economic
data out of the U.S. and news of a trade deal between the
European Union  and China that would avoid tariffs and manage the
growth of Chinese textile imports to Europe through the end of
2008.  Finally, gains were recorded during July and September
from long positions in Japanese and European equity index
futures.  During July, long positions benefited as prices
increased on positive economic data out of the U.S. and Japan.
Prices continued to strengthen after China reformed its U.S.
dollar currency peg policy, leading market participants to
conclude that a revaluation in the Chinese yuan would likely ease
trade tensions between China, the U.S, Europe, and Japan.
Finally, strong corporate earnings out of the European Union and
the U.S. resulted in optimistic investor sentiment and pushed
prices higher.  Then in September, long positions in Japanese
stock index futures experienced gains as prices moved sharply
higher on positive comments from Bank of Japan Governor Toshihiko
Fukui, who said the Japanese economy was in the process of
emerging from a soft patch as demonstrated by rising production,
improving business sentiment and a sustained upturn in consumer
spending.  Additional sector gains resulted from long positions
in European stock index futures as oil prices declined and <page>
investors embraced signs that the global economy could move
forward despite Hurricane Katrina's devastation of the U.S. Gulf
Coast.  Additional gains of approximately 0.7% were recorded in
the energy markets, primarily during August from long positions
in natural gas as prices climbed higher throughout the month on
supply and demand concerns.  After Hurricane Katrina struck the
Gulf of Mexico, prices advanced further to touch record highs
amid concern for heavily damaged, or even possibly destroyed,
refineries and production facilities.   Smaller gains resulted
from long futures positions in unleaded gasoline as prices also
moved higher during August.

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 <page>
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
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
<page> 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 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.

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.
<page>
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,
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
<page> 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.

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 September 30, 2006 and 2005.
<page> At September 30, 2006 and 2005, the Partnership?s total
capitalization was approximately $419 million and $443 million,
respectively.

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

Equity	(2.54)%	(2.35)%
Interest Rate	(1.12)	(0.09)
Currency	(0.54)	(0.98)
Commodity 	(0.27)	(0.61)
Aggregate Value at Risk	        (2.51)%	(2.83)%

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
period, or even within a single trading day.  Such changes could
positively or negatively materially impact market risk as
measured by VaR.

<page> 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 October 1, 2005 through September 30,
2006.

Primary Market Risk Category	High	Low	Average
Equity	(3.32)%	(0.13)%	(2.09)%

Interest Rate	(3.49)	(0.41)	(1.43)

Currency	(1.15)	(0.37)	(0.76)

Commodity	(0.31)	(0.05)	(0.22)

Aggregate Value at Risk	(6.04)%	(0.75)%	(3.09)%




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:
*	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;
<page>
*	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?.

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 September 30, 2005, and for the four quarter-
end reporting periods from October 1, 2005 through September 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.
<page>
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 September 30,
2006, such amount is equal to approximately 92% 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,
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
<page> 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
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 September 30, 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
September 30, 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,
<page> Italy, and Canada.  The stock index futures traded by the
Partnership are by law limited to futures on broadly-based
indices.  The Partnership?s primary market exposures were to the
DAX (Germany), CAC 40 (France), IBEX 35 (Spain), Euro Stoxx 50
(Europe), S&P 500 (U.S.), Hang Seng (China), FTSE 100 (United
Kingdom), NASDAQ 100 (U.S.), TOPIX (Japan), NIKKEI 225 (Japan),
Dow Jones (U.S.), RUSSELL 2000 (U.S.), and 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.

Interest Rate. The second largest exposure of the Partnership at
September 30, 2006 was to the global interest rate sector.
Exposure was primarily spread across the U.S., European,
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.  However, the Partnership also takes futures
<page> 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
from short to long-term instruments.  Consequently, changes in
short, medium, or long-term interest rates may have an effect on
the Partnership.

Currency.  The third largest market exposure of the Partnership
at September 30, 2006 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 September
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.
<page>
Commodity.
Soft Commodities and Agriculturals.  At September 30, 2006,
the Partnership had exposure to the markets that comprise
these sectors.  Most of the exposure was to the soybean
meal, coffee, cocoa, cotton, corn, and sugar markets. Supply
and demand inequalities, severe weather disruptions, and
market expectations affect price movements in these markets.

Energy.  At September 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.
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 September 30, 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 zinc, copper, and aluminum.  The Partnership also
<page> had exposure to 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
trading system(s) to take positions when market
opportunities develop, and Demeter anticipates that the
Partnership will continue to do so.

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

Foreign Currency Balances. The Partnership?s primary foreign
currency balances at September 30, 2006 were in euros, Hong
Kong dollars, British pounds, Swiss francs, Japanese yen,
Swedish kronor, and Australian 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
<page> 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.

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>   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
Reports on Form 10-Q for the quarters ended March 31, 2006 and
June 30, 2006.
<table>
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>                                    <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 9/30/06	      35,149,740.611
Units unsold through 9/30/06    14,850,259.389
</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 September 30, 2006
was $656,332,210.

<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.  On September 22, 2006, the following individual was
elected as a Director of Demeter.  Jacques Chappuis, age 37, is a
Director of Demeter, and will be a principal of Demeter, pending
approval by and registration with the National Futures
Association.  Mr. Chappuis is a Managing Director of Morgan
Stanley and Head of Alternative Investments for the 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 on the financial services sector, and a
corporate finance Associate at Bankers Trust Company.  Mr.
Chappuis received a B.A. degree in finance from Tulane University
in 1991 and an MBA in finance, with honors, from the Columbia
University Graduate School of Business in 1998.

<page> On November 6, 2006, Mr. Kevin Perry resigned his position
as Chief Financial Officer of Demeter effective November 7, 2006.

On November 7, 2006, the Board of Directors of Demeter appointed
Mr. Lee Horwitz as the Chief Financial Officer of Demeter.  Lee
Horwitz, age 55, is the Chief Financial Officer of Demeter, and
will be a principal of Demeter, pending approval by and
registration with the National Futures Association.  Mr. Horwitz
currently serves as an Executive Director and Controller within
the Global Wealth Management Group at Morgan Stanley.  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.

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.
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.
<page>
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)

November 14, 2006    By: /s/ Lee Horwitz
                             Lee Horwitz
                             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.