MORGAN STANLEY CHARTER MSFCM LP - 10-Q Quarterly Report

Back to GetFilings.com

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

FORM 10-K

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the year ended December 31, 2002 or

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

Commission File Number 0-26282

MORGAN STANLEY CHARTER MSFCM L.P.

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

DELAWARE 13-3775071
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Demeter Management Corporation
825 Third Avenue, 9th Floor
New York, NY 10022
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (212) 310-6444

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

Name of each exchange
Title of each class on which registered

None None

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

Units of Limited Partnership Interest

(Title of Class)

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

Indicate by check-mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment of this Form 10-K. [X]

State the aggregate market value of the Units of Limited Partnership Interest
held by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which units were sold as of a specified
date within 60 days prior to the date of filing: $94,063,746 at January 31,
2003.

DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)

MORGAN STANLEY CHARTER MSFCM L.P.
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 2002

DOCUMENTS INCORPORATED BY REFERENCE

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

Documents Incorporated Part of Form 10-K

Partnership's Prospectus dated
February 26, 2003 I

Annual Report to Morgan Stanley
Charter Series Limited Partners
for the year ended December 31, 2002 II, III and IV

PART I
Item 1. BUSINESS
(a) General Development of Business. Morgan Stanley Charter MSFCM
L.P. (the "Partnership") is a Delaware limited partnership
organized to engage primarily in the speculative trading of
futures contracts, options on futures contracts and forward
contracts on physical commodities and other commodity interests,
including foreign currencies, financial instruments, metals,
energy and agricultural products. The Partnership commenced
operations on March 3, 1994. The Partnership is one of the Morgan
Stanley Charter series of funds, comprised of the Partnership,
Morgan Stanley Charter Campbell L.P. ("Charter Campbell"), Morgan
Stanley Charter Graham L.P., Morgan Stanley Charter Millburn L.P.,
and Morgan Stanley Charter Welton L.P. ("Charter Welton")
(collectively, the "Charter Series").

Charter Welton terminated trading effective December 31, 2002 and
will commence its dissolution in April 2003 pursuant to its
Limited Partnership Agreement.

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").
The trading advisor is Morgan Stanley Futures & Currency
Management Inc. ("MSFCM" or the "Trading Advisor").
Demeter, Morgan Stanley DW, MS & Co., MSIL, and MSFCM are wholly-
owned subsidiaries of Morgan Stanley.

Effective June 20, 2002, Morgan Stanley Dean Witter & Co. changed
its name to Morgan Stanley.

Effective July 29, 2002, Charter Campbell was added to the
Charter Series of funds and began trading on October 1, 2002.

Units of limited partnership interest ("Unit(s)") are 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 managing underwriter for the Partnership is Morgan Stanley
DW.

The Partnership's net asset value per Unit as of December 31, 2002
was $21.84, representing an increase of 29.1 percent from the net
asset value per Unit of $16.92 at December 31, 2001. For a more
detailed description of the Partnership's business see
subparagraph (c).

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

(c) Narrative Description of Business. The Partnership is in the
business of speculative trading of futures, forwards and options
pursuant to trading instructions provided by its Trading Advisor.
For a detailed description of the different facets of the
Partnership's business, see those portions of the Partnership's
prospectus, dated February 26, 2003 (the "Prospectus"),
incorporated by reference in this Form 10-K, set forth below:
Facets of Business
1. Summary 1. "Summary" (Pages 1-9 of the
Prospectus).

2. Futures, Options, and 2. "The Futures, Options, and
Forwards Markets Forwards Markets" (Pages
108-112 of the Prospectus).

3. Partnership's Trading 3. "Use of Proceeds" (Pages
Arrangements and 24-26 of the Prospectus).
Policies "The Trading Advisors"
(Pages 61-85 of the
Prospectus).

4. Management of the Part- 4. "Management Agreements"
nership (Page 61 of the Prospectus).
"The General Partner" (Pages
55-60 of the Prospectus).
"The Commodity Brokers"
(Pages 87-89 of the
Prospectus) and "The
Limited Partnership
Agreement" (Pages 90-
93 of the Prospectus).

5. Taxation of the Partner- 5. "Material Federal Income
ship's Limited Partners Tax Considerations" and
"State and Local Income Tax
Aspects" (Pages 99-106
of the Prospectus).

(d) Financial Information about Geographic Areas. The Partner-
ship has not engaged in any operations in foreign countries;
however, the Partnership (through the commodity brokers) enters
into forward contract transactions where foreign banks are the
contracting party and trades futures, forwards and options on
foreign exchanges.

(e) Available Information. The Partnership files annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and all amendments to these reports with the Securities
and Exchange Commission ("SEC"). You may read and copy any
document filed by the Partnership at the SEC's public reference
room at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for information on
the public reference room. The Partnership does not maintain an
internet website, however, the SEC maintains a website that
contains annual, quarterly, and current reports, proxy statements
and other information that issuers (including the Partnership)
file electronically with the SEC. The SEC's website address is
http://www.sec.gov.

Item 2. PROPERTIES
The Partnership's executive and administrative offices are located
within the offices of Morgan Stanley DW. The Morgan Stanley DW
offices utilized by the Partnership are located at 825 Third
Avenue, 9th Floor, New York, NY 10022.

Item 3. LEGAL PROCEEDINGS
None.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND
RELATED SECURITY HOLDER MATTERS

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

(b) Holders. The number of holders of Units at December 31, 2002
was approximately 4,329.

(c) Distributions. No distributions have been made by the
Partnership since it commenced trading operations on March 3,
1994. Demeter has sole discretion to decide what distributions, if
any, shall be made to investors in the Partnership. Demeter
currently does not intend to make any distributions of Partnership
profits.

(d) Use of Proceeds. The Partnership sold 66,708.624 Units prior
to its 100 for 1 conversion on October 11, 2000. The Partnership
de-registered the Units remaining unsold at the time of the
conversion.

The Partnership registered an additional 1,750,000 Units pursuant
to a Registration Statement on Form S-1, which became effective on
October 11, 2000 (SEC File Number 333-41684).

The Partnership registered an additional 3,000,000 Units
pursuant to a Registration Statement on Form S-1, which became
effective on July 29, 2002 (SEC File Number 333-85074). The
aggregate price of the amount registered was $51,780,000 based
upon an initial offering price of $17.26 per Unit.

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

Through December 31, 2002, 8,952,560.254 Units were sold, leaving
2,468,302.146 Units unsold at December 31, 2002. The aggregate
price of the Units sold through December 31, 2002 was
$111,614,554.

The Partnership registered an additional 7,500,000 Units pursuant
to a Registration Statement on Form S-1, which became effective on
February 26, 2003 (SEC File Number 333-103168). The aggregate
price of the amount registered was $184,800,000 based upon an
initial offering price of $24.64 per Unit.

The managing underwriter for the Partnership is Morgan Stanley DW.

Since no expenses are chargeable against 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.

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

Liquidity. The Partnership deposits its assets with Morgan
Stanley DW as non-clearing broker and MS & Co. and MSIL as
clearing brokers in separate futures, forwards and options trading
accounts established for the Trading Advisor, which assets are
used as margin to engage in trading. The assets are held in either
non-interest bearing bank accounts or in securities and
instruments permitted by the Commodity Futures Trading Commission
for investment of customer segregated or secured funds. The
Partnership's assets held by the commodity brokers may be used as
margin solely for the Partnership's trading. 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
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 currency. 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.

The Partnership has never had illiquidity affect a material
portion of its assets. Furthermore, there are no material
trends, demands, commitments, events or uncertainties known at the
present time that will result in, or 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 expect to
have, any capital assets. Redemptions, exchanges and sales of
additional Units in the future will affect the amount of funds
available for investment in futures, forwards, and options in

subsequent periods. It is not possible to estimate the amount and
therefore the impact of future redemptions 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.
The Partnership has no off-balance sheet arrangements, nor
contractual obligations or commercial commitments to make future
payments that would affect the Partnership's liquidity or capital
resources. The contracts traded by the Partnership are accounted
for on a trade-date basis and marked to market on a daily basis.
The value of futures contracts is the settlement price on the
exchange on which that futures contract is traded on a particular
day and the value of foreign currency forward contracts is based
on the spot rate as of the close of business, New York City time,
on a given day.

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 or other profit opportunities in the
futures, forwards, and options markets. The following presents a
summary of the Partnership's operations for the three years ended
December 31, 2002 and a general discussion of its trading
activities during each period. The Partnership has restated all
prior periods' per Unit amounts to reflect the 100-for-1
conversion that took place on December 1, 2000. 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 as a
whole are difficult to discuss other than in the context of the
Trading Advisor's trading activities on behalf of the Partnership
and how the Partnership has performed in the past.

The Partnership's results of operations are set forth in financial
statements prepared in accordance with United States generally
accepted accounting principles, 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 profit/loss" for open (unrealized)
contracts, and recorded as "Realized profit/loss" when open
positions are closed out, and the sum of these amounts constitutes
the Partnership's trading revenues. Interest income revenue as
well as management fees, incentive fees and brokerage fees
expenses of the Partnership are recorded on an accrual basis.

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

At December 31, 2002, the Partnership's total capital was
$84,378,733, an increase of $41,978,785 from the Partnership's
total capital of $42,399,948 at December 31, 2001. For the year
ended December 31, 2002, the Partnership generated net income of
$14,407,426, total subscriptions aggregated $33,275,899 and total
redemptions aggregated $5,704,540.

For the year ended December 31, 2002, the Partnership recorded
total trading revenues, including interest income, of $21,980,820
and posted an increase in net asset value per Unit. The most
significant gains of approximately 23.3% were recorded from long
positions in European, Japanese, and U.S. interest rate futures
during the period from June through September, as well as in
December, as prices trended higher amid increased demand among
investors seeking the safety of fixed income investments.
Additional gains of approximately 21.7% were generated in the
currency markets from long positions in the Swiss franc, euro,
Japanese yen, and Swedish krona, relative to the U.S. dollar, as
the dollar weakened due to continued uncertainty regarding a U.S.
economic recovery. Additional currency gains were recorded from
the energy futures markets, long positions in crude oil futures
resulted in gains of approximately 1.3%, primarily in March, as
tensions in the Middle East and supply/demand concerns placed
upward pressure on prices. A portion of the Partnership's
overall gains was offset by losses of approximately 6.5% recorded
in the metals markets from positions in aluminum futures as
prices moved without consistent direction throughout a majority
of the year amid shifting supply and demand concerns. Total
expenses for the year were $7,573,394, resulting in net income of
$14,407,426. The net asset value of a Unit increased from $16.92
at December 31, 2001 to $21.84 at December 31, 2002.

At December 31, 2001, the Partnership's total capital was
$42,399,948, an increase of $5,017,637 from the Partnership's
total capital of $37,382,311 at December 31, 2000. For the year
ended December 31, 2001, the Partnership generated a net loss of
$1,430,187, total subscriptions aggregated $10,799,873 and total
redemptions aggregated $4,352,049.

For the year ended December 31, 2001, the Partnership recorded
total trading revenues, including interest income, of $2,265,316
and after expenses, posted a decrease in net asset value per Unit.
The most significant losses of approximately 6.2% were recorded
in the currency markets primarily during July and September from
transactions involving the euro relative to the British pound.
Smaller losses of approximately 1.6% were recorded in the
metals markets primarily during April and early May from short
gold futures positions as prices climbed higher on weakness in
the U.S. dollar. Smaller losses of approximately 1.3% were
recorded throughout the first nine months of the year from
trading in crude oil futures and its related products as a result
of volatility in oil prices due to a continually changing outlook
for supply, production and demand. A portion of the
Partnership's overall losses was partially offset by gains of
approximately 13.1% recorded in the global interest rate futures
markets during the first and third quarter and during October
from long positions in German interest rate futures as prices
trended higher in response to an interest rate cut by the
European Central Bank, strength in the euro and weakness in
global equity prices. Additional profits were recorded
throughout a majority of the first quarter from long positions in
eurodollar futures as prices rose amid a rattled stock market,
shaky consumer confidence, positive inflation data and interest
rate cuts by the U.S. Federal Reserve. During September and
October, profits were recorded from long positions as prices
continued trending higher amid continued concerns for the
sluggish U.S. economy, interest rate cuts by the U.S. Federal
Reserve and as investors sought a "safe haven" from declining
stock prices. Total expenses for the year were $3,695,503,
resulting in a net loss of $1,430,187. The net asset value of a
Unit decreased from $17.50 at December 31, 2000 to $16.92
at December 31, 2001.
At December 31, 2000, the Partnership's total capital was
$37,382,311, an increase of $1,197,097 from the Partnership's
total capital of $36,185,214 at December 31, 1999. For the year
ended December 31, 2000, the Partnership generated net income of
$7,369,945, total subscriptions aggregated $343,831 and total
redemptions aggregated $6,516,679.

For the year ended December 31, 2000, the Partnership recorded
total trading revenues, including interest income, of $10,529,366
and posted an increase in net asset value per Unit. The
Partnership posted gains in 2000 as a result of strong trends in
the energy and currency markets. In the energy sector, profits
of approximately 20.2% resulted primarily from long positions in
the natural gas and crude oil futures markets. Natural gas saw
its price rise to record levels in 2000. Recent low inventory
levels, sluggish supply and cold winter weather combined to push
prices to such high levels. In the crude oil market, gains were
realized from long positions earlier in the year as prices rose
to nine-year highs on a combination of cold weather, declining
inventories and increasing demand. In addition, concerns about
future output levels from the world's leading producer countries
added to the upward price momentum. Later in the year, however,
profits resulted from short positions as the price of crude oil
futures fell on expectations that Iraqi oil exports would resume
and on fears that the slowdown in the economy would curb
demand while at the same time increase supply. In the currency
markets, gains of approximately 15.4% were recorded primarily
from short positions in the euro, Swiss franc and Swedish krona
as the value of these European currencies weakened relative to
the U.S. dollar amid skepticism about Europe's economic outlook.
Strong economic data out of the U.S. and interest rate hikes in
the U.S. also boosted the dollar and, subsequently, added to the
euro's difficulties. Later in the year as the bullish trend in
the U.S. dollar reversed, additional gains were recorded from
long positions in the euro, Swiss franc and Swedish krona versus
the U.S. dollar as a result of new confidence in the European
economy and an overall skepticism regarding the U.S. economy. A
portion of these gains was offset by losses experienced in the
metals and stock index futures markets. The majority of losses,
approximately 8.8%, were experienced in the metals markets
primarily from aluminum futures. From a technical standpoint,
the price of aluminum traded in a very volatile pattern
throughout the year leaving little opportunity for the
development of trends. In addition, long positions in this
market, particularly in the second half of the year, resulted in
losses as prices declined after concerns mounted that demand
would weaken amid a cooling of the U.S. economy. Losses of
approximately 6.1% were recorded in the global stock index
futures markets. The S&P 500 Index traded in a very choppy
pattern resulting in losses for both long and short positions.
Contributing to this price pattern was uncertainty over
the state of the U.S. economy. Total expenses for the year were
$3,159,421, resulting in net income of $7,369,945. The net asset
value of a Unit increased from $14.14 at December 31, 1999 to
$17.50 at December 31, 2000.

The Partnership's overall performance record represents varied
results of trading in different futures, forwards and options
markets. For an analysis of unrealized gains and (losses) by
contract type and a further description of 2002 trading results,
refer to the "Letter to the Limited Partners" in the Partnership's
Annual Report to Limited Partners for the year ended December 31,
2002, which is incorporated by reference to Exhibit 13.01 of this
Form 10-K.

The Partnership's gains and losses are allocated among its
partners for income tax purposes.

Credit Risk.
Financial Instruments. The Partnership is a party to financial
instruments with elements of off-balance sheet market and credit
risk. The Partnership trades futures, forwards and options in
interest rates, stock indices, currencies, agriculturals,
energies and metals. In entering into these contracts, the
Partnership is subject to the market risk that such contracts may
be significantly influenced by market conditions, such as
interest rate volatility, resulting in such contracts
being less valuable. If the markets should move against all of
the positions held by the Partnership at the same time, and if
the Trading Advisor were unable to offset positions of the
Partnership, the Partnership could lose all of its assets and the
limited partners would realize a 100% loss.

In addition to the Trading Advisor's internal controls, the
Trading Advisor must comply with the trading policies of the
Partnership. These trading policies include standards for
liquidity and leverage with which the Partnership must comply.
The Trading Advisor and Demeter monitor the Partnership's trading
activities to ensure compliance with the trading policies.
Demeter may require the Trading Advisor to modify positions of
the Partnership if Demeter believes they violate the
Partnership's trading policies.

In addition to market risk, in entering into futures, forward and
options contracts there is a credit risk to the Partnership that
the counterparty on a contract will not be able to meet its
obligations to the Partnership. The ultimate counterparty or
guarantor of the Partnership for futures contracts traded in the
United States and the foreign exchanges on which the Partnership
trades is the clearinghouse associated with such exchange. In
general, a clearinghouse is backed by the membership of the
exchange and will act in the event of non-performance by one of
its members or one of its member's customers, which should
significantly reduce this credit risk. For example, a
clearinghouse may cover a default by drawing upon a defaulting
member's mandatory contributions and/or non-defaulting members'
contributions to a clearinghouse guarantee fund, established
lines or letters of credit with banks, and/or the clearinghouse's
surplus capital and other available assets of the exchange and
clearinghouse, or assessing its members. In cases where the
Partnership trades off-exchange forward contracts with a
counterparty, the sole recourse of the Partnership will be the
forward contracts counterparty.

There is no assurance that a clearinghouse, exchange or other
exchange member will meet its obligations to the Partnership, and
Demeter and the commodity brokers will not indemnify the
Partnership against a default by such parties. Further, the law
is unclear as to whether a commodity broker has any obligation to
protect its customers from loss in the event of an exchange or
clearinghouse defaulting on trades effected for the broker's
customers. Any such obligation on the part of a broker appears
even less clear where the default occurs in a non-U.S.
jurisdiction.

Demeter deals with these credit risks of the Partnership in
several ways. First, it monitors the Partnership's credit
exposure to each exchange on a daily basis, calculating not only
the amount of margin required for it but also the amount
of its unrealized gains at each exchange, if any. The commodity
brokers inform the Partnership, as with all their customers, of
its net margin requirements for all its existing open positions,
but do not break that net figure down, exchange by exchange.
Demeter, however, has installed a system which permits it to
monitor the Partnership's potential margin liability, exchange by
exchange. As a result, Demeter is able to monitor the
Partnership's potential net credit exposure to each exchange by
adding the unrealized trading gains on that exchange, if any, to
the Partnership's margin liability thereon.

Second, the Partnership's trading policies limit the amount of
its net assets that can be committed at any given time to futures
contracts and require, in addition, a minimum amount of
diversification in the Partnership's trading, usually over
several different products. One of the aims of such trading
policies has been to reduce the credit exposure of the
Partnership to a single exchange and, historically, the
Partnership's exposure to any one exchange has typically amounted
to only a small percentage of its total net assets. On those
relatively few occasions where the Partnership's credit exposure
may climb above such level, Demeter deals with the situation on a
case by case basis, carefully weighing whether the increased
level of credit exposure remains appropriate. Material changes
to the trading policies may be made only with the prior written
approval of the limited partners owning more than 50% of
Units then outstanding.
Third, with respect to forward contract trading, the Partnership
trades with only those counterparties which Demeter, together
with Morgan Stanley DW, have determined to be creditworthy. The
Partnership presently deals with MS & Co. as the sole
counterparty on forward contracts.

See "Financial Instruments" under "Notes to Financial Statements"
in the Partnership's Annual Report to Limited Partners for the
year ended December 31, 2002, which is incorporated by reference
to Exhibit 13.01 of this Form 10-K.

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

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK

Introduction

The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards, and options. The
market-sensitive instruments held by the Partnership are acquired
for speculative trading purposes only and, as a result, all or
substantially all of the Partnership's assets are at risk of
trading loss. Unlike an operating company, the risk of market-
sensitive instruments is central, not incidental, to the
Partnership's main business activities.

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. Fluctuations in market risk based
upon these factors result in frequent changes in the fair value
of the Partnership's open positions, and, consequently, in its
earnings and cash flow.

The Partnership's total market risk is influenced by a wide
variety of factors, including the diversification among the
Partnership's open positions, the volatility present within the
markets, and the liquidity of the markets. At different times,
each of these factors may act to increase or decrease the market
risk associated with the Partnership.

The Partnership's past performance is not necessarily indicative
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 may
cause future losses and volatility (i.e. "risk of ruin") that far
exceed the Partnership's experiences to date or any reasonable
expectations based upon historical changes in market value.
Quantifying the Partnership's Trading Value at Risk
The following quantitative disclosures regarding the Partner-
ship's market risk exposures contain "forward-looking statements"
within the meaning of the safe harbor from civil liability
provided for such statements by the Private Securities Litigation
Reform Act of 1995 (set forth in Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of
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, whether realized or unrealized, and its
cash flow. Profits and losses on open positions of exchange-
traded futures, forwards and options are settled daily through
variation margin.

The Partnership's risk exposure in the market sectors traded by
the Trading Advisor is estimated below in terms of Value at Risk
("VaR"). The VaR model used by the Partnership includes many
variables that could change the market value of the Partnership's
trading portfolio. The Partnership estimates VaR using a model
based upon historical simulation with a confidence level of 99%.
Historical simulation involves constructing a distribution of
hypothetical daily changes in the value of a trading
portfolio. The VaR model takes into account linear exposures to
price and interest rate risk. Market risks that are incorporated
in the VaR model include 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 historical observation period of the
Partnership's VaR is approximately four years. 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.
In other words, one-day VaR for a portfolio is a number such that
losses in this portfolio are estimated to exceed the VaR only one
day in 100. VaR typically does not represent the worst case
outcome.

VaR is calculated using historical simulation. Demeter uses
approximately four years of daily market data (1,000
observations) and revalues 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 does not distinguish between exchange and non-
exchange-traded instruments and is also not based on exchange
and/or dealer-based margin requirements.

VaR models, including the Partnership's, are continuously
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 December 31, 2002 and 2001. At
December 31, 2002 and 2001, the Partnership's total
capitalization was approximately $84 million and $42 million,
respectively.

Primary Market December 31, 2002 December 31, 2001
Risk Category Value at Risk Value at Risk

Currency (3.42)% (2.48)%

Interest Rate (2.57) (1.07)

Equity (0.00) (0.00)

Commodity (2.33) (0.83)

Aggregate Value at Risk (4.98)% (3.12)%

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

The table above represents the VaR of the Partnership's open
positions at December 31, 2002 and 2001 only and is not
necessarily representative of either the historic or future risk
of an investment in the Partnership. Because the Partnership's
only business 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. Any changes in open positions could positively or
negatively materially impact market risk as measured by VaR.

The table below supplements the December 31, 2002 VaR by
presenting the Partnership's high, low and average VaR, as a
percentage of total net assets for the four quarterly reporting
periods from January 1, 2002 through December 31, 2002.

Primary Market Risk Category High Low Average
Currency (3.42)% (2.34)% (2.87)%
Interest Rate (3.24) (1.23) (2.29)
Equity (0.16) (0.00) (0.07)
Commodity (2.61) (0.75) (2.07)
Aggregate Value at Risk (4.98)% (3.61)% (4.28)%

Limitations on Value at Risk as an Assessment of Market Risk
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 value of the
Partnership's open positions thus creates a "risk of ruin" not
usually found in other investments. The relative size of the
positions held may cause the Partnership to incur losses greatly
in excess of VaR within a short period of time, given the effects
of the leverage employed and market volatility. The VaR tables
above, as well as the past performance of the Partnership, give
no indication of such "risk of ruin". In addition, VaR
risk measures should be viewed in light of the methodology's
limitations, which include 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 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.

The VaR tables above present the results of the Partnership's VaR
for each of the Partnership's market risk exposures and on an
aggregate basis at December 31, 2002 and 2001 and for the end of
the four quarterly reporting periods during calendar year 2002.
Since VaR is based on historical data, VaR should not be viewed
as predictive of 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 not needed for margin. These balances and any market
risk they may represent are immaterial.

At December 31, 2002, the Partnership's cash balance at Morgan
Stanley DW was approximately 76% of its total net asset value. A
decline in short-term interest rates will 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 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 expro-
priations, 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 December 31, 2002, by market sector. It may be
anticipated, however, that these market exposures will vary
materially over time.

Currency. The primary market exposure of the Partnership at
December 31, 2002 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 large number of currencies, including cross-rates - i.e.,
positions between two currencies other than the U.S. dollar. At
December 31, 2002, the Partnership's major exposures were to the
euro currency crosses and 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 profile of
the Partnership's currency sector will change significantly in
the future. The currency trading VaR figure includes foreign
margin amounts converted into U.S. dollars with an incremental
adjustment to reflect the exchange rate risk inherent to the
U.S.-based Partnership in expressing VaR in a functional currency
other than U.S. dollars.

Interest Rate. The second largest market exposure at December
31, 2002 was to the global interest rate sector. Exposure was
primarily spread across the Japanese, German and U.S. 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 primary 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 from short to long-term instruments.
Consequently, changes in short, medium or long-term interest
rates may have an effect on the Partnership.

Commodity.
Energy. At December 31, 2002, the Partnership's energy
exposure was shared primarily by futures contracts in crude
oil and natural gas. Price movements in these markets
result from political developments in the Middle East,
weather patterns and other economic fundamentals.
Significant profits and losses, which have been experienced
in the past, are expected 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. The Partnership's metals exposure at December 31,
2002 was to fluctuations in the price of 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, from time to time, takes 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 December 31, 2002:

Foreign Currency Balances. The Partnership's primary
foreign currency balances at December 31, 2002 were in euros
and Australian dollars. The Partnership controls the non-
trading risk of these 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 monitoring the performance of the Trading
Advisor daily. In addition, the Trading Advisor establishes
diversi-fication 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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements are incorporated by reference to the
Partnership's Annual Report, which is filed as Exhibit 13.01
hereto.

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

Summary of Quarterly Results (Unaudited)

Quarter Revenues/ Net Net Income/
Ended (Net Losses) Income/(Loss) (Loss) Per Unit*

2002
March 31 $ 658,286 $ (316,154) $(0.12)
June 30 11,502,547 9,340,183 3.38
September 30 9,241,955 6,418,619 2.16
December 31 578,032 (1,035,222) (0.50)

Total $21,980,820 $ 14,407,426 $ 4.92

2001
March 31 $ 2,101,728 $ 1,128,332 $ 0.51
June 30 (817,393) (1,676,192) (0.77)
September 30 1,841,035 942,776 0.41
December 31 (860,054) (1,825,103) (0.73)

Total $ 2,265,316 $ (1,430,187) $(0.58)

* The Partnership became one of the Charter Series of
funds on December 1, 2000 and each outstanding Unit on
that date was converted to 100 Units of the Partner-
ship. Per Unit amounts prior to the conversion have
been restated to reflect this 100 for 1 split.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.
PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

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

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

Robert E. Murray, age 42, is the Managing Director of the
Strategic Products Group at Morgan Stanley and Chairman of the
Board of Directors of Demeter Management Corporation, a leading
commodity pool operator with approximately $1.7 billion in assets
across a variety of U.S. and international public and private
managed futures funds. Mr. Murray began at Dean Witter in 1984
and has been closely involved in the growth of managed futures at
the firm over the last 18 years. He is also the Chairman of the
Board of Directors of MSFCM, Morgan Stanley's internal commodity
trading advisor. Mr. Murray served as the Vice Chairman and a
Director of the Board of the Managed Futures Association and is
currently a member of the Board of Directors of the National
Futures Association. Mr. Murray received a Bachelors Degree in
Finance from Geneseo State University in 1983.

Jeffrey A. Rothman, age 41, is the President and a Director of
Demeter. Mr. Rothman is the Executive Director of Morgan Stanley
Managed Futures, responsible for overseeing all aspects of the
firm's managed futures department. He is also President
and a Director of MSFCM. Mr. Rothman has been with the managed
futures department for sixteen years and most recently held the
position of National Sales Manager, assisting Branch Managers and
Financial Advisors with their managed futures education,
marketing, and asset retention efforts. Throughout his career,
Mr. Rothman has helped with the development, marketing, and
administration of approximately 35 commodity pools. Mr. Rothman
is an active member of the Managed Funds Association and serves
on its Board of Directors.

Mitchell M. Merin resigned his position as a Director of Demeter.

Joseph G. Siniscalchi, age 57, is a Director of Demeter. Mr.
Siniscalchi joined Morgan Stanley DW in July 1984 as a First Vice
President, Director of General Accounting and served as a Senior
Vice President and Controller for Morgan Stanley DW's Securities
Division through 1997. He is currently Managing Director
responsible for the Client Support Service Division of Morgan
Stanley DW. From February 1980 to July 1984, Mr. Siniscalchi was
Director of Internal Audit at Lehman Brothers Kuhn Loeb, Inc.

Edward C. Oelsner, III, age 61, is a Director of Demeter. Mr.
Oelsner is currently an Executive Vice President and head of the
Product Development Group at Morgan Stanley Investment Advisors
Inc., an affiliate of Morgan Stanley DW. Mr. Oelsner joined
Morgan Stanley DW in 1981 as a Managing Director in Morgan
Stanley DW's Investment Banking Department, specializing in
coverage of regulated industries and subsequently served as head
of the Morgan Stanley DW Retail Products Group. Prior to joining
Morgan Stanley DW, Mr. Oelsner held positions at The First Boston
Corporation as a member of the Research and Investment Banking
Departments from 1967 to 1981. Mr. Oelsner received an M.B.A. in
Finance from the Columbia University Graduate School of Business
in 1966 and an A.B. in Politics from Princeton University in
1964.

Richard A. Beech, age 51, is a Director of Demeter. Mr. Beech
has been associated with the futures industry for over 25 years.
He has been at Morgan Stanley DW since August 1984 where he is
presently an Executive Director and head of Branch Futures. Mr.
Beech began his career at the Chicago Mercantile Exchange, where
he became the Chief Agricultural Economist doing market analysis,
marketing and compliance. Prior to joining Morgan Stanley DW,
Mr. Beech worked at two investment banking firms in operations,
research, managed futures and sales management.

Raymond A. Harris, age 46, is a Director of Demeter and of MSFCM.
Mr. Harris is currently Managing Director of Global Products &
Services at Morgan Stanley. He previously served as Chief
Accounting Officer of Morgan Stanley Dean Witter Asset
Management. From July 1982 to July 1994, Mr. Harris served in
financial, administrative and other assignments at Dean
Witter Reynolds, Inc. and Dean Witter, Discover & Co. From
August 1994 to January 1999, he worked in Discover Financial
Services and the firm's Credit Service business units. Mr.
Harris has been with Morgan Stanley and its affiliates since July
1982. He has a B.A. degree from Boston College and an M.B.A. in
Finance from the University of Chicago.

Anthony J. DeLuca, age 40, is a Director of Demeter. Mr. DeLuca
is also a Director of MSFCM. Mr. DeLuca was appointed the
Controller of Asset Management for Morgan Stanley in June 1999.
Prior to that, Mr. DeLuca was a partner at the accounting firm of
Ernst & Young LLP, where he had Morgan Stanley as a major client.
Mr. DeLuca had worked continuously at Ernst & Young LLP ever
since 1984, after he graduated from Pace University with a B.B.A.
degree in Accounting.

Frank Zafran, age 47, is a Director of Demeter and of MSFCM. Mr.
Zafran is an Executive Director of Morgan Stanley and, in
September 2002, was named Chief Administrative officer of Morgan
Stanley's Global Products & Services Division. Mr. Zafran joined
the firm in 1979 and has held various positions in Corporate
Accounting and the Insurance Department, including Senior
Operations Officer - Insurance Division, until his appointment in
2000 as Director of 401(k) Plan Services, responsible for all
aspects of 401(k) Plan Services including marketing, sales and
operations. Mr. Zafran received a B.S. degree in
Accounting from Brooklyn College, New York.

Raymond E. Koch resigned his position as Chief Financial Officer
of Demeter.

Jeffrey D. Hahn, age 45, is the Chief Financial Officer of
Demeter. Mr. Hahn began his career at Morgan Stanley in 1992 and
is currently an Executive Director responsible for the management
and supervision of the accounting, reporting, tax and finance
functions for the firm's private equity, managed futures, and
certain legacy real estate investing activities. He is also Chief
Financial Officer of MSFCM. From August 1984 through May 1992,
Mr. Hahn held various positions as an auditor at Coopers &
Lybrand, specializing in manufacturing businesses and venture
capital organizations. Mr. Hahn received his B.A. in Economics
from St. Lawrence University in 1979, an M.B.A. from Pace
University in 1984, and is a Certified Public Accountant.

All of the foregoing directors have indefinite terms.

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

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

(a) Security Ownership of Certain Beneficial Owners - At December
31, 2002, there were no persons known to be beneficial owners of
more than 5 percent of the Units.

(b) Security Ownership of Management - At December 31, 2002,
Demeter owned 42,827.965 Units of general partnership interest,
representing a 1.11 percent interest in the Partnership.

Robert E. Murray, Chairman of the Board of Directors of Demeter,
owns only 200.300 Units of limited partnership interest, which
amounts to less than 1% of the outstanding Units of the
Partnership.

(c) Changes in Control - None.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Refer to Note 2 - "Related Party Transactions" of "Notes to
Financial Statements", in the accompanying Annual Report to
Limited Partners for the year ended December 31, 2002, which is
incorporated by reference to Exhibit 13.01 of this Form 10-K. In
its capacity as the Partnership's retail commodity broker, Morgan
Stanley DW received commodity brokerage fees (paid and accrued by
the Partnership) of $3,858,279 for the year ended December 31,
2002. In its capacity as the Partnership's trading advisor, MSFCM
received management fees of $1,132,395 and incentive fees of
$2,582,720 for the year ended December 31, 2002.

Item 14. CONTROLS AND PROCEDURES
(a) As of a date within 90 days of the filing date of this
annual report, the President and Chief Financial Officer
of the general partner, Demeter, have evaluated the
effectiveness of the Partnership's disclosure controls and
procedures (as defined in Rules 13a-14 and 15d-14 of the
Exchange Act), and have judged such controls and
procedures to be effective.

(b) There have been no significant changes in the
Partnership's internal controls or in other factors that
could significantly affect these controls subsequent to
the date of their evaluation.

PART IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K

(a) 1. Listing of Financial Statements
The following financial statements and report of independent
auditors, all appearing in the accompanying Annual Report to
Limited Partners for the year ended December 31, 2002, are
incorporated by reference to Exhibit 13.01 of this Form 10-K:
- - Report of Deloitte & Touche LLP, independent auditors, for
the years ended December 31, 2002, 2001 and 2000.

- - Statements of Financial Condition, including the Schedules of
Investments, as of December 31, 2002 and 2001.

- - Statements of Operations, Changes in Partners' Capital, and
Cash Flows for the years ended December 31, 2002, 2001 and
2000.

- - Notes to Financial Statements.

With the exception of the aforementioned information and the
information incorporated in Items 7, 8 and 13, the Annual Report
to Limited Partners for the year ended December 31, 2002 is not
deemed to be filed with this report.

2. Listing of Financial Statement Schedules
No financial statement schedules are required to be filed with
this report.

(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Partnership during
the last quarter of the period covered by this report.

(c) Exhibits
Refer to Exhibit Index on Page E-1 to E-3.

SIGNATURES

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

MORGAN STANLEY CHARTER MSFCM L.P.
(Registrant)

BY: Demeter Management Corporation,
General Partner

March 31, 2003 BY: /s/ Jeffrey A. Rothman
Jeffrey A. Rothman, Director
and President

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

Demeter Management Corporation.

BY: /s/ Robert E. Murray March 31, 2003
Robert E. Murray, Director and Chairman

/s/ Jeffrey A. Rothman March 31, 2003
Jeffrey A. Rothman, Director and
President

/s/ Joseph G. Siniscalchi March 31, 2003
Joseph G. Siniscalchi, Director

/s/ Edward C. Oelsner III March 31, 2003
Edward C. Oelsner III, Director

/s/ Richard A. Beech March 31, 2003
Richard A. Beech, Director

/s/ Raymond A. Harris March 31, 2003
Raymond A. Harris, Director

/s/ Anthony J. DeLuca March 31, 2003
Anthony J. DeLuca, Director

/s/ Frank Zafran March 31, 2003
Frank Zafran, Director

/s/ Jeffrey D. Hahn March 31, 2003
Jeffrey D. Hahn, Chief Financial
Officer

CERTIFICATIONS

I, Jeffrey A. Rothman, President of Demeter Management
Corporation, the general partner of the registrant, certify that:

1. I have reviewed this annual report on Form 10-K of the
registrant;

2. Based on my knowledge, this annual report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
annual report;

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this annual
report is being prepared;

b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90
days prior to the filing date of this annual report (the
"Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of Demeter's
board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and

6. The registrant's other certifying officers and I have
indicated in this annual report whether there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.

Date: March 31, 2003 /s/Jeffrey A. Rothman
Jeffrey A. Rothman
President, Demeter
Management Corporation,
general partner of the
registrant
CERTIFICATIONS

I, Jeffrey D. Hahn, Chief Financial Officer of Demeter Management
Corporation, the general partner of the registrant, certify that:

1. I have reviewed this annual report on Form 10-K of the
registrant;

2. Based on my knowledge, this annual report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
annual report;

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this annual
report is being prepared;

b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90
days prior to the filing date of this annual report (the
"Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of Demeter's
board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and

6. The registrant's other certifying officers and I have
indicated in this annual report whether there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.

Date: March 31, 2003 /s/ Jeffrey D. Hahn
Jeffrey D. Hahn
Chief Financial Officer,
Demeter Management
Corporation, general
partner of the registrant

EXHIBIT INDEX

ITEM

3.01 Form of Amended and Restated Limited Partnership Agreement
of the Partnership, is incorporated by reference to Exhibit
A of the Partnership's Prospectus, dated February 26, 2003,
filed with the Securities and Exchange Commission pursuant
to Rule 424(b)(3) under the Securities Act of 1933, as
amended, on March 18, 2003.

3.02 Certificate of Limited Partnership, dated March 1, 1994, is
incorporated by reference to Exhibit 3.02 of the
Partnership's Registration Statement on Form S-1 (File No.
33-71654) filed with the Securities and Exchange Commission
on November 12, 1993.

3.03 Certificate of Amendment of Certificate of Limited
Partnership, dated as of October 11, 2000, is incorporated
by reference to Exhibit 3.03 of the Partnership's Post-
Effective Amendment No. 1 to the Registration Statement on
Form S-1 (File No. 333-41684) filed with the Securities and
Exchange Commission on March 30, 2001.

3.04 Certificate of Amendment of Certificate of Limited
Partnership, dated November 1, 2001, (changing its name from
Morgan Stanley Dean Witter Charter DWFCM L.P.) is
incorporated by reference to Exhibit 3.01 of the
Partnership's Form 8-K (File No. 0-26282) filed with the
Securities and Exchange Commission on November 6, 2001.

10.01 Amended and Restated Management Agreement among the
Partnership, Demeter and MSFCM, dated as of December 1, 2000
is incorporated by reference to Exhibit 10.01 of the
Partnership's Form 10-K (File No. 0-26282) for fiscal year
ended December 31, 2001, filed on March 28, 2002.

10.02 Form of Subscription and Exchange Agreement and Power of
Attorney to be executed by each purchaser of Units is
incorporated by reference to Exhibit B of the Partnership's
Prospectus, dated February 26, 2003, filed with the
Securities and Exchange Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933, as amended, on
March 18, 2003.

10.03 Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW, dated as of May 19, 2000,
is incorporated by reference to Exhibit 10.01 of the
Partnership's Form 8-K (File No. 0-26282) filed with the
Securities and Exchange Commission on November 6, 2001.

10.04 Commodity Futures Customer Agreement between MS & Co. and
the Partnership, and acknowledged and agreed to by Morgan
Stanley DW, dated as of May 1, 2000, is incorporated by
reference to Exhibit 10.02 of the Partnership's Form 8-K
(File No. 0-26282) filed with the Securities and Exchange
Commission on November 6, 2001.

10.05 Customer Agreement between the Partnership and MSIL, dated
as of May 1, 2000, is incorporated by reference to Exhibit
10.04 of the Partnership's Form 8-K (File No. 0-26282) filed
with the Securities and Exchange Commission on November 6,
2001.

10.06 Foreign Exchange and Options Master Agreement between MS &
Co. and the Partnership, dated as of August 30, 1999, is
incorporated by reference to Exhibit 10.05 of the
Partnership's Form 8-K (File No. 0-26282) filed with the
Securities and Exchange Commission on November 6, 2001.

10.07 Amended and Restated Escrow Agreement, dated as of August
31, 2002, among the Partnership, Morgan Stanley Charter
Graham L.P., Morgan Stanley Charter Millburn L.P., Morgan
Stanley Charter Welton L.P., Morgan Stanley DW and JP Morgan
Chase Bank is incorporated by reference to Exhibit 10.10 of
the Partnership's Registration Statement on Form S-1 (File
No. 333-103168) filed with the Securities and Exchange
Commission on February 13, 2003.

10.08 Form of Subscription Agreement Update Form is incorporated
by reference to Exhibit C of the Partnership's Prospectus,
dated February 26, 2003, filed with the Securities and
Exchange Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933, as amended, on March 18, 2003.

10.09 Securities Account Control Agreement among the Partnership,
MS & Co., and Morgan Stanley DW, dated as of May 1, 2000,
is incorporated by reference to Exhibit 10.03 of the
Partnership's Form 8-K (File No. 0-26282) filed with the
Securities and Exchange Commission on November 6, 2001.

13.01 Annual Report to Limited Partners for the year ended
December 31, 2002 is filed herewith.

99.01 Certification of President of Demeter Management
Corporation, 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.

99.02 Certification of Chief Financial Officer of Demeter
Management Corporation, 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.

EXHIBIT 99.01

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Morgan Stanley Charter
MSFCM L.P. (the "Partnership") on Form 10-K for the period ended
December 31, 2002, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Jeffrey A.
Rothman, President, Demeter Management Corporation, general
partner of the Partnership, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:

(1) The Report fully complies with the requirements of
Section 13 or 15(d) of the Securities Exchange Act of
1934; and

(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.

By: /s/ Jeffrey A. Rothman

Name: Jeffrey A. Rothman
Title: President

Date: March 31, 2003

EXHIBIT 99.02

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Morgan Stanley Charter
MSFCM L.P. (the "Partnership") on Form 10-K for the period ended
December 31, 2002, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Jeffrey D. Hahn,
Chief Financial Officer, Demeter Management Corporation, general
partner of the Partnership, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:

(1) The Report fully complies with the requirements of
Section 13 or 15(d) of the Securities Exchange Act of
1934; and

(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.

By: /s/ Jeffrey D. Hahn

Name: Jeffrey D. Hahn
Title: Chief Financial Officer

Date: March 31, 2003

Morgan Stanley
Charter Series

December 31, 2002
Annual Report

[LOGO] Morgan Stanley

MORGAN STANLEY CHARTER SERIES

HISTORICAL FUND PERFORMANCE

Presented below is the percentage change in Net Asset Value per Unit from the
start of every calendar year for each Fund in the Morgan Stanley Charter
Series. Also provided is the inception-to-date return and the annualized return
since inception for each Fund. Past performance is not necessarily indicative
of future results.

INCEPTION-
TO-DATE ANNUALIZED
1994 1995 1996 1997 1998 1999 2000 2001 2002 RETURN RETURN
FUND % % % % % % % % % % %
- ----------------------------------------------------------------------------------------------------

Charter Campbell -- -- -- -- -- -- -- -- (4.2) (4.2) --
(3 mos.)
- ----------------------------------------------------------------------------------------------------
Charter MSFCM... (7.3) 21.9 4.0 26.2 5.1 (9.2) 23.8 (3.3) 29.1 118.4 9.3
(10 mos.)
- ----------------------------------------------------------------------------------------------------
Charter Graham.. -- -- -- -- -- 2.9 22.0 9.7 36.8 88.4 17.9
(10 mos.)
- ----------------------------------------------------------------------------------------------------
Charter Millburn -- -- -- -- -- (7.2) 12.1 (11.3) 21.1 11.8 3.0
(10 mos.)
- ----------------------------------------------------------------------------------------------------
Charter Welton.. -- -- -- -- -- (10.7) (8.2) (13.0) 5.5 (24.8) (7.2)
(10 mos.)
- ----------------------------------------------------------------------------------------------------

DEMETER MANAGEMENT CORPORATION

825 Third Avenue, 9th Floor
New York, NY 10022
Telephone (212) 310-6444

MORGAN STANLEY CHARTER SERIES
ANNUAL REPORT
2002

Dear Limited Partner:
This marks the first annual report for Morgan Stanley Charter Campbell L.P.,
the fourth annual report for Morgan Stanley Charter Graham L.P., Morgan Stanley
Charter Millburn L.P. and Morgan Stanley Charter Welton L.P. and the ninth
annual report for Morgan Stanley Charter MSFCM L.P. The Net Asset Value per
Unit for each of the five Charter Series Funds on December 31, 2002 was
as follows:

% CHANGE
FUNDS N.A.V. FOR YEAR
--------------------------------

Charter Campbell $ 9.58 -4.2%
--------------------------------
Charter MSFCM $21.84 29.1%
--------------------------------
Charter Graham $18.84 36.8%
--------------------------------
Charter Millburn $11.18 21.1%
--------------------------------
Charter Welton $ 7.52 5.5%
--------------------------------

Since their inception in March 1999, Charter Graham has increased by 88.4% (a
compound annualized return of 17.9%), Charter Millburn has increased by 11.8%
(a compound annualized return of 3.0%) and Charter Welton has decreased by
24.8% (a compound annualized return of -7.2%). Since its inception in March
1994, Charter MSFCM has increased by 118.4% (a compound annualized return of
9.3%). Since its inception in October 2002, Charter Campbell has decreased by
4.2%.

Limited Partners are advised that, effective October 1, 2002, Morgan Stanley
Charter Campbell L.P. commenced trading as the fifth fund in the Morgan Stanley
Charter Series. Campbell & Company, Inc., the trading advisor to Charter
Campbell, utilizes its Financial, Metal & Energy Large Portfolio program on
behalf of Charter Campbell, pursuant to which it trades futures, forwards, and
options contracts using proprietary technical trading methods.

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

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

Special Notice to Limited Partners of Morgan Stanley Charter Welton L.P.

As notified under separate cover dated December 16, 2002, Limited Partners of
Morgan Stanley Charter Welton L.P. are advised that Demeter Management
Corporation, the general partner of Charter Welton, has determined to terminate
trading within the Fund effective December 31, 2002, and commence dissolution
pursuant to the Fund's Limited Partnership Agreement.

Limited Partners are advised of recent changes to the Board of Directors and
Officers of Demeter Management Corporation (the "General Partner"):

Mr. Robert E. Murray resigned the position of President of the General
Partner. Mr. Murray will, however, retain his position as Chairman of the Board
of Directors of the General Partner.

Mr. Jeffrey A. Rothman, age 41, is the President and a Director of the
General Partner. Mr. Rothman is the Executive Director of Morgan Stanley
Managed Futures, responsible for overseeing all aspects of the firm's Managed
Futures Department. He is also President and a Director of Morgan Stanley
Futures & Currency Management Inc., Morgan Stanley's internal commodity trading
advisor. Mr. Rothman has been with the Managed Futures Department for sixteen
years and most recently held the position of National Sales Manager, assisting
Branch Managers and Financial Advisors with their managed futures education,
marketing, and asset retention efforts. Throughout his career, Mr. Rothman has
helped with the development, marketing, and administration of approximately 35
commodity pool investments. Mr. Rothman is an active member of the Managed
Funds Association and serves on its Board of Directors.

Mr. Frank Zafran, age 47, is a Director of the General Partner and of Morgan
Stanley Futures & Currency Management Inc. Mr. Zafran is an Executive Director
of Morgan Stanley and, in September 2002, was named Chief Administrative
Officer of Morgan Stanley's Global Products & Services Division. Mr. Zafran
joined the firm in 1979 and held various positions in

Corporate Accounting and the Insurance Department, including Senior Operations
Officer-- Insurance Division, until his appointment in 2000 as Director of
401(k) Plan Services, responsible for all aspects of 401(k) Plan Services
including marketing, sales and operations. Mr. Zafran received a B.S. degree in
Accounting from Brooklyn College, New York.

Mr. Raymond E. Koch resigned his position of Chief Financial Officer of the
General Partner.

Mr. Jeffrey D. Hahn, age 45, was named Chief Financial Officer of the General
Partner. Mr. Hahn began his career at Morgan Stanley in 1992 and is currently
an Executive Director responsible for the management and supervision of the
accounting, reporting, tax and finance functions for the firm's private equity,
managed futures, and certain legacy real estate investing activities. He is
also Chief Financial Officer of Morgan Stanley Futures & Currency Management
Inc. From August 1984 through May 1992, Mr. Hahn held various positions as an
auditor at Coopers & Lybrand, specializing in manufacturing businesses and
venture capital organizations. Mr. Hahn received his B.A. in Economics from St.
Lawrence University in 1979, an M.B.A. from Pace University in 1984, and is a
Certified Public Accountant.

Should you have any questions concerning this report, please feel free to
contact Demeter Management Corporation, 825 Third Avenue, 9th Floor, New York,
NY 10022 or your Morgan Stanley Financial Advisor.

I hereby affirm, that to the best of my knowledge and belief, the information
contained in this report is accurate and complete. Past performance is not a
guarantee of future results.

Sincerely,

/s/ Jeffrey A. Rothman
Jeffrey A. Rothman
President
Demeter Management Corporation
General Partner

CHARTER CAMPBELL

[CHART]

Year ended
December 31, 2002
-----------------
Currencies 2.76%
Interest Rates 0.64%
Stock Indices -1.36%
Energies -4.18%
Metals 0.12%

Note: Reflects trading results only and does not include fees or interest
income.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the currency markets, gains were recorded from long positions in the euro
and British pound versus the U.S. dollar as the dollar's value weakened amid
investors' fears concerning increased global tensions.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the energy futures markets, losses resulted from both long and short
futures positions in crude oil amid price volatility caused by tensions with
Iraq and concerns regarding output from Venezuela. Additional losses were
recorded from long futures positions in heating oil as prices moved lower
during October as geopolitical and weather related concerns temporarily
subsided.

.. In the global stock index futures markets, losses were recorded from short
positions in European, U.S., and Asian stock index futures as prices
reversed higher during October amid short-lived optimism regarding an
economic recovery.

CHARTER MSFCM

[CHART]

Year ended
December 31, 2002
-----------------
Currencies 21.66%
Interest Rates 23.28%
Stock Indices -0.43%
Energies 1.27%
Metals -6.52%

Note: Reflects trading results only and does not include fees or interest
income.

FACTORS INFLUENCING ANNUAL TRADING GAINS:

.. In the global interest rate futures markets, long positions in European,
Japanese, and U.S. interest rate futures resulted in gains during the period
from June through September, as well as in December, as prices trended
higher amid increased demand among investors seeking the safe haven of fixed
income investments.

.. In the currency markets, gains were recorded from long positions in the
Swiss franc, euro, Japanese yen, and Swedish krona relative to the U.S.
dollar as the dollar weakened due to continued uncertainty regarding a U.S.
economic recovery. Additional currency gains were recorded from long
positions in the euro versus the British pound.

.. In the energy futures markets, long positions in crude oil futures resulted
in gains, primarily in March, as tensions in the Middle East and
supply/demand concerns placed upward pressure on prices.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:

.. In the metals futures markets, losses were recorded from positions in
aluminum futures as prices moved without consistent direction throughout a
majority of the year amid shifting supply and demand concerns.

CHARTER GRAHAM

[CHART]

Year ended
December 31, 2002
-----------------
Currencies 21.35%
Interest Rates 23.40%
Stock Indices 6.10%
Energies -3.68%
Metals -4.89%
Agriculturals 6.59%

Note: Reflects trading results only and does not include fees or interest
income.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the global interest rate futures markets, gains were recorded from long
positions in European and U.S. interest rate futures as prices trended
higher, during the period from June through September, as well as in
December, drawing strong support from falling equity prices, increased
economic uncertainty, and global tensions.
.. In the currency markets, gains were recorded from long positions in the euro
and Swiss franc versus the U.S. dollar as the value of the dollar weakened
during May, June, and December, prompted by pessimism regarding a U.S.
economic recovery and increased global tension concerning India, Pakistan,
Iraq, and North Korea.
.. In the agricultural futures markets, gains were recorded from long positions
in corn and wheat futures as prices trended higher during the third quarter
amid fears that continued hot-dry weather would have an adverse effect on
crops in the U.S. midwest.
.. In the global stock index futures markets, gains were recorded from short
positions in U.S. and European stock index futures, primarily in July and
September, as prices moved lower amid suspicions regarding corporate
accounting practices and skepticism surrounding a global economic recovery.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the metals futures markets, losses were recorded from positions in
copper, nickel and zinc futures as prices moved without consistent direction
throughout a majority of the year amid shifting supply and demand concerns.
.. In the energy futures markets, losses were recorded from long positions in
crude oil futures as prices reversed lower during May and October amid a
temporary easing of tensions between the U.S. and Iraq.

CHARTER MILLBURN

[CHART]

Year ended
December 31, 2002
-----------------
Currencies 11.22%
Interest Rates 18.37%
Stock Indices 1.71%
Energies -0.39%
Metals -0.54%
Agriculturals -2.42%

Note: Reflects trading results only and does not include fees or interest
income.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the global interest rate futures markets, gains were recorded during the
period from June through September, as well as in December, from long
positions in European, U.S., and Japanese interest rate futures as prices
trended higher amid increased demand among investors seeking the safe haven
of fixed income investments.
.. In the currency markets, gains were recorded from long positions in euro,
Swiss franc, and Singapore dollar versus the U.S. dollar as the value of the
dollar weakened during May, June, and December amid concerns regarding the
U.S. economic recovery and escalating tensions involving Iraq and North
Korea.
.. In the global stock index futures markets, gains were recorded from short
positions in European and U.S. stock index futures as equity prices trended
lower throughout a majority of the year amid continued uncertainty regarding
a global economic recovery.
FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the agricultural futures markets, losses were incurred throughout the
first and second quarter from long positions in sugar futures as prices
initially declined and then moved erratically amid rumors of
larger-than-expected Brazilian exports.

CHARTER WELTON

[CHART]

Year ended
December 31, 2002
-----------------
Currencies -5.22%
Interest Rates 34.23%
Stock Indices -4.42%
Energies -3.24%
Metals -1.86%
Agriculturals -3.90%

Note: Reflects trading results only and does not include fees or interest
income.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the global interest rate futures markets, gains were recorded during the
second half of the year from long positions in European, U.S., and Japanese
interest rate futures as prices trended higher in reaction to falling equity
prices, increased economic uncertainty, and global political tensions.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the currency markets, losses were incurred early in the year from short
positions in the euro relative to the U.S. dollar as the euro reversed
higher amid weakness in U.S equities and improved European economic
confidence. The Japanese yen also reversed higher versus the U.S. dollar
early in the year amid yen repatriation, resulting in losses from short yen
positions. Additional losses resulted from long euro/Japanese yen crossrate
positions.
.. In the global stock index futures markets, losses were recorded during the
first six months of the year from short positions in Japanese stock index
futures as prices increased amid renewed optimism regarding a Japanese
economic recovery. Additional losses resulted from positions in U.S. stock
index futures as equity prices experienced volatility throughout the year.
.. In the agricultural futures markets, short positions in coffee futures
resulted in losses during October as prices increased amid news of lower
supply resulting from Brazilian drought stress.
.. In the energy futures markets, losses were experienced from long positions
in crude oil futures as prices reversed lower in May amid a temporary easing
of tensions in the Middle East and supply concerns.

MORGAN STANLEY CHARTER SERIES

INDEPENDENT AUDITORS' REPORT

To the Limited Partners and the General Partner of Morgan Stanley Charter
Campbell L.P., Morgan Stanley Charter MSFCM L.P., Morgan Stanley Charter Graham
L.P., Morgan Stanley Charter Millburn L.P. and Morgan Stanley Charter Welton
L.P.:

We have audited the accompanying statement of financial condition, including
the schedule of investments, of Morgan Stanley Charter Campbell L.P. as of
December 31, 2002, and the statements of financial condition, including the
schedules of investments, of Morgan Stanley Charter MSFCM L.P., Morgan Stanley
Charter Graham L.P., Morgan Stanley Charter Millburn L.P. and Morgan Stanley
Charter Welton L.P., (collectively, the "Partnerships") as of December 31, 2002
and 2001, and the related statements of operations, changes in partners'
capital, and cash flows for each of the three years in the period ended
December 31, 2002 for Morgan Stanley Charter MSFCM L.P., Morgan Stanley Charter
Graham L.P., Morgan Stanley Charter Millburn L.P., and Morgan Stanley Charter
Welton L.P., and for the period from October 1, 2002 (commencement of
operations) to December 31, 2002 for Morgan Stanley Charter Campbell L.P. These
financial statements are the responsibility of the Partnerships' management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Morgan Stanley Charter Campbell L.P. as of
December 31, 2002, of Morgan Stanley Charter MSFCM L.P., Morgan Stanley Charter
Graham L.P., Morgan Stanley Charter Millburn L.P. and Morgan Stanley Charter
Welton L.P. as of December 31, 2002 and 2001, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2002 for Morgan Stanley Charter MSFCM L.P., Morgan Stanley Charter
Graham L.P., Morgan Stanley Charter Millburn L.P., and Morgan Stanley Charter
Welton L.P. and for the period from October 1, 2002 (commencement of
operations) to December 31, 2002 for Morgan Stanley Charter Campbell L.P. in
conformity with accounting principles generally accepted in the United States
of America.

/s/ Deloitte & Touche LLP

New York, New York
February 14, 2003

MORGAN STANLEY CHARTER CAMPBELL L.P.

STATEMENT OF FINANCIAL CONDITION

DECEMBER 31,
2002
------------
$

ASSETS
Equity in futures interests trading accounts:
Cash 15,406,094
Net unrealized gain on open contracts (MS&Co.) 500,205
Net unrealized loss on open contracts (MSIL) (3,518)
----------
Total net unrealized gain on open contracts 496,687
----------
Total Trading Equity 15,902,781
Subscriptions receivable 3,827,157
Interest receivable (Morgan Stanley DW) 13,716
----------
Total Assets 19,743,654
==========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Accrued brokerage fee (Morgan Stanley DW) 85,912
Accrued management fee 35,002
Redemptions payable 20,297
----------
Total Liabilities 141,211
----------
PARTNERS' CAPITAL
Limited Partners (2,023,938.819 Units) 19,384,720
General Partner (22,732.308 Units) 217,723
----------
Total Partners' Capital 19,602,443
----------
Total Liabilities and Partners' Capital 19,743,654
==========
NET ASSET VALUE PER UNIT 9.58
==========

STATEMENT OF OPERATIONS

FOR THE PERIOD
FROM
OCTOBER 1, 2002
(COMMENCEMENT
OF OPERATIONS) TO
DECEMBER 31,
2002
-----------------
$

REVENUES
Trading profit (loss):
Realized (424,353)
Net change in unrealized 496,687
--------
Total Trading Results 72,334
Interest income (Morgan Stanley DW) 35,475
--------
Total 107,809
--------
EXPENSES
Brokerage fees (Morgan Stanley DW) 201,253
Management fees 81,992
--------
Total 283,245
--------
NET LOSS (175,436)
========
Net Loss Allocation
Limited Partners (173,159)
General Partner (2,277)
Net Loss per Unit
Limited Partners (0.42)
General Partner (0.42)

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

MORGAN STANLEY CHARTER MSFCM L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
----------------------
2002 2001
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 73,899,220 43,273,083
Net unrealized gain on open contracts (MS&Co.) 9,592,834 47,467
Net unrealized loss on open contracts (MSIL) (2,026,931) (1,148,932)
---------- ----------
Total net unrealized gain (loss) on open contracts 7,565,903 (1,101,465)
---------- ----------
Total Trading Equity 81,465,123 42,171,618
Subscriptions receivable 3,667,007 1,275,759
Interest receivable (Morgan Stanley DW) 78,484 66,817
---------- ----------
Total Assets 85,210,614 43,514,194
========== ==========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Accrued brokerage fees (Morgan Stanley DW) 428,726 252,816
Redemptions payable 276,125 789,197
Accrued management fees (MSFCM) 127,030 72,233
---------- ----------
Total Liabilities 831,881 1,114,246
---------- ----------
PARTNERS' CAPITAL
Limited Partners (3,820,623.306 and 2,471,774.794
Units, respectively) 83,443,360 41,832,302
General Partner (42,827.965 and 33,540.900 Units,
respectively) 935,373 567,646
---------- ----------
Total Partners' Capital 84,378,733 42,399,948
---------- ----------
Total Liabilities and Partners' Capital 85,210,614 43,514,194
========== ==========
NET ASSET VALUE PER UNIT 21.84 16.92
========== ==========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
2002 2001 2000
---------- ---------- ----------
$ $ $

REVENUES
Trading profit (loss):
Realized 12,083,168 5,807,007 5,655,002
Net change in unrealized 8,667,368 (4,973,466) 3,263,304
Proceeds from Litigation Settlement 292,406 -- --
---------- ---------- ----------
Total Trading Results 21,042,942 833,541 8,918,306
Interest income (Morgan Stanley DW) 937,878 1,431,775 1,611,060
---------- ---------- ----------
Total 21,980,820 2,265,316 10,529,366
---------- ---------- ----------
EXPENSES
Brokerage fees (Morgan Stanley DW) 3,858,279 2,759,119 1,821,573
Incentive fees (MSFCM) 2,582,720 148,065 205,168
Management fees (MSFCM) 1,132,395 788,319 982,932
Transaction fees and costs -- -- 83,748
Administrative expenses -- -- 66,000
---------- ---------- ----------
Total 7,573,394 3,695,503 3,159,421
---------- ---------- ----------
NET INCOME (LOSS) 14,407,426 (1,430,187) 7,369,945
========== ========== ==========
Net Income (Loss) Allocation:
Limited Partners 14,239,699 (1,410,776) 7,257,147
General Partner 167,727 (19,411) 112,798
Net Income (Loss) per Unit (Note 1):
Limited Partners 4.92 (0.58) 3.36
General Partner 4.92 (0.58) 3.36

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

MORGAN STANLEY CHARTER GRAHAM L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
-----------------------
2002 2001
----------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 104,510,473 45,247,504
Net unrealized gain on open contracts (MS&Co.) 9,176,225 1,617,509
Net unrealized loss on open contracts (MSIL) (1,963,300) (751,401)
----------- ----------
Total net unrealized gain on open contracts 7,212,925 866,108
----------- ----------
Total Trading Equity 111,723,398 46,113,612
Subscriptions receivable 5,780,876 2,428,001
Interest receivable (Morgan Stanley DW) 113,169 69,554
----------- ----------
Total Assets 117,617,443 48,611,167
=========== ==========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Accrued brokerage fees (Morgan Stanley DW) 570,067 264,953
Redemptions payable 482,247 329,746
Accrued management fees 168,909 75,700
----------- ----------
Total Liabilities 1,221,223 670,399
----------- ----------
PARTNERS' CAPITAL
Limited Partners (6,112,309.183 and
3,443,452.290 Units, respectively) 115,164,948 47,429,838
General Partner (65,349.049 and 37,094.046 Units,
respectively) 1,231,272 510,930
----------- ----------
Total Partners' Capital 116,396,220 47,940,768
----------- ----------
Total Liabilities and Partners' Capital 117,617,443 48,611,167
=========== ==========
NET ASSET VALUE PER UNIT 18.84 13.77
=========== ==========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
2002 2001 2000
---------- ---------- ---------
$ $ $

REVENUES
Trading profit (loss):
Realized 26,923,850 9,678,296 4,638,274
Net change in unrealized 6,346,817 (2,549,392) 2,344,969
---------- ---------- ---------
Total Trading Results 33,270,667 7,128,904 6,983,243
Interest income (Morgan Stanley DW) 1,164,347 1,250,516 1,242,395
---------- ---------- ---------
Total 34,435,014 8,379,420 8,225,638
---------- ---------- ---------
EXPENSES
Brokerage fees (Morgan Stanley DW) 4,751,864 2,476,549 1,517,906
Incentive fees 3,660,660 1,936,526 950,165
Management fees 1,395,472 707,585 433,688
---------- ---------- ---------
Total 9,807,996 5,120,660 2,901,759
---------- ---------- ---------
NET INCOME 24,627,018 3,258,760 5,323,879
========== ========== =========
Net Income Allocation:
Limited Partners 24,356,676 3,223,806 5,265,407
General Partner 270,342 34,954 58,472
Net Income per Unit:
Limited Partners 5.07 1.22 2.26
General Partner 5.07 1.22 2.26

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

MORGAN STANLEY CHARTER MILLBURN L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
----------------------
2002 2001
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 40,616,156 28,407,799
Net unrealized gain on open contracts (MS&Co.) 2,778,058 1,741,218
Net unrealized loss on open contracts (MSIL) (136,681) (306,488)
---------- ----------
Total net unrealized gain on open contracts 2,641,377 1,434,730
---------- ----------
Total Trading Equity 43,257,533 29,842,529
Subscriptions receivable 1,528,398 812,001
Interest receivable (Morgan Stanley DW) 48,632 46,476
---------- ----------
Total Assets 44,834,563 30,701,006
========== ==========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 266,141 264,713
Accrued brokerage fees (Morgan Stanley DW) 222,620 169,316
Accrued management fees 65,961 48,376
---------- ----------
Total Liabilities 554,722 482,405
---------- ----------
PARTNERS' CAPITAL
Limited Partners (3,916,281.429 and 3,239,320.452
Units, respectively) 43,800,015 29,883,431
General Partner (42,902.576 and 36,331.944 Units,
respectively) 479,826 335,170
---------- ----------
Total Partners' Capital 44,279,841 30,218,601
---------- ----------
Total Liabilities and Partners' Capital 44,834,563 30,701,006
========== ==========
NET ASSET VALUE PER UNIT 11.18 9.23
========== ==========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------
2002 2001 2000
--------- ---------- ---------
$ $ $

REVENUES
Trading profit (loss):
Realized 8,189,036 1,548,568 76,367
Net change in unrealized 1,206,647 (3,536,111) 4,050,018
--------- ---------- ---------
Total Trading Results 9,395,683 (1,987,543) 4,126,385
Interest income (Morgan Stanley DW) 603,947 1,143,337 1,404,756
--------- ---------- ---------
Total 9,999,630 (844,206) 5,531,141
--------- ---------- ---------
EXPENSES
Brokerage fees (Morgan Stanley DW) 2,355,852 2,168,012 1,699,726
Management fees 690,564 619,432 485,636
Incentive fees 99,341 -- --
--------- ---------- ---------
Total 3,145,757 2,787,444 2,185,362
--------- ---------- ---------
NET INCOME (LOSS) 6,853,873 (3,631,650) 3,345,779
========= ========== =========
Net Income (Loss) Allocation:
Limited Partners 6,779,217 (3,592,200) 3,310,250
General Partner 74,656 (39,450) 35,529
Net Income (Loss) per Unit:
Limited Partners 1.95 (1.17) 1.12
General Partner 1.95 (1.17) 1.12

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

MORGAN STANLEY CHARTER WELTON L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
----------------------
2002 2001
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 13,824,708 17,326,697
Net unrealized gain (loss) on open contracts
(MS&Co.) (42,663) 602,122
Net unrealized loss on open contracts (MSIL) (169,395) (476,077)
---------- ----------
Total net unrealized gain (loss) on open contracts (212,058) 126,045
Net option premiums -- (185,228)
---------- ----------
Total Trading Equity 13,612,650 17,267,514
Interest receivable (Morgan Stanley DW) 14,116 28,300
Subscriptions receivable -- 75,500
---------- ----------
Total Assets 13,626,766 17,371,314
========== ==========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 2,640,845 586,655
Accrued brokerage fees (Morgan Stanley DW) 66,156 102,343
Accrued management fees 19,602 29,240
---------- ----------
Total Liabilities 2,726,603 718,238
---------- ----------
PARTNERS' CAPITAL
Limited Partners (1,417,975.251 and 2,303,418.240
Units, respectively) 10,656,722 16,422,138
General Partner (32,392.072 Units) 243,441 230,938
---------- ----------
Total Partners' Capital 10,900,163 16,653,076
---------- ----------
Total Liabilities and Partners' Capital 13,626,766 17,371,314
========== ==========
NET ASSET VALUE PER UNIT 7.52 7.13
========== ==========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
2002 2001 2000
--------- ---------- ----------
$ $ $

REVENUES
Trading profit (loss):
Realized 1,955,548 1,237,257 (2,859,783)
Net change in unrealized (338,103) (3,175,394) 1,578,590
--------- ---------- ----------
Total Trading Results 1,617,445 (1,938,137) (1,281,193)
Interest income (Morgan Stanley DW) 255,994 764,243 1,274,899
--------- ---------- ----------
Total 1,873,439 (1,173,894) (6,294)
--------- ---------- ----------
EXPENSES
Brokerage fees (Morgan Stanley DW) 993,084 1,369,546 1,547,098
Management fees 290,454 391,300 442,028
--------- ---------- ----------
Total 1,283,538 1,760,846 1,989,126
--------- ---------- ----------
NET INCOME (LOSS) 589,901 (2,934,740) (1,995,420)
========= ========== ==========
Net Income (Loss) Allocation:
Limited Partners 577,398 (2,900,116) (1,972,281)
General Partner 12,503 (34,624) (23,139)
Net Income (Loss) per Unit:
Limited Partners 0.39 (1.07) (0.73)
General Partner 0.39 (1.07) (0.73)

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

MORGAN STANLEY CHARTER CAMPBELL L.P.

STATEMENT OF CHANGES IN PARTNERS' CAPITAL

FOR THE PERIOD FROM OCTOBER 1, 2002 (COMMENCEMENT OF OPERATIONS) TO DECEMBER
31, 2002

UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
------------- ---------- ------- ----------
$ $ $

Partners' Capital,
Initial Offering 832,786.300 8,227,863 100,000 8,327,863
Offering of Units 1,216,003.471 11,350,313 120,000 11,470,313
Net loss -- (173,159) (2,277) (175,436)
Redemptions (2,118.644) (20,297) -- (20,297)
------------- ---------- ------- ----------
Partners' Capital,
December 31, 2002 2,046,671.127 19,384,720 217,723 19,602,443
============= ========== ======= ==========

MORGAN STANLEY CHARTER MSFCM L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
------------- ---------- ------- ----------
(NOTE 1) $ $ $

Partners' Capital,
December 31, 1999 2,559,116.400 35,710,955 474,259 36,185,214
Offering of Units 21,412.187 343,831 -- 343,831
Net income -- 7,257,147 112,798 7,369,945
Redemptions (444,728.953) (6,516,679) -- (6,516,679)
------------- ---------- ------- ----------
Partners' Capital,
December 31, 2000 2,135,799.634 36,795,254 587,057 37,382,311
Offering of Units 619,493.785 10,799,873 -- 10,799,873
Net loss -- (1,410,776) (19,411) (1,430,187)
Redemptions (249,977.725) (4,352,049) -- (4,352,049)
------------- ---------- ------- ----------
Partners' Capital,
December 31, 2001 2,505,315.694 41,832,302 567,646 42,399,948
Offering of Units 1,650,078.947 33,075,899 200,000 33,275,899
Net income -- 14,239,699 167,727 14,407,426
Redemptions (291,943.370) (5,704,540) -- (5,704,540)
------------- ---------- ------- ----------
Partners' Capital,
December 31, 2002 3,863,451.271 83,443,360 935,373 84,378,733
============= ========== ======= ==========

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

MORGAN STANLEY CHARTER GRAHAM L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
------------- ----------- --------- -----------
$ $ $

Partners' Capital,
December 31, 1999 2,007,335.985 20,424,608 236,504 20,661,112
Offering of Units 768,712.178 7,657,343 30,000 7,687,343
Net income -- 5,265,407 58,472 5,323,879
Redemptions (484,404.373) (4,901,176) -- (4,901,176)
------------- ----------- --------- -----------
Partners' Capital,
December 31, 2000 2,291,643.790 28,446,182 324,976 28,771,158
Offering of Units 1,560,633.916 20,661,938 151,000 20,812,938
Net income -- 3,223,806 34,954 3,258,760
Redemptions (371,731.370) (4,902,088) -- (4,902,088)
------------- ----------- --------- -----------
Partners' Capital,
December 31, 2001 3,480,546.336 47,429,838 510,930 47,940,768
Offering of Units 3,256,032.080 52,245,849 450,000 52,695,849
Net income -- 24,356,676 270,342 24,627,018
Redemptions (558,920.184) (8,867,415) -- (8,867,415)
------------- ----------- --------- -----------
Partners' Capital,
December 31, 2002 6,177,658.232 115,164,948 1,231,272 116,396,220
============= =========== ========= ===========

MORGAN STANLEY CHARTER MILLBURN L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
------------- ---------- ------- ----------
$ $ $

Partners' Capital,
December 31, 1999 2,510,210.431 23,039,629 264,091 23,303,720
Offering of Units 993,751.374 8,793,482 25,000 8,818,482
Net income -- 3,310,250 35,529 3,345,779
Redemptions (639,474.070) (5,685,382) -- (5,685,382)
------------- ---------- ------- ----------
Partners' Capital,
December 31, 2000 2,864,487.735 29,457,979 324,620 29,782,599
Offering of Units 905,670.879 9,005,536 50,000 9,055,536
Net loss -- (3,592,200) (39,450) (3,631,650)
Redemptions (494,506.218) (4,987,884) -- (4,987,884)
------------- ---------- ------- ----------
Partners' Capital,
December 31, 2001 3,275,652.396 29,883,431 335,170 30,218,601
Offering of Units 1,249,986.726 12,765,966 70,000 12,835,966
Net income -- 6,779,217 74,656 6,853,873
Redemptions (566,455.117) (5,628,599) -- (5,628,599)
------------- ---------- ------- ----------
Partners' Capital,
December 31, 2002 3,959,184.005 43,800,015 479,826 44,279,841
============= ========== ======= ==========

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

MORGAN STANLEY CHARTER WELTON L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
-------------- ---------- ------- ----------
$ $ $

Partners' Capital,
December 31, 1999 2,584,100.171 22,813,660 263,701 23,077,361
Offering of Units 866,731.444 7,100,282 25,000 7,125,282
Net loss -- (1,972,281) (23,139) (1,995,420)
Redemptions (729,623.322) (5,897,782) -- (5,897,782)
-------------- ---------- ------- ----------
Partners' Capital,
December 31, 2000 2,721,208.293 22,043,879 265,562 22,309,441
Offering of Units 409,666.930 2,990,346 -- 2,990,346
Net loss -- (2,900,116) (34,624) (2,934,740)
Redemptions (795,064.911) (5,711,971) -- (5,711,971)
-------------- ---------- ------- ----------
Partners' Capital,
December 31, 2001 2,335,810.312 16,422,138 230,938 16,653,076
Offering of Units 273,158.163 1,857,568 -- 1,857,568
Net income -- 577,398 12,503 589,901
Redemptions (1,158,601.152) (8,200,382) -- (8,200,382)
-------------- ---------- ------- ----------
Partners' Capital,
December 31, 2002 1,450,367.323 10,656,722 243,441 10,900,163
============== ========== ======= ==========

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

MORGAN STANLEY CHARTER CAMPBELL L.P.

STATEMENT OF CASH FLOWS

FOR THE PERIOD
FROM OCTOBER 1, 2002
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31,
2002
--------------------
$

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (175,436)
Noncash item included in net loss:
Net change in unrealized (496,687)
Increase in operating assets:
Interest receivable (Morgan Stanley DW) (13,716)
Increase in operating liabilities:
Accrued brokerage fee (Morgan Stanley DW) 85,912
Accrued management fee 35,002
----------
Net cash used for operating activities (564,925)
----------
CASH FLOWS FROM FINANCING ACTIVITIES
Initial offering 8,327,863
Offering of Units 11,470,313
Increase in subscriptions receivable (3,827,157)
Increase in redemptions payable 20,297
Redemptions of Units (20,297)
----------
Net cash provided by financing activities 15,971,019
----------

Net increase in cash 15,406,094
Balance at beginning of period --
----------
Balance at end of period 15,406,094
==========

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

MORGAN STANLEY CHARTER MSFCM L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
2002 2001 2000
---------- ---------- ----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) 14,407,426 (1,430,187) 7,369,945
Noncash item included in net
income (loss):
Net change in unrealized (8,667,368) 4,973,466 (3,263,304)
(Increase) decrease in operating
assets:
Interest receivable
(Morgan Stanley DW) (11,667) 116,097 (52,908)
Increase (decrease) in operating
liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 175,910 68,395 184,421
Accrued management fees
(MSFCM) 54,797 19,541 (39,318)
Accrued incentive fees (MSFCM) -- (205,168) 205,168
Accrued administrative expenses -- -- (70,250)
---------- ---------- ----------
Net cash provided by operating
activities 5,959,098 3,542,144 4,333,754
---------- ---------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 33,275,899 10,799,873 343,831
Increase in subscriptions receivable (2,391,248) (1,082,400) (193,359)
Increase (decrease) in redemptions
payables (513,072) (141,583) 404,024
Redemptions of Units (5,704,540) (4,352,049) (6,516,679)
---------- ---------- ----------
Net cash provided by (used for)
financing activities 24,667,039 5,223,841 (5,962,183)
---------- ---------- ----------

Net increase (decrease) in cash 30,626,137 8,765,985 (1,628,429)
Balance at beginning of period 43,273,083 34,507,098 36,135,527
---------- ---------- ----------
Balance at end of period 73,899,220 43,273,083 34,507,098
========== ========== ==========

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

MORGAN STANLEY CHARTER GRAHAM L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
2002 2001 2000
----------- ---------- ----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income 24,627,018 3,258,760 5,323,879
Noncash item included in net
income:
Net change in unrealized (6,346,817) 2,549,392 (2,344,969)
(Increase) decrease in operating
assets:
Interest receivable
(Morgan Stanley DW) (43,615) 72,477 (63,257)
Increase (decrease) in operating
liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 305,114 115,492 41,311
Accrued management fees 93,209 32,997 11,803
Accrued incentive fees -- (860,827) 860,827
----------- ---------- ----------
Net cash provided by operating
activities 18,634,909 5,168,291 3,829,594
----------- ---------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 52,695,849 20,812,938 7,687,343
(Increase) decrease in subscriptions
receivable (3,352,875) (2,175,483) 558,682
Increase (decrease) in redemptions
payable 152,501 (226,515) 328,118
Redemptions of Units (8,867,415) (4,902,088) (4,901,176)
----------- ---------- ----------
Net cash provided by financing
activities 40,628,060 13,508,852 3,672,967

----------- ---------- ----------

Net increase in cash 59,262,969 18,677,143 7,502,561
Balance at beginning of period 45,247,504 26,570,361 19,067,800
----------- ---------- ----------
Balance at end of period 104,510,473 45,247,504 26,570,361
=========== ========== ==========

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

MORGAN STANLEY CHARTER MILLBURN L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
2002 2001 2000
---------- ---------- ----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) 6,853,873 (3,631,650) 3,345,779
Noncash item included in net
income (loss):
Net change in unrealized (1,206,647) 3,536,111 (4,050,018)
(Increase) decrease in operating
assets:
Interest receivable
(Morgan Stanley DW) (2,156) 95,074 (45,348)
Increase in operating liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 53,304 19,109 20,836
Accrued management fees 17,585 5,460 5,953

---------- ---------- ----------
Net cash provided by (used for)
operating activities 5,715,959 24,104 (722,798)
---------- ---------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 12,835,966 9,055,536 8,818,482
(Increase) decrease in subscriptions
receivable (716,397) (409,676) 610,910
Increase (decrease) in redemptions
payable 1,428 (354,584) 381,322
Redemptions of Units (5,628,599) (4,987,884) (5,685,382)
---------- ---------- ----------
Net cash provided by financing
activities 6,492,398 3,303,392 4,125,332
---------- ---------- ----------

Net increase in cash 12,208,357 3,327,496 3,402,534
Balance at beginning of period 28,407,799 25,080,303 21,677,769
---------- ---------- ----------
Balance at end of period 40,616,156 28,407,799 25,080,303
========== ========== ==========

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

MORGAN STANLEY CHARTER WELTON L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
2002 2001 2000
---------- ---------- ----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) 589,901 (2,934,740) (1,995,420)
Noncash item included in net
income (loss):
Net change in unrealized 338,103 3,175,394 (1,578,590)
(Increase) decrease in operating
assets:
Net option premiums (185,228) 129,234 459,306
Interest receivable
(Morgan Stanley DW) 14,184 82,506 (27,259)
Decrease in operating liabilities:
Accrued brokerage fees
(Morgan Stanley DW) (36,187) (17,538) (967)
Accrued management fees (9,638) (5,012) (276)
---------- ---------- ----------
Net cash provided by (used for)
operating activities 711,135 429,844 (3,143,206)
---------- ---------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 1,857,568 2,990,346 7,125,282
Decrease in subscriptions receivable 75,500 189,550 683,374
Increase (decrease) in redemptions
payable 2,054,190 (185,175) 549,196
Redemptions of Units (8,200,382) (5,711,971) (5,897,782)
---------- ---------- ----------
Net cash provided by (used for)
financing activities (4,213,124) (2,717,250) 2,460,070
---------- ---------- ----------

Net decrease in cash (3,501,989) (2,287,406) (683,136)
Balance at beginning of period 17,326,697 19,614,103 20,297,239
---------- ---------- ----------
Balance at end of period 13,824,708 17,326,697 19,614,103
========== ========== ==========

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

MORGAN STANLEY CHARTER CAMPBELL L.P.

SCHEDULE OF INVESTMENTS

DECEMBER 31, 2002

PARTNERSHIP NET ASSETS: $19,602,443

LONG SHORT NET UNREALIZED PERCENTAGE OF # OF CONTRACTS/
Futures and Forward Contracts: GAIN/(LOSS) GAIN/(LOSS) GAIN/(LOSS) NET ASSETS NOTIONAL AMOUNTS
- ------------------------------ ----------- ----------- -------------- ------------- ----------------
$ $ $ %

Foreign currency 1,050,080 (806,523) 243,557 1.24 706,700,000
Interest rate 212,714 -- 212,714 1.09 332
Commodity 19,382 -- 19,382 0.10 172
Equity (8,180) 31,175 22,995 0.12 37
--------- -------- ------- ----
Grand Total: 1,273,996 (775,348) 498,648 2.55
========= ======== ====
Unrealized Currency Loss (1,961)
-------
Total Net Unrealized Gain per Statement of
Financial Condition 496,687
=======

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

MORGAN STANLEY CHARTER MSFCM L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2002 AND 2001

FUTURES AND FORWARD CONTRACTS: LONG GAIN/(LOSS) SHORT GAIN/(LOSS) NET UNREALIZED GAIN/(LOSS)
- ------------------------------ ---------------- ----------------- --------------------------
2002 PARTNERSHIP NET ASSETS: $84,378,733 $ $ $

Foreign currency 7,543,280 -- 7,543,280
Interest rate 2,252,650 -- 2,252,650
Commodity (2,010,612) -- (2,010,612)
---------- --------- ----------
Grand Total: 7,785,318 -- 7,785,318
========== =========
Unrealized Currency Loss (219,415)
----------
Total Net Unrealized Gain per Statement of
Financial Condition 7,565,903
==========

2001 PARTNERSHIP NET ASSETS: $42,399,948
Foreign currency (1,557,847) 1,193,718 (364,129)
Interest rate -- 311,908 311,908
Commodity (1,148,932) 183,470 (965,462)
---------- --------- ----------
Grand Total: (2,706,779) 1,689,096 (1,017,683)
========== =========
Unrealized Currency Loss (83,782)
----------
Total Net Unrealized Loss per Statement of
Financial Condition (1,101,465)
==========

# OF CONTRACTS/
FUTURES AND FORWARD CONTRACTS: PERCENTAGE OF NET ASSETS NOTIONAL AMOUNTS
- ------------------------------ ------------------------ ----------------
2002 PARTNERSHIP NET ASSETS: $84,378,733 %

Foreign currency 8.94* 4,785,991,256
Interest rate 2.67 2,072
Commodity (2.38) 1,640
-----
Grand Total: 9.23
=====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of
Financial Condition

2001 PARTNERSHIP NET ASSETS: $42,399,948
Foreign currency (0.86) 2,268,192,000
Interest rate 0.74 792
Commodity (2.28) 467
-----
Grand Total: (2.40)
=====
Unrealized Currency Loss

Total Net Unrealized Loss per Statement of
Financial Condition

* No single contract's value exceeds 5% of Net Assets.

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

MORGAN STANLEY CHARTER GRAHAM L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2002 AND 2001

- -

FUTURES AND FORWARD CONTRACTS: LONG GAIN/(LOSS) SHORT GAIN/(LOSS) NET UNREALIZED GAIN/(LOSS)
- ------------------------------ ---------------- ----------------- --------------------------
2002 PARTNERSHIP NET ASSETS: $116,396,220 $ $ $

Foreign currency 4,830,579 514,624 5,345,203
Interest rate 2,471,036 (55,922) 2,415,114
Commodity (936,619) 497,138 (439,481)
Equity -- 452,280 452,280
--------- --------- ---------
Grand Total: 6,364,996 1,408,120 7,773,116
========= =========
Unrealized Currency Loss (560,191)
---------
Total Net Unrealized Gain per Statement of
Financial Condition 7,212,925
=========

2001 PARTNERSHIP NET ASSETS: $47,940,768
Foreign currency 934,741 1,007,431 1,942,172
Interest rate (55,801) (92,474) (148,275)
Commodity (633,879) (36,080) (669,959)
Equity 14,300 (40,973) (26,673)
--------- --------- ---------
Grand Total: 259,361 837,904 1,097,265
========= =========
Unrealized Currency Loss (231,157)
---------
Total Net Unrealized Gain per Statement of
Financial Condition 866,108
=========

- -

FUTURES AND FORWARD CONTRACTS: PERCENTAGE OF NET ASSETS # OF CONTRACTS/NOTIONAL AMOUNTS
- ------------------------------ ------------------------ -------------------------------
2002 PARTNERSHIP NET ASSETS: $116,396,220 %

Foreign currency 4.59 7,282,618,804
Interest rate 2.07 5,116
Commodity (0.38) 3,065
Equity 0.39 455
-----
Grand Total: 6.67
=====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of
Financial Condition

2001 PARTNERSHIP NET ASSETS: $47,940,768
Foreign currency 4.05 2,398,800,974
Interest rate (0.31) 3,454
Commodity (1.40) 1,241
Equity (0.05) 62
-----
Grand Total: 2.29
=====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of
Financial Condition

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

MORGAN STANLEY CHARTER MILLBURN L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2002 AND 2001

FUTURES AND FORWARD CONTRACTS: LONG GAIN/(LOSS) SHORT GAIN/(LOSS) NET UNREALIZED GAIN/(LOSS)
- ------------------------------ ---------------- ----------------- --------------------------
2002 PARTNERSHIP NET ASSETS: $44,279,841 $ $ $

Foreign currency 319,174 (8,396) 310,778
Interest rate 1,322,639 -- 1,322,639
Commodity 584,409 45,431 629,840
Equity -- 127,413 127,413
--------- --------- ---------
Grand Total 2,226,222 164,448 2,390,670
========= =========
Unrealized Currency Gain 250,707
---------
Total Net Unrealized Gain per Statement of Financial Condition 2,641,377
=========

2001 PARTNERSHIP NET ASSETS: $30,218,601
Foreign currency 537,188 1,119,535 1,656,723
Interest rate (42,624) 150,141 107,517
Commodity (312,108) 100,695 (211,413)
Equity (737) 4,219 3,482
--------- --------- ---------
Grand Total: 181,719 1,374,590 1,556,309
========= =========
Unrealized Currency Loss (121,579)
---------
Total Net Unrealized Gain per Statement of Financial Condition 1,434,730
=========

FUTURES AND FORWARD CONTRACTS: PERCENTAGE OF NET ASSETS # OF CONTRACTS/NOTIONAL AMOUNTS
- ------------------------------ ------------------------ -------------------------------
2002 PARTNERSHIP NET ASSETS: $44,279,841 %

Foreign currency 0.70 17,304,330,000
Interest rate 2.99 1,616
Commodity 1.42 779
Equity 0.29 140
-----
Grand Total 5.40
=====
Unrealized Currency Gain

Total Net Unrealized Gain per Statement of Financial Condition

2001 PARTNERSHIP NET ASSETS: $30,218,601
Foreign currency 5.48* 3,503,740,000
Interest rate 0.36 704
Commodity (0.70) 263
Equity 0.01 57
-----
Grand Total: 5.15
=====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

* No single contract's value exceeds 5% of Net Assets.
The accompanying notes are an integral part of these financial statements.

MORGAN STANLEY CHARTER WELTON L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2002 AND 2001

FUTURES AND FORWARD CONTRACTS: LONG GAIN/(LOSS) SHORT GAIN/(LOSS) NET UNREALIZED GAIN/(LOSS)
- ------------------------------ ---------------- ----------------- --------------------------

2002 PARTNERSHIP NET ASSETS: $10,900,163 $ $ $
Commodity (169,395) -- (169,395)
-------- ------- --------
Grand Total: (169,395) -- (169,395)
======== =======
Unrealized Currency Loss (42,663)
--------
Total Net Unrealized Loss per Statement of Financial Condition (212,058)
========

2001 PARTNERSHIP NET ASSETS: $16,653,076
Commodity (370,424) 17,838 (352,586)
Interest rate 14,100 101,428 115,528
Foreign currency -- 300,875 300,875
Equity 39,687 (10,150) 29,537
-------- ------- --------
Grand Total: (316,637) 409,991 93,354
======== =======
Unrealized Currency Gain 32,691
--------
Total Net Unrealized Gain per Statement of Financial Condition 126,045
========

FUTURES AND FORWARD CONTRACTS: PERCENTAGE OF NET ASSETS # OF CONTRACTS
- ------------------------------ ------------------------ --------------

2002 PARTNERSHIP NET ASSETS: $10,900,163 %
Commodity (1.55) --
-----
Grand Total: (1.55)
=====
Unrealized Currency Loss

Total Net Unrealized Loss per Statement of Financial Condition

2001 PARTNERSHIP NET ASSETS: $16,653,076
Commodity (2.12) 621
Interest rate 0.69 481
Foreign currency 1.81 398
Equity 0.18 222
-----
Grand Total: 0.56
=====
Unrealized Currency Gain

Total Net Unrealized Gain per Statement of Financial Condition

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

MORGAN STANLEY CHARTER SERIES

NOTES TO FINANCIAL STATEMENTS

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

ORGANIZATION. Morgan Stanley Charter Campbell L.P. ("Charter Campbell"),
Morgan Stanley Charter MSFCM L.P. ("Charter MSFCM"), Morgan Stanley Charter
Graham L.P. ("Charter Graham"), Morgan Stanley Charter Millburn L.P. ("Charter
Millburn"), and Morgan Stanley Charter Welton L.P. ("Charter Welton")
(individually, a "Partnership", or collectively, the "Partnerships") are
limited partnerships organized to engage primarily in the speculative trading
of futures contracts, options on futures contracts, and forward contracts on
physical commodities and other commodity interests, including foreign
currencies, financial instruments, metals, energy and agricultural products
(collectively, "futures interests").
The general partner for each Partnership 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"). The trading advisor for Charter MSFCM is Morgan Stanley Futures
& Currency Management Inc. ("MSFCM"). Demeter, Morgan Stanley DW, MS&Co., MSIL
and MSFCM are wholly-owned subsidiaries of Morgan Stanley.
DWFCM International Access Fund L.P. became one of the Charter Series of
funds effective December 1, 2000. Each outstanding unit of limited partnership
interest ("Unit(s)") in DWFCM International Access Fund L.P. was converted to
100 Units of Charter MSFCM. The number of Units outstanding, net income or loss
per Unit and Net Asset Value per Unit have been adjusted for all prior
reporting periods to reflect this conversion.
Effective June 20, 2002, Morgan Stanley Dean Witter & Co. changed its name to
Morgan Stanley.
Effective July 29, 2002, Charter Campbell was added to the Charter Series and
began trading on October 1, 2002.

MORGAN STANLEY CHARTER SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

Effective December 31, 2002, Charter Welton ceased trading and will commence
dissolution in April 2003 in accordance with its Limited Partnership Agreement.
Demeter is required to maintain a 1% minimum interest in the equity of each
Partnership and income (losses) are shared by Demeter and the Limited Partners
based on their proportional ownership interests.

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

REVENUE RECOGNITION. Futures interests are open commitments until settlement
date. They are valued at market on a daily basis and the resulting net change
in unrealized gains and losses is reflected in the change in unrealized profit
(loss) on open contracts from one period to the next in the statement of
operations. Monthly, Morgan Stanley DW credits each Partnership with interest
income on 100% of its average daily funds held at Morgan Stanley DW. In
addition, Morgan Stanley DW credits each Partnership with 100% of the interest
income Morgan Stanley DW receives from MS&Co. and MSIL with respect to such
Partnership's assets deposited as margin. The interest rates used are equal to
that earned by Morgan Stanley DW on its U.S. Treasury bill investments. Prior
to December 1, 2000 Charter MSFCM was credited with interest income based on
80% of the average daily Net Assets for the month at a rate equal to the
average yield on 13-week U.S. Treasury bills. For purposes of such interest
payments Net Assets do not include monies owed to the Partnerships on forward
contracts and other futures interests.

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

MORGAN STANLEY CHARTER SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

CONDENSED SCHEDULES OF INVESTMENTS. In March 2001, the American Institute of
Certified Public Accountants' Accounting Standards Executive Committee issued
Statement of Position ("SOP") 01-1, "Amendment to the Scope of Statement of
Position 95-2, Financial Reporting by Nonpublic Investment Partnerships, to
Include Commodity Pools" effective for fiscal years ending after December 15,
2001. Accordingly, commodity pools are required to include a condensed schedule
of investments identifying those investments which constitute more than 5% of
Net Assets, taking long and short positions into account separately.

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

BROKERAGE AND RELATED TRANSACTION FEES AND COSTS. Each Partnership pays a
flat-rate monthly brokerage fee of 1/12 of 6.75% of the Partnership's Net
Assets as of the first day of each month (a 6.75% annual rate). Such fees
currently cover all brokerage commissions, transaction fees and costs and
ordinary administrative and offering expenses.

MORGAN STANLEY CHARTER SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

Prior to May 1, 2002, each Partnership paid a flat-rate monthly brokerage fee
of 1/12 of 7% of the Partnership's Net Assets as of the first day of each
month (a 7% annual rate).
Prior to becoming a member of the Charter Series on December 1, 2000, Charter
MSFCM accrued brokerage commissions and transaction fees and costs on a
half-turn basis, at 80% and 100%, respectively, of the rates Morgan Stanley DW
charged parties that were not clearinghouse members. Total brokerage
commissions and transaction fees chargeable to the Partnership were capped at
13/20 of 1% per month (a maximum 7.8% annual rate) of the Partnership's
adjusted month-end Net Assets.

OPERATING EXPENSES. Each of the Partnerships incurs monthly management fees
and may incur incentive fees. All common administrative and continuing offering
expenses including legal, auditing, accounting, filing fees and other related
expenses are borne by Morgan Stanley DW through the brokerage fees paid by the
Partnerships.
Prior to becoming a member of the Charter Series on December 1, 2000, Charter
MSFCM paid all operating expenses related to its trading activities, up to a
maximum 1/4 of 1% annually of its average month-end Net Assets. Charter
MSFCM's operating expenses included filing fees, legal, auditing, accounting,
mailing, printing and other incidental expenses as permitted by its Limited
Partnership Agreement at the time.

INCOME TAXES. No provision for income taxes has been made in the accompanying
financial statements, as partners are individually responsible for reporting
income or loss based upon their respective share of each Partnership's revenues
and expenses for income tax purposes.

DISTRIBUTIONS. Distributions, other than redemptions of Units, are made on a
pro-rata basis at the sole discretion of Demeter. No distributions have been
made to date.

CONTINUING OFFERING. Units of each Partnership are offered at a price equal to
100% of the Net Asset Value per Unit at monthly closings held as of the last
day of each month. No selling commissions or charges related

MORGAN STANLEY CHARTER SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

to the continuing offering of Units are paid by the Limited Partners or the
Partnerships. Morgan Stanley DW pays all such costs.

REDEMPTIONS. Limited Partners may redeem some or all of their Units as of the
last day of the sixth month following the closing at which a person first
becomes a Limited Partner. Redemptions may only be made in whole Units, with a
minimum of 100 Units required for each redemption, unless a Limited Partner is
redeeming his entire interest in a particular Partnership.
Units redeemed on or prior to the last day of the twelfth month from the date
of purchase will be subject to a redemption charge equal to 2% of the Net Asset
Value of a Unit on the Redemption Date. Units redeemed after the last day of
the twelfth month and on or prior to the last day of the twenty-fourth month
from the date of purchase will be subject to a redemption charge equal to 1% of
the Net Asset Value of a Unit on the Redemption Date. Units redeemed after the
last day of the twenty-fourth month from the date of purchase will not be
subject to a redemption charge. The foregoing redemption charges are paid to
Morgan Stanley DW.

EXCHANGES. On the last day of the first month which occurs more than six
months after a person first becomes a Limited Partner in any of the
Partnerships, and at the end of each month thereafter, Limited Partners may
transfer their investment among the Partnerships (subject to certain
restrictions outlined in the Limited Partnership Agreements) without paying
additional charges.

DISSOLUTION OF THE PARTNERSHIPS. Charter Welton terminated trading on December
31, 2002 and will commence dissolution in accordance with its Limited
Partnership Agreement in April 2003. Charter MSFCM will terminate on December
31, 2025 and Charter Campbell, Charter Graham and Charter Millburn will
terminate on December 31, 2035 or at an earlier date if certain conditions
occur as defined in each Partnership's Limited Partnership Agreement.

LITIGATION SETTLEMENT. On February 27, 2002, Charter MSFCM received
notification of a preliminary entitlement to payment from the Sumitomo Copper

MORGAN STANLEY CHARTER SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

Litigation Settlement Administrator and received payment of this settlement
award in the amount of $292,406 as of August 30, 2002.

- --------------------------------------------------------------------------------
2. RELATED PARTY TRANSACTIONS
Each Partnership pays brokerage fees to Morgan Stanley DW as described in Note
1. Each Partnership's cash is on deposit with Morgan Stanley DW, MS&Co. and
MSIL in futures interests trading accounts to meet margin requirements as
needed. Morgan Stanley DW pays interest on these funds as described in Note 1.
Demeter, on behalf of Charter MSFCM and itself, entered into a management
agreement with MSFCM to make all trading decisions for the Partnership. Charter
MSFCM pays management and incentive fees (if any) to MSFCM.

- --------------------------------------------------------------------------------
3. TRADING ADVISORS
Demeter, on behalf of Charter Campbell, Charter MSFCM, Charter Graham, Charter
Millburn and Charter Welton, retains certain commodity trading advisors to make
all trading decisions for the Partnerships. The trading advisors for each
Partnership at December 31, 2002 were as follows:

Morgan Stanley Charter Campbell L.P.
Campbell & Company, Inc.

Morgan Stanley Charter MSFCM L.P.
Morgan Stanley Futures & Currency Management Inc.

Morgan Stanley Charter Graham L.P.
Graham Capital Management, L.P.

Morgan Stanley Charter Millburn L.P.
Millburn Ridgefield Corporation

Morgan Stanley Charter Welton L.P.
Welton Investment Corporation

Compensation to the trading advisors by the Partnerships consists of a
management fee and an incentive fee as follows:

MANAGEMENT FEE. Each Partnership pays its trading advisor a flat-rate monthly
fee of 1/12 of 2% (a 2% annual rate) or, in the case of Charter Campbell, a

MORGAN STANLEY CHARTER SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

monthly fee of 1/12 of 2.75% (a 2.75% annual rate), of the Partnership's Net
Assets under management by each trading advisor as of the first day of each
month.
Prior to December 1, 2000, Charter MSFCM paid a monthly management fee equal
to 1/4 of 1% (a 3% annual rate) of the Partnership's adjusted Net Assets, as
defined in the management agreement, as of the last day of each month.

INCENTIVE FEE. Each Partnership's incentive fee is equal to 20% of trading
profits, paid on a quarterly basis for Charter MSFCM, and paid on a monthly
basis for Charter Campbell, Charter Graham, Charter Millburn and Charter Welton.
Prior to December 1, 2000, Charter MSFCM paid a quarterly incentive fee equal
to 15% of the trading profits earned by the Partnership as of the end of each
calendar quarter.
Trading profits represent the amount by which profits from futures, forwards
and options trading exceed losses after brokerage and management fees are
deducted. When a trading advisor experiences losses with respect to Net Assets
as of the end of a calendar month, or calendar quarter with respect to Charter
MSFCM, the trading advisor must recover such losses before that trading advisor
is eligible for an incentive fee in the future.

- --------------------------------------------------------------------------------
4. FINANCIAL INSTRUMENTS
The Partnerships trade futures contracts, options on futures contracts and
forward contracts on physical commodities and other commodity interests,
including 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 contracts is based on closing prices quoted by the
exchange, bank or clearing firm through which the contracts are traded.

MORGAN STANLEY CHARTER SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

The Partnerships' contracts are accounted for on a trade-date basis and
marked to market on a daily basis. Each Partnership accounts for its derivative
investments in accordance with the provisions of Statement of Financial
Accounting Standard 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, or
other financial instruments with similar characteristics such as caps, floors
and collars.
The net unrealized gains (losses) on open contracts at December 31, 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:

CHARTER CAMPBELL

NET UNREALIZED GAINS
ON OPEN CONTRACTS LONGEST MATURITIES
------------------------------- -------------------
OFF-
EXCHANGE- OFF-EXCHANGE- EXCHANGE- EXCHANGE-
YEAR TRADED TRADED TOTAL TRADED TRADED
- ---- --------- ------------- ------- --------- ---------
$ $ $

2002 253,129 243,558 496,687 Sep. 2003 Mar. 2003

CHARTER MSFCM

NET UNREALIZED GAINS/
(LOSSES) ON OPEN CONTRACTS LONGEST MATURITIES
---------------------------------- -------------------
OFF-
EXCHANGE- OFF-EXCHANGE- EXCHANGE- EXCHANGE-
YEAR TRADED TRADED TOTAL TRADED TRADED
- ---- --------- ------------- ---------- --------- ---------
$ $ $

2002 22,623 7,543,280 7,565,903 Sep. 2004 Apr. 2003
2001 (737,333) (364,132) (1,101,465) Jun. 2003 Apr. 2002

MORGAN STANLEY CHARTER SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

CHARTER GRAHAM

NET UNREALIZED GAINS/
(LOSSES) ON OPEN CONTRACTS LONGEST MATURITIES
----------------------------- -------------------
OFF- OFF-
EXCHANGE- EXCHANGE- EXCHANGE- EXCHANGE-
YEAR TRADED TRADED TOTAL TRADED TRADED
---- --------- --------- --------- --------- ---------
$ $ $

2002 7,053,639 159,286 7,212,925 Jun. 2004 Mar. 2003
2001 1,017,777 (151,669) 866,108 Jun. 2003 Mar. 2002

CHARTER MILLBURN

NET UNREALIZED GAINS/
(LOSSES) ON OPEN CONTRACTS LONGEST MATURITIES
------------------------------ -------------------
OFF- OFF-
EXCHANGE- EXCHANGE- EXCHANGE- EXCHANGE-
YEAR TRADED TRADED TOTAL TRADED TRADED
---- --------- --------- --------- --------- ---------
$ $ $

2002 2,330,599 310,778 2,641,377 Mar. 2003 Mar. 2003
2001 (221,988) 1,656,718 1,434,730 Mar. 2002 Mar. 2002

CHARTER WELTON

NET UNREALIZED GAINS/
(LOSSES) ON OPEN CONTRACTS LONGEST MATURITIES
-------------------------------- -------------------
OFF-
EXCHANGE- OFF-EXCHANGE- EXCHANGE- EXCHANGE-
YEAR TRADED TRADED TOTAL TRADED TRADED
---- --------- ------------- -------- --------- ---------
$ $ $

2002 (212,058) -- (212,058) Jun. 2003 --
2001 126,045 -- 126,045 Sep. 2002 --

The Partnerships have credit risk associated with counterparty
nonperformance. The credit risk associated with the instruments in which the
Partnerships are involved is limited to the amounts reflected in the
Partnerships' statements of financial condition.
The Partnerships also have 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 Partnerships' assets. Exchange-traded futures 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 each Partnership's
exchange-traded futures and futures-styled options contracts, are required,
pursuant to regulations of the Commodity Futures Trading Commission, to
segregate from their own assets, and for the sole benefit of their commodity

MORGAN STANLEY CHARTER SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

customers, all funds held by them with respect to exchange-traded futures and
futures-styled options contracts, including an amount equal to the net
unrealized gains (losses) on all open futures and futures-styled options
contracts, which funds, in the aggregate, totaled $15,659,223 for Charter
Campbell at December 31, 2002, $73,921,843 and $42,535,750 for Charter MSFCM,
$111,564,112 and $46,265,281 for Charter Graham, $42,946,755 and $28,185,811
for Charter Millburn, and $13,612,650 and $17,452,742 for Charter Welton at
December 31, 2002 and 2001, respectively. With respect to each Partnership's
off-exchange-traded forward currency contracts, there are no daily settlements
of variations in value nor is there any requirement that an amount equal to the
net unrealized gains (losses) on open forward contracts be segregated. With
respect to those off-exchange-traded forward currency contracts, the
Partnerships are at risk to the ability of MS&Co., the sole counterparty on all
such contracts, to perform. Each Partnership has a netting agreement with
MS&Co. These agreements, which seek to reduce both the Partnerships' and
MS&Co.'s exposure on off-exchange-traded forward currency contracts, should
materially decrease the Partnerships' credit risk in the event of MS&Co.'s
bankruptcy or insolvency.

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

CHARTER CAMPBELL

PER UNIT:
---------

NET ASSET VALUE, OCTOBER 1, 2002: $ 10.00
-------
NET OPERATING RESULTS:
Realized Loss (0.61)
Unrealized Profit 0.37
Interest Income 0.03
Expenses (0.21)
-------
Net Loss (0.42)
-------
NET ASSET VALUE, DECEMBER 31, 2002: $ 9.58
=======

Expense Ratio 2.0 %
Net Loss Ratio (1.3)%

TOTAL RETURN (4.2)%

MORGAN STANLEY CHARTER SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

CHARTER MSFCM

PER UNIT:
---------

NET ASSET VALUE, JANUARY 1, 2002: $16.92
------
NET OPERATING RESULTS:
Realized Profit 4.15
Unrealized Profit 2.88
Proceeds from Litigation Settlement 0.10
Interest Income 0.31
Expenses (2.52)
------
Net Income 4.92
------
NET ASSET VALUE, DECEMBER 31, 2002: $21.84
======

Expense Ratio 12.6%
Net Income Ratio 24.0%

TOTAL RETURN 29.1%

CHARTER GRAHAM

PER UNIT:
---------

NET ASSET VALUE, JANUARY 1, 2002: $13.77
------
NET OPERATING RESULTS:
Realized Profit 5.57
Unrealized Profit 1.37
Interest Income 0.25
Expenses (2.12)
------
Net Income 5.07
------
NET ASSET VALUE, DECEMBER 31, 2002: $18.84
======

Expense Ratio 13.0%
Net Income Ratio 32.6%

TOTAL RETURN 36.8%

CHARTER MILLBURN

PER UNIT:
---------

NET ASSET VALUE, JANUARY 1, 2002: $ 9.23
------
NET OPERATING RESULTS:
Realized Profit 2.33
Unrealized Profit 0.35
Interest Income 0.17
Expenses (0.90)
------
Net Income 1.95
------
NET ASSET VALUE, DECEMBER 31, 2002: $11.18
======
Expense Ratio 8.8%
Net Income Ratio 19.2%

TOTAL RETURN 21.1%

MORGAN STANLEY CHARTER SERIES

NOTES TO FINANCIAL STATEMENTS
(concluded)

CHARTER WELTON

PER UNIT:
---------

NET ASSET VALUE, JANUARY 1, 2002: $ 7.13
------
NET OPERATING RESULTS:
Realized Profit 1.05
Unrealized Loss (0.16)
Interest Income 0.12
Expenses (0.62)
------
Net Income 0.39
------
NET ASSET VALUE, DECEMBER 31, 2002: $ 7.52
======
Expense Ratio 9.1%
Net Income Ratio 4.2%

TOTAL RETURN 5.5%

PRESORTED
FIRST CLASS MAIL
U.S. POSTAGE
PAID
PERMIT #374
LANCASTER, PA

Demeter Management Corporation
825 Third Avenue, 9th Floor
New York, NY 10022

[LOGO] Morgan Stanley

ADDRESS SERVICE REQUESTED

[LOGO] printed on recycled paper