MORGAN STANLEY CHARTER GRAHAM LP/ - 10-Q Quarterly Report

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

FORM 10-Q

[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2002 or

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

Commission File Number 0-25603

MORGAN STANLEY CHARTER GRAHAM L.P.

(Exact name of registrant as specified in its charter)

Delaware 13-4018068
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Demeter Management Corporation
c/o Managed Futures Department
825 Third Avenue, 8th Fl., New York, NY 10022
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (201) 209-8400

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

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

Yes X No___________

MORGAN STANLEY CHARTER GRAHAM L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

June 30, 2002

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MORGAN STANLEY CHARTER GRAHAM L.P.
STATEMENTS OF FINANCIAL CONDITION

MORGAN STANLEY CHARTER GRAHAM L.P.
STATEMENTS OF OPERATIONS
(Unaudited)

- -

MORGAN STANLEY CHARTER GRAHAM L.P.
STATEMENTS OF OPERATIONS
(Unaudited)

-

MORGAN STANLEY CHARTER GRAHAM L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 2002 and 2001
(Unaudited)

-

MORGAN STANLEY CHARTER GRAHAM L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)

MORGAN STANLEY CHARTER GRAHAM L.P.
NOTES TO FINANCIAL STATEMENTS

June 30, 2002
(Unaudited)

The unaudited financial statements contained herein include, in
the opinion of management, all adjustments necessary for a fair
presentation of the results of operations and financial condition
of Morgan Stanley Charter Graham L.P. (the "Partnership"). The
financial statements and condensed notes herein should be read in
conjunction with the Partnership's December 31, 2001 Annual Report
on Form 10-K.

1. Organization
Morgan Stanley Charter Graham L.P. 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 is one
of the Morgan Stanley Charter Series of funds, comprised of the
Partnership, Morgan Stanley Charter Millburn L.P., Morgan Stanley
Charter Welton L.P., and Morgan Stanley Charter MSFCM L.P.

The general partner is Demeter Management Corporation ("Demeter").

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

The non-clearing commodity broker is Morgan Stanley DW Inc.
("Morgan Stanley DW"). The clearing commodity brokers are Morgan
Stanley & Co., Inc. ("MS & Co.") and Morgan Stanley & Co.
International Limited ("MSIL"). Demeter, Morgan Stanley DW, MS &
Co. and MSIL are wholly-owned subsidiaries of Morgan Stanley.
Graham Capital Management L.P. (the "Trading Advisor") is the
trading advisor to the Partnership.

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

2. Related Party Transactions
The Partnership's cash is on deposit with Morgan Stanley DW, MS &
Co. and MSIL in futures, forwards and options trading accounts to
meet margin requirements as needed. Morgan Stanley DW pays
interest on these funds based on a rate equal to that earned by
Morgan Stanley DW on its U.S. Treasury bill investments. The
Partnership pays brokerage fees to Morgan Stanley DW.

3. Financial Instruments
The Partnership trades futures contracts, options on futures
contracts, and forward contracts on physical commodities and other
commodity interests, including foreign currencies, financial

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

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.

The Partnership's contracts are accounted for on a trade-date
basis and marked to market on a daily basis. The Partnership
accounts for its derivative investments in accordance with the
provisions of Statement of Financial Accounting 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;

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

2) Requires no initial net investment or a smaller initial net
investment than would be required relative to changes in
market factors;
3) Terms require or permit net settlement.

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

The net unrealized gains (losses) on open contracts, reported as a
component of "Equity in futures interests trading accounts" on the
statements of financial condition, and their longest contract
maturities were as follows:

Net Unrealized Gains (Losses)
on Open Contracts Longest Maturities

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

Jun. 30, 2002 5,509,052 537,913 6,046,965 Dec. 2003 Sept. 2002
Dec. 31, 2001 1,017,777 (151,669) 866,108 Jun. 2003 Mar. 2002

The Partnership has credit risk associated with counterparty non-
performance. The credit risk associated with the instruments in

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

which the Partnership is involved is limited to the amounts
reflected in the Partnership's statements of financial condition.

The Partnership also has credit risk because Morgan Stanley DW, MS
& Co. and MSIL act as the futures commission merchants or the
counterparties with respect to most of the Partnership's assets.
Exchange-traded futures and futures-styled options contracts are
marked to market on a daily basis, with variations in value
settled on a daily basis. Each of Morgan Stanley DW, MS & Co., and
MSIL, as a futures commission merchant for the Partnership's
exchange-traded futures and futures-styled options contracts, are
required, pursuant to regulations of the Commodity Futures Trading
Commission ("CFTC"), to segregate from their own assets, and for
the sole benefit of their commodity customers, all funds held by
them with respect to exchange-traded futures 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 $62,754,908 and
$46,265,281 at June 30, 2002 and December 31, 2001, respectively.
With respect to the 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

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

segregated. With respect to those off-exchange-traded forward
currency contracts, the Partnership is at risk to the ability of
MS & Co., the sole counterparty on all of such contracts, to
perform. The Partnership has a netting agreement with MS & Co.
This agreement, which seeks to reduce both the Partnership's and
MS & Co.'s exposure on off-exchange-traded forward currency
contracts, should materially decrease the Partnership's credit
risk in the event of MS & Co.'s bankruptcy or insolvency.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Liquidity - The Partnership deposits its assets with Morgan
Stanley DW as non-clearing broker and MS & Co. and MSIL as
clearing brokers in separate futures, forwards, and options
trading accounts established for the Trading Advisor, 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 CFTC 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 currencies. The markets for some world
currencies have low trading volume and are illiquid, which may
prevent the Partnership from trading in potentially profitable
markets or prevent the Partnership from promptly liquidating
unfavorable positions in such markets, subjecting it to
substantial losses. Either of these market conditions could
result in restrictions on redemptions.

There are no material trends, 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.

The Partnership has never had illiquidity affect a material
portion of its assets.

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 foreign currency forward contracts is based on the
spot rate as of the close of business, New York City time, on a
given day.

Capital Resources. The Partnership does not have, nor expect to
have, any capital assets. Redemptions, exchanges and sales of
additional units of limited partnership interest ("Unit(s)") 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, nor
any expected material changes to the Partnership's capital
resource arrangements at the present time.

Results of Operations
General. The Partnership's results depend on the Trading Advisor
and the ability of the Trading Advisor's trading 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 and six
month periods ended June 30, 2002 and 2001 and a general
discussion of its trading activities during each period. It is
important to note, however, that the Trading Advisor trades in
various markets at different times and that prior activity in a
particular market does not mean that such market will be actively
traded by the Trading Advisor or will be profitable in the future.
Consequently, the results of operations of the Partnership are
difficult to discuss other than in the context of the Trading
Advisor's trading activities on 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. Earned 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.

For the Quarter and Six Months Ended June 30, 2002
For the quarter ended June 30, 2002, the Partnership recorded
total trading revenues, including interest income, of $7,280,505
and posted an increase in net asset value per Unit. The most
significant gains of approximately 17.3% were recorded in the
currency markets primarily during May and June from previously
established long positions in the euro, Swiss franc and British
pound relative to the U.S. dollar as the value of these currencies
strengthened against the dollar amid falling equity prices,
concerns regarding corporate accounting integrity and weak U.S.
economic data. Significant currency gains were also recorded
during May from long positions in the Korean won, Australian
dollar and New Zealand dollar. Additional gains of approximately
1.6% were recorded in the global stock index futures markets
primarily during June from short positions in U.S. and German
index futures as prices declined amidst global economic
uncertainty. A portion of the Partnership's gains was offset by
losses of approximately 3.4% recorded in the global interest rate

futures markets primarily during April from short positions in
European and U.S. interest rate futures as prices climbed higher
following weak equity markets, geopolitical concerns and
uncertainty surrounding a global economic recovery. Additional
losses of approximately 2.5% were recorded in the energy markets
primarily during May from previously established long futures
positions in crude oil and its related products as prices moved
lower on supply and demand concerns. Total expenses for the three
months ended June 30, 2002 were $1,163,234, resulting in net
income of $6,117,271. The net asset value of a Unit increased
from $13.11 at March 31, 2002 to $14.45 at June 30, 2002.

For the six months ended June 30, 2002, the Partnership recorded
total trading revenues, including interest income, of $5,899,818
and posted an increase in net asset value per Unit. The most
significant gains of approximately 17.3% were recorded in the
currency markets primarily during May and June from previously
established long positions in the euro, Swiss franc and British
pound relative to the U.S. dollar as the value of these currencies
strengthened against the U.S. dollar amid falling equity prices,
concerns regarding corporate accounting integrity and weak U.S.
economic data. Significant currency gains were also recorded
during May from long positions in the Korean won, Australian
dollar and New Zealand dollar. A portion of the Partnership's
gains was offset by losses of approximately 4.2% recorded in the

global interest rate futures markets primarily during April from
short positions in European and U.S. interest rate futures as
prices climbed higher following weak equity markets, geopolitical
concerns and uncertainty surrounding a global economic recovery.
Additional losses of approximately 2.5% were recorded in the
energy markets primarily during May from previously established
long futures positions in crude oil and its related products as
prices moved lower on supply and demand concerns. Total expenses
for the six months ended June 30, 2002 were $2,288,196, resulting
in net income of $3,611,622. The net asset value of a Unit
increased from $13.77 at December 31, 2001 to $14.45 at June 30,
2002.

For the Quarter and Six Months Ended June 30, 2001
For the quarter ended June 30, 2001, the Partnership recorded
total trading losses, net of interest income, of $2,807,638 and
posted a decrease in net asset value per Unit. The most
significant losses of approximately 7.2% were recorded in the
global interest rate futures markets primarily during June from
short positions in U.S. interest rate futures primarily during
June from short positions in U.S. interest rate futures as prices
rallied on the possibility that the release of weak U.S. economic
data would prompt the U.S. Federal Reserve to cut interest rates
at its Federal Open Market Committee meeting in late June. Long

positions experienced losses during April as U.S. bond prices
reversed sharply lower following a rally in stock prices as
investors deserted risk-free government securities in an asset
shift to equities. Additional losses were recorded during these
same months from short positions in German interest rate futures
as prices increased during June on the decline in U.S. equity
prices, and from long positions during April as prices reversed
sharply lower on reports of the European Central Bank's decision
to leave interest rates on hold. In the currency markets, losses
of approximately 2.2% were recorded primarily during April from
short positions in the Australian and Canadian dollar as their
respective values strengthened versus the U.S. dollar on fears of
a prolonged economic slowdown in the U.S. Smaller losses were
incurred during May from short positions in the Japanese yen as
the value of the yen reversed higher relative to the U.S. dollar
following a surprise interest rate cut by the U.S. Federal
Reserve and on optimism that the Japanese government would unveil
an emergency package to revive that country's ailing economy. In
global stock index future markets, losses of approximately 1.6%
were recorded primarily during April from short DAX Index futures
positions as German stock prices reversed higher following the
rise in the U.S. equity prices. These losses were partially
offset by gains in approximately 2.1% recorded in the

agricultural markets during May and June from short positions in
corn and wheat futures as prices declined amid favorable weather
forecasts in the U.S. midwest and on reports of declining demand.
Additional gains of approximately 0.4% were recorded in the
energy markets during May and June from short positions in
natural gas futures as prices declined on continued concerns
regarding rising U.S. natural gas inventories and mild weather
across the United States. Total expenses for the three months
ended June 30, 2001 were $726,549, resulting in a net loss of
$3,534,187. The net asset value of a Unit decreased from $13.79
at March 31, 2001 to $12.34 at June 30, 2001.

For the six months ended June 30, 2001, the Partnership recorded
total trading revenues, including interest income, of $1,428,625
and, after expenses, posted a decrease in net asset value per
Unit. The most significant losses of approximately 1.5% were
recorded in the energy markets primarily during April from short
positions in crude oil futures as prices moved higher on supply
concerns amid refinery production problems. Additional losses
were incurred during January from long positions in natural gas
futures as prices declined, reversing their previous sharp upward
trend amid bearish inventory data and forecasts for warmer
weather in key consumption areas. Smaller losses of
approximately 0.3% were recorded in the global stock index
futures markets primarily during April from short DAX index

future positions as German stock prices reversed higher following
the rise in U.S. equity prices. These losses were partially
offset by gains of approximately 2.4% recorded in the
agricultural markets throughout a majority of the first half of
the year from short positions in corn and wheat futures as prices
declined amid favorable weather conditions in South America and
the United States. Additional gains of approximately 1.5% were
recorded throughout the first quarter from short cotton futures
positions as prices moved lower on weak export sales and low
demand. Smaller gains of approximately 0.6% were recorded in the
metals markets throughout the second quarter from trading zinc
and palladium futures. Total expenses for the six months ended
June 30, 2001 were $2,016,198, resulting in a net loss of
$587,573. The net asset value of a Unit decreased from $12.55 at
December 31, 2000 to $12.34 at June 30, 2001.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK

Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards, and options. The
market-sensitive instruments held by the Partnership are acquired
for speculative trading purposes only and, as a result, all or
substantially all of the Partnership's assets are at risk of
trading loss. Unlike an operating company, the risk of market-
sensitive instruments is 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 Partnership's
market risk exposures contain "forward-looking statements" within
the meaning of the safe harbor from civil liability provided for
such statements by the Private Securities Litigation Reform Act of
1995 (set forth in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934). All
quantitative disclosures in this section are deemed to be forward-
looking statements for purposes of the safe harbor, except for
statements of historical fact.

The Partnership accounts for open positions on the basis of mark-
to-market accounting principles. Any loss in the market value of
the Partnership's open positions is directly reflected in the
Partnership's earnings, 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 Partner-
ship'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 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.

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 June 30, 2002 and 2001. At
June 30, 2002 and 2001, the Partnership's total capitalization
was approximately $64 million and $33 million, respectively.

Primary Market June 30, 2002 June 30, 2001
Risk Category Value at Risk Value at Risk

Interest Rate (3,24)% (0.58)%
Currency (2.25) (2.00)
Equity (1.30) (0.45)
Commodity (0.69) (1.20)
Aggregate Value at Risk (4.59)% (2.29)%

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 VaRs 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 June 30, 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 quarter-end 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 July 1,
2001 through June 30, 2002.

Primary Market Risk Category High Low Average
Interest Rate (3.42)% (0.97)% (2.42)%

Currency (2.25) (0.94) (1.59)

Equity (1.30) (0.18) (0.58)

Commodity (1.30) (0.69) (0.98)

Aggregate Value at Risk (4.59)% (2.59)% (3.51)%

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 typically 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 the Partnership's market risk exposures and on an aggregate
basis at June 30, 2002 and 2001 and for the end of the four

quarterly reporting periods from July 1, 2001 through June 30,
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 June 30, 2002, the Partnership's cash balance at Morgan Stanley
DW was approximately 71% 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 expropriations, illiquid markets, the emergence of
dominant fundamental factors, political upheavals, changes in
historical price relationships, an influx of new market
participants, increased regulation and many other factors could
result in material losses as well as in material changes to the
risk exposures and the risk management strategies of the
Partnership. Investors must be prepared to lose all or
substantially all of their investment in the Partnership.

The following were the primary trading risk exposures of the
Partnership at June 30, 2002, by market sector. It may be
anticipated however, that these market exposures will vary
materially over time.

Interest Rate. The primary market exposure of the Partnership at
June 30, 2002 was to the global interest rate sector. Exposure
was primarily spread across the European, Japanese 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
G-7 interest rates will remain the primary interest rate exposure
of the Partnership for the foreseeable future. The speculative
futures positions held by the Partnership may range from short to
long-term instruments. Consequently, changes in short, medium,
or long-term interest rates may have an effect on the
Partnership.

Currency. The second largest market exposure at June 30, 2002
was to the currency complex. 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 June 30, 2002, the
Partnership's major exposures were to the Japanese yen and 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.

Equity. The primary equity exposure at June 30, 2002 was to
equity price risk in the G-7 countries. The stock index futures
traded by the Partnership are by law limited to futures on
broadly-based indices. At June 30, 2002, the Partnership's
primary exposures were to the NASDAQ (U.S.), S&P 500 (U.S.),
TOPIX (Taiwan) and DAX (Germany) stock indices. The Partnership
is primarily exposed to the risk of adverse price trends or

static markets in the U.S. and Japanese indices. Static markets
would not cause major market changes but would make it difficult
for the Partnership to avoid being "whipsawed" into numerous
small losses.

Commodity.
Energy. At June 30, 2002, the Partnership's energy exposure
was primarily to futures contracts in the natural gas
markets. Price movements in the energy 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 continue to be experienced in these markets.
Natural gas has exhibited volatility in prices resulting
from weather patterns and supply and demand factors and may
continue in this choppy pattern.

Metals. The Partnership's metals exposure at June 30, 2002
was to fluctuations in the price of base metals, such as
copper, nickel, aluminum and lead. 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. Demeter anticipates that the
Partnership will continue to be exposed to the base metals
markets.

Soft Commodities and Agriculturals. At June 30, 2002, the
Partnership had exposure to the markets that comprise these
sectors. Most of the exposure was to the sugar, cotton and
corn markets. Supply and demand inequalities, severe
weather disruption and market expectations affect price
movements in these markets.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at June 30, 2002:

Foreign Currency Balances. The Partnership's primary
foreign currency balances at June 30, 2002 were in euros,
Swiss francs and British pounds. 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 diversification
guidelines, often set in terms of the maximum margin to be
committed to positions in any one market sector or market-
sensitive instrument.

Demeter monitors and controls the risk of the Partnership's non-
trading instrument, cash. Cash is the only Partnership
investment directed by Demeter, rather than the Trading Advisor.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS
None.

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Partnership initially registered 3,000,000 Units pursuant to a
Registration Statement on Form S-1, which became effective on
November 6, 1998 (SEC File Number 333-60115).

The Partnership registered an additional 6,000,000 Units pursuant to
a new Registration Statement on Form S-1, which became effective on
March 27, 2000 (SEC File Number 333-91563).

The managing underwriter for the Partnership is Morgan Stanley DW.

Units are continuously 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 June 30, 2002, 5,544,127.740 Units were sold, leaving
3,455,872.260 Units unsold. The aggregate price of the Units sold
through June 30, 2002 was $63,635,850.

Since no expenses are chargeable against the proceeds, 100% of the
proceeds of the offering have been applied to the working capital of
the Partnership for use in accordance with the "Use of Proceeds"
section of the Prospectus included as part of the above referenced
Registration Statement.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) Exhibits

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
July 29, 2002, filed with the Securities and Exchange
Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933, as amended, on August 12, 2002.
3.02 Certificate of Limited Partnership, dated July 15, 1998,
is incorporated by reference to Exhibit 3.02 of the
Partnership's Registration Statement on Form S-1 (File
No. 333-60115) filed with the Securities and Exchange
Commission on July 29, 1998.
3.03 Certificate of Amendment of Certificate of Limited
Partnership, dated November 1, 2001, (changing its name
from Morgan Stanley Dean Witter Charter Graham L.P.) is
incorporated by reference to Exhibit 3.01 of the
Partnership's Form 8-K (File No. 0-25603) filed with the
Securities and Exchange Commission on November 6, 2001.
10.01 Management Agreement, dated as of November 6, 1998, among
the Partnership, Demeter and Graham Capital Management
L.P. is incorporated by reference to Exhibit 10.01 of the
Partnership's Quarterly Report on Form 10-Q (File No. 0-
25603) filed with the Securities and Exchange Commission
on May 17, 1999.
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 July 29, 2002, filed with
the Securities and Exchange Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933, as amended,
on August 12, 2002.

10.03 Amended and Restated Escrow Agreement, dated as of
October 11, 2000, among the Partnership, Morgan Stanley
Charter Millburn L.P., Morgan Stanley Charter Welton
L.P., Morgan Stanley Charter MSFCM L.P., Morgan Stanley
DW, and The Chase Manhattan Bank is incorporated by
reference to Exhibit 10.04 of the Partnership's Post-
Effective Amendment No. 3 to the Registration Statement
on Form S-1 (File No. 333-91563) filed with the
Securities and Exchange Commission on March 30, 2001.
10.04 Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW, dated as of November
13, 2000, is incorporated by reference to Exhibit 10.01
of the Partnership's Form 8-K (File No. 0-25603) filed
with the Securities and Exchange Commission on November
6, 2001.
10.05 Commodity Futures Customer Agreement between MS & Co. and
the Partnership, and acknowledged and agreed to by Morgan
Stanley DW, dated as of November 6, 2000, is incorporated
by reference to Exhibit 10.02 of the Partnership's Form
8-K (File No. 0-25603) filed with the Securities and
Exchange Commission on November 6, 2001.
10.06 Customer Agreement between the Partnership and MSIL,
dated as of November 6, 2000, is incorporated by
reference to Exhibit 10.04 of the Partnership's Form 8-K
(File No. 0-25603) filed with the Securities and Exchange
Commission on November 6, 2001.
10.07 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. 0-25603) filed with the
Securities and Exchange Commission on November 6, 2001.
10.08 Form of Subscription Agreement Update Form is
incorporated by reference to Exhibit C of the
Partnership's Prospectus dated July 29, 2002, filed with
the Securities and Exchange Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933, as amended,
on August 12, 2002.
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. 0-25603)
filed with the Securities and Exchange Commission on
November 6, 2001

99.01 Certification of Periodic Financial Reports.

(B) Reports on Form 8-K. - None.

SIGNATURE

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

Morgan Stanley Charter Graham L.P.
(Registrant)

By: Demeter Management Corporation
(General Partner)

August 13, 2002 By: /s/ Raymond E. Koch
Raymond E. Koch
Chief Financial Officer

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

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 Quarterly Report of Morgan Stanley Charter
Graham L.P. (the "Partnership") on Form 10-Q for the period ended
June 30, 2002 as filed with the Securities and Exchange Commission
on the date hereof (the "Report"), I, Robert E. Murray, 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/Robert E. Murray

Name: Robert E. Murray
Title: Chairman of the Board and President

Date: August 13, 2002

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 Quarterly Report of Morgan Stanley Charter
Graham L.P. (the "Partnership") on Form 10-Q for the period ended
June 30, 2002 as filed with the Securities and Exchange Commission
on the date hereof (the "Report"), I, Raymond E. Koch, 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/Raymond E. Koch

Name: Raymond E. Koch
Title: Chief Financial Officer

Date: August 13, 2002