MORGAN STANLEY CHARTER WELTON LP - 10-K Annual Report

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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, 2001 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 0-25607

MORGAN STANLEY CHARTER WELTON L.P.

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

DELAWARE 13-4018063
(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 Floor,
New York, NY 10022
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (201) 876-4647

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: $16,331,235 at January 31,
2002.

DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)

MORGAN STANLEY CHARTER WELTON L.P.
(formerly, "Morgan Stanley Dean Witter Charter Welton, L.P.")
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 2001

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
October 11, 2000 and the
Prospectus Supplement dated
December 19, 2001 I

Annual Report to Morgan Stanley
Charter Series Limited Partners
for the year ended December 31,
2001 II, III and IV

PART I
Item 1. BUSINESS
(a) General Development of Business. Morgan Stanley Charter
Welton 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 1, 1999. The Partnership is one of the Morgan
Stanley Charter Series of funds, comprised of the Partnership,
Morgan Stanley Charter Graham L.P., Morgan Stanley Charter
Millburn L.P., and Morgan Stanley Charter MSFCM L.P.

On November 1, 2001, Morgan Stanley Dean Witter Charter Millburn
L.P., Morgan Stanley Dean Witter Charter Graham L.P., Morgan
Stanley Dean Witter Charter Welton L.P., and Morgan Stanley Dean
Witter Charter DWFCM L.P. were renamed Morgan Stanley Charter
Millburn L.P., Morgan Stanley Charter Graham L.P., Morgan Stanley
Charter Welton L.P., and Morgan Stanley Charter MSFCM L.P.,
respectively.

The 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., 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 Dean
Witter & Co. ("MSDW"). Welton Investment Corporation (the
"Trading Advisor") is the trading advisor to the Partnership.

Effective April 2, 2001, Dean Witter Reynolds Inc. changed its
name to Morgan Stanley DW Inc.

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

The Partnership's net asset value per Unit at December 31, 2001
was $7.13, representing a decrease of 13.0 percent from the net
asset value per Unit of $8.20 at December 31, 2000. For a more
detailed description of the Partnership's business, see
subparagraph (c).

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

(c) Narrative Description of Business. The Partnership is in the
business of speculative trading of futures, forwards, and options
pursuant to trading instructions provided by the Trading Advisor.
For a detailed description of the different facets of the
Partnership's business, see those portions of the Partnership's
prospectus, dated October 11, 2000 (the "Prospectus") and the
Partnership's Supplement to the Prospectus dated December 19, 2001
(the "Supplement") incorporated by reference in this Form 10-K,
set forth below.
Facets of Business
1. Summary 1. "Summary" (Pages 1-9 of
of the Prospectus and
Pages S-1 - S-2 of the
Supplement).

2. Futures, Options, and 2. "The Futures, Options, and
Forwards Markets Forwards Markets" (Pages
121-125 of the Prospectus).

3. Partnership's Trading 3. "Use of Proceeds"(Pages
Arrangements and 23-29 of the Prospectus
Policies and Page S-4 of the Supple-
ment). "The Trading
Advisors" (Pages 60-98
of the Prospectus and
Pages S-29 - S-49 of the
Supplement).

4. Management of the Part- 4. "The Management Agree-
nership ments" (Page 60 of the
Prospectus). "The
General Partner" (Pages
55-59 of the Prospectus
and Pages S-27 - S-28 of
the Supplement). "The
Commodity Brokers"
(Pages 100-102 of the
Prospectus and Page S-49
of the Supplement ) and "The
Limited Partnership
Agreements" (Pages 104-
107 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 113-
120 of the Prospectus).

(d) Financial Information about Geographic Areas.

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

Item 2. PROPERTIES
The 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, 8th
Floor, New York, NY 10022.

Demeter changed its address from 2 World Trade Center, New York,
NY 10048.

Item 3. LEGAL PROCEEDINGS
In April 2001, the Appellate Division of New York State dismissed
the class action previously disclosed in the Partnership's Form
10-K for the year ended December 31, 2000. Because plaintiffs did
not exercise their right to appeal any further, this dismissal
constituted a final resolution of the case.

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 of the
Partnership.

(b) Holders
The number of holders of Units at December 31, 2001 was
approximately 1,269.

(c) Distributions
No distributions have been made by the Partnership since it
commenced trading operations on March 1, 1999. 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 distribution of Partnership profits.

(d) Use of Proceeds
Units of the Partnership 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, 2001, 3,891,607.602 Units were sold, leaving
5,108,392.398 Units unsold at December 31, 2001. The aggregate

price of the Units sold through December 31, 2001 was $33,931,156.

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 and the Supplement.

Item 6. SELECTED FINANCIAL DATA (in dollars)

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 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.

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

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.

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 years ended
December 31, 2001 and 2000 and the period from March 1, 1999
through December 31, 1999 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.

At December 31, 2001, the Partnership's total capital was
$16,653,076, a decrease of $5,656,365 from the Partnership's total
capital of $22,309,441 at December 31, 2000. For the year ended
December 31, 2001, the Partnership generated a net loss of
$2,934,740, total subscriptions aggregated $2,990,346 and total
redemptions aggregated $5,711,971.

For the year ended December 31, 2001, the Partnership recorded
total trading losses, net of interest income, of $1,173,894 and
posted a decrease in net asset value per Unit. The most
significant losses of approximately 10.2% were recorded in the
energy markets 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. In the currency markets,
losses of approximately 7.8% were experienced primarily during
January and February from crossrate transactions involving the
euro relative to the Japanese yen due to short term volatility as
a result of conflicting economic signals and a surprise cut in
the discount rate by the Bank of Japan. Smaller losses of
approximately 5.3% 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. These
losses were partially offset by gains of approximately 18.5%
recorded in the global interest rate futures markets primarily
during August and September from long positions in short-term
U.S. interest rate futures as prices trended higher following
interest rate cuts by the U.S. Federal Reserve and as investors
sought the safe-haven of shorter maturity fixed income
investments. Smaller gains of approximately 0.4% were recorded
in the soft commodities markets primarily during February from
short cotton futures positions as cotton prices declined on weak

export sales and low demand. Total expenses for the year were
$1,760,846, resulting in a net loss of $2,934,740. The net asset
value of a Unit decreased from $8.20 at December 31, 2000 to $7.13
at December 31, 2001.

At December 31, 2000, the Partnership's total capital was
$22,309,441, a decrease of $767,920 from the Partnership's total
capital of $23,077,361 at December 31, 1999. For the year ended
December 31, 2000, the Partnership generated a net loss of
$1,995,420, total subscriptions aggregated $7,125,282 and total
redemptions aggregated $5,897,782.

For the year ended December 31, 2000, the Partnership recorded
total trading losses, net of interest income, of $6,294 and posted
a decrease in net asset value per Unit. The most significant
losses of approximately 10.8% were recorded in the global stock
index futures markets primarily during January from long
positions in U.S. stock index futures as U.S. and European equity
prices reversed lower, after rallying higher in December 1999,
amid fears of interest rate hikes in the U.S. and Europe. During
April, additional losses were recorded from long U.S. stock index
futures positions as domestic equity prices declined following
the release of an unexpected jump in the Consumer Price Index.
In the metals markets, losses of approximately 5.6% resulted
primarily from short aluminum futures positions as prices

reversed sharply higher during mid June on institutional buying
and fears that U.S. capacity could be hit further by power
shortages. Additional losses were incurred throughout the fourth
quarter from long positions in copper and aluminum futures as
prices declined after concerns mounted that demand would weaken
amid a cooling of the U.S. economy. A portion of the
Partnership's overall losses was partially offset by gains of
approximately 7.2% recorded in the energy markets primarily
during November and December from long positions in natural gas
futures as prices trended higher on supply and storage concerns.
In the global interest rate futures markets, gains of
approximately 6.5% were recorded primarily during August and
December from long positions in U.S. interest rate futures as
prices climbed higher amid a drop in stock prices and as fears of
an economic slowdown drew investors to the perceived safety of
government securities. Total expenses for the year were
$1,989,126, resulting in a net loss of $1,995,420. The net asset
value of a Unit decreased from $8.93 at December 31, 1999 to $8.20
at December 31, 2000.

At December 31, 1999, the Partnership's total capital was
$23,077,361, an increase of $17,275,911 from the Partnership's
total capital of $5,801,450 at February 26, 1999. For the period
from March 1, 1999 (commencement of operations) through December
31, 1999, the Partnership generated a net loss of $487,845, total

subscriptions aggregated $18,309,078 and total redemptions
aggregated $545,322.

For the period ended December 31, 1999, the Partnership recorded
trading revenues, including interest income, of $608,255 and,
after expenses, posted a decrease in net asset value per Unit.
Losses of approximately 6.25% occurred in the global interest rate
futures markets. The Partnership experienced losses in the third
quarter from short positions in Japanese interest rate futures as
prices moved higher amid fears that a strong yen may slow that
nation's budding recovery. In addition, positions in U.S. and
European bonds proved unprofitable as price volatility and
choppiness experienced during the year limited the ability to
capitalize on trends. Additional losses of approximately 4.27%
were recorded in the soft commodities markets primarily in coffee
futures due to weather-driven volatility in Brazil, which is the
world's largest producer of coffee. A portion of the
Partnership's overall losses was offset by gains of approximately
11.19% recorded in the global stock index futures markets
particularly from long positions in U.S. and European equity
markets. These long positions in U.S. and European equity index
futures were especially profitable as many markets experienced
significant year-end rallies. Trading in the energy markets
produced gains of approximately 0.80% as OPEC cooperated with
other major global oil producing countries to rein in production
and allow for the drawing down of inventories that had grown

steadily throughout 1998. Crude oil and its refined products all
benefited from the improving global demand for energy and the
decreased supply of crude oil. Total expenses for the period were
$1,096,100, resulting in a net loss of $487,845. The net asset
value of a Unit decreased from $10.00 at inception of trading on
March 1, 1999 to $8.93 at December 31, 1999.

The Partnership's overall performance record represents varied
results of trading in different futures, forwards and options
markets. For a further description of 2001 trading results, refer
to the letter to the Limited Partners in the accompanying Annual
Report to Limited Partners for the year ended December 31, 2001,
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 or exchange 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.

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

See "Financial Instruments" under Notes to Financial Statements
in the Partnership's Annual Report to Limited Partners for the
year ended December 31, 2001, which is incorporated by reference
to Exhibit 13.01 of this Form 10-K.

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 Partnership's
- 22 -
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.

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.

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, 2001 and 2000. At
December 31, 2001 and 2000, the Partnership's total

- - 24 -
capitalization was approximately $17 million and $22 million,
respectively.
Primary Market December 31, 2001 December 31, 2000
Risk Category Value at Risk Value at Risk

Interest Rate (1.57)% (3.01)%
Equity (1.47) (0.00)
Currency (0.68) (1.60)
Commodity (1.01) (1.68)
Aggregate Value at Risk (2.13)% (3.82)%

Aggregate Value at Risk represents the aggregate VaR of all the
Partnership's open positions and not the sum of the VaR of the
individual market categories listed above. Aggregate VaR will be
lower as it takes into account correlation among different
positions and categories.

The table above represents the VaR of the Partnership's open
positions at December 31, 2001 and 2000 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, 2001 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, 2001 through December 31, 2001.
Primary Market Risk Category High Low Average
Interest Rate (3.52)% (1.57)% (2.51)%
Equity (1.47) (0.00) (0.63)
Currency (2.30) (0.68) (1.48)
Commodity (1.70) (0.61) (1.11)
Aggregate Value at Risk (4.90)% (2.13)% (3.44)%

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, 2001 and 2000 and for the end of
the four quarterly reporting periods during calendar year 2001.

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, 2001, the Partnership's cash balance at Morgan
Stanley DW was approximately 79% 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, 2001, 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
December 31, 2001 was to the global interest rate complex.
- 29 -
Exposure was primarily spread across the U.S., European and
Japanese 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 United States and the other G-7
countries. The G-7 countries consist of France, U.S., Britain,
Germany, Japan, Italy and Canada. 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.

Equity. The primary equity exposure at December 31, 2001 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 December 31, 2001, the Partnership's
primary exposures were to the Hang Seng (China), S&P 500 (U.S.),
NASDAQ (U.S.) and Nikkei (Japan) stock indices. The Partnership
is primarily exposed to the risk of adverse price trends or
static markets in the U.S., Japanese and European 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.

Currency. The Partnership's currency exposure at December 31,
2001 was 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 in a large number of
currencies, including cross-rates - i.e., positions between two
currencies other than the U.S. dollar. At December 31, 2001, 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 dollar-based Partnership in expressing
VaR in a functional currency other than dollars.

Commodity.
Energy. At December 31, 2001, the Partnership's energy
exposure was shared primarily by futures contracts in the
crude oil and its related products, and natural gas markets.
Price movements in these markets result from political
developments in the Middle East, weather patterns and other
economic fundamentals. It is possible that volatility will
remain high. 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 December 31,
2001 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 movement in these markets. The Trading
Advisor has, from time to time, taken positions when market
opportunities develop. Demeter anticipates that the
Partnership will continue to be exposed to the precious
metals markets.

Soft Commodities and Agriculturals. At December 31, 2001,
the Partnership had exposure to the markets that comprise
these sectors. Most of the exposure, however, was to the
coffee 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 December 31, 2001:

Foreign Currency Balances. The Partnership's primary
foreign currency balances at December 31, 2001 were in Hong
Kong dollars, euros and Japanese yen. 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)

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 officers of Demeter are as follows:

Robert E. Murray, age 41, is the Executive Director of Morgan
Stanley DW's Managed Futures Department, a leading commodity pool
operator with approximately $1.4 billion in assets across a
variety of U.S. and international public and private managed
futures funds. In this capacity, Mr. Murray is responsible for
overseeing all aspects of Morgan Stanley DW's Managed Futures
Department. 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 17 years. He is also the Chairman and President of
Morgan Stanley Futures & Currency Management Inc. ("MSFCM")
(formerly known as Dean Witter Futures & Currency Management
Inc.), Morgan Stanley's internal commodity trading advisor, and
is Chairman and President of Demeter, the entity which acts as a
general partner for Morgan Stanley DW's managed futures funds.
Mr. Murray has served as the Vice Chairman and a Director of the
Board of the Managed Futures Association and is currently a

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.

Mitchell M. Merin, age 48, is a Director of Demeter. Mr. Merin
is also a Director of MSFCM. Mr. Merin was appointed the Chief
Operating Officer of Individual Asset Management for MSDW in
December 1998 and the President and Chief Executive Officer of
Morgan Stanley Dean Witter Advisors in February 1998. He has
been an Executive Vice President of Morgan Stanley DW since 1990,
during which time he has been Director of Morgan Stanley DW's
Taxable Fixed Income and Futures divisions, Managing Director in
Corporate Finance and Corporate Treasurer. Mr. Merin received
his Bachelors degree from Trinity College in Connecticut and his
M.B.A. degree in Finance and Accounting from the Kellogg Graduate
School of Management of Northwestern University in 1977.

Joseph G. Siniscalchi, age 56, 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 60, is a Director of Demeter. Mr.
Oelsner is currently an Executive Vice President and head of the
Product Development Group at Morgan Stanley Dean Witter Advisors,
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 his 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 50, is a Director of Demeter. Mr. Beech
has been associated with the futures industry for over 24 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 also had worked at two investment banking firms in
operations, research, managed futures and sales management.

Raymond A. Harris, age 45, is currently Managing Director in
Asset Management Services. He previously served as CAO 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 Dean
Witter & Co. 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 39, became a Director of Demeter on
September 14, 2000. Mr. DeLuca is also a Director of MSFCM. Mr.
DeLuca was appointed the Controller of Asset Management for MSDW
in June 1999. Prior to that, Mr. DeLuca was a partner at the
accounting firm of Ernst & Young LLP, where he had MSDW 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.

Raymond E. Koch, age 46, is Chief Financial Officer of Demeter.
Mr. Koch began his career at MSDW in 1988, has overseen the
Managed Futures Accounting function since 1992, and is currently
an Executive Director in Investment Management Controllers. From

November 1979 to June 1988, Mr. Koch held various positions at
Thomson McKinnon Securities, Inc. culminating as Manager, Special
Projects in the Capital Markets Division. From August 1977 to
November 1979 he was an auditor, specializing in financial
services at Deloitte Haskins & Sells. Mr. Koch received his
B.B.A. in accounting from Iona College in 1977, an M.B.A. in
finance 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, 2001, 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, 2001,
Demeter owned 32,392.072 Units of General Partnership Interest
representing a 1.39 percent interest in 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, 2001, 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 $1,369,546 for the year ended December 31,
2001.

PART IV
Item 14.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, 2001 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, 2001 and 2000 and the period from March
1, 1999 (commencement of operations) to December 31 1999.

- - Statements of Financial Condition as of December 31, 2001 and
2000.

- - Schedule of Investments as of December 31, 2001.

- - Statements of Operations, Changes in Partners' Capital, and Cash
Flows for the years ended December 31, 2001 and 2000 and the
period from March 1, 1999 (commencement of operations) to December
31, 1999.

- - 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, 2001 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
During the quarter ended December 31, 2001, the Current Report on Form
8-K was filed by the Partnership on November 6, 2001 for the purpose of
reporting, under Item 5, the Partnership's change of name; the
relocation of offices of the Partnership and Demeter; the transfer of

futures and options clearing of the Partnership to MS & Co.; and the
replacement by MS & Co. as counterparty on all foreign currency forward
contracts for the Partnership.

(c) Exhibits
Refer to Exhibit Index on Pages E-1 to E-2.

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 WELTON L.P.
(Registrant)

BY: Demeter Management Corporation,
General Partner

March 29, 2002 BY: /s/ Robert E. Murray
Robert E. Murray, Director,
Chairman of the Board 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 29, 2002
Robert E. Murray, Director,
Chairman of the Board and
President

/s/ Mitchell M. Merin March 29, 2002
Mitchell M. Merin, Director

/s/ Joseph G. Siniscalchi March 29, 2002
Joseph G. Siniscalchi, Director

/s/ Edward C. Oelsner III March 29, 2002
Edward C. Oelsner III, Director

/s/ Richard A. Beech March 29, 2002
Richard A. Beech, Director

/s/ Raymond A. Harris March 29, 2002
Raymond A. Harris, Director

/s/ Anthony J. DeLuca March 29, 2002
Anthony J. DeLuca, Director

/s/ Raymond E. Koch March 29, 2002
Raymond E. Koch, Chief
Financial Officer and Principal
Accounting Officer

EXHIBIT INDEX
ITEM

3.01 Form of Amended and Restated Limited Partnership Agreement
of the Partnership, dated as of October 31, 2000, is
incorporated by reference to Exhibit A of the
Partnership's Prospectus, dated October 11, 2000, filed
with the Securities and Exchange Commission pursuant to
Rule 424(b)(3) under the Securities Act of 1933, as
amended, on October 13, 2000.

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.
333-60097) 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 Welton L.P.) is
incorporated by reference to Exhibit 3.01 of the
Partnership's Form 8-K (File No. 0-25607) 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 Welton Investment Corporation,
is incorporated by reference to Exhibit 10.01 of the
Partnership's Quarterly Report on Form 10-Q (File No. 0-
25607) 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 referenced to Exhibit B of the
Partnership's Prospectus dated October 11, 2000, filed with
the Securities and Exchange Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933, as amended, on
October 13, 2000.
10.03 Amended and Restated Escrow Agreement, dated as of October
11, 2000, among the Partnership, Morgan Stanley Charter
Graham L.P., Morgan Stanley Charter Millburn 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. 333-91567) 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. 0-25607) 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. 0-25607) 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-
25607) 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. 0-25607) 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 October 11, 2000, filed with the Securities and
Exchange Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933, as amended, on October 13, 2000.
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. 0-25607) filed
with the Securities and Exchange Commission on November 6,
2001.
13.01 December 31, 2001 Annual Report to Limited Partners is
filed herewith.

Morgan Stanley
Charter Series

December 31, 2001
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.

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

CHARTER MSFCM

Year Return
- ---- ------

1994 (10 months) -7.3%
1995 21.9%
1996 4.0%
1997 26.2%
1998 5.1%
1999 -9.2%
2000 23.8%
2001 -3.3%

Inception-to-Date Return: 69.2%
Annualized Return: 6.9%

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

CHARTER GRAHAM

Year Return
- ---- ------
1999 (10 months) 2.9%
2000 22.0%
2001 9.7%

Inception-to-Date Return: 37.7%
Annualized Return: 11.9%

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

CHARTER MILLBURN

Year Return
- ---- ------
1999 (10 months) -7.2%
2000 12.1%
2001 -11.3%

Inception-to-Date Return: -7.7%
Annualized Return: -2.8%

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

CHARTER WELTON

Year Return
- ---- ------
1999 (10 months) -10.7%
2000 -8.2%
2001 -13.0%

Inception-to-Date Return: -28.7%
Annualized Return: -11.2%

Demeter Management Corporation

c/o Managed Futures Department
825 Third Avenue, 8th Floor,
New York, NY 10022
Telephone (201) 876-4647

Morgan Stanley Charter Series
Annual Report
2001

Dear Limited Partner:

This marks the third annual report for Morgan Stanley Charter Graham, Charter
Millburn and Charter Welton and the eighth annual report for Morgan Stanley
Charter MSFCM. The Net Asset Value per Unit for each of the four Charter Series
Funds on December 31, 2001 was as follows:

% change
Funds N.A.V. for year
----- ------ --------

Charter MSFCM $16.92 -3.3%
Charter Graham $13.77 9.7%
Charter Millburn $ 9.23 -11.3%
Charter Welton $ 7.13 -13.0%

Charter MSFCM

During the year, the Fund posted a loss in Net Asset Value per Unit. The most
significant losses were recorded in the currency markets primarily during July
and September from transactions involving the euro relative to the British
pound. Smaller losses were recorded throughout the first nine months of the
year from trading 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 Fund's overall losses was partially
offset by gains recorded in the global interest rate futures markets during the
first and third quarters from long positions in U.S. and European interest rate
futures as prices trended higher on interest rate cuts, shaky consumer
confidence and continued economic concerns.

Charter Graham

During the year, the Fund posted a gain in Net Asset Value per Unit. The most
significant gains were recorded in the global interest rate futures markets
primarily from long positions in U.S. interest rate

futures during August and September as domestic bond prices trended higher amid
concerns for the U.S. economy. In the global stock index futures markets, gains
were recorded primarily during the third quarter from short positions in DAX,
TOPIX and Nikkei Index futures as equity prices moved sharply lower on
corporate profit warnings and amid worries regarding global economic
uncertainty. A portion of the Fund's overall gains was partially offset
primarily by losses recorded in the agricultural markets from trading soybean
meal and soybean oil futures due to volatile, trendless price movements.

On June 14, 2001, the General Partner, after consultation with Graham Capital
Management, L.P., the Trading Advisor to Charter Graham, stopped using the
Non-Trend Based Program at 150% Leverage to trade Fund assets on the basis that
the Non-Trend Based Program at 150% Leverage was not performing up to
expectations. The General Partner instructed the Trading Advisor to liquidate
all positions in the Non-Trend Based Program at 150% Leverage and to reallocate
all assets from those positions to the K4 Program at 150% Leverage, one of the
Trading Advisor's other two programs used in the Fund. (The other is the Global
Diversified Program at 150% Leverage). With this reallocation, approximately
60% of the Fund's assets are traded pursuant to the Global Diversified Program
at 150% Leverage and approximately 40% of the Fund's assets are traded pursuant
to the K4 Program at 150% Leverage. Starting with the June closing, the
allocations of subscriptions, redemptions and exchanges are similarly changed,
with 60% allocated to the Global Diversified Program at 150% Leverage and 40%
allocated to the K4 Program at 150% Leverage.

Limited Partners are further advised that, effective January 2, 2002, the
assets of Charter Graham were reallocated as follows: approximately 50% of the
assets will be traded pursuant to the Global Diversified Program at 150%
Leverage and approximately 50% of the assets will be traded pursuant to the K4
Program at 150% Leverage. Furthermore, all subscriptions, redemptions, and
exchanges into or out of Charter Graham will be reallocated in the same
proportions.

Charter Millburn

During the year, the Fund posted a loss in Net Asset Value per Unit. The most
significant losses were

recorded in the energy markets 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 Fund's overall losses was partially
offset primarily by gains recorded throughout a majority of the third quarter
in the global stock index futures markets from short positions in Hang Seng and
DAX Index futures as equity prices moved sharply lower on corporate profit
warnings and amid worries regarding global economic uncertainty. Smaller
profits were recorded in the currency markets during the first quarter and also
during December from short positions in the Japanese yen as its value weakened
relative to the U.S. dollar amid concerns for the ailing Japanese economy.

Charter Welton

During the year, the Fund posted a loss in Net Asset Value per Unit. The most
significant losses were recorded in the energy markets 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. These losses were partially offset
primarily by gains recorded in the global interest rate futures markets
primarily from long positions in U.S. interest rate futures during August and
September as prices trended higher following interest rate cuts by the U.S.
Federal Reserve.

Should you have any questions concerning this report, please feel free to
contact Demeter Management Corporation, c/o Managed Futures Department, 825
Third Avenue, 8th 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/ Robert Murray
Robert E. Murray
Chairman
Demeter Management Corporation
General Partner

Morgan Stanley Charter Series
(formerly, Morgan Stanley Dean Witter Charter Series)

Independent Auditors' Report

The Limited Partners and the General Partner of Morgan Stanley Charter MSFCM
L.P. (formerly, Morgan Stanley Dean Witter Charter DWFCM L.P.), Morgan Stanley
Charter Graham L.P. (formerly, Morgan Stanley Dean Witter Charter Graham L.P.),
Morgan Stanley Charter Millburn L.P. (formerly, Morgan Stanley Dean Witter
Charter Millburn L.P.), and Morgan Stanley Charter Welton L.P. (formerly,
Morgan Stanley Dean Witter Charter Welton L.P.):

We have audited the accompanying statements of financial condition 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, 2001 and 2000, including the schedules
of investments as of December 31, 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, 2001 for Morgan Stanley Charter MSFCM
L.P., and for the years ended December 31, 2001 and 2000 and the period from
March 1, 1999 (commencement of operations) to December 31, 1999 for Morgan
Stanley Charter Graham L.P., Morgan Stanley Charter Millburn L.P., and Morgan
Stanley Charter Welton 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 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, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001 for Morgan Stanley Charter MSFCM L.P., and for the years
ended December 31, 2001 and 2000 and the period from March 1, 1999
(commencement of operations) to December 31, 1999 for Morgan Stanley Charter
Graham L.P., Morgan Stanley Charter Millburn L.P., and Morgan Stanley Charter
Welton L.P. in conformity with accounting principles generally accepted in the
United States of America.

/s/ Deloitte & Touche LLP

New York, New York
February 15, 2002

Morgan Stanley Charter MSFCM L.P.
(formerly, Morgan Stanley Dean Witter Charter DWFCM L.P.)

Statements of Financial Condition

December 31,
----------------------
2001 2000
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 43,273,083 34,507,098

Net unrealized gain on open contracts (MS&Co.) 47,467 4,714,032
Net unrealized loss on open contracts (MSIL) (1,148,932) (842,031)
---------- ----------
Total net unrealized gain (loss) on open contracts (1,101,465) 3,872,001
---------- ----------
Total Trading Equity 42,171,618 38,379,099
Subscriptions receivable 1,275,759 193,359
Interest receivable (Morgan Stanley DW) 66,817 182,914
---------- ----------
Total Assets 43,514,194 38,755,372
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 789,197 930,780
Accrued brokerage fees (-Morgan Stanley DW) 252,816 184,421
Accrued management fees (MSFCM) 72,233 52,692
Accrued incentive fees (MSFCM) -- 205,168
---------- ----------
Total Liabilities 1,114,246 1,373,061
---------- ----------
PARTNERS' CAPITAL
Limited Partners (2,471,774.794 and 2,102,258.734
Units, respectively) 41,832,302 36,795,254
General Partner (33,540.900 Units) 567,646 587,057
---------- ----------
Total Partners' Capital 42,399,948 37,382,311
---------- ----------
Total Liabilities and Partners' Capital 43,514,194 38,755,372
========== ==========
NET ASSET VALUE PER UNIT (Note 1) 16.92 17.50
========== ==========

Statements of Operations

For the Years Ended
December 31,
---------------------------------
2001 2000 1999
---------- ---------- ----------
$ $ $

REVENUES
Trading profit (loss):
Realized 5,807,007 5,655,002 (3,118,414)
Net change in unrealized (4,973,466) 3,263,304 1,054,886
---------- ---------- ----------
Total Trading Results 833,541 8,918,306 (2,063,528)
Interest income (Morgan Stanley DW) 1,431,775 1,611,060 1,492,539
---------- ---------- ----------
Total 2,265,316 10,529,366 (570,989)
---------- ---------- ----------
EXPENSES
Brokerage fees (Morgan Stanley DW) 2,759,119 1,821,573 2,089,386
Management fees (MSFCM) 788,319 982,932 1,194,754
Incentive fees (MSFCM) 148,065 205,168 --
Transaction fees and costs -- 83,748 134,354
Administrative expenses -- 66,000 72,000
---------- ---------- ----------
Total 3,695,503 3,159,421 3,490,494
---------- ---------- ----------
NET INCOME (LOSS) (1,430,187) 7,369,945 (4,061,483)
========== ========== ==========
Net Income (Loss) Allocation:
Limited Partners (1,410,776) 7,257,147 (4,013,384)
General Partner (19,411) 112,798 (48,099)
Net Income (Loss) per Unit (Note 1):
Limited Partners (0.58) 3.36 (1.43)
General Partner (0.58) 3.36 (1.43)

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

Morgan Stanley Charter Graham L.P.
(formerly, Morgan Stanley Dean Witter Charter Graham L.P.)

Statements of Financial Condition

December 31,
----------------------
2001 2000
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 45,247,504 26,570,361

Net unrealized gain on open contracts (MS&Co.) 1,617,509 3,586,880
Net unrealized loss on open contracts (MSIL) (751,401) (160,517)
Net unrealized loss on open contracts (Carr) -- (10,863)
---------- ----------
Total net unrealized gain on open contracts 866,108 3,415,500
---------- ----------
Total Trading Equity 46,113,612 29,985,861
Subscriptions receivable 2,428,001 252,518
Interest receivable (Morgan Stanley DW) 69,554 142,031
---------- ----------
Total Assets 48,611,167 30,380,410
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 329,746 556,261
Accrued brokerage fees (Morgan Stanley DW) 264,953 149,461
Accrued management fees 75,700 42,703
Accrued incentive fees -- 860,827
---------- ----------
Total Liabilities 670,399 1,609,252
---------- ----------
PARTNERS' CAPITAL
Limited Partners (3,443,452.290 and 2,265,759.190
Units, respectively) 47,429,838 28,446,182
General Partner (37,094.046 and 25,884.600 Units,
respectively) 510,930 324,976
---------- ----------
Total Partners' Capital 47,940,768 28,771,158
---------- ----------
Total Liabilities and Partners' Capital 48,611,167 30,380,410
========== ==========
NET ASSET VALUE PER UNIT 13.77 12.55
========== ==========

Statements of Operations

For the Years For the Period from
Ended March 1, 1999
December 31, (commencement of
--------------------- operations) to
2001 2000 December 31, 1999
---------- --------- -------------------
$ $ $

REVENUES
Trading profit (loss):
Realized 9,678,296 4,638,274 839,458
Net change in unrealized (2,549,392) 2,344,969 1,070,531
---------- --------- ---------
Total Trading Results 7,128,904 6,983,243 1,909,989
Interest income (Morgan Stanley DW) 1,250,516 1,242,395 444,815
---------- --------- ---------
Total 8,379,420 8,225,638 2,354,804
---------- --------- ---------
EXPENSES
Brokerage fees (Morgan Stanley DW) 2,476,549 1,517,906 723,042
Incentive fees 1,936,526 950,165 --
Management fees 707,585 433,688 206,583
---------- --------- ---------
Total 5,120,660 2,901,759 929,625
---------- --------- ---------
NET INCOME 3,258,760 5,323,879 1,425,179
========== ========= =========
Net Income Allocation:
Limited Partners 3,223,806 5,265,407 1,408,675
General Partner 34,954 58,472 16,504
Net Income per Unit:
Limited Partners 1.22 2.26 .29
General Partner 1.22 2.26 .29

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

Morgan Stanley Charter Millburn L.P.
(formerly, Morgan Stanley Dean Witter Charter Millburn L.P.)

Statements of Financial Condition

December 31,
----------------------
2001 2000
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 28,407,799 25,080,303

Net unrealized gain on open contracts (MS&Co.) 1,741,218 5,085,160
Net unrealized loss on open contracts (MSIL) (306,488) (114,319)
---------- ----------
Total net unrealized gain on open contracts 1,434,730 4,970,841
---------- ----------
Total Trading Equity 29,842,529 30,051,144
Subscriptions receivable 812,001 402,325
Interest receivable (Morgan Stanley DW) 46,476 141,550
---------- ----------
Total Assets 30,701,006 30,595,019
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 264,713 619,297
Accrued brokerage fees (Morgan Stanley DW) 169,316 150,207
Accrued management fees 48,376 42,916
---------- ----------
Total Liabilities 482,405 812,420
---------- ----------
PARTNERS' CAPITAL
Limited Partners (3,239,320.452 and 2,833,265.854
Units, respectively) 29,883,431 29,457,979
General Partner (36,331.944 and 31,221.881 Units,
respectively) 335,170 324,620
---------- ----------
Total Partners' Capital 30,218,601 29,782,599
---------- ----------
Total Liabilities and Partners' Capital 30,701,006 30,595,019
========== ==========
NET ASSET VALUE PER UNIT 9.23 10.40
========== ==========

Statements of Operations

For the Years For the Period from
Ended March 1, 1999
December 31, (commencement of
--------------------- operations) to
2001 2000 December 31, 1999
---------- --------- -------------------
$ $ $

REVENUES
Trading profit (loss):
Realized 1,548,568 76,367 (2,134,562)
Net change in unrealized (3,536,111) 4,050,018 920,823
---------- --------- ----------
Total Trading Results (1,987,543) 4,126,385 (1,213,739)
Interest income (Morgan Stanley DW) 1,143,337 1,404,756 559,942
---------- --------- ----------
Total (844,206) 5,531,141 (653,797)
---------- --------- ----------
EXPENSES
Brokerage fees (Morgan Stanley DW) 2,168,012 1,699,726 912,182
Management fees 619,432 485,636 260,624
Incentive fees -- -- 103,350
---------- --------- ----------
Total 2,787,444 2,185,362 1,276,156
---------- --------- ----------
NET INCOME (LOSS) (3,631,650) 3,345,779 (1,929,953)
========== ========= ==========
Net Income (Loss) Allocation:
Limited Partners (3,592,200) 3,310,250 (1,909,044)
General Partner (39,450) 35,529 (20,909)
Net Income (Loss) per Unit:
Limited Partners (1.17) 1.12 (.72)
General Partner (1.17) 1.12 (.72)

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

Morgan Stanley Charter Welton L.P.
(formerly, Morgan Stanley Dean Witter Charter L.P.)

Statements of Financial Condition

December 31,
----------------------
2001 2000
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 17,326,697 19,614,103

Net unrealized gain on open contracts (MS&Co.) 602,122 3,456,472
Net unre-alized loss on open contracts (MSIL) (476,077) (155,033)
---------- ----------
Total net unrealized gain on open contracts 126,045 3,301,439
Net option premiums (185,228) (55,994)
---------- ----------
Total Trading Equity 17,267,514 22,859,548
Subscriptions receivable 75,500 265,050
Interest receivable (Morgan Stanley DW) 28,300 110,806
---------- ----------
Total Assets 17,371,314 23,235,404
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 586,655 771,830
Accrued brokerage fees (Morgan Stanley DW) 102,343 119,881
Accrued management fees 29,240 34,252
---------- ----------
Total Liabilities 718,238 925,963
---------- ----------
PARTNERS' CAPITAL
Limited Partners (2,303,418.240 and 2,688,816.221
Units, respectively) 16,422,138 22,043,879
General Partner (32,392.072 Units) 230,938 265,562
---------- ----------
Total Partners' Capital 16,653,076 22,309,441
---------- ----------
Total Liabilities and Partners' Capital 17,371,314 23,235,404
========== ==========
NET ASSET VALUE PER UNIT 7.13 8.20
========== ==========

Statements of Operations

For the Years For the Period from
Ended March 1, 1999
December 31, (commencement of
---------------------- operations) to
2001 2000 December 31, 1999
---------- ---------- -------------------
$ $ $

REVENUES
Trading profit (loss):
Realized 1,237,257 (2,859,783) (1,636,293)
Net change in unrealized (3,175,394) 1,578,590 1,722,849
---------- ---------- ----------
Total Trading Results (1,938,137) (1,281,193) 86,556
Interest income (Morgan
Stanley DW) 764,243 1,274,899 521,699
---------- ---------- ----------
Total (1,173,894) (6,294) 608,255
---------- ---------- ----------
EXPENSES
Brokerage fees (Morgan
Stanley DW) 1,369,546 1,547,098 852,522
Management fees 391,300 442,028 243,578
---------- ---------- ----------
Total 1,760,846 1,989,126 1,096,100
---------- ---------- ----------
NET LOSS (2,934,740) (1,995,420) (487,845)
========== ========== ==========
Net Loss Allocation:
Limited Partners (2,900,116) (1,972,281) (481,546)
General Partner (34,624) (23,139) (6,299)
Net Loss per Unit:
Limited Partners (1.07) (0.73) (1.07)
General Partner (1.07) (0.73) (1.07)

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

Morgan Stanley Charter Series
(formerly, Morgan Stanley Dean Witter Charter Series)
Statements of Changes in Partners' Capital
For the Years Ended December 31, 2001, 2000 and 1999

Units of
Partnership Limited General
Interest Partners Partner Total
------------- ---------- ------- ----------
(Note 1) $ $ $

Morgan Stanley Charter MSFCM L.P.
(formerly, Morgan Stanley Dean Witter Charter DWFCM L.P.)
Partners' Capital,
December 31, 1998 2,919,789.900 44,949,810 522,358 45,472,168
Net loss -- (4,013,384) (48,099) (4,061,483)
Redemptions (360,673.500) (5,225,471) -- (5,225,471)
------------- ---------- ------- ----------
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
============= ========== ======= ==========

Statements of Changes in Partners' Capital

For the Years Ended December 31, 2001 and 2000 and for the Period from March 1,
1999 (commencement of operations) to December 31, 1999

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

$ $ $
Morgan Stanley Charter Graham L.P.
(formerly, Morgan Stanley Dean Witter Charter Graham L.P.)
Partners' Capital,
Initial Offering 436,313.664 4,303,136 60,000 4,363,136
Offering of Units 1,612,075.766 15,122,352 160,000 15,282,352
Net income -- 1,408,675 16,504 1,425,179
Redemptions (41,053.445) (409,555) -- (409,555)
------------- ---------- ------- ----------
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
============= ========== ======= ==========

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

Morgan Stanley Charter Series
(formerly, Morgan Stanley Dean Witter Charter Series)

Statements of Changes in Partners' Capital

For the Years Ended December 31, 2001 and 2000 and for the Period from March 1,
1999 (commencement of operations) to December 31, 1999

Units of
Partnership Limited General
Interest Partners Partner Total
------------- ---------- ------- ----------
$ $ $
Morgan Stanley Charter Millburn L.P.
(formerly, Morgan Stanley Dean Witter Charter
Millburn L.P.)

Partners' Capital,
Initial Offering 483,488.295 4,774,883 60,000 4,834,883
Offering of Units 2,079,748.071 20,678,854 225,000 20,903,854
Net loss -- (1,909,044) (20,909) (1,929,953)
Redemptions (53,025.935) (505,064) -- (505,064)
------------- ---------- ------- ----------
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
============= ========== ======= ==========

Units of
Partnership Limited General
Interest Partners Partner Total
------------- ---------- ------- ----------
$ $ $
Morgan Stanley Charter Welton L.P.
(formerly, Morgan Stanley Dean Witter Charter
Welton L.P.)
Partners' Capital,
Initial Offering 580,145.052 5,731,450 70,000 5,801,450
Offering of Units 2,067,456.248 18,109,078 200,000 18,309,078
Net loss -- (481,546) (6,299) (487,845)
Redemptions (63,501.129) (545,322) -- (545,322)
------------- ---------- ------- ----------
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
============= ========== ======= ==========

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

Morgan Stanley Charter MSFCM L.P.
(formerly, Morgan Stanley Dean Witter Charter DWFCM L.P.)

Statements of Cash Flows

For the Years Ended
December 31,
-----------------------------------
2001 2000 1999
---------- ---------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) (1,430,187) 7,369,945 (4,061,483)
Noncash item included in net
income (loss):
Net change in unrealized 4,973,466 (3,263,304) (1,054,886)
(Increase) decrease in operating
assets:
Interest receivable (Morgan
Stanley DW) 116,097 (52,908) 8,818
Increase (decrease) in operating
liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 68,395 184,421 --
Accrued management fees
(MSFCM) 19,541 (39,318) (22,557)
Accrued incentive fees
(MSFCM) (205,168) 205,168 --
Accrued administrative
expenses -- (70,250) (7,619)
---------- ---------- -----------
Net cash provided by (used for)
operating activities 3,542,144 4,333,754 (5,137,727)
---------- ---------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 10,799,873 343,831 --
Increase in subscriptions
receivable (1,082,400) (193,359) --
Increase (decrease) in
redemptions payable (141,583) 404,024 286,839
Redemptions of Units (4,352,049) (6,516,679) (5,225,471)
---------- ---------- -----------
Net cash provided by (used for)
financing activities 5,223,841 (5,962,183) (4,938,632)
---------- ---------- -----------

Net increase (decrease) in cash 8,765,985 (1,628,429) (10,076,359)
Balance at beginning of period 34,507,098 36,135,527 46,211,886
---------- ---------- -----------
Balance at end of period 43,273,083 34,507,098 36,135,527
========== ========== ===========

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

Morgan Stanley Charter Graham L.P.
(formerly, Morgan Stanley Dean Witter Charter Graham L.P.)

Statements of Cash Flows

For the
Period from
For the Years March 1, 1999
Ended (commencement
December 31, of operations) to
---------------------- December 31,
2001 2000 1999
---------- ---------- -----------------
$ $ $

CASH FLOWS FROM
OPERATING
ACTIVITIES
Net income 3,258,760 5,323,879 1,425,179
Noncash item included in
net income:
Net change in
unrealized 2,549,392 (2,344,969) (1,070,531)
(Increase) decrease in
operating assets:
Interest receivable
(Morgan Stanley DW) 72,477 (63,257) (78,774)
Increase (decrease) in
operating liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 115,492 41,311 108,150
Accrued management
fees 32,997 11,803 30,900
Accrued incentive fees (860,827) 860,827 --
---------- ---------- ----------
Net cash provided by
operating activities 5,168,291 3,829,594 414,924
---------- ---------- ----------
CASH FLOWS FROM
FINANCING
ACTIVITIES
Initial Offering -- -- 4,363,136
Offering of Units 20,812,938 7,687,343 15,282,352
(Increase) decrease in
subscriptions receivable (2,175,483) 558,682 (811,200)
Increase (decrease) in
redemptions payable (226,515) 328,118 228,143
Redemptions of Units (4,902,088) (4,901,176) (409,555)
---------- ---------- ----------
Net cash provided by
financing activities 13,508,852 3,672,967 18,652,876

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

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

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

Morgan Stanley Charter Millburn L.P.
(formerly, Morgan Stanley Dean Witter Charter Millburn L.P.)

Statements of Cash Flows

For the
Period from
For the Years March 1, 1999
Ended (commencement
December 31, of operations)
---------------------- to December 31,
2001 2000 1999
---------- ---------- ---------------
$ $ $

CASH FLOWS FROM
OPERATING
ACTIVITIES
Net income (loss) (3,631,650) 3,345,779 (1,929,953)
Noncash item included in
net income (loss):
Net change in unrealized 3,536,111 (4,050,018) (920,823)
(Increase) decrease in
operating assets:
Interest receivable
(Morgan Stanley DW) 95,074 (45,348) (96,202)
Increase in operating
liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 19,109 20,836 129,371
Accrued management
fees 5,460 5,953 36,963

---------- ---------- ----------
Net cash provided by (used
for) operating activities 24,104 (722,798) (2,780,644)
---------- ---------- ----------
CASH FLOWS FROM
FINANCING
ACTIVITIES
Initial offering -- -- 4,834,883
Offering of Units 9,055,536 8,818,482 20,903,854
(Increase) decrease in
subscriptions receivable (409,676) 610,910 (1,013,235)
Increase (decrease) in
redemptions payable (354,584) 381,322 237,975
Redemptions of Units (4,987,884) (5,685,382) (505,064)
---------- ---------- ----------
Net cash provided by
financing activities 3,303,392 4,125,332 24,458,413
---------- ---------- ----------

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

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

Morgan Stanley Charter Welton L.P.
(formerly, Morgan Stanley Dean Witter Charter Welton L.P.)

Statements of Cash Flows

For the
Period from
For the Years March 1, 1999
Ended (commencement
December 31, of operations) to
---------------------- December 31,
2001 2000 1999
---------- ---------- -----------------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss (2,934,740) (1,995,420) (487,845)
Noncash item included in net
loss:
Net change in unrealized 3,175,394 (1,578,590) (1,722,849)
(Increase) decrease in
operating assets:
Net option premiums 129,234 459,306 (403,312)
Interest receivable
(Morgan Stanley DW) 82,506 (27,259) (83,547)
Increase (decrease) in
operating liabilities:
Accrued brokerage fees
(Morgan Stanley DW) (17,538) (967) 120,848
Accrued management fees (5,012) (276) 34,528
---------- ---------- ----------
Net cash provided by (used
for) operating activities 429,844 (3,143,206) (2,542,177)
---------- ---------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Initial offering -- -- 5,801,450
Offering of Units 2,990,346 7,125,282 18,309,078
(Increase) decrease in
subscriptions receivable 189,550 683,374 (948,424)
Increase (decrease) in
redemptions payable (185,175) 549,196 222,634
Redemptions of Units (5,711,971) (5,897,782) (545,322)
---------- ---------- ----------
Net cash provided by (used
for) financing activities (2,717,250) 2,460,070 22,839,416
---------- ---------- ----------

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

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

Morgan Stanley Charter MSFCM L.P. (formerly, Morgan Stanley Dean Witter Charter
DWFCM L.P.)

Schedule of Investments

December 31, 2001

Partnership Net Assets: $42,399,948

Net
Long Short Unrealized Percentage of # of Contracts/
Futures and Forward Contracts: Gain/(Loss) Gain/(Loss) Gain/(Loss) Net Assets Notional Amounts
- ------------------------------ ----------- ----------- ----------- ------------- ----------------
$ $ $ %

Foreign currency (1,557,847) 1,193,718 (364,129) (0.86) 2,268,192,000
Interest rate -- 311,908 311,908 0.74 792
Commodity (1,148,932) 183,470 (965,462) (2.28) 467
---------- --------- ---------- -----
Grand Total: (2,706,779) 1,689,096 (1,017,683) (2.40)
========== ========= =====
Unrealized Currency Loss (83,782)
----------
Total Net Unrealized Loss per Statement of
Financial Condition (1,101,465)
==========

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

Morgan Stanley Charter Graham L.P. (formerly, Morgan Stanley Dean Witter
Charter Graham L.P.)

Schedule of Investments

December 31, 2001

Partnership Net Assets: $47,940,768

Net
Long Short Unrealized Percentage of # of Contracts/
Futures and Forward Contracts: Gain/(Loss) Gain/(Loss) Gain/(Loss) Net Assets Notional Amounts
- ------------------------------ ----------- ----------- ----------- ------------- ----------------
$ $ $ %

Foreign currency 934,741 1,007,431 1,942,172 4.05 2,398,800,974
Interest rate (55,801) (92,474) (148,275) (0.31) 3,454
Commodity (633,879) (36,080) (669,959) (1.40) 1,241
Equity 14,300 (40,973) (26,673) (0.05) 62
-------- --------- --------- -----
Grand Total: 259,361 837,904 1,097,265 2.29
======== ========= =====
Unrealized Currency Loss (231,157)
---------
Total Net Unrealized Gain per Statement of
Financial Condition 866,108
=========

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

Morgan Stanley Charter Millburn L.P. (formerly, Morgan Stanley Dean Witter
Charter Millburn L.P.)

Schedule of Investments

December 31, 2001

Partnership Net Assets: $30,218,601

Long Short Net Unrealized Percentage of # of Contracts/
Futures and Forward Contracts: Gain/(Loss) Gain/(Loss) Gain/(Loss) Net Assets Notional Amounts
- ------------------------------ ----------- ----------- -------------- ------------- ----------------
$ $ $ %

Foreign currency 537,188 1,119,535 1,656,723 5.48* 3,503,740,000
Interest rate (42,624) 150,141 107,517 0.36 704
Commodity (312,108) 100,695 (211,413) (0.70) 263
Equity (737) 4,219 3,482 0.01 57
-------- --------- --------- -----
Grand Total 181,719 1,374,590 1,556,309 5.15
======== ========= =====
Unrealized Currency Loss (121,579)
---------
Total Net Unrealized Gain per Statement of
Financial Condition 1,434,730
=========

*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. (formerly, Morgan Stanley Dean Witter
Charter Welton L.P.)

Schedule of Investments

December 31, 2001

Partnership Net Assets: $16,653,076

Net
Long Short Unrealized Percentage of # of Contracts/
Futures and Forward Contracts: Gain/(Loss) Gain/(Loss) Gain/(Loss) Net Assets Notional Amounts
- ------------------------------ ----------- ----------- ----------- ------------- ----------------
$ $ $ %

Commodity (370,424) 17,838 (352,586) (2.12) 621
Interest rate 14,100 101,428 115,528 0.69 481
Foreign currency -- 300,875 300,875 1.81 398
Equity 39,687 (10,150) 29,537 0.18 222
-------- ------- -------- -----
Grand Total: (316,637) 409,991 93,354 0.56
======== ======= =====
Unrealized Currency Gain 32,691
--------
Total Net Unrealized Gain per Statement of
Financial Condition 126,045
========

Theaccompanying notes are an integral part of these financial statements.

Morgan Stanley Charter Series
(formerly, Morgan Stanley Dean Witter Charter Series)

Notes to Financial Statement

1. Summary of Significant Accounting Policies

Organization--Morgan Stanley Charter MSFCM L.P. (formerly known as Morgan
Stanley Dean Witter Charter DWFCM L.P.) ("Charter MSFCM"), Morgan Stanley
Charter Graham L.P. (formerly known as Morgan Stanley Dean Witter Charter
Graham L.P.) ("Charter Graham"), Morgan Stanley Charter Millburn L.P. (formerly
known as Morgan Stanley Dean Witter Charter Millburn L.P.) ("Charter
Millburn"), and Morgan Stanley Charter Welton L.P. (formerly known as Morgan
Stanley Dean Witter 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.,
Inc. ("MS&Co.") and Morgan Stanley & Co. International Limited ("MSIL"). The
trading advisor for Charter MSFCM is Morgan Stanley Futures & Currency
Management Inc. ("MSFCM"). Prior to November 2000, Carr Futures Inc. ("Carr")
provided clearing and execution services to the Partnerships. Demeter, Morgan
Stanley DW, MS&Co., MSIL and MSFCM are wholly-owned subsidiaries of Morgan
Stanley Dean Witter & Co.

On October 11, 2000, DWFCM International Access Fund L.P. changed its name to
Morgan Stanley Dean Witter Charter DWFCM L.P. and 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 April 2, 2001, Dean Witter Reynolds Inc. changed its name to Morgan
Stanley DW Inc.

Effective November 1, 2001, Morgan Stanley Dean Witter Charter DWFCM L.P.,
Morgan Stanley Dean Witter Charter Graham L.P., Morgan Stanley Dean Witter
Charter Millburn L.P. and Morgan Stanley Dean Witter Charter Welton L.P. were
renamed to 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., respectively.

Morgan Stanley Charter Series
(formerly, Morgan Stanley Dean Witter Charter Series)

Notes to Financial Statement--(Continued)

Effective November 8, 2001, Dean Witter Futures & Currency Management Inc.
changed its name to Morgan Stanley Futures & Currency Management Inc.

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 due the Partnerships on forward
contracts and other futures interests, but not actually received.

Net Income (Loss) per Unit--Net income (loss) per Unit is computed using the
weighted average number of Units outstanding during the period.

Condensed Schedule 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 now 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.

Morgan Stanley Charter Series
(formerly, Morgan Stanley Dean Witter Charter Series)

Notes to Financial Statement--(Continued)

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 7% of the Partnership's Net Assets
as of the first day of each month (a 7% annual rate). Such fees currently cover
all brokerage commissions, transaction fees and costs and ordinary
administrative and offering expenses.

Prior to December 1, 2000, Charter MSFCM accrued brokerage commissions on a
half-turn basis at 80% of Morgan Stanley DW's published non-member rates and
transaction fees and costs were accrued on a half-turn basis. 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 incur 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 December 1, 2000, Charter MSFCM paid all operating expenses related to
its trading activities, 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.

Morgan Stanley Charter Series
(formerly, Morgan Stanley Dean Witter Charter Series)

Notes to Financial Statement--(Continued)

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 to the continuing
offering of Units will be paid by the Limited Partners or the Partnerships.
Morgan Stanley DW will pay 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 the Partnerships.

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 180 days
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 MSFCM will terminate on December 31,
2025 and Charter Graham, Charter Millburn and Charter Welton will terminate on
December 31, 2035 or at an earlier date if certain conditions occur as defined
in each Partnership's Limited Partnership Agreement.

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

Morgan Stanley Charter Series
(formerly, Morgan Stanley Dean Witter Charter Series)

Notes to Financial Statement--(Continued)

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 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, 2001 were as follows:

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 a flat-rate monthly fee of 1/12 of 2% of
the Net Assets under management by each trading advisor as of the first day of
each month (a 2% annual rate).

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, which is paid on a quarterly basis for Charter MSFCM, and paid on a
monthly basis for 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, quarterly with respect to Charter MSFCM, the
trading advisor must earn back such losses before that trading advisor is
eligible for an incentive fee in the future.

Morgan Stanley Charter Series
(formerly, Morgan Stanley Dean Witter Charter Series)

Notes to Financial Statement--(Continued)

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.

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 MSFCM

Net Unrealized Gains/
(Losses) on Open Contracts Longest Maturities
-------------------------------- --------------------
Off- Off-
Exchange- Exchange- Exchange- Exchange-
Year Traded Traded Total Traded Traded
---- --------- --------- ---------- --------- ----------

$ $ $
2001 (737,333) (364,132) (1,101,465) June 2003 April 2002
2000 2,307,848 1,564,153 3,872,001 June 2002 Mar. 2001

Morgan Stanley Charter Series
(formerly, Morgan Stanley Dean Witter Charter Series)

Notes to Financial Statement--(Continued)

Charter Graham

Net unrealized Gains/
(Losses) on Open Contracts Longest Maturities
----------------------------- -------------------
Off- Off-
Exchange- Exchange- Exchange- Exchange-
Year Traded Traded Total Traded Traded
---- --------- --------- --------- --------- ---------
$ $ $

2001 1,017,777 (151,669) 866,108 June 2003 Mar. 2002
2000 3,043,579 371,921 3,415,500 June 2002 Mar. 2001

Charter Millburn

Net unrealized Gains/
(Losses) on Open Contracts Longest Maturities
------------------------------ -------------------
Off- Off-
Exchange- Exchange- Exchange- Exchange-
Year Traded Traded Total Traded Traded
---- --------- --------- --------- --------- ---------
$ $ $

2001 (221,988) 1,656,718 1,434,730 Mar. 2002 Mar. 2002
2000 2,734,201 2,236,640 4,970,841 June 2001 Mar. 2001

Charter Welton

Net unrealized Gains/
(Losses) on Open Contracts Longest Maturities
----------------------------- -------------------
Off- Off-
Exchange- Exchange- Exchange- Exchange-
Year Traded Traded Total Traded Traded
---- --------- --------- --------- --------- ---------
$ $ $

2001 126,045 -- 126,045 Sep. 2002 --
2000 3,301,439 -- 3,301,439 Sep. 2001 --

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.

Morgan Stanley Charter Series
(formerly, Morgan Stanley Dean Witter Charter Series)

Notes to Financial Statement--(Continued)

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
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 $42,535,750 and $36,814,946
for Charter MSFCM, $46,265,281 and $29,613,940 for Charter Graham, $28,185,811
and $27,814,504 for Charter Millburn, and $17,452,742 and $22,915,542 for
Charter Welton at December 31, 2001 and 2000, 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 MSFCM

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

NET ASSET VALUE, JANUARY 1, 2001: $17.50
------
NET OPERATING RESULTS:
Realized Profit 2.60
Unrealized Loss (2.19)
Interest Income 0.63
Expenses (1.62)
------
Net Loss (0.58)
------
NET ASSET VALUE, DECEMBER 31, 2001: $16.92
======

Expense Ratio 9.3 %
Net Loss Ratio (3.6)%
TOTAL RETURN: (3.3)%

Morgan Stanley Charter Series
(formerly, Morgan Stanley Dean Witter Charter Series)

Notes to Financial Statement--(Concluded)

Charter Graham

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

NET ASSET VALUE, JANUARY 1, 2001: $12.55
------
NET OPERATING RESULTS:
Realized Profit 3.56
Unrealized Loss (0.93)
Interest Income 0.45
Expenses (1.86)
------
Net Income 1.22
------
NET ASSET VALUE, DECEMBER 31, 2001: $13.77
======

Expense Ratio 13.8%
Net Income Ratio 8.8%
TOTAL RETURN: 9.7%

Charter Millburn

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

NET ASSET VALUE, JANUARY 1, 2001: $10.40
------
NET OPERATING RESULTS:
Realized Profit 0.52
Unrealized Loss (1.15)
Interest Income 0.37
Expenses (0.91)
------
Net Loss (1.17)
------

NET ASSET VALUE, DECEMBER 31, 2001: $ 9.23
======

Expense Ratio 9.0 %
Net Loss Ratio (11.7)%
TOTAL RETURN: (11.3)%

Charter Welton

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

NET ASSET VALUE, JANUARY 1, 2001: $ 8.20
------
NET OPERATING RESULTS:
Realized Profit 0.51
Unrealized Loss (1.20)
Interest Income 0.29
Expenses (0.67)
------
Net Loss (1.07)
------

NET ASSET VALUE, DECEMBER 31, 2001: $ 7.13
======

Expense Ratio 9.2 %
Net Loss Ratio (15.4)%
TOTAL RETURN: (13.0)%

6. Legal Matters

In April 2001, the Appellate Division of New York State dismissed the class
action previously disclosed in the Partnership's Annual Report for the year
ended December 31, 2000. Because plaintiffs did not exercise their right to
appeal any further, this dismissal constituted a final resolution of the case.

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