MORGAN STANLEY CHARTER CAMPBELL LP - 10-Q Quarterly Report

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

FORM 10-Q

[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2004 or

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

Commission File Number 0-50064

MORGAN STANLEY CHARTER CAMPBELL L.P.

(Exact name of registrant as specified in its charter)

Delaware 01-0710311
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Demeter Management Corporation
330 Madison Avenue, 8th Floor
New York, NY 10017
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (212) 905-2700

825 Third Avenue, 9th Floor, New York, NY 10022

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

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

Yes X No___________

Indicate by check-mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act).

Yes No X

MORGAN STANLEY CHARTER CAMPBELL L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 30, 2004

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

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

MORGAN STANLEY CHARTER CAMPBELL L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Nine Months Ended September 30, 2004 and 2003
(Unaudited)

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

MORGAN STANLEY CHARTER CAMPBELL L.P.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004
(Unaudited)
The unaudited financial statements contained herein include, in
the opinion of management, all adjustments necessary for a fair
presentation of the results of operations and financial condition
of Morgan Stanley Charter Campbell L.P. (the "Partnership"). The
financial statements and condensed notes herein should be read in
conjunction with the Partnership's December 31, 2003 Annual Report
on Form 10-K.

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

The Partnership's general partner is Demeter Management
Corporation ("Demeter"). The non-clearing commodity broker is
MORGAN STANLEY CHARTER CAMPBELL L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Morgan Stanley DW Inc. ("Morgan Stanley DW"). The clearing
commodity brokers are Morgan Stanley & Co. Incorporated ("MS &
Co.") and Morgan Stanley & Co. International Limited ("MSIL").
Demeter, Morgan Stanley DW, MS & Co., and MSIL are wholly-owned
subsidiaries of Morgan Stanley. Campbell & Company, Inc. (the
"Trading Advisor") is the trading advisor to the Partnership.

2. Related Party Transactions
The Partnership's cash is on deposit with Morgan Stanley DW, MS &
Co., and MSIL in futures, forwards, and options trading accounts
to meet margin requirements as needed. Morgan Stanley DW pays the
Partnership interest income at a rate equal to that earned by
Morgan Stanley DW on its U.S. Treasury bill investments. In
addition, Morgan Stanley DW pays interest received from MS & Co.
and MSIL with respect to such Partnership's assets deposited as
margin. The Partnership pays brokerage fees to Morgan Stanley DW.

3. Financial Instruments
The Partnership trades futures contracts, options on futures
contracts, and forward contracts on physical commodities and other
commodity interests, including, but not limited to, foreign
currencies, financial instruments, metals, energy, and
agricultural products. Futures and forwards represent contracts
for delayed delivery of an instrument at a specified date and
MORGAN STANLEY CHARTER CAMPBELL L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

price. Risk arises from changes in the value of these contracts
and the potential inability of counterparties to perform under the
terms of the contracts. There are numerous factors which may
significantly influence the market value of these contracts,
including interest rate volatility.

The market value of exchange-traded contracts is based on the
settlement price quoted by the exchange on the day with respect
to which market value is being determined. If an exchange-traded
contract could not have been liquidated on such day due to the
operation of daily limits or other rules of the exchange, the
settlement price shall be the settlement price on the first
subsequent day on which the contract could be liquidated. The
market value of off-exchange-traded contracts is based on the
fair market value quoted by the counterparty.

The Partnership's contracts are accounted for on a trade-date
basis and marked to market on a daily basis. The Partnership
accounts for its derivative investments in accordance with the
provisions of Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
("SFAS No. 133"). SFAS No. 133 defines a derivative as a
financial instrument or other contract that has all three of the
following characteristics:
MORGAN STANLEY CHARTER CAMPBELL L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1) One or more underlying notional amounts or payment
provisions;
2) Requires no initial net investment or a smaller initial net
investment than would be required relative to changes in
market factors;
3) Terms require or permit net settlement.

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

The net unrealized gains on open contracts, reported as a
component of "Equity in futures interests trading accounts" on the
Statements of Financial Condition, and their longest contract
maturities were as follows:
Net Unrealized Gains
on Open Contracts Longest Maturities
Exchange- Off-Exchange- Exchange- Off-Exchange-
Date Traded Traded Total Traded Traded
$ $ $

Sep. 30, 2004 1,310,506 3,929,888 5,240,394 Jun. 2005 Dec. 2004
Dec. 31, 2003 1,903,386 3,309,147 5,212,533 Sep. 2004 Mar. 2004

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

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

which the Partnership trades is limited to the amounts reflected
in the Partnership's Statements of Financial Condition.

The Partnership also has credit risk because Morgan Stanley DW,
MS & Co., and MSIL act as the futures commission merchants or the
counterparties, with respect to most of the Partnership's assets.
Exchange-traded futures, forward, and futures-styled options
contracts are marked to market on a daily basis, with variations
in value settled on a daily basis. Morgan Stanley DW, MS & Co.,
and MSIL, each as a futures commission merchant for the
Partnership's exchange-traded futures, forward, and futures-
styled options contracts, are required, pursuant to regulations
of the Commodity Futures Trading Commission ("CFTC"), to
segregate from their own assets, and for the sole benefit of
their commodity customers, all funds held by them with respect to
exchange-traded futures, forward, and futures-styled options
contracts, including an amount equal to the net unrealized gains
(losses) on all open futures, forward, and futures-styled options
contracts, which funds, in the aggregate, totaled $215,249,812
and $99,731,757 at September 30, 2004 and December 31, 2003,
respectively. With respect to the Partnership's off-exchange-
traded forward currency contracts, there are no daily exchange-

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

required settlements of variation in value nor is there any
requirement that an amount equal to the net unrealized gains
(losses) on open forward contracts be segregated. However, the
Partnership is required to meet margin requirements equal to the

net unrealized loss on open contracts in the Partnership accounts
with the counterparty, which is accomplished by daily maintenance
of the cash balance in a custody account held at Morgan Stanley
DW for the benefit of MS & Co. With respect to those off-
exchange-traded forward currency contracts, the Partnership is at
risk to the ability of MS & Co., the sole counterparty on all
such contracts, to perform. The Partnership has a netting
agreement with MS & Co. This agreement, which seeks to reduce
both the Partnership's and MS & Co.'s exposure on off-exchange-
traded forward currency contracts, should materially decrease the
Partnership's credit risk in the event of MS & Co.'s bankruptcy
or insolvency.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Liquidity. The Partnership deposits its assets with Morgan
Stanley DW as non-clearing broker, and MS & Co. and MSIL as
clearing brokers in separate futures, forwards, and options
trading accounts established for the Trading Advisor, which assets
are used as margin to engage in trading and may be used as margin
solely for the Partnership's trading. The assets are held in
either non-interest bearing bank accounts or in securities and
instruments permitted by the CFTC for investment of customer
segregated or secured funds. Since the Partnership's sole purpose
is to trade in futures, forwards, and options, it is expected that
the Partnership will continue to own such liquid assets for margin
purposes.

The Partnership's investment in futures, forwards, and options
may, from time to time, be illiquid. Most U.S. futures exchanges
limit fluctuations in prices during a single day by regulations
referred to as "daily price fluctuations limits" or "daily
limits". Trades may not be executed at prices beyond the daily
limit. If the price for a particular futures or options contract
has increased or decreased by an amount equal to the daily limit,
positions in that futures or options contract can neither be taken
nor liquidated unless traders are willing to effect trades at or
within the limit. Futures prices have occasionally moved the
daily limit for several consecutive days with little or no
trading. These market conditions could prevent the Partnership
from promptly liquidating its futures or options contracts and
result in restrictions on redemptions.

There is no limitation on daily price moves in trading forward
contracts on foreign currencies. The markets for some world
currencies have low trading volume and are illiquid, which may
prevent the Partnership from trading in potentially profitable
markets or prevent the Partnership from promptly liquidating
unfavorable positions in such markets, subjecting it to
substantial losses. Either of these market conditions could
result in restrictions on redemptions. For the periods covered by
this report, illiquidity has not materially affected the
Partnership's assets.

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

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

There are no known material trends, favorable or unfavorable, that
would affect, nor any expected material changes to, the
Partnership's capital resource arrangements at the present time.

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

Results of Operations
General. The Partnership's results depend on the Trading Advisor
and the ability of the Trading Advisor's trading program to take
advantage of price movements in the futures, forwards, and options
markets. The following presents a summary of the Partnership's
operations for the three and nine month periods ended September
30, 2004 and 2003, 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 during the period in question. Past
performance is no guarantee of future results.

The Partnership's results of operations set forth in the
financial statements on pages 2 through 11 of this report were
prepared in accordance with accounting principles generally
accepted in the United States of America, which require the use
of certain accounting policies that affect the amounts reported
in these financial statements, including the following: The
contracts the Partnership trades are accounted for on a trade-
date basis and marked to market on a daily basis. The difference
between their cost and market value is recorded on the Statements
of Operations as "Net change in unrealized trading profit (loss)"
for open (unrealized) contracts, and recorded as "Realized
trading profit (loss)" when open positions are closed out. The
sum of these amounts constitutes the Partnership's trading
results. The market value of a futures contract is the
settlement price on the exchange on which that futures contract
is traded on a particular day. The value of foreign currency
forward contracts is based on the spot rate as of the close of
business, New York City time, on a given day. Interest income
revenue, as well as management fees, incentive fees, and
brokerage fees expenses of the Partnership are recorded on an
accrual basis.

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

For the Three and Nine Months Ended September 30, 2004
The Partnership recorded losses net of interest income totaling
$3,963,978 and expenses totaling $4,760,925, resulting in a net
loss of $8,724,903 for the three months ended September 30, 2004.
The Partnership's net asset value per Unit decreased from $11.32
at June 30, 2004 to $10.86 at September 30, 2004.

The most significant trading losses of approximately 2.1% were
incurred during July from long positions in European and U.S.
equity index futures as prices reversed lower early in the month
due to the release of disappointing U.S. employment data, surging
energy prices, and government warnings concerning potential
terrorist attacks. Further losses were recorded from newly
established short positions late in the month as U.S. equity
prices reversed higher due to a better-than-expected consumer
confidence report and the release of strong earnings in Great
Britain, France, and Germany. During September, losses resulted
from long positions in European equity index futures as rising
energy prices, conflicting economic data, and weak corporate
earnings data pulled prices lower. Additional losses resulted
from short positions in Nasdaq-100 Index futures in the first
half of the month as prices drifted higher after better-than-
expected earnings. In the currency markets, losses of
approximately 1.4% were recorded during August from positions in
the euro relative to the U.S. dollar as the value of the euro
experienced short-term volatility due to conflicting economic
data and surging energy prices throughout a majority of the
month. Additional losses in August were incurred from long
positions in the British pound versus the U.S. dollar as the
value of the pound reversed lower due to speculation that the
Bank of England will not increase interest rates as much as
expected. Elsewhere in the currency markets, losses were
incurred during September from long positions in the Japanese yen
relative to the U.S. dollar as the value of the yen declined amid
surprisingly low second quarter growth, weakness in the equity
markets, and the repatriation of funds by Japanese exporters.
Further losses were recorded from short positions in the Swiss
franc against the U.S. dollar as that currency's "safe-haven"
status pushed its value higher in reaction to major geopolitical
concerns. A portion of the Partnership's overall losses for the
quarter was offset by gains of approximately 1.7% in global
interest rate futures markets, primarily during August, from long
positions in European interest rate futures as global bond prices
trended higher, boosted by a surge in oil prices earlier in the
month, a drop in equity prices, and a mixed economic picture
generated by reports on U.S. retail sales, jobless claims, and
trade deficit.

The Partnership recorded revenues including interest income
totaling $3,684,768 and expenses totaling $16,070,562, resulting
in a net loss of $12,385,794 for the nine months ended September
30, 2004. The Partnership's net asset value per Unit decreased
from $11.14 at December 31, 2003 to $10.86 at September 30, 2004.

The most significant trading losses of approximately 4.0% were
incurred in the global stock index markets, primarily during
March, from long European stock index futures positions as equity
prices dropped on terror attacks in Madrid, worse-than-expected
German industrial production, and weak business confidence data.
Further losses were recorded during July from long positions in
European and U.S. equity index futures as prices reversed lower
early in the month due to the release of disappointing U.S.
employment data, surging energy prices, and government warnings
concerning potential terrorist attacks. Later in the month,
losses were recorded from newly established short positions as
U.S. equity prices reversed higher due to a better-than-expected
consumer confidence report and the release of strong earnings in
Great Britain, France, and Germany. During September, losses
continued from long positions in European equity index futures as
rising energy prices, conflicting economic data, and weak
corporate earnings data pulled prices lower. Further losses were
experienced in September from short positions in Nasdaq-100 Index
futures in the first half of the month as prices drifted higher
after better-than-expected earnings. A portion of the Partner-
ship's overall losses for the first nine months of the year was
offset by gains of approximately 8.8% generated in the
global interest rate markets, primarily during February, March,
and August, from long positions in European and U.S. interest rate
futures as prices moved higher on speculation about European and
U.S. interest rate policy, uncertainty in global equity markets,
and safe-haven buying following major geopolitical concerns.
Additional gains of approximately 1.9% were recorded in the energy
markets, primarily during February, April, and May, from long
futures positions in crude oil and its related products as prices
trended higher amid fears of potential terrorist attacks against
Saudi Arabian oil facilities and disruptions in Iraqi oil
production, falling inventory levels, and uncertainty regarding
production levels from OPEC. Smaller gains of approximately 1.0%
were experienced in the currency markets during January, February,
and September from long positions in the New Zealand and Canadian
dollar versus the U.S. dollar as the value of these "commodity
currencies" strengthened due to higher gold prices and interest
rate hikes by the Reserve Bank of New Zealand and the Bank of
Canada. Smaller gains were recorded from long positions in the
British pound versus the U.S. dollar, primarily during January and
February, as the pound increased sharply versus the dollar due to
U.S. current-account deficits, concerns for potential terrorist
attacks, and looming expectations for a further increase of U.K.
interest rates by the Bank of England.

For the Three and Nine Months Ended September 30, 2003
The Partnership recorded losses net of interest income totaling
$1,267,036 and expenses totaling $1,568,504, resulting in a net
loss of $2,835,540 for the three months ended September 30, 2003.
The Partnership's net asset value per Unit decreased from $10.79
at June 30, 2003 to $10.31 at September 30, 2003.

The most significant trading losses of approximately 3.6% in the
global interest rate markets stemmed from positions in European
and U.S. interest rate futures as prices declined in July amid
rising interest rates and then reversed higher during August amid
renewed fears that a global economic recovery was unsustainable
and amid investor demand for the security of fixed income
investments. Additional losses of approximately 2.3% in the
energy markets were recorded from futures positions in crude oil
and its related products during September as prices trailed lower
throughout a majority of the month and then unexpectedly reversed
higher after OPEC announced that it would move to reduce output by
limiting production in an effort to stem declining oil prices. A
portion of the Partnership's overall losses for the quarter was
offset by gains of approximately 2.0% in the global stock index
markets from long positions in Asian stock index futures during
July and August as prices jumped higher in response to increased
investor demand triggered by record low Japanese government bond
yields, robust Japanese economic data, and strength in U.S. equity
markets. In the currency markets, gains of approximately 1.3%
were provided during September by long positions in the
Japanese yen versus the U.S. dollar as the yen's value was buoyed
by the Bank of Japan's comments regarding its passive currency
intervention policy and perceptions that the Japanese economic
crisis was finally at a turning point. Long positions in the
British pound and Australian dollar versus the U.S. dollar
provided additional gains also during September as the value of
the U.S. dollar declined in the wake of lower U.S. and European
equity prices.

The Partnership recorded revenues including interest income
totaling $4,039,015 and expenses totaling $4,009,188, resulting in
net income of $29,827 for the nine months ended September 30,
2003. The Partnership's net asset value per Unit increased from
$9.58 at December 31, 2002 to $10.31 at September 30, 2003.

The most significant trading gains of approximately 14.6% were
recorded in the currency markets from long positions in the euro
as its value strengthened versus the U.S. dollar during January
amid renewed fears of a military conflict with Iraq, increased
tensions with North Korea, and weak U.S. economic data.
Additional gains were provided by short positions in the British
pound versus the U.S. dollar as the value of the pound decreased
during February due to weak economic data out of the U.K. and an
interest rate cut by the Bank of England. Additional gains during
February and April were recorded from long positions in the
Canadian and Australian dollar versus the U.S. dollar as the value
of these currencies increased on the heels of higher
commodity prices and significant interest rate differentials
between the respective countries and the U.S. During September,
profits were recorded from long positions in the Japanese yen
versus the U.S. dollar as the yen's value was buoyed by the Bank
of Japan's comments regarding its passive currency intervention
policy and perceptions that the Japanese economic crisis was
finally at a turning point. Long positions in the British pound,
Australian dollar, and euro versus the U.S. dollar provided
additional gains during September as the value of the U.S. dollar
declined in the wake of lower U.S. and European equity prices.
Additional gains of approximately 1.7% in the energy markets were
provided by long positions in natural gas futures as prices
rallied during January and February due to prolonged frigid
temperatures in the northeastern and midwestern United States. In
the global stock index markets, long positions in Asian stock
index futures recorded gains of approximately 1.4% during July and
August as prices jumped higher in response to increased investor
demand triggered by record low Japanese government bond yields,
robust Japanese economic data, and gains in U.S. equity markets.
Long positions in U.S. stock index futures also experienced gains
during July as prices were buoyed by a rise in investor sentiment.
A portion of the Partnership's overall gains for the first nine
months of the year was offset by losses of approximately 0.6%
incurred by long gold futures positions during February, March,
and June as prices declined in response to the rise of the U.S.
dollar.
Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK

Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards, and options. The
market-sensitive instruments held by the Partnership are acquired
for speculative trading purposes only and, as a result, all or
substantially all of the Partnership's assets are at risk of
trading loss. Unlike an operating company, the risk of market-
sensitive instruments is inherent to the primary business
activity of the Partnership.

The futures, forwards, and options traded by the Partnership
involve varying degrees of related market risk. Market risk is
often dependent upon changes in the level or volatility of
interest rates, exchange rates, and prices of financial
instruments and commodities, factors that result in frequent
changes in the fair value of the Partnership's open positions,
and consequently in its earnings, whether realized or unrealized,
and cash flow. Gains and losses on open positions of exchange-
traded futures, forwards, and options are settled daily through
variation margin. Gains and losses on off-exchange-traded
forward currency contracts are settled upon termination of the
contract, however, the Partnership is required to meet margin
requirements equal to the net unrealized loss on open contracts
in the Partnership accounts with the counterparty, which is
accomplished by daily maintenance of the cash balance in a
custody account held at Morgan Stanley DW for the benefit of MS &
Co.

The Partnership's total market risk may increase or decrease as
it is influenced by a wide variety of factors, including, but not
limited to, the diversification among the Partnership's open
positions, the volatility present within the markets, and the
liquidity of the markets.

The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements. Margin requirements generally range between 2% and
15% of contract face value. Additionally, the use of leverage
causes the face value of the market sector instruments held by
the Partnership to typically be many times the total
capitalization of the Partnership.

The Partnership's past performance is no guarantee of its future
results. Any attempt to numerically quantify the Partnership's
market risk is limited by the uncertainty of its speculative
trading. The Partnership's speculative trading and use of
leverage may cause future losses and volatility (i.e., "risk of
ruin") that far exceed the Partnership's experience to date under
the "Partnership's Value at Risk in Different Market Sectors"
section and significantly exceed the Value at Risk ("VaR") tables
disclosed.

Limited partners will not be liable for losses exceeding the
current net asset value of their investment.

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

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

The Partnership's risk exposure in the market sectors traded by
the Trading Advisor is estimated below in terms of VaR. The
Partnership estimates VaR using a model based upon historical
simulation (with a confidence level of 99%) which involves
constructing a distribution of hypothetical daily changes in the
value of a trading portfolio. The VaR model takes into account
linear exposures to risks including equity and commodity
prices, interest rates, foreign exchange rates, and correlation
among these variables. The hypothetical changes in portfolio
value are based on daily percentage changes observed in key
market indices or other market factors ("market risk factors") to
which the portfolio is sensitive. The one-day 99% confidence
level of the Partnership's VaR corresponds to the negative change
in portfolio value that, based on observed market risk factors,
would have been exceeded once in 100 trading days, or one day in
100. VaR typically does not represent the worst case outcome.
Demeter uses approximately four years of daily market data (1,000
observations) and revalues its portfolio (using delta-gamma
approximations) for each of the historical market moves that
occurred over this time period. This generates a probability
distribution of daily "simulated profit and loss" outcomes. The
VaR is the appropriate percentile of this distribution. For
example, the 99% one-day VaR would represent the 10th worst
outcome from Demeter's simulated profit and loss series.

The Partnership's VaR computations are based on the risk
representation of the underlying benchmark for each instrument or
contract and do not distinguish between exchange and non-exchange
dealer-based instruments. They are also not based on exchange
and/or dealer-based maintenance margin requirements.

VaR models, including the Partnership's, are continually
evolving as trading portfolios become more diverse and modeling
techniques and systems capabilities improve. Please note that
the VaR model is used to numerically quantify market risk for
historic reporting purposes only and is not utilized by either
Demeter or the Trading Advisor in their daily risk management
activities. Please further note that VaR as described above may
not be comparable to similarly titled measures used by other
entities.

The Partnership's Value at Risk in Different Market Sectors
The following table indicates the VaR associated with the
Partnership's open positions as a percentage of total net assets
by primary market risk category at September 30, 2004 and 2003.
At September 30, 2004 and 2003, the Partnership's total
capitalization was approximately $227 million and $83 million,
respectively.

Primary Market September 30, 2004 September 30, 2003
Risk Category Value at Risk Value at Risk

Interest Rate (2.25)% (0.22)%

Currency (1.29) (1.61)

Equity (0.52) (1.12)

Commodity (0.10) (0.73)

Aggregate Value at Risk (2.27)% (2.10)%

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

Because the business of the Partnership is the speculative
trading of futures, forwards, and options, the composition of its
trading portfolio can change significantly over any given time
period, or even within a single trading day, which could
positively or negatively materially impact market risk as
measured by VaR.

The table below supplements the quarter-end VaR set forth above
by presenting the Partnership's high, low, and average VaR, as a
percentage of total net assets for the four quarter-end reporting
periods from October 1, 2003 through September 30, 2004.

Primary Market Risk Category High Low Average
Interest Rate (2.25)% (0.54)% (1.68)%
Currency (1.75) (0.92) (1.22)
Equity (1.23) (0.23) (0.63)
Commodity (0.58) (0.10) (0.32)
Aggregate Value at Risk (2.78)% (1.19)% (2.07)%

Limitations on Value at Risk as an Assessment of Market
Risk
VaR models permit estimation of a portfolio's aggregate market
risk exposure, incorporating a range of varied market risks;
reflect risk reduction due to portfolio diversification or hedging
activities; and can cover a wide range of portfolio assets.
However, VaR risk measures should be viewed in light of the
methodology's limitations, which include, but may not be limited
to the following:
? past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
? changes in portfolio value caused by market movements may
differ from those of the VaR model;
? VaR results reflect past market fluctuations applied to current
trading positions while future risk depends on future
positions;
? VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
? the historical market risk factor data used for VaR estimation
may provide only limited insight into losses that could be
incurred under certain unusual market movements.

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

The VaR tables provided present the results of the Partnership's
VaR for each of the Partnership's market risk exposures and on an
aggregate basis at September 30, 2004 and 2003, and for the four
quarter-end reporting periods from October 1, 2003 through
September 30, 2004. VaR is not necessarily representative of the
Partnership's historic risk, nor should it be used to predict the
Partnership's future financial performance or its ability to
manage or monitor risk. There can be no assurance that the
Partnership's actual losses on a particular day will not exceed
the VaR amounts indicated above or that such losses will not occur
more than once in 100 trading days.

Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances. These balances and any market risk they may represent
are immaterial.

The Partnership also maintains a substantial portion
(approximately 89% as of September 30, 2004) of its available
assets in cash at Morgan Stanley DW. A decline in short-term
interest rates would result in a decline in the Partnership's cash
management income. This cash flow risk is not considered to be
material.

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

Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership's
market risk exposures - except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
Partnership manages its primary market risk exposures - constitute
forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act.
The Partnership's primary market risk exposures, as well as the
strategies used and to be used by Demeter and the Trading Advisor
for managing such exposures, are subject to numerous
uncertainties, contingencies and risks, any one of which could
cause the actual results of the Partnership's risk controls to
differ materially from the objectives of such strategies.
Government interventions, defaults and expropriations, illiquid
markets, the emergence of dominant fundamental factors, political
upheavals, changes in historical price relationships, an influx of
new market participants, increased regulation, and many other
factors could result in material losses, as well as in material
changes to the risk exposures and the risk management strategies
of the Partnership. Investors must be prepared to lose all
or substantially all of their investment in the Partnership.

The following were the primary trading risk exposures of the
Partnership at September 30, 2004, 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
September 30, 2004 was to the global interest rate sector.
Exposure was primarily spread across the European, U.S., 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 interest rate exposure is generally to interest
rate fluctuations in the U.S. and the other G-7 countries. The
G-7 countries consist of France, the U.S., Britain, Germany,
Japan, Italy, and Canada. Demeter anticipates that the G-7
countries interest rates will remain the primary interest rate
exposure of the Partnership for the foreseeable future. The
speculative futures positions held by the Partnership may range
from short to long-term instruments. Consequently, changes in
short, medium, or long-term interest rates may have an effect on
the Partnership.

Currency. The second largest market exposure of the
Partnership at September 30, 2004 was to the currency sector.
The Partnership's currency exposure is to exchange rate
fluctuations, primarily fluctuations which disrupt the historical
pricing relationships between different currencies and currency
pairs. Interest rate changes, as well as political and general
economic conditions influence these fluctuations. At September
30, 2004, the Partnership's major exposure was to outright U.S.
dollar positions. Outright positions consist of the U.S. dollar
vs. other currencies. These other currencies include major and
minor currencies. Demeter does not anticipate that the risk
associated with the Partnership's currency trades will change
significantly in the future.

Equity. The third largest market exposure of the Partnership at
September 30, 2004 was to the global stock index sector,
primarily to equity price risk in the G-7 countries. The stock
index futures traded by the Partnership are by law limited to
futures on broadly-based indices. At September 30, 2004, the
Partnership's primary exposures were to the Euro Stoxx 50
(Europe), DAX (Germany), Hang Seng (China), and S&P 500 (U.S.)
stock indices. The Partnership is exposed to the risk of adverse
price trends or static markets in the U.S., European, and
Japanese stock indices. Static markets would not cause major
market changes, but would make it difficult for the Partnership
to avoid trendless price movements, resulting in numerous small
losses.

Commodity.
Energy. At September 30, 2004, the Partnership's energy
exposure was primarily to futures contracts in unleaded gas
and natural gas. Price movements in these markets result
from geopolitical developments, particularly in the Middle
East, as well as weather patterns and other economic
fundamentals. Significant profits and losses, which have
been experienced in the past, are expected to continue to be
experienced in the future. Natural gas has exhibited
volatility in prices resulting from weather pattern and
supply and demand factors and will likely continue in this
choppy pattern.

Metals. The Partnership's metals exposure at September 30,
2004 was to fluctuations in the price of base metals, such
as copper, nickel, and zinc. Economic forces, supply and
demand inequalities, geopolitical factors and market
expectations influence price movements in these markets.
The Trading Advisor utilizes the trading system(s) to take
positions when market opportunities develop, and Demeter
anticipates that the Partnership will continue to do so.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at September 30, 2004:

Foreign Currency Balances. The Partnership's primary
foreign currency balances at September 30, 2004 were in
euros and Hong Kong dollars. The Partnership controls the
non-trading risk of foreign currency balances by regularly
converting them back into U.S. dollars upon liquidation of
their respective positions.

Qualitative Disclosures Regarding Means of Managing Risk Exposure
The Partnership and the Trading Advisor, separately, attempt to
manage the risk of the Partnership's open positions in essentially
the same manner in all market categories traded. Demeter attempts
to manage market exposure by diversifying the Partnership's assets
among different market sectors and trading approaches, and by
monitoring the performance of the Trading Advisor daily. In
addition, the Trading Advisor establishes diversification
guidelines, often set in terms of the maximum margin to be
committed to positions in any one market sector or market-
sensitive instrument.

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

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

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

PART II. OTHER INFORMATION

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

1152: Registration Statement on Form S-1 Units Registered
Effective Date File Number

Initial Registration 3,000,000.000 July 29, 2002 333-85078
Additional Registration 18,000,000.000 February 26, 2003 333-103171
Additional Registration 34,000,000.000 April 28, 2004 333-113878
Total Units Registered 55,000,000.000

Units sold through 9/30/04 21,844,105.485
Units unsold through 9/30/04 33,155,894.515

The managing underwriter for the Partnership is Morgan Stanley DW.

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

The aggregate price of the Units sold through September 30, 2004
was $242,739,635.

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

Item 5. OTHER INFORMATION
Management. The following changes have been made to the Board
of Directors and Officers of Demeter:

Mr. Kevin Perry, Chief Financial Officer of Demeter, was confirmed
as a principal of Demeter by the National Futures Association on
September 3, 2004.

Mr. William D. Seugling, Director of Demeter, was confirmed as a
principal of Demeter by the National Futures Association on
October 11, 2004.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits

3.01 Form of Amended and Restated Limited Partnership
Agreement, by and among Demeter Management Corporation
and the Limited Partners, dated March 26, 2002, is
incorporated by reference to Exhibit A of the
Partnership's Prospectus, dated April 28, 2004, filed
with the Securities and Exchange Commission pursuant to
Rule 424(b)(3) under the Securities Act of 1933, as
amended, on May 4, 2004.
3.02 Certificate of Limited Partnership of the Partnership,
dated as of March 26, 2002, is incorporated by reference
to Exhibit 3.02 of the Partnership's Registration
Statement on Form S-1 (File No. 333-85078) filed with
the Securities and Exchange Commission on March 28,
2002.
10.01 Management Agreement, among the Partnership, Demeter
Management Corporation and Campbell & Company, Inc.,
dated September 30, 2002, is incorporated by reference to
Exhibit 10.01 of the Partnership Registration Statement
on Form S-1 (File No. 333-103171) filed with the
Securities and Exchange Commission on February 13, 2003.
10.02 Form of Subscription and Exchange Agreement and Power of
Attorney to be executed by purchasers of Units is
incorporated by reference to Exhibit B of the
Partnership's Prospectus, dated April 28, 2004, filed
with the Securities and Exchange Commission pursuant to
Rule 424(b)(3) under the Securities Act of 1933, as
amended, on May 4, 2004.
10.03 Form of Subscription Agreement Update Form to be executed
by purchasers of Units is incorporated by reference to
Exhibit C of the Partnership's Prospectus, dated April
28, 2004, filed with the Securities and Exchange
Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933, as amended, on May 4, 2004.
10.04 Amended and Restated Escrow Agreement among the
Partnership, Morgan Stanley Charter Graham L.P., Morgan
Stanley Charter Millburn L.P., Morgan Stanley Charter
Welton L.P., Morgan Stanley Charter MSFCM L.P., Morgan
Stanley DW Inc., and JP Morgan Chase Bank, as escrow
agent, dated August 31, 2002, is incorporated by
reference to Exhibit 10.04 of the Partnership's
Registration Statement on Form S-1 (File No. 333-103171)
filed with the Securities and Exchange Commission on
February 13, 2003.
10.05 Customer Agreement between the Partnership and Morgan
Stanley DW Inc., dated September 30, 2002, is
incorporated by reference to Exhibit 10.05 of the
Partnership's Registration Statement on Form S-1 (File
No. 333-103171) filed with the Securities and Exchange
Commission on February 13, 2003.
10.06 Customer Agreement, among the Partnership, Morgan Stanley
& Co. Incorporated, and Morgan Stanley DW Inc., dated
September 30, 2002, is incorporated by reference to
Exhibit 10.06 of the Partnership's Registration Statement
on Form S-1 (File No. 333-103171) filed with the
Securities and Exchange Commission on February 13, 2003.
10.07 Customer Agreement, between the Partnership and Morgan
Stanley & Co. International Limited, dated September 30,
2002, is incorporated by reference to Exhibit 10.07 of
the Partnership's Registration Statement on Form S-1
(File No. 333-103171) filed with the Securities and
Exchange Commission on February 13, 2003.
10.08 Foreign Exchange and Options Master Agreement, between
the Partnership and Morgan Stanley & Co. Incorporated,
dated August 31, 2002, is incorporated by reference to
Exhibit 10.08 of the Partnership's Quarterly Report on
Form 10-Q (File No. 0-50064) filed with the Securities
and Exchange Commission on May 14, 2003.

10.09 Securities Account Control Agreement, among the
Partnership, Morgan Stanley & Co. Incorporated, and
Morgan Stanley DW Inc., dated September 30, 2002, is
incorporated by reference to Exhibit 10.09 of the
Partnership's Registration Statement on Form S-1 (File
No. 333-103171) filed with the Securities and Exchange
Commission on February 13, 2003.
31.01 Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to rules 13a-15(e) and 15d-15(e), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.02 Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to rules 13a-15(e) and 15d-15(e),
as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.01 Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
32.02 Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.

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

SIGNATURE

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

Morgan Stanley Charter Campbell L.P.
(Registrant)

By: Demeter Management Corporation
(General Partner)

November 15, 2004 By:/s/ Kevin Perry
Kevin Perry
Chief Financial Officer

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

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