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 March 31, 2006 or

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

Commission File Number 0-25603

MORGAN STANLEY CHARTER GRAHAM L.P.

(Exact name of registrant as specified in its charter)

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

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

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

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

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

Yes X No___________

Indicate by check-mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of ?accelerated
filer and large accelerated filer? in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer___Accelerated filer____Non-accelerated filer X

Indicate by check-mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes___ No X

<page> <table> MORGAN STANLEY CHARTER GRAHAM L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

March 31, 2006

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
<s> <c>
Statements of Financial Condition as of March 31, 2006
(Unaudited) and December 31, 2005..........................2

Statements of Operations for the Quarters
Ended March 31, 2006 and 2005 (Unaudited)..................3

Statements of Changes in Partners? Capital for the
Quarters Ended March 31, 2006 and 2005 (Unaudited) ........4

Statements of Cash Flows for the Quarters
Ended March 31, 2006 and 2005 (Unaudited)..................5

Notes to Financial Statements (Unaudited)...............6-12

Item 2. Management?s Discussion and Analysis of
Financial Condition and Results of Operations.......13-22

Item 3. Quantitative and Qualitative Disclosures about
Market Risk.........................................23-36

Item 4. Controls and Procedures.............................36-37

PART II. OTHER INFORMATION

Item 1A. Risk Factors........................................38-39

Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds........................................40

Item 5. Other Information......................................41

Item 6. Exhibits...............................................41
</table>

<page> <table> PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MORGAN STANLEY CHARTER GRAHAM L.P.
STATEMENTS OF FINANCIAL CONDITION
<caption>
March 31, December 31,
2006 2005
$ $
(Unaudited)
ASSETS
<s> <c> <c>
Equity in futures interests trading accounts:
Unrestricted cash 339,856,552 396,726,923
Restricted cash 74,850,772 29,685,072

Total cash 414,707,324 426,411,995

Net unrealized gain (loss) on open contracts (MS&Co.) 10,841,063 (1,496,739)
Net unrealized gain on open contracts (MSIL) 534,893 4,355,496

Total net unrealized gain on open contracts 11,375,956 2,858,757

Total Trading Equity 426,083,280 429,270,752

Subscriptions receivable 8,769,110 8,958,985
Interest receivable (Morgan Stanley DW) 1,519,077 1,331,130

Total Assets 436,371,467 439,560,867

LIABILITIES AND PARTNERS? CAPITAL

Liabilities

Redemptions payable 10,185,447 15,313,368
Accrued brokerage fees (Morgan Stanley DW) 2,065,818 2,194,515
Accrued management fees 688,606 731,505

Total Liabilities 12,939,871 18,239,388

Partners? Capital

Limited Partners (21,762,082.093 and
22,414,234.236 Units, respectively) 418,764,997 416,811,790
General Partner (242,510.501 Units) 4,666,599 4,509,689

Total Partners? Capital 423,431,596 421,321,479

Total Liabilities and Partners? Capital 436,371,467 439,560,867

NET ASSET VALUE PER UNIT 19.24 18.60
<fn>
The accompanying notes are an integral part
of these financial statements.
</table>

<page> <table> MORGAN STANLEY CHARTER GRAHAM L.P.
STATEMENTS OF OPERATIONS
(Unaudited)

For the Quarters Ended March 31,

2006 2005
$ $
<s> <c> <c>
INVESTMENT INCOME
Interest income (Morgan Stanley DW) 4,166,796 2,556,515

EXPENSES
Brokerage fees (Morgan Stanley DW) 6,286,876 7,134,378
Management fees 2,095,626 2,283,001

Total Expenses 8,382,502 9,417,379

NET INVESTMENT LOSS (4,215,706) (6,860,864)

TRADING RESULTS
Trading profit (loss):
Realized 10,084,814 (45,838,272)
Net change in unrealized 8,517,199 (9,322,125)

Total Trading Results 18,602,013 (55,160,397)

NET INCOME (LOSS) 14,386,307 (62,021,261)

NET INCOME (LOSS) ALLOCATION

Limited Partners 14,229,397 (61,350,672)
General Partner 156,910 (670,589)

NET INCOME (LOSS) PER UNIT

Limited Partners 0.64 (2.85)
General Partner 0.64 (2.85)

<fn>

The accompanying notes are an integral part
of these financial statements.
</table>

<page> <table> MORGAN STANLEY CHARTER GRAHAM L.P.
STATEMENTS OF CHANGES IN PARTNERS? CAPITAL
For the Quarters Ended March 31, 2006 and 2005
(Unaudited)

Units of
Partnership Limited General
Interest Partners Partner Total
$ $ $
<s> <c> <c> <c> <c>
Partners? Capital,
December 31, 2004 21,497,776.200 471,290,914 5,146,964 476,437,878

Offering of Units 2,377,457.482 46,293,339 480,000 46,773,339

Net Loss ? (61,350,672) (670,589) (62,021,261)

Redemptions (554,438.019) (10,846,936) ? (10,846,936)

Partners? Capital,
March 31, 2005 23,320,795.663 445,386,645 4,956,375 450,343,020

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

Offering of Units 1,223,196.253 23,176,630 ? 23,176,630

Net Income ? 14,229,397 156,910 14,386,307

Redemptions (1,875,348.396) (35,452,820) ? (35,452,820)

Partners? Capital,
March 31, 2006 22,004,592.594 418,764,997 4,666,599 423,431,596

<fn>

The accompanying notes are an integral part
of these financial statements.
</table>
<page> <table> MORGAN STANLEY CHARTER GRAHAM L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)

<caption>
For the Quarters Ended March 31,

2006 2005
$ $

<s> <c> <c>
CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss) 14,386,307 (62,021,261)
Noncash item included in net income (loss):
Net change in unrealized (8,517,199) 9,322,125

(Increase) decrease in operating assets:
Restricted cash (45,165,700) 23,702,287
Interest receivable (Morgan Stanley DW) (187,947) (240,252)

Increase (decrease) in operating liabilities:
Accrued brokerage fees (Morgan Stanley DW) (128,697) 6,035
Accrued management fees (42,899) 1,933

Net cash used for operating activities (39,656,135) (29,229,133)

CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from offering of Units 23,366,505 47,242,097
Cash paid for redemptions of Units (40,580,741) (11,348,923)

Net cash provided by (used for) financing activities (17,214,236) 35,893,174

Net increase (decrease) in unrestricted cash (56,870,371) 6,664,041

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

Unrestricted cash at end of period 339,856,552 388,044,072

<fn>

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

</table>

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

March 31, 2006
(Unaudited)

The unaudited financial statements contained herein include, in the
opinion of management, all adjustments necessary for a fair
presentation of the results of operations and financial condition
of Morgan Stanley Charter Graham L.P. (the ?Partnership?). The
financial statements and condensed notes herein should be read in
conjunction with the Partnership?s December 31, 2005 Annual Report
on Form 10-K. Certain prior year amounts relating to cash balances
were reclassified on the Statements of Financial Condition and the
related Statements of Cash Flows to conform to 2006 presentation.
Such reclassifications have no impact on the Partnership?s reported
net income (loss).

1. Organization
Morgan Stanley Charter Graham L.P. is a Delaware limited
partnership organized in 1998 to engage primarily in the
speculative trading of futures contracts, options on futures
contracts, and forward contracts on physical commodities and other
commodity interests, including, but not limited to, foreign
currencies, financial instruments, metals, energy, and agricultural
products. The Partnership is one of the Morgan

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

Stanley Charter Series of funds, comprised of three continuously-
offered limited partnerships, the Partnership, Morgan Stanley
Charter Millburn L.P., and Morgan Stanley Charter MSFCM L.P., and
effective as of May 1, 2006, one closed-end partnership, Morgan
Stanley Charter Campbell L.P.

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

2. Related Party Transactions
The Partnership?s cash is on deposit with Morgan Stanley DW, MS &
Co., and MSIL in futures, forwards, and options trading accounts to
meet margin requirements as needed. Monthly, Morgan Stanley DW
pays the Partnership interest income equal to 100% of its average
daily funds held at Morgan Stanley DW at a rate equal to that
earned by Morgan Stanley DW on its U.S. Treasury bill investments.
In addition, Morgan Stanley DW pays interest received from MS &

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

Co. and MSIL with respect to such Partnership?s assets deposited as
margin. The Partnership pays brokerage fees to Morgan Stanley DW.

3. Financial Instruments
The Partnership trades futures contracts, options on futures
contracts, and forward contracts on physical commodities and other
commodity interests, including, but not limited to, foreign
currencies, financial instruments, metals, energy, and
agricultural products. Futures and forwards represent contracts
for delayed delivery of an instrument at a specified date and
price. Risk arises from changes in the value of these contracts
and the potential inability of counterparties to perform under
the terms of the contracts. There are numerous factors which may
significantly influence the market value of these contracts,
including interest rate volatility.

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

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

settlement price shall be the settlement price on the first
subsequent day on which the contract could be liquidated. The
market value of off-exchange-traded contracts is based on the
fair market value quoted by the counterparty.

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

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

Generally, derivatives include futures, forward, swaps or options
contracts, and other financial instruments with similar
characteristics such as caps, floors, and collars.
<page> MORGAN STANLEY CHARTER GRAHAM L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The net unrealized gains (losses) on open contracts, reported as a
component of ?Equity in futures interests trading accounts? on
the Statements of Financial Condition, and their longest contract
maturities were as follows:

Net Unrealized Gains/(Losses)
on Open Contracts Longest Maturities

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

Mar. 31, 2006 13,810,108 (2,434,152) 11,375,956 Sep. 2007 Jun. 2006
Dec. 31, 2005 786,903 2,071,854 2,858,757 Jun. 2007 Mar. 2006

The Partnership has credit risk associated with counterparty non-
performance. As of the date of the financial statements, the
credit risk associated with the instruments in which the
Partnership trades is limited to the amounts reflected in the
Partnership?s Statements of Financial Condition.

The Partnership also has credit risk because Morgan Stanley DW,
MS & Co., and MSIL act as the futures commission merchants or the
counterparties, with respect to most of the Partnership?s assets.
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.,

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

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 $428,517,432
and $427,198,898 at March 31, 2006 and December 31, 2005,
respectively. With respect to the Partnership?s off-exchange-
traded forward currency contracts, there are no daily exchange-
required settlements of variation in value, nor is there any
requirement that an amount equal to the net unrealized gains
(losses) on open forward contracts be segregated. However, the
Partnership is required to meet margin requirements equal to the
net unrealized loss on open contracts in the Partnership accounts
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

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

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.

<page> Item 2. MANAGEMENT?S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

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

The Partnership?s investment in futures, forwards, and options may,
from time to time, be illiquid. Most U.S. futures exchanges limit
fluctuations in prices during a single day by regulations referred
to as ?daily price fluctuations limits? or ?daily limits?.
Trades may not be executed at prices beyond the daily limit. If
the price for a particular futures or options contract has
increased or decreased by an amount equal to the daily limit,
positions in that futures or options contract can neither be taken
nor liquidated unless traders are willing to effect trades at or
within the limit. Futures prices have occasionally moved the daily
limit for several consecutive days with little or no <page>
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 investments in
futures, forwards, and options in subsequent periods. It is not
<page> possible to estimate the amount, and therefore the impact,
of future inflows and outflows 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 programs to take
advantage of price movements in the futures, forwards, and options
markets. The following presents a summary of the Partnership?s
operations for the three month periods ended March 31, 2006 and
2005 and a general discussion of its trading activities during each
period. It is important to note, however, that the Trading Advisor
trades in various markets at different times and that prior
activity in a particular market does not mean that such market will
be actively traded by the Trading Advisor or will be profitable in
the future. Consequently, the results of operations of the
Partnership are difficult to discuss other than in the <page>
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 12 of this report are
prepared in accordance with accounting principles generally
accepted in the United States of America, which require the use
of certain accounting policies that affect the amounts reported
in these financial statements, including the following: The
contracts the Partnership trades are accounted for on a trade-
date basis and marked to market on a daily basis. The difference
between their cost and market value is recorded on the Statements
of Operations as ?Net change in unrealized trading profit (loss)?
for open (unrealized) contracts, and recorded as ?Realized
trading profit (loss)? when open positions are closed out. The
sum of these amounts constitutes the Partnership?s trading
results. The market value of a futures contract is the
settlement price on the exchange on which that futures contract
is traded on a particular day. The value of foreign currency
forward contracts is based on the spot rate as of the close of
business. Interest income, as well as management fees, incentive
fees, and brokerage fees expenses of the Partnership are recorded
on an accrual basis.
<page> Demeter believes that, based on the nature of the operations
of the Partnership, no assumptions relating to the application of
critical accounting policies other than those presently used could
reasonably affect reported amounts.

For the Quarter Ended March 31, 2006
The Partnership recorded total trading results including interest
income totaling $22,768,809 and expenses totaling $8,382,502,
resulting in net income of $14,386,307 for the quarter ended
March 31, 2006. The Partnership?s net asset value per Unit
increased from $18.60 at December 31, 2005 to $19.24 at March 31,
2006.

The most significant trading gains of approximately 5.2% were
recorded in the global stock index futures markets from long
positions in European stock index futures as global equity
markets trended higher during the quarter on strong corporate
earnings, and solid economic data out of the European Union,
Australia, Japan, and the United States. Within the global
interest rate futures markets, gains of approximately 2.6% were
recorded, primarily during March, from short positions in U.S.,
European, and Japanese interest rate futures as global bond
prices trended lower amid strength in regional equity markets and
investor sentiment that interest rates in the United States, the
European Union, and Japan will rise. Additional gains of
approximately 0.2% were experienced in the metals markets during
<page> January and March from long positions in copper futures as
prices strengthened amid weak supplies, forecasts for continued
buying by China, and acceleration in demand from Japan, Europe,
and the U.S. A portion of these gains for the quarter was offset
by losses of approximately 3.1% in the currency markets from long
U.S. dollar positions versus the Swiss franc and the euro as the
U.S. dollar?s value reversed lower against these currencies
during January on expectations that a string of increases in
interest rates by the U.S. Federal Reserve would soon come to an
end. Also pushing the value of the U.S. dollar lower against its
rivals was speculation that China, with a massive U.S. dollar
reserve, might move to diversify some of its assets into other
currencies. Further losses in the currency sector were
experienced during February from long positions in the South
African rand versus the U.S. dollar as the value of this
?commodity currency? moved lower in tandem with gold prices.
During March losses were experienced from long U.S. dollar
positions relative to the euro and the Swiss franc as European
currencies reversed higher after the release of generally
positive economic data from the euro-zone reinforced expectations
that European interest rates would continue to rise. Additional
losses were recorded during March from long positions in the
Canadian dollar against the U.S. dollar as the value of the
Canadian dollar decreased on sentiment that the Bank of Canada
has reached the end of its rate increases and news that the
Canadian economy edged up 0.2% in January, a pace slower than
<page> that of the previous three months. Losses were also
incurred during March from long positions in the Mexican peso
versus the U.S. dollar as the value of the peso weakened on
political uncertainty in Mexico. Within the agricultural
markets, losses of approximately 0.6% were recorded primarily
during January from short positions in coffee futures as prices
increased sharply early in the month amid news of a smaller crop
in Brazil, the world?s largest producer. Additional losses were
experienced from newly established long positions in coffee
futures during February as prices reversed lower. Elsewhere in
the agricultural sector, losses were experienced during March
from long positions in wheat futures as prices fell on forecasts
for above-average rainfall in the U.S. growing regions. Smaller
losses of approximately 0.4% were experienced in the energy
markets during February from long futures positions in crude oil
and its related products as prices declined after Chinese
government authorities announced that China would place an
emphasis on prospecting alternative energy sources in the future,
reports of larger-than-expected supplies from the International
Energy Agency, and mild weather in the U.S. Northeast. Further
losses in the energy markets were recorded during March from
short positions in crude oil futures as prices strengthened early
in the month on supply fears fueled by news of geopolitical
tensions in Nigeria and Iran.

<page> For the Quarter Ended March 31, 2005
The Partnership recorded total trading results including interest
income totaling $(52,603,882) and expenses totaling $9,417,379,
resulting in a net loss of $62,021,261 for the quarter ended
March 31, 2005. The Partnership?s net asset value per Unit
decreased from $22.16 at December 31, 2004 to $19.31 at March 31,
2005.

The most significant trading losses of approximately 6.8% were
recorded in the currency markets, primarily during January, from
long positions in the euro relative to the Japanese yen, U.S.
dollar, and Canadian dollar as the value of the euro reversed
sharply lower in what many analysts described as a ?corrective?
move after its strong upward trend during the fourth quarter of
2004. This decline in the value of the euro was attributed to
weak economic data out of the European Union and a rebound in the
value of its main rival, the U.S. dollar. Additional losses were
experienced from short U.S. dollar positions against the South
African rand and Swiss franc as the value of the U.S. dollar
reversed sharply higher on data released by the U.S. Treasury
Department which showed November's investment inflows to the U.S.
were ample to cover that month?s record trade deficit.
Speculation that U.S. interest rates were likely to continue to
rise and fears that the re-evaluation of the Chinese yuan was
farther away than expected also boosted the U.S. dollar.
Additional losses of approximately 2.9% were recorded in the
<page> global interest rate futures markets during February from
long positions in long-term European and U.S. interest rate
futures as prices declined in response to strong global economic
data and congressional testimony by U.S. Federal Reserve Chairman
Alan Greenspan, which supported Wall Street expectations for
additional interest rate hikes. Losses continued in March from
long positions in long-term U.S. interest rate futures as prices
moved lower early in the month leading up to the U.S. Federal
Reserve?s decision to increase interest rates. Additional losses
were incurred from newly established short positions in long-term
U.S. interest rates as prices reversed higher at the end of the
month on strength in the U.S. dollar and in oil prices. Smaller
losses were experienced during March from short positions in
British interest rate futures as prices moved higher amid weak
economic data out of the United Kingdom. Within the global stock
index futures markets, losses of approximately 2.0% were recorded
in January from long positions in U.S. equity index futures as
prices finished the month lower amid weak consumer confidence
data, concerns regarding U.S. interest rate policy and the
potential for corporate profit growth to slow down. Further
losses were experienced during March from long positions in U.S.
equity index futures after prices moved lower early in the month
amid concerns about the growing U.S. trade deficit, a weaker U.S.
dollar, inflation fears, and a surge in crude oil prices.
Smaller losses of approximately 0.6% were recorded in the
agricultural markets during February from short positions in
<page> soybean meal as prices reversed higher on news of
extremely cold weather in the growing regions of the United
States and rumors of a reduction in world output during 2005.
Additional losses in the agricultural markets were experienced
during February from long positions in lean hogs futures as
prices weakened on news of a reduction in demand. Elsewhere in
the agricultural complex, losses were incurred during March from
long positions in sugar and wheat futures as prices reversed
lower on technically-based selling. Smaller losses of
approximately 0.4% were recorded in the energy markets, primarily
during January, from short positions in unleaded gasoline, gas
oil, and crude oil futures as prices moved higher amid
speculation that OPEC would move to cut production later in the
month and forecasts for cold winter weather in the Northeastern
U.S. Further loses resulted from short positions in natural gas
as prices increased in tandem with the petroleum complex. A
portion of the Partnership?s overall losses for the quarter was
offset by gains of approximately 0.6% in the metals markets
during February from long positions in copper and zinc as prices
moved higher due to the weaker U.S. dollar and news of strong
demand from China. Long positions in copper futures experienced
additional gains during March as prices continued to trend higher
on news of consistent demand from the developing economies of
Asia.

<page>
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
<page> 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.
<page> 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,
<page> interest rates, foreign exchange rates, and correlation
among these variables. The hypothetical changes in portfolio
value are based on daily percentage changes observed in key
market indices or other market factors (?market risk factors?) to
which the portfolio is sensitive. The one-day 99% confidence
level of the Partnership?s VaR corresponds to the negative change
in portfolio value that, based on observed market risk factors,
would have been exceeded once in 100 trading days, or one day in
100. VaR typically does not represent the worst case outcome.
Demeter uses approximately four years of daily market data (1,000
observations) and re-values its portfolio (using delta-gamma
approximations) for each of the historical market moves that
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.

<page> 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 March 31, 2006 and 2005. At
March 31, 2006 and 2005, the Partnership?s total capitalization
was approximately $423 million and $450 million, respectively.

Primary Market March 31, 2006 March 31, 2005
Risk Category Value at Risk Value at Risk

Interest Rate (3.49)% (1.12)%
Equity (3.32) (4.27)
Currency (1.15) (0.45)
Commodity (0.31) (1.38)
Aggregate Value at Risk (6.04)% (5.36)%

The VaR for a market category represents the one-day downside risk
for the aggregate exposures associated with this market category.
<page> 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 April 1, 2005 through March 31, 2006.

Primary Market Risk Category High Low Average
Interest Rate (5.24)% (0.09)% (2.31)%

Equity (3.72) (2.35) (2.94)

Currency (3.57) (0.96) (1.67)

Commodity (0.61) (0.05) (0.30)

Aggregate Value at Risk (6.04)% (2.83)% (4.33)%

Limitations on Value at Risk as an Assessment of Market Risk
<page> 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?.

<page> 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 March 31, 2005, and for the
four quarter-end reporting periods from April 1, 2005 through March
31, 2006. VaR is not necessarily representative of the
Partnership?s historic risk, nor should it be used to predict the
Partnership?s future financial performance or its ability to manage
or monitor risk. There can be no assurance that the Partnership?s
actual losses on a particular day will not exceed the VaR amounts
indicated above or that such losses will not occur more than once
in 100 trading days.

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

The Partnership also maintains a substantial portion of its
available assets in cash at Morgan Stanley DW; as of March 31,
2006, such amount is equal to approximately 85% of the
Partnership?s net asset value. A decline in short-term interest
rates would result in a decline in the Partnership?s cash
management income. This cash flow risk is not considered to be
material.

<page> 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 <page> 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 March 31, 2006, 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
March 31, 2006 was to the global interest rate sector. Exposure
was primarily spread across the European, U.S., Australian, 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. However, the Partnership also takes
futures positions in the government debt of smaller nations -
e.g., Australia. Demeter anticipates that the G-7 countries and
Australian interest rates will remain the primary interest rate
exposure of the Partnership for the foreseeable future. The
<page> 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 second largest market exposure of the Partnership at
March 31, 2006 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. The Partnership?s primary market
exposures were to the S&P 500 (U.S.), Euro Stoxx 50 (Europe), DAX
(Germany), NASDAQ 100 (U.S.), Hang Seng (China), CAC 40 (France),
IBEX 35 (Spain), Dow Jones (U.S.), FTSE 100 (United Kingdom),
NIKKEI 225 (Japan), TOPIX (Japan), and RUSSELL 2000 (U.S.) stock
indices. The Partnership is typically exposed to the risk of
adverse price trends or static markets in the European, U.S.,
Chinese, and Japanese stock indices. Static markets would not
cause major market changes, but would make it difficult for the
Partnership to avoid trendless price movements, resulting in
numerous small losses.

Currency. At March 31, 2006, the third largest market exposure
of the Partnership 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
<page> changes, as well as political and general economic
conditions influence these fluctuations. The Partnership trades
a number of currencies, including cross-rates - i.e., positions
between two currencies other than the U.S. dollar. At March 31,
2006, the Partnership?s major exposures were to the euro,
Canadian dollar, Australian dollar, Japanese yen, Swiss franc,
and British pound currency crosses, as well as to outright U.S.
dollar positions. Outright positions consist of the U.S. dollar
vs. other currencies. These other currencies include major and
minor currencies. Demeter does not anticipate that the risk
associated with the Partnership?s currency trades will change
significantly in the future.

Commodity.
Soft Commodities and Agriculturals. At March 31, 2006, the
Partnership was exposed to the markets that comprise these
sectors. Most of the exposure was to the cotton, lean hogs,
soybean meal, corn, live cattle, wheat, coffee, sugar,
cocoa, and soybean markets. Supply and demand inequalities,
severe weather disruptions, and market expectations affect
price movements in these markets.

Metals. At March 31, 2006, the Partnership had market
exposure in the metals sector. The Partnership's metals
exposure was to fluctuations in the price of base metals,
such as copper, zinc, and aluminum and precious metals, such
<page> as gold. 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.

Energy. At March 31, 2006, the Partnership had market
exposure to the energy sector. The Partnership?s energy
exposure was shared primarily by futures contracts in crude
oil and its related products, and natural gas. Price
movements in these markets result from geopolitical
developments, particularly in the Middle East, as well as
weather patterns and other economic fundamentals.
Significant profits and losses, which have been experienced
in the past, are expected to continue to be experienced in
the future. Natural gas has exhibited volatility in prices
resulting from weather patterns and supply and demand
factors and will likely continue in this choppy pattern.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at March 31, 2006:

Foreign Currency Balances. The Partnership?s primary foreign
currency balances at March 31, 2006 were in euros, <page>
Australian dollars, Canadian dollars, Japanese yen, British
pounds, Hong Kong dollars, Swiss francs, and Swedish kronor.
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 <page>
evaluated the effectiveness of the Partnership?s disclosure
controls and procedures (as defined in Rules 13a?15(e) and
15d?15(e) of the Exchange Act), and have judged such
controls and procedures to be effective.

(b) There have been no material changes during the period
covered by this quarterly report in the Partnership?s
internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act) or in
other factors that could significantly affect these controls
subsequent to the date of their evaluation.

<page> PART II. OTHER INFORMATION
Item 1A. RISK FACTORS
New investors and current limited partners of a Morgan Stanley
Charter Series of funds are advised that effective May 1, 2006,
Demeter will no longer accept any subscriptions for investments in
Morgan Stanley Charter Campbell L.P. or any exchanges from other
Morgan Stanley Charter Series of funds for Units of Morgan Stanley
Charter Campbell L.P. Current limited partners of Morgan Stanley
Charter Campbell L.P. will continue to be able to redeem Units of
Morgan Stanley Charter Campbell L.P. and exchange Units of Morgan
Stanley Charter Campbell L.P. for Units in other Morgan Stanley
Charter Series of funds at any month-end closing.

The Partnership?s trading is highly leveraged. As an example of
the leverage employed by the Partnership, the average of the
underlying value of the Partnership?s month-end positions for the
period March 2005 through February 2006 compared to the average
month-end Net Assets of the Partnership during such period was 9.6
times Net Assets.

Trading on foreign exchanges presents greater risks to the
Partnership than trading on U.S. exchanges. The average percentage
of month-end margin requirements for the period March 2005 through
February 2006 that relates to futures and options contracts on
foreign exchanges as compared to the Partnership?s total average
month-end margin requirements was 45.1%.
<page> The unregulated nature of the forwards markets creates
counterparty risks that does not exist in futures trading on
exchanges. The average percentage of month-end total margin
requirements for the period March 2005 through February 2006 that
relates to forward contracts as compared to the Partnership?s total
average month-end margin requirements was 25.0%.

The Partnership incurs substantial charges. Demeter estimates the
percentage of Partnership Net Assets that must be earned each year
in order for the Partnership to break even without accounting for a
redemption charge to be 3.55%.

The Partnership could lose assets and have its trading disrupted if
a commodity broker, the Trading Advisor, or others become bankrupt
or if the Partnership?s Trading Advisor commits a trading error.
The Partnership?s assets could be lost or impounded and trading
suspended if a commodity broker, the Partnership?s Trading Advisor,
an exchange or a clearinghouse becomes insolvent or involved in
lengthy bankruptcy proceedings, or if the Partnership?s Trading
Advisor commits a trading error executed on behalf of the
Partnership.

Increasing the assets managed by a Trading Advisor may adversely
affect performance. The assets under management for Graham have
increased from approximately $3 billion on February 29, 2004 to
approximately $5.1 billion on February 28, 2006.
<page>
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS

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

Initial Registration 3,000,000.000 November 6, 1998 333-60115
Additional Registration 6,000,000.000 March 27, 2000 333-91563
Additional Registration 2,000,000.000 July 29, 2002 333-85076
Additional Registration 9,000,000.000 February 26, 2003 333-103166
Additional Registration 30,000,000.000 April 28, 2004 333-113876
Total Units Registered 50,000,000.000

Units sold through 3/31/06 32,931,944.952
Units unsold through 3/31/06 17,068,055.048

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 March 31, 2006 was
$612,914,070.

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.

<page>
Item 5. OTHER INFORMATION

Management. In connection with the election of new directors to
the Board of Directors of Demeter, the following information
updates the disclosures in the Partnership?s Form 8-K filed on
March 27, 2006 and Form 8-K filed on April 5, 2006:

On April 11, 2006, the National Futures Association approved Mr.
Richard Gueren as a director of Demeter.

Item 6. EXHIBITS

31.01 Certification of President of Demeter Management
Corporation, the general partner of the Partnership
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02 Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.01 Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.02 Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.

<page>

SIGNATURE

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

Morgan Stanley Charter Graham L.P.
(Registrant)

By: Demeter Management Corporation
(General Partner)

May 15, 2006 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.