424B3 1 char.txt SPECTRUM SELECT <PAGE> Morgan Stanley Charter Series December 2007 Monthly Report This Monthly Report supplements the Charter Funds' Prospectus dated April 2, 2007 and the Prospectus Supplement dated December 17, 2007. Issued: January 31, 2008 [LOGO] <PAGE> MORGAN STANLEY CHARTER SERIES HISTORICAL FUND PERFORMANCE Presented below is the percentage change in Net Asset Value per Unit from the start of every calendar year each Fund has traded. Also provided is the inception-to-date return and the compound annualized return since inception for each Fund. Past performance is no guarantee of future results. <TABLE> <CAPTION> INCEPTION- TO-DATE 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 RETURN FUND % % % % % % % % % % % % % % % ------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Charter Campbell -- -- -- -- -- -- -- -- (4.2) 16.3 3.9 9.7 3.1 (15.0) 11.3 (3 mos.) ------------------------------------------------------------------------------------------------------------------------- Charter Aspect.. (7.3) 21.9 4.0 26.2 5.1 (9.2) 23.8 (3.3) 29.1 (5.1) (5.6) (19.6) 10.5 4.4 81.4 (10 mos.) ------------------------------------------------------------------------------------------------------------------------- Charter Graham.. -- -- -- -- -- 2.9 22.0 9.7 36.8 16.1 1.3 (16.1) 4.6 13.2 120.2 (10 mos.) ------------------------------------------------------------------------------------------------------------------------- Charter WCM..... -- -- -- -- -- (7.2) 12.1 (11.3) 21.1 (0.6) (5.3) (0.6) (2.4) 10.4 12.7 (10 mos.) ------------------------------------------------------------------------------------------------------------------------- </TABLE> <TABLE> <CAPTION> COMPOUND ANNUALIZED RETURN FUND % --------------------------- <S> <C> Charter Campbell 2.1 --------------------------- Charter Aspect.. 4.4 --------------------------- Charter Graham.. 9.3 --------------------------- Charter WCM..... 1.4 --------------------------- </TABLE> <PAGE> DEMETER MANAGEMENT CORPORATION 522 Fifth Avenue, 13th Floor New York, NY 10036 Telephone (212) 296-1999 Morgan Stanley Charter Series Monthly Report December 2007 Dear Limited Partner: The Net Asset Value per Unit for each of the four Morgan Stanley Charter Funds as of December 31, 2007 was as follows: <TABLE> <CAPTION> % CHANGE FUND N.A.V. FOR MONTH --------------------------------- <S> <C> <C> Charter Campbell $11.13 -2.25% --------------------------------- Charter Aspect $18.14 2.83% --------------------------------- Charter Graham $22.02 -3.12% --------------------------------- Charter WCM $11.27 -0.47% --------------------------------- </TABLE> Detailed performance information for each Fund is located in the body of the financial report. (Note: all returns are net of all fees). For each Fund, we provide a trading results by sector chart that portrays trading gains and trading losses for the previous month and year-to-date in each sector in which the Fund participates. The trading results by sector chart indicates the monthly and year-to-date composite percentage returns generated by the specific assets dedicated to trading within each market sector in which each Fund participates. Please note that there is not an equal amount of assets in each market sector, and the specific allocations of assets by a Fund to each sector will vary over time within a predetermined range. Below the chart is a description of the factors that influenced trading gains and trading losses within each Fund during the previous month. Effective December 1, 2007, Gavin Ferris became Chief Investment Officer of Aspect Capital Limited. I would also like to take this opportunity to inform you that we anticipate Schedule K-1 (Form 1065) tax forms reporting each Limited Partner's share of the Partnership income, loss and deductions for calendar year 2007 will be mailed to holders of non-IRA accounts during the last week of February. Should you have an IRA account and wish to receive a Schedule K-1 tax form, please contact your Morgan Stanley Financial Advisor. Should you have any questions concerning this report, please feel free to contact Demeter Management Corporation, 522 Fifth Avenue, 13th Floor, New York, NY 10036, or your Morgan Stanley Financial Advisor. I hereby affirm, that to the best of my knowledge and belief, the information contained in this report is accurate and complete. Past performance is no guarantee of future results. Sincerely, /s/ Walter J. Davis Walter J. Davis Chairman of the Board of Directors and President Demeter Management Corporation, General Partner of Morgan Stanley Charter Campbell L.P. Morgan Stanley Charter Aspect L.P. Morgan Stanley Charter Graham L.P. Morgan Stanley Charter WCM L.P. <PAGE> MORGAN STANLEY CHARTER CAMPBELL L.P. [CHART] Month ended December 31, 2007 YTD ended December 31, 2007 ----------------------------- --------------------------- Currencies -1.85% -7.21% Interest Rates -0.28% 0.81% Stock Indices -0.10% -2.42% Energies 0.01% -1.78% Metals 0.39% -0.63% Note:Reflects trading results only and does not include fees or interest income. During the month, the Fund incurred losses across the currency, global interest rate, and global stock index sectors. These losses were partially offset by gains recorded in the metals markets. Trading results in the energy sector were essentially flat and had no material effect on the overall Fund performance for the month. Within the currency sector, long positions in the British pound, euro, and Swiss franc versus the U.S. dollar resulted in losses as the value of the U.S. dollar reversed higher against these currencies following a smaller-than-expected interest rate cut by the U.S. Federal Reserve. Additionally, the value of the U.S. dollar continued to move higher after U.S. government reports showed retail sales and producer prices increased more than forecast in November, which increased optimism that the U.S. economy may avoid a recession. <PAGE> MORGAN STANLEY CHARTER CAMPBELL L.P. (continued) Additional losses were incurred within the global interest rate sector from long positions in European fixed-income futures as prices decreased after the European Central Bank and U.S. Federal Reserve announced a joint effort with three other central banks to boost liquidity within the global banking sector, which has been constricted by the U.S. housing slump and heavy losses related to sub-prime mortgage investments. In addition, European fixed-income futures prices moved lower amid expectations that inflation in the Euro-Zone may exceed previous projections. Smaller losses were recorded within the global stock index sector from long positions in U.S. and European equity index futures as prices decreased on continued concerns that accelerating global inflation and losses related to the collapse of the U.S. sub-prime mortgage market may erode corporate earnings and global economic growth. Within in the metals markets, long futures positions in gold experienced gains as prices increased due to speculative buying and continued uncertainty regarding the direction of the U.S. dollar. Elsewhere in the metals sector, short positions in aluminum and zinc futures resulted in gains as prices decreased following news that producers may increase output. <PAGE> MORGAN STANLEY CHARTER ASPECT L.P. [CHART] Month ended December 31, 2007 YTD ended December 31, 2007 ------------------------------ -------------------------- Currencies -0.17% 2.39% Interest Rates -0.50% 2.69% Stock Indices -0.25% -1.34% Energies 2.06% 4.98% Metals 0.77% -1.22% Agriculturals 1.39% 1.93% Note:Reflects trading results only and does not include fees or interest income. During the month, the Fund recorded gains across the energy, agricultural, and metals sectors. These gains were partially offset by losses incurred in the global interest rate, global stock index, and currency sectors. Within the energy markets, long futures positions in crude oil and its related products resulted in gains as prices increased amid news of falling stockpiles and geopolitical concerns following reports that Turkish military planes had bombed suspected Kurdish sites in northern Iraq. Additionally, futures prices of crude oil and its related products moved higher on concerns of unrest in the Middle East following the assassination of former Pakistani Prime Minister and opposition leader, Benazir Bhutto. Additional gains were recorded within the agricultural markets from long futures positions in the soybean complex and corn as prices rose amid speculation that the rising cost of oil may boost demand for alternative biofuels that are made from soybeans and corn. In addition, futures prices of the soybean complex rose on concerns of diminishing supplies in Brazil and Argentina, two of the world's largest producers. <PAGE> MORGAN STANLEY CHARTER ASPECT L.P. (continued) Smaller gains were experienced within the metals markets from long futures positions in gold as prices moved higher due to speculative buying and continued uncertainty regarding the direction of the U.S. dollar. Elsewhere in the metals markets, short positions in aluminum futures resulted in gains as prices moved lower following news that producers may increase output. Within the global interest rate sector, long positions in European fixed-income futures recorded losses as prices decreased after the European Central Bank and U.S. Federal Reserve announced a joint effort with three other central banks to boost liquidity within the global banking sector, which has been constricted by the U.S. housing slump and heavy losses related to sub-prime mortgage investments. In addition, European fixed-income futures prices moved lower amid expectations that inflation in the Euro-Zone may exceed previous projections. Additional losses were incurred within the global stock index sector from long positions in European and U.S. equity index futures as prices declined on continued concerns that accelerating global inflation and losses related to the collapse of the U.S. sub-prime mortgage market may erode corporate earnings and global economic growth. Smaller losses were experienced within the currency sector from long positions in the Swiss franc and British pound versus the U.S. dollar as the value of the U.S. dollar reversed higher against these currencies following a smaller-than-expected interest rate cut by the U.S. Federal Reserve. Additionally, the value of the U.S. dollar continued to move higher after U.S. government reports showed retail sales and producer prices increased more than forecast in November, which increased optimism that the U.S. economy may avoid a recession. Elsewhere, short positions in the Japanese yen versus the U.S. dollar resulted in losses as the value of the Japanese yen moved higher against the U.S. dollar towards the end of the month amid speculation that the Bank of Japan may raise interest rates at its next policy meeting due to concerns regarding accelerating global inflation. <PAGE> MORGAN STANLEY CHARTER GRAHAM L.P. [CHART] Month ended December 31, 2007 YTD ended December 31, 2007 ----------------------------- --------------------------- Currencies -0.08% 6.96% Interest Rates -2.95% 8.16% Stock Indices -0.12% 0.63% Energies 0.11% 1.25% Metals 0.17% -0.92% Agriculturals 0.23% 0.31% Note:Reflects trading results only and does not include fees or interest income. During the month, the Fund incurred losses across the global interest rate, global stock index, and currency sectors. These losses were partially offset by gains experienced in the agricultural, metals, and energy markets. Within the global interest rate sector, long positions in European and U.S. fixed-income futures resulted in losses as prices decreased after the European Central Bank and U.S. Federal Reserve announced a joint effort with three other central banks to boost liquidity within the global banking sector, which has been constricted by the U.S. housing slump and heavy losses related to sub-prime mortgage investments. Additionally, U.S. interest rate futures prices declined after U.S. government reports showed retail sales and producer prices increased more than forecast in November, while European fixed-income futures prices moved lower amid expectations that inflation in the Euro-Zone may exceed previous projections. Additional losses were recorded within the global stock index sector from long positions in European equity index futures as prices moved lower on continued concerns that accelerating global inflation and losses related to the collapse of the U.S. sub-prime mortgage market may erode corporate earnings and global economic growth. <PAGE> MORGAN STANLEY CHARTER GRAHAM L.P. (continued) Smaller losses were incurred within the currency sector from long positions in the Mexican peso, Canadian dollar, and New Zealand dollar versus the U.S. dollar as the value of the U.S. dollar reversed higher against these currencies following a smaller-than-expected interest rate cut by the U.S. Federal Reserve. Additionally, the value of the U.S. dollar continued to move higher after the aforementioned U.S. economic data regarding retail sales and producer prices boosted optimism that the U.S. economy may avoid a recession. Within the agricultural markets, long futures positions in the soybean complex and corn experienced gains as prices increased amid speculation that the rising cost of oil may strengthen demand for alternative biofuels that are made from soybeans and corn. In addition, futures prices of the soybean complex rose on concerns of diminishing supplies in Brazil and Argentina, two of the world's largest producers. Additional gains were recorded in the metals sector from long futures positions in gold as prices moved higher due to speculative buying and continued uncertainty regarding the direction of the U.S. dollar. Elsewhere in the metals markets, short positions in aluminum futures resulted in gains as prices declined following news that producers may increase output. Smaller gains were experienced within the energy markets from long futures positions in crude oil as prices increased amid news of falling stockpiles and geopolitical concerns following reports that Turkish military planes had bombed suspected Kurdish sites in northern Iraq. Additionally, futures prices of crude oil moved higher on concerns of unrest in the Middle East following the assassination of former Pakistani Prime Minister and opposition leader, Benazir Bhutto. <PAGE> MORGAN STANLEY CHARTER WCM L.P. [CHART] Month ended December 31, 2007 YTD ended December 31, 2007 ----------------------------- --------------------------- Currencies -0.59% 4.64% Interest Rates -1.53% 3.98% Stock Indices -0.22% 0.55% Energies 0.71% 2.38% Metals 0.65% 0.19% Agriculturals 0.91% 3.66% Note:Reflects trading results only and does not include fees or interest income. During the month, the Fund incurred losses across the global interest rate, currency, and global stock index sectors. These losses were partially offset by gains recorded in the agricultural, energy, and metals sectors. Within the global interest rate sector, long positions in European and U.S. fixed-income futures resulted in losses as prices decreased after the European Central Bank and U.S. Federal Reserve announced a joint effort with three other central banks to boost liquidity within the global banking sector, which has been constricted by the U.S. housing slump and heavy losses related to sub-prime mortgage investments. Additionally, U.S. interest rate futures prices declined after U.S. government reports showed retail sales and producer prices increased more than forecast in November, while European fixed-income futures prices moved lower amid expectations that inflation in the Euro-Zone may exceed previous projections. <PAGE> MORGAN STANLEY CHARTER WCM L.P. (continued) Additional losses were incurred within the currency sector from long positions in the British pound, Swiss franc, and Mexican peso versus the U.S. dollar as the value of the U.S. dollar reversed higher against these currencies following a smaller-than-expected interest rate cut by the U.S. Federal Reserve. Additionally, the value of the U.S. dollar continued to move higher after the aforementioned U.S. economic data regarding retail sales and producer prices boosted optimism that the U.S. economy may avoid a recession. Smaller losses were recorded within the global stock index sector from long positions in U.S. equity index futures as prices decreased on continued concerns that accelerating global inflation and losses related to the collapse of the U.S. sub-prime mortgage market may erode corporate earnings and global economic growth. Within the agricultural markets, long futures positions in the soybean complex and corn experienced gains as prices increased amid speculation that the rising cost of oil may strengthen demand for alternative biofuels that are made from soybeans and corn. In addition, futures prices of the soybean complex rose on concerns of diminishing supplies in Brazil and Argentina, two of the world's largest producers. Additional gains were recorded within the energy sector from long futures positions in crude oil and its related products as prices moved higher amid news of falling stockpiles and geopolitical concerns following reports that Turkish military planes had bombed suspected Kurdish sites in northern Iraq. Additionally, futures prices of crude oil and its related products moved higher on concerns of unrest in the Middle East following the assassination of former Pakistani Prime Minister and opposition leader, Benazir Bhutto. Smaller gains were experienced within the metals markets from long positions in gold futures as prices increased due to speculative buying and continued uncertainty regarding the direction of the U.S. dollar. Meanwhile, short futures positions in aluminum resulted in gains as prices declined following news that producers may increase output. <PAGE> MORGAN STANLEY CHARTER SERIES STATEMENTS OF OPERATIONS FOR THE MONTH ENDED DECEMBER 31, 2007 (UNAUDITED) <TABLE> <CAPTION> MORGAN STANLEY MORGAN STANLEY MORGAN STANLEY CHARTER CAMPBELL L.P. CHARTER ASPECT L.P. CHARTER GRAHAM L.P. --------------------------- -------------------------- ---------------------------- PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF DECEMBER 1, 2007 DECEMBER 1, 2007 DECEMBER 1, 2007 BEGINNING BEGINNING BEGINNING AMOUNT NET ASSET VALUE AMOUNT NET ASSET VALUE AMOUNT NET ASSET VALUE ---------- ---------------- --------- ---------------- ----------- ---------------- $ % $ % $ % <S> <C> <C> <C> <C> <C> <C> INVESTMENT INCOME Interest income (Note 2) 842,283 .29 363,233 .28 1,136,385 .25 ---------- ----- --------- ---- ----------- ----- EXPENSES Brokerage fees (Note 2) 1,430,423 .50 643,677 .50 2,261,438 .50 Management fees (Note 2 & 3) 631,770 .22 214,558 .16 753,814 .17 ---------- ----- --------- ---- ----------- ----- Total Expenses 2,062,193 .72 858,235 .66 3,015,252 .67 ---------- ----- --------- ---- ----------- ----- NET INVESTMENT LOSS (1,219,910) (.43) (495,002) (.38) (1,878,867) (.42) ---------- ----- --------- ---- ----------- ----- TRADING RESULTS Trading profit (loss): Realized 4,010,614 1.40 43,884 .03 6,112,488 1.35 Net change in unrealized (9,213,583) (3.22) 4,097,259 3.18 (18,326,781) (4.05) ---------- ----- --------- ---- ----------- ----- Total Trading Results (5,202,969) (1.82) 4,141,143 3.21 (12,214,293) (2.70) ---------- ----- --------- ---- ----------- ----- NET INCOME (LOSS) (6,422,879) (2.25) 3,646,141 2.83 (14,093,160) (3.12) ========== ===== ========= ==== =========== ===== </TABLE> <TABLE> <CAPTION> MORGAN STANLEY CHARTER WCM L.P. ------------------------- PERCENTAGE OF DECEMBER 1, 2007 BEGINNING AMOUNT NET ASSET VALUE -------- ---------------- $ % <S> <C> <C> INVESTMENT INCOME Interest income (Note 2) 205,192 .26 -------- ---- EXPENSES Brokerage fees (Note 2) 401,840 .50 Management fees (Note 2 & 3) 133,945 .17 -------- ---- Total Expenses 535,785 .67 -------- ---- NET INVESTMENT LOSS (330,593) (.41) -------- ---- TRADING RESULTS Trading profit (loss): Realized 526,149 .65 Net change in unrealized (570,761) (.71) -------- ---- Total Trading Results (44,612) (.06) -------- ---- NET INCOME (LOSS) (375,205) (.47) ======== ==== </TABLE> <PAGE> MORGAN STANLEY CHARTER SERIES STATEMENTS OF CHANGES IN NET ASSET VALUE FOR THE MONTH ENDED DECEMBER 31, 2007 (UNAUDITED) <TABLE> <CAPTION> MORGAN STANLEY MORGAN STANLEY MORGAN STANLEY CHARTER CAMPBELL L.P. CHARTER ASPECT L.P. CHARTER GRAHAM L.P. ------------------------------------ ------------------------------------ ---------------------------- UNITS AMOUNT PER UNIT UNITS AMOUNT PER UNIT UNITS AMOUNT -------------- ----------- -------- ------------- ----------- -------- -------------- ----------- $ $ $ $ $ <S> <C> <C> <C> <C> <C> <C> <C> <C> Net Asset Value, December 1, 2007 25,122,590.541 286,084,561 11.39 7,297,094.134 128,735,347 17.64 19,896,548.221 452,287,699 Net Income (Loss) -- (6,422,879) (.26) -- 3,646,141 .50 -- (14,093,160) Redemptions (948,409.805) (10,555,801) 11.13 (85,944.411) (1,559,032) 18.14 (179,506.942) (3,952,743) Subscriptions -- -- -- 270,650.777 4,909,605 18.14 273,941.146 6,032,184 -------------- ----------- ------------- ----------- -------------- ----------- Net Asset Value, December 31, 2007 24,174,180.736 269,105,881 11.13 7,481,800.500 135,732,061 18.14 19,990,982.425 440,273,980 ============== =========== ============= =========== ============== =========== </TABLE> <TABLE> <CAPTION> MORGAN STANLEY CHARTER WCM L.P. -------- ---------------------------------- PER UNIT UNITS AMOUNT PER UNIT -------- ------------- ---------- -------- $ $ $ <S> <C> <C> <C> <C> Net Asset Value, December 1, 2007 22.73 7,095,633.693 80,367,903 11.33 Net Income (Loss) (.71) -- (375,205) (.06) Redemptions 22.02 (66,110.338) (745,064) 11.27 Subscriptions 22.02 404,108.407 4,554,302 11.27 ------------- ---------- Net Asset Value, December 31, 2007 22.02 7,433,631.762 83,801,936 11.27 ============= ========== </TABLE> The accompanying notes are an integral part of these financial statements. <PAGE> MORGAN STANLEY CHARTER SERIES NOTES TO FINANCIAL STATEMENTS (Unaudited) -------------------------------------------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION. Morgan Stanley Charter Campbell L.P. ("Charter Campbell"), Morgan Stanley Charter Aspect L.P. ("Charter Aspect"), Morgan Stanley Charter Graham L.P. ("Charter Graham"), and Morgan Stanley Charter WCM L.P. ("Charter WCM") (individually, a "Partnership", or collectively, the "Partnerships") are limited partnerships organized to engage primarily in the speculative trading of futures contracts, options on futures and forward 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 (collectively, "Futures Interests"). The general partner for each Partnership is Demeter Management Corporation ("Demeter"). The commodity brokers are Morgan Stanley & Co. Incorporated ("MS&Co.") and Morgan Stanley & Co. International plc ("MSIP"). MS&Co. acts as the counterparty on all trading of foreign currency forward contracts. For Charter Campbell, Morgan Stanley Capital Group Inc. ("MSCG") acts as the counterparty on all trading of options on foreign currency forward contracts. Demeter, MS&Co., MSIP, and MSCG are wholly-owned subsidiaries of Morgan Stanley. Demeter is required to maintain a 1% minimum interest in the equity of each Partnership and income (losses) are shared by Demeter and the limited partners based on their proportional ownership interests. USE OF ESTIMATES. The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions that affect the reported amounts in the financial statements and related disclosures. Management believes that the estimates utilized in the preparation of the financial statements are prudent and reasonable. Actual results could differ from those estimates. <PAGE> MORGAN STANLEY CHARTER SERIES NOTES TO FINANCIAL STATEMENTS (continued) REVENUE RECOGNITION. Futures Interests are open commitments until settlement date, at which time they are realized. They are valued at market on a daily basis and the resulting net change in unrealized gains and losses is reflected in the change in unrealized trading profit (loss) on open contracts from one period to the next on the Statements of Operations. Monthly, MS&Co. credits each Partnership with interest income on 100% of its average daily funds held at MS&Co. and MSIP to meet margin requirements at a rate approximately equivalent to what the commodity brokers pay other similar customers on margin deposits. In addition, MS&Co. credits at each month end each Partnership with interest income on 100% of such Partnership's assets not deposited as margin at a rate equal to the monthly average of the 4-week U.S. Treasury bill discount rate during the month. For purposes of such interest payments, Net Assets do not include monies owed to the Partnerships on forward contracts and other Futures Interests. The Partnerships' functional currency is the U.S. dollar; however, they transact business in currencies other than the U.S. dollar. Assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollars at the rates in effect at the date of the Statements of Changes in Net Asset Value. Income and expense items denominated in currencies other than the U.S. dollar are translated into U.S. dollars at the rates in effect during the period. Gains and losses resulting from the translation to U.S. dollars are reported in income currently. NET INCOME (LOSS) PER UNIT. Net income (loss) per unit of limited partnership interest ("Unit(s)") is computed using the weighted average number of Units outstanding during the period. BROKERAGE AND RELATED TRANSACTION FEES AND COSTS. Each Partnership pays a flat-rate monthly brokerage fee of 1/12 of 6% of the Partnership's Net Assets as of the first day of each month (a 6% annual rate). Such fees currently cover all brokerage fees, transaction fees and costs, and ordinary administrative and offering expenses. <PAGE> MORGAN STANLEY CHARTER SERIES NOTES TO FINANCIAL STATEMENTS (continued) OPERATING EXPENSES. The Partnerships incur monthly management fees and may incur an incentive fee. All common administrative and continuing offering expenses including legal, auditing, accounting, filing fees, and other related expenses are borne by MS&Co. through the brokerage fees paid by the Partnerships. CONTINUING OFFERING. Units of each Partnership, except Charter Campbell, are offered at a price equal to 100% of the Net Asset Value per Unit as of the close of business on the last day of each month. No selling commissions or charges related to the continuing offering of Units are paid by the limited partners or the Partnerships. MS&Co. pays all such costs. REDEMPTIONS. Limited partners may redeem some or all of their Units at 100% of the Net Asset Value per Unit as of the end of the last day of any month that is at least six months after the closing at which a person first becomes a limited partner. The Request for Redemption must be delivered to a limited partner's local Morgan Stanley Branch Office in time for it to be forwarded and received by Demeter no later than 3:00 p.m., New York City time, on the last day of the month in which the redemption is to be effective. Redemptions must be made in whole Units, with a minimum of 100 Units required for each redemption, unless a limited partner is redeeming his entire interest in a particular Partnership. Units redeemed on or prior to the last day of the twelfth month from the date of purchase will be subject to a redemption charge equal to 2% of the Net Asset Value of a Unit on the Redemption Date. Units redeemed after the last day of the twelfth month and on or prior to the last day of the twenty-fourth month from the date of purchase will be subject to a redemption charge equal to 1% of the Net Asset Value of a Unit on the Redemption Date. Units redeemed after the last day of the twenty-fourth month from the date of purchase will not be subject to a redemption charge. The foregoing redemption charges are paid to MS&Co. <PAGE> MORGAN STANLEY CHARTER SERIES NOTES TO FINANCIAL STATEMENTS (continued) EXCHANGES. On the last day of the first month which occurs more than six months after a person first becomes a limited partner in each Partnership except Charter Campbell, and at the end of each month thereafter, limited partners may exchange their Units among Charter Aspect, Charter Graham, and Charter WCM (subject to certain restrictions outlined in the Limited Partnership Agreements) without paying additional charges. DISTRIBUTIONS. Distributions, other than redemptions of Units, are made on a pro-rata basis at the sole discretion of Demeter. No distributions have been made to date. Demeter does not intend to make any distributions of the Partnerships' profits. INCOME TAXES. No provision for income taxes has been made in the accompanying financial statements, as partners are individually responsible for reporting income or loss based upon their respective share of each Partnership's revenues and expenses for income tax purposes. DISSOLUTION OF THE PARTNERSHIPS. Charter Aspect will terminate on December 31, 2025 and Charter Campbell, Charter Graham, and Charter WCM will terminate on December 31, 2035 or at an earlier date if certain conditions occur as defined in each Partnership's Limited Partnership Agreement. -------------------------------------------------------------------------------- 2. RELATED PARTY TRANSACTIONS Each Partnership pays brokerage fees to MS&Co. as described in Note 1. Each Partnership's cash is on deposit with MS&Co. and MSIP in futures interests trading accounts to meet margin requirements as needed. MS&Co. pays interest on these funds as described in Note 1. <PAGE> MORGAN STANLEY CHARTER SERIES NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------------------------------------------------- 3. TRADING ADVISORS Demeter, on behalf of each Partnership, retains certain commodity trading advisors to make all trading decisions for the Partnerships. The trading advisors are as follows: Morgan Stanley Charter Campbell L.P. Campbell & Company, Inc. Morgan Stanley Charter Aspect L.P. Aspect Capital Limited ("Aspect") Morgan Stanley Charter Graham L.P. Graham Capital Management, L.P. Morgan Stanley Charter WCM L.P. Winton Capital Management Limited ("Winton") Compensation to the trading advisors by the Partnerships consists of a management fee and an incentive fee as follows: MANAGEMENT FEE. Charter Aspect, Charter Graham, and Charter WCM each pays its trading advisor a flat-rate monthly fee equal to 1/6 of 1% (a 2% annual rate) of the Partnership's Net Assets under management by each trading advisor as of the first day of each month. Charter Campbell pays its trading advisor a flat-rate monthly fee equal to 1/12 of 2.65% (a 2.65% annual rate) of the Partnership's Net Assets under management as of the first day of each month. INCENTIVE FEE. Each Partnership's incentive fee is equal to 20% of trading profits paid on a monthly basis. Trading profits represent the amount by which profits from futures, forwards, and options trading exceed losses after brokerage and management fees are deducted. When a trading advisor experiences losses with respect to Net Assets as of the end of a calendar month, the trading advisor must recover such losses before that trading advisor is eligible for an incentive fee in the future. Charter Aspect and Charter WCM pays incentive fees to Aspect and Winton, respectively, based upon the performance of each trading advisor beginning December 1, 2006 without regard to any losses incurred by the prior trading advisor(s). <PAGE> MORGAN STANLEY CHARTER SERIES NOTES TO FINANCIAL STATEMENTS (concluded) Managed futures investments are speculative, involve a high degree of risk, use significant leverage, are generally illiquid, have substantial charges, are subject to conflicts of interest, and are suitable only for the risk capital portion of an investor's portfolio. Before investing in any managed futures investment, qualified investors should read the prospectus or offering documents carefully for additional information with respect to charges, expenses, and risks. Past performance is no guarantee of future results. This report is based on information from multiple sources and Morgan Stanley makes no representation as to the accuracy or completeness of information from sources outside of Morgan Stanley. <PAGE> Demeter Management Corporation 522 Fifth Avenue, 13/th/ Floor New York, NY 10036 [LOGO] ADDRESS SERVICE REQUESTED [LOGO] printed on recycled paper CHT 38280-09 PRESORTED FIRST CLASS MAIL U.S. POSTAGE PAID PERMIT #374 LANCASTER, PA </TEXT> </DOCUMENT>