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, 1998 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 No. 0-24035
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3968008
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
c/o Demeter Management Corporation
Two World Trade Center, 62 Fl. New York, NY 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 392-5454
_________________________________________________________________
_
(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
<PAGE>
<TABLE>
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
September 30, 1998
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Statement of Financial Condition September 30, 1998
(Unaudited).......................................... 2
Statement of Operations for the Quarter Ended
September 30, 1998 (Unaudited)........................3
Statement of Operations for the Nine Months Ended
September 30, 1998 (Unaudited)........................4
Statement of Changes in Partners' Capital for the
Nine Months Ended September 30, 1998 (Unaudited)......5
Statement of Cash Flows for the Nine Months Ended
September 30, 1998 (Unaudited)........................6
Notes to Financial Statements (Unaudited)..........7-14
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..15-20
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.................................21
Item 2. Change in Securities and Use of Proceeds.......21-22
Item 6. Exhibits and Reports on Form 8-K..................22
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
STATEMENT OF FINANCIAL CONDITION
<CAPTION>
September 30,
1998
$
(Unaudited)
ASSETS
<S>
<C>
Equity in Commodity futures trading accounts:
Cash
32,053,183
Net unrealized loss on open contracts
(892,798)
Total Trading Equity
31,160,385
Subscriptions receivable
267,800
Interest receivable (MS & Co.)
101,935
Total Assets
31,530,120
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable
178,553
Accrued brokerage fees (MS & Co. and MSIL)
88,228
Accrued management fee payable (MSCM)
60,430
Service fee payable (Demeter)
24,172
Total Liabilities
351,383
Partners' Capital
Limited Partners (3,979,566.819 Units)
30,842,412
General Partner (43,395.648 Units)
336,325
Total Partners' Capital
31,178,737
Total Liabilities and Partners' Capital
31,530,120
NET ASSET VALUE PER UNIT
7.75
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
For the
Quarter Ended
September 30, 1998
$
REVENUES
<S>
<C>
Trading profit (loss):
Realized
(3,078,390)
Net change in unrealized
676,382
Total Trading Results
(2,402,008)
Interest Income (MS & Co.)
322,281
Total Revenues
(2,079,727)
EXPENSES
Brokerage fees (MS & Co. and MSIL)
289,642
Management fee (MSCM)
198,385
Service fee (Demeter)
79,354
Total Expenses
567,381
NET LOSS
(2,647,108)
NET LOSS ALLOCATION
Limited Partners
(2,619,316)
General Partner
(27,792)
NET LOSS PER UNIT
Limited Partners
(.64)
General Partner
(.64)
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
For the
Nine Months Ended
September 30, 1998
$
REVENUES
<S>
<C>
Trading profit (loss):
Realized
(7,201,840)
Net change in unrealized
(892,798)
Total Trading Results
(8,094,638)
Interest Income (MS & Co.)
1,009,087
Total Revenues
(7,085,551)
EXPENSES
Brokerage fees (MS & Co. and MSIL)
909,449
Management fee (MSCM)
622,910
Service fee (Demeter)
249,164
Total Expenses
1,781,523
NET LOSS
(8,867,074)
NET LOSS ALLOCATION
Limited Partners
(8,773,399)
General Partner
(93,675)
NET LOSS PER UNIT
Limited Partners
(2.25)
General Partner
(2.25)
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
For the Nine Months Ended September 30, 1998
(Unaudited)
<CAPTION>
Units of
Partnership Limited General
Interest Partners Partner Total
<S> <C> <C> <C> <C>
Partners' Capital
January 2, 1998
(commencement of operations)200.000 $1,000 $1,000 $2,000
Initial Offering 2,573,486.803 25,475,868 259,000
25,734,868
Offering of Units 1,665,202.477 15,758,355 170,000
15,928,355
Net Loss - (8,773,399) (93,675)
(8,867,074)
Redemptions (215,926.813) (1,619,412) -
(1,619,412)
Partners' Capital
September 30, 1998 4,022,962.467 $30,842,412 $336,325
$31,178,737
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
For the
Nine Months Ended
September 30, 1998
$
CASH FLOWS FROM OPERATING ACTIVITIES
<S>
<C>
Net loss
(8,867,074)
Noncash item included in net loss:
Net change in unrealized
892,798
Increase in operating assets:
Subscriptions receivable
(267,800)
Interest receivable (MS & Co.)
(101,935)
Increase in operating liabilities:
Accrued brokerage fees (MS & Co. and MSIL)
88,228
Accrued management fee payable (MSCM)
60,430
Service fee payable (Demeter)
24,172
Net cash used for operating activities
(8,171,181)
CASH FLOWS FROM FINANCING ACTIVITIES
Initial offering
25,736,868
Offering of Units
15,928,355
Increase in redemptions payable
178,553
Redemptions of units
(1,619,412)
Net cash provided by financing activities
40,224,364
Net increase in cash
32,053,183
Balance at beginning of period
- -
Balance at end of period 3
2,053,183
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
The financial statements include, in the opinion of management,
all adjustments necessary for a fair presentation of the results
of operations and financial condition of Morgan Stanley Tangible
Asset Fund L.P. (the "Partnership").
1. Summary of Significant Accounting Policies
Organization - Morgan Stanley Tangible Asset Fund L.P. is a
limited partnership organized to engage primarily in speculative
trading of futures contracts in metals, energy and agricultural
markets, (collectively, "futures interests"), and commenced
operations on January 2, 1998. The general partner is Demeter
Management Corporation ("Demeter"). The commodity brokers are
Morgan Stanley & Co. Incorporated ("MS & Co.") and Morgan Stanley
& Co. International Limited ("MSIL"), (collectively, the
"Commodity Brokers"). The trading advisor is Morgan Stanley
Commodities Management, Inc. ("MSCM" or the "Trading Advisor").
The selling agent is Dean Witter Reynolds Inc. ("DWR"), an
affiliate of Demeter. MSCM, DWR, the Commodity Brokers and
Demeter are wholly-owned subsidiaries of Morgan Stanley Dean
Witter & Co. ("MSDW").
Demeter is required to maintain a 1% minimum interest in the
equity of the Partnership and income (losses) are shared by
Demeter and the limited partners based upon their proportional
ownership interests.
<PAGE>
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Basis of Accounting - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts in the financial statements.
Revenue Recognition - MS & Co. credits the Partnership at each
month-end with interest income as if 80% of the Partnership's
average daily "Net Assets", as defined in the Limited Partnership
Agreement, for the month were invested at a rate based on U.S.
Treasury bills. For purposes of such interest payments, Net
Assets do not include monies due to the Partnership on or with
respect to futures interests but not actually received.
Net Income (Loss) per Unit - Net income (loss) per Unit is
computed using the weighted average number of units outstanding
during the period.
Equity in Commodity Futures Trading Accounts - The Partnership's
asset "Equity in Commodity futures trading accounts" consists of
cash on deposit at MS & Co. and MSIL to be used as margin for
trading and the net asset or liability related to unrealized
gains or losses on open contracts.
<PAGE>
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Brokerage and Related Transaction Fees and Costs - Brokerage
fees are accrued at a monthly rate of 1/12 of 3.65% of Net Assets
as of the first day of each month (a 3.65% annual rate). Such
fees are for all costs of executing trades by the Partnership,
including floor brokerage fees, exchange fees, clearing house
fees, NFA fees, "give-ups" or transfer fees and any costs
associated with taking delivery of commodities.
Service Fee - The Partnership pays Demeter a monthly service fee
equal to 1/12 of 1% per month (a 1% annual rate) of the
Partnership's Net Assets as of the first day of each month.
Operating Expenses - The Partnership incurs monthly management
fees and may incur incentive fees as described in Note 2. All
administrative expenses are borne by Demeter.
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 the Partnership's revenues and expenses for
income tax purposes.
Distributions - Distributions, other than on redemption of Units,
are made on a pro-rata basis at the sole discretion of Demeter.
No distributions have been made to date.
<PAGE>
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Redemptions - Limited Partners may redeem some or all of their
Units at 100% of the Net Asset Value Per Unit effective as of the
last day of the sixth month following the closing at which a
person first becomes a Limited Partner, upon five business days
advance notice by redemption form to Demeter. Thereafter, Units
may be redeemed as of the end of any month upon five business
days advance notice by redemption form to Demeter. However, any
Units redeemed at or prior to the last day of the eleventh month
after such Units were purchased will be subject to a redemption
charge equal to 2% of the Net Asset Value of a Unit on the date
of such redemption. Units redeemed after the last day of the
eleventh month and on or prior to the last day of the twenty-
fourth month after which such Units were purchased, will be
subject to a redemption charge equal to 1% of the Net Asset Value
per Unit on the date of such redemption. Units redeemed after
the last day of the twenty-fourth month after which such Units
were purchased will not be subject to a redemption charge.
Limited Partners who obtained their Units via an exchange from
another DWR-sponsored commodity pool are not subject to the six
month holding period or the redemption charges.
Dissolution of the Partnership - The Partnership will terminate
on December 31, 2027 or at an earlier date if certain conditions
<PAGE>
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
occur as set forth in the Partnership's Limited Partnership
Agreement.
2. Related Party Transactions
The Partnership pays brokerage commissions to the Commodity
Brokers and a service fee to Demeter as described in Note 1. The
Partnership's cash is on deposit with MS & Co. and MSIL in
futures interest trading accounts to meet margin requirements as
needed. MS & Co. pays interest on these funds as described in
Note 1.
Compensation to the Trading Advisor by the Partnership consists
of a management fee and an incentive fee as follows:
Management Fee - The management fee is accrued at the rate of
5/24 of 1% of the Net Assets on the first day of each month (a
2.5% annual rate).
Incentive Fee - The Partnership will pay an annual incentive fee
equal to 20% of the "Trading Profits" as defined in the Limited
Partnership Agreement, as of the end of each calendar year. Such
incentive fee is accrued in each month in which Trading Profits
occur. In those months in which trading profits are negative,
previous accruals, if any, during the incentive period will be
reduced. Any accrued incentive fees with respect to Units
<PAGE>
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
redeemed at the end of a month that is not the end of a calendar
year will be deducted and paid to the Trading Advisor at the time
of such redemption.
3. Financial Instruments
The Partnership trades futures contracts in metals, energy and
agricultural markets. 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. At September 30, 1998, open
contracts were:
Contract or
Notional Amount
September 30, 1998
$
Exchange-Traded Contracts
Commodity Futures:
Commitments to Purchase 36,818,000
Foreign Futures:
Commitments to Purchase 6,767,000
Commitments to Sell 562,000
The net unrealized loss on open contracts is reported as a
component of "Equity in Commodity futures trading accounts" on
the Statement of Financial Condition and totaled $892,798 at
September 30, 1998.
<PAGE>
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The entire $892,798 net unrealized loss on open contracts at
September 30, 1998 related to exchange-traded futures contracts.
Exchange-traded futures contracts held by the Partnership at
September 30, 1998 mature through March 1999.
The contract amounts in the above table represent the
Partnership's extent of involvement in a particular class of
financial instrument, but not the credit risk associated with
counterparty non-performance. The credit risk associated with
these instruments is limited to the amounts reflected in the
Partnership's Statement of Financial Condition.
The Partnership also has credit risk because 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 contracts are marked to market on a daily basis, with
variations in value settled on a daily basis. Each of MS & Co.
and MSIL, as a futures commission merchant for the Partnership's
exchange-traded futures 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 contracts, including an amount equal to
the net unrealized loss on all open futures contracts, which
<PAGE>
MORGAN STANLEY TANGIBLE ASSET FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
funds, in the aggregate, totaled $31,160,385 at September 30,
1998.
For the nine months ended September 30, 1998, the average fair
value of financial instruments held for trading purposes was as
follows:
September 1998
Assets Liabilities
$ $
Exchange-Traded Contracts:
Commodity Futures 22,632,000 -
Foreign Futures 4,637,000 487,000
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity - Assets of the Partnership are deposited with MS & Co.
and MSIL, the Commodity Brokers, in separate futures interest
trading accounts established for the Trading Advisor and are used
by the Partnership as margin to engage in futures interest
trading. Such assets are held in either non-interest bearing
bank accounts or in securities approved by the CFTC for
investment of customer funds. The Partnership's assets held by MS
& Co. and MSIL may be used as margin solely for the Partnership's
trading. Since the Partnership's sole purpose is to trade in
futures interests, it is expected that the Partnership will
continue to own such liquid assets for margin purposes.
The Partnership's investment in futures interests may, from time
to time, be illiquid. Most United States futures exchanges limit
fluctuations in certain futures interest prices during a single
day by regulations referred to as "daily price fluctuations
limits" or "daily limits". Pursuant to such regulations, during
a single trading day no trades may be executed at prices beyond
the daily limit. If the price of a particular futures interest
has increased or decreased by an amount equal to the daily limit,
positions in such futures interest can neither be taken nor
liquidated unless traders are willing to effect trades at or
within the limit. Futures interests prices have occasionally
moved the daily limit for several consecutive days with little or
no trading. Such market conditions could prevent the Partnership
<PAGE>
from promptly liquidating its futures interests and result in
restrictions on redemptions.
There is no limitation on daily price moves in trading forward
contracts on foreign currency. 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 and subjecting it to
substantial losses. Either of these market conditions could
result in restrictions on redemptions.
Capital Resources. The Partnership does not have, nor does it
expect to have, any capital assets. Future redemptions of Units
of Limited Partnership interest will affect the amount of funds
available for investment in futures interests in subsequent
periods. Since they are at the discretion of Limited Partners,
it is not possible to estimate the amount and therefore, the
impact of future redemptions.
Results of Operations
For the Quarter and Nine Months Ended September 30, 1998
For the quarter ended September 30, 1998, the Partnership
recorded total trading losses net of interest income of
$2,079,727 and posted a decrease in Net Asset Value per Unit.
The Partnership's long-only trading approach recorded its most
significant losses in the agricultural markets during July and
<PAGE>
August from long positions in corn and wheat futures as grain
prices moved lower on near perfect growing conditions and
disappointing export demand. Smaller losses were recorded from
long positions in livestock futures as prices in these markets
also moved lower due to ample supply and decreasing demand during
July and August. In soft commodities, losses were experienced
during July from long cotton futures positions and during August
and September from long sugar futures positions. Additional
losses were recorded in the metals markets from long nickel,
copper and aluminum futures as base metals prices declined during
August and September. Smaller losses were recorded in the energy
markets from long natural gas futures positions as prices
declined during July and August as a result of cooler
temperatures in the U.S. Midwest and Northeast, thus decreasing
the demand for air conditioning. A portion of the losses
experienced in this market complex was offset by gains recorded
during September from long positions in crude oil futures as
prices moved higher due to increased hurricane activity in the
Gulf of Mexico that caused safety-related shutdowns of a number
of production sites. Total expenses for the three months ended
September 30, 1998 were $567,381, resulting in a net loss of
$2,647,108. The value of an individual Unit in the Partnership
decreased from $8.39 at June 30, 1998 to $7.75 at September 30,
1998.
For the nine months ended September 30, 1998, the Partnership
recorded total trading losses net of interest income of
$7,085,551 and posted a decrease in Net Asset Value per Unit.
<PAGE>
The most significant losses were recorded in the agricultural
markets from long positions in corn and wheat futures as grain
prices moved lower during a majority of the year, with the
exception of brief spikes higher in June and September. Smaller
losses were recorded from long positions in livestock futures
during the first eight months of the year. In the energy
markets, losses were experienced throughout a majority of the
first three quarters of the year from long position in oil and
gas futures despite brief spikes higher during the months of
March and September. Additional Partnership losses recorded in
the metals markets during the second and third quarters from long
positions in precious and base metals futures more than offset
profits recorded during the first quarter from long silver, gold
and platinum futures. In soft commodities, losses were recorded
during much of the first six months from long positions in coffee
futures as prices moved lower. A portion of these losses was
offset by gains recorded during the second quarter from long
positions in orange juice futures. Total expenses for the nine
months ended September 30, 1998 were $1,781,523, resulting in a
net loss of $8,867,074. The value of an individual Unit in the
Partnership decreased from $10.00 at inception of trading on
January 2, 1998 to $7.75 at September 30, 1998.
Year 2000 Problem - Commodity pools, like financial and business
organizations and individuals around the world, depend on the
smooth functioning of computer systems. Many computer systems in
use today cannot recognize the computer code for the year 2000,
but revert to 1900 or some other date. This is commonly known as
<PAGE>
the "Year 2000 Problem". The Partnership could be adversely
affected if computer systems used by it or any third party with
whom it has a material relationship do no properly process and
calculate date-related information and data concerning dates on
or after January 1, 2000. Such a failure could have a negative
impact on the handling or determination of futures trades and
prices and the services provided the Partnership.
MSDW began its planning in response to the Year 2000 Problem in
1995 and currently has several hundred employees working on such
response. It has developed its own Year 2000 compliance plan to
deal with the problem and had the plan approved by the company's
executive management, Board of Directors and Information
Technology Department. Demeter is coordinating with MSDW in
taking steps that both believe are reasonably designed to address
the Year 2000 Problem with respect to Demeter's computer systems
that relate to the Partnership. This includes hardware and
software upgrades, systems consulting and computer maintenance.
Beyond the challenge facing internal computer systems, the
systems failure of any of the third parties with whom the
Partnership has a material relationship - the futures exchanges
and clearing organizations through which it trades, Commodity
Brokers, or the Trading Advisor - could result in a material
financial risk to the Partnership. Regarding the futures
exchanges, all U.S. futures exchanges will be subject to the
monitoring of the CFTC for their Year 2000 preparedness and the
major foreign futures exchanges are also expected to be subject
<PAGE>
to market-wide testing of their Year 2000 compliance during 1999.
With respect to the Commodity Brokers and the Trading Advisor,
Demeter intends to monitor their progress throughout 1999 in
their Year 2000 compliance and, where applicable, to test its
external interface with the Commodity Brokers and the Trading
Advisor.
Finally, MSDW has begun developing various "contingency plans" in
the event that the systems of such third parties fail, and
Demeter intends to consult closely with MSDW in implementing
those plans. MSDW has also recently reported that its
development of such contingency plans is proceeding on schedule.
Despite the best efforts of both Demeter and MSDW, however, there
can be no assurance that the above steps will be sufficient to
avoid any adverse impact to the Partnership, whether from
failures in their own computer systems or those of the Commodity
Brokers, the Trading Advisor or any other third party.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Previously reported. See Form 10-Q for the quarter ended March
31, 1998.
Item 2. CHANGE IN SECURITIES AND USE OF PROCEEDS
The Partnership registered 5,000,000 Units of Limited Partnership
Interest ("Units") pursuant to a Registration Statement on Form
S-1, which became effective on November 10, 1997 (the
"Registration Statement") (SEC File Number 333-33975). The
Partnership, Demeter, MSCM and DWR extended the offering period
for unsold Units until no later than October 16, 1998 pursuant to
Post Effective Amendment No. 1 to the Registration Statement,
which became effective on July 10, 1998. The managing
underwriter for the Partnership is DWR.
The offering originally commenced on November 10, 1997 with
4,045,503.483 Units sold through April 1, 1998. The aggregate
price of the offering amount registered was $50,000,000 (based
upon the initial offering price of $10.00 per Unit) for the
initial closing on January 2, 1998 (the "Initial Offering").
After the Initial Offering, Units were sold at three closings
held on February 2, March 2 and April 1, 1998, at a price equal
to 100% of the Net Asset Value per Unit at the close of business
on the last day of the month immediately preceding the closing.
The aggregate price of the Units sold at the four closings of the
offering was $40,100,218 (based upon the Net Asset Value per Unit
of $10.00 at January 2, 1998, $10.13 at February 2, 1998, $9.53
<PAGE>
at March 2, 1998 and $9.54 at April 1, 1998 closings,
respectively).
An additional 149,990.149 Units were sold at subsequent closings;
held on August 3, September 1 and October 1, 1998 at a price
equal to 100% of the Net Asset Value per Unit at the close of
business on the last day of the month immediately preceding the
closing. The aggregate price of the Units sold at the subsequent
three closings was $1,135,005 (based upon the Net Asset Value per
Unit of $7.85 at August 3, 1998, $7.23 at September 1, 1998 and
$7.75 at October 1, 1998). Together with the Initial Offering
the aggregate price of Units sold is $41,235,223.
No expenses chargeable against proceeds were incurred, making net
offering proceeds $41,235,223, which were 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
Registration Statement.
Item 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K. - No reports have been filed for the quarter
ended September 30, 1998.
<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 Tangible Asset
Fund L.P.(Registrant)
By: Demeter Management Corporation
(General Partner)
November 10, 1998 By: /s/ Lewis A. Raibley, III
Lewis A. Raibley, III
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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Morgan
Stanley Tangible Asset Fund L.P. and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 32,053,183
<SECURITIES> 0
<RECEIVABLES> 369,735<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 31,530,120<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 31,530,120<F3>
<SALES> 0
<TOTAL-REVENUES> (7,085,551)<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,781,523
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (8,867,074)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,867,074)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,867,074)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include interest receivable of $101,935 and
subscriptions receivable of $267,800.
<F2>In addition to cash and receivables, total assets include
net unrealized loss on open contracts of $(892,798).
<F3>Liabilities include accrued brokerage fees of $88,228, accrued
management fee payable of $60,430, service fee payable of $24,172,
and redemptions payable of $178,553.
<F4>Total revenue includes realized trading revenue of $(7,201,840),
net change in unrealized of $(892,798) and interest income of $1,009,087.
</FN>
</TABLE>
