MORGAN STANLEY SPECTRUM SELECT LP - 10-K Annual Report

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

FORM 10-K

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the year ended December 31, 2002 or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from ________________ to ___________________

Commission File Number 0-19511

MORGAN STANLEY SPECTRUM SELECT L.P.
(Exact name of registrant as specified in its Limited Partnership Agreement)

DELAWARE 13-3619290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Demeter Management Corporation
825 Third Avenue, 9th Floor
New York, NY 10022
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (212) 310-6444

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which registered

None None

Securities registered pursuant to Section 12(g) of the Act:

Units of Limited Partnership Interest
(Title of Class)

Indicate by check-mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No _____

Indicate by check-mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment of this Form 10-K. [X]

State the aggregate market value of the Units of Limited Partnership Interest
held by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which units were sold as of a specified
date within 60 days prior to the date of filing: $305,934,637 at January 31,
2003.

DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)

MORGAN STANLEY SPECTRUM SELECT L.P.
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 2002

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference
as follows:

Documents Incorporated Part of Form 10-K

Partnership's Prospectus dated
April 30, 2002 I

Partnership's Supplement to the
Prospectus dated January 24, 2003 I

Annual Report to Morgan Stanley
Spectrum Series Limited Partners
for the year ended December 31,
2002 II, III and IV

`

PART I
Item 1. BUSINESS
(a) General Development of Business. Morgan Stanley Spectrum Se-
lect L.P. (the "Partnership") is a Delaware limited partnership
organized to engage primarily in the speculative trading of
futures contracts, options on futures contracts, and forward
contracts on physical commodities and other commodity interests,
including but not limited to, foreign currencies, financial
instruments, metals, energy and agricultural products. The
Partnership commenced operations on August 1, 1991. The
Partnership is one of the Morgan Stanley Spectrum series of funds,
comprised (at December 31, 2002) of the Partnership, Morgan
Stanley Spectrum Commodity L.P. ("Spectrum Commodity"), Morgan
Stanley Spectrum Currency L.P., Morgan Stanley Spectrum Global
Balanced L.P., Morgan Stanley Spectrum Strategic L.P., and Morgan
Stanley Spectrum Technical L.P. (collectively, the "Spectrum
Series").

Spectrum Commodity terminated trading on December 31, 2002 and
commenced its dissolution in January 2003 pursuant to its Limited
Partnership Agreement.

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. The trading advisors
to the Partnership are EMC Capital Management, Inc., Northfield
Trading L.P., Rabar Market Research, Inc., and Sunrise Capital
Management, Inc. (collectively, the "Trading Advisors").

Effective June 20, 2002, Morgan Stanley Dean Witter & Co. changed
its name to Morgan Stanley.

Units of limited partnership interest ("Unit(s)") are offered for
sale at monthly closings at a purchase price equal to 100% of the
net asset value per Unit at the close of business on the last day
of each month.

The managing underwriter for the Spectrum Series is Morgan
Stanley DW.

The Partnership's net asset value per Unit at December 31, 2002
was $27.65, representing an increase of 15.40 percent from the net
asset value per Unit of $23.96 at December 31, 2001. For a more
detailed description of the Partnership's business, see
subparagraph (c).

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

(c) Narrative Description of Business. The Partnership is in the
business of speculative trading of futures, forwards, and options,
pursuant to trading instructions provided by the Trading Advisors.
For a detailed description of the different facets of the
Partnership's business, see those portions of the Partnership's
prospectus, dated April 30, 2002 (the "Prospectus"), and the
Partnership's supplement to the Prospectus dated January 24, 2003
(the "Supplement"), incorporated by reference in this Form 10-K,
set forth below.

Facets of Business
1. Summary 1. "Summary" (Pages 1-8 of the
Prospectus and Page S-1 of
the Supplement).

2. Futures, Options, and 2. "The Futures, Options, and
Forwards Markets Forwards Markets" (Pages
137-141 of the Prospectus).

3. Partnership's Trading 3. "Use of Proceeds" (Page 26-28
Arrangements and of the Prospectus and Page
Policies S-4 of the Supplement), "The
Trading Advisors" (Pages 72-
119 of the Prospectus and
Pages S-28 - S-38 of the
Supplement).

4. Management of the 4. "The Trading Advisors - The
Partnership Management Agreements" (Page
72 of the Prospectus), "The
General Partner" (Pages 67-
71 of the Prospectus and
Pages S-25 - S-28 of the
Supplement), "The Commodity
Brokers" (Pages 121-122 of
the Prospectus) and "The
Limited Partnership
Agreements" (Pages 123-125 of
the Prospectus).

5. Taxation of the Partner- 5. "Material Federal Income Tax
ship's Limited Partners Considerations" and "State
and Local Income Tax
Aspects" (Pages 130-135 of
the Prospectus).

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

(e) Available Information. The Partnership files annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and all amendments to these reports with the Securities
and Exchange Commission ("SEC"). You may read and copy any
document filed by the Partnership at the SEC's public reference
room at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for information on
the public reference room. The Partnership does not maintain an
internet website, however, the SEC maintains a website
that contains annual, quarterly, and current reports, proxy
statements and other information that issuers (including the
Partnership) file electronically with the SEC. The SEC's website
address is http://www.sec.gov.

Item 2. PROPERTIES
The Partnership's executive and administrative offices are located
within the offices of Morgan Stanley DW. The Morgan Stanley DW
offices utilized by the Partnership are located at 825 Third
Avenue, 9th Floor, New York, NY 10022.

Item 3. LEGAL PROCEEDINGS
None.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.

PART II
Item 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND
RELATED SECURITY HOLDER MATTERS

(a) Market Information. There is no established public trading
market for Units of the Partnership.

(b) Holders. The number of holders of Units at December 31, 2002
was approximately 23,256.

(c) Distributions. No distributions have been made by the
Partnership since it commenced trading operations on August 1,
1991. Demeter has sole discretion to decide what distributions, if
any, shall be made to investors in the Partnership. Demeter
currently does not intend to make any distributions of Partnership
profits.

(d) Use of Proceeds. The Partnership initially registered 60,000
Units (prior to the 100 for one Unit conversion on April 30, 1998)
pursuant to a Registration Statement on Form S-1, which became
effective on May 17, 1991 (SEC File Number 33-39667), and 10,000
(pre-conversion) Units at a supplemental closing pursuant to a new
Registration Statement on Form S-1, which became effective on
August 23, 1991 (SEC File Number 33-42380).

The Partnership registered an additional 75,000 Units (pre-
conversion) pursuant to a new Registration Statement on Form S-1,
which became effective on August 31, 1993 (SEC File Number 33-
65072).

The Partnership registered an additional 60,000 Units (pre-
conversion) pursuant to another Registration Statement on Form S-
1, which became effective on October 17, 1997 (SEC File Number
333-1918), (the "Third Offering"). Through the Third Offering
58,860.329 Units (pre-conversion) were left unsold and ultimately
de-registered.

The Partnership registered an additional 1,500,000 Units pursuant
to another Registration Statement on Form S-1, which became
effective on May 11, 1998 (SEC File Number 333-47829).

The Partnership registered an additional 5,000,000 Units pursuant
to another Registration Statement on Form S-1, which became
effective on January 21, 1999 (File Number 333-68773).

The Partnership registered an additional 4,500,000 Units pursuant
to another Registration Statement on Form S-1, which became
effective on February 28, 2000 (SEC File Number 333-90467).

The Partnership registered an additional 1,000,000 Units
pursuant to a registration statement on Form S-1, which became
effective on April 30, 2002 (SEC File Number 333-84656).

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

Through December 31, 2002, 23,633,015.209 Units were sold, leaving
2,980,951.891 Units unsold at December 31, 2002. The aggregate
price of the Units sold through December 31, 2002 was
$413,607,408.

The managing underwriter for the Partnership is Morgan Stanley DW.

Since no expenses are chargeable against proceeds, 100% of the
proceeds of the offering have been applied to the working capital
of the Partnership for use in accordance with the "Use of
Proceeds" section of the Prospectus and the Supplement.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

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

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

There is no limitation on daily price moves in trading forward
contracts on foreign currencies. The markets for some world
currencies have low trading volume and are illiquid, which may
prevent the Partnership from trading in potentially profitable
markets or prevent the Partnership from promptly liquidating
unfavorable positions in such markets, subjecting it to
substantial losses. Either of these market conditions could
result in restrictions on redemptions.

The Partnership has never had illiquidity affect a material
portion of its assets. Furthermore, there are no material
trends, demands, commitments, events or uncertainties known at the
present time that will result in or 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 expect to
have, any capital assets. Redemptions, exchanges and sales of
additional Units in the future will affect the amount of funds
available for investment in futures, forwards, and options in
subsequent periods. It is not possible to estimate the
amount and therefore, the impact of future redemptions of Units.

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.
The Partnership has no off-balance sheet arrangements, nor
contractual obligations or commercial commitments to make future
payments that would affect the Partnership's liquidity or capital
resources. The contracts traded by the Partnership are accounted
for on a trade-date basis and marked to market on a daily basis.
The value of futures contracts is the settlement price on the
exchange on which that futures contract is traded on a particular
day. The value of foreign currency forward contracts is based on
the spot rate as of the close of business, New York City time, on
a given day.

Results of Operations.
General. The Partnership's results depend on the Trading Advisors
and the ability of each Trading Advisor's trading program to take
advantage of price movements or other profit opportunities in the
futures, forwards, and options markets. The following presents a
summary of the Partnership's operations for the three years ended
December 31, 2002 and a general discussion of its trading
activities during each period. It is important to note, however,
that the Trading Advisors trade 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
Advisors or will be profitable in the future. Consequently, the
results of operations of the Partnership are difficult to discuss
other than in the context of the Trading Advisors' trading
activities on behalf of the Partnership and how the Partnership
has performed in the past.

The Partnership's results of operations are set forth in financial
statements prepared in accordance with United States generally
accepted accounting principles, 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 profit/loss" for open (unrealized)
contracts, and recorded as "Realized profit/loss" when open
positions are closed out, and the sum of these amounts constitutes
the Partnership's trading revenues. Interest income revenue as
well as management fees, incentive fees and brokerage fees of the
Partnership are recorded on an accrual basis.

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

At December 31, 2002, the Partnership's total capital was
$295,377,799, an increase of $53,966,214 from the Partnership's
total capital of $241,411,585 at December 31, 2001. For the year
ended December 31, 2002, the Partnership generated net income of
$40,823,199, total subscriptions aggregated $62,812,840 and total
redemptions aggregated $49,669,825.

For the year ended December 31, 2002, the Partnership recorded
total trading revenues, including interest income, of $67,605,728
and posted an increase in net asset value per Unit. The most
significant gains of approximately 12.1% were recorded in the
currency markets from long positions in the euro and Swiss franc
versus the U.S. dollar during May, June and December, as the
dollar's value weakened amid investors' fears concerning global
political tensions, specifically the threat of war between India
and Pakistan, the looming threat of a military strike against
Iraq, and the resumption of North Korea's nuclear program.
Additional gains of approximately 9.5% were recorded from June
through September, as well as in December, from long positions in
European and U.S. interest rate futures as prices trended higher
amid a shift of assets from stocks into bonds as investors sought
the "safe haven" of fixed income investments. In the
agricultural futures markets, gains of approximately 1.2% were
recorded from long positions in soybean and wheat futures
as prices rallied during the second and third quarter amid fears
that hot and dry weather would adversely affect crops in the U.S.
midwest. In the energy futures markets, gains of approximately
1.0% were experienced from long positions in natural gas futures
during March, August, September, and December, as prices moved
higher amid supply concerns. A portion of the Partnership's
overall gains was offset by losses of approximately 1.8% recorded
in the metals markets early in the year from long positions in
copper futures as prices fell amid weak industrial demand.
Additional losses were recorded in October from short positions
in copper futures as prices reversed higher in response to a
temporary rally in global equity prices in October. Total
expenses for the year were $26,782,529, resulting in net income of
$40,823,199. The net asset value of a Unit increased from $23.96
at December 31, 2001 to $27.65 at December 31, 2002.

At December 31, 2001, the Partnership's total capital was
$241,411,585, an increase of $20,681,616 from the Partnership's
total capital of $220,729,969 at December 31, 2000. For the year
ended December 31, 2001, the Partnership generated net income of
$3,165,349, total subscriptions aggregated $41,261,535 and total
redemptions aggregated $23,745,268.

For the year ended December 31, 2001, the Partnership recorded
total trading revenues, including interest income, of $30,468,895
and posted an increase in net asset value per Unit. The
most significant gains of approximately 8.2% were recorded in the
global interest rate futures markets primarily during August,
September and October from previously established long positions
in short and intermediate term U.S. interest rate futures as
prices continued trending higher following interest rate cuts by
the U.S. and European central banks and as investors sought a
"safe haven" from the decline in stock prices. Additional gains
were recorded throughout the majority of the first quarter from
previously established long positions in Japanese government bond
futures as prices moved higher on concerns regarding that
country's economy. In the global stock index futures markets,
profits of approximately 5.1% were recorded throughout a majority
of the third quarter from previously established short positions
in DAX, Hang Seng, Nikkei and S&P 500 index futures as the trend
in equity prices continued sharply lower amid worries regarding
global economic uncertainty. A portion of the Partnership's
overall gains was partially offset by losses of approximately
2.6% recorded in the energy markets throughout a majority of the
fourth quarter from volatile price movement in natural gas
futures as a result of a continually changing outlook for supply,
production and demand. In the currency markets, losses of
approximately 0.1% were recorded throughout a majority of the
fourth quarter from transactions involving the euro and Swiss
franc. Total expenses for the year were $27,303,546, resulting
in net income of $3,165,349. The net asset value of a Unit
increased from $23.57 at December 31, 2000 to $23.96 at December
31, 2001.

At December 31, 2000, the Partnership's total capital was
$220,729,969, an increase of $6,924,295 from the Partnership's
total capital of $213,805,674 at December 31, 1999. For the year
ended December 31, 2000, the Partnership generated net income of
$14,291,045, total subscriptions aggregated $28,581,403 and total
redemptions aggregated $35,948,153.

For the year ended December 31, 2000, the Partnership recorded
total trading revenues, including interest income, of $35,083,619
and posted an increase in net asset value per Unit. The most
significant gains of approximately 9.3% were recorded in the
global interest rate futures markets primarily during August,
November and December from long positions in U.S. interest rate
futures as prices climbed higher amid a drop in stock prices and
as fears of an economic slowdown drew investors to the perceived
safety of government securities. Additional gains were recorded
during December from long positions in European and Australian
interest rate futures as prices in these markets rose amid the
speculation that the U.S. Federal Reserve would lower interest
rates in the near future following their decision to switch to an
easing policy bias. In the currency markets, gains of
approximately 8.2% were recorded primarily during January, March,
April and October from short positions in the euro and the Swiss
franc as the value of these European currencies weakened
relative to the U.S. dollar amid skepticism about Europe's
economic outlook. In the energy markets, gains of approximately
4.0% were recorded primarily during May, August, September,
November and December from long positions in natural gas futures
as prices trended upward, amid supply and storage concerns. A
portion of the Partnership's overall gains was partially offset
by losses of approximately 4.9% recorded in the global stock
index futures markets primarily during mid-April from long
positions in U.S. stock index futures as domestic equity prices
declined following the release of an unexpected jump in the
Consumer Price Index. During the first half of September,
additional losses were recorded from long positions in U.S. stock
index futures as prices declined due to jitters in the technology
sector and a worrisome spike in oil prices. In the metals
markets, losses of approximately 3.5% were experienced from long
positions in copper and aluminum futures as prices moved lower
during February, May, October and December, after concerns
mounted that demand would weaken amid a cooling of the U.S.
economy. Total expenses for the year were $20,792,574, resulting
in net income of $14,291,045. The net asset value of a Unit
increased from $22.00 at December 31, 1999 to $23.57 at December
31, 2000.

The Partnership's overall performance record represents varied
results of trading in different futures, forwards, and options
markets. For an analysis of unrealized gains and (losses)
by contract type and a further description of 2002 trading
results, refer to the "Letter to the Limited Partners" in the
Partnership's Annual Report to Limited Partners for the year ended
December 31, 2002, which is incorporated by reference to Exhibit
13.01 of this Form 10-K.

The Partnership's gains and losses are allocated among its
partners for income tax purposes.

Credit Risk.
Financial Instruments. The Partnership is a party to financial
instruments with elements of off-balance sheet market and credit
risk. The Partnership may trade futures, forwards, and options
in interest rates, stock indices, commodities, currencies,
petroleum, precious metals and other commodity interests. In
entering into these contracts, the Partnership is subject to the
market risk that such contracts may be significantly influenced
by market conditions, such as interest rate volatility, resulting
in such contracts being less valuable. If the markets should move
against all of the positions held by the Partnership at the same
time, and if the Trading Advisors were unable to offset positions
of the Partnership, the Partnership could lose all of its assets
and the Limited Partners would realize a 100% loss.

In addition to the Trading Advisors' internal controls,
the Trading Advisors must comply with the trading policies of the
Partnership. These trading policies include standards for
liquidity and leverage with which the Partnership must comply.
The Trading Advisors and Demeter monitor the Partnership's trading
activities to ensure compliance with the trading policies.
Demeter may require the Trading Advisors to modify positions of
the Partnership if Demeter believes they violate the Partnership's
trading policies.

In addition to market risk, in entering into futures, forward,
and options contracts there is a credit risk to the Partnership
that the counterparty on a contract will not be able to meet its
obligations to the Partnership. The ultimate counterparty or
guarantor of the Partnership for futures contracts traded in the
United States and the foreign exchanges on which the Partnership
trades is the clearinghouse associated with such exchange. In
general, a clearinghouse is backed by the membership of the
exchange and will act in the event of non-performance by one of
its members or one of its member's customers, which should
significantly reduce this credit risk. For example, a
clearinghouse may cover a default by drawing upon a defaulting
member's mandatory contributions and/or non-defaulting members'
contributions to a clearinghouse guarantee fund, established
lines or letters of credit with banks, and/or the clearinghouse's
surplus capital and other available assets of the exchange and
clearinghouse, or assessing its members. In cases where
the Partnership trades off-exchange forward contracts with a
counterparty, the sole recourse of the Partnership will be the
forward contracts counterparty.

There is no assurance that a clearinghouse, exchange or other
exchange member will meet its obligations to the Partnership, and
Demeter and the commodity brokers will not indemnify the
Partnership against a default by such parties. Further, the law
is unclear as to whether a commodity broker has any obligation to
protect its customers from loss in the event of an exchange or
clearinghouse defaulting on trades effected for the broker's
customers. Any such obligation on the part of a broker appears
even less clear where the default occurs in a non-U.S.
jurisdiction.

Demeter deals with these credit risks of the Partnership in
several ways. First, it monitors the Partnership's credit
exposure to each exchange on a daily basis, calculating not only
the amount of margin required for it but also the amount of its
unrealized gains at each exchange, if any. The commodity brokers
inform the Partnership, as with all their customers, of its net
margin requirements for all its existing open positions, but do
not break that net figure down, exchange by exchange. Demeter,
however, has installed a system which permits it to monitor the
Partnership's potential margin liability, exchange by exchange.
As a result, Demeter is able to monitor the Partnership's
potential net credit exposure to each exchange by adding the
unrealized trading gains on that exchange, if any, to the
Partnership's margin liability thereon.

Second, the Partnership's trading policies limit the amount of
its net assets that can be committed at any given time to futures
contracts and require, in addition, a minimum amount of
diversification in the Partnership's trading, usually over
several different products. One of the aims of such trading
policies has been to reduce the credit exposure of the
Partnership to a single exchange and, historically, the
Partnership's exposure to one exchange has typically amounted to
only a small percentage of its total net assets. On those
relatively few occasions where the Partnership's credit exposure
may climb above such level, Demeter deals with the situation on a
case by case basis, carefully weighing whether the increased
level of credit exposure remains appropriate. Material changes
to the trading policies may be made only with the prior written
approval of the Limited Partners owning more than 50% of Units
then outstanding.

Third, with respect to forward contract trading, the Partnership
trades with only those counterparties which Demeter, together
with Morgan Stanley DW, have determined to be creditworthy. The
Partnership presently deals with MS & Co. as the sole
counterparty on forward contracts.

See "Financial Instruments" under "Notes to Financial Statements"
in the Partnership's Annual Report to Limited Partners for the
year ended December 31, 2002, which is incorporated by reference
to Exhibit 13.01 of this Form 10-K.

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

Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards, and options. The
market-sensitive instruments held by the Partnership are acquired
for speculative trading purposes only and, as a result, all or
substantially all of the Partnership's assets are at risk of
trading loss. Unlike an operating company, the risk of market-
sensitive instruments is central, not incidental, to the
Partnership's main business activities.

The futures, forwards, and options traded by the Partnership
involve varying degrees of related market risk. Market risk is
often dependent upon changes in the level or volatility of
interest rates, exchange rates, and prices of financial
instruments and commodities. Fluctuations in market risk based
upon these factors result in frequent changes in the fair value
of the Partnership's open positions, and consequently, in its
earnings and cash flow.

The Partnership's total market risk is influenced by a wide
variety of factors, including the diversification among the
Partnership's open positions, the volatility present within the
markets, and the liquidity of the markets. At different times,
each of these factors may act to increase or decrease the market
risk associated with the Partnership.

The Partnership's past performance is not necessarily indicative
of its future results. Any attempt to numerically quantify the
Partnership's market risk is limited by the uncertainty of its
speculative trading. The Partnership's speculative trading may
cause future losses and volatility (i.e., "risk of ruin") that
far exceed the Partnership's experiences to date or any
reasonable expectations based upon historical changes in market
value.

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

The Partnership accounts for open positions on the basis of mark-
to-market accounting principles. Any loss in the market value of
the Partnership's open positions is directly reflected in the
Partnership's earnings, whether realized or unrealized, and its
cash flow. Profits and losses on open positions of exchange-
traded futures, forwards, and options are settled daily through
variation margin.

The Partnership's risk exposure in the market sectors traded by
the Trading Advisors is estimated below in terms of Value at Risk
("VaR"). The VaR model used by the Partnership includes many
variables that could change the market value of the Partnership's
trading portfolio. The Partnership estimates VaR using a model
based upon historical simulation with a confidence level of 99%.
Historical simulation involves constructing a distribution of
hypothetical daily changes in the value of a trading portfolio.
The VaR model takes into account linear exposures to price and
interest rate risk. Market risks that are incorporated in the
VaR model include equity and commodity prices, interest rates,
foreign exchange rates, and correlation among these variables.
The hypothetical changes in portfolio value are based on
daily percentage changes observed in key market indices or other
market factors ("market risk factors") to which the portfolio is
sensitive. The historical observation period of the
Partnership's VaR is approximately four years. The one-day 99%
confidence level of the Partnership's VaR corresponds to the
negative change in portfolio value that, based on observed market
risk factors, would have been exceeded once in 100 trading days.
In other words, one-day VaR for a portfolio is a number such that
losses in this portfolio are estimated to exceed the VaR only one
day in 100. VaR typically does not represent the worst case
outcome.

VaR is calculated using historical simulation. Demeter uses
approximately four years of daily market data (1,000
observations) and revalues its portfolio (using delta-gamma
approximations) for each of the historical market moves that
occurred over this time period. This generates a probability
distribution of daily "simulated profit and loss" outcomes. The
VaR is the appropriate percentile of this distribution. For
example, the 99% one-day VaR would represent the 10th worst
outcome from Demeter's simulated profit and loss series.

The Partnership's VaR computations are based on the risk
representation of the underlying benchmark for each instrument or
contract and does not distinguish between exchange and non-
exchange-traded instruments and is also not based on exchange
and/or dealer-based margin requirements.
VaR models, including the Partnership's, are continuously
evolving as trading portfolios become more diverse and modeling
techniques and systems capabilities improve. Please note that
the VaR model is used to numerically quantify market risk for
historic reporting purposes only and is not utilized by either
Demeter or the Trading Advisors 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 December 31, 2002 and 2001.
At December 31, 2002 and 2001, the Partnership's total
capitalization was approximately $295 million and $241 million,
respectively.
Primary Market December 31, 2002 December 31, 2001
Risk Category Value at Risk Value at Risk

Currency (2.17)% (2.02)%
Interest Rate (1.25) (0.49)
Equity (0.44) (0.30)
Commodity (1.22) (0.40)
Aggregate Value at Risk (2.84)% (2.30)%

The VaR for a market category represents the one-day downside
risk for the aggregate exposures associated with this market
category. The aggregate VaR, listed above for the Partnership,
represents the aggregate 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.

The table above represents the VaR of the Partnership's open
positions at December 31, 2002 and 2001 only and is not
necessarily representative of either the historic or future risk
of an investment in the Partnership. Because the Partnership's
only business is the speculative trading of futures, forwards,
and options, the composition of its trading portfolio can change
significantly over any given time period, or even within a single
trading day. Any changes in open positions could positively or
negatively materially impact market risk as measured by VaR.

The table below supplements the December 31, 2002 VaR by
presenting the Partnership's high, low and average VaR, as a
percentage of total net assets for the four quarterly reporting
periods from January 1, 2002 through December 31, 2002.

Primary Market Risk Category High Low Average
Currency (2.17)% (0.58)% (1.61)%
Interest Rate (1.41) (1.03) (1.26)
Equity (0.71) (0.38) (0.52)
Commodity (1.62) (0.78) (1.23)
Aggregate Value at Risk (2.85)% (2.44)% (2.67)%

Limitations on Value at Risk as an Assessment of Market Risk
The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements. Margin requirements generally range between 2% and
15% of contract face value. Additionally, the use of leverage
causes the face value of the market sector instruments held by
the Partnership to typically be many times the total
capitalization of the Partnership. The value of the
Partnership's open positions thus creates a "risk of ruin" not
typically found in other investments. The relative size of the
positions held may cause the Partnership to incur losses greatly
in excess of VaR within a short period of time, given the effects
of the leverage employed and market volatility. The VaR tables
above, as well as the past performance of the Partnership, give
no indication of such "risk of ruin". In addition, VaR risk
measures should be viewed in light of the methodology's
limitations, which include the following:

? past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
? changes in portfolio value caused by market movements may
differ from those of the VaR model;
? VaR results reflect past trading positions while future risk
depends on future positions;
? VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
? the historical market risk factor data used for VaR estimation
may provide only limited insight into losses that could be
incurred under certain unusual market movements.

The VaR tables above present the results of the Partnership's VaR
for each of the Partnership's market risk exposures and on an
aggregate basis at December 31, 2002, and 2001, and for the end
of the four quarterly reporting periods during calendar year
2002. Since VaR is based on historical data, VaR should not be
viewed as predictive of the Partnership's future financial
performance or its ability to manage or monitor risk. There can
be no assurance that the Partnership's actual losses on a
particular day will not exceed the VaR amounts indicated above or
that such losses will not occur more than once in 100
trading days.
Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances not needed for margin. These balances and any market
risk they may represent are immaterial.

At December 31, 2002, the Partnership's cash balance at Morgan
Stanley DW was approximately 86% of its total net asset value. A
decline in short-term interest rates will result in a decline in
the Partnership's cash management income. This cash flow risk is
not considered material.

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

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

The following were the primary trading risk exposures of the
Partnership at December 31, 2002, by market sector. It may be
anticipated, however, that these market exposures will vary
materially over time.

Currency. The primary market exposure of the Partnership at
December 31, 2002 was to the currency sector. The Partnership's
currency exposure was to exchange rate fluctuations, primarily
fluctuations which disrupt the historical pricing relationships
between different currencies and currency pairs. Interest
rate changes as well as political and general economic conditions
influence these fluctuations. The Partnership trades a large
number of currencies, including cross-rates - i.e., positions
between two currencies other than the U.S. dollar. At December
31, 2002, the Partnership's major exposures were to Japanese yen
and euro currency crosses, and 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 profile of
the Partnership's currency sector will change significantly in
the future. The currency trading VaR figure includes foreign
margin amounts converted into U.S. dollars with an incremental
adjustment to reflect the exchange rate risk inherent to the
U.S.-based Partnership in expressing VaR in a functional currency
other than U.S. dollars.

Interest Rate. The second largest market exposure at December 31,
2002 was to the global interest rate complex. The Partnership's
exposure in the interest rate market complex was primarily spread
across the U.S., European and Japanese interest rate sectors.
Interest rate movements directly affect the price of the
sovereign bond futures positions held by the Partnership and
indirectly affect the value of its stock index and currency
positions. Interest rate movements in one country as well as
relative interest rate movements between countries materially
impact the Partnership's profitability. The Partnership's
primary interest rate exposure is generally to interest rate
fluctuations in the 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 G-7 countries and Australian
interest rates will remain the primary interest rate exposure of
the Partnership for the foreseeable future. The speculative
futures positions held by the Partnership may range from short to
long-term instruments. Consequently, changes in short, medium or
long-term interest rates may have an effect on the Partnership.

Equity. The primary equity exposure at December 31, 2002 was to
price risk in the G-7 countries. The stock index futures traded
by the Partnership are by law limited to futures on broadly-based
indices. At December 31, 2002, the Partnership's primary
exposures were to the NASDAQ (U.S.), Hang Seng (Hong Kong) and
Nikkei (Japan) stock indices. The Partnership is primarily
exposed to the risk of adverse price trends or static markets in
the U.S., Japanese, European and Hong Kong stock indices. Static
markets would not cause major market changes but would make it
difficult for the Partnership to avoid being "whipsawed" into
numerous small losses.

Commodity.
Energy. At December 31, 2002, the Partnership's energy
exposure was shared primarily by futures contracts in crude
oil and its related products, and natural gas. Price
movements in the energy markets result from political
developments in the Middle East, 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.

Metals. The Partnership's metals exposure at December 31,
2002 was to fluctuations in the price of precious metals,
such as gold and silver, and base metals, such as copper,
aluminum and lead. Economic forces, supply and demand
inequalities, geopolitical factors and market expectations
influence price movements in these markets. The Trading
Advisors, from time to time, take positions when market
opportunities develop and Demeter anticipates that the
Partnership will continue to do so.

Soft Commodities and Agriculturals. At December 31,
2002, the Partnership had exposure to the markets that
comprise these sectors. Most of the exposure was to cotton,
soybeans and its related products, and sugar. Supply and
demand inequalities, severe weather disruption and market
expectations affect price movements in these markets.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at December 31, 2002:

Foreign Currency Balances. The Partnership's primary
foreign currency balances at December 31, 2002 were in Hong
Kong dollars, Japanese yen and euros. The Partnership
controls the non-trading risk of these balances by regularly
converting them back into U.S. dollars upon liquidation of
their respective positions.

Qualitative Disclosures Regarding Means of Managing Risk Exposure
The Partnership and the Trading Advisors, 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 Trading Advisors, each of
whose strategies focus on different market sectors and trading
approaches, and monitoring the performance of the Trading
Advisors daily. In addition, the Trading Advisors establish
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 Advisors.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements are incorporated by reference to the
Partnership's Annual Report, which is filed as Exhibit 13.01
hereto.
Supplementary data specified by Item 302 of Regulation S-K:

Summary of Quarterly Results (Unaudited)

Quarter Revenues/ Net Net Income/
Ended (Net Losses) Income/(Loss) (Loss) Per Unit

2002
March 31 $ (4,965,948) $(11,031,500) $ (1.10)
June 30 35,775,689 29,684,989 2.81
September 30 45,366,560 38,074,946 3.56
December 31 (8,570,573) (15,905,236) (1.58)

Total $ 67,605,728 $ 40,823,199 $ 3.69

2001
March 31 $ 30,525,016 $ 24,046,834 $ 2.55
June 30 (16,536,822) (22,611,942) (2.37)
September 30 28,022,232 21,354,388 2.20
December 31 (11,541,531) (19,623,931) (1.99)

Total $ 30,468,895 $ 3,165,349 $ 0.39

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

There are no directors or executive officers of the Partnership.
The Partnership is managed by Demeter.

Directors and Officers of the General Partner
The directors and executive officers of Demeter are as follows:

Robert E. Murray, age 42, is the Managing Director of the
Strategic Products Group at Morgan Stanley and Chairman of the
Board of Directors of Demeter Management Corporation, a leading
commodity pool operator with approximately $1.7 billion in assets
across a variety of U.S. and international public and private
managed futures funds. Mr. Murray began at Dean Witter in 1984
and has been closely involved in the growth of managed futures at
the firm over the last 18 years. He is also the Chairman of the
Board of Directors of Morgan Stanley Futures & Currency
Management Inc., Morgan Stanley's internal commodity trading
advisor. Mr. Murray served as the Vice Chairman and a Director
of the Board of the Managed Futures Association and is currently
a member of the Board of Directors of the National Futures
Association. Mr. Murray received a Bachelors Degree in Finance
from Geneseo State University in 1983.

Jeffrey A. Rothman, age 41, is the President and a
Director of Demeter. Mr. Rothman is the Executive Director of
Morgan Stanley Managed Futures, responsible for overseeing all
aspects of the firm's managed futures department. He is also
President and a Director of Morgan Stanley Futures & Currency
Management Inc. Mr. Rothman has been with the managed futures
department for sixteen years and most recently held the position
of National Sales Manager, assisting Branch Managers and
Financial Advisors with their managed futures education,
marketing, and asset retention efforts. Throughout his career,
Mr. Rothman has helped with the development, marketing and
administration of approximately 35 commodity pools. Mr. Rothman
is an active member of the Managed Funds Association and serves
on its Board of Directors.

Mitchell M. Merin resigned his position as a Director of Demeter.

Joseph G. Siniscalchi, age 57, is a Director of Demeter. Mr.
Siniscalchi joined Morgan Stanley DW in July 1984 as a First Vice
President, Director of General Accounting and served as a Senior
Vice President and Controller for Morgan Stanley DW's Securities
Division through 1997. He is currently Managing Director
responsible for the Client Support Service Division of Morgan
Stanley DW. From February 1980 to July 1984, Mr. Siniscalchi was
Director of Internal Audit at Lehman Brothers Kuhn Loeb, Inc.
Edward C. Oelsner, III, age 61, is a Director of Demeter.
Mr. Oelsner is currently an Executive Vice President and head of
the Product Development Group at Morgan Stanley Investment
Advisors Inc., an affiliate of Morgan Stanley DW. Mr. Oelsner
joined Morgan Stanley DW in 1981 as a Managing Director in Morgan
Stanley DW's Investment Banking Department specializing in
coverage of regulated industries and subsequently served as head
of the Morgan Stanley DW Retail Products Group. Prior to joining
Morgan Stanley DW, Mr. Oelsner held positions at The First Boston
Corporation as a member of the Research and Investment Banking
Departments from 1967 to 1981. Mr. Oelsner received an M.B.A. in
Finance from the Columbia University Graduate School of Business
in 1966 and an A.B. in Politics from Princeton University in
1964.

Richard A. Beech, age 51, is a Director of Demeter. Mr. Beech
has been associated with the futures industry for over 25 years.
He has been at Morgan Stanley DW since August 1984 where he is
presently an Executive Director and head of Branch Futures. Mr.
Beech began his career at the Chicago Mercantile Exchange, where
he became the Chief Agricultural Economist doing market analysis,
marketing and compliance. Prior to joining Morgan Stanley DW, Mr.
Beech worked at two investment banking firms in operations,
research, managed futures and sales management.

Raymond A. Harris, age 46, is a Director of Demeter and of
Morgan Stanley Futures & Currency Management Inc. Mr. Harris is
currently Managing Director of Global Products & Services at
Morgan Stanley. He previously served as Chief Accounting Officer
of Morgan Stanley Dean Witter Asset Management. From July 1982
to July 1994, Mr. Harris served in financial, administrative and
other assignments at Dean Witter Reynolds, Inc. and Dean Witter,
Discover & Co. From August 1994 to January 1999, he worked in
Discover Financial Services and the firm's Credit Service
business units. Mr. Harris has been with Morgan Stanley and its
affiliates since July 1982. He has a B.A. degree from Boston
College and an M.B.A. in Finance from the University of Chicago.

Anthony J. DeLuca, age 40, is a Director of Demeter. Mr. DeLuca
is also a Director of Morgan Stanley Futures & Currency
Management Inc. Mr. DeLuca was appointed the Controller of Asset
Management for Morgan Stanley in June 1999. Prior to that, Mr.
DeLuca was a partner at the accounting firm of Ernst & Young LLP,
where he had Morgan Stanley as a major client. Mr. DeLuca had
worked continuously at Ernst & Young LLP ever since 1984, after
he graduated from Pace University with a B.B.A. degree in
Accounting.

Frank Zafran, age 47, is a Director of Demeter and of Morgan
Stanley Futures & Currency Management Inc. Mr. Zafran is an
Executive Director of Morgan Stanley and, in September 2002, was
named Chief Administrative Officer of Morgan Stanley's
Global Products & Services Division. Mr. Zafran joined the firm
in 1979 and has held various positions in Corporate Accounting
and the Insurance Department, including Senior Operations Officer
- - Insurance Division, until his appointment in 2000 as Director
of 401(k) Plan Services, responsible for all aspects of 401(k)
Plan Services including marketing, sales and operations. Mr.
Zafran
received a B.S. degree in Accounting from Brooklyn College, New
York.

Raymond E. Koch resigned his position as Chief Financial Officer
of Demeter.

Jeffrey D. Hahn, age 45, is the Chief Financial Officer of
Demeter. Mr. Hahn began his career at Morgan Stanley in 1992 and
is currently an Executive Director responsible for the management
and supervision of the accounting, reporting, tax and finance
functions for the firm's private equity, managed futures, and
certain legacy real estate investing activities. He is also Chief
Financial Officer of Morgan Stanley Futures & Currency Management
Inc. From August 1984 through May 1992, Mr. Hahn held various
positions as an auditor at Coopers & Lybrand, specializing in
manufacturing businesses and venture capital organizations. Mr.
Hahn received his B.A. in Economics from St. Lawrence University
in 1979, an M.B.A. from Pace University in 1984, and is a
Certified Public Accountant.

All of the foregoing directors have indefinite terms.

Item 11. EXECUTIVE COMPENSATION
The Partnership has no directors and executive officers. As a
limited partnership, the business of the Partnership is managed by
Demeter, which is responsible for the administration of the
business affairs of the Partnership but receives no compensation
for such services.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

(a) Security Ownership of Certain Beneficial Owners - At December
31, 2002, there were no persons known to be beneficial owners of
more than 5 percent of the Units.

(b) Security Ownership of Management - At December 31, 2002,
Demeter owned 113,977.644 Units of general partnership interest,
representing a 1.07 percent interest in the Partnership.

Robert E. Murray, Chairman of the Board of Demeter, owns 81.169
Units of limited partnership interest, which is less than 1% of
the outstanding Units of the Partnership.

(c) Changes in Control - None.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Refer to Note 2 - "Related Party Transactions" of "Notes to
Financial Statements", in the accompanying Annual Report to
Limited Partners for the year ended December 31, 2002, which is
incorporated by reference to Exhibit 13.01 of this Form 10-K. In
its capacity as the Partnership's retail commodity broker, Morgan
Stanley DW received commodity brokerage fees (paid and accrued by
the Partnership) of $18,943,743 for the year ended December 31,
2002.

Item 14. CONTROLS AND PROCEDURES
(a) As of a date within 90 days of the filing date of this annual
report, the President and Chief Financial Officer of the
general partner, Demeter, have evaluated the effectiveness of
the Partnership's disclosure controls and procedures (as
defined in Rules 13a-14 and 15d-14 of the Exchange Act), and
have judged such controls and procedures to be effective.

(b) There have been no significant changes in the Partnership's
internal controls or in other factors that could
significantly affect these controls subsequent to the date of
their evaluation.
PART IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K

(a) 1. Listing of Financial Statements
The following financial statements and report of independent
auditors, all appearing in the accompanying Annual Report to
Limited Partners for the year ended December 31, 2002 are
incorporated by reference to Exhibit 13.01 of this Form 10-K:
- - Report of Deloitte & Touche LLP, independent auditors, for the
years ended December 31, 2002, 2001 and 2000.

- - Statements of Financial Condition, including the Schedules of
Investments, as of December 31, 2002 and 2001.

- - Statements of Operations, Changes in Partners' Capital, and
Cash Flows for the years ended December 31, 2002, 2001 and
2000.

- - Notes to Financial Statements.

With the exception of the aforementioned information and the
information incorporated in Items 7, 8, and 13, the Annual Report
to Limited Partners for the year ended December 31, 2002 is not
deemed to be filed with this report.

2. Listing of Financial Statement Schedules
No financial statement schedules are required to be filed with
this report.

(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Partnership during
the last quarter of the period covered by this report.

(c) Exhibits
Refer to Exhibit Index on Page E-1 to E-3.

SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

MORGAN STANLEY SPECTRUM SELECT L.P.
(Registrant)

BY: Demeter Management Corporation,
General Partner

March 31, 2003 BY: /s/ Jeffrey A. Rothman
Jeffrey A. Rothman, Director
and President

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

Demeter Management Corporation.

BY: /s/ Robert E. Murray March 31, 2003
Robert E. Murray, Director
and Chairman

/s/ Jeffrey A. Rothman March 31, 2003
Jeffrey A. Rothman, Director
and President

/s/ Joseph G. Siniscalchi March 31, 2003
Joseph G. Siniscalchi, Director

/s/ Edward C. Oelsner III March 31, 2003
Edward C. Oelsner III, Director

/s/ Richard A. Beech March 31, 2003
Richard A. Beech, Director

/s/ Raymond A. Harris March 31, 2003
Raymond A. Harris, Director

/s/ Anthony J. DeLuca March 31, 2003
Anthony J. DeLuca, Director

/s/ Frank Zafran March 31, 2003
Frank Zafran, Director

/s/ Jeffrey D. Hahn March 31, 2003
Jeffrey D. Hahn, Chief
Financial Officer

CERTIFICATIONS

I, Jeffrey A. Rothman, President of Demeter Management
Corporation, the general partner of the registrant, certify that:

1. I have reviewed this annual report on Form 10-K of the
registrant;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-
14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation
Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of Demeter's
board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated
in this annual report whether there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.

Date: March 31, 2003 /s/ Jeffrey A. Rothman
Jeffrey A. Rothman
President, Demeter Management
Corporation, general partner
of the registrant

CERTIFICATIONS

I, Jeffrey D. Hahn, Chief Financial Officer of Demeter Management
Corporation, the general partner of the registrant, certify that:

1. I have reviewed this annual report on Form 10-K of the
registrant;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-
14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation
Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of Demeter's
board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated
in this annual report whether there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.

Date: March 31, 2003 /s/ Jeffrey D. Hahn
Jeffrey D. Hahn
Chief Financial Officer,
Demeter Management
Corporation, general partner
of the registrant

EXHIBIT INDEX
ITEM
3.01 Form of Amended and Restated Limited Partnership Agreement
of the Partnership, is incorporated by reference to
Exhibit A of the Partnership's Prospectus, dated April 30,
2002, filed with the Securities and Exchange Commission
pursuant to Rule 424(b)(3) under the Securities Act of
1933 on May 8, 2002.
3.02 Certificate of Limited Partnership, dated March 19, 1991,
is incorporated by reference to Exhibit 3.02 of the
Partnership's Registration Statement on Form S-1 (File No.
333-47829) filed with the Securities and Exchange
Commission on March 12, 1998.
3.03 Certificate of Amendment Certificate of Limited
Partnership, dated April 6, 1999, is incorporated by
reference to Exhibit 3.03 of the Partnership's
Registration Statement on Form S-1 (File No. 333-68773)
filed with the Securities and Exchange Commission on April
12, 1999.
3.04 Certificate of Amendment of Certificate of Limited
Partnership, dated November 1, 2001 (changing its name
from Morgan Stanley Dean Witter Spectrum Select L.P.), is
incorporated by reference to Exhibit 3.01 of the
Partnership's Form 8-K (File No. 0-19511) filed with the
Securities and Exchange Commission on November 1, 2001.
10.01 Amended and Restated Management Agreement, dated as of
June 1, 1998, among the Partnership, Demeter, and Rabar
Market Research, Inc. is incorporated by reference to
Exhibit 10.01 of the Partnership's Form 10-K (File No.
0-19511) for fiscal year ended December 31, 1998 filed on
June 30, 1999.
10.02 Amended and Restated Management Agreement, dated as of
June 1, 1998, among the Partnership, Demeter, and EMC
Capital Management, Inc. is incorporated by reference to
Exhibit 10.02 of the Partnership's Form 10-K (File No. 0-
19511) for fiscal year ended December 31, 1998 filed on
June 30, 1999.
10.03 Amended and Restated Management Agreement, dated as of
June 1, 1998, among the Partnership, Demeter, and Sunrise
Capital Management, Inc. is incorporated by reference to
Exhibit 10.03 of the Partnership's Form 10-K (File No.
0-19511) for fiscal year ended December 31, 1998 filed on
June 30, 1999.

10.04 Management Agreement, dated as of May 1, 2001, among the
Partnership, Demeter, and Northfield Trading L.P., is
incorporated by reference to Exhibit 10.01 of the
Partnership's Form 8-K (File No. 0-19511) filed with the
Securities and Exchange Commission on April 25, 2001.
10.07 Form of Subscription and Exchange Agreement and Power of
Attorney to be executed by each purchaser of Units is
incorporated by reference to Exhibit B of the
Partnership's Prospectus, dated April 30, 2002, filed with
the Securities and Exchange Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933 on May 8, 2002.
10.10 Amended and Restated Escrow Agreement, dated as of March
10, 2000, among the Partnership, Morgan Stanley Spectrum
Strategic L.P., Morgan Stanley Spectrum Global Balanced
L.P., Morgan Stanley Spectrum Technical L.P., Morgan
Stanley Spectrum Currency L.P., Morgan Stanley Spectrum
Commodity L.P., Morgan Stanley DW, and The Chase Manhattan
Bank is incorporated by reference to Exhibit 10.10 of the
Partnership's Registration Statement on Form S-1 (File No.
333-90467) filed with the Securities and Exchange
Commission on November 2, 2001.
10.11 Form of Subscription Agreement Update Form to be executed
by purchasers of Units is incorporated by reference to
Exhibit C of the Partnership's Prospectus, dated April 30,
2002, filed with the Securities and Exchange Commission
pursuant to Rule 424(b)(3) under the Securities Act of
1933 on May 8, 2002.
10.12 Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW, dated as of October 16,
2000, is incorporated by reference to Exhibit 10.01 of the
Partnership's Form 8-K (File No. 0-19511) filed with the
Securities and Exchange Commission on November 1, 2001.
10.13 Commodity Futures Customer Agreement between MS & Co. and
the Partnership, and acknowledged and agreed to by Morgan
Stanley DW, dated as of June 6, 2000, is incorporated by
reference to Exhibit 10.02 of the Partnership's Form 8-K
(File No. 0-19511) filed with the Securities and Exchange
Commission on November 1, 2001.

10.14 Customer Agreement between the Partnership and MSIL, dated
as of June 6, 2000, is incorporated by reference to
Exhibit 10.04 of the Partnership's Form 8-K (File No.
0-19511) filed with the Securities and Exchange Commission
on November 1, 2001.
10.15 Foreign Exchange and Options Master Agreement between MS &
Co. and the Partnership, dated as of April 30, 2000, is
incorporated by reference to Exhibit 10.05 of the
Partnership's Form 8-K (File No. 0-19511) filed with the
Securities and Exchange Commission on November 1, 2001.
10.16 Securities Account Control Agreement among the
Partnership, MS & Co., and Morgan Stanley DW, dated as of
May 1, 2000, is incorporated by reference to Exhibit 10.03
of the Partnership's Form 8-K (File No. 0-19511) filed
with the Securities and Exchange Commission on November 1,
2001.
13.01 December 31, 2002 Annual Report to Limited Partners is
filed herewith.
99.01 Certification of President of Demeter Management
Corporation, 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.
99.02 Certification of Chief Financial Officer of Demeter
Management Corporation, 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.

EXHIBIT 99.01

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Morgan Stanley Spectrum
Select L.P. (the "Partnership") on Form 10-K for the period ended
December 31, 2002 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Jeffrey A.
Rothman, President, Demeter Management Corporation, general
partner of the Partnership, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:
(1) The Report fully complies with the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.

By: /s/ Jeffrey A. Rothman

Name: Jeffrey A. Rothman
Title: President

Date: March 31, 2003

EXHIBIT 99.02

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Morgan Stanley Spectrum
Select L.P. (the "Partnership") on Form 10-K for the period ended
December 31, 2002 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Jeffrey D. Hahn,
Chief Financial Officer, Demeter Management Corporation, general
partner of the Partnership, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:
(1) The Report fully complies with the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.

By: /s/ Jeffrey D. Hahn

Name: Jeffrey D. Hahn
Title: Chief Financial Officer

Date: March 31, 2003

Morgan Stanley
Spectrum Series

December 31, 2002
Annual Report

[LOGO] Morgan Stanley

MORGAN STANLEY SPECTRUM 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 annualized return since inception for each
Fund. Past performance is not necessarily indicative of future results.

INCEPTION-
TO-DATE ANNUALIZED
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 RETURN RETURN
FUND % % % % % % % % % % % % % %
- --------------------------------------------------------------------------------------------------------------------------------

Spectrum Commodity...... -- -- -- -- -- -- -- (34.3) 15.8 3.2 (25.6) 16.6 (31.9) (7.4)
- --------------------------------------------------------------------------------------------------------------------------------
Spectrum Currency....... -- -- -- -- -- -- -- -- -- 11.7 11.1 12.2 39.3 14.2
(6 mos.)
- --------------------------------------------------------------------------------------------------------------------------------
Spectrum Global Balanced -- -- -- (1.7) 22.8 (3.6) 18.2 16.4 0.7 0.9 (0.3) (10.1) 45.7 4.7
(2 mos.)
- --------------------------------------------------------------------------------------------------------------------------------
Spectrum Select......... 31.2 (14.4) 41.6 (5.1) 23.6 5.3 6.2 14.2 (7.6) 7.1 1.7 15.4 176.5 9.3
(5 mos.)
- --------------------------------------------------------------------------------------------------------------------------------
Spectrum Strategic...... -- -- -- 0.1 10.5 (3.5) 0.4 7.8 37.2 (33.1) (0.6) 9.4 15.4 1.8
(2 mos.)
- --------------------------------------------------------------------------------------------------------------------------------
Spectrum Technical...... -- -- -- (2.2) 17.6 18.3 7.5 10.2 (7.5) 7.8 (7.2) 23.3 84.1 7.8
(2 mos.)
- --------------------------------------------------------------------------------------------------------------------------------

DEMETER MANAGEMENT CORPORATION

825 Third Avenue, 9th Floor
New York, NY 10022
(212) 310-6444

MORGAN STANLEY SPECTRUM SERIES
ANNUAL REPORT
2002

Dear Limited Partner:
This marks the ninth annual report for Morgan Stanley Spectrum Global
Balanced L.P., Morgan Stanley Spectrum Strategic L.P. and Morgan Stanley
Spectrum Technical L.P., the twelfth annual report for Morgan Stanley Spectrum
Select L.P., the fifth annual report for Morgan Stanley Spectrum Commodity L.P.
and the third annual report for Morgan Stanley Spectrum Currency L.P. The Net
Asset Value per Unit for each of the six Morgan Stanley Spectrum Funds as of
December 31, 2002 was as follows:

% CHANGE
FUNDS N.A.V. FOR YEAR
-----------------------------------------

Spectrum Commodity $ 6.81 16.6%
-----------------------------------------
Spectrum Currency $13.93 12.2%
-----------------------------------------
Spectrum Global Balanced $14.57 -10.1%
-----------------------------------------
Spectrum Select $27.65 15.4%
-----------------------------------------
Spectrum Strategic $11.54 9.4%
-----------------------------------------
Spectrum Technical $18.41 23.3%
-----------------------------------------

Since their inception in November 1994, Spectrum Global Balanced has
increased by 45.7% (a compound annualized return of 4.7%), Spectrum Strategic
has increased by 15.4% (a compound annualized return of 1.8%), and Spectrum
Technical has increased by 84.1% (a compound annualized return of 7.8%). Since
its inception in August 1991, Spectrum Select has increased by 176.5% (a
compound annualized return of 9.3%). Since its inception in January 1998,
Spectrum Commodity has decreased by 31.9% (a compound annualized return of
- -7.4%). Since its inception in July 2000, Spectrum Currency has increased by
39.3% (a compound annualized return of 14.2%).

Detailed performance information for each Fund is located in the body of the
financial report. For each Fund, we provide a trading results by sector chart
that portrays trading gains and trading losses for the year in each sector in
which the Fund participates. In the case of Spectrum Currency, we provide the
trading gains and trading losses for the five major currencies in which the
Fund participates, and composite information for all other "minor" currencies
traded within the Fund.

The trading results by sector charts indicate the year's 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 each chart is a description of the factors that influenced trading
gains and trading losses within each Fund during the year.

Special Notice to Limited Partners of Morgan Stanley Spectrum Commodity L.P.

As notified under separate cover dated December 16, 2002, Limited Partners of
Morgan Stanley Spectrum Commodity L.P. are advised that Demeter Management
Corporation, the general partner of Spectrum Commodity, has determined to
terminate trading within the Fund effective December 31, 2002, and commence
dissolution pursuant to the Fund's Limited Partnership Agreement.

Limited Partners are advised of recent changes to the Board of Directors and
Officers of Demeter Management Corporation (the "General Partner"):

Mr. Robert E. Murray resigned the position of President of the General
Partner. Mr. Murray will, however, retain his position as Chairman of the Board
of Directors.

Mr. Jeffrey A. Rothman, age 41, is the President and a Director of the
General Partner. Mr. Rothman is the Executive Director of Morgan Stanley
Managed Futures, responsible for overseeing all aspects of the firm's Managed
Futures Department. He is also President and a Director of Morgan Stanley
Futures & Currency Management Inc., Morgan Stanley's internal commodity trading
advisor. Mr. Rothman has been with the Managed Futures Department for sixteen
years and most recently held the position of National Sales Manager, assisting
Branch Managers and Financial Advisors with their managed futures education,
marketing, and asset retention efforts. Throughout his career, Mr. Rothman has
helped with the development, marketing, and administration of approximately 35
commodity pool investments. Mr. Rothman is an active member of the Managed
Funds Association and serves on its Board of Directors.

Mr. Frank Zafran, age 47, is a Director of the General Partner and of Morgan
Stanley Futures & Currency Management Inc. Mr. Zafran is an Executive Director
of Morgan Stanley and, in September 2002, was named Chief Administrative
Officer of Morgan Stanley's Global Products & Services Division. Mr. Zafran
joined the firm in 1979 and held various positions in Corporate Accounting and
the Insurance Department, including

Senior Operations Officer--Insurance Division, until his appointment in 2000 as
Director of 401(k) Plan Services, responsible for all aspects of 401(k) Plan
Services including marketing, sales and operations. Mr. Zafran received a B.S.
degree in Accounting from Brooklyn College, New York.

Mr. Raymond E. Koch resigned the position of Chief Financial Officer of the
General Partner.

Mr. Jeffrey D. Hahn, age 45, was named Chief Financial Officer of the General
Partner. Mr. Hahn began his career at Morgan Stanley in 1992 and is currently
an Executive Director responsible for the management and supervision of the
accounting, reporting, tax and finance functions for the firm's private equity,
managed futures, and certain legacy real estate investing activities. He is
also Chief Financial Officer of Morgan Stanley Futures & Currency Management
Inc. From August 1984 through May 1992, Mr. Hahn held various positions as an
auditor at Coopers & Lybrand, specializing in manufacturing businesses and
venture capital organizations. Mr. Hahn received his B.A. in Economics from St.
Lawrence University in 1979, an M.B.A. from Pace University in 1984, and is a
Certified Public Accountant.

Should you have any questions concerning this report, please feel free to
contact Demeter Management Corporation, 825 Third Avenue, 9th Floor, New York,
NY 10022 or your Morgan Stanley Financial Advisor.

I hereby affirm, that to the best of my knowledge and belief, the information
contained in this report is accurate and complete. Past performance is not a
guarantee of future results.

Sincerely,
/s/ Jeffrey A. Rothman
Jeffrey A. Rothman
President
Demeter Management Corporation
General Partner

SPECTRUM COMMODITY

[CHART]

Year ended
December 31, 2002
-----------------
Energies 10.34%
Metals 1.70%
Agriculturals 9.77%

Note:Reflects trading results only and does not include fees or interest income.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the energy futures markets, gains were experienced throughout a majority
of the year from long positions in natural gas futures as prices drew
strength primarily from colder weather in the Northeastern U.S. and a
disruption of output from the Gulf of Mexico caused by Hurricane Isidore.
Additional gains were recorded from long positions in crude oil futures and
related products as growing tensions between the U.S. and Iraq pushed prices
higher in late February and early March, as well as during the second half
of the year.
.. In the agricultural markets, gains were provided from long positions in
cocoa futures as political unrest in the Ivory Coast threatened supplies
throughout a majority of the year. Additional gains were recorded from long
positions in sugar futures during December and long positions in a variety
of grain futures during May, June, and July.
.. In the metals futures markets, gains were recorded from long futures
positions in gold as prices initially climbed higher early in the year amid
investors' fears concerning weaker global equity prices. Additional gains
resulted later in the year, as gold prices resumed their upward move amid
the looming threat of military action against Iraq and North Korea.

SPECTRUM CURRENCY

[CHART]

Year ended
December 31, 2002
-----------------
Australian dollar 4.12%
British Pound -8.99%
Euro 16.42%
Japanese yen -7.28%
Swiss franc 5.07%
Minor Currencies 12.95%

Note:Reflects trading results only and does not include fees or interest
income. Minor currencies may include, but are not limited to, the South
African rand, Thai baht, Greek drachma, Singapore dollar, Mexican peso,
New Zealand dollar and Norwegian krone.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. Gains were recorded from long positions in the euro, Swiss franc, and
Norwegian krone versus the U.S. dollar as the dollar's value significantly
weakened during April, May, and June amid falling equity prices and concerns
regarding corporate integrity. Additional gains from long positions in the
euro, Swiss franc, and Norwegian krone were experienced in December as the
looming threat of a potential military conflict with Iraq and North Korea
further weakened the dollar.
.. Additional gains stemmed from long positions in the South African rand
versus the U.S. dollar as its value approached a 16-month high during the
second and fourth quarter amid strong demand for South African exports and
high relative interest rates.
.. Profits were recorded from long positions in the Australian dollar and New
Zealand dollar versus the U.S. dollar as the value of both currencies
strengthened during April, May, and throughout the fourth quarter amid
higher gold prices.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. Losses were recorded in the British pound from short positions versus the
U.S. dollar during the summer months and into the fourth quarter as the
value of the dollar weakened amid geopolitical and economic concerns.
.. Losses resulted from positions in the Japanese yen versus the U.S. dollar
during March as the yen initially strengthened amid asset repatriation out
of the U.S. into Japan, only to retreat by month-end on expectations that
the repatriation flow would soon subside ahead of the Japanese fiscal
year-end. Further losses in the Japanese yen were experienced in December
from short positions versus the U.S. dollar as the value of the dollar
weakened versus most major currencies.

SPECTRUM GLOBAL BALANCED

[CHART]

Year ended
December 31, 2002
-----------------
Currencies 1.31%
Interest Rates 7.42%
Stock Indices -14.15%
Energies 0.00%
Metals -0.45%
Agriculturals -0.43%

Note:Reflects trading results only and does not include fees or interest income.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the global stock index futures markets, losses were experienced from long
positions in European, U.S., and Japanese stock index futures as prices
continued to weaken throughout the majority of the year, particularly during
July, September, and December, amid continued economic uncertainty and
ongoing political concerns.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the global interest rate futures markets, gains resulted from long
positions in European, Japanese, and U.S. interest rate futures,
predominantly during the third quarter, as prices trended higher amid a
shift in assets from stocks into bonds as investors sought the "safe haven"
of fixed income investments.
.. In the currency markets, gains were recorded from long positions in the euro
and Swiss franc versus the U.S. dollar as the dollar's value weakened during
May, June, and December amid investors' fears concerning increased global
tensions, specifically the threat of war between India and Pakistan, the
looming threat of a military strike against Iraq, and the resumption of
North Korea's nuclear program.

SPECTRUM SELECT

[CHART]

Year ended
December 31, 2002
-----------------
Currencies 12.08%
Interest Rates 9.54%
Stock Indices 0.45%
Energies 1.01%
Metals -1.82%
Agriculturals 1.23%

Note:Reflects trading results only and does not include fees or interest income.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the currency markets, gains were recorded from long positions in the euro
and Swiss franc versus the U.S. dollar during May, June and December, as the
dollar's value weakened amid investors' fears concerning global political
tensions, specifically the threat of war between India and Pakistan, the
looming threat of a military strike against Iraq, and the resumption of
North Korea's nuclear program.
.. In the global interest rate futures markets, gains were recorded from long
positions in European and U.S. interest rate futures during the period from
June through September, as well as in December, as prices trended higher
amid a shift of assets from stocks into bonds as investors sought the "safe
haven" of fixed income investments.
.. In the agricultural futures markets, gains were recorded from long futures
positions in soybean and wheat as prices rallied during the second and third
quarter amid fears that hot and dry weather would adversely affect crops in
the U.S. midwest.
.. In the energy futures markets, gains were experienced from long positions in
natural gas futures during March, August, September, and December as prices
moved higher amid supply concerns.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the metals futures markets, losses were incurred early in the year from
long positions in copper futures as prices fell amid weak industrial demand.
Additional losses were recorded from short positions in copper futures as
prices reversed higher in response to a temporary rally in global equity
prices in October.

SPECTRUM STRATEGIC

[CHART]

Year ended
December 31, 2002
-----------------
Currencies 7.56%
Interest Rates -0.28%
Stock Indices -2.92%
Energies -0.06%
Metals -2.87%
Agriculturals 18.25%

Note:Reflects trading results only and does not include fees or interest income.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the agricultural markets, gains were recorded from long futures positions
in cocoa as political unrest in the Ivory Coast threatened supplies
throughout a majority of the year. Additional gains were recorded from long
futures positions in coffee as technical factors and concerns regarding
supplies placed upward pressure on prices. Further gains resulted from long
positions in wheat, soybean, and corn futures as weather-related concerns
threatened supplies in the U.S. midwest.
.. In the currency markets, gains were recorded from long positions in the euro
and Swiss franc versus the U.S. dollar as the dollar's value weakened amid
investors' fears concerning increased global tensions and prolonged
uncertainty regarding the U.S. economy.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the global stock index futures markets, losses were recorded from long
positions in U.S. and European stock index futures as prices continued to
weaken throughout a majority of the year amid ongoing concerns regarding the
global economic recovery, corporate accounting scandals, and geopolitical
concerns. Additional losses were incurred from short positions in U.S. and
European stock index futures as global equity prices reversed higher during
the fourth quarter amid temporary economic optimism.
.. In the metals futures markets, losses were experienced from long positions
in copper, aluminum, and zinc futures as prices reversed lower during April
and July amid growing inventory levels and weak industrial demand.

SPECTRUM TECHNICAL

[CHART]

Year ended
December 31, 2002
-----------------
Currencies 13.05%
Interest Rates 17.05%
Stock Indices 4.34%
Energies 0.01%
Metals -2.34%
Agriculturals 0.96%

Note:Reflects trading results only and does not include fees or interest income.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the global interest rate futures markets, gains resulted from long
positions in Japanese, European, and U.S. interest rate futures as prices
trended higher during the period from June through September, as well as in
December, amid global economic uncertainty and falling equity prices.
.. In the currency markets, gains were recorded during the second quarter, as
well as in December, from long positions in the euro versus the U.S. dollar
as the value of the dollar weakened amid continued uncertainty regarding the
U.S. economic recovery and heightened global political tensions.
.. In the global stock index futures markets, gains were recorded from short
positions in European stock index futures as prices trended lower during
June, July, and September amid skepticism regarding a global economic
recovery.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the metals futures markets, losses resulted from long positions in copper
futures as prices reversed lower during the second quarter amid growing
inventory levels and weak industrial demand. Additional losses were recorded
during October from short positions in copper futures as prices reversed
higher amid renewed economic optimism.

MORGAN STANLEY SPECTRUM SERIES

INDEPENDENT AUDITORS' REPORT

To the Limited Partners and the General Partner of Morgan Stanley Spectrum
Commodity L.P., Morgan Stanley Spectrum Currency L.P., Morgan Stanley Spectrum
Global Balanced L.P., Morgan Stanley Spectrum Select L.P., Morgan Stanley
Spectrum Strategic L.P. and Morgan Stanley Spectrum Technical L.P.:

We have audited the accompanying statements of financial condition of Morgan
Stanley Spectrum Commodity L.P., Morgan Stanley Spectrum Currency L.P.
("Spectrum Currency"), Morgan Stanley Spectrum Global Balanced L.P., Morgan
Stanley Spectrum Select L.P., Morgan Stanley Spectrum Strategic L.P., and
Morgan Stanley Spectrum Technical L.P. (collectively, the "Partnerships"),
including the schedules of investments, as of December 31, 2002 and 2001, and
the related statements of operations, changes in partners' capital, and cash
flows for the period from July 3, 2000 (commencement of operations) to December
31, 2000 and the years ended December 31, 2001 and 2002 for Spectrum Currency,
and for each of the three years in the period ended December 31, 2002 for the
other above mentioned Partnerships. These financial statements are the
responsibility of the Partnerships' management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Morgan Stanley Spectrum Commodity L.P.,
Morgan Stanley Spectrum Currency L.P., Morgan Stanley Spectrum Global Balanced
L.P., Morgan Stanley Spectrum Select L.P., Morgan Stanley Spectrum Strategic
L.P., and Morgan Stanley Spectrum Technical L.P. as of December 31, 2002 and
2001, and the results of their operations and their cash flows for the period
from July 3, 2000 (commencement of operations) to December 31, 2000 and the
years ended December 31, 2001 and 2002 for Spectrum Cur-

rency, and for each of the three years in the period ended December 31, 2002
for the other above mentioned Partnerships, in conformity with accounting
principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

New York, New York
February 14, 2003

MORGAN STANLEY SPECTRUM COMMODITY L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
----------------------
2002 2001
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 14,290,282 12,980,361

Net unrealized gain on open contracts (MS&Co.) -- 289,317
Net unrealized gain (loss) on open contracts
(MSIL) (101,856) 77,762
---------- ----------
Total net unrealized gain (loss) on open contracts (101,856) 367,079
---------- ----------
Total Trading Equity 14,188,426 13,347,440
Interest receivable (Morgan Stanley DW and
MS&Co.) 11,963 17,129
Subscriptions receivable -- 108,050
---------- ----------
Total Assets 14,200,389 13,472,619
========== ==========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 5,357,853 417,678
Accrued brokerage fees (Morgan Stanley DW and
MS&Co.) 52,969 52,001
Accrued management fees (MSCM) 28,788 28,261
---------- ----------
Total Liabilities 5,439,610 497,940
---------- ----------
PARTNERS' CAPITAL
Limited Partners (1,243,152.442 and 2,180,009.505
Units, respectively) 8,465,275 12,721,444
General Partner (43,395.648 Units) 295,504 253,235
---------- ----------
Total Partners' Capital 8,760,779 12,974,679
---------- ----------
Total Liabilities and Partners' Capital 14,200,389 13,472,619
========== ==========
NET ASSET VALUE PER UNIT 6.81 5.84
========== ==========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
2002 2001 2000
--------- ---------- ---------
$ $ $

REVENUES
Trading profit (loss):
Realized 3,310,675 (4,662,750) 1,696,824
Net change in unrealized (468,935) 392,362 (567,711)
--------- ---------- ---------
Total Trading Results 2,841,740 (4,270,388) 1,129,113
Interest income (Morgan Stanley DW
and MS&Co.) 178,063 518,759 1,047,350
--------- ---------- ---------
Total 3,019,803 (3,751,629) 2,176,463
--------- ---------- ---------
EXPENSES
Brokerage fees (Morgan Stanley DW and
MS&Co.) 607,846 736,436 949,310
Management fees (MSCM) 330,352 400,237 546,187
Service fees (Demeter) -- -- 58,604
--------- ---------- ---------
Total 938,198 1,136,673 1,554,101
--------- ---------- ---------
NET INCOME (LOSS) 2,081,605 (4,888,302) 622,362
========= ========== =========
NET INCOME (LOSS) ALLOCATION:
Limited Partners 2,039,336 (4,800,953) 612,086
General Partner 42,269 (87,349) 10,276
NET INCOME (LOSS) PER UNIT:
Limited Partners .97 (2.01) .24
General Partner .97 (2.01) .24

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

MORGAN STANLEY SPECTRUM CURRENCY L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
---------------------
2002 2001
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 88,478,803 43,241,135
Net unrealized gain on open contracts (MS&Co.) 5,651,549 3,178,383
---------- ----------
Total Trading Equity 94,130,352 46,419,518
Subscriptions receivable 4,178,758 2,642,117
Interest receivable (Morgan Stanley DW) 70,210 50,588
---------- ----------
Total Assets 98,379,320 49,112,223
========== ==========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 1,526,335 165,224
Accrued brokerage fees (Morgan Stanley DW) 316,460 154,729
Accrued incentive fees 239,482 913,255
Accrued management fees 137,591 67,274
---------- ----------
Total Liabilities 2,219,868 1,300,482
---------- ----------
PARTNERS' CAPITAL
Limited Partners (6,739,826.121 and 3,674,315.446 Units,
respectively) 93,891,619 45,598,611
General Partner (162,791.986 and 178,332.987 Units, respectively) 2,267,833 2,213,130
---------- ----------
Total Partners' Capital 96,159,452 47,811,741
---------- ----------
Total Liabilities and Partners' Capital 98,379,320 49,112,223
========== ==========
NET ASSET VALUE PER UNIT 13.93 12.41
========== ==========

STATEMENTS OF OPERATIONS

FOR THE PERIOD FROM
JULY 3, 2000
FOR THE YEARS ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
-------------------- DECEMBER 31,
2002 2001 2000
---------- --------- -------------------
$ $ $

REVENUES
Trading profit:
Realized 12,877,202 3,998,924 1,126,201
Net change in unrealized 2,473,166 2,622,814 555,569
---------- --------- ---------
Total Trading Results 15,350,368 6,621,738 1,681,770
Interest income (Morgan Stanley DW) 833,523 731,716 236,461
---------- --------- ---------
Total 16,183,891 7,353,454 1,918,231
---------- --------- ---------
EXPENSES
Brokerage fees (Morgan Stanley DW) 3,077,048 1,297,698 249,571
Incentive fees 1,485,875 1,155,201 188,423
Management fees 1,337,848 564,216 171,693
---------- --------- ---------
Total 5,900,771 3,017,115 609,687
---------- --------- ---------
NET INCOME 10,283,120 4,336,339 1,308,544
========== ========= =========
NET INCOME ALLOCATION:
Limited Partners 10,038,409 4,119,027 1,134,371
General Partner 244,711 217,312 174,173
NET INCOME PER UNIT:
Limited Partners 1.52 1.24 1.17
General Partner 1.52 1.24 1.17

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

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
----------------------
2002 2001
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 49,330,482 57,396,091

Net unrealized gain on open contracts (MS&Co.) 758,782 839,855
Net unrealized loss on open contracts (MSIL) (12,849) (150,647)
---------- ----------
Total net unrealized gain on open contracts 745,933 689,208
Net option premiums 712,573 --
---------- ----------
Total Trading Equity 50,788,988 58,085,299
Subscriptions receivable 716,792 611,641
Interest receivable (Morgan Stanley DW) 53,458 93,818
---------- ----------
Total Assets 51,559,238 58,790,758
========== ==========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 896,775 725,284
Accrued brokerage fees (Morgan Stanley DW) 202,109 219,946
Accrued management fees 54,922 59,768
---------- ----------
Total Liabilities 1,153,806 1,004,998
---------- ----------
PARTNERS' CAPITAL
Limited Partners (3,419,596.378 and 3,524,663.525
Units, respectively) 49,814,229 57,127,967
General Partner (40,584.304 Units) 591,203 657,793
---------- ----------
Total Partners' Capital 50,405,432 57,785,760
---------- ----------
Total Liabilities and Partners' Capital 51,559,238 58,790,758
========== ==========
NET ASSET VALUE PER UNIT 14.57 16.21
========== ==========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
2002 2001 2000
---------- ---------- ----------
$ $ $

REVENUES
Trading profit (loss):
Realized (3,772,374) 3,618,628 (2,091,009)
Net change in unrealized 56,725 (2,628,436) 2,507,530
---------- ---------- ----------
(3,715,649) 990,192 416,521
Proceeds from Litigation Settlement 233,074 -- --
---------- ---------- ----------
Total Trading Results (3,482,575) 990,192 416,521
Interest income (Morgan Stanley DW) 916,179 2,160,076 3,275,958
---------- ---------- ----------
Total (2,566,396) 3,150,268 3,692,479
---------- ---------- ----------
EXPENSES
Brokerage fees (Morgan Stanley DW) 2,532,371 2,597,121 2,558,008
Management fees 688,151 705,746 695,117
---------- ---------- ----------
Total 3,220,522 3,302,867 3,253,125
---------- ---------- ----------
NET INCOME (LOSS) (5,786,918) (152,599) 439,354
========== ========== ==========
NET INCOME (LOSS) ALLOCATION:
Limited Partners (5,720,328) (150,650) 433,786
General Partner (66,590) (1,949) 5,568
NET INCOME (LOSS) PER UNIT:
Limited Partners (1.64) (.05) .14
General Partner (1.64) (.05) .14

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

MORGAN STANLEY SPECTRUM SELECT L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
------------------------
2002 2001
----------- -----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 274,780,334 235,183,061

Net unrealized gain on open contracts
(MS&Co.) 20,865,525 7,164,265
Net unrealized loss on open contracts (MSIL) (2,967,507) (1,767,529)
----------- -----------
Total net unrealized gain on open contracts 17,898,018 5,396,736
Net option premiums -- 167,063
----------- -----------
Total Trading Equity 292,678,352 240,746,860
Subscriptions receivable 6,690,744 4,991,166
Interest receivable (Morgan Stanley DW) 235,283 305,356
----------- -----------
Total Assets 299,604,379 246,043,382
=========== ===========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 1,876,403 2,595,426
Accrued brokerage fees (Morgan Stanley DW) 1,662,321 1,440,360
Accrued management fees 687,856 596,011
----------- -----------
Total Liabilities 4,226,580 4,631,797
----------- -----------
PARTNERS' CAPITAL
Limited Partners (10,567,690.403 and
9,966,639.126 Units, respectively) 292,226,000 238,821,840
General Partner (113,977.644 and 108,076.600
Units, respectively) 3,151,799 2,589,745
----------- -----------
Total Partners' Capital 295,377,799 241,411,585
----------- -----------
Total Liabilities and Partners' Capital 299,604,379 246,043,382
=========== ===========
NET ASSET VALUE PER UNIT 27.65 23.96
=========== ===========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
2002 2001 2000
---------- ----------- ----------
$ $ $

REVENUES
Trading profit (loss):
Realized 46,999,853 43,420,724 6,845,291
Net change in unrealized 12,501,282 (20,155,561) 18,665,233
---------- ----------- ----------
59,501,135 23,265,163 25,510,524
Proceeds from Litigation Settlement 4,636,156 -- --
---------- ----------- ----------
Total Trading Results 64,137,291 23,265,163 25,510,524
Interest income (Morgan Stanley DW) 3,468,437 7,203,732 9,573,095
---------- ----------- ----------
Total 67,605,728 30,468,895 35,083,619
---------- ----------- ----------
EXPENSES
Brokerage fees (Morgan Stanley DW) 18,943,743 17,183,347 14,706,945
Management fees 7,838,786 7,110,346 6,085,629
Incentive fees -- 3,009,853 --
---------- ----------- ----------
Total 26,782,529 27,303,546 20,792,574
---------- ----------- ----------
NET INCOME 40,823,199 3,165,349 14,291,045
========== =========== ==========
NET INCOME ALLOCATION:
Limited Partners 40,391,145 3,123,455 14,165,099
General Partner 432,054 41,894 125,946
NET INCOME PER UNIT:
Limited Partners 3.69 .39 1.57
General Partner 3.69 .39 1.57

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

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
----------------------
2002 2001
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 68,224,648 65,967,662

Net unrealized gain on open contracts (MS&Co.) 7,430,755 4,515,344
Net unrealized loss on open contracts (MSIL) (499,611) (23,578)
---------- ----------
Total net unrealized gain on open contracts 6,931,144 4,491,766
Net option premiums 222,768 288,552
---------- ----------
Total Trading Equity 75,378,560 70,747,980
Subscriptions receivable 1,654,471 651,936
Interest receivable (Morgan Stanley DW) 61,778 89,359
---------- ----------
Total Assets 77,094,809 71,489,275
========== ==========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 1,115,549 2,072,098
Accrued brokerage fees (Morgan Stanley DW) 431,596 424,242
Accrued management fees 178,592 175,549
---------- ----------
Total Liabilities 1,725,737 2,671,889
---------- ----------
PARTNERS' CAPITAL
Limited Partners (6,454,424.204 and 6,449,326.013
Units, respectively) 74,487,934 68,012,216
General Partner (76,351.101 Units) 881,138 805,170
---------- ----------
Total Partners' Capital 75,369,072 68,817,386
---------- ----------
Total Liabilities and
Partners' Capital 77,094,809 71,489,275
========== ==========
NET ASSET VALUE PER UNIT 11.54 10.55
========== ==========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
2002 2001 2000
---------- ---------- -----------
$ $ $

REVENUES
Trading profit (loss):
Realized 10,648,811 2,132,212 (23,193,914)
Net change in unrealized 2,439,378 2,505,634 (7,577,681)
---------- ---------- -----------
13,088,189 4,637,846 (30,771,595)
Proceeds from Litigation Settlement 17,556 -- --
---------- ---------- -----------
Total Trading Results 13,105,745 4,637,846 (30,771,595)
Interest income (Morgan Stanley DW) 972,942 2,217,963 3,832,634
---------- ---------- -----------
Total 14,078,687 6,855,809 (26,938,961)
---------- ---------- -----------
EXPENSES
Brokerage fees (Morgan Stanley DW) 5,304,486 5,152,756 5,798,093
Management fees 2,194,958 2,183,596 2,880,999
Incentive fees 264,827 -- 1,269,237
---------- ---------- -----------
Total 7,764,271 7,336,352 9,948,329
---------- ---------- -----------
NET INCOME (LOSS) 6,314,416 (480,543) (36,887,290)
========== ========== ===========
NET INCOME (LOSS) ALLOCATION:
Limited Partners 6,238,448 (475,383) (36,503,461)
General Partner 75,968 (5,160) (383,829)
NET INCOME (LOSS) PER UNIT:
Limited Partners .99 (.06) (5.24)
General Partner .99 (.06) (5.24)

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

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
------------------------
2002 2001
----------- -----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 310,115,973 246,172,354

Net unrealized gain on open contracts (MS&Co.) 27,172,226 14,299,794
Net unrealized loss on open contracts (MSIL) (3,069,013) (2,794,179)
----------- -----------
Total net unrealized gain on open contracts 24,103,213 11,505,615
----------- -----------
Total Trading Equity 334,219,186 257,677,969
Subscriptions receivable 7,108,790 4,445,562
Interest receivable (Morgan Stanley DW) 268,836 318,673
----------- -----------
Total Assets 341,596,812 262,442,204
=========== ===========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 3,195,919 2,377,346
Accrued brokerage fees (Morgan Stanley DW) 1,906,305 1,509,205
Accrued management fees 672,962 581,531
----------- -----------
Total Liabilities 5,775,186 4,468,082
----------- -----------
PARTNERS' CAPITAL
Limited Partners (18,038,726.045 and
17,089,473.684 Units, respectively) 332,124,550 255,122,417
General Partner (200,799.812 and 191,022.517
Units, respectively) 3,697,076 2,851,705
----------- -----------
Total Partners' Capital 335,821,626 257,974,122
----------- -----------
Total Liabilities and Partners' Capital 341,596,812 262,442,204
=========== ===========
NET ASSET VALUE PER UNIT 18.41 14.93
=========== ===========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
2002 2001 2000
---------- ----------- ----------
$ $ $

REVENUES
Trading profit (loss):
Realized 76,058,451 30,115,483 12,255,064
Net change in unrealized 12,597,598 (28,536,694) 22,006,013
---------- ----------- ----------
88,656,049 1,578,789 34,261,077
Proceeds from Litigation Settlement 306,400 -- --
---------- ----------- ----------
Total Trading Results 88,962,449 1,578,789 34,261,077
Interest income (Morgan Stanley DW) 3,686,460 8,288,660 11,613,896
---------- ----------- ----------
Total 92,648,909 9,867,449 45,874,973
---------- ----------- ----------
EXPENSES
Brokerage fees (Morgan Stanley DW) 20,470,797 19,556,056 17,835,223
Management fees 7,377,756 7,501,053 9,595,464
Incentive fees 4,024,921 2,093,709 166,085
---------- ----------- ----------
Total 31,873,474 29,150,818 27,596,772
---------- ----------- ----------
NET INCOME (LOSS) 60,775,435 (19,283,369) 18,278,201
========== =========== ==========
NET INCOME (LOSS) ALLOCATION:
Limited Partners 60,110,064 (19,062,561) 18,053,408
General Partner 665,371 (220,808) 224,793
NET INCOME (LOSS) PER UNIT:
Limited Partners 3.48 (1.15) 1.17
General Partner 3.48 (1.15) 1.17

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

MORGAN STANLEY SPECTRUM COMMODITY L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
-------------- ---------- ------- ----------
$ $ $

Partners' Capital,
December 31, 1999 3,105,867.170 23,310,162 330,308 23,640,470
Offering of Units 277,607.062 2,115,964 -- 2,115,964
Net income -- 612,086 10,276 622,362
Redemptions (809,685.913) (6,178,815) -- (6,178,815)
-------------- ---------- ------- ----------
Partners' Capital,
December 31, 2000 2,573,788.319 19,859,397 340,584 20,199,981
Offering of Units 287,171.772 1,838,372 -- 1,838,372
Net loss -- (4,800,953) (87,349) (4,888,302)
Redemptions (637,554.938) (4,175,372) -- (4,175,372)
-------------- ---------- ------- ----------
Partners' Capital,
December 31, 2001 2,223,405.153 12,721,444 253,235 12,974,679
Offering of Units 261,767.021 1,602,387 -- 1,602,387
Net income -- 2,039,336 42,269 2,081,605
Redemptions (1,198,624.084) (7,897,892) -- (7,897,892)
-------------- ---------- ------- ----------
Partners' Capital,
December 31, 2002 1,286,548.090 8,465,275 295,504 8,760,779
============== ========== ======= ==========

MORGAN STANLEY SPECTRUM CURRENCY L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND THE PERIOD FROM JULY 3, 2000
(COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 2000

UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
------------- ----------- --------- -----------
$ $ $

Partners' Capital,
July 3, 2000
(commencement of
operations) 2.000 10 10 20
Initial Offering 633,152.332 4,886,888 1,444,635 6,331,523
Offering of Units 980,783.417 10,281,803 100,000 10,381,803
Net income -- 1,134,371 174,173 1,308,544
Redemptions (207,486.516) (2,314,658) -- (2,314,658)
------------- ----------- --------- -----------
Partners' Capital,
December 31, 2000 1,406,451.233 13,988,414 1,718,818 15,707,232
Offering of Units 2,572,156.095 28,921,302 277,000 29,198,302
Net income -- 4,119,027 217,312 4,336,339
Redemptions (125,958.895) (1,430,132) -- (1,430,132)
------------- ----------- --------- -----------
Partners' Capital,
December 31, 2001 3,852,648.433 45,598,611 2,213,130 47,811,741
Offering of Units 3,918,276.910 48,564,478 420,000 48,984,478
Net income -- 10,038,409 244,711 10,283,120
Redemptions (868,307.236) (10,309,879) (610,008) (10,919,887)
------------- ----------- --------- -----------
Partners' Capital,
December 31, 2002 6,902,618.107 93,891,619 2,267,833 96,159,452
============= =========== ========= ===========

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

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
------------- ----------- ------- -----------
$ $ $

Partners' Capital,
December 31, 1999 3,589,823.691 57,209,838 654,174 57,864,012
Offering of Units 568,088.752 8,983,545 -- 8,983,545
Net income -- 433,786 5,568 439,354
Redemptions (720,447.437) (11,407,161) -- (11,407,161)
------------- ----------- ------- -----------
Partners' Capital,
December 31, 2000 3,437,465.006 55,220,008 659,742 55,879,750
Offering of Units 640,074.598 10,254,342 -- 10,254,342
Net loss -- (150,650) (1,949) (152,599)
Redemptions (512,291.775) (8,195,733) -- (8,195,733)
------------- ----------- ------- -----------
Partners' Capital,
December 31, 2001 3,565,247.829 57,127,967 657,793 57,785,760
Offering of Units 572,583.510 8,829,394 -- 8,829,394
Net loss -- (5,720,328) (66,590) (5,786,918)
Redemptions (677,650.657) (10,422,804) -- (10,422,804)
------------- ----------- ------- -----------
Partners' Capital,
December 31, 2002 3,460,180.682 49,814,229 591,203 50,405,432
============= =========== ======= ===========

MORGAN STANLEY SPECTRUM SELECT L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
-------------- ----------- --------- -----------
$ $ $

Partners' Capital,
December 31, 1999 9,716,887.432 210,877,519 2,928,155 213,805,674
Offering of Units 1,339,972.159 28,581,403 -- 28,581,403
Net income -- 14,165,099 125,946 14,291,045
Redemptions (1,693,772.364) (35,441,903) (506,250) (35,948,153)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2000 9,363,087.227 218,182,118 2,547,851 220,729,969
Offering of Units 1,676,778.529 41,261,535 -- 41,261,535
Net income -- 3,123,455 41,894 3,165,349
Redemptions (965,150.030) (23,745,268) -- (23,745,268)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2001 10,074,715.726 238,821,840 2,589,745 241,411,585
Offering of Units 2,459,750.992 62,682,840 130,000 62,812,840
Net income -- 40,391,145 432,054 40,823,199
Redemptions (1,852,798.671) (49,669,825) -- (49,669,825)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2002 10,681,668.047 292,226,000 3,151,799 295,377,799
============== =========== ========= ===========

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

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
-------------- ----------- --------- -----------
$ $ $

Partners' Capital,
December 31, 1999 6,795,971.519 106,542,362 1,150,159 107,692,521
Offering of Units 1,467,043.314 17,566,488 35,000 17,601,488
Net loss -- (36,503,461) (383,829) (36,887,290)
Redemptions (1,268,061.404) (14,172,270) -- (14,172,270)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2000 6,994,953.429 73,433,119 801,330 74,234,449
Offering of Units 892,802.518 9,240,482 9,000 9,249,482
Net loss -- (475,383) (5,160) (480,543)
Redemptions (1,362,078.833) (14,186,002) -- (14,186,002)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2001 6,525,677.114 68,012,216 805,170 68,817,386
Offering of Units 1,160,993.682 13,475,899 -- 13,475,899
Net income -- 6,238,448 75,968 6,314,416
Redemptions (1,155,895.491) (13,238,629) -- (13,238,629)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2002 6,530,775.305 74,487,934 881,138 75,369,072
============== =========== ========= ===========

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
-------------- ----------- --------- -----------
$ $ $

Partners' Capital,
December 31, 1999 18,027,896.093 265,907,998 2,847,720 268,755,718
Offering of Units 2,110,290.038 29,668,693 -- 29,668,693
Net income -- 18,053,408 224,793 18,278,201
Redemptions (3,467,967.635) (48,569,520) -- (48,569,520)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2000 16,670,218.496 265,060,579 3,072,513 268,133,092
Offering of Units 2,591,525.213 40,832,142 -- 40,832,142
Net loss -- (19,062,561) (220,808) (19,283,369)
Redemptions (1,981,247.508) (31,707,743) -- (31,707,743)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2001 17,280,496.201 255,122,417 2,851,705 257,974,122
Offering of Units 3,538,032.569 58,538,660 180,000 58,718,660
Net income -- 60,110,064 665,371 60,775,435
Redemptions (2,579,002.913) (41,646,591) -- (41,646,591)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2002 18,239,525.857 332,124,550 3,697,076 335,821,626
============== =========== ========= ===========

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

MORGAN STANLEY SPECTRUM COMMODITY L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
2002 2001 2000
---------- ---------- ----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) 2,081,605 (4,888,302) 622,362
Noncash item included in net
income (loss):
Net change in unrealized 468,935 (392,362) 567,711
(Increase) decrease in operating assets:
Interest receivable (Morgan Stanley
DW and MS&Co.) 5,166 71,999 (12,936)
Increase (decrease) in operating liabilities:
Accrued brokerage fees (Morgan
Stanley DW and MS&Co.) 968 (25,627) 6,801
Accrued management fees (MSCM) 527 (13,928) (6,322)
Service fees payable (Demeter) -- -- (19,404)
---------- ---------- ----------
Net cash provided by (used
for) operating activities 2,557,201 (5,248,220) 1,158,212
---------- ---------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 1,602,387 1,838,372 2,115,964
(Increase) decrease in
subscriptions receivable 108,050 107,847 (215,897)
Increase (decrease) in redemptions
payable 4,940,175 (72,245) 220,378
Redemptions of Units (7,897,892) (4,175,372) (6,178,815)
---------- ---------- ----------
Net cash used for financing activities (1,247,280) (2,301,398) (4,058,370)
---------- ---------- ----------
Net increase (decrease) in cash 1,309,921 (7,549,618) (2,900,158)
Balance at beginning of period 12,980,361 20,529,979 23,430,137
---------- ---------- ----------
Balance at end of period 14,290,282 12,980,361 20,529,979
========== ========== ==========

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

MORGAN STANLEY SPECTRUM CURRENCY L.P.

STATEMENTS OF CASH FLOWS

FOR THE PERIOD FROM
FOR THE YEARS JULY 3, 2000
ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
----------------------- DECEMBER 31,
2002 2001 2000
----------- ---------- -------------------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income 10,283,120 4,336,339 1,308,544
Noncash item included in net
income:
Net change in unrealized (2,473,166) (2,622,814) (555,569)
(Increase) decrease in
operating assets:
Interest receivable (Morgan
Stanley DW) (19,622) 4,876 (55,464)
Increase (decrease) in
operating liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 161,731 99,484 55,245
Accrued incentive fees (673,773) 880,379 32,876
Accrued management fees 70,317 43,254 24,020
----------- ---------- ----------
Net cash provided by
operating activities 7,348,607 2,741,518 809,652
----------- ---------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Initial offering -- -- 6,331,543
Offering of Units 48,984,478 29,198,302 10,381,803
(Increase) decrease in
subscriptions receivable (1,536,641) 412,033 (3,054,150)
Increase (decrease) in
redemptions payable 1,361,111 (2,072,127) 2,237,351
Redemptions of Units (10,919,887) (1,430,132) (2,314,658)
----------- ---------- ----------
Net cash provided
by financing activities 37,889,061 26,108,076 13,581,889
----------- ---------- ----------
Net increase in cash 45,237,668 28,849,594 14,391,541
Balance at beginning of
period 43,241,135 14,391,541 --
----------- ---------- ----------
Balance at end of period 88,478,803 43,241,135 14,391,541
=========== ========== ==========

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

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
2002 2001 2000
----------- ---------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) (5,786,918) (152,599) 439,354
Noncash item included in net
income (loss):
Net change in unrealized (56,725) 2,628,436 (2,507,530)
(Increase) decrease in operating assets:
Net option premiums (712,573) 192,500 (192,500)
Interest receivable
(Morgan Stanley DW) 40,360 191,236 (40,455)
Increase (decrease) in operating
liabilities:
Accrued brokerage fees
(Morgan Stanley DW) (17,837) 17,157 (14,106)
Accrued management fees (4,846) 4,661 (3,833)
----------- ---------- -----------
Net cash provided by (used for)
operating activities (6,538,539) 2,881,391 (2,319,070)
----------- ---------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 8,829,394 10,254,342 8,983,545
(Increase) decrease in subscriptions
receivable (105,151) (81,007) 317,320
Increase (decrease) in redemptions
payable 171,491 122,794 (65,251)
Redemptions of Units (10,422,804) (8,195,733) (11,407,161)
----------- ---------- -----------
Net cash provided by (used for)
financing activities (1,527,070) 2,100,396 (2,171,547)
----------- ---------- -----------
Net increase (decrease) in cash (8,065,609) 4,981,787 (4,490,617)
Balance at beginning of period 57,396,091 52,414,304 56,904,921
----------- ---------- -----------
Balance at end of period 49,330,482 57,396,091 52,414,304
=========== ========== ===========

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

MORGAN STANLEY SPECTRUM SELECT L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
2002 2001 2000
----------- ----------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income 40,823,199 3,165,349 14,291,045
Noncash item included in net
income:
Net change in unrealized (12,501,282) 20,155,561 (18,665,233)
(Increase) decrease in
operating assets:
Net option premiums 167,063 (167,063) 776,380
Interest receivable
(Morgan Stanley DW) 70,073 584,598 (167,649)
Increase (decrease) in
operating liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 221,961 208,881 (39,496)
Accrued management fees 91,845 86,434 (16,344)
----------- ----------- -----------
Net cash provided by (used for)
operating activities 28,872,859 24,033,760 (3,821,297)
----------- ----------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 62,812,840 41,261,535 28,581,403
(Increase) decrease in subscriptions
receivable (1,699,578) (3,407,225) 2,146,110
Increase (decrease) in
redemptions payable (719,023) 484,897 (1,653,713)
Redemptions of Units (49,669,825) (23,745,268) (35,948,153)
----------- ----------- -----------
Net cash provided by (used for)
financing activities 10,724,414 14,593,939 (6,874,353)
----------- ----------- -----------
Net increase (decrease) in cash 39,597,273 38,627,699 (10,695,650)
Balance at beginning of period 235,183,061 196,555,362 207,251,012
----------- ----------- -----------
Balance at end of period 274,780,334 235,183,061 196,555,362
=========== =========== ===========

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

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
2002 2001 2000
----------- ----------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) 6,314,416 (480,543) (36,887,290)
Noncash item included in net
income (loss):
Net change in unrealized (2,439,378) (2,505,634) 7,577,681
(Increase) decrease in operating
assets:
Net option premiums 65,784 (62,352) (237,853)
Interest receivable
(Morgan Stanley DW) 27,581 217,520 32,703
Increase (decrease) in operating
liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 7,354 14,950 (180,709)
Accrued management fees 3,043 (11,028) (127,069)
Accrued incentive fee -- (289,687) 289,687
----------- ----------- -----------
Net cash provided by (used for)
operating activities 3,978,800 (3,116,774) (29,532,850)
----------- ----------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 13,475,899 9,249,482 17,601,488
(Increase) decrease in subscriptions
receivable (1,002,535) (189,876) 1,281,898
Increase (decrease) in redemptions
payable (956,549) 765,005 459,233
Redemptions of Units (13,238,629) (14,186,002) (14,172,270)
----------- ----------- -----------
Net cash provided by
(used for) financing activities (1,721,814) (4,361,391) 5,170,349
----------- ----------- -----------
Net increase (decrease) in cash 2,256,986 (7,478,165) (24,362,501)
Balance at beginning of period 65,967,662 73,445,827 97,808,328
----------- ----------- -----------
Balance at end of period 68,224,648 65,967,662 73,445,827
=========== =========== ===========

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

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
2002 2001 2000
----------- ----------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) 60,775,435 (19,283,369) 18,278,201
Noncash item included in net
income (loss):
Net change in unrealized (12,597,598) 28,536,694 (22,006,013)
(Increase) decrease in operating
assets:
Interest receivable (Morgan
Stanley DW) 49,837 744,371 (162,089)
Net option premiums -- -- (74,725)
Increase (decrease) in operating
liabilities:
Accrued brokerage fees (Morgan
Stanley DW) 397,100 51,079 (101,355)
Accrued management fees 91,431 21,704 (300,576)
Accrued incentive fee -- (111,599) 111,599
----------- ----------- -----------
Net cash provided by (used for)
operating activities 48,716,205 9,958,880 (4,254,958)
----------- ----------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 58,718,660 40,832,142 29,668,693
(Increase) decrease in subscriptions
receivable (2,663,228) (3,357,977) 2,839,329
Increase (decrease) in redemptions
payable 818,573 (1,055,038) 374,791
Redemptions of Units (41,646,591) (31,707,743) (48,569,520)
----------- ----------- -----------
Net cash provided by (used for)
financing activities 15,227,414 4,711,384 (15,686,707)
----------- ----------- -----------
Net increase (decrease)
in cash 63,943,619 14,670,264 (19,941,665)
Balance at beginning of period 246,172,354 231,502,090 251,443,755
----------- ----------- -----------
Balance at end of period 310,115,973 246,172,354 231,502,090
=========== =========== ===========

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

MORGAN STANLEY SPECTRUM COMMODITY L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2002 AND 2001

FUTURES AND FORWARD CONTRACTS: LONG GAIN/(LOSS) SHORT GAIN/(LOSS) NET UNREALIZED GAIN(LOSS)
- ------------------------------ ---------------- ----------------- --------------------------
2002 PARTNERSHIP NET ASSETS: $8,760,779 $ $ $

Commodity (101,856) -- (101,856)
--------
Total Net Unrealized Loss per Statement of Financial Condition (101,856)
========

2001 PARTNERSHIP NET ASSETS: $12,974,679
Commodity 367,079 -- 367,079
--------
Total Net Unrealized Gain per Statement of Financial Condition 367,079
========

FUTURES AND FORWARD CONTRACTS: PERCENTAGE OF NET ASSETS # OF CONTRACTS
- ------------------------------ ------------------------ --------------
2002 PARTNERSHIP NET ASSETS: $8,760,779 %

Commodity (1.16) --

Total Net Unrealized Loss per Statement of Financial Condition

2001 PARTNERSHIP NET ASSETS: $12,974,679
Commodity 2.83 795

Total Net Unrealized Gain per Statement of Financial Condition

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

MORGAN STANLEY SPECTRUM CURRENCY L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2002 AND 2001

FUTURES AND FORWARD CONTRACTS: LONG GAIN/(LOSS) SHORT GAIN/(LOSS) NET UNREALIZED GAIN/(LOSS)
- ------------------------------ ---------------- ----------------- ---------------------------
2002 PARTNERSHIP NET ASSETS: $96,159,452 $ $ $

Foreign currency:
Other 4,758,215 (4,013,755) 744,460
Euro/US dollar Mar. 03 4,860,786 -- 4,860,786
--------- ---------- ---------
Grand Total: 9,619,001 (4,013,755) 5,605,246
========= ==========
Unrealized Currency Gain 46,303
---------
Total Net Unrealized Gain per Statement of Financial Condition 5,651,549
=========

2001 PARTNERSHIP NET ASSETS: $47,811,741
Foreign currency 503,253 2,675,130 3,178,383
---------
Total Net Unrealized Gain per Statement of Financial Condition 3,178,383
=========

FUTURES AND FORWARD CONTRACTS: PERCENTAGE OF NET ASSETS NOTIONAL AMOUNTS
- ------------------------------ ------------------------ ----------------
2002 PARTNERSHIP NET ASSETS: $96,159,452 %

Foreign currency:
Other 0.77 9,742,575,176
Euro/US dollar Mar. 03 5.05 143,425,000
------
Grand Total: 5.82
======
Unrealized Currency Gain

Total Net Unrealized Gain per Statement of Financial Condition

2001 PARTNERSHIP NET ASSETS: $47,811,741
Foreign currency 6.65* 7,044,346,181

Total Net Unrealized Gain per Statement of Financial Condition

* No single contract's value exceeds 5% of Net Assets.

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

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2002 AND 2001

FUTURES AND FORWARD CONTRACTS: LONG GAIN/(LOSS) SHORT GAIN/(LOSS) NET UNREALIZED GAIN/(LOSS)
- ------------------------------ ---------------- ----------------- --------------------------
2002 PARTNERSHIP NET ASSETS: $50,405,432 $ $ $

Foreign Currency 641,746 137,676 779,422
Interest Rate 806,083 (1,737) 804,346
Equity (812,665) -- (812,665)
Commodity 120,736 26,606 147,342
-------- ------- --------
Grand Total: 755,900 162,545 918,445
======== =======
Unrealized Currency Loss (172,512)
--------
Total Net Unrealized Gain per Statement of Financial Condition 745,933
========

2001 PARTNERSHIP NET ASSETS: $57,785,760
Foreign Currency 545,662 121,385 667,047
Interest Rate (30,784) 207,014 176,230
Commodity (166,876) 43,389 (123,487)
Equity 57,696 -- 57,696
-------- ------- --------
Grant Total: 405,698 371,788 777,486
======== =======
Unrealized Currency Loss (88,278)
--------
Total Net Unrealized Gain per Statement of Financial Condition 689,208
========

FUTURES AND FORWARD CONTRACTS: PERCENTAGE OF NET ASSETS # OF CONTRACTS/NOTIONAL AMOUNTS
- ------------------------------ ------------------------ -------------------------------
2002 PARTNERSHIP NET ASSETS: $50,405,432 %

Foreign Currency 1.55 6,800,258
Interest Rate 1.60 1,479
Equity (1.61) 477
Commodity 0.29 425
----
Grand Total: 1.83
====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

2001 PARTNERSHIP NET ASSETS: $57,785,760
Foreign Currency 1.15 6,800,319
Interest Rate 0.30 1,132
Commodity (0.21) 437
Equity 0.10 209
----
Grant Total: 1.34
====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

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

MORGAN STANLEY SPECTRUM SELECT L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2002 AND 2001

FUTURES AND FORWARD CONTRACTS: LONG GAIN/(LOSS) SHORT GAIN/(LOSS) NET UNREALIZED GAIN/(LOSS)
- ------------------------------ ---------------- ----------------- --------------------------
2002 PARTNERSHIP NET ASSETS: $295,377,799 $ $ $

Foreign currency 16,008,784 (5,655,235) 10,353,549
Interest rate 9,770,731 (48,039) 9,722,692
Commodity (1,443,818) 371,055 (1,072,763)
Equity (194,728) 829,442 634,714
---------- ---------- ----------
Grand Total: 24,140,969 (4,502,777) 19,638,192
========== ==========
Unrealized Currency Loss (1,740,174)
----------
Total Net Unrealized Gain per Statement of Financial Condition 17,898,018
==========

2001 PARTNERSHIP NET ASSETS: $241,411,585
Foreign currency 3,340,060 5,340,666 8,680,726
Interest rate (590,545) 1,010,165 419,620
Commodity (1,867,521) (573,394) (2,440,915)
Equity 142,296 (57,555) 84,741
---------- ---------- ----------
Grand Total: 1,024,290 5,719,882 6,744,172
========== ==========
Unrealized Currency Loss (1,347,436)
----------
Total Net Unrealized Gain per Statement of Financial Condition 5,396,736
==========

FUTURES AND FORWARD CONTRACTS: PERCENTAGE OF NET ASSETS # OF CONTRACTS/NOTIONAL AMOUNTS
- ------------------------------ ------------------------ -------------------------------
2002 PARTNERSHIP NET ASSETS: $295,377,799 %

Foreign currency 3.51 11,828,382,656
Interest rate 3.29 14,820
Commodity (0.36) 5,211
Equity 0.21 1,202
----
Grand Total: 6.65
====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

2001 PARTNERSHIP NET ASSETS: $241,411,585
Foreign currency 3.60 19,685,077,273
Interest rate 0.17 6,472
Commodity (1.01) 2,686
Equity 0.03 722
----
Grand Total: 2.79
====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

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

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2002 AND 2001

FUTURES AND FORWARD CONTRACTS: LONG GAIN/(LOSS) SHORT GAIN/(LOSS) NET UNREALIZED GAIN/(LOSS)
- ------------------------------ ---------------- ----------------- --------------------------
2002 PARTNERSHIP NET ASSETS: $75,369,072 $ $ $

Foreign currency 2,362,577 3,680 2,366,257
Commodity 3,548,205 4,379 3,552,584
Interest rate 1,057,473 -- 1,057,473
Equity -- 131,610 131,610
--------- --------- ---------
Grand Total: 6,968,255 139,669 7,107,924
========= =========
Unrealized Currency Loss (176,780)
---------
Total Net Unrealized Gain per Statement of Financial Condition 6,931,144
=========

2001 PARTNERSHIP NET ASSETS: $68,817,386
Foreign currency (163,374) 1,006,617 843,243
Commodity 2,761,214 632,208 3,393,422
Interest rate 160,801 -- 160,801
Equity 137,400 2,400 139,800
--------- --------- ---------
Grand Total: 2,896,041 1,641,225 4,537,266
========= =========
Unrealized Currency Loss (45,500)
---------
Total Net Unrealized Gain per Statement of Financial Condition 4,491,766
=========

FUTURES AND FORWARD CONTRACTS: PERCENTAGE OF NET ASSETS # OF CONTRACTS/NOTIONAL AMOUNTS
- ------------------------------ ------------------------ -------------------------------
2002 PARTNERSHIP NET ASSETS: $75,369,072 %

Foreign currency 3.14 1,471,600,565
Commodity 4.72 12,920
Interest rate 1.40 3,130
Equity 0.17 172
----
Grand Total: 9.43
====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

2001 PARTNERSHIP NET ASSETS: $68,817,386
Foreign currency 1.23 13,274,657
Commodity 4.93 4,965
Interest rate 0.23 599
Equity 0.20 35
----
Grand Total: 6.59
====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

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

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2002 AND 2001

FUTURES AND FORWARD CONTRACTS: LONG GAIN/(LOSS) SHORT GAIN/(LOSS) NET UNREALIZED GAIN/(LOSS)
- ------------------------------ ---------------- ----------------- ---------------------------
2002 PARTNERSHIP NET ASSETS: $335,821,626 $ $ $

Foreign currency 10,097,643 967,843 11,065,486
Commodity 2,703,202 1,100,261 3,803,463
Interest rate 9,047,725 (683,890) 8,363,835
Equity (486,130) 449,469 (36,661)
---------- ---------- ----------
Grand Total: 21,362,440 1,833,683 23,196,123
========== ==========
Unrealized Currency Gain 907,090
----------
Total Net Unrealized Gain per Statement of Financial Condition 24,103,213
==========

2001 PARTNERSHIP NET ASSETS: $257,974,122
Foreign currency 2,247,864 10,754,547 13,002,411
Interest rate (323,455) 1,378,568 1,055,113
Commodity (2,009,527) (1,765,451) (3,774,978)
Equity 195,865 (31,771) 164,094
---------- ---------- ----------
Grand Total: 110,747 10,335,893 10,446,640
========== ==========
Unrealized Currency Gain 1,058,975
----------
Total Net Unrealized Gain per Statement of Financial Condition 11,505,615
==========

FUTURES AND FORWARD CONTRACTS: PERCENTAGE OF NET ASSETS # OF CONTRACTS/NOTIONAL AMOUNTS
- ------------------------------ ------------------------ -------------------------------
2002 PARTNERSHIP NET ASSETS: $335,821,626 %

Foreign currency 3.30 3,317,707,667
Commodity 1.13 11,280
Interest rate 2.49 10,261
Equity (0.01) 881
-----
Grand Total: 6.91
====
Unrealized Currency Gain

Total Net Unrealized Gain per Statement of Financial Condition

2001 PARTNERSHIP NET ASSETS: $257,974,122
Foreign currency 5.04* 29,705,176,931
Interest rate 0.41 8,984
Commodity (1.46) 5,538
Equity 0.06 584
----
Grand Total: 4.05
====
Unrealized Currency Gain

Total Net Unrealized Gain per Statement of Financial Condition

* No single contract's value exceeds 5% of Net Assets.

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

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION. Morgan Stanley Spectrum Commodity L.P. ("Spectrum Commodity"),
Morgan Stanley Spectrum Currency L.P. ("Spectrum Currency"), Morgan Stanley
Spectrum Global Balanced L.P. ("Spectrum Global Balanced"), Morgan Stanley
Spectrum Select L.P. ("Spectrum Select"), Morgan Stanley Spectrum Strategic
L.P. ("Spectrum Strategic") and Morgan Stanley Spectrum Technical L.P.
("Spectrum Technical") (individually, a "Partnership," or collectively, the
"Partnerships"), are limited partnerships organized to engage 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 (collectively, "futures interests").
The Partnerships' 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"). Prior to October 2000, Carr Futures Inc. ("Carr") provided clearing
and execution services to Spectrum Global Balanced, Spectrum Select, Spectrum
Strategic and Spectrum Technical. Morgan Stanley Commodities Management, Inc.
("MSCM") was the trading advisor to Spectrum Commodity. Demeter, Morgan Stanley
DW, MS&Co., MSIL and MSCM are wholly-owned subsidiaries of Morgan Stanley.
Spectrum Commodity became one of the Spectrum Series of funds effective March
6, 2000.
Spectrum Currency commenced trading as of July 3, 2000.
On April 2, 2001, Dean Witter Reynolds Inc. changed its name to Morgan
Stanley DW Inc.
On September 28, 2001, Morgan Stanley Dean Witter Commodities Management Inc.
changed its name to Morgan Stanley Commodities Management Inc.

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

On November 1, 2001, the Partnerships were renamed Morgan Stanley Spectrum
Commodity L.P., Morgan Stanley Spectrum Currency L.P., Morgan Stanley Spectrum
Global Balanced L.P., Morgan Stanley Spectrum Select L.P., Morgan Stanley
Spectrum Strategic L.P. and Morgan Stanley Spectrum Technical L.P.
On June 20, 2002, Morgan Stanley Dean Witter & Co. changed its name to Morgan
Stanley.
Spectrum Commodity terminated trading on December 31, 2002, and commenced its
dissolution in January 2003 in accordance with the Limited Partnership
Agreement.
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 upon their proportional ownership interests.

USE OF ESTIMATES. The financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, which
require management to make estimates and assumptions that affect the reported
amounts in the financial statements and related disclosures. Management
believes that the estimates utilized in the preparation of the financial
statements are prudent and reasonable. Actual results could differ from those
estimates.

REVENUE RECOGNITION. Futures interests are open commitments until settlement
date. They are valued at market on a daily basis and the resulting net change
in unrealized gains and losses is reflected in the change in unrealized profits
(losses) on open contracts from one period to the next in the statements of
operations. Monthly, Morgan Stanley DW pays each Partnership interest income
based upon 80% of the month's average daily "Net Assets" (as defined in the
limited partnership agreements) for the month in the case of Spectrum
Commodity, Spectrum Currency, Spectrum Select, Spectrum Strategic and Spectrum
Technical, and on 100% in the case of Spectrum Global Balanced. The interest
rate is equal to a prevailing rate on U.S. Treasury bills. For purposes of such
interest payments, Net Assets do not include monies owed to the Partnerships on
futures interests.

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

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.

CONDENSED SCHEDULES OF INVESTMENTS. In March 2001, the American Institute of
Certified Public Accountants' Accounting Standards Executive Committee issued
Statement of Position ("SOP") 01-1, "Amendment to the Scope of Statement of
Position 95-2, Financial Reporting by Nonpublic Investment Partnerships, to
Include Commodity Pools" effective for fiscal years ending after December 15,
2001. Accordingly, commodity pools are required to include a condensed schedule
of investments identifying those investments which constitute more than 5% of
Net Assets, taking long and short positions into account separately.

EQUITY IN FUTURES INTERESTS TRADING ACCOUNTS. The Partnerships' asset "Equity
in futures interests trading accounts," reflected in the statements of
financial condition consists of (A) cash on deposit with Morgan Stanley DW,
MS&Co. and MSIL to be used as margin for trading; (B) net unrealized gains or
losses on open contracts, which are valued at market and calculated as the
difference between original contract value and market value, and (C) net option
premiums, which represent the net of all monies paid and/or received for such
option premiums.
The Partnerships, in their normal course of business, enter into various
contracts with MS&Co. and MSIL acting as their commodity brokers. Pursuant to
brokerage agreements with MS&Co. and MSIL, to the extent that such trading
results in unrealized gains or losses, these amounts are offset and reported on
a net basis on the Partnerships' statements of financial condition.
The Partnerships have offset the fair value amounts recognized for forward
contracts executed with the same counterparty as allowable under terms of
master netting agreements with MS&Co., the sole counterparty on such contracts.
The Partnerships have consistently applied their right to offset.

BROKERAGE AND RELATED TRANSACTION FEES AND COSTS. The brokerage fees for
Spectrum Commodity, Spectrum

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

Currency and Spectrum Global Balanced are accrued at a flat monthly rate of
1/12 of 4.6% (a 4.6% annual rate) of Net Assets as of the first day of each
month. Prior to April 1, 2000, brokerage fees for Spectrum Commodity were
accrued at a monthly rate of 1/12 of 3.65% of Net Assets (a 3.65% annual rate)
as of the first day of each month.
Brokerage fees for Spectrum Select, Spectrum Strategic and Spectrum Technical
are accrued at a flat monthly rate of 1/12 of 7.25% (a 7.25% annual rate) of
Net Assets as of the first day of each month.
Such brokerage fees currently cover all brokerage commissions, transaction
fees and costs and ordinary administrative and continuing offering expenses.

SERVICE FEE. Prior to April 1, 2000, Spectrum Commodity paid 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 Partnerships incur monthly management fees and may
incur incentive fees. All common administrative and continuing offering
expenses including legal, auditing, accounting, filing fees and other related
expenses are bore by Morgan Stanley DW through the brokerage fees paid by the
Partnerships.

INCOME TAXES. No provision for income taxes has been made in the accompanying
financial statements, as partners are individually responsible for reporting
income or loss based upon their respective share of each Partnership's revenues
and expenses for income tax purposes.

DISTRIBUTIONS. Distributions, other than redemptions of Units, are made on a
pro-rata basis at the sole discretion of Demeter. No distributions have been
made to date.

CONTINUING OFFERING. Units of each Partnership are offered at a price equal to
100% of the Net Asset Value per Unit as of the close of business on the last
day of the month. No selling commissions or charges related to the continuing
offering of Units are paid by the Limited Partners or the Partnerships. Morgan
Stanley DW pays all such costs.

MORGAN STANLEY SPECTRUM SERIES

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 as of the end of the last day of any month that is
at least six months after the closing at which a person becomes a Limited
Partner, upon five business days advance notice by redemption form to Demeter.
Thereafter, Units redeemed on or prior to the last day of the twelfth 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 twelfth 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 of a 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. The foregoing redemption charges are paid to Morgan
Stanley DW. Redemptions must be made in whole Units, in a minimum amount of 50
Units, unless a Limited Partner is redeeming his entire interest in a
Partnership.

EXCHANGES. On the last day of the first month which occurs more than six
months after a person first becomes a Limited Partner in any of the
Partnerships, and at the end of each month thereafter, Limited Partners may
exchange their investment among the Partnerships (subject to certain
restrictions outlined in the Limited Partnership Agreements) without paying
additional charges.

DISSOLUTION OF THE PARTNERSHIPS. Spectrum Commodity terminated trading on
December 31, 2002 and its dissolution was effective January 31, 2003. Spectrum
Currency, Spectrum Global Balanced, Spectrum Strategic and Spectrum Technical
will terminate on December 31, 2035 and Spectrum Select will terminate on
December 31, 2025, regardless of financial condition at such time, or at an
earlier date if certain conditions occur as defined in each Partnership's
Limited Partnership Agreement.

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

LITIGATION SETTLEMENT. On February 27, 2002, Spectrum Global Balanced,
Spectrum Select, Spectrum Strategic and Spectrum Technical received
notification of a preliminary entitlement to payment from the Sumitomo Copper
Litigation Administrator and received settlement award payments in the amounts
of $233,074, $4,636,156, $17,556 and $306,400, respectively as of August 30,
2002.

- --------------------------------------------------------------------------------
2. RELATED PARTY TRANSACTIONS
The Partnerships pay brokerage fees to Morgan Stanley DW as described in Note
1. Each Partnership's cash is on deposit with Morgan Stanley DW, MS&Co. and
MSIL in futures interests trading accounts to meet margin requirements as
needed. Morgan Stanley DW pays interest on these funds as described in Note 1.
Spectrum Commodity paid Demeter a service fee prior to April 1, 2000 and paid
management fees, and when applicable, incentive fees to MSCM.

- --------------------------------------------------------------------------------
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 for each Partnership at December 31, 2002 were as follows:

Morgan Stanley Spectrum Commodity L.P.
Morgan Stanley Commodities Management Inc.

Morgan Stanley Spectrum Currency L.P.
John W. Henry & Company, Inc. ("JWH")
Sunrise Capital Partners, LLC ("Sunrise")

Morgan Stanley Spectrum Global Balanced L.P.
SSARIS Advisors, LLC ("SSARIS")

Effective December 6, 2002, SSARIS replaced RXR, Inc. as a trading advisor to
Spectrum Global Balanced.

Morgan Stanley Spectrum Select L.P.
EMC Capital Management, Inc.
Northfield Trading L.P.
Rabar Market Research, Inc.
Sunrise Capital Management, Inc.

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

Effective May 1, 2001 Spectrum Select entered into a management agreement
with Northfield Trading L.P., ("Northfield") adding Northfield as its fourth
trading advisor to the Partnership.

Morgan Stanley Spectrum Strategic L.P.
Allied Irish Capital Management, Ltd.
Blenheim Capital Management, L.L.C. ("Blenheim")
Eclipse Capital Management, Inc. ("Eclipse")

Effective April 14, 2000, Willowbridge Associates Inc. ("Willowbridge") was
terminated as an advisor to Spectrum Strategic. The assets of the Partnership
previously allocated to Willowbridge were allocated to Eclipse, effective June
26, 2000.
Effective August 31, 2001 Blenheim Investments, Inc. changed its name to
Blenheim Capital Management, L.L.C.

Morgan Stanley Spectrum Technical L.P.
Campbell & Company, Inc. ("Campbell")
Chesapeake Capital Corporation ("Chesapeake")
John W. Henry & Company, Inc.

Compensation to the trading advisors by the Partnerships consists of a
management fee and an incentive fee as follows:

MANAGEMENT FEE. The management fee for Spectrum Commodity was accrued at the
rate of 5/24 of 1% of Net Assets on the first day of each month (a 2.5% annual
rate).
The management fee for Spectrum Currency is accrued at the rate of 1/12 of
2% of Net Assets allocated to each trading advisor on the first day of each
month (a 2% annual rate). Prior to December 1, 2000, the management fee was
accrued at the rate of 1/3 of 1% of Net Assets allocated to JWH on the first
day of each month and 1/4 of 1% of Net Assets allocated to Sunrise on the
first day of each month (annual rates of 4% and 3%, respectively).
The management fee for Spectrum Global Balanced is accrued at the rate of
5/48 of 1% per month of Net Assets allocated to each trading advisor on the
first day of each month (a 1.25% annual rate).

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

The management fee for Spectrum Select is accrued at the rate of 1/4 of 1%
per month of Net Assets allocated to each trading advisor on the first day of
each month (a 3% annual rate).
The management fee for Spectrum Strategic is accrued at the rate of 1/12 of
3% of Net Assets allocated to each trading advisor on the first day of each
month (a 3% annual rate). Prior to March 23, 2001, the management fee allocated
to Blenheim was accrued at a rate of 1/12 of 4% per month of Net Assets as of
the first day of each month (a 4% annual rate).
The management fee for Spectrum Technical is accrued at the rate of 1/12 of
2% of Net Assets allocated to JWH on the first day of each month, and 1/12 of
3% of Net Assets allocated to Campbell and Chesapeake on the first day of each
month (annual rates of 2%, 3% and 3% respectively). Prior to May 1, 2002, the
management fee for Chesapeake was accrued at a rate of 1/12 of 4% of Net
Assets on the first day of each month (a 4% annual rate). Prior to December 1,
2000, the management fee was accrued to each trading advisor at the rate of
1/3 of 1% of Net Assets on the first day of each month (a 4% annual rate).

INCENTIVE FEE. Spectrum Commodity was subject to annual incentive fees on its
trading profits at a rate of 20% through December 1, 2000 and 17.5% thereafter
through December 31, 2002.
Spectrum Currency pays a monthly incentive fee equal to 20% of the trading
profits experienced with respect to each trading advisor's allocated Net Assets
as of the end of each calendar month. Prior to December 1, 2000, Spectrum
Currency paid a monthly incentive fee equal to 15% of trading profits.
Spectrum Global Balanced, Spectrum Select and Spectrum Strategic each pay a
monthly incentive fee equal to 15% of the trading profits experienced with
respect to each trading advisor's allocated Net Assets as of the end of each
calendar month.
Spectrum Technical pays a monthly incentive fee equal to 20% of the trading
profits experienced with respect to the Net Assets allocated to Campbell and
JWH as of the end of each calendar month and 19% of

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

the trading profits experienced with respect to the Net Assets allocated to
Chesapeake as of the end of each calendar month. Prior to December 1, 2000,
Spectrum Technical paid a 15% incentive fee to Campbell and JWH.
Trading profits represent the amount by which profits from futures, forwards
and options trading exceed losses after brokerage and management fees are
deducted.
For all Partnerships with trading losses, no incentive fee is paid in
subsequent months until all such losses are recovered. Cumulative trading
losses are adjusted on a pro-rata basis for the net amount of each month's
subscriptions and redemptions.

- --------------------------------------------------------------------------------
4. FINANCIAL INSTRUMENTS
The Partnerships trade 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 contracts is based on closing prices quoted by the
exchange, bank or clearing firm through which the contracts are traded.
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 Standard No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133").

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

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.
The net unrealized gains (losses) on open contracts at December 31, reported
as a component of "Equity in futures interests trading accounts" on the
statements of financial condition, and their longest contract maturities were
as follows:

SPECTRUM COMMODITY

NET UNREALIZED GAINS/
(LOSSES) ON OPEN CONTRACTS LONGEST MATURITIES
---------------------------- -------------------
OFF- OFF-
EXCHANGE- EXCHANGE- EXCHANGE- EXCHANGE-
YEAR TRADED TRADED TOTAL TRADED TRADED
---- --------- --------- -------- --------- ---------
$ $ $

2002 (101,856) -- (101,856) Mar. 2003 --
2001 367,079 -- 367,079 Dec. 2002 --

SPECTRUM CURRENCY

NET UNREALIZED GAINS
ON OPEN CONTRACTS LONGEST MATURITIES
----------------------------- -------------------
OFF- OFF-
EXCHANGE- EXCHANGE- EXCHANGE- EXCHANGE-
YEAR TRADED TRADED TOTAL TRADED TRADED
---- --------- --------- --------- --------- ---------
$ $ $

2002 -- 5,651,549 5,651,549 -- Mar. 2003
2001 -- 3,178,383 3,178,383 -- Mar. 2002

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

SPECTRUM GLOBAL BALANCED

NET UNREALIZED GAINS
ON OPEN CONTRACTS LONGEST MATURITIES
--------------------------- -------------------
OFF- OFF-
EXCHANGE- EXCHANGE- EXCHANGE- EXCHANGE-
YEAR TRADED TRADED TOTAL TRADED TRADED
---- --------- --------- ------- --------- ---------
$ $ $

2002 717,293 28,640 745,933 Mar. 2003 Mar. 2003
2001 646,308 42,900 689,208 Mar. 2002 Mar. 2002

SPECTRUM SELECT

NET UNREALIZED GAINS
ON OPEN CONTRACTS LONGEST MATURITIES
------------------------------- -------------------
OFF- OFF-
EXCHANGE- EXCHANGE- EXCHANGE- EXCHANGE-
YEAR TRADED TRADED TOTAL TRADED TRADED
---- ---------- --------- ---------- --------- ---------
$ $ $

2002 12,359,670 5,538,348 17,898,018 Dec. 2003 Mar. 2003
2001 1,010,544 4,386,192 5,396,736 Dec. 2002 Mar. 2002

SPECTRUM STRATEGIC

NET UNREALIZED GAINS
ON OPEN CONTRACTS LONGEST MATURITIES
----------------------------- -------------------
OFF- OFF-
EXCHANGE- EXCHANGE- EXCHANGE- EXCHANGE-
YEAR TRADED TRADED TOTAL TRADED TRADED
---- --------- --------- --------- --------- ---------
$ $ $

2002 6,387,996 543,148 6,931,144 Jul. 2004 Mar. 2003
2001 4,491,712 54 4,491,766 Dec. 2002 Jan. 2002

SPECTRUM TECHNICAL

NET UNREALIZED GAINS
ON OPEN CONTRACTS LONGEST MATURITIES
-------------------------------- -------------------
OFF- OFF-
EXCHANGE- EXCHANGE- EXCHANGE- EXCHANGE-
YEAR TRADED TRADED TOTAL TRADED TRADED
---- ---------- ---------- ---------- --------- ---------
$ $ $

2002 16,269,250 7,833,963 24,103,213 Dec. 2003 Mar. 2003
2001 828,853 10,676,762 11,505,615 Dec. 2002 Mar. 2002

The Partnerships have credit risk associated with counterparty
nonperformance. The credit risk associated with the instruments in which the
Partnerships are involved is limited to the amounts reflected in the
Partnerships' statements of financial condition.
The Partnerships also have credit risk because Morgan Stanley DW, MS&Co. and
MSIL act as the futures commission merchants or the counterparties,

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

with respect to most of the Partnerships' assets. Exchange-traded futures and
futures-styled options contracts are marked to market on a daily basis, with
variations in value settled on a daily basis. Each of Morgan Stanley DW, MS&Co.
and MSIL, as a futures commission merchant for each Partnership's
exchange-traded futures and futures-styled options contracts, are required,
pursuant to regulations of the Commodity Futures Trading Commission, to
segregate from their own assets, and for the sole benefit of their commodity
customers, all funds held by them with respect to exchange-traded futures and
futures-styled options contracts, including an amount equal to the net
unrealized gains (losses) on all open futures and futures-styled options
contracts, which funds, in the aggregate, totaled at December 31, 2002 and 2001
respectively, $14,188,426 and $13,347,440 for Spectrum Commodity, $50,047,775
and $58,042,399 for Spectrum Global Balanced, $287,140,004 and $236,193,605 for
Spectrum Select, $74,612,644 and $70,459,374 for Spectrum Strategic and
$326,385,223 and $247,001,207 for Spectrum Technical. With respect to the
Partnerships' off-exchange-traded forward currency contracts, there are no
daily settlements of variations in value nor is there any requirement that an
amount equal to the net unrealized gains (losses) on open forward contracts be
segregated. With respect to those off-exchange-traded forward currency
contracts, the Partnerships are at risk to the ability of MS&Co., the sole
counterparty on all of such contracts, to perform. Each Partnership has a
netting agreement with MS&Co. These agreements, which seek to reduce both the
Partnerships' and MS&Co.'s exposure on off-exchange-traded forward currency
contracts, should materially decrease the Partnerships' credit risk in the
event of MS&Co.'s bankruptcy or insolvency.

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

- --------------------------------------------------------------------------------
5. FINANCIAL HIGHLIGHTS

SPECTRUM COMMODITY

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

NET ASSET VALUE, JANUARY 1, 2002: $ 5.84
------
NET OPERATING RESULTS:
Realized Profit 1.56
Unrealized Loss (0.22)
Interest Income 0.08
Expenses (0.45)
------
Net Income 0.97
------
NET ASSET VALUE, DECEMBER 31, 2002: $ 6.81
======
Expense Ratio 7.3%
Net Income Ratio 16.2%

TOTAL RETURN 16.6%

SPECTRUM CURRENCY

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

NET ASSET VALUE, JANUARY 1, 2002: $12.41
------
NET OPERATING RESULTS:
Realized Profit 1.99
Unrealized Profit 0.45
Interest Income 0.15
Expenses (1.07)
------
Net Income 1.52
------
NET ASSET VALUE, DECEMBER 31, 2002: $13.93
======
Expense Ratio 8.3%
Net Income Ratio 14.5%

TOTAL RETURN 12.2%

SPECTRUM GLOBAL BALANCED

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

NET ASSET VALUE, JANUARY 1, 2002: $ 16.21
--------
NET OPERATING RESULTS:
Realized Loss (1.08)
Unrealized Profit 0.02
Proceeds from Litigation Settlement 0.07
Interest Income 0.26
Expenses (0.91)
--------
Net Loss (1.64)
--------
NET ASSET VALUE, DECEMBER 31, 2002: $ 14.57
========
Expense Ratio 5.9 %
Net Loss Ratio (10.6)%

TOTAL RETURN (10.1)%

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(concluded)

SPECTRUM SELECT

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

NET ASSET VALUE, JANUARY 1, 2002: $23.96
------
NET OPERATING RESULTS:
Realized Profit 4.28
Unrealized Profit 1.20
Proceeds from Litigation Settlement 0.44
Interest Income 0.33
Expenses (2.56)
------
Net Income 3.69
------
NET ASSET VALUE, DECEMBER 31, 2002: $27.65
======
Expense Ratio 10.1%
Net Income Ratio 15.3%

TOTAL RETURN 15.4%

SPECTRUM STRATEGIC

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

NET ASSET VALUE, JANUARY 1, 2002: $10.55
------
NET OPERATING RESULTS:
Realized Profit 1.67
Unrealized Profit 0.38
Interest Income 0.15
Expenses (1.21)
------
Net Income 0.99
------
NET ASSET VALUE, DECEMBER 31, 2001: $11.54
======
Expense Ratio 10.5%
Net Income Ratio 8.6%

TOTAL RETURN 9.4%

SPECTRUM TECHNICAL

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

NET ASSET VALUE, JANUARY 1, 2002: $14.93
------
NET OPERATING RESULTS:
Realized Profit 4.34
Unrealized Profit 0.72
Proceeds from Litigation Settlement 0.02
Interest Income 0.21
Expenses (1.81)
------
Net Income 3.48
------
NET ASSET VALUE, DECEMBER 31, 2002: $18.41
======
Expense Ratio 11.0%
Net Income Ratio 21.0%

TOTAL RETURN 23.3%

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