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, 2003 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. [ ]

Indicate by check-mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No 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 the last
business day of the registrant's most recently completed second fiscal quarter:
$362,046,851 at June 30, 2003.

DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)

MORGAN STANLEY SPECTRUM SELECT L.P.
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 2003

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 28, 2003 I

Partnership's Supplement to the
Prospectus dated December 17, 2003 I

Annual Report to Morgan Stanley
Spectrum Series Limited Partners
for the year ended December 31,
2003 II, III and IV

`

PART I
Item 1. BUSINESS

(a) General Development of Business. Morgan Stanley Spectrum
Select 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 of the Partnership, 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").

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").

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

The managing underwriter for the Partnership is Morgan Stanley
DW.

The Partnership's net asset value per Unit at December 31, 2003
was $30.31, representing an increase of 9.6 percent from the net
asset value per Unit of $27.65 at December 31, 2002. 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 28, 2003 (the "Prospectus"), and the
Partnership's supplement to the Prospectus dated December 17, 2003
(the "Supplement"), incorporated by reference in this Form 10-K,
set forth below.

Facets of Business
1. Summary 1. "Summary" (Pages 1-9 of the
Prospectus and Page S-1 of
the Supplement).

2. Futures, Options, and 2. "The Futures, Options, and
Forwards Markets Forwards Markets" (Pages
136-140 of the Prospectus).

3. Partnership's Trading 3. "Use of Proceeds" (Page 26-28
Arrangements and of the Prospectus and Page
Policies S-5 of the Supplement), "The
Trading Advisors" (Pages 70-
116 of the Prospectus and
Pages S-31 - S-52 of the
Supplement).

4. Management of the 4. "The Trading Advisors - The
Partnership Management Agreements" (Page
70 of the Prospectus), "The
General Partner" (Pages 64-
69 of the Prospectus and
Pages S-29 - S-30 of the
Supplement), "The Commodity
Brokers" (Pages 119-120 of
the Prospectus) and "The
Limited Partnership
Agreements" (Pages 121-123 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 128-134 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, 2003
was approximately 36,269.

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

Through December 31, 2003, 28,529,412.378 Units were sold, leaving
5,084,554.722 Units unsold. The aggregate price of the Units sold
through December 31, 2003 was $554,768,112.

(e) Underwriter. The managing underwriter for the
Partnership is Morgan Stanley DW.

(f) Use of Proceeds. The Partnership initially registered 60,000
Units (prior to the 100 for one Unit conversion on April 30,
1998, the "Conversion") pursuant to a Registration Statement on
Form S-1, which became effective on May 17, 1991 (SEC File Number
33-39667), and 10,000 Units (pre-Conversion) at a supplemental
closing pursuant to a new Registration Statement on Form S-1,
which became effective on August 23, 1991 (SEC File No. 33-
42380).

The Partnership registered an additional 75,000 Units (pre-
Conversion) pursuant to a new Registration Statement of 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.

Commencing with the April 30, 1998 monthly closing and with
becoming a member of the Spectrum Series of funds, each
previously outstanding Unit of the Partnership was converted into
100 Units. 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 another Registration Statement on Form S-1, which became
effective on April 30, 2002 (SEC File Number 333-84656).

The Partnership registered an additional 7,000,000 Units pursuant
to another Registration Statement on Form S-1, which became
effective on April 28, 2003 (SEC File Number 333-104005).

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 included as
part of the above referenced Registration Statements.

Item 6. SELECTED FINANCIAL DATA (in dollars)

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 and may be used as
margin solely for the Partnership's trading. The assets are held
in either non-interest bearing bank accounts or in securities and
instruments permitted by the Commodity Futures Trading Commission
for investment of customer segregated or secured funds. Since the
Partnership's sole purpose is to trade in futures, forwards, and
options, it is expected that the Partnership will continue to own
such liquid assets for margin purposes.

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

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

There are no known material trends, demands, commitments, events
or uncertainties at the present time that 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 does not have any off-balance sheet
arrangements, nor does it have contractual obligations or
commercial commitments to make future payments that would affect
its liquidity or capital resources.

Results of Operations.
General. The Partnership's results depend on the Trading Advisors
and the ability of the Trading Advisors' 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 each of the three
years in the period ended December 31, 2003 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.
Past performance is not necessarily indicative of future results.

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

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

The Partnership recorded revenues including interest totaling
$74,213,042 and expenses totaling $40,026,137, resulting in net
income of $34,186,905 for the year ended December 31, 2003.
The Partnership's net asset value per Unit increased from $27.65
at December 31, 2002 to $30.31 at December 31, 2003. Total
redemptions and subscriptions for the year were $30,542,924 and
$142,500,704, respectively, and the Partnership's ending capital
was $441,522,484 at December 31, 2003, an increase of $146,144,685
from ending capital at December 31, 2002 of $295,377,799.

The most significant trading gains of approximately 12.2% were
recorded in the currency markets during January from long
positions in the euro versus the U.S. dollar as the value of the
European currency strengthened against the U.S. dollar amid
renewed fears of a military conflict with Iraq, increased
tensions with North Korea, and weak U.S. economic data. During
May, gains were supplied by long positions in the euro versus the
U.S. dollar as the value of the euro strengthened amid
uncertainty regarding the Bush Administration's economic policy,
renewed fears of potential terrorist attacks against American
interests, and investor preference for non-U.S. dollar assets.
Additional currency gains were recorded by long positions in the
Australian dollar versus the U.S. dollar as the value of the
Australian currency strengthened in response to continued
weakness in the U.S. currency, rising gold prices and relatively
high interest rates in Australia. During November and December,
long positions in the euro, British pound, and Australian and New
Zealand dollar versus the U.S. dollar generated additional gains.
The U.S. dollar tumbled to a six-year low against the
Australian and New Zealand dollar and a five-year low against the
British pound. Additionally, the euro soared past the $1.20
mark, its highest level against the U.S. dollar since its
introduction in January 1999. The U.S. dollar's weakness was
caused by a variety of factors, including concerns regarding the
growing U.S. current trade account and budget deficits, the
Federal Reserve's policy of maintaining low interest rates,
widening interest rate differentials relative to other countries,
and renewed fears of global terrorism. In the metals markets,
gains of approximately 5.9% were achieved primarily during the
fourth quarter by long futures positions in copper and nickel.
Industrial metals prices rallied during October in response to
increased demand, especially from China, as well as to growing
investor sentiment that the global economy was on the path to
recovery. During December, copper and nickel prices rose to a
six and fourteen-year high respectively, benefiting from
increased demand from China and the strengthening of the global
economy. Gains of approximately 2.6% in the global stock index
markets were supplied by long positions in Asian stock index
futures during August as Asian equity prices drew strength from
robust Japanese economic data and rising prices in the U.S.
equity markets. Long U.S. equity index futures positions
profited after the release of favorable economic data during
October, as well as in December. In the agricultural markets,
gains of approximately 1.7% resulted from long futures positions
in soybeans and its related products during September as
prices reacted positively in response to robust U.S. export sales
data and smaller U.S. crop assessments. Then in October, long
futures positions in cotton and soybeans generated gains as
increased demand from China and tight market supplies lifted
prices. A portion of the Partnership's overall gains for the
year was offset by losses of approximately 1.1% in the global
interest rate markets incurred primarily during the last four
months of the year. The Partnership experienced losses from
short European futures positions. Prices reversed higher amid
investor demand for safe haven investments following renewed
volatility in global equity markets, continued geopolitical
instability in the Middle East and comments from the U.S. Federal
Reserve regarding the continuation of low U.S. interest rates.
In the energy sector, losses of approximately 0.8% partially
offset Partnership's gains for the year. Long positions in crude
oil futures resulted in losses during March as prices reversed
sharply lower amid market anticipation of a swift military
victory for Coalition forces against Iraq. During September,
losses were suffered from short positions in crude oil futures as
prices unexpectedly reversed higher following OPEC's announcement
for output reductions and curbs in production. During October,
short crude oil positions experienced further losses as prices
moved higher in response to supply fears spurred by Middle East
tensions early in the month, as well as strike threats in
Nigeria, one of the world's major oil producers.
The Partnership recorded revenues including interest
totaling $67,605,728 and expenses totaling $26,782,529, resulting
in net income of $40,823,199 for the year ended December 31,
2002. The Partnership's net asset value per Unit increased from
$23.96 at December 31, 2001 to $27.65 at December 31, 2002.
Total redemptions and subscriptions for the year were $49,669,825
and $62,812,840, respectively, and the Partnership's ending
capital was $295,377,799 at December 31, 2002, an increase of
$53,966,214 from ending capital at December 31, 2001 of
$241,411,585.

The most significant trading 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. As of August 30, 2002, the Partnership received a
settlement award payment from the Sumitomo Copper Litigation
Settlement Administrator in the amount of $4,631,156.

The Partnership recorded revenues including interest totaling
$30,468,895 and expenses totaling $27,303,546, resulting in net
income of $3,165,349 for the year ended December 31, 2001. The
Partnership's net asset value per Unit increased from $23.57 at
December 31, 2000 to $23.96 at December 31, 2001. Total
redemptions and subscriptions for the year were $23,745,268 and
$41,261,535, respectively, and the Partnership's ending capital
was $241,411,585 at December 31, 2001, an increase of $20,681,616
from ending capital at December 31, 2000 of $220,729,969.

The most significant trading 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.

For an analysis of unrealized gains and (losses) by
contract type and a further description of 2003 trading results,
refer to the Partnership's Annual Report to Limited Partners for
the year ended December 31, 2003, 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.

Market Risk.
Financial Instruments. The Partnership is a party to financial
instruments with elements of off-balance sheet market and credit
risk. The Partnership trades 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 Partnership's trading
policies that include standards for liquidity and leverage that
must be maintained. The Trading Advisors and Demeter monitor the
Partnership's trading activities to ensure compliance with the
trading policies and Demeter can require the Trading Advisors to
modify positions of the Partnership if Demeter believes they
violate the Partnership's trading policies.

Credit Risk.
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. 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. 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.
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. The commodity
brokers inform the Partnership, as with all their customers, of
its net margin requirements for all its existing open positions
and Demeter has installed a system which permits it to monitor
the Partnership's potential net credit exposure, exchange by
exchange, by adding the unrealized trading gains on each
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 a minimum amount of diversification in the
Partnership's trading, usually over several different products and
exchanges. Historically, the Partnership's exposure to any one
exchange has typically amounted to only a small percentage of its
total net assets and on those relatively few occasions where the
Partnership's credit exposure climbs above an acceptable 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, 2003, 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, factors that result in
frequent changes in the fair value of the Partnership's open
positions, and consequently in its earnings whether, realized or
unrealized, and cash flow. Profits and losses on open positions
of exchange-traded futures, forwards, and options are settled
daily through variation margin.

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

The 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 Partner-
ship'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 statement for purposes of the safe harbor,
except for statements of historical fact.

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

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

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

VaR models, including the Partnership's, are 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, 2003 and 2002.
At December 31, 2003 and 2002, the Partnership's total
capitalization was approximately $442 million and $295 million,
respectively.

Primary Market December 31, 2003 December 31, 2002
Risk Category Value at Risk Value at Risk

Equity (1.75)% (0.44)%

Currency (1.19) (2.17)

Interest Rate (0.48) (1.25)

Commodity (1.40) (1.22)

Aggregate Value at Risk (2.64)% (2.84)%

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

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

The table below supplements the December 31, 2003 VaR set forth
above by presenting the Partnership's high, low and average VaR,
as a percentage of total net assets for the four quarter-end
reporting periods from January 1, 2003 through December 31, 2003.

Primary Market Risk Category High Low Average
Equity (1.75)% (0.42)% (0.86)%
Currency (1.32) (0.44) (1.00)
Interest Rate (0.58) (0.35) (0.47)
Commodity (1.40) (0.16) (0.80)
Aggregate Value at Risk (2.64)% (0.82)% (1.72)%

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 provided 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, 2003, and
2002, and for the four quarter-end reporting periods during
calendar year 2003. VaR is not necessarily representative of the
historic risk, nor should it be used to predict the Partnership's
future financial performance or its ability to manage or monitor
risk. There can be no assurance that the Partnership's actual
losses on a particular day will not exceed the VaR amounts
indicated above or that such losses will not occur more than once
in 100 trading days.

Non-Trading Risk

The Partnership has non-trading market risk on its foreign cash
balances not needed for margin. These balances and any market
risk they may represent are immaterial.

The Partnership also maintains a substantial portion
(approximately 78% as of December 31, 2003) of its available
assets in cash at Morgan Stanley DW. A decline in short-term
interest rates would result in a decline in the Partnership's
cash management income. This cash flow risk is not considered to
be material.

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

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

The following were the primary trading risk exposures of the
Partnership at December 31, 2003, by market sector. It may be
anticipated, however, that these market exposures will vary
materially over time.
Equity. The primary market exposure of the Partnership at
December 31, 2003 was to equity price risk in the G-7 countries.
The G-7 countries consist of France, the U.S., Britain, Germany,
Japan, Italy, and Canada. The stock index futures traded by the
Partnership are by law limited to futures on broadly-based
indices. At December 31, 2003, the Partnership's primary
exposures were to the S&P 500 (U.S.), DAX (Germany), Euro Stoxx
50 (Europe), MIB 30 (Italy), and FTSE 100 (Great Britain) stock
indices. The Partnership is exposed to the risk of adverse price
trends or static markets in the U.S., European and Japanese stock
indices. Static markets would not cause major market changes,
but would make it difficult for the Partnership to avoid
trendless price movements resulting in numerous small losses.

Currency. The second largest market exposure of the Partnership
at December 31, 2003 was to the currency complex. The
Partnership's currency exposure is to exchange rate fluctuations,
primarily fluctuations which disrupt the historical pricing
relationships between different currencies and currency pairs.
Interest rate changes as well as political and general
economic conditions influence these fluctuations. 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, 2003, the Partnership's major
exposures were to the euro and Norwegian kroner currency crosses,
as well as to outright U.S. dollar positions. Outright positions
consist of the U.S. dollar vs. other currencies. These other
currencies include major and minor currencies. Demeter does not
anticipate that the risk 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 third largest market exposure of the
Partnership at December 31, 2003 was to the global interest rate
complex. Exposure was primarily spread across the U.S.,
European, Australian, and Japanese interest rate sectors.
Interest rate movements directly affect the price of the
sovereign bond futures positions held by the Partnership and
indirectly affect the value of its stock index and currency
positions. Interest rate movements in one country, as well as
relative interest rate movements between countries, materially
impact the Partnership's profitability. The Partnership's
interest rate exposure is generally to interest rate
fluctuations in the U.S. and the other G-7 countries. 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.

Commodity.
Metals. The Partnership's metals exposure at December 31,
2003 was to fluctuations in the price of precious metals,
such as gold and silver, and base metals, such as copper,
aluminum, nickel, zinc, lead, and tin. 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.

Energy. At December 31, 2003, the Partnership's energy
exposure was primarily to futures contracts in crude oil and
its related products, and natural gas. Price movements in
the energy markets result from geopolitical developments,
particularly in the Middle East, as well as weather
patterns and other economic fundamentals. Significant
profits and losses, which have been experienced in the past,
are expected to continue to be experienced in the future.
Natural gas has exhibited volatility in prices resulting
from weather patterns and supply and demand factors and will
likely continue in this choppy pattern.
Soft Commodities and Agriculturals. At December 31,
2003, the Partnership had exposure to the markets that
comprise these sectors. Most of the exposure was to
soybeans and its related products, and wheat. Supply and
demand inequalities, severe weather disruptions 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, 2003:

Foreign Currency Balances. The Partnership's primary
foreign currency balances at December 31, 2003 were in Hong
Kong dollars, euros, and Japanese yen. The Partnership
controls the non-trading risk of foreign currency balances
by regularly converting them back into U.S. dollars upon
liquidation of their respective positions.

Qualitative Disclosure 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 by
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

2003
March 31 $ 5,648,636 $ (3,435,893) $ (0.22)
June 30 30,802,630 21,952,801 1.89
September 30 (7,076,850) (16,582,417) (1.29)
December 31 44,838,626 32,252,414 2.28

Total $ 74,213,042 $ 34,186,905 $ 2.66

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

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

None.

Item 9A. CONTROLS AND PROCEDURES
(a) As of the end of the period covered by 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-15(e) and 15d-
15(e) of the Exchange Act), and have judged such
controls and procedures to be effective.
(b) There have been no significant changes in the
Partnership's internal controls or in other factors that
could significantly affect these controls subsequent to
the date of their evaluation.

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:

Jeffrey A. Rothman, age 42, is the Chairman of the Board of
Directors and President 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 the Chairman of the Board of Directors of Morgan
Stanley Futures & Currency Management Inc. Mr. Rothman has been
with the managed futures department for seventeen years.
Throughout his career, Mr. Rothman has helped with the
development, marketing and administration of approximately 39
commodity pools. Mr. Rothman is an active member of the Managed
Funds Association and serves on its Board of Directors. Mr.
Rothman has a B.A. degree in Liberal Arts from Brooklyn College,
New York.

Richard A. Beech, age 52, 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 Futures, Forex
& Metals. 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. Mr.
Beech has a B.S. degree in Business Administration from Ohio State
University and an M.B.A. degree from Virginia Polytechnic
Institute and State University.

Raymond A. Harris, age 47, is a Director of Demeter and of Morgan
Stanley Futures & Currency Management Inc. Mr. Harris is
currently Managing Director and head of Client Solutions for
Morgan Stanley Individual Investor Group. Mr. Harris joined
Morgan Stanley in 1982 and served in financial and operational
assignments for Dean Witter Reynolds. In 1994, he joined the
Discover Financial Services division, leading restructuring and
product development efforts. Mr. Harris became Chief
Administrative Officer for Morgan Stanley Investment Management in
1999. In 2001, he was named head of Global Products and Services
for Investment Management. Mr. Harris has an M.B.A. in Finance
from the University of Chicago and a B.A. degree from Boston
College.

Frank Zafran, age 48, 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 Client
Solutions 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.

Douglas J. Ketterer, age 38, was named a Director of Demeter, and
confirmed by the National Futures Association as a principal of
Demeter on October 27, 2003. Mr. Ketterer is a Managing Director
and head of the Investment Solutions Group, which is comprised of
a number of departments which offer products and services through
Morgan Stanley's Individual Investor Group (including Managed
Futures, Alternative Investments, Insurance Services, Personal
Trust, Corporate Services, and others). Mr. Ketterer joined the
firm in 1990 in the Corporate Finance Division as a part of the
Retail Products Group. He later moved to the origination side of
Investment Banking, and then, after the merger between Morgan
Stanley and Dean Witter, served in the Product Development Group
at Morgan Stanley Dean Witter Advisors (now known as Morgan
Stanley Funds). From the summer of 2000 to the summer of 2002,
Mr. Ketterer served as the Chief Administrative Officer for Morgan
Stanley Investment Management, where he headed the Strategic
Planning & Administrative Group. Mr. Ketterer received his
M.B.A. from New York University's Leonard N. Stern School of
Business and his B.S. in Finance from the University at Albany's
School of Business.

Jeffrey S. Swartz, age 36, was named a Director of Demeter, and
confirmed by the National Futures Association as a principal of
Demeter on October 23, 2003. Mr. Swartz is a Managing Director
and Director of the Mass Affluent Segment of Morgan Stanley's
Individual Investor Group. Mr. Swartz began his career with Morgan
Stanley in 1990, working as a Financial Advisor in Boston. He was
appointed Sales Manager of the Boston office in 1994, and served
in that role for two years. In 1996, he was named Branch Manager
of the Cincinnati office. In 1999, Mr. Swartz was named Associate
Director of the Midwest Region, which consisted of 10 states and
approximately 90 offices. Mr. Swartz served in this capacity
until October of 2001, when he was named Director of Investor
Advisory Services ("IAS") Strategy and relocated to IAS
headquarters in New York. In December of 2002, Mr. Swartz was
promoted to Managing Director and Chief Operating Officer of IAS
and has recently assumed the responsibility for managing the Mass
Affluent Client Segment. Mr. Swartz received his degree in
Business Administration from the University of New Hampshire.

Jeffrey D. Hahn, age 46, 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
the 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.

The Audit Committee
The Partnership is operated by its general partner, Demeter, and
does not have an audit committee. As such, the entire Board of
Directors of Demeter serves as the audit committee. None of the
directors are considered to be "independent" as that term is used
in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange
Act of 1934, as amended. The Board of Directors of Demeter has
determined that Mr. Jeffrey D. Hahn is the audit committee
financial expert.

Section 16(a) Beneficial Ownership Reporting Compliance
The Partnership has no directors, executive officers or greater
than 10 percent beneficial owners. However, Mr. Jeffrey Rothman,
President and Chairman of the Board of Directors of Demeter, the
general partner of the Partnership, beneficially owns 640 Units of
the Partnership and filed the Annual Statement of Changes in
Beneficial Ownership on Form 5 for the year ended December 31,
2003, on February 15, 2004. Mr. Rothman became a director and
officer of Demeter on September 12, 2002, and Form 3 should have
been filed on or before September 22, 2002 and a Form 5 should
have been filed for the fiscal year ending December 31, 2002. Mr.
Rothman's ownership of 640 Units of the Partnership represents
less than 1% of the outstanding Units of the Partnership. No
other Forms 3, 4, or 5 have been filed.

Code of Ethics
The Partnership has not adopted a code of ethics that applies to
the Partnership's principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions. The Partnership is operated by its
general partner, Demeter. The President, Chief Financial Officer
and each member of the Board of Directors of Demeter are employees
of Morgan Stanley and are subject to the code of ethics adopted by
Morgan Stanley, the text of which can be viewed on Morgan
Stanley's website at www.morganstanley.com/ourcommitment/codeofcon
duct.html.
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, 2003, 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, 2003,
Demeter owned 160,190.965 Units of general partnership interest,
representing a 1.10 percent interest in 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, 2003, 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 $25,658,616 for the year ended December
31, 2003.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Morgan Stanley DW, on behalf of the Partnership, pays all
accounting fees. The Partnership reimburses Morgan Stanley DW
through the brokerage fees it pays, as discussed in the Notes to
Financial Statements in the Annual Report to the Limited Partners
for the year ended December 31, 2003.

(1) Audit Fees. The aggregate fees for professional services
rendered by Deloitte & Touche LLP in connection with their audit
of the Partnership's financial statements and reviews of the
financial statements included in the Quarterly Reports on Form
10-Q and in connection with statutory and regulatory filings for
the years ended December 31, 2003 and 2002 were approximately
$44,900 and $45,049, respectively.

(2) Audit-Related Fees. There were no fees for assurance and
related services rendered by Deloitte & Touche LLP for the years
ended December 31, 2003 and 2002.

(3) Tax Fees. The aggregate fees for tax compliance services
rendered by Deloitte & Touche LLP for the years ended December 31,
2003 and 2002 were approximately $29,914 and $29,066,
respectively.

(4) All Other Fees. None.

As of the date of this Report, the Board of Directors of Demeter
has not adopted pre-approval policies and procedures. As a
result, all services provided by Deloitte & Touche LLP must be
directly pre-approved by the Board of Directors of Demeter.

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, 2003 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, 2003, 2002 and 2001.

- - Statements of Financial Condition, including the Schedules of
Investments, as of December 31, 2003 and 2002.

- - Statements of Operations, Changes in Partners' Capital, and
Cash Flows for the years ended December 31, 2003, 2002 and
2001.

- - 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, 2003 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
On March 10, 2004, the Partnership filed the Current Report on
Form 8-K for the purpose of reporting, under Item 5, the
Partnership having entered a management agreement with Graham
Capital Management, L.P., thereby adding Graham Capital
Management, L.P., as a trading advisor to the Partnership.

(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 15, 2004 BY: /s/ Jeffrey A. Rothman
Jeffrey A. Rothman,
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/ Jeffrey A. Rothman March 15, 2004
Jeffrey A. Rothman, President

/s/ Douglas J. Ketterer March 15, 2004
Douglas J. Ketterer, Director

/s/ Jeffrey S. Swartz March 15, 2004
Jeffrey S. Swartz, Director

/s/ Richard A. Beech March 15, 2004
Richard A. Beech, Director

/s/ Raymond A. Harris March 15, 2004
Raymond A. Harris, Director

/s/ Frank Zafran March 15, 2004
Frank Zafran, Director

/s/ Jeffrey D. Hahn March 15, 2004
Jeffrey D. Hahn, Chief
Financial Officer

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 28,
2003, filed with the Securities and Exchange Commission
pursuant to Rule 424(b)(3) under the Securities Act of
1933 on May 7, 2003.
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.
E-1

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 28, 2003, filed with
the Securities and Exchange Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933 on May 7, 2003.
10.10 Amended and Restated Escrow Agreement, 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 as escrow
agent, dated March 10, 2000, 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 28,
2003, filed with the Securities and Exchange Commission
pursuant to Rule 424(b)(3) under the Securities Act of
1933 on May 7, 2003.
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.

E-2

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, 2003 Annual Report to Limited Partners is
filed herewith.
31.01 Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to rules 13a-15(e) and 15d-15(e), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02 Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to rules 13a-15(e) and 15d-15(e), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
32.01 Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

32.02 Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
E-3

Morgan Stanley
Spectrum Series

December 31, 2003
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 compound annualized return since inception for
each Fund. Past performance is not necessarily indicative of future results.

INCEPTION-
TO-DATE
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 RETURN
FUND % % % % % % % % % % % % % %
- ------------------------------------------------------------------------------------------------------------------------

Spectrum Currency....... -- -- -- -- -- -- -- -- -- 11.7 11.1 12.2 12.4 56.6
(6 mos.)
- ------------------------------------------------------------------------------------------------------------------------
Spectrum Global Balanced -- -- -- (1.7) 22.8 (3.6) 18.2 16.4 0.8 0.9 (0.3) (10.1) 6.2 54.7
(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 9.6 203.1
(5 mos.)
- ------------------------------------------------------------------------------------------------------------------------
Spectrum Strategic...... -- -- -- 0.1 10.5 (3.5) 0.4 7.8 37.2 (33.1) (0.6) 9.4 24.0 43.1
(2 mos.)
- ------------------------------------------------------------------------------------------------------------------------
Spectrum Technical...... -- -- -- (2.2) 17.6 18.3 7.5 10.2 (7.5) 7.8 (7.2) 23.3 23.0 126.4
(2 mos.)
- ------------------------------------------------------------------------------------------------------------------------

COMPOUND
ANNUALIZED
RETURN
FUND %
- -----------------------------------

Spectrum Currency....... 13.7

- -----------------------------------
Spectrum Global Balanced 4.9

- -----------------------------------
Spectrum Select......... 9.3

- -----------------------------------
Spectrum Strategic...... 4.0

- -----------------------------------
Spectrum Technical...... 9.3

- -----------------------------------

DEMETER MANAGEMENT CORPORATION

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

MORGAN STANLEY SPECTRUM SERIES
ANNUAL REPORT
2003

Dear Limited Partner:

This marks the tenth annual report for Morgan Stanley Spectrum Global
Balanced L.P., Morgan Stanley Spectrum Strategic L.P. and Morgan Stanley
Spectrum Technical L.P., the thirteenth annual report for Morgan Stanley
Spectrum Select L.P., and the fourth annual report for Morgan Stanley Spectrum
Currency L.P. The Net Asset Value per Unit for each of the five Morgan Stanley
Spectrum Funds ("Fund(s)") as of December 31, 2003 was as follows:

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

Spectrum Currency $15.66 12.4%
-----------------------------------------
Spectrum Global Balanced $15.47 6.2%
-----------------------------------------
Spectrum Select $30.31 9.6%
-----------------------------------------
Spectrum Strategic $14.31 24.0%
-----------------------------------------
Spectrum Technical $22.64 23.0%
-----------------------------------------

Since their inception in November 1994, Spectrum Global Balanced has
increased by 54.7% (a compound annualized return of 4.9%), Spectrum Strategic
has increased by 43.1% (a compound annualized return of 4.0%), and Spectrum
Technical has increased by 126.4% (a compound annualized return of 9.3%). Since
its inception in August 1991, Spectrum Select has increased by 203.1% (a
compound annualized return of 9.3%). Since its inception in July 2000, Spectrum
Currency has increased by 56.6% (a compound annualized return of 13.7%).

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.

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 no
guarantee of future results.

Sincerely,

/s/ Jeffrey A. Rothman
Jeffrey A. Rothman
Chairman and President
Demeter Management Corporation
General Partner for
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.
Morgan Stanley Spectrum Technical L.P.

SPECTRUM CURRENCY

[CHART]

Year ended
December 31, 2003
-----------------
Australian dollar 8.68%
British pound -2.43%
Euro 12.03%
Japanese yen 0.14%
Swiss franc -2.31%
Minor currencies 4.76%

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:
.. The most significant gains were recorded from long positions in the euro
versus the U.S. dollar as the dollar's value weakened throughout a majority
of the year. Fears of a military conflict with Iraq, skepticism regarding
the likelihood of a U.S. economic recovery and fears of a potential
terrorist attack resulted in gains from long euro positions during January,
April, and May. A confluence of factors during December including concerns
regarding U.S. budget and trade deficits, a dip in consumer confidence, an
outbreak of Mad Cow Disease in the U.S., and continued fears of a potential
terrorist attack forced the U.S. dollar to retreat further and the euro to
climb.
.. Additional gains resulted from long positions in the Australian dollar
versus the U.S. dollar during April, May, and June and again during November
and December as the Australian currency strengthened in response to
continued weakness in the U.S. dollar, higher interest rates in Australia
relative to those in the U.S. and higher gold prices.
.. Profits were also provided by long positions in the South African rand
versus the U.S. dollar during April and December due to significant interest
rate differentials between

the two countries, economic concerns regarding U.S. budget and trade
deficits and fears of a potential terrorist attack. Smaller profits were
experienced from long positions in the New Zealand dollar versus the U.S.
dollar primarily during November as the U.S. dollar's value tumbled to a
six-year low versus the New Zealand currency.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. Losses were recorded by positions in the British pound versus the U.S.
dollar as the value of the pound strengthened during April and May on
expectations that the Bank of England would likely leave interest rates
unchanged and upon the release of lower-than-expected unemployment data from
Great Britain. During June, losses stemmed from positions in the pound
versus the U.S. dollar as the pound's value increased early in the month,
amid expectations that the Bank of England would likely leave interest rates
unchanged, and then reversed lower, after the British Finance Minister
released positive comments regarding the U.K.'s entry prospects into the
European Union.
.. Additional losses resulted from short positions in the Swiss franc versus
the U.S. dollar during September as the dollar's value declined amid
concerns about the strength of the U.S. economy and the potential impact of
a statement by the G-7 nations supporting "more flexible exchange rates."
The G-7 countries consist of France, the U.S., Britain, Germany, Japan,
Italy, and Canada.

SPECTRUM CURRENCY
(continued)

SPECTRUM GLOBAL BALANCED

[CHART]

Year ended
December 31, 2003
-----------------
Currencies 0.41%
Interest Rates 2.45%
Stock Indices 7.05%
Energies 0.50%
Metals 1.07%
Agriculturals -1.19%

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the global stock index futures markets, gains were recorded by long
positions in European and U.S. stock index futures. During the second
quarter, global equity prices rallied in response to positive earnings
announcements, the conclusion of the war in Iraq, and the prospect of lower
interest rates. Additional gains were recorded from long positions in
Japanese stock index futures during July and August as prices jumped higher
in response to increased investor demand triggered by record-low Japanese
government bond yields, robust Japanese economic data and gains in the U.S.
equity markets. During the fourth quarter, further gains were provided by
long European, U.S., and Asian equity index futures positions. The release
of favorable economic data and an inflow of investor assets into equities
spurred in part by strong U.S. manufacturing data and the strongest U.S.
quarterly growth rate in twenty years helped boost global equity prices.
.. Additional gains were generated in the global interest rate markets. During
February and May, long positions in European and U.S. interest rate futures
profited as prices trended higher amid speculation of an interest rate cut
by the U.S. Federal Reserve, lingering doubts concerning a global economic
recovery, and investor preference for fixed income investments.

.. In the metals markets, smaller gains were experienced, primarily during
October, by long futures positions in nickel and copper as industrial metals
prices rallied in response to increased demand, especially from China, as
well as to growing investor sentiment that the global economy was on the
path to recovery.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. Losses were recorded in the agricultural sector. Corn futures positions
incurred losses as the price of corn was lifted higher with wheat prices
during January and then traded inconsistently during April and August amid
supply and weather-related issues. Long positions in cotton and corn futures
during November added to losses within in this sector as the prices of those
commodities reversed lower.

SPECTRUM GLOBAL BALANCED
(continued)

SPECTRUM SELECT

[CHART]

Year ended
December 31, 2003
-----------------
Currencies 12.15%
Interest Rates -1.10%
Stock Indices 2.56%
Energies -0.83%
Metals 5.91%
Agriculturals 1.71%

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. The most significant gains were recorded in the currency markets. During
January, long positions in the euro versus the U.S. dollar profited as the
value of the European currency strengthened against the U.S. dollar amid
renewed fears of a military conflict with Iraq, increased tensions with
North Korea, and weak U.S. economic data. During May, gains were supplied by
long positions in the euro versus the U.S. dollar as the value of the euro
strengthened amid uncertainty regarding the Bush Administration's economic
policy, renewed fears of potential terrorist attacks against American
interests, and investor preference for non-U.S. dollar assets. Additional
currency gains were recorded by long positions in the Australian dollar
versus the U.S. dollar as the value of the Australian currency strengthened
in response to continued weakness in the U.S. currency, rising gold prices
and relatively high interest rates in Australia. During November and
December, long positions in the euro, British pound, and Australian and New
Zealand dollars versus the U.S. dollar generated additional gains. The U.S.
dollar tumbled to a six-year low against the Australian and New Zealand
dollar and a five-year low against the British pound. Additionally, the euro
soared past the $1.20 mark, its highest level against the U.S. dollar since
its introduction in January 1999. The U.S. dollar's weakness was caused by a
variety of factors, including concerns regarding the growing U.S. current
trade account and budget deficits, the Federal Reserve's policy of

maintaining low interest rates, widening interest rate differentials
relative to other countries, and renewed fears of global terrorism.
.. In the metals markets, gains were achieved primarily during the fourth
quarter by long futures positions in copper and nickel. Industrial metals
prices rallied during October in response to increased demand, especially
from China, as well as to growing investor sentiment that the global economy
was on the path to recovery. During December, copper and nickel prices rose
to six and fourteen year highs respectively, benefiting from increased
demand from China and the strengthening of the global economy.
.. Gains were also supplied by the global stock index markets. Long positions
in Asian stock index futures returned gains during August as Asian equity
prices drew strength from robust Japanese economic data and rising prices in
the U.S. equity markets. Long U.S. equity index futures positions also
profited after the release of favorable economic data during October, as
well as in December.
.. In the agricultural markets, smaller gains resulted from long futures
positions in soybeans and its related products during September as prices
reacted positively in response to robust U.S. export sales data and smaller
U.S. crop assessments. Then in October, long futures positions in cotton and
soybeans generated gains as increased demand from China and tight market
supplies lifted prices.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the global interest rate markets, losses were incurred primarily during
the last four months of the year. The Fund experienced losses from short
European futures positions. Prices reversed higher amid investor demand for
safe haven investments following renewed volatility in global equity
markets, continued geopolitical instability in the Middle East and comments
from the U.S. Federal Reserve regarding the continuation of low U.S.
interest rates.
.. Additional losses stemmed from the energy sector. Long positions in crude
oil futures resulted in losses during March as prices reversed sharply lower
amid market anticipation of a swift military victory for Coalition forces
against Iraq. During September, losses were suffered from short positions in
crude oil futures as prices unexpectedly reversed higher following OPEC's
announcement for output reductions and curbs in production. During October,
short crude oil positions experienced further losses as prices moved higher
in response to supply fears spurred by Middle East tensions early in the
month, as well as strike threats in Nigeria, one of the world's major oil
producers.

SPECTRUM SELECT
(continued)

SPECTRUM STRATEGIC

[CHART]

Year ended
December 31, 2003
-----------------
Currencies 11.06%
Interest Rates 0.87%
Stock Indices 5.50%
Energies -0.13%
Metals 8.35%
Agriculturals 8.34%

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. The most significant gains were recorded in the currency markets, primarily
during September, from long euro positions against the U.S. dollar. The
dollar's weakness was caused by concerns about the strength of the U.S.
economy and the potential impact of a statement by the G-7 countries
supporting "more flexible exchange rates." The G-7 countries consist of
France, the U.S., Britain, Germany, Japan, Italy, and Canada. The G-7's
statement was viewed as part of an effort by the Bush Administration to
allow the dollar to weaken against its counterparts. The dollar tumbled
during the month, falling to three-month lows against the euro. During May,
long positions in the euro versus the U.S. dollar generated gains as the
value of the euro strengthened amid uncertainty regarding the Bush
Administration's economic policy, renewed fears of potential terrorist
attacks against American interests, and investor preference for non-U.S.
dollar assets. Additional gains were recorded from long positions in the
Australian dollar versus the U.S. dollar as its value strengthened during
January, April, and May in response to continued weakness in the U.S.
dollar, rising commodity prices and higher interest rates in Australia
relative to those in the U.S.
.. Gains were also experienced in the metals markets from long futures
positions in nickel, copper, and zinc. Base metals prices climbed higher
during January following the release of positive U.S. manufacturing data and
continued supply and

demand concerns. Long futures positions in nickel and copper provided
further gains in this sector as prices trended higher during July amid
renewed optimism concerning a U.S. economic recovery and hopes for increased
industrial production. During the fourth quarter, prices rallied during
October in response to growing investor sentiment that the global economy
was on the path to recovery and increased demand, especially from China.
During December, nickel and copper prices rose to fourteen and six-year
highs respectively, benefiting from increased demand from China and the
strengthening of the global economy.
.. Additional profits were achieved in the agricultural markets. During
January, long positions in sugar futures yielded gains as prices rose amid
speculative buying ahead of the Brazilian harvest. Gains were also provided
from long positions in cocoa futures during August as prices rallied amid
short-covering, tight U.S. cocoa reserves and dry weather in the Ivory
Coast, the world's top cocoa producer. Cocoa prices rallied again during the
first two weeks of December in response to political developments in the
Ivory Coast, thereby, generating profits for long cocoa positions.
Meanwhile, long futures positions in cotton benefited as prices rallied to
their highest level in seven years during December following an increase in
export orders from China. Further gains in the agricultural sector stemmed
from long futures positions in soybeans and cotton during April as increased
demand from China and tight market supplies lifted prices. Rough rice
futures positions profited during April as prices rose in response to the
Iraqi war and the potential for increased Iraqi demand after the war.
.. In the global stock index markets, gains were contributed during May and
June from long positions in U.S. and European stock index futures as prices
moved higher amid increased optimism regarding the U.S. economic recovery
and a rise in investor sentiment. Long positions in Japanese stock index
futures also returned gains as Japanese equity markets tracked gains in
global stock indices during September. During December, the Fund generated
gains from long U.S. and European stock index futures positions as strong
U.S. manufacturing data and the strongest U.S. quarterly growth rate in
twenty years resulted in higher prices.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. Losses were incurred in the energy markets, primarily during May, from short
positions in crude oil futures and its related products as prices moved
higher amid supply concerns and renewed fears concerning security at Middle
Eastern refining facilities. Long positions in natural gas futures
experienced losses during June as prices reversed sharply lower following
news of larger-than-expected U.S. reserves.

SPECTRUM STRATEGIC
(continued)

SPECTRUM TECHNICAL

[CHART]

Year ended
December 31, 2003
-----------------
Currencies 22.78%
Interest Rates -0.93%
Stock Indices 10.30%
Energies 0.40%
Metals 6.97%
Agriculturals -2.99%

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. The most significant gains were recorded in the currency markets. Long
positions in the euro profited as its value rose versus the U.S. dollar
during January amid renewed fears of a military conflict with Iraq,
increased tensions with North Korea, and weak U.S. economic data. During
May, additional gains were recorded as the value of the euro strengthened
due to uncertainty regarding the Bush Administration's economic policy,
renewed fears of potential terrorist attacks against American interests and
investor preference for non-U.S. dollar assets. Gains were also recorded
during April by long positions in the Australian dollar versus the U.S.
dollar as the Australian currency strengthened in response to continued
weakness in the U.S. dollar, rising commodity prices and significant
interest rate differentials between the two countries. The strongest gains
in the currency sector were recorded during the fourth quarter, particularly
during December, by long positions in a broad range of major and minor
currencies versus the U.S. dollar. Profits accumulated as the U.S. dollar
tumbled to a six-year low against the Australian and New Zealand dollars and
a five-year low against the British pound. Additionally, the euro soared
past the $1.20 mark, its highest level against the U.S. dollar since its
introduction in January 1999. The U.S. dollar's weakness was caused by a
variety of factors, including concerns regarding the growing U.S. current
trade account

and budget deficits, the Federal Reserve's policy of maintaining low
interest rates, widening interest rate differentials relative to other
countries, and renewed fears of global terrorism.
.. Additional gains were recorded in the global stock index markets from long
positions in Japanese stock index futures during July and August as prices
trended higher in response to increased investor demand triggered by
record-low Japanese government bond yields and robust Japanese economic
data. Gains were also contributed during July and August by long positions
in U.S. stock index futures as prices were buoyed by a rise in investor
sentiment and tangible signs of a U.S. economic recovery. During the fourth
quarter, additional gains were achieved on long European, U.S. and Asian
equity index futures positions. The release of favorable economic data and
an inflow of investor assets into equities helped boost prices.
.. In the metals markets, gains were produced, primarily during the fourth
quarter, from long futures positions in base and precious metals. Long
futures positions in copper, nickel, and aluminum profited as industrial
metals prices rallied in response to growing investor confidence in the
global economy and increased demand, especially from China. Meanwhile, gold
and silver climbed higher during December as investors sought a safe haven
from the falling U.S. dollar and an increased risk of terrorism.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. Losses stemmed from the agricultural markets. Short futures positions in
coffee suffered losses as prices reversed higher in early September due to
supply fears prompted by reduced estimates for world coffee production.
Additional losses were experienced from long positions in lean hog futures
during June as prices declined in response to a potential outbreak of Mad
Cow Disease. During October, short futures positions in corn also incurred
losses as prices reversed higher in response to news of decreased supply.

SPECTRUM TECHNICAL
(continued)

MORGAN STANLEY SPECTRUM SERIES

INDEPENDENT AUDITORS' REPORT

To the Limited Partners and the General Partner of 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 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. (collectively, the "Partnerships"),
including the schedules of investments, as of December 31, 2003 and 2002, and
the related statements of operations, changes in partners' capital, and cash
flows for each of the three years in the period ended December 31, 2003. 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 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. at December 31, 2003 and 2002, and the results of their
operations and their cash flows for each of the three years in the period

ended December 31, 2003 in conformity with accounting principles generally
accepted in the United States of America.

/s/ Deloitte & Touche LLP

New York, New York
March 2, 2004

MORGAN STANLEY SPECTRUM CURRENCY L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
----------------------
2003 2002
----------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 178,774,244 88,478,803
Net unrealized gain on open contracts 4,878,640 5,651,549
----------- ----------
Total Trading Equity 183,652,884 94,130,352
Subscriptions receivable 8,709,868 4,178,758
Interest receivable (Morgan Stanley DW) 101,889 70,210
----------- ----------
Total Assets 192,464,641 98,379,320
=========== ==========

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Redemptions payable 1,060,483 1,526,335
Accrued brokerage fees (Morgan Stanley DW) 661,566 316,460
Accrued incentive fees 399,035 239,482
Accrued management fees 287,637 137,591
----------- ----------
Total Liabilities 2,408,721 2,219,868
----------- ----------

PARTNERS' CAPITAL
Limited Partners (12,010,816.426 and 6,739,826.121 Units,
respectively) 188,042,673 93,891,619
General Partner (128,591.799 and 162,791.986 Units, respectively) 2,013,247 2,267,833
----------- ----------
Total Partners' Capital 190,055,920 96,159,452
----------- ----------
Total Liabilities and Partners' Capital 192,464,641 98,379,320
=========== ==========

NET ASSET VALUE PER UNIT 15.66 13.93
=========== ==========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
2003 2002 2001
---------- ---------- ---------
$ $ $

REVENUES
Trading profit (loss):
Realized 27,952,154 12,877,202 3,998,924
Net change in unrealized (772,909) 2,473,166 2,622,814
---------- ---------- ---------
Total Trading Results 27,179,245 15,350,368 6,621,738
Interest income (Morgan Stanley DW) 1,006,410 833,523 731,716
---------- ---------- ---------
Total 28,185,655 16,183,891 7,353,454
---------- ---------- ---------
EXPENSES
Brokerage fees (Morgan Stanley DW) 6,109,327 3,077,048 1,297,698
Management fees 2,656,229 1,337,848 564,216
Incentive fees 2,623,290 1,485,875 1,155,201
---------- ---------- ---------
Total 11,388,846 5,900,771 3,017,115
---------- ---------- ---------
NET INCOME 16,796,809 10,283,120 4,336,339
========== ========== =========
NET INCOME ALLOCATION:
Limited Partners 16,514,538 10,038,409 4,119,027
General Partner 282,271 244,711 217,312

NET INCOME PER UNIT:
Limited Partners 1.73 1.52 1.24
General Partner 1.73 1.52 1.24

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

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
----------------------
2003 2002
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 50,336,417 49,330,482

Net unrealized gain on open contracts (MS&Co.) 1,845,313 758,782
Net unrealized gain (loss) on open contracts
(MSIL) 701,727 (12,849)
---------- ----------
Total net unrealized gain on open contracts 2,547,040 745,933
Net option premiums (39,600) 712,573
---------- ----------
Total Trading Equity 52,843,857 50,788,988
Subscriptions receivable 1,036,417 716,792
Interest receivable (Morgan Stanley DW) 40,110 53,458
---------- ----------
Total Assets 53,920,384 51,559,238
========== ==========

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Redemptions payable 1,033,040 896,775
Accrued brokerage fees (Morgan Stanley DW) 194,891 202,109
Accrued management fees 52,960 54,922
---------- ----------
Total Liabilities 1,280,891 1,153,806
---------- ----------

PARTNERS' CAPITAL
Limited Partners (3,364,748.115 and
3,419,596.378 Units, respectively) 52,064,431 49,814,229
General Partner (37,164.331 and
40,584.304 Units, respectively) 575,062 591,203
---------- ----------
Total Partners' Capital 52,639,493 50,405,432
---------- ----------
Total Liabilities and Partners' Capital 53,920,384 51,559,238
========== ==========

NET ASSET VALUE PER UNIT 15.47 14.57
========== ==========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
2003 2002 2001
--------- ---------- ----------
$ $ $

REVENUES
Trading profit (loss):
Realized 3,711,981 (3,772,374) 3,618,628
Net change in unrealized 1,801,107 56,725 (2,628,436)
--------- ---------- ----------
5,513,088 (3,715,649) 990,192
Proceeds from Litigation Settlement -- 233,074 --
--------- ---------- ----------
Total Trading Results 5,513,088 (3,482,575) 990,192
Interest income (Morgan Stanley DW) 525,817 916,179 2,160,076
--------- ---------- ----------
Total 6,038,905 (2,566,396) 3,150,268
--------- ---------- ----------
EXPENSES
Brokerage fees (Morgan Stanley DW) 2,328,615 2,532,371 2,597,121
Management fees 632,782 688,151 705,746
--------- ---------- ----------
Total 2,961,397 3,220,522 3,302,867
--------- ---------- ----------
NET INCOME (LOSS) 3,077,508 (5,786,918) (152,599)
========= ========== ==========
NET INCOME (LOSS) ALLOCATION:
Limited Partners 3,043,649 (5,720,328) (150,650)
General Partner 33,859 (66,590) (1,949)

NET INCOME (LOSS) PER UNIT:
Limited Partners .90 (1.64) (.05)
General Partner .90 (1.64) (.05)

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

MORGAN STANLEY SPECTRUM SELECT L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
-----------------------
2003 2002
----------- -----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 398,595,952 274,780,334
Net unrealized gain on open contracts
(MS&Co.) 25,504,948 20,865,525
Net unrealized gain (loss) on open contracts
(MSIL) 11,277,017 (2,967,507)
----------- -----------
Total net unrealized gain on open contracts 36,781,965 17,898,018
Net option premiums 1,232,488 --
----------- -----------
Total Trading Equity 436,610,405 292,678,352
Subscriptions receivable 12,688,217 6,690,744
Interest receivable (Morgan Stanley DW) 250,620 235,283
----------- -----------
Total Assets 449,549,242 299,604,379
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 2,405,123 1,876,403
Accrued brokerage fees (Morgan Stanley DW) 2,401,080 1,662,321
Accrued incentive fee 2,227,005 --
Accrued management fees 993,550 687,856
----------- -----------
Total Liabilities 8,026,758 4,226,580
----------- -----------
PARTNERS' CAPITAL
Limited Partners (14,405,312.114 and
10,567,690.403 Units, respectively) 436,666,633 292,226,000
General Partner (160,190.965 and
113,977.644 Units, respectively) 4,855,851 3,151,799
----------- -----------
Total Partners' Capital 441,522,484 295,377,799
----------- -----------
Total Liabilities and Partners' Capital 449,549,242 299,604,379
=========== ===========
NET ASSET VALUE PER UNIT 30.31 27.65
=========== ===========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
2003 2002 2001
---------- ---------- -----------
$ $ $

REVENUES
Trading profit (loss):
Realized 52,485,483 46,999,853 43,420,724
Net change in unrealized 18,883,947 12,501,282 (20,155,561)
---------- ---------- -----------
71,369,430 59,501,135 23,265,163
Proceeds from Litigation Settlement -- 4,636,156 --
---------- ---------- -----------
Total Trading Results 71,369,430 64,137,291 23,265,163
Interest income (Morgan Stanley DW) 2,843,612 3,468,437 7,203,732
---------- ---------- -----------
Total 74,213,042 67,605,728 30,468,895
---------- ---------- -----------
EXPENSES
Brokerage fees (Morgan Stanley DW) 25,658,616 18,943,743 17,183,347
Management fees 10,617,352 7,838,786 7,110,346
Incentive fees 3,750,169 -- 3,009,853
---------- ---------- -----------
Total 40,026,137 26,782,529 27,303,546
---------- ---------- -----------
NET INCOME 34,186,905 40,823,199 3,165,349
========== ========== ===========
NET INCOME ALLOCATION:
Limited Partners 33,822,853 40,391,145 3,123,455
General Partner 364,052 432,054 41,894
NET INCOME PER UNIT:
Limited Partners 2.66 3.69 .39
General Partner 2.66 3.69 .39

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

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
----------------------
2003 2002
----------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 109,846,761 68,224,648
Net unrealized gain on open contracts (MS&Co.) 5,847,799 7,430,755
Net unrealized gain (loss) on open contracts
(MSIL) 2,073,986 (499,611)
----------- ----------
Total net unrealized gain on open contracts 7,921,785 6,931,144
Net option premiums 678,280 222,768
----------- ----------
Total Trading Equity 118,446,826 75,378,560
Subscriptions receivable 5,143,178 1,654,471
Interest receivable (Morgan Stanley DW) 66,591 61,778
----------- ----------
Total Assets 123,656,595 77,094,809
=========== ==========

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Accrued incentive fee 811,250 --
Redemptions payable 655,871 1,115,549
Accrued brokerage fees (Morgan Stanley DW) 650,049 431,596
Accrued management fees 268,986 178,592
----------- ----------
Total Liabilities 2,386,156 1,725,737
----------- ----------

PARTNERS' CAPITAL
Limited Partners (8,385,489.652 and
6,454,424.204 Units, respectively) 119,976,992 74,487,934
General Partner (90,402.219 and
76,351.101 Units, respectively) 1,293,447 881,138
----------- ----------
Total Partners' Capital 121,270,439 75,369,072
----------- ----------
Total Liabilities and Partners' Capital 123,656,595 77,094,809
=========== ==========

NET ASSET VALUE PER UNIT 14.31 11.54
=========== ==========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
2003 2002 2001
---------- ---------- ----------
$ $ $

REVENUES
Trading profit:
Realized 30,251,636 10,648,811 2,132,212
Net change in unrealized 990,641 2,439,378 2,505,634
---------- ---------- ----------
31,242,277 13,088,189 4,637,846
Proceeds from Litigation Settlement -- 17,556 --
---------- ---------- ----------
Total Trading Results 31,242,277 13,105,745 4,637,846
Interest income (Morgan Stanley DW) 741,890 972,942 2,217,963
---------- ---------- ----------
Total 31,984,167 14,078,687 6,855,809
---------- ---------- ----------
EXPENSES
Brokerage fees (Morgan Stanley DW) 6,611,238 5,304,486 5,152,756
Management fees 2,735,685 2,194,958 2,183,596
Incentive fees 2,123,832 264,827 --
---------- ---------- ----------
Total 11,470,755 7,764,271 7,336,352
---------- ---------- ----------
NET INCOME (LOSS) 20,513,412 6,314,416 (480,543)
========== ========== ==========
NET INCOME (LOSS) ALLOCATION:
Limited Partners 20,281,103 6,238,448 (475,383)
General Partner 232,309 75,968 (5,160)

NET INCOME (LOSS) PER UNIT:
Limited Partners 2.77 .99 (.06)
General Partner 2.77 .99 (.06)

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

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
-----------------------
2003 2002
----------- -----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 483,512,056 310,115,973
Net unrealized gain on open contracts (MS&Co.) 27,948,353 27,172,226
Net unrealized gain (loss) on open contracts
(MSIL) 18,485,857 (3,069,013)
----------- -----------
Total net unrealized gain on open contracts 46,434,210 24,103,213
Net option premiums 3,973,725 --
----------- -----------
Total Trading Equity 533,919,991 334,219,186
Subscriptions receivable 15,855,119 7,108,790
Interest receivable (Morgan Stanley DW) 291,810 268,836
----------- -----------
Total Assets 550,066,920 341,596,812
=========== ===========

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Accrued incentive fee 4,924,640 --
Accrued brokerage fees (Morgan Stanley DW) 2,947,775 1,906,305
Redemptions payable 2,925,703 3,195,919
Accrued management fees 1,084,524 672,962
----------- -----------
Total Liabilities 11,882,642 5,775,186
----------- -----------

PARTNERS' CAPITAL
Limited Partners (23,512,770.158 and
18,038,726.045 Units, respectively) 532,266,109 332,124,550
General Partner (261,434.166 and
200,799.812 Units, respectively) 5,918,169 3,697,076
----------- -----------
Total Partners' Capital 538,184,278 335,821,626
----------- -----------
Total Liabilities and Partners' Capital 550,066,920 341,596,812
=========== ===========

NET ASSET VALUE PER UNIT 22.64 18.41
=========== ===========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
2003 2002 2001
----------- ---------- -----------
$ $ $

REVENUES
Trading profit (loss):
Realized 116,446,374 76,058,451 30,115,483
Net change in unrealized 22,330,997 12,597,598 (28,536,694)
----------- ---------- -----------
138,777,371 88,656,049 1,578,789
Proceeds from Litigation Settlement -- 306,400 --
----------- ---------- -----------
Total Trading Results 138,777,371 88,962,449 1,578,789
Interest income (Morgan Stanley DW) 3,316,107 3,686,460 8,288,660
----------- ---------- -----------
Total 142,093,478 92,648,909 9,867,449
----------- ---------- -----------
EXPENSES
Brokerage fees (Morgan Stanley DW) 30,273,037 20,470,797 19,556,056
Incentive fees 13,042,559 4,024,921 2,093,709
Management fees 10,835,994 7,377,756 7,501,053
----------- ---------- -----------
Total 54,151,590 31,873,474 29,150,818
----------- ---------- -----------
NET INCOME (LOSS) 87,941,888 60,775,435 (19,283,369)
=========== ========== ===========
NET INCOME (LOSS) ALLOCATION:
Limited Partners 86,960,795 60,110,064 (19,062,561)
General Partner 981,093 665,371 (220,808)

NET INCOME (LOSS) PER UNIT:
Limited Partners 4.23 3.48 (1.15)
General Partner 4.23 3.48 (1.15)

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

MORGAN STANLEY SPECTRUM CURRENCY L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

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

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
Offering of Units 6,157,215.998 89,883,376 790,000 90,673,376
Net income -- 16,514,538 282,271 16,796,809
Redemptions (920,425.880) (12,246,860) (1,326,857) (13,573,717)
-------------- ----------- ---------- -----------
Partners' Capital,
December 31, 2003 12,139,408.225 188,042,673 2,013,247 190,055,920
============== =========== ========== ===========

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

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

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
Offering of Units 690,016.887 10,491,897 -- 10,491,897
Net income -- 3,043,649 33,859 3,077,508
Redemptions (748,285.123) (11,285,344) (50,000) (11,335,344)
------------- ----------- ------- -----------
Partners' Capital,
December 31, 2003 3,401,912.446 52,064,431 575,062 52,639,493
============= =========== ======= ===========

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

MORGAN STANLEY SPECTRUM SELECT L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

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

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
Offering of Units 4,942,610.490 141,160,704 1,340,000 142,500,704
Net income -- 33,822,853 364,052 34,186,905
Redemptions (1,058,775.458) (30,542,924) -- (30,542,924)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2003 14,565,503.079 436,666,633 4,855,851 441,522,484
============== =========== ========= ===========

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

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

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
Offering of Units 2,823,095.529 36,375,972 180,000 36,555,972
Net income -- 20,281,103 232,309 20,513,412
Redemptions (877,978.963) (11,168,017) -- (11,168,017)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2003 8,475,891.871 119,976,992 1,293,447 121,270,439
============== =========== ========= ===========

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

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

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

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
Offering of Units 7,617,427.705 156,115,402 1,240,000 157,355,402
Net income -- 86,960,795 981,093 87,941,888
Redemptions (2,082,749.238) (42,934,638) -- (42,934,638)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2003 23,774,204.324 532,266,109 5,918,169 538,184,278
============== =========== ========= ===========

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

MORGAN STANLEY SPECTRUM CURRENCY L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
2003 2002 2001
----------- ----------- ----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income 16,796,809 10,283,120 4,336,339
Noncash item included in net income:
Net change in unrealized 772,909 (2,473,166) (2,622,814)
(Increase) decrease in operating assets:
Interest receivable
(Morgan Stanley DW) (31,679) (19,622) 4,876
Increase (decrease) in operating
liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 345,106 161,731 99,484
Accrued incentive fees 159,553 (673,773) 880,379
Accrued management fees 150,046 70,317 43,254
----------- ----------- ----------
Net cash provided by operating
activities 18,192,744 7,348,607 2,741,518
----------- ----------- ----------

CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 90,673,376 48,984,478 29,198,302
(Increase) decrease in subscriptions
receivable (4,531,110) (1,536,641) 412,033
Increase (decrease) in redemptions
payable (465,852) 1,361,111 (2,072,127)
Redemptions of Units (13,573,717) (10,919,887) (1,430,132)
----------- ----------- ----------
Net cash provided by financing
activities 72,102,697 37,889,061 26,108,076
----------- ----------- ----------

Net increase in cash 90,295,441 45,237,668 28,849,594

Balance at beginning of period 88,478,803 43,241,135 14,391,541
----------- ----------- ----------

Balance at end of period 178,774,244 88,478,803 43,241,135
=========== =========== ==========

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,
------------------------------------
2003 2002 2001
----------- ----------- ----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) 3,077,508 (5,786,918) (152,599)
Noncash item included in net
income (loss):
Net change in unrealized (1,801,107) (56,725) 2,628,436
(Increase) decrease in operating assets:
Net option premiums 752,173 (712,573) 192,500
Interest receivable
(Morgan Stanley DW) 13,348 40,360 191,236
Increase (decrease) in operating
liabilities:
Accrued brokerage fees
(Morgan Stanley DW) (7,218) (17,837) 17,157
Accrued management fees (1,962) (4,846) 4,661
----------- ----------- ----------
Net cash provided by (used for)
operating activities 2,032,742 (6,538,539) 2,881,391
----------- ----------- ----------

CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 10,491,897 8,829,394 10,254,342
Increase in subscriptions receivable (319,625) (105,151) (81,007)
Increase in redemptions payable 136,265 171,491 122,794
Redemptions of Units (11,335,344) (10,422,804) (8,195,733)
----------- ----------- ----------
Net cash provided by (used for)
financing activities (1,026,807) (1,527,070) 2,100,396
----------- ----------- ----------

Net increase (decrease) in cash 1,005,935 (8,065,609) 4,981,787

Balance at beginning of period 49,330,482 57,396,091 52,414,304
----------- ----------- ----------

Balance at end of period 50,336,417 49,330,482 57,396,091
=========== =========== ==========

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,
-------------------------------------
2003 2002 2001
----------- ----------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income 34,186,905 40,823,199 3,165,349
Noncash item included in net
income:
Net change in unrealized (18,883,947) (12,501,282) 20,155,561
(Increase) decrease in
operating assets:
Net option premiums (1,232,488) 167,063 (167,063)
Interest receivable
(Morgan Stanley DW) (15,337) 70,073 584,598
Increase in operating liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 738,759 221,961 208,881
Accrued incentive fee 2,227,005 -- --
Accrued management fees 305,694 91,845 86,434
----------- ----------- -----------
Net cash provided by operating
activities 17,326,591 28,872,859 24,033,760
----------- ----------- -----------

CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 142,500,704 62,812,840 41,261,535
Increase in subscriptions receivable (5,997,473) (1,699,578) (3,407,225)
Increase (decrease) in
redemptions payable 528,720 (719,023) 484,897
Redemptions of Units (30,542,924) (49,669,825) (23,745,268)
----------- ----------- -----------
Net cash provided by financing
activities 106,489,027 10,724,414 14,593,939
----------- ----------- -----------

Net increase in cash 123,815,618 39,597,273 38,627,699

Balance at beginning of period 274,780,334 235,183,061 196,555,362
----------- ----------- -----------

Balance at end of period 398,595,952 274,780,334 235,183,061
=========== =========== ===========

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,
-------------------------------------
2003 2002 2001
----------- ----------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) 20,513,412 6,314,416 (480,543)
Noncash item included in net
income (loss):
Net change in unrealized (990,641) (2,439,378) (2,505,634)
(Increase) decrease in operating
assets:
Net option premiums (455,512) 65,784 (62,352)
Interest receivable
(Morgan Stanley DW) (4,813) 27,581 217,520
Increase (decrease) in operating
liabilities:
Accrued incentive fees 811,250 -- (289,687)
Accrued brokerage fees
(Morgan Stanley DW) 218,453 7,354 14,950
Accrued management fees 90,394 3,043 (11,028)
----------- ----------- -----------
Net cash provided by (used for)
operating activities 20,182,543 3,978,800 (3,116,774)
----------- ----------- -----------

CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 36,555,972 13,475,899 9,249,482
Increase in subscriptions receivable (3,488,707) (1,002,535) (189,876)
Increase (decrease) in redemptions
payable (459,678) (956,549) 765,005
Redemptions of Units (11,168,017) (13,238,629) (14,186,002)
----------- ----------- -----------
Net cash provided by (used for)
financing activities 21,439,570 (1,721,814) (4,361,391)
----------- ----------- -----------

Net increase (decrease) in cash 41,622,113 2,256,986 (7,478,165)

Balance at beginning of period 68,224,648 65,967,662 73,445,827
----------- ----------- -----------

Balance at end of period 109,846,761 68,224,648 65,967,662
=========== =========== ===========

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,
-------------------------------------
2003 2002 2001
----------- ----------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) 87,941,888 60,775,435 (19,283,369)
Noncash item included in net
income (loss):
Net change in unrealized (22,330,997) (12,597,598) 28,536,694
(Increase) decrease in operating
assets:
Net option premiums (3,973,725) -- --
Interest receivable
(Morgan Stanley DW) (22,974) 49,837 744,371
Increase (decrease) in operating
liabilities:
Accrued incentive fees 4,924,640 -- (111,599)
Accrued brokerage fees
(Morgan Stanley DW) 1,041,470 397,100 51,079
Accrued management fees 411,562 91,431 21,704
----------- ----------- -----------
Net cash provided by operating
activities 67,991,864 48,716,205 9,958,880
----------- ----------- -----------

CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 157,355,402 58,718,660 40,832,142
Increase in subscriptions receivable (8,746,329) (2,663,228) (3,357,977)
Increase (decrease) in redemptions
payable (270,216) 818,573 (1,055,038)
Redemptions of Units (42,934,638) (41,646,591) (31,707,743)
----------- ----------- -----------
Net cash provided by financing
activities 105,404,219 15,227,414 4,711,384
----------- ----------- -----------

Net increase in cash 173,396,083 63,943,619 14,670,264

Balance at beginning of period 310,115,973 246,172,354 231,502,090
----------- ----------- -----------

Balance at end of period 483,512,056 310,115,973 246,172,354
=========== =========== ===========

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

MORGAN STANLEY SPECTRUM CURRENCY L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2003 AND 2002

LONG UNREALIZED PERCENTAGE SHORT UNREALIZED PERCENTAGE
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS) OF NET ASSETS GAIN/(LOSS) OF NET ASSETS
- ------------------------------ --------------- ------------- ---------------- -------------
2003 PARTNERSHIP NET ASSETS: $190,055,920 $ % $ %

Foreign currency 5,023,184 2.64 (144,544) (0.07)
--------- ----- ---------- -----
Grand Total: 5,023,184 2.64 (144,544) (0.07)
========= ===== ========== =====
Unrealized Currency Gain/(Loss)

Total Net Unrealized Gain per Statement of Financial
Condition

2002 PARTNERSHIP NET ASSETS: $96,159,452
Foreign currency:
Other 4,758,215 4.95 (4,013,755) (4.18)
Euro/US dollar Mar. 03 4,860,786 5.05 -- --
--------- ----- ---------- -----
Grand Total: 9,619,001 10.00 (4,013,755) (4.18)
========= ===== ========== =====
Unrealized Currency Gain

Total Net Unrealized Gain per Statement of Financial
Condition

FUTURES AND FORWARD CONTRACTS: NET UNREALIZED GAIN/(LOSS) NOTIONAL AMOUNTS
- ------------------------------ -------------------------- ----------------
2003 PARTNERSHIP NET ASSETS: $190,055,920 $

Foreign currency 4,878,640 10,021,102,895
---------
Grand Total: 4,878,640

Unrealized Currency Gain/(Loss) --
---------
Total Net Unrealized Gain per Statement of Financial
Condition 4,878,640
=========
2002 PARTNERSHIP NET ASSETS: $96,159,452
Foreign currency:
Other 744,460 9,742,575,176
Euro/US dollar Mar. 03 4,860,786 143,425,000
---------
Grand Total: 5,605,246

Unrealized Currency Gain 46,303
---------
Total Net Unrealized Gain per Statement of Financial
Condition 5,651,549
=========

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

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2003 AND 2002

LONG UNREALIZED PERCENTAGE SHORT UNREALIZED PERCENTAGE
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS) OF NET ASSETS GAIN/(LOSS) OF NET ASSETS
- ------------------------------ --------------- ------------- ---------------- -------------
2003 PARTNERSHIP NET ASSETS: $52,639,493 $ % $ %

Foreign currency 627,263 1.19 109,420 0.21
Interest rate 216,798 0.41 -- --
Equity 936,933 1.78 -- --
Commodity 689,471 1.31 (5,870) (0.01)
--------- ----- ------- -----
Grand Total: 2,470,465 4.69 103,550 0.20
========= ===== ======= =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

2002 PARTNERSHIP NET ASSETS: $50,405,432
Foreign currency 641,746 1.27 137,676 0.28
Interest rate 806,083 1.60 (1,737) --
Equity (812,665) (1.61) -- --
Commodity 120,736 0.24 26,606 0.05
--------- ----- ------- -----
Grand Total: 755,900 1.50 162,545 0.33
========= ===== ======= =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

FUTURES AND FORWARD CONTRACTS: NET UNREALIZED GAIN/(LOSS) # OF CONTRACTS/NOTIONAL AMOUNTS
- ------------------------------ -------------------------- -------------------------------
2003 PARTNERSHIP NET ASSETS: $52,639,493 $

Foreign currency 736,683 15,130,291
Interest rate 216,798 1,053
Equity 936,933 291
Commodity 683,601 172
---------
Grand Total: 2,574,015

Unrealized Currency Loss (26,975)
---------
Total Net Unrealized Gain per Statement of Financial Condition 2,547,040
=========
2002 PARTNERSHIP NET ASSETS: $50,405,432
Foreign currency 779,422 6,800,258
Interest rate 804,346 1,479
Equity (812,665) 477
Commodity 147,342 425
---------
Grand Total: 918,445

Unrealized Currency Loss (172,512)
---------
Total Net Unrealized Gain per Statement of Financial Condition 745,933
=========

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

MORGAN STANLEY SPECTRUM SELECT L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2003 AND 2002

LONG UNREALIZED PERCENTAGE SHORT UNREALIZED PERCENTAGE
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS) OF NET ASSETS GAIN/(LOSS) OF NET ASSETS
- ------------------------------ --------------- ------------- ---------------- -------------
2003 PARTNERSHIP NET ASSETS: $441,522,484 $ % $ %

Foreign currency 11,095,838 2.51 691,093 0.16
Commodity 20,983,272 4.75 (175,989) (0.04)
Interest rate 1,338,070 0.31 (87,559) (0.02)
Equity 5,391,145 1.22 -- --
---------- ----- ---------- -----
Grand Total: 38,808,325 8.79 427,545 0.10
========== ===== ========== =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

2002 PARTNERSHIP NET ASSETS: $295,377,799
Foreign currency 16,008,784 5.42* (5,655,235) (1.91)
Interest rate 9,770,731 3.31 (48,039) (0.02)
Commodity (1,443,818) (0.49) 371,055 0.13
Equity (194,728) (0.07) 829,442 0.28
---------- ----- ---------- ----
Grand Total: 24,140,969 8.17 (4,502,777) (1.52)
========== ==== ========== =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

FUTURES AND FORWARD CONTRACTS: NET UNREALIZED GAIN/(LOSS) # OF CONTRACTS/NOTIONAL AMOUNTS
- ------------------------------ -------------------------- -------------------------------
2003 PARTNERSHIP NET ASSETS: $441,522,484 $

Foreign currency 11,786,931 14,607,137,889,667
Commodity 20,807,283 11,866
Interest rate 1,250,511 11,094
Equity 5,391,145 3,874
----------
Grand Total: 39,235,870

Unrealized Currency Loss (2,453,905)
----------
Total Net Unrealized Gain per Statement of Financial Condition 36,781,965
==========
2002 PARTNERSHIP NET ASSETS: $295,377,799
Foreign currency 10,353,549 11,828,382,656
Interest rate 9,722,692 14,820
Commodity (1,072,763) 5,211
Equity 634,714 1,202
----------
Grand Total: 19,638,192

Unrealized Currency Loss (1,740,174)
----------
Total Net Unrealized Gain per Statement of Financial Condition 17,898,018
==========

* No single contract's value exceeds 5% of Net Assets.
The accompanying notes are an integral part of these financial statements.

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2003 AND 2002

LONG UNREALIZED PERCENTAGE SHORT UNREALIZED PERCENTAGE
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS) OF NET ASSETS GAIN/(LOSS) OF NET ASSETS
- ------------------------------ --------------- ------------- ---------------- -------------
2003 PARTNERSHIP NET ASSETS: $121,270,439 $ % $ %

Foreign currency 1,149,874 0.95 13,175 0.01
Commodity 6,059,248 5.00* (1,198,617) (0.99)
Interest rate 207,192 0.17 8,576 0.01
Equity 1,807,241 1.49 -- --
--------- ---- ---------- -----
Grand Total: 9,223,555 7.61 (1,176,866) (0.97)
========= ==== ========== =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

2002 PARTNERSHIP NET ASSETS: $75,369,072
Foreign currency 2,362,577 3.13 3,680 0.01
Commodity 3,548,205 4.71 4,379 0.01
Interest rate 1,057,473 1.40 -- --
Equity -- -- 131,610 0.17
--------- ---- ---------- -----
Grand Total: 6,968,255 9.24 139,669 0.19
========= ==== ========== =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

FUTURES AND FORWARD CONTRACTS: NET UNREALIZED GAIN/(LOSS) # OF CONTRACTS/NOTIONAL AMOUNTS
- ------------------------------ -------------------------- -------------------------------
2003 PARTNERSHIP NET ASSETS: $121,270,439 $

Foreign currency 1,163,049 2,274,600,195
Commodity 4,860,631 9,826
Interest rate 215,768 1,476
Equity 1,807,241 1,160
---------
Grand Total: 8,046,689

Unrealized Currency Loss (124,904)
---------
Total Net Unrealized Gain per Statement of Financial Condition 7,921,785
=========
2002 PARTNERSHIP NET ASSETS: $75,369,072
Foreign currency 2,366,257 1,471,600,565
Commodity 3,552,584 12,920
Interest rate 1,057,473 3,130
Equity 131,610 172
---------
Grand Total: 7,107,924

Unrealized Currency Loss (176,780)
---------
Total Net Unrealized Gain per Statement of Financial Condition 6,931,144
=========

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

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

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2003 AND 2002

LONG UNREALIZED PERCENTAGE SHORT UNREALIZED PERCENTAGE
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS) OF NET ASSETS GAIN/(LOSS) OF NET ASSETS
- ------------------------------ --------------- ------------- ---------------- -------------
2003 PARTNERSHIP NET ASSETS: $538,184,278 $ % $ %

Foreign currency 22,436,449 4.17 (1,729,369) (0.32)
Interest rate 53,129 0.01 (5,502,664) (1.02)
Commodity 23,626,420 4.39 (2,094,377) (0.39)
Equity 10,843,962 2.01 (2,020,472) (0.37)
---------- ----- ----------- -----
Grand Total: 56,959,960 10.58 (11,346,882) (2.10)
========== ===== =========== =====
Unrealized Currency Gain

Total Net Unrealized Gain per Statement of Financial Condition

2002 PARTNERSHIP NET ASSETS: $335,821,626
Foreign currency 10,097,643 3.01 967,843 0.29
Commodity 2,703,202 0.80 1,100,261 0.33
Interest rate 9,047,725 2.69 (683,890) (0.20)
Equity (486,130) (0.14) 449,469 0.13
---------- ----- ----------- -----
Grand Total: 21,362,440 6.36 1,833,683 0.55
========== ===== =========== =====
Unrealized Currency Gain

Total Net Unrealized Gain per Statement of Financial Condition

FUTURES AND FORWARD CONTRACTS: NET UNREALIZED GAIN/(LOSS) # OF CONTRACTS/NOTIONAL AMOUNTS
- ------------------------------ -------------------------- -------------------------------
2003 PARTNERSHIP NET ASSETS: $538,184,278 $

Foreign currency 20,707,080 15,752,105,748
Interest rate (5,449,535) 18,105
Commodity 21,532,043 15,966
Equity 8,823,490 7,658
----------
Grand Total: 45,613,078

Unrealized Currency Gain 821,132
----------
Total Net Unrealized Gain per Statement of Financial Condition 46,434,210
==========
2002 PARTNERSHIP NET ASSETS: $335,821,626
Foreign currency 11,065,486 3,317,707,667
Commodity 3,803,463 11,280
Interest rate 8,363,835 10,261
Equity (36,661) 881
----------
Grand Total: 23,196,123

Unrealized Currency Gain 907,090
----------
Total Net Unrealized Gain per Statement of Financial Condition 24,103,213
==========

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 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 for Spectrum Global
Balanced, Spectrum Select, Spectrum Strategic and Spectrum Technical are
Morgan Stanley & Co. Incorporated ("MS&Co.") and Morgan Stanley & Co.
International Limited ("MSIL"). Spectrum Currency's clearing commodity broker
is MS&Co. Demeter, Morgan Stanley DW, MS&Co., and MSIL are wholly-owned
subsidiaries of Morgan Stanley.
On April 2, 2001, Dean Witter Reynolds Inc. changed its name to Morgan
Stanley DW Inc.
On November 1, 2001, the Partnerships were renamed 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.
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.

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

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 profit
(loss) 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) in the case of 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.

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 ("AICPA
Executive Committee") issued Statement of Position 01-1 ("SOP 01-1") "Amendment
to the Scope of Statement of Position 95-2, Financial Reporting By Nonpublic
Investment Partnerships, to Include Commodity Pools". SOP 01-1 required
commodity pools 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, beginning in fiscal years ending after
December 15, 2001.

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

In December 2003, the AICPA Executive Committee issued Statement of Position
03-4 ("SOP 03-4") "Reporting Financial Highlights and Schedule of Investments
by Nonregistered Investment Partnerships: An Amendment to the Audit and
Accounting Guide Audits Of Investment Companies and AICPA Statement of Position
95-2, Financial Reporting By Nonpublic Investment Partnerships". SOP 03-4
requires commodity pools to disclose on the Schedule of Investments the number
of contracts, the contracts' expiration dates and the cumulative unrealized
gains/(losses) on open futures contracts, when the cumulative unrealized
gains/(losses) on an open futures contract exceeds 5% of Net Assets, taking
long and short positions into account separately. SOP 03-4 also requires ratios
for expenses and net income/(losses) based on average net assets to be
disclosed in Financial Highlights. SOP 03-4 is effective for fiscal years
ending after December 15, 2003.

EQUITY IN FUTURES INTERESTS TRADING ACCOUNTS. The Partnerships' asset "Equity
in futures interests trading accounts," reflected on the statements of
financial condition, consists of (A) cash on deposit with Morgan Stanley DW,
MS&Co. and MSIL for Spectrum Global Balanced, Spectrum Select, Spectrum
Strategic and Spectrum Technical, and Morgan Stanley DW and MS&Co. for Spectrum
Currency, 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/or MSIL acting as their commodity brokers. Pursuant
to brokerage agreements with MS&Co. and/or 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

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

same counterparty as allowable under the terms of their 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 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.
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.

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 borne 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 each 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 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.

LITIGATION SETTLEMENT. On February 27, 2002, Spectrum Global Balanced,
Spectrum Select, Spectrum Strategic and Spectrum Technical received notification

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

of a preliminary entitlement to payment from the Sumitomo Copper Litigation
Settlement Administrator and received payment of this settlement awards in the
amount 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. Spectrum Global Balanced, Spectrum Select, Spectrum Strategic and Spectrum
Technical's cash is on deposit with Morgan Stanley DW, MS&Co. and MSIL, and
Spectrum Currency's cash is on deposit with Morgan Stanley DW and MS&Co., in
futures interests trading accounts to meet margin requirements as needed.
Morgan Stanley DW pays interest on these funds as described in Note 1.

- --------------------------------------------------------------------------------
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, 2003 were as follows:

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

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.

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

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

Effective January 1, 2004, Spectrum Select entered into a management
agreement with Graham Capital Management, L.P. ("Graham"), adding Graham as
its fifth trading advisor.

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

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.

Effective January 1, 2004, Spectrum Technical entered into a management
agreement with Winton Capital Management Limited ("Winton"), adding Winton as
its fourth trading advisor.

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 Currency is accrued at the
rate of 1/12 of 2% per month of Net Assets allocated to each trading advisor
on the first day of each month (a 2% annual rate).
The management fee for Spectrum Global Balanced is accrued at the rate of
5/48 of 1% per month of Net Assets allocated to its sole trading advisor on the
first day of each month (a 1.25% annual rate).
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% per month 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).

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

The management fee for Spectrum Technical is accrued at the rate of 1/12 of
2% per month of Net Assets allocated to JWH on the first day of each month,
1/12 of 3% per month of Net Assets allocated to Campbell on the first day of
each month and 1/12 of 3% per month of Net Assets allocated to 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% per month of Net Assets on the first day of each month (a 4% annual
rate).

INCENTIVE FEE. 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.
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 the trading profits
experienced with respect to the Net Assets allocated to Chesapeake as of the
end of each calendar month.
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 instru-

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

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

(1) One or more underlying notional amounts or payment provisions;

(2) Requires no initial net investment or a smaller initial net investment than
would be required relative to changes in market factors;

(3) Terms require or permit net settlement.

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

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

2003 -- 4,878,640 4,878,640 -- Mar. 2004
2002 -- 5,651,549 5,651,549 -- Mar. 2003

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
---- --------- --------- --------- --------- ---------
$ $ $

2003 2,472,718 74,322 2,547,040 Apr. 2004 Mar. 2004
2002 717,293 28,640 745,933 Mar. 2003 Mar. 2003

SPECTRUM SELECT

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

2003 31,690,225 5,091,740 36,781,965 Mar. 2005 Mar. 2004
2002 12,359,670 5,538,348 17,898,018 Dec. 2003 Mar. 2003

SPECTRUM STRATEGIC

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

2003 6,905,992 1,015,793 7,921,785 Jul. 2005 Mar. 2004
2002 6,387,996 543,148 6,931,144 Jul. 2004 Mar. 2003

SPECTRUM TECHNICAL

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

2003 34,239,960 12,194,250 46,434,210 Dec. 2004 Mar. 2004
2002 16,269,250 7,833,963 24,103,213 Dec. 2003 Mar. 2003

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/or MSIL act as the futures commission merchants or the counterparties, with
respect to most of the Partnerships' assets.

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

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.
Morgan Stanley DW, MS&Co. and/or MSIL, each 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 on all open futures and futures-styled
options contracts, which funds, in the aggregate, totaled at December 31, 2003
and 2002 respectively, $52,809,135 and $50,047,775 for Spectrum Global
Balanced, $430,286,177 and $287,140,004 for Spectrum Select, $116,752,753 and
$74,612,644 for Spectrum Strategic and $517,752,016 and $326,385,223 for
Spectrum Technical. With respect to the Partnerships' off-exchange-traded
forward currency contracts, there are no daily exchange-related settlements of
variations in value nor is there any requirement that an amount equal to the
net unrealized gains on open forward contracts be segregated, however, MS&Co.
and Morgan Stanley DW will make daily settlements of losses as needed. 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
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 CURRENCY

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

NET ASSET VALUE, JANUARY 1, 2003: $13.93
------
NET OPERATING RESULTS:
Realized Profit 2.92
Unrealized Loss (0.08)
Interest Income 0.11
Expenses (1.22)
------
Net Income 1.73
------
NET ASSET VALUE, DECEMBER 31, 2003: $15.66
======
Expense Ratio 8.1%
Net Income Ratio 11.9%

TOTAL RETURN 2003 12.4%

INCEPTION-TO-DATE RETURN 56.6%

COMPOUND ANNUALIZED RETURN 13.7%

SPECTRUM GLOBAL BALANCED

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

NET ASSET VALUE, JANUARY 1, 2003: $14.57
------
NET OPERATING RESULTS:
Realized Profit 1.08
Unrealized Profit 0.54
Interest Income 0.16
Expenses (0.88)
------
Net Income 0.90
------
NET ASSET VALUE, DECEMBER 31, 2003: $15.47
======
Expense Ratio 5.8%
Net Income Ratio 6.1%

TOTAL RETURN 2003 6.2%

INCEPTION-TO-DATE RETURN 54.7%

COMPOUND ANNUALIZED RETURN 4.9%

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

SPECTRUM SELECT

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

NET ASSET VALUE, JANUARY 1, 2003: $ 27.65
-------
NET OPERATING RESULTS:
Realized Profit 4.12
Unrealized Profit 1.51
Interest Income 0.23
Expenses (3.20)
-------
Net Income 2.66
-------
NET ASSET VALUE, DECEMBER 31, 2003: $ 30.31
=======
Expense Ratio 10.9%
Net Income Ratio 9.3%

TOTAL RETURN 2003 9.6%

INCEPTION-TO-DATE RETURN 203.1%

COMPOUND ANNUALIZED RETURN 9.3%

SPECTRUM STRATEGIC

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

NET ASSET VALUE, JANUARY 1, 2003: $11.54
------
NET OPERATING RESULTS:
Realized Profit 4.10
Unrealized Profit 0.14
Interest Income 0.10
Expenses (1.57)
------
Net Income 2.77
------
NET ASSET VALUE, DECEMBER 31, 2003: $14.31
======
Expense Ratio 12.1%
Net Income Ratio 21.6%

TOTAL RETURN 2003 24.0%

INCEPTION-TO-DATE RETURN 43.1%

COMPOUND ANNUALIZED RETURN 4.0%

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(concluded)

SPECTRUM TECHNICAL

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

NET ASSET VALUE, JANUARY 1, 2003: $ 18.41
-------
NET OPERATING RESULTS:
Realized Profit 5.61
Unrealized Profit 1.07
Interest Income 0.16
Expenses (2.61)
-------
Net Income 4.23
-------
NET ASSET VALUE, DECEMBER 31, 2003: $ 22.64
=======
Expense Ratio 12.5%
Net Income Ratio 20.2%

TOTAL RETURN 2003 23.0%

INCEPTION-TO-DATE RETURN 126.4%

COMPOUND ANNUALIZED RETURN 9.3%

Demeter Management Corporation
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