MORGAN STANLEY SPECTRUM TECHNICAL LP - 10-Q Quarterly Report

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

FORM 10-Q

[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2003 or

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

Commission File Number 0-26338

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

(Exact name of registrant as specified in its charter)

Delaware 13-3782231
(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

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

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

Yes X No___________
MORGAN STANLEY SPECTRUM TECHNICAL L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 30, 2003

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MORGAN STANLEY SPECTRUM TECHNICAL L.P.
STATEMENTS OF FINANCIAL CONDITION

MORGAN STANLEY SPECTRUM TECHNICAL L.P.
STATEMENTS OF OPERATIONS
(Unaudited)

MORGAN STANLEY SPECTRUM TECHNICAL L.P.
STATEMENTS OF OPERATIONS
(Unaudited)

MORGAN STANLEY SPECTRUM TECHNICAL L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Nine Months Ended September 30, 2003 and 2002
(Unaudited)

MORGAN STANLEY SPECTRUM TECHNICAL L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)

MORGAN STANLEY SPECTRUM TECHNICAL L.P.
NOTES TO FINANCIAL STATEMENTS

September 30, 2003

(Unaudited)

The unaudited financial statements contained herein include, in
the opinion of management, all adjustments necessary for a fair
presentation of the results of operations and financial condition
of Morgan Stanley Spectrum Technical L.P. (the "Partnership").
The financial statements and condensed notes herein should be read
in conjunction with the Partnership's December 31, 2002 Annual
Report on Form 10-K.

1. Organization
Morgan Stanley Spectrum Technical L.P. 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 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 Select L.P., and Morgan Stanley Spectrum
Strategic L.P.

The Partnership's general partner is Demeter Management
Corporation ("Demeter"). The non-clearing commodity broker is
MORGAN STANLEY SPECTRUM TECHNICAL L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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 Campbell & Company, Inc., Chesapeake Capital
Corporation, and John W. Henry & Company, Inc. (individually, a
"Trading Advisor", or collectively, the "Trading Advisors").

2. Related Party Transactions
The Partnership's cash is on deposit with Morgan Stanley DW, MS &
Co. and MSIL in futures, forwards, and options trading accounts to
meet margin requirements as needed. Morgan Stanley DW pays
interest on these funds based on a prevailing rate on U.S.
Treasury bills. The Partnership pays brokerage fees to Morgan
Stanley DW.

3. Financial Instruments
The Partnership trades futures contracts, options on futures
contracts, and forward contracts on physical commodities and other
commodity interests, including, but not limited to, foreign
currencies, financial instruments, metals, energy and
agricultural products. Futures and forwards represent contracts
for delayed delivery of an instrument at a specified date and
price. Risk arises from changes in the value of these contracts
MORGAN STANLEY SPECTRUM TECHNICAL L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

and the potential inability of counterparties to perform under
the terms of the contracts. There are numerous factors which may
significantly influence the market value of these contracts,
including interest rate volatility.

The market value of contracts is based on closing prices quoted by
the exchange, bank or clearing firm through which the contracts
are traded.

The Partnership's contracts are accounted for on a trade-date
basis and marked to market on a daily basis. The Partnership
accounts for its derivative investments in accordance with the
provisions of Statement of Financial Accounting 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.

MORGAN STANLEY SPECTRUM TECHNICAL L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

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

Net Unrealized Gains (Losses)
on Open Contracts Longest Maturities

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

Sep. 30, 2003 (64,270) 13,717,461 13,653,191 Sep. 2004 Dec. 2003
Dec. 31, 2002 16,269,250 7,833,963 24,103,213 Dec. 2003 Mar. 2003

The Partnership has credit risk associated with counterparty non-
performance. The credit risk associated with the instruments in
which the Partnership is involved is limited to the amounts
reflected in the Partnership's statements of financial condition.

The Partnership also has credit risk because Morgan Stanley DW,
MS & Co. and MSIL act as the futures commission merchants or the
counterparties with respect to most of the Partnership's assets.
Exchange-traded futures 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 MSIL,
MORGAN STANLEY SPECTRUM TECHNICAL L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

each as a futures commission merchant for the Partnership's
exchange-traded futures and futures-styled options contracts, are
required, pursuant to regulations of the Commodity Futures
Trading Commission ("CFTC"), to segregate from their own assets,
and for the sole benefit of their commodity customers, all funds
held by them with respect to exchange-traded futures and futures-
styled options contracts, including an amount equal to the net
unrealized gains (losses) on all open futures and futures-styled
options contracts, which funds, in the aggregate, totaled
$400,489,179 and $326,385,223 at September 30, 2003 and December
31, 2002, respectively. With respect to the Partnership's off-
exchange-traded forward currency contracts, there are no daily
exchange-required settlements of variations in value nor is there
any requirement that an amount equal to the net unrealized gains
(losses) on open forward contracts be segregated, 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 Partnership is at risk to the ability of
MS & Co., the sole counterparty on all such contracts, to
perform. The Partnership has a netting agreement with MS & Co.
This agreement, which seeks to reduce both the Partnership's and
MS & Co.'s exposure on off-exchange-traded forward currency
contracts, should materially decrease the Partnership's credit
risk in the event of MS & Co.'s bankruptcy or insolvency.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

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

The Partnership's investment in futures, forwards, and options
may, from time to time, be illiquid. Most U.S. futures exchanges
limit fluctuations in prices during a single day by regulations
referred to as "daily price fluctuations limits" or "daily
limits". Trades may not be executed at prices beyond the daily
limit. If the price for a particular futures or 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.

The Partnership has never had illiquidity affect a material
portion of its assets. Furthermore, there are no material
trends, demands, commitments, events or uncertainties known at the
present time that will result in, or that are reasonably likely to
result in, the Partnership's liquidity increasing or decreasing in
any material way.

Capital Resources. The Partnership does not have, nor expect to
have, any capital assets. Redemptions, exchanges and sales of
additional units of limited partnership interest ("Unit(s)") 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, and no 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. The contracts the
Partnership trades are accounted for on a trade-date basis and
marked to market on a daily basis. The value of futures
contracts is the settlement price on the exchange on which that
futures contract is traded on a particular day. The value of
foreign currency forward contracts is based on the spot rate as
of the close of business, New York City time, on a given day.

Results of Operations
General. The Partnership's results depend on the Trading
Advisors and the ability of each Trading Advisor's trading
programs to take advantage of price movements or other profit
opportunities in the futures, forwards, and options markets. The
following presents a summary of the Partnership's operations for
the three and nine month periods ended September 30, 2003 and
2002 and a general discussion of its trading activities during
each period. It is important to note, however, that the Trading
Advisors trade in various markets at different times and that
prior activity in a particular market does not mean that such
market will be actively traded by the Trading Advisors or will be
profitable in the future. Consequently, the results of operations
of the Partnership are difficult to discuss other than in
the context of the Trading Advisors' trading activities on behalf
of the Partnership and how the Partnership has performed in the
past.

The Partnership's results of operations set forth in the financial
statements on pages 2 through 11 of this report were 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. 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.

For the Quarter and Nine Months Ended September 30, 2003
For the quarter ended September 30, 2003, the Partnership
recorded total trading losses, net of interest income, of
$11,784,806 and posted a decrease in net asset value per Unit.
The most significant losses of approximately 3.0% were incurred
in the global interest rate markets during July from long
positions in European and U.S. interest rate futures as prices
declined amid rising interest rates, a rally in global equity
prices and renewed hope for a U.S. economic recovery. Additional
losses of approximately 2.4% in the currency markets resulted
from long positions in the Australian dollar and British pound
versus the U.S. dollar as the value of the U.S. dollar
strengthened during July amid rising expectations for a U.S.
economic recovery, negative economic data out of Australia and
the U.K., and narrowing interest rate differentials. Losses also
were incurred from short positions in the Swiss franc and euro
versus the U.S. dollar as the dollar's value reversed sharply
lower during September pressured by the release of disappointing
U.S. economic reports and concerns that Tokyo officials appeared
to be less likely to intervene and buy U.S. dollars ahead of the
Group of Seven meeting. In the energy markets, losses of
approximately 1.3% resulted from futures positions in crude oil
and heating oil as prices trailed lower throughout the majority
of the month and then unexpectedly reversed higher after OPEC
announced that it would move to reduce output by limiting
production in an effort to stem declining oil prices. A portion
of the Partnership's overall losses for the third quarter was
offset by gains of approximately 2.3% in the global stock
index markets from long positions in Japanese stock index futures
as Japanese equity prices drew strength from robust Japanese
economic data and increased foreign investment. Additional gains
were supplied during July by long positions in U.S. stock index
futures and August as positive investor sentiment and tangible
signs of a U.S. economic recovery buoyed prices. Gains of
approximately 1.5% in the metals markets also reduced a portion
of the Partnership's overall losses for the quarter as long
futures positions in copper, nickel and aluminum profited during
July from rising prices spurred by renewed optimism concerning a
U.S. economic recovery, technically-based buying and increased
Chinese demand. Additional gains were provided during September
by long gold futures positions as speculative buying and a weaker
U.S. dollar buoyed prices later in the month. Total expenses for
the three months ended September 30, 2003 were $10,335,815,
resulting in a net loss of $22,120,621. The net asset value of a
Unit decreased from $20.08 at June 30, 2003 to $19.04 at
September 30, 2003.

For the nine months ended September 30, 2003, the Partnership
recorded total trading revenues, including interest income, of
$43,041,592 and posted an increase in net asset value per Unit.
The most significant gains of approximately 8.3% in the currency
markets were supplied primarily during January by long positions
in the euro as its value rose versus 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,
additional gains were recorded as the value of the euro
strengthened to an all-time high 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. Gains were also recorded
during April from 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 and significant
interest rate differentials between the two countries.
Additional gains of approximately 3.2% in the global stock index
markets incurred 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 recorded during July and August from 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. In the global interest rate markets, gains of
approximately 3.0% were recorded primarily during January and
February from positions in U.S. interest rate futures as prices
first declined amid a temporary increase in U.S. manufacturing
activity and then increased as investors continued to seek the
security of fixed income investments in response to prolonged
uncertainty in global equity markets. Additional gains were
recorded from long positions in European and U.S. interest rate
futures as strong demand from investors sent prices higher during
February, and again during May, as prices trended higher
amid speculation of an interest rate cut by the U.S. Federal
Reserve and lingering doubts concerning a global economic
recovery. Short positions in Japanese interest rate futures
yielded gains during August as prices trended lower amid an
improved economic outlook for Japan and a sell-off in Japanese
fixed income markets after investors repositioned capital into
Japanese equities. Gains of approximately 2.4% were recorded in
the energy markets primarily during January and February from
long positions in natural gas futures as prices increased in
response to prolonged frigid temperatures in the northeastern and
midwestern United States and fears that extremely cold weather
could further deplete already diminished supplies. A portion of
the Partnership's gains for the first nine months of the year was
offset by losses of approximately 2.7% in the agricultural
markets, primarily during June, as short futures positions in
cotton suffered losses due to an increase in prices spurred by
supply concerns. Short coffee futures positions resulted in
losses as prices reversed higher in early September due to supply
fears prompted by reduced estimates for world coffee production.
In the metals markets, losses of approximately 1.1% stemmed from
long positions in aluminum and zinc futures as prices fell amid
muted industrial demand during March, and again during June, as
prices declined in response to technically-based selling and
anticipation of the U.S. Federal Reserve's interest rate cut.
Further losses in this sector were provided by long silver
futures positions as precious metal prices moved lower amid fears
of slower global growth due to rising oil prices and
weaker U.S. consumer sentiment. Total expenses for the nine
months ended September 30, 2003 were $36,466,427, resulting in
net income of $6,575,165. The net asset value of a Unit
increased from $18.41 at December 31, 2002 to $19.04 at September
30, 2003.

For the Quarter and Nine Months Ended September 30, 2002
For the quarter ended September 30, 2002, the Parntership
recorded total trading revenues, including interest income, of
$73,338,452 and posted an increase in net asset value per Unit.
The most significant gains of approximately 19.3% were recorded
in the interest rate futures markets throughout a majority of the
quarter from long positions in European and U.S. interest rate
futures, as prices rose due to multiple negative economic
indicators that pointed to further difficulties in the global
economy. Additional gains of approximately 7.5% were recorded in
the global stock index futures markets from short positions in
European and U.S. stock index futures as prices trended lower
during much of the quarter amid suspicions regarding corporate
accounting practices and skepticism regarding a global economic
recovery. Gains of approximately 2.1% were supplied by long
positions in crude oil futures and its related products,
predominantly during September, as prices pushed higher on
looming concerns regarding the possibility of military action
against Iraq. A portion of the Partnership's overall gains was
offset by losses of approximately 4.0% in the currency markets
from long positions in most major currencies, particularly
the Australian dollar, Canadian dollar, and Japanese yen, as the
value of these currencies moved lower relative to the U.S. dollar
throughout the quarter due to a decline in gold prices and
repatriation activity by U.S. companies. On February 27, 2002,
the Partnership received notification of a preliminary
entitlement to payment from the Sumitomo Copper Litigation
Settlement Administrator. The Partnership received payment of
this settlement award in the amount of $306,400 as of August 30,
2002. Total expenses for the three months ended September 30,
2002 were $11,488,936, resulting in net income of $61,849,516.
The net asset value of a Unit increased from $16.16 at June 30,
2002 to $19.69 at September 30, 2002.

For the nine months ended September 30, 2002, the Partnership
recorded total trading revenues, including interest income, of
$107,139,990 and posted an increase in net asset value per Unit.
The most significant gains of approximately 19.0% were recorded
in the interest rate futures markets between May and September
from previously established long positions in European, Japanese,
and U.S. interest rate futures, as investors sought a safe haven
from falling equity prices, concerns regarding corporate
accounting integrity and weak economic data. Additional gains of
approximately 10.3% were recorded in the currency markets from
long positions in most major currencies, mainly the euro, Swiss
franc, and Australian dollar as their values climbed relative to
the U.S. dollar during the second quarter prompted by a lack of
confidence in the strength of the domestic economic
recovery. Short positions in European and U.S. stock index
futures contributed gains of approximately 6.7%, primarily from
May to September, as prices trended lower due to continued global
economic and political uncertainty. Additional gains of
approximately 2.6% were mainly contributed from long positions in
crude oil futures and its related products during March and
September as prices increased due to tensions in the Middle East.
Elsewhere in the energy markets, gains were recorded during
September from long positions in natural gas futures as prices
trended higher due to a disruption of output in the Gulf of
Mexico caused by Hurricane Isidore. A portion of the
Partnership's overall gains was offset by losses of approximately
1.5% in the metals markets, primarily during June, from long
positions in gold futures as prices weakend due to an easing of
tensions between India and Pakistan. During January, short gold
futures positions resulted in losses as prices trended higher,
reacting to an increase in demand. Elsewhere in the metals
markets, copper futures prices weakened in early April amid
increasing tensions in the Middle East, growing inventory levels,
and weakening demand, which resulted in losses from previously
established long positions. Total expenses for the nine months
ended September 30, 2002 were $23,768,275, resulting in net
income of $83,371,715. The net asset value of a Unit increased
from $14.93 at December 31, 2001 to $19.69 at September 30, 2002.
Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

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

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

The Partnership's total market risk is influenced by a wide
variety of factors, including, but not limited to, the
diversification among the Partnership's open positions, the
volatility present within the markets, and the liquidity of the
markets. At different times, each of these factors may act to
increase or decrease the market risk associated with the
Partnership.

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

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

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

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

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

The Partnership's VaR computations are based on the risk
representation of the underlying benchmark for each instrument or
contract and 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 continually evolving
as trading portfolios become more diverse and modeling techniques
and systems capabilities improve. Please note that the VaR model
is used to numerically quantify market risk for historic
reporting purposes only and is not utilized by either Demeter or
the Trading 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 September 30, 2003 and 2002.
At September 30, 2003 and 2002, the Partnership's total
capitalization was approximately $421 million and $349 million,
respectively.

Primary Market September 30, 2003 September 30, 2002
Risk Category Value at Risk Value at Risk

Equity (1.97)% (0.59)%
Currency (1.88) (0.85)
Interest Rate (0.96) (1.78)
Commodity (1.13) (1.19)
Aggregate Value at Risk (3.44)% (2.50)%

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.

The table above represents the VaR of the Partnership's open
positions at September 30, 2003 and 2002 only and is not
necessarily representative of either the historic or future risk
of an investment in the Partnership. Because the only 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. Any changes in open positions could
positively or negatively materially impact market risk as
measured by VaR.
The table below supplements the quarter-end VaR set forth above
by presenting the Partnership's high, low and average VaR, as a
percentage of total net assets for the four quarter-end reporting
periods from October 1, 2002 through September 30, 2003.

Primary Market Risk Category High Low Average
Equity (1.97)% (0.24)% (0.97)%

Currency (2.14) (0.61) (1.55)

Interest Rate (1.35) (0.53) (1.02)

Commodity (1.46) (0.39) (1.05)

Aggregate Value at Risk (3.44)% (0.87)% (2.45)%

Limitations on Value at Risk as an Assessment of Market Risk
The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements. Margin requirements generally range between 2% and
15% of contract face value. Additionally, the use of leverage
causes the face value of the market sector instruments held by the
Partnership to typically be many times the total capitalization of
the Partnership. The value of the Partnership's open positions
thus creates a "risk of ruin" not typically found in other
investments. The relative size of the positions held may cause
the Partnership to incur losses greatly in excess of VaR
within a short period of time, given the effects of the leverage
employed and market volatility. The VaR tables above, as well as
the past performance of the Partnership, give no indication of
such "risk of ruin". In addition, VaR risk measures should be
viewed in light of the methodology's limitations, which include
the following:
? past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
? changes in portfolio value caused by market movements may
differ from those of the VaR model;
? VaR results reflect past trading positions while future risk
depends on future positions;
? VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
? the historical market risk factor data used for VaR estimation
may provide only limited insight into losses that could be
incurred under certain unusual market movements.

The VaR tables above present the results of the Partnership's VaR
for each of the Partnership's market risk exposures and on an
aggregate basis at September 30, 2003 and 2002, and for the four
quarter-end reporting periods from October 1, 2002 through
September 30, 2003. Since VaR is based on historical data, VaR
should not be viewed as predictive of the Partnership's
future financial performance or its ability to manage or monitor
risk. There can be no assurance that the Partnership's actual
losses on a particular day will not exceed the VaR amounts
indicated above or that such losses will not occur more than once
in 100 trading days.

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

The Partnership also maintains a substantial portion
(approximately 84% as of September 30, 2003) of its available
assets in cash at Morgan Stanley DW. A decline in short-term
interest rates will result in a decline in the Partnership's cash
management income. This cash flow risk is not considered 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 expro-
priations, illiquid markets, the emergence of dominant
fundamental factors, political upheavals, changes in historical
price relationships, an influx of new market participants,
increased regulation and many other factors could result in
material losses, as well as in material changes to the risk
exposures and the risk management strategies of the Partnership.
Investors must be prepared to lose all or substantially all of
their investment in the Partnership.

The following were the primary trading risk exposures of the
Partnership at September 30, 2003, by market sector. It may be
anticipated, however, that these market exposures will vary
materially over time.

Equity. At September 30, 2003, the primary market risk
exposure of the Partnership 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 September 30, 2003, the
Partnership's primary exposures were to the Euro Stoxx 50
(Europe), S&P 500 (U.S.), NASDAQ (U.S.), DAX (Germany) and FTSE
(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 September 30, 2003 was to the currency sector. The
Partnership's currency exposure is to exchange rate fluctuations,
primarily fluctuations which disrupt the historical pricing
relationships between different currencies and currency pairs.
Interest rate 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
September 30, 2003, the Partnership's major exposures were to
euro, Japanese yen, Australian dollar, British pound, Swiss
franc, Canadian dollar, New Zealand dollar and Norwegian krone
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 risk exposure of the
Partnership at September 30, 2003 was to the global interest rate
market, primarily spread across the U.S., European and Japanese
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.
Energy. At September 30, 2003, the Partnership's energy
exposure was shared primarily by futures contracts in crude
oil and its related products, and natural gas. Price
movements in these markets result from geopolitical
developments, particularly in the Middle East, as well as
weather patterns and other economic fundamentals.
Significant profits and losses, which have been experienced
in the past, are expected to continue to be experienced in
the future. Natural gas has exhibited volatility in prices
resulting from weather patterns and supply and demand
factors and will likely continue in this choppy pattern.

Metals. The Partnership's metals exposure at September 30,
2003 was to fluctuations in the price of precious metals,
such as gold and silver, and base metals, such as copper,
aluminum, nickel and zinc. Economic forces, supply and
demand inequalities, geopolitical factors and market
expectations influence price movements in these markets.
The Trading Advisors, from time to time, take positions when
market opportunities develop and Demeter anticipates that
the Partnership will continue to do so.

Soft Commodities and Agriculturals. At September 30, 2003,
the Partnership had exposure to the markets that comprise
these sectors. Most of the exposure was to live cattle,
cotton, coffee and sugar. 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 September 30, 2003:

Foreign Currency Balances. The Partnership's primary foreign
currency balances at September 30, 2003 were in Australian
dollars, euros, Japanese yen, Norwegian krone and Swedish
krona. The Partnership controls the non-trading risk of
foreign currency balances by regularly converting them back
into U.S. dollars upon liquidation of their respective
positions.

Qualitative Disclosures Regarding Means of Managing Risk Exposure
The Partnership and the Trading Advisors, separately, attempt to
manage the risk of the Partnership's open positions in essentially
the same manner in all market categories traded. Demeter attempts
to manage market exposure by diversifying the Partnership's assets
among different Trading Advisors, each of whose strategies focus
on different market sectors and trading approaches, and monitoring
the performance of the Trading Advisors daily. In
addition, the Trading Advisors establish diversification
guidelines, often set in terms of the maximum margin to be
committed to positions in any one market sector or market-
sensitive instrument.

Demeter monitors and controls the risk of the Partnership's non-
trading instrument, cash. Cash is the only Partnership investment
directed by Demeter, rather than the Trading Advisors.

Item 4. CONTROLS AND PROCEDURES
(a) As of the end of the period covered by this quarterly
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 II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS
None.

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Partnership, Morgan Stanley Spectrum Strategic L.P.
("Spectrum Strategic") and Morgan Stanley Spectrum Global
Balanced L.P. ("Spectrum Global Balanced"), collectively
registered 10,000,000 Units pursuant to a Registration Statement
on Form S-1, which became effective on September 15, 1994 (SEC
File Number 33-80146). While such Units were not allocated among
the Partnership, Spectrum Strategic, and Spectrum Global Balanced
at that time, they were subsequently allocated for convenience
purposes as follows: the Partnership 4,000,000, Spectrum
Strategic 4,000,000, and Spectrum Global Balanced 2,000,000.

The Partnership, Spectrum Strategic, and Spectrum Global Balanced
collectively registered an additional 20,000,000 Units pursuant
to a new Registration Statement on Form S-1, which became
effective on January 31, 1996 (SEC File Number 333-00494); such
Units were allocated as follows: the Partnership 9,000,000,
Spectrum Strategic 6,000,000, and Spectrum Global Balanced
5,000,000.

The Partnership, Spectrum Strategic, and Spectrum Global Balanced
collectively registered an additional 8,500,000 Units pursuant to
other Registration Statement on Form S-1, which became
1996 (SEC File Number 333-3222); such Units were
allocated as follows: the Partnership 5,000,000, Spectrum
Strategic 2,500,000, and Spectrum Global Balanced 1,000,000.

The Partnership registered an additional 5,000,000 Units pursuant
to another Registration Statement on Form S-1, which became
effective on May 11, 1998 (SEC File Number 333-47831).

The Partnership registered an additional 10,000,000 Units
pursuant to another Registration Statement on Form S-1, which
became effective January 21, 1999 (SEC File Number 333-68779).

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 333-84652).

The Partnership registered an additional 10,000,000 Units
pursuant to another Registration Statement on Form S-1, which
became effective on April 28, 2003 (SEC File Number 333-104001).

The managing underwriter for the Partnership is Morgan Stanley
DW.

Units are continuously sold at monthly closings at a purchase
price equal to 100% of the net asset value per Unit as of the
close of business on the last day of each month.
Through September 30, 2003, 36,306,869.410 Units were
sold, leaving 7,693,130.590 Units unsold. The aggregate price of
the Units sold through September 30, 2003 was $542,019,450.

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 included as a part of the
above referenced Registration Statements.

Item 5. OTHER INFORMATION
Management. The following individuals were named to the Board of
Directors of Demeter in the quarter ended March 31, 2003 and were
subsequently confirmed as principals of Demeter by the National
Futures Association:

Mr. Douglas J. Ketterer was confirmed as a principal of Demeter
by the National Futures Association on October 27, 2003.

Mr. Jeffrey S. Swartz was confirmed as a principal of Demeter by
the National Futures Association on October 23, 2003.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) Exhibits

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 April 18, 1994,
is incorporated by reference to Exhibit 3.02 of the
Partnership's Registration Statement on Form S-1 (File
No. 33-80146) filed with the Securities and Exchange
Commission on June 10, 1994.
3.03 Certificate of Amendment of Certificate of Limited
Partnership, dated April 6, 1999 (changing its name from
Dean Witter Spectrum Technical L.P.), is incorporated by
reference to Exhibit 3.03 of the Partnership's
Registration Statement on Form S-1 (File No. 333-68779)
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 Technical L.P.),
is incorporated by reference to Exhibit 3.01 of the
Partnership's Form 8-K (File No. 0-26338) filed with the
Securities and Exchange Commission on November 1, 2001.
10.01 Management Agreement, dated as of November 1, 1994, among
the Partnership, Demeter, and Campbell & Company, Inc. is
incorporated by reference to Exhibit 10.01 of the
Partnership's Form 10-K (File No. 0-26338) for fiscal
year ended December 31, 1998 filed on March 31, 1999.
10.01(a) Amendment to Management Agreement, dated as of November
30, 2000, among the Partnership, Demeter, and Campbell &
Company, Inc. is incorporated by reference to Exhibit
10.02 of the Partnership's Form 8-K (File No. 0-26338)
filed with the Securities and Exchange Commission on
January 3, 2001.
10.02 Management Agreement, dated as of November 1, 1994, among
the Partnership, Demeter, and Chesapeake Capital
Corporation is incorporated by reference to Exhibit 10.02
of the Partnership's Form 10-K (File No. 0-26338) for
fiscal year ended December 31, 1998 filed on March 31,
1999.

10.03 Management Agreement, dated as of November 1, 1994, among
the Partnership, Demeter, and John W. Henry & Co. is
incorporated by reference to Exhibit 10.03 of the
Partnership's Form 10-K (File No. 0-26338) for fiscal
year ended December 31, 1998 filed on March 31, 1999.
10.03(a) Amendment to Management Agreement, dated as of November
30, 2000, among the Partnership, Demeter, and John W.
Henry & Company, Inc. is incorporated by reference to
Exhibit 10.01 of the Partnership's Form 8-K (File No. 0-
26338) filed with the Securities and Exchange Commission
on January 3, 2001.
10.07 Form of Subscription and Exchange Agreement and Power of
Attorney to be executed by purchasers 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 1993 on May 7,
2003.
10.08 Amended and Restated Escrow Agreement, dated as of March
10, 2000, among the Partnership, Morgan Stanley Spectrum
Select L.P., Morgan Stanley Spectrum Strategic L.P.,
Morgan Stanley Spectrum Global Balanced 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, is incorporated by
reference to Exhibit 10.08 of the Partnership's
Registration Statement on Form S-1 (File No. 333-68779)
filed with the Securities and Exchange Commission on
November 2, 2001.
10.09 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, as 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 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 0-26338) filed with
the Securities and Exchange Commission on November 1,
2001.
10.11 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. 0-26338) filed with the Securities and
Exchange Commission on November 1, 2001.
10.12 Customer Agreement between the Partnership and MSIL,
dated as of May 1, 2000, is incorporated by reference to
Exhibit 10.04 of the Partnership's Form 8-K (File No.
0-26338) filed with the Securities and Exchange
Commission on November 1, 2001.
10.13 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. 0-26338) filed with the
Securities and Exchange Commission on November 1, 2001.
10.14 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. 0-26338)
filed with the Securities and Exchange Commission on
November 1, 2001.
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.

(B) Reports on Form 8-K. - None.

SIGNATURE

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

Morgan Stanley Spectrum Technical L.P.
(Registrant)

By: Demeter Management Corporation
(General Partner)

November 14, 2003 By: /s/Jeffrey D. Hahn
Jeffrey D. Hahn
Chief Financial Officer

The General Partner which signed the above is the only party
authorized to act for the Registrant. The Registrant has no
principal executive officer, principal financial officer,
controller, or principal accounting officer and has no Board of
Directors.

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