MORGAN STANLEY SPECTRUM GLOBAL BALANCED 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 June 30, 2002 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 0-26340

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

(Exact name of registrant as specified in its charter)

Delaware 13-3782232
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Demeter Management Corporation
c/o Managed Futures Department
825 Third Ave., 8th Floor, New York, NY 10022
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (201) 209-8400

(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 GLOBAL BALANCED L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

June 30, 2002

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.
STATEMENTS OF FINANCIAL CONDITION

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

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

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 2002 and 2001
(Unaudited)

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

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.
NOTES TO FINANCIAL STATEMENTS

June 30, 2002

(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 Global Balanced L.P. (the
"Partnership"). The financial statements and condensed notes
herein should be read in conjunction with the Partnership's
December 31, 2001 Annual Report on Form 10-K.

1. Organization
Morgan Stanley Spectrum Global Balanced 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
Commodity L.P., Morgan Stanley Spectrum Currency L.P., Morgan
Stanley Spectrum Select L.P., Morgan Stanley Spectrum Strategic
L.P., and Morgan Stanley Spectrum Technical L.P.

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

The general partner for the Partnership 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., Inc. ("MS & Co.") and
Morgan Stanley & Co. International Limited ("MSIL"). Demeter,
Morgan Stanley DW, MS & Co. and MSIL are wholly-owned subsidiaries
of Morgan Stanley. RXR, Inc. (the "Trading Advisor") is the
trading advisor to the Partnership.

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

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

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

commodity interests, including, but not limited to foreign
currencies, financial instruments, metals, energy and
agricultural products. Futures and forwards represent contracts
for delayed delivery of an instrument at a specified date and
price. Risk arises from changes in the value of these contracts
and the potential inability of counterparties to perform under the
terms of the contracts. There are numerous factors which may
significantly influence the market value of these contracts,
including interest rate volatility.

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

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

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

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, 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
on Open Contracts Longest Maturities

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

Jun. 30, 2002 2,394,603 125,496 2,520,099 Dec. 2002 Sep. 2002
Dec. 31, 2001 646,308 42,900 689,208 Mar. 2002 Mar. 2002

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

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. Each of Morgan Stanley DW, MS & Co., and
MSIL, 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 on all open futures and futures-styled options contracts,
which funds, in the aggregate, totaled $55,843,200 and $58,042,399
at June 30, 2002 and December 31, 2001, respectively. With
respect to the Partnership's off-exchange-traded forward currency

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

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

There are no material trends, 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.

The Partnership has never had illiquidity affect a material
portion of its assets.

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

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, nor
any expected material changes to the Partnership's capital
resource arrangements at the present time.

Results of Operations
General. The Partnership's results depend on the Trading Advisor
and the ability of the 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 six
month periods ended June 30, 2002 and 2001, and a general
discussion of its trading activities during each period. It is
important to note, however, that the Trading Advisor trades 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 Advisor 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
Advisor's trading activities on behalf of the Partnership and how
the Partnership has performed in the past.

The Partnership's results of operations are set forth in
financial statements prepared in accordance with United States
generally accepted accounting principles, which require the use
of certain accounting policies that affect the amounts reported
in these financial statements, including the following. The
contracts the Partnership trades are accounted for on a trade-
date basis and marked to market on a daily basis. The difference
between their cost and market value is recorded on the Statements
of Operations as "Net change in unrealized profit/loss" for open
(unrealized) contracts, and recorded as "Realized profit/loss"
when open positions are closed out, and the sum of these amounts
constitutes the Partnership's trading revenues. Earned 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 other than those
presently used relating to the application of critical accounting
policies are reasonably plausible that could affect reported
amounts.

For the Quarter and Six Months Ended June 30, 2002
For the quarter ended June 30, 2002, the Partnership recorded
total trading revenues, including interest income, of $247,747
and, after expenses, posted a decrease in net asset value per
Unit. The most significant losses of approximately 3.9% were
recorded in global stock index futures primarily from long
positions in U.S. and European stock index futures as equity
prices decreased on geopolitical concerns and uncertainty
surrounding a global economic recovery. Additional losses of
approximately 0.6% were recorded in the energy markets primarily
from previously established long positions in crude oil as prices
moved lower on supply and demand concerns. A portion of the
Partnership's overall losses for the quarter was offset by gains
of approximately 3.2% in the currency markets primarily during May
and June from previously established long positions in the euro
and Swiss franc relative to the U.S. dollar, as the value of these
currencies strengthened against the U.S. dollar amid falling

equity prices, concerns regarding corporate accounting integrity
and weak economic data. Additional gains of approximately 1.8%
were recorded in the global interest rate futures markets from
long positions in U.S. and European interest rate futures as
prices climbed higher, drawing strength from declining equity
prices. Total expenses for the three months ended June 30, 2002
were $809,751, resulting in a net loss of $562,004. The net asset
value of a Unit decreased from $15.78 at March 31, 2002 to $15.62
at June 30, 2002.

For the six months ended June 30, 2002, the Partnership recorded
total trading losses, net of interest income, of $442,755 and
posted a decrease in net asset value per unit. The most
significant losses of approximately 3.9% were recorded in the
global stock index futures primarily from long positions in U.S.
and European stock index futures as equity prices decreased
throughout the year on geopolitical concerns and uncertainty
surrounding a global economic recovery. Additional losses of
approximately 0.6% were recorded in the agricultural markets from
short positions in sugar and soybean oil as prices trended higher
on supply concerns and speculative buying. A portion of the
Partnership's overall losses was offset by gains of approximately
1.9% in the currency markets primarily during May and June from
previously established long positions in the euro and

Swiss franc relative to the U.S. dollar as the value of these
currencies strengthened against the U.S. dollar amid falling
equity prices, concerns regarding corporate accounting integrity
and weak economic data. Additional gains of approximately 1.1%
were recorded in the global interest rate futures markets
primarily during June from long positions in U.S. and Japanese
interest rate futures as prices trended higher following weakness
in equity markets, geopolitical concerns and uncertainty
surrounding a global economic recovery. Total expenses for the
six months ended June 30, 2002, were $1,645,913, resulting in a
net loss of $2,088,668. The net asset value of a Unit decreased
from $16.21 at December 31, 2001 to $15.62 at June 30, 2002.

For the Quarter and Six Months Ended June 30, 2001

For the quarter ended June 30, 2001, the Partnership recorded
total trading losses, net of interest income, of $965,508 and
posted a decrease in net asset value per Unit. The most
significant losses of approximately 2.0% were recorded during mid
April and June in the global interest rate futures markets from
long positions in European interest rate futures as prices moved
lower due to weakness in the euro, gains in the equity markets
and the European Central Bank's decision to leave interest rates
on hold. In the currency markets, losses of approximately 0.6%
were recorded throughout a majority of the quarter from cross-rate
positions in the Australian dollar, Swiss franc and euro versus

the Japanese yen. In the energy markets, losses of approximately
0.4% were recorded in early April from short futures positions in
crude oil and its related products as oil prices reversed sharply
higher on concerns over tight summer supplies. These losses were
partially offset by gains of approximately 0.1% recorded during
the first half of April in the global stock index futures markets
from long positions in U.S. and German stock index futures as U.S.
equity prices reversed higher on positive economic data, optimism
about corporate earnings and the U.S. Federal Reserve's surprise
interest rate cut in April. In soft commodities, gains of
approximately 0.1% were recorded throughout a majority of the
quarter from short cotton futures positions as prices moved lower
on weak export sales and low demand. Total expenses for the three
months ended June 30, 2001 were $834,450, resulting in a net loss
of $1,799,958. The net asset value of a Unit decreased from
$16.26 at March 31, 2001 to $15.75 at June 30, 2001.

For the six months ended June 30, 2001, the Partnership recorded
total trading losses, net of interest income, of $150,488 and
posted a decrease in net asset value per Unit. The most
significant losses of approximately 3.5% were recorded in the
global stock index futures markets primarily during February,
March, May and June from long positions in U.S., German and
British stock index futures as global stock prices continued to
trend lower on worries that the U.S. economic slowdown will
ignite a global downturn and corporate earnings will suffer.

In the energy markets, losses of approximately 0.8% were
experienced throughout the first six months of the year from
crude oil futures and its related products as a result of
volatility in oil prices due to continually changing outlook for
supply, production and demand. In the agricultural markets,
losses of approximately 0.3% were recorded primarily during
February and April from short positions in soybean oil futures as
prices increased on technically-based factors. These losses were
partially offset by gains of approximately 1.1% recorded in the
soft commodities markets throughout a majority of the first and
second quarters from short cotton futures positions as prices
moved lower on weak export sales and low demand. In the global
interest rate futures markets, gains of approximately 0.6% were
recorded primarily during January from long positions in
eurodollar futures as prices moved higher due to a surprise
interest rate cut by the U.S. Federal Reserve on January 3rd and
the subsequent anticipation of an additional interest rate cut by
the U.S. Federal Reserve later in January. In the currency
markets, gains of approximately 0.4% were recorded throughout a
majority of the second quarter from long positions in the Mexican
peso as its value strengthened relative to the U.S. dollar.
Total expenses for the six months ended June 30, 2001 were
$1,649,148, resulting in a net loss of $1,799,636. The net asset
value of a Unit decreased from $16.26 at December 31, 2000 to
$15.75 at June 30, 2001.

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 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 Advisor is estimated below in terms of Value at Risk
("VaR"). The VaR model used by the Partnership includes many
variables that could change the market value of the Partnership's
trading portfolio. The Partnership estimates VaR using a model
based upon historical simulation with a confidence level of 99%.
Historical simulation involves constructing a distribution of
hypothetical daily changes in the value of a trading portfolio.
The VaR model takes into account linear exposures to price and
interest rate risk. Market risks that are incorporated in the
VaR model include equity and commodity prices, interest rates,
foreign exchange rates, and correlation among these variables.
The hypothetical changes in portfolio value are based on daily
percentage changes observed in key market indices or other market
factors ("market risk factors") to which the portfolio is
sensitive. The historical observation period of the
Partnership's VaR is approximately four years. The one-day 99%
confidence level of the Partnership's VaR corresponds to the
negative change in portfolio value that, based on observed market
risk factors, would have been exceeded once in 100 trading days.

In other words, one-day VaR for a portfolio is a number such that
losses in this portfolio are estimated to exceed the VaR only one
day in 100.

VaR 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.

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 Advisor in their daily risk management
activities. Please further note that the VaR as described above
may not be comparable to similarly titled measures by other
companies.

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 June 30, 2002 and 2001. At
both June 30, 2002 and 2001, the Partnership's total
capitalization was approximately $56 million.
Primary Market June 30, 2002 June 30, 2001
Risk Category Value at Risk Value at Risk

Interest Rate (1.02)% (0.67)%
Equity (0.94) (0.86)
Currency (0.60) (0.58)
Commodity (0.32) (0.33)
Aggregate Value at Risk (1.33)% (1.33)%

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

The table above represents the VAR of the Partnership's open
positions at June 30, 2002 and 2001 only and is not necessarily
representative of either the historic or future risk of an

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

The table below supplements the quarter-end VaR by presenting the
Partnership's high, low and average VaR, as a percentage of total
net assets for the four quarterly reporting periods from July 1,
2001 through June 30, 2002.

Primary Market Risk Category High Low Average
Interest Rate (1.02)% (0.22)% (0.63)%
Equity (1.32) (0.79) (1.08)
Currency (0.60) (0.32) (0.46)
Commodity (0.32) (0.18) (0.25)
Aggregate Value at Risk (1.53)% (1.14)% (1.35)%

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 exposure and on an
aggregate basis at June 30, 2002 and 2001, and for the end of the
four quarterly reporting periods from July 1, 2001 through June
30, 2002. Since VaR is based on historical data, VaR should not
be viewed as predictive of the Partnership's future financial
performance or its ability to manage or monitor risk. There can
be no assurance that the Partnership's actual losses on a
particular day will not exceed the VaR amounts indicated above or
that such losses will not occur more than once in 100 trading
days.

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

At June 30, 2002 the Partnership's cash balance at Morgan Stanley
DW was approximately 91% of its total net asset value. A decline
in short-term interest rates will result in a decline in the
Partnership's cash management income. This cash flow risk is not
considered 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 Advisor
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 June 30, 2002 by market sector. It may be
anticipated, however, that these market exposures will vary
materially over time.

Interest Rate. The largest market exposure at June 30, 2002 was
in the global interest rate complex, primarily spread across the
European, U.S. 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. The G-7 countries consist of France, the U.S.,
Britain, Germany, Japan, Italy, and Canada. However, the
Partnership also takes futures positions in the government debt
of smaller nations - e.g., Australia. Demeter anticipates that
G-7 and Australian interest rates will remain the primary
interest rate exposures of the Partnership for the foreseeable
future. The speculative futures positions held by the
Partnership range from short to long-term instruments.
Consequently, changes in short, medium or long-term interest
rates may have an effect on the Partnership.

Equity. The second largest market exposure of the Partnership at
June 30, 2002 was in the global stock index complex, primarily
equity price risk in the G-7 countries. The stock index futures
traded by the Partnership are by law limited to futures on
broadly-based indices. At June 30, 2002, the Partnership's
primary exposures were to the S&P 500 (U.S.), DAX (Germany), and
Nikkei (Japan) stock indices. The Partnership is exposed to the
risk of adverse price trends or static markets in the U.S.,
European and Japanese indices. Static markets would not cause
major market changes but would make it difficult for the
Partnership to avoid being "whipsawed" into numerous small
losses.

Currency. The Partnership's currency exposure at June 30, 2002
was to exchange rate fluctuations, primarily fluctuations which
disrupt the historical pricing relationships between different
currencies and currency pairs. Interest rate changes as well as
political and general economic conditions influence these
fluctuations. The Partnership trades a large number of
currencies, including cross-rates - i.e., positions between two
currencies other than the U.S. dollar. These other currencies
include major and minor currencies. Outright positions consist
of the U.S. dollar vs. other currencies. At June 30, 2002, the
Partnership's exposures were to the Singapore dollar, Mexican
peso and the euro. 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.

Commodity.
Energy. At June 30, 2002, the Partnership's energy exposure
was shared primarily by futures contracts in crude oil and
its related products, and natural gas. Price movements in
these markets result from political developments in the
Middle East, weather patterns and other economic
fundamentals. Significant profits and losses, which have
been experienced in the past, are expected to continue to be
experienced in these markets. Natural gas has exhibited
volatility in prices resulting from weather patterns and
supply and demand factors, and may continue in this choppy
pattern.

Soft Commodities and Agriculturals. At June 30, 2002, the
Partnership had exposure to the markets that comprise these
sectors. Most of the exposure was to the sugar, corn and
cotton markets. Supply and demand inequalities, severe
weather disruptions and market expectations affect price
movements in these markets.

Metals. The Partnership's metals exposure at June 30, 2002
was to fluctuations in the price of base metals, such as
copper and nickel. Economic forces, supply and demand
inequalities, geopolitical factors and market expectations
influence price movements in these markets. The Trading
Advisor, from time to time, takes positions when market
opportunities develop. Demeter anticipates that the
Partnership will continue to be exposed to the base metals
markets.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at June 30, 2002:

Foreign Currency Balances. The Partnership's primary
foreign currency balances at June 30, 2002 were in Japanese
yen and South African rand. The Partnership controls the
non-trading risk of these balances by regularly converting
them back into U.S. dollars upon liquidation of their
respective positions.

Qualitative Disclosures Regarding Means of Managing Risk Exposure
The Partnership and the Trading Advisor, 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 market sectors and trading
approaches, and monitoring the performance of the Trading Advisor
daily. In addition, the Trading Advisor establishes diversifi-
cation 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 Advisor.

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 Technical L.P.
("Spectrum Technical"), 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 Technical at the time, they were
subsequently allocated for convenience purposes as follows:
Spectrum Strategic 4,000,000, Spectrum Technical 4,000,000 and
the Partnership 2,000,000. The Partnership, Spectrum Strategic
and Spectrum Technical 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: Spectrum
Strategic 6,000,000, Spectrum Technical 9,000,000 and the
Partnership 5,000,000. The Partnership, Spectrum Strategic and
Spectrum Technical collectively registered an additional
8,500,000 Units pursuant to another Registration Statement on
Form S-1, which became effective on April 30, 1996 (SEC File

Number 333-3222); such Units were allocated as follows: Spectrum
Strategic 2,500,000, Spectrum Technical 5,000,000 and the
Partnership 1,000,000.

The Partnership registered an additional 3,000,000 Units pursuant
to another Registration Statement on Form S-1, which became
effective on February 28, 2000 (SEC File Number 333-90475).

The managing underwriter for the Partnership is Morgan Stanley
DW.

Units are being sold at monthly closings at a price equal to 100%
of the net asset value of a Unit as of the last day of each
month.

Through June 30, 2002, 6,079,116.468 Units were sold, leaving
4,920,883.532 Units unsold. The aggregate price of the Units
sold through June 30, 2002 was $84,504,557.

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 its Prospectus and Supplement to the
Prospectus.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) Exhibits

3.01 Form of Amended and Restated Limited Partnership
Agreement of the Partnership, dated as of April 30, 2002,
is incorporated by reference to Exhibit A of the
Partnership's Prospectus, dated April 30, 2002, filed
with the Securities and Exchange Commission pursuant to
Rule 424(b)(3) under the Securities Act of 1933 on May 8,
2002.
3.02 Certificate of Limited Partnership, dated 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 17, 1998, is incorporated by
reference to Exhibit 3.03 of the Partnership's Form 10-K
(File No. 0-26340) for the fiscal year ended December 31,
1998 filed March 31, 1999.
3.04 Certificate of Amendment of Certificate of Limited
Partnership, dated November 1, 2001, (changing its name
from Morgan Stanley Dean Witter Spectrum Global Balanced
L.P.) is incorporated by reference to Exhibit 3.01 of the
Partnership's Form 8-K (File No. 0-26340) 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 RXR, Inc., is incorporated
by reference to Exhibit 10.01 of the Partnership's Form
10-K (File No.0-26340) for fiscal year ended December 31,
1998 filed on March 31, 1999.
10.11 Form of Subscription and Exchange Agreement and Power of
Attorney to be executed by each purchaser of Units is
incorporated by reference to Exhibit B of the
Partnership's Prospectus, dated April 30, 2002, as filed
with the Securities and Exchange Commission pursuant to
Rule 424(b)(3) under the Securities Act of 1933 on May 8,
2002.
10.13 Amended and Restated Escrow Agreement, dated as of March
10, 2000, among the Partnership, Morgan Stanley Spectrum
Select L.P., Morgan Stanley Spectrum Technical L.P.,
Morgan Stanley Spectrum Strategic L.P., Morgan Stanley
Spectrum Currency L.P., Morgan Stanley Spectrum Commodity

L.P., Morgan Stanley DW and The Chase Manhattan Bank, the
escrow agent, is incorporated by reference to Exhibit
10.13 of the Partnership's Registration Statement on Form
S-1 (File No. 333-90475) filed with the Securities and
Exchange Commission on November 2, 2001.
10.14 Form of Subscription Agreement Update Form to be executed
by purchasers of Units is incorporated by reference to
Exhibit C of the Partnership's Prospectus, dated April
30, 2002, filed with the Securities and Exchange
Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933 on May 8, 2002.
10.15 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. 0-26340) filed
with the Securities and Exchange Commission on November
1, 2001.
10.16 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. 0-26340) filed with the Securities and Exchange
Commission on November 1, 2001.
10.17 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.
0-26340) filed with the Securities and Exchange
Commission on November 1, 2001.
10.18 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. 0-26340) filed with the
Securities and Exchange Commission on November 1, 2001.
10.19 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. 0-26340)
filed with the Securities and Exchange Commission on
November 1, 2001.
99.01 Certification of Periodic Financial Reports.

(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
Global Balanced L.P. (Registrant)

By: Demeter Management Corporation
(General Partner)

August 13, 2002 By:/s/Raymond E. Koch
Raymond E. Koch
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.

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

In connection with the Quarterly Report of Morgan Stanley Spectrum
Global Balanced L.P. (the "Partnership") on Form 10-Q for the
period ended June 30, 2002, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Robert
E. Murray, President, Demeter Management Corporation, general
partner of the Partnership, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.

By: /s/Robert E. Murray

Name: Robert E. Murray
Title: Chairman of the Board and President

Date: August 13, 2002

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

In connection with the Quarterly Report of Morgan Stanley Spectrum
Global Balanced L.P. (the "Partnership") on Form 10-Q for the
period ended June 30, 2002, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Raymond
E. Koch, Chief Financial Officer, Demeter Management Corporation,
general partner of the Partnership, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.

By: /s/Raymond E. Koch

Name: Raymond E. Koch
Title: Chief Financial Officer

Date: August 13, 2002