MORGAN STANLEY SPECTRUM CURRENCY LP - 10-K Annual 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, 2001 or

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

Commission File No. 0-31563

MORGAN STANLEY SPECTRUM CURRENCY L.P.

(Exact name of registrant as specified in its charter)

Delaware 13-4084211
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Demeter Management Corporation
c/o Morgan Stanley Trust Company
Attention: Managed Futures, 7th Fl.,
Harborside Financial Center Plaza Two
Jersey City, NJ 07311-3977
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (201) 876-4647

Morgan Stanley Dean Witter Spectrum Currency L.P.
Two World Trade Center, 62nd Fl., New York, NY 10048

(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 DEAN WITTER SPECTRUM CURRENCY L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 30, 2001

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MORGAN STANLEY DEAN WITTER SPECTRUM CURRENCY L.P.
STATEMENTS OF FINANCIAL CONDITION

MORGAN STANLEY DEAN WITTER SPECTRUM CURRENCY L.P.
STATEMENTS OF OPERATIONS
(Unaudited)

MORGAN STANLEY DEAN WITTER SPECTRUM CURRENCY L.P.
STATEMENTS OF OPERATIONS
(Unaudited)

MORGAN STANLEY DEAN WITTER SPECTRUM CURRENCY L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Nine Months Ended September 30, 2001
and the Period from July 3, 2000
(commencement of operations) to
September 30, 2000
(Unaudited)

MORGAN STANLEY DEAN WITTER SPECTRUM CURRENCY L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)

MORGAN STANLEY DEAN WITTER SPECTRUM CURRENCY L.P.
NOTES TO FINANCIAL STATEMENTS
September 30, 2001
(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 Dean Witter Spectrum Currency L.P. (the
"Partnership"). The financial statements and condensed notes
herein should be read in conjunction with the Partnership's
December 31, 2000 Annual Report on Form 10-K.

1. Organization
Morgan Stanley Dean Witter Spectrum Currency 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 in global currency markets. The
Partnership commenced operations on July 3, 2000. The Partnership
is one of the Morgan Stanley Dean Witter Spectrum Series of funds,
comprised of the Partnership, Morgan Stanley Dean Witter Spectrum
Commodity L.P., Morgan Stanley Dean Witter Spectrum Global
Balanced L.P., Morgan Stanley Dean Witter Spectrum Select L.P.,
Morgan Stanley Dean Witter Spectrum Strategic L.P. and Morgan
Stanley Dean Witter Spectrum Technical L.P.

MORGAN STANLEY DEAN WITTER SPECTRUM CURRENCY L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The general partner is Demeter Management Corporation ("Demeter").
The non-clearing commodity broker is Morgan Stanley DW Inc.
("Morgan Stanley DW"). The clearing commodity brokers are Morgan
Stanley & Co., Incorporated. ("MS & Co.") and Morgan Stanley & Co.
International Limited ("MSIL"). Demeter, MS & Co., MSIL and
Morgan Stanley DW are wholly-owned subsidiaries of Morgan Stanley
Dean Witter & Co. The trading advisors to the Partnership are
John W. Henry & Company, Inc. and Sunrise Capital Partners, LLC
(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. Brokerage fees are paid to Morgan Stanley DW.

3. Financial Instruments
The Partnership trades futures contracts, options on futures
contracts, and forward contracts in global currency markets.
Futures and forwards represent contracts for delayed delivery of
an instrument at a specified date and price. Risk arises from
changes in the value of these contracts and the potential
inability of counterparties to perform under the terms of the

MORGAN STANLEY DEAN WITTER SPECTRUM CURRENCY L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

contracts. There are numerous factors which may significantly
influence the market value of these contracts, including interest
rate volatility.

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:

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

MORGAN STANLEY DEAN WITTER SPECTRUM CURRENCY L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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-
Traded Traded Total Traded Traded
Date Contracts Contracts Contracts Contracts Contracts
$ $ $

Sept. 30, 2001 - 569,865 569,865 - Dec. 2001

Dec. 31, 2000 - 555,569 555,569 - March 2001

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
each as a futures commission merchant for the Partnership's
exchange-traded futures and futures-styled options contracts, are

MORGAN STANLEY DEAN WITTER SPECTRUM CURRENCY L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

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.
With respect to the Partnership's off-exchange-traded forward
currency contracts, there are no daily settlements of variations
in value nor is there any requirement that an amount equal to the
net unrealized gains 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
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.

Capital Resources. The Partnership does not have, or 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.

Results of Operations
General. The Partnership's results depend on its Trading Advisors
and the ability of each Trading Advisor's trading program to take
advantage of price movements or other profit opportunities in the
futures, forwards and options markets. The following presents a
summary of the Partnership's operations for the three and nine
month periods ended September 30, 2001 and the period from July 3,
2000 (commencement of operations) to September 30, 2000, 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
its Trading Advisors' trading activities on behalf of the
Partnership as a whole and how the Partnership has performed in
the past.

For the Quarter and Nine Months Ended September 30, 2001

For the quarter ended September 30, 2001, the Partnership
recorded total trading losses, net of interest income, of
$230,606 and posted a decrease in net asset value per Unit. The
most significant losses of approximately 3.3% were recorded
primarily during August from short positions in the Japanese yen
as the value of the yen strengthened versus the U.S. dollar due
to U.S. economic weakness. Losses of approximately 1.6% were

experienced primarily during July from short positions in the
euro and Swiss franc as the value of these European currencies
reversed higher versus the U.S. dollar following Chairman
Greenspan's testimony highlighting that the U.S. economy still
faces weakness. Benign European inflation data also boosted the
values of these currencies. During September, losses were
recorded from long positions in the euro and Japanese yen as
their values reversed lower and the U.S. dollar strengthened amid
newly released optimistic economic data out of the U.S. and the
Bank of Japan's surprise interventions, which also boosted the
U.S. dollar. Losses of approximately 0.8% were experienced
during early July from long positions in the Mexican peso as its
value weakened relative to the U.S. dollar on worries that
Argentina won't meet its debt obligations and that Argentina's
economic crisis could hit Mexico. These losses were partially
offset by gains of approximately 4.1% recorded primarily during
September from short positions in the South African rand as its
value trended lower relative to the U.S. dollar as investors
targeted the emerging market currency while global economic
jitters persisted. Total expenses for the three months ended
September 30, 2001 were $524,988, resulting in a net loss of
$755,594. The net asset value of a Unit decreased from $11.50 at
June 30, 2001 to $11.18 at September 30, 2001.

For the nine months ended September 30, 2001, the Partnership
recorded total trading revenues, including interest income, of

$1,283,553 and, after expenses, posted a net loss for the period.
The most significant gains of approximately 3.4% were recorded
from short positions in the Singapore dollar as its value
weakened versus the U.S. dollar on the heels of the declining
Japanese yen. Gains of approximately 1.4% were recorded
throughout the majority of the first quarter from short positions
in the Japanese yen as the value of the yen weakened relative to
the U.S. dollar on continuing concerns for the Japanese economy
and in both anticipation and reaction to the Bank of Japan's
decision to reinstate its zero interest rate policy. Profits of
approximately 1.3% were recorded primarily during September from
short positions in the South African rand as its value trended
lower relative to the U.S. dollar as investors targeted the
emerging market currency while global economic jitters persisted.
These gains were partially offset by losses of approximately 2.0%
recorded primarily during May and early June from long positions
in the British pound as its value weakened relative to the U.S.
dollar in reaction to reports that British Prime Minister Blair
will push for Great Britain's entry into the European Monetary
Union. Total expenses for the nine months ended September 30,
2001 were $1,476,642, resulting in a net loss of $193,089. The
net asset value of a Unit, however, increased from $11.17 at
December 31, 2000 to $11.18 at September 30, 2001, due to the
increase in Partnership total Units.

For the Period from July 3, 2000 (commencement of operations) to
September 30, 2000

For the period from July 3, 2000 (commencement of operations) to
September 30, 2000, the Partnership recorded total trading
revenues, including interest income, of $422,969 and posted an
increase in net asset value per Unit. The most significant gains
of approximately 1.5% were recorded primarily during July from
short British pound positions as the value of the pound weakened
relative to the U.S. dollar after June data showed Britain's
manufacturing sector grew at its slowest rate since June 1999.
Additional profits of approximately 1.2% were recorded primarily
during August from short euro positions as the value of the
European common currency weakened versus the U.S. dollar and
other major currencies amid a cooling economy in Europe and in
the wake of the European Central Bank decision to raise interest
rates. During August and September, additional gains of
approximately 1.1% were experienced from short New Zealand dollar
positions as its value dropped relative to the U.S. dollar on a
worse-than-expected contraction in New Zealand gross domestic
product. Additional gains of approximately 0.9% resulted
primarily during July from short positions in the Thai baht as
its value weakened versus the U.S. dollar. Short Thai baht
positions were also profitable during September as its value fell
sharply versus the U.S. dollar on investor concerns over
political developments in Indonesia. A portion of overall
Partnership gains was offset by losses of approximately 1.3%

recorded primarily during August from short Japanese yen
positions as the value of the yen strengthened versus the U.S.
dollar following comments by a senior Japanese official stating
that the Bank of Japan could raise interest rates further by
December. Long Japanese yen positions incurred losses during
September as the yen's value weakened against the U.S. dollar on
warnings that the Japanese economy may shrink in the fourth
quarter because of lethargic consumer spending. Additional
losses of approximately 1.0% were recorded from long Australian
dollar positions as its value declined versus the U.S. dollar
during August on weakness in the euro and fading Australian
interest rate expectations. Total expenses for the period from
July 3, 2000 (commencement of operations) to September 30, 2000
were $207,465, resulting in net income of $215,504. The net
asset value of a Unit increased from $10.00 at July 3, 2000
(commencement of operations) to $10.24 at September 30, 2000.

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 using 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.

VaR models, including the Partnership's, are continuously
evolving as trading portfolios become more diverse and modeling
techniques and systems capabilities improve. Please note that
the VaR model is used to numerically quantify market risk for
historic reporting purposes only and is not utilized by either
Demeter or the Trading Advisors in their daily risk management
activities.

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, 2001 and 2000.

At September 30, 2001 and 2000, the Partnership's total
capitalization was approximately $36 million and $11 million,
respectively.
Primary Market September 30, 2001 September 30, 2000
Risk Category Value at Risk Value at Risk

Currency (1.86)% (2.85)%

The table above represents the VaR of the Partnership's open
positions at September 30, 2001 and 2000 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 2001 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 October 1, 2000 through September 30, 2001.

Primary Market Risk Category High Low Average
Currency (2.63)% (1.86)% (2.29)%

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 its market risk exposure at September 30, 2001 and for the
end of the four quarterly reporting periods from October 1, 2000
through September 30, 2001. 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. The Partnership did not have any
foreign currency balances at September 30, 2001.

At September 30, 2001, the Partnership's cash balance at Morgan
Stanley DW was approximately 94% of its total net asset value. A
decline in short-term interest rates will result in a decline in
the Partnership's cash management income. This cash flow risk is
not considered material.

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

Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership's
market risk exposures - except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
Partnership manages its primary market risk exposures -
constitute forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. The Partnership's primary market risk
exposures as well as the strategies used and to be used by
Demeter and the Trading Advisors for managing such exposures are
subject to numerous uncertainties, contingencies and risks, any
one of which could cause the actual results of the Partnership's

risk controls to differ materially from the objectives of such
strategies. Government interventions, defaults and expro-
priations, illiquid markets, the emergence of dominant
fundamental factors, political upheavals, changes in historical
price relationships, an influx of new market participants,
increased regulation and many other factors could result in
material losses as well as in material changes to the risk
exposures and the risk management strategies of the Partnership.
Investors must be prepared to lose all or substantially all of
their investment in the Partnership.

The following was the primary trading risk exposure of the
Partnership at September 30, 2001. It may be anticipated,
however, that market exposure will vary materially over time.

Currency. The Partnership's currency exposure at September 30,
2001 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 in a large number of
currencies. At September 30, 2001, the Partnership's major
exposures were 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 dollar-based
Partnership in expressing VaR in a functional currency other than
dollars.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
At September 30, 2001, there was no non-trading risk exposure
because the Partnership did not have any foreign currency
balances.

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 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-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.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Please refer to Legal Proceedings previously disclosed in the
Partnership's Form 10-Q for the quarter ended June 30, 2001.

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

The Partnership registered 12,000,000 Units pursuant to a
Registration Statement on Form S-1, which became effective on
March 6, 2000 (the "Registration Statement") (SEC File Number 333-
90483). As part of the Spectrum Series, Units of the Partnership
are sold monthly on a continuous basis at a price equal to 100% of
the net asset value per Unit at the close of business on the last
day of each month.

The managing underwriter for the Partnership is Morgan Stanley DW.

Through September 30, 2001, 3,347,470.947 total Units of the
Partnership have been sold, leaving 8,652,529.053 Units unsold.
The aggregate price of Units sold through September 30, 2001 was
$36,497,708.

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.

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 March 23,
2001, is incorporated by reference to Exhibit A of the
Partnership's Prospectus, dated March 23, 2001, filed
with the Securities and Exchange Commission pursuant to
Rule 424(b)(3) under the Securities Act of 1933.

3.02 Certificate of Limited Partnership, dated October 20,
1999, is incorporated by reference to Exhibit 3.02 of
the Partnership's Registration Statement on Form S-1
(File No. 333-90485) filed with the Securities and
Exchange Commission on November 5, 1999.

3.03 Certificate of Amendment of Certificate of Limited
Partnership, dated November 1, 2001, (changing its name
from Morgan Stanley Dean Witter Spectrum Currency L.P.)
is incorporated by reference to the Partnership's Form
8-K (File No. 0-31563) filed with the Securities and
Exchange Commission on November 1, 2001.

10.01 Management Agreement among the Partnership, Demeter and
John W. Henry & Company, Inc. dated as of March 6,
2000, is incorporated by reference to Exhibit 10.1 of
the Partnership's Quarterly Report on Form 10-Q (File
No. 0-31563) filed with the Securities and Exchange
Commission on November 14, 2000.

10.02 Management Agreement among the Partnership, Demeter and
Sunrise Capital Management, Inc., dated as of March 6,
2000, is incorporated by reference to Exhibit 10.2 of
the Partnership's Quarterly Report on Form 10-Q (File
No. 0-31563) filed with the Securities and Exchange
Commission on November 14, 2000.

10.05 Amended and Restated Escrow Agreement among the
Partnership, Morgan Stanley Spectrum Select L.P.,
Morgan Stanley Spectrum Technical L.P., Morgan Stanley
Spectrum Strategic L.P., Morgan Stanley Spectrum Global
Balanced L.P., Morgan Stanley Spectrum Commodity L.P.,
Demeter, Morgan Stanley DW and The Chase Manhattan
Bank, the escrow agent, dated as of March 10, 2000, is
incorporated by reference to Exhibit 10.05 of the
Partnership's Registration Statement on Form S-1(File
No. 333-90485) filed with the Securities and Exchange
Commission on November 2, 2001.

10.06 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 March 23, 2001, filed with
the Securities and Exchange Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933, as amended, on
April 6, 2001.
10.08 Form of Subscription Agreement Update Form to be executed
by each purchaser of Units is incorporated by reference to
Exhibit C of the Partnership's Prospectus, dated March 23,
2001, filed with the Securities and Exchange Commission
pursuant to Rule 424(b)(3) under the Securities Act of
1933, as amended, on April 6, 2001.

10.09 Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW Inc., dated as of June
30, 2000 is incorporated by reference to Exhibit 10.01 of
the Partnership's Form 8-K (File No. 0-31563) filed with
the Securities and Exchange Commission on November 1,
2001.

10.10 Commodity Futures Customer Agreement between Morgan
Stanley & Co. Incorporated and the Partnership, and
acknowledged and agreed to by Morgan Stanley DW Inc.,
dated as of June 6, 2000, is incorporated by reference to
Exhibit 10.02 of the Partnership's Form 8-K (File No. 0-
31563) filed with the Securities and Exchange Commission
on November 1, 2001.

10.11 Foreign Exchange and Options Master Agreement between
Morgan Stanley & Co. Incorporated and the Partnership,
dated as of June 30, 1999, is incorporated by reference to
Exhibit 10.05 of the Partnership's Form 8-K (File No. 0-
31563) filed with the Securities and Exchange Commission
on November 1, 2001.

10.12 Amendment to Management Agreement, dated as of November
30, 2000, among the Registrant, John W. Henry & Company,
Inc., and Demeter is incorporated by reference to the
Partnership's Form 8-K (File No. 0-31563), filed with the
Securities and Exchange Commission on January 3, 2001.

10.13 Amendment to Management Agreement, dated as of November
30, 2000, among the Registrant, Sunrise Capital
Management, Inc., and Demeter is incorporated by reference
to the Partnership's Form 8-K (File No. 0-31563), filed
with the Securities and Exchange Commission on January 3,
2001.

10.14 Securities Account Control Agreement among the
Partnership, Morgan Stanley & Co. Incorporated, and Morgan
Stanley DW Inc., dated as of June 6, 2000, is incorporated
by reference to Exhibit 10.03 of the Partnership's Form 8-
K (File No. 0-31563) filed with the Securities and
Exchange Commission on November 1, 2001.
(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 Currency
L.P. (Registrant)

By: Demeter Management Corporation
(General Partner)

November 14, 2001 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.