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-K

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the year ended December 31, 2004 or

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

Commission File Number 0-31563

MORGAN STANLEY SPECTRUM CURRENCY L.P.

(Exact name of registrant as specified in its Limited Partnership Agreement)

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

Demeter Management Corporation
330 Madison Avenue, 8th Floor
New York, NY 10017
(Address of principal executive offices) (Zip Code)

Registrant?s telephone number, including area code (212) 905-2700

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

Name of each exchange
Title of each class on which registered

None None

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

Units of Limited Partnership Interest

(Title of Class)

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

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

Indicate by check-mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No X

State the aggregate market value of the Units of Limited Partnership Interest
held by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which Units were sold as of the last
business day of the registrant?s most recently completed second fiscal quarter:
$218,756,743 at June 30, 2004.

DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)

MORGAN STANLEY SPECTRUM CURRENCY L.P.
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 2004

DOCUMENTS INCORPORATED BY REFERENCE

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

Documents Incorporated Part of Form l0-K

Partnership?s Prospectus dated
April 28, 2004 I

Partnership's Supplement to
the Prospectus dated October 19, 2004 I

Annual Report to Morgan Stanley
Spectrum Series Limited
Partners for the year ended
December 31, 2004 II, III, and IV

PART I
Item 1. BUSINESS

(a) General Development of Business. Morgan Stanley Spectrum Cur-
rency L.P. (the "Partnership") is a Delaware limited partnership
organized in 1999 to engage primarily in the speculative trading
of futures contracts, options on futures contracts, and forward
contracts in global currency markets. The Partnership commenced
trading operations on July 3, 2000. The Partnership is one of the
Morgan Stanley Spectrum series of funds, comprised of the
Partnership, Morgan Stanley Spectrum Global Balanced L.P., Morgan
Stanley Spectrum Strategic L.P., Morgan Stanley Spectrum Select
L.P., and Morgan Stanley Spectrum Technical L.P. (collectively,
the ?Spectrum Series?).

The Partnership?s general partner is Demeter Management
Corporation (?Demeter?). The non-clearing commodity broker is
Morgan Stanley DW Inc. (?Morgan Stanley DW?). The clearing
commodity broker is Morgan Stanley & Co. Incorporated (?MS &
Co.?). Demeter, Morgan Stanley DW, and MS & Co. are wholly-owned
subsidiaries of Morgan Stanley. The trading advisors to the
Partnership are John W. Henry & Company, Inc. and Sunrise Capital
Partners, LLC (individually, a ?Trading Advisor?, or collectively,
the ?Trading Advisors?).

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

The managing underwriter for the Partnership is Morgan Stanley DW.

The Partnership's net asset value per Unit at December 31, 2004
was $14.41, representing a decrease of 8.0 percent from the net
asset value per Unit of $15.66 on December 31, 2003. For a more
detailed description of the Partnership's business see
subparagraph (c).

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

(c) Narrative Description of Business. The Partnership is in the
business of speculative trading of futures, forwards, and options,
pursuant to trading instructions provided by the Trading Advisors.
For a detailed description of the different facets of the
Partnership's business, see those portions of the Partnership's

prospectus, dated April 28, 2004 (the ?Prospectus?), and
the Partnership's supplement to the Prospectus dated October 19,
2004 (the ?Supplement?), incorporated by reference in this Form
10-K, set forth below.

Facets of Business
1. Summary 1. "Summary" (Pages 1-9 of
the Prospectus and Pages
S-1 ? S-2 of the
Supplement).

2. Futures, Options, and 2. "The Futures, Options, and
Forwards Markets Forwards Markets" (Pages
140-144 of the Prospectus).

3. Partnership's Trading 3. ?Use of Proceeds? (Pages
Arrangements and 26-28 of the Prospectus
Policies and Page S-6 of the
Supplement). ?The Trading
Advisors? (Pages 68-118 of
the Prospectus and Pages
S-31 - S-41 of the
Supplement).

4. Management of the Part- 4. "The Trading Advisors -
nership The Management Agree-
ments? (Page 68 of the
Prospectus), "The
General Partner" (Pages
63-67 of the Prospectus
and Pages S-28 ? S-30 of
the Supplement), ?The Com-
modity Brokers? (Pages
121-122 of the Prospectus
and Page S-41 of the
Supplement) and ?The
Limited Partnership
Agreements? (Pages 123-
127 of the Prospectus).

5. Taxation of the Partner- 5. ?Material Federal Income
ship?s Limited Partners Tax Considerations? and
?State and Local Income Tax
Aspects? (Pages 133-139 of
the Prospectus).

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

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

Item 2. PROPERTIES
The Partnership?s executive and administrative offices are located
within the offices of Morgan Stanley DW. The Morgan Stanley DW
offices utilized by the Partnership are located at 330 Madison
Avenue, 8th Floor, New York, NY 10017.

Demeter changed its address in August 2004 from 825 Third Avenue,
9th Floor, New York, NY 10022 to 330 Madison Avenue, 8th Floor,
New York, NY 10017.

Item 3. LEGAL PROCEEDINGS
None.

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

PART II

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

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

(b) Holders. The number of holders of Units at December 31, 2004
was approximately 29,541.

(c) Distributions. No distributions have been made by the
Partnership since it commenced trading operations on July 3, 2000.
Demeter has sole discretion to decide what distributions, if
any, shall be made to investors in the Partnership. Demeter
currently does not intend to make any distributions of
Partnership?s profits.

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

The aggregate price of the Units sold through December 31, 2004
was $297,077,235.

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

(f) Use of Proceeds.

Item 6. SELECTED FINANCIAL DATA (in dollars)

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

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

The Partnership?s investment in futures, forwards, and options
may, from time to time, be illiquid. Most U.S. futures exchanges
limit fluctuations in prices during a single day by regulations
referred to as ?daily price fluctuations limits? or ?daily
limits?. Trades may not be executed at prices beyond the daily
limit. If the price for a particular futures or options contract
has increased or decreased by an amount equal to the daily limit,
positions in that futures or options contract can neither be taken

nor liquidated unless traders are willing to effect trades
at or within the limit. Futures prices have occasionally moved
the daily limit for several consecutive days with little or no
trading. These market conditions could prevent the Partnership
from promptly liquidating its futures or options contracts and
result in restrictions on redemptions.

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

There are no known material trends, demands, commitments, events,
or uncertainties at the present time that 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
expects to have, any capital assets. Redemptions, exchanges, and
sales of Units in the future will affect the amount of funds
available for investments in futures, forwards, and options in
subsequent periods. It is not possible to estimate the amount,
and therefore the impact, of future inflows and outflows of Units.

There are no known material trends, favorable or unfavorable, that
would affect, nor any expected material changes to, the Partner-
ship?s capital resource arrangements at the present time.

Off-Balance Sheet Arrangements and Contractual Obligations. The
Partnership does not have any off-balance sheet arrangements, nor
does it have contractual obligations or commercial commitments to
make future payments that would affect its liquidity or capital
resources.

Results of Operations
General. The Partnership's results depend on the Trading Advisors
and the ability of each Trading Advisor?s trading program to take
advantage of price movements in the futures, forwards, and options
markets. The following presents a summary of the Partnership's
operations for each of the three years in the period ended
December 31, 2004, 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 during
the period in question. Past performance is no guarantee of
future results.

The Partnership?s results of operations set forth in the financial
statements are 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 trading profit (loss)?
for open (unrealized) contracts, and recorded as ?Realized trading
profit (loss)? when open positions are closed out. The sum of
these amounts constitutes the Partnership?s trading results. The
market value of a futures contract is the settlement price on the
exchange on which that futures contract is traded on a
particular day. The value of foreign currency forward contracts is
based on the spot rate as of the close of business. Interest
income, as well as management fees, incentive fees, and brokerage
fees expenses of the Partnership are recorded on an accrual basis.

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

The Partnership recorded total trading results including interest
totaling $2,632,707 and expenses totaling $14,541,414, resulting
in a net loss of $11,908,707 for the year ended December 31, 2004.
The Partnership?s net asset value per Unit decreased from $15.66
at December 31, 2003 to $14.41 at December 31, 2004. Total
redemptions and subscriptions for the year were $20,575,860
and $115,529,377, respectively, and the Partnership?s ending
capital was $273,100,730 at December 31, 2004, an increase of
$83,044,810 from ending capital at December 31, 2003 of
$190,055,920.

The most significant trading losses of approximately 8.8%
were recorded from positions in the Japanese yen versus the U.S.
dollar. Short yen positions against the U.S. dollar recorded
losses during March, as the yen reversed higher due to
speculation that the Bank of Japan was relaxing its efforts to
weaken the yen. After reversing to long yen positions, the U.S.
dollar surged upwards against most currencies during April
following the release of stronger-than-expected U.S. jobs data,
thereby causing additional losses. The yen also came under
pressure from weakening efforts undertaken by the Japanese
government. Short yen positions incurred losses during May as
the U.S. dollar?s value declined amid fears of potential
terrorist attacks, expanding energy prices, and the release of
weaker-than-expected U.S. economic data. During June, short yen
positions experienced further losses due to the yen?s rise
prompted by better-than-anticipated improvements in Japanese
economic data. The yen continued its rise later in the month in
response to speculation that the Bank of Japan would move to
raise interest rates amid further confirmation that Japan's
economic recovery was on track. During August and September,
short yen positions also experienced losses as the U.S. dollar?s
value declined under pressure from concerns for the rate of U.S.
economic growth, soft economic data, and record-high oil prices.

Finally, long yen positions incurred losses during
December as the yen?s value declined early in the month due to
weak Japanese machinery orders and temporary U.S. dollar
strength. Additional Partnership losses of approximately 4.1%
resulted from positions in the British pound, primarily during
the fourth quarter. During both October and November, short
pound positions generated losses as the pound?s value reversed
higher amid a decline in the U.S. dollar prompted by higher oil
prices and concerns for the growing U.S. Current-Account
deficit. During December, long pound positions recorded losses
as the pound?s value declined due to weaker-than-expected U.K.
economic data and the releases of dovish minutes from the Bank
of England's December meeting, which reflected the possibility
for future interest rate cuts. Partnership losses of
approximately 2.1% were experienced from short positions in the
Mexican peso versus the U.S. dollar, primarily during the first
quarter, as the peso reversed higher in response to encouraging
signs of a recovery in the Mexican economy. Partnership losses
of approximately 1.8% resulted during the first nine months of
the year from positions in the South African rand versus the
U.S. dollar. During January and February, long rand positions
declined amid expectations for weaker gold prices caused by
improvements in the global economy. During April, long South
African rand positions versus the U.S. dollar experienced

losses as the U.S. dollar?s value moved higher amid
economic optimism. During May, short South African rand
positions incurred losses as the commodity-linked currency
reversed higher in response to rising gold prices. During July,
the U.S. dollar?s upward reversal was prompted by upbeat market
sentiment. During August, long rand positions experienced
further losses as the rand?s value moved lower due to a
reduction in interest rates by the South African Reserve Bank.
Long positions in the Norwegian krone versus the U.S. dollar
incurred losses of approximately 1.4%, primarily during the
second and third quarter, as the value of the U.S. dollar
temporarily moved higher in response to growing confidence in
the U.S. economy. A portion of the Partnership?s overall losses
for the year was offset by gains achieved primarily during the
fourth quarter from long positions in the euro, Swiss franc, and
Polish zloty versus the U.S. dollar of approximately 7.0%, 2.7%,
and 2.1%, respectively. The U.S. dollar?s value trended lower
throughout the quarter amid rising oil prices, reports of
weaker-than-expected U.S. economic data, growing U.S. Current-
Account deficit, and the investment community?s perception that
the Bush Administration would not move to intervene in the U.S.
dollar?s decline. Additional gains of approximately 2.3% and
1.9%, were recorded from long positions in the New Zealand

dollar and Brazilian real versus the U.S. dollar,
respectively, as both foreign currencies benefited from a weaker
U.S. dollar during the fourth quarter. Additionally, the New
Zealand dollar?s value moved higher as it was propelled by
stronger gold prices.

The Partnership recorded total trading results including
interest totaling $28,185,655 and expenses totaling $11,388,846,
resulting in net income of $16,796,809 for the year ended
December 31, 2003. The Partnership?s net asset value per Unit
increased from $13.93 at December 31, 2002 to $15.66 at December
31, 2003. Total redemptions and subscriptions for the year were
$13,573,717 and $90,673,376, respectively, and the Partnership?s
ending capital was $190,055,920 at December 31, 2003, an
increase of $93,896,468 from ending capital at December 31, 2002
of $96,159,452.

The most significant trading gains of approximately 12.0% were
recorded from long positions in the euro versus the U.S. dollar
as the U.S. dollar?s value weakened throughout a majority of the
year. Fears of a military conflict with Iraq, skepticism
regarding the likelihood of a U.S. economic recovery, and fears
of a potential terrorist attack resulted in gains from long euro
positions during January, April, and May. A confluence of

factors during December including concerns regarding U.S.
budget and trade deficits, a dip in consumer confidence, an
outbreak of Mad Cow Disease in the U.S., and continued fears of
a potential terrorist attack forced the U.S. dollar to retreat
further and the euro to climb. Additional gains of
approximately 8.7% resulted from long positions in the
Australian dollar versus the U.S. dollar during April, May, and
June and again during November and December as the Australian
currency strengthened in response to continued weakness in the
U.S. dollar, higher interest rates in Australia relative to
those in the U.S., and higher gold prices. Gains of
approximately 3.8% were provided by long positions in the South
African rand versus the U.S. dollar during April and December
due to significant interest rate differentials between the two
countries, economic concerns regarding U.S. budget and trade
deficits, and fears of a potential terrorist attack. Smaller
profits of approximately 2.5% were experienced from long
positions in the New Zealand dollar versus the U.S. dollar
primarily during November as the U.S. dollar?s value tumbled to
a six-year low versus the New Zealand currency. A portion of
the Partnership?s gains for the year was offset by losses of
approximately 2.4% from positions in the British pound versus
the U.S. dollar as the value of the pound strengthened during
April and May on expectations that the Bank of England would
likely leave interest rates unchanged and upon the
release of lower-than-expected unemployment data from Great
Britain. During June, losses stemmed from positions in
the pound versus the U.S. dollar as the pound?s value increased
early in the month, amid expectations that the Bank of England
would likely leave interest rates unchanged, and then reversed
lower, after the British Finance Minister released positive
comments regarding the U.K.?s entry prospects into the European
Union. Additional losses of approximately 2.3% resulted from
short positions in the Swiss franc versus the U.S. dollar during
September as the U.S. dollar?s value declined amid concerns
about the strength of the U.S. economy and the potential impact
of a statement by the G-7 countries supporting ?more flexible
exchange rates.? The G-7 countries consist of France, the U.S.,
Britain, Germany, Japan, Italy, and Canada.

The Partnership recorded total trading results including
interest totaling $16,183,891 and expenses totaling $5,900,771,
resulting in net income of $10,283,120 for the year ended
December 31, 2002. The Partnership?s net asset value per Unit
increased from $12.41 at December 31, 2001 to $13.93 at December
31, 2002. Total redemptions and subscriptions for the year were
$10,919,887 and $48,984,478, respectively, and the Partnership?s
ending capital was $96,159,452 at December 31, 2002, an increase

of $48,347,711 from ending capital at December 31, 2001 of
$47,811,741.

The most significant trading gains of approximately 16.4% were
recorded from long positions in the euro relative to the U.S.
dollar as the U.S. dollar?s value significantly weakened during
April, May, and June amid falling equity prices and concerns
regarding corporate integrity. Additional gains from long
positions in the euro, Swiss franc, and Norwegian krone were
experienced in December as the looming threat of a potential
military conflict with Iraq and North Korea further weakened the
U.S. dollar. Further gains of approximately 4.4% stemmed from
long positions in the South African rand versus the U.S. dollar
as its value approached a sixteen-month high during the second
and fourth quarter amid strong demand for South African exports
and high relative interest rates. Profits of approximately 7.3%
were recorded from long positions in the Australian dollar and
New Zealand dollar versus the U.S. dollar as the value of both
currencies strengthened during April, May, and throughout the
fourth quarter amid higher gold prices. A portion of the
Partnership?s overall gains was offset by losses of
approximately 9.0% recorded in the British pound from short
positions versus the U.S. dollar during the summer months and
into the fourth quarter as the value of the U.S. dollar
weakened amid geopolitical and economic uncertainty. Additional
losses of approximately 7.3% resulted from positions in the
Japanese yen versus the U.S. dollar during March as the yen
initially strengthened amid asset repatriation out of the U.S.
into Japan, only to retreat by month-end on expectations that
the repatriation flow would soon subside ahead of the Japanese
fiscal year-end. Further losses in the Japanese yen were
experienced in December from short positions versus the U.S.
dollar as the value of the U.S. dollar weakened versus most
major currencies.

For an analysis of unrealized gains and (losses) by contract type
and a further description of 2004 trading results, refer to the
Partnership?s Annual Report to Limited Partners for the year ended
December 31, 2004, which is incorporated by reference to Exhibit
13.01 of this Form 10-K.

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

Market Risk.
Financial Instruments. The Partnership is a party to financial
instruments with elements of off-balance sheet market and credit
risk. The Partnership trades futures contracts, options on
futures contracts, and forward contracts in global currency
markets. In entering into these contracts, the Partnership is
subject to the market risk that such contracts may be
significantly influenced by market conditions, such as interest
rate volatility, resulting in such contracts being less valuable.
If the markets should move against all of the positions held by
the Partnership at the same time, and if the Trading Advisors were
unable to offset positions of the Partnership, the Partnership
could lose all of its assets and the limited partners would
realize a 100% loss.

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

Credit Risk.
In addition to market risk, in entering into futures, forward, and
options contracts there is a credit risk to the Partnership that
the counterparty on a contract will not be able to meet its
obligations to the Partnership. The ultimate counterparty or
guarantor of the Partnership for futures, forward, and options
contracts traded in the United States and most foreign exchanges
on which the Partnership trades is the clearinghouse associated
with such exchange. In general, a clearinghouse is backed by the
membership of the exchange and will act in the event of non-
performance by one of its members or one of its member?s
customers, which should significantly reduce this credit risk.
There is no assurance that a clearinghouse, exchange, or other
exchange member will meet its obligations to the Partnership, and
Demeter and the commodity brokers will not indemnify the
Partnership against a default by such parties. Further, the law is
unclear as to whether a commodity broker has any obligation to
protect its customers from loss in the event of an exchange or
clearinghouse defaulting on trades effected for the broker?s
customers. In cases where the Partnership trades off-exchange
forward contracts with a counterparty, the sole recourse of the
Partnership will be the forward contract?s counterparty.

Demeter deals with these credit risks of the Partnership in
several ways. First, it monitors the Partnership?s credit
exposure to each exchange on a daily basis. The commodity brokers
inform the Partnership, as with all their customers, of its net

margin requirements for all its existing open positions and
Demeter has installed a system which permits it to monitor the
Partnership?s potential net credit exposure, exchange by exchange,
by adding the unrealized trading gains on each exchange, if any,
to the Partnership?s margin liability thereon.

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

Third, with respect to forward contract trading, the Partnership
trades with only those counterparties which Demeter, together with
Morgan Stanley DW, have determined to be creditworthy. The

Partnership presently deals with MS & Co. as the sole
counterparty on forward contracts.

For additional information, see the ?Financial Instruments?
section under ?Notes to Financial Statements? in the Partnership?s
Annual Report to Limited Partners for the year ended December 31,
2004, which is incorporated by reference to Exhibit 13.01 of this
Form 10-K.

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

Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards, and options. The
market-sensitive instruments held by the Partnership are acquired
for speculative trading purposes only and, as a result, all or
substantially all of the Partnership?s assets are at risk of
trading loss. Unlike an operating company, the risk of market-
sensitive instruments is inherent to the primary business activity
of the Partnership.

The futures, forwards, and options traded by the
Partnership involve varying degrees of related market risk.
Market risk is often dependent upon changes in the level or
volatility of interest rates, exchange rates, and prices of
financial instruments and commodities, factors that result in
frequent changes in the fair value of the Partnership?s open
positions, and consequently in its earnings, whether realized or
unrealized, and cash flow. Gains and losses on open positions of
exchange-traded futures, forwards, and options are settled daily
through variation margin. Gains and losses on off-exchange-traded
forward currency contracts are settled upon termination of the
contract, however, the Partnership is required to meet margin
requirements equal to the net unrealized loss on open contracts in
the Partnership accounts with the counterparty, which is
accomplished by daily maintenance of the cash balance in a custody
account held at Morgan Stanley DW for the benefit of MS & Co.

The Partnership?s total market risk may increase or decrease as
it 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.

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 Partnership?s past performance is no guarantee 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 and use of
leverage may cause future losses and volatility (i.e., ?risk of
ruin?) that far exceed the Partnership?s experiences to date under
the ?Partnership?s Value at Risk in Different Market Sectors?
section and significantly exceed the Value at Risk (?VaR?) tables
disclosed.

Limited partners will not be liable for losses exceeding the
current net asset value of their investment.

Quantifying the Partnership?s Trading Value at Risk
The following quantitative disclosures regarding the Partner-
ship?s market risk exposures contain ?forward-looking statements?
within the meaning of the safe harbor from civil liability

provided for such statements by the Private Securities
Litigation Reform Act of 1995 (set forth in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934). All quantitative disclosures in this
section are deemed to be forward-looking 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 and cash flow.

The Partnership?s risk exposure in the market sectors traded by
the Trading Advisors is estimated below in terms of VaR. The
Partnership estimates VaR using a model based upon historical
simulation (with a confidence level of 99%) which involves
constructing a distribution of hypothetical daily changes in the
value of a trading portfolio. The VaR model takes into account
linear exposures to risks including equity and commodity prices,
interest rates, foreign exchange rates, and correlation among
these variables. The hypothetical changes in portfolio value are
based on daily percentage changes observed in key market
indices or other market factors (?market risk factors?) to which
the portfolio is sensitive. The one-day 99% confidence level of

the Partnership?s VaR corresponds to the negative change in
portfolio value that, based on observed market risk factors, would
have been exceeded once in 100 trading days, or one day in 100.
VaR typically does not represent the worst case outcome. Demeter
uses approximately four years of daily market data (1,000
observations) and revalues its portfolio (using delta-gamma
approximations) for each of the historical market moves that
occurred over this time period. This generates a probability
distribution of daily ?simulated profit and loss? outcomes. The
VaR is the appropriate percentile of this distribution. For
example, the 99% one-day VaR would represent the 10th worst outcome
from Demeter?s simulated profit and loss series.

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

VaR models, including the Partnership?s, are continuously evolving
as trading portfolios become more diverse and modeling techniques
and systems capabilities improve. Please note that the VaR model
is used to numerically quantify market risk for historic reporting

purposes only and is not utilized by either Demeter or the
Trading Advisors in their daily risk management activities. Please
further note that VaR as described above may not be comparable to
similarly titled measures used by other entities.

The Partnership?s Value at Risk in Different Market Sectors
The following table indicates the VaR associated with the
Partnership?s open positions as a percentage of total net assets
by primary market risk category at December 31, 2004 and 2003. At
December 31, 2004 and 2003, the Partnership?s total capitali-
zation was approximately $273 million and $190 million,
respectively.

Primary Market December 31, 2004 December 31, 2003
Risk Category Value at Risk Value at Risk
Currency (3.93)% (2.60)%

The VaR for a market category represents the one-day downside risk
for the aggregate exposures associated with this market category.
Because the business of the Partnership is the speculative trading
of futures, forwards, and options, the composition of its trading
portfolio can change significantly over any given time period, or
even within a single trading day, which could positively or
negatively materially impact market risk as measured by VaR.

The table below supplements the December 31, 2004 VaR set
forth above by presenting the Partnership?s high, low, and
average VaR, as a percentage of total net assets for the four
quarter-end reporting periods from January 1, 2004 through
December 31, 2004.

Primary Market Risk Category High Low Average

Currency (3.93)% (0.84)% (1.80)%

Limitations on Value at Risk as an Assessment of Market Risk
VaR models permit estimation of a portfolio?s aggregate market
risk exposure, incorporating a range of varied market risks;
reflect risk reduction due to portfolio diversification or
hedging activities; and can cover a wide range of portfolio
assets. However, VaR risk measures should be viewed in light of
the methodology?s limitations, which include, but may not be
limited to 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 market fluctuations applied to
current 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.

In addition, the VaR tables above, as well as the past
performance of the Partnership, give no indication of the
Partnership?s potential ?risk of ruin?.

The VaR tables provided present the results of the Partnership?s
VaR for its market risk exposure at December 31, 2003, and for the
four quarter-end reporting periods during calendar year 2004. VaR
is not necessarily representative of the Partnership?s historic
risk, nor should it be used to predict the Partnership?s future
financial performance or its ability to manage or monitor risk.
There can be no assurance that the Partnership?s actual losses on
a particular day will not exceed the VaR amounts indicated above
or that such losses will not occur more than once in 100 trading
days.

Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances. The Partnership did not have any foreign currency
balances at December 31, 2004.

The Partnership also maintains a substantial portion
(approximately 85% as of December 31, 2004) of its available
assets in cash at Morgan Stanley DW. A decline in short-term
interest rates would result in a decline in the Partnership?s cash
management income. This cash flow risk is not considered to be
material.

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

Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership?s
market risk exposures ? except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
Partnership manages its primary market risk exposures ? constitute

forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act.
The Partnership?s primary market risk exposures, as well as the
strategies used and to be used by Demeter and the Trading Advisors
for managing such exposures, are subject to numerous
uncertainties, contingencies and risks, any one of which could
cause the actual results of the Partnership?s risk controls to
differ materially from the objectives of such strategies.
Government interventions, defaults and expropriations, illiquid
markets, the emergence of dominant fundamental factors, political
upheavals, changes in historical price relationships, an influx of
new market participants, increased regulation, and many other
factors could result in material losses, as well as in material
changes to the risk exposures and the risk management strategies
of the Partnership. Investors must be prepared to lose all or
substantially all of their investment in the Partnership.

The following was the only trading risk exposure of the
Partnership at December 31, 2004. It may be anticipated, however,
that market exposure will vary materially over time.

Currency. At December 31, 2004, the Partnership had market
exposure in the currency sector. The Partnership?s currency
market exposure at December 31, 2004 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. At
December 31, 2004, the Partnership?s exposure was 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
associated with the Partnership?s currency trades will change
significantly in the future.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
At December 31, 2004, 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 the market exposure by diversifying the Partnership?s
assets among different Trading Advisors in a multi-advisor
Partnership, each of whose strategies focus on different market
sectors and trading approaches, and by monitoring the performance
of the Trading Advisors daily. In addition, the Trading Advisors
establish diversification guidelines, often set in terms of the
maximum margin to be committed to positions in any one market
sector or market-sensitive instrument.

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

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements are incorporated by reference to the
Partnership's Annual Report, which is filed as Exhibit 13.01
hereto.

Supplementary data specified by Item 302 of Regulation S-K:

Summary of Quarterly Results (Unaudited)

Quarter Total Trading Results Net Net Income/
Ended including interest Income/(Loss) (Loss) Per Unit

2004
March 31 $(13,624,011) $(17,153,573) $ (1.25)
June 30 (19,529,341) (23,130,916) (1.48)
September 30 (19,847,451) (23,397,173) (1.35)
December 31 55,633,510 51,772,955 2.83

Total $ 2,632,707 $(11,908,707) $ (1.25)
2003
March 31 $ 6,321,965 $ 3,660,402 $ 0.55
June 30 6,641,296 3,268,861 0.45
September 30 (5,055,352) (7,367,330) (0.79)
December 31 20,277,746 17,234,876 1.52

Total $ 28,185,655 $16,796,809 $ 1.73

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

None.

Item 9A. CONTROLS AND PROCEDURES
(a) As of the end of the period covered by this annual
report, the President and Chief Financial Officer of
Demeter, the general partner of the Partnership, 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 material changes during the period
covered by this annual report in the Partnership?s
internal controls or in other factors that could
significantly affect these controls subsequent to the
date of their evaluation.

Management?s Report on Internal Control Over Financial Reporting
Demeter is responsible for the management of the Partnership.

Management of Demeter (?Management?) is responsible for
establishing and maintaining adequate internal control over
financial reporting. The internal control over financial
reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles.

The Partnership?s internal control over financial reporting
includes those policies and procedures that:

* Pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Partnership;

* Provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and
that the Partnership?s transactions are being made only in
accordance with authorizations of Management and directors;
and

* Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of
the Partnership?s assets that could have a material effect on
the financial statements.

Because of its inherent limitations, internal control
over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures
may deteriorate.

Management assessed the effectiveness of the Partnership?s
internal control over financial reporting as of December 31,
2004. In making this assessment, Management used the criteria
set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated Framework.
Based on our assessment and those criteria, Management believes
that the Partnership maintained effective internal control over
financial reporting as of December 31, 2004.

Deloitte & Touche LLP, the Partnership?s independent registered
public accounting firm, has issued an audit report on Management?s
assessment of the Partnership?s internal control over financial
reporting and on the effectiveness of the Partnership?s internal
control over financial reporting. This report, which expresses
unqualified opinions on Management?s assessment and on the
effectiveness of the Partnership?s internal control over financial
reporting, appears under ?Report of Independent Registered Public
Accounting Firm? in the Partnership?s Annual Report to
Limited Partners for the year ended December 31, 2004.
- - 40 -
Item 9B. OTHER INFORMATION
The Board of Directors of Demeter, the general partner of the
registrant, approved the engagement of Ernst & Young LLP as the
registrant?s principal accountant for tax purposes. Ernst & Young
LLP was engaged by the registrant on November 1, 2004. Deloitte &
Touche LLP will continue as the registrant?s principal accountant
and audit the financial statements of the registrant.

There have been no material disagreements with Deloitte & Touche
LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

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

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

Mr. Jeffrey D. Hahn resigned his position as Chief Financial
Officer and Director of Demeter.

Mr. Jeffrey S. Swartz resigned his position as a Director of
Demeter.

Mr. Jeffrey A. Rothman, age 43, is the Chairman of the Board of
Directors and President of Demeter. Mr. Rothman is the Managing
Director of Morgan Stanley Managed Futures, responsible for
overseeing all aspects of the firm?s managed futures department.
Mr. Rothman has been with the managed futures department for
eighteen years. Throughout his career, Mr. Rothman has helped
with the development, marketing, and administration of
approximately 40 commodity pools. Mr. Rothman is an active member
of the Managed Funds Association and has recently served on its
Board of Directors. Mr. Rothman has a B.A. degree in Liberal Arts
from Brooklyn College, New York.

Mr. Richard A. Beech, age 53, is a Director of Demeter.
Mr. Beech has been associated with the futures industry for over
25 years. He has been at Morgan Stanley DW since August 1984 where
he is presently an Executive Director and head of Futures, Forex &
Metals. Mr. Beech began his career at the Chicago Mercantile
Exchange, where he became the Chief Agricultural Economist doing
market analysis, marketing, and compliance. Prior to joining
Morgan Stanley DW, Mr. Beech worked at two investment banking
firms in operations, research, managed futures, and sales
management. Mr. Beech has a B.S. degree in Business
Administration from Ohio State University and an M.B.A. degree
from Virginia Polytechnic Institute and State University.

Mr. Raymond A. Harris, age 48, is a Director of Demeter. Mr.
Harris is currently Managing Director and head of Client Solutions
for Morgan Stanley Individual Investor Group (?IIG?), a Board
Member of Morgan Stanley DW Inc., and Director of Morgan Stanley
Trust. Mr. Harris joined Morgan Stanley in 1982 and served in
financial and operational assignments for Dean Witter Reynolds.
In 1994, he joined the Discover Financial Services division,
leading restructuring and product development efforts. Mr. Harris
became Chief Administrative Officer for Morgan Stanley Investment
Management in 1999. In 2001, he was named head of Global Products

and Services for Investment Management. Mr. Harris has an
M.B.A. in Finance from the University of Chicago and a B.A. degree
from Boston College.

Mr. Frank Zafran, age 50, is a Director of Demeter. Mr. Zafran is
an Executive Director of Morgan Stanley and, in September 2002,
was named Chief Administrative Officer of Morgan Stanley?s Client
Solutions Division. Mr. Zafran joined the firm in 1979 and has
held various positions in Corporate Accounting and the Insurance
Department, including Senior Operations Officer ? Insurance
Division, until his appointment in 2000 as Director of 401(k) Plan
Services, responsible for all aspects of 401(k) Plan Services
including marketing, sales, and operations. Mr. Zafran received a
B.S. degree in Accounting from Brooklyn College, New York.

Mr. Douglas J. Ketterer, age 39, is a Director of Demeter. Mr.
Ketterer is a Managing Director and has had responsibility for
managing a number of departments at Morgan Stanley over the years,
most recently as head of the Investment Solutions Group, which is
comprised of a number of departments which offer products and
services through Morgan Stanley?s IIG (including Managed Futures,
Alternative Investments, Insurance Services, Personal Trust,

Corporate Services, and others). Mr. Ketterer joined the
firm in 1990 in the Corporate Finance Division as a part of the
Retail Products Group. He later moved to the origination side of
Investment Banking, and then, after the merger between Morgan
Stanley and Dean Witter, served in the Product Development Group
at Morgan Stanley Dean Witter Advisors (now known as Morgan
Stanley Funds). From the summer of 2000 to the summer of 2002,
Mr. Ketterer served as the Chief Administrative Officer for Morgan
Stanley Investment Management, where he headed the Strategic
Planning & Administrative Group. Mr. Ketterer received his M.B.A.
from New York University?s Leonard N. Stern School of Business and
his B.S. in Finance from the University at Albany?s School of
Business.

Mr. Todd Taylor, age 42, is a Director of Demeter. Mr. Taylor
began his career with Morgan Stanley in June 1987 as a Financial
Advisor in the Dallas office. In 1995, he joined the Management
Training Program in New York and was appointed Branch Manager of
the Missouri and southern Illinois branch offices in 1997. Three
years later, in 2000, Mr. Taylor was appointed to a newly created
position, Director of IIG Learning and Development, before
becoming the Director of IIG Strategy in 2002. Most recently, Mr.
Taylor has taken on a new role as the High Net Worth Segment

Director. Mr. Taylor graduated from Texas Tech University
with a B.B.A. in Finance.

Mr. William D. Seugling, age 35, is a Director of Demeter. Mr.
Seugling is a Managing Director at Morgan Stanley and currently
serves as Director of Client Solutions for U.S. Private Wealth
Management. Mr. Seugling joined Morgan Stanley in June 1993 as
an Associate in Equity Structured Products having previously
worked in research and consulting for Greenwich Associates from
October 1991 to June 1993. Since 1994, he has focused broadly
on analysis and solutions for wealthy individuals and families
culminating in his current role within the division. He was
named Vice President in 1996 and an Executive Director in 1999.
Mr. Seugling graduated cum laude from Bucknell University with a
B.S. in Management and a concentration in Chemistry.

Ms. Louise M. Wasso-Jonikas, age 51, is a Director of Demeter.
Ms. Wasso-Jonikas is a Managing Director of Morgan Stanley and
the Director of Alternative Investments for the IIG of Morgan
Stanley. Ms. Wasso-Jonikas was Co-Founder, President, and Chief
Operating Officer of Graystone Partners, an objective consulting
firm, from 1993 to 1999, when Graystone was acquired by Morgan

Stanley. Prior to founding Graystone, Ms. Wasso-Jonikas
was a Senior Vice President at Bessemer Trust and opened their
Chicago office. She also was a Vice President at the Northern
Trust in their Wealth Management Services Group where she worked
exclusively with their largest private clients and family
offices throughout the U.S. and abroad, serving their broad
investment and custody needs. Ms. Wasso-Jonikas also worked as
an equity block trader with Goldman Sachs and with Morgan
Stanley advising and managing money for private clients. Ms.
Wasso-Jonikas? focus is on developing a robust external manager
platform utilizing alternative managers for Morgan Stanley?s IIG
private clients as well as overseeing some of the Morgan
Stanley?s largest client relationships. Ms. Wasso-Jonikas holds
a B.A. in Economics from Mount Holyoke College and an M.B.A in
Finance from the University of Chicago Graduate School of
Business.

Mr. Kevin Perry, age 35, is the Chief Financial Officer of
Demeter. Mr. Perry currently serves as an Executive Director
and Controller within the IIG at Morgan Stanley. Mr. Perry
joined Morgan Stanley in October 2000 and is also Chief
Financial Officer of Morgan Stanley Trust National Association,
Van Kampen Funds Inc., and Morgan Stanley Distribution, Inc.

Prior to joining Morgan Stanley, Mr. Perry worked as an
auditor and consultant in the financial services practice of
Ernst & Young LLP from October 1991 to October 2000. Mr. Perry
received a B.S. degree in Accounting from the University of
Notre Dame in 1991 and is a Certified Public Accountant.
All of the foregoing directors have indefinite terms.

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

Code of Ethics
The Partnership has not adopted a code of ethics that applies to
the Partnership?s principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions. The Partnership is operated by its
general partner, Demeter. The President, Chief Financial Officer,
and each member of the Board of Directors of Demeter are employees

of Morgan Stanley and are subject to the code of ethics
adopted by Morgan Stanley, the text of which can be viewed on
Morgan Stanley?s website at
http://www.morganstanley.com/ourcommitment/ codeofconduct.html.

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

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners ? At December
31, 2004, there were no persons known to be beneficial owners of
more than 5 percent of the Units.

(b) Security Ownership of Management - At December 31, 2004,
Demeter owned 199,150.709 Units of general partnership interest,
representing a 1.05 percent interest in the Partnership.

(c) Changes in Control ? None.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Refer to Note 2 - "Related Party Transactions" of "Notes to
Financial Statements", in the accompanying Annual Report to
Limited Partners for the year ended December 31, 2004, which is
incorporated by reference to Exhibit 13.01 of this Form 10-K. In
its capacity as the Partnership's retail commodity broker, Morgan
Stanley DW received commodity brokerage fees (paid and accrued by
the Partnership) of $10,011,029 for the year ended December 31,
2004.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Morgan Stanley DW, on behalf of the Partnership, pays all
accounting fees. The Partnership reimburses Morgan Stanley DW
through the brokerage fees it pays, as discussed in the Notes to
Financial Statements in the Annual Report to the Limited Partners
for the year ended December 31, 2004.

(1) Audit Fees. The aggregate fees for professional services
rendered by Deloitte & Touche LLP in connection with their audit
of the Partnership?s financial statements and reviews of the
financial statements included in the Quarterly Reports on Form
10-Q, and in connection with statutory and regulatory filings for
the year ended December 31, 2004 were approximately $34,050 and
for the year ended December 31, 2003 were $31,170.

(2) Audit-Related Fees. There were no fees for assurance and
related services rendered by Deloitte & Touche LLP for the years
ended December 31, 2004 and 2003.

(3) Tax Fees. The aggregate fees for tax compliance services
rendered by Ernst & Young LLP were approximately $30,446 and
Deloitte & Touche LLP were $29,559 for the years ended December
31, 2004 and 2003, respectively.

(4) All Other Fees. None.

As of the date of this Report, the Board of Directors of Demeter
has not adopted pre-approval policies and procedures. As a
result, all services provided by Ernst & Young LLP and Deloitte &
Touche LLP must be directly pre-approved by the Board of Directors
of Demeter. Additionally, all services provided by Deloitte &
Touche LLP are borne by Morgan Stanley through the brokerage fees
paid by the Partnership. Such services must be directly pre-
approved by Morgan Stanley?s Audit Director and Principal
Accounting Officer. All services provided by Ernst & Young LLP
must be communicated to Morgan Stanley?s Audit Director.

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1. Listing of Financial Statements
The following financial statements and report of independent
registered public accounting firm, all appearing in the
accompanying Annual Report to Limited Partners for the year ended
December 31, 2004, are incorporated by reference to Exhibit 13.01
of this Form 10-K:
- - Report of Deloitte & Touche LLP, independent registered public
accounting firm, for the years ended December 31, 2004, 2003,
and 2002.

- - Statements of Financial Condition, including the Schedules of
Investments, as of December 31, 2004 and 2003.

- - Statements of Operations, Changes in Partners' Capital, and
Cash Flows for the years ended December 31, 2004, 2003, and
2002.

- - Notes to Financial Statements.

With the exception of the aforementioned information and the
information incorporated in Items 7, 8, and 13, the Annual Report
to Limited Partners for the year ended December 31, 2004 is not
deemed to be filed with this report.

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

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

SIGNATURES

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

MORGAN STANLEY SPECTRUM CURRENCY L.P.
(Registrant)

BY: Demeter Management Corporation,
General Partner

March 31, 2005 BY: /s/ Jeffrey A. Rothman
Jeffrey A. Rothman,
President

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

Demeter Management Corporation.

BY: /s/ Jeffrey A. Rothman March 31, 2005
Jeffrey A. Rothman, President

/s/ Richard A. Beech March 31, 2005
Richard A. Beech, Director

/s/ Raymond A. Harris March 31, 2005
Raymond A. Harris, Director

/s/ Frank Zafran March 31, 2005
Frank Zafran, Director

/s/ Douglas J. Ketterer March 31, 2005
Douglas J. Ketterer, Director

/s/ Todd Taylor March 31, 2005
Todd Taylor, Director

/s/ William D. Seugling March 31, 2005
William D. Seugling, Director

/s/ Louise M. Wasso-Jonikas March 31, 2005
Louise M. Wasso-Jonikas, Director

/s/ Kevin Perry March 31, 2005
Kevin Perry, Chief Financial Officer

EXHIBIT INDEX
ITEM

3.01 Form of Amended and Restated Limited Partnership
Agreement of the Partnership, is incorporated by
reference to Exhibit A of the Partnership?s
Prospectus, dated April 28, 2004, filed with the
Securities and Exchange Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933 on May 4,
2004.

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 Exhibit 3.01 of
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 10.01
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.

10.01(a) Amendment to Management Agreement, dated as of
November 30, 2000, among the Partnership, John W.
Henry & Company, Inc., and Demeter 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 January 3, 2001.

10.02 Management Agreement among the Partnership, Demeter,
and Sunrise Capital Partners, LLC, dated as of March
6, 2000, is incorporated by reference to Exhibit 10.02
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(a) Amendment to Management Agreement, dated as
of November 30, 2000, among the Partnership, Sunrise
Capital Partners, LLC, and Demeter 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 January 3, 2001.

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., 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 April 28, 2004, filed
with the Securities and Exchange Commission pursuant
to Rule 424(b)(3) under the Securities Act of 1933 on
May 4, 2004.
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 April 28, 2004, filed with the
Securities and Exchange Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933 on May 4,
2004.
10.09 Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW, 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 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. 0-31563) filed with
the Securities and Exchange Commission on November 1,
2001.
10.11 Foreign Exchange and Options Master Agreement between
MS & Co. and the Partnership, dated as of June 30,
2000, is incorporated by reference to Exhibit 10.04 of
the Partnership?s Form 8-K (File No. 0-31563) filed
with the Securities and Exchange Commission on
November 1, 2001.

10.12 Securities Account Control Agreement among the
Partnership, MS & Co., and Morgan Stanley DW, 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.

13.10 December 31, 2004 Annual Report to Limited Partners is
filed herewith.
31.01 Certification of President of Demeter Management
Corporation, the general partner of the Partnership
pursuant to 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 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.

Morgan Stanley
Spectrum Series

December 31, 2004
Annual Report

[LOGO] Morgan Stanley

MORGAN STANLEY SPECTRUM SERIES

HISTORICAL FUND PERFORMANCE

Presented below is the percentage change in Net Asset Value per Unit from the
start of every calendar year each Fund has traded. Also provided is the
inception-to-date return and the compound annualized return since inception for
each Fund. Past performance is no guarantee of future results.

INCEPTION-
TO-DATE
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 RETURN
FUND % % % % % % % % % % % % % % %
- ------------------------------------------------------------------------------------------------------------------------

Spectrum Currency. -- -- -- -- -- -- -- -- -- 11.7 11.1 12.2 12.4 (8.0) 44.1
(6 mos.)
- ------------------------------------------------------------------------------------------------------------------------
Spectrum Global
Balanced......... -- -- -- (1.7) 22.8 (3.6) 18.2 16.4 0.8 0.9 (0.3) (10.1) 6.2 (5.6) 46.1
(2 mos.)
- ------------------------------------------------------------------------------------------------------------------------
Spectrum Select... 31.2 (14.4) 41.6 (5.1) 23.6 5.3 6.2 14.2 (7.6) 7.1 1.7 15.4 9.6 (4.7) 188.8
(5 mos.)
- ------------------------------------------------------------------------------------------------------------------------
Spectrum Strategic -- -- -- 0.1 10.5 (3.5) 0.4 7.8 37.2 (33.1) (0.6) 9.4 24.0 1.7 45.6
(2 mos.)
- ------------------------------------------------------------------------------------------------------------------------
Spectrum Technical -- -- -- (2.2) 17.6 18.3 7.5 10.2 (7.5) 7.8 (7.2) 23.3 23.0 4.4 136.3
(2 mos.)
- ------------------------------------------------------------------------------------------------------------------------

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

Spectrum Currency. 8.5

- -----------------------------
Spectrum Global
Balanced......... 3.8

- -----------------------------
Spectrum Select... 8.2

- -----------------------------
Spectrum Strategic 3.8

- -----------------------------
Spectrum Technical 8.8

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

DEMETER MANAGEMENT CORPORATION

330 Madison Avenue, 8th Floor
New York, NY 10017
(212) 905-2700

MORGAN STANLEY SPECTRUM SERIES
ANNUAL REPORT
2004

Dear Limited Partner:

This marks the fifth annual report for Morgan Stanley Spectrum Currency L.P.,
the eleventh annual report for Morgan Stanley Spectrum Global Balanced L.P.,
Morgan Stanley Spectrum Strategic L.P., and Morgan Stanley Spectrum Technical
L.P., and the fourteenth annual report for Morgan Stanley Spectrum Select L.P.
The Net Asset Value per Unit for each of the five Morgan Stanley Spectrum Funds
("Fund(s)") as of December 31, 2004 was as follows:

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

Spectrum Currency $14.41 -8.0%
----------------------------------------
Spectrum Global Balanced $14.61 -5.6%
----------------------------------------
Spectrum Select $28.88 -4.7%
----------------------------------------
Spectrum Strategic $14.56 1.7%
----------------------------------------
Spectrum Technical $23.63 4.4%
----------------------------------------

Since its inception in July 2000, Spectrum Currency has increased by 44.1% (a
compound annualized return of 8.5%). Since their inception in November 1994,
Spectrum Global Balanced has increased by 46.1% (a compound annualized return
of 3.8%), Spectrum Strategic has increased by 45.6% (a compound annualized
return of 3.8%), and Spectrum Technical has increased by 136.3% (a compound
annualized return of 8.8%). Since its inception in August 1991, Spectrum Select
has increased by 188.8% (a compound annualized return of 8.2%).

Detailed performance information for each Fund is located in the body of the
financial report. For each Fund, we provide a trading results by sector chart
that portrays trading gains and trading losses for the year in each sector in
which the Fund participates. In the case of Spectrum Currency, we provide the
trading gains and trading losses

for the five major currencies in which the Fund participates, and composite
information for all other "minor" currencies traded within the Fund.

The trading results by sector charts indicate the year's composite percentage
returns generated by the specific assets dedicated to trading within each
market sector in which each Fund participates. Please note that there is not an
equal amount of assets in each market sector, and the specific allocations of
assets by a Fund to each sector will vary over time within a predetermined
range. Below each chart is a description of the factors that influenced trading
gains and trading losses within each Fund during the year.

Should you have any questions concerning this report, please feel free to
contact Demeter Management Corporation, 330 Madison Avenue, 8th Floor, New
York, NY 10017 or your Morgan Stanley Financial Advisor.

I hereby affirm, that to the best of my knowledge and belief, the information
contained in this report is accurate and complete. Past performance is no
guarantee of future results.

Sincerely,

/s/ Jeffrey A. Rothman
Jeffrey A. Rothman
Chairman of the Board of Directors and President
Demeter Management Corporation
General Partner for
Morgan Stanley Spectrum Currency L.P.
Morgan Stanley Spectrum Global Balanced L.P.
Morgan Stanley Spectrum Select L.P.
Morgan Stanley Spectrum Strategic L.P.
Morgan Stanley Spectrum Technical L.P.

SPECTRUM CURRENCY

[CHART]

Year ended December 31, 2004
----------------------------
Australian dollar 0.08
British pound -4.12
Euro 6.98
Japanese yen -8.81
Swiss franc 2.72
Minor currencies 2.30

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. Partnership gains were achieved from long positions in the euro, Swiss
franc, and Polish zloty versus the U.S. dollar, primarily during the fourth
quarter. The U.S. dollar's value trended lower throughout the quarter amid
rising oil prices, reports of weaker-than-expected U.S. economic data, a
growing U.S. Current-Account deficit, and the investment community's
perception that the Bush administration would not move to intervene in the
U.S. dollar's decline.

.. Additional gains resulted from long positions in the New Zealand dollar and
Brazilian real versus the U.S. dollar as both foreign currencies benefited
from a weaker U.S. dollar during the fourth quarter. Additionally, the New
Zealand dollar's value moved higher as it was propelled by stronger gold
prices.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. The most significant losses were recorded from positions in the Japanese yen
versus the U.S. dollar. Short yen positions against the U.S. dollar recorded
losses during March, as the yen reversed higher due to speculation that the
Bank of Japan was relaxing its efforts to weaken the yen. After reversing to
long yen positions, the U.S. dollar surged upwards against most currencies
during April following the release of stronger-than-expected U.S. jobs data,
thereby causing additional losses. The yen also came under pressure from
weakening efforts undertaken by the Japanese government. Short yen positions
incurred losses during May as the U.S. dollar's value declined amid fears of
potential terrorist attacks, expanding energy prices, and the

SPECTRUM CURRENCY

release of weaker-than-expected U.S. economic data. During June, short yen
positions experienced further losses due to the yen's rise prompted by
better-than-anticipated improvements in Japanese economic data. The yen
continued its rise later in the month in response to speculation that the
Bank of Japan would move to raise interest rates amid further confirmation
that Japan's economic recovery was on track. During August and September,
short yen positions also experienced losses as the U.S. dollar's value
declined under pressure from concerns for the rate of U.S. economic growth,
soft economic data, and record-high oil prices. Finally, long yen positions
incurred losses during December as the yen's value declined early in the
month due to weak Japanese machinery orders and temporary U.S. dollar
strength.

.. Additional losses resulted from positions in the British pound, primarily
during the fourth quarter. During both October and November, short pound
positions generated losses as the pound's value reversed higher amid a
decline in the U.S. dollar prompted by higher oil prices and concerns for
the growing U.S. Current-Account deficit. During December, long pound
positions recorded losses as the pound's value declined due to
weaker-than-expected U.K. economic data and the releases of dovish minutes
from the Bank of England's December meeting, which reflected the possibility
for future interest rate cuts.

.. Losses were also experienced from short positions in the Mexican peso versus
the U.S. dollar, primarily during the first quarter, as the peso reversed
higher in response to encouraging signs of a recovery in the Mexican economy.

.. Positions in the South African rand versus the U.S. dollar also incurred
losses during the first nine months of the year. During January and
February, long rand positions declined amid expectations for weaker gold
prices caused by improvements in the global economy. During April, long
South African rand positions versus the U.S. dollar experienced losses as
the U.S. dollar's value moved higher amid economic optimism. During May,
short South African rand positions incurred losses as the commodity-linked
currency reversed higher in response to rising gold prices. During July, the
U.S. dollar's upward reversal was prompted by upbeat market sentiment.
During August, long rand positions experienced further losses as the rand's
value moved lower due to a reduction in interest rates by the South African
Reserve Bank.

.. Long positions in the Norwegian krona versus the U.S. dollar incurred
smaller losses, primarily during the second and third quarter, as the value
of the U.S. dollar temporarily moved higher in response to growing
confidence in the U.S. economy.

SPECTRUM GLOBAL BALANCED

[CHART]

Year ended December 31, 2004
----------------------------
Currencies -1.96
Interest Rates 0.51
Stock Indices 1.92
Energies 0.61
Metals -1.44
Agriculturals -1.30

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

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. Losses were recorded in the currency markets during the first nine months of
the year. During the first quarter, long cross-rate positions in the Swiss
franc versus the Japanese yen resulted in losses as the yen's value reversed
higher due to speculation that the Bank of Japan was relaxing its efforts to
weaken the yen. Long positions in the U.S. dollar index were also
unprofitable as the U.S. dollar's value declined due to a reduction in Bank
of Japan intervention activity. During the second quarter, losses were
incurred from long positions in the Japanese yen versus the U.S. dollar as
the U.S. dollar surged following the release of stronger-than-expected U.S.
jobs data. The yen also came under pressure from weakening efforts by
Japanese government currency market interventions. Losses were also incurred
from short U.S. dollar positions against the South African rand as the U.S.
dollar benefited from rising U.S. interest rates and the perception that the
U.S. economy was experiencing a sustainable recovery. During the third
quarter, short cross-rate positions in the Australian dollar versus the
Japanese yen incurred losses as the Australian currency reversed higher amid
speculation for increases in Australian interest rates. During August,
losses were experienced from short positions in the Japanese yen versus the
U.S. dollar, Swiss franc, Australian dollar, and the euro as the value of
the yen moved higher due to higher Japanese equity prices and the release of
positive Japanese economic data. During September, short positions in the
Mexican peso versus the U.S. dollar resulted in losses as the U.S. dollar
reversed lower amid perceptions that the U.S. Federal Reserve reformed their
outlook regarding aggressive increases in interest rates. Long positions in
the Japanese yen versus the U.S. dollar also resulted in losses during
September as the yen declined due to

SPECTRUM GLOBAL BALANCED

Japan's swelling national debt and a reversal of the U.S. dollar's value in
response to a hike in U.S. interest rates.

.. Additional losses were established in the metals markets from positions in
base metals. Long futures positions in nickel experienced losses as prices
fell due to a strengthening of the U.S. dollar during January. Short nickel
futures positions during May experienced losses as prices increased due to
weakness in the U.S. dollar and strong Asian demand. During the third
quarter, further sector losses resulted from long nickel futures positions
after prices declined amid a slowdown in demand from China. Newly
established long futures positions created further losses during the fourth
quarter as prices weakened amid concern for demand and an advancing U.S.
dollar.

.. In the agricultural markets, losses were incurred from positions in soybean
oil, sugar, and cocoa. Short futures positions in soybean oil generated
losses after prices reversed higher amid news of reduced supply, strong
Chinese export demand, and rumors that U.S. soybean crops were possibly
infected by a damaging fungus. Long futures positions in sugar incurred
losses during August, October, and November as prices for the commodity
moved lower in response to technically-based selling and news of weaker
demand. Losses were also experienced from positions in cocoa as a result of
"whipsawing" in prices due to supply and demand concerns throughout most of
the year.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. Gains were achieved in the global stock index markets, primarily during
November and December from long positions in European and U.S. stock index
futures as prices advanced in response to a decline in oil prices, positive
consumer sentiment, and an increase in corporate earnings.

.. Partnership gains were achieved in the energy markets, primarily during the
third quarter, from long futures positions in crude oil and its related
products as prices trended higher amid heavy market demand and supply
concerns.

.. Gains achieved in the global interest rates markets resulted during the
first and third quarter of the year from long positions in U.S. and European
interest rate futures. During the first quarter, long positions benefited
from a rally in bond prices sparked by low inflation and reduced concerns
for increases in interest rates. Long positions also profited during the
third quarter as prices trended higher in response to a surge in oil prices,
a drop in equity prices, and a conflicted economic picture generated by U.S.
economic reports.

SPECTRUM SELECT

[CHART]

Year ended December 31, 2004
----------------------------
Currencies 0.76
Interest Rates -2.51
Stock Indices -0.45
Energies 4.74
Metals 1.54
Agriculturals 1.67

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. Gains were recorded in the energy markets, primarily during February, May,
throughout the third quarter, and in October, from long futures positions in
crude oil and its related products as prices advanced upwards amid concerns
for market supply, falling inventory levels, and heavy market demand.

.. Additional Partnership gains achieved in the agricultural markets, primarily
during the first quarter, resulted from long futures positions in corn,
soybeans, and soybean-related products as prices for these commodities
finished higher amid strong, steady demand from Asia.

.. In the metals markets, gains were recorded primarily during the first
quarter from long futures positions in base metals as prices moved higher in
response to increased demand from China coupled with a weaker U.S. dollar.
Long futures positions in industrial metals held during October were also
profitable due to the drop in the U.S. dollar prompted by the investment
community's perception that the Bush administration would not take steps to
stem the U.S. dollar's decline.

.. Relatively smaller Partnership gains resulted from trading in the currency
markets, primarily during October and November. Long positions in the euro
and Swiss franc versus the U.S. dollar benefited from a declining U.S.
dollar trend triggered by prospects for lower U.S. interest rates, higher
oil prices, concern for the growing U.S. Current-Account deficit, and
beliefs that the Bush administration would not act to curb the decline in
the U.S. dollar.

SPECTRUM SELECT

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. Losses were incurred in the global interest rate sector, particularly during
the second and third quarter, from positions in U.S. and Australian interest
rate futures. During January, long positions in U.S. interest rate futures
experienced losses as prices declined following comments from the U.S.
Federal Reserve concerning a shift in the U.S. Federal Reserve's interest
rate policy. Short positions in Australian interest rate futures deepened
sector losses as prices reversed higher during the final week of January.
During April, long U.S. interest rate futures positions incurred losses as
prices tumbled following the release of stronger-than-expected U.S. jobs
data. During May, short positions in global bond futures experienced losses
as prices moved higher during the latter half of the month due to
uncertainty in global equity prices, weaker-than-expected economic data,
stronger energy prices, and geopolitical concerns. During June, short
positions experienced losses as prices rallied on weaker-than-expected
economic reports and expectations that the U.S. Federal Reserve would not
aggressively tighten U.S. interest rates. During July, short positions in
U.S. interest rate futures recorded losses as prices moved higher after the
release of disappointing U.S. unemployment data. Additional losses were
incurred from newly established long U.S. interest rate futures positions
after prices moved lower following Federal Reserve Chairman Alan Greenspan's
upbeat assessment of the U.S. economy. During September, long positions in
U.S. interest rate futures resulted in losses as prices declined due to
expectations for rising interest rates prompted by the release of positive
U.S. economic data.

.. Smaller Partnership losses resulted from trading in the global stock index
sector, primarily during the second and third quarter, via positions in
Asian equity index futures. During the second quarter, long positions in
these markets incurred losses as global equity prices were negatively
impacted by geopolitical concerns and expanding energy prices. Newly
established short Asian equity index positions experienced losses as prices
rebounded during the second quarter amid a slight pullback in oil prices and
strong earnings from technology companies. During the third quarter, long
Asian equity index positions experienced losses as prices reversed lower due
to the release of disappointing U.S. employment data, surging energy prices,
and new warnings concerning potential terrorist activity.

SPECTRUM STRATEGIC

[CHART]

Year ended December 31, 2004
----------------------------
Currencies -0.65
Interest Rates 0.96
Stock Indices -2.05
Energies -0.56
Metals 4.67
Agriculturals 8.31

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. The most significant gains were recorded in the agricultural markets,
primarily during the first five months of the year, from long futures
positions in soybeans, soybean-related products, corn, and sugar. During the
first quarter, soybean and corn prices finished higher, especially during
February, due to increased exports abroad and greater demand from Asia. Long
futures positions in sugar also benefited as prices rallied during April and
June amid diminished market supply, increasing demand and inflation concerns.

.. In the metals markets, gains were recorded primarily during the first
quarter and the final two months of the year, from long futures positions in
base metals. During the first quarter, prices trended higher due to a
declining U.S. dollar and increased demand from Asia. During September, long
base metals futures positions benefited as prices moved higher in response
to continued demand from China and reports of lower-than-expected
inventories. During November and December, long base metals positions
continued to profit from the decline in the U.S. dollar.

.. Relatively smaller Partnership gains achieved in the global interest rate
markets occurred primarily during the first and third quarter of the year
from long positions in European interest rate futures. During the first
quarter, long positions profited as global bond prices rallied in response
to a lack of inflation and no increases in interest rates by the European
Central Bank. Prices also trended higher during March amid uncertainty in
the equity markets, disappointing U.S. economic data and "safe-haven" buying
following the terrorist attack in Madrid. During the third quarter, long
European interest

SPECTRUM STRATEGIC

rate futures positions profited after prices trended higher amid rising oil
prices, a drop in equity prices, and concern for economic growth.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. Losses were incurred in the global stock index markets, primarily during the
first and third quarter of the year. During the first quarter, long European
and Japanese equity index futures positions were unprofitable as equity
prices dropped during February and early March amid weakness in the U.S.
technology sector and growing geopolitical uncertainty. During the third
quarter, long European, Asian, and U.S. stock index futures experienced
losses as prices reversed lower during July due to the release of
disappointing U.S. employment data, surging energy prices, and concern for
potential terrorist attacks.

.. Losses in the currency markets resulted primarily during the first and third
quarter. During the first quarter, long positions in the Japanese yen versus
the U.S. dollar resulted in losses after the Bank of Japan weakened the yen
through currency market intervention activity. During the third quarter,
long European currency positions, such as the Swiss franc and Norwegian
krone versus the U.S. dollar, generated negative performance as the U.S.
dollar reversed higher amid upbeat market sentiment.

.. Smaller losses were recorded in the energy markets, primarily during the
second quarter and the month of November. During the second quarter, losses
resulted from long futures positions in crude oil and its related products,
and natural gas as energy prices declined in response to increases in output
and energy reserves. During November, long positions in natural gas
experienced losses as prices reversed sharply lower amid hefty reserves and
seasonally moderate temperatures.

SPECTRUM TECHNICAL

[CHART]

Year ended December 31, 2004
----------------------------
Currencies -0.23
Interest Rates 9.48
Stock Indices -1.50
Energies 10.88
Metals 0.15
Agriculturals -1.96

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. The most significant gains were achieved in the energy markets throughout a
majority of the year from long futures positions in crude oil and its
related products as crude oil prices trended higher in response to rising
demand combined with geopolitical concerns and supply issues.

.. Additional gains resulted in the global interest rate markets during the
first, third, and fourth quarter from long positions in European, Asian, and
U.S. interest rate futures. During the first quarter, long positions
profited as bond prices rallied in response to weak economic data, a lack of
inflation and "safe-haven" buying following the terrorist attack in Madrid.
During the third quarter, long positions benefited from a surge in oil
prices, a drop in equity prices, and a conflicted economic picture. During
the fourth quarter, long positions in European and U.S. interest rate
futures benefited from rising global bond prices triggered by record high
oil prices, growth concerns prompted by weak economic data, and strength in
foreign currencies versus a weaker U.S. dollar. Additional gains were
recorded from long positions in Japanese interest rate futures, which
profited as prices increased amid higher values for the Japanese yen.

.. Smaller gains recorded in the metals markets resulted, primarily during the
first quarter, from long futures positions in base metals after prices
trended higher in response to greater demand from Asia and a declining U.S.
dollar.

SPECTRUM TECHNICAL

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. Losses were incurred in the agricultural markets from futures positions in
cocoa and coffee. During January, short futures positions in coffee
experienced losses as prices reversed higher amid tight global supply. Long
coffee positions experienced additional losses as prices reversed lower
during June in response to an increase in Brazilian crop estimates and mild
weather in growing regions. During July, short cocoa futures positions
recorded losses as prices hit five-month highs amid speculative buying and
lower market supply. During September, long cocoa futures positions incurred
losses as prices reversed lower amid news of easing geopolitical tensions
from the Ivory Coast, the world's top cocoa producer. During October, long
futures positions in coffee incurred losses as prices declined due to larger
harvests and greater market supply.

.. Additional losses in the global stock index sector occurred primarily during
the second and third quarter of the year from positions in Asian and
European stock index futures. Long positions in Asian and European stock
index futures also incurred losses during March, April, and May as equity
prices fell in response to the terror attacks in Madrid, continuing
instability in Iraq, and concerns for higher interest rates. During July,
long positions in Asian and European stock index futures also recorded
losses as prices reversed lower due to the release of disappointing U.S.
employment data, surging energy prices, and new warnings concerning
potential terrorist attacks. During August, short positions in Asian and
European equity index futures recorded losses as prices reversed higher in
response to falling energy prices and better-than-expected U.S. Gross
Domestic Product and consumer sentiment data.

.. Smaller losses were incurred in the currency markets primarily from
positions in the Japanese yen between the months of March through August.
Losses were incurred during March from short positions in the Japanese yen
versus the U.S. dollar as the yen reversed higher due to speculation that
the Bank of Japan was relaxing its efforts to weaken the yen. During April,
long positions in the Japanese yen versus the U.S. dollar resulted in losses
as the U.S. dollar surged following the release of stronger-than-expected
U.S. jobs data. During May, short positions in the Japanese yen versus the
U.S. dollar sustained losses as the U.S. dollar's value declined in response
to fears of potential terrorist attacks, expanding energy prices, and the
release of weaker-than-expected economic data during the latter half of May.
During June, losses were experienced primarily from short positions in the
Japanese yen versus the U.S. dollar as the yen climbed higher in response to
better-than-anticipated improvements in Japanese economic data and
speculation that the Bank of Japan would move to raise interest rates.
During July, long positions in the Japanese yen, euro, Swiss franc, British
pound, and Australian dollar, all versus the U.S. dollar, resulted in losses
as the U.S. dollar's value strengthened in response to upbeat market
sentiment. During August, losses resulted from short positions in the
Japanese yen versus the U.S. dollar as the U.S. dollar's value decreased due
to concerns for the rate of U.S. economic growth caused by the release of
soft economic data.

MORGAN STANLEY SPECTRUM SERIES

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Demeter Management Corporation ("Demeter"), the general partner of Morgan
Stanley Spectrum Currency L.P., Morgan Stanley Spectrum Global Balanced L.P.,
Morgan Stanley Spectrum Select L.P., Morgan Stanley Spectrum Strategic L.P.,
and Morgan Stanley Spectrum Technical L.P. (collectively, the "Partnerships"),
is responsible for the management of the Partnerships.

Management of Demeter ("Management") is responsible for establishing and
maintaining adequate internal control over financial reporting. The internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles.

The Partnerships' internal control over financial reporting includes those
policies and procedures that:

.. Pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the
Partnerships;

.. Provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that the Partnerships' transactions are
being made only in accordance with authorizations of Management and
directors; and

.. Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Partnerships' assets
that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of each Partnership's internal control
over financial reporting as of December 31, 2004. In making this assessment,
Management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control-Integrated
Framework. Based on our assessment and those criteria, Management believes that
each Partnership maintained effective internal control over financial reporting
as of December 31, 2004.

Deloitte & Touche LLP, the Partnerships' independent registered public
accounting firm, has issued an audit report on Management's assessment of the
Partnerships' internal control over financial reporting and on the
effectiveness of the Partnerships' internal control over financial reporting.
This report, which expresses unqualified opinions on Management's assessment
and on the effectiveness of the Partnerships' internal control over financial
reporting, appears under "Report of Independent Registered Public Accounting
Firm" on the following page.

New York, New York
March 11, 2005

MORGAN STANLEY SPECTRUM SERIES

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that Morgan
Stanley Spectrum Currency L.P., Morgan Stanley Spectrum Global Balanced L.P.,
Morgan Stanley Spectrum Select L.P., Morgan Stanley Spectrum Strategic L.P.,
and Morgan Stanley Spectrum Technical L.P. (collectively, the "Partnerships")
maintained effective internal control over financial reporting as of December
31, 2004, based on criteria established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Partnerships' management is responsible for maintaining
effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting. Our
responsibility is to express an opinion on management's assessment and an
opinion on the effectiveness of the Partnerships' internal control over
financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinions.

A company's internal control over financial reporting is a process designed
by, or under the supervision of, the company's principal executive and
principal financial offi-

cers, or persons performing similar functions, and effected by the company's
board of directors, management, and other personnel to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal control over financial
reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the company's assets that could have a material effect on the financial
statements.

Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion, management's assessment that the Partnerships maintained
effective internal control over financial reporting as of December 31, 2004, is
fairly stated, in all material respects, based on the criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Also in our opinion, the Partnerships
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2004, based on the criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the financial statements as of and
for the year ended December 31, 2004 of the Partnerships and our report dated
March 11, 2005 expressed an unqualified opinion on those financial statements.

/s/ Deloitte & Touche LLP

New York, New York
March 11, 2005

MORGAN STANLEY SPECTRUM SERIES

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying statements of financial condition of Morgan
Stanley Spectrum Currency L.P., Morgan Stanley Spectrum Global Balanced L.P.,
Morgan Stanley Spectrum Select L.P., Morgan Stanley Spectrum Strategic L.P.,
and Morgan Stanley Spectrum Technical L.P. (collectively, the "Partnerships"),
including the schedules of investments, as of December 31, 2004 and 2003, and
the related statements of operations, changes in partners' capital, and cash
flows for each of the three years in the period ended December 31, 2004. These
financial statements are the responsibility of the Partnerships' management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Morgan Stanley Spectrum Currency L.P.,
Morgan Stanley Spectrum Global Balanced L.P., Morgan Stanley Spectrum Select
L.P., Morgan Stanley Spectrum Strategic L.P., and Morgan Stanley Spectrum
Technical L.P. at December 31, 2004 and 2003, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2004, in conformity with accounting principles generally accepted
in the United States of America.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the
Partnerships' internal control over financial reporting as of December 31,
2004, based on the criteria established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated March 11, 2005 expressed an unqualified opinion
on management's assessment of the effectiveness of the Partnerships' internal
control over financial reporting and an unqualified opinion on the
effectiveness of the Partnerships' internal control over financial reporting.

/s/ Deloitte & Touche LLP
New York, New York
March 11, 2005

MORGAN STANLEY SPECTRUM CURRENCY L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
-----------------------
2004 2003
----------- -----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 253,392,247 178,774,244
Net unrealized gain on open contracts 16,647,953 4,878,640
----------- -----------
Total Trading Equity 270,040,200 183,652,884
Subscriptions receivable 6,690,404 8,709,868
Interest receivable (Morgan Stanley DW) 315,539 101,889
----------- -----------
Total Assets 277,046,143 192,464,641
=========== ===========

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Redemptions payable 2,499,153 1,060,483
Accrued brokerage fees (Morgan Stanley DW) 1,007,999 661,566
Accrued management fees 438,261 287,637
Accrued incentive fee -- 399,035
----------- -----------
Total Liabilities 3,945,413 2,408,721
----------- -----------
PARTNERS' CAPITAL
Limited Partners (18,755,238.476 and 12,010,816.426 Units,
respectively) 270,231,305 188,042,673
General Partner (199,150.709 and 128,591.799 Units, respectively) 2,869,425 2,013,247
----------- -----------
Total Partners' Capital 273,100,730 190,055,920
----------- -----------
Total Liabilities and Partners' Capital 277,046,143 192,464,641
=========== ===========
NET ASSET VALUE PER UNIT 14.41 15.66
=========== ===========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------
2004 2003 2002
----------- ---------- ----------
$ $ $

INVESTMENT INCOME
Interest income (Morgan Stanley DW) 2,064,338 1,006,410 833,523
----------- ---------- ----------

EXPENSES
Brokerage fees (Morgan Stanley DW) 10,011,029 6,109,327 3,077,048
Management fees 4,352,622 2,656,229 1,337,848
Incentive fees 177,763 2,623,290 1,485,875
----------- ---------- ----------
Total Expenses 14,541,414 11,388,846 5,900,771
----------- ---------- ----------

NET INVESTMENT LOSS (12,477,076)(10,382,436) (5,067,248)
----------- ---------- ----------
TRADING RESULTS
Trading profit (loss):
Realized (11,200,944) 27,952,154 12,877,202
Net change in unrealized 11,769,313 (772,909) 2,473,166
----------- ---------- ----------
Total Trading Results 568,369 27,179,245 15,350,368
----------- ---------- ----------

NET INCOME (LOSS) (11,908,707) 16,796,809 10,283,120
=========== ========== ==========

NET INCOME (LOSS) ALLOCATION:
Limited Partners (11,774,885) 16,514,538 10,038,409
General Partner (133,822) 282,271 244,711

NET INCOME (LOSS) PER UNIT:
Limited Partners (1.25) 1.73 1.52
General Partner (1.25) 1.73 1.52

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

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
----------------------
2004 2003
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 48,892,516 50,336,417
Net unrealized gain on open contracts (MS&Co.) 932,265 1,845,313
Net unrealized gain (loss) on open contracts
(MSIL) (114,942) 701,727
---------- ----------
Total net unrealized gain on open contracts 817,323 2,547,040
Net option premiums -- (39,600)
---------- ----------
Total Trading Equity 49,709,839 52,843,857
Subscriptions receivable 640,161 1,036,417
Interest receivable (Morgan Stanley DW) 83,972 40,110
---------- ----------
Total Assets 50,433,972 53,920,384
========== ==========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 582,712 1,033,040
Accrued brokerage fees (Morgan Stanley DW) 188,436 194,891
Accrued management fees 51,206 52,960
---------- ----------
Total Liabilities 822,354 1,280,891
---------- ----------
PARTNERS' CAPITAL
Limited Partners (3,359,662.807 and
3,364,748.115 Units, respectively) 49,068,822 52,064,431
General Partner (37,164.331 Units) 542,796 575,062
---------- ----------
Total Partners' Capital 49,611,618 52,639,493
---------- ----------
Total Liabilities and Partners' Capital 50,433,972 53,920,384
========== ==========
NET ASSET VALUE PER UNIT 14.61 15.47
========== ==========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
2004 2003 2002
---------- ---------- ----------
$ $ $

INVESTMENT INCOME
Interest income (Morgan Stanley DW) 625,965 525,817 916,179
---------- ---------- ----------

EXPENSES
Brokerage fees (Morgan Stanley DW) 2,332,241 2,328,615 2,532,371
Management fees 633,766 632,782 688,151
---------- ---------- ----------
Total Expenses 2,966,007 2,961,397 3,220,522
---------- ---------- ----------

NET INVESTMENT LOSS (2,340,042) (2,435,580) (2,304,343)
---------- ---------- ----------

TRADING RESULTS
Trading profit (loss):
Realized 1,049,835 3,711,981 (3,772,374)
Net change in unrealized (1,729,717) 1,801,107 56,725
---------- ---------- ----------
(679,882) 5,513,088 (3,715,649)
Proceeds from Litigation Settlement 2,296 -- 233,074
---------- ---------- ----------
Total Trading Results (677,586) 5,513,088 (3,482,575)
---------- ---------- ----------

NET INCOME (LOSS) (3,017,628) 3,077,508 (5,786,918)
========== ========== ==========

NET INCOME (LOSS) ALLOCATION:
Limited Partners (2,985,362) 3,043,649 (5,720,328)
General Partner (32,266) 33,859 (66,590)

NET INCOME (LOSS) PER UNIT:
Limited Partners (0.86) 0.90 (1.64)
General Partner (0.86) 0.90 (1.64)

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

MORGAN STANLEY SPECTRUM SELECT L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
-----------------------
2004 2003
----------- -----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 563,835,247 398,595,952
Net unrealized gain on open contracts
(MS&Co.) 12,072,891 25,504,948
Net unrealized gain on open contracts (MSIL) 3,053,732 11,277,017
----------- -----------
Total net unrealized gain on open contracts 15,126,623 36,781,965
Net option premiums 3,366,493 1,232,488
----------- -----------
Total Trading Equity 582,328,363 436,610,405
Subscriptions receivable 12,736,861 12,688,217
Interest receivable (Morgan Stanley DW) 757,981 250,620
----------- -----------
Total Assets 595,823,205 449,549,242
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 5,692,215 2,405,123
Accrued brokerage fees (Morgan Stanley DW) 3,468,754 2,401,080
Accrued management fees 1,356,111 993,550
Accrued incentive fee -- 2,227,005
----------- -----------
Total Liabilities 10,517,080 8,026,758
----------- -----------
PARTNERS' CAPITAL
Limited Partners (20,050,871.818 and
14,405,312.114 Units, respectively) 579,155,164 436,666,633
General Partner (212,951.775 and
160,190.965 Units, respectively) 6,150,961 4,855,851
----------- -----------
Total Partners' Capital 585,306,125 441,522,484
----------- -----------
Total Liabilities and Partners' Capital 595,823,205 449,549,242
=========== ===========
NET ASSET VALUE PER UNIT 28.88 30.31
=========== ===========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
2004 2003 2002
----------- ----------- -----------
$ $ $

INVESTMENT INCOME
Interest income (Morgan Stanley DW) 4,952,656 2,843,612 3,468,437
----------- ----------- -----------
EXPENSES
Brokerage fees (Morgan Stanley DW) 36,680,599 25,658,616 18,943,743
Management fees 14,450,217 10,617,352 7,838,786
Incentive fees 6,104,991 3,750,169 --
----------- ----------- -----------
Total Expenses 57,235,807 40,026,137 26,782,529
----------- ----------- -----------
NET INVESTMENT LOSS (52,283,151) (37,182,525) (23,314,092)
----------- ----------- -----------
TRADING RESULTS
Trading profit (loss):
Realized 50,580,928 52,485,483 46,999,853
Net change in unrealized (21,655,342) 18,883,947 12,501,282
----------- ----------- -----------
28,925,586 71,369,430 59,501,135
Proceeds from Litigation Settlement 45,665 -- 4,636,156
----------- ----------- -----------
Total Trading Results 28,971,251 71,369,430 64,137,291
----------- ----------- -----------
NET INCOME (LOSS) (23,311,900) 34,186,905 40,823,199
=========== =========== ===========
NET INCOME (LOSS) ALLOCATION:
Limited Partners (23,067,010) 33,822,853 40,391,145
General Partner (244,890) 364,052 432,054
NET INCOME (LOSS) PER UNIT:
Limited Partners (1.43) 2.66 3.69
General Partner (1.43) 2.66 3.69

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

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
------------------------
2004 2003
----------- -----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 178,400,461 109,846,761
Net unrealized gain on open contracts (MSIL) 2,886,349 2,073,986
Net unrealized gain (loss) on open contracts
(MS&Co.) (226,980) 5,847,799
----------- -----------
Total net unrealized gain on open contracts 2,659,369 7,921,785
Net option premiums 263,288 678,280
----------- -----------
Total Trading Equity 181,323,118 118,446,826
Subscriptions receivable 5,084,126 5,143,178
Interest receivable (Morgan Stanley DW) 238,656 66,591
----------- -----------
Total Assets 186,645,900 123,656,595
=========== ===========

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Redemptions payable 1,725,329 655,871
Accrued brokerage fees (Morgan Stanley DW) 1,080,805 650,049
Accrued management fees 409,897 268,986
Accrued incentive fees 188,744 811,250
----------- -----------
Total Liabilities 3,404,775 2,386,156
----------- -----------
PARTNERS' CAPITAL
Limited Partners (12,446,331.591 and
8,385,489.652 Units, respectively) 181,218,795 119,976,992
General Partner (138,896.135 and
90,402.219 Units, respectively) 2,022,330 1,293,447
----------- -----------
Total Partners' Capital 183,241,125 121,270,439
----------- -----------
Total Liabilities and Partners' Capital 186,645,900 123,656,595
=========== ===========
NET ASSET VALUE PER UNIT 14.56 14.31
=========== ===========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
2004 2003 2002
----------- ----------- ----------
$ $ $

INVESTMENT INCOME
Interest income (Morgan Stanley DW) 1,602,712 741,890 972,942
----------- ----------- ----------

EXPENSES
Brokerage fees (Morgan Stanley DW) 9,860,579 6,611,238 5,304,486
Management fees 4,006,640 2,735,685 2,194,958
Incentive fees 2,751,859 2,123,832 264,827
----------- ----------- ----------
Total Expenses 16,619,078 11,470,755 7,764,271
----------- ----------- ----------

NET INVESTMENT LOSS (15,016,366) (10,728,865) (6,791,329)
----------- ----------- ----------

TRADING RESULTS
Trading profit (loss):
Realized 21,527,423 30,251,636 10,648,811
Net change in unrealized (5,262,416) 990,641 2,439,378
----------- ----------- ----------
16,265,007 31,242,277 13,088,189
Proceeds from Litigation Settlement 173 -- 17,556
----------- ----------- ----------
Total Trading Results 16,265,180 31,242,277 13,105,745
----------- ----------- ----------

NET INCOME 1,248,814 20,513,412 6,314,416
=========== =========== ==========

NET INCOME ALLOCATION:
Limited Partners 1,239,931 20,281,103 6,238,448
General Partner 8,883 232,309 75,968

NET INCOME PER UNIT:
Limited Partners 0.25 2.77 0.99
General Partner 0.25 2.77 0.99

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

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
-----------------------
2004 2003
----------- -----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 745,974,904 483,512,056
Net unrealized gain on open contracts (MS&Co.) 22,634,674 27,948,353
Net unrealized gain on open contracts (MSIL) 4,707,076 18,485,857
----------- -----------
Total net unrealized gain on open contracts 27,341,750 46,434,210
Net option premiums -- 3,973,725
----------- -----------
Total Trading Equity 773,316,654 533,919,991
Subscriptions receivable 17,135,652 15,855,119
Interest receivable (Morgan Stanley DW) 1,000,293 291,810
----------- -----------
Total Assets 791,452,599 550,066,920
=========== ===========

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Redemptions payable 6,466,684 2,925,703
Accrued brokerage fees (Morgan Stanley DW) 4,629,988 2,947,775
Accrued management fees 1,632,040 1,084,524
Accrued incentive fee -- 4,924,640
----------- -----------
Total Liabilities 12,728,712 11,882,642
----------- -----------

PARTNERS' CAPITAL
Limited Partners (32,613,627.616 and
23,512,770.158 Units, respectively) 770,511,257 532,266,109
General Partner (347,618.087 and
261,434.166 Units, respectively) 8,212,630 5,918,169
----------- -----------
Total Partners' Capital 778,723,887 538,184,278
----------- -----------
Total Liabilities and Partners' Capital 791,452,599 550,066,920
=========== ===========

NET ASSET VALUE PER UNIT 23.63 22.64
=========== ===========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
2004 2003 2002
----------- ----------- -----------
$ $ $

INVESTMENT INCOME
Interest income (Morgan Stanley DW) 6,171,302 3,316,107 3,686,460
----------- ----------- -----------

EXPENSES
Brokerage fees (Morgan Stanley DW) 45,508,966 30,273,037 20,470,797
Management fees 16,226,640 10,835,994 7,377,756
Incentive fees 12,132,833 13,042,559 4,024,921
----------- ----------- -----------
Total Expenses 73,868,439 54,151,590 31,873,474
----------- ----------- -----------

NET INVESTMENT LOSS (67,697,137) (50,835,483) (28,187,014)
----------- ----------- -----------

TRADING RESULTS
Trading profit (loss):
Realized 122,928,230 116,446,374 76,058,451
Net change in unrealized (19,092,460) 22,330,997 12,597,598
----------- ----------- -----------
103,835,770 138,777,371 88,656,049
Proceeds from Litigation Settlement 3,018 -- 306,400
----------- ----------- -----------
Total Trading Results 103,838,788 138,777,371 88,962,449
----------- ----------- -----------

NET INCOME 36,141,651 87,941,888 60,775,435
=========== =========== ===========

NET INCOME ALLOCATION:
Limited Partners 35,747,190 86,960,795 60,110,064
General Partner 394,461 981,093 665,371

NET INCOME PER UNIT:
Limited Partners 0.99 4.23 3.48
General Partner 0.99 4.23 3.48

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

MORGAN STANLEY SPECTRUM CURRENCY L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002

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

Partners' Capital,
December 31, 2001 3,852,648.433 45,598,611 2,213,130 47,811,741
Offering of Units 3,918,276.910 48,564,478 420,000 48,984,478
Net income -- 10,038,409 244,711 10,283,120
Redemptions (868,307.236) (10,309,879) (610,008) (10,919,887)
-------------- ----------- ---------- -----------
Partners' Capital,
December 31, 2002 6,902,618.107 93,891,619 2,267,833 96,159,452
Offering of Units 6,157,215.998 89,883,376 790,000 90,673,376
Net income -- 16,514,538 282,271 16,796,809
Redemptions (920,425.880) (12,246,860) (1,326,857) (13,573,717)
-------------- ----------- ---------- -----------
Partners' Capital,
December 31, 2003 12,139,408.225 188,042,673 2,013,247 190,055,920
Offering of Units 8,372,327.316 114,539,377 990,000 115,529,377
Net loss -- (11,774,885) (133,822) (11,908,707)
Redemptions (1,557,346.356) (20,575,860) -- (20,575,860)
-------------- ----------- ---------- -----------
Partners' Capital,
December 31, 2004 18,954,389.185 270,231,305 2,869,425 273,100,730
============== =========== ========== ===========

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002

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

Partners' Capital,
December 31, 2001 3,565,247.829 57,127,967 657,793 57,785,760
Offering of Units 572,583.510 8,829,394 -- 8,829,394
Net loss -- (5,720,328) (66,590) (5,786,918)
Redemptions (677,650.657) (10,422,804) -- (10,422,804)
------------- ----------- ------- -----------
Partners' Capital,
December 31, 2002 3,460,180.682 49,814,229 591,203 50,405,432
Offering of Units 690,016.887 10,491,897 -- 10,491,897
Net income -- 3,043,649 33,859 3,077,508
Redemptions (748,285.123) (11,285,344) (50,000) (11,335,344)
------------- ----------- ------- -----------
Partners' Capital,
December 31, 2003 3,401,912.446 52,064,431 575,062 52,639,493
Offering of Units 778,018.263 11,587,284 -- 11,587,284
Net loss -- (2,985,362) (32,266) (3,017,628)
Redemptions (783,103.571) (11,597,531) -- (11,597,531)
------------- ----------- ------- -----------
Partners' Capital,
December 31, 2004 3,396,827.138 49,068,822 542,796 49,611,618
============= =========== ======= ===========

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

MORGAN STANLEY SPECTRUM SELECT L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002

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

Partners' Capital,
December 31, 2001 10,074,715.726 238,821,840 2,589,745 241,411,585
Offering of Units 2,459,750.992 62,682,840 130,000 62,812,840
Net income -- 40,391,145 432,054 40,823,199
Redemptions (1,852,798.671) (49,669,825) -- (49,669,825)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2002 10,681,668.047 292,226,000 3,151,799 295,377,799
Offering of Units 4,942,610.490 141,160,704 1,340,000 142,500,704
Net income -- 33,822,853 364,052 34,186,905
Redemptions (1,058,775.458) (30,542,924) -- (30,542,924)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2003 14,565,503.079 436,666,633 4,855,851 441,522,484
Offering of Units 7,215,873.382 208,687,672 1,540,000 210,227,672
Net loss -- (23,067,010) (244,890) (23,311,900)
Redemptions (1,517,552.868) (43,132,131) -- (43,132,131)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2004 20,263,823.593 579,155,164 6,150,961 585,306,125
============== =========== ========= ===========

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002

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

Partners' Capital,
December 31, 2001 6,525,677.114 68,012,216 805,170 68,817,386
Offering of Units 1,160,993.682 13,475,899 -- 13,475,899
Net income -- 6,238,448 75,968 6,314,416
Redemptions (1,155,895.491) (13,238,629) -- (13,238,629)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2002 6,530,775.305 74,487,934 881,138 75,369,072
Offering of Units 2,823,095.529 36,375,972 180,000 36,555,972
Net income -- 20,281,103 232,309 20,513,412
Redemptions (877,978.963) (11,168,017) -- (11,168,017)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2003 8,475,891.871 119,976,992 1,293,447 121,270,439
Offering of Units 5,057,597.578 73,841,018 720,000 74,561,018
Net income -- 1,239,931 8,883 1,248,814
Redemptions (948,261.723) (13,839,146) -- (13,839,146)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2004 12,585,227.726 181,218,795 2,022,330 183,241,125
============== =========== ========= ===========

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

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002

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

Partners' Capital,
December 31, 2001 17,280,496.201 255,122,417 2,851,705 257,974,122
Offering of Units 3,538,032.569 58,538,660 180,000 58,718,660
Net income -- 60,110,064 665,371 60,775,435
Redemptions (2,579,002.913) (41,646,591) -- (41,646,591)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2002 18,239,525.857 332,124,550 3,697,076 335,821,626
Offering of Units 7,617,427.705 156,115,402 1,240,000 157,355,402
Net income -- 86,960,795 981,093 87,941,888
Redemptions (2,082,749.238) (42,934,638) -- (42,934,638)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2003 23,774,204.324 532,266,109 5,918,169 538,184,278
Offering of Units 11,745,240.279 259,052,698 1,900,000 260,952,698
Net income -- 35,747,190 394,461 36,141,651
Redemptions (2,558,198.900) (56,554,740) -- (56,554,740)
-------------- ----------- --------- -----------
Partners' Capital,
December 31, 2004 32,961,245.703 770,511,257 8,212,630 778,723,887
============== =========== ========= ===========

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

MORGAN STANLEY SPECTRUM CURRENCY L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
2004 2003 2002
----------- ----------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) (11,908,707) 16,796,809 10,283,120
Noncash item included in net
income (loss):
Net change in unrealized (11,769,313) 772,909 (2,473,166)
Increase in operating assets:
Interest receivable
(Morgan Stanley DW) (213,650) (31,679) (19,622)
Increase (decrease) in operating
liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 346,433 345,106 161,731
Accrued management fees 150,624 150,046 70,317
Accrued incentive fees (399,035) 159,553 (673,773)
----------- ----------- -----------
Net cash provided by (used for)
operating activities (23,793,648) 18,192,744 7,348,607
----------- ----------- -----------

CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 115,529,377 90,673,376 48,984,478
(Increase) decrease in subscriptions
receivable 2,019,464 (4,531,110) (1,536,641)
Increase (decrease) in redemptions
payable 1,438,670 (465,852) 1,361,111
Redemptions of Units (20,575,860) (13,573,717) (10,919,887)
----------- ----------- -----------
Net cash provided by financing
activities 98,411,651 72,102,697 37,889,061
----------- ----------- -----------

Net increase in cash 74,618,003 90,295,441 45,237,668

Balance at beginning of period 178,774,244 88,478,803 43,241,135
----------- ----------- -----------

Balance at end of period 253,392,247 178,774,244 88,478,803
=========== =========== ===========

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

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
2004 2003 2002
----------- ----------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) (3,017,628) 3,077,508 (5,786,918)
Noncash item included in net
income (loss):
Net change in unrealized 1,729,717 (1,801,107) (56,725)
(Increase) decrease in operating assets:
Net option premiums (39,600) 752,173 (712,573)
Interest receivable
(Morgan Stanley DW) (43,862) 13,348 40,360
Decrease in operating liabilities:
Accrued brokerage fees
(Morgan Stanley DW) (6,455) (7,218) (17,837)
Accrued management fees (1,754) (1,962) (4,846)
----------- ----------- -----------
Net cash provided by (used for)
operating activities (1,379,582) 2,032,742 (6,538,539)
----------- ----------- -----------

CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 11,587,284 10,491,897 8,829,394
(Increase) decrease in subscriptions
receivable 396,256 (319,625) (105,151)
Increase (decrease) in redemptions
payable (450,328) 136,265 171,491
Redemptions of Units (11,597,531) (11,335,344) (10,422,804)
----------- ----------- -----------
Net cash used for financing activities (64,319) (1,026,807) (1,527,070)
----------- ----------- -----------

Net increase (decrease) in cash (1,443,901) 1,005,935 (8,065,609)

Balance at beginning of period 50,336,417 49,330,482 57,396,091
----------- ----------- -----------

Balance at end of period 48,892,516 50,336,417 49,330,482
=========== =========== ===========

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

MORGAN STANLEY SPECTRUM SELECT L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
2004 2003 2002
----------- ----------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) (23,311,900) 34,186,905 40,823,199
Noncash item included in net
income (loss):
Net change in unrealized 21,655,342 (18,883,947) (12,501,282)
(Increase) decrease in operating
assets:
Net option premiums (2,134,005) (1,232,488) 167,063
Interest receivable
(Morgan Stanley DW) (507,361) (15,337) 70,073
Increase (decrease) in operating
liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 1,067,674 738,759 221,961
Accrued management fees 362,561 305,694 91,845
Accrued incentive fees (2,227,005) 2,227,005 --
----------- ----------- -----------
Net cash provided by (used for)
operating activities (5,094,694) 17,326,591 28,872,859
----------- ----------- -----------

CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 210,227,672 142,500,704 62,812,840
Increase in subscriptions receivable (48,644) (5,997,473) (1,699,578)
Increase (decrease) in redemptions
payable 3,287,092 528,720 (719,023)
Redemptions of Units (43,132,131) (30,542,924) (49,669,825)
----------- ----------- -----------
Net cash provided by financing
activities 170,333,989 106,489,027 10,724,414
----------- ----------- -----------

Net increase in cash 165,239,295 123,815,618 39,597,273

Balance at beginning of period 398,595,952 274,780,334 235,183,061
----------- ----------- -----------

Balance at end of period 563,835,247 398,595,952 274,780,334
=========== =========== ===========

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

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
2004 2003 2002
----------- ----------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income 1,248,814 20,513,412 6,314,416
Noncash item included in net
income:
Net change in unrealized 5,262,416 (990,641) (2,439,378)
(Increase) decrease in operating
assets:
Net option premiums 414,992 (455,512) 65,784
Interest receivable
(Morgan Stanley DW) (172,065) (4,813) 27,581
Increase (decrease) in operating
liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 430,756 218,453 7,354
Accrued management fees 140,911 90,394 3,043
Accrued incentive fees (622,506) 811,250 --
----------- ----------- -----------
Net cash provided by operating
activities 6,703,318 20,182,543 3,978,800
----------- ----------- -----------

CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 74,561,018 36,555,972 13,475,899
(Increase) decrease in subscriptions
receivable 59,052 (3,488,707) (1,002,535)
Increase (decrease) in redemptions
payable 1,069,458 (459,678) (956,549)
Redemptions of Units (13,839,146) (11,168,017) (13,238,629)
----------- ----------- -----------
Net cash provided by financing
activities 61,850,382 21,439,570 (1,721,814)
----------- ----------- -----------

Net increase in cash 68,553,700 41,622,113 2,256,986

Balance at beginning of period 109,846,761 68,224,648 65,967,662
----------- ----------- -----------

Balance at end of period 178,400,461 109,846,761 68,224,648
=========== =========== ===========

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

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
2004 2003 2002
----------- ----------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income 36,141,651 87,941,888 60,775,435
Noncash item included in net
income:
Net change in unrealized 19,092,460 (22,330,997) (12,597,598)
(Increase) decrease in operating
assets:
Net option premiums 3,973,725 (3,973,725) --
Interest receivable
(Morgan Stanley DW) (708,483) (22,974) 49,837
Increase (decrease) in operating
liabilities:
Accrued brokerage fees
(Morgan Stanley DW) 1,682,213 1,041,470 397,100
Accrued management fees 547,516 411,562 91,431
Accrued incentive fees (4,924,640) 4,924,640 --
----------- ----------- -----------
Net cash provided by operating
activities 55,804,442 67,991,864 48,716,205
----------- ----------- -----------

CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 260,952,698 157,355,402 58,718,660
Increase in subscriptions receivable (1,280,533) (8,746,329) (2,663,228)
Increase (decrease) in redemptions
payable 3,540,981 (270,216) 818,573
Redemptions of Units (56,554,740) (42,934,638) (41,646,591)
----------- ----------- -----------
Net cash provided by financing
activities 206,658,406 105,404,219 15,227,414
----------- ----------- -----------

Net increase in cash 262,462,848 173,396,083 63,943,619

Balance at beginning of period 483,512,056 310,115,973 246,172,354
----------- ----------- -----------

Balance at end of period 745,974,904 483,512,056 310,115,973
=========== =========== ===========

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

MORGAN STANLEY SPECTRUM CURRENCY L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2004 AND 2003

LONG UNREALIZED PERCENTAGE SHORT UNREALIZED PERCENTAGE
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS) OF NET ASSETS GAIN/(LOSS) OF NET ASSETS
- ------------------------------ --------------- ------------- ---------------- -------------
2004 PARTNERSHIP NET ASSETS: $273,100,730 $ % $ %

Foreign currency 16,600,066 6.08* 47,887 0.02
---------- ---- -------- -----
Grand Total: 16,600,066 6.08 47,887 0.02
========== ==== ======== =====
Unrealized Currency Gain/(Loss)

Total Net Unrealized Gain per Statement of Financial Condition

2003 PARTNERSHIP NET ASSETS: $190,055,920
Foreign currency 5,023,184 2.64 (144,544) (0.07)
---------- ---- -------- -----
Grand Total: 5,023,184 2.64 (144,544) (0.07)
========== ==== ======== =====
Unrealized Currency Gain/(Loss)

Total Net Unrealized Gain per Statement of Financial Condition

NET UNREALIZED
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS)
- ------------------------------ --------------
2004 PARTNERSHIP NET ASSETS: $273,100,730 $

Foreign currency 16,647,953
----------
Grand Total: 16,647,953

Unrealized Currency Gain/(Loss) --
----------
Total Net Unrealized Gain per Statement of Financial Condition 16,647,953
==========

2003 PARTNERSHIP NET ASSETS: $190,055,920
Foreign currency 4,878,640
----------
Grand Total: 4,878,640

Unrealized Currency Gain/(Loss) --
----------
Total Net Unrealized Gain per Statement of Financial Condition 4,878,640
==========

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

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

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2004 AND 2003

LONG UNREALIZED PERCENTAGE SHORT UNREALIZED PERCENTAGE
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS) OF NET ASSETS GAIN/(LOSS) OF NET ASSETS
- ------------------------------ --------------- ------------- ---------------- -------------
2004 PARTNERSHIP NET ASSETS: $49,611,618 $ % $ %

Commodity (174,817) (0.35) 88,890 0.18
Equity 416,781 0.84 -- --
Foreign currency 233,829 0.47 15,689 0.03
Interest rate 25,587 0.05 181,418 0.37
--------- ----- ------- -----
Grand Total: 501,380 1.01 285,997 0.58
========= ===== ======= =====
Unrealized Currency Gain

Total Net Unrealized Gain per Statement of Financial Condition

2003 PARTNERSHIP NET ASSETS: $52,639,493
Commodity 689,471 1.31 (5,870) (0.01)
Equity 936,933 1.78 -- --
Foreign currency 627,263 1.19 109,420 0.21
Interest rate 216,798 0.41 -- --
--------- ----- ------- -----
Grand Total: 2,470,465 4.69 103,550 0.20
========= ===== ======= =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

NET UNREALIZED
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS)
- ------------------------------ -----------
2004 PARTNERSHIP NET ASSETS: $49,611,618 $

Commodity (85,927)
Equity 416,781
Foreign currency 249,518
Interest rate 207,005
---------
Grand Total: 787,377

Unrealized Currency Gain 29,946
---------
Total Net Unrealized Gain per Statement of Financial Condition 817,323
=========

2003 PARTNERSHIP NET ASSETS: $52,639,493
Commodity 683,601
Equity 936,933
Foreign currency 736,683
Interest rate 216,798
---------
Grand Total: 2,574,015

Unrealized Currency Loss (26,975)
---------
Total Net Unrealized Gain per Statement of Financial Condition 2,547,040
=========

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

MORGAN STANLEY SPECTRUM SELECT L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2004 AND 2003

LONG UNREALIZED PERCENTAGE SHORT UNREALIZED PERCENTAGE
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS) OF NET ASSETS GAIN/(LOSS) OF NET ASSETS
- ------------------------------ --------------- ------------- ---------------- -------------

2004 PARTNERSHIP NET ASSETS: $585,306,125 $ % $ %

Commodity 5,488,782 0.94 642,817 0.11
Equity 7,810,435 1.33 -- --
Foreign currency 3,951,731 0.68 (2,735,991) (0.47)
Interest rate 1,815,260 0.31 828,324 0.14
---------- ---- ---------- -----
Grand Total: 19,066,208 3.26 (1,264,850) (0.22)
========== ==== ========== =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

2003 PARTNERSHIP NET ASSETS: $441,522,484
Commodity 20,983,272 4.75 (175,989) (0.04)
Equity 5,391,145 1.22 -- --
Foreign currency 11,095,838 2.51 691,093 0.16
Interest rate 1,338,070 0.31 (87,559) (0.02)
---------- ---- ---------- -----
Grand Total: 38,808,325 8.79 427,545 0.10
========== ==== ========== =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

NET UNREALIZED
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS)
- ------------------------------ --------------

2004 PARTNERSHIP NET ASSETS: $585,306,125 $

Commodity 6,131,599
Equity 7,810,435
Foreign currency 1,215,740
Interest rate 2,643,584
----------
Grand Total: 17,801,358

Unrealized Currency Loss (2,674,735)
----------
Total Net Unrealized Gain per Statement of Financial Condition 15,126,623
==========

2003 PARTNERSHIP NET ASSETS: $441,522,484
Commodity 20,807,283
Equity 5,391,145
Foreign currency 11,786,931
Interest rate 1,250,511
----------
Grand Total: 39,235,870

Unrealized Currency Loss (2,453,905)
----------
Total Net Unrealized Gain per Statement of Financial Condition 36,781,965
==========

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

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2004 AND 2003

LONG UNREALIZED PERCENTAGE SHORT UNREALIZED PERCENTAGE
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS) OF NET ASSETS GAIN/(LOSS) OF NET ASSETS
- ------------------------------ --------------- ------------- ---------------- -------------
2004 PARTNERSHIP NET ASSETS: $183,241,125 $ % $ %

Commodity 2,260,763 1.23 811,061 0.44
Equity 746,712 0.41 -- --
Foreign currency 1,083,470 0.59 (1,174,936) (0.64)
Interest rate (999,978) (0.54) (59,493) (0.03)
--------- ----- ---------- -----
Grand Total: 3,090,967 1.69 (423,368) (0.23)
========= ===== ========== =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

2003 PARTNERSHIP NET ASSETS: $121,270,439
Commodity 6,059,248 5.00* (1,198,617) (0.99)
Equity 1,807,241 1.49 -- --
Foreign currency 1,149,874 0.95 13,175 0.01
Interest rate 207,192 0.17 8,576 0.01
--------- ----- ---------- -----
Grand Total: 9,223,555 7.61 (1,176,866) (0.97)
========= ===== ========== =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

NET UNREALIZED
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS)
- ------------------------------ -----------
2004 PARTNERSHIP NET ASSETS: $183,241,125 $

Commodity 3,071,824
Equity 746,712
Foreign currency (91,466)
Interest rate (1,059,471)
----------
Grand Total: 2,667,599

Unrealized Currency Loss (8,230)
----------
Total Net Unrealized Gain per Statement of Financial Condition 2,659,369
==========

2003 PARTNERSHIP NET ASSETS: $121,270,439
Commodity 4,860,631
Equity 1,807,241
Foreign currency 1,163,049
Interest rate 215,768
----------
Grand Total: 8,046,689

Unrealized Currency Loss (124,904)
----------
Total Net Unrealized Gain per Statement of Financial Condition 7,921,785
==========

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

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

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2004 AND 2003

LONG UNREALIZED PERCENTAGE SHORT UNREALIZED PERCENTAGE
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS) OF NET ASSETS GAIN/(LOSS) OF NET ASSETS
- ------------------------------ --------------- ------------- ---------------- -------------
2004 PARTNERSHIP NET ASSETS: $778,723,887 $ % $ %

Commodity 4,959,331 0.63 1,798,641 0.23
Equity 7,857,895 1.01 (817,447) (0.10)
Foreign currency 13,746,446 1.77 (2,924,743) (0.38)
Interest rate 3,829,920 0.49 (382,283) (0.05)
---------- ----- ----------- -----
Grand Total: 30,393,592 3.90 (2,325,832) (0.30)
========== ===== =========== =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

2003 PARTNERSHIP NET ASSETS: $538,184,278
Commodity 23,626,420 4.39 (2,094,377) (0.39)
Equity 10,843,962 2.01 (2,020,472) (0.37)
Foreign currency 22,436,449 4.17 (1,729,369) (0.32)
Interest rate 53,129 0.01 (5,502,664) (1.02)
---------- ----- ----------- -----
Grand Total: 56,959,960 10.58 (11,346,882) (2.10)
========== ===== =========== =====
Unrealized Currency Gain

Total Net Unrealized Gain per Statement of Financial Condition

NET UNREALIZED
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS)
- ------------------------------ -----------
2004 PARTNERSHIP NET ASSETS: $778,723,887 $

Commodity 6,757,972
Equity 7,040,448
Foreign currency 10,821,703
Interest rate 3,447,637
----------
Grand Total: 28,067,760

Unrealized Currency Loss (726,010)
----------
Total Net Unrealized Gain per Statement of Financial Condition 27,341,750
==========

2003 PARTNERSHIP NET ASSETS: $538,184,278
Commodity 21,532,043
Equity 8,823,490
Foreign currency 20,707,080
Interest rate (5,449,535)
----------
Grand Total: 45,613,078

Unrealized Currency Gain 821,132
----------
Total Net Unrealized Gain per Statement of Financial Condition 46,434,210
==========

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

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS

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

ORGANIZATION. Morgan Stanley Spectrum Currency L.P. ("Spectrum Currency"),
Morgan Stanley Spectrum Global Balanced L.P. ("Spectrum Global Balanced"),
Morgan Stanley Spectrum Select L.P. ("Spectrum Select"), Morgan Stanley
Spectrum Strategic L.P. ("Spectrum Strategic"), and Morgan Stanley Spectrum
Technical L.P. ("Spectrum Technical") (individually, a "Partnership," or
collectively, the "Partnerships"), are limited partnerships organized to engage
in the speculative trading of futures contracts, options on futures and forward
contracts, and forward contracts on physical commodities and other commodity
interests, including, but not limited to, foreign currencies, financial
instruments, metals, energy, and agricultural products (collectively, "Futures
Interests").
The general partner for each Partnership is Demeter Management Corporation
("Demeter"). The non-clearing commodity broker is Morgan Stanley DW Inc.
("Morgan Stanley DW"). The clearing commodity brokers for Spectrum Global
Balanced, Spectrum Select, and Spectrum Technical are Morgan Stanley & Co.
Incorporated ("MS&Co.") and Morgan Stanley & Co. International Limited
("MSIL"). Spectrum Strategic's clearing commodity brokers are MS&Co., MSIL, and
Morgan Stanley Capital Group Inc. ("MSCG"). Spectrum Currency's clearing
commodity broker is MS&Co. Demeter, Morgan Stanley DW, MS&Co., MSIL, and MSCG
are wholly-owned subsidiaries of Morgan Stanley.
Effective June 20, 2002, Morgan Stanley Dean Witter & Co. changed its name to
Morgan Stanley.

Demeter is required to maintain a 1% minimum interest in the equity of each
Partnership and income (losses) are shared by Demeter and the limited partners
based upon their proportional ownership interests.

USE OF ESTIMATES. The financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, which
require management to make estimates and assumptions that affect the reported
amounts in the

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

financial statements and related disclosures. Management believes that the
estimates utilized in the preparation of the financial statements are prudent
and reasonable. Actual results could differ from those estimates.

REVENUE RECOGNITION. Futures Interests are open commitments until settlement
date, at which time they are realized. They are valued at market on a daily
basis and the resulting net change in unrealized gains and losses is reflected
in the change in unrealized trading profit (loss) on open contracts from one
period to the next on the Statements of Operations. Monthly, Morgan Stanley DW
pays each Partnership interest income equal to 80% of the month's average daily
"Net Assets" (as defined in the Limited Partnership Agreements) in the case of
Spectrum Currency, Spectrum Select, Spectrum Strategic, and Spectrum Technical,
and on 100% in the case of Spectrum Global Balanced. The interest rate is equal
to a prevailing rate on U.S. Treasury bills. For purposes of such interest
payments, Net Assets do not include monies owed to the Partnerships on Futures
Interests.

NET INCOME (LOSS) PER UNIT. Net income (loss) per unit of limited partnership
interest ("Unit(s)") is computed using the weighted average number of Units
outstanding during the period.

CONDENSED SCHEDULES OF INVESTMENTS. In December 2003, the American Institute
of Certified Public Accountants' Accounting Standards Executive Committee
issued Statement of Position 03-4 ("SOP 03-4") "Reporting Financial Highlights
and Schedule of Investments by Nonregistered Investment Partnerships: An
Amendment to the Audit and Accounting Guide Audits Of Investment Companies and
AICPA Statement of Position 95-2, Financial Reporting By Nonpublic Investment
Partnerships". SOP 03-4 requires commodity pools to disclose the number of
contracts, the contracts' expiration dates, and the cumulative unrealized
gains/(losses) on open futures contracts, when the cumulative unrealized
gains/(losses) on an open futures contract exceeds 5% of Net Assets, taking
long and short positions into account separately.

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

SOP 03-4 also requires ratios for net investment income/(losses), expenses
before and after incentive fees, and net income/(losses) based on average net
assets, and ratios for total return before and after incentive fees based on
average units outstanding to be disclosed in Financial Highlights. SOP 03-4 was
effective for fiscal years ending after December 15, 2003.

EQUITY IN FUTURES INTERESTS TRADING ACCOUNTS. The Partnerships' asset "Equity
in futures interests trading accounts," reflected on the Statements of
Financial Condition, consists of (A) cash on deposit with Morgan Stanley DW,
MS&Co, MSIL, and MSCG for Spectrum Strategic and Morgan Stanley DW, MS&Co., and
MSIL for Spectrum Global Balanced, Spectrum Select, and Spectrum Technical, and
Morgan Stanley DW and MS&Co. for Spectrum Currency, to be used as margin for
trading; (B) net unrealized gains or losses on open contracts, which are valued
at market and calculated as the difference between original contract value and
market value; and (C) net option premiums, which represent the net of all
monies paid and/or received for such option premiums.

The Partnerships, in their normal course of business, enter into various
contracts with MS&Co., MSIL, and/or MSCG acting as their commodity brokers.
Pursuant to brokerage agreements with MS&Co., MSIL, and/or MSCG to the extent
that such trading results in unrealized gains or losses, these amounts are
offset and reported on a net basis on the Partnerships' Statements of Financial
Condition.
The Partnerships have offset the fair value amounts recognized for forward
and options on forward contracts executed with the same counterparty as
allowable under the terms of their master netting agreements with MS&Co., the
sole counterparty on such contracts. The Partnerships have consistently applied
their right to offset.

BROKERAGE AND RELATED TRANSACTION FEES AND COSTS. The brokerage fees for
Spectrum Currency and Spectrum Global Balanced are accrued at a flat monthly
rate of 1/12 of 4.6% (a 4.6% annual rate) of Net Assets as of the first day of
each month.

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

Brokerage fees for Spectrum Select, Spectrum Strategic, and Spectrum
Technical are accrued at a flat monthly rate of 1/12 of 7.25% (a 7.25% annual
rate) of Net Assets as of the first day of each month.

Such brokerage fees currently cover all brokerage commissions, transaction
fees and costs, and ordinary administrative and continuing offering expenses.

OPERATING EXPENSES. The Partnerships incur monthly management fees and may
incur incentive fees. All common administrative and continuing offering
expenses including legal, auditing, accounting, filing fees, and other related
expenses are borne by Morgan Stanley DW through the brokerage fees paid by the
Partnerships.

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

DISTRIBUTIONS. Distributions, other than redemptions of Units, are made on a
pro-rata basis at the sole discretion of Demeter. No distributions have been
made to date. Demeter does not intend to make any distributions of the
Partnerships' profits.

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

REDEMPTIONS. Limited partners may redeem some or all of their Units at 100% of
the Net Asset Value per Unit as of the end of the last day of any month that is
at least six months after the closing at which a person becomes a limited
partner, upon five business days advance notice by redemption form to Demeter.
Redemptions must be made in whole Units, in a minimum amount of 50 Units
required for each redemption, unless a limited partner is redeeming his entire
interest in a Partnership.

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

Units redeemed on or prior to the last day of the twelfth month from the date
of purchase will be subject to a redemption charge equal to 2% of the Net Asset
Value of a Unit on the Redemption Date. Units redeemed after the last day of
the twelfth month and on or prior to the last day of the twenty-fourth month
from the date of purchase will be subject to a redemption charge equal to 1% of
the Net Asset Value of a Unit on Redemption Date. Units redeemed after the last
day of the twenty-fourth month from the date of purchase will not be subject to
a redemption charge. The foregoing redemption charges are paid to Morgan
Stanley DW.

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

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

LITIGATION SETTLEMENT. On February 27, 2002, Spectrum Global Balanced,
Spectrum Select, Spectrum Strategic, and Spectrum Technical received
notification of a preliminary entitlement to payment from the Sumitomo Copper
Litigation Settlement Administrator, and the Partnerships received settlement
award payments in the amounts of $233,074, $4,636,156, $17,556, and $306,400,
respectively, during August 2002 and $0, $45,665, $173, and 3,018,
respectively, during July 2004. Spectrum Global Balanced received a settlement
award payment in the amount of $2,296 during October 2004. Any amounts received
are accounted for in the period received, for the benefit of the limited
partners at the date of receipt.

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

RECLASSIFICATIONS. Certain reclassifications have been made to the prior
years' financial statements to conform to the current year presentation. Such
reclassifications have no impact to the Partnerships' reported net income
(loss).

- --------------------------------------------------------------------------------
2. RELATED PARTY TRANSACTIONS

The Partnerships pay brokerage fees to Morgan Stanley DW as described in Note
1. Spectrum Strategic's cash is on deposit with Morgan Stanley DW, MS&Co.,
MSIL, and MSCG. Spectrum Global Balanced, Spectrum Select, and Spectrum
Technical's cash is on deposit with Morgan Stanley DW, MS&Co., and MSIL, and
Spectrum Currency's cash is on deposit with Morgan Stanley DW and MS&Co., in
futures interests trading accounts to meet margin requirements as needed.
Morgan Stanley DW pays interest on these funds as described in Note 1.

- --------------------------------------------------------------------------------
3. TRADING ADVISORS

Demeter, on behalf of each Partnership, retains certain commodity trading
advisors to make all trading decisions for the Partnerships. The trading
advisors for each Partnership at December 31, 2004 were as follows:

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

Morgan Stanley Spectrum Global Balanced L.P.
SSARIS Advisors, LLC ("SSARIS") replaced RXR,
Inc. effective December 6, 2002

Morgan Stanley Spectrum Select L.P.
EMC Capital Management, Inc. ("EMC")
Northfield Trading L.P. ("Northfield")
Rabar Market Research, Inc. ("Rabar")
Sunrise Capital Management, Inc. ("Sunrise")
Graham Capital Management, L.P. ("Graham"),
effective January 1, 2004

Morgan Stanley Spectrum Strategic L.P.
Blenheim Capital Management, L.L.C. ("Blenheim")
Eclipse Capital Management, Inc. ("Eclipse")
FX Concepts (Trading Advisor), Inc. ("FX Concepts"),
effective November 1, 2004

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

Effective April 30, 2004, Allied Irish Capital Management Ltd. was terminated
as a trading advisor for Spectrum Strategic.

Morgan Stanley Spectrum Technical L.P.
Campbell & Company, Inc. ("Campbell")
Chesapeake Capital Corporation ("Chesapeake")
John W. Henry & Company, Inc.
Winton Capital Management Limited ("Winton"),
effective January 1, 2004
Compensation to the trading advisors by the Partnerships consists of a
management fee and an incentive fee as follows:

MANAGEMENT FEE. The management fee for Spectrum Currency is accrued at the
rate of 1/12 of 2% per month of Net Assets allocated to each trading advisor
on the first day of each month (a 2% annual rate).

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

The management fee for Spectrum Select is accrued at the rate of 1/4 of 1%
per month of Net Assets allocated to EMC, Northfield, Rabar, and Sunrise on the
first day of each month (a 3% annual rate) and 1/12 of 2% per month of Net
Assets allocated to Graham on the first day of each month (a 2% annual rate).
The management fee for Spectrum Strategic is accrued at the rate of 1/12 of
3% per month of Net Assets allocated to Blenheim and Eclipse on the first day
of each month (a 3% annual rate) and 1/12 of 2% per month of Net Assets
allocated to FX Concepts on the first day of each month (a 2% annual rate).

The management fee for Spectrum Technical is accrued at the rate of 1/12 of
2% per month of Net Assets allocated to JWH and Winton on the first day of each
month (a 2% annual rate) and 1/12 of 3% per month of Net Assets allocated to
Campbell and Chesapeake on the first day of each month (a 3% annual rate).
Prior to May 1, 2002, the management fee for Chesapeake was accrued at a rate
of 1/12 of 4% per month of Net Assets on the first day of each month (a 4%
annual rate).

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

INCENTIVE FEE. Spectrum Currency pays a monthly incentive fee equal to 20% of
the trading profits experienced with respect to each trading advisor's
allocated Net Assets as of the end of each calendar month.

Spectrum Global Balanced pays a monthly incentive fee equal to 15% of the
trading profits experienced with respect to each trading advisor's allocated
Net Assets as of the end of each calendar month.

Spectrum Select pays a monthly incentive fee equal to 15% of the trading
profits experienced with respect to the Net Assets allocated to EMC,
Northfield, Rabar, and Sunrise as of the end of each calendar month and 20% of
the trading profits experienced with respect to the Net Assets allocated to
Graham as of the end of each calendar month.

Spectrum Strategic pays a monthly incentive fee equal to 15% of the trading
profits experienced with respect to the Net Assets allocated to Blenheim and
Eclipse as of the end of each calendar month and 20% of the trading profits
experienced with respect to the Net Assets allocated to FX Concepts as of the
end of each calendar month.

Spectrum Technical pays a monthly incentive fee equal to 20% of the trading
profits experienced with respect to the Net Assets allocated to Campbell, JWH,
and Winton as of the end of each calendar month and 19% of the trading profits
experienced with respect to the Net Assets allocated to Chesapeake as of the
end of each calendar month.

Trading profits represent the amount by which profits from futures, forwards,
and options trading exceed losses after brokerage and management fees are
deducted.

For all Partnerships with trading losses, no incentive fee is paid in
subsequent months until all such losses are recovered. Cumulative trading
losses are adjusted on a pro-rata basis for the net amount of each month's
subscriptions and redemptions.

- --------------------------------------------------------------------------------
4. FINANCIAL INSTRUMENTS
The Partnerships trade Future Interests. Futures and forwards represent
contracts for delayed delivery of an instrument at a specified date and price.
Risk arises

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

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 exchange-traded contracts is based on the settlement
price quoted by the exchange on the day with respect to which market value is
being determined. If an exchange-traded contract could not have been liquidated
on such day due to the operation of daily limits or other rules of the
exchange, the settlement price shall be the settlement price on the first
subsequent day on which the contract could be liquidated. The market value of
off-exchange-traded contracts is based on the fair market value quoted by the
counterparty.
The Partnerships' contracts are accounted for on a trade-date basis and
marked to market on a daily basis. The Partnerships account for their
derivative investments in accordance with the provisions of Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 defines a derivative as
a financial instrument or other contract that has all three of the following
characteristics:

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

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

(3) Terms require or permit net settlement.

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

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

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

SPECTRUM CURRENCY

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

2004 -- 16,647,953 16,647,953 -- Mar. 2005
2003 -- 4,878,640 4,878,640 -- Mar. 2004

SPECTRUM GLOBAL BALANCED

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

2004 746,251 71,072 817,323 Mar. 2005 Mar. 2005
2003 2,472,718 74,322 2,547,040 Apr. 2004 Mar. 2004

SPECTRUM SELECT

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

2004 13,504,844 1,621,779 15,126,623 Jun. 2006 Mar. 2005
2003 31,690,225 5,091,740 36,781,965 Mar. 2005 Mar. 2004

SPECTRUM STRATEGIC

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

2004 3,084,000 (424,631) 2,659,369 Mar. 2006 Mar. 2005
2003 6,905,992 1,015,793 7,921,785 Jul. 2005 Mar. 2004

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

SPECTRUM TECHNICAL

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

2004 15,108,739 12,233,011 27,341,750 Jun. 2006 Mar. 2005
2003 34,239,960 12,194,250 46,434,210 Dec. 2004 Mar. 2004

The Partnerships have credit risk associated with counterparty
nonperformance. The credit risk associated with the instruments in which the
Partnerships trade is limited to the amounts reflected in the Partnerships'
Statements of Financial Condition.

The Partnerships also have credit risk because Morgan Stanley DW, MS&Co.,
MSIL, and/or MSCG act as the futures commission merchants or the
counterparties, with respect to most of the Partnerships' assets.
Exchange-traded futures, forward, options on forward, 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., MSIL, and/or MSCG
each as a futures commission merchant for each Partnership's exchange-traded
futures, forward, options on forward, and futures-styled options contracts, are
required, pursuant to regulations of the Commodity Futures Trading Commission,
to segregate from their own assets, and for the sole benefit of their commodity
customers, all funds held by them with respect to exchange-traded futures,
forward, options on forward, and futures-styled options contracts, including an
amount equal to the net unrealized gains (losses) on all open futures, forward,
options on forward, and futures-styled options contracts, which funds, in the
aggregate, totaled at December 31, 2004 and 2003 respectively, $49,638,767 and
$52,809,135 for Spectrum Global Balanced, $577,340,091 and $430,286,177 for
Spectrum Select, $181,484,461 and $116,752,753 for Spectrum Strategic, and
$761,083,643 and $517,752,016 for Spectrum Technical. With respect to each
Partnership's off-exchange-traded forward currency contracts, there are no
daily exchange-required settlements of variation in value, nor is there any
requirement that an amount equal to the net unrealized gains (losses)

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

on open forward contracts be segregated. However, each Partnership is required
to meet margin requirements equal to the net unrealized loss on open contracts
in the Partnership accounts with the counterparty, which is accomplished by
daily maintenance of the cash balance in a custody account held at Morgan
Stanley DW for the benefit of MS&Co. With respect to those off-exchange-traded
forward currency contracts, the Partnerships are at risk to the ability of
MS&Co., the sole counterparty on all such contracts, to perform. Each
Partnership has a netting agreement with MS&Co. These agreements, which seek to
reduce both the Partnerships' and MS&Co.'s exposure on off-exchange-traded
forward currency contracts, should materially decrease the Partnerships' credit
risk in the event of MS&Co.'s bankruptcy or insolvency.

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

SPECTRUM CURRENCY

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

NET ASSET VALUE, JANUARY 1, 2004: $ 15.66
-------
NET OPERATING RESULTS:
Interest Income 0.13
Expenses (0.89)
Realized Loss (1.21)
Unrealized Profit 0.72
-------
Net Loss (1.25)
-------
NET ASSET VALUE, DECEMBER 31, 2004: $ 14.41
=======
RATIOS TO AVERAGE NET ASSETS:

Net Investment Loss (5.6)%
Expenses before Incentive Fees 6.4 %
Expenses after Incentive Fees 6.5 %
Net Loss (5.3)%

TOTAL RETURN BEFORE INCENTIVE FEES (7.9)%
TOTAL RETURN AFTER INCENTIVE FEES (8.0)%
INCEPTION-TO-DATE RETURN 44.1 %
COMPOUND ANNUALIZED RETURN 8.5 %

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

SPECTRUM GLOBAL BALANCED

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

NET ASSET VALUE, JANUARY 1, 2004: $ 15.47
-------
NET OPERATING RESULTS:
Interest Income 0.18
Expenses (0.87)
Realized Profit 0.34
Unrealized Loss (0.51)
Proceeds from Litigation Settlement 0.0
-------
Net Loss (0.86)
-------
NET ASSET VALUE, DECEMBER 31, 2004: $ 14.61
=======
RATIOS TO AVERAGE NET ASSETS:

Net Investment Loss (4.6)%
Expenses before Incentive Fees 5.9 %
Expenses after Incentive Fees 5.9 %
Net Loss (6.0)%

TOTAL RETURN BEFORE INCENTIVE FEES (5.6)%
TOTAL RETURN AFTER INCENTIVE FEES (5.6)%
INCEPTION-TO-DATE RETURN 46.1 %
COMPOUND ANNUALIZED RETURN 3.8 %

SPECTRUM SELECT

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

NET ASSET VALUE, JANUARY 1, 2004: $ 30.31
--------
NET OPERATING RESULTS:
Interest Income 0.28
Expenses (3.20)
Realized Profit 2.70
Unrealized Loss (1.21)
Proceeds from Litigation Settlement 0.0
--------
Net Loss (1.43)
--------
NET ASSET VALUE, DECEMBER 31, 2004: $ 28.88
========
RATIOS TO AVERAGE NET ASSETS:

Net Investment Loss (10.1)%
Expenses before Incentive Fees 9.9 %
Expenses after Incentive Fees 11.1 %
Net Loss (4.5)%

TOTAL RETURN BEFORE INCENTIVE FEES (3.6)%
TOTAL RETURN AFTER INCENTIVE FEES (4.7)%
INCEPTION-TO-DATE RETURN 188.8 %
COMPOUND ANNUALIZED RETURN 8.2 %

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(concluded)

SPECTRUM STRATEGIC

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

NET ASSET VALUE, JANUARY 1, 2004: $ 14.31
-------
NET OPERATING RESULTS:
Interest Income 0.15
Expenses (1.52)
Realized Profit 2.10
Unrealized Loss (0.48)
Proceeds from Litigation Settlement 0.0
-------
Net Income 0.25
-------
NET ASSET VALUE, DECEMBER 31, 2004: $ 14.56
=======
RATIOS TO AVERAGE NET ASSETS:

Net Investment Loss (9.3)%
Expenses before Incentive Fees 8.6 %
Expenses after Incentive Fees 10.3 %
Net Income 0.8 %

TOTAL RETURN BEFORE INCENTIVE FEES 3.5 %
TOTAL RETURN AFTER INCENTIVE FEES 1.7 %
INCEPTION-TO-DATE RETURN 45.6 %
COMPOUND ANNUALIZED RETURN 3.8 %

SPECTRUM TECHNICAL

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

NET ASSET VALUE, JANUARY 1, 2004: $ 22.64
--------
NET OPERATING RESULTS:
Interest Income 0.21
Expenses (2.53)
Realized Profit 3.96
Unrealized Loss (0.65)
Proceeds from Litigation Settlement 0.0
--------
Net Income 0.99
--------
NET ASSET VALUE, DECEMBER 31, 2004: $ 23.63
========
RATIOS TO AVERAGE NET ASSETS:

Net Investment Loss (10.5)%
Expenses before Incentive Fees 9.5 %
Expenses after Incentive Fees 11.4 %
Net Income 5.6 %

TOTAL RETURN BEFORE INCENTIVE FEES 6.2 %
TOTAL RETURN AFTER INCENTIVE FEES 4.4 %
INCEPTION-TO-DATE RETURN 136.3 %
COMPOUND ANNUALIZED RETURN 8.8 %

Demeter Management Corporation
330 Madison Avenue, 8th Floor
New York, NY 10017
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