MORGAN STANLEY SPECTRUM STRATEGIC 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, 2002 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 0-26280

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

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

DELAWARE 13-3782225
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Demeter Management Corporation
825 Third Avenue, 9th Floor
New York, NY 10022
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (212) 310-6444

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

Name of each exchange
Title of each class on which registered

None None

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

Units of Limited Partnership Interest

(Title of Class)

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

Indicate by check-mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment of this Form 10-K. [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 a specified
date within 60 days prior to the date of filing: $84,746,590 at January 31,
2003.

DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)

MORGAN STANLEY SPECTRUM STRATEGIC L.P.
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 2002

DOCUMENTS INCORPORATED BY REFERENCE

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

Documents Incorporated Part of Form 10-K

Partnership's Prospectus dated
April 30, 2002 I

Partnership's Supplement to the
Prospectus dated January 24, 2003 I

Annual Report to Morgan Stanley
Spectrum Series Limited Partners
for the year ended December 31,
2002 II, III and IV

PART I
Item 1. BUSINESS
(a) General Development of Business. Morgan Stanley Spectrum
Strategic L.P. (the "Partnership") is a Delaware limited
partnership organized to engage primarily in the speculative
trading of futures contracts, options on futures contracts, and
forward contracts on physical commodities and other commodity
interests, including, but not limited to, foreign currencies,
financial instruments, metals, energy and agricultural products.
The Partnership commenced operations on November 2, 1994. The
Partnership is one of the Morgan Stanley Spectrum series of
funds, comprised (at December 31, 2002) of the Partnership,
Morgan Stanley Spectrum Commodity L.P. ("Spectrum Commodity"),
Morgan Stanley Spectrum Currency L.P., Morgan Stanley Spectrum
Global Balanced L.P., Morgan Stanley Spectrum Select L.P., and
Morgan Stanley Spectrum Technical L.P. (collectively, the
"Spectrum Series").

Spectrum Commodity terminated trading on December 31, 2002 and
commenced its dissolution in January 2003 pursuant to its Limited
Partnership Agreement.

The Partnership's general partner is Demeter Management
Corporation ("Demeter"). The non-clearing commodity broker is
Morgan Stanley DW Inc. ("Morgan Stanley DW"). The clearing
commodity brokers are Morgan Stanley & Co. Incorporated ("MS &
Co.") and Morgan Stanley & Co. International Limited
("MSIL"). Demeter, Morgan Stanley DW, MS & Co. and MSIL are
wholly-owned subsidiaries of Morgan Stanley. The trading
advisors to the Partnership are Allied Irish Capital Management,
Ltd., Blenheim Capital Management, L.L.C., and Eclipse Capital
Management Inc., (collectively, the "Trading Advisors").

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

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

The managing underwriter for the Spectrum Series is Morgan Stanley
DW.

The Partnership's net asset value per Unit at December 31, 2002
was $11.54, representing an increase of 9.38 percent from the net
asset value per Unit of $10.55 on December 31, 2001. For a more
detailed description of the Partnership's business see
subparagraph (c).

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

(c) Narrative Description of Business. The Partnership is in the
business of speculative trading of futures, forwards, and options
pursuant to trading instructions provided by the Trading Advisors.
For a detailed description of the different facets of the
Partnership's business, see those portions of the Partnership's
prospectus, dated April 30, 2002 (the "Prospectus"), and the
Partnership's supplement to the Prospectus dated January 24, 2003
(the Supplement"), incorporated by reference in this Form 10-K,
set forth below.

Facets of Business
1. Summary 1. "Summary" (Pages 1-8 of
the Prospectus and Page
S-1 of the Supplement).

2. Futures, Options, and 2. "The Futures, Options, and
Forwards Markets Forwards Markets" (Pages
137-141 of the Prospectus).

3. Partnership's Trading 3. "Use of Proceeds" (Pages
Arrangements and 26-28 of the Prospectus
Policies and Page S-4 of the Supple-
ment). "The Trading
Advisors" (Pages 72-119
of the Prospectus and
Pages S-28 - S-38 of the
Supplement).

4. Management of the Part- 4. "The Trading Advisors -
nership The Management Agree-
ments" (Page 72 of the
Prospectus), "The
General Partner" (Pages
67-71 of the Prospectus
and Pages S-25 - S-28 of
the Supplement), "The Com-
modity Brokers" (Pages
121-122 of the Prospectus)
and "The Limited Partner-
ship Agreements"(Pages 123-
125 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 130-135 of
the Prospectus).

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

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

Item 2. PROPERTIES
The Partnership's executive and administrative offices are located
within the offices of Morgan Stanley DW. The Morgan Stanley DW
offices utilized by the Partnership are located at 825 Third
Avenue, 9th Floor, New York, NY 10022.

Item 3. LEGAL PROCEEDINGS
None.

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

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

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

(b) Holders. The number of holders of Units at December 31, 2002
was approximately 10,209.

(c) Distributions. No distributions have been made by the
Partnership since it commenced trading operations on November 2,
1994. Demeter has sole discretion to decide what distributions, if
any, shall be made to investors in the Partnership. Demeter
currently does not intend to make any distributions of Partnership
profits.

(d) Use of Proceeds. The Partnership initially registered
4,000,000 Units pursuant to a Registration Statement on a Form
S-1, which became effective on September 15, 1994 (SEC File Number
33-80146).

The Partnership registered an additional 6,000,000 Units pursuant
to the new Registration Statement on Form S-1, which became
effective on January 31, 1996 (SEC File Number 333-00494).

The Partnership registered an additional 2,500,000 Units
pursuant to another Registration Statement on Form S-1, which
became effective on April 30, 1996 (SEC File Number 333-3222).

The Partnership registered an additional 6,500,000 Units pursuant
to another Registration Statement on Form S-1, which became
effective on February 28, 2000 (SEC File Number 333-90487).

Units are being sold at monthly closings as of the close of
business on last day of each month at a purchase price equal to
100% of the net asset value per Unit as of the date of such
monthly closing.

Through December 31, 2002, 13,168,223.767 Units were sold, leaving
5,831,776.233 Units unsold at December 31, 2002. The aggregate
price of the Units sold through December 31, 2002 was
$145,506,558.

The managing underwriter for the Partnership is Morgan Stanley DW.

Since no expenses are chargeable against proceeds, 100% of the
proceeds of the offering have been applied to the working capital
of the Partnership for use in accordance with the "Use of
Proceeds" section of the Prospectus and the Supplement.

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

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

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

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

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

Capital Resources. The Partnership does not have, nor expect to
have, any capital assets. Redemptions, exchanges and sales of
additional Units in the future will affect the amount of funds
available for investment in futures, forwards, and options in
subsequent periods. It is not possible to estimate the
amount and therefore, the impact of future redemptions of Units.

There are no known material trends, favorable or unfavorable, that
would affect, nor any expected material changes to, the
Partnership's capital resource arrangements at the present time.
The Partnership has no off-balance sheet arrangements, nor
contractual obligations or commercial commitments to make future
payments that would affect the Partnership's liquidity or capital
resources. The contracts traded by the Partnership are accounted
for on a trade-date basis and marked to market on a daily basis.
The value of futures contracts is the settlement price on the
exchange on which that futures contract is traded on a particular
day. The value of foreign currency forward contracts is based on
the spot rate as of the close of business, New York City time, on
a given day.

Results of Operations.
General. The Partnership's results depend on the Trading Advisors
and the ability of each Trading Advisor's trading programs to take
advantage of price movements or other profit opportunities in the
futures, forwards, and options markets. The following presents a
summary of the Partnership's operations for the three years ended
December 31, 2002, and a general discussion of its trading
activities during each period. It is important to note, however,
that the Trading Advisors trade in various markets at different
times and that prior activity in a particular market does
not mean that such market will be actively traded by the Trading
Advisors or will be profitable in the future. Consequently, the
results of operations of the Partnership are difficult to discuss
other than in the context of the Trading Advisors' trading
activities on behalf of the Partnership and how the Partnership
has performed in the past.

The Partnership's results of operations are set forth in financial
statements prepared in accordance with United States generally
accepted accounting principles, which require the use of certain
accounting policies that affect the amounts reported in these
financial statements, including the following: The contracts the
Partnership trades are accounted for on a trade-date basis and
marked to market on a daily basis. The difference between their
cost and market value is recorded on the Statements of Operations
as "Net change in unrealized profit/loss" for open (unrealized)
contracts, and recorded as "Realized profit/loss" when open
positions are closed out, and the sum of these amounts constitutes
the Partnership's trading revenues. Interest income revenue as
well as management fees, incentive fees and brokerage fees
expenses of the Partnership are recorded on an accrual basis.

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

At December 31, 2002, Partnership's total capital was $75,369,072,
an increase of $6,551,686 from the Partnership's total capital of
$68,817,386 at December 31, 2001. For the year ended December 31,
2002, the Partnership generated net income of $6,314,416, total
subscriptions aggregated $13,475,899 and total redemptions
aggregated $13,238,629.

For the year ended December 31, 2002, the Partnership recorded
total trading revenues, including interest income, of $14,078,687
and posted an increase in net asset value per Unit. The most
significant gains of approximately 18.3% were recorded in the
agricultural markets primarily from long futures positions in
cocoa as political unrest in the Ivory Coast threatened supplies
throughout much of the year. Additional gains were recorded in
the agricultural markets from long futures positions in coffee as
technical factors and concerns regarding supplies placed upward
pressure on prices. Further gains resulted from long positions
in wheat, soybean, and corn futures, as weather-related concerns
threatened crops in the U.S. midwest. In the currency markets,
gains of approximately 7.6% were recorded from long positions in
the euro and Swiss franc versus the U.S. dollar as the dollar's
value weakened amid investors' fears concerning increased global
tensions and prolonged uncertainty regarding the U.S. economy. A
portion of the Partnership's overall gains was offset by
losses of approximately 2.9% recorded in the global stock index
futures markets from long positions in U.S. and European stock
index futures as prices continued to weaken throughout a majority
of the year amid ongoing concerns regarding the global economic
recovery, corporate accounting scandals, and geopolitical
concerns. Additional losses were incurred from short positions in
U.S. and European stock index futures as global equity prices
reversed higher during the fourth quarter amid temporary economic
optimism. In the metals futures markets, losses of approximately
2.9% were experienced from long positions in copper, aluminum,
and zinc futures as prices reversed lower during April and July
amid growing inventory levels and weak industrial demand. Total
expenses for the year were $7,764,271, resulting in net income of
$6,314,416. The net asset value of a Unit increased from $10.55 at
December 31, 2001 to $11.54 at December 31, 2002.

At December 31, 2001, the Partnership's total capital was
$68,817,386, a decrease of $5,417,063 from the Partnership's total
capital of $74,234,449 at December 31, 2000. For the year ended
December 31, 2001, the Partnership generated a net loss of
$480,543, total subscriptions aggregated $9,249,482 and total
redemptions aggregated $14,186,002.

For the year ended December 31, 2001, the Partnership
recorded total trading revenues, including interest income, of
$6,855,809 and, after expenses, posted a decrease in net asset
value per Unit. The most significant losses of approximately 5.5%
were recorded in the currency markets throughout a majority of
the fourth quarter from transactions involving the euro and Swiss
franc. In the global stock index futures markets, losses of
approximately 2.2% were experienced throughout a majority of the
first quarter from long positions in U.S. stock index futures as
U.S. stock prices declined after discouraging corporate earnings
warnings, inflationary news and on worries of a U.S. economic
slowdown. In the metals markets, losses of approximately 1.8%
were incurred primarily during October and November from long
gold futures positions as prices reversed lower on the heels of
sharp gains in the U.S. stock market. A portion of the
Partnership's overall losses was partially offset by gains of
approximately 13.1% recorded in the soft commodities markets
primarily during September and November from long cocoa futures
positions as prices soared higher on expectations that global
demand will outpace production. Additional gains were recorded
primarily during April, May and December from long lumber futures
positions as prices increased amid low inventories and on hopes
of a pickup in the U.S. economy. In the global interest rate
futures markets, gains of approximately 5.4% were recorded
throughout a majority of the first quarter from long positions in
eurodollar futures as prices rose amid a rattled stock market,
shaky consumer confidence, positive inflation data and
interest rate cuts by the U.S. Federal Reserve. During September
and October, profits were recorded from long positions in U.S.
and European interest rate futures as prices continued trending
higher amid continued concerns for the sluggish U.S. economy,
interest rate cuts by the U.S. Federal Reserve and as investors
sought a "safe haven" from declining stock prices. Total
expenses for the year were $7,336,352, resulting in a net loss of
$480,543. The net asset value of a Unit decreased from $10.61 at
December 31, 2000 to $10.55 at December 31, 2001.

At December 31, 2000, the Partnership's total capital was
$74,234,449, a decrease of $33,458,072 from the Partnership's
total capital of $107,692,521 at December 31, 1999. For the year
ended December 31, 2000, the Partnership generated a net loss of
$36,887,290, total subscriptions aggregated $17,601,488 and total
redemptions aggregated $14,172,270.

For the year ended December 31, 2000, the Partnership recorded
total trading losses, net of interest income, of $26,938,961 and
posted a decrease in net asset value per Unit. The most
significant losses of approximately 16.0% were recorded in the
global stock index futures markets from short positions in U.S.
stock index futures as domestic equity prices moved higher in
early January on fears of an interest rate hike and reports of a
major corporate merger. Additional losses were recorded during
February from short positions in NASDAQ 100 Index futures
as the NASDAQ Index climbed higher on strength in computer-chip
maker and biotechnology companies. During the first half of
September and November, additional losses were incurred from long
positions in U.S. stock index futures as prices declined due to
jitters in the technology sector and a worrisome spike in oil
prices. In the metals markets, losses of approximately 14.6%
were incurred primarily from long positions in aluminum and
copper futures as prices moved lower in February and March due
primarily to technically based selling, falling prices of other
base metals and the softening of oil prices. Additional losses
were recorded during April, late May, early June and October from
long positions in aluminum and copper futures as prices declined
after concerns mounted that demand would weaken amid a cooling of
the
U.S. economy. In soft commodities, losses of approximately 11.5%
were experienced primarily during June, throughout a majority of
the third quarter and December from long positions in lumber
futures as prices declined amid weak demand and abundant
supplies. Additional losses were experienced during January,
February and early April from long coffee futures positions as
coffee prices declined in the wake of forecasts for a bumper crop
in Brazil and on technically based selling. In the currency
markets, losses of approximately 8.9% were recorded primarily
during January, February and July from long positions in the euro
as the value of the European common currency weakened versus the
U.S. dollar due to skepticism regarding Europe's economic
outlook. During mid September, additional losses were
experienced from short positions in the euro as its value
reversed sharply and suddenly higher versus the U.S. dollar after
the world's major central banks carried out coordinated
intervention to buy euros. Losses were also experienced during
April from long positions in the Japanese yen as the value of the
yen weakened versus the U.S. dollar amid fears of additional Bank
of Japan intervention. During May and June, losses were recorded
from short positions in the Japanese yen as the value of the U.S.
dollar weakened versus the yen due primarily to the perception
that interest rates in the U.S. may have topped out. A portion
of the Partnership's overall losses was partially offset by gains
of approximately 18.9% recorded primarily during January in the
energy markets from long futures positions in crude oil and its
refined products as oil prices increased on growing speculation
that the Organization of Petroleum Exporting Countries (OPEC)
would extend production cuts beyond the deadline of March 2000.
Additional gains were recorded during March from short positions
in crude oil futures as prices declined after OPEC effectively
restored production levels to their year-earlier level.
Additional gains were recorded early in May from long futures
positions in crude oil as oil prices increased amid concerns over
tight gasoline supplies and after comments from OPEC ministers
who saw no need to raise supplies further. Profits were
also recorded primarily during May from long positions in natural
gas futures as prices continued their upward trend, as
data released by the American Gas Association further confirmed
fears that inventory levels remain low. During August, November
and December, additional gains were recorded from long positions
in natural gas futures as prices moved higher amid supply and
storage concerns. Total expenses for the year were $9,948,329,
resulting in a net loss of $36,887,290. The net asset value of a
Unit decreased from $15.85 at December 31, 1999 to $10.61 at
December 31, 2000.

The Partnership's overall performance record represents varied
results of trading in different futures, forwards, and options
markets. For an analysis of unrealized gains and (losses) by
contract type and a further description of 2002 trading results,
refer to the "Letter to the Limited Partners" in the Partnership's
Annual Report to Limited Partners for the year ended December 31,
2002, 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.

Credit Risk.
Financial Instruments. The Partnership is a party to financial
instruments with elements of off-balance sheet market and credit
risk. The Partnership may trade futures, forwards, and options
in interest rates, stock indices, commodities, currencies,
petroleum, precious metals and other commodity interests. In
entering into these contracts, the Partnership is subject to the
market risk that such contracts may be significantly influenced
by market conditions, such as interest rate volatility, resulting
in such contracts being less valuable. If the markets should
move against all of the positions held by the Partnership at the
same time, and if the Trading Advisors were unable to offset
positions of the Partnership, the Partnership could lose all of
its assets and the Limited Partners would realize a 100% loss.

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

In addition to market risk, in entering into futures, forward,
and options contracts there is a credit risk to the Partnership
that the counterparty on a contract will not be able to meet its
obligations to the Partnership. The ultimate counterparty or
guarantor of the Partnership for futures contracts traded in the
United States and the foreign exchanges on which the
Partnership trades is the clearinghouse associated with such
exchange. In general, a clearinghouse is backed by the
membership of the exchange and will act in the event of non-
performance by one of its members or one of its member's
customers, which should significantly reduce this credit risk.
For example, a clearinghouse may cover a default by drawing upon
a defaulting member's mandatory contributions and/or non-
defaulting members' contributions to a clearinghouse guarantee
fund, established lines or letters of credit with banks, and/or
the clearinghouse's surplus capital and other available assets of
the exchange and clearinghouse, or assessing its members. In
cases where the Partnership trades off-exchange forward contracts
with a counterparty, the sole recourse of the Partnership will be
the forward contracts counterparty.

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. Any such obligation on the part of a broker appears
even less clear where the default occurs in a non-U.S.
jurisdiction.

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, calculating not only
the amount of margin required for it but also the amount of its
unrealized gains at each exchange, if any. The commodity brokers
inform the Partnership, as with all their customers, of its net
margin requirements for all its existing open positions, but do
not break that net figure down, exchange by exchange. Demeter,
however, has installed a system which permits it to monitor the
Partnership's potential margin liability, exchange by exchange.
As a result, Demeter is able to monitor the Partnership's
potential net credit exposure to each exchange by adding the
unrealized trading gains on that 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, in addition, a minimum amount of
diversification in the Partnership's trading, usually over
several different products. One of the aims of such trading
policies has been to reduce the credit exposure of the
Partnership to a single exchange and, historically, the
Partnership's exposure to any one exchange has typically amounted
to only a small percentage of its total net assets. On those
relatively few occasions where the Partnership's credit exposure
may climb 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.

See "Financial Instruments" under "Notes to Financial Statements"
in the Partnership's Annual Report to Limited Partners for the
year ended December 31, 2002, which is incorporated by reference
to Exhibit 13.01 of this Form 10-K.

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

Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Introduction

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

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

The Partnership's total market risk is influenced by a wide
variety of factors, including the diversification among the
Partnership's open positions, the volatility present within the
markets, and the liquidity of the markets. At different times,
each of these factors may act to increase or decrease the market
risk associated with the Partnership.

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

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

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

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

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

The Partnership's VaR computations are based on the risk
representation of the underlying benchmark for each instrument or
contract and does not distinguish between exchange and non-
exchange-traded instruments and is also not based on exchange
and/or dealer-based 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, 2002 and
2001. At December 31, 2002 and 2001, the Partnership's total
capitalization was approximately $75 million and $69 million,
respectively.

Primary Market December 31, 2002 December 31, 2001
Risk Category Value at Risk Value at Risk

Currency (1.99)% (0.82)%
Interest Rate (1.39) (0.23)
Equity (0.46) (0.21)
Commodity (2.79) (2.01)
Aggregate Value at Risk (3.93)% (2.20)%

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

The table above represents the VaR of the Partnership's open
positions at December 31, 2002 and 2001 only and is not
necessarily representative of either the historic or future risk
of an investment in the Partnership. Because the Partnership's
only business is the speculative trading of futures, forwards, and
options, the composition of its trading portfolio can change
significantly over any given time period, or even within a
single trading day. Any changes in open positions could positively
or negatively materially impact market risk as measured by VaR.

The table below supplements the December 31, 2002 VaR by
presenting the Partnership's high, low and average VaR, as a
percentage of total net assets for the four quarterly reporting
periods from January 1, 2002 through December 31, 2002.

Primary Market Risk Category High Low Average
Currency (1.99)% (0.38)% (1.12)%
Interest Rate (1.39) (0.25) (0.80)
Equity (0.64) (0.17) (0.37)
Commodity (2.79) (1.87) (2.25)
Aggregate Value at Risk (3.93)% (2.47)% (2.85)%

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

The VaR tables above present the results of the Partnership's VaR
for each of the Partnership's market risk exposures and on an
aggregate basis at December 31, 2002 and 2001, and for the end of
the four quarterly reporting periods during calendar year 2002.
Since VaR is based on historical data, VaR should not be
viewed as predictive of the Partnership's future financial
performance or its ability to manage or monitor risk. There can
be no assurance that the Partnership's actual losses on a
particular day will not exceed the VaR amounts indicated above or
that such losses will not occur more than once in 100 trading
days.

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

At December 31, 2002, the Partnership's cash balance at Morgan
Stanley DW was approximately 86% of its total net asset value. A
decline in short-term interest rates will result in a decline in
the Partnership's cash management income. This cash flow risk is
not considered to be material.

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

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

The following were the primary trading risk exposures of the
Partnership at December 31, 2002, by market sector. It may be
anticipated, however, that these market exposures will
vary materially over time.

Currency. The Partnership's currency exposure at December 31,
2002 was to exchange rate fluctuations, primarily fluctuations
which disrupt the historical pricing relationships between
different currencies and currency pairs. Interest rate changes
as well as political and general economic conditions influence
these fluctuations. At December 31, 2002, the Partnership's
major exposures were to outright U.S. dollar positions. Outright
positions consist of the U.S. dollar vs. other currencies. These
other currencies include major and minor currencies. Demeter
does not anticipate that the risk profile of the Partnership's
currency sector will change significantly in the future. The
currency trading VaR figure includes foreign margin amounts
converted into U.S. dollars with an incremental adjustment to
reflect the exchange rate risk inherent to the U.S.-based
Partnership in expressing VaR in a functional currency other than
U.S. dollars.

Interest Rate. At December 31, 2002, the Partnership's exposure
to the global interest rate market complex was primarily spread
across the U.S., European and Japanese interest rate sectors.
Interest rate movements directly affect the price of the
sovereign bond futures positions held by the Partnership and
indirectly affect the value of its stock index and currency
positions. Interest rate movements in one country as well
as relative interest rate movements between countries materially
impact the Partnership's profitability. The Partnership's
primary interest rate exposure is generally to interest rate
fluctuations in the U.S. and the other G-7 countries. The G-7
countries consist of France, the U.S., Britain, Germany, Japan,
Italy and Canada. However, the Partnership also takes futures
positions in the government debt of smaller nations - e.g.,
Australia. Demeter anticipates that the G-7 countries and
Australian interest rates will remain the primary interest rate
exposure of the Partnership for the foreseeable future. The
speculative futures positions held by the Partnership may range
from short to long-term instruments. Consequently, changes in
short, medium or long-term interest rates may have an effect on
the Partnership.

Equity. The primary equity exposure at December 31, 2002 was to
price risk in the G-7 countries. The stock index futures traded
by the Partnership are by law limited to futures on broadly-based
indices. At December 31, 2002, the Partnership's primary
exposures were to the DAX (Germany) and S&P 500 (U.S.) stock
indices. The Partnership is exposed to the risk of adverse price
trends or static markets in the U.S. and European stock indices.
Static markets would not cause major market changes but would
make it difficult for the Partnership to avoid being "whipsawed"
into numerous small losses.

Commodity.
Soft Commodities and Agriculturals. At December 31, 2002,
the Partnership had exposure to the markets that comprise
these sectors. Most of the exposure was to the cocoa,
sugar, coffee and soybean oil markets. Supply and demand
inequalities, severe weather disruptions and market
expectations affect price movements in these markets.

Metals. The Partnership's metals exposure at December 31,
2002 was to fluctuations in the price of precious metals,
such as gold, and base metals, such as copper and tin.
Economic forces, supply and demand inequalities,
geopolitical factors and market expectations influence price
movements in these markets. The Trading Advisors, from time
to time, take positions as market opportunities develop and
Demeter anticipates that the Partnership will continue to do
so.

Energy. At December 31, 2002, the Partnership's energy
exposure was shared primarily by futures contracts in crude
oil and its related products, and natural gas. Price
movements in the energy markets result from political
developments in the Middle East, weather patterns and other
economic fundamentals. Significant profits and losses,
which have been experienced in the past, are expected to
continue to be experienced in the futures. Natural
gas has exhibited volatility in prices resulting from
weather patterns and supply and demand factors and will
likely continue in this choppy pattern.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at December 31, 2002:

Foreign Currency Balances. The Partnership's foreign
currency balances at December 31, 2002 were in British
pounds, Japanese yen and euros. The Partnership controls
the non-trading risk of these balances by regularly
converting them back into U.S. dollars upon liquidation of
their respective positions.

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

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

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

Supplementary data specified by Item 302 of Regulation S-K:
Summary of Quarterly Results (Unaudited)

Quarter Revenues/ Net Net Income/
Ended (Net Losses) Income/(Loss) (Loss) Per Unit

2002
March 31 $ 8,275,813 $ 6,492,203 $ 1.00
June 30 4,753,904 2,944,241 0.47
September 30 6,023,092 3,800,561 0.60
December 31 (4,974,122) (6,922,589) (1.08)

Total $ 14,078,687 $ 6,314,416 $ 0.99

2002
March 31 $ 2,340,103 $ 404,464 $ 0.06
June 30 (1,824,625) (3,672,569) (0.54)
September 30 2,975,539 1,217,762 0.18
December 31 3,364,792 1,569,800 0.24

Total $ 6,855,809 $ (480,543) $(0.06)

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

None.

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:

Robert E. Murray, age 42, is the Managing Director of the
Strategic Products Group at Morgan Stanley and Chairman of the
Board of Directors of Demeter Management Corporation, a leading
commodity pool operator with approximately $1.7 billion in assets
across a variety of U.S. and international public and private
managed futures funds. Mr. Murray began at Dean Witter in 1984
and has been closely involved in the growth of managed futures at
the firm over the last 18 years. He is also the Chairman of the
Board of Directors of Morgan Stanley Futures & Currency
Management Inc., Morgan Stanley's internal commodity trading
advisor. Mr. Murray served as the Vice Chairman and a Director of
the Board of the Managed Futures Association and is currently a
member of the Board of Directors of the National Futures
Association. Mr. Murray received a Bachelors Degree in Finance
from Geneseo State University in 1983.

Jeffrey A. Rothman, age 41, is the President and a Director of
Demeter. Mr. Rothman is the Executive Director of Morgan Stanley
Managed Futures, responsible for overseeing all aspects of
the firm's managed futures department. He is also President and
a Director of Morgan Stanley Futures & Currency Management Inc.
Mr. Rothman has been with the managed futures department for
sixteen years and most recently held the position of National
Sales Manager, assisting Branch Managers and Financial Advisors
with their managed futures education, marketing, and asset
retention efforts. Throughout his career, Mr. Rothman has helped
with the development, marketing and administration of
approximately 35 commodity pools. Mr. Rothman is an active member
of the Managed Funds Association and serves on its Board of
Directors.

Mitchell M. Merin resigned his position as a Director of Demeter.

Joseph G. Siniscalchi, age 57, is a Director of Demeter. Mr.
Siniscalchi joined Morgan Stanley DW in July 1984 as a First Vice
President, Director of General Accounting and served as a Senior
Vice President and Controller for Morgan Stanley DW's Securities
Division through 1997. He is currently Managing Director
responsible for the Client Support Service Division of Morgan
Stanley DW. From February 1980 to July 1984, Mr. Siniscalchi was
Director of Internal Audit at Lehman Brothers Kuhn Loeb, Inc.

Edward C. Oelsner, III, age 61, is a Director of Demeter. Mr.
Oelsner is currently an Executive Vice President and head of the
Product Development Group at Morgan Stanley Investment
Advisors Inc., an affiliate of Morgan Stanley DW. Mr. Oelsner
joined Morgan Stanley DW in 1981 as a Managing Director in Morgan
Stanley DW's Investment Banking Department, specializing in
coverage of regulated industries and subsequently served as head
of the Morgan Stanley DW Retail Products Group. Prior to joining
Morgan Stanley DW, Mr. Oelsner held positions at The First Boston
Corporation as a member of the Research and Investment Banking
Departments from 1967 to 1981. Mr. Oelsner received an M.B.A. in
Finance from the Columbia University Graduate School of Business
in 1966 and an A.B. in Politics from Princeton University in
1964.

Richard A. Beech, age 51, 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 Branch Futures. 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.

Raymond A. Harris, age 46, is a Director of Demeter and of Morgan
Stanley Futures & Currency Management Inc. Mr. Harris is
currently Managing Director of Global Products & Services at
Morgan Stanley. He previously served Chief Accounting
Officer of Morgan Stanley Dean Witter Asset Management. From
July 1982 to July 1994, Mr. Harris served in financial,
administrative and other assignments at Dean Witter Reynolds,
Inc. and Dean Witter, Discover & Co. From August 1994 to January
1999, he worked in Discover Financial Services and the firm's
Credit Service business units. Mr. Harris has been with Morgan
Stanley and its affiliates since July 1982. He has a B.A. degree
from Boston College and an M.B.A. in Finance from the University
of Chicago.

Anthony J. DeLuca, age 40, is a Director of Demeter. Mr. DeLuca
is also a Director of Morgan Stanley Futures & Currency
Management Inc. Mr. DeLuca was appointed the Controller of Asset
Management for Morgan Stanley in June 1999. Prior to that, Mr.
DeLuca was a partner at the accounting firm of Ernst & Young LLP,
where he had Morgan Stanley as a major client. Mr. DeLuca had
worked continuously at Ernst & Young LLP ever since 1984, after
he graduated from Pace University with a B.B.A. degree in
Accounting.

Frank Zafran, age 47, is a Director of Demeter and of Morgan
Stanley Futures & Currency Management Inc. Mr. Zafran is an
Executive Director of Morgan Stanley and, in September 2002, was
named Chief Administrative Officer of Morgan Stanley's Global
Products & Services 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.

Raymond E. Koch resigned his position as Chief Financial Officer
of Demeter.

Jeffrey D. Hahn, age 45, is the Chief Financial Officer of
Demeter. Mr. Hahn began his career at Morgan Stanley in 1992 and
is currently an Executive Director responsible for the management
and supervision of the accounting, reporting, tax and finance
functions for the firm's private equity, managed futures, and
certain legacy real estate investing activities. He is also Chief
Financial Officer of Morgan Stanley Futures & Currency Management
Inc. From August 1984 through May 1992, Mr. Hahn held various
positions as an auditor at Coopers & Lybrand, specializing in
manufacturing businesses and venture capital organizations. Mr.
Hahn received his B.A. in Economics from St. Lawrence University
in 1979, an M.B.A. from Pace University in 1984, and is a
Certified Public Accountant.

All the foregoing directors have indefinite terms.

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, 2002, 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, 2002,
Demeter owned 76,351.101 Units of general partnership interest
representing a 1.17 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, 2002, 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 $5,304,486 for the year ended
December 31, 2002.

Item 14. CONTROLS AND PROCEDURES
(a) As of a date within 90 days of the filing date of this
annual report, the President and Chief Financial
Officer of the general partner, Demeter, have evaluated
the effectiveness of the Partnership's disclosure
controls and procedures (as defined in Rules 13a-14 and
15d-14 of the Exchange Act), and have judged such
controls and procedures to be effective.

(b) There have been no significant changes in the
Partnership's internal controls or in other factors
that could significantly affect these controls
subsequent to the date of their evaluation.

PART IV
Item 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) 1. Listing of Financial Statements
The following financial statements and report of independent auditors,
all appearing in the accompanying Annual Report to Limited Partners
for the year ended December 31, 2002, are incorporated by reference to
Exhibit 13.01 of this Form 10-K:
- - Report of Deloitte & Touche LLP, independent auditors, for the years
ended December 31, 2002, 2001 and 2000.

- - Statements of Financial Condition, including the Schedules of
Investments, as of December 31, 2002 and 2001.

- - Statements of Operations, Changes in Partners' Capital, and Cash
Flows for the years ended December 31, 2002, 2001 and 2000.

- - 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, 2002 is not deemed to be filed with this
report.

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

(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Partnership during the
last quarter of the period covered by 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 STRATEGIC L.P.
(Registrant)

BY: Demeter Management Corporation,
General Partner

March 31, 2003 BY: /s/ Jeffrey A. Rothman
Jeffrey A. Rothman, Director
and 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/ Robert E. Murray March 31, 2003
Robert E. Murray, Director and
Chairman

/s/ Jeffrey A. Rothman March 31, 2003
Jeffrey A. Rothman, Director and
President

/s/ Joseph G. Siniscalchi March 31, 2003
Joseph G. Siniscalchi, Director

/s/ Edward C. Oelsner III March 31, 2003
Edward C. Oelsner III, Director

/s/ Richard A. Beech March 31, 2003
Richard A. Beech, Director

/s/ Raymond A. Harris March 31, 2003
Raymond A. Harris, Director

/s/ Anthony J. DeLuca March 31, 2003
Anthony J. DeLuca, Director

/s/ Frank Zafran March 31, 2003
Frank Zafran, Director

/s/ Jeffrey D. Hahn March 31, 2003
Jeffrey D. Hahn, Chief
Financial Officer

CERTIFICATIONS

I, Jeffrey A. Rothman, President of Demeter Management
Corporation, the general partner of the registrant, certify that:

1. I have reviewed this annual report on Form 10-K of the
registrant;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-
14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation
Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of Demeter's
board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated
in this annual report whether there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.

Date: March 31, 2003 /s/Jeffrey A. Rothman
Jeffrey A. Rothman,
President, Demeter Management
Corporation, general partner
of the registrant
CERTIFICATIONS

I, Jeffrey D. Hahn, Chief Financial Officer of Demeter Management
Corporation, the general partner of the registrant, certify that:

1. I have reviewed this annual report on Form 10-K of the
registrant;

2. Based on my knowledge, this annual report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
annual report;

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this annual
report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of this annual report (the "Evaluation
Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of Demeter's
board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and

6. The registrant's other certifying officers and I have
indicated in this annual report whether there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.

Date: March 31, 2003 /s/Jeffrey D. Hahn
Jeffrey D. Hahn
Chief Financial Officer,
Demeter Management Corporation,
general partner of the
registrant

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 30, 2002,
filed with the Securities and Exchange Commission pursuant
to Rule 424(b)(3) under the Securities Act of 1933 on May
8, 2002.
3.02 Certificate of Limited Partnership, dated April 18, 1994,
is incorporated by reference to Exhibit 3.02 of the
Partnership's Registration Statement on Form S-1 (File No.
33-80146) filed with the Securities and Exchange
Commission on June 10, 1994.

3.04 Certificate of Amendment of Certificate of Limited
Partnership of the Partnership, dated April 6, 1999
(changing its name from Dean Witter Spectrum Strategic
L.P.), is incorporated by reference to Exhibit 3.04 of the
Partnership's Registration Statement (No. 333-3222) filed
with the Securities and Exchange Commission on April 12,
1999.

3.05 Certificate of Amendment of Certificate of Limited
Partnership, dated November 1, 2001 (changing its name
from Morgan Stanley Dean Witter Spectrum Strategic L.P.),
is incorporated by reference to Exhibit 3.01 of the
Partnership's Form 8-K (File No. 0-26280) filed with the
Securities and Exchange Commission on November 1, 2001.
10.02 Management Agreement, dated as of November 1, 1994, among
the Partnership, Demeter, and Blenheim Investments, Inc.
is incorporated by reference to Exhibit 10.01 of the
Partnership's Form 10-K (File No. 0-26280) for fiscal year
ended December 31, 1998 filed on June 30, 1999.

10.02(a)Amendment to the Management Agreement, among the
Partnership, Demeter, and Blenheim Investments, Inc. is
incorporated by reference to Exhibit 10.01 of the
Partnership's Form 8-K (File No. 0-26280) filed with the
Securities and Exchange Commission on April 25, 2001.

10.03 Management Agreement, dated as of June 1, 2000, among the
Partnership, Demeter, and Eclipse Capital Management, Inc.
is incorporated by reference to Exhibit 10.09 of the
Partnership's Form 10-Q (File No. 0-26280) for the
quarterly period ended September 30, 2000 and filed with
the Securities and Exchange Commission on November 14,
2000.

10.04 Management Agreement, dated as of May 1, 1999, among the
Partnership, Demeter, and Allied Irish Capital Management
Ltd. is incorporated by reference to Exhibit 10.04 of the
Partnership's Registration Statement on Form S-1 (File No.
333-90487) filed with the Securities and Exchange
Commission on December 29, 1999.

10.11 Form of Subscription and Exchange Agreement and Power of
Attorney to be executed by each purchaser of Units is
incorporated by reference to Exhibit B of the
Partnership's Prospectus dated April 30, 2002, as filed
with the Securities and Exchange Commission pursuant to
Rule 424 (b)(3) under the Securities Act of 1933 on May 8,
2002.
10.13 Amended and Restated Escrow Agreement, dated as of March
10, 2000 among the Partnership, Morgan Stanley Spectrum
Select L.P., Morgan Stanley Spectrum Technical L.P.,
Morgan Stanley Spectrum Global Balanced L.P., Morgan
Stanley Spectrum Currency L.P., Morgan Stanley Spectrum
Commodity L.P., Morgan Stanley DW, and The Chase Manhattan
Bank, the escrow agent, is incorporated by reference to
Exhibit 10.13 of the Partnership's Registration Statement
on Form S-1 (File No. 333-90487) filed with the Securities
and Exchange Commission on November 2, 2001.

10.14 Form of Subscription Agreement Update Form to be executed
by purchasers of Units is incorporated by reference to
Exhibit C of the Partnership's Prospectus dated June 30,
2002, as filed with the Securities and Exchange Commission
pursuant to Rule 424(b)(3)under the Securities Act of 1933
on May 8, 2002.
10.15 Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW, dated as of October 16,
2000 is incorporated by reference to Exhibit 10.01 of the
Partnership's Form 8-K (File No. 0-26280) filed with the
Securities and Exchange Commission on November 1, 2001.

10.16 Commodity Futures Customer Agreement between MS & Co. and
the Partnership, and acknowledged and agreed to by Morgan
Stanley DW, dated as of June 6, 2000, is incorporated by
reference to Exhibit 10.02 of the Partnership's Form 8-K
(File No. 0-26280) filed with the Securities and Exchange
Commission on November 1, 2001.

10.17 Customer Agreement between the Partnership and MSIL, dated
as of May 1, 2000, is incorporated by reference to Exhibit
10.04 of the Partnership's Form 8-K (File No. 0-26280)
filed with the Securities and Exchange Commission on
November 1, 2001.
10.18 Foreign Exchange and Options Master Agreement between MS &
Co. and the Partnership, dated as of April 30, 2000, is
incorporated by reference to Exhibit 10.05 of the
Partnership's Form 8-K (File No. 0-26280) filed with the
Securities and Exchange Commission on November 1, 2001.

10.19 Securities Account Control Agreement among the
Partnership, MS & Co., and Morgan Stanley DW, dated as of
May 1, 2000, is incorporated by reference to Exhibit 10.03
of the Partnership's Form 8-K (File No. 0-26280) filed
with the Securities and Exchange Commission on November 1,
2001.
13.01 December 31, 2002 Annual Report to Limited Partners is
filed herewith.

99.01 Certification of President of Demeter Management Corpor-
ation, 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.

99.02 Certification of Chief Financial Officer of Demeter
Management Corporation, 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.

EXHIBIT 99.01

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

In connection with the Annual Report of Morgan Stanley Spectrum
Strategic L.P. (the "Partnership") on Form 10-K for the period
ended December 31, 2002 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Jeffrey A.
Rothman, President, Demeter Management Corporation, general
partner of the Partnership, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:

(1) The Report fully complies with the requirements of
Section 13 or 15(d) of the Securities Exchange Act of
1934; and

(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.

By: /s/Jeffrey A. Rothman

Name: Jeffrey A. Rothman
Title: President

Date: March 31, 2003

EXHIBIT 99.02

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

In connection with the Annual Report of Morgan Stanley Spectrum
Strategic L.P. (the "Partnership") on Form 10-K for the period
ended December 31, 2002 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Jeffrey D. Hahn,
Chief Financial Officer, Demeter Management Corporation, general
partner of the Partnership, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:

(1) The Report fully complies with the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Partnership.

By: /s/Jeffrey D. Hahn

Name: Jeffrey D. Hahn
Title: Chief Financial Officer

Date: March 31, 2003

Morgan Stanley
Spectrum Series

December 31, 2002
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 annualized return since inception for each
Fund. Past performance is not necessarily indicative of future results.

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

Spectrum Commodity...... -- -- -- -- -- -- -- (34.3) 15.8 3.2 (25.6) 16.6 (31.9) (7.4)
- --------------------------------------------------------------------------------------------------------------------------------
Spectrum Currency....... -- -- -- -- -- -- -- -- -- 11.7 11.1 12.2 39.3 14.2
(6 mos.)
- --------------------------------------------------------------------------------------------------------------------------------
Spectrum Global Balanced -- -- -- (1.7) 22.8 (3.6) 18.2 16.4 0.7 0.9 (0.3) (10.1) 45.7 4.7
(2 mos.)
- --------------------------------------------------------------------------------------------------------------------------------
Spectrum Select......... 31.2 (14.4) 41.6 (5.1) 23.6 5.3 6.2 14.2 (7.6) 7.1 1.7 15.4 176.5 9.3
(5 mos.)
- --------------------------------------------------------------------------------------------------------------------------------
Spectrum Strategic...... -- -- -- 0.1 10.5 (3.5) 0.4 7.8 37.2 (33.1) (0.6) 9.4 15.4 1.8
(2 mos.)
- --------------------------------------------------------------------------------------------------------------------------------
Spectrum Technical...... -- -- -- (2.2) 17.6 18.3 7.5 10.2 (7.5) 7.8 (7.2) 23.3 84.1 7.8
(2 mos.)
- --------------------------------------------------------------------------------------------------------------------------------

DEMETER MANAGEMENT CORPORATION

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

MORGAN STANLEY SPECTRUM SERIES
ANNUAL REPORT
2002

Dear Limited Partner:
This marks the ninth annual report for Morgan Stanley Spectrum Global
Balanced L.P., Morgan Stanley Spectrum Strategic L.P. and Morgan Stanley
Spectrum Technical L.P., the twelfth annual report for Morgan Stanley Spectrum
Select L.P., the fifth annual report for Morgan Stanley Spectrum Commodity L.P.
and the third annual report for Morgan Stanley Spectrum Currency L.P. The Net
Asset Value per Unit for each of the six Morgan Stanley Spectrum Funds as of
December 31, 2002 was as follows:

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

Spectrum Commodity $ 6.81 16.6%
-----------------------------------------
Spectrum Currency $13.93 12.2%
-----------------------------------------
Spectrum Global Balanced $14.57 -10.1%
-----------------------------------------
Spectrum Select $27.65 15.4%
-----------------------------------------
Spectrum Strategic $11.54 9.4%
-----------------------------------------
Spectrum Technical $18.41 23.3%
-----------------------------------------

Since their inception in November 1994, Spectrum Global Balanced has
increased by 45.7% (a compound annualized return of 4.7%), Spectrum Strategic
has increased by 15.4% (a compound annualized return of 1.8%), and Spectrum
Technical has increased by 84.1% (a compound annualized return of 7.8%). Since
its inception in August 1991, Spectrum Select has increased by 176.5% (a
compound annualized return of 9.3%). Since its inception in January 1998,
Spectrum Commodity has decreased by 31.9% (a compound annualized return of
- -7.4%). Since its inception in July 2000, Spectrum Currency has increased by
39.3% (a compound annualized return of 14.2%).

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.

Special Notice to Limited Partners of Morgan Stanley Spectrum Commodity L.P.

As notified under separate cover dated December 16, 2002, Limited Partners of
Morgan Stanley Spectrum Commodity L.P. are advised that Demeter Management
Corporation, the general partner of Spectrum Commodity, has determined to
terminate trading within the Fund effective December 31, 2002, and commence
dissolution pursuant to the Fund's Limited Partnership Agreement.

Limited Partners are advised of recent changes to the Board of Directors and
Officers of Demeter Management Corporation (the "General Partner"):

Mr. Robert E. Murray resigned the position of President of the General
Partner. Mr. Murray will, however, retain his position as Chairman of the Board
of Directors.

Mr. Jeffrey A. Rothman, age 41, is the President and a Director of the
General Partner. Mr. Rothman is the Executive Director of Morgan Stanley
Managed Futures, responsible for overseeing all aspects of the firm's Managed
Futures Department. He is also President and a Director of Morgan Stanley
Futures & Currency Management Inc., Morgan Stanley's internal commodity trading
advisor. Mr. Rothman has been with the Managed Futures Department for sixteen
years and most recently held the position of National Sales Manager, assisting
Branch Managers and Financial Advisors with their managed futures education,
marketing, and asset retention efforts. Throughout his career, Mr. Rothman has
helped with the development, marketing, and administration of approximately 35
commodity pool investments. Mr. Rothman is an active member of the Managed
Funds Association and serves on its Board of Directors.

Mr. Frank Zafran, age 47, is a Director of the General Partner and of Morgan
Stanley Futures & Currency Management Inc. Mr. Zafran is an Executive Director
of Morgan Stanley and, in September 2002, was named Chief Administrative
Officer of Morgan Stanley's Global Products & Services Division. Mr. Zafran
joined the firm in 1979 and 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. Raymond E. Koch resigned the position of Chief Financial Officer of the
General Partner.

Mr. Jeffrey D. Hahn, age 45, was named Chief Financial Officer of the General
Partner. Mr. Hahn began his career at Morgan Stanley in 1992 and is currently
an Executive Director responsible for the management and supervision of the
accounting, reporting, tax and finance functions for the firm's private equity,
managed futures, and certain legacy real estate investing activities. He is
also Chief Financial Officer of Morgan Stanley Futures & Currency Management
Inc. From August 1984 through May 1992, Mr. Hahn held various positions as an
auditor at Coopers & Lybrand, specializing in manufacturing businesses and
venture capital organizations. Mr. Hahn received his B.A. in Economics from St.
Lawrence University in 1979, an M.B.A. from Pace University in 1984, and is a
Certified Public Accountant.

Should you have any questions concerning this report, please feel free to
contact Demeter Management Corporation, 825 Third Avenue, 9th Floor, New York,
NY 10022 or your Morgan Stanley Financial Advisor.

I hereby affirm, that to the best of my knowledge and belief, the information
contained in this report is accurate and complete. Past performance is not a
guarantee of future results.

Sincerely,
/s/ Jeffrey A. Rothman
Jeffrey A. Rothman
President
Demeter Management Corporation
General Partner

SPECTRUM COMMODITY

[CHART]

Year ended
December 31, 2002
-----------------
Energies 10.34%
Metals 1.70%
Agriculturals 9.77%

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the energy futures markets, gains were experienced throughout a majority
of the year from long positions in natural gas futures as prices drew
strength primarily from colder weather in the Northeastern U.S. and a
disruption of output from the Gulf of Mexico caused by Hurricane Isidore.
Additional gains were recorded from long positions in crude oil futures and
related products as growing tensions between the U.S. and Iraq pushed prices
higher in late February and early March, as well as during the second half
of the year.
.. In the agricultural markets, gains were provided from long positions in
cocoa futures as political unrest in the Ivory Coast threatened supplies
throughout a majority of the year. Additional gains were recorded from long
positions in sugar futures during December and long positions in a variety
of grain futures during May, June, and July.
.. In the metals futures markets, gains were recorded from long futures
positions in gold as prices initially climbed higher early in the year amid
investors' fears concerning weaker global equity prices. Additional gains
resulted later in the year, as gold prices resumed their upward move amid
the looming threat of military action against Iraq and North Korea.

SPECTRUM CURRENCY

[CHART]

Year ended
December 31, 2002
-----------------
Australian dollar 4.12%
British Pound -8.99%
Euro 16.42%
Japanese yen -7.28%
Swiss franc 5.07%
Minor Currencies 12.95%

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. Gains were recorded from long positions in the euro, Swiss franc, and
Norwegian krone versus the U.S. dollar as the 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 dollar.
.. Additional gains stemmed from long positions in the South African rand
versus the U.S. dollar as its value approached a 16-month high during the
second and fourth quarter amid strong demand for South African exports and
high relative interest rates.
.. Profits 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.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. Losses were 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 dollar weakened amid geopolitical and economic concerns.
.. Losses 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 dollar
weakened versus most major currencies.

SPECTRUM GLOBAL BALANCED

[CHART]

Year ended
December 31, 2002
-----------------
Currencies 1.31%
Interest Rates 7.42%
Stock Indices -14.15%
Energies 0.00%
Metals -0.45%
Agriculturals -0.43%

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

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the global stock index futures markets, losses were experienced from long
positions in European, U.S., and Japanese stock index futures as prices
continued to weaken throughout the majority of the year, particularly during
July, September, and December, amid continued economic uncertainty and
ongoing political concerns.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the global interest rate futures markets, gains resulted from long
positions in European, Japanese, and U.S. interest rate futures,
predominantly during the third quarter, as prices trended higher amid a
shift in assets from stocks into bonds as investors sought the "safe haven"
of fixed income investments.
.. In the currency markets, gains were recorded from long positions in the euro
and Swiss franc versus the U.S. dollar as the dollar's value weakened during
May, June, and December amid investors' fears concerning increased global
tensions, specifically the threat of war between India and Pakistan, the
looming threat of a military strike against Iraq, and the resumption of
North Korea's nuclear program.

SPECTRUM SELECT

[CHART]

Year ended
December 31, 2002
-----------------
Currencies 12.08%
Interest Rates 9.54%
Stock Indices 0.45%
Energies 1.01%
Metals -1.82%
Agriculturals 1.23%

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the currency markets, gains were recorded from long positions in the euro
and Swiss franc versus the U.S. dollar during May, June and December, as the
dollar's value weakened amid investors' fears concerning global political
tensions, specifically the threat of war between India and Pakistan, the
looming threat of a military strike against Iraq, and the resumption of
North Korea's nuclear program.
.. In the global interest rate futures markets, gains were recorded from long
positions in European and U.S. interest rate futures during the period from
June through September, as well as in December, as prices trended higher
amid a shift of assets from stocks into bonds as investors sought the "safe
haven" of fixed income investments.
.. In the agricultural futures markets, gains were recorded from long futures
positions in soybean and wheat as prices rallied during the second and third
quarter amid fears that hot and dry weather would adversely affect crops in
the U.S. midwest.
.. In the energy futures markets, gains were experienced from long positions in
natural gas futures during March, August, September, and December as prices
moved higher amid supply concerns.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the metals futures markets, losses were incurred early in the year from
long positions in copper futures as prices fell amid weak industrial demand.
Additional losses were recorded from short positions in copper futures as
prices reversed higher in response to a temporary rally in global equity
prices in October.

SPECTRUM STRATEGIC

[CHART]

Year ended
December 31, 2002
-----------------
Currencies 7.56%
Interest Rates -0.28%
Stock Indices -2.92%
Energies -0.06%
Metals -2.87%
Agriculturals 18.25%

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the agricultural markets, gains were recorded from long futures positions
in cocoa as political unrest in the Ivory Coast threatened supplies
throughout a majority of the year. Additional gains were recorded from long
futures positions in coffee as technical factors and concerns regarding
supplies placed upward pressure on prices. Further gains resulted from long
positions in wheat, soybean, and corn futures as weather-related concerns
threatened supplies in the U.S. midwest.
.. In the currency markets, gains were recorded from long positions in the euro
and Swiss franc versus the U.S. dollar as the dollar's value weakened amid
investors' fears concerning increased global tensions and prolonged
uncertainty regarding the U.S. economy.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the global stock index futures markets, losses were recorded from long
positions in U.S. and European stock index futures as prices continued to
weaken throughout a majority of the year amid ongoing concerns regarding the
global economic recovery, corporate accounting scandals, and geopolitical
concerns. Additional losses were incurred from short positions in U.S. and
European stock index futures as global equity prices reversed higher during
the fourth quarter amid temporary economic optimism.
.. In the metals futures markets, losses were experienced from long positions
in copper, aluminum, and zinc futures as prices reversed lower during April
and July amid growing inventory levels and weak industrial demand.

SPECTRUM TECHNICAL

[CHART]

Year ended
December 31, 2002
-----------------
Currencies 13.05%
Interest Rates 17.05%
Stock Indices 4.34%
Energies 0.01%
Metals -2.34%
Agriculturals 0.96%

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the global interest rate futures markets, gains resulted from long
positions in Japanese, European, and U.S. interest rate futures as prices
trended higher during the period from June through September, as well as in
December, amid global economic uncertainty and falling equity prices.
.. In the currency markets, gains were recorded during the second quarter, as
well as in December, from long positions in the euro versus the U.S. dollar
as the value of the dollar weakened amid continued uncertainty regarding the
U.S. economic recovery and heightened global political tensions.
.. In the global stock index futures markets, gains were recorded from short
positions in European stock index futures as prices trended lower during
June, July, and September amid skepticism regarding a global economic
recovery.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the metals futures markets, losses resulted from long positions in copper
futures as prices reversed lower during the second quarter amid growing
inventory levels and weak industrial demand. Additional losses were recorded
during October from short positions in copper futures as prices reversed
higher amid renewed economic optimism.

MORGAN STANLEY SPECTRUM SERIES

INDEPENDENT AUDITORS' REPORT

To the Limited Partners and the General Partner of Morgan Stanley Spectrum
Commodity L.P., 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 Commodity L.P., Morgan Stanley Spectrum Currency L.P.
("Spectrum Currency"), 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, 2002 and 2001, and
the related statements of operations, changes in partners' capital, and cash
flows for the period from July 3, 2000 (commencement of operations) to December
31, 2000 and the years ended December 31, 2001 and 2002 for Spectrum Currency,
and for each of the three years in the period ended December 31, 2002 for the
other above mentioned Partnerships. These financial statements are the
responsibility of the Partnerships' management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Morgan Stanley Spectrum Commodity L.P.,
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. as of December 31, 2002 and
2001, and the results of their operations and their cash flows for the period
from July 3, 2000 (commencement of operations) to December 31, 2000 and the
years ended December 31, 2001 and 2002 for Spectrum Cur-

rency, and for each of the three years in the period ended December 31, 2002
for the other above mentioned Partnerships, in conformity with accounting
principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

New York, New York
February 14, 2003

MORGAN STANLEY SPECTRUM COMMODITY L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
----------------------
2002 2001
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 14,290,282 12,980,361

Net unrealized gain on open contracts (MS&Co.) -- 289,317
Net unrealized gain (loss) on open contracts
(MSIL) (101,856) 77,762
---------- ----------
Total net unrealized gain (loss) on open contracts (101,856) 367,079
---------- ----------
Total Trading Equity 14,188,426 13,347,440
Interest receivable (Morgan Stanley DW and
MS&Co.) 11,963 17,129
Subscriptions receivable -- 108,050
---------- ----------
Total Assets 14,200,389 13,472,619
========== ==========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 5,357,853 417,678
Accrued brokerage fees (Morgan Stanley DW and
MS&Co.) 52,969 52,001
Accrued management fees (MSCM) 28,788 28,261
---------- ----------
Total Liabilities 5,439,610 497,940
---------- ----------
PARTNERS' CAPITAL
Limited Partners (1,243,152.442 and 2,180,009.505
Units, respectively) 8,465,275 12,721,444
General Partner (43,395.648 Units) 295,504 253,235
---------- ----------
Total Partners' Capital 8,760,779 12,974,679
---------- ----------
Total Liabilities and Partners' Capital 14,200,389 13,472,619
========== ==========
NET ASSET VALUE PER UNIT 6.81 5.84
========== ==========

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
2002 2001 2000
--------- ---------- ---------
$ $ $

REVENUES
Trading profit (loss):
Realized 3,310,675 (4,662,750) 1,696,824
Net change in unrealized (468,935) 392,362 (567,711)
--------- ---------- ---------
Total Trading Results 2,841,740 (4,270,388) 1,129,113
Interest income (Morgan Stanley DW
and MS&Co.) 178,063 518,759 1,047,350
--------- ---------- ---------
Total 3,019,803 (3,751,629) 2,176,463
--------- ---------- ---------
EXPENSES
Brokerage fees (Morgan Stanley DW and
MS&Co.) 607,846 736,436 949,310
Management fees (MSCM) 330,352 400,237 546,187
Service fees (Demeter) -- -- 58,604
--------- ---------- ---------
Total 938,198 1,136,673 1,554,101
--------- ---------- ---------
NET INCOME (LOSS) 2,081,605 (4,888,302) 622,362
========= ========== =========
NET INCOME (LOSS) ALLOCATION:
Limited Partners 2,039,336 (4,800,953) 612,086
General Partner 42,269 (87,349) 10,276
NET INCOME (LOSS) PER UNIT:
Limited Partners .97 (2.01) .24
General Partner .97 (2.01) .24

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

MORGAN STANLEY SPECTRUM CURRENCY L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
---------------------
2002 2001
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 88,478,803 43,241,135
Net unrealized gain on open contracts (MS&Co.) 5,651,549 3,178,383
---------- ----------
Total Trading Equity 94,130,352 46,419,518
Subscriptions receivable 4,178,758 2,642,117
Interest receivable (Morgan Stanley DW) 70,210 50,588
---------- ----------
Total Assets 98,379,320 49,112,223
========== ==========

LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 1,526,335 165,224
Accrued brokerage fees (Morgan Stanley DW) 316,460 154,729
Accrued incentive fees 239,482 913,255
Accrued management fees 137,591 67,274
---------- ----------
Total Liabilities 2,219,868 1,300,482
---------- ----------
PARTNERS' CAPITAL
Limited Partners (6,739,826.121 and 3,674,315.446 Units,
respectively) 93,891,619 45,598,611
General Partner (162,791.986 and 178,332.987 Units, respectively) 2,267,833 2,213,130
---------- ----------
Total Partners' Capital 96,159,452 47,811,741
---------- ----------
Total Liabilities and Partners' Capital 98,379,320 49,112,223
========== ==========
NET ASSET VALUE PER UNIT 13.93 12.41
========== ==========

STATEMENTS OF OPERATIONS

FOR THE PERIOD FROM
JULY 3, 2000
FOR THE YEARS ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
-------------------- DECEMBER 31,
2002 2001 2000
---------- --------- -------------------
$ $ $

REVENUES
Trading profit:
Realized 12,877,202 3,998,924 1,126,201
Net change in unrealized 2,473,166 2,622,814 555,569
---------- --------- ---------
Total Trading Results 15,350,368 6,621,738 1,681,770
Interest income (Morgan Stanley DW) 833,523 731,716 236,461
---------- --------- ---------
Total 16,183,891 7,353,454 1,918,231
---------- --------- ---------
EXPENSES
Brokerage fees (Morgan Stanley DW) 3,077,048 1,297,698 249,571
Incentive fees 1,485,875 1,155,201 188,423
Management fees 1,337,848 564,216 171,693
---------- --------- ---------
Total 5,900,771 3,017,115 609,687
---------- --------- ---------
NET INCOME 10,283,120 4,336,339 1,308,544
========== ========= =========
NET INCOME ALLOCATION:
Limited Partners 10,038,409 4,119,027 1,134,371
General Partner 244,711 217,312 174,173
NET INCOME PER UNIT:
Limited Partners 1.52 1.24 1.17
General Partner 1.52 1.24 1.17

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

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
----------------------
2002 2001
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 49,330,482 57,396,091

Net unrealized gain on open contracts (MS&Co.) 758,782 839,855
Net unrealized loss on open contracts (MSIL) (12,849) (150,647)
---------- ----------
Total net unrealized gain on open contracts 745,933 689,208
Net option premiums 712,573 --
---------- ----------
Total Trading Equity 50,788,988 58,085,299
Subscriptions receivable 716,792 611,641
Interest receivable (Morgan Stanley DW) 53,458 93,818
---------- ----------
Total Assets 51,559,238 58,790,758