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, 2006 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
330 Madison Avenue, 8th Floor
New York, NY					  		      	 	 10017
(Address of principal executive offices)		 		(Zip Code)

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

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

									 Name of each exchange
    Title of each class 						  on which registered

		None								   None

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

	Units of Limited Partnership Interest

	(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.  Yes          No  X

Indicate by check mark if the
registrant is not required to file reports pursuant
to Section 13 or Section 15(d) of the Act.  Yes          No  X

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 is not contained herein,
and will not be contained, to the best of
registrant?s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this
 Form 10-K or any amendment of this
Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definitions of ?accelerated
filer and large accelerated filer? in Rule 12b-2 of the Exchange Act.  (Check
one):

Large accelerated filer___  Accelerated filer____  Non-accelerated filer   X

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

State the aggregate market value of the Units of Limited Partnership Interest
held by non-affiliates of the registrant.  The aggregate market value shall be
computed by reference to the price at which Units were sold as of the last
business day of the registrant?s most recently completed second fiscal quarter:
$193,616,408 at June 30, 2006.

	<page> <table> DOCUMENTS INCORPORATED BY REFERENCE
	(See Page 1)


MORGAN STANLEY SPECTRUM STRATEGIC L.P.
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 2006
<caption>
                               Page No.

							<c>
DOCUMENTS INCORPORATED BY REFERENCE. . . . . . . . . . . . . 	. . . . . 1

Part I .

	Item 1. 	Business . . . . . . . . . . . . . . . . . . . . . . . . 2-6

	Item 1A.	Risk Factors . . . . . .  . . . . . . . . . . . . . . . . .6

	Item 1B.	Unresolved Staff Comments. . . . . . . . . . . . . . . . ..6

	Item 2. 	Properties . . . . . . . . . . . . . . . . . . . . . . . . 7

	Item 3. 	Legal Proceedings . . . . . . . . . . . . . . . . . . . . .7

	Item 4. 	Submission of Matters to a Vote of Security Holders . . . .7

Part II.

	Item 5. 	Market for Registrant's Partnership Units
		 	and Related Security Holder Matters . . . . . . . . . . .8-9

	Item 6.		Selected Financial Data . .  . . . . . . . . . . . . . . .10

	Item 7. 	Management's Discussion and Analysis of Financial
	        	Condition and Results of Operations . . . . . . . . . .11-33

	Item 7A.	Quantitative and Qualitative Disclosures About
	         	Market Risk . . . . . . . . . . . . . . . . . . . . . .33-48

	Item 8. 	Financial Statements and Supplementary Data. . . . . . 48-49

	Item 9. 	Changes in and Disagreements with Accountants on
	        	Accounting and Financial Disclosure . . . . . . . . . . . 49

	Item 9A.	Controls and Procedures . . . . . . . . . . . . . . . .49-52

	Item 9B.	Other Information. . . . . . . . . . . . . . . . . . . . .52

Part III.

	Item 10.	Directors, Executive Officers and Corporate
			Governance . . . . . . . . . . . .  . . . . . . . . . .53-60

	Item 11.	Executive Compensation . . . . . . . . . . . . . . . . . .60

	Item 12.	Security Ownership of Certain Beneficial Owners
	        	and Management and Related Security Holder Matters . . . .61

	Item 13.	Certain Relationships and Related Transactions, and
			Director Independence . . . . . . . . . . . . . . . . . ..61

	Item 14.	Principal Accountant Fees and Services . . . . . . . . 62-63
Part IV.

	Item 15.	Exhibits and Financial Statement Schedules. . . . . . .64-65

</table>


<page>



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
	May 1, 2006	        I

	Partnership's Supplement to the
	Prospectus dated January 18, 2007	 	   I

	Annual Report to Morgan Stanley
	Spectrum Series Limited Partners
	for the year ended December 31,
	2006	  II, III, and IV



























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

The Partnership?s general partner is Demeter Management
Corporation (?Demeter?).  The non-clearing commodity broker is
Morgan Stanley DW Inc. (?Morgan Stanley DW?).  The clearing
commodity brokers are Morgan Stanley & Co. Incorporated
(?MS&Co.?) and Morgan Stanley & Co. International Limited
(?MSIL?).  MS&Co. acts as the counterparty on all of the foreign
currency forward contracts for the Partnership.  In 2007, Morgan
Stanley intends to merge Morgan Stanley DW into MS&Co.  Upon

<page> completion of the merger, the surviving entity, MS&Co.,
will be the Partnership?s principal U.S. commodity broker-dealer.
 Morgan Stanley Capital Group Inc. (?MSCG?) acts as the
counterparty on all of the options on foreign currency forward
contracts.  Demeter, Morgan Stanley DW, MS&Co., MSIL, and MSCG
are wholly-owned subsidiaries of Morgan Stanley.  The trading
advisors to the Partnership are Blenheim Capital Management,
L.L.C., Eclipse Capital Management, Inc., and FX Concepts
(Trading Advisor), Inc. (each individually, a ?Trading Advisor?,
or collectively, the ?Trading Advisors?).

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

The managing underwriter for the Partnership is Morgan Stanley DW.

The Partnership began the year at a net asset value per Unit of
$14.18 and returned 20.9% to $17.15 on December 31, 2006.  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

<page> one industry segment, the speculative trading of futures,
forwards, and options on such contracts.  The relevant financial
information is presented in Items 6 and 8.

(c) Narrative Description of Business.  The Partnership is in the
business of speculative trading of futures, forwards, and options
pursuant to trading instructions provided by the Trading Advisors.
For a detailed description of the different facets of the
Partnership's business, see those portions of the Partnership?s
prospectus, dated May 1, 2006 (the ?Prospectus?), and the
Partnership's supplement to the Prospectus dated January 18, 2007
(the ?Supplement"), incorporated by reference in this Form 10-K,
set forth below.


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

	2.	Futures, Options, and	2.	"The Futures, Options, and
		Forwards Markets		 Forwards Markets" (Pages
				 150-154 of the Prospectus).

	3.	Partnership?s Trading	3.	?Use of Proceeds? (Pages
		Arrangements and		 29-31 of the Prospectus
		Policies	 	 and Page S-5 of the
				 Supplement), ?The Trading
 				 Advisors? (Pages 78-126
			 	 of the Prospectus and
				 Pages S-33 ? S-39 of the
				 Supplement).







<page>
	4.	Management of the Part-	4.	?The Trading Advisors ?
	       nership		 Management Agreements?
				(Page 78 of the
				 Prospectus), ?The
				 General  Partner? (Pages
				 75-77 of the Prospectus
				 and Page S-32 of
				 the Supplement), ?The Com-
				 modity Brokers? (Pages
 129-130 of the Prospectus)
 and ?The Limited Partner-
 ship Agreements? (Pages
 133-136 of the Prospectus
 and page S-41 of the
 Supplement).

	5.	Taxation of the Partner-	5. 	?Material Federal Income
  	ship?s Limited Partners		 Tax Considerations? and
				?State and Local Income Tax
                            		 Aspects? (Pages 142-148 of
				 the Prospectus and Page
				 S-41 of the Supplement).


(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 an annual report
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 100 F Street, N.E., 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,
<page> 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 1A.  RISK FACTORS
The Partnership is in the business of speculative trading of
futures, forwards, and options on such contracts.  For a detailed
description of the risks that may affect the business of the
Partnership or the limited partnership interests offered by the
Partnership, see those portions of the Partnership?s Prospectus
dated May 1, 2006, and the Partnership?s Supplement dated January
18, 2007, incorporated by reference in this Form 10-K, set forth in
the ?Risk Factors? section of the Prospectus at pages 10-15 and the
?Risk Factors? section of the Supplement at pages S-2?S-4.



Item 1B.  UNRESOLVED STAFF COMMENTS
Not applicable.

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

<page>
Item 3.  LEGAL PROCEEDINGS
None.


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























































- 7 -
<page> PART II

Item 5. MARKET FOR 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, 2006,
was approximately 19,168.

(c) Distributions.  No distributions have been made by the
Partnership since it commenced trading operations on November 1,
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 the
Partnership?s profits.

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

The aggregate price of the Units sold through December 31, 2006,
was $327,738,801.



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

(f) Use of Proceeds.
<table>
<caption>					 SEC
Registration Statement on Form S-1  Units Registered  Effective Date  File Number

                              <c>                 <c>               <c>

Initial Registration	4,000,000.000		September 15, 1994	33-80146
Additional Registration	6,000,000.000		January 31, 1996	333-00494
Additional Registration	2,500,000.000 	  April 30, 1996	      333-03222
Additional Registration	6,500,000.000 	  February 28, 2000  	333-90487
Additional Registration	6,500,000.000   	April 28, 2003	333-104003
Additional Registration	 12,000,000.000  	April 28, 2004	333-113396
  Total Units Registered        37,500,000.000

Units sold through 12/31/06	     25,849,930.242
Units unsold through 12/31/06   11,650,069.758
</table>
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 included as part of
the above referenced Registration Statements.






<page>  <table> Item 6.  SELECTED FINANCIAL DATA (in dollars)

<caption>





	       		 	     For the Years Ended December 31,
                       2006         2005	      2004         2003            2002

				<c>			<c>		<c>		<c>		<c>
Total Trading Results
including interest
income				57,607,962	  12,799,043	   17,867,892    31,984,167	14,078,687


Net Income (Loss)		35,652,273	  (5,545,967)   1,248,814    20,513,412     6,314,416


Net Income (Loss)
Per Unit (Limited
& General Partners)           2.97         (0.38)        0.25          2.77         0.99


Total Assets 	     214,091,773   177,063,684  186,645,900   123,656,595   77,094,809


Total Limited
Partners' Capital	     207,238,137   167,774,452  181,218,795   119,976,992   74,487,934


Net Asset Value
Per Unit 			     17.15	       14.18	       14.56	         14.31        11.54



</table>
























<page> 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.  Such assets are used as
margin to engage in trading and may be used as margin solely for
the Partnership?s trading.  The assets are held in either non-
interest bearing bank accounts or in securities and instruments
permitted by the Commodity Futures Trading Commission for
investment of customer segregated or secured funds. Since the
Partnership?s sole purpose is to trade in futures, forwards, and
options, it is expected that the Partnership will continue to own
such liquid assets for margin purposes.

The Partnership?s investment in futures, forwards, and options may,
from time to time, be illiquid.  Most U.S. futures exchanges limit
fluctuations in prices during a single day by regulations referred
to as ?daily price fluctuations limits? or ?daily limits?.  Trades
may not be executed at prices beyond the daily limit.  If the price
for a particular futures or options contract has increased or
decreased by an amount equal to the daily limit, positions in that
futures or options contract can neither be taken nor liquidated
unless traders are willing to affect trades at or within the limit.
Futures prices have occasionally moved the

<page> daily limit for several consecutive days with little or no
trading.  These market conditions could prevent the Partnership
from promptly liquidating its futures or options contracts and
result in restrictions on redemptions.

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

There are no known material trends, demands, commitments, events,
or uncertainties at the present time that are reasonably likely to
result in the Partnership?s liquidity increasing or decreasing in
any material way.

Capital Resources.  The Partnership does not have, nor does it
expect to have, any capital assets.  Redemptions, exchanges, and
sales of Units in the future will affect the amount of funds

<page> available for investments in futures, forwards, and options
in subsequent periods.  It is not possible to estimate the amount,
and therefore the impact, of future inflows and outflows of Units.

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

Results of Operations
General.  The Partnership?s results depend on the Trading Advisors
and the ability of each Trading Advisor?s trading program to take
advantage of price movements in the futures, forwards, and options
markets.  The following presents a summary of the Partnership?s
operations for each of the three years in the period ended December
31, 2006, and a general discussion of its trading activities during
each period.  It is important to note, however, that the Trading
Advisors trade in various markets at different times and that prior
activity in a particular market does not mean that such market will
be actively traded by the Trading Advisors or will be profitable in
the future.  Consequently, the results of operations of the
Partnership are difficult to discuss other than in the context of
the Trading Advisors? trading activities on behalf of the
Partnership during the period in question.  Past performance is no
guarantee of future results.



<page> The Partnership?s results of operations set forth in the
Financial Statements are prepared in accordance with accounting
principles generally accepted in the United States of America,
which require the use of certain accounting policies that affect
the amounts reported in these Financial Statements, including the
following:  The contracts the Partnership trades are accounted for
on a trade-date basis and marked to market on a daily basis. The
difference between their cost and market value is recorded on the
Statements of Operations as ?Net change in unrealized trading
profit (loss)? for open (unrealized) contracts, and recorded as
?Realized trading profit (loss)? when open positions are closed
out.  The sum of these amounts, along with the ?Proceeds from
Litigation Settlement?, constitutes the Partnership?s trading
results.  The market value of a futures contract is the settlement
price on the exchange on which that futures contract is traded on a
particular day.  The value of a foreign currency forward contract
is based on the spot rate as of the close of business.  Interest
income, as well as management fees, incentive fees, and brokerage
fees expenses of the Partnership are recorded on an accrual basis.

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


<page> The Partnership recorded total trading results including
interest income totaling $57,607,962 and expenses totaling
$21,955,689, resulting in net income of $35,652,273 for the year
ended December 31, 2006.  The Partnership?s net asset value per
Unit increased from $14.18 at December 31, 2005, to $17.15 at
December 31, 2006.  Total redemptions and subscriptions for the
year were $36,204,698 and $40,403,751, respectively, and the
Partnership?s ending capital was $209,477,064 at December 31,
2006, an increase of $39,851,326 from ending capital at December
31, 2005, of $169,625,738.

The most significant trading gains of approximately 22.9% were
recorded in the metals markets throughout the first half of the
year from long positions in copper, zinc, and aluminum futures as
base metals prices rallied on strong global demand, particularly
from China, and reports of falling inventories. Elsewhere in the
metals markets, long positions in gold futures experienced
additional gains as prices reached 25-year highs amid continued
geopolitical concerns, inflation concerns, and consistent demand
from foreign central banks.  Further gains were experienced from
long positions in silver futures as prices moved higher due to
the aforementioned factors that affected gold, as well as on news
that a silver-backed Exchange Traded Fund would launch.  Gains
were extended during October from long positions in zinc and
aluminum futures as base metals prices continued to trend higher

<page> amid labor protests in producer countries and news that
inventories declined more than expected. Additionally, prices
were pressured higher after the National Bureau of Statistics
said that China's industrial production had increased
significantly from a year earlier, reaffirming expectations that
demand from China would stay strong.  Additional gains of
approximately 4.2% were experienced within the global stock index
markets primarily during the first and fourth quarters from long
positions in U.S., European, and Pacific Rim stock index futures
as global equity markets trended higher on strong corporate
earnings and solid economic data.  Long positions in Hong Kong
equity index futures recorded further gains during April, July,
August, October, November, and December as prices moved higher
amid positive performance in the technology and banking sectors
and consistently strong economic data out of China and Japan.
During the fourth quarter, European equity index futures prices
moved higher due to consistent merger and acquisition activity,
as well as strong performance in the automobile, industrial, and
technology sectors, resulting in further gains from long
positions.  Meanwhile, U.S. equity prices rose after the U.S.
Federal Reserve?s decision to hold interest rates steady in
October and its assessment that the U.S. economy would continue
to expand in the near-term albeit at a slower pace.  Additional
gains of approximately 2.4% were experienced within the global


<page> interest rate markets during the first quarter from short
positions in U.S. and European interest rate futures as prices
trended lower amid strength in regional equity markets and
investor sentiment that interest rates in the United States and
the European Union would rise in order to combat inflation.  U.S.
and European fixed-income futures continued to move lower into
the second quarter following the release of stronger than
expected economic data out of the U.S. and the Euro-Zone.  During
October, U.S. fixed-income futures prices declined amid weak
demand after U.S. economic reports showed unexpected strength in
retail sales, business inventories, and consumer sentiment, while
European fixed-income futures prices continued to decline on
speculation of another European Central Bank interest rate hike
after government reports showed higher industrial production in
France and Italy.  Finally, in November, newly established long
positions in European fixed-income futures resulted in gains as
prices rose after the release of data indicating that economic
expansion in the Euro-Zone might have peaked during the first
half of the year.  Smaller gains of approximately 1.7% were
recorded within the agricultural markets primarily during the
fourth quarter from long positions in corn futures as prices
moved higher after the U.S. Department of Agriculture?s reduction
of its world ending stock estimate, increased demand from ethanol
producers, and news that Argentina, one of the world?s major corn


<page> producers, would suspend new export orders.  Elsewhere in
the agricultural complex, long positions in coffee futures
resulted in gains primarily during November as prices moved
higher on speculation that inventories might be insufficient to
satisfy growing demand.  A portion of the Partnership?s overall
gains for the year was offset by losses of approximately 0.4% in
the currency markets from positions in the Japanese yen and Swiss
franc relative to the U.S. dollar.  During the first half of the
year, long positions in the U.S. dollar versus the Swiss franc
and Japanese yen experienced losses as the value of the U.S.
dollar moved lower on news that foreign central banks were
beginning to diversify their currency reserves away from U.S.
dollar-denominated assets, as well as uncertainty regarding the
future of the U.S. Federal Reserve?s interest rate tightening
campaign. In addition, the Japanese yen and Swiss franc moved
higher against the U.S. dollar as strong economic data out of
Japan and Switzerland increased speculation that the Bank of
Japan and Swiss National Bank would raise interest rates.  Losses
were extended during October as the value of the U.S. dollar
declined towards the latter half of the month after the U.S.
Department of Commerce reported slower than expected growth in
third quarter U.S. Gross Domestic Growth, as well as a faster
than expected decline in consumer core inflation.  Smaller losses
in the currency markets were experienced from both short and long
positions in the Swedish krona versus the U.S. dollar as the

<page> value of the Swedish krona moved without consistent
direction throughout a majority of the year.  Finally, losses of
approximately 0.4% were incurred within the energy markets during
February, May, August, and December from both short and long
positions in heating oil futures as prices experienced short-term
volatility due to conflicting news regarding supply and demand.
Smaller losses were recorded during October from long positions
in gasoline futures as prices weakened due to uncertainty
regarding OPEC?s plan to cut production, as well as a lower
demand forecast.

The Partnership recorded total trading results including interest
income totaling $12,799,043 and expenses totaling $18,345,010,
resulting in a net loss of $5,545,967 for the year ended December
31, 2005.  The Partnership?s net asset value per Unit decreased
from $14.56 at December 31, 2004, to $14.18 at December 31, 2005.
Total redemptions and subscriptions for the year were $39,680,923
and $31,611,503, respectively, and the Partnership?s ending
capital was $169,625,738 at December 31, 2005, a decrease of
$13,615,387 from ending capital at December 31, 2004, of
$183,241,125.

The most significant trading losses of approximately 11.2% were
incurred in the currency markets throughout much of the year from
U.S. dollar positions versus a variety of foreign currencies.

<page> During January, long positions in the Japanese yen and
Australian dollar versus the U.S. dollar incurred losses after
the U.S. dollar?s value reversed higher amid improvements in U.S.
trade deficit numbers, higher U.S. interest rates, and China?s
reluctance to re-value the yuan.  Short positions in the Swiss
franc and Japanese yen against the U.S. dollar experienced losses
during February as the U.S. dollar weakened amid concerns for the
U.S. Current-Account deficit, a larger than expected drop in
January leading economic indicators, and news that South Korea?s
Central Bank planned to reduce its U.S. dollar currency reserves.
During March, long positions in the Canadian dollar, Japanese
yen, Australian dollar, Swiss franc, and euro versus the U.S.
dollar experienced losses after the U.S. dollar reversed higher,
benefiting from increases in U.S. interest rates.  During April,
losses were recorded from positions in most major currencies
relative to the U.S. dollar as the U.S. dollar?s value remained
volatile due to speculation on the U.S. Federal Reserve?s
interest rate policy, high oil prices, and weak U.S. economic
data.  During May, losses were recorded from long positions in
the Japanese yen, Swiss franc, Canadian dollar, and Australian
dollar versus the U.S. dollar as the U.S. dollar increased after
China downplayed rumors of a move toward a flexible exchange
rate.  Later in the month, most foreign currencies declined with
the euro, which dropped in response to weaker than expected
French economic data.  During June, losses stemmed from positions

<page> in the Australian dollar versus the U.S. dollar as the
value of the Australian currency moved without consistent
direction amid a rise in gold prices during early June and
concerns over global commodity demand in the latter part of the
month.  Additional losses stemmed from long Japanese yen
positions during mid-June, as well as from short Canadian dollar
positions.  During July, losses were incurred from short
positions in the euro and Swiss franc after the euro advanced
amid new signals that the European Central Bank would stand firm
against calls to cut interest rates.  Additional losses followed
the release of positive U.S. economic data, particularly from
long positions in the British pound and Australian dollar against
the U.S. dollar.  During August, long U.S. dollar positions
against the Canadian dollar, Australian dollar, Japanese yen,
euro, and Swiss franc, recorded losses as the value of the U.S.
dollar declined amid higher crude oil prices, lower durable goods
orders, the U.S. trade imbalance, and economic warnings from U.S.
Federal Reserve Chairman Alan Greenspan.  During the fourth
quarter, losses resulted from short positions in European
currencies, particularly the euro and Swiss franc, versus the
U.S. dollar as their values moved higher in response to a rise in
the euro-zone Organization for Economic Cooperation &
Development?s leading indicator to 106 in August
from a July figure of 105.5.  European currency values also moved
higher with the euro, which was boosted by expectations that the
<page> European Central Bank would raise interest rates in the
following year.  Additional losses resulted from long positions
in the Canadian dollar versus the U.S. dollar.  Finally, losses
were also incurred from long positions in the Australian dollar
versus the U.S. dollar, as the Australian dollar initially
weakened in response to volatile gold prices, as well as from
short U.S. dollar positions against the British pound.  A portion
of the Partnership?s overall losses for the year was offset by
gains of approximately 6.9% recorded in metals primarily during
the third and fourth quarters from long futures positions in base
metals.  During the third quarter, long futures positions in
zinc, aluminum, and copper were profitable as prices strengthened
amid supply tightness and strong demand from China. Long futures
positions in zinc, aluminum, and copper continued to record gains
during the fourth quarter as prices trended higher on news of
consistently strong demand from India, China, and the Middle East
combined with tight market supply.  In the agricultural markets,
gains of approximately 2.5% were recorded primarily during
November and December from long futures positions in sugar after
prices rose in response to divisions among European Union
countries over a proposal to cut sugar export prices.  Gains of
approximately 1.3% were recorded in global stock indices
primarily during July, September, and November from long
positions in European and Pacific Rim stock index futures.
During July, Japanese equity prices initially increased on
<page> positive economic data out of Japan and better than
expected Japanese corporate earnings.  Prices strengthened
further after China reformed its U.S. dollar currency peg policy.
During September, long positions in Japanese stock index futures
experienced gains as prices increased on positive comments from
Bank of Japan Governor Toshihiko Fukui, who said the Japanese
economy was in the process of emerging from a soft patch.  During
November, long positions in European and Japanese stock index
futures experienced gains as markets reacted positively to weak
energy prices and strong U.S. equity prices. European markets
prices were also pulled higher on strong corporate earnings,
while Japanese equity markets were buoyed by optimism about the
future of the Japanese economy.  Gains of approximately 1.1% were
recorded in the energy markets primarily during the third quarter
from long futures positions in crude oil and its related
products.  During July, prices surged on possible supply
disruptions in the Gulf of Mexico caused by Hurricane Dennis.
Prices continued to move higher towards the end of the month in
response to news of several refinery fires in Texas and
Louisiana, declining U.S. inventories, and passage by the U.S.
Congress of President George Bush?s energy bill.  During August,
long futures positions continued to benefit as prices climbed
higher on supply and demand concerns.  After Hurricane Katrina
struck the Gulf of Mexico, prices advanced further to touch new
record highs.  Smaller gains of approximately 0.4% were achieved
<page> in the global interest rate markets during the second and
fourth quarters from positions in European and Japanese interest
rate futures.  During the second quarter, long positions in
European interest rate futures positions benefited from rising
prices supported by weakness in equity markets, disappointing
European economic data, speculation that certain hedge funds had
experienced significant trading losses, refusals by the European
Central Bank to alter interest rates, and concerns for the future
of the European integration process.  Later in the quarter,
prices strengthened amid a sharp reduction in Swedish interest
rates, the release of weaker than expected French consumer
spending data, and higher oil prices.  Long Japanese interest
rate futures positions also benefited after prices increased
during April due to weaker Japanese equity markets and then
continued to rise during June after the release of weak Japanese
economic data.  During the fourth quarter, short positions in
short-term European interest rate futures experienced gains as
euribor prices trended lower following the European Central Bank
President Jean-Claude Trichet's comments confirming that the
European Central Bank would continue to combat rising inflation.

The Partnership recorded total trading results including interest
income totaling $17,867,892 and expenses totaling $16,619,078,
resulting in net income of $1,248,814 for the year ended December
31, 2004. The Partnership?s net asset value per Unit increased

<page> from $14.31 at December 31, 2003, to $14.56 at December 31,
2004.

Total redemptions and subscriptions for the year were $13,839,146
and $74,561,018, respectively, and the Partnership?s ending capital
was $183,241,125 at December 31, 2004, an increase of $61,970,686
from ending capital at December 31, 2003, of $121,270,439.

The most significant trading gains of approximately 8.3% were
recorded in the agricultural markets, primarily during the first
five months of the year, from long futures positions in soybeans
and its related products, corn, and sugar.  During the first
quarter, soybean and corn prices finished higher, especially
during February, due to increased exports abroad and greater
demand from Asia.  Long futures positions in sugar also benefited
as prices rallied during April and June amid diminished market
supply, increased demand, and inflation concerns.  In the metals
markets, gains of approximately 4.7% were recorded primarily
during the first quarter and the final two months of the year,
from long futures positions in base metals.  During the first
quarter, prices trended higher due to a declining U.S. dollar and
increased demand from Asia.  During September, long base metals
futures positions benefited as prices moved higher in response to
continued demand from China and reports of lower than expected
inventories.  During November and December, long base metals
positions continued to profit from the decline in the U.S.
<page> dollar.  Relatively smaller Partnership gains of
approximately 1.0% achieved in the global interest rate markets
occurred primarily during the first and third quarters of the
year from long positions in European interest rate futures.
During the first quarter, long positions profited as global bond
prices rallied in response to a lack of inflation and the
European Central Bank?s decision not to increase interest rates.
 Prices also trended higher during March amid uncertainty in the
equity markets, disappointing U.S. economic data, and safe-haven
buying following the terrorist attack in Madrid.  During the
third quarter, long European interest rate futures positions
profited after prices trended higher amid rising oil prices, a
drop in equity prices, and concern for economic growth.  A
portion of the Partnership?s overall gains for the year was
offset by losses of approximately 2.0% incurred in the global
stock index markets, primarily during the first and third
quarters of the year.  During the first quarter, long European
and Japanese equity index futures positions were unprofitable as
equity prices dropped during February and early March amid
weakness in the U.S. technology sector and growing geopolitical
uncertainty.  During the third quarter, long European, Asian, and
U.S. stock index futures experienced losses as prices reversed
lower during July due to the release of disappointing U.S.
employment data, surging energy prices, and concern for potential
terrorist attacks.  Losses of approximately 0.7% in the currency
markets resulted primarily during the first and third quarters.
<page> During the first quarter, long positions in the Japanese
yen versus the U.S. dollar resulted in losses after the Bank of
Japan weakened the yen through currency market intervention
activity.  During the third quarter, long European currency
positions, such as the Swiss franc and Norwegian krone versus the
U.S. dollar, generated negative performance as the U.S. dollar
reversed higher amid upbeat market sentiment.  Smaller losses of
approximately 0.6% were recorded in the energy markets, primarily
during the second quarter and the month of November.  During the
second quarter, losses resulted from long futures positions in
crude oil and its related products and natural gas as energy
prices declined in response to increases in output and energy
reserves. During November, long positions in natural gas
experienced losses as prices reversed sharply lower amid hefty
reserves and seasonally moderate temperatures.

For an analysis of unrealized gains and (losses) by contract type
and a further description of 2006 trading results, refer to the
Partnership?s Annual Report to Limited Partners for the year ended
December 31, 2006, 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.


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

Market Risk.
The Partnership is a party to financial instruments with elements
of off-balance sheet market and credit risk.  The Partnership may
trade futures contracts, options on futures and forward
contracts, and forward contracts on physical commodities and
other commodity interests, including, but not limited to, foreign
currencies, financial instruments, metals, energies, and
agricultural products.  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 the
Trading Advisors were unable to offset positions of the
Partnership, the Partnership could lose all of its assets and the
limited partners would realize a 100% loss.

In addition to the Trading Advisors? internal controls, the Trading
Advisors must comply with the Partnership?s trading

<page> policies that include standards for liquidity and leverage
that must be maintained.  The Trading Advisors and Demeter monitor
the Partnership's trading activities to ensure compliance with the
trading policies and Demeter can require the Trading Advisors to
modify positions of the Partnership if Demeter believes they
violate the Partnership's trading policies.

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

<page> clearinghouse defaulting on trades affected for the broker?s
customers.  In cases where the Partnership trades off-exchange
forward contracts with a counterparty, the sole recourse of the
Partnership will be the forward contract?s counterparty.

Demeter deals with these credit risks of the Partnership in
several ways.  First, Demeter monitors the Partnership?s credit
exposure to each exchange on a daily basis.  The commodity
brokers inform the Partnership, as with all their customers, of
the Partnership?s net margin requirements for all its existing
open positions, and Demeter has installed a system which permits
it to monitor the Partnership?s potential net credit exposure,
exchange by exchange, by adding the unrealized trading gains on
each exchange, if any, to the Partnership?s margin liability
thereon.

Second, the Partnership?s trading policies limit the amount of its
Net Assets that can be committed at any given time to futures
contracts and require a minimum amount of diversification in the
Partnership?s trading, usually over several different products and
exchanges.  Historically, the Partnership?s exposure to any one
exchange has typically amounted to only a small percentage of its
total Net Assets and on those relatively few occasions where the
Partnership?s credit exposure climbs above such level, Demeter
deals with the situation on a case by case basis, carefully

<page> 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 and options on 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 foreign currency forward contracts and
MSCG as the counterparty on options on the foreign currency forward
contracts.

For additional information, see the ?Financial Instruments?
section under ?Notes to Financial Statements? in the
Partnership?s Annual Report to Limited Partners for the year
ended December 31, 2006, 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.





<page> New Accounting Developments.
In July 2006, the Financial Accounting Standards Board (?FASB?)
issued Interpretation No. 48, ?Accounting for Uncertainty in
Income Taxes ? an interpretation of FASB Statement 109? (?FIN
48?).  FIN 48 clarifies the accounting for income taxes by
prescribing the minimum recognition threshold a tax position must
meet before being recognized in the financial statements.  FIN 48
is effective for fiscal years beginning after December 15, 2006.
The impact to the Partnership?s Financial Statements, if any, is
currently being assessed.

In September 2006, the FASB issued SFAS No. 157, ?Fair Value
Measurements? (?SFAS No. 157?). SFAS No. 157 defines fair value,
establishes a framework for measuring fair value, and expands
disclosures about fair value measurements. SFAS No. 157 is
effective for the Partnership as of January 1, 2008. The impact to
the Partnership?s Financial Statements, if any, is currently being
assessed.

In September 2006, the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 108, ?Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements? (?SAB No. 108?) to provide guidance
on how the effects of the carryover or reversal of prior year
unrecorded misstatements should be considered in quantifying a
current year misstatement.  SAB No. 108 requires a company to

<page> apply an approach that considers the amount by which the
current year income statement is misstated (?rollover approach?)
and an approach that considers the cumulative amount by which the
current year balance sheet is misstated (?iron-curtain
approach?).  Prior to the issuance of SAB No. 108, many companies
applied either the rollover or iron-curtain approach for purposes
of assessing materiality of misstatements.  SAB No. 108 is
effective for the Partnership as of January 1, 2007.  Upon
adoption, SAB No. 108 allows a one-time cumulative effect
adjustment against Partners? Capital for those prior year
misstatements that were not material under the Partnership?s prior
approach, but are deemed material under the SAB No. 108 approach.
Demeter does not expect the adoption of SAB No. 108 to have a
material impact on the Partnership?s Financial Statements.


Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Introduction

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

<page> The futures, forwards, and options on such contracts traded
by the Partnership involve varying degrees of related market risk.

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

The Partnership?s total market risk may increase or decrease as
it is influenced by a wide variety of factors, including, but not
limited to, the diversification among the Partnership?s open
positions, the volatility present within the markets, and the
liquidity of the markets.

<page> 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 typically to be many times the total capitalization of
the Partnership.

The Partnership?s past performance is no guarantee of its future
results.  Any attempt to numerically quantify the Partnership?s
market risk is limited by the uncertainty of its speculative
trading.  The Partnership?s speculative trading and use of leverage
may cause future losses and volatility (i.e., ?risk of ruin?) that
far exceed the Partnership?s experiences to date under the
?Partnership?s Value at Risk in Different Market Sectors? section
and significantly exceed the Value at Risk (?VaR?) tables
disclosed.


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


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

<page> provided for such statements by the Private Securities
Litigation Reform Act of 1995 (set forth in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934).  All quantitative disclosures in this section are
deemed to be forward-looking statements for purposes of the safe
harbor, except for statements of historical fact.

The Partnership accounts for open positions on the basis of mark to
market accounting principles.  Any loss in the market value of the
Partnership?s open positions is directly reflected in the
Partnership?s earnings and cash flow.

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

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

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

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


<page> 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, 2006 and 2005.
At December 31, 2006 and 2005, the Partnership?s total
capitalization was approximately $209 million and $170 million,
respectively.

Primary Market 	  December 31, 2006	     December 31, 2005
Risk Category	         Value at Risk	       Value at Risk

Equity				   (0.88)%			 (1.46)%

Currency			 	   (0.67)				 (0.53)

Interest Rate			   (0.24)     			 (0.22)

Commodity				   (1.57)     			 (1.79)

Aggregate Value at Risk	   (2.14)%		  	 (2.44)%


The VaR for a market category represents the one-day downside risk
for the aggregate exposures associated with this market category.
In the quarter-end reporting periods prior to September 30, 2005,
the VaR for the primary market risk category of currency listed
above did not include the one-day downside risk for the exposure
associated with options on foreign currency forward trades.
Demeter did not believe the omission of such market risk exposure
materially misrepresented the VaR for the primary risk category of

<page> currency and the Aggregate Value at Risk listed above.  The
Aggregate Value at Risk listed above represents the VaR of the
Partnership?s open positions across all the market categories, and
is less than the sum of the VaRs for all such market categories due
to the diversification benefit across asset classes.

Because the business of the Partnership is the speculative trading
of futures, forwards, and options on such contracts, the
composition of its trading portfolio can change significantly over
any given time period, or even within a single trading day.  Such
changes could positively or negatively materially impact market
risk as measured by VaR.

The table below supplements the December 31, 2006, VaR set forth
above by presenting the Partnership?s high, low, and average VaR,
as a percentage of total Net Assets for the four quarter-end
reporting periods from January 1, 2006, through December 31, 2006.

Primary Market Risk Category        High       Low       Average
Equity						(1.23)%	 (0.70)%	  (0.89)%
Currency						(0.67)	 (0.35)	  (0.50)
Interest Rate 					(0.76)	 (0.21)	  (0.37)
Commodity  					(2.10)	 (1.57)	  (1.79)
Aggregate Value at Risk  		(2.69)%	 (1.92)%	  (2.19)%





<page> In the quarter-end reporting periods prior to September
30, 2005, the VaR for the primary market risk category of
currency listed above did not include the one-day downside risk
for the exposure associated with options on foreign currency
forward trades.  Demeter did not believe the omission of such
market risk exposure materially misrepresented the VaR for the
primary risk category of currency and the Aggregate Value at Risk
listed above.

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

*	past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
*	changes in portfolio value caused by market movements may
differ from those of the VaR model;
*	VaR results reflect past market fluctuations applied to
current trading positions while future risk depends on future
positions;

<page>
*	VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
*	the historical market risk factor data used for VaR estimation
may provide only limited insight into losses that could be
incurred under certain unusual market movements.

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

The VaR tables provided present the results of the Partnership?s
VaR for each of the Partnership?s market risk exposures and on an
aggregate basis at December 31, 2005, and for the four quarter-end
reporting periods during calendar year 2006.  VaR is not
necessarily representative of the Partnership?s historic risk, nor
should it be used to predict the Partnership?s future financial
performance or its ability to manage or monitor risk.  There can be
no assurance that the Partnership?s actual losses on a particular
day will not exceed the VaR amounts indicated above or that such
losses will not occur more than once in 100 trading days.




<page> Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances.  These balances and any market risk they may represent
are immaterial.

The Partnership also maintains a substantial portion of its
available assets in cash at Morgan Stanley DW; as of December 31,
2006, such amount is equal to approximately 90% of the
Partnership?s net asset value.  A decline in short-term interest
rates would result in a decline in the Partnership?s cash
management income. This cash flow risk is not considered to be
material.

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

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

<page> 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, 2006, by market sector.  It may be
anticipated, however, that these market exposures will vary
materially over time.

Equity.  The third largest market exposure of the Partnership at
December 31, 2006, was to the global stock index sector,
primarily to equity price risk in the G-7 countries.  The G-7

<page> countries consist of France, the U.S., Britain, Germany,
Japan, Italy, and Canada.  The stock index futures traded by the
Partnership are by law limited to futures on broadly?based
indices.  At December 31, 2006, the Partnership?s primary
exposures were to the DAX (Germany), NIKKEI 225 (Japan), Hang
Seng (China), S&P 500 (U.S.), NASDAQ 100 (U.S.) stock indices.
The Partnership is exposed to the risk of adverse price trends or
static markets in the U.S., European, and Asian stock indices.
Static markets would not cause major market changes, but would
make it difficult for the Partnership to avoid trendless price
movements, resulting in numerous small losses.

Currency.  At December 31, 2006, the Partnership had market
exposure to the currency sector.  The Partnership?s currency
exposure is to exchange rate fluctuations, primarily fluctuations
which disrupt the historical pricing relationships between
different currencies and currency pairs.  Interest rate changes,
as well as political and general economic conditions influence
these fluctuations.  The Partnership trades a large number of
currencies, including cross-rates - i.e., positions between two
currencies other than the U.S. dollar.  At December 31, 2006, the
Partnership?s major exposures were to euro and Japanese yen
currency crosses, as well as to outright U.S. dollar positions.
Outright positions consist of the U.S. dollar vs. other
currencies.  These other currencies include major and minor

<page> currencies.  Demeter does not anticipate that the risk
associated with the Partnership?s currency trades will change
significantly in the future.

Interest Rate.  At December 31, 2006, the Partnership had market
exposure to the global interest rate sector.  Exposure was
primarily spread across the U.S., Japanese, and European interest
rate sectors.  Interest rate movements directly affect the price
of the sovereign bond futures positions held by the Partnership
and indirectly affect the value of its stock index and currency
positions.  Interest rate movements in one country, as well as
relative interest rate movements between countries, materially
impact the Partnership?s profitability.  The Partnership?s
interest rate exposure is generally to interest rate fluctuations
in the U.S. and the other G-7 countries? interest rates.
However, the Partnership also takes futures positions in the
government debt of smaller countries ? e.g., Australia.  Demeter
anticipates that G-7 countries interest rates 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.



<page> Commodity.
Soft Commodities and Agriculturals.  The largest market
exposure of the Partnership at December 31, 2006, was to the
markets that comprise these sectors.  Most of the exposure
was to the cocoa, sugar, corn, cotton, soybean meal,
soybeans, wheat, soybean oil, rubber, rough rice, and coffee
markets.  Supply and demand inequalities, severe weather
disruptions, and market expectations affect price movements
in these markets.

Metals.	The second largest market exposure of the
Partnership at December 31, 2006, was to the metals sector.
The Partnership?s metals exposure was to fluctuations in the
price of base metals, such as aluminum, zinc, and copper.
The Partnership also had exposure to precious metals, such
as gold, silver, platinum, and palladium.  Economic forces,
supply and demand inequalities, geopolitical factors, and
market expectations influence price movements in these
markets.  The Trading Advisors utilize trading system(s) to
take positions when market opportunities develop, and
Demeter anticipates that the Partnership will continue to do
so.

Energy.  At December 31, 2006, the Partnership had market
exposure to the energy sector.  The Partnership?s energy

<page> exposure was shared primarily by futures contracts in
crude oil and its related products and natural gas.  Price
movements in these markets result from geopolitical
developments, particularly in the Middle East, as well as
weather patterns and other economic fundamentals.
Significant profits and losses, which have been experienced
in the past, are expected to continue to be experienced in
the future.  Natural gas has exhibited volatility in prices
resulting from weather patterns, and supply and demand
factors and will likely continue in this choppy pattern.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at December 31, 2006:

Foreign Currency Balances. The Partnership?s primary foreign
currency balances at December 31, 2006, were in euros,
Japanese yen, British pounds, Hong Kong dollars, Canadian
dollars, and Swiss franc.  The Partnership controls the non-
trading risk of foreign currency balances by regularly
converting them back into U.S. dollars upon liquidation of
their respective positions.




<page> 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 in a multi-advisor Partnership,
each of whose strategies focus on different market sectors and
trading approaches, and by monitoring the performance of the
Trading Advisors daily.  In addition, the Trading Advisors
establish diversification guidelines, often set in terms of the
maximum margin to be committed to positions in any one market
sector or market-sensitive instrument.

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

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




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

Summary of Quarterly Results (Unaudited)

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

2006
March 31 		$ 24,410,672	     $ 17,585,840		  $ 1.48
June 30	   	  17,117,577	       10,768,053		    0.91
September 30	 (11,443,378)	      (15,707,737)		   (1.31)
December 31	  27,523,091	       23,006,117		    1.89

Total			$ 57,607,962 	     $ 35,652,273		  $ 2.97


2005
March 31 		$ (7,718,402)	     $(12,643,570)		  $(0.99)
June 30	   	  (2,689,402)	       (6,996,443)		   (0.54)
September 30	   4,324,832	          665,340		    0.06
December 31	  18,882,015	       13,428,706		    1.09

Total			$ 12,799,043 	     $ (5,545,967)		  $(0.38)



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

None.



Item 9A.  CONTROLS AND PROCEDURES
(a)	As of the end of the period covered by this annual report,
the President and Chief Financial Officer of Demeter, the
general partner of the Partnership, have evaluated the
effectiveness of the Partnership?s disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of
the Exchange Act), and have judged such controls and
procedures to be effective.
<page>
 (b)	There have been no material changes during the period covered
by this annual report in the Partnership?s internal control
over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act) or in other factors that could
significantly affect these controls subsequent to the date of
their evaluation.

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

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

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

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




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

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

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

Management assessed the effectiveness of the Partnership?s
internal control over financial reporting as of December 31,
2006.  In making this assessment, Management used the criteria
set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated Framework.


<page> Based on our assessment and those criteria, Management
believes that the Partnership maintained effective internal
control over financial reporting as of December 31, 2006.

Deloitte & Touche LLP, the Partnership?s independent registered
public accounting firm, has issued an attestation report on
Management?s assessment of the Partnership?s internal control over
financial reporting and on the effectiveness of the Partnership?s
internal control over financial reporting.  This report, which
expresses an unqualified opinion on Management?s assessment and on
the effectiveness of the Partnership?s internal control over
financial reporting, appears under ?Report of Independent
Registered Public Accounting Firm? in the Partnership?s Annual
Report to Limited Partners for the year ended December 31, 2006.


Item 9B.  OTHER INFORMATION
     None.











<page> PART III
Item 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
There are no directors or executive officers of the Partnership.
The Partnership is managed by Demeter, its general partner.

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

Effective May 1, 2006, Mr. Walter Davis, age 41, is a Director,
Chairman of the Board of Directors, and President of Demeter.  Mr.
Davis is an Executive Director of Morgan Stanley and the Director
of Morgan Stanley?s Managed Futures Department.  Prior to joining
Morgan Stanley in 1999, Mr. Davis worked for Chase Manhattan Bank?s
Alternative Investment Group.  Throughout his career, Mr. Davis has
been involved with the development, management, and marketing of a
diverse array of commodity pools, hedge funds, and other
alternative investment funds.  Mr. Davis received an MBA in Finance
and International Business from the Columbia University Graduate
School of Business in 1992 and a B.A. in Economics from the
University of the South in 1987.

Effective December 5, 2002, Mr. Frank Zafran, age 51, is a Director
of Demeter.  Mr. Zafran is a Managing Director of Morgan Stanley
and, in November 2005, was named Managing Director of Wealth
Solutions. Previously, Mr. Zafran was Chief Administrative Officer
of Morgan Stanley?s Client Solutions Division. Mr. Zafran

<page> 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 Retirement 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.

Effective March 31, 2003, Mr. Douglas J. Ketterer, age 41, is a
Director of Demeter.  Mr. Ketterer is a Managing Director of Morgan
Stanley and is head of Morgan Stanley?s Managed Money Group.  The
Managed Money Group is comprised of a number of departments
(including the Alternative Investments Group, Consulting Services
Group, and Mutual Fund Department) which offer products and
services through Morgan Stanley?s Global Wealth Management Group.
Mr. Ketterer joined Morgan Stanley in 1990 and has served in many
roles in the corporate finance/investment banking, asset
management, and distribution divisions of the firm. Mr. Ketterer
received his MBA from New York University?s Leonard N. Stern School
of Business and his B.S. in Finance from the University at Albany?s
School of Business.

Effective May 1, 2005, Mr. Harry Handler, age 48, is a Director of
Demeter. Mr. Handler serves as an Executive Director of Morgan
Stanley?s Global Wealth Management Group.  Mr. Handler works in
Morgan Stanley?s Capital Markets Division as Equity Risk Officer.

<page> Additionally, Mr. Handler also serves as Chairman of the
Morgan Stanley DW Best Execution Committee and manages the Global
Wealth Management Group?s Stock Lending business.  In his prior
position, Mr. Handler was a Systems Director in Information
Technology, in charge of Equity and Fixed Income Trading Systems
along with the Special Products, such as Unit Trusts, Managed
Futures, and Annuities.  Prior to his transfer to the Information
Technology Area, Mr. Handler managed the Foreign Currency and
Precious Metals Trading Desk for Dean Witter, a predecessor company
to Morgan Stanley.  He also held various positions in the Futures
Division where he helped to build the Precious Metals  Trading
Operation of Dean Witter.  Before joining Dean Witter, Mr. Handler
worked at Mocatta Metals as an Assistant to the Chairman. His roles
at Mocatta Metals included stints on the Futures Order Entry Desk
and the Commodities Exchange Trading Floor.  Additional work
included building a computerized Futures Trading System and writing
a history of the company.  Mr. Handler graduated on the Dean?s List
from the University of Wisconsin-Madison with a B.A. degree and a
double major in History and Political Science.

Effective May 1, 2006, Mr. Richard D. Gueren, age 45, is a Director
of Demeter.  Mr. Gueren is Executive Director, Retail
Options and Transactional Futures of Morgan Stanley.  He is
responsible for marketing the options product to the firm?s
approximately 400 offices and 8,000 Financial Advisors.  Mr. Gueren
first joined Dean Witter in August 1986, as a member of the

<page> Options Strategy/Trading team.  In 1997, Dean Witter merged
with Morgan Stanley.  Mr. Gueren is the firm?s Senior Registered
Options Principal.  He is a member of several Morgan Stanley
committees, including the firm?s National Error Committee and Best
Execution Committee.  He is an advisory member to the Credit & Risk
Committee.  Mr. Gueren is also an active member of several exchange
and industry committees, including the Retail Advisory committees
for the Chicago Board Options Exchange, the American Stock
Exchanges, the Philadelphia Stock Exchange, the Pacific Stock
Exchange, and the International Securities Exchange. Mr. Gueren is
also an Industry Arbitrator for the NASD and has been seated on
numerous industry cases over the past eight years. He has also been
asked to testify as an expert witness regarding
options on numerous occasions.  Mr. Gueren holds a Bachelor of
Science in Economics from the University of Hartford.

Effective May 1, 2006, Mr. Michael P. McGrath, age 38, is a
Director of Demeter.  Mr. McGrath is a Managing Director and the
Director of Product Development for Morgan Stanley?s Global Wealth
Management Group. In this role, Mr. McGrath oversees the flow of
new products and services being offered through Global Wealth
Management in the United States.  He coordinates the firm?s New
Product Committee as well as being a voting member on the
committee.  He is also a voting member of the Global Wealth
Management Alternative Investments Due Diligence Committee, the
Global Wealth Management Insurance Due Diligence Committee, and

<page> the Portfolio Architect Oversight Committee, and is a member
of the Global Advisor Research Due Diligence Committee.  Mr.
McGrath joined Morgan Stanley in 2004, after three years with
Nuveen Investments, a publicly traded investment management company
headquartered in Chicago, Illinois.  At Nuveen, Mr. McGrath served
as a Managing Director and oversaw the development of alternative
investment products catering to the ultra-high net worth investor.
Mr. McGrath received his B.A. degree from Saint Peters College in
1990 and his MBA in Finance from New York University in 1996.

Effective May 1, 2006, Mr. Andrew Saperstein, age 39, is a Director
of Demeter.  Mr. Saperstein is Chief Operating Officer of National
Sales for Morgan Stanley?s Global Wealth Management Group, and
serves as a member of the group?s Executive Committee.
One of the largest businesses of its kind in the world with $640
billion in client assets, the Global Wealth Management Group
provides a range of wealth management products and services to
individuals, businesses, and institutions.  These include brokerage
and investment advisory services, financial and wealth planning,
credit and lending, banking and cash management, annuities and
insurance, retirement and trust.  Prior to joining Morgan Stanley
in March 2006, Mr. Saperstein was with Merrill Lynch as First Vice
President and Chief Operating Officer of the Direct Division, and
served as a member of the Global Private Client Executive
Committee.  In this capacity, he was responsible for the oversight
of the online brokerage unit and the Financial

<page> Advisory Center, including the Retail Client Relationship
Management group, the Services, Operations and Technology group,
the Client Acquisition team, and the Business Development and
Analysis team.  Mr. Saperstein joined Merrill Lynch in November
2001.  Prior to Merrill Lynch, Mr. Saperstein was a partner in the
Financial Institutions group of McKinsey & Co.  Additionally, he
served as co-leader of both the North American Asset Management and
Brokerage Practice and North American Recruiting. Mr. Saperstein
graduated cum laude from Harvard Law School and summa cum laude
from the Wharton School/College of Arts and Sciences at the
University of Pennsylvania with a dual degree in Economics and
Finance.

Effective September 22, 2006, Mr. Jacques Chappuis, age 37, is a
Director of Demeter. Mr. Chappuis is a Managing Director of
Morgan Stanley and Head Of Alternative Investments of Morgan
Stanley?s Global Wealth Management Group.  Prior to joining
Morgan Stanley in 2006, Mr. Chappuis was Head of Alternative
Investments for Citigroup?s Global Wealth Management Group and
prior to that a Managing Director at Citigroup Alternative
Investments.  Before joining Citigroup, Mr. Chappuis was a
consultant at the Boston Consulting Group, where he focused on
the financial services sector, and a corporate finance Associate
at Bankers Trust Company.  Mr. Chappuis received an MBA in
Finance, with honors, from the Columbia University Graduate

<page> School of Business in 1998 and a B.A. in finance from
Tulane University in 1991.

Effective November 6, 2006, Mr. Lee Horwitz, age 55, is the Chief
Financial Officer of Demeter and a Principal of Demeter.  Mr.
Horwitz currently serves as an Executive Director within Morgan
Stanley?s Financial Control Group.  Mr. Horwitz joined Morgan
Stanley in March 1984 and has held a variety of positions
throughout Morgan Stanley?s organization during his tenure.  Mr.
Horwitz received a B.A. degree from Queens College and an MBA
from Rutgers University.  Mr. Horwitz is a Certified Public
Accountant.
All of the foregoing directors have indefinite terms.

Effective May 1, 2006, Mr. Jeffrey A. Rothman resigned his position
as a Director of Demeter.

Effective May 1, 2006, Mr. Richard A. Beech resigned his position
as a Director of Demeter.

Effective May 1, 2006, Ms. Shelley Hanan resigned her position as a
Director of Demeter.

Effective November 6, 2006, Mr. Kevin Perry resigned his position
as Chief Financial Officer of Demeter.

<page> The Audit Committee
The Partnership is operated by its general partner, Demeter, and
has no audit committee and, thus, no audit committee financial
expert.

Code of Ethics
The Partnership has not adopted a code of ethics that applies to
the Partnership?s principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions.  The Partnership is operated by its
general partner, Demeter.  The President, Chief Financial Officer,
and each member of the Board of Directors of Demeter are  employees
of Morgan Stanley and are subject to the code of ethics adopted by
Morgan Stanley, the text of which can be viewed on Morgan Stanley?s
website at http://www.morganstanley.com/our commitment/ code of
conduct.html.

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






<page>
Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
        	MANAGEMENT AND RELATED SECURITY HOLDER MATTERS


(a)	Security Ownership of Certain Beneficial Owners - At December
31, 2006, 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, 2006,
Demeter owned 130,584.135 Units of general partnership interest,
representing a 1.07 percent interest in the Partnership.

(c)  Changes in Control ? None.

Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
      DIRECTOR INDEPENDENCE


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, 2006, 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 $11,319,725 for the year ended December 31,
2006.








<page>
Item 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
Morgan Stanley DW, on behalf of the Partnership, pays all
accounting fees.  The Partnership reimburses Morgan Stanley DW
through the brokerage fees it pays, as discussed in the Notes to
Financial Statements in the Annual Report to the Limited Partners
for the year ended December 31, 2006.

(1) 	Audit Fees.  The aggregate fees for professional services
rendered by Deloitte & Touche LLP in connection with their audit of
the Partnership?s Financial Statements and review of the Financial
Statements included in the Quarterly Reports on Form  10-Q, audit
of Management?s assessments on the effectiveness of the internal
control over financial reporting, and in connection with statutory
and regulatory filings were approximately $57,928 for the year
ended December 31, 2006, and $58,741 for the year ended December
31, 2005.

(2)	Audit-Related Fees.  None.

(3)	Tax Fees.  The Partnership did not pay Deloitte & Touche LLP
any amounts in 2006 and 2005 for professional services in
connection with tax compliance, tax advice, and tax planning.  The
Partnership engaged another unaffiliated professional firm to
provide services in connection with tax compliance, tax advice, and
tax planning.

<page>
(4) All Other Fees.  None.

Because the Partnership has no audit committee, the Board of
Directors of Demeter, its general partner, functions as the audit
committee with respect to the Partnership.  The Board of Directors
of Demeter has not established pre-approval policies and procedures
with respect to the engagement of audit or permitted non-audit
services rendered to the Partnership.  Consequently, all audit and
permitted non-audit services provided by Deloitte & Touche LLP that
are borne by Morgan Stanley DW through the brokerage fees paid for
by the Partnership are approved by Morgan Stanley?s Board Audit
Committee and the Board of Directors of Demeter.













<page> PART IV
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1. Listing of Financial Statements
The following Financial Statements and report of independent
registered public accounting firm, all appearing in the
accompanying Annual Report to Limited Partners for the year
ended December 31, 2006, are incorporated by reference to
Exhibit 13.01 of this Form 10-K:
-	Report of Deloitte & Touche LLP, independent registered
public accounting firm, for the years ended December 31,
2006, 2005, and 2004.

-	Statements of Financial Condition, including the Schedules
of Investments, as of December 31, 2006 and 2005.

-	Statements of Operations, Changes in Partners? Capital, and
Cash Flows for the years ended December 31, 2006, 2005, and
2004.

-	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, 2006,
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.


<page>
3. Exhibits
	For the exhibits incorporated by reference or filed herewith to
this report, refer to Exhibit Index on Page E-1 to E-4.















































<page>
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 8, 2007			BY: /s/	Walter Davis
						 	Walter Davis,
							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/ 	Walter Davis	                    		March 8, 2007
	  	Walter Davis, President

    /s/    Frank Zafran	             		March 8, 2007
           Frank Zafran, Director

    /s/    Douglas J. Ketterer   	             		March 8, 2007
           Douglas J. Ketterer, Director

    /s/    Harry Handler		           		March 8, 2007
	    	Harry Handler, Director

    /s/ 	Richard Gueren	                 		March 8, 2007
	 	Richard Gueren, Director

    /s/	Michael McGrath		                 	March 8, 2007
	  	Michael McGrath, Director

    /s/  	Andrew Saperstein		           		March 8, 2007
	    	Andrew Saperstein, Director

    /s/  	Jacques Chappuis		                 	March 8, 2007
	    	Jacques Chappuis, Director

    /s/  	Lee Horwitz			                 	March 8, 2007
	    	Lee Horwitz, Chief Financial Officer


<page>
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 May 1, 2006, filed with the Securities and
Exchange Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933 on May 4, 2006 and to pages S-122
? S-124 of the Supplement dated January 18, 2007, to
that Prospectus, filed with the Securities and Exchange
Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933 on January 24, 2007.

3.02	Certificate of Limited Partnership, dated April 18,
1994, is incorporated by reference to Exhibit 3.02 of
the Partnership?s Registration Statement on Form S-1
(File No. 33-80146) filed with the Securities and
Exchange Commission on June 10, 1994.

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

3.04	Certificate of Amendment of Certificate of Limited
Partnership, dated November 1, 2001 (changing its name
from Morgan Stanley Dean Witter Spectrum 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 Invest-
ments, 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 with the
Securities and Exchange Commission on March 31, 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.
E-1
<page>
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 October 7, 2004, among
the Partnership, Demeter, and FX Concepts (Trading
Advisors), Inc., is incorporated by reference to Exhibit
10.04 of the Partnership's Form 10Q (File No. 0-26280) for
the quarterly period ended September 30, 2004 and filed
with the Securities and Exchange Commission on
November 15, 2004.

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 May 1, 2006, as filed with
the Securities and Exchange Commission pursuant to Rule
424 (b)(3) under the Securities Act of 1933 on May 4,
2006.
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 May 1,
2006, filed with the Securities and Exchange Commission
pursuant to Rule 424(b)(3)under the Securities Act of 1933
on May 4, 2006.
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.



E-2
<page>
   10.15(a) Amendment No. 1 to the Amended and Restated Customer
Agreement between the Partnership and Morgan Stanley DW
Inc., dated July 1, 2005, is incorporated by reference
to Exhibit 10.15(a) of the Partnership?s Form 10-Q
(File No. 0-26280) filed with the Securities and
Exchange Commission on August 15, 2005.
   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 Partner-
hip, 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.
   10.20	 Foreign Exchange and Options Master Agreement between
Morgan Stanley Capital Group Inc. and the Partnership,
dated as of September 27, 2004, is incorporated by
reference to Exhibit 10.20 of the Partnership?s Form 10Q
(File No. 0-26280) for the quarterly period ended
September 30, 2004 and filed with the Security and
Exchange Commission on November 15, 2004.
   13.01	 December 31, 2006, Annual Report to Limited Partners is
filed herewith.


E-3
<page>
   31.01	 Certification of President of Demeter Management
Corporation, the general partner of the Partnership
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02	Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.

32.01	Certification of President of Demeter Management Corpor-
ation, the general partner of the Partnership, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.

32.02	Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.








E-4
<PAGE>

                                                                 Morgan Stanley
                                                                Spectrum Series

 December 31, 2006
 Annual Report

[LOGO] Morgan Stanley

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

HISTORICAL FUND PERFORMANCE

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

<TABLE>
<CAPTION>


                     1991    1992  1993   1994   1995 1996  1997 1998 1999    2000   2001   2002  2003 2004   2005  2006
FUND                  %       %     %      %      %    %     %    %    %       %      %      %     %    %      %     %
--------------------------------------------------------------------------------------------------------------------------
<S>                <C>      <C>    <C>  <C>      <C>  <C>   <C>  <C>  <C>   <C>      <C>   <C>    <C>  <C>   <C>    <C>
Spectrum Currency.    --      --    --     --     --   --    --   --   --     11.7   11.1   12.2  12.4 (8.0) (18.3) (3.4)
                                                                            (6 mos.)
--------------------------------------------------------------------------------------------------------------------------
Spectrum Global
 Balanced.........    --      --    --   (1.7)   22.8 (3.6) 18.2 16.4  0.8    0.9    (0.3) (10.1) 6.2  (5.6)  4.2    2.4
                                        (2 mos.)
--------------------------------------------------------------------------------------------------------------------------
Spectrum Select...   31.2   (14.4) 41.6  (5.1)   23.6  5.3  6.2  14.2 (7.6)   7.1     1.7   15.4  9.6  (4.7) (5.0)   5.9
                   (5 mos.)
--------------------------------------------------------------------------------------------------------------------------
Spectrum Strategic    --      --    --    0.1    10.5 (3.5) 0.4  7.8  37.2   (33.1)  (0.6)  9.4   24.0  1.7  (2.6)  20.9
                                        (2 mos.)
--------------------------------------------------------------------------------------------------------------------------
Spectrum Technical    --      --    --   (2.2)   17.6 18.3  7.5  10.2 (7.5)   7.8    (7.2)  23.3  23.0  4.4  (5.4)   5.4
                                        (2 mos.)
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
                   INCEPTION-  COMPOUND
                    TO-DATE   ANNUALIZED
                     RETURN     RETURN
FUND                   %          %
----------------------------------------
<S>                <C>        <C>
Spectrum Currency.   13.8        2.0

----------------------------------------
Spectrum Global
 Balanced.........   56.0        3.7

----------------------------------------
Spectrum Select...   190.6       7.2

----------------------------------------
Spectrum Strategic   71.5        4.5

----------------------------------------
Spectrum Technical   135.7       7.3

----------------------------------------
</TABLE>

<PAGE>

DEMETER MANAGEMENT CORPORATION

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

MORGAN STANLEY SPECTRUM SERIES
ANNUAL REPORT
2006

Dear Limited Partner:
  This marks the seventh annual report for Morgan Stanley Spectrum Currency
L.P., the thirteenth annual report for Morgan Stanley Spectrum Global Balanced
L.P., Morgan Stanley Spectrum Strategic L.P., and Morgan Stanley Spectrum
Technical L.P., and the sixteenth annual report for Morgan Stanley Spectrum
Select L.P. The Net Asset Value per Unit for each of the five Morgan Stanley
Spectrum funds ("Fund(s)") as of December 31, 2006 was as follows:

<TABLE>
<CAPTION>
                                                    % CHANGE
                    FUNDS                    N.A.V. FOR YEAR
                    ----------------------------------------
                    <S>                      <C>    <C>
                    Spectrum Currency        $11.38  (3.4)%
                    ----------------------------------------
                    Spectrum Global Balanced $15.60    2.4%
                    ----------------------------------------
                    Spectrum Select          $29.06    5.9%
                    ----------------------------------------
                    Spectrum Strategic       $17.15   20.9%
                    ----------------------------------------
                    Spectrum Technical       $23.57    5.4%
                    ----------------------------------------
</TABLE>

  Since its inception in July 2000, Spectrum Currency has returned 13.8% (a
compound annualized return of 2.0%). Since their inception in November 1994,
Spectrum Global Balanced has returned 56.0% (a compound annualized return of
3.7%), Spectrum Strategic has returned 71.5% (a compound annualized return of
4.5%), and Spectrum Technical has returned 135.7% (a compound annualized return
of 7.3%). Since its inception in August 1991, Spectrum Select has returned
190.6% (a compound annualized return of 7.2%).

  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.

<PAGE>

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

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

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

Sincerely,

/s/ Walter J. Davis
Walter J. Davis
Chairman of the Board of Directors and President
Demeter Management Corporation,
General Partner of
Morgan Stanley Spectrum Currency L.P.
Morgan Stanley Spectrum Global Balanced L.P.
Morgan Stanley Spectrum Select L.P.
Morgan Stanley Spectrum Strategic L.P.
Morgan Stanley Spectrum Technical L.P.

<PAGE>

                      This page intentionally left blank.

<PAGE>

MORGAN STANLEY SPECTRUM CURRENCY L.P.

                       [CHART]

                                      Year Ended
                                  December 31, 2006
                                -----------------------
Australian dollar                       0.07%
British pound                           6.07%
Euro                                    0.90%
Japanese yen                           -2.29%
Swiss franc                            -5.95%
Minor Currencies                        0.76%


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, Australian dollar, Polish zloty, Brazilian real, Norwegian
     krone, and Czech koruna.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
..  The most significant trading losses resulted from short positions in the
   Swiss franc and Japanese yen against the U.S. dollar. During January and
   February, the Swiss franc rose after strong economic data out of
   Switzerland, while the value of the Japanese yen increased on speculation
   that the Bank of Japan would raise interest rates in the following months.
   During April, further losses were recorded from short positions in the Swiss
   franc versus the U.S. dollar as the value of the Swiss franc strengthened on
   geopolitical tensions in the Middle East, while the value of the U.S. dollar
   was pressured lower on news that foreign central banks were beginning to
   diversify their currency reserves away from U.S. dollar-denominated assets.
   Further losses were experienced towards the end of October and during
   November from long positions in the U.S. dollar relative to the Swiss franc
   and Japanese yen as the value of the U.S. dollar declined after the U.S.
   Department of Commerce reported slower than expected growth in third quarter
   U.S. Gross Domestic Product, as well as a faster than expected decline in
   consumer core inflation. Meanwhile, the Japanese yen strengthened after the
   Swiss National Bank said it had raised its holdings of the Japanese currency
   in the previous quarter, while the Swiss franc strengthened in tandem with
   the euro. Additional losses

<PAGE>

MORGAN STANLEY SPECTRUM CURRENCY L.P.

FACTORS INFLUENCING ANNUAL TRADING LOSSES: (continued)

 were experienced primarily during May and June from long positions in the
  Brazilian real versus the U.S. dollar as the value of the Brazilian real
  moved lower on political uncertainty out of Brazil. Finally, losses were
  recorded throughout the year from both short and long positions in the
  Mexican peso, Polish zloty, and Norwegian krone versus the U.S. dollar as the
  value of these currencies moved without consistent direction.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
..  Trading gains for the year were recorded from positions in the British
   pound, New Zealand dollar, and Singapore dollar versus the U.S. dollar. Long
   positions in the British pound versus the U.S. dollar experienced gains
   throughout the second half of the year as the value of the British pound
   increased on consistently strong economic data out of the United Kingdom,
   spurring the Bank of England to lift its key interest rate to 5.0% by the
   end of the year. Elsewhere, smaller gains resulted from long positions in
   the Singapore dollar relative to the U.S. dollar as the value of the
   Singapore dollar benefited from the U.S. dollar's weakness, particularly
   during April, May, and November. During the fourth quarter, the value of the
   U.S. dollar continued to move lower against most of its rivals on news that
   China, the world's largest holder of foreign-exchange reserves, would begin
   to more aggressively diversify its reserves away from the U.S. currency.
   Also weighing on the U.S. dollar were concerns of a slowing U.S. economy
   after reports showed an increase in jobless claims, while consumer sentiment
   unexpectedly weakened. Elsewhere, short positions in the New Zealand dollar
   versus the U.S. dollar experienced gains during March as the value of the
   New Zealand dollar moved lower on expectations for an economic slow-down in
   New Zealand. However, during the fourth quarter, gains were recorded from
   long positions in the New Zealand dollar versus the U.S. dollar as the value
   of the New Zealand dollar reversed higher after manufacturing sales figures
   added to evidence that the New Zealand economy was expanding fast enough to
   spur the Reserve Bank of New Zealand to raise interest rates in 2007.

<PAGE>

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

                                     [CHART]

                                  Year ended December 31, 2006
                                  ----------------------------
Currencies                                   0.19%
Interest Rates                              -3.41%
Stock Indices                                5.79%
Energies                                    -0.85%
Metals                                       1.15%
Agriculturals                               -0.59%

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
..  The most significant trading gains were recorded in the global stock index
   sector during January and March from long positions in U.S., European, and
   Japanese equity index futures as prices trended higher on strong corporate
   earnings and solid economic data. During August and September, additional
   gains were experienced from long positions in U.S. and European equity index
   futures as prices advanced after the U.S. Conference Board reported a
   stronger than expected rebound in consumer confidence and data showing
   increased merger and acquisition activity and solid corporate earnings in
   Europe. During October, gains continued from long positions in U.S. and
   European stock index futures as prices moved higher amid declining energy
   prices and stronger than expected third quarter earnings. In addition, U.S.
   equity index futures prices rose after the U.S. Federal Reserve's decision
   to hold interest rates steady and its assessment that the U.S. economy would
   continue to expand in the near-term but at a slower pace. Finally, gains
   were experienced during December from long positions in U.S. and European
   equity index futures as prices continued to move higher amid optimism about
   the future of the global economy.

..  Further gains were experienced within the metals markets, primarily during
   January and March, from long futures positions in copper, nickel, and zinc
   as prices strengthened amid weak supplies, forecasts for continued buying by
   China,

<PAGE>

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

FACTORS INFLUENCING ANNUAL TRADING GAINS: (continued)

 and acceleration in global demand. During October, long positions in zinc
  futures resulted in further gains as prices rose amid labor protests in
  producer countries and news that inventories tracked by the London Metal
  Exchange declined more than expected. Additional gains were recorded in
  December from short positions in copper futures as prices dropped after
  industrial output unexpectedly fell in the Euro-Zone countries, signaling
  reduced demand for the metal.

..  Smaller gains were recorded in the currency markets, primarily from short
   positions in the South African rand against the U.S. dollar as the rand
   trended lower during the second quarter amid falling commodities prices,
   news that South Africa's Current-Account deficit had widened to a 24-year
   high and on expectations that the country's Gross Domestic Product growth
   would be weaker than expected. During September, short positions in the
   Norwegian krone versus the euro resulted in additional gains as the value of
   the Norwegian krone moved lower on investor concern that a prolonged decline
   in oil prices might negatively affect the Norwegian economy. In addition,
   gains were experienced from long positions in the euro against the U.S.
   dollar as the value of the U.S. dollar hit a 20-month low against the euro
   in November due to expectations that the European Central Bank would
   continue to raise interest rates and a marginal decline in unemployment
   within Germany and France.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
..  Trading losses for the year were recorded in the global interest rate
   sector. In January, short and long positions in European and U.S.
   fixed-income futures incurred losses as prices moved without consistent
   direction amid uncertainty regarding the future of global interest rate
   policy. Additional losses were incurred from short positions in European
   interest rates as fixed-income prices reversed higher during the second
   quarter after weakness in the equity markets created strong demand for the
   safe-haven of fixed-income investments. European interest rates were also
   pushed higher after the May "ZEW" Institute survey showed investor
   confidence in Germany falling for a fourth straight month. During June,
   losses were incurred from long positions in Japanese interest rate futures
   as prices fell on speculation that the Bank of Japan would raise interest
   rates and end its "zero-interest-rate" policy. Losses were extended in
   October and December from long positions in U.S., European, and Japanese
   fixed-income futures as prices moved lower amid overall strength in the
   equity markets and speculation of further interest rate hikes by the U.S.
   Federal Reserve, European Central Bank, and Bank of Japan as a result of
   robust global economic data.

<PAGE>

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

FACTORS INFLUENCING ANNUAL TRADING LOSSES: (continued)


..  Further losses were recorded in the energy markets during March from short
   positions in gas oil futures as prices moved higher on fears of supply
   disruptions fueled by news of geopolitical tensions in Nigeria. In May,
   newly established long positions in gas oil experienced additional losses as
   prices fell after supply data from the U.S. Department of Energy showed
   crude oil inventory levels at an eight-year high. Gas oil prices continued
   to fall into June on news of the death of Iraqi insurgent leader Abu Musab
   al-Zarqawi and positive steps taken regarding the nuclear standoff between
   the U.S. and Iran, resulting in additional losses from long positions.
   During October and November, short positions in natural gas futures incurred
   losses as prices reversed higher on speculation of increased demand after
   near-term weather forecasts called for colder weather in much of the U.S.
   Losses were also recorded from long positions in gas oil futures as prices
   weakened due to uncertainty regarding OPEC's plan to cut production, as well
   as a lower demand forecast. In December, long positions in gas oil futures
   resulted in losses as prices weakened amid mild winter temperatures across
   the U.S. Northeast.

..  Smaller losses were incurred in the agricultural markets, during July, from
   long positions in orange juice futures as prices moved lower after the U.S.
   Department of Agriculture reported an increase in orange juice production.
   Additional losses were incurred from newly established short positions in
   orange juice futures as prices reversed higher towards the end of the month
   on concerns regarding poor harvest due to hot weather and labor shortages.
   Finally, losses were incurred from both short and long positions in corn and
   lean hog futures as prices moved without consistent direction throughout a
   majority of the year due to conflicting news regarding supply and demand.

<PAGE>

                      This page intentionally left blank.

<PAGE>

MORGAN STANLEY SPECTRUM SELECT L.P.

                       [CHART]

                                      Year Ended
                                  December 31, 2006
                                -----------------------
Currencies                               0.03%
Interest Rates                           1.31%
Stock Indices                            5.59%
Energies                                -1.08%
Metals                                   6.12%
Agriculturals                           -1.70%


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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
..  The most significant trading gains were recorded in the metals markets
   primarily during the first six months of the year from long futures
   positions in copper, nickel, zinc, and aluminum as base metals prices
   rallied on strong global demand and reports of falling inventories. Further
   gains in the metals markets were experienced from long positions in gold and
   silver futures as prices reached 25-year highs, benefiting from strong
   demand and lagging supply. Demand for precious metals increased on continued
   geopolitical concerns, inflation fears, and consistent demand from foreign
   central banks. In addition, silver prices were pressured higher after news
   that a silver-backed Exchange Traded Fund would launch. Gains were extended
   during October from long positions in base metals as prices continued to
   trend higher amid labor protests in producer countries and news that
   inventories had declined more than expected. Additionally, prices were
   pressured higher after the National Bureau of Statistics said that China's
   industrial production had increased significantly from a year earlier,
   reaffirming expectations that demand from China would stay strong.

..  Additional gains were recorded within the global stock index markets from
   long positions in European, U.S., and Pacific Rim stock index futures as
   global equity prices trended higher throughout the first quarter on strong
   corporate earnings and

<PAGE>

MORGAN STANLEY SPECTRUM SELECT L.P.

FACTORS INFLUENCING ANNUAL TRADING GAINS: (continued)

 solid economic data. Long positions in Hong Kong equity index futures also
  recorded gains as prices moved higher during April and July on positive
  performance in the technology sector, speculation that the U.S. Federal
  Reserve could be near the end of its interest rate tightening campaign, and
  news that Gross Domestic Product in China had surged to 10.9% in the first
  six months of the year. Further gains in the global stock index futures
  markets were experienced during September from long positions in European
  equity index futures as prices were supported higher on merger and
  acquisition activity and solid corporate earnings. During the fourth quarter,
  further gains were recorded from long positions in U.S., European, and
  Pacific Rim equity index futures as prices continued to move higher amid the
  U.S. Federal Reserve's decision to hold interest rates steady, consistent
  merger and acquisition activity, and news of the world's largest initial
  public offering in China.

..  Smaller gains were experienced within the global interest rates sector,
   primarily during March and April, from short positions in U.S. and European
   interest rate futures as global bond prices trended lower throughout a
   majority of the first quarter amid strength in regional equity markets and
   investor sentiment that interest rates in the United States and the European
   Union might rise in order to combat inflation. U.S. fixed-income futures
   continued to move lower into the second quarter following the release of
   consistently strong U.S. economic data resulting in further gains from short
   positions. Finally, during November, gains were recorded from long positions
   in U.S. fixed-income futures as prices moved higher on new concerns of a
   slowing U.S. economy after reports showed an increase in jobless claims,
   while consumer sentiment unexpectedly weakened.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
..  Trading losses for the year were recorded in the agricultural markets from
   positions in wheat, soybeans, and cocoa futures. Long positions in wheat
   futures incurred losses as prices fell in March, April, and June on
   forecasts for favorable weather in U.S. wheat-growing regions, while short
   futures positions in soybeans recorded losses as prices moved higher in
   March on speculative buying and increased demand. During the third quarter,
   losses were incurred primarily during July from long futures positions in
   wheat and soybean oil as prices decreased on forecasts of improved weather
   conditions across the growing regions of the U.S. Additional losses were
   incurred during July from long positions in cocoa futures as prices reversed
   lower on news from the International Cocoa Organization that global supplies
   were still adequate to meet demand. Further losses in the agricultural
   markets were experienced during October, November, and December from

<PAGE>

MORGAN STANLEY SPECTRUM SELECT L.P.

FACTORS INFLUENCING ANNUAL TRADING LOSSES: (continued)

 both short and long positions in the soybean complex as prices moved without
  consistent direction due to conflicting news regarding supply and demand.

..  Smaller losses were incurred within the energy markets throughout the year
   from futures positions in crude oil and its related products, as well as in
   natural gas. During February, long futures positions in crude oil and its
   related products recorded losses as prices declined after an announcement by
   Chinese government authorities that China would place an emphasis on
   prospecting alternative energy sources in the future, reports of larger than
   expected supplies, and mild weather in the U.S. Northeast. Further losses
   were recorded during March from short futures positions in crude oil and its
   related products as prices reversed higher early in the month on supply
   fears. During May, losses were incurred from long futures positions in crude
   oil and its related products as prices fell after supply data showed an
   increase in domestic inventories. Further losses were incurred from short
   positions in natural gas as prices moved higher on fears of a possible
   supply shortage. During June, newly established long positions in natural
   gas futures recorded losses as prices reversed lower on reports of a supply
   surplus and fears of a slowing global economy. During July and August,
   losses were also experienced from long futures positions in crude oil and
   its related products as prices moved lower after weaker than expected U.S.
   economic data led investors to believe that energy demand would be
   negatively affected and the U.S. Department of Labor reported an unexpected
   climb in domestic gasoline supplies. In addition, prices were pressured
   lower after news of an official cease-fire between Israel and Hezbollah
   militants in Lebanon and news that the OPEC had reduced its 2006 oil demand
   growth forecast. Finally, during November, losses were incurred from newly
   established short positions in crude oil futures and its related products as
   prices moved higher amid concern over OPEC's production cut after the U.S.
   Department of Energy reported a sharp fall in domestic inventories.

<PAGE>

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<PAGE>

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

                                     [CHART]

                                  Year ended December 31, 2006
                                  ----------------------------
Currencies                                  -0.42%
Interest Rates                               2.44%
Stock Indices                                4.24%
Energies                                    -0.36%
Metals                                      22.87%
Agriculturals                                1.66%

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
..  The most significant trading gains were recorded in the metals markets
   throughout the first half of the year from long positions in copper, zinc,
   and aluminum futures as base metals prices rallied on strong global demand,
   particularly from China, and reports of falling inventories. Elsewhere in
   the metals markets, long positions in gold futures experienced additional
   gains as prices reached 25-year highs amid continued geopolitical concerns,
   inflation concerns, and consistent demand from foreign central banks.
   Further gains were experienced from long positions in silver futures as
   prices moved higher due to the aforementioned factors that affected gold, as
   well as on news that a silver-backed Exchange Traded Fund would launch.
   Gains were extended during October from long positions in zinc and aluminum
   futures as base metals prices continued to trend higher amid labor protests
   in producer countries and news that inventories declined more than expected.
   Additionally, prices were pressured higher after the National Bureau of
   Statistics said that China's industrial production had increased
   significantly from a year earlier, reaffirming expectations that demand from
   China would stay strong.

<PAGE>

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

FACTORS INFLUENCING ANNUAL TRADING GAINS: (continued)


..  Additional gains were experienced within the global stock index markets
   primarily during the first and fourth quarters from long positions in U.S.,
   European, and Pacific Rim stock index futures as global equity markets
   trended higher on strong corporate earnings and solid economic data. Long
   positions in Hong Kong equity index futures recorded further gains during
   April, July, August, October, November, and December as prices moved higher
   amid positive performance in the technology and banking sectors and
   consistently strong economic data out of China and Japan. During the fourth
   quarter, European equity index futures prices moved higher due to consistent
   merger and acquisition activity, as well as strong performance in the
   automobile, industrial, and technology sectors, resulting in further gains
   from long positions. Meanwhile, U.S. equity prices rose after the U.S.
   Federal Reserve's decision to hold interest rates steady in October and its
   assessment that the U.S. economy would continue to expand in the near-term
   albeit at a slower pace.

..  Additional gains were experienced within the global interest rate markets
   during the first quarter from short positions in U.S. and European interest
   rate futures as prices trended lower amid strength in regional equity
   markets and investor sentiment that interest rates in the United States and
   the European Union would rise in order to combat inflation. U.S. and
   European fixed-income futures continued to move lower into the second
   quarter following the release of stronger than expected economic data out of
   the U.S. and the Euro-Zone. During October, U.S. fixed-income futures prices
   declined amid weak demand after U.S. economic reports showed unexpected
   strength in retail sales, business inventories, and consumer sentiment,
   while European fixed-income futures prices continued to decline on
   speculation of another European Central Bank interest rate hike after
   government reports showed higher industrial production in France and Italy.
   Finally, in November, newly established long positions in European
   fixed-income futures resulted in gains as prices rose after the release of
   data indicating that economic expansion in the Euro-Zone might have peaked
   during the first half of the year.

..  Smaller gains were recorded within the agricultural markets primarily during
   the fourth quarter from long positions in corn futures as prices moved
   higher after the U.S. Department of Agriculture's reduction of its world
   ending stock estimate, increased demand from ethanol producers, and news
   that Argentina, one of the world's major corn producers, would suspend new
   export orders. Elsewhere in the agricultural complex, long positions in
   coffee futures resulted in gains primarily during November as prices moved
   higher on speculation that inventories might be insufficient to satisfy
   growing demand.

<PAGE>

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:


..  Trading losses for the year were experienced in the currency markets from
   positions in the Japanese yen and Swiss franc relative to the U.S. dollar.
   During the first half of the year, long positions in the U.S. dollar versus
   the Swiss franc and Japanese yen experienced losses as the value of the U.S.
   dollar moved lower on news that foreign central banks were beginning to
   diversify their currency reserves away from U.S. dollar-denominated assets,
   as well as uncertainty regarding the future of the U.S. Federal Reserve's
   interest rate tightening campaign. In addition, the Japanese yen and Swiss
   franc moved higher against the U.S. dollar as strong economic data out of
   Japan and Switzerland increased speculation that the Bank of Japan and Swiss
   National Bank would raise interest rates. Losses were extended during
   October as the value of the U.S. dollar declined towards the latter half of
   the month after the U.S. Department of Commerce reported slower than
   expected growth in third quarter U.S. Gross Domestic Product, as well as a
   faster than expected decline in consumer core inflation. Smaller losses in
   the currency markets were experienced from both short and long positions in
   the Swedish krona versus the U.S. dollar as the value of the Swedish krona
   moved without consistent direction throughout a majority of the year.

..  Finally, losses were incurred within the energy markets during February,
   May, August, and December from both short and long positions in heating oil
   futures as prices experienced short-term volatility due to conflicting news
   regarding supply and demand. Smaller losses were recorded during October
   from long positions in gasoline futures as prices weakened due to
   uncertainty regarding OPEC's plan to cut production, as well as a lower
   demand forecast.

<PAGE>

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<PAGE>

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

                                     [CHART]

                                  Year ended December 31, 2006
                                  ----------------------------
Currencies                                  -1.07%
Interest Rates                               0.33%
Stock Indices                                9.68%
Energies                                    -3.26%
Metals                                       8.42%
Agriculturals                               -2.75%

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
..  The most significant trading gains were recorded in the global stock index
   markets primarily during January, March, April, and July from long positions
   in Pacific Rim, European, and U.S. stock index futures as prices trended
   higher on strong corporate earnings and solid global economic data. In
   addition, Pacific Rim equity index futures prices moved higher during July
   on news that Gross Domestic Product in China had surged to 10.9% in the
   first six months of the year. During September, additional gains were
   experienced from long positions in European equity index and U.S. equity
   index futures as prices increased on falling energy prices. Furthermore,
   U.S. equity index futures moved higher after the U.S. Conference Board
   reported a stronger than expected rebound in consumer confidence in
   September, while European equity index futures prices were supported higher
   on merger and acquisition activity. During the fourth quarter, global stock
   indices continued to rally amid declining energy prices and optimism about
   the future of the global economy, resulting in further gains from long
   positions. Additionally, Australian stock index futures prices increased on
   speculation that strong commodity prices in 2007 might have a positive
   effect on the Australian economy.

..  Additional gains were experienced in the metals markets throughout the first
   half of the year from long positions in copper, zinc, and aluminum futures
   as base metals prices

<PAGE>

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

FACTORS INFLUENCING ANNUAL TRADING GAINS: (continued)

 rallied on strong global demand and on reports of falling inventories. Within
  precious metals, long positions in gold and silver futures experienced gains
  as gold and silver prices reached 25-year highs in May, benefiting from
  strong demand and lagging supply, continued geopolitical concerns regarding
  Iran's nuclear program, and consistent demand from foreign central banks.
  During October, gains were experienced in zinc and aluminum futures as prices
  continued to trend higher amid labor protests in producer countries and news
  that inventories declined more than expected. Prices were also pressured
  higher after the National Bureau of Statistics said that China's industrial
  production had increased 16.1% in September from a year earlier, reaffirming
  expectations that demand from China would stay strong.

..  Smaller gains were recorded in the global interest rates markets primarily
   during the first and second quarters from short positions in U.S., European,
   and Australian fixed-income futures as prices trended lower amid strength in
   regional equity markets and investor sentiment that interest rates in the
   United States, the European Union, and Australia would rise in order to
   combat inflation. In addition, U.S. fixed-income futures prices were
   pressured lower following the release of stronger than expected U.S.
   economic data and the sixteenth consecutive interest rate hike by the U.S.
   Federal Reserve, while German fixed-income futures prices declined amid
   rising equity prices and solid economic data out of the Euro-Zone.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
..  Trading losses for the year were experienced within the energy markets
   during February from long futures positions in crude oil and its related
   products as prices declined after an announcement by Chinese government
   authorities that China would place an emphasis on prospecting alternative
   energy sources in the future, reports of larger than expected supplies, and
   mild weather in the U.S. Northeast. During August and September, long
   futures positions in crude oil and its related products incurred additional
   losses as prices moved lower after weaker than expected U.S. economic data
   led investors to believe that energy demand would be negatively affected and
   the U.S. Department of Labor reported an unexpected climb in domestic
   gasoline supplies. Prices were pressured lower during October due to
   uncertainty regarding OPEC's plan to cut production, as well as a lower
   demand forecast, resulting in additional losses from long positions. During
   November, short futures positions in crude oil and its related products
   incurred further losses as prices reversed higher on supply concerns.
   Additionally, short positions in natural gas futures resulted in losses
   during November as prices reversed

<PAGE>

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

FACTORS INFLUENCING ANNUAL TRADING LOSSES: (continued)

 higher on colder temperatures forecasted in the U.S. and expectations of a
  decline in domestic inventories.

..  Additional losses were recorded within the agricultural markets during
   second and third quarters, primarily from short positions in live cattle
   futures as prices moved higher on strong demand and technically-based
   buying. Meanwhile, losses were incurred during July and August from long
   positions in cocoa futures as prices fell on news from the International
   Cocoa Organization that global supplies were adequate to meet demand.
   Elsewhere in the agricultural complex, losses were incurred from short
   positions in soybean and soybean meal futures as prices rose during October
   on news of a smaller than expected crop from Brazil.

..  Smaller losses were incurred within the currency markets, primarily during
   the first half of the year, from short positions in the Swiss franc and
   Japanese yen versus the U.S. dollar as the value of the U.S. dollar moved
   lower against its major rivals on news that foreign central banks were
   beginning to diversify their currency reserves away from U.S.
   dollar-denominated assets, as well as uncertainty regarding the future of
   the U.S. Federal Reserve's interest rate tightening campaign. In addition,
   the Swiss franc and Japanese yen moved higher against the U.S. dollar as
   strong economic data out of Switzerland and Japan increased speculation that
   the Swiss National Bank and Bank of Japan would raise interest rates.
   Additionally, the Swiss franc moved higher on political tensions in the
   Middle East, which increased the demand for the safe-haven currency.
   Elsewhere in the currency markets, losses were experienced from both short
   and long positions in the Norwegian krone relative to the U.S. dollar as the
   value of the Norwegian krone moved without consistent direction throughout a
   majority of the year.

<PAGE>

                      This page intentionally left blank.

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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

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

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

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

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

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

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

<PAGE>

  Management assessed the effectiveness of each Partnership's internal control
over financial reporting as of December 31, 2006. In making this assessment,
Management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control--Integrated
Framework. Based on our assessment and those criteria, Management believes that
each Partnership maintained effective internal control over financial reporting
as of December 31, 2006.

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

/s/ Walter J. Davis
Walter J. Davis
President
Demeter Management Corporation

/s/ Lee Horwitz
Lee Horwitz
Chief Financial Officer
Demeter Management Corporation

New York, New York
February 28, 2007

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

  We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that Morgan
Stanley Spectrum Currency L.P., Morgan Stanley Spectrum Global Balanced L.P.,
Morgan Stanley Spectrum Select L.P., Morgan Stanley Spectrum Strategic L.P.,
and Morgan Stanley Spectrum Technical L.P. (collectively, the "Partnerships")
maintained effective internal control over financial reporting as of December
31, 2006, based on criteria established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Partnerships' management is responsible for maintaining
effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting. Our
responsibility is to express an opinion on management's assessment and an
opinion on the effectiveness of the Partnerships' internal control over
financial reporting based on our audit.

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

  A company's internal control over financial reporting is a process designed
by, or under the supervision of, the company's principal executive and
principal financial officers, or persons performing similar functions, and
effected by the company's board of directors, management, and other personnel
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company's

<PAGE>

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

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

  In our opinion, management's assessment that the Partnerships maintained
effective internal control over financial reporting as of December 31, 2006, is
fairly stated, in all material respects, based on the criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Also in our opinion, the Partnerships
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2006, based on the criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

  We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the financial statements as of and
for the year ended December 31, 2006 of the Partnerships and our report dated
February 28, 2007 expressed an unqualified opinion on those financial
statements.

/s/ Deloitte & Touche LLP
New York, New York
February 28, 2007

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

  We have audited the accompanying statements of financial condition of Morgan
Stanley Spectrum Currency L.P., Morgan Stanley Spectrum Global Balanced L.P.,
Morgan Stanley Spectrum Select L.P., Morgan Stanley Spectrum Strategic L.P.,
and Morgan Stanley Spectrum Technical L.P. (collectively, the "Partnerships"),
including the schedules of investments, as of December 31, 2006 and 2005, and
the related statements of operations, changes in partners' capital, and cash
flows for each of the three years in the period ended December 31, 2006. These
financial statements are the responsibility of the Partnerships' management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

  In our opinion, such financial statements present fairly, in all material
respects, the financial position of Morgan Stanley Spectrum Currency L.P.,
Morgan Stanley Spectrum Global Balanced L.P., Morgan Stanley Spectrum Select
L.P., Morgan Stanley Spectrum Strategic L.P., and Morgan Stanley Spectrum
Technical L.P. at December 31, 2006 and 2005, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2006, in conformity with accounting principles generally accepted
in the United States of America.

<PAGE>

  As discussed in Note 1, in 2006 and 2005, the Partnerships modified their
classification of cash within the statements of cash flows.

  We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the
Partnerships' internal control over financial reporting as of December 31,
2006, based on the criteria established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 28, 2007 expressed an unqualified
opinion on management's assessment of the effectiveness of the Partnerships'
internal control over financial reporting and an unqualified opinion on the
effectiveness of the Partnerships' internal control over financial reporting.

/s/ Deloitte & Touche LLP
New York, New York
February 28, 2007

<PAGE>

MORGAN STANLEY SPECTRUM CURRENCY L.P.

STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                    -------------------------
                                                        2006         2005
                                                    ------------ ------------
                                                         $            $
  <S>                                               <C>          <C>
                                    ASSETS
  Equity in futures interests trading accounts:
   Unrestricted cash                                 162,737,117  207,952,625
   Restricted cash                                       --           --
                                                    ------------ ------------
     Total Cash                                      162,737,117  207,952,625

   Net unrealized gain on open contracts (MS & Co.)    4,534,033    6,202,194
                                                    ------------ ------------
     Total Trading Equity                            167,271,150  214,154,819
  Subscriptions receivable                               759,216    1,355,204
  Interest receivable (Morgan Stanley DW)                560,751      559,983
                                                    ------------ ------------
     Total Assets                                    168,591,117  216,070,006
                                                    ============ ============

                       LIABILITIES AND PARTNERS' CAPITAL
  LIABILITIES
  Redemptions payable                                  4,643,347    6,346,278
  Accrued brokerage fees (Morgan Stanley DW)             626,181      862,131
  Accrued management fees                                272,253      374,840
                                                    ------------ ------------
     Total Liabilities                                 5,541,781    7,583,249
                                                    ------------ ------------
  PARTNERS' CAPITAL
  Limited Partners (14,173,942.826 and
   17,508,991.514 Units, respectively)               161,303,764  206,199,270
  General Partner (153,385.343 and
   194,237.343 Units, respectively)                    1,745,572    2,287,487
                                                    ------------ ------------
     Total Partners' Capital                         163,049,336  208,486,757
                                                    ------------ ------------
     Total Liabilities and Partners' Capital         168,591,117  216,070,006
                                                    ============ ============
  NET ASSET VALUE PER UNIT                                 11.38        11.78
                                                    ============ ============
</TABLE>

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                          FOR THE YEARS ENDED DECEMBER 31,
                                        ------------------------------------
                                           2006         2005         2004
                                        ----------  -----------  -----------
                                            $            $            $
   <S>                                  <C>         <C>          <C>
   INVESTMENT INCOME
    Interest income (Morgan Stanley DW)  6,632,240    5,391,828    2,064,338
                                        ----------  -----------  -----------

   EXPENSES
    Brokerage fees (Morgan Stanley DW)   8,151,647   10,921,579   10,011,029
    Management fees                      3,544,196    4,748,514    4,352,622
    Incentive fee                           --           --          177,763
                                        ----------  -----------  -----------
      Total Expenses                    11,695,843   15,670,093   14,541,414
                                        ----------  -----------  -----------

   NET INVESTMENT LOSS                  (5,063,603) (10,278,265) (12,477,076)
                                        ----------  -----------  -----------

   TRADING RESULTS
   Trading profit (loss):
    Realized                            (1,843,404) (28,979,835) (11,200,944)
    Net change in unrealized            (1,668,161) (10,445,759)  11,769,313
                                        ----------  -----------  -----------
      Total Trading Results             (3,511,565) (39,425,594)     568,369
                                        ----------  -----------  -----------

   NET LOSS                             (8,575,168) (49,703,859) (11,908,707)
                                        ==========  ===========  ===========

   NET LOSS ALLOCATION:
   Limited Partners                     (8,482,159) (49,177,845) (11,774,885)
   General Partner                         (93,009)    (526,014)    (133,822)

   NET LOSS PER UNIT:
   Limited Partners                          (0.40)       (2.63)       (1.25)
   General Partner                           (0.40)       (2.63)       (1.25)
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                     -----------------------
                                                        2006        2005
                                                     ----------- -----------
                                                         $           $
    <S>                                              <C>         <C>
                                    ASSETS
    Equity in futures interests trading accounts:
     Unrestricted cash                                36,518,808  41,897,899
     Restricted cash                                   3,363,695   2,476,604
                                                     ----------- -----------
       Total Cash                                     39,882,503  44,374,503
                                                     ----------- -----------

     Net unrealized gain on open contracts (MS&Co.)    1,135,527     562,409
     Net unrealized gain on open contracts (MSIL)         56,239      40,229
                                                     ----------- -----------
       Total net unrealized gain on open contracts     1,191,766     602,638
                                                     ----------- -----------
       Total Trading Equity                           41,074,269  44,977,141
    Subscriptions receivable                             224,965     295,999
    Interest receivable (Morgan Stanley DW)              179,223     149,040
                                                     ----------- -----------
       Total Assets                                   41,478,457  45,422,180
                                                     =========== ===========

                       LIABILITIES AND PARTNERS' CAPITAL
    LIABILITIES
    Redemptions payable                                  919,278     851,645
    Accrued brokerage fees (Morgan Stanley DW)           158,727     171,976
    Accrued management fees                               43,132      46,733
                                                     ----------- -----------
       Total Liabilities                               1,121,137   1,070,354
                                                     ----------- -----------
    PARTNERS' CAPITAL
    Limited Partners (2,558,814.213 and
     2,879,808.149 Units, respectively)               39,917,674  43,870,162
    General Partner (28,182.331 and
     31,618.331 Units, respectively)                     439,646     481,664
                                                     ----------- -----------
       Total Partners' Capital                        40,357,320  44,351,826
                                                     ----------- -----------
       Total Liabilities and Partners' Capital        41,478,457  45,422,180
                                                     =========== ===========
    NET ASSET VALUE PER UNIT                               15.60       15.23
                                                     =========== ===========
</TABLE>

STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                          FOR THE YEARS ENDED DECEMBER 31,
                                       --------------------------------------
                                           2006          2005           2004
                                       ------------  ------------    ----------
                                            $             $              $
  <S>                                  <C>           <C>             <C>
  INVESTMENT INCOME
   Interest income (Morgan Stanley DW)    2,044,009     1,370,806       625,965
                                       ------------  ------------    ----------

  EXPENSES
   Brokerage fees (Morgan Stanley DW)     1,987,699     2,126,114     2,332,241
   Management fees                          540,137       577,754       633,766
                                       ------------  ------------    ----------
     Total Expenses                       2,527,836     2,703,868     2,966,007
                                       ------------  ------------    ----------

  NET INVESTMENT LOSS                      (483,827)   (1,333,062)   (2,340,042)
                                       ------------  ------------    ----------

  TRADING RESULTS
  Trading profit (loss):
   Realized                                 981,659     3,338,207     1,049,835
   Net change in unrealized                 589,128      (214,685)   (1,729,717)
                                       ------------  ------------    ----------
                                          1,570,787     3,123,522      (679,882)
   Proceeds from Litigation Settlement      --              2,230         2,296
                                       ------------  ------------    ----------
     Total Trading Results                1,570,787     3,125,752      (677,586)
                                       ------------  ------------    ----------

  NET INCOME (LOSS)                       1,086,960     1,792,690    (3,017,628)
                                       ============  ============    ==========

  NET INCOME (LOSS) ALLOCATION:
  Limited Partners                        1,074,038     1,769,412    (2,985,362)
  General Partner                            12,922        23,278       (32,266)

  NET INCOME (LOSS) PER UNIT:
  Limited Partners                             0.37          0.62         (0.86)
  General Partner                              0.37          0.62         (0.86)
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM SELECT L.P.

STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                    -------------------------
                                                        2006         2005
                                                    ------------ ------------
                                                         $            $
   <S>                                              <C>          <C>
                                    ASSETS
   Equity in futures interests trading accounts:
    Unrestricted cash                                472,088,633  475,166,952
    Restricted cash                                   64,801,445   51,242,347
                                                    ------------ ------------
      Total Cash                                     536,890,078  526,409,299
                                                    ------------ ------------

    Net unrealized gain on open contracts (MS&Co.)    11,039,855    9,019,008
    Net unrealized gain on open contracts (MSIL)         921,756    9,166,796
                                                    ------------ ------------
      Total net unrealized gain on open contracts     11,961,611   18,185,804
                                                    ------------ ------------
      Total Trading Equity                           548,851,689  544,595,103
   Subscriptions receivable                            4,725,710    4,455,213
   Interest receivable (Morgan Stanley DW)             1,858,406    1,417,447
                                                    ------------ ------------
      Total Assets                                   555,435,805  550,467,763
                                                    ============ ============

                       LIABILITIES AND PARTNERS' CAPITAL
   LIABILITIES
   Redemptions payable                                 7,988,976   13,439,853
   Accrued brokerage fees (Morgan Stanley DW)          2,727,852    2,730,072
   Accrued management fees                             1,196,492    1,295,496
                                                    ------------ ------------
      Total Liabilities                               11,913,320   17,465,421
                                                    ------------ ------------
   PARTNERS' CAPITAL
   Limited Partners (18,501,387.237 and
    19,209,338.858 Units, respectively)              537,667,844  527,198,790
   General Partner (201,460.769 and
    211,461.769 Units, respectively)                   5,854,641    5,803,552
                                                    ------------ ------------
      Total Partners' Capital                        543,522,485  533,002,342
                                                    ------------ ------------
      Total Liabilities and Partners' Capital        555,435,805  550,467,763
                                                    ============ ============
   NET ASSET VALUE PER UNIT                                29.06        27.45
                                                    ============ ============
</TABLE>

STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                          FOR THE YEARS ENDED DECEMBER 31,
                                       -------------------------------------
                                           2006         2005         2004
                                       -----------  -----------  -----------
                                            $            $            $
  <S>                                  <C>          <C>          <C>
  INVESTMENT INCOME
   Interest income (Morgan Stanley DW)  20,639,273   12,876,956    4,952,656
                                       -----------  -----------  -----------

  EXPENSES
   Brokerage fees (Morgan Stanley DW)   32,847,913   36,601,881   36,680,599
   Management fees                      15,437,482   15,652,447   14,450,217
   Incentive fee                            --           --        6,104,991
                                       -----------  -----------  -----------
     Total Expenses                     48,285,395   52,254,328   57,235,807
                                       -----------  -----------  -----------

  NET INVESTMENT LOSS                  (27,646,122) (39,377,372) (52,283,151)
                                       -----------  -----------  -----------

  TRADING RESULTS
  Trading profit (loss):
   Realized                             64,987,687    7,018,678   50,580,928
   Net change in unrealized             (6,224,193)   3,059,181  (21,655,342)
                                       -----------  -----------  -----------
                                        58,763,494   10,077,859   28,925,586
   Proceeds from Litigation Settlement      --           85,000       45,665
                                       -----------  -----------  -----------
     Total Trading Results              58,763,494   10,162,859   28,971,251
                                       -----------  -----------  -----------

  NET INCOME (LOSS)                     31,117,372  (29,214,513) (23,311,900)
                                       ===========  ===========  ===========

  NET INCOME (LOSS) ALLOCATION:
  Limited Partners                      30,776,254  (28,920,794) (23,067,010)
  General Partner                          341,118     (293,719)    (244,890)

  NET INCOME (LOSS) PER UNIT:
  Limited Partners                            1.61        (1.43)       (1.43)
  General Partner                             1.61        (1.43)       (1.43)
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                    -----------------------
                                                       2006         2005
                                                    ----------- -----------
                                                        $            $
   <S>                                              <C>         <C>
                                    ASSETS
   Equity in futures interests trading accounts:
    Unrestricted cash                               172,839,122 142,187,180
    Restricted cash                                  20,250,647  19,593,820
                                                    ----------- -----------
      Total Cash                                    193,089,769 161,781,000
                                                    ----------- -----------
    Net unrealized gain on open contracts (MSIL)      9,283,006   5,662,270
    Net unrealized gain on open contracts (MS&Co.)    7,766,985   7,823,513
                                                    ----------- -----------
      Total net unrealized gain on open contracts    17,049,991  13,485,783
    Net option premiums                                 680,129        (568)
                                                    ----------- -----------
      Total Trading Equity                          210,819,889 175,266,215
   Subscriptions receivable                           2,601,546   1,351,545
   Interest receivable (Morgan Stanley DW)              670,338     445,924
                                                    ----------- -----------
      Total Assets                                  214,091,773 177,063,684
                                                    =========== ===========
                      LIABILITIES AND PARTNERS' CAPITAL

   LIABILITIES
   Redemptions payable                                3,111,834   4,515,005
   Accrued brokerage fees (Morgan Stanley DW)         1,024,464     837,558
   Accrued management fees                              478,411     381,027
   Accrued incentive fee                                --        1,704,356
                                                    ----------- -----------
      Total Liabilities                               4,614,709   7,437,946
                                                    ----------- -----------
   PARTNERS' CAPITAL
   Limited Partners (12,087,045.247 and
    11,834,304.588 Units, respectively)             207,238,137 167,774,452
   General Partner (130,584.135 Units)                2,238,927   1,851,286
                                                    ----------- -----------
      Total Partners' Capital                       209,477,064 169,625,738
                                                    ----------- -----------
      Total Liabilities and Partners' Capital       214,091,773 177,063,684
                                                    =========== ===========
   NET ASSET VALUE PER UNIT                               17.15       14.18
                                                    =========== ===========
</TABLE>

STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                          FOR THE YEARS ENDED DECEMBER 31,
                                       -------------------------------------
                                           2006         2005         2004
                                       -----------  -----------  -----------
                                            $            $            $
  <S>                                  <C>          <C>          <C>
  INVESTMENT INCOME
   Interest income (Morgan Stanley DW)   6,908,530    4,008,536    1,602,712
                                       -----------  -----------  -----------

  EXPENSES
   Brokerage fees (Morgan Stanley DW)   11,319,725   11,407,747    9,860,579
   Incentive fees                        5,369,200    2,251,786    2,751,859
   Management fees                       5,266,764    4,685,477    4,006,640
                                       -----------  -----------  -----------
     Total Expenses                     21,955,689   18,345,010   16,619,078
                                       -----------  -----------  -----------

  NET INVESTMENT LOSS                  (15,047,159) (14,336,474) (15,016,366)
                                       -----------  -----------  -----------

  TRADING RESULTS
  Trading profit (loss):
   Realized                             47,135,224   (2,036,361)  21,527,423
   Net change in unrealized              3,564,208   10,826,414   (5,262,416)
                                       -----------  -----------  -----------
                                        50,699,432    8,790,053   16,265,007
   Proceeds from Litigation Settlement      --              454          173
                                       -----------  -----------  -----------
     Total Trading Results              50,699,432    8,790,507   16,265,180
                                       -----------  -----------  -----------

  NET INCOME (LOSS)                     35,652,273   (5,545,967)   1,248,814
                                       ===========  ===========  ===========

  NET INCOME (LOSS) ALLOCATION:
  Limited Partners                      35,264,632   (5,489,130)   1,239,931
  General Partner                          387,641      (56,837)       8,883

  NET INCOME (LOSS) PER UNIT:
  Limited Partners                            2.97        (0.38)        0.25
  General Partner                             2.97        (0.38)        0.25
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                       -----------------------
                                                          2006         2005
                                                       ----------- -----------
                                                           $            $
<S>                                                    <C>         <C>
                                    ASSETS
Equity in futures interests trading accounts:
 Unrestricted cash                                     618,802,593 591,492,563
 Restricted cash                                       113,620,432 127,922,335
                                                       ----------- -----------
   Total Cash                                          732,423,025 719,414,898
                                                       ----------- -----------
 Net unrealized gain (loss) on open contracts (MS&Co.)  30,280,000  (2,653,896)
 Net unrealized gain on open contracts (MSIL)            1,537,347  24,718,032
                                                       ----------- -----------
   Total net unrealized gain on open contracts          31,817,347  22,064,136
 Net option premiums                                        64,116      --
                                                       ----------- -----------
   Total Trading Equity                                764,304,488 741,479,034
Subscriptions receivable                                 6,849,894   8,317,319
Interest receivable (Morgan Stanley DW)                  2,538,494   1,887,334
                                                       ----------- -----------
   Total Assets                                        773,692,876 751,683,687
                                                       =========== ===========
                       LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable                                     11,571,388  22,863,255
Accrued brokerage fees (Morgan Stanley DW)               3,693,334   3,775,150
Accrued management fees                                  1,607,196   1,629,189
                                                       ----------- -----------
   Total Liabilities                                    16,871,918  28,267,594
                                                       ----------- -----------

PARTNERS' CAPITAL
Limited Partners (31,769,428.115 and
 32,000,561.834 Units, respectively)                   748,658,571 715,669,731
General Partner (346,372.001 Units)                      8,162,387   7,746,362
                                                       ----------- -----------
   Total Partners' Capital                             756,820,958 723,416,093
                                                       ----------- -----------
   Total Liabilities and Partners' Capital             773,692,876 751,683,687
                                                       =========== ===========

NET ASSET VALUE PER UNIT                                     23.57       22.36
                                                       =========== ===========
</TABLE>

STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                          FOR THE YEARS ENDED DECEMBER 31,
                                       -------------------------------------
                                           2006         2005         2004
                                       -----------  -----------  -----------
                                            $            $            $
  <S>                                  <C>          <C>          <C>
  INVESTMENT INCOME
   Interest income (Morgan Stanley DW)  27,915,330   17,176,811    6,171,302
                                       -----------  -----------  -----------

  EXPENSES
   Brokerage fees (Morgan Stanley DW)   44,839,676   49,430,024   45,508,966
   Management fees                      19,618,375   19,268,955   16,226,640
   Incentive fees                        6,762,802    2,668,447   12,132,833
                                       -----------  -----------  -----------
     Total Expenses                     71,220,853   71,367,426   73,868,439
                                       -----------  -----------  -----------

  NET INVESTMENT LOSS                  (43,305,523) (54,190,615) (67,697,137)
                                       -----------  -----------  -----------

  TRADING RESULTS
  Trading profit (loss):
   Realized                             72,015,436   19,045,879  122,928,230
   Net change in unrealized              9,753,211   (5,277,614) (19,092,460)
                                       -----------  -----------  -----------
                                        81,768,647   13,768,265  103,835,770
   Proceeds from Litigation Settlement      --            4,209        3,018
                                       -----------  -----------  -----------
     Total Trading Results              81,768,647   13,772,474  103,838,788
                                       -----------  -----------  -----------

  NET INCOME (LOSS)                     38,463,124  (40,418,141)  36,141,651
                                       ===========  ===========  ===========

  NET INCOME (LOSS) ALLOCATION:
  Limited Partners                      38,047,099  (39,990,714)  35,747,190
  General Partner                          416,025     (427,427)     394,461

  NET INCOME (LOSS) PER UNIT:
  Limited Partners                            1.21        (1.27)        0.99
  General Partner                             1.21        (1.27)        0.99
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM CURRENCY L.P.

STATEMENT OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004

<TABLE>
<CAPTION>
                          UNITS OF
                         PARTNERSHIP     LIMITED     GENERAL
                          INTEREST       PARTNERS    PARTNER      TOTAL
                       --------------  -----------  ---------  -----------
                                            $           $           $
    <S>                <C>             <C>          <C>        <C>
    Partners' Capital,
    December 31, 2003  12,139,408.225  188,042,673  2,013,247  190,055,920
    Offering of Units   8,372,327.316  114,539,377    990,000  115,529,377
    Net loss                 --        (11,774,885)  (133,822) (11,908,707)
    Redemptions        (1,557,346.356) (20,575,860)     --     (20,575,860)
                       --------------  -----------  ---------  -----------
    Partners' Capital,
    December 31, 2004  18,954,389.185  270,231,305  2,869,425  273,100,730
    Offering of Units   3,336,357.445   40,295,529    170,000   40,465,529
    Net loss                 --        (49,177,845)  (526,014) (49,703,859)
    Redemptions        (4,587,517.773) (55,149,719)  (225,924) (55,375,643)
                       --------------  -----------  ---------  -----------
    Partners' Capital,
    December 31, 2005  17,703,228.857  206,199,270  2,287,487  208,486,757
    Offering of Units   1,518,069.025   16,510,816      --      16,510,816
    Net loss                 --         (8,482,159)   (93,009)  (8,575,168)
    Redemptions        (4,893,969.713) (52,924,163)  (448,906) (53,373,069)
                       --------------  -----------  ---------  -----------
    Partners' Capital,
    December 31, 2006  14,327,328.169  161,303,764  1,745,572  163,049,336
                       ==============  ===========  =========  ===========
</TABLE>

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004

<TABLE>
<CAPTION>
                           UNITS OF
                          PARTNERSHIP     LIMITED    GENERAL
                           INTEREST       PARTNERS   PARTNER     TOTAL
                         -------------  -----------  -------  -----------
                                             $          $          $
      <S>                <C>            <C>          <C>      <C>
      Partners' Capital,
      December 31, 2003  3,401,912.446   52,064,431  575,062   52,639,493
      Offering of Units    778,018.263   11,587,284     --     11,587,284
      Net loss                 --        (2,985,362) (32,266)  (3,017,628)
      Redemptions         (783,103.571) (11,597,531)    --    (11,597,531)
                         -------------  -----------  -------  -----------
      Partners' Capital,
      December 31, 2004  3,396,827.138   49,068,822  542,796   49,611,618
      Offering of Units    345,735.053    4,999,666     --      4,999,666
      Net income               --         1,769,412   23,278    1,792,690
      Redemptions         (831,135.711) (11,967,738) (84,410) (12,052,148)
                         -------------  -----------  -------  -----------
      Partners' Capital,
      December 31, 2005  2,911,426.480   43,870,162  481,664   44,351,826
      Offering of Units    258,442.402    4,021,015     --      4,021,015
      Net income               --         1,074,038   12,922    1,086,960
      Redemptions         (582,872.338)  (9,047,541) (54,940)  (9,102,481)
                         -------------  -----------  -------  -----------
      Partners' Capital,
      December 31, 2006  2,586,996.544   39,917,674  439,646   40,357,320
                         =============  ===========  =======  ===========
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM SELECT L.P.

STATEMENT OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004

<TABLE>
<CAPTION>
                         UNITS OF
                        PARTNERSHIP     LIMITED      GENERAL
                         INTEREST       PARTNERS     PARTNER       TOTAL
                      --------------  ------------  ---------  ------------
                                           $            $            $
   <S>                <C>             <C>           <C>        <C>
   Partners' Capital,
   December 31, 2003  14,565,503.079   436,666,633  4,855,851   441,522,484
   Offering of Units   7,215,873.382   208,687,672  1,540,000   210,227,672
   Net loss                 --         (23,067,010)  (244,890)  (23,311,900)
   Redemptions        (1,517,552.868)  (43,132,131)     --      (43,132,131)
                      --------------  ------------  ---------  ------------
   Partners' Capital,
   December 31, 2004  20,263,823.593   579,155,164  6,150,961   585,306,125
   Offering of Units   3,482,044.148    91,946,015    380,000    92,326,015
   Net loss                 --         (28,920,794)  (293,719)  (29,214,513)
   Redemptions        (4,325,067.114) (114,981,595)  (433,690) (115,415,285)
                      --------------  ------------  ---------  ------------
   Partners' Capital,
   December 31, 2005  19,420,800.627   527,198,790  5,803,552   533,002,342
   Offering of Units   2,664,130.689    76,905,995      --       76,905,995
   Net income               --          30,776,254    341,118    31,117,372
   Redemptions        (3,382,083.310)  (97,213,195)  (290,029)  (97,503,224)
                      --------------  ------------  ---------  ------------
   Partners' Capital,
   December 31, 2006  18,702,848.006   537,667,844  5,854,641   543,522,485
                      ==============  ============  =========  ============
</TABLE>

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004

<TABLE>
<CAPTION>
                          UNITS OF
                         PARTNERSHIP     LIMITED     GENERAL
                          INTEREST       PARTNERS    PARTNER      TOTAL
                       --------------  -----------  ---------  -----------
                                            $           $           $
    <S>                <C>             <C>          <C>        <C>
    Partners' Capital,
    December 31, 2003   8,475,891.871  119,976,992  1,293,447  121,270,439
    Offering of Units   5,057,597.578   73,841,018    720,000   74,561,018
    Net income               --          1,239,931      8,883    1,248,814
    Redemptions          (948,261.723) (13,839,146)     --     (13,839,146)
                       --------------  -----------  ---------  -----------
    Partners' Capital,
    December 31, 2004  12,585,227.726  181,218,795  2,022,330  183,241,125
    Offering of Units   2,346,340.284   31,611,503      --      31,611,503
    Net loss                 --         (5,489,130)   (56,837)  (5,545,967)
    Redemptions        (2,966,679.287) (39,566,716)  (114,207) (39,680,923)
                       --------------  -----------  ---------  -----------
    Partners' Capital,
    December 31, 2005  11,964,888.723  167,774,452  1,851,286  169,625,738
    Offering of Units   2,517,218.118   40,403,751      --      40,403,751
    Net income               --         35,264,632    387,641   35,652,273
    Redemptions        (2,264,477.459) (36,204,698)     --     (36,204,698)
                       --------------  -----------  ---------  -----------
    Partners' Capital,
    December 31, 2006  12,217,629.382  207,238,137  2,238,927  209,477,064
                       ==============  ===========  =========  ===========
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004

<TABLE>
<CAPTION>
                         UNITS OF
                        PARTNERSHIP     LIMITED      GENERAL
                         INTEREST       PARTNERS     PARTNER       TOTAL
                      --------------  ------------  ---------  ------------
                                           $            $            $
   <S>                <C>             <C>           <C>        <C>
   Partners' Capital,
   December 31, 2003  23,774,204.324   532,266,109  5,918,169   538,184,278
   Offering of Units  11,745,240.279   259,052,698  1,900,000   260,952,698
   Net income               --          35,747,190    394,461    36,141,651
   Redemptions        (2,558,198.900)  (56,554,740)     --      (56,554,740)
                      --------------  ------------  ---------  ------------
   Partners' Capital,
   December 31, 2004  32,961,245.703   770,511,257  8,212,630   778,723,887
   Offering of Units   6,431,314.024   139,226,034    480,000   139,706,034
   Net loss                 --         (39,990,714)  (427,427)  (40,418,141)
   Redemptions        (7,045,625.892) (154,076,846)  (518,841) (154,595,687)
                      --------------  ------------  ---------  ------------
   Partners' Capital,
   December 31, 2005  32,346,933.835   715,669,731  7,746,362   723,416,093
   Offering of Units   5,449,636.682   127,236,707      --      127,236,707
   Net income               --          38,047,099    416,025    38,463,124
   Redemptions        (5,680,770.401) (132,294,966)     --     (132,294,966)
                      --------------  ------------  ---------  ------------
   Partners' Capital,
   December 31, 2006  32,115,800.116   748,658,571  8,162,387   756,820,958
                      ==============  ============  =========  ============
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM CURRENCY L.P.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                            FOR THE YEARS ENDED DECEMBER 31,
                                         -------------------------------------
                                             2006         2005         2004
                                         -----------  -----------  -----------
                                              $            $            $
<S>                                      <C>          <C>          <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES
Net loss                                  (8,575,168) (49,703,859) (11,908,707)
Noncash item included in net loss:
  Net change in unrealized                 1,668,161   10,445,759  (11,769,313)
(Increase) decrease in operating assets:
  Restricted cash                             --          169,680     (169,680)
  Interest receivable
   (Morgan Stanley DW)                          (768)    (244,444)    (213,650)
Increase (decrease) in operating
 liabilities:
  Accrued brokerage fees
   (Morgan Stanley DW)                      (235,950)    (145,868)     346,433
  Accrued management fees                   (102,587)     (63,421)     150,624
  Accrued incentive fee                       --           --         (399,035)
                                         -----------  -----------  -----------
Net cash used for operating activities    (7,246,312) (39,542,153) (23,963,328)
                                         -----------  -----------  -----------

CASH FLOWS FROM
 FINANCING ACTIVITIES
Cash received from offering of Units      17,106,804   45,800,729  117,548,841
Cash paid for redemptions of Units       (55,076,000) (51,528,518) (19,137,190)
                                         -----------  -----------  -----------
Net cash provided by (used for)
 financing activities                    (37,969,196)  (5,727,789)  98,411,651
                                         -----------  -----------  -----------

Net increase (decrease) in
 unrestricted cash                       (45,215,508) (45,269,942)  74,448,323
Unrestricted cash at beginning of
 period                                  207,952,625  253,222,567  178,774,244
                                         -----------  -----------  -----------

Unrestricted cash at end of period       162,737,117  207,952,625  253,222,567
                                         ===========  ===========  ===========
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                             FOR THE YEARS ENDED DECEMBER 31,
                                         ---------------------------------------
                                             2006          2005          2004
                                         ------------  ------------  -----------
                                              $             $             $
<S>                                      <C>           <C>           <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES
Net income (loss)                           1,086,960     1,792,690   (3,017,628)
Noncash item included in net
 income (loss):
  Net change in unrealized                   (589,128)      214,685    1,729,717
(Increase) decrease in operating assets:
  Restricted cash                            (887,091)    1,501,795     (116,681)
  Interest receivable
   (Morgan Stanley DW)                        (30,183)      (65,068)     (43,862)
  Net option premiums                         --            --           (39,600)
Decrease in operating liabilities:
  Accrued brokerage fees
   (Morgan Stanley DW)                        (13,249)      (16,460)      (6,455)
  Accrued management fees                      (3,601)       (4,473)      (1,754)
                                         ------------  ------------  -----------
Net cash provided by (used for)
 operating activities                        (436,292)    3,423,169   (1,496,263)
                                         ------------  ------------  -----------

CASH FLOWS FROM
 FINANCING ACTIVITIES
Cash received from offering of Units        4,092,049     5,343,828   11,983,540
Cash paid for redemptions of Units         (9,034,848)  (11,783,215) (12,047,859)
                                         ------------  ------------  -----------
Net cash used for financing activities     (4,942,799)   (6,439,387)     (64,319)
                                         ------------  ------------  -----------

Net decrease in unrestricted cash          (5,379,091)   (3,016,218)  (1,560,582)
Unrestricted cash at beginning of
 period                                    41,897,899    44,914,117   46,474,699
                                         ------------  ------------  -----------

Unrestricted cash at end of period         36,518,808    41,897,899   44,914,117
                                         ============  ============  ===========
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM SELECT L.P.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                             FOR THE YEARS ENDED DECEMBER 31,
                                         ---------------------------------------
                                             2006            2005          2004
                                         ------------    ------------  -----------
                                              $               $             $
<S>                                      <C>             <C>           <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES
Net income (loss)                          31,117,372     (29,214,513) (23,311,900)
Noncash item included in net
 income (loss):
  Net change in unrealized                  6,224,193      (3,059,181)  21,655,342
(Increase) decrease in operating assets:
  Restricted cash                         (13,559,098)     24,246,115  (15,987,079)
  Interest receivable
   (Morgan Stanley DW)                       (440,959)       (659,466)    (507,361)
  Net option premiums                         --            3,366,493   (2,134,005)
Increase (decrease) in operating
 liabilities:
  Accrued brokerage fees
   (Morgan Stanley DW)                         (2,220)       (738,682)   1,067,674
  Accrued management fees                     (99,004)        (60,615)     362,561
  Accrued incentive fee                       --              --        (2,227,005)
                                         ------------    ------------  -----------
Net cash provided by (used for)
 operating activities                      23,240,284      (6,119,849) (21,081,773)
                                         ------------    ------------  -----------

CASH FLOWS FROM
 FINANCING ACTIVITIES
Cash received from offering of Units       76,635,498     100,607,663  210,179,028
Cash paid for redemptions of Units       (102,954,101)   (107,667,647) (39,845,039)
                                         ------------    ------------  -----------
Net cash provided by (used for)
 financing activities                     (26,318,603)     (7,059,984) 170,333,989
                                         ------------    ------------  -----------

Net increase (decrease) in
 unrestricted cash                         (3,078,319)    (13,179,833) 149,252,216
Unrestricted cash at beginning of
 period                                   475,166,952     488,346,785  339,094,569
                                         ------------    ------------  -----------

Unrestricted cash at end of period        472,088,633     475,166,952  488,346,785
                                         ============    ============  ===========
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                            FOR THE YEARS ENDED DECEMBER 31,
                                         -------------------------------------
                                             2006         2005         2004
                                         -----------  -----------  -----------
                                              $            $            $
<S>                                      <C>          <C>          <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES
Net income (loss)                         35,652,273   (5,545,967)   1,248,814
Noncash item included in net
 income (loss):
  Net change in unrealized                (3,564,208) (10,826,414)   5,262,416
(Increase) decrease in operating assets:
  Restricted cash                           (656,827)  (2,785,615)  (3,161,765)
  Net option premiums                       (680,697)     263,856      414,992
  Interest receivable
   (Morgan Stanley DW)                      (224,414)    (207,268)    (172,065)
Increase (decrease) in operating
 liabilities:
  Accrued brokerage fees
   (Morgan Stanley DW)                       186,906     (243,247)     430,756
  Accrued management fees                     97,384      (28,870)     140,911
  Accrued incentive fees                  (1,704,356)   1,515,612     (622,506)
                                         -----------  -----------  -----------
Net cash provided by (used for)
 operating activities                     29,106,061  (17,857,913)   3,541,553
                                         -----------  -----------  -----------

CASH FLOWS FROM
 FINANCING ACTIVITIES
Cash received from offering of Units      39,153,750   35,344,084   74,620,070
Cash paid for redemptions of Units       (37,607,869) (36,891,247) (12,769,688)
                                         -----------  -----------  -----------
Net cash provided by (used for)
 financing activities                      1,545,881   (1,547,163)  61,850,382
                                         -----------  -----------  -----------

Net increase (decrease) in
 unrestricted cash                        30,651,942  (19,405,076)  65,391,935
Unrestricted cash at beginning of
 period                                  142,187,180  161,592,256   96,200,321
                                         -----------  -----------  -----------

Unrestricted cash at end of period       172,839,122  142,187,180  161,592,256
                                         ===========  ===========  ===========
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                          FOR THE YEARS ENDED DECEMBER 31,
                                      ---------------------------------------
                                          2006          2005          2004
                                      ------------  ------------  -----------
                                           $             $             $
 <S>                                  <C>           <C>           <C>
 CASH FLOWS FROM
  OPERATING ACTIVITIES
 Net income (loss)                      38,463,124   (40,418,141)  36,141,651
 Noncash item included in net
  income (loss):
   Net change in unrealized             (9,753,211)    5,277,614   19,092,460
 (Increase) decrease in operating
  assets:
   Restricted cash                      14,301,903    33,063,604  (71,797,043)
   Net option premiums                     (64,116)      --         3,973,725
   Interest receivable
    (Morgan Stanley DW)                   (651,160)     (887,041)    (708,483)
 Increase (decrease) in operating
  liabilities:
   Accrued brokerage fees
    (Morgan Stanley DW)                    (81,816)     (854,838)   1,682,213
   Accrued management fees                 (21,993)       (2,851)     547,516
   Accrued incentive fee                   --            --        (4,924,640)
                                      ------------  ------------  -----------
 Net cash provided by (used for)
  operating activities                  42,192,731    (3,821,653) (15,992,601)
                                      ------------  ------------  -----------

 CASH FLOWS FROM
  FINANCING ACTIVITIES
 Cash received from offering of Units  128,704,132   148,524,367  259,672,165
 Cash paid for redemptions of Units   (143,586,833) (138,199,116) (53,013,759)
                                      ------------  ------------  -----------
 Net cash provided by (used for)
  financing activities                 (14,882,701)   10,325,251  206,658,406
                                      ------------  ------------  -----------

 Net increase in unrestricted cash      27,310,030     6,503,598  190,665,805
 Unrestricted cash at beginning of
  period                               591,492,563   584,988,965  394,323,160
                                      ------------  ------------  -----------

 Unrestricted cash at end of period    618,802,593   591,492,563  584,988,965
                                      ============  ============  ===========
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM CURRENCY L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                  LONG UNREALIZED  PERCENTAGE   SHORT UNREALIZED  PERCENTAGE
FUTURES AND FORWARD CONTRACTS:                                      GAIN/(LOSS)   OF NET ASSETS   GAIN/(LOSS)    OF NET ASSETS
------------------------------                                    --------------- ------------- ---------------- -------------
2006 PARTNERSHIP NET ASSETS: $163,049,336                                $              %              $               %
<S>                                                               <C>             <C>           <C>              <C>
Foreign currency                                                     1,858,967         1.14        2,675,066         1.64
                                                                    ----------        -----        ---------         ----
  Grand Total:                                                       1,858,967         1.14        2,675,066         1.64
                                                                    ==========        =====        =========         ====
  Unrealized Currency Gain/(Loss)

  Total Net Unrealized Gain per Statement of Financial Condition


2005 PARTNERSHIP NET ASSETS: $208,486,757
Foreign currency                                                    (1,081,795)       (0.52)       7,283,989         3.49
                                                                    ----------        -----        ---------         ----
  Grand Total:                                                      (1,081,795)       (0.52)       7,283,989         3.49
                                                                    ==========        =====        =========         ====
  Unrealized Currency Gain/(Loss)

  Total Net Unrealized Gain per Statement of Financial Condition

</TABLE>
<TABLE>
<CAPTION>
                                                                  NET UNREALIZED
FUTURES AND FORWARD CONTRACTS:                                     GAIN/(LOSS)
------------------------------                                    --------------
2006 PARTNERSHIP NET ASSETS: $163,049,336                               $
<S>                                                               <C>
Foreign currency                                                    4,534,033
                                                                    ---------
  Grand Total:                                                      4,534,033

  Unrealized Currency Gain/(Loss)                                      --
                                                                    ---------
  Total Net Unrealized Gain per Statement of Financial Condition    4,534,033
                                                                    =========

2005 PARTNERSHIP NET ASSETS: $208,486,757
Foreign currency                                                    6,202,194
                                                                    ---------
  Grand Total:                                                      6,202,194

  Unrealized Currency Gain/(Loss)                                      --
                                                                    ---------
  Total Net Unrealized Gain per Statement of Financial Condition    6,202,194
                                                                    =========
</TABLE>


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

<PAGE>

MORGAN STANLEY SPECTRUM GLOBAL BALANCED L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                  LONG UNREALIZED  PERCENTAGE   SHORT UNREALIZED  PERCENTAGE
FUTURES AND FORWARD CONTRACTS:                                      GAIN/(LOSS)   OF NET ASSETS   GAIN/(LOSS)    OF NET ASSETS
------------------------------                                    --------------- ------------- ---------------- -------------
2006 PARTNERSHIP NET ASSETS: $40,357,320                                 $              %              $               %
<S>                                                               <C>             <C>           <C>              <C>
Commodity                                                              65,101          0.16         127,695           0.32
Equity                                                                269,904          0.66            --              --
Foreign currency                                                      (30,000)        (0.07)         (7,613)         (0.02)
Interest rate                                                         (41,078)        (0.10)        371,009           0.92
                                                                      -------         -----         -------          -----
  Grand Total:                                                        263,927          0.65         491,091           1.22
                                                                      =======         =====         =======          =====
  Unrealized Currency Gain

  Total Net Unrealized Gain per Statement of Financial Condition


2005 PARTNERSHIP NET ASSETS: $44,351,826
Commodity                                                              74,261          0.17          (9,113)         (0.02)
Equity                                                                431,246          0.97            --              --
Foreign currency                                                       25,515          0.06         (31,429)         (0.07)
Interest rate                                                          37,273          0.08         186,788           0.42
                                                                      -------         -----         -------          -----
  Grand Total:                                                        568,295          1.28         146,246           0.33
                                                                      =======         =====         =======          =====
  Unrealized Currency Loss

  Total Net Unrealized Gain per Statement of Financial Condition

</TABLE>
<TABLE>
<CAPTION>
                                                                  NET UNREALIZED
FUTURES AND FORWARD CONTRACTS:                                     GAIN/(LOSS)
------------------------------                                    --------------
2006 PARTNERSHIP NET ASSETS: $40,357,320                                $
<S>                                                               <C>
Commodity                                                             192,796
Equity                                                                269,904
Foreign currency                                                      (37,613)
Interest rate                                                         329,931
                                                                    ---------
  Grand Total:                                                        755,018

  Unrealized Currency Gain                                            436,748
                                                                    ---------
  Total Net Unrealized Gain per Statement of Financial Condition    1,191,766
                                                                    =========

2005 PARTNERSHIP NET ASSETS: $44,351,826
Commodity                                                              65,148
Equity                                                                431,246
Foreign currency                                                       (5,914)
Interest rate                                                         224,061
                                                                    ---------
  Grand Total:                                                        714,541

  Unrealized Currency Loss                                           (111,903)
                                                                    ---------
  Total Net Unrealized Gain per Statement of Financial Condition      602,638
                                                                    =========
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM SELECT L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                  LONG UNREALIZED  PERCENTAGE   SHORT UNREALIZED  PERCENTAGE
FUTURES AND FORWARD CONTRACTS:                                      GAIN/(LOSS)   OF NET ASSETS   GAIN/(LOSS)    OF NET ASSETS
------------------------------                                    --------------- ------------- ---------------- -------------
2006 PARTNERSHIP NET ASSETS: $543,522,485                                $              %              $               %
<S>                                                               <C>             <C>           <C>              <C>
Commodity                                                              456,160         0.08         2,995,834         0.55
Equity                                                               4,924,820         0.91            --              --
Foreign currency                                                      (247,846)       (0.05)        2,552,915         0.47
Interest rate                                                       (2,248,119)       (0.41)        4,585,113         0.84
                                                                    ----------        -----        ----------        -----
  Grand Total:                                                       2,885,015         0.53        10,133,862         1.86
                                                                    ==========        =====        ==========        =====
  Unrealized Currency Loss

  Total Net Unrealized Gain per Statement of Financial Condition


2005 PARTNERSHIP NET ASSETS: $533,002,342
Commodity                                                           15,589,813         2.92          (730,681)       (0.14)
Equity                                                               1,882,850         0.35            12,500          --
Foreign currency                                                    (2,386,026)       (0.44)        4,136,927         0.78
Interest rate                                                          684,290         0.13         1,798,925         0.34
                                                                    ----------        -----        ----------        -----
  Grand Total:                                                      15,770,927         2.96         5,217,671         0.98
                                                                    ==========        =====        ==========        =====
  Unrealized Currency Loss

  Total Net Unrealized Gain per Statement of Financial Condition

</TABLE>
<TABLE>
<CAPTION>
                                                                  NET UNREALIZED
FUTURES AND FORWARD CONTRACTS:                                     GAIN/(LOSS)
------------------------------                                    --------------
2006 PARTNERSHIP NET ASSETS: $543,522,485                               $
<S>                                                               <C>
Commodity                                                            3,451,994
Equity                                                               4,924,820
Foreign currency                                                     2,305,069
Interest rate                                                        2,336,994
                                                                    ----------
  Grand Total:                                                      13,018,877

  Unrealized Currency Loss                                          (1,057,266)
                                                                    ----------
  Total Net Unrealized Gain per Statement of Financial Condition    11,961,611
                                                                    ==========

2005 PARTNERSHIP NET ASSETS: $533,002,342
Commodity                                                           14,859,132
Equity                                                               1,895,350
Foreign currency                                                     1,750,901
Interest rate                                                        2,483,215
                                                                    ----------
  Grand Total:                                                      20,988,598

  Unrealized Currency Loss                                          (2,802,794)
                                                                    ----------
  Total Net Unrealized Gain per Statement of Financial Condition    18,185,804
                                                                    ==========
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM STRATEGIC L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                  LONG UNREALIZED  PERCENTAGE   SHORT UNREALIZED  PERCENTAGE
FUTURES AND FORWARD CONTRACTS:                                      GAIN/(LOSS)   OF NET ASSETS   GAIN/(LOSS)    OF NET ASSETS
------------------------------                                    --------------- ------------- ---------------- -------------
2006 PARTNERSHIP NET ASSETS: $209,477,064                                $              %              $               %
<S>                                                               <C>             <C>           <C>              <C>
Commodity                                                           12,403,353         5.92*          570,125         0.27
Equity                                                               1,533,728         0.73              (775)         --
Foreign currency                                                     1,553,840         0.74         1,207,868         0.58
Interest rate                                                         (773,724)       (0.37)          969,810         0.46
                                                                    ----------        -----        ----------        -----
  Grand Total:                                                      14,717,197         7.02         2,747,028         1.31
                                                                    ==========        =====        ==========        =====
  Unrealized Currency Loss

  Total Net Unrealized Gain per Statement of Financial Condition


2005 PARTNERSHIP NET ASSETS: $169,625,738
Commodity                                                           16,718,531         9.86*          (28,242)       (0.01)
Equity                                                                 (96,027)       (0.06)           --              --
Foreign currency                                                    (1,327,499)       (0.78)       (2,048,373)       (1.21)
Interest rate                                                           --              --            582,959         0.34
                                                                    ----------        -----        ----------        -----
  Grand Total:                                                      15,295,005         9.02        (1,493,656)       (0.88)
                                                                    ==========        =====        ==========        =====
  Unrealized Currency Loss

  Total Net Unrealized Gain per Statement of Financial Condition

</TABLE>
<TABLE>
<CAPTION>
                                                                  NET UNREALIZED
FUTURES AND FORWARD CONTRACTS:                                     GAIN/(LOSS)
------------------------------                                    --------------
2006 PARTNERSHIP NET ASSETS: $209,477,064                               $
<S>                                                               <C>
Commodity                                                           12,973,478
Equity                                                               1,532,953
Foreign currency                                                     2,761,708
Interest rate                                                          196,086
                                                                    ----------
  Grand Total:                                                      17,464,225

  Unrealized Currency Loss                                            (414,234)
                                                                    ----------
  Total Net Unrealized Gain per Statement of Financial Condition    17,049,991
                                                                    ==========

2005 PARTNERSHIP NET ASSETS: $169,625,738
Commodity                                                           16,690,289
Equity                                                                 (96,027)
Foreign currency                                                    (3,375,872)
Interest rate                                                          582,959
                                                                    ----------
  Grand Total:                                                      13,801,349

  Unrealized Currency Loss                                            (315,566)
                                                                    ----------
  Total Net Unrealized Gain per Statement of Financial Condition    13,485,783
                                                                    ==========
</TABLE>

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

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

<PAGE>

MORGAN STANLEY SPECTRUM TECHNICAL L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                  LONG UNREALIZED  PERCENTAGE   SHORT UNREALIZED  PERCENTAGE
FUTURES AND FORWARD CONTRACTS:                                      GAIN/(LOSS)   OF NET ASSETS   GAIN/(LOSS)    OF NET ASSETS
------------------------------                                    --------------- ------------- ---------------- -------------
2006 PARTNERSHIP NET ASSETS: $756,820,958                                $              %              $               %
<S>                                                               <C>             <C>           <C>              <C>
Commodity                                                            1,502,376         0.20         2,066,014         0.27
Equity                                                               7,860,426         1.04            --              --
Foreign currency                                                     3,058,385         0.40        12,834,701         1.70
Interest rate                                                       (6,358,278)       (0.84)       16,042,982         2.12
                                                                    ----------        -----        ----------        -----
  Grand Total:                                                       6,062,909         0.80        30,943,697         4.09
                                                                    ==========        =====        ==========        =====
  Unrealized Currency Loss

  Total Net Unrealized Gain per Statement of Financial Condition


2005 PARTNERSHIP NET ASSETS: $723,416,093
Commodity                                                           33,767,846         4.66        (1,474,466)       (0.20)
Equity                                                              (1,753,796)       (0.24)           --              --
Foreign currency                                                    (4,881,736)       (0.67)       (2,151,613)       (0.30)
Interest rate                                                        1,726,772         0.24         2,349,450         0.32
                                                                    ----------        -----        ----------        -----
  Grand Total:                                                      28,859,086         3.99        (1,276,629)       (0.18)
                                                                    ==========        =====        ==========        =====
  Unrealized Currency Loss

  Total Net Unrealized Gain per Statement of Financial Condition

</TABLE>
<TABLE>
<CAPTION>
                                                                  NET UNREALIZED
FUTURES AND FORWARD CONTRACTS:                                     GAIN/(LOSS)
------------------------------                                    --------------
2006 PARTNERSHIP NET ASSETS: $756,820,958                               $
<S>                                                               <C>
Commodity                                                            3,568,390
Equity                                                               7,860,426
Foreign currency                                                    15,893,086
Interest rate                                                        9,684,704
                                                                    ----------
  Grand Total:                                                      37,006,606

  Unrealized Currency Loss                                          (5,189,259)
                                                                    ----------
  Total Net Unrealized Gain per Statement of Financial Condition    31,817,347
                                                                    ==========

2005 PARTNERSHIP NET ASSETS: $723,416,093
Commodity                                                           32,293,380
Equity                                                              (1,753,796)
Foreign currency                                                    (7,033,349)
Interest rate                                                        4,076,222
                                                                    ----------
  Grand Total:                                                      27,582,457

  Unrealized Currency Loss                                          (5,518,321)
                                                                    ----------
  Total Net Unrealized Gain per Statement of Financial Condition    22,064,136
                                                                    ==========
</TABLE>

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

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS

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

ORGANIZATION.  Morgan Stanley Spectrum Currency L.P. ("Spectrum Currency"),
Morgan Stanley Spectrum Global Balanced L.P. ("Spectrum Global Balanced"),
Morgan Stanley Spectrum Select L.P. ("Spectrum Select"), Morgan Stanley
Spectrum Strategic L.P. ("Spectrum Strategic"), and Morgan Stanley Spectrum
Technical L.P. ("Spectrum Technical") (individually, a "Partnership", or
collectively, the "Partnerships"), are limited partnerships organized to engage
primarily in the speculative trading of futures contracts, options on futures
and forward contracts, and forward contracts on physical commodities and other
commodity interests, including, but not limited to, foreign currencies,
financial instruments, metals, energy, and agricultural products (collectively,
"Futures Interests").
  The general partner of each Partnership is Demeter Management Corporation
("Demeter"). The non-clearing commodity broker is Morgan Stanley DW Inc.
("Morgan Stanley DW"). The clearing commodity brokers for Spectrum Global
Balanced, Spectrum Select, Spectrum Strategic, and Spectrum Technical are
Morgan Stanley & Co. Incorporated ("MS&Co.") and Morgan Stanley & Co.
International Limited ("MSIL"). Spectrum Currency's clearing commodity broker
is MS&Co. MS&Co. acts as the counterparty on all of the foreign currency
forward contracts for each Partnership. In 2007, Morgan Stanley intends to
merge Morgan Stanley DW into MS&Co. Upon completion of the merger, the
surviving entity, MS&Co., will be the Partnerships' principal U.S. commodity
broker-dealer. For Spectrum Strategic and Spectrum Technical, Morgan Stanley
Capital Group Inc. ("MSCG") acts as the counterparty on all of the options on
foreign currency forward contracts. Demeter, Morgan Stanley DW, MS&Co., MSIL,
and MSCG are wholly-owned subsidiaries of Morgan Stanley.
  Demeter is required to maintain a 1% minimum interest in the equity of each
Partnership and income (losses) are shared by Demeter and the limited partners
based upon their proportional ownership interests.

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)


USE OF ESTIMATES.  The financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, which
require management to make estimates and assumptions that affect the reported
amounts in the financial statements and related disclosures. Management
believes that the estimates utilized in the preparation of the financial
statements are prudent and reasonable. Actual results could differ from those
estimates.

REVENUE RECOGNITION.  Futures Interests are open commitments until settlement
date, at which time they are realized. They are valued at market on a daily
basis and the resulting net change in unrealized gains and losses is reflected
in the change in unrealized trading profit (loss) on open contracts from one
period to the next on the Statements of Operations. Monthly, Morgan Stanley DW
pays each Partnership interest income on 80% of the month's average daily "Net
Assets" (as defined in the Limited Partnership Agreements) in the case of
Spectrum Currency, Spectrum Select, Spectrum Strategic, and Spectrum Technical,
and on 100% in the case of Spectrum Global Balanced. The interest rate is equal
to a prevailing rate on U.S. Treasury bills. For purposes of such interest
payments, Net Assets do not include monies owed to the Partnerships on Futures
Interests.
  The Partnerships' functional currency is the U.S. dollar; however, they
transact business in currencies other than the U.S. dollar. Assets and
liabilities denominated in currencies other than the U.S. dollar are translated
into U.S. dollars at the rates in effect at the date of the Statements of
Financial Condition. Income and expense items denominated in currencies other
than the U.S. dollar are translated into U.S. dollars at the rates in effect
during the period. Gains and losses resulting from the translation to U.S.
dollars are reported in income currently.

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

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)


NEW ACCOUNTING DEVELOPMENTS.  In July 2006, the Financial Accounting Standards
Board ("FASB") issued Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes--an interpretation of FASB Statement 109" ("FIN 48"). FIN 48
clarifies the accounting for income taxes by prescribing the minimum
recognition threshold a tax position must meet before being recognized in the
financial statements. FIN 48 is effective for fiscal years beginning after
December 15, 2006. The impact to the Partnerships' Financial Statements, if
any, is currently being assessed.
  In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements.
SFAS No. 157 is effective for the Partnerships as of January 1, 2008. The
impact to the Partnerships' Financial Statements, if any, is currently being
assessed.
  In September 2006, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements" ("SAB No. 108") to provide guidance on how the effects of the
carryover or reversal of prior year unrecorded misstatements should be
considered in quantifying a current year misstatement. SAB No. 108 requires a
company to apply an approach that considers the amount by which the current
year income statement is misstated ("rollover approach") and an approach that
considers the cumulative amount by which the current year balance sheet is
misstated ("iron-curtain approach"). Prior to the issuance of SAB No. 108, many
companies applied either the rollover or iron-curtain approach for purposes of
assessing materiality of misstatements. SAB No. 108 is effective for the
Partnerships as of January 1, 2007. Upon adoption, SAB No. 108 allows a
one-time cumulative effect adjustment against Partners' Capital for those prior
year misstatements that were not material under the Partnerships' prior
approach, but that are deemed material under the SAB No. 108 approach. Demeter
does not expect the adoption of SAB No. 108 to have a material impact on the
Partnerships' Financial Statements.

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)


EQUITY IN FUTURES INTERESTS TRADING ACCOUNTS.  The Partnerships' asset "Equity
in futures interests trading accounts," reflected on the Statements of
Financial Condition, consists of (A) cash on deposit with Morgan Stanley DW,
MS&Co, and MSIL for Spectrum Global Balanced, Spectrum Select, Spectrum
Strategic, and Spectrum Technical, and with Morgan Stanley DW and MS&Co. for
Spectrum Currency, to be used as margin for trading; (B) net unrealized gains
or losses on open contracts, which are valued at market and calculated as the
difference between original contract value and market value; and (C) net option
premiums, which represent the net of all monies paid and/or received for such
option premiums.
  The Partnerships, in their normal course of business, enter into various
contracts with MS&Co. and MSIL acting as their commodity brokers. Pursuant to
brokerage agreements with MS&Co. and MSIL to the extent that such trading
results in unrealized gains or losses, these amounts are offset and reported on
a net basis on the Partnerships' Statements of Financial Condition.
  The Partnerships have offset the fair value amounts recognized for forward
and options on forward contracts executed with the same counterparty as
allowable under the terms of their master netting agreements with MS&Co., the
sole counterparty on such contracts. The Partnerships have consistently applied
their right to offset.

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

  Brokerage fees for Spectrum Select, Spectrum Strategic, and Spectrum
Technical are currently accrued at a flat monthly rate of  1/12 of 6.00% (a
6.00% annual rate) of Net Assets as of the first day of each month.

  Effective July 1, 2005, brokerage fees for Spectrum Select, Spectrum
Strategic, and Spectrum Technical were reduced from  1/12 of 7.25% (a 7.25%
annual rate) to  1/12 of 6.00% (a 6.00% annual rate) of Net Assets as of the
first day of each month.

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

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

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

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

REDEMPTIONS.  Limited partners may redeem some or all of their Units at 100% of
the Net Asset Value per Unit as of the end of the last day of any month that is
at least six months after the closing at which a person first becomes a limited
partner. The Request for Redemption must be delivered to a limited partner's
local Morgan Stanley Branch Office in time for it to be forwarded and received
by Demeter no later than 3:00 p.m., New York City time, on the last day of the
month in which the redemption is to be effective. Redemptions must be made in
whole Units, in a minimum amount of 50 Units required for each redemption,
unless a limited partner is redeeming his entire interest in a Partnership.
  Units redeemed on or prior to the last day of the twelfth month from the date
of purchase will be subject to a redemption charge equal to 2% of the Net Asset
Value of a Unit on the Redemption Date. Units redeemed after the last day of
the twelfth month and on or prior to the last day of the twenty-fourth month
from the date of purchase will be subject to a redemption charge equal to 1% of
the Net Asset Value of a Unit on the Redemption Date. Units redeemed after the
last day of the twenty-fourth month from the date of purchase will not be
subject to a redemption charge. The foregoing redemption charges are paid to
Morgan Stanley DW.

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)


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

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

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

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

LITIGATION SETTLEMENT.  Spectrum Global Balanced, Spectrum Select, Spectrum
Strategic, and Spectrum Technical received notification of a preliminary
entitlement to payment from the Sumitomo Copper Litigation Settlement
Administrator, and the Partnerships received settlement award payments in the
amounts of $0, $45,665, $173, and $3,018, respectively, during July 2004 and
$2,230, $85,000, $454, and $4,209, respectively, during November 2005. Spectrum
Global Balanced received a settlement award payment in the amount of $2,296
during October 2004. Any amounts received are accounted for in the period
received, for the benefit of the limited partners at the date of receipt.

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)


RECLASSIFICATIONS.  Certain prior year amounts relating to cash balances were
reclassified on the Statements of Cash Flows to conform to 2006 and 2005
presentation. Such reclassifications have no impact on the Partnerships'
reported net income (loss).

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

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

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

Demeter, on behalf of each Partnership, retains certain commodity trading
advisors to make all trading decisions for the Partnerships. The trading
advisors for each Partnership at December 31, 2006 were as follows:

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

Morgan Stanley Spectrum Global Balanced L.P.
  SSARIS Advisors, LLC

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

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

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)


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

Morgan Stanley Spectrum Technical L.P.
  Campbell & Company, Inc. ("Campbell")
  Chesapeake Capital Corporation ("Chesapeake")
  John W. Henry & Company, Inc. ("JWH")
  Winton Capital Management Limited ("Winton")

  Compensation to the trading advisors by the Partnerships consists of a
management fee and an incentive fee as follows:

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

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

  The management fee for Spectrum Select is accrued at a rate of  1/4 of 1% per
month of Net Assets allocated to Northfield and Sunrise on the first day of
each month (a 3% annual rate),  5/24 of 1% per month of Net Assets allocated to
EMC and Rabar on the first day of each month (a 2.5% annual rate), and  1/12 of
2% per month of Net Assets allocated to Graham on the first day of each month
(a 2% annual rate).
  Effective November 1, 2006, the monthly management fee payable to EMC and
Rabar was reduced from 1/4 of 1% (a 3% annual rate) to  5/24 of 1% (a 2.5%
annual rate) of Net Assets.
  The management fee for Spectrum Strategic is accrued at a rate of  1/12 of 3%
per month of Net Assets allocated to Blenheim and Eclipse on the first day of
each month (a 3% annual rate) and  1/12 of 2% per month of Net Assets allocated
to FX Concepts on the first day of each month (a 2% annual rate).


<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

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

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

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

  Spectrum Select pays a monthly incentive fee equal to 17.5% of the trading
profits experienced with respect to the Net Assets allocated to EMC and Rabar
as of the end of each calendar month, 15% of the trading profits experienced
with respect to the Net Assets allocated to each of Northfield and Sunrise as
of the end of each calendar month, and 20% of the trading profits experienced
with respect to the Net Assets allocated to Graham as of the end of each
calendar month.

  Effective November 1, 2006, the monthly incentive fee payable to EMC and
Rabar was increased from 15% to 17.5% of the trading profits experienced with
respect to the Net Assets as of the end of each calendar month.
  Spectrum Strategic pays a monthly incentive fee equal to 15% of the trading
profits experienced with respect to the Net Assets allocated to each of
Blenheim and Eclipse as of the end of each calendar month and 20% of the
trading profits experienced with respect to the Net Assets allocated to FX
Concepts as of the end of each calendar month.

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


<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

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

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

--------------------------------------------------------------------------------
4. FINANCIAL INSTRUMENTS
The Partnerships trade Futures Interests. Futures and forwards represent
contracts for delayed delivery of an instrument at a specified date and price.
Risk arises from changes in the value of these contracts and the potential
inability of counterparties to perform under the terms of the contracts. There
are numerous factors which may significantly influence the market value of
these contracts, including interest rate volatility.

  The market value of exchange-traded contracts is based on the settlement
price quoted by the exchange on the day with respect to which market value is
being determined. If an exchange-traded contract could not have been liquidated
on such day due to the operation of daily limits or other rules of the
exchange, the settlement price shall be the settlement price on the first
subsequent day on which the contract could be liquidated. The market value of
off-exchange-traded contracts is based on the fair market value quoted by the
counterparty.
  The Partnerships' contracts are accounted for on a trade-date basis and
marked to market on a daily basis. The Partnerships account for their
derivative investments in accordance with the provisions of Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 defines a derivative as
a financial instrument or other contract that has all three of the following
characteristics:
(1)One or more underlying notional amounts or payment provisions;
(2)Requires no initial net investment or a smaller initial net investment than
   would be required relative to changes in market factors;
(3)Terms require or permit net settlement.

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

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

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

SPECTRUM CURRENCY

<TABLE>
<CAPTION>
                      NET UNREALIZED GAINS
                        ON OPEN CONTRACTS       LONGEST MATURITIES
                  ----------------------------- -------------------
                              OFF-                          OFF-
                  EXCHANGE- EXCHANGE-           EXCHANGE- EXCHANGE-
             YEAR  TRADED    TRADED     TOTAL    TRADED    TRADED
             ---- --------- --------- --------- --------- ---------
                      $         $         $
             <S>  <C>       <C>       <C>       <C>       <C>
             2006    --     4,534,033 4,534,033    --     Mar. 2007
             2005    --     6,202,194 6,202,194    --     Mar. 2006
</TABLE>

SPECTRUM GLOBAL BALANCED

<TABLE>
<CAPTION>
                      NET UNREALIZED GAINS
                        ON OPEN CONTRACTS       LONGEST MATURITIES
                  ----------------------------- -------------------
                              OFF-                          OFF-
                  EXCHANGE- EXCHANGE-           EXCHANGE- EXCHANGE-
             YEAR  TRADED    TRADED     TOTAL    TRADED    TRADED
             ---- --------- --------- --------- --------- ---------
                      $         $         $
             <S>  <C>       <C>       <C>       <C>       <C>
             2006 1,191,766    --     1,191,766 Jun. 2007    --
             2005   581,983  20,655     602,638 Mar. 2006 Mar. 2006
</TABLE>

SPECTRUM SELECT

<TABLE>
<CAPTION>
                      NET UNREALIZED GAINS
                        ON OPEN CONTRACTS        LONGEST MATURITIES
                 ------------------------------- -------------------
                              OFF-                           OFF-
                 EXCHANGE-  EXCHANGE-            EXCHANGE- EXCHANGE-
            YEAR  TRADED     TRADED     TOTAL     TRADED    TRADED
            ---- ---------- --------- ---------- --------- ---------
                     $          $         $
            <S>  <C>        <C>       <C>        <C>       <C>
            2006 10,738,293 1,223,318 11,961,611 Jun. 2008 Mar. 2007
            2005 16,351,481 1,834,323 18,185,804 Jun. 2007 Mar. 2006
</TABLE>

SPECTRUM STRATEGIC

<TABLE>
<CAPTION>
                      NET UNREALIZED GAINS/
                   (LOSSES) ON OPEN CONTRACTS     LONGEST MATURITIES
                --------------------------------- -------------------
                              OFF-                            OFF-
                EXCHANGE-   EXCHANGE-             EXCHANGE- EXCHANGE-
           YEAR  TRADED      TRADED      TOTAL     TRADED    TRADED
           ---- ---------- ----------  ---------- --------- ---------
                    $           $          $
           <S>  <C>        <C>         <C>        <C>       <C>
           2006 14,262,116  2,787,875  17,049,991 Dec. 2008  May 2007
           2005 16,488,302 (3,002,519) 13,485,783 Jun. 2010 Jul. 2006
</TABLE>

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)


SPECTRUM TECHNICAL

<TABLE>
<CAPTION>
                      NET UNREALIZED GAINS/
                   (LOSSES) ON OPEN CONTRACTS     LONGEST MATURITIES
                --------------------------------- -------------------
                              OFF-                            OFF-
                EXCHANGE-   EXCHANGE-             EXCHANGE- EXCHANGE-
           YEAR  TRADED      TRADED      TOTAL     TRADED    TRADED
           ---- ---------- ----------  ---------- --------- ---------
                    $           $          $
           <S>  <C>        <C>         <C>        <C>       <C>
           2006 21,920,150  9,897,197  31,817,347 Jun. 2008 Mar. 2007
           2005 26,727,989 (4,663,853) 22,064,136 Jun. 2007 Mar. 2006
</TABLE>

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

  The Partnerships also have credit risk because Morgan Stanley DW, MS&Co.,
MSIL, and/or MSCG act as the futures commission merchants or the
counterparties, with respect to most of the Partnerships' assets.
Exchange-traded futures, exchange-traded forward, and exchange-traded
futures-styled options contracts are marked to market on a daily basis, with
variations in value settled on a daily basis. Morgan Stanley DW, MS&Co., and
MSIL, each as a futures commission merchant for each Partnership's
exchange-traded futures, exchange-traded forward, and exchange-traded
futures-styled options contracts, are required, pursuant to regulations of the
Commodity Futures Trading Commission, to segregate from their own assets, and
for the sole benefit of their commodity customers, all funds held by them with
respect to exchange-traded futures, exchange-traded forward, and
exchange-traded futures-styled options contracts, including an amount equal to
the net unrealized gains (losses) on all open exchange-traded futures,
exchange-traded forward, and exchange-traded futures-styled options contracts,
which funds, in the aggregate, totaled at December 31, 2006 and 2005
respectively, $41,074,269 and $44,956,486 for Spectrum Global Balanced,
$547,628,371 and $542,760,780 for Spectrum Select, $207,351,885 and
$178,269,302 for Spectrum Strategic, and $754,343,175 and $746,142,887 for
Spectrum Technical. With respect to each Partnership's off-exchange-traded
forward currency contracts and forward currency options contracts, there are no
daily settlements of variation in value, nor is there

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)

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

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

SPECTRUM CURRENCY

<TABLE>
<CAPTION>
                                              2006     2005      2004
                                            -------  --------  -------
        <S>                                 <C>      <C>       <C>
        PER UNIT OPERATING
         PERFORMANCE:
        NET ASSET VALUE, JANUARY 1:         $ 11.78  $  14.41  $ 15.66
                                            -------  --------  -------
        NET OPERATING RESULTS:
           Interest Income                     0.41      0.28     0.13
           Expenses                           (0.73)    (0.82)   (0.89)
           Realized Profit (Loss)              0.02     (1.54)   (1.21)
           Unrealized Profit (Loss)           (0.10)    (0.55)    0.72
                                            -------  --------  -------
           Net Loss                           (0.40)    (2.63)   (1.25)
                                            -------  --------  -------
        NET ASSET VALUE,
         DECEMBER 31:                       $ 11.38  $  11.78  $ 14.41
                                            =======  ========  =======
        FOR THE CALENDAR YEAR:
        RATIOS TO AVERAGE NET
         ASSETS:
           Net Investment Loss               (2.9)%    (4.4)%   (5.6)%
           Expenses before Incentive Fees     6.7 %     6.8 %    6.4 %
           Expenses after Incentive Fees      6.7 %     6.8 %    6.5 %
           Net Loss                          (4.9)%   (21.4)%   (5.3)%
        TOTAL RETURN BEFORE
         INCENTIVE FEES                      (3.4)%   (18.3)%   (7.9)%
        TOTAL RETURN AFTER
         INCENTIVE FEES                      (3.4)%   (18.3)%   (8.0)%
        INCEPTION-TO-DATE RETURN             13.8 %
        COMPOUND ANNUALIZED
         RETURN                               2.0 %
</TABLE>

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(continued)


SPECTRUM GLOBAL BALANCED

<TABLE>
<CAPTION>
                                               2006     2005     2004
                                             -------  -------  -------
         <S>                                 <C>      <C>      <C>
         PER UNIT OPERATING
          PERFORMANCE:
         NET ASSET VALUE, JANUARY 1:         $ 15.23  $ 14.61  $ 15.47
                                             -------  -------  -------
         NET OPERATING RESULTS:
            Interest Income                     0.74     0.43     0.18
            Expenses                           (0.91)   (0.85)   (0.87)
            Realized Profit                     0.33     1.11     0.34
            Unrealized Profit (Loss)            0.21    (0.07)   (0.51)
            Proceeds from Litigation
             Settlement                           --     0.00     0.00
                                             -------  -------  -------
            Net Income (Loss)                   0.37     0.62    (0.86)
                                             -------  -------  -------
         NET ASSET VALUE,
          DECEMBER 31:                       $ 15.60  $ 15.23    14.61
                                             =======  =======  =======
         FOR THE CALENDAR YEAR:
         RATIOS TO AVERAGE NET
          ASSETS:
            Net Investment Loss               (1.1)%   (2.9)%   (4.6)%
            Expenses before Incentive Fees     5.9 %    5.9 %    5.9 %
            Expenses after Incentive Fees      5.9 %    5.9 %    5.9 %
            Net Income (Loss)                  2.5 %    3.9 %   (6.0)%
         TOTAL RETURN BEFORE
          INCENTIVE FEES                       2.4 %    4.2 %   (5.6)%
         TOTAL RETURN AFTER
          INCENTIVE FEES                       2.4 %    4.2 %   (5.6)%

         INCEPTION-TO-DATE RETURN             56.0 %
         COMPOUND ANNUALIZED
          RETURN                               3.7 %
</TABLE>

SPECTRUM SELECT

<TABLE>
<CAPTION>
                                                          2006      2005     2004
                                                        --------  -------  --------
<S>                                                     <C>       <C>      <C>
PER UNIT OPERATING PERFORMANCE:
NET ASSET VALUE, JANUARY 1:                             $  27.45  $ 28.88  $  30.31
                                                        --------  -------  --------
NET OPERATING RESULTS:
  Interest Income                                           1.08     0.63      0.28
  Expenses                                                 (2.54)   (2.54)    (3.20)
  Realized Profit                                           3.40     0.33      2.70
  Unrealized Profit (Loss)                                 (0.33)    0.15     (1.21)
  Proceeds from Litigation Settlement                         --     0.00      0.00
                                                        --------  -------  --------
  Net Income (Loss)                                         1.61    (1.43)    (1.43)
                                                        --------  -------  --------
NET ASSET VALUE, DECEMBER 31:                           $  29.06  $ 27.45  $  28.88
                                                        ========  =======  ========
FOR THE CALENDAR YEAR:
RATIOS TO AVERAGE NET ASSETS:
  Net Investment Loss                                     (5.0)%   (7.2)%   (10.1)%
  Expenses before Incentive Fees                           8.8 %    9.5 %     9.9 %
  Expenses after Incentive Fees                            8.8 %    9.5 %    11.1 %
  Net Income (Loss)                                        5.7 %   (5.3)%    (4.5)%
TOTAL RETURN BEFORE INCENTIVE FEES                         5.9 %   (5.0)%    (3.6)%
TOTAL RETURN AFTER INCENTIVE FEES                          5.9 %   (5.0)%    (4.7)%

INCEPTION-TO-DATE RETURN                                 190.6 %
COMPOUND ANNUALIZED RETURN                                 7.2 %
</TABLE>

<PAGE>

MORGAN STANLEY SPECTRUM SERIES

NOTES TO FINANCIAL STATEMENTS
(concluded)


SPECTRUM STRATEGIC

<TABLE>
<CAPTION>
                                                          2006     2005     2004
                                                        -------  -------  -------
<S>                                                     <C>      <C>      <C>
PER UNIT OPERATING PERFORMANCE:
NET ASSET VALUE, JANUARY 1:                             $ 14.18  $ 14.56  $ 14.31
                                                        -------  -------  -------
NET OPERATING RESULTS:
  Interest Income                                          0.58     0.31     0.15
  Expenses                                                (1.83)   (1.44)   (1.52)
  Realized Profit (Loss)                                   3.92    (0.10)    2.10
  Unrealized Profit (Loss)                                 0.30     0.85    (0.48)
  Proceeds from Litigation Settlement                        --     0.00     0.00
                                                        -------  -------  -------
  Net Income (Loss)                                        2.97    (0.38)    0.25
                                                        -------  -------  -------
NET ASSET VALUE, DECEMBER 31:                           $ 17.15  $ 14.18  $ 14.56
                                                        =======  =======  =======
FOR THE CALENDAR YEAR:
RATIOS TO AVERAGE NET ASSETS:
  Net Investment Loss                                    (7.8)%   (8.4)%   (9.3)%
  Expenses before Incentive Fees                          8.6 %    9.4 %    8.6 %
  Expenses after Incentive Fees                          11.4 %   10.8 %   10.3 %
  Net Income (Loss)                                      18.6 %   (3.3)%    0.8 %
TOTAL RETURN BEFORE INCENTIVE FEES                       24.1 %   (1.4)%    3.5 %
TOTAL RETURN AFTER INCENTIVE FEES                        20.9 %   (2.6)%    1.7 %

INCEPTION-TO-DATE RETURN                                 71.5 %

COMPOUND ANNUALIZED RETURN                                4.5 %
</TABLE>

SPECTRUM TECHNICAL

<TABLE>
<CAPTION>
                                                          2006      2005     2004
                                                        --------  -------  --------
<S>                                                     <C>       <C>      <C>
PER UNIT OPERATING PERFORMANCE:
NET ASSET VALUE, JANUARY 1:                             $  22.36  $ 23.63  $  22.64
                                                        --------  -------  --------
NET OPERATING RESULTS:
  Interest Income                                           0.87     0.51      0.21
  Expenses                                                 (2.21)   (2.10)    (2.53)
  Realized Profit                                           2.25     0.48      3.96
  Unrealized Profit (Loss)                                  0.30    (0.16)    (0.65)
  Proceeds from Litigation Settlement                         --     0.00      0.00
                                                        --------  -------  --------
  Net Income (Loss)                                         1.21    (1.27)     0.99
                                                        --------  -------  --------
NET ASSET VALUE, DECEMBER 31:                           $  23.57  $ 22.36  $  23.63
                                                        ========  =======  ========
FOR THE CALENDAR YEAR:
RATIOS TO AVERAGE NET ASSETS:
  Net Investment Loss                                     (5.8)%   (7.3)%   (10.5)%
  Expenses before Incentive Fees                           8.6 %    9.3 %     9.5 %
  Expenses after Incentive Fees                            9.5 %    9.6 %    11.4 %
  Net Income (Loss)                                        5.1 %   (5.4)%     5.6 %
TOTAL RETURN BEFORE INCENTIVE FEES                         6.4 %   (5.0)%     6.2 %
TOTAL RETURN AFTER INCENTIVE FEES                          5.4 %   (5.4)%     4.4 %

INCEPTION-TO-DATE RETURN                                 135.7 %
COMPOUND ANNUALIZED RETURN                                 7.3 %
</TABLE>

<PAGE>


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

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