UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2006 or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to__________________

Commission File Number 0-19511

MORGAN STANLEY SPECTRUM SELECT L.P.

(Exact name of registrant as specified in its charter)

Delaware 13-3619290
(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

(Former name, former address, and former fiscal year, if changed since
last report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes X No___________

Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition
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 Exchange Act). Yes ___ No X

<page> <table> MORGAN STANLEY SPECTRUM SELECT L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 30, 2006

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
<s> <c>
Statements of Financial Condition as of September 30, 2006
(Unaudited) and December 31, 2005 2

Statements of Operations for the Three and Nine Months
Ended September 30, 2006 and 2005 (Unaudited) 3

Statements of Changes in Partners? Capital for the
Nine Months Ended September 30, 2006 and 2005 (Unaudited) 4

Statements of Cash Flows for the Nine Months Ended
September 30, 2006 and 2005 (Unaudited) 5

Notes to Financial Statements (Unaudited) 6-13

Item 2. Management?s Discussion and Analysis of
Financial Condition and Results of Operations 14-32

Item 3. Quantitative and Qualitative Disclosures about
Market Risk 33-46

Item 4. Controls and Procedures 47

PART II. OTHER INFORMATION

Item 1A.Risk Factors 48

Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds 48-49

Item 5. Other Information 50-51

Item 6. Exhibits 51-52
</table>

<page> <table> PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

MORGAN STANLEY SPECTRUM SELECT L.P.
STATEMENTS OF FINANCIAL CONDITION
<caption>
September 30, December 31,
2006 2005
$ $
(Unaudited)
ASSETS
<s> <c> <c>
Equity in futures interests trading accounts:
Unrestricted cash 475,121,629 475,166,952
Restricted cash 51,827,813 51,242,347

Total cash 526,949,442 526,409,299

Net unrealized gain on open contracts (MS&Co.) 12,553,756 9,019,008
Net unrealized gain (loss) on open contracts (MSIL) (127,317) 9,166,796

Total net unrealized gain on open contracts 12,426,439 18,185,804

Total Trading Equity 539,375,881 544,595,103

Subscriptions receivable 5,534,540 4,455,213
Interest receivable (Morgan Stanley DW) 1,770,632 1,417,447

Total Assets 546,681,053 550,467,763

LIABILITIES AND PARTNERS? CAPITAL

Liabilities

Redemptions payable 8,102,073 13,439,853
Accrued brokerage fees (Morgan Stanley DW) 2,701,978 2,730,072
Accrued management fees 1,287,466 1,295,496

Total Liabilities 12,091,517 17,465,421

Partners? Capital

Limited Partners (18,776,971.878 and
19,209,338.858 Units, respectively) 528,636,162 527,198,790
General Partner (211,461.769 Units) 5,953,374 5,803,552

Total Partners? Capital 534,589,536 533,002,342

Total Liabilities and Partners? Capital 546,681,053 550,467,763

NET ASSET VALUE PER UNIT 28.15 27.45

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

</table>

<page> <table> MORGAN STANLEY SPECTRUM SELECT L.P.
STATEMENTS OF OPERATIONS
(Unaudited)

<caption>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,

2006 2005 2006 2005
$ $ $ $
<s> <c> <c> <c> <c>
INVESTMENT INCOME
Interest income (Morgan Stanley DW) 5,482,892 3,558,470 15,228,561 8,901,753

EXPENSES
Brokerage fees (Morgan Stanley DW) 8,220,584 8,306,348 24,777,826 28,461,221
Management fees 3,915,861 3,930,740 11,796,806 11,797,378

Total Expenses 12,136,445 12,237,088 36,574,632 40,258,599

NET INVESTMENT LOSS (6,653,553) (8,678,618) (21,346,071) (31,356,846)

TRADING RESULTS
Trading profit (loss):
Realized (23,258,682) 8,722,211 41,067,247 (15,915,050)
Net change in unrealized (243,326) 7,592,694 (5,759,365) 7,074,603

Total Trading Results (23,502,008) 16,314,905 35,307,882 (8,840,447)

NET INCOME (LOSS) (30,155,561) 7,636,287 13,961,811 (40,197,293)

NET INCOME (LOSS) ALLOCATION

Limited Partners (29,819,979) 7,552,550 13,811,989 (39,774,875)
General Partner (335,582) 83,737 149,822 (422,418)

NET INCOME (LOSS) PER UNIT

Limited Partners (1.59) 0.37 0.70 (1.99)
General Partner (1.59) 0.37 0.70 (1.99)

<fn>

The accompanying notes are an integral part
of these financial statements.
</table>

<page> <table> MORGAN STANLEY SPECTRUM SELECT L.P.
STATEMENTS OF CHANGES IN PARTNERS? CAPITAL
For the Nine Months Ended September 30, 2006 and 2005
(Unaudited)

Units of
Partnership Limited General
Interest Partners Partner Total
$ $ $
<s> <c> <c> <c> <c>
Partners? Capital,
December 31, 2004 20,263,823.593 579,155,164 6,150,961 585,306,125

Offering of Units 2,972,289.415 78,072,791 380,000 78,452,791

Net Loss ? (39,774,875) (422,418) (40,197,293)

Redemptions (2,707,860.740) (71,505,707) ? (71,505,707)

Partners? Capital,
September 30, 2005 20,528,252.268 545,947,373 6,108,543 552,055,916

Partners? Capital,
December 31, 2005 19,420,800.627 527,198,790 5,803,552 533,002,342

Offering of Units 2,084,611.535 60,239,714 ? 60,239,714

Net Income ? 13,811,989 149,822 13,961,811

Redemptions (2,516,978.515) (72,614,331) ? (72,614,331)

Partners? Capital,
September 30, 2006 18,988,433.647 528,636,162 5,953,374 534,589,536

<fn>

The accompanying notes are an integral part
of these financial statements.
</table>

<page> <table> MORGAN STANLEY SPECTRUM SELECT L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)

For the Nine Months Ended September 30,

2006 2005
$ $

<s> <c> <c>
CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss) 13,961,811 (40,197,293)
Noncash item included in net income (loss):
Net change in unrealized 5,759,365 (7,074,603)

(Increase) decrease in operating assets:
Restricted cash (585,466) 17,777,600
Interest receivable (Morgan Stanley DW) (353,185) (464,994)
Net option premiums ? 3,366,493

Decrease in operating liabilities:
Accrued brokerage fees (Morgan Stanley DW) (28,094) (718,840)
Accrued management fees (8,030) (55,368)

Net cash provided by (used for) operating activities 18,746,401 (27,367,005)

CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from offering of Units 59,160,387 86,119,032
Cash paid for redemptions of Units (77,952,111) (65,672,130)

Net cash provided by (used for) financing activities (18,791,724) 20,446,902

Net decrease in unrestricted cash (45,323) (6,920,103)

Unrestricted cash at beginning of period 475,166,952 488,346,785

Unrestricted cash at end of period 475,121,629 481,426,682

<fn>

The accompanying notes are an integral part
of these financial statements.
</table>

<page> MORGAN STANLEY SPECTRUM SELECT L.P.
NOTES TO FINANCIAL STATEMENTS

September 30, 2006

(Unaudited)

The unaudited financial statements contained herein include, in
the opinion of management, all adjustments necessary for a fair
presentation of the results of operations and financial condition
of Morgan Stanley Spectrum Select L.P. (the ?Partnership?). The
financial statements and condensed notes herein should be read in
conjunction with the Partnership?s December 31, 2005 Annual Report
on Form 10-K. Certain prior year amounts relating to cash
balances were reclassified on the Statements of Financial
Condition and the related Statements of Cash Flows to conform to
2006 presentation. Such reclassifications have no impact on the
Partnership?s reported net income (loss).

1. Organization
Morgan Stanley Spectrum Select L.P. is a Delaware limited
partnership organized in 1991 to engage primarily in the
speculative trading of futures contracts, options on futures
contracts, and forward contracts on physical commodities and
other commodity interests, including, but not limited to, foreign
currencies, financial instruments, metals, energy, and
agricultural products. The Partnership is one of the Morgan
Stanley Spectrum Series of funds, comprised of the Partnership,

<page> MORGAN STANLEY SPECTRUM SELECT L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Morgan Stanley Spectrum Currency L.P., Morgan Stanley Spectrum
Global Balanced L.P., Morgan Stanley Spectrum Strategic L.P., and
Morgan Stanley Spectrum Technical L.P.

The Partnership?s general partner is Demeter Management
Corporation (?Demeter?). The non-clearing commodity broker is
Morgan Stanley DW Inc. (?Morgan Stanley DW?). The clearing
commodity brokers are Morgan Stanley & Co. Incorporated (?MS &
Co.?) and Morgan Stanley & Co. International Limited (?MSIL?).
Demeter, Morgan Stanley DW, MS & Co., and MSIL are wholly-owned
subsidiaries of Morgan Stanley. The trading advisors to the
Partnership are EMC Capital Management, Inc. (?EMC?), Northfield
Trading L.P., Rabar Market Research, Inc. (?Rabar?), Sunrise
Capital Management, Inc., and Graham Capital Management, L.P.
(individually, a ?Trading Advisor?, or collectively, the ?Trading
Advisors?).

2. Related Party Transactions
The Partnership?s cash is on deposit with Morgan Stanley DW, MS &
Co., and MSIL in futures, forwards, and options trading accounts
to meet margin requirements as needed. Monthly, Morgan Stanley DW
pays the Partnership interest income equal to 80% of the month?s

<page> MORGAN STANLEY SPECTRUM SELECT L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

average daily Net Assets at a rate equal to a prevailing rate on
U.S. Treasury bills. The Partnership pays brokerage fees to
Morgan Stanley DW.

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

The market value of 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

<page> MORGAN STANLEY SPECTRUM SELECT L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

1) One or more underlying notional amounts or payment
provisions;
2) Requires no initial net investment or a smaller initial net
investment than would be required relative to changes in
market factors;
3) Terms require or permit net settlement.

Generally, derivatives include futures, forward, swap or options
contracts, and other financial instruments with similar
characteristics such as caps, floors, and collars.
<page> MORGAN STANLEY SPECTRUM SELECT L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The net unrealized gains on open contracts, reported as a
component of ?Equity in futures interests trading accounts? on the
Statements of Financial Condition, and their longest contract
maturities were as follows:

Net Unrealized Gains
on Open Contracts Longest Maturities
Exchange- Off-Exchange- Exchange- Off-Exchange-
Date Traded Traded Total Traded Traded
$ $ $
Sep. 30, 2006 11,609,755 816,684 12,426,439 Mar. 2008 Dec. 2006
Dec. 31, 2005 16,351,481 1,834,323 18,185,804 Jun. 2007 Mar. 2006

The Partnership has credit risk associated with counterparty non-
performance. As of the date of the financial statements, the
credit risk associated with the instruments in which the
Partnership trades is limited to the amounts reflected in the
Partnership?s Statements of Financial Condition.

The Partnership also has credit risk because Morgan Stanley DW, MS
& Co., and MSIL act as the futures commission merchants or the
counterparties, with respect to most of the Partnership?s assets.

Exchange-traded futures, forward, and futures-styled options
contracts are marked to market on a daily basis, with variations
in value settled on a daily basis. Morgan Stanley DW, MS & Co.,
and MSIL, each as a futures commission merchant for the

<page> MORGAN STANLEY SPECTRUM SELECT L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Partnership?s exchange-traded futures, forward, and futures-styled
options contracts, are required, pursuant to regulations of the
Commodity Futures Trading Commission (?CFTC?), to segregate from
their own assets, and for the sole benefit of their commodity
customers, all funds held by them with respect to exchange-traded
futures, forward, and futures-styled options contracts, including
an amount equal to the net unrealized gains (losses) on all open
futures, forward, and futures-styled options contracts, which
funds, in the aggregate, totaled $538,559,197 and $542,760,780 at
September 30, 2006 and December 31, 2005, respectively. With
respect to the Partnership?s off-exchange-traded forward currency
contracts, there are no daily exchange-required settlements of
variation in value, nor is there any requirement that an amount
equal to the net unrealized gains (losses) on open forward
contracts be segregated. However, the Partnership is required to
meet margin requirements equal to the net unrealized loss on open
contracts in the Partnership accounts with the counterparty,
which is accomplished by daily maintenance of the cash balance in
a custody account held at Morgan Stanley DW for the benefit of
MS & Co. With respect to those off-exchange-traded forward
currency contracts, the Partnership is at risk to the ability of
MS & Co., the sole counterparty on all such contracts, to perform.
The Partnership has a netting agreement with MS & Co. This

<page> MORGAN STANLEY SPECTRUM SELECT L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

agreement, which seeks to reduce both the Partnership?s and MS &
Co.?s exposure on off-exchange-traded forward currency contracts,
should materially decrease the Partnership?s credit risk in the
event of MS & Co.?s bankruptcy or insolvency.

4. New Accounting Developments
In July 2006, the FASB issued FASB Interpretation No. 48,
?Accounting for Uncertainty in Income Taxes, an interpretation of
FASB Statement No. 109? (?FIN 48?). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in a
company?s financial statements and prescribes a recognition
threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to
be taken in an income tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition. FIN 48 is effective
for the Partnership as of January 1, 2007. The Partnership is
currently evaluating the potential impact of adopting FIN 48.

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

<page> MORGAN STANLEY SPECTRUM SELECT L.P..
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

disclosures about fair value measurements. SFAS No. 157 is
effective for the Partnership as of January 1, 2008. The Partner-
ship is currently evaluating the potential impact of adopting SFAS
No. 157.

<page> Item 2. MANAGEMENT?S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Liquidity. The Partnership deposits its assets with Morgan
Stanley DW as non-clearing broker, and MS & Co. and MSIL as
clearing brokers in separate futures, forwards, and options
trading accounts established for 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 CFTC for investment of customer
segregated or secured funds. Since the Partnership?s sole purpose
is to trade in futures, forwards, and options, it is expected that
the Partnership will continue to own such liquid assets for margin
purposes.

The Partnership?s investment in futures, forwards, and options
may, from time to time, be illiquid. Most U.S. futures exchanges
limit fluctuations in prices during a single day by regulations
referred to as ?daily price fluctuations limits? or ?daily
limits?. Trades may not be executed at prices beyond the daily
limit. If the price for a particular futures or options contract
has increased or decreased by an amount equal to the daily limit,
positions in that futures or options contract can neither be taken
nor liquidated unless traders are willing to effect trades at or
within the limit. Futures prices have occasionally moved the
daily limit for several consecutive days with little or no <page>
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 of limited partnership interest (?Unit(s)?) in the
future will affect the amount of funds available for investments
in futures, forwards, and options in subsequent periods. It is not

<page> 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.

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

Results of Operations
General. The Partnership?s results depend on the Trading
Advisors and the ability of each Trading Advisor?s trading
program(s) to take advantage of price movements in the futures,
forwards, and options markets. The following presents a summary
of the Partnership?s operations for the three and nine month
periods ended September 30, 2006 and 2005, 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 <page>
Partnership are difficult to discuss other than in the context of
the Trading Advisors? trading activities on behalf of the
Partnership during the period in question. Past performance is
no guarantee of future results.

The Partnership?s results of operations set forth in the
financial statements on pages 2 through 13 of this report are
prepared in accordance with accounting principles generally
accepted in the United States of America, which require the use
of certain accounting policies that affect the amounts reported
in these financial statements, including the following: The
contracts the Partnership trades are accounted for on a trade-
date basis and marked to market on a daily basis. The difference
between their cost and market value is recorded on the Statements
of Operations as ?Net change in unrealized trading profit (loss)?
for open (unrealized) contracts, and recorded as ?Realized
trading profit (loss)? when open positions are closed out. The
sum of these amounts constitutes the Partnership?s trading
results. The market value of a futures contract is the
settlement price on the exchange on which that futures contract
is traded on a particular day. The value of foreign currency
forward contracts is based on the spot rate as of the close of
business. Interest income, as well as management fees, incentive
fees, and brokerage fees expenses of the Partnership are recorded
on an accrual basis.
<page> 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.

For the Three and Nine Months Ended September 30, 2006

The Partnership recorded total trading results including interest
income totaling $(18,019,116) and expenses totaling $12,136,445,
resulting in a net loss of $30,155,561 for the three months ended
September 30, 2006. The Partnership?s net asset value per Unit
decreased from $29.74 at June 30, 2006 to $28.15 at September 30,
2006.

The most significant trading losses of approximately 3.6% were
incurred in the global interest rate futures markets primarily
during July from short positions in U.S., British, German, and
Japanese fixed-income futures as prices reversed higher on
significant geopolitical concerns after North Korea conducted
long-range missile tests, terrorist bombings aboard commuter
trains in Bombay, India, and fears of an escalating conflict in
the Middle East. Prices for German fixed-income futures
continued to rise in August after the ?ZEW? report showed
investor confidence in Germany fell to its lowest level since
June 2001. Meanwhile, British fixed-income futures prices
increased on weaker-than expected industrial data. Finally,
short positions in Japanese fixed-income futures incurred losses
<page> during August as prices were pressured higher after lower-
than-expected inflation data dampened expectations for an
interest rate hike by the Bank of Japan in the near-future.
Losses of approximately 0.8% were recorded in the energy markets
during July and August 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.
Prices were pressured further lower after news of an official
cease-fire between Israel and Hezbollah militants in Lebanon and
news that the Organization of Petroleum Exporting Countries
reduced its 2006 oil demand growth forecast. Within the
agricultural markets, losses of approximately 0.7% 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. A portion of the Partnership?s overall losses for
the quarter was offset by gains of approximately 0.4% in the
global stock index markets during July and August from long
positions in Hong Kong stock index futures as prices moved higher
on news that Gross Domestic Product in China surged to 10.9% in
the first six months of this year. Additional gains in the
<page> 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 stronger-than-expected corporate earnings. Within the
currency markets, gains of approximately 0.3% were recorded
primarily during August from short positions in the Japanese yen
against the U.S. dollar, British pound, and euro as the value of
the Japanese yen moved lower against other foreign currencies
after the Japanese Consumer Price Index for July came in lower-
than-expected and was revised down for the previous months. As
such, this weaker-than-expected inflation data diminished
expectations of another interest rate hike by the Bank of Japan
this year. Finally, smaller gains of approximately 0.2% were
recorded within the metals markets from long futures positions in
nickel during July and August as prices reached record highs on
strong demand from China and inadequate inventories.
Additionally, prices moved higher on news of a labor strike at a
Canadian nickel mine.

The Partnership recorded total trading results including interest
income totaling $50,536,443 and expenses totaling $36,574,632,
resulting in net income of $13,961,811 for the nine months ended
September 30, 2006. The Partnership?s net asset value per Unit
increased from $27.45 at December 31, 2005 to $28.15 at September
30, 2006.

<page> The most significant trading gains of approximately 6.5%
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. As a
result, copper and nickel prices hit new-record highs during the
month of May. Further gains in the metals markets were
experienced from long positions in gold and silver futures as
prices reached 25-year highs in May, benefiting from strong
demand and lagging supply. Demand for precious metals increased
on continued geopolitical concerns and inflation fears due to
high energy prices. Additional gains of approximately 4.8% were
experienced within the global interest rates sector, during March
and April, from short positions in U.S., European, and Australian
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, the European Union, and Australia
would rise. U.S. fixed-income futures continued to move lower
into the second quarter following the release of consistently
strong U.S. economic data. Similarly in Germany, rising equity
prices, strong economic growth, and concerns about rising oil
prices pressured German fixed-income futures prices even lower in
the second quarter. Smaller gains of approximately 1.0% were
recorded within the global stock index markets from long
positions in European and Australian stock index futures as
<page> global equity prices trended higher throughout the first
quarter on strong corporate earnings and solid economic data.
Long positions in Hong Kong equity index futures also recorded
gains as prices moved higher during April on positive performance
in the technology sector and amid speculation that the U.S.
Federal Reserve could be near the end of its interest rate
tightening campaign. During July, long positions in Hong Kong
stock index futures experienced gains as prices moved higher on
news that Gross Domestic Product in China surged to 10.9% in the
first six months of this year. Gains were also 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. A portion of the
Partnership?s overall gains for the first nine months of the year
was offset by losses of approximately 2.7% in the currency
markets primarily during the first six months of the year from
short positions in the Swiss franc and Japanese yen versus the
U.S. dollar. Throughout a majority of the first half of the
year, 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. The Swiss franc and Japanese yen moved
higher against the U.S. dollar during January and February as
strong economic data out of Switzerland and Japan increased
speculation that the Swiss National Bank and Bank of Japan might
<page> raise interest rates. During April, the Swiss franc moved
higher on the political tensions in the Middle East, which
increased the demand for the safe-haven currency, while the
Japanese yen strengthened on speculation of a possible Bank of
Japan interest rate hike in the near-future. Short positions in
the Australian dollar relative to the U.S. dollar also incurred
losses as the value of the Australian dollar moved higher from
May to July on an unexpected interest rate hike by the Reserve
Bank of Australia. Additional losses of approximately 1.8% were
incurred within the energy markets throughout the first nine
months of 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 Chinese government
authorities announced that China would place an emphasis on
prospecting alternative energy sources in the future, reports of
larger-than-expected supplies from the International Energy
Agency, and mild weather in the U.S. Northeast. Further losses
in the energy markets were recorded during March from short
positions 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 gasoline and
crude oil inventories. Losses were also incurred from short
positions in natural gas as prices moved higher on fears of a
possible supply shortage. During June, newly established long
<page> 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
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.
Prices were pressured further lower after news of an official
cease-fire between Israel and Hezbollah militants in Lebanon and
news that the Organization of Petroleum Exporting Countries
reduced its 2006 oil demand growth forecast. Finally, the
agricultural complex experienced losses of approximately 1.5%
from positions in wheat, soybeans, and cocoa futures. Losses
were incurred from long positions in wheat futures 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.

For the Three and Nine Months Ended September 30, 2005
<page> The Partnership recorded total trading results including
interest income totaling $19,873,375 and expenses totaling
$12,237,088, resulting in net income of $7,636,287 for the three
months ended September 30, 2005. The Partnership?s net asset
value per Unit increased from $26.52 at June 30, 2005 to $26.89 at
September 30, 2005.

The most significant trading gains of approximately 6.3% were
achieved in the global stock indices during July and September
from long positions in Pacific Rim and European stock index
futures. During July, positive economic data out of the U.S. and
Japan pushed global equity prices higher in the beginning of the
month as a strong U.S. jobs number and better-than-expected
Japanese corporate earnings supported growth estimates. Prices
continued to strengthen after China reformed its U.S. dollar
currency peg policy, leading market participants to conclude that
a re-valuation in the Chinese yuan would likely ease trade
tensions between China, the U.S., Europe, and Japan. Finally,
strong corporate earnings out of the European Union and the U.S.
resulted in optimistic investor sentiment and pushed prices
further. 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
that the Japanese economy was in the process of emerging from a
soft patch as demonstrated by rising production, improving
business sentiment, and a sustained upturn in consumer spending.
<page> Additional sector gains resulted from long positions in
European stock index futures as oil prices declined and investors
embraced signs that the global economy could move forward despite
Hurricane Katrina's devastation of the U.S. Gulf Coast. Gains of
approximately 3.7% were recorded in the energy markets during
August from long positions in crude oil and its related products
and natural gas 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 amid concern
for heavily damaged, or even possibly destroyed refineries and
production facilities. In the metals markets, gains of
approximately 0.8% were established during July and September
from long futures positions in base and precious metals after
prices strengthened amid supply tightness, fears of inflation,
and increased global demand. A portion of the Partnership?s
overall gains for the quarter was offset by losses of
approximately 5.9% in the global interest rate markets from
positions in U.S., European, Australian, Asian, and Canadian
interest rate futures held primarily during July and September.
During July, long U.S. interest rate futures positions
experienced losses as prices declined following a rise in
interest rates and after the U.S. Labor Department released its
June employment report. European fixed-income prices declined
amid strength in regional equity markets, and news of terrorist
attacks on the London transport network also weighed on European
<page> bond prices. During September, long positions in U.S. and
European fixed-income futures incurred losses as prices weakened
after it was revealed that measurements of Hurricane Katrina?s
economic impact were not weak enough to deter the U.S. Federal
Reserve from its policy of raising interest rates. European
fixed-income prices also fell in response to expectations that
European Central Bank representatives would leave European
interest rates unchanged at their upcoming meeting, despite the
fact that European Central Bank representatives had openly
discussed the eventual need to hike rates due to concern for
inflation risks. Long positions in Australian bonds contributed
to losses as prices declined after Australia's largest ever
annual jobs gain initiated speculation that the Reserve Bank of
Australia would perhaps reconsider its stance on interest rates
and lean towards future interest rate tightening. Additional
losses stemmed from long positions in Canadian interest rate
futures as prices finished lower on strength in the equity
markets and after the Bank of Canada raised its key interest rate
for the first time in 11 months. Losses of approximately 1.5%
were recorded in the currency markets during August from long
U.S. dollar positions against the British pound, euro, and Swiss
franc, 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. Smaller Partnership losses of approximately 0.5%
<page> resulted in the agricultural markets from long futures
positions in cotton, corn, and the soybean complex held during
July and August. During July, long futures positions in cotton
incurred losses as prices moved lower earlier in the month amid
news that the Bush Administration asked Congress to repeal a
federal cotton subsidy in an effort to comply with a World Trade
Organization ruling against the program. Prices also declined
further after the U.S. Department of Agriculture reported weak
demand. Long positions in corn futures also experienced losses
later in the month after prices weakened in response to higher
silo rates. During August, long futures positions in the soybean
complex and corn incurred losses as prices reversed lower due to
forecasts for supply increases spurred by moisture in parts of
the U.S. growing regions.

The Partnership recorded total trading results including interest
income totaling $61,306 and expenses totaling $40,258,599,
resulting in a net loss of $40,197,293 for the nine months ended
September 30, 2005. The Partnership?s net asset value per Unit
decreased from $28.88 at December 31, 2004 to $26.89 at September
30, 2005.

The most significant trading losses of approximately 6.0% were
incurred in the currency markets, primarily during the first
quarter and August, from positions in foreign currencies versus
<page> the U.S. dollar. During January, long positions in Swiss
franc and euro versus the U.S. dollar incurred losses after the
U.S. dollar?s value reversed sharply higher amid conflicting
economic data, improvements in U.S. trade deficit numbers, and
speculation for higher U.S. interest rates. The U.S. dollar?s
value also advanced in response to expectations that the Chinese
government would announce postponement of Chinese yuan re-
valuation for the foreseeable future. Additional losses were
recorded during February from short positions in the Swiss franc
and euro versus the U.S. dollar as the U.S. dollar weakened in
response to concern for the considerable U.S. Current-Account
deficit expressed by U.S. Federal Reserve Chairman Alan Greenspan.
The value of the U.S. dollar was further weakened during the
remainder of February by a larger-than-expected drop in January
leading economic indicators and news that South Korea?s Central
Bank would be reducing its U.S. dollar currency reserves. Long
European currency positions versus the U.S. dollar also recorded
losses during March after the value of the U.S. dollar reversed
sharply higher benefiting from higher U.S. interest rates and
consumer prices. During August, long U.S. dollar positions
against the British pound, euro, and Swiss franc resulted in
losses, as the value of the U.S. dollar declined amid higher crude
oil prices, lower durable goods orders reported by the U.S.
Commerce Department, the U.S. trade imbalance, and economic
warnings from U.S. Federal Reserve Chairman Alan Greenspan.
<page> Losses of approximately 1.3% resulted in the metals markets
from positions in both precious and base metals held primarily
during the second quarter. During April and May, long futures
positions in base metals recorded losses as prices fell due to
news of increases in supply, fears that a slowing global economy
would weaken demand, and a stronger U.S. dollar. During June,
losses were recorded from short gold positions after prices
reversed higher amid technically-based buying, while long futures
positions in silver experienced losses amid strength in the U.S.
dollar. In the agricultural markets, losses of approximately 0.8%
were experienced primarily during the second quarter and July from
long futures positions in corn, wheat, and cotton. During April,
long futures positions in wheat resulted in losses as prices fell
in response to favorable weather in growing regions, improved crop
conditions, and reduced foreign demand. During May, losses
stemmed from long futures positions in cotton as prices moved
lower on supply increases and the lack of damage to crops by the
touchdown of a hurricane in U.S. growing regions. During July,
long futures positions in cotton incurred losses as prices moved
lower earlier in the month amid news that the Bush Administration
had asked Congress to repeal a federal cotton subsidy in an effort
to comply with a World Trade Organization ruling against the
program. Prices also declined further after the U.S. Department of
Agriculture reported weak demand. Long positions in corn futures
also experienced losses later in the month after prices weakened
<page> in response to higher silo rates. Smaller Partnership
losses of approximately 0.3% were experienced in the global
interest rate sector primarily during the third quarter from
positions in U.S., Canadian, and Australian interest rate. During
July, long U.S. interest rate futures positions experienced losses
as prices declined following a rise in interest rates and after
the U.S. Labor Department released its June employment report.
During September, long positions in U.S. fixed-income futures
incurred losses as prices weakened after it was revealed that
measurements of Hurricane Katrina?s economic impact were not weak
enough to deter the U.S. Federal Reserve from its policy of
raising interest rates. Long positions in Canadian interest rate
futures recorded losses as prices finished lower on strength in
the equity markets and as the Bank of Canada raised its key
interest rate for the first time in 11 months. Additional losses
stemmed from long positions in Australian bonds as prices declined
after Australia's largest ever annual jobs gain initiated
speculation that the Reserve Bank of Australia would perhaps
reconsider its stance on interest rates and lean towards future
interest rate tightening. A portion of the Partnership?s overall
losses for the first nine months of the year was offset by gains
of approximately 4.1% recorded in the global stock index markets,
primarily during the third quarter, from long positions in Pacific
Rim and European stock index futures. During July, positive
economic data out of the U.S. and Japan pushed global equity
<page> prices higher in the beginning of the month as a strong
U.S. jobs number and better-than-expected Japanese corporate
earnings supported growth estimates. Prices continued to
strengthen after China reformed its U.S. dollar currency peg
policy, leading market participants to conclude that a re-
valuation in the Chinese yuan would likely ease trade tensions
between China, the U.S., Europe, and Japan. Finally, strong
corporate earnings out of the European Union and the U.S. resulted
in optimistic investor sentiment and pushed prices further.
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 that the Japanese
economy was in the process of emerging from a soft patch.
Additional sector gains resulted from long positions in European
stock index futures as oil prices declined and investors embraced
signs that the global economy could move forward despite Hurricane
Katrina's devastation of the U.S. Gulf Coast. Additional
Partnership gains of approximately 2.8% were achieved in the
energy markets primarily during August from long positions in
natural gas and crude oil and its related products, as prices
climbed higher on supply and demand concerns. After Hurricane
Katrina struck the Gulf of Mexico, prices advanced further to
touch record highs amid concern for heavily damaged, or even
possibly destroyed, refineries and production facilities.

<page>

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards, and options. The
market-sensitive instruments held by the Partnership are acquired
for speculative trading purposes only and, as a result, all or
substantially all of the Partnership?s assets are at risk of
trading loss. Unlike an operating company, the risk of market-
sensitive instruments is inherent to the primary business activity
of the Partnership.

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

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

The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements. Margin requirements generally range between 2% and
15% of contract face value. Additionally, the use of leverage
causes the face value of the market sector instruments held by
the Partnership 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 experience to date under
the ?Partnership?s Value at Risk in Different Market Sectors?
<page> 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 Partnership?s
market risk exposures contain ?forward-looking statements? within
the meaning of the safe harbor from civil liability provided for
such statements by the Private Securities Litigation Reform Act of
1995 (set forth in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934). All
quantitative disclosures in this section are deemed to be forward-
looking statements for purposes of the safe harbor, except for
statements of historical fact.

The Partnership accounts for open positions on the basis of mark
to market accounting principles. Any loss in the market value of
the Partnership?s open positions is directly reflected in the
Partnership?s earnings 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 <page>
constructing a distribution of hypothetical daily changes in the
value of a trading portfolio. The VaR model takes into account
linear exposures to risk including equity and commodity prices,
interest rates, foreign exchange rates, and correlation among
these variables. The hypothetical changes in portfolio value are
based on daily percentage changes observed in key market indices
or other market factors (?market risk factors?) to which the
portfolio is sensitive. The one-day 99% confidence level of the
Partnership?s VaR corresponds to the negative change in portfolio
value that, based on observed market risk factors, would have
been exceeded once in 100 trading days, or one day in 100. VaR
typically does not represent the worst case outcome. Demeter
uses approximately four years of daily market data (1,000
observations) and re-values its portfolio (using delta-gamma
approximations) for each of the historical market moves that
occurred over the 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
<page> 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 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 September 30, 2006 and 2005.
At September 30, 2006 and 2005, the Partnership?s total
capitalization was approximately $535 million and $552 million,
respectively.

Primary Market September 30, 2006 September 30, 2005
Risk Category Value at Risk Value at Risk

Equity (1.46)% (2.21)%

Interest Rate (1.46) (0.31)

Currency (0.99) (1.06)

Commodity (0.75) (1.04)

Aggregate Value at Risk (1.86)% (2.91)%

<page> The VaR for a market category represents the one-day
downside risk for the aggregate exposures associated with this
market category. 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, 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 quarter-end 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 October 1, 2005 through September 30, 2006.

Primary Market Risk Category High Low Average
Equity (1.95)% (0.39)% (1.35)%
Interest Rate (1.70) (0.45) (1.32)
Currency (0.99) (0.55) (0.75)
Commodity (0.87) (0.49) (0.67)
Aggregate Value at Risk (2.96)% (1.73)% (2.35)%
<page>

Limitations on Value at Risk as an Assessment of Market Risk
VaR models permit estimation of a portfolio?s aggregate market
risk exposure, incorporating a range of varied market risks,
reflect risk reduction due to portfolio diversification or hedging
activities, and can cover a wide range of portfolio assets.
However, VaR risk measures should be viewed in light of the
methodology?s limitations, which include, but may not be limited
to the following:
* past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
* changes in portfolio value caused by market movements may
differ from those of the VaR model;
* VaR results reflect past market fluctuations applied to current
trading positions while future risk depends on future
positions;
* VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
* the historical market risk factor data used for VaR estimation
may provide only limited insight into losses that could be
incurred under certain unusual market movements.

<page> 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 September 30, 2005, and for the four quarter-
end reporting periods from October 1, 2005 through September 30,
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.

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 September 30,
2006, such amount is equal to approximately 92% of the
Partnership?s net asset value. A decline in short-term interest
rates would result in a decline in the Partnership?s cash <page>
management income. This cash flow risk is not considered to be
material.

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

Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership?s
market risk exposures - except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
Partnership manages its primary market risk exposures - constitute
forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act.
The Partnership?s primary market risk exposures, as well as the
strategies used and to be used by Demeter and the Trading Advisors
for managing such exposures, are subject to numerous
uncertainties, contingencies and risks, any one of which could
cause the actual results of the Partnership?s risk controls to
differ materially from the objectives of such strategies.
Government interventions, defaults and expropriations, illiquid
markets, the emergence of dominant fundamental factors, political
upheavals, changes in historical price relationships, an influx of
new market participants, increased regulation, and many other
<page> 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 September 30, 2006, by market sector. It may be
anticipated, however, that these market exposures will vary
materially over time.

Equity. The largest market exposure of the Partnership at
September 30, 2006 was to the global stock index sector,
primarily to equity price risk in the G-7 countries. The G-7
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. The Partnership?s primary market exposures were to the
DAX (Germany), S&P 500 (U.S.), Euro Stoxx 50 (Europe), Hang Seng
(China), S&P/MIB (Italy), NASDAQ 100 (U.S.), IBEX 35 (Spain), CAC
40 (France), Dow Jones (U.S.), NIKKEI 225 (Japan), TAIWAN
(Taiwan), FTSE 100 (United Kingdom), and TOPIX (Japan) stock
indices. The Partnership is typically exposed to the risk of
adverse price trends or static markets in the European, U.S.,
Chinese, and Japanese stock indices. Static markets would not
cause major market changes, but would make it difficult for the
<page> Partnership to avoid trendless price movements, resulting
in numerous small losses.

Interest Rate. The second largest market exposure of the
Partnership at September 30, 2006 was to the global interest rate
sector. Exposure was primarily spread across U.S., European,
Japanese, Canadian, and Australian 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 the 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> Currency. The third largest market exposure of the
Partnership at September 30, 2006 was to the currency sector.
The Partnership?s currency market exposure was to exchange rate
fluctuations, primarily fluctuations which disrupt the historical
pricing relationships between different currencies and currency
pairs. Interest rate changes, as well as political and general
economic conditions influence these fluctuations. The
Partnership trades a large number of currencies, including cross-
rates ? i.e., positions between two currencies other than the
U.S. dollar. At September 30, 2006, the Partnership?s major
exposures were to British pounds, Japanese yen, euros, Norwegian
krone, Swiss franc, and Australian dollar 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 currencies. Demeter does not
anticipate that the risk associated with the Partnership?s
currency trades will change significantly in the future.

Commodity.
Energy. At September 30, 2006, the Partnership had market
exposure to the energy sector. The Partnership?s energy
exposure was shared primarily by futures contracts in crude
oil and its related products, and natural gas. Price
movements in these markets result from geopolitical
developments, particularly in the Middle East, as well as
weather patterns and other economic fundamentals. <page>
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.

Soft Commodities and Agriculturals. At September 30, 2006,
the Partnership had market exposure to the markets that
comprise these sectors. Most of the exposure was to the
soybean meal, soybeans, soybean oil, cotton, coffee, sugar,
wheat, feeder cattle, live cattle, lean hogs, cocoa, and
corn markets. Supply and demand inequalities, severe
weather disruptions, and market expectations affect price
movements in these markets.

Metals. At September 30, 2006, the Partnership had market
exposure in the metals sector. The Partnership's metals
exposure was to fluctuations in the price of base metals,
such as aluminum, nickel, copper, zinc, and lead and
precious metals, such as gold. Economic forces, supply and
demand inequalities, geopolitical factors, and market
expectations influence price movements in these markets.
The Trading Advisors utilize the trading system(s) to take
positions when market opportunities develop, and Demeter
anticipates that the Partnership will continue to do so.
<page>
Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at September 30, 2006:

Foreign Currency Balances. The Partnership?s primary foreign
currency balances at September 30, 2006 were in Hong Kong
dollars, euros, Japanese yen, Swiss francs, British pounds,
Australian dollars, Canadian dollars, and Norwegian krone.
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.

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.

<page> 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 4. CONTROLS AND PROCEDURES
(a) As of the end of the period covered by this quarterly
report, the President and Chief Financial Officer of
Demeter, the general partner of the Partnership, have
evaluated the effectiveness of the Partnership?s
disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act), and have
judged such controls and procedures to be effective.

(b) There have been no material changes during the period
covered by this quarterly 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.

<page> PART II. OTHER INFORMATION
Item 1A. RISK FACTORS
There have been no material changes from the risk factors
previously referenced in the Partnership?s Report on Form 10-K for
the fiscal year ended December 31, 2005 and the Partnership?s
Reports on Form 10-Q for the quarters ended March 31, 2006 and
June 30, 2006.

<table>
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
<caption>
SEC
Registration Statement on Form S-1 Units Registered Effective Date File Number
<s> <c> <c> <c>
Initial Registration 60,000.000 May 17, 1991 33-39667
Supplemental Closing 10,000.000 August 23, 1991 33-42380
Additional Registration 75,000.000 August 31, 1993 33-65072
Additional Registration 60,000.000 October 27, 1997 333-01918
Pre-conversion 205,000.000

Units sold through 10/17/97 146,139.671
Units unsold through 10/17/97 58,860.329
(Ultimately de-registered)
</table>
Commencing with the April 30, 1998 monthly closing and with
becoming a member of the Spectrum Series of funds, each previously
outstanding Unit of the Partnership was converted into 100 Units,
totaling 14,613,967.100 (pre-conversion).

<page>
Additional Registration 1,500,000.000 May 11, 1998 333-47829
Additional Registration 5,000,000.000 January 21, 1999 333-68773
Additional Registration 4,500,000.000 February 28, 2000 333-90467
Additional Registration 1,000,000.000 April 30, 2002 333-84656
Additional Registration 7,000,000.000 April 28, 2003 333-104005
Additional Registration 23,000,000.000 April 28, 2004 333-113393
Total Units Registered 42,000,000.000

Units sold post conversion 26,631,018.539
Units unsold through 9/30/06 15,368,981.461

Total Units sold
through 9/30/06 41,244,985.639
(pre and post conversion)

The managing underwriter for the Partnership is Morgan Stanley DW.

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 September 30, 2006
was $915,641,513.

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 included as part of the above
referenced Registration Statements.

<page>
Item 5. OTHER INFORMATION
Management. On September 22, 2006, the following individual was
elected as a Director of Demeter. Jacques Chappuis, age 37, is a
Director of Demeter, and will be a principal of Demeter, pending
approval by and registration with the National Futures
Association. Mr. Chappuis is a Managing Director of Morgan
Stanley and Head of Alternative Investments for the 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 a B.A. degree in finance from Tulane University
in 1991 and an MBA in finance, with honors, from the Columbia
University Graduate School of Business in 1998.

On November 6, 2006, Mr. Kevin Perry resigned his position as
Chief Financial Officer of Demeter effective November 7, 2006.

On November 7, 2006, the Board of Directors of Demeter appointed
Mr. Lee Horwitz as the Chief Financial Officer of Demeter. Lee
Horwitz, age 55, is the Chief Financial Officer of Demeter, and
<page> will be a principal of Demeter, pending approval by and
registration with the National Futures Association. Mr. Horwitz
currently serves as an Executive Director and Controller within
the Global Wealth Management Group at Morgan Stanley. 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.

Other. Effective November 1, 2006, the monthly management fee
payable to EMC and Rabar will be reduced from 1/4 of 1% (a 3%
annual rate) to 5/24 of 1% (a 2.5% annual rate). Also, effective
November 1, 2006, the monthly incentive fee, payable by the
Partnership to EMC and Rabar, will be increased form 15% to 17.5%

Item 6. EXHIBITS

31.01 Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.02 Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
32.01 Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
<page>
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.

<page>

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

Morgan Stanley Spectrum Select L.P.
(Registrant)

By: Demeter Management Corporation
(General Partner)

November 14, 2006 By:/s/ Lee Horwitz
Lee Horwitz
Chief Financial Officer

The General Partner which signed the above is the only party
authorized to act for the Regisrant. The Registrant has no
principal executive officer, principal financial officer,
controller, or principal accounting officer and has no Board of
Directors.