Dean Witter Spectrum Series
Monthly Report
May 1998
Dear Limited Partner:
The Net Asset Value per Unit for each of the four Dean Witter Spectrum
Funds as of May 31, 1998 was as follows:
Funds N.A.V. % change for month
Spectrum Balanced $14.28 -.33%
Spectrum Select $20.44 1.77%
Spectrum Strategic $9.01 -7.41%
Spectrum Technical $14.49 3.32%
In Spectrum Global Balanced, a balanced portfolio of stocks, bonds and
managed futures utilizing the futures, options and forward markets, small
losses were experienced during the month primarily from long S&P 500 Index
futures positions in the stock index component as U.S. equity prices
finished the month lower. Additional losses were recorded in the managed
futures component of the balanced portfolio from short European bond
futures positions as prices in these markets moved higher. These losses
were partially offset by gains from long positions in Japanese and
Australian government bond futures as prices in these markets also moved
higher. In commodities, small losses recorded from long copper futures
positions, as base metals prices moved lower, more than offset gains from
short positions in natural gas and corn futures. A majority of the overall
Fund losses for the month were offset by gains in currencies as the value
of the Japanese yen moved lower relative to the U.S. dollar and major
European currencies, thus resulting in profits for short yen positions.
Additional currency gains were recorded from short New Zealand dollar and
British pound positions as the value of these currencies also declined.
Gains from long U.S. Treasury securities positions in the fixed income
component of the portfolio also helped to offset a majority of the overall
losses for the month.
In Spectrum Select, a fund managed by three trading advisors who employ
long-term technical trend-following trading systems across a diverse
portfolio of futures, options and forward markets, gains were recorded from
short Japanese yen positions as the value of the yen weakened relative to
the U.S. dollar and other currencies as concerns about the Japanese economy
reemerged. Additional currency gains were recorded from short positions in
the Canadian, Australian and New Zealand dollars as the value of these
currencies also declined relative to the U.S. dollar. In global stock
index futures, profits were recorded from short positions in Hang Seng
Index futures as equity prices in Hong Kong moved lower during the month.
Additional profits were recorded from long European stock index futures
positions as prices in these markets finished the month higher. These
gains were partially offset by losses experienced in soft commodities from
short-term price volatility in sugar and coffee futures. In metals, losses
recorded from long copper futures positions, as copper prices moved lower,
more than offset gains from short positions in silver futures.
In Spectrum Strategic, a Fund managed by three trading advisors who employ
fundamental trading methodologies in a diverse portfolio of futures,
options and forwards markets, losses were experienced primarily from long
silver futures positions as silver prices declined. Additional losses were
recorded in the agricultural markets from long soybean oil futures
positions as prices in this market reversed lower after moving higher prior
to May. In soft commodities, long positions in lumber futures also
experienced losses as prices in this market finished the month lower.
Smaller losses were recorded in energy futures from long unleaded gas and
crude oil futures positions, as well as in currencies from short German
mark and Swiss franc positions. These losses were partially offset by
gains from short positions in the Japanese yen as the value of the yen
declined relative to other currencies due to growing concerns about the
Japanese economy. Profits recorded in financial futures from long
positions in German, French and U.S. bond futures, as prices in these
markets moved higher, also helped to mitigate Fund losses for the month.
In Spectrum Technical, a Fund managed by three trading advisors who employ
long-term technical trend-following trading systems across a diverse
portfolio of futures, options and forward markets, gains were recorded from
long positions in Japanese government bond futures as prices moved higher
in reaction to declining interest rate yields in Japan. Additional profits
were recorded from long positions in Australian interest rate and European
stock index futures as prices in these markets also moved higher. In
currency trading, gains were recorded from short Japanese yen positions as
the value of the yen dropped relative to the U.S. dollar and other major
currencies. Smaller currency gains were recorded from short Australian
dollar positions as its value also weakened relative to the U.S. dollar.
In other markets, short positions in crude and heating oil futures, as well
as in corn and wheat futures, were profitable
<PAGE>
as energy and grain prices moved lower. These gains were partially offset
by losses experienced in soft commodities from short
cotton futures positions as cotton prices rose during the month. Smaller
losses recorded in metals from long positions in copper and gold futures,
as both base and precious metals prices moved lower, more than offset gains
from short silver futures positions.
Should you have any questions concerning this report, please feel free to
contact Demeter Management Corporation at Two World Trade Center, 62nd
Floor New York , NY 10048, or your Dean Witter Account Executive.
I hereby affirm, that to the best of my knowledge and belief, the
information contained in this report is accurate and complete. Past
performance is not a guarantee of future results.
Sincerely,
Mark J. Hawley
President
Demeter Management Corporation
General Partner
<PAGE>
<TABLE>
Historical Fund Performance
Presented below is the percentage change in Net Asset Value per Unit from
the start of each calendar year the Fund has traded. Also provided is the
inception-to-date return and the annualized return since inception for the
Fund. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
<CAPTION>
Funds Year Return
<S> <C> <C>
Spectrum Global Balanced
1994 (2 months) -1.7%
1995 22.8%
1996 -3.7%
1997 18.2%
1998 (5 months) 3.9%
Inception-to-Date Return: 42.8%
Annualized Return: 10.5%
___________________________________________________________________________
__________
Spectrum Select
1991 (5 months) 31.2%
1992 -14.4%
1993 41.6%
1994 -5.1%
1995 23.6%
1996 5.3%
1997 6.2%
1998 (5 months) -2.0%
Inception-to-Date Return: 104.4%
Annualized Return: 11.0%
___________________________________________________________________________
__________
Spectrum Strategic
1994 (2 months) 0.1%
1995 10.5%
1996 -3.5%
1997 0.4%
1998 (5 months) -15.9%
Inception-to-Date Return: -9.9%
Annualized Return: -2.9%
___________________________________________________________________________
__________
Spectrum Technical
1994 (2 months) -2.2%
1995 17.6%
1996 18.4%
1997 7.5%
1998 (5 months) -1.0%
Inception-to-Date Return: 44.9%
Annualized Return: 10.9%
___________________________________________________________________________
__________
</TABLE>
<PAGE>
<TABLE>
Statements of Operations
For the Month Ended May 31, 1998
(Unaudited)
<CAPTION>
Dean Witter Spectrum Global Balanced Dean Witter
Spectrum Select L.P.
Percent of
Percent of
May 1, 1998 May 1,
1998
Beginning Net Beginning
Net
Amount Asset Value Amount
Asset Value
$ % $
REVENUES
<S> <C> <C>
<C> <C>
Trading Profit (Loss):
Realized (560,669) (1.84) (7,065,793)
(4.59)
Net change in unrealized 491,386 1.61 10,505,378
6.82
Total Trading Results (69,283) (.23) 3,439,585
2.23
Interest Income (DWR) 125,419 .41 538,929
.35
Total Revenues 56,136 .18 3,978,514
2.58
EXPENSES
Brokerage commissions (DWR) 124,141 .41 731,326
.47
Management fees 31,669 .10 392,772
.26
Transaction fees and costs - - 109,565
.07
Administrative expenses - - 12,000
.01
Total Expenses 155,810 .51 1,245,663
.81
NET INCOME (LOSS) (99,674) (.33) 2,732,851
1.77
Statements of Changes in Net Asset Value
For the Month Ended May 31, 1998
(Unaudited)
Dean Witter Spectrum Global Balanced Dean Witter
Spectrum Select L.P.
Units Amount Per Unit Units
Amount Per Unit
$ $
$ $
<S> <C> <C> <C> <C>
<C> <C>
Net Asset Value,
May 1, 1998 2,121,858.442 30,401,819 14.33 7,667,737.800
153,983,232 20.08
Net Income (Loss) - (99,674) (.05) -
2,732,851 .36
Redemptions (19,384.511) (276,811) 14.28 (81,424.708)
(1,664,321) 20.44
Subscriptions 115,265.663 1,645,994 14.28 12,867.661
263,015 20.44
Net Asset Value,
May 31, 1998 2,217,739.594 31,671,328 14.28 7,599,180.753
155,314,777 20.44
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
Statements of Operations
For the Month Ended May 31, 1998
(Unaudited)
<CAPTION>
Dean Witter Spectrum Strategic Dean Witter
Spectrum Technical L.P.
Percent of
Percent of
May 1, 1998 May 1,
1998
Beginning Net
Beginning Net
Amount Asset Value Amount
Asset Value
$ % $
REVENUES
<S> <C> <C> <C>
<C>
Trading Profit (Loss):
Realized (4,472,302) (7.84) (3,237,442)
(1.68)
Net change in unrealized 546,330 .96 10,853,929
5.64
Total Trading Results (3,925,972) (6.88) 7,616,487
3.96
Interest Income (DWR) 189,216 .33 633,569
.33
Total Revenues (3,736,756) (6.55) 8,250,056
4.29
EXPENSES
Brokerage commissions (DWR) 322,923 .56 1,226,342
.64
Management fees 168,849 .30 641,225
.33
Total Expenses 491,772 .86 1,867,567
.97
NET INCOME (LOSS) (4,228,528) (7.41) 6,382,489
3.32
Statements of Changes in Net Asset Value
For the Month Ended May 31, 1998
(Unaudited)
Dean Witter Spectrum Strategic Dean Witter
Spectrum Technical
Units Amount Per Unit Units
Amount Per Unit
$ $
$ $
<S> <C> <C> <C> <C>
<C> <C>
Net Asset Value,
May 1, 1998 5,866,476.730 57,064,085 9.73 13,713,106.084
192,367,410 14.03
Net Income (Loss) - (4,228,528) (.72) -
6,382,489 .46
Redemptions (83,700.023) (754,137) 9.01 (132,996.765)
(1,927,123) 14.49
Subscriptions 145,217.996 1,308,414 9.01 465,787.920
6,749,267 14.49
Net Asset Value,
May 31, 1998 5,927,994.703 53,389,834 9.01 14,045,897.239
203,572,043 14.49
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Dean Witter Spectrum Series L.P.
Notes to Financial Statements
(Unaudited)
1. Summary of Significant Accounting Policies
Organization - Dean Witter Spectrum Global Balanced L.P. (formally known as
Dean Witter Spectrum Balanced L.P.)("Spectrum Balanced"), Dean Witter
Spectrum Select L.P. (formally known as Dean Witter Select Futures fund
L.P.) ("Spectrum Select"), Dean Witter Spectrum Strategic L.P. ("Spectrum
Strategic") and Dean Witter Spectrum Technical L.P. ("Spectrum Technical")
(individually, a "Partnership", or collectively, the "Partnerships") are
limited partnerships organized to engage in the speculative trading of
futures and forward contracts, options on futures contracts and on physical
commodities, and other commodities interests, including foreign currencies,
financial instruments, precious and industrial metals, energy products, and
agriculturals. The commodity broker for the Partnership is Carr Futures
Inc. ("Carr"). The general partner for each Partnership is Demeter
Management Corporation ("Demeter"). Demeter is a wholly-owned subsidiary
of Morgan Stanley Dean Witter & Co. ("MSDW").
Demeter is required to maintain a 1% minimum interest in the equity of each
Partnership and income (losses) are shared by the General and Limited
Partners based upon their proportional ownership interests.
Basis of Accounting - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts in the financial
statements.
Revenue Recognition - Commodity futures contracts and forward contracts on
foreign currencies are open commitments until settlement date. They are
valued at market and the resulting unrealized gains and losses are
reflected in income. Monthly, Dean Witter Reynolds, Inc. ("DWR") pays
each Partnership interest income based upon 80% of its average daily Net
Assets for the month in the case of Spectrum Select, Spectrum Strategic and
Spectrum Technical and 100% in the case of Spectrum 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 due the
Partnership on forward contracts and other commodity interests, but not
actually received.
Net Income (Loss) per Unit - Net income (loss) per Unit is computed using
the weighted average number of units outstanding during the period.
Brokerage Commissions and Related Transaction Fees and Costs - Brokerage
commissions for Spectrum Balanced are accrued at a monthly rate of 49/120
of 1% of the Net Assets as of the first day of each month. Effective June
1, 1998, brokerage commissions for Spectrum Global Balanced will be reduced
to a flat-rate monthly fee of 1/12 of 4.60% of the Net Assets as of the
first day of each month.
Brokerage commissions for Spectrum Select are accrued on a half-turn basis
at 80% of DWR's published non-member rates. Transaction fees and costs are
accrued on a half-turn basis. Brokerage commissions and transaction fees
and costs chargeable to the Partnership have been capped at .65% per month
of the Partnership's month-end Net Assets.
Brokerage commissions for Spectrum Strategic and Spectrum Technical are
accrued at a monthly rate of 51/80 of 1% of the Net Assets as of the first
day of each month. Effective June 1, 1998, brokerage commissions for
Spectrum Select, Spectrum Strategic and Spectrum Technical
<PAGE>
Dean Witter Spectrum Series L.P.
Notes to Financial Statements -
(Continued)
will be reduced to a flat-rate monthly fee of 1/12 of 7.25% of the Net
Assets as of the first day of each month.
Such fees will cover all brokerage commissions, transaction fees and costs
and ordinary administrative and continuing offering expenses.
Operating Expenses - Spectrum Balanced, Spectrum Strategic and Spectrum
Technical, 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
DWR through the brokerage commissions paid by each Partnership.
Spectrum Select bears all operating expenses related to its trading
activities, to a maximum of one fourth of 1% annually of the Partnership's
average month end Net Assets. In addition, the Partnership incurs a monthly
management fee and may incur an incentive fee. Demeter bears all other
operating expenses. Effective with the June 1, 1998 change to a flat rate
brokerage commission, all common administrative and continuing offering
expenses will be borne by DWR through the brokerage commissions.
Income Taxes - No provision for income taxes has been made in the
accompanying financial statements, as partners are individually responsible
for reporting income or loss based upon their respective share of each
Partnership's revenues and expenses for income tax purposes.
Distributions - Distributions, other than on redemption of Units, are made
on a pro-rata basis at the sole discretion of Demeter. No distributions
have been made to date.
Continuing Offering - Units of each Partnership are offered at a price
equal to 100% of the Net Asset Value per Unit as of the opening of business
on the first day of the month. No selling commissions or charges related
to the continuing offering of Units will be paid by the Limited Partners or
the Partnership. DWR will pay 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 that is
six months after the closing at which a person becomes a Limited Partner,
upon five business days advance notice by redemption form to Demeter.
Thereafter, Units redeemed on or prior to the last day of the twelfth month
after such Units were purchased will be subject to a redemption charge
equal to 2% of the Net Asset Value of a Unit on the date of such
redemption. Units redeemed after the last day of the twelfth month and on
or prior to the last day of the twenty-fourth month after which such units
were purchased will be subject to a redemption charge equal to 1% of the
Net Asset Value of a Unit on the date of such redemption. Units redeemed
after the last day of the twenty-fourth month after which such Units were
purchased will not be subject to a redemption charge. The foregoing
redemption charges will be paid to DWR. Redemptions must be made in whole
Units, in a minimum amount of 50 Units, unless a Limited Partner is
redeeming his entire interest in a Partnership.
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 the end of each month thereafter, Limited Partners may
exchange their investment among the Partnerships (subject to certain
restrictions outlined in the Limited Partnership Agreement) without paying
additional charges.
<PAGE>
Dean Witter Spectrum Series L.P.
Notes to Financial Statements
(Continued)
Dissolution of the Partnership - Spectrum Balanced, Spectrum Strategic and
Spectrum Technical, will terminate on December 31, 2035 and Spectrum Select
will terminate on December 31, 2025 regardless of their financial condition
at such time, or at an earlier date if certain conditions occur as defined
in each Partnership's Limited Partnership Agreement.
2. Related Party Transactions
Each Partnership pays brokerage commissions to DWR as described in Note 1.
Each Partnership's cash is on deposit with DWR and Carr in commodity
trading accounts to meet margin requirements as needed. DWR pays interest
on these funds as described in Note 1. Each Partnership is authorized to
issue and sell Units at Monthly Closings at a price per Unit equal to 100%
of the Net Asset Value of a Unit of such Partnership as of the close of
business on the date of such monthly closing.
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 are as follows:
Dean Witter Spectrum Global Balanced L.P.
RXR, Inc.
Dean Witter Spectrum Select L.P.
EMC Capital Management, Inc.
Rabar Market Research, Inc.
Sunrise Capital Management, Inc.
Dean Witter Spectrum Strategic L.P.
Blenheim Investments, Inc.
Stonebrook Capital Management, Inc. (effective June 1, 1998)
Willowbridge Associates Inc.
Dean Witter Spectrum Technical L.P.
Campbell & Company, Inc.
Chesapeake Capital Corporation
John W. Henry & Company, Inc. ("JWH")
Compensation to the trading advisors by the Partnerships consists of a
management fee and an incentive fee as follows:
Management Fee - The management fee is accrued at the rate of 5/48 of 1% of
the Net Assets on the first day of each month (a 1.25% annual rate) to
Spectrum Balanced.
The management fee is accrued at the rate of 1/3 of 1% per month of the Net
Assets allocated to each trading advisor on the first day of each month (a
4% annual rate) to Spectrum Technical.
<PAGE>
Dean Witter Spectrum Series L.P.
Notes to Financial Statements
(Continued)
Prior to June 1, 1998, the management fee was accrued at the rate of one fourth
of 1% of the Partnership's adjusted net assets, as defined in the Limited
Partnership Agreement, as of the last day of each month (a 3% annual rate)
to Spectrum Select. Effective June 1, 1998, the management fee is accrued
at the rate of one fourth of 1% per month of the Net Assets allocated to
each trading advisor on the first day of each month (a 3% annual rate).
Prior to June 1, 1998, the management fee was accrued at the rate of 1/3 of
1% per month of the Net Assets allocated to each trading advisor on the
first day of each month (a 4% annual rate) to Spectrum Strategic.
Effective June 1, 1998, management fees are accrued at a rate of 1/12 of 4%
of the Net Assets allocated to each of Blenheim and Willowbridge on the
first day of each month, and 1/12 of 3% of the Net Assets allocated to
Stonebrook on the first day of each month.
Incentive Fee - Spectrum Balanced and Spectrum Strategic each will pay a
monthly incentive fee equal to 15% of the "Trading Profits" as defined in
the Limited Partnership Agreement, experienced with respect to each trading
manager's allocated Net Assets as of the end of each calendar month.
Prior to June 1, 1998, Spectrum Select paid, when applicable, a quarterly
incentive fee to each trading advisor equal to 17.5% of the trading
advisors "Trading Profits" experienced by the Net Assets allocated to such
trading advisor as of the end of each calendar quarter. Effective June 1,
1998 the incentive fees will be revised to 15% of "Trading Profits" and
will be paid on a monthly basis.
Prior to June 1, 1998, Spectrum Technical paid a monthly incentive fee
equal to 15% of the "Trading Profits" as defined in the Limited Partnership
Agreement, experienced with respect to each trading manager's allocated Net
Assets as of the end of each calendar month. Effective June 1, 1998,
incentive fees for Spectrum Technical will be revised to 15% of the
"Trading Profits" experienced with respect to the Net Assets allocated to
Campbell and JWH 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.
For all Partnerships, if a trading advisor has experienced "Trading losses"
with respect to its allocated Net Assets at the time of a supplemental
closing, the trading advisor must earn back such losses plus a pro-rata
amount related to the funds allocated to the trading advisor at
supplemental closing before the trading advisor is eligible for an
incentive fee.
4. Legal Matters
On September 6, 10, and 20, 1996 and on March 13, 1997, similar purported
class actions were filed in the Superior Court of the State of California,
County of Los Angeles, on behalf of all purchasers of interests in limited
partnership commodity pools sold by DWR. Named defendants include DWR,
Demeter, Dean Witter Futures & Currency Management Inc., MSDW (all such
parties referred to hereafter as the "Dean Witter Parties"), certain
limited partnership commodity pools of which Demeter is the general
partner, and certain trading advisors (including JWH) to those pools. On
June 16, 1997, the plaintiffs in the above actions filed a consolidated
amended complaint, alleging, among other things, that the defendants
committed fraud, deceit, negligent misrepresentation, various violations of
the California Corporations Code, intentional and negligent breach of
fiduciary duty, fraudulent and unfair business practices, unjust
enrichment, and conversion in the sale and operation of the various limited
partnership commodity pools. Similar purported class actions were also
filed on September 18
<PAGE>
Dean Witter Spectrum Series L.P.
Notes to Financial Statements
(Concluded)
and 20, 1996, in the Supreme Court of the State of New York, New York
County, and on November 14, 1996 in the Superior Court of the State of
Delaware, New Castle County against the Dean Witter Parties and certain
trading advisors (including JWH) on behalf of all purchasers of interests
in various limited partnership commodity pools sold by DWR. A consolidated
and amended complaint in the action pending in the Supreme Court of the
State of New York was
filed on August 13, 1997, alleging that the defendants committed fraud,
breach of fiduciary duty, and negligent misrepresentation in the sale and
operation of the various limited partnership commodity pools. On December
16, 1997, upon motion of the plaintiffs, the action pending in the Superior
Court of the State of Delaware was voluntarily dismissed without prejudice.
The complaints seek unspecified amounts of compensatory and punitive
damages and other relief. It is possible that additional similar actions
may be filed and that, in the course of these actions, other parties could
be added as defendants. The Dean Witter Parties believe that they have
strong defenses to, and they will vigorously contest, the actions.
Although the ultimate outcome of legal proceedings cannot be predicted with
certainty, it is the opinion of management of the Dean Witter Parties that
the resolution of the actions will not have a material adverse effect on
the financial condition or the results of operations of any of the Dean
Witter Parties.
