Morgan Stanley Dean Witter Spectrum Series
Monthly Report
September 2000
Dear Limited Partner:
The Net Asset Value per Unit for each of the six Morgan Stanley Dean Witter
Spectrum Funds as of September 30, 2000 was as follows:
Funds N.A.V. % change for month
Spectrum Commodity $ 7.70 -0.42%
Spectrum Currency $10.24 1.34%
Spectrum Global Balanced $15.11 -3.92%
Spectrum Select $20.31 -1.85%
Spectrum Strategic $ 9.65 -10.43%
Spectrum Technical $12.42 -8.61%
In general, the performance disparity between the Funds in the Spectrum
Series is due to the portfolio structure and trading approaches unique to
each Fund. Spectrum Currency, a fund that participates exclusively in the
currency markets, recorded profits primarily from short positions in the
South African rand and British pound. Spectrum Strategic, a fund managed
by multiple trading advisors who employ fundamental trading methodologies,
experienced difficulty in a wide variety of markets, including soft
commodities, stock index futures, currency and energy futures. Spectrum
Technical, a technically-based multi-manager fund, incurred widespread
losses, but primarily in the global stock index and global interest rate
futures markets. Spectrum Global Balanced, a balanced portfolio of stocks,
bonds and managed futures, recorded losses primarily in the global stock
index futures markets from long positions in FTSE, DAX and Nikkei Index
futures. Spectrum Select, the other technically-based multi-manager fund,
experienced losses primarily in the global stock index and global interest
rate futures markets; however, gains were generated in currencies.
Spectrum Commodity, a fund that participates in the tangible commodity
markets from the long side, recorded small losses primarily in soft
commodities.
Spectrum Commodity
The Fund decreased in value during September primarily as a result of
losses recorded in the soft commodities markets from long positions in
sugar futures as prices dropped during mid-month on technically based
factors. Additional losses were recorded from long positions in cotton
futures as prices moved lower on rain-related quality concerns in the U.S.
Southeast and harvest delays. In the energy markets, losses were incurred
from long futures positions in crude oil and its refined products as prices
dropped after President Clinton ordered the release of 30 million barrels
of oil in the U.S.'s emergency Strategic Petroleum Reserve over a period of
a month in order to stabilize prices and to ease shortages as the U.S.
winter approaches. These losses were mitigated by gains recorded from long
natural gas futures positions as prices were bolstered higher during the
first half of the month by hot weather in the South that spurred cooling
demand and on fears of potential production interruptions in the Gulf of
Mexico. In the metals markets, losses were experienced earlier in the
month from long positions in silver and gold futures as prices declined on
the heels of a surging U.S. dollar. A portion of these losses was offset
by gains recorded in the livestock markets from long positions in cattle
and lean hog futures as livestock prices increased.
Spectrum Currency
The Fund increased in value during September primarily due to gains
recorded from short South African rand positions as the value of the rand
drifted weaker versus the U.S. dollar on the back of a weaker euro.
Additional gains were experienced from short British pound positions as the
value of the pound weakened relative to the U.S. dollar amid a combination
of capital flow considerations and expectations of peaking UK interest rate
hikes. Smaller gains were recorded from short Thai baht positions as its
value fell sharply versus the U.S. dollar on investor concerns over
political developments in Indonesia. Short New Zealand dollar positions
also resulted in profits as its value weakened versus the U.S. dollar on
worse-than-expected contraction in New Zealand gross domestic product. A
portion of overall Fund gains was offset by losses incurred from short euro
positions as the value of the European common currency reversed sharply
<PAGE>
and suddenly higher versus the U.S. dollar on Friday, September 22, after
declining to lifetime lows earlier in the month. This sharp rally occurred
because the world's major central banks carried out coordinated
intervention to buy euros because of concern about the potential
implications of recent movements in the euro on the world economy.
Additional losses resulted from long positions in the Japanese yen as the
value of the yen weakened against the U.S. dollar on warnings that the
Japanese economy may shrink in the fourth quarter because of lethargic
consumer spending.
Spectrum Global Balanced
The Fund decreased in value during September primarily as a result of
losses recorded in the global stock index futures markets from long
positions in FTSE and DAX Index futures as most stock indices around the
world sagged later in the month on concerns about costly crude oil, a weak
euro and profit warnings from Intel. Additional losses were experienced
from long positions in Nikkei Index futures as prices declined as leading
technology shares took their marching orders from Wall Street and extended
recent declines. In the global interest rate futures markets, losses were
incurred from long positions in Australian interest rate futures as prices
declined during mid-month following the pattern set by U.S. Treasuries and
as the Australian currency again dipped to new historic lows. In the
energy markets, losses were incurred from long futures positions in crude
oil and its refined products as prices dropped late in the month after
President Clinton ordered the release of 30 million barrels of oil in the
U.S.'s emergency Strategic Petroleum Reserve over a period of a month in
order to stabilize prices and to ease shortages as the U.S. winter
approaches. A portion of these losses was offset by gains recorded in the
metals markets from long positions in copper futures as prices rose higher
during mid-month due to a rise in COMEX copper stocks. In the currency
markets, gains were recorded from short positions in the Australian dollar
versus the Japanese yen as the value of the Australian dollar weakened due
to selling by Japanese exporters.
Spectrum Select
The Fund decreased in value during September primarily as a result of
losses recorded in the global stock index futures markets during the first
half of the month from long positions in U.S. stock index futures as prices
declined due to jitters in the technology sector and a worrisome spike in
oil prices. In the global interest rate futures markets, losses were
recorded from long positions in U.S. interest rate futures, particularly 30-
year U.S. Treasury bond futures, as domestic bond prices reversed lower
during mid-month amid steep oil prices and disappointing budget surplus
data that prompted investors to shift into shorter-dated instruments and
corporate debt. In the energy markets, losses were incurred from long
futures positions in crude oil and its refined products as prices dropped
late in the month after President Clinton ordered the release of 30 million
barrels of oil in the U.S.'s emergency Strategic Petroleum Reserve over a
period of a month in order to stabilize prices and to ease shortages as the
U.S. winter approaches. There losses were mitigated by gains recorded from
long natural gas futures positions as prices were bolstered higher during
the first half of the month by hot weather in the South that spurred
cooling demand and on fears of potential production interruptions in the
Gulf of Mexico. In the soft commodities markets, losses were incurred from
long positions in sugar futures as prices dropped during mid-month on
technically based factors. A portion of these losses was offset by gains
recorded in the currency markets from short positions in the New Zealand
dollar relative to the U.S. dollar as the value of the New Zealand dollar
dropped to a new historic low early in the month. In the metals markets,
gains were recorded during mid-month from long positions in copper futures
as prices rose higher due to a rise in COMEX copper stocks.
Spectrum Strategic
The Fund decreased in value during September across a variety of market
sectors, with the most severe occurring in the soft commodities markets
from long positions in cotton futures as prices moved lower on rain-related
quality concerns in the U.S. Southeast and harvest delays. In the global
stock index futures markets, losses were incurred during the first half of
the month from long positions in U.S. stock index futures as prices
declined due to jitters in the technology sector and a worrisome spike in
oil prices. In the currency markets, losses were experienced from short
positions in the euro as the value of the European common currency reversed
sharply and suddenly higher versus the U.S. dollar on Friday, September 22,
after declining to lifetime lows earlier in the month. This sharp rally
occurred because the world's major central banks carried out coordinated
intervention to buy euros because of concern about the potential
implications of recent movements in the euro on the world economy. In the
energy markets, losses were incurred from long futures positions in crude
oil and its refined products as prices dropped late in the month after
President Clinton ordered the
<PAGE>
release of 30 million barrels of oil in the U.S.'s emergency Strategic
Petroleum Reserve over a period of a month in order to stabilize prices and
to ease shortages as the U.S. winter approaches. In the global interest
rate futures markets, losses were recorded from short positions in German
interest rate futures as prices increased on benign economic data,
volatility in the equity markets and concerted intervention in the foreign
exchange markets. A portion of these losses was offset by gains recorded
in the metals markets from long positions in copper futures as prices rose
higher earlier in the month due to a rise in COMEX copper stocks.
Additional gains were recorded earlier in the month from long positions in
aluminum futures as prices climbed higher on the back of positive
sentiment.
Spectrum Technical
The Fund decreased in value during September primarily as a result of
losses recorded in the global stock index futures markets during the first
half of the month from long positions in U.S. stock index futures as prices
declined due to jitters in the technology sector and a worrisome spike in
oil prices. In the global interest rate futures markets, losses were
recorded from short positions in Japanese government bond futures positions
as prices surged and long-term interest rates dropped early in the month as
investors sought refuge from falling U.S. and Japanese stock prices.
Additional losses were recorded from long positions in U.S. interest rate
futures, particularly 30-year U.S. Treasury bond futures, as domestic bond
prices reversed lower during mid-month amid steep oil prices and
disappointing budget surplus data that prompted investors to shift into
shorter-dated instruments and corporate debt. In the soft commodities
markets, losses were incurred from long positions in sugar futures as
prices dropped during mid-month on technically based factors. In the
energy markets, losses were incurred from long futures positions in crude
oil and its refined products as prices dropped late in the month after
President Clinton ordered the release of 30 million barrels of oil in the
U.S.'s emergency Strategic Petroleum Reserve over a period of a month in
order to stabilize prices and to ease shortages as the U.S. winter
approaches. These losses were mitigated by gains recorded from long
natural gas futures positions as prices were bolstered higher during the
first half of the month by hot weather in the South that spurred cooling
demand and on fears of potential production interruptions in the Gulf of
Mexico. In the currency markets, losses were experienced from long
positions in the Japanese yen as its value weakened versus the U.S. dollar
after concerted central bank intervention on the euro, as well as
resurfacing concerns over Japan's economy and the decline in the Nikkei
Index. Offsetting currency gains were recorded earlier in the month from
short positions in the Australian dollar as its value weakened relative to
the U.S. dollar. A portion of these losses was offset by gains recorded in
the metals markets from long positions in copper futures as prices rose
higher during mid-month due to a rise in COMEX copper stocks.
Fee Changes Relating to Spectrum Currency, Spectrum Technical, and Spectrum
Commodity
The General Partner recently reached agreement with certain Trading
Advisors of Spectrum Currency and Spectrum Technical to adjust the fee
structure so as to reduce the net recurring costs of those funds.
Commencing December 1, 2000, the following changes will be made:
The management fee paid by Spectrum Currency will be reduced from a 4%
to a 2% annual rate in the case of John W. Henry & Company, Inc. and from a
3% to a 2% annual rate in the case of Sunrise Capital Partners, LLC.
Additionally, the monthly incentive fee paid by Spectrum Currency to each
Trading Advisor will be changed from 15% to 20% of Fund trading profits, as
determined from the end of the last period in which an incentive fee was
earned. Of course, no incentive fee will be paid to a Trading Advisor
unless that Trading Advisor recoups all prior trading losses on its
allocated assets and has again achieved net new high trading profits for
the period.
The management fee paid by Spectrum Technical will be reduced from a
4% to a 2% annual rate in the case of John W. Henry &Company, Inc. and from
a 4% to a 3% annual rate in the case of Campbell & Company, Inc.
Additionally, the monthly incentive fee paid by Spectrum Technical to both
John W. Henry & Company, Inc. and Campbell & Company, Inc. will be changed
from 15% to 20% of Fund trading profits, as determined from the end of the
last period in which an incentive fee was earned. Of course, no incentive
fee will be paid to a Trading Advisor unless that Trading Advisor recoups
all prior trading losses on its allocated assets and has again achieved net
new high trading profits for the period.
The General Partner believes that the reduction of net recurring costs and
the simultaneous increase in incentive fee better align each Fund's fee
structure toward the objective of future profitability.
<PAGE>
The General Partner believes that the foregoing changes will be beneficial
to those limited partners owning units in the aforementioned Funds.
Nonetheless, in view of these changes, the General Partner and Dean Witter
Reynolds Inc. have determined to waive any applicable redemption charges,
as well as the six month minimum holding period, for units of Spectrum
Currency and Spectrum Technical that are redeemed as of November 30, 2000.
Furthermore, limited partners are reminded that, subject to certain
restrictions, they have the right to redeem their units on a monthly basis,
and they may vote to take certain actions with respect to each Fund's
operations, as more fully set forth in Section 15 of each Fund's Limited
Partnership Agreement.
Additionally, the General Partner recently reached agreement with the
Trading Advisor of Spectrum Commodity to adjust the fee structure of the
Fund. Commencing December 1, 2000, the annual incentive fee paid by
Spectrum Commodity to the Trading Advisor will be reduced from 20% to 17.5%
of Fund trading profits, as determined from the end of the last period in
which an incentive fee was earned. Of course, no incentive fee will be
paid to the Trading Advisor unless the Trading Advisor recoups all prior
trading losses and has again achieved net new high trading profits for the
period.
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 Morgan Stanley Dean Witter Financial
Advisor.
I hereby affirm, that to the best of my knowledge and belief, the
information contained in this report is accurate and complete. Past
performance is not a guarantee of future results.
Sincerely,
Robert E. Murray
Chairman
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 each the Fund has traded. Also provided is the
inception-to-date return and the annualized return since inception for each
Fund. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
<CAPTION>
Funds Year Return
<S> <C> <C>
Spectrum Commodity
1998 -34.3%
1998 15.8%
2000 (9 months) 1.2%
Inception-to-Date Return: -23.0%
Annualized Return: -9.1%
___________________________________________________________________________
__________
Spectrum Currency 2000 (3 month) 2.4%
Inception-to-Date Return: 2.4%
___________________________________________________________________________
___________
Spectrum Global Balanced
1994 (2 months) -1.7%
1995 22.8%
1996 -3.6%
1997 18.2%
1999 16.4%
1999 0.8%
2000 (9 months) -6.3%
Inception-to-Date Return: -51.1%
Annualized Return: 7.2%
___________________________________________________________________________
__________
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 14.2%
1999
-7.6%
2000 (9 months) -7.7%
Inception-to-Date Return: 103.1%
Annualized Return 8.0%
___________________________________________________________________________
__________
Spectrum Strategic
1994 (2 months) 0.1%
1995 10.5%
1996 -3.5%
1997 0.4%
1998 7.8%
1999
37.2%
2000 (9 months) -39.1%
Inception-to-Date Return: -3.5%
Annualized Return: -0.6%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Spectrum Technical
<S> <C> <C>
1994 (2 months) -2.2%
1995 17.6%
1996 18.3%
1997 7.5%
1998 10.2%
1999
-7.5%
2000 (9 months) -16.7%
Inception-to-Date Return: 24.2%
Annualized Return: 3.7%
</TABLE>
<PAGE>
<TABLE>
Morgan Stanley Dean Witter Spectrum Series
Statements of Operations
For the Month Ended September 30, 2000
(Unaudited)
<CAPTION>
Morgan Stanley Dean Witter Morgan Stanley Dean
Witter Morgan Stanley Dean Witter
Spectrum Commodity Spectrum Currency
_ Spectrum Global Balanced
Percent of Percent of
Percent of
September 1, 2000 September 1, 2000
September 1, 2000
Beginning Beginning
Beginning
Amount Net Asset Value Amount Net Asset
Value Amount Net Asset Value
$ % $ %
$ %
REVENUES
<S> <C> <C> <C> <C>
<C> <C>
Trading profit (loss):
Realized 729,504 3.37 634,784 6.18
382,003 0.69
Net change in unrealized (781,547) (3.61) (463,267) (4.51)
(2,562,449) (4.62)
Total Trading Results (52,043) (0.24) 171,517 1.67
(2,180,446) (3.93)
Interest Income (DWR) 88,898 0.41 38,103 0.37
278,729 0.50
Total Revenues 36,855 0.17 209,620 2.04
(1,901,717) (3.43)
EXPENSES
Brokerage fees (DWR) 82,977 0.38 39,385 0.38
212,435 0.38
Management fees 45,097 0.21 29,826
0.29 57,727 0.11
Incentive fees - - 2,307
0.03 - -.
Total Expenses 128,074 0.59 71,518 0.70
270,162 0.49
NET INCOME (LOSS) (91,219) (0.42) 138,102 1.34
(2,171,879) (3.92)
Morgan Stanley Dean Witter Spectrum Series
Statements of Changes in Net Asset Value
For the Month Ended September 30, 2000
(Unaudited)
Morgan Stanley Dean Witter Morgan Stanley Dean
Witter Morgan Stanley Dean Witter
Spectrum Commodity Spectrum Currency
Spectrum Global Balanced .
Units Amount Per Unit Units Amount
Per Unit Units Amount Per Unit
$ $ $ $
<S> <C> <C> <C> <C> <C>
<C> <C> <C> <C>
Net Asset Value,
September 1, 2000 2,797,580.625 21,646,222 7.74 1,016,908.263
10,274,312 10.10 3,523,093.172 55,418,345 15.73
Net Income (Loss) - (91,219) (0.04) -
138,102 0.14 - (2,171,879) (0.62)
Redemptions (53,588.598) (412,632) 7.70 (1,712.991)
(17,541) 10.24 (55,823.756) (843,497) 15.11
Subscriptions 24,900.346 191,733 7.70 102,511.499
1,049,718 10.24 31,412.533 474,643 15.11
Net Asset Value,
September 30, 2000 2,768,892.373 21,334,104 7.70 1,117,706.771
11,444,591 10.24 3,498,681.949 52,877,612 15.11
The accompanying notes are an integral part of these financial statements.
</TABLE>
<page
<TABLE>
Morgan Stanley Dean Witter Spectrum Series
Statements of Operations
For the Month Ended September 30, 2000
(Unaudited)
<CAPTION>
Morgan Stanley Dean Witter Morgan Stanley Dean
Witter Morgan Stanley Dean Witter
Spectrum Select Spectrum Strategic
_ Spectrum Technical
Percent of Percent of
Percent of
September 1, 2000 September 1, 2000
September 1, 2000 Beginning Beginning
Beginning
Amount Net Asset Value Amount Net Asset
Value Amount Net Asset Value
$ % $ %
$ %
REVENUES
<S> <C> <C> <C> <C>
<C> <C>
Trading profit (loss):
Realized 9,338,030 4.74 (4,637,663) (5.97)
5,125,121 2.17
Net change in unrealized (12,119,422) (6.16) (3,076,727)
(3.96) (24,204,764) (10.25)
Total Trading Results (2,781,392) (1.42) (7,714,390)
(9.93) (19,079,643) (8.08)
Interest Income (DWR) 812,158 0.41 301,636
0.39 966,661 0.41
Total Revenues (1,969,234) (1.01) (7,412,754)
(9.54) (18,112,982) (7.67)
EXPENSES
Brokerage fees (DWR) 1,189,579 0.60 469,566 0.60
1,426,336 0.61
Management fees 492,239 0.24 222,854
0.29 786,944 0.33
Total Expenses 1,681,818 0.84 692,420 0.89
2,213,280 0.94
NET LOSS (3,651,052) (1.85) (8,105,174) (10.43)
(20,326,262) (8.61)
Morgan Stanley Dean Witter Spectrum Series
Statements of Changes in Net Asset Value
For the Month Ended September 30, 2000
(Unaudited)
Morgan Stanley Dean Witter Morgan Stanley Dean
Witter Morgan Stanley Dean Witter
Spectrum Select Spectrum Strategic
Spectrum Technical .
Units Amount Per Unit Units Amount
Per Unit Units Amount Per Unit
$ $ $ $
<S> <C> <C> <C> <C> <C>
<C> <C> <C> <C>
Net Asset Value,
September 1, 2000 9,516,262.092 196,895,667 20.69 7,217,680.536
77,721,195 10.77 17,372,635.090 236,083,217 13.59
Net Loss - (3,651,052) (0.38) -
(8,105,174) (1.12) - (20,326,262) (1.17)
Redemptions (142,651.285) (2,897,248) 20.31 (117,966.008)
(1,138,372) 9.65 (298,300.305) (3,704,890) 12.42
Subscriptions 76,221.109 1,548,051 20.31 94,495.183
911,879 9.65 163,171.274 2,026,587 12.42
Net Asset Value,
September 30, 2000 9,449,831.916 191,895,418 20.31 7,194,209.711
69,389,528 9.65 17,237,506.059 214,078,652 12.42
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Morgan Stanley Dean Witter Spectrum Series
Notes to Financial Statements
(Unaudited)
1. Summary of Significant Accounting Policies
Organization - Morgan Stanley Dean Witter Spectrum Commodity
L.P. ("Spectrum Commodity," formerly Morgan Stanley Tangible
Asset Fund L.P.), Morgan Stanley Dean Witter Spectrum Currency
L.P. ("Spectrum Currency"), Morgan Stanley Dean Witter Spectrum
Global Balanced L.P. ("Spectrum Global Balanced"), Morgan
Stanley Dean Witter Spectrum Select L.P. ("Spectrum Select"),
Morgan Stanley Dean Witter Spectrum Strategic L.P. ("Spectrum
Strategic") and Morgan Stanley Dean Witter Spectrum Technical
L.P. ("Spectrum Technical"), (individually, a "Partnership", or
collectively, the "Partnerships"), are limited partnerships
organized to engage primarily in the speculative trading of
futures, forwards, and options contracts on physical
commodities and other commodity interests, including, but not
limited to foreign currencies, financial instruments, metals,
energy and agricultural products (collectively, "futures
interests").
The general partner for each Partnership is Demeter Management
Corporation ("Demeter"). The non-clearing commodity broker for
the Partnerships is Dean Witter Reynolds, Inc. ("DWR") and an
unaffiliated clearing commodity broker, Carr Futures Inc.
("Carr"), provides clearing and execution services for Spectrum
Global Balanced, Spectrum Select and Spectrum Technical. The
clearing commodity brokers for Spectrum Commodity and Spectrum
Currency are Morgan Stanley & Co. Incorporated ("MS & Co.") and
Morgan Stanley & Co. International Limited ("MSIL"). Morgan
Stanley Dean Witter Commodities Management, Inc. ("MSCM") is
the trading advisor to Spectrum Commodity. For Spectrum
Strategic, Carr provides clearing and execution services for
Blenheim Investments Inc. ("Blenheim") and Allied Irish Capital
Management, Ltd. ("AICM"), while MS & Co. and MSIL provide
clearing and execution services for Eclipse Capital Management,
Inc. ("Eclipse"). Demeter, DWR, MS& Co., MSCM and MSIL are
wholly-owned subsidiaries of Morgan Stanley Dean Witter & Co.
Demeter is required to maintain a 1% minimum interest in the
equity of each Partnership and income (losses) are shared by
Demeter and the Limited Partners based upon their proportional
ownership interests.
Use of Estimates - The financial statements are prepared in
accordance with generally accepted accounting principles, which
require management to make estimates and assumptions that
affect the reported amounts in the financial statements and
related disclosures. Management believes that the estimates
utilized in the preparation of the financial statements are
prudent and reasonable. Actual results could differ from those
estimates.
Revenue Recognition - Futures interests are open commitments
until settlement date. They are valued at market on a daily
basis and the resulting net change in unrealized gains and
losses is reflected in the changes in unrealized profits
(losses) on open contracts from one period to the next in the
statements of operations. Monthly, DWR pays interest income on
80% of the month's average daily "Net Assets" (as defined in
the limited partnership agreements) of
Spectrum Commodity, Spectrum Currency, Spectrum Select,
Spectrum Strategic and Spectrum Technical, and 100% in the case
of Spectrum Global Balanced. The interest rates used are equal
to a prevailing rate on U.S. Treasury bills. For purposes of
such interest payments, Net Assets do not include monies due
the Partnerships on futures interests, but not actually
received.
Net Income (Loss) per Unit - Net income (loss) per unit of
limited partnership interest ("Unit(s)") is computed using the
weighted average number of Units outstanding during the period.
<PAGE>
Morgan Stanley Dean Witter Spectrum Series
Notes to Financial Statements
(Continued)
Brokerage and Related Transaction Fees and Costs - The
brokerage fees for Spectrum Commodity, Spectrum Currency, and
Spectrum Global Balanced are accrued at a flat monthly rate of
1/12 of 4.6% (a 4.6% annual rate) of Net Assets as of the first
day of each month.
Brokerage fees for Spectrum Select, Spectrum Strategic and
Spectrum Technical are accrued at a flat monthly rate of 1/12
of 7.25% (a 7.25% annual rate) of Net Assets as of the first
day of each month.
Such fees currently cover all brokerage commissions,
transaction fees and costs and ordinary administrative and
continuing offering expenses.
Operating Expenses - The Partnerships incur monthly management
fees and may incur incentive fees. All common administrative
and continuing offering expenses including legal, auditing,
accounting, filing fees and other related expenses are borne by
DWR through the brokerage fees paid by each Partnership.
Income Taxes - No provision for income taxes has been made in
the accompanying financial statements, as partners are
individually responsible for reporting income or loss based
upon their respective share of each Partnership's revenues and
expenses for income tax purposes.
Distributions - Distributions, other than redemptions of Units,
are made on a pro-rata basis at the sole discretion of Demeter.
No distributions have been made to date.
Continuing Offering - Units of each Partnership are offered at
a price equal to 100% of the Net Asset Value per Unit as of the
close of business on the last day of the month. No selling
commissions or charges related to the continuing offering of
Units are borne by the Limited Partners or the Partnership.
DWR will pays all such costs.
Redemptions - Limited Partners may redeem some or all of their
Units at 100% of the Net Asset Value Per Unit as of the end of
the last day of any month that is at least six months after the
closing at which a person becomes a Limited Partner, upon five
business days advance notice by redemption form to Demeter.
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 redemptions 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 at the end of each
month thereafter, Limited Partners may exchange their
investment among the Partnerships (subject to certain
restrictions outlined in the Limited Partnership Agreements)
without paying additional charges.
<PAGE>
Morgan Stanley Dean Witter Spectrum Series
Notes to Financial Statements
(Continued)
Dissolution of the Partnership - Spectrum Commodity will
terminate on December 31, 2027, Spectrum Currency, Spectrum
Global Balanced, Spectrum Strategic and Spectrum Technical will
terminate on December 31, 2035 and Spectrum Select will
terminate on December 31, 2025 regardless of financial
condition at such time, or at an earlier date under certain
conditions as defined in each Partnership's Limited Partnership
Agreement.
2. Related Party Transactions
Spectrum Commodity and Spectrum Currency pay brokerage fees to
MS & Co. and MSIL. Spectrum Global Balanced, Spectrum Select,
Spectrum Strategic and Spectrum Technical each pay brokerage
fees to DWR as described in Note 1. Spectrum Commodity's and
Spectrum Currency's cash is on deposit with DWR, MS & Co. and
MSIL and Spectrum Global Balanced's, Spectrum Select's,
Spectrum Strategic's and Spectrum Technical's cash is on
deposit with DWR and Carr in futures interests trading accounts
to meet margin requirements as needed. DWR and MS & Co. pay
interest on these funds as described in Note 1.
3. Trading Advisors
Demeter, on behalf of each Partnership, retains certain
commodity trading advisors to make all trading decisions for
the Partnerships. The trading advisors for each Partnership
are as follows:
Morgan Stanley Dean Witter Spectrum Commodity L.P.
Morgan Stanley Dean Witter Commodities Management Inc.
Morgan Stanley Dean Witter Spectrum Currency L.P.
John W. Henry & Company, Inc. ("JWH")
Sunrise Capital Partners, LLC ("Sunrise")
Morgan Stanley Dean Witter Spectrum Global Balanced L.P.
RXR, Inc.
Morgan Stanley Dean Witter Spectrum Select L.P.
EMC Capital Management, Inc.
Rabar Market Research, Inc.
Sunrise Capital Management, Inc.
Morgan Stanley Dean Witter Spectrum Strategic L.P.
Allied Irish Capital Management, Ltd. ("AICM")
Blenheim Investments, Inc. ("Blenheim")
Eclipse Capital Management, Inc.
Morgan Stanley Dean Witter Spectrum Technical L.P.
Campbell & Company, Inc.) ("Campbell")
Chesapeake Capital Corporation ("Chesapeake")
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:
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Morgan Stanley Dean Witter Spectrum Series
Notes to Financial Statements
(Concluded)
Management Fee - The management fee for Spectrum Commodity is
accrued at a rate of 5/24 of 1% of Net Assets on the first day
of each month (a 2.5% annual rate).
The management fee for Spectrum Global Balanced is accrued at a
rate of 5/48 of 1% of Net Assets on the first day of each month
(a 1.25% annual rate).
The management fees for Spectrum Currency are accrued at a rate
of 1/12 of 4% of Net Assets allocated to JWH on the first day
of each month, and 1/12 of 3% of Net Assets allocated to
Sunrise on the first day of each month (annual rates of 4% and
3%, respectively).
The management fee for Spectrum Select is accrued at a rate of
1/4 of 1% of Net Assets on the first day of each month (a 3%
annual rate).
The management fees for Spectrum Strategic are accrued at a
rate of 1/12 of 4% of Net Assets allocated to Blenheim on the
first day of each month, and 1/12 of 3% of Net Assets allocated
to AICM and Eclipse on the first day of each month (annual
rates of 4% and 3%, respectively).
The management fee for Spectrum Technical is accrued at a rate
of 1/3 of 1% of Net Assets on the first day of each month (a 4%
annual rate).
Incentive Fee - Spectrum Commodity pays an annual incentive fee
equal to 20% of the trading profits as of the end of each
calendar year.
Spectrum Currency, Spectrum Global Balanced, Spectrum Select
and Spectrum Strategic each pay a monthly incentive fee equal
to 15% of the trading profits experienced with respect to each
trading advisor's allocated Net Assets as of the end of each
calendar month.
Spectrum Technical pays a monthly incentive fee equal to 15% of
the trading profits experienced with respect to the Net Assets
allocated to Campbell and JWH and 19% of the trading profits
experienced with respect to the Net Assets allocated to
Chesapeake as of the end of each calendar month.
Trading profits for the Partnership's represent the amount by
which profits from futures, forward and options trading exceed
losses after brokerage and management fees are deducted.
For all Partnerships, when trading losses are incurred, no
incentive fees will be paid in subsequent months until all such
losses are received. Cumulative trading losses are adjusted on
a pro-rata basis for the net amount of each months
subscriptions and redemptions.
4. Subsequent Event
In the month of October 2000, the clearing commodity broker for
Spectrum Global Balanced, Spectrum Select, Spectrum Strategic
and Spectrum Technical was changed to MS & Co. and MSIL.
