UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the period ended December 31, 1997 or
[ ] Transition report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the transition period from
________________to___________________
Commission File Number 33-55806
DEAN WITTER WORLD CURRENCY FUND L.P.
(Exact name of registrant as specified in its Limited Partnership
Agreement)
DELAWARE 13-3700691
(State or other jurisdiction of
(I.R.S. Employer
incorporation of organization)
Identification No.)
c/o Demeter Management Corporation
Two World Trade Center, New York, N.Y. - 62nd Flr.
10048 (Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code
(212) 392-5454
Securities registered pursuant to Section 12(b) of the Act:
Name of each
exchange
Title of each class
on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
(Title of Class)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment of this Form 10K. [X ]
State the aggregate market value of the Units of Limited
Partnership Interest held by non-affiliates of the registrant.
The aggregate market value shall be computed by reference to the
price at which units were sold, or the average bid and asked
prices of such units, as of a specified date within 60 days prior
to the date of filing: $29,912,696.08 at January 31, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)
<PAGE>
<TABLE>
DEAN WITTER WORLD CURRENCY FUND L.P.
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 1997
<CAPTION>
Page No.
<S> <C>
DOCUMENTS INCORPORATED BY REFERENCE. . . . . . . . . . . . .
. . . . 1
Part I .
Item 1. Business. . . . . . . . . . . . . . . . . . . . .
. . 2-5
Item 2. Properties. . . . . . . . . . . . . . . . . . . .
. . 5
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . .
. . 5-7
Item 4. Submission of Matters to a Vote of Security
Holders . . 7
Part II.
Item 5. Market for the Registrant's Partnership Units and
Related Security Holder Matters . . . . . . . . .
. . . .8
Item 6. Selected Financial Data . . . . . . . . . . . . .
. . . .9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . .
. 10-17
Item 8. Financial Statements and Supplementary Data. . . .
. . 17
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . .
. . 17
Part III.
Item10. Directors, Executive Officers, Promoters and
Control Persons of the Registrant . . . . . . . .
. 18-22
Item11. Executive Compensation . . . . . . . . . . . . . .
. . 23
Item12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . .
. . 23
Item13. Certain Relationships and Related Transactions . .
. . 23
Part IV.
Item14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . . .
. . . 24
</TABLE>
<PAGE>
<TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by
reference as follows:
<CAPTION>
Documents Incorporated Part
of Form 10-K
<S> <C>
Partnership's Registration Statements
On Forms S-1, File Nos. 33-55806, 33-61148
and 33-63312 I and IV
December 31, 1997 Annual Report for
the Dean Witter World Currency Fund L.P. II
and IV
</TABLE>
<PAGE>
PART I
Item 1. BUSINESS
(a) General Development of Business. Dean Witter World
Currency Fund L.P. (the "Partnership") is a Delaware limited
partnership formed to engage in the speculative trading of
futures and forward contracts and options on futures on a
diversified portfolio of foreign currencies and related
instruments.
60,000 Units of limited partnership interest in the
Partnership were registered pursuant to a Registration
Statement on Form S-1 (File No. 33-55806) which became
effective on February 5, 1993. The offering of units was
underwritten on a "best efforts" basis by Dean Witter
Reynolds Inc. ("DWR"). The Partnership's general partner is
Demeter Management Corporation ("Demeter"). DWR and Demeter
are wholly-owned subsidiaries of Morgan Stanley, Dean
Witter, Discover & Co. ("MSDWD"). The Partnership
commenced operations on April 2, 1993. Additional units of
limited partnership interests in the Partnership were
registered pursuant to a Registration Statement on Form S-1
(File No. 33-61148) which became effective on April 27, 1993
and a Registration Statement on Form S-1 (File No. 33-63312,
into which File Nos. 33-61148 and 33-55806 were subsumed),
which became effective on June 2, 1993.
Through July 31, 1997, the sole commodity broker for
the Partnership's transactions was DWR. On July 31, 1997,
DWR closed the
<PAGE>
sale of its institutional futures business and foreign
currency trading operations to Carr Futures, Inc. ("Carr"),
a subsidiary of Credit Agricole Indosuez. Following the
sale, Carr became the clearing commodity broker for the
Partnership's futures and futures options trades and the
counterparty on the Partnership's foreign currency trades.
DWR serves as the non-clearing commodity broker for the
Partnership with Carr providing all clearing services for
the Partnership's transactions.
The Partnership's net asset value per unit, as of
December 31, 1997 was $993.79, representing an increase of
39.35 percent from the net asset value per unit of $713.17
at December 31, 1996. For a more detailed description of
the Partnership's business see subparagraph (c).
(b) Financial Information about Industry Segments. The
Partnership's business comprises only one segment for
financial reporting purposes, speculative trading of futures
interests and other commodity interests. The relevant
financial information is presented in Items 6 and 8.
(c) Narrative Description of Business. The
Partnership is in the business of speculative trading in
futures contracts interests, pursuant to trading
instructions provided by John W. Henry & Company, Inc.
("JWH") and Millburn Ridgefield Corporation, its
independent trading advisors (the "Trading Advisors").
<PAGE>
For a detailed description of the different facets of the
Partnership's business, see those portions of the
Partnership's Prospectus, dated February 5, 1993, filed as
part of the Registration Statement on Form S-1 ( File No. 33-
55806) (see "Documents Incorporated by Reference" Page 1),
set forth below.
Facets of Business
1. Summary 1. "Summary of the
Prospectus"
(Pages 1-8).
2. Currency Markets 2. "The Currency Markets"
(Pages 80-88).
3. Partnership's Trading 3. "Trading Policies"
(Page Arrangements and
75). "The Trading Policies
Advisors" (Pages 34-74).
4. Management of the Part- 4. "The Management Agree-
nership ments" (Pages 77-80).
"The General Partner" (Pages 30-
33) and
"The Commodity Broker"
(Page 76-77). "The Limited Partnership
Agreement" (Pages 89-
93).
5. Taxation of the Partner- 5. "Federal Income Tax
nership's Limited Partners Aspects" and "State
and Local Income Tax
Aspects" (Pages 97-
104).
(d) Financial Information About Foreign and Domestic
Operations and
Export Sales.
The Partnership has not engaged in any operations in
foreign
<PAGE>
countries; however, the Partnership (through the commodity
brokers) enters into forward contract transactions where
foreign banks are the contracting party, and trades in
futures interests on foreign exchanges.
Item 2. PROPERTIES
The executive and administrative offices are located
within the offices of DWR. The DWR offices utilized by the
Partnership are located at Two World Trade Center, 62nd
Floor, New York, NY 10048.
Item 3. LEGAL PROCEEDINGS
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 interest in limited
partnership commodity pools sold by DWR. Named defendants
include DWR, Demeter, Dean Witter Futures & Currency Manage-
ment Inc. ("DWFCM"), MSDWD (all such parties referred to
hereafter as the "Dean Witter Parties"), the Partnership,
certain other 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
<PAGE>
enrichment, and conversion in the sale and operation of the
various limited partnership commodity pools including the
Partnership sold by DWR. Similar purported class actions
were also filed on September 18 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 and
the Partnership 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
<PAGE>
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
or the Partnership.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND
RELATED
SECURITY HOLDER MATTERS
There is no established public trading market for the
Units of Limited Partnership Interest in the Partnership.
The number of holders of Units at December 31, 1997 was
approximately 3,683. No distributions have been made by the
Partnership since it commenced trading operations on April
2, 1993. Demeter has sole discretion to decide what
distributions, if any, shall be made to investors in the
Partnership. No determination has yet been made as to
future distributions.
<PAGE>
<TABLE>
Item 6. SELECTED FINANCIAL DATA (in dollars)
<CAPTION>
For the
Period
from
April
2, 1993
(commencement For the Years Ended December 31,
of operations) to
1997 1996 1995 1994
December 31, 1993
<S> <C> <C> <C> <C> <C>
Total Revenues
(including interest) 12,366,515 5,746,636 4,814,020 (12,285,075)
(13,521,231)
Net Income (Loss) 9,849,370 3,438,844 1,480,810 (19,768,097)
(21,491,018)
Net Income (Loss)
Per Unit (Limited
& General Partners) 280.62 81.88 12.50 (207.71)
(173.50)
Total Assets 32,260,016 27,427,364 31,591,379 49,603,246
90,786,961
Total Limited
Partners' Capital 30,674,029 25,668,776 29,734,237 46,629,315
88,549,902
Net Asset Value Per
Unit of Limited
Partnership Interest 993.79 713.17 631.29 618.79
826.50
</TABLE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity. The Partnership's assets are on deposit in
separate commodity interest trading accounts with DWR and
Carr, the commodity brokers, and are used by the Partnership
as margin to engage in commodity futures, forward contracts
and other commodity interest trading. DWR and Carr hold
such assets in either designated depositories or in
securities approved by the Commodity Futures Trading
Commission ("CFTC") for investment of customer funds. The
Partnership's assets held by DWR and Carr may be used as
margin solely for the Partnership's trading. Since the
Partnership's sole purpose is to trade in commodity futures
contracts and other commodity interests, it is expected that
the Partnership will continue to own such liquid assets for
margin purposes.
The Partnership's investment in commodity futures
contracts, forward contracts and other commodity interests
may be illiquid. If the price for a futures contract for a
particular commodity has increased or decreased by an amount
equal to the "daily limit", positions in the commodity can
neither be taken nor liquidated unless traders are willing
to effect trades at or within the limit. Commodity futures
prices have occasionally moved the daily limit for several
consecutive days with
<PAGE>
little or no trading. Such market conditions could prevent
the Partnership from promptly liquidating its commodity
futures positions.
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 and subjecting it to substantial losses. Either of
these market conditions could result in restrictions on
redemptions.
Market Risk. The Partnership trades futures, options
and forward contracts in interest rates, stock indices,
commodities and currencies. In entering into these
contracts there exists a risk to the Partnership (market
risk) that such contracts may be significantly influenced by
market conditions, such as interest rate volatility,
resulting in such contracts being less valuable. If the
markets should move against all of the futures interest
positions held by the Partnership at the same time, and if
the Trading Advisors were unable to offset futures interest
positions of the Partnership, the Partnership could lose all
of its assets and the Limited Partners would realize a 100%
loss. The Partnership has established Trading Policies,
which include standards for liquidity and leverage which
help control market risk. Both the Trading
<PAGE>
Advisors and Demeter monitor the Partnership's trading
activities on a daily basis to ensure compliance with the
Trading Policies. Demeter may
(under terms of the Management Agreements) override the
trading instructions of a Trading Advisor to the extent
necessary to comply with the Partnership's Trading Policies.
Credit Risk. In addition to market risk, in entering
into futures, options and forward contracts there is a
credit risk to the Partnership that the counterparty on a
contract will not be able to meet its obligations to the
Partnership. The ultimate counterparty of the Partnership
for futures contracts traded in the United States and most
foreign exchanges on which the Partnership trades is the
clearinghouse associated with such exchange. In general, a
clearinghouse is backed by the membership of the exchange
and will act in the event of non-performance by one of its
members or one of its member's customers, and, as such,
should significantly reduce this credit risk. For example,
a clearinghouse may cover a default by (i) drawing upon a
defaulting member's mandatory contributions and/or non-
defaulting members' contributions to a clearinghouse
guarantee fund, established lines or letters of credit with
banks, and/or the clearinghouse's surplus capital and other
available assets of the exchange and clearinghouse, or (ii)
assessing its members. In cases where the Partnership
trades on a foreign exchange where the clearinghouse is not
funded or guaranteed by the membership or where the exchange
is a "principals' market" in which
<PAGE>
performance is the responsibility of the exchange member and
not the exchange or a clearinghouse, or when the Partnership
enters into off-
exchange contracts with a counterparty, the sole recourse of
the Partnership will be the clearinghouse, the exchange
member or the off-exchange contract counterparty, as the
case may be.
There can be no assurance that a clearinghouse,
exchange or other exchange member will meet its obligations
to the Partnership, and the Partnership is not indemnified
against a default by such parties from Demeter or MSDWD or
DWR. Further, the law is unclear as to whether a commodity
broker has any obligation to protect its customers from loss
in the event of an exchange, clearinghouse or other exchange
member default on trades effected for the broker's
customers; any such obligation on the part of the broker
appears even less clear where the default occurs in a non-US
jurisdiction.
Demeter deals with the credit risks of all
partnership's for which it serves as General Partner in
several ways. First, it monitors each partnership's credit
exposure to each exchange on a daily basis, calculating not
only the amount of margin required for it but also the
amount of its unrealized gains at each exchange, if any.
The Commodity Brokers inform each partnership, as with all
their customers, of its net margin requirements for all its
existing open positions, but do not break that net figure
down, exchange by exchange. Demeter, however, has installed
a system which permits it to monitor each partnership's
<PAGE>
potential margin liability, exchange by exchange. Demeter
is then able to monitor the individual partnership's
potential net credit exposure to
each exchange by adding the unrealized trading gains on that
exchange, if any, to the partnership's margin liability
thereon.
Second, as discussed earlier, each partnership's
trading policies limit the amount of partnership Net Assets
that can be committed at any given time to futures contracts
and require, in addition, a certain minimum amount of
diversification in the partnership's trading, usually over
several different products. One of the aims of such trading
policies has been to reduce the credit exposure of any
partnership to any single exchange and, historically, such
partnership exposure has typically amounted to only a small
percentage of its total Net Assets. On those relatively few
occasions where a partnership's credit exposure has climbed
above that level, Demeter has dealt with the situations on a
case by case basis, carefully weighing whether the increased
level of credit exposure remained appropriate. Demeter
expects to continue to deal with such situations in a
similar manner in the future.
Third, Demeter has secured, with respect to Carr acting
as the clearing broker for the partnerships, a guarantee by
Credit Agricole Indosuez, Carr's parent, of the payment of
the "net liquidating value" of the transactions (futures,
options and forward contracts) in each partnership's
account. As of December 31, 1997, Credit Agricole
<PAGE>
Indosuez' total capital was over $3.25 billion and it is
currently rated AA2 by Moody's.
With respect to forward contract trading, the
partnerships trade with only those counterparties which
Demeter, together with DWR, have determined to be
creditworthy. At the date of this filing, the partnerships
deal only with Carr as their counterparty on forward
contracts. The guarantee by Carr's parent, discussed above,
covers these forward contracts.
See "Financial Instruments" under Notes to Financial
Statements in the Partnership's 1997 Annual Report to
Partners, incorporated by reference in this Form 10-K.
Capital Resources. The Partnership does not have, nor
does it expect to have, any capital assets. Redemptions of
additional Units of Limited Partnership Interest in the
future will affect the amount of funds available for
investments in subsequent periods. As redemptions are at
the discretion of Limited Partners, it is not possible to
estimate the amount and therefore, the impact of future
redemptions.
Results of Operations. As of December 31, 1997, the
Partnership's total capital was $31,874,031, an increase of
$5,344,100 from the Partnership's total capital of
$26,529,931, at December 31, 1996. For
<PAGE>
the year ended December 31, 1997, the Partnership generated
net income of $9,849,370 and total redemptions aggregated
$4,505,270.
For the year ended December 31, 1997, the Partnership's
total trading revenues including interest income were
$12,366,515. The
Partnership's total expenses for the year were $2,517,145,
resulting in net income of $9,849,370. The value of an
individual unit in the partnership icreased from $713.17 at
December 31, 1996 to $993.79 at December 31, 1997.
As of December 31, 1996, the Partnership's total
capital was $26,529,931, a decrease of $3,966,591 from the
Partnership's total capital of $30,496,522 at December 31,
1995. For the year ended December 31, 1996, the Partnership
generated net income of $3,438,844, and total redemptions
aggregated $7,405,435.
For the period ended December 31, 1996, the
Partnership's total trading revenues including interest
income were $5,746,636. The Partnership's total expenses
for the period were $2,307,792, resulting in net income of
$3,438,844. The value of an individual unit in the
Partnership increased from $631.29 at December 31, 1995 to
$713.17 at December 31, 1996.
As of December 31, 1995, the Partnership's total
capital was $30,496,522, a decrease of $16,879,981 from the
Partnership's total capital of $47,376,503 at December 31,
1994. For the year ended December
<PAGE>
31, 1995, the Partnership generated net income of $1,480,810
and total redemptions aggregated $18,360,791.
For the year ended December 31, 1995, the Partnership's
total trading revenues including interest income were
$4,814,020. The
Partnership's total expenses for the year were $3,333,210,
resulting in net income of $1,480,810. The value of an
individual unit in the Partnership increased from $618.79 at
December 31, 1994 to $631.29 at December 31, 1995.
The Partnership's overall performance record represents
varied results of trading in different commodity markets.
For a further description of trading results, refer to the
letter to the Limited Partners in the accompanying 1997
Annual Report to Partners, incorporated by reference in this
Form 10-K. The Partnership's gains and losses are allocated
among its Limited Partners for income tax purposes.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item appears in the
attached 1997 Annual Report to Partners and is incorporated
by reference in this Annual Report on Form 10-K.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS OF THE REGISTRANT
General Partner
Demeter, a Delaware corporation, was formed on August
18, 1977 to act as a commodity pool operator and is
registered with the CFTC as a commodity pool operator and
currently is a member of the National Futures Association
("NFA") in such capacity. Demeter is wholly-owned by MSDWD
and is an affiliate of DWR. MSDWD, DWR and Demeter may each
be deemed to be "promoters" and/or a "parent" of the
Partnership within the meaning of the federal securities
laws.
On July 21, 1997, MSDWD, the sole shareholder of
Demeter, appointed a new Board of Directors consisting of
Richard M. DeMartini, Mark J. Hawley, Lawrence Volpe, Joseph
G. Siniscalchi, Edward C. Oelsner III, and Robert E. Murray.
Dean Witter Reynolds Inc.
DWR is a financial services company which provides to
its individual, corporate and institutional clients services
as a broker in securities and commodity interest contracts,
a dealer in corporate, municipal and government securities,
an investment adviser and an agent in the sale of life
insurance and various other products and services. DWR is a
member firm of the New York Stock Exchange, the American
Stock Exchange, the Chicago Board Options Exchange, and
other major securities
<PAGE>
exchanges.
DWR is registered with the CFTC as a futures commission
merchant and is a member of the NFA in such capacity. As of
December 31, 1997, DWR is servicing its clients through a
network of approximately 401 branch offices with
approximately 10,155 account executives servicing individual
and institutional client accounts.
Directors and Officers of the General Partner
The directors and officers of Demeter as of December
31, 1997 are as follows:
Richard M. DeMartini, age 45, is the Chairman of the
Board and a Director of Demeter. Mr. DeMartini is also
Chairman of the Board and a Director of Dean Witter Futures
& Currency Management Inc. ("DWFCM"). Mr. DeMartini is
president and chief operating officer of MSDWD's Individual
Asset Management Group. He was named to this position in
May of 1997 and is responsible for Dean Witter InterCapital,
Van Kampen American Capital, insurance services, managed
futures, unit trust, investment consulting services, Dean
Witter Realty, and NOVUS Financial Corporation. Mr.
DeMartini is a member of the MSDWD management committee, a
director of the InterCapital funds, a trustee of the TCW/DW
funds and a trustee of the Van Kampen American Capital and
Morgan Stanley retail funds. Mr. DeMartini has been with
Dean Witter his entire career, joining the firm in 1975 as
an account executive. He
<PAGE>
served as a branch manager, regional director and national
sales director, before being appointed president and chief
operating officer of the Dean Witter Consumer Markets. In
1988 he was named president and chief operating officer of
Sears' Consumer Banking Division and in January 1989 he
became president and chief operating officer of Dean Witter
Capital. Mr. DeMartini has served as chairman of the board
of the Nasdaq Stock Market, Inc. and vice chairman of the
board of the National Association of Securities Dealers,
Inc. A native of San Francisco, Mr. DeMartini holds a
bachelor's degree in marketing from San Diego State
University.
Mark J. Hawley, age 54, is President and a Director of
Demeter. Mr. Hawley is also President and a Director of
DWFCM. Mr. Hawley joined DWR in February 1989 as Senior
Vice President and is currently the Executive Vice President
and Director of DWR's Managed Futures Department. From 1978
to 1989, Mr. Hawley was a member of the senior management
team at Heinold Asset Management, Inc., a CPO, and was
responsible for a variety of projects in public futures
funds. From 1972 to 1978, Mr. Hawley was a Vice President
in charge of institutional block trading for the Mid-West at
Kuhn Loeb & Company.
Lawrence Volpe, age 50, is a Director of Demeter and
DWFCM. Mr. Volpe joined DWR as a Senior Vice President and
Controller in September 1983, and currently holds those
positions. From July 1979 to September 1983, he was
associated with E.F. Hutton & Company Inc. and prior to his
<PAGE>
departure, held the positions of First Vice President and
Assistant Controller. From 1970 to July 1979, he was
associated with Arthur Anderson & Co. and prior to his
departure served as audit manager in the financial services
division.
Joseph G. Siniscalchi, age 52, is a Director of
Demeter. Mr. Siniscalchi joined DWR in July 1984 as a First
Vice President, Director of General Accounting and served as
a Senior Vice President and Controller for DWR's Securities
division through 1997. He is currently Executive Vice
President and Director of the Operations Division of DWR.
From February 1980 to July 1984, Mr. Siniscalchi was
Director of Internal Audit at Lehman Brothers Kuhn Loeb,
Inc.
Edward C. Oelsner, III, age 55, is a Director of
Demeter. Mr. Oelsner is currently an Executive Vice
President and head of the Product Development Group at Dean
Witter InterCapital Inc., an affiliate of DWR. Mr. Oelsner
joined DWR in 1981 as a Managing Director in DWR's
Investment Banking Department specializing in coverage of
regulated industries and, subsequently, served as head of
the DWR Retail Products Group. Prior to joining DWR, Mr.
Oelsner held positions at The First Boston Corporation as a
member of the Research and Investment Banking Departments
from 1967 to 1981. Mr. Oelsner received his M.B.A. in
Finance from the Columbia University Graduate School of
Business in 1966 and an A.B. in Politics from Princeton
University in 1964.
<PAGE>
Robert E. Murray, age 37, is a Director of Demeter.
Mr. Murray is also a Director of DWFCM. Mr. Murray is
currently a Senior Vice President of DWR's Managed Futures
Department and is the Senior Administrative Officer of
DWFCM. Mr. Murray began his career at DWR in 1984 and is
currently the Director of Product Development for the
Managed Futures Department. He is responsible for the
development and maintenance of the proprietary Fund
Management System utilized by DWFCM and Demeter in
organizing information and producing reports for monitoring
clients' accounts. Mr. Murray currently serves as a
Director of the Managed Funds Association. Mr. Murray
graduated from Geneseo State University in May 1983 with a
B.A. degree in Finance.
Patti L. Behnke, age 37, is Vice President and Chief
Financial Officer of Demeter. Ms. Behnke joined DWR in
April 1991 as Assistant Vice President of Financial
Reporting and is currently a First Vice President and
Director of Financial Reporting and Managed Futures
Accounting in the Individual Asset Management Group. Prior
to joining DWR, Ms. Behnke held positions of increasing
responsibility at L.F. Rothschild & Co. and Carteret Savings
Bank. Ms. Behnke began her career at Arthur Anderson & Co.,
where she was employed in the audit division from 1982-1986.
She is a member of the AICPA and the New York State Society
of Certified Public Accountants.
<PAGE>
Item 11. EXECUTIVE COMPENSATION
The Partnership has no directors and executive
officers. As a limited partnership, the business of the
Partnership is managed by Demeter, which is responsible for
the administration of the business affairs of the
Partnership, but receives no compensation for such services.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT (a) Security Ownership of Certain
Beneficial Owners - As of December 31, 1997, there were no
persons known to be beneficial owners of more than 5 percent
of the Units of Limited Partnership Interest in the
Partnership.
(b) Security Ownership of Management - At December 31,
1997, Demeter owned 1,207.506 Units of General Partnership
Interest representing a 3.76 percent interest in the
Partnership.
(c) Changes in Control - None
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Refer to Note 2 - "Related Party Transactions" of
"Notes to Financial Statements", in the accompanying 1997
Annual Report to Partners, incorporated by reference in this
Form 10-K. In its capacity as the Partnership's retail
commodity broker, DWR received commodity brokerage
commissions (paid and accrued by the Partnership) of
$888,907 for the year ended December 31, 1997.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a) 1. Listing of Financial Statements
The following financial statements and report of
independent public accountants, all appearing in the
accompanying 1997 Annual Report to Partners, are
incorporated by reference in this Form 10-K:
- Report of Deloitte & Touche LLP, independent
auditors, for the years ended December 31, 1997,
1996 and 1995.
- Statements of Financial Condition as of
December 31, 1997 and 1996.
- Statements of Operations, Changes in Partners'
Capital, and Cash Flows for the years ended
December 31, 1997, 1996 and 1995.
- Notes to Financial Statements.
With exception of the aforementioned information
and the information incorporated in Items 7, 8 and 13, the
1997 Annual Report to Partners is not deemed to be filed
with this report.
2. Listing of Financial Statement Schedules
No financial statement schedules are required to be
filed with this report.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the
Partnership during the last quarter of the period covered by
this report.
(c) Exhibits
Refer to Exhibit Index on Page E-1.
<PAGE>
SIGNATURES
Pursuant to the requirement of Sections 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DEAN WITTER WORLD CURRENCY FUND L.P.
(Registrant)
BY: Demeter Management Corporation,
General Partner
March 24, 1998 BY: /s/ Mark J. Hawley
Mark J. Hawley, Director
and
President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Demeter Management Corporation.
BY: /s/ Mark J. Hawley March
24, 1998
Mark J. Hawley, Director and
President
/s/ Richard M. DeMartini March
24, 1998
Richard M. DeMartini, Director
and Chairman of the Board
/s/ Lawrence Volpe March
24, 1998
Lawrence Volpe, Director
/s/ Joseph G. Siniscalchi March
24, 1998
Joseph G. Siniscalchi, Director
/s/ Edward C. Oelsner III March
24, 1998
Edward C. Oelsner III, Director
/s/ Robert E. Murray March
24, 1998
Robert E. Murray, Director
/s/ Patti L. Behnke March
24, 1998
Patti L. Behnke, Chief Financial
Officer and Principal Accounting
Officer
<PAGE>
EXHIBIT INDEX
ITEM
METHOD OF FILING
-3. Limited Partnership Agreement of
the Partnership, dated as of
December 8, 1992. (1)
- -10. Form of the
Management Agreements among
the Partnership, Demeter and CCA
Capital Management (2)
Inc., Colorado Commodities
Management Corporation, Ezra Zask
Associates Inc. and Millburn
Ridgefield Corporation dated as
of March 1, 1993.
- -10. Customer Agreement Between the
Partnership and DWR, dated as of (3)
March 1, 1993.
- -10. Management Agreement among the
Partnership, Demeter and JWH
dated as of June 1, 1995. (4)
- -13. December 31, 1997 Annual Report to Limited Partners. (5)
(1)
Incorporated by reference to Exhibit 3.01 and Exhibit 3.02
of the Partnership's Registration Statement on Form S-1
(File No. 33-55806).
(2)
Incorporated by reference to Exhibit 10.02 of the
Partnership's Registration Statement on Form S-1 (File No.
33-55806).
(3)
Incorporated by reference to Exhibit 10.01 of the
Partnership's Registration Statement on Form S-1 (File No.
33-55806).
(4)
Incorporated by reference to Exhibit 10.03 of the
Partnership's Annual Report on Form 10K for the fiscal year
ended December 31, 1995.
(5) Filed
herewith.
<PAGE>
World
Currency
Fund
December 31, 1997
Annual Report [LOGO] DEAN WITTER
<PAGE>
DEAN WITTER
Two World Trade Center
62nd Floor
New York, NY 10048
Telephone (212) 392-8899
DEAN WITTER WORLD CURRENCY FUND L.P.
ANNUAL REPORT
1997
Dear Limited Partner:
This marks the fifth annual report for the Dean Witter World Currency Fund L.P.
(the "Fund"). The Fund began the year trading at a Net Asset Value per Unit of
$713.17, and increased by 39.4% to $993.79 on December 31, 1997. The Fund has
decreased by .6% since its inception of trading in April 1993 ( a compound
annualized return of -0.1%).
The Fund recorded significant gains during January as advisors took advantage
of a strong upward move in the value of the U.S. dollar. Profits were recorded
from short positions in the Japanese yen, German mark and both the Swiss and
French francs. During February, the Fund experienced gains as the value of the
U.S. dollar continued to strengthen versus most world currencies. The most
significant gains were recorded from short German mark, Swiss franc, Japanese
yen and Singapore dollar positions. The Fund experienced losses during March
from short positions in the German mark and Swiss franc as the value of these
currencies moved higher versus the U.S. dollar after trending lower previously.
A portion of these losses was offset as the value of the Singapore dollar
continued to trend lower.
The Fund recorded gains during April as the value of the U.S. dollar continued
to strengthen relative to the Japanese yen. Smaller gains were recorded from
short positions in the German mark and Singapore
<PAGE>
dollar. A portion of these gains was offset by losses recorded from
transactions involving the British pound as its value moved in a trendless
range during the month. In May, the Fund recorded losses from previously
established short Japanese yen positions as its value increased sharply early
in the month. This upward move resulted in new long positions, which
experienced losses late in the month as the yen decreased in value. During
June, the Fund experienced gains from short German mark positions as the value
of the U.S. dollar increased versus the mark. Additional gains were recorded
from long Japanese yen positions.
The Fund recorded gains during July from a strengthening in value of the U.S.
dollar versus most world currencies. The most significant gains were recorded
from short positions in European and Pacific Rim currencies. In August, the
Fund recorded losses due to trend reversals and choppy movement in the value of
most European currencies. The most significant losses were recorded from short
German mark and Swiss franc positions. A majority of the months' losses was
offset by gains resulting from the Asian currency crisis from short Malaysian
ringgit and Singapore dollar positions. During September, the Fund experienced
small profits due primarily to the continued weakening trend in the value of
the Malaysian ringgit. A portion of these gains was offset by losses
experienced from trendless movement in the value of the British pound and Swiss
franc.
The Fund recorded losses during October due primarily to short positions in the
German mark and Swiss franc as the value of these currencies strengthened
relative to the U.S. dollar. Smaller losses were recorded from transactions
involving the Mexican peso. The Fund posted profits during November from short
Japanese yen positions
<PAGE>
as its value moved sharply lower amid concerns over Asian economic stability.
Smaller gains were recorded from short Australian dollar and Malaysian ringgit
positions. As the economic turmoil in the Far East continued during December,
additional gains were recorded from short positions in Pacific Rim currencies,
as well as the German mark and Swiss franc.
Overall, the Fund recorded extremely strong profits for the year due primarily
to a strengthening in value of the U.S. dollar versus most world currencies
throughout much of 1997. The most significant gains were recorded from short
positions in the Japanese yen during January and February. Additional gains
were recorded as the U.S. dollar increased in value versus most European and
Pacific Rim currencies during July. In the wake of the Asian currency crisis
during November and December, the Fund was again able to capture profits from
short positions in the Japanese yen and other Pacific Rim currencies.
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,
/s/ Mark J. Hawley
Mark J. Hawley
President
Demeter Management Corporation
General Partner
<PAGE>
DEAN WITTER WORLD CURRENCY FUND L.P.
INDEPENDENT AUDITORS' REPORT
The Limited Partners and the General Partner:
We have audited the accompanying statements of financial condition of Dean
Witter World Currency Fund L.P. (the "Partnership") as of December 31, 1997 and
1996 and the related statements of operations, changes in partners' capital,
and cash flows for each of the three years in the period ended December 31,
1997. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Dean Witter World Currency Fund L.P. as of
December 31, 1997 and 1996 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
February 17, 1998
New York, New York
<PAGE>
DEAN WITTER WORLD CURRENCY FUND L.P.
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1997 1996
---------- ----------
$ $
<S> <C> <C>
ASSETS
Equity in Commodity futures trading
accounts:
Cash 31,327,827 25,825,801
Net unrealized gain on open contracts 775,529 1,242,668
Net option premiums 49,687 230,200
---------- ----------
Total Trading Equity 32,153,043 27,298,669
Interest receivable (DWR) 106,973 87,895
Due from DWR -- 40,800
---------- ----------
Total Assets 32,260,016 27,427,364
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 305,335 779,025
Accrued management fees 80,650 68,410
Accrued brokerage commissions (DWR) -- 26,388
Accrued administrative expenses -- 21,908
Accrued transaction fees and costs -- 1,702
---------- ----------
Total Liabilities 385,985 897,433
---------- ----------
PARTNERS' CAPITAL
Limited Partners (30,865.833 and 35,992.609 Units,
respectively) 30,674,029 25,668,776
General Partner (1,207.506 Units) 1,200,002 861,155
---------- ----------
Total Partners' Capital 31,874,031 26,529,931
---------- ----------
Total Liabilities and Partners' Capital 32,260,016 27,427,364
========== ==========
NET ASSET VALUE PER UNIT 993.79 713.17
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DEAN WITTER WORLD CURRENCY FUND L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
1997 1996 1995
---------- --------- ---------
$ $ $
<S> <C> <C> <C>
REVENUES
Trading Profit (Loss):
Realized 11,608,498 2,720,213 1,451,982
Net change in unrealized (467,139) 1,877,237 1,539,185
---------- --------- ---------
Total Trading Results 11,141,359 4,597,450 2,991,167
Interest income (DWR) 1,225,156 1,149,186 1,822,853
---------- --------- ---------
Total Revenues 12,366,515 5,746,636 4,814,020
---------- --------- ---------
EXPENSES
Management fees 922,702 871,626 1,225,699
Brokerage commissions (DWR) 888,907 1,280,404 1,730,874
Incentive Fee 564,539 -- --
Administrative expenses 75,084 74,537 106,193
Transaction fees and costs 65,913 81,225 270,444
---------- --------- ---------
Total Expenses 2,517,145 2,307,792 3,333,210
---------- --------- ---------
NET INCOME 9,849,370 3,438,844 1,480,810
========== ========= =========
NET INCOME ALLOCATION:
Limited Partners 9,510,523 3,339,974 1,465,713
General Partner 338,847 98,870 15,097
NET INCOME PER UNIT:
Limited Partners 280.62 81.88 12.50
General Partner 280.62 81.88 12.50
</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
----------- ----------- --------- -----------
$ $ $
<S> <C> <C> <C> <C>
Partners' Capital, December
31, 1994 76,563.617 46,629,315 747,188 47,376,503
Net Income -- 1,465,713 15,097 1,480,810
Redemptions (28,255.254) (18,360,791) -- (18,360,791)
----------- ----------- --------- -----------
Partners' Capital, December
31, 1995 48,308.363 29,734,237 762,285 30,496,522
Net Income -- 3,339,974 98,870 3,438,844
Redemptions (11,108.248) (7,405,435) -- (7,405,435)
----------- ----------- --------- -----------
Partners' Capital,
December 31, 1996 37,200.115 25,668,776 861,155 26,529,931
Net Income -- 9,510,523 338,847 9,849,370
Redemptions (5,126.776) (4,505,270) -- (4,505,270)
----------- ----------- --------- -----------
Partners' Capital, December
31, 1997 32,073.339 30,674,029 1,200,002 31,874,031
=========== =========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DEAN WITTER WORLD CURRENCY FUND L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
1997 1996 1995
---------- ---------- -----------
$ $ $
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 9,849,370 3,438,844 1,480,810
Noncash item included in net income:
Net change in unrealized 467,139 (1,877,237) (1,539,185)
(Increase) decrease in operating assets:
Net option premiums 180,513 (34,462) 608,212
Interest receivable (DWR) (19,078) 25,983 86,762
Due from DWR 40,800 (40,800) 86,859
Increase (decrease) in operating
liabilities:
Accrued management fees 12,240 (10,260) (45,137)
Accrued brokerage commissions (DWR) (26,388) 14,004 12,384
Accrued administrative expenses (21,908) (75,389) 30,668
Accrued transaction fees and costs (1,702) 1,083 619
---------- ---------- -----------
Net cash provided by operating
activities 10,480,986 1,441,766 721,992
---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in redemptions payable (473,690) (126,862) (1,130,420)
Redemptions of units (4,505,270) (7,405,435) (18,360,791)
---------- ---------- -----------
Net cash used for financing activities (4,978,960) (7,532,297) (19,491,211)
---------- ---------- -----------
Net increase (decrease) in cash 5,502,026 (6,090,531) (18,769,219)
Balance at beginning of period 25,825,801 31,916,332 50,685,551
---------- ---------- -----------
Balance at end of period 31,327,827 25,825,801 31,916,332
========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DEAN WITTER WORLD CURRENCY FUND L.P.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION--Dean Witter World Currency Fund L.P. (the "Partnership") is a
limited partnership organized to engage in the speculative trading of commodity
futures contracts, commodity options contracts and forward contracts on foreign
currencies. The general partner for the Partnership is Demeter Management
Corporation ("Demeter"). Demeter is a wholly-owned subsidiary of Morgan
Stanley, Dean Witter, Discover & Co. ("MSDWD").
On May 31, 1997, Morgan Stanley Group Inc. was merged with and into Dean
Witter, Discover & Co. ("DWD"). At that time DWD changed its corporate name to
Morgan Stanley, Dean Witter, Discover & Co.
Demeter has retained John W. Henry & Company, Inc. ("JWH") and Millburn
Ridgefield Corporation ("Milburn") as the trading advisors of the Partnership.
Through July 31, 1997, the sole commodity broker for the Partnership's
transactions was Dean Witter Reynolds Inc. ("DWR"), also a subsidiary of MSDWD.
On July 31, 1997, DWR closed the sale of its institutional futures business and
foreign currency trading operations to Carr Futures, Inc. ("Carr"), a
subsidiary of Credit Agricole Indosuez. Following the sale, Carr became the
clearing commodity broker for the Partnership's futures and futures options
trades and the counterparty on the Partnership's foreign currency trades. DWR
will continue to serve as the non-clearing commodity broker for the Partnership
with Carr providing all clearing services for the Partnership's transactions.
Demeter is required to maintain a 1% minimum interest in the equity of the
Partnership and income (losses) are shared by Demeter and the 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, commodity options 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, DWR pays the Partnership interest income based
upon 80% of the average daily Net Assets for the month at a rate equal to the
average yield on 13-week U.S. Treasury Bills issued during the month. 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.
<PAGE>
DEAN WITTER WORLD CURRENCY FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NET INCOME (LOSS) PER UNIT--Net income (loss) per Unit is computed using the
weighted average number of units outstanding during the period.
EQUITY IN COMMODITY FUTURES TRADING ACCOUNTS--The Partnership's asset "Equity
in Commodity futures trading accounts" consists of cash on deposit at DWR and
Carr to be used as margin for trading and the net asset or liability related to
unrealized gains or losses on open contracts. The asset or liability related to
the unrealized gains or losses on forward contracts is presented as a net
amount in each period due to master netting agreements.
BROKERAGE COMMISSIONS AND RELATED TRANSACTION FEES AND COSTS--The Partnership
accrues brokerage commissions 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.
Prior to September 1, 1996 brokerage commissions were capped at 3/4 of 1% per
month of the Net Assets allocated to each trading advisor as defined in the
Limited Partnership Agreement.
Effective September 1, 1996, brokerage commissions and transaction fees
chargeable to the Partnership have been capped at 13/20 of 1% per month of the
Partnership's month-end Net Assets as defined in the Limited Partnership
Agreement.
OPERATING EXPENSES--The Partnership bears all operating expenses related to its
trading activities, to a maximum of 1/4 of 1% annually of the Partnership's
average month end Net Assets. These include filing fees, clerical,
administrative, auditing, accounting, mailing, printing, and other incidental
operating expenses as permitted by the Limited Partnership Agreement. In
addition, the Partnership incurs a monthly management fee and may incur an
incentive fee.
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 any month upon five business days
advance notice by redemption form to Demeter.
DISTRIBUTIONS--Distributions, other than on redemptions of Units, are made on a
pro-rata basis at the sole discretion of Demeter. No distributions have been
made to date.
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 the Partnership's revenues
and expenses for income tax purposes.
<PAGE>
DEAN WITTER WORLD CURRENCY FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DISSOLUTION OF THE PARTNERSHIP--The Partnership will terminate on December 31,
2025 or at an earlier date if certain conditions set forth in the Limited
Partnership Agreement occur.
2. RELATED PARTY TRANSACTIONS
The 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. Under its Customer Agreement with DWR, the
Partnership pays DWR brokerage commissions as described in Note 1.
3. TRADING ADVISORS
Compensation to JWH and Millburn consists of a management fee and an incentive
fee as follows:
MANAGEMENT FEE--The Partnership pays a monthly management fee equal to 1/4 of
1% per month of the Partnership's adjusted Net Assets, as defined, as of the
last day of each month.
INCENTIVE FEE--The Partnership pays a quarterly incentive fee to each trading
advisor equal to 17.5% of "Trading Profits", as defined in the Limited
Partnership Agreement, experienced with respect to the Net Assets allocated to
such trading advisor as of the end of each calendar quarter. Such incentive fee
is accrued in each month in which Trading Profits occur. In those months in
which Trading Profits are negative, previous accruals, if any, during the
incentive period are reduced. In those instances in which a Limited Partner
redeems an investment, the incentive fee, (earned through the redemption date),
is to be paid to such advisor on those redemptions in the month of such
redemptions.
4. FINANCIAL INSTRUMENTS
The Partnership trades commodity futures contracts, options contracts and
forward contracts on foreign currencies. Futures, options 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. At
December 31, 1997 and 1996, open contracts were:
<TABLE>
<CAPTION>
CONTRACT OR NOTIONAL AMOUNT
---------------------------
1997 1996
------------- -------------
$ $
<S> <C> <C>
EXCHANGE-TRADED CONTRACTS
Financial Futures:
Commitments to Purchase -- 8,348,000
Commitments to Sell -- 64,040,000
OFF-EXCHANGE-TRADED FORWARD
CURRENCY CONTRACTS:
Commitments to Purchase 56,832,000 111,517,000
Commitments to Sell 114,502,000 131,009,000
</TABLE>
<PAGE>
DEAN WITTER WORLD CURRENCY FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
A portion of the amounts indicated as off-balance-sheet risk in forward
currency contracts is due to offsetting forward commitments to purchase and to
sell the same currency on the same date in the future. These commitments are
economically offsetting, but are not offset in the forward market until the
settlement date.
The unrealized gains on open contracts are reported as a component of "Equity
in Commodity futures trading accounts" on the Statements of Financial Condition
and totaled $775,529 and $1,242,668 at December 31, 1997 and 1996,
respectively.
Of the $775,529 net unrealized gain on open contracts at December 31, 1997,
$(24,755) related to exchange-traded futures contracts and $800,284 related to
off-exchange-traded forward currency contracts.
Of the $1,242,668, net unrealized gain on open contracts at December 31, 1996,
$1,289,462 related to exchange-traded futures contracts and $(46,794) related
to off-exchange-traded forward currency contracts.
Exchange-traded futures contracts held by the Partnership at December 31, 1997
and 1996 mature through March 1998 and March 1997, respectively. Off-exchange-
traded forward currency contracts held by the Partnership at December 31, 1997
and 1996 mature through March 1998 and March 1997, respectively.
The contract amounts in the above table represent the Partnership's extent of
involvement in the particular class of financial instrument, but not the credit
risk associated with counterparty nonperformance. The credit risk associated
with these instruments is limited to the amounts reflected in the Partnership's
Statements of Financial Condition.
The Partnership also has credit risk because either DWR or Carr acts as the
futures commission merchant or the counterparty, with respect to most of the
Partnerships' assets. Exchange-traded futures and options contracts are marked
to market on a daily basis, with variations in value settled on a daily basis.
DWR and Carr, as the futures commission merchants for the Partnership's
exchange-traded futures and options contracts, are required pursuant to
regulations of the Commodity Futures Trading Commission to segregate from their
own assets, and for the sole benefit of their commodity customers, all funds
held by them with respect to exchange-traded futures and option contracts
including an amount equal to the net unrealized gain on all open futures and
option contracts, which funds totaled $31,303,072 and $27,115,263 at December
31, 1997 and 1996, respectively. With respect to the Partnership's off-
exchange-traded forward currency contracts, there
<PAGE>
DEAN WITTER WORLD CURRENCY FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
are no daily settlements of variations in value nor is there any requirement
that an amount equal to the net unrealized gain on open forward contracts be
segregated. With respect to those off-exchange-traded forward currency
contracts, the Partnership is at risk to the ability of Carr, the sole
counterparty on all of such contracts, to perform. Carr's parent, Credit
Agricole Indosuez has guaranteed Carr's obligations to the Partnership.
For the years ended December 31, 1997 and 1996, the average fair value of
financial instruments held for trading purposes was as follows:
<TABLE>
<CAPTION>
1997
-----------------------
ASSETS LIABILITIES
----------- -----------
$ $
<S> <C> <C>
EXCHANGE-TRADED CONTRACTS
Financial Futures 6,501,000 19,214,000
OFF-EXCHANGE-TRADED
FORWARD CURRENCY CONTRACTS 130,462,000 152,556,000
<CAPTION>
1996
-----------------------
ASSETS LIABILITIES
----------- -----------
$ $
<S> <C> <C>
EXCHANGE-TRADED CONTRACTS
Financial Futures 11,267,000 36,511,000
Options on Financial Futures 31,535,000 --
OFF-EXCHANGE-TRADED
FORWARD CURRENCY CONTRACTS 150,360,000 162,534,000
</TABLE>
5. 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., MSDWD (all such parties referred to
hereafter as the "Dean Witter Parties"), the Partnership, certain other 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 and 20, 1996, in the Supreme
<PAGE>
DEAN WITTER WORLD CURRENCY FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)
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,
including the Partnership, 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 and the Partnership 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 or the Partnership.
<PAGE>
DEAN WITTER REYNOLDS INC.
Two World Trade Center
62nd Floor
New York, NY 10048
FIRST-CLASS MAIL
ZIP + 4 PRESORT
U.S. POSTAGE PAID
BROOKLYN, NY
PERMIT NO. 148
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Dean
Witter World Currency Fund L.P. and is qualified in its entirety by
reference to such financial instruments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 31,327,827
<SECURITIES> 0
<RECEIVABLES> 106,973<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 32,260,016<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 32,260,016<F3>
<SALES> 0
<TOTAL-REVENUES> 12,366,515<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,517,145
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,849,370
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,839,370
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,849,370
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include interest receivable of $106,973 and due from DWR of
$0.
<F2>In addition to cash and receivables, total assets include net unrealized
gain on open contracts of $775,529 and net option premiums of $49,687.
<F3>Liabilities include redemptions payable of $305,335, accrued brokerage
commission of $0, accrued management fees of $80,650, accrued
administrative expenses of $0, accrued transaction fees and costs of
$0.
<F4>Total revenue includes realized trading revenue of $11,608,498, net
change in unrealized of $(467,139) and interest income of $1,225,156.
</FN>
</TABLE>
