UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended March 31, 1996 or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from________________to_____________
Commission file number 33-80146
DEAN WITTER SPECTRUM STRATEGIC L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3782225
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
c/o Demeter Management Corp.
Two World Trade Center, New York, NY 62 Fl. 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 392-5454
(Former name, former address, and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
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<TABLE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 1996
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition
March 31, 1996 (Unaudited) and December 31, 1995...........2
Statements of Operations for the Quarters Ended
March 31, 1996 and 1995 (Unaudited)........................3
Statements of Changes in Partners' Capital for
the Quarters Ended March 31, 1996 and 1995 (Unaudited)......4
Statements of Cash Flows for the Quarters Ended
March 31, 1996 and 1995 (Unaudited).........................5
Notes to Financial Statements (Unaudited)................6-10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations.............................................9-12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...................... 13
</TABLE>
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<TABLE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
March 31, December 31,
1996 1995
$ $
(Unaudited)
ASSETS
<S> <C> <C>
Equity in Commodity futures trading accounts:
Cash 32,654,497 29,593,927
Net unrealized gain on open contracts 1,373,916 1,819,403
Net option premiums 99,505 (19,873)
Total Trading Equity 34,127,918 31,393,457
Subscriptions receivable 1,753,233 1,547,750
Interest receivable (DWR) 108,670 108,075
Total Assets 35,989,821 33,049,282
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accrued brokerage commissions (DWR) 249,332 212,825
Redemptions payable 250,300 77,310
Accrued management fees 113,980 97,291
Incentive fees payable - 198,924
Total Liabilities 613,612 586,350
Partners' Capital
Limited Partners (3,434,575.760 and
2,905,719.741 Units, respectively) 35,013,019 32,132,595
General Partner (35,626.848 and
29,872.079 Units, respectively) 363,190 330,337
Total Partners' Capital 35,376,209 32,462,932
Total Liabilities and Partners' Capital 35,989,821 33,049,282
NET ASSET VALUE PER UNIT 10.19 11.06
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Quarters Ended March 31,
1996 1995
$ $
<S> <C> <C>
REVENUES
Trading profit (loss):
Realized (1,315,884) 642,021
Net change in unrealized (445,487) 765,083
Total Trading Results (1,761,371) 1,407,104
Interest Income (DWR) 333,537 134,111
Total Revenues (1,427,834) 1,541,215
EXPENSES
Brokerage commissions (DWR) 741,950 287,893
Management fees 339,178 131,609
Incentive fees 210,774 203,590
Total Expenses 1,291,902 623,092
NET INCOME (LOSS) (2,719,736) 918,123
NET INCOME (LOSS) ALLOCATION
Limited Partners (2,692,588) 911,045
General Partner (27,148) 7,078
NET INCOME (LOSS) PER UNIT
Limited Partners (.87) .56
General partner (.87) .56
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Quarters Ended March 31, 1996 and 1995
(Unaudited)
<CAPTION>
Units of
Partnership Limited General
Interest Partners Partner Total
<S> <C> <C> <C> <C>
Partners' Capital
December 31, 1994 1,190,794.333 $11,791,839 $127,090 $11,918,929
Continuous Offering 483,735.477 4,857,296 - 4,857,296
Net Income - 911,045 7,078 918,123
Partners' Capital
March 31, 1995 1,674,529.810 $17,560,180 $134,168 $17,694,348
Partners' Capital
December 31, 1995 2,935,591.820 $32,132,595 $330,337 $32,462,932
Continuous Offering 587,070.509 6,133,712 60,000 6,193,712
Net Loss - (2,692,588) (27,147) (2,719,735)
Redemptions (52,459.721) (560,700) - (560,700)
Partners' Capital
March 31, 1996 3,470,202.608 $35,013,019 $363,190 $35,376,209
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Quarters Ended March 31,
1996 1995
$ $
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) (2,719,735) 918,123
Noncash item included in net income (loss):
Net change in unrealized 445,487 (765,083)
Increase in operating assets:
Net option premiums (119,378) (9,289)
Interest receivable (DWR) (595) (19,600)
Increase (decrease) in operating liabilities:
Accrued brokerage commissions (DWR) 36,507 34,902
Accrued management fees 16,689 15,955
Incentive fees payable (198,924) 184,749
Net cash provided by (used for) operating activities (2,539,949) 359,757
CASH FLOWS FROM FINANCING ACTIVITIES
Continuous Offering 6,193,712 4,857,296
Decrease (increase) in subscriptions receivable (205,483) 153,281
Increase in redemptions payable 172,990 -
Redemptions of units (560,700) -
Net cash provided by financing activities 5,600,519 5,010,577
Net increase in cash 3,060,570 5,370,334
Balance at beginning of period 29,593,927 9,649,168
Balance at end of period 32,654,497 15,019,502
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
The financial statements include, in the opinion of management, all
adjustments necessary for a fair presentation of the results of
operations and financial condition. The financial statements and
condensed notes herein should be read in conjunction with the
Partnership's December 31, 1995 Annual Report on Form 10-K.
1. Organization
Dean Witter Spectrum Strategic L.P. (the "Partnership") is a
limited partnership organized to engage in the speculative trading
of futures and forward contracts, options on future contracts and
on physical commodities, and other commodity interests, including
foreign currencies, financial instruments, precious and industrial
metals, energy products and agriculturals. Demeter Management
Corporation ("the General Partner") has retained Blenheim
Investments, Inc., A. Gary Shilling & Co., Inc., and Willowbridge
Associates Inc. as the trading advisors of the Partnership. Both
the General Partner and the commodity broker Dean Witter Reynolds
Inc. ("DWR") are wholly owned subsidiaries of Dean Witter, Discover
& Co.
2. Related Party Transactions
The Partnership's cash is on deposit with DWR in commodity trading
accounts to meet margin requirements as needed. DWR pays interest
on these funds based on prevailing U.S. Treasury Bill rates.
Brokerage expenses incurred by the Partnership are paid to DWR.
<PAGE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. Financial Instruments
The Partnership trades futures, options and forward contracts in
interest rates, stock indices, commodities, currencies, petroleum
and precious metals. Futures and forwards represent contracts for
delayed delivery of an instrument at a specified date and price.
Risk arises from changes in the value of these contracts and the
potential inability of counterparties to perform under the terms of
the contracts. There are numerous factors which may significantly
influence the market value of these contracts, including interest
rate volatility. At March 31, 1996 open contracts were:
Contract or
Notional Amount
$
Exchange-Traded Contracts
Financial Futures:
Commitments to Purchase 31,285,000
Commitments to Sell 30,629,000
Options Written 1,904,000
Commodity Futures:
Commitments to Purchase 172,792,000
Commitments to Sell 4,802,000
Options Written 1,059,000
Foreign Futures:
Commitments to Purchase 39,950,000
Commitments to Sell 53,249,000
Off-Exchange-Traded Forward
Currency Contracts
Commitments to Purchase 1,866,000
Commitments to Sell 1,878,000
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.
<PAGE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The unrealized gain on open contracts is reported as a component of
"Equity in Commodity futures trading accounts" on the Statement of
Financial Condition and totaled $1,373,916 at March 31, 1996. Of
this amount, $1,373,901 was related to exchange-traded futures
contracts and $15 related to off-exchange-traded forward currency
contracts.
Exchange-traded futures contracts held by the Partnership at March
31, 1996 mature through January 1997. Off-exchange-traded forward
currency contracts held at March 31, 1996 mature through April
1996. 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 non-performance. 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 the sole counterparty
with respect to most of the Partnership's assets, is DWR.
Exchange-traded futures and options contracts are marked to market
on a daily basis, with variations in value settled on a daily
basis. DWR, as the futures commission merchant for all of the
Partnership's exchange-traded futures and options contracts, is
required pursuant to regulations of the Commodity Futures Trading
<PAGE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
Commission to segregate from its own assets and for the sole
benefit of its commodity customers, all funds held by DWR with
respect to exchange-traded futures and options contracts including
an amount equal to the net unrealized gains on all open futures
contracts, which funds totaled $34,028,398 at March 31, 1996. With
respect to the Partnership's off-exchange-traded forward currency
contracts, there 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 DWR, the counterparty
on all of such contracts, to perform.
For the quarter ended March 31, 1996, the average fair value of
financial instruments held for trading purposes was as follows:
Assets Liabilities
$ $
Exchange-Traded Contracts:
Financial Futures 68,749,000 41,560,000
Commodity Futures 144,675,000 12,146,000
Foreign Futures 78,528,000 25,653,000
Off-Exchange-Traded Forward
Currency Contracts 1,571,000 1,565,000
<PAGE>
Item 2. 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 are used by the
Partnership as margin to engage in commodity futures, forward
contracts on foreign currencies and other commodity interest
trading. DWR holds such assets in either designated depositories
or in securities approved by the Commodity Futures Trading
Commission for investment of customer funds. The Partnership's
assets held by DWR may be used as margin solely for the
Partnership's trading. Since the Partnership's sole purpose is to
trade in commodity futures contracts, forward contracts on foreign
currencies 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 and forward
contracts and other commodity interests may be illiquid. If the
price of the 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 little or no trading. Such
market conditions could prevent the Partnership from promptly
liquidating its commodity futures positions.
<PAGE>
There is no limitation on daily price moves in trading forward
contracts on foreign currency. 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.
Capital Resources - The Partnership does not have, nor does it
expect to have, any capital assets. Redemptions of additional
Units in the future will impact the amount of funds available for
investments in commodity futures and forward contracts and other
commodity interests. 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
For the Quarter Ended March 31, 1996
For the Quarter ended March 31, 1996, the Partnership's total
trading losses net of interest income were $1,427,834. During the
first quarter, the Partnership posted a decrease in Net Asset Value
per Unit. During the first quarter, the Partnership posted a loss
in Net Asset Value per Unit. The most significant losses for the
quarter were recorded during February as a result of sharp and
sudden price movements in many of the markets traded by the
Partnership. As a result, losses were recorded in financial
futures from trading global interest rate futures. In the currency
<PAGE>
markets, losses were recorded as the downward move in the value of
the Japanese yen and most European currencies, which has resulted
in significant gains during January, abruptly reversed. Additional
losses were recorded during February in the energy markets due
primarily from trading crude oil futures. Smaller losses were
recorded in the soft commodities markets during the quarter due to
short-term choppy price movement. A portion of the overall losses
for the quarter was offset in March by gains recorded from
transactions involving the Australian dollar and Japanese yen.
Additionally, gains were recorded in the agricultural markets from
long corn futures positions as prices moved higher during the
quarter. Smaller gains were recorded from trading hog, soybean and
wheat futures. Gains experienced in the metals markets from
trading silver futures during January also helped to mitigate a
portion of the overall losses for the quarter. Total expenses for
the period were $1,291,901, resulting in a new loss of $2,719,735.
The value of an individual Unit in the Partnership decreased from
$11.06 at December 31, 1995 to $10.19 at March 31, 1996.
For the Quarter Ended March 31, 1995
For the quarter ended March 31, 1995, the Partnership's total
trading revenues including interest income were $1,541,215. During
the first quarter, the Partnership posted a gain in Net Asset Value
per Unit. The most significant trading gains were recorded during
March in the currency markets as a result of a decrease in value of
the U.S. dollar versus the Japanese yen and major European
currencies such as the Swiss franc, German mark and French franc.
Additional trading gains were recorded in the financial futures
<PAGE>
markets as a result of trading Japanese bond futures during
February and March. Smaller trading losses in the international,
metals and energy markets offset a portion of overall gains for the
quarter. Total expenses for the period were $623,092, resulting in
net income of $918,123. The value of an individual Unit in the
Partnership increased from $10.01 at December 31, 1994 to $10.57 at
March 31, 1995.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A) Exhibits.
None.
B) Reports on Form 8-K. - None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dean Witter Spectrum Strategic L.P.
(Registrant)
By: Demeter Management Corporation
(General Partner)
May 8, 1996 By: /s/ Patti L. Behnke
Patti L. Behnke
Chief Financial Officer
The General Partner which signed the above is the only party
authorized to act for the Registrant. The Registrant has no
principal executive officer, principal financial officer,
controller, or principal accounting officer and has no Board of
Directors.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Dean
Witter Spectrum Strategic L.P. and is qualified in its entirety by
references to such financial instruments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 32,654,497
<SECURITIES> 0
<RECEIVABLES> 1,861,903<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 35,989,821<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 35,989,821<F3>
<SALES> 0
<TOTAL-REVENUES> (1,427,834)<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,291,902
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,719,736)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,719,736)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,719,736)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include subscriptions receivable of $1,753,233 and interest
receivable of $108,670.
<F2>In addition to cash and receivables, total assets include net unrealized
gain on open contracts of $1,373,916 and net option premiums of $99,505.
<F3>Liabilities include redemptions payable of $249,295, accrued brokerage
commissions of $249,332 , and accrued management fees of $113,980.
<F4>Total revenues includes realized trading revenue of $(1,315,884), net
change in unrealized of $(445,487) and interest income of $333,537.
</FN>
</TABLE>
