<PAGE>
RULE NO. 424(b)(3)
REGISTRATION NO. 333-3222
DEAN WITTER SPECTRUM STRATEGIC L.P.
DEAN WITTER SPECTRUM TECHNICAL L.P.
DEAN WITTER SPECTRUM BALANCED L.P.
---------------
SUPPLEMENT
TO PROSPECTUS
DATED APRIL 30, 1996
THIS SUPPLEMENT IS AN INTEGRAL PART OF, AND MUST BE READ TOGETHER WITH, THE
PROSPECTUS DATED APRIL 30, 1996 (THE "PROSPECTUS"). ALL CAPITALIZED TERMS USED
IN THIS SUPPLEMENT AND NOT DEFINED HEREIN SHALL HAVE THE SAME MEANINGS AS USED
IN THE PROSPECTUS. ALL PAGE AND SECTION REFERENCES HEREIN ARE TO THE
PROSPECTUS, EXCEPT REFERENCES TO PAGES PRECEDED BY AN "S-", WHICH ARE TO THIS
SUPPLEMENT.
THESE ARE SPECULATIVE SECURITIES AND INVOLVE A HIGH DEGREE OF RISK. THESE
SECURITIES ARE SUITABLE FOR INVESTMENT ONLY BY A PERSON WHO CAN AFFORD TO LOSE
HIS ENTIRE INVESTMENT. SEE "SUMMARY OF THE PROSPECTUS--INVESTMENT
REQUIREMENTS" (PAGE 1), "RISK FACTORS" (PAGE 13), AND "CONFLICTS OF INTEREST"
(PAGE 19).
The Partnerships are not mutual funds or any other type of investment
company within the meaning of the Investment Company Act of 1940, as amended,
and are not subject to regulation thereunder.
An investment in the Partnerships involves significant risks, including the
following:
. Futures interests trading is speculative and volatile. The Partnerships'
trading has been volatile. Such volatility could result in an investor
losing all or a substantial part of his investment.
. The Partnerships are subject to substantial charges by the trading
managers and DWR. Spectrum Strategic, Spectrum Technical and Spectrum
Balanced must earn annual net trading profits (after taking into account
estimated interest income based upon current rates of 5%) of 8.25%, 8.25%
and 1.75%, respectively, of their average annual Net Assets in order to
avoid depletion or exhaustion of their assets. Investors should see "Break
Even Analysis" on page S-1 for the effect of redemption charges which are
not included in the above figures.
. No secondary market for Units exists. Units may be redeemed monthly only
after the end of the sixth month following the closing at which an
investor first became a Limited Partner in the Spectrum Series. A Unit
redeemed at or prior to the two year anniversary following the closing at
which such Unit was issued may be subject to redemption charges. Certain
market conditions may result in possible delays in, or inability to pay,
redemptions.
. Conflicts of interest between and among the General Partner, DWR, the
trading managers, their affiliates, and each Partnership may adversely
affect the trading performance of such Partnership. See "Conflicts in
Interest" in the Prospectus.
. Each Partnership's profitability is largely dependent on the collective
performance of its trading managers.
. While the General Partner does not intend to make any distributions,
profits earned by a Partnership in any year will result in taxable income
to investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF THE
PARTICIPATING IN ANY ONE OF THESE POOLS NOR HAS THE COMMISSION PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT.
---------------
DEAN WITTER REYNOLDS INC.
THE DATE OF THIS SUPPLEMENT IS OCTOBER 23, 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Description of Charges to Each Partnership................................ S-1
Investment Program, Use of Proceeds and Trading Policies.................. S-2
The Spectrum Series....................................................... S-2
Selected Financial Data................................................... S-6
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... S-6
The General Partner....................................................... S-11
Description and Performance Information of Commodity Pools Operated by
the General Partner..................................................... S-11
The Trading Managers...................................................... S-18
Dean Witter Spectrum Strategic L.P. ..................................... S-18
1. Blenheim Investments, Inc. .......................................... S-18
2. A. Gary Shilling & Co., Inc. ........................................ S-19
3. Willowbridge Associates Inc. ........................................ S-20
Dean Witter Spectrum Technical L.P. ..................................... S-24
1. Campbell & Company, Inc. ............................................ S-24
2. Chesapeake Capital Corporation....................................... S-26
3. John W. Henry & Company, Inc. ....................................... S-29
Dean Witter Spectrum Balanced L.P. ...................................... S-36
RXR, Inc. .............................................................. S-36
Certain Litigation........................................................ S-40
The Futures, Options and Forwards Markets................................. S-40
Plan of Distribution...................................................... S-40
Potential Advantages...................................................... S-41
Dean Witter Spectrum Balanced L.P.
Dean Witter Spectrum Strategic L.P.
Dean Witter Spectrum Technical L.P.
Independent Auditors' Report ............................................ S-44
Statements of Financial Condition ....................................... S-45
Statements of Operations ................................................ S-48
Statements of Changes in Partners' Capital .............................. S-51
Statements of Cash Flows ................................................ S-53
Notes to Financial Statements ........................................... S-56
Demeter Management Corporation
Independent Auditors' Report............................................. S-61
Statements of Financial Condition ....................................... S-62
Notes to Statements of Financial Condition .............................. S-63
</TABLE>
S-ii
<PAGE>
THE FOLLOWING INFORMATION SUPPLEMENTS, OR, IN CERTAIN INSTANCES, REPLACES
PORTIONS OF, THE PROSPECTUS, AND ACCORDINGLY MUST BE READ AS AN INTEGRAL PART
OF THE PROSPECTUS.
DESCRIPTION OF CHARGES TO EACH PARTNERSHIP
THE FOLLOWING SUPPLEMENTS THE INFORMATION UNDER "SUMMARY OF THE PROSPECTUS--
DESCRIPTION OF CHARGES TO EACH PARTNERSHIP" ON PAGES 5-7 AND "DESCRIPTION OF
CHARGES TO EACH PARTNERSHIP" ON PAGES 23-28.
Effective September 1, 1996, the flat-rate brokerage fee payable to the
Commodity Broker was reduced to a rate of 33/48 of 1% of the Net Assets (an
8.25% annual rate) as of the first day of the month with regard to each of
Spectrum Strategic and Spectrum Technical, and to a rate of 11/24 of 1% of the
Net Assets (a 5.50% annual rate) as of the first day of the month with regard
to Spectrum Balanced.
THE FOLLOWING UPDATES THE BREAK EVEN INFORMATION UNDER "SUMMARY OF THE
PROSPECTUS--THE DEAN WITTER SPECTRUM SERIES" ON PAGES 2-7, AND UPDATES AND
REPLACES "DESCRIPTION OF CHARGES TO EACH PARTNERSHIP--3. BREAK EVEN ANALYSIS"
ON PAGES 27-28 TO REFLECT A CURRENT SELLING PRICE AND REDUCED BROKERAGE FEES.
3. BREAK EVEN ANALYSIS
Based upon the annual fees and expenses of Spectrum Strategic, Spectrum
Technical and Spectrum Balanced that are in effect as of September 1, 1996,
the Partnerships will be required to earn net trading profits (after taking
into account estimated interest income) of 11.34%, 11.36% and 4.96%,
respectively, per year of average annual Net Assets in order for a Limited
Partner to break-even (earning profits sufficient to pay the redemption charge
and to recoup its initial investment) upon redemption after one year.
Based upon the selling price as of August 31, 1996, Spectrum Strategic,
Spectrum Technical and Spectrum Balanced must earn net trading profits of
$1.11, $1.28 and $.54 per Unit, respectively, in order for a Limited Partner
to break even (earning profits sufficient to recoup its initial investment
upon redemption of a Unit after one year after payment by the Partnership of
its expenses and payment of the 3% redemption charge (as calculated below)).
<TABLE>
<CAPTION>
SPECTRUM SPECTRUM SPECTRUM
STRATEGIC TECHNICAL BALANCED
--------- --------- --------
$ $ $
<S> <C> <C> <C>
Selling Price per Unit (as of 8/31/96)(1)......... 9.79 11.27 10.88
Management Fee(2)................................. .39 .45 .14
Brokerage Fee(3).................................. .81 .93 .60
Less: Interest Income(4).......................... (.39) (.45) (.54)
Redemption Fee(5)................................. .30 .35 .34
Incentive Fee(6).................................. -- -- --
Amount of Trading Income Required for a Limited
Partner to Recoup its
Investment at the End of One Year................ 1.11 1.28 .54
Percentage of Initial Selling Price............... 11.34% 11.36% 4.96%
</TABLE>
- -------
Notes
(1) Units of each Partnership are offered for sale at monthly closings held as
of the last day of each month at a purchase price equal to 100% of the Net
Asset Value of the Unit at the close of business as of the date of the
closing.
(2) In the case of Spectrum Strategic and Spectrum Technical, monthly
management fees are equal to 1/3 of 1% of the Net Assets allocated to each
trading manager on the first day of each month (a 4% annual rate). In the
case of Spectrum Balanced, the monthly management fee is equal to 5/48 of
1% of the Partnership's Net Assets on the first day of each month (a 1.25%
annual rate).
(3) Effective September 1, 1996, the brokerage fee in the case of Spectrum
Strategic and Spectrum Technical is a flat-rate monthly fee of 33/48 of 1%
of the Net Assets (an 8.25% annual rate) as of the first day of the month.
The brokerage fee in the case of Spectrum Balanced is a flat-rate monthly
fee of 11/24 of 1% of the Net Assets (a 5.50% annual rate) as of the first
day of the month. Such fee covers all brokerage commissions, transaction
fees and costs (including "give up" and transfer fees) and ordinary
administrative and continuing offering expenses. For purposes of the above
table, brokerage fees were based on the new reduced rates.
S-1
<PAGE>
(4) DWR credits each Partnership at month-end with interest income as if 80%,
in the case of Spectrum Strategic and Spectrum Technical, and 100%, in the
case of Spectrum Balanced, of such Partnership's average daily Net Assets
for the month were invested at a prevailing rate on U.S. Treasury Bills.
Such rate was estimated based upon current rates of 5%.
(5) Units redeemed at the end of one year from the date of purchase are
subject to a 3% redemption charge.
(6) Incentive fees are assumed to be zero because (i) interest income is
greater than the redemption fee and (ii) each trading manager's trading
profits equal expenses.
INVESTMENT PROGRAM, USE OF PROCEEDS AND TRADING POLICIES
THE FOLLOWING SUPPLEMENTS THE INFORMATION CONTAINED IN THE FIRST PARAGRAPH
ON PAGE 29.
The Partnerships may each trade up to 75 different types of futures
interests, on both domestic and foreign markets, and may trade additional
futures interests as determined by the trading managers. The Partnerships
trade on the following foreign futures exchanges: the Deutsche Terminborse,
the Hong Kong Futures Exchange Ltd., the International Petroleum Exchange of
London, the London Commodity Exchange, the London International Financial
Futures Exchange Ltd., the London Metals Exchange, the Marche a Terme
International de France, the MEFF Renta Fija, the Montreal Exchange, the
Sydney Futures Exchange, the Singapore International Monetary Exchange, the
Tokyo International Futures Exchange and the Tokyo Stock Exchange. From time
to time the Partnerships may trade on other foreign exchanges.
THE FOLLOWING SUPPLEMENTS THE INFORMATION UNDER "SPECTRUM STRATEGIC,"
"SPECTRUM TECHNICAL," AND "SPECTRUM BALANCED" ON PAGES 31-32 AS REGARDS ASSETS
MANAGED BY THE TRADING MANAGERS:
As of July 31, 1996, Blenheim and Shilling & Co. were managing approximately
$73.6 million and $20.2 million, respectively, of client assets pursuant to
the trading strategies described in the Prospectus ("notional funds"
excluded), while Willowbridge was managing approximately $212.0 million of
assets pursuant to its XLIM trading program and approximately $246.8 million
of client assets pursuant to its other programs ("notional funds" excluded).
As of July 31, 1996, Campbell was managing approximately $355.3 million of
client assets pursuant to its Financial, Metal & Energy Large Portfolio and
approximately $427.6 million pursuant to all of its programs; Chesapeake was
managing approximately $712.5 million of customer funds pursuant to its
Diversified Program, approximately $27.2 million of client assets pursuant to
its Financial and Metals Program, and approximately $758.6 million of client
assets pursuant to all of its programs ("notional funds" excluded in all
cases); and JWH was managing approximately $146.0 million of client assets
pursuant to its Original Investment Program, approximately $922.7 million of
client assets pursuant to its Financial and Metals Portfolio, and
approximately $1.5 billion pursuant to all of its portfolios.
As of July 31, 1996, RXR was managing approximately $192.5 million of client
assets pursuant to its Balanced Portfolio, and approximately $206.3 million
pursuant to all of its programs ("notional funds" excluded).
THE SPECTRUM SERIES
THE FOLLOWING UPDATES AND REPLACES THE SECOND PARAGRAPH UNDER "THE SPECTRUM
SERIES--THE CONTINUING OFFERING" ON PAGE 35.
At the 23 Monthly Closings held by the General Partner and DWR through
September 1, 1996, Spectrum Strategic had sold an additional 3,847,758.206
Units and received proceeds of $36,833,470; Spectrum Technical had sold an
additional 7,230,602.131 Units and received proceeds of $51,194,483; and
Spectrum Balanced had sold an additional 1,557,207.64 Units and received
proceeds of $15,941,591. In connection with such Monthly Closings, the General
Partner contributed an additional $347,000 to Spectrum Strategic, $553,000 to
Spectrum Technical, and $90,000 to Spectrum Balanced. See "Capitalization." At
the close of business on September 1, 1996, Spectrum Strategic had
approximately 6,746 Limited Partners of record, Spectrum Technical had
approximately 11,183 Limited Partners of record and Spectrum Balanced had
approximately 3,100 Limited Partners of record. At the close of business on
September 1, 1996, Spectrum Strategic had 7,183,383.651 unsold Units, Spectrum
Technical had 11,410,442.747 unsold Units, and Spectrum Balanced had
5,585,566.425 unsold Units. The General Partner, in its discretion, may
register and sell additional Units from time to time.
S-2
<PAGE>
THE FOLLOWING UPDATES AND REPLACES THE PERFORMANCE INFORMATION CONTAINED ON
PAGES 36-38. THE FOOTNOTES ON PAGE 38 ARE AN INTEGRAL PART OF THE FOLLOWING
TABLES.
PERFORMANCE RECORDS
The Partnerships began trading on November 2, 1994. The performance summary
of each such Partnership from the commencement of trading through August 31,
1996 is set forth in Tables I, II and III below. All performance information
has been calculated on an accrual basis in accordance with generally accepted
accounting principles.
---------------
INVESTORS ARE CAUTIONED THAT THE INFORMATION SET FORTH IN EACH CAPSULE
PERFORMANCE SUMMARY IS NOT INDICATIVE OF, AND HAS NO BEARING ON, ANY TRADING
RESULTS WHICH MAY BE ATTAINED BY SPECTRUM STRATEGIC, SPECTRUM TECHNICAL AND
SPECTRUM BALANCED, RESPECTIVELY, IN THE FUTURE, SINCE PAST RESULTS ARE NOT A
GUARANTEE OF FUTURE RESULTS. THERE CAN BE NO ASSURANCE THAT ANY PARTNERSHIP
WILL MAKE ANY PROFITS AT ALL OR WILL BE ABLE TO AVOID INCURRING SUBSTANTIAL
LOSSES. INVESTORS SHOULD ALSO NOTE THAT INTEREST INCOME MAY CONSTITUTE A
SIGNIFICANT PORTION OF A COMMODITY POOL'S TOTAL INCOME AND, IN CERTAIN
INSTANCES, MAY GENERATE PROFITS WHERE THERE HAVE BEEN REALIZED OR UNREALIZED
LOSSES FROM FUTURES INTEREST TRADING.
S-3
<PAGE>
TABLE I
PERFORMANCE OF SPECTRUM STRATEGIC
Type of Pool: Publicly-Offered Fund
Inception of Trading: November 2, 1994
Aggregate Subscriptions: $46,553,511
Current Capitalization: $41,499,528
Current Net Asset Value per Unit: $9.79
Worst Monthly % Drawdown (Month/Year): (10.29)%
(February 1996)
Worst Month-End Peak-to-Valley Drawdown: (15.60)% (6 months, February
1996-July 1996)
<TABLE>
<CAPTION>
MONTHLY PERFORMANCE
--------------------------------------------
MONTH 1996 1995 1994
----- ---- ---- ----
% % %
<S> <C> <C> <C>
January 3.71 (3.50)
February (10.29) 1.45
March (0.97) 7.86
April 6.08 0.00
May (3.05) (0.66)
June (2.86) (6.38)
July (4.91) (0.81)
August 1.14 4.00
September (0.39)
October 0.30
November 2.76 0.10
December 6.24 0.00
Compound Annual/Period (11.48) 10.49 0.10
Rate of Return (8 months) (2 months)
</TABLE>
TABLE II
PERFORMANCE OF SPECTRUM TECHNICAL
Type of Pool: Publicly-Offered Fund
Inception of Trading: November 2, 1994
Aggregate Subscriptions: $89,279,007
Current Capitalization: $86,217,712
Current Net Asset Value per Unit: $11.27
Worst Monthly % Drawdown (Month/Year): (6.39)%
(February 1996)
Worst Month-End Peak-to-Valley Drawdown: (7.41)% (5 months, June 1995-
October 1995)
<TABLE>
<CAPTION>
MONTHLY PERFORMANCE
--------------------------------------------
MONTH 1996 1995 1994
----- ---- ---- ----
% % %
<S> <C> <C> <C>
January 4.78 (1.84)
February (6.39) 5.10
March 1.24 10.21
April 4.82 3.60
May (3.84) 0.69
June 3.21 (1.12)
July (4.80) (2.44)
August (0.35) (0.63)
September (3.33)
October (0.09)
November 0.93 (0.90)
December 6.09 (1.31)
Compound Annual/Period (2.00) 17.59 (2.20)
Rate of Return (8 months) (2 months)
</TABLE>
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-4
<PAGE>
TABLE III
PERFORMANCE OF SPECTRUM BALANCED
Type of Pool: Publicly-Offered Fund
Inception of Trading: November 2, 1984
Aggregate Subscriptions: $19,863,977
Current Capitalization: $18,635,097
Current Net Asset Value per Unit: $10.88
Worst Monthly % Drawdown (Month/Year): (7.92)% (February
1996)
Worst Month-End Peak-to-Valley Drawdown: (10.64)% (4 months,
February 1996-May 1996)
<TABLE>
<CAPTION>
MONTHLY PERFORMANCE
--------------------------------------------
MONTH 1996 1995 1994
----- ---- ---- ----
% % %
<S> <C> <C> <C>
January 0.41 1.32
February (7.92) 4.62
March (1.08) 2.88
April 1.27 2.15
May (3.13) 4.38
June 0.46 0.79
July 0.83 (1.39)
August (0.82) (1.41)
September 1.61
October 0.26
November 2.72 (0.50)
December 2.99 (1.21)
Compound Annual/Period (9.86) 22.79 (1.70)
Rate of Return (8 months) (2 months)
</TABLE>
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-5
<PAGE>
SELECTED FINANCIAL DATA
The following are the results of operations of Spectrum Strategic, Spectrum
Technical and Spectrum Balanced for the six months ended June 30, 1996 and
1995. Results of operations for the year ended December 31, 1995 and for the
period from November 2, 1994 (commencement of operations) to December 31, 1994
appear under "Selected Financial Data" on pages 39-40. For the complete
financial statements of all the Partnerships, see pages S-44 - S-60. For
performance information with respect to each Partnership, see "The Spectrum
Series--Performance Records" on pages S-3 - S-5.
<TABLE>
<CAPTION>
DEAN WITTER SPECTRUM
---------------------------------------------------------------------------
STRATEGIC L.P. TECHNICAL L.P. BALANCED L.P
------------------------ ------------------------ ------------------------
FOR THE SIX MONTHS FOR THE SIX MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30, ENDED JUNE 30,
------------------------ ------------------------ ------------------------
1996 1995 1996 1995 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ $ $ $ $ $
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
REVENUES
Trading Profit (Loss):
Realized (65,275) 766,814 6,081,909 4,706,695 (1,190,031) 893,810
Net change in
unrealized (902,079) (407,543) (586,355) 154,964 (226,960) 161,952
----------- ----------- ----------- ----------- ----------- -----------
Total Trading Results (967,354) 359,271 5,495,554 4,861,659 (1,416,990) 1,055,762
Interest income (DWR) 720,784 343,248 1,374,738 470,963 401,024 152,706
----------- ----------- ----------- ----------- ----------- -----------
Total Revenues (246,570) 702,519 6,870,292 5,332,622 (1,015,967) 1,208,468
----------- ----------- ----------- ----------- ----------- -----------
EXPENSES
Brokerage commissions
(DWR) 1,584,267 716,675 3,055,877 1,015,387 494,446 170,162
Management fees 724,237 327,623 1,396,972 464,177 103,010 35,450
Incentive fees 396,899 238,386 12,659 600,504 -- 111,283
----------- ----------- ----------- ----------- ----------- -----------
Total Expenses 2,705,403 1,282,684 4,465,508 2,080,068 597,456 316,895
----------- ----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) (2,951,973) (580,165) 2,404,784 3,252,554 (1,613,423) 891,573
=========== =========== =========== =========== =========== ===========
Net Income (Loss)
Allocation:
Limited Partners (2,922,871) (560,292) 2,379,896 3,226,771 (1,596,720) 874,955
General Partner (29,102) (19,873) 24,888 25,783 (16,703) 16,618
Net Income (Loss) per Unit:
Limited Partners (.88) (.18) .38 1.69 (1.19) 1.69
General Partner (.88) (.18) .38 1.69 (1.19) 1.69
TOTAL ASSETS AT END OF
PERIOD 42,174,523 21,583,094 87,471,276 39,334,436 18,853,652 9,194,871
TOTAL NET ASSETS AT END
OF PERIOD 41,356,862 21,261,455 85,989,148 38,862,078 18,397,602 9,123,235
NET ASSET VALUE PER
UNIT AT END OF PERIOD
Limited Partners 10.18 9.83 11.88 11.47 10.88 11.52
General Partner 10.18 9.83 11.88 11.47 10.88 11.52
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THE FOLLOWING UPDATES AND SUPPLEMENTS THE INFORMATION UNDER THE SUBCAPTION
"RESULTS OF OPERATIONS" ON PAGES 41-44.
Results of Operations. During the first six months of 1996, Spectrum
Strategic posted a loss in Net Asset Value per Unit. Significant losses were
recorded during February as a result of sharp and sudden price movement in
many of the markets traded by Spectrum Strategic. As a result, losses were
recorded in financial futures from trading global interest rate futures. In
the currency markets, losses were recorded as the downward move in the value
of the Japanese yen and most European currencies, which had 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 first quarter due to short-term choppy price movement. In
March, gains were 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
first quarter. Smaller gains were recorded from trading hog, soybean and wheat
futures. While gains were experienced in the metals markets from trading
silver futures during January, significant losses were recorded in the metals
markets as both precious and base metals prices moved in a short-term volatile
pattern throughout the second quarter. Additional losses were recorded in
global financial futures trading as prices in these markets moved without
consistent direction between April and June. Trading losses were also recorded
in the energy markets as a result of losses in crude oil futures during May
and June, as well as in natural and
S-6
<PAGE>
unleaded gas futures during April. A majority of these losses was offset by
gains experienced during April from long corn and wheat futures positions as
prices in these markets increased. Additional gains were recorded during April
as the value of the German mark and Swiss franc moved lower relative to the
U.S. dollar and other world currencies. Small currency gains were recorded in
June from short positions in the Japanese yen. Losses in May from transactions
involving the German mark offset a portion of overall currency gains for the
second quarter. In soft commodities, trading gains in cocoa futures during
April and May, and in sugar futures during May and June, more than offset
losses experienced in cotton trading during May.
During the first six months of 1996, Spectrum Technical posted a gain in Net
Asset Value per Unit. Significant losses were recorded in the currency markets
during February. These losses were recorded as a result of a sharp and sudden
reversal in the downward move in the value of the Japanese yen and most
European currencies, which proved profitable for Spectrum Technical in January.
Trading gains recorded during March from transactions involving the Australian
dollar and Japanese yen offset a portion of the overall losses experienced
within this market sector during February. Additional losses were recorded in
the financial futures markets as global interest rate futures prices reversed
during February resulting in a give back of January's gains within this sector.
In the energy markets, short-term volatile movement in gas and oil prices
resulted in losses for Spectrum Technical during January and February. However,
a portion of these losses was offset by gains in crude oil futures during
March. Smaller losses were recorded in the agricultural, soft commodities and
metals markets during the first quarter. Significant losses were recorded in
the currency markets during April from short German mark and Swiss franc
positions as the value of these currencies moved lower relative to the U.S.
dollar and other world currencies. Additional currency gains were recorded from
short Japanese yen positions as the value of the yen moved lower relative to
the U.S. dollar during mid-May through June. Gains were also recorded in the
energy markets during April and June from long crude oil and natural gas
futures positions and in the metals markets during June from short copper
futures positions as prices moved lower on news of significant losses by
Sumitomo Corporation. Smaller gains were recorded from agricultural futures
trading, particularly from long corn futures positions as prices moved higher
in April and early May. A portion of overall gains for the second quarter was
offset by losses in global interest rate and global stock index futures as
prices moved in a short-term volatile pattern. Smaller losses were recorded in
soft commodities as losses in coffee futures more than offset gains experienced
in sugar futures.
During the first six months of 1996, Spectrum Balanced posted a loss in Net
Asset Value per Unit. Significant losses were recorded in the bond portion of
the balanced portfolio from long positions in U.S. Treasury bond futures as
prices moved dramatically lower during February and into March. Additional
losses were recorded in the managed futures portion of the balanced portfolio
in February as global interest rate futures also reversed their upward trend.
Trading losses were also experienced in the managed futures portion of the
portfolio in the currency markets during February as a sudden upward move
occurred in the value of most European currencies relative to the U.S. dollar.
A portion of these losses was offset by gains from short positions in the
Japanese yen during January and March. Smaller losses were recorded in the
managed futures portion of the portfolio from trading soft commodities, base
metals and energy futures during the first quarter. Gains were recorded in the
stock portion of the balanced portfolio as S&P 500 index futures prices moved
higher during the first quarter. Significant losses were recorded in the
managed futures portion of the balanced portfolio as a result of trendless
movement in global interest rate futures prices during May and June. Additional
losses were recorded in the bond portion of the balanced portfolio as U.S.
Treasury bond futures prices moved lower during April and May. Losses were also
recorded in the managed futures portion of the portfolio from trading in the
currency markets as the value of the Japanese yen traded in a narrow range
during May. Smaller losses were recorded as sugar, coffee and base metals
futures prices moved without consistent direction during the second quarter.
Trading gains recorded in the agricultural markets from long corn futures
positions, as prices increased in April and early May, offset a portion of
overall losses within the managed futures portion of the portfolio. Gains
recorded during April from short German mark and Swiss franc positions, as the
value of these currencies decreased relative to other world currencies, also
helped to mitigate losses during the second quarter.
To enhance the foregoing comparison of results of operations from year to
year, prospective investors can examine, line by line, the Statement of
Financial Condition and Statement of Operations on pages S-45 - S-50 for each
of the Partnerships for the first half of 1996 versus the first half of 1995.
Total trading results were unprofitable in the first half of 1996 versus
profitable in the first half of 1995 for Spectrum Balanced. For Spectrum
Strategic, total trading results were unprofitable for each of the first half
of 1996 and the first half of 1995 (although profitable for the year ended
December 31, 1995). For Spectrum Technical, total trading results
S-7
<PAGE>
were profitable for each of the first half of 1996 and the first half of 1995.
While total trading results were greater on a gross basis for the first half of
1996, this was due primarily to the increased size of the Spectrum Technical
versus the first half of 1995.
Interest income to Spectrum Strategic and Spectrum Technical is derived from
80% of its assets earning interest at the prevailing rate paid on U.S. Treasury
Bills. Spectrum Balanced earns interest at the same rate on 100% of its assets.
The size of the assets and the fluctuation of interest rates affect the
resulting interest income annual totals. Interest income for each of the
Partnerships was greater in the first half of 1996 than the first half of 1995
due to the increasing size of each Partnership's asset base due to
subscriptions far outweighing redemptions.
With respect to expenses of the Partnerships, effective September 1, 1996,
brokerage commissions to the Partnerships were reduced to an annual rate of
8.25% of assets for Spectrum Strategic and Spectrum Technical and to an annual
rate of 5.50% for Spectrum Balanced. Management fees payable by the
Partnerships are charged at an annual rate of 4% for Spectrum Strategic and
Spectrum Technical, and 1.25% for Spectrum Balanced. Each of these fees for all
of the Partnerships were greater in the first half of 1996 than the first half
of 1995 because of the increasing asset size of each of the Partnerships.
Incentive fees are charged on a monthly basis at 15% of each trading manager's
net profits from each of the Partnerships. Incentive fees were greater in the
first half of 1995 than the first half of 1996 for Spectrum Balanced and
Spectrum Technical as a result of decreased monthly profitability of these
Partnerships' trading managers during 1996. For Spectrum Strategic, incentive
fees increased in the first half of 1996 due to increased monthly profitable
performance by two of the Partnership's three trading managers.
THE FOLLOWING UPDATES AND REPLACES THE INFORMATION UNDER THE SUBCAPTION
"FINANCIAL INSTRUMENTS" ON PAGES 44-46.
Financial Instruments. Each Partnership is a party to financial instruments
with elements of off-balance sheet market and credit risk. The Partnerships
trade futures, options, and forward contracts in interest rates, stock indices,
commodities, currencies, petroleum and precious metals. In entering into these
contracts there exists a risk to a 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 interests positions held by
the Partnership at the same time, and if the trading managers were unable to
offset futures interests positions of the Partnership, the Partnership could
lose all of its assets and the Limited Partners would realize a 100% loss. In
addition to the trading managers' internal controls, each trading manager must
be in compliance with the Trading Policies of the respective Partnerships. Such
Trading Policies include standards for liquidity and leverage with which the
Partnerships must comply. The trading managers and the General Partner monitor
the Partnerships' trading activities to ensure compliance with the Trading
Policies. See "Investment Program, Use of Proceeds and Trading Policies--
Trading Policies." The General Partner may (under the terms of each Management
Agreement) require a trading manager to modify positions of the Partnership if
the General Partner believes they violate the Partnership's Trading Policies.
In addition to market risk, in entering into futures, options and forward
contracts there is a credit risk to a Partnership that the counterparty on a
contract will not be able to meet its obligations to the Partnership. The
ultimate counterparty of a 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 members' 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 a
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 performance is the responsibility of the exchange member and not the
exchange or a clearinghouse, or when a 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. For a list of the foreign exchanges on which the
Partnerships currently trade, see "Investment Program, Use of Proceeds and
Trading Policies" on page S-2. For an additional discussion of the credit risks
relating to trading on foreign exchanges, see "Risk Factors--Risks Relating to
Futures Interests Trading and the Futures Interest Markets--Special Risks
Associated with Trading on Foreign Exchanges" on page 14.
S-8
<PAGE>
DWR, in its business as an international commodity broker and as a member of
various futures exchanges, monitors the creditworthiness of the exchanges and
clearing members of the foreign exchanges with which it does business for
clients, including the Partnerships. DWR employees also from time to time serve
on supervisory or management committees of such exchanges. If DWR believed that
there were a problem with the creditworthiness of an exchange on which a
Partnership deals, it would so advise the General Partner. With respect to
exchanges of which DWR is not a member, DWR acts only through clearing brokers
it has determined to be creditworthy. If DWR believed that a clearing broker
with which it deals on behalf of clients were not creditworthy, it would
terminate its relationship with such broker.
While DWR monitors the creditworthiness and risks involved in dealing on the
various exchanges (and their clearinghouses) and with other exchange members,
there can be no assurance that an exchange (or its clearinghouse) or other
exchange member will be able to meet its obligations to a Partnership. DWR has
not undertaken to indemnify the Partnerships against any loss. Further, the law
is unclear, particularly with respect to trading in various non-U.S.
jurisdictions, as to whether DWR has any obligation to protect the Partnerships
from any liability in the event that an exchange or its clearinghouse or
another exchange member defaults on its obligations on trades effected for a
Partnership.
Although DWR monitors the creditworthiness of the foreign exchanges and
clearing brokers with which it does business for clients, DWR does not have the
capability to precisely quantify a Partnership's exposure to risks inherent in
its trading activities on foreign exchanges, and, as a result, the risk is not
monitored by DWR on an individual client basis (including the Partnerships). In
this regard, DWR must clear its customer trades through one or more other
clearing brokers on each exchange where DWR is not a clearing member. Such
other clearing brokers calculate the net margin requirements of DWR in respect
of the aggregate of all of DWR's customer positions carried in DWR's omnibus
account with that clearing broker. Similarly, DWR calculates a net margin
requirement for the exchange-traded futures positions of each of its customers,
including the Partnerships. Neither DWR nor DWR's respective clearing brokers
on each foreign futures exchange calculates the margin requirements of an
individual customer, such as a Partnership, in respect of the customer's
aggregate contract positions on any particular exchange.
With respect to forward contract trading, the Partnerships trade with only
those counterparties which the General Partner, together with DWR, have
determined to be creditworthy. As set forth in the Partnerships' Trading
Policies, in determining creditworthiness, the General Partner and DWR consult
with the Corporate Credit Department of DWR. Currently, the Partnerships deal
only with DWR as their counterparty on forward contracts.
At June 30, 1996, open futures and forward contracts were:
<TABLE>
<CAPTION>
CONTRACT OR NOTIONAL AMOUNT
----------------------------------
SPECTRUM SPECTRUM SPECTRUM
BALANCED STRATEGIC TECHNICAL
---------- ----------- -----------
$ $ $
<S> <C> <C> <C>
EXCHANGE TRADED CONTRACTS:
Financial Futures
Commitments to Purchase.............. 17,868,000 12,105,000 48,751,000
Commitments to Sell.................. 10,786,000 51,681,000 211,955,000
Options Written...................... 4,738,000 1,692,000 --
Commodity Futures
Commitments to Purchase.............. 2,192,000 103,453,000 53,209,000
Commitments to Sell.................. 1,735,000 15,129,000 37,859,000
Options Written...................... -- 3,342,000 --
Foreign Futures
Commitments to Purchase.............. 15,290,000 12,262,000 124,947,000
Commitments to Sell.................. 18,650,000 4,063,000 79,555,000
OFF EXCHANGE TRADED FORWARD CURRENCY
CONTRACTS
Commitments to Purchase.............. 11,032,000 7,111,000 22,639,000
Commitments to Sell.................. 17,116,000 7,111,000 21,598,000
</TABLE>
A portion of the amounts indicated as off-balance sheet risk in forward foreign
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.
S-9
<PAGE>
The unrealized gains and losses on open contracts is reported as a component
of "Equity in Commodity Futures Trading Accounts" on the Statements of
Financial Condition and totaled, at June 30, 1996, $165,468 for Spectrum
Balanced, $917,324 for Spectrum Strategic, and $3,500,193 for Spectrum
Technical.
For Spectrum Balanced, of the $165,468 net unrealized gain on open contracts
at June 30, 1996, $215,815 related to exchange-traded futures contracts and
$(50,347) related to off-exchange-traded forward currency contracts.
For Spectrum Strategic, of the $917,324 net unrealized gain on open contracts
at June 30, 1996, $917,324 related entirely to exchange-traded futures
contracts.
For Spectrum Technical, of the $3,500,195 net unrealized gain on open
contracts at June 30, 1996, $3,597,517 related to exchange-traded futures
contracts and $(97,324) related to off-exchange-traded forward currency
contracts.
The contract amounts in the above table represent the Partnerships' 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 Partnerships'
Statements of Financial Condition.
Exchange-traded futures contracts held by the Partnerships at June 30, 1996
mature through December 1996 for Spectrum Balanced, March 1997 for Spectrum
Strategic, and June 1997 for Spectrum Technical. Off-exchange-traded forward
currency contracts held by the Partnerships at June 30, 1996 mature through
July 1996 for Spectrum Balanced, July 1996 for Spectrum Strategic, and
September 1996 for Spectrum Technical.
The Partnerships also have credit risk because DWR acts as the futures
commission merchant or the sole counterparty with respect to most of the
Partnerships' assets. Exchange-traded futures 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 Partnerships' exchange-traded
futures and option contracts, is required, pursuant to regulations of the CFTC,
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
contracts, including an amount equal to the net unrealized gain on all open
futures contracts, which funds totalled, at June 30, 1996, $39,789,617 in the
case of Spectrum Strategic, $82,135,286 in the case of Spectrum Technical, and
$18,369,610 in the case of Spectrum Balanced. With respect to the Partnerships'
off-exchange-traded foreign currency forward 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 contracts, the Partnerships are at risk to
the ability of DWR, the counterparty on all such contracts, to perform.
For the six months ended June 30, 1996, the average fair value of financial
instruments held for trading purposes was as follows:
<TABLE>
<CAPTION>
SPECTRUM BALANCED SPECTRUM STRATEGIC SPECTRUM TECHNICAL
---------------------- ----------------------- -----------------------
ASSETS LIABILITIES ASSETS LIABILITIES ASSETS LIABILITIES
---------- ----------- ----------- ----------- ----------- -----------
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C>
EXCHANGE-TRADED CON-
TRACTS:
Financial Futures....... 17,836,000 11,585,000 48,025,000 39,880,000 67,263,000 142,296,000
Commodity Futures....... 4,028,000 1,084,000 132,768,000 10,239,000 56,827,000 18,077,000
Foreign Futures......... 17,087,000 6,620,000 56,332,000 18,641,000 103,809,000 57,216,000
OFF-EXCHANGE-TRADED FOR-
WARD
CURRENCY CONTRACTS..... 12,945,000 14,618,000 2,756,000 2,749,000 28,520,000 47,313,000
</TABLE>
Inflation has not been, and is not expected to be, a major factor in the
Partnerships' operations.
S-10
<PAGE>
THE GENERAL PARTNER
THE FOLLOWING UPDATES THE INFORMATION UNDER "SUMMARY OF THE PROSPECTUS--THE
DEAN WITTER SPECTRUM SERIES--THE GENERAL PARTNER" ON PAGE 3 AND UNDER "THE
GENERAL PARTNER" ON PAGE 48.
As of August 31, 1996, the General Partner had an aggregate of approximately
$950 million in net assets under management. As of June 30, 1996, there were
approximately 89,000 investors in the commodity pools managed by Demeter and,
according to Managed Account Reports, as of December 31, 1995, Demeter was the
biggest manager of public commodity pools in terms of assets under management,
with Demeter's pools representing a significant portion of all public
commodity pools.
THE FOLLOWING UPDATES AND REPLACES THE INFORMATION AND TABLES UNDER "THE
GENERAL PARTNER--DESCRIPTION AND PERFORMANCE INFORMATION OF COMMODITY POOLS
OPERATED BY THE GENERAL PARTNER" ON PAGES 50-57, SOLELY WITH REGARD TO THOSE
POOLS STILL IN OPERATION AS OF AUGUST 31, 1996. A PERFORMANCE CAPSULE FOR DEAN
WITTER PRINCIPAL GUARANTEED FUND II L.P. ("PRINCIPAL GUARANTEED II"), WHICH IS
NO LONGER IN OPERATION, IS INCLUDED TO REFLECT FINAL RESULTS NOT INCLUDED IN
THE PROSPECTUS. SEE THE TABLES ON PAGES 52, 53, AND 55 AS TO DEAN WITTER
REYNOLDS COMMODITY PARTNERS, DEAN WITTER CORNERSTONE FUND I, AND DEAN WITTER
PRINCIPAL GUARANTEED FUND III L.P., RESPECTIVELY, WHICH ARE NO LONGER IN
OPERATION. THE TERM "DRAWDOWN" AS USED IN THESE TABLES MEANS LOSSES
EXPERIENCED BY THE POOL OVER THE SPECIFIED PERIOD.
DESCRIPTION AND PERFORMANCE INFORMATION OF COMMODITY POOLS OPERATED BY THE
GENERAL PARTNER. The following tables set forth summary information for the 14
publicly-offered commodity pools still operated as of August 31, 1996 by
Demeter Management Corporation ("Demeter"), eight of which are single-advisor
pools and six of which are multi-advisor pools, for which Demeter serves as
general partner, as well as for Principal Guaranteed II, which was a multi-
advisor pool. In the single-advisor pool context, Demeter performs general
monitoring of the trading advisor and administrative services. Generally, in
the multi-advisor pool context, in addition to providing general monitoring
and administrative services, Demeter provides asset allocation strategies in
the selection and replacement of trading advisors as well as in the allocation
of assets to such advisors.
Except as regards Principal Guaranteed II, all summary performance
information is current as of August 31, 1996. In reviewing the following
summary performance information, prospective investors should understand that
(i) such performance is calculated on the accrual basis in accordance with
generally accepted accounting principles and is "net" of all fees and charges
and (ii) a more complete presentation of the performance of the futures funds
operated or managed by the General Partner and/or its affiliates is available
without charge upon request to the General Partner.
As the General Partner will provide no trading advisor or asset allocation
services to the Partnerships, the past performance of other pools to which it
provides trading advisor or asset allocation services is not necessarily
indicative of how the Partnerships will perform. Furthermore, the fee
structure and interest income arrangements, as well as other structural
aspects, of the various commodity pools vary from the material terms of the
Partnerships.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS AND
MATERIAL DIFFERENCES EXIST BETWEEN THE COMMODITY POOLS SET FORTH BELOW AND THE
PARTNERSHIPS. THERE CAN BE NO ASSURANCE THAT THE PARTNERSHIPS WILL PERFORM IN
A MANNER COMPARABLE TO ANY OF THE COMMODITY POOLS DESCRIBED BELOW OR THAT THE
PARTNERSHIPS WOULD HAVE DONE SO IN THE PAST. INVESTORS SHOULD ALSO NOTE THAT
INTEREST INCOME MAY CONSTITUTE A SIGNIFICANT PORTION OF A COMMODITY POOL'S
TOTAL INCOME, AND IN CERTAIN INSTANCES, MAY GENERATE PROFITS WHERE THERE HAVE
BEEN REALIZED OR UNREALIZED LOSSES FROM COMMODITY TRADING.
THE FOOTNOTES ON PAGE 57 ARE AN INTEGRAL PART OF THE FOLLOWING PERFORMANCE
TABLES.
---------------
Prospective investors should note that the performance records of the
commodity pools operated by the General Partner are set forth in summary form
herein. A more detailed presentation of such performation will be provided to
any prospective investor upon request and without charge.
---------------
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
S-11
<PAGE>
SUMMARY INFORMATION (BEGINNING JANUARY 1, 1991 EXCEPT AS INDICATED) REGARDING
COMMODITY POOLS OPERATED BY
THE GENERAL PARTNER
A. PUBLICLY-OFFERED FUNDS WITHOUT "PRINCIPAL PROTECTION" FEATURES
DEAN WITTER DIVERSIFIED FUTURES FUND L.P. ("Diversified I"). Diversified I
initially was privately-offered but was publicly-offered in August 1995, and
seeks long-term capital appreciation and portfolio diversification. Diversified
I is managed by a single advisor who uses technically based trading systems to
trade four distinct trading portfolios. Since the funds of Diversified I have
not been managed by any of the trading managers for the Partnerships, and since
its fee structure is different from the fees structures of the Partnerships',
the performance of Diversified I is not indicative of the performance that may
be realized by the Partnerships.
ANNUAL/PERIOD RATE OF RETURN
----------------------------
1996 Year-to-date return (8
Inception of trading: April 1988 months): (11.79)%
Aggregate gross 1995 Annual Return: (4.56)%
subscriptions: $206,815,107 1994 Annual Return: 7.68 %
Current capitalization: $156,868,985 1993 Annual Return: 6.65 %
Current net asset value per unit: $826.04 1992 Annual Return: 16.70 %
Worst monthly return (May 1990): (12.85)% 1991 Annual Return: 23.85 %
Worst month-end peak-to-valley drawdown
(14 months, May 1995 to June
1996): (24.86)%
DEAN WITTER DIVERSIFIED FUTURES FUND II L.P. ("Diversified II"). Diversified
II was publicly-offered and seeks long-term capital appreciation and portfolio
diversification. Diversified II is managed by a single advisor who uses
technically based trading systems to trade four distinct trading portfolios.
Since the funds of Diversified II have not been managed by any of the trading
managers of the Partnerships, and since its fee structure is different from the
Partnerships', the performance of Diversified II is not indicative of the
performance that may be realized by the Partnerships.
ANNUAL/PERIOD RATE OF RETURN
----------------------------
Inception of trading: January 1989 1996 Year-to-date return (8
Aggregate gross months): (14.20)%
subscriptions: $13,210,576 1995 Annual Return: (2.90)%
Current capitalization: $11,656,707 1994 Annual Return: 5.41 %
Current net asset value per 1993 Annual Return: 7.35 %
unit: $2,174.81 1992 Annual Return: 17.99 %
Worst monthly return (August 1991 Annual Return: 21.67 %
1989): (13.41)%
Worst month-end peak-to-valley drawdown
(14 months, May 1995 to June
1996): (25.62)%
DEAN WITTER DIVERSIFIED FUTURES FUND III L.P. ("Diversified III").
Diversified III was publicly-offered and seeks long-term capital appreciation
and portfolio diversification. Diversified III is managed by a single advisor
who uses technically based trading systems to trade four distinct trading
portfolios. Since the funds of Diversified III have not been managed by any of
the trading managers for the Partnerships, and since its fee structure is
different from the Partnerships', the performance of Diversified III is not
indicative of the performance that may be realized by the Partnerships.
ANNUAL/PERIOD RATE OF RETURN
----------------------------
Inception of trading: November 1990 1996 Year-to-date return (8
Aggregate gross months): (13.45)%
subscriptions: $126,815,755 1995 Annual Return: (4.02)%
Current capitalization: $77,568,622 1994 Annual Return: 5.89 %
Current net asset value per 1993 Annual Return: 7.58 %
unit: $1,369.08 1992 Annual Return: 15.79 %
Worst monthly return (January 1991 Annual Return: 27.06 %
1992): (13.62)%
Worst month-end peak-to-valley drawdown
(14 months, May 1995 to June
1996): (27.00)%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
S-12
<PAGE>
DEAN WITTER MULTI-MARKET PORTFOLIO, L.P. ("Multi-Market") was publicly-
offered and seeks long-term capital appreciation and portfolio diversification.
Multi-Market is currently managed by a single advisor who uses technically
based trading systems to trade four distinct trading portfolios. The funds of
Multi-Market were at one time managed by multiple advisors in a limited risk
pool format. A portion of the funds of Multi-Market at that time were managed
by a trading manager of Spectrum Strategic (Blenheim) pursuant to a trading
program which will be used by Spectrum Strategic. However, since the funds of
Multi-Market have not been managed by any of the trading managers for the
Partnerships (other than Blenheim), and since its fee structure is different
from the Partnerships', the performance of Multi-Market is not indicative of
the performance that may be realized by the Partnerships.
ANNUAL/PERIOD RATE OF RETURN
----------------------------
Inception of trading: September 1988 1996 Year-to-date return (8
Aggregate gross months): (15.36)%
subscriptions: $252,526,000 1995 Annual Return: (6.37)%
Current capitalization: $11,492,123 1994 Annual Return: 2.66 %
Current net asset value per unit: $914.80 1993 Annual Return: 8.65 %
Worst monthly return (February 1992 Annual Return: (7.75)%
1996): (13.26)% 1991 Annual Return: 1.82 %
Worst month-end peak-to-valley drawdown
(14 months, May 1995 to June
1996): (29.84)%
DWFCM INTERNATIONAL ACCESS FUND L.P. ("IAF"). IAF was publicly-offered and
seeks long term capital appreciation and portfolio diversification. IAF is
managed by a single advisor using three distinct technically based trading
systems. Since the funds of IAF have not been managed by any of the trading
managers for the Partnerships, and since its fee structure is different than
the fee structure of the Partnerships', the performance of IAF is not
indicative of the performance that may be realized by the Partnerships.
ANNUAL/PERIOD RATE OF RETURN
----------------------------
1996 Year-to-date return (8
months): (7.60)%
Inception of trading: March 1994 1995 Annual Return: 21.88 %
Aggregate gross 1994 Period Return (10
subscriptions: $68,115,440 months): (7.32)%
Current capitalization: $42,326,215
Current net asset value: $1,043.67
Worst monthly return (January
1995): (12.87)%
Worst month-end peak-to-valley drawdown (7
months, August 1994 to January
1995): (22.84)%
COLUMBIA FUTURES FUND ("Columbia"). Demeter became general partner and
commodity pool operator of Columbia in February 1985. Columbia was publicly-
offered, and initially used multiple advisors and currently uses a single
advisor and seeks long term capital appreciation and portfolio diversification
through participation in a diverse portfolio of over 40 global tangible and
financial markets with multiple trading programs. A portion of the funds of
Columbia are managed by a trading manager of Spectrum Technical (JWH) pursuant
to a trading program (the Original Investment Program) which will be used by
Spectrum Technical. However, since the funds of Columbia have not been managed
by the trading managers of the Partnerships (other than JWH), and since its fee
structure is different from the Partnerships', the performance of Columbia is
not indicative of the performance that may be realized by the Partnerships.
ANNUAL/PERIOD RATE OF RETURN
----------------------------
1996 Year-to-date return (8
Inception of trading: July 1983 months): (4.59)%
Aggregate gross 1995 Annual Return: 28.21 %
subscriptions: $29,276,299 1994 Annual Return: (5.75)%
Current capitalization: $6,863,318 1993 Annual Return: 14.36 %
Current net asset value per 1992 Annual Return: 2.02 %
unit: $1,849.81 1991 Annual Return: 11.70 %
Worst monthly return (April 1986): (17.54)%
Worst month-end peak-to-valley drawdown
(27 months, July 1983 to September
1985): (42.58)%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
S-13
<PAGE>
DEAN WITTER CORNERSTONE FUND II ("Cornerstone II"). Cornerstone II is
publicly-offered and seeks long-term capital appreciation and portfolio
diversification through participation in a broad range of futures and interbank
markets, by using multiple technical trading advisors and a moderate degree of
leverage. A portion of the funds of Cornerstone II have been managed by a
trading manager of Spectrum Technical (JWH) pursuant to a trading program (the
Original Investment Program) which will be used by Spectrum Technical. However,
since the funds of Cornerstone II have not been managed by the trading managers
of the Partnerships (other than JWH), and since its fee structure is different
from the Partnerships', the performance of Cornerstone II is not indicative of
the performance that may be realized by the Partnerships.
ANNUAL/PERIOD RATE OF RETURN*
-----------------------------
1996 Year-to-date return (8
months): (7.45)%
Inception of trading: January 1985 1995 Annual Return: 26.50 %
Aggregate gross 1994 Annual Return: (8.93)%
subscriptions: $65,253,651 1993 Annual Return: 7.81 %
Current capitalization: $25,968,585 1992 Annual Return: (1.34)%
Current net asset value per 1991 Annual Return: 10.98 %
unit: $2,619.73
Worst monthly return (September
1989): (11.74)%
Worst month-end peak-to-valley drawdown
(16 months, July 1988 to October 1989):
(32.70)%
DEAN WITTER CORNERSTONE FUND III ("Cornerstone III"). Cornerstone III is
publicly-offered and seeks long-term capital appreciation and portfolio
diversification. Cornerstone III is managed by multiple advisors using
technically based trading systems and participates in a broad range of futures
and interbank currency markets. Since the funds of Cornerstone III have not
been managed by the trading managers of the Partnerships, and since its fee
structure is different from the Partnerships', the performance of Cornerstone
III is not indicative of the performance that may be realized by the
Partnerships.
ANNUAL/PERIOD RATE OF RETURN*
-----------------------------
1996 Year-to-date return (8
months): (13.81)%
Inception of trading: January 1985 1995 Annual Return: 27.50 %
Aggregate gross 1994 Annual Return: (10.04)%
subscriptions: $137,103,376 1993 Annual Return: (4.78)%
Current capitalization: $36,116,722 1992 Annual Return: (11.08)%
Current net asset value per 1991 Annual Return: 11.97 %
unit: $2,162.12
Worst monthly return (February
1989): (18.28)%
Worst month-end peak-to-valley drawdown (9
months, February 1989 to October
1989): (32.35)%
DEAN WITTER CORNERSTONE FUND IV ("Cornerstone IV"). Cornerstone IV is a
publicly-offered specialty fund which trades a portfolio of outright currency
positions (trading foreign currencies against the U.S. dollar) and crossrate
currency positions (trading foreign currencies against another). Cornerstone IV
uses multiple advisors who employ technically based trading systems. A portion
of the funds of Cornerstone IV have been managed by a trading manager of
Spectrum Technical (JWH) pursuant to a trading system which will not be used by
Spectrum Technical. However, since the funds of Cornerstone IV have not been
managed by the trading managers of the Partnerships (other than JWH),
Cornerstone IV's trading is limited to currencies, and since its fee structure
is different from the Partnerships', the performance of Cornerstone IV is not
indicative of the performance that may be realized by the Partnerships.
ANNUAL/PERIOD RATE OF RETURN*
-----------------------------
Inception of trading: May 1987 1996 Year-to-date return (8
Aggregate gross months): (2.44)%
subscriptions: $167,515,692 1995 Annual Return: 22.96 %
Current capitalization: $89,250,835 1994 Annual Return: (14.27)%
Current net asset value per 1993 Annual Return: (9.12)%
unit: $2,767.51 1992 Annual Return: 10.37 %
Worst monthly return (September 1991 Annual Return: 33.52 %
1989): (21.04)%
Worst month-end peak-to-valley drawdown (3
months, July 1989 to September
1989): (45.21)%
* Subscriptions for interests in Cornerstone II, Cornerstone III and
Cornerstone IV included an up-front 7.625% of NAV selling commission and
Continuing Offering Expense charge until sales to new investors were
terminated on September 30, 1994. Because sales occurred throughout the year
and, therefore, the amount of the NAV-based charge varied among investors,
it was not practicable to include the up-front charge in determining the
Cornerstone funds' Annual Returns for the years 1991 through 1994.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
S-14
<PAGE>
DEAN WITTER SELECT FUTURES FUND L.P. ("Select"). Select was publicly-offered
and seeks long-term capital appreciation potential and portfolio
diversification through a broad array of futures and foreign currency markets.
Select is managed by three trading advisors who use technically-based
aggressive trend following trading systems. Since the funds of Select have not
been managed by the trading managers of the Partnerships, and since its fee
structure is different from the Partnerships', the performance of Select is not
indicative of the performance that may be realized by the Partnerships.
ANNUAL/PERIOD RATE OF RETURN
----------------------------
1996 Year-to-date return (8
Inception of trading: August 1991 months): (12.86)%
Aggregate gross 1995 Annual Return: 23.62 %
subscriptions: $178,588,966 1994 Annual Return: (5.12)%
Current capitalization: $136,513,268 1993 Annual Return: 41.62 %
Current net asset value per 1992 Annual Return: (14.45)%
unit: $1,624.40 1991 Period Return (5
Worst monthly return (January months): 31.19 %
1992): (13.72)%
Worst month-end peak-to-valley drawdown
(15 months, June 1995 to August
1996): (26.77)%
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P. ("Global"). Global is
publicly-offered and is a "multi-advisor" specialty fund designed to provide
long-term capital appreciation potential and overall portfolio diversification
in a diverse portfolio of foreign currencies, domestic and international
interest rate and stock index futures, and metals. Global uses multiple trading
advisors, two of whom use technically-based systems and a third who uses a
combination of technical and discretionary methods in its trading strategy.
Since the funds of Global have not been managed by the trading managers of the
Partnerships, and since its fee structure is different from the Partnerships',
the performance of Global is not indicative of the performance that may be
realized by the Partnerships.
ANNUAL/PERIOD RATE OF RETURN
----------------------------
1996 Year-to-date return (8
Inception of trading: March 1992 months): (7.55)%
Aggregate gross 1995 Annual Return: 16.76 %
subscriptions: $67,424,535 1994 Annual Return: (31.62)%
Current capitalization: $19,464,259 1993 Annual Return: (4.67)%
Current net asset value per unit: $736.24 1992 Period Return (10
Worst monthly return (February months): 4.63 %
1996): (8.55)%
Worst month-end peak-to-valley drawdown(18
months, August 1993 to January
1995): (40.90)%
DEAN WITTER WORLD CURRENCY FUND L.P. ("World Currency"). World Currency was
publicly-offered and is a specialty fund which trades a portfolio of outright
currency positions (trading foreign currencies against the U.S. dollar) and
crossrate currency positions (trading foreign currencies against another).
World Currency uses multiple advisors who employ technically based trading
systems. Since the funds of World Currency have not been managed by the trading
managers for the Partnerships, World Currency's trading is limited to
currencies, and its fee structure is different from the Partnerships', the
performance of World Currency is not indicative of the performance that may be
realized by the Partnerships.
ANNUAL/PERIOD RATE OF RETURN
----------------------------
1996 Year-to-date return (8
Inception of trading: April 1993 months): (1.41)%
Aggregate gross 1995 Annual Return: 2.02 %
subscriptions: $114,945,830 1994 Annual Return: (25.13)%
Current capitalization: $25,777,018 1993 Period Return (9
Current net asset value per unit: $622.36 months): (17.35)%
Worst monthly return (May 1995): (9.68)%
Worst month-end peak-to-valley drawdown
(18 months, August 1993 to January
1995): (46.04)%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RETURNS
S-15
<PAGE>
DEAN WITTER PORTFOLIO STRATEGY FUND L.P. ("Portfolio Strategy"). Formerly
Dean Witter Principal Secured Futures Fund, Portfolio Strategy is a limited
risk pool which was publicly offered and seeks long-term capital appreciation
and portfolio diversification and features a one-time principal assurance at
the end of 5 1/2 years from the initial trading date. A portion of the funds of
Portfolio Strategy is managed by a trading manager of Spectrum Technical (JWH)
pursuant to a trading program (the Financials and Metals Program) which will be
used by Spectrum Technical. However, since the funds of Portfolio Strategy have
not been managed by the trading managers of the Partnerships (other than JWH),
and since its fee structure is different from the Partnerships', the
performance of Portfolio Strategy is not indicative of the performance that may
be realized by the Partnerships.
ANNUAL/PERIOD RATE OF RETURN
----------------------------
1996 Year-to-date return (8
Inception of trading: February 1991 months): 0.74 %
Aggregate gross 1995 Annual Return: 25.37 %
subscriptions: $100,491,090 1994 Annual Return: (5.41)%
Current capitalization: $73,373,993 1993 Annual Return: 19.88 %
Current net asset value per 1992 Annual Return: (6.37)%
unit: $1,712.08 1991 Period Return (11
Worst monthly return (January months): 27.68 %
1992): (14.40)%
Worst month-end peak-to-valley drawdown
(4 months, January 1992 to April
1992): (25.65)%
B. PUBLIC FUNDS WITH "PRINCIPAL PROTECTION" FEATURES
DEAN WITTER PRINCIPAL PLUS FUND L.P. ("Principal Plus"). Principal Plus is a
limited risk pool which was publicly-offered and seeks long-term capital
appreciation and portfolio diversification through a balanced portfolio
program, which uses the futures markets for representative participation in
stocks and bonds, along with a traditional managed future component, and
features a one-time guarantee of principal plus a 4% compound annual return at
the end of 5 1/2 years from the initial trading date. Principal Plus is a
single advisor fund managed by RXR, a trading manager for Spectrum Balanced
using a trading system that will be used by Spectrum Balanced. However, RXR
will use a higher degree of leverage to trade the funds of Spectrum Balanced.
Because of the differences in leverage, and since its fee structure is
different from the Partnerships' (including Spectrum Balanced), the performance
of Principal Plus is not indicative of the performance that may be realized by
the Partnerships.
ANNUAL/PERIOD RATE OF RETURN
----------------------------
Inception of trading: February 1990 1996 Year-to-date return (8
Aggregate gross months): (12.27)%
subscriptions: $109,013,535 1995 Annual Return: 17.98 %
Current capitalization: $51,892,148 1994 Annual Return: (8.61)%
Current net asset value per 1993 Annual Return: 11.55 %
unit: $1,370.52 1992 Annual Return: 9.44 %
Worst monthly return (February 1991 Annual Return: 10.38 %
1996): (7.48)%
Worst month-end peak-to-valley drawdown(4
months, February 1996 to May
1996): (13.08)%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
S-16
<PAGE>
DEAN WITTER PRINCIPAL GUARANTEED FUND II L.P. ("Principal Guaranteed II").
Principal Guaranteed II ceased trading commodity interest contracts effective
April 20, 1995, and its assets earned short-term interest rates through its
"Guaranteed Redemption Date" of March 31, 1996, when it terminated and
remaining limited partners were paid the then-net asset value per unit of
$1,056.55. Principal Guaranteed II was a limited risk pool which was publicly-
offered and featured a one-time principal guarantee at the end of approximately
7 1/4 years from the initial trading date. A portion of the funds of Principal
Guaranteed II were previously managed by a trading manager for Spectrum
Strategic (Blenheim) pursuant to a trading program that will be used by
Spectrum Strategic. However, since the funds of Principal Guaranteed II have
not been managed by the trading managers of the Partnerships (other than
Blenheim), and since its fee structure is different from the Partnerships', the
performance of Principal Guaranteed II is not indicative of the performance
that may be realized by the Partnerships.
<TABLE>
<CAPTION>
ANNUAL/PERIOD RATE OF RETURN
----------------------------
<S> <C> <C> <C>
Inception of trading: March 1989 1996 Period return (3 months): 1.00 %
Aggregate gross subscriptions: $162,203,303 1995 Annual Return: 7.30 %
Ending capitalization: $4,966,449 1994 Annual Return: (8.12)%
Ending net asset value per unit: March 31, 1996 1992 Annual Return: (4.54)%
$1,0556.55 1991 Annual Return: 2.49 %
Worst monthly return (January 1991): (5.62)% 1991 Annual Return: 2.49 %
Worst month-end peak-to-valley drawdown
(33 months, August 1989 to April 1992): (14.69)%
</TABLE>
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
S-17
<PAGE>
THE TRADING MANAGERS
DEAN WITTER SPECTRUM STRATEGIC L.P.
1. BLENHEIM INVESTMENTS, INC. (CURRENT ALLOCATION 32.28%)
THE FOLLOWING UPDATE AND REPLACE THE PERFORMANCE CAPSULES RELATING TO THE
GLOBAL MARKETS STRATEGY AND TANGIBLE ASSET STRATEGY OF BLENHEIM INVESTMENTS,
INC. APPEARING ON PAGES 66-68. SEE THE CAPSULES ON PAGE 67 AS TO THE
DIVERSIFIED FINANCIAL STRATEGY AND ENERGY ONLY STRATEGY PROGRAMS, WHICH ARE NO
LONGER IN OPERATION, EFFECTIVE FEBRUARY 1995 AND JUNE 1993, RESPECTIVELY. THE
TANGIBLE ASSET STRATEGY IS NO LONGER IN OPERATION AS OF JULY 1996. THE NOTES
ON PAGE 68 ARE AN INTEGRAL PART OF THE FOLLOWING CAPSULES. THE TERM "DRAWDOWN"
AS USED IN THESE CAPSULES MEANS LOSSES EXPERIENCED BY THE TRADING PROGRAM OVER
THE SPECIFIED PERIOD.
BLENHEIM INVESTMENTS, INC.
GLOBAL MARKETS STRATEGY
The following reflects the composite performance information of Blenheim
Investments Inc.'s Global Market Strategy which trades a portion of the assets
of Spectrum Strategic.
Name of CTA: Blenheim Investments, Inc.
Name of program: Global Markets Strategy
Inception of trading by CTA: July 1987
Inception of trading in program: July 1988
Number of open accounts: 20
Aggregate assets overall: $80.0 million (notional included); $73.6
million (notional excluded)
Aggregate assets in program: $80.0 million (notional included); $73.6
million (notional excluded)
Worst monthly drawdown: (17.76)%--(2/96)
Worst peak-to-valley drawdown: (25.23)%--(2/96-7/96)
1996 year-to-date return (7 months): (18.11)%
1995 annual return: 24.89%
1994 annual return: (10.58)%
1993 annual return; 16.88%
1992 annual return: 13.93%
1991 annual return: 1.17%
See "Supplementary Performance Information" on page 135 for pro forma annual
(period) rates of return, prepared by the General Partner, for the period 1991
(or inception of trading) through November 1994 which, in certain cases, are
lower than actual program results.
SUMMARY OF OTHER PROGRAMS TRADED BY BLENHEIM INVESTMENTS, INC.
The following summary performance information reflects the composite
performance results of another program of Blenheim Investments, Inc. This
program is no longer in operation, effective July 15, 1996.
Name of CTA: Blenheim Investments, Inc.
Name of program: Tangible Asset Strategy
Inception of trading by CTA: July 1987
Inception of trading in program: August 1994
Number of open accounts: 0
Aggregate assets overall: $80.0 million (notional included); $73.6
million (notional excluded)
Aggregate assets in program: $0
Worst monthly drawdown (notional included): (7.47)%--(6/96)
Worst monthly drawdown (notional excluded): (22.62)%--(6/96)
Worst month-end peak-to-valley drawdown (notional included): (8.02)%--
(5/96-6/96)
Worst month-end peak-to-valley drawdown (notional excluded): (24.00)%--
(5/96-6/96)
1996 year-to-date return (7 months) (notional included):
(6.66)%
1996 year-to-date return (7 months) (notional excluded):
(20.59)%
1995 period return (10 months): (0.92)%
1994 annual return: 4.76%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-18
<PAGE>
2. A. GARY SHILLING & CO., INC. (CURRENT ALLOCATION 28.41%)
THE FOLLOWING UPDATE AND REPLACE THE PERFORMANCE CAPSULES RELATING TO A.
GARY SHILLING & CO., INC. APPEARING ON PAGES 72-73. THE FOOTNOTES ON PAGE 73
ARE AN INTEGRAL PART OF THE FOLLOWING CAPSULES. THE TERM "DRAWDOWN" AS USED IN
THESE CAPSULES MEANS LOSSES EXPERIENCED BY THE TRADING PROGRAM OVER THE
SPECIFIED PERIOD.
A. GARY SHILLING & CO., INC.
THEMATIC FUTURES TRADING PROGRAM
The following reflects the composite performance results of A. Gary Shilling
& Co., Inc.'s Thematic Futures Trading Program, which trades a portion of the
assets of Spectrum Strategic.
Name of CTA: A. Gary Shilling & Co., Inc.
Name of program: Thematic Futures Trading Program
Inception of trading by CTA: July 1990
Inception of trading in program: July 1990
Number of open accounts: 10
Aggregate assets overall: $38.4 million
Aggregate assets in program: $20.2 million
Worst monthly drawdown: (18.54)% -- (2/94)
Worst month-end peak-to-valley drawdown: (50.2)% -- (1/94-7/96)
1996 year-to-date return (6 months): (12.90)%
1995 annual return: (7.61)%
1994 annual return: (38.10)%
1993 annual return: 169.38 %
1992 annual return: 5.91 %
1991 annual return: 20.51 %
See "Supplementary Performance Information" on page 135 for pro forma annual
(period) rates of return, prepared by the General Partner, for the period 1991
(or inception of trading) through November 1994 which, in certain cases, are
lower than actual program results.
SUMMARY OF OTHER PROGRAMS TRADED BY A. GARY SHILLING & CO., INC.
The following summary performance information reflects the composite
performance results of another program currently traded by A. Gary Shilling &
Co., Inc.
Name of CTA: A. Gary Shilling & Co., Inc.
Name of program: Thematic Investment Partners, L.P.
Inception of trading by CTA: April 1990
Inception of trading in program: April 1990
Number of open accounts: 1
Aggregate assets overall: $7.5 million
Aggregate assets in program: $7.5 million
Worst monthly drawdown: (20.3)%--(2/94)
Worst month-end peak-to-valley drawdown: (52.1)%--(1/94-
7/96)
1996 year-to-date return (7 months): (8.05)%
1995 annual return: (13.90)%
1994 annual return: (40.14)%
1993 annual return: 148.42%
1992 annual return: 26.77%
1991 annual return: (3.10)%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-19
<PAGE>
3. WILLOWBRIDGE ASSOCIATES INC. (CURRENT ALLOCATION 39.31%)
THE FOLLOWING UPDATE AND REPLACE THE PERFORMANCE CAPSULES RELATING TO
CURRENT TRADING PROGRAMS OF WILLOWBRIDGE ASSOCIATES INC. APPEARING ON PAGES
77-82. SEE THE CAPSULES ON PAGE 81 AS TO THE LIFFE II AND ATLAS PROGRAMS,
WHICH ARE NO LONGER IN OPERATION. THE FOOTNOTES ON PAGES 81-82 ARE AN INTEGRAL
PART OF THE FOLLOWING CAPSULES. THE TERM "DRAWDOWN" AS USED IN THESE CAPSULES
MEANS LOSSES EXPERIENCED BY THE TRADING PROGRAM OVER THE SPECIFIED PERIOD.
WILLOWBRIDGE ASSOCIATES INC.
XLIM
(EXCLUDING NOTIONAL)
The following reflects the composite performance information of Willowbridge
Associates Inc.'s XLIM trading program (client assets only), which trades a
portion of the assets of Spectrum Strategic.
Name of CTA: Willowbridge Associates Inc.
Name of program: XLIM
Inception of trading by CTA: January 1988
Inception of trading in program: August 1988
Number of open accounts: 28
Aggregate assets overall (excluding notional): $458.7
million
Aggregate assets overall (notional included): $535.7
million
Aggregate assets in program (excluding notional): $212.0
million
Aggregate assets in program (notional included): $258.7
million
Worst monthly drawdown: (13.74)%--(8/91)
Worst month-end peak-to-valley drawdown: (29.10)%--
(8/93-1/95)
1996 year-to-date return (7 months): 4.33%
1995 annual return: 34.99%
1994 period return (5 months):* (19.68)%
1993 annual return: 22.30%
1992 period return (3 months):* 8.36%
1991 period return (8 months):* 3.65%
*This trading program did not trade client accounts from (i) September 1, 1991
through September 30, 1992 and (ii) April 1, 1994 to October 31, 1994.
See "Supplementary Performance Information" on page 135 for pro forma annual
(period) rates of return, prepared by the General Partner, for the period 1991
(or inception of trading) through November 1994 which, in certain cases, are
lower than actual program results.
SUMMARY OF OTHER PROGRAMS TRADED BY WILLOWBRIDGE ASSOCIATES INC.
The following summary performance information reflects the composite
performance results of other programs currently traded by Willowbridge
Associates Inc.
Name of CTA: Willowbridge Associates Inc.
Name of program: Vulcan (pursuant to the Fully-Funded
Subset Method)
Inception of trading by CTA: January 1988
Inception of trading in program: January 1988
Number of open accounts: 18
Aggregate assets overall (excluding notional): $458.7
million
Aggregate assets overall (including notional): $535.7
million
Aggregate assets in program (excluding notional): $19.4
million
Aggregate assets in program (including notional): $22.3
million
Worst monthly drawdown: (20.16)%--(1/91)
Worst month-end peak-to-valley drawdown: (30.19)%--
(11/90-5/91)
1996 year-to-date return (7 months): (11.58)%
1995 annual return: 57.62%
1994 annual return: 14.67%
1993 annual return: 33.97%
1992 annual return: 19.30%
1991 annual return: 19.78%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-20
<PAGE>
Name of CTA: Willowbridge Associates Inc.
Name of program: Titan (pursuant to the Fully-Funded
Subset Method)
Inception of trading by CTA: January 1988
Inception of trading in program: January 1988
Number of open accounts: 10
Aggregate assets overall (excluding notional): $458.7 million
Aggregate assets overall (including notional): $535.7 million
Aggregate assets in program (excluding notional): $16.7 million
Aggregate assets overall (including notional): $18.1 million
Worst monthly drawdown: (25.07)%--(7/91)
Worst month-end peak-to-valley drawdown: (39.89)%--(10/90-8/91)
1996 year-to-date return (7 months): (6.00)%
1995 annual return: 68.10%
1994 annual return: 10.06%
1993 annual return: 23.28%
1992 annual return: 32.16%
1991 annual return: 24.11%
Name of CTA: Willowbridge Associates Inc.
Name of program: Rex
Inception of trading by CTA: January 1988
Inception of trading in program: March 1988
Number of open accounts: 1
Aggregate assets overall (excluding notional): $458.7 million
Aggregate assets overall (including notional): $535.7 million
Aggregate assets in program (excluding notional): $0.59 million
Aggregate assets in program (including notional): $0.59 million
Worst monthly drawdown: (25.19)%--(2/96)
Worst month-end peak-to-valley drawdown: (76.19)%--(9/90-3/96)
1996 year-to-date return (7 months): (23.38)%
1995 annual return: (13.07)%
1994 annual return: (12.49)%
1993 annual return: (10.37)%
1992 annual return: (18.54)%
1991 annual return: (37.94)%
Name of CTA: Willowbridge Associates Inc.
Name of program: Argo (pursuant to the Fully-Funded
Subset Method)
Inception of trading by CTA: January 1988
Inception of trading in program: January 1988
Number of open accounts: 67
Aggregate assets overall (excluding notional): $458.7 million
Aggregate assets overall (including notional): $535.7 million
Aggregate assets in program (excluding notional): $118.7 million
Aggregate assets in program (including notional): $135.6 million
Worst monthly drawdown: (16.70)%--(2/96)
Worst month-end peak-to-valley drawdown: (21.30)%-- (11/90-2/91)
1996 year-to-date return (7 months): (16.80)%
1995 annual return: 59.52%
1994 annual return: 20.28%
1993 annual return: 17.10%
1992 annual return: 22.09%
1991 annual return: 36.30%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-21
<PAGE>
Name of CTA: Willowbridge Associates Inc.
Name of program: Siren (pursuant to the Fully-Funded
Subset Method)
Inception of trading by CTA: January 1988
Inception of trading in program: January 1991
Number of open accounts: 12
Aggregate assets overall (excluding notional): $458.7
million
Aggregate assets overall (including notional): $535.7
million
Aggregate assets in program (excluding notional): $15.0
million
Aggregate assets in program (including notional): $17.0
million
Worst monthly drawdown: (14.94)%--(1/91)
Worst month-end peak-to-valley drawdown: (17.53)%--
(7/93-10/93)
1996 year-to-date return (7 months): (3.39)%
1995 annual return: 25.12%
1994 annual return: 37.88%
1993 annual return: 9.45%
1992 annual return: (1.39)%
1991 annual return: 16.43%
Name of CTA: Willowbridge Associates Inc.
Name of program: MTech
Inception of trading by CTA: January 1988
Inception of trading in program: January 1991
Number of open accounts: 1
Aggregate assets overall (excluding notional): $458.7
million
Aggregate assets overall (including notional): $535.7
million
Aggregate assets in program (excluding notional): $10.5
million
Aggregate assets in program (including notional): $10.5
million
Worst monthly drawdown: (13.62)%--(1/94)
Worst month-end peak-to-valley drawdown: (21.37)%--
(8/93-2/94)
1996 year-to-date return (7 months): 12.04%
1995 annual return: 53.22%
1994 annual return: 21.68%
1993 annual return: 32.48%
1992 annual return: 25.13%
1991 annual return: 19.96%
Name of CTA: Willowbridge Associates Inc.
Name of program: CFM (pursuant to the Fully-Funded
Subset Method)
Inception of trading by CTA: January 1988
Inception of trading in program: January 1993
Number of open accounts: 5
Aggregate assets overall (excluding notional): $458.7
million
Aggregate assets overall (including notional): $535.7 million
Aggregate assets in program (excluding notional): $26.3
million
Aggregate assets in program (including notional): $26.3 million
Worst monthly drawdown: (16.92)%--(2/94)
Worst month-end peak-to-valley drawdown: (29.04)%--
(8/93-9/94)
1996 year-to-date return (7 months): 0.22%
1995 annual return: 24.52%
1994 annual return: (10.51)%
1993 annual return: 29.49%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-22
<PAGE>
Name of CTA: Willowbridge Associates Inc.
Name of program: Currency (pursuant to the Fully-Funded
Subset Method)
Inception of trading by CTA: January 1988
Inception of trading in program: May 1991
Number of open accounts: 5
Aggregate assets overall (excluding notional): $458.7
million
Aggregate assets overall (including notional): $535.7 million
Aggregate assets in program (excluding notional): $6.5
million
Aggregate assets in program (including notional): $11.5 million
Worst monthly drawdown: (8.14)%--(2/96)
Worst month-end peak-to-valley drawdown: (25.32)%--
(7/93-8/94)
1996 year-to-date return (7 months): (4.92)%
1995 annual return: 28.55%
1994 annual return: (10.26)%
1993 annual return: (8.59)%
1992 annual return: 16.96%
1991 period return (8 months): 12.61%
Name of CTA: Willowbridge Associates Inc.
Name of program: Primary (pursuant to the Fully-Funded
Subset Method)
Inception of trading by CTA: January 1988
Inception of trading in program: January 1993
Number of open accounts: 12
Aggregate assets overall (excluding notional): $458.7
million
Aggregate assets overall (including notional): $535.7 million
Aggregate assets in program (excluding notional): $33.2
million
Aggregate assets in program (including notional): $35.3 million
Worst monthly drawdown: (16.67)%--(2/96)
Worst month-end peak-to-valley drawdown: (20.28)%--
(5/96-7/96)
1996 year-to-date return (7 months): (13.01)%
1995 annual return: 56.76%
1994 annual return: 22.70%
1993 annual return: 16.79%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-23
<PAGE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
1. CAMPBELL & COMPANY, INC. (CURRENT ALLOCATION 20.47%)
THE FOLLOWING UPDATE AND REPLACE THE PERFORMANCE CAPSULES RELATING TO
CURRENT TRADING PROGRAMS OF CAMPBELL & COMPANY, INC. APPEARING ON PAGES 86-88.
SEE THE CAPSULES ON PAGE 88 AS TO THE DIVERSIFIED PORTFOLIO AND GLOBAL
FINANCIAL PORTFOLIO PROGRAMS, WHICH ARE NO LONGER IN OPERATION. THE FOOTNOTES
ON PAGE 88 ARE AN INTEGRAL PART OF THE FOLLOWING CAPSULES. THE TERM "DRAWDOWN"
AS USED IN THESE CAPSULES MEANS LOSSES EXPERIENCED OVER THE SPECIFIED PERIOD.
CAMPBELL & COMPANY, INC.
FINANCIAL, METAL & ENERGY LARGE PORTFOLIO
The following reflects the composite performance information of Campbell &
Company, Inc.'s Financial, Metal & Energy Large Portfolio, which trades a
portion of the assets of Spectrum Technical.
Name of CTA: Campbell & Company, Inc.
Name of program: Financial, Metal & Energy Large
Portfolio
Inception of trading by CTA: January 1972
Inception of trading in program: April 1983
Number of open accounts: 4
Aggregate assets overall: $427.6 million
Aggregate assets in program: $355.3 million
Worst monthly drawdown: (7.96)%--(7/91)
Worst month-end peak-to-valley drawdown: (31.72)%--
(7/93-1/95)
1996 year-to-date return (7 months): 8.31%
1995 annual return: 19.46%
1994 annual return: (16.74)%
1993 annual return: 4.68%
1992 annual return: 13.47%
1991 annual return: 31.12%
See "Supplementary Performance Information" on page 136 for pro forma annual
(period) rates of return, prepared by the General Partner, for the period 1991
(or inception of trading) through November 1994 which, in certain cases, are
lower than actual program results.
SUMMARY OF OTHER PROGRAMS TRADED BY CAMPBELL & COMPANY, INC.
The following summary performance information reflects the composite
performance results of other programs currently traded by Campbell & Company,
Inc.
Name of CTA: Campbell & Company, Inc.
Name of program: Financial, Metal & Energy Small
Portfolio
Inception of trading by CTA: January 1972
Inception of trading in program: February 1995
Number of open accounts: 48
Aggregate assets overall : $427.6 million
Aggregate assets in program: $37.3 million
Worst monthly drawdown: (5.78)%--(9/95)
Worst month-end peak-to-valley drawdown: (6.50)%--(4/95-
7/95)
1996 year-to-date return (7 months): 7.72%
1995 period return (11 months): 20.34%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-24
<PAGE>
Name of CTA: Campbell & Company, Inc.
Name of program: Global Diversified Portfolio
Inception of trading by CTA: January 1972
Inception of trading in program: February 1986
Number of open accounts: 12
Aggregate assets overall: $427.6 million
Aggregate assets in program: $22.5 million
Worst monthly drawdown: (8.54)%--(7/91)
Worst month-end peak-to-valley drawdown: (26.05)%--
(7/93-2/94)
1996 year-to-date return (7 months): 1.66%
1995 annual return: 6.52%
1994 annual return: 9.61%
1993 annual return: 2.39%
1992 annual return: 7.68%
1991 annual return: 14.86%
Name of CTA: Campbell & Company, Inc.
Name of program: Foreign Exchange Portfolio
Inception of trading by CTA: January 1972
Inception of trading in program: November 1990
Number of open accounts: 1
Aggregate assets overall: $427.6 million
Aggregate assets in program: $3.1 million
Worst monthly drawdown: (17.01)%--(7/91)
Worst month-end peak-to-valley drawdown: (44.73)%--
(7/93-1/95)
1996 year-to-date return (7 months): 10.17%
1995 annual return: 26.36%
1994 annual return: (21.19)%
1993 annual return: (8.49)%
1992 annual return: 17.67%
1991 annual return: 21.23%
Name of CTA: Campbell & Company, Inc.
Name of program: Interest Rates, Stock Indices &
Commodities Portfolio
Inception of trading by CTA: January 1972
Inception of trading in program: February 1996
Number of open accounts: 1
Aggregate assets overall: $427.6 million
Aggregate assets in program: $9.4 million
Worst monthly drawdown: (5.56)%--(2/96)
Worst month-end peak-to-valley drawdown: (5.56)%--(2/96)
1996 year-to-date return (6 months): (0.96)%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-25
<PAGE>
2. CHESAPEAKE CAPITAL CORPORATION (CURRENT ALLOCATION 38.51%)
THE FOLLOWING UPDATE AND REPLACE THE PERFORMANCE CAPSULES RELATING TO
CURRENT TRADING PROGRAMS OF CHESAPEAKE CAPITAL CORPORATION ("CHESAPEAKE")
APPEARING ON PAGES 92-94. SEE THE CAPSULES ON PAGE 94 AS TO THE FOREIGN
FINANCIALS PROGRAM AND PACIFIC RIM PROGRAM, WHICH ARE NO LONGER IN OPERATION.
THE NOTES ON PAGES 95-96 ARE AN INTEGRAL PART OF THE FOLLOWING CAPSULES.
CHESAPEAKE CAPITAL CORPORATION
FINANCIALS AND METALS PROGRAM
The following reflects the composite performance information of Chesapeake's
Financial and Metals Program, which trades a portion of the assets of Spectrum
Technical.
Name of CTA: Chesapeake Capital Corporation
Name of program: Financials and Metals Program
Inception of trading by CTA: February 1988
Inception of trading in program: March 1992
Number of open accounts: 7
Aggregate assets overall (excluding notional): $758.6
million
Aggregate assets overall (including notional): $928.5
million
Aggregate assets in program (excluding notional): $27.2
million
Aggregate assets in program (including notional): $31.3
million
Largest monthly drawdown:* (7.86)%--(7/96)
Largest month-end peak-to-valley drawdown:** (10.36)%--
(1/94-2/94)
1996 year-to-date return (7 months): (4.93)%
1995 annual return: 12.61%
1994 annual return: 3.22%
1993 annual return: 68.53%
1992 period return (10 months): 24.19%
* "Largest monthly drawdown" is the largest monthly loss experienced by the
program on a composite basis in any calendar month expressed as a percentage
of the total equity (including notional equity) in the program and includes
the month and year of such drawdown. A small number of accounts managed by
Chesapeake have experienced monthly drawdowns which are materially larger than
the largest composite monthly drawdown. These variances result from such
factors as small account size, intra-month account opening or closing,
significant intra-month additions or withdrawals and investment restrictions
imposed by the client. Small account sizes refers to accounts of $1,000,000
trading level or less, which is substantially below the minimum account size
now required by Chesapeake for new accounts.
** "Largest peak-to-valley drawdown" is the largest calendar month to calendar
month loss experienced by the program on a composite basis (regardless of
whether it is continuous) expressed as a percentage of total equity (including
notional equity) in the program and includes the month(s) and year(s) in which
it occurred. For example, a largest peak-to-valley drawdown of (16.62)% (1/92-
5/92) means that the peak-to-valley drawdown lasted from January 1992 to May
1992 and resulted in a 16.62% drawdown. A small number of accounts managed by
Chesapeake have experienced peak-to-valley drawdowns which are materially
larger than the largest composite peak-to-valley drawdown. These variances
result from such factors as small account size, intra-month account opening or
closing, significant intra-month additions or withdrawals and investment
restrictions imposed by the client.
See "Supplementary Performance Information" on page 136 for pro forma annual
(period) rates of return, prepared by the General Partner, for the period 1991
(or inception of trading) through November 1994 which, in certain cases, are
lower than actual program results.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-26
<PAGE>
CHESAPEAKE CAPITAL CORPORATION
DIVERSIFIED PROGRAM
The following reflects the composite performance information of Chesapeake's
Diversified Program, which trades a portion of the assets of Spectrum
Technical. The performance of the program from February 1988 (inception)
through December 1990, while profitable, includes the program's two largest
drawdowns, the larger of which occurred during the period August 1989 through
October 1989 and was (20.58)%.
Name of CTA: Chesapeake Capital Corporation
Name of program: Diversified Program
Inception of trading by CTA: February 1988
Inception of trading in program: February 1988
Number of open accounts: 63
Aggregate assets overall (excluding notional): $758.6
million
Aggregate assets overall (including notional): $928.5
million
Aggregate assets in program (excluding notional): $712.5
million
Aggregate assets in program (including notional): $878.4
million
Largest monthly drawdown:* (10.98)%--(1/92)
Largest month-end peak-to-valley drawdown:** (16.62)%--
(1/92-5/92)
1996 year-to-date return (7 months): (0.01)%
1995 annual return: 14.09%
1994 annual return: 15.87%
1993 annual return: 61.82%
1992 annual return: 1.81%
1991 annual return: 12.51%
* "Largest monthly drawdown" is the largest monthly loss experienced by the
program on a composite basis in any calendar month expressed as a percentage of
the total equity (including notional equity) in the program and includes the
month and year of such drawdown. A small number of accounts managed by
Chesapeake have experienced monthly drawdowns which are materially larger than
the largest composite monthly drawdown. These variances result from such
factors as small account size, intra-month account opening or closing,
significant intra-month additions or withdrawals and investment restrictions
imposed by the client. Small account sizes refers to accounts of $1,000,000
trading level or less, which is substantially below the minimum account size
now required by Chesapeake for new accounts.
** "Largest peak-to-valley drawdown" is the largest calendar month to calendar
month loss experienced by the program on a composite basis (regardless of
whether it is continuous) expressed as a percentage of total equity (including
notional equity) in the program and includes the month(s) and year(s) in which
it occurred. For example, a largest peak-to-valley drawdown of (16.62)% (1/92-
5/92) means that the peak-to-valley drawdown lasted from January 1992 to May
1992 and resulted in a 16.62% drawdown. A small number of accounts managed by
Chesapeake have experienced peak-to-valley drawdowns which are materially
larger than the largest composite peak-to-valley drawdown. These variances
result from such factors as small account size, intra-month account opening or
closing, significant intra-month additions or withdrawals and investment
restrictions imposed by the client.
See "Supplementary Performance Information" on page 136 for pro forma annual
(period) rates of return, prepared by the General Partner, for the period 1991
(or inception of trading) through November 1994 which, in certain cases, are
lower than actual program results.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-27
<PAGE>
SUMMARY OF OTHER PROGRAMS TRADED BY CHESAPEAKE CAPITAL CORPORATION
The following summary performance information reflects the composite
performance results of another program currently traded by Chesapeake.
Name of CTA: Chesapeake Capital Corporation
Name of program: Diversified 2XL Program
Inception of trading by CTA: February 1988
Inception of trading in program: April 1994
Number of open accounts: 4
Aggregate assets overall (excluding notional): $758.6 million
Aggregate assets overall (including notional): $928.5 million
Aggregate assets in program: $ 18.8 million
Largest monthly drawdown:* (9.38)%--(2/96)
Largest month-end peak-to-valley drawdown:** (15.07)%--(1/95-2/95)
1996 year-to-date return (7 months): (8.39)%
1995 annual return: 18.77%
1994 period return (9 months): 26.88%
* "Largest monthly drawdown" is the largest monthly loss experienced by the
program on a composite basis in any calendar month expressed as a percentage of
the total equity (including notional equity) in the program and includes the
month and year of such drawdown. A small number of accounts managed by
Chesapeake have experienced monthly drawdowns which are materially larger than
the largest composite monthly drawdown. These variances result from such
factors as small account size, intra-month account opening or closing,
significant intra-month additions or withdrawals and investment restrictions
imposed by the client. Small account sizes refers to accounts of $1,000,000
trading level or less, which is substantially below the minimum account size
now required by Chesapeake for new accounts.
** "Largest peak-to-valley drawdown" is the largest calendar month to calendar
month loss experienced by the program on a composite basis (regardless of
whether it is continuous) expressed as a percentage of total equity (including
notional equity) in the program and includes the month(s) and year(s) in which
it occurred. For example, a largest peak-to-valley drawdown of (16.62)% (1/92-
5/92) means that the peak-to-valley drawdown lasted from January 1992 to May
1992 and resulted in a 16.62% drawdown. A small number of accounts managed by
Chesapeake have experienced peak-to-valley drawdowns which are materially
larger than the largest composite peak-to-valley drawdown. These variances
result from such factors as small account size, intra-month account opening or
closing, significant intra-month additions or withdrawals and investment
restrictions imposed by the client.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-28
<PAGE>
3. JOHN W. HENRY & COMPANY, INC. (CURRENT ALLOCATION 41.02%)
THE FOLLOWING UPDATES AND SUPPLEMENTS THE INFORMATION RELATING TO JOHN W.
HENRY & COMPANY, INC. ("JWH") BEGINNING ON PAGE 97.
Mr. John A.F. Ford is the director of marketing at JWH and is responsible
for the development and implementation of strategic marketing and
communications programs. He joined JWH in May 1996 from J.P. Morgan where he
had been vice president and head of corporate communications for the firm's
European operations, responsible for public relations, advertising, and
marketing from February 1994 to October 1995. He was previously in similar
position with J.P. Morgan at the Euroclear Operations Centre in Brussels from
January 1992 to February 1994. From October 1995 to May 1996 he undertook a
number of consultancy projects while relocating to the United States. Prior to
joining J.P. Morgan, Mr. Ford was managing director of the European
headquarters of Gavin Anderson & Co. (UK), an international corporate and
investor relations consultancy, from February 1987 to December 1991. Mr. Ford
has also been involved in advising the Chicago Mercantile Exchange on
marketing its services to European institutions and advising the International
Petroleum Exchange in London on similar issues. He also helped market Mercury
Asset Management to major institutions and pension funds.
Ms. Wendy B. Goodyear is director of the office of the chairman. She is
responsible for managing and coordinating projects involving Mr. Henry. Ms.
Goodyear joined JWH in October 1995 as director of marketing, responsible for
the development and implementation of strategic marketing and communications
programs. Prior to her employment at JWH, Ms. Goodyear was a vice president at
Citibank where she held several positions, including product development
manager for the depository receipt business and marketing manager for the
pension business. Prior to joining Citibank in May 1993, Ms. Goodyear was
employed at Bankers Trust Company from 1985 where she held positions of
increasing responsibility in both the private bank and pension businesses. Ms.
Goodyear received a B.A. in History from the University of Virginia and an
M.B.A. from the Stern School of Business at New York University.
Mr. Julius A. Staniewicz is the senior strategist in JWH's Product
Development Department. He will also be President of JWH Asset Management,
Inc. upon NFA registration. Prior to joining JWH in March of 1992, Mr.
Staniewicz was employed with Shearson Lehman Brothers as a financial
consultant starting in April 1991. Prior to that, beginning in 1990, Mr.
Staniewicz was a vice president of Phoenix Asset Management, a commodity pool
operator and introducing broker, where he helped develop futures funds for
syndication and institutional investors. From 1986 to 1989, Mr. Staniewicz
worked in the managed futures department at Prudential-Bache Securities, Inc.,
lastly as an assistant vice president and co-director of managed futures. In
this capacity, Mr. Staniewicz oversaw all aspects of forming and offering
futures funds, including the selection and monitoring of CTAs. Mr. Staniewicz
received a B.A. in Economics from Cornell University.
JWH was named as a co-defendant in certain purported class actions described
in greater detail under "Certain Litigation" on page S-40. The actions
essentially allege that JWH aided and abetted or directly participated with
DWR in the subject matter of those actions and seek unspecified amounts of
damages. JWH believes the allegations against it in such actions are without
merit, it intends to contest those actions vigorously and is convinced that it
will be shown to have acted properly and in the best interest of investors.
THE FOLLOWING UPDATE AND REPLACE THE PERFORMANCE CAPSULES RELATING TO
CURRENT TRADING PROGRAMS OF JWH APPEARING ON PAGES 104-113. PERFORMANCE
CAPSULES FOR THE INTERRATE PROGRAM AND YEN FINANCIAL PORTFOLIO ACCOUNTS 7, 13
AND 15, ALL OF WHICH HAVE CLOSED, ARE ALSO INCLUDED TO REFLECT FINAL RESULTS
NOT INCLUDED IN THE PROSPECTUS. SEE THE CAPSULES ON PAGES 106-113 AS TO FORMER
YEN FINANCIAL PORTFOLIO ACCOUNTS 2, 3, 4, 5, 6, 9, 10, 11, 12, 16, 18, 20, 21,
22, 24, AND 25, THE KT DIVERSIFIED PROGRAM, AND THE ACCOUNTS OPERATED BY JWH
INVESTMENTS, INC., WHICH ARE NO LONGER IN OPERATION.
THE FOOTNOTES ON PAGES 114-117 ARE AN INTEGRAL PART OF THE FOLLOWING
CAPSULES. HOWEVER, THE FOLLOWING SUPPLEMENTS THE FOOTNOTE DEFINING "WORST
MONTHLY DRAWDOWN" CONTAINED ON PAGE 115.
The "worst monthly drawdown" in the JWH capsules below is in each case that
of an individual account included in the capsule, and was determined after
identification of the three worst monthly drawdowns on a composite basis for
each investment program. Within the three months in which the worst composite
monthly drawdowns occurred with respect to each program, individual accounts
were reviewed. The individual account which experienced the worst loss in
those months is the account shown as having the worst individual monthly
drawdown for the program. Some individual accounts were excluded from review
if they were being phased in or out, opened or closed during the month, or if
material mid-month additions or redemptions were made.
S-29
<PAGE>
Differences between the worst monthly drawdown for an individual account and
the worst monthly drawdown on a composite basis for a program are because of,
among other factors, the reasons noted in the first paragraph on page 114,
variations in fill prices, and the timing of additions and withdrawals.
WITH RESPECT TO THE COMPOSITE PERFORMANCE CAPSULE FOR THE KT DIVERSIFIED
PROGRAM ON PAGE 112, THE WORST MONTHLY DRAWDOWN IS (28.6)% IN JANUARY 1992.
WITH RESPECT TO THE COMPOSITE PERFORMANCE CAPSULE FOR THE JWH INVESTMENTS,
INC. INTERRATE(TM) PROGRAM ON PAGE 113, THE WORST MONTHLY DRAWDOWN IS (9.3)%
IN SEPTEMBER 1992.
JOHN W. HENRY & COMPANY, INC.
FINANCIAL AND METALS PORTFOLIO
The following reflects the composite performance information of John W.
Henry & Company, Inc.'s Financial and Metals Portfolio, which trades a portion
of the assets of Spectrum Technical.
Name of CTA: John W. Henry & Company, Inc.
Name of program: Financial and Metals Portfolio*
Inception of client trading by CTA: October 1982
Inception of client trading in program: October 1984
Number of open accounts: 70
Aggregate assets overall: $1.5 billion
Aggregate assets in program: $922.7 million
Worst monthly drawdown: (27.7)%--(1/92)
Worst month-end peak-to-valley drawdown: (39.5)%--
(12/91-5/92)
1996 year-to-date return (7 months): 2.4%
1995 annual return: 38.5%
1994 annual return: (5.3)%
1993 annual return: 46.8%
1992 annual return: (10.9)%
1991 annual return: 61.9%
*Please see additional notes for the Financial and Metals Portfolio on page
114.
JOHN W. HENRY & COMPANY, INC.
ORIGINAL INVESTMENT PROGRAM
The following reflects the composite performance information of John W.
Henry & Company, Inc.'s Original Investment Program, which trades a portion of
the assets of Spectrum Technical.
Name of CTA: John W. Henry & Company, Inc.
Name of program: Original Investment Program*
Inception of client trading by CTA: October 1982
Inception of client trading in program: October 1982
Number of open accounts: 26
Aggregate assets overall: $1.5 billion
Aggregate assets in program: $168.7 million
Worst monthly drawdown: (18.1)%--(2/92)
Worst month-end peak-to-valley drawdown: (26.2)%--(6/94-
10/94)
1996 year-to-date return (7 months): (1.2)%
1995 annual return: 53.2%
1994 annual return: (5.7)%
1993 annual return: 40.6%
1992 annual return: 10.9%
1991 annual return: 5.4%
*Please see additional notes for the Original Investment Program on page 115.
See "Supplementary Performance Information" on page 136 for pro forma annual
(period) rates of return, prepared by the General Partner, for the period 1991
(or inception of trading) through November 1994 which, in certain cases, are
lower than actual program results.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-30
<PAGE>
SUMMARY OF OTHER PROGRAMS TRADED BY JOHN W. HENRY & COMPANY, INC.
The following summary performance information reflects the composite
performance results of other programs currently traded (with the exception of
Accounts 7, 13, and 15) by John W. Henry & Company, Inc.
Name of CTA: John W. Henry & Company, Inc.
Name of program: Global Diversified Portfolio
Inception of client trading by CTA: October 1982
Inception of client trading in program: June 1988
Number of open accounts: 16
Aggregate assets overall: $1.5 billion
Aggregate assets in program: $124.7 million
Worst monthly drawdown: (20.3)%--(7/91)
Worst month-end peak-to-valley drawdown: (29.1)%--(12/91-5/92)
1996 year-to-date return (7 months): (8.8)%
1995 annual return: 19.6%*
1994 annual return: 10.1%
1993 annual return: 59.8%
1992 annual return: (12.6)%
1991 annual return: 40.4%
*Please see additional note for the Global Diversified Portfolio on
page 116.
Name of CTA: John W. Henry & Company, Inc.
Name of program: The World Financial Perspective
Inception of client trading by CTA: October 1982
Inception of client trading in program: April 1987
Number of open accounts: 5
Aggregate assets overall: $1.5 billion
Aggregate assets in program: $14.8 million
Worst monthly drawdown: (25.5)%--(1/92)
Worst month-end peak-to-valley drawdown: (32.0)%--(12/91-10/92)
1996 year-to-date return (7 months): 8.5%
1995 annual return: 32.2%
1994 annual return: (15.2)%
1993 annual return: 13.7%
1992 annual return: (23.2)%
1991 annual return: 14.6%
Name of CTA: John W. Henry & Company, Inc.
Name of program: Delivered Yen Denominated Financial and Metals Profile
Inception of client trading by CTA: October 1982
Inception of client trading in program: October 1995
Number of open accounts: 1
Aggregate assets overall: $1.5 billion
Aggregate assets in program: (Yen)930.6 million
Worst monthly drawdown*: (3.2)%--(2/96)
Worst month-end peak-to-valley drawdown*: (3.7)%--(1/96-5/96)
1996 year-to-date return (7 months): (1.9)%
1995 period return (3 months): 0.2%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-31
<PAGE>
Name of CTA: John W. Henry & Company, Inc.
Name of program: Yen Financial Portfolio
Inception of client trading by CTA: October 1982
Inception of client trading in program: January 1992
Number of open accounts: 7
Aggregate assets overall: $1.5 billion
Aggregate assets in program: $36.5 million
Worst monthly drawdown for any single account: (14.4)%--(2/92)
Worst month-end peak-to-valley drawdown: (32.1)%--(4/95-6/96)
ACCOUNT 1
The account below commenced trading on January 14, 1992 and as of July 31,
1996 was profitable. Assets under management are $5,549,861 as of July 31,
1996. The largest drawdown since inception was (30.5)% from April 1995 through
July 1996. The largest monthly drawdown was (14.4)% in February 1992.
1996 year-to-date return (7 months): (19.8)%
1995 annual return: 20.6%
1994 annual return: (13.0)%
1993 annual return: 76.4%
1992 annual return: 20.01%
ACCOUNT 7
The account below commenced trading on December 31, 1992 and closed
profitably in March 1996. The largest drawdown since inception was (15.8)% from
December 1993 through January 1995. The largest monthly drawdown was (4.9)% in
July 1995.
1996 period return (3 months): (4.1)%
1995 annual return: 31.4%
1994 annual return: (14.1)%
1993 annual return: 69.2%
1992 period return (1 month): 0.1%
ACCOUNT 8
The account below commenced trading on January 4, 1993 and as of July 31,
1996 was profitable. Assets under management are $966,726 as of July 31, 1996.
The largest monthly drawdown since inception was (29.0)% from April 1995
through July 1996. The largest monthly drawdown was (6.9)% in July 1995.
1996 period return (7 months): (18.7)%
1995 annual return: 21.0%
1994 annual return: (8.8)%
1993 annual return: 71.4%
ACCOUNT 13
The account below commenced trading on March 11, 1994 and closed profitably
on April 1, 1996. The largest drawdown since inception was (18.5)% from April
1995 through April 1996. The largest monthly drawdown was (6.2)% in July 1995.
1996 period return (4 months): (6.3)%
1995 annual return: 18.5%
1994 period return (10 months): (10.1)%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-32
<PAGE>
ACCOUNT 14
The account below commenced trading on January 18, 1994 and as of July 31,
1996 was profitable. Assets under management are $835,294 as of July 31, 1996.
The largest drawdown since inception was (26.6)% from April 1995 through July
1996. The largest monthly drawdown was (6.0)% in July 1995.
1996 period return (7 months): (17.1)%
1995 annual return: 22.4%
1994 annual return: (7.5)%
ACCOUNT 15
The account below commenced trading on December 1, 1994 and closed profitably
in April 1996. The largest drawdown since inception was (21.1)% from April 1995
through April 1996. The largest monthly drawdown was (6.6)% in July 1995.
1996 period return (4 months): (7.8)%
1995 annual return: 18.3%
1994 period return (1 month): 0.2%
ACCOUNT 17
The account below commenced trading on June 3, 1994 and as of July 31, 1996
was profitable. Assets under management are $20,962,451 as of July 31, 1996.
The largest drawdown since inception was (22.3)% from April 1995 through July
1996. The largest monthly drawdown was (6.5)% in July 1995.
1996 period return (7 months): (14.1)%
1995 annual return: 24.2%
1994 period return (6 months): (1.6)%
ACCOUNT 19
The account below commenced trading on August 31, 1994 and as of July 31,
1996 was profitable. Assets under management are $4,657,931 as of July 31,
1996. The largest drawdown since inception was (30.4)% from April 1995 through
July 1996. The largest monthly drawdown was (7.1)% in July 1995.
1996 period return (7 months): (17.0)%
1995 annual return: 21.1%
1994 period return (5 months): (4.3)%
ACCOUNT 23
The account below commenced trading on January 5, 1995 and as of July 31,
1996 was unprofitable. Assets under management are $2,028,892 as of July 31,
1996. The largest drawdown since inception was (35.5)% from May 1995 through
July 1996. The largest monthly drawdown was (7.5)% in July 1995.
1996 period return (7 months): (21.5)%
1995 annual return: 13.2%
ACCOUNT 26
The yen denominated account below commenced trading on March 4, 1994 and as
of July 31, 1996 was profitable. Assets under management are (Yen)164,339,028
as of July 31, 1996. The largest drawdown since inception was (15.9)% from
February 1996 through July 1996. The largest monthly drawdown was (6.7)% in
July 1996.
1996 period return (7 months): (12.9)%
1995 annual return: 28.1%
1994 period return (10 months): (11.2)%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-33
<PAGE>
Name of CTA: John W. Henry & Company, Inc.
Name of program: International Foreign Exchange Program
Inception of client trading by CTA: October 1982
Inception of client trading in program: August 1986
Number of open accounts: 7
Aggregate assets overall: $1.5 billion
Aggregate assets in program: $72.0 million
Worst monthly drawdown: (13.6)%--(1/92)
Worst month-end peak-to-valley drawdown: (24.1)%--(12/91-4/92)
1996 year-to-date return (7 months): 1.3%
1995 annual return: 16.9%
1994 annual return: (6.3)%
1993 annual return: (4.5)%
1992 annual return: 4.5%
1991 annual return: 38.7%
Name of CTA: John W. Henry & Company, Inc.
Name of program: G-7 Currency Portfolio
Inception of client trading by CTA: October 1982
Inception of client trading in program: February 1991
Number of open accounts: 8
Aggregate assets overall: $1.5 billion
Aggregate assets in program: $109.6 million
Worst monthly drawdown: (12.3)%--(1/92)
Worst month-end peak-to-valley drawdown: (19.5%)%--(7/93-1/95)
1996 year-to-date return (7 months): 0.1%
1995 annual return: 32.2%*
1994 annual return: (4.9)%
1993 annual return: (6.3)%
1992 annual return: 14.6%
1991 annual return: 48.5%
Please see additional note for the G-7 Currency Portfolio on page 116.
Name of CTA: John W. Henry & Company, Inc.
Name of program: InterRate(TM)
Inception of client trading by CTA: October 1982
Inception of client trading in program: December 1988
Number of open accounts: 0
Aggregate assets overall: $1.5 billion
Aggregate assets in program: $17.9 million
Worst monthly drawdown: (10.2)%--(9/92)
Worst month-end peak-to-valley drawdown: (17.8)%--(8/92-2/94)
1996 period (7 months): 5.8%
1995 annual return: 5.2%
1994 annual return: 3.4%
1993 annual return: (5.4)%
1992 annual return: (0.7)%
1991 annual return: 8.7%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-34
<PAGE>
Name of CTA: John W. Henry & Company, Inc.
Name of program: International Currency and Bond Portfolio
Inception of client trading by CTA: October 1982
Inception of client trading in program: January 1993
Number of open accounts: 1
Aggregate assets overall: $1.5 billion
Aggregate assets in program: $2.0 million
Worst monthly drawdown: (7.8)%--(7/94)
Worst month-end peak-to-valley drawdown: (20.1)%--(6/94-1/95)
1996 year-to-date return (7 months): (3.5)%*
1995 annual return: 36.5%*
1994 annual return: (2.3)%
1993 annual return: 14.8%
*Please see additional note for the International Currency and Bond
Portfolio on page 116.
Name of CTA: John W. Henry & Company, Inc.
Name of program: Global Financial Portfolio
Inception of client trading by CTA: October 1982
Inception of client trading in program: June 1994
Number of open accounts: 3
Aggregate assets overall: $1.5 billion
Aggregate assets in program: $55.2 million
Worst monthly drawdown: (19.5)%--(11/94)
Worst month-end peak-to-valley drawdown: (46.0)%--(6/94-1/95)
1996 year-to-date return (7 months): 0.7%*
1995 annual return: 86.2%*
1994 annual return: (37.7)%
*Please see additional notes for the Global Financial Portfolio on page
116.
Name of CTA: John W. Henry & Company, Inc.
Name of program: Worldwide Bond Program
Inception of client trading by CTA: October 1982
Inception of client trading in program: July 1996
Number of open accounts: 2
Aggregate assets overall: $1.5 billion
Aggregate assets in program: $9.2 million
Worst monthly drawdown: none
Worst month-end peak-to-valley drawdown: none
1996 period return (1 month): 1.4%
Name of CTA: John W. Henry & Company, Inc.
Name of program: Dollar Program
Inception of client trading by CTA: October 1982
Inception of client trading in program: July 1996
Number of open accounts: 2
Aggregate assets overall: $1.5 billion
Aggregate assets in program: $9.0 million
Worst monthly drawdown: (1.2)%--(7/96)
Worst month-end peak-to-valley drawdown: (1.2)%--(7/96)
1996 period return (1 month): (1.2)%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-35
<PAGE>
DEAN WITTER SPECTRUM BALANCED L.P.
RXR, INC. (CURRENT ALLOCATION 100%)
THE FOLLOWING UPDATE AND REPLACE THE PERFORMANCE CAPSULES RELATING TO
CURRENT TRADING PROGRAMS OF RXR, INC. APPEARING ON PAGES 124-126. SEE CAPSULES
A-2, B-1, B-2, C-3, C-4, C-5, AND C-6 ON PAGES 125, 129, 131, 132, AND 133 AS
TO PROGRAMS WHICH ARE NO LONGER IN OPERATION. THE NOTES ON PAGES 128 AND 133-
135 ARE AN INTEGRAL PART OF THE FOLLOWING CAPSULES. THE TERM "DRAWDOWN" AS
USED IN THESE CAPSULES MEANS LOSSES EXPERIENCED BY THE TRADING PROGRAM OVER
THE SPECIFIED PERIOD.
CAPSULE A-1
RXR, INC.
BALANCED PORTFOLIO PROGRAM
Name of CTA: RXR and RXR Capital
Name of program: Balanced Portfolio Program
Inception of trading by CTA: March 1983
Inception of trading in program: September 1986
Aggregate assets overall (excluding notional): $206.3 million
Aggregate assets overall (including notional): $218.9 million
Aggregate assets in program: $119.3 million
Number of open accounts: 9
Worst monthly drawdown: (4.80)% (2/96)
Worst month-end peak-to-valley drawdown: (7.83)% (1/94-12/94)
1996 year-to-date return (7 months): (4.35)%
1995 annual return: 18.90%
1994 annual return: (7.83)%
1993 annual return: 11.01%
1992 annual return: 9.81%
1991 annual return: 11.71%
See "Supplementary Performance Information" on page 136 for pro forma annual
(period) rates of return, prepared by the General Partner, for the period 1991
(or inception of trading) through November 1994 which, in certain cases, are
lower than actual program results.
CAPSULE A-3
RXR, INC.
BALANCED PORTFOLIO PROGRAM
Name of CTA: RXR and RXR Capital
Name of program: Balanced Portfolio Program
Inception of trading of CTA: March 1983
Inception of trading in program: November 1993
Number of open accounts: 0 (account closed in May 1996)
Aggregate assets overall (excluding notional): $206.3 million
Aggregate assets overall (including notional): $218.9 million
Aggregate assets in program: $0
Worst monthly drawdown: (6.00)%--(2/96)
Worst month-end peak-to-valley drawdown: (12.05)%--(1/94-12/94)
1996 period return (5 months): (4.69)%
1995 annual return: 27.43%
1994 annual return: (12.01)%
1993 period return (2 months): 1.53%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-36
<PAGE>
CAPSULE A-4
RXR, INC.
BALANCED PORTFOLIO PROGRAM
Name of CTA: RXR and RXR Capital
Name of program: Balanced Portfolio Program
Inception of trading of CTA: March 1983
Inception of trading in program: February 1994
Number of open accounts: 1
Aggregate assets overall (excluding notional): $206.3 million
Aggregate assets overall (including notional): $218.9 million
Aggregate assets in program: $10.1 million
Worst monthly drawdown: B: (4.79)%--(2/96)
Worst monthly drawdown: C: (5.02)%--(2/96)
Worst month-end peak-to-valley drawdown: B: (6.84)%--(4/94-11/94)
Worst month-end peak-to-valley drawdown: C: (9.88)%--(4/94-12/94)
1996 year-to-date return (7 months): A: 2.62%, B: (2.78)%, C: (5.27)%
1995 annual return: A: 5.99%, B: 22.70%, C: 15.85%
1994 annual return: A: 3.83%, B: (5.44)%, C: (8.97)%
CAPSULE A-5
RXR, INC.
BALANCED PORTFOLIO PROGRAM
Name of CTA: RXR and RXR Capital
Name of program: Balanced Portfolio Program
Inception of trading by CTA: March 1983
Inception of trading in program: March 1994
Number of open accounts: 1
Aggregate assets overall (excluding notional): $206.3 million
Aggregate assets overall (including notional): $218.9 million
Aggregate assets in program: $44.4 million
Worst monthly drawdown: (4.29)%-(2/96)
Worst month-end peak-to-valley drawdown: (6.52)%-(4/94-11/94)
1996 year-to-date return (7 months): (2.23)%
1995 annual return: 15.35%
1994 annual return: (5.73)%
CAPSULE A-6
RXR, INC.
BALANCED PORTFOLIO PROGRAM
Name of CTA: RXR and RXR Capital
Name of program: Balanced Portfolio Program
Inception of trading by CTA: March 1983
Inception of trading in program: November 1994
Number of open accounts: 1
Aggregate assets overall (excluding notional): $206.3 million
Aggregate assets overall (including notional): $218.9 million
Aggregate assets in program: $18.7 million
Worst monthly drawdown: (7.94)%-(2/96)
Worst month-end peak-to-valley drawdown: (10.64)%-(2/96-5/96)
1996 year-to-date return (7 months): (9.10)%
1995 annual return: 22.82%
1994 period return (2 months): (1.75)%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-37
<PAGE>
CAPSULE B-3
EQUITY YIELD ENHANCEMENT PROGRAM
Name of CTA: RXR and RXR Capital
Name of program: Equity Yield Enhancement Program (EYE)
Inception of trading by CTA: March 1983
Inception of trading in program: September 1992
Number of open accounts: 1
Aggregate assets overall (excluding notional): $206.3
million
Aggregate assets overall (including notional): $218.9 million
Aggregate assets in program: $13.4 million
Largest monthly drawdown: B: (4.84)%--(8/95)
Largest monthly drawdown: C: (3.41)%--(11/95)
Worst month-end peak-to-valley drawdown: B: (4.84)%--
(8/95)
Worst month-end peak-to-valley drawdown: C: (32.09)%--
(10/92-5/96)
1996 year-to-date return (7 months): A: 6.53%, B: 4.14%,
C: (2.73)%
1995 annual return : A: 39.32%, B: 17.26%, C: (16.66)%
1994 annual return: A: 3.89%, B: 1.95%, C: (2.53)%
1993 annual return: A: 12.93%, B: 6.24%, C: (6.22)%
1992 period return (4 months): A: 5.43%, B: 1.49%, C:
(3.84)%
A = Underlying portfolio rate of return, B = Combined
A+C rate of return, and C = the CTA's rate of return.
CAPSULE C-1
DIVERSIFIED TRADING PROGRAM
Name of CTA: RXR and RXR Capital
Name of program: Diversified Trading Program
Inception of trading by CTA: March 1983
Inception of trading in program: March 1983
Number of open accounts: 7
Aggregate assets overall (excluding notional): $206.3
million
Aggregate assets overall (including notional): $218.9 million
Aggregate assets in program (excluding notional): $7.1
million
Aggregate assets in program (including notional): $7.1
million
Worst monthly drawdown: (18.15)%--(1/91)
Worst month-end peak-to-valley drawdown: (24.20)%--
(1/91-5/91)
1996 year-to-date return (7 months): (7.21%)
1995 annual return: 20.93%
1994 annual return: (20.41)%
1993 annual return: 13.37%
1992 annual return: 11.29%
1991 annual return: 8.59%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-38
<PAGE>
CAPSULE C-2
FINANCIAL TRADING PROGRAM COMPOSITE
(Including JGB)
Name of CTA: RXR and RXR Capital
Name of program: Financial Trading Program (Including JGB)
Inception of trading by CTA: March 1983
Inception of trading in program: January 1991
Number of open accounts: 1
Aggregate assets overall (excluding notional): $206.3 million
Aggregate assets overall (including notional): $218.9 million
Aggregate assets in program: $3.9 million
Worst monthly drawdown: (12.68)%--(4/92)
Worst month-end peak-to-valley drawdown: (26.39)%--(4/94-1/95)
1996 year-to-date return (7 months): (5.54)%
1995 annual return: 17.24%
1994 annual return: (22.24)%
1993 annual return: 20.64%
1992 annual return: 14.63%
1991 annual return: 18.47%
CAPSULE C-7*
DIVERSIFIED TRADING PROGRAM ACCOUNT
Name of Advisor: RXR and RXR Capital
Name of program: Diversified Trading Program
Inception of trading by CTA: March 1983
Inception of trading in program: May 1996
Aggregate assets overall (excluding notional): $206.3 million
Aggregate assets overall (including notional): $218.9 million
Total assets in program: $386,125 (actual funds)
$1,986,125 (nominal funds)
Worst monthly drawdown: May 1996 (0.68)%
Worst month-end peak-to-valley drawdown: (0.80)%--(5/96-6/96)
1996 period return (3 months): (0.69)%
* Capsule C-7 sets forth the actual performance record of an account that
commenced trading in May 1996. Due to client-imposed restrictions, this account
is traded with less leverage than other accounts that are also managed pursuant
to the Diversified Trading Program. The notes to Capsules C-5 and C-6 on pages
134-135 are also applicable to Capsule C-7 and should be read in conjunction
with Capsule C-7.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
S-39
<PAGE>
CERTAIN LITIGATION
At any given time, DWR is involved in numerous legal actions, some of which
seek significant damages. On January 16, 1992, DWR, without admitting or
denying liability, consented to findings in an administrative proceeding
brought by the SEC that it failed to keep accurate records with respect to
customer orders relating to the primary distribution of securities of
government sponsored enterprises ("GSEs"). In that proceeding, DWR was
censured, paid a civil money penalty of $100,000, and was ordered to cease and
desist from any future violations of Section 17(a) of the 1934 Act and Rules
17a-3 and 17a-4 thereunder in connection with the primary distribution of
securities of GSEs.
On May 16, 1996, an NASD arbitration panel awarded damages and costs against
DWR and one of its account executives in the amount of approximately $1.1
million, including punitive damages, to three customers who alleged, among
other things, fraud and misrepresentation in connection with their individually
managed futures accounts (not commodity pools).
On September 6, 10, and 20, 1996, 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 Management Corporation, Dean
Witter Futures and Currency Management Inc., Dean Witter, Discover & Co. (all
such parties referred to hereafter as the "Dean Witter Parties"), certain
limited partnership commodity pools of which Demeter is the general partner,
and certain trading advisors to those pools. Also, on September 18 and 20, 1996
similar purported class actions were filed in the Supreme Court of the State of
New York, New York County, against the Dean Witter Parties and certain trading
advisors on behalf of all purchasers of interests in various limited
partnership commodity pools sold by DWR. Generally, these complaints allege,
among other things, that the defendants committed fraud, deceit,
misrepresentation, breach of fiduciary duty, fraudulent and unfair business
practices, unjust enrichment, and conversion in connection with the sale and
operation of the various limited partnership commodity pools. 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, including the Partnerships, could be
added as defendants. The Dean Witter Parties believe that they have strong
defenses to, and they will vigorously contest, the actions. Although the
ultimate outcome of legal proceedings cannot be predicted with certainty, it is
the opinion of management of the Dean Witter Parties that the resolution of the
actions will not have a material adverse effect on the financial condition or
the results of operations of any of the Dean Witter Parties.
During the five years preceding the date of this Prospectus, there have been
(other than as described above) no material criminal, civil or administrative
actions pending, on appeal or concluded against DWR, Demeter or any of their
principals which DWR or Demeter believes would be material to an investor's
decision to invest in the Partnership.
THE FUTURES, OPTIONS AND FORWARDS MARKETS
THE FOLLOWING SUPPLEMENTS THE INFORMATION UNDER "THE FUTURES, OPTIONS AND
FORWARDS MARKETS" ON PAGE 142.
Since 1974, the market in futures interests has undergone dramatic changes.
According to statistics provided by the Futures Industry Association, in 1974
the futures markets were divided 82% in agricultural products, 15% in metals,
2% in currencies, and 1% in lumber and energy products; by 1995, the markets
were divided 54% in interest rates, 12% in agriculturals, 11% in stock indices,
9% in currencies, 8% in metals, and 6% in energy products. By 1995, over $21
billion was invested in managed futures interests.
PLAN OF DISTRIBUTION
THE FOLLOWING SUPPLEMENTS THE INFORMATION UNDER "SUMMARY OF THE PROSPECTUS--
THE OFFERING--NO SELLING COMMISSIONS OR CHARGES FOR ORGANIZATIONAL OR OFFERING
EXPENSES" ON PAGE 10 AND IN THE FIFTH PARAGRAPH UNDER "PLAN OF DISTRIBUTION" ON
PAGE 150.
By reason of the reduced flat-rate brokerage fees payable to the Commodity
Broker effective September 1, 1996, the continuing compensation payable by DWR
to its employees will increase from up to 72% to up to 76% of the brokerage
fees attributable to outstanding Units sold by such employees.
S-40
<PAGE>
POTENTIAL ADVANTAGES
THE FOLLOWING SUPPLEMENTS AND REPLACES THE INFORMATION UNDER "POTENTIAL
ADVANTAGES--INVESTMENT DIVERSIFICATION" ON PAGE 161.
Investment Diversification. An investor who is not prepared to make a
significant investment or spend substantial time trading various futures
interests nevertheless may participate in these markets through an investment
in a Partnership, thereby obtaining diversification from investments in
stocks, bonds, and real estate. The General Partner believes, on the basis of
the past experience of the Partnerships, that the profit potential of a
Partnership does not depend upon favorable general economic conditions, and
that a Partnership is as likely to be profitable during periods of declining
stock, bond, and real estate markets as at any other time; conversely, a
Partnership may be unprofitable (as well as profitable) during periods of
general favorable economic conditions.
The table below is an empirical example of how different assets can react to
business cycles. In each case, the asset class is represented by a recognized
industry index for that asset.
ANNUAL RETURNS OF VARIOUS ASSET CLASSES OVER TIME
<TABLE>
<CAPTION>
BONDS MANAGED
STOCKS (SALOMON CORP. INT'L STOCKS FUTURES (BARCLAY
(S&P 500) BOND INDEX) (EAFE INDEX) CTA INDEX)
--------- -------------- ------------ ----------------
<S> <C> <C> <C> <C>
1981 -5.0% -1.2% -1.0% 23.9%
1982 21.6% 42.5% -0.9% 16.7%
1983 22.5% 6.3% 24.6% 23.8%
1984 6.2% 16.8% 7.9% 8.7%
1985 31.7% 30.1% 56.7% 25.5%
1986 18.6% 19.9% 70.0% 3.8%
1987 5.2% -0.2% 24.9% 57.3%
1988 16.5% 10.7% 28.6% 21.8%
1989 31.6% 16.2% 10.8% 1.8%
1990 -3.1% 6.8% -23.2% 21.0%
1991 30.4% 19.9% 12.5% 3.7%
1992 7.6% 9.4% -11.8% -0.9%
1993 10.1% 13.2% 32.9% 10.4%
1994 1.3% -5.8% 8.1% -0.7%
1995 37.5% 27.2% 11.5% 13.7%
</TABLE>
Performance data for stocks, bonds and international stocks is provided by
Thomson Investment Software, Rockville, MD. Managed futures performance data
is represented by the Barclay CTA Index, Fairfield, IA.
THE PERFORMANCE INFORMATION OF THE ASSET CLASSES ABOVE DOES NOT REFLECT THE
EFFECT OF FEES IDENTICAL TO THOSE TO BE PAID BY THE PARTNERSHIPS, INCLUDING
MANAGEMENT, INCENTIVE AND BROKERAGE FEES. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. PLEASE NOTE THAT WHILE THE BARCLAY CTA INDEX REFLECTS RESULTS
NET OF ACTUAL FEES AND EXPENSES, IT INCLUDES ACCOUNTS WITH TRADING ADVISORS
AND FEE STRUCTURES THAT DIFFER FROM PUBLIC MANAGED FUTURES FUNDS (SUCH AS THE
DEAN WITTER SPECTRUM SERIES). ACCORDINGLY, WHILE THE BARCLAY CTA INDEX IS
BELIEVED TO BE REPRESENTATIVE OF MANAGED FUTURES IN GENERAL, THE PERFORMANCE
OF PUBLIC MANAGED FUTURE FUNDS AS A SUBCLASS MAY DIFFER. SEE "THE SPECTRUM
SERIES--PERFORMANCE RECORDS" ON PAGES S-2-S-4, AND "THE TRADING MANAGERS" ON
PAGES 58-136 AND S-18-S-39, FOR PERFORMANCE INFORMATION ABOUT THE PARTNERSHIPS
AND THE TRADING MANAGERS.
---------------
Over time, managed futures investments have demonstrated that they have the
potential to perform independently of traditional markets such as stocks and
bonds. The factors that influence the stock and bond markets can affect the
futures markets in different ways and to varying degrees.
S-41
<PAGE>
MANAGED FUTURES VS. STOCKS
12-MONTH HOLDING PERIOD PERFORMANCE
<TABLE>
<CAPTION>
S&P 500 INDEX BARCLAY CTA INDEX
<S> <C> <C>
Dec-81 -0.05125517 0.238974795
-0.022535339 0.196832016
-0.091736376 0.223789826
-0.131036252 0.368065
-0.072514199 0.341574103
-0.10583704 0.336392283
-0.113933079 0.225772142
-0.131619051 0.145246968
0.03339177 0.159138858
0.099676624 0.301428705
0.163320154 0.290245086
0.162202641 0.149746075
Dec-82 0.215897843 0.166788936
0.277493477 0.358442068
0.382937372 0.198935539
0.441312641 0.139737114
0.48678425 0.138818532
0.525262117 0.212340549
0.60888052 0.038468078
0.589220107 0.17833218
0.438945919 0.232108414
0.441789687 0.128484696
0.277567893 0.185776457
0.254227728 0.195004299
Dec-83 0.224687517 0.237498149
0.173904911 0.062176332
0.107349209 0.156656891
0.085992426 0.155863419
0.015538793 0.13593474
-0.032625005 0.07697618
-0.048453085 0.061557181
-0.030795513 0.249017969
0.060873087 0.053637017
0.046225928 0.093494132
0.063168854 0.028741408
0.029847207 0.041516136
Dec-84 0.061932899 0.087411739
0.151673704 0.097793527
0.207765594 0.16019839
0.188764364 0.125723526
0.176982746 0.132075727
0.319118381 0.101849347
0.311374038 0.162689894
0.325974375 0.092064127
0.183948308 0.167796403
0.147245914 0.036730967
0.195238262 0.15371491
0.291920841 0.244922847
Dec-85 0.319622844 0.255014002
0.231484771 0.246449009
0.306931466 0.35922128
0.378740877 0.450989991
0.36493966 0.388077259
0.358489096 0.316029817
0.359826207 0.362630844
0.284960896 0.234570339
0.391177416 0.319025099
0.316521883 0.34946084
0.331625372 0.210097134
0.275570065 0.130456582
Dec-86 0.186718315 0.038202133
0.338891953 0.126256183
0.296506166 -0.007248685
0.263356864 -0.028397052
0.265911669 0.26483494
0.213015079 0.292611808
0.252375454 0.269262403
0.394329041 0.287456214
0.346293479 0.204165339
0.43585062 0.284239024
0.065352306 0.347779304
-0.044928301 0.49661383
Dec-87 0.054007333 0.572672009
-0.030498983 0.39634943
-0.025837921 0.397598535
-0.081693664 0.305660158
-0.062234096 0.027350351
-0.065022305 0.139930964
-0.068584122 0.500901222
-0.115553714 0.315169543
-0.177814633 0.345001996
-0.123170413 0.346070319
0.149372786 0.360023379
0.232007444 0.285134435
Dec-88 0.165598109 0.217567042
0.199092314 0.259261131
0.117622882 0.20711498
0.179841056 0.295614243
0.227640942 0.315173239
0.266691148 0.351025134
0.204930887 0.074033163
0.317214012 0.149989083
0.390999854 0.077128232
0.328318179 0.036094777
0.26248318 -0.039131206
0.307388574 -0.042127483
Dec-89 0.315094203 0.017999763
0.143666655 0.018601656
0.187111899 0.063553929
0.190589756 0.057089493
0.103528589 0.133416772
0.164126977 -0.042894751
0.162957013 -0.043367255
0.063823178 0.028287711
-0.050083231 0.164999634
-0.092047423 0.234928444
-0.074408263 0.32872048
-0.034441594 0.292742431
Dec-90 -0.030669881 0.210240036
0.084528878 0.133482635
0.147819877 0.11526414
0.145584598 0.128904536
0.177275971 0.059468374
0.119218528 0.102963634
0.075305529 0.11854437
0.129178554 0.023443742
0.269549489 -0.059149291
0.31088984 -0.059698533
0.334556878 -0.078848518
0.203988746 -0.072092354
Dec-91 0.30471155 0.037261788
0.226054296 0.041297402
0.159595266 0.022607181
0.109817527 -0.037113551
0.139692977 -0.026415901
0.098090343 -0.017708167
0.132585332 -0.000676417
0.126101062 0.078636616
0.077619217 0.125046149
0.109410629 0.077621594
0.098480478 0.089584298
0.183243304 0.099691153
Dec-92 0.075965412 -0.009148588
0.105548985 0.019081388
0.106641419 0.10362988
0.151764423 0.118353933
0.092498869 0.163448855
0.116461955 0.179270908
0.136864305 0.140202761
0.087767474 0.133644223
0.153389439 0.073692948
0.130595177 0.081986539
0.149719685 0.073671043
0.100748077 0.062636182
Dec-93 0.099661455 0.103688195
0.127997622 0.086940102
0.082343228 0.01572785
0.014498014 0.041554898
0.052918103 -0.008605254
0.04264573 0.012676923
0.014578498 0.027920227
0.052230861 -0.019159332
0.055274922 -0.019159332
0.037190575 0.005868675
0.038205437 0.012546138
0.010911866 0.028014891
Dec-94 0.01390864 -0.006528486
0.006071666 0.008984875
0.074385174 0.05853324
0.156339318 0.104078285
0.174585313 0.137123078
0.202358752 0.112008564
0.260259211 0.070891373
0.260259211 0.068835296
0.214211285 0.128846273
0.297649413 0.10864073
0.264669061 0.107422195
0.369729847 0.100451797
Dec-95 0.375127792 0.136392593
</TABLE>
Data: December 1981 - December 1995
Stocks: S&P 500 Index (Thomson Investment Software, Rockville, MD)
Managed Futures: Barclay CTA Index (Barclay Trading Group, Fairfield,
IA)
Notes to this table appear on page S-43
S-42
<PAGE>
Notes to "Managed Futures vs. Stocks" Table:
Managed futures investments can serve to diversify a portfolio and smooth
overall portfolio volatility. Several academic studies, such as the late John
Lintner's of Harvard University, indicate that the nature of the futures
markets traded, combined with the ability to profit in rising or declining
markets as well as in bull or bear market cycles, have contributed to the non-
correlated nature of returns experienced by managed futures investments.
The chart above illustrates the performance of managed futures against that
of stocks from 1981 through 1995, using the recognized market indices of each
asset. Stocks are represented by the S&P 500 Index, Thomson Investment
Software, Rockville, MD; managed futures are represented by the Barclay CTA
Index, Barclay Trading Group, Fairfield, IA. Each bar represents the asset
class performance derived from successive 12-month hypothetical holding periods
or windows. (A 12-month holding period is defined as a period of 12 consecutive
months, i.e., from January 1989 to December 1989; the next would be from
February 1989 to January 1990, etc.)
By overlaying returns, investors can see the potential benefits of a
diversified portfolio that includes both traditional asset classes as well as
assets that are non-traditional and non-correlated. There are many times when
both the managed futures and stock indices showed positive performance.
Obviously, though, there is no investment that only appreciates. There are 19
periods when managed futures showed negative returns, while stocks experienced
26 periods of negative returns during the studied time frame. While not a
guarantee of future results, this chart provides clear indication of the non-
correlated aspect of managed futures. This non-correlation enables investors
with managed futures to potentially lower the overall volatility of their
portfolios.
THE PERFORMANCE INFORMATION OF THE ASSET CLASSES ABOVE DOES NOT REFLECT THE
EFFECT OF FEES IDENTICAL TO THOSE TO BE PAID BY THE PARTNERSHIPS, INCLUDING
MANAGEMENT, INCENTIVE AND BROKERAGE FEES. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. PLEASE NOTE THAT WHILE THE BARCLAY CTA INDEX REFLECTS RESULTS
NET OF ACTUAL FEES AND EXPENSES, IT INCLUDES ACCOUNTS WITH TRADING ADVISORS AND
FEE STRUCTURES THAT DIFFER FROM PUBLIC MANAGED FUTURES FUNDS (SUCH AS THE DEAN
WITTER SPECTRUM SERIES). ACCORDINGLY, WHILE THE BARCLAY CTA INDEX IS BELIEVED
TO BE REPRESENTATIVE OF MANAGED FUTURES IN GENERAL, THE PERFORMANCE OF PUBLIC
MANAGED FUTURE FUNDS AS A SUBCLASS MAY DIFFER. SEE "THE SPECTRUM SERIES--
PERFORMANCE RECORDS" ON PAGES S-3-S-5, AND "THE TRADING MANAGERS" ON PAGES 58-
136 AND S-18-S-39, FOR PERFORMANCE INFORMATION ABOUT THE PARTNERSHIPS AND THE
TRADING MANAGERS.
---------------
Each Partnership's combined benefits of aggressive growth potential (with
commensurate risk) and diversification can potentially reduce overall portfolio
volatility while maximizing profits. By combining asset classes, investors
strive to create a portfolio mix that provides the potential to offer the
greatest possible return within acceptable levels of volatility. While past
performance is no guarantee of future results, a managed futures investment
such as the Partnerships may profit (with commensurate risk) in sustained
futures interests market moves, regardless of their direction, a potential
enhancement to an investor's overall portfolio.
The trading managers' speculative trading techniques will be the primary
factors in the Partnerships' future success or failure. Investors should note
that there are always two parties to a futures interests contract;
consequently, for any gain achieved by one party on a futures interests
contract, a corresponding loss is suffered by the other. Therefore, due to the
nature of futures interests trading, only 50% of futures interests held by all
market participants can experience gain at any one time, without reference to
brokerage commissions and other costs of trading, which may reduce or eliminate
any gain that would otherwise be achieved.
S-43
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Limited Partners and the General Partner of
Dean Witter Spectrum Balanced L.P.
Dean Witter Spectrum Strategic L.P.
Dean Witter Spectrum Technical L.P.:
We have audited the accompanying statements of financial condition of Dean
Witter Spectrum Balanced L.P., Dean Witter Spectrum Strategic L.P. and Dean
Witter Spectrum Technical L.P. (the "Partnerships"), as of December 31, 1995
and 1994 and the related statements of operations, changes in partners'
capital, and cash flows for the year ended December 31, 1995 and for the period
from November 2, 1994 (commencement of operations) to December 31, 1994. These
financial statements are the responsibility of the Partnerships' 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 Spectrum Balanced L.P., Dean
Witter Spectrum Strategic L.P. and Dean Witter Spectrum Technical L.P., as of
December 31, 1995 and 1994 and the results of their operations and their cash
flows for the year ended December 31, 1995 and for the period from November 2,
1994 (commencement of operations) to December 31, 1994 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
February 21, 1996
New York, New York
S-44
<PAGE>
DEAN WITTER SPECTRUM BALANCED L.P.
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------------
1996 1995 1994
----------- ---------- ---------
$ $ $
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Equity in Commodity futures trading
accounts:
Cash 18,153,795 13,409,068 3,260,143
Net unrealized gain on open contracts 165,468 392,428 18,804
Net option premiums received (120,200) -- --
---------- ---------- ---------
Total Trading Equity 18,199,063 13,801,496 3,278,947
Subscriptions receivable 579,455 1,061,057 522,720
Interest receivable (DWR) 75,134 61,129 16,204
---------- ---------- ---------
Total Assets 18,853,652 14,923,682 3,817,871
========== ========== =========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 346,795 38,746 --
Accrued brokerage commissions (DWR) 90,418 66,673 16,573
Accrued management fees 18,837 13,890 3,453
Incentive fees payable -- 49,873 --
---------- ---------- ---------
Total Liabilities 456,050 169,182 20,026
---------- ---------- ---------
PARTNERS' CAPITAL
Limited Partners (1,673,582.146,
1,209,758.681 and 376,514.897 Units,
respectively) 18,204,494 14,604,689 3,701,277
General Partner (17,752.928, 12,409.369 and
9,823.400 Units, respectively) 193,108 149,811 96,568
---------- ---------- ---------
Total Partners' Capital 18,397,602 14,754,500 3,797,845
---------- ---------- ---------
Total Liabilities and Partners' Capital 18,853,652 14,923,682 3,817,871
========== ========== =========
NET ASSET VALUE PER UNIT 10.88 12.07 9.83
========== ========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-45
<PAGE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ----------------------
1996 1995 1994
----------- ---------- ----------
$ $ $
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Equity in Commodity
futures trading accounts:
Cash 38,872,293 29,593,927 9,649,168
Net unrealized gain on
open contracts 917,324 1,819,403 367,611
Net option premiums
received 30,832 (19,873) (46,457)
---------- ---------- ----------
Total Trading Equity 39,820,449 31,393,457 9,970,322
Subscriptions receivable 2,224,620 1,547,750 2,036,646
Interest receivable (DWR) 129,454 108,075 35,804
---------- ---------- ----------
Total Assets 42,174,523 33,049,282 12,042,772
========== ========== ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 385,260 77,310 --
Accrued brokerage
commissions (DWR) 296,746 212,825 72,060
Accrued management fees 135,655 97,291 32,942
Incentive fees payable -- 198,924 18,841
---------- ---------- ----------
Total Liabilities 817,661 586,350 123,843
---------- ---------- ----------
PARTNERS' CAPITAL
Limited Partners
(4,021,226.369,
2,905,719.741 and
1,178,097.030 Units,
respectively) 40,935,627 32,132,595 11,971,839
General Partner
(41,379.149, 29,872.079
and 12,697.303 Units,
respectively) 421,235 330,337 127,090
---------- ---------- ----------
Total Partners' Capital 41,356,862 32,462,932 11,918,929
---------- ---------- ----------
Total Liabilities and
Partners' Capital 42,174,523 33,049,282 12,042,772
========== ========== ==========
NET ASSET VALUE PER UNIT 10.18 11.06 10.01
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-46
<PAGE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ---------------------
1996 1995 1994
----------- ---------- --------------
$ $ $
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Equity in Commodity futures trading
accounts:
Cash 78,537,769 52,705,410 11,829,496
Net unrealized gain on open contracts 3,500,193 4,086,548 724,455
---------- ---------- ----------
Total Trading Equity 82,037,962 56,791,958 12,553,951
Subscriptions receivable 5,170,213 3,091,196 2,484,249
Interest receivable (DWR) 263,101 192,688 46,478
---------- ---------- ----------
Total Assets 87,471,276 60,075,842 15,084,678
========== ========== ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 643,870 184,326 --
Accrued brokerage commissions (DWR) 575,275 387,839 91,924
Accrued management fees 262,983 177,298 42,022
Incentive fees payable -- -- 19,678
---------- ---------- ----------
Total Liabilities 1,482,128 749,463 153,624
---------- ---------- ----------
PARTNERS' CAPITAL
Limited Partners (7,162,981.544,
5,105,307.329 and 1,509,924.871 Units,
respectively) 85,124,376 58,726,495 14,771,789
General Partner (72,768,158, 52,150.079
and 16,279.549 Units, respectively) 864,772 599,884 159,265
---------- ---------- ----------
Total Partners' Capital 85,989,148 59,326,379 14,931,054
---------- ---------- ----------
Total Liabilities and Partners' Capital 87,471,276 60,075,842 15,084,678
========== ========== ==========
NET ASSET VALUE PER UNIT 11.88 11.50 9.78
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-47
<PAGE>
DEAN WITTER SPECTRUM BALANCED L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
FOR THE SIX MONTHS FOR THE YEAR NOVEMBER 2, 1994
ENDED JUNE 30, ENDED (COMMENCEMENT
------------------------ DECEMBER 31, OF OPERATIONS) TO
1996 1995 1995 DECEMBER 31, 1994
----------- ----------- ------------ -----------------
$ $ $ $
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES
Trading Profit (Loss):
Realized (1,190,031) 893,810 1,508,581 (61,916)
Net change in
unrealized (226,960) 161,952 373,624 18,804
---------- --------- --------- -------
Total Trading Results (1,416,991) 1,055,762 1,882,205 (43,112)
Interest income (DWR) 401,024 152,706 447,608 25,896
---------- --------- --------- -------
Total Revenues (1,015,967) 1,208,468 2,329,813 (17,216)
---------- --------- --------- -------
EXPENSES
Brokerage commissions
(DWR) 494,446 170,162 503,995 29,040
Management fees 103,010 35,450 104,999 6,050
Incentive fees -- 111,283 161,155 --
---------- --------- --------- -------
Total Expenses 597,456 316,895 770,149 35,090
---------- --------- --------- -------
NET INCOME (LOSS) (1,613,423) 891,573 1,559,664 (52,306)
========== ========= ========= =======
Net Income (Loss)
Allocation:
Limited Partners (1,596,720) 874,955 1,536,421 (50,640)
General Partner (16,703) 16,618 23,243 (1,666)
Net Income (Loss) per
Unit:
Limited Partners (1.19) 1.69 2.24 (.17)
General Partner (1.19) 1.69 2.24 (.17)
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-48
<PAGE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
NOVEMBER 2, 1994
(COMMENCEMENT
FOR THE SIX MONTHS FOR THE YEAR OF OPERATIONS)
ENDED JUNE 30, ENDED TO
------------------------ DECEMBER 31, DECEMBER 31,
1996 1995 1995 1994
----------- ----------- ------------ ----------------
$ $ $ $
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES
Trading Profit (Loss):
Realized (65,275) 766,814 3,408,036 (221,731)
Net change in
unrealized (902,079) (407,543) 1,451,792 367,611
---------- --------- --------- --------
Total Trading Results (967,354) 359,271 4,859,828 145,880
Interest income (DWR) 720,784 343,248 887,226 55,127
---------- --------- --------- --------
Total Revenues (246,570) 702,519 5,747,054 201,007
---------- --------- --------- --------
EXPENSES
Brokerage commissions
(DWR) 1,584,267 716,675 1,802,579 121,039
Management fees 724,237 327,623 824,036 55,333
Incentive fees 396,899 238,386 437,310 18,841
---------- --------- --------- --------
Total Expenses 2,705,403 1,282,684 3,063,925 195,213
---------- --------- --------- --------
NET INCOME (LOSS) (2,951,973) (580,165) 2,683,129 5,794
========== ========= ========= ========
Net Income (Loss)
Allocation:
Limited Partners (2,922,871) (560,292) 2,659,882 5,704
General Partner (29,102) (19,873) 23,247 90
Net Income (Loss) per Unit:
Limited Partners (.88) (.18) 1.05 .01
General Partner (.88) (.18) 1.05 .01
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-49
<PAGE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
NOVEMBER 2, 1994
FOR THE SIX MONTHS FOR THE (COMMENCEMENT
ENDED JUNE 30, YEAR ENDED OF OPERATIONS) TO
----------------------- DECEMBER 31, DECEMBER 31,
1996 1995 1995 1994
----------- ----------- ------------ -----------------
<S> <C> <C> <C> <C>
$ $ $ $
(UNAUDITED) (UNAUDITED)
REVENUES
Trading Profit (Loss):
Realized 6,081,909 4,706,695 4,446,595 (786,137)
Net change in
unrealized (586,355) 154,964 3,362,093 724,455
--------- --------- --------- --------
Total Trading Results 5,495,554 4,861,659 7,808,688 (61,682)
Interest income (DWR) 1,374,738 470,963 1,430,845 67,617
--------- --------- --------- --------
Total Revenues 6,870,292 5,332,622 9,239,533 5,935
--------- --------- --------- --------
EXPENSES
Brokerage commissions
(DWR) 3,055,877 1,015,387 3,003,934 149,907
Management fees 1,396,972 464,177 1,373,227 68,529
Incentive fees 12,659 600,504 600,504 19,678
--------- --------- --------- --------
Total Expenses 4,465,508 2,080,068 4,977,665 238,114
--------- --------- --------- --------
NET INCOME (LOSS) 2,404,784 3,252,554 4,261,868 (232,179)
========= ========= ========= ========
Net Income (Loss)
Allocation:
Limited Partners 2,379,896 3,226,771 4,226,249 (229,460)
General Partner 24,888 25,783 35,619 (2,719)
Net Income (Loss) per
Unit:
Limited Partners .38 1.69 1.72 (.22)
General Partner .38 1.69 1.72 (.22)
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-50
<PAGE>
DEAN WITTER SPECTRUM SERIES
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED), THE YEAR ENDED DECEMBER 31,
1995, AND THE PERIOD FROMNOVEMBER 2, 1994 (COMMENCEMENT OF OPERATIONS) TO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
------------- ---------- ------- ----------
$ $ $
<S> <C> <C> <C> <C>
DEAN WITTER SPECTRUM BALANCED L.P.
Partners' Capital,
November 2, 1994 2.000 10 10 20
Initial Offering 249,337.719 2,395,153 98,224 2,493,377
Continuous Offering 136,998.578 1,356,754 -- 1,356,754
Net Loss -- (50,640) (1,666) (52,306)
------------- ---------- ------- ----------
Partners' Capital,
December 31, 1994 386,338.297 3,701,277 96,568 3,797,845
Continuous Offering 856,935.520 9,609,381 30,000 9,639,381
Net Income -- 1,536,421 23,243 1,559,664
Redemptions (21,105.767) (242,390) -- (242,390)
------------- ---------- ------- ----------
Partners' Capital,
December 31, 1995 1,222,168.050 14,604,689 149,811 14,754,500
Continuous Offering 520,786.541 5,763,236 60,000 5,823,236
Net Loss -- (1,596,720) (16,703) (1,613,423)
Redemptions (51,619.517) (566,711) -- (566,711)
------------- ---------- ------- ----------
Partners' Capital,
June 30, 1996 1,691,335.074 18,204,494 193,108 18,397,602
============= ========== ======= ==========
DEAN WITTER SPECTRUM STRATEGIC L.P.
Partners' Capital,
November 2, 1994 2.000 10 10 20
Initial Offering 671,717.229 6,617,182 99,990 6,717,172
Continuous Offering 519,075.104 5,168,943 27,000 5,195,943
Net Income -- 5,704 90 5,794
------------- ---------- ------- ----------
Partners' Capital,
December 31, 1994 1,190,794.333 11,791,839 127,090 11,918,929
Continuous Offering 1,880,517.736 19,071,379 180,000 19,251,379
Net Income -- 2,659,882 23,247 2,683,129
Redemptions (135,720.249) (1,390,505) -- (1,390,505)
------------- ---------- ------- ----------
Partners' Capital,
December 31, 1995 2,935,591.820 32,132,595 330,337 32,462,932
Continuous Offering 1,247,524.887 12,991,881 120,000 13,111,881
Net Loss -- (2,922,871) (29,102) (2,951,973)
Redemptions (120,511.189) (1,265,978) -- (1,265,978)
------------- ---------- ------- ----------
Partners' Capital,
June 30, 1996 4,062,605.518 40,935,627 421,235 41,356,862
============= ========== ======= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-51
<PAGE>
DEAN WITTER SPECTRUM SERIES
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL--(CONCLUDED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED), THE YEAR ENDED DECEMBER 31,
1995, AND THE PERIOD FROM NOVEMBER 2, 1994 (COMMENCEMENT OF OPERATIONS) TO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
------------- ---------- ------- ----------
$ $ $
<S> <C> <C> <C> <C>
DEAN WITTER SPECTRUM TECHNICAL L.P.
Partners' Capital,
November 2, 1994 2.000 10 10 20
Initial Offering 795,200.117 7,838,027 113,974 7,952,001
Continuous Offering 731,002.303 7,163,212 48,000 7,211,212
Net Loss -- (229,460) (2,719) (232,179)
------------- ---------- ------- ----------
Partners' Capital,
December 31, 1994 1,526,204.420 14,771,789 159,265 14,931,054
Continuous Offering 3,799,373.914 41,608,374 405,000 42,013,374
Net Income -- 4,226,249 35,619 4,261,868
Redemptions (168,120.926) (1,879,917) -- (1,879,917)
------------- ---------- ------- ----------
Partners' Capital,
December 31, 1995 5,157,457.408 58,726,495 599,884 59,326,379
Continuous Offering 2,257,056.773 26,109,899 240,000 26,349,899
Net Income -- 2,379,896 24,888 2,404,784
Redemptions (178,764.479) (2,091,914) -- (2,091,914)
------------- ---------- ------- ----------
Partners' Capital,
June 30, 1996 7,235,749.702 85,124,376 864,772 85,989,148
============= ========== ======= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-52
<PAGE>
DEAN WITTER SPECTRUM BALANCED L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
NOVEMBER 2, 1994
FOR THE SIX MONTHS FOR THE (COMMENCEMENT
ENDED JUNE 30, YEAR ENDED OF OPERATIONS) TO
------------------------- DECEMBER 31, DECEMBER 31,
1996 1995 1995 1994
----------- ----------- ------------ -----------------
$ $ $ $
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) (1,613,423) 891,573 1,559,664 (52,306)
Noncash item included in
net income (loss):
Net change in
unrealized 226,960 (161,952) (373,624) (18,804)
(Increase) decrease in
operating assets:
Net option premiums 120,200 -- -- --
Interest receivable
(DWR) (14,005) (19,237) (44,925) (16,204)
Increase (decrease) in
operating liabilities:
Accrued brokerage
commissions (DWR) 23,745 23,375 50,100 16,573
Accrued management fees 4,947 4,869 10,437 3,453
Incentive fees payable (49,873) 4,934 49,873 --
----------- ---------- ---------- ---------
Net cash provided by
(used for) operating
activities (1,301,449) 743,562 1,251,525 (67,288)
----------- ---------- ---------- ---------
CASH FLOWS FROM
FINANCING ACTIVITIES
Increase in redemptions
payable 308,049 18,432 38,746 --
Redemptions of units (566,711) (62,580) (242,390) --
(Increase) decrease in
subscriptions
receivable 481,602 (565,909) (538,337) (522,720)
Offering of units 5,823,236 4,496,397 9,639,381 3,850,131
----------- ---------- ---------- ---------
Net cash provided by
financing activities 6,046,176 3,886,340 8,897,400 3,327,411
----------- ---------- ---------- ---------
Net increase in cash 4,744,727 4,629,902 10,148,925 3,260,123
Balance at beginning of
period 13,409,068 3,260,143 3,260,143 20
----------- ---------- ---------- ---------
Balance at end of period 18,153,795 7,890,045 13,409,068 3,260,143
=========== ========== ========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-53
<PAGE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
NOVEMBER 2, 1994
FOR THE SIX MONTHS FOR THE (COMMENCEMENT
ENDED JUNE 30, YEAR ENDED OF OPERATIONS) TO
------------------------ DECEMBER 31, DECEMBER 31,
1996 1995 1995 1994
----------- ----------- ------------ -----------------
$ $ $ $
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERAT-
ING ACTIVITIES
Net income (loss) (2,951,973) (580,165) 2,683,129 5,794
Noncash item included in
net income (loss):
Net change in
unrealized 902,079 407,543 (1,451,792) (367,611)
(Increase) decrease in
operating assets:
Net option premiums (50,705) (101,422) (26,584) 46,457
Interest receivable
(DWR) (21,379) (37,580) (72,271) (35,804)
Increase (decrease) in
operating liabilities:
Accrued brokerage com-
missions (DWR) 83,921 83,928 140,765 72,060
Accrued management fees 38,364 38,367 64,349 32,942
Incentive fees payable (198,924) (18,841) 180,083 18,841
---------- ---------- ---------- ----------
Net cash provided by
(used for) operating
activities (2,198,617) (208,170) 1,517,679 (227,321)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANC-
ING ACTIVITIES
(Increase) decrease in
subscriptions receiv-
able (676,870) 706,137 488,896 (2,036,646)
Offering of units 13,111,881 10,359,788 19,251,379 11,913,115
Increase in redemptions
payable 307,950 94,342 77,310 --
Redemptions of units (1,265,978) (437,097) (1,390,505) --
---------- ---------- ---------- ----------
Net cash provided by fi-
nancing activities 11,476,983 10,723,170 18,427,080 9,876,469
---------- ---------- ---------- ----------
Net increase in cash 9,278,366 10,515,000 19,944,759 9,649,148
Balance at beginning of
period 29,593,927 9,649,168 9,649,168 20
---------- ---------- ---------- ----------
Balance at end of period 38,872,293 20,164,168 29,593,927 9,649,168
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-54
<PAGE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
NOVEMBER 2, 1994
FOR THE SIX MONTHS FOR THE (COMMENCEMENT OF
ENDED JUNE 30, YEAR ENDED OPERATIONS) TO
------------------------ DECEMBER 31, DECEMBER 31,
1996 1995 1995 1994
----------- ----------- ------------ ----------------
$ $ $ $
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) 2,404,784 3,252,554 4,261,868 (232,179)
Noncash item included in net income
(loss):
Net change in
unrealized 586,355 (154,964) (3,362,093) (724,455)
(Increase) decrease in
operating assets:
Interest receivable
(DWR) (70,413) (64,383) (146,210) (46,478)
Net option premiums -- (69,748) -- --
Increase (decrease) in
operating liabilities:
Accrued brokerage
commissions (DWR) 187,436 164,722 295,915 91,924
Accrued management fees 85,685 75,302 135,276 42,022
Incentive fees payable -- (19,678) (19,678) 19,678
---------- ---------- ---------- ----------
Net cash provided by
(used for) operating
activities 3,193,847 3,183,805 1,165,078 (849,488)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
(Increase) decrease in
subscriptions receivable (2,079,017) (1,677,662) (606,947) (2,484,249)
Offering of units 26,349,899 21,121,375 42,013,374 15,163,213
Increase in redemptions
payable 459,544 98,388 184,326 --
Redemptions of units (2,091,914) (442,905) (1,879,917) --
---------- ---------- ---------- ----------
Net cash provided by
financing activities 22,638,512 19,099,196 39,710,836 12,678,964
---------- ---------- ---------- ----------
Net increase in cash 25,832,359 22,283,001 40,875,914 11,829,476
Balance at beginning of
period 52,705,410 11,829,496 11,829,496 20
---------- ---------- ---------- ----------
Balance at end of period 78,537,769 34,112,497 52,705,410 11,829,496
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-55
<PAGE>
DEAN WITTER SPECTRUM SERIES
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO 1996 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION--Dean Witter Spectrum Balanced L.P. ("Spectrum Balanced"), Dean
Witter Spectrum Strategic L.P. ("Spectrum Strategic") and Dean Witter Spectrum
Technical L.P. ("Spectrum Technical") (individually, a "Partnership," and
collectively, the "Partnerships") are limited partnerships organized to engage
in the speculative trading of futures and forward contracts, options on futures
contracts and on physical commodities, and other commodities interests,
including foreign currencies, financial instruments, precious and industrial
metals, energy products, and agriculturals. The general partner for each
Partnership is Demeter Management Corporation (the "General Partner"). The
commodity broker is Dean Witter Reynolds Inc. ("DWR"). Both DWR and the General
Partner are wholly-owned subsidiaries of Dean Witter, Discover & Co.
The General Partner is required to maintain a 1% minimum interest in the equity
of each Partnership and income (losses) are shared by the General and Limited
Partners based upon their proportional ownership interests.
BASIS OF ACCOUNTING--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts in the financial statements.
REVENUE RECOGNITION--Commodity futures contracts and forward contracts on
foreign currencies are open commitments until settlement date. They are valued
at market and the resulting unrealized gains and losses are reflected in
income. Monthly, DWR pays each Partnership interest income based upon 80% of
its average daily Net Assets for the month in the case of Spectrum Strategic
and Spectrum Technical and 100% in the case of Spectrum Balanced. The interest
rate is equal to a prevailing rate on U.S. Treasury Bills. For purposes of such
interest payments, Net Assets do not include monies due the Partnership on
forward contracts and other commodity interests, but not actually received.
NET INCOME (LOSS) PER UNIT--Net income (loss) per Unit is computed using the
weighted average number of Units outstanding during the period.
EQUITY IN COMMODITY FUTURES TRADING ACCOUNTS--The Partnerships' assets "Equity
in Commodity futures trading accounts" consist of cash on deposit at DWR to be
used as margin for trading and the net asset or liability related to unrealized
gains or losses on open contracts and the net option premiums paid and/or
received. The asset or liability related to the unrealized gains or losses on
forward contracts is presented as a net amount because each Partnership has a
master netting agreement with DWR.
BROKERAGE AND RELATED TRANSACTION FEES AND COSTS--Brokerage fees for Spectrum
Balanced are accrued at a monthly rate of 1/2 of 1% of the Net Assets as of the
first day of each month.
Brokerage fees for Spectrum Strategic and Spectrum Technical are accrued at a
monthly rate of 35/48 of 1% of the Net Assets as of the first day of each
month.
Such fees will cover all brokerage commissions, transaction fees and costs and
ordinary administrative and continuing offering expenses.
OPERATING EXPENSES--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 on redemption of Units, are made on a
pro-rata basis at the sole discretion of the General Partner. No distributions
have been made to date.
CONTINUING OFFERING--Units of each Partnership are offered for sale at monthly
closings, 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 will be paid by the Limited
Partners or the Partnership. DWR will pay all such costs.
S-56
<PAGE>
REDEMPTIONS--Limited Partners may redeem some or all of their Units at 100% of
the Net Asset Value per Unit as of the end of the last day that is six months
after the closing at which a person becomes a limited partner, upon five
business days' advance notice by redemption form to the General Partner.
Thereafter, Units may be redeemed as of the end of any month upon five business
days' advance notice by redemption form to the General Partner. However, any
Units redeemed at or prior to the end of the twelfth, eighteenth, or twenty-
fourth full months following the closing at which such person first becomes a
limited partner, may be assessed a redemption charge equal to 3%, 2% or 1%,
respectively, of the Net Asset Value per Unit on the date of such redemption.
Redemptions must be made in whole Units, in a minimum amount of 50 Units,
unless a Limited Partner is redeeming his entire interest in a Partnership.
EXCHANGES--On the last day of the first month which occurs more than six months
after a person first becomes a Limited Partner in any of the Partnerships, and
the end of each month thereafter, Limited Partners may exchange their
investment among the Partnerships (subject to certain restrictions outlined in
the Limited Partnership Agreement) without paying additional charges.
DISSOLUTION OF THE PARTNERSHIP--Each Partnership will terminate on December 31,
2035 regardless of its financial condition at such time, or at an earlier date
if certain conditions occur as defined in each Partnership's Limited
Partnership Agreement.
2. RELATED PARTY TRANSACTIONS
Each Partnership pays brokerage commissions to DWR as described in Note 1. Each
Partnership's cash is on deposit with DWR in commodity trading accounts to meet
margin requirements as needed. DWR pays interest on these funds as described in
Note 1. Each Partnership is authorized to issue and sell Units at monthly
closings at a price per Unit equal to 100% of the Net Asset Value of a Unit of
such Partnership as of the close of business on the date of such monthly
closing.
3. TRADING MANAGERS
The General Partner, on behalf of each Partnership, retains certain commodity
trading managers to make all trading decisions for the Partnerships. The
trading managers for each Partnership are as follows:
Dean Witter Spectrum Balanced L.P.
RXR, Inc.
Dean Witter Spectrum Strategic L.P.
Blenheim Investments, Inc.
A. Gary Shilling & Co., Inc.
Willowbridge Associates Inc.
Dean Witter Spectrum Technical L.P.
Campbell & Company, Inc.
Chesapeake Capital Corporation
John W. Henry & Company, Inc.
Compensation to the trading managers by the Partnerships consists of a
management fee and an incentive fee as follows:
MANAGEMENT FEE--The management fee is accrued at the rate of 5/48 of 1% of the
Net Assets on the first day of each month (a 1.25% annual rate) to Spectrum
Balanced.
The management fee is accrued at the rate of 1/3 of 1% per month of the Net
Assets allocated to each trading manager on the first day of each month (a 4%
annual rate) to Spectrum Strategic and Spectrum Technical.
INCENTIVE FEE--Each Partnership will pay a monthly incentive fee equal to 15%
of the "Trading Profits," as defined in the Limited Partnership Agreement,
experienced with respect to each trading manager's allocated Net Assets as of
the end of each calendar month. When trading losses are incurred, no incentive
fee will be paid in subsequent months until all such losses are recovered.
4. FINANCIAL INSTRUMENTS
The Partnerships trade futures, financial instruments 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
S-57
<PAGE>
factors which may significantly influence the market value of these contracts,
including interest rate volatility. At June 30, 1996, and December 31, 1995 and
1994, open contracts were:
<TABLE>
<CAPTION>
SPECTRUM BALANCED
--------------------------------
CONTRACT OR
NOTIONAL AMOUNT
--------------------------------
1996 1995 1994
----------- ---------- ---------
$ $ $
EXCHANGE-TRADED CONTRACTS: (UNAUDITED)
<S> <C> <C> <C>
Financial Futures:
Commitment to Purchase 17,868,000 10,185,000 4,023,000
Commitment to Sell 10,786,000 1,286,000 3,560,000
Options Written 4,738,000 -- --
Commodity Futures:
Commitment to Purchase 2,192,000 4,769,000 90,000
Commitment to Sell 1,735,000 1,109,000 553,000
Foreign Futures:
Commitment to Purchase 15,290,000 16,671,000 152,000
Commitment to Sell 18,650,000 73,000 1,553,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY
CONTRACTS:
Commitment to Purchase 11,032,000 6,993,000 --
Commitment to Sell 17,116,000 6,806,000 --
</TABLE>
<TABLE>
<CAPTION>
SPECTRUM STRATEGIC
---------------------------------
CONTRACT OR
NOTIONAL AMOUNT
---------------------------------
1996 1995 1994
----------- ----------- ---------
$ $ $
EXCHANGE-TRADED CONTRACTS: (UNAUDITED)
<S> <C> <C> <C>
Financial Futures:
Commitment to Purchase 12,105,000 112,590,000 6,158,000
Commitment to Sell 51,681,000 27,712,000 4,498,000
Options Written 1,692,000 9,865,000 1,920,000
Commodity Futures:
Commitment to Purchase 103,453,000 142,365,000 6,924,000
Commitment to Sell 15,129,000 20,701,000 1,700,000
Options Written 3,342,000 8,762,000 1,717,000
Foreign Futures:
Commitment to Purchase 12,262,000 88,628,000 9,775,000
Commitment to Sell 4,063,000 17,287,000 9,015,000
Options Written -- 200,000 615,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY
CONTRACTS:
Commitment to Purchase 7,111,000 242,000 --
Commitment to Sell 7,111,000 242,000 --
</TABLE>
<TABLE>
<CAPTION>
SPECTRUM TECHNICAL
----------------------------------
CONTRACT OR
NOTIONAL AMOUNT
----------------------------------
1996 1995 1994
----------- ----------- ----------
$ $ $
EXCHANGE-TRADED CONTRACTS: (UNAUDITED)
<S> <C> <C> <C>
Financial Futures:
Commitment to Purchase 48,751,000 107,671,000 6,075,000
Commitment to Sell 211,955,000 20,387,000 46,321,000
Commodity Futures:
Commitment to Purchase 53,209,000 51,165,000 6,525,000
Commitment to Sell 37,859,000 15,282,000 9,668,000
Foreign Futures:
Commitment to Purchase 124,947,000 136,327,000 8,336,000
Commitment to Sell 79,555,000 8,149,000 22,397,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY
CONTRACTS:
Commitment to Purchase 22,639,000 7,035,000 50,320,000
Commitment to Sell 21,598,000 44,415,000 11,158,000
</TABLE>
S-58
<PAGE>
A portion of the amounts indicated as off-balance-sheet risk in forward foreign
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 at June 30, 1996, and December 31, 1995 and 1994, respectively,
$165,468, $392,428 and $18,804 for Spectrum Balanced, $917,324, $1,819,403 and
$367,611 for Spectrum Strategic, and $3,500,193, $4,086,548 and $724,455 for
Spectrum Technical.
For Spectrum Balanced, of the $165,468 net unrealized gain on open contracts at
June 30, 1996, $215,815 related to exchange-traded futures contracts and
($50,347) related to off-exchange-traded forward currency contracts. Of the
$392,428 net unrealized gain on open contracts at December 31, 1995, $428,893
related to exchange-traded futures contracts and ($36,465) related to off-
exchange-traded forward currency contracts. Of the $18,804 net unrealized gain
on open contracts at December 31, 1994, $20,929 related to exchange-traded
futures contracts and ($2,125) related to off-exchange-traded forward currency
contracts.
For Spectrum Strategic, of the $917,324 net unrealized gain on open contracts
at June 30, 1996, $917,324 related entirely to exchange-traded futures
contracts. Of the $1,819,403 net unrealized gain on open contracts at December
31, 1995, $1,819,403 related entirely to exchange-traded futures and option
contracts. Of the $367,611 net unrealized gain on open contracts at December
31, 1994, $407,249 related to exchange-traded futures and option contracts and
($39,638) related to off-exchange-traded forward currency contracts.
For Spectrum Technical, of the $3,500,193 net unrealized gain on open contracts
at June 30, 1996, $3,597,517 related to exchange-traded futures contracts and
($97,324) related to off-exchange-traded forward currency contracts. Of the
$4,086,548 net unrealized gain on open contracts at December 31, 1995,
$4,164,279 related to exchange-traded futures and option contracts and
($77,731) related to off-exchange-traded forward currency contracts. Of the
$724,455 net unrealized gain on open contracts at December 31, 1994, $815,157
related to exchange-traded futures contracts and ($90,702) related to off-
exchange-traded forward currency contracts.
The contract amounts in the above table represent the Partnerships' 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 Partnerships'
Statements of Financial Condition.
Exchange-traded contracts and off-exchange-traded forward currency contracts
held by the Partnerships at June 30, 1996, and December 1995 and 1994 mature as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------------- ------------- -------------
<S> <C> <C> <C>
SPECTRUM BALANCED
Exchange-Traded Contracts December 1996 June 1996 March 1995
Off-Exchange-Traded Forward
Currency Contracts July 1996 January 1996 November 1995
SPECTRUM STRATEGIC
Exchange-Traded Contracts March 1997 December 1996 December 1995
Off-Exchange-Traded Forward
Currency Contracts July 1996 January 1996 April 1995
SPECTRUM TECHNICAL
Exchange-Traded Contracts June 1997 December 1996 December 1995
Off-Exchange-Traded Forward
Currency Contracts September 1996 January 1996 March 1995
</TABLE>
The Partnerships also have credit risk because DWR acts as the futures
commission merchant or is the sole counterparty with respect to most of the
Partnerships' assets. Exchange-traded futures 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 Partnerships' exchange-traded
futures contracts, is required, pursuant to regulations of the Commodity
Futures Trading 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 contracts, including an amount equal to the net
unrealized gain on all open futures contracts, which funds totaled at June 30,
1996, and December 31, 1995 and 1994, respectively, $18,369,610, $13,837,961
and $3,281,072 for Spectrum Balanced, $39,789,617, $31,413,330 and $10,056,417
for Spectrum Strategic, and $82,135,286, $56,869,689 and $12,644,653 for
Spectrum Technical. With respect to the Partnerships' 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
S-59
<PAGE>
unrealized gain on open forward contracts be segregated. With respect to those
off-exchange-traded forward currency contracts, the Partnerships are at risk to
the ability of DWR, the counterparty on all of such contracts, to perform.
For the six months ended June 30, 1996 and for the year ended December 31,
1995, the average fair value of financial instruments held for trading purposes
was as follows:
<TABLE>
<CAPTION>
SPECTRUM BALANCED
----------------------------------------------
FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED JUNE 30, 1996 DECEMBER 31, 1995
----------------------- ----------------------
ASSETS LIABILITIES ASSETS LIABILITIES
----------- ----------- ---------- -----------
$ $ $ $
<S> <C> <C> <C> <C>
EXCHANGE-TRADED CONTRACTS:
Financial Futures 17,836,000 11,585,000 10,315,000 1,410,000
Commodity Futures 4,028,000 1,084,000 2,419,000 649,000
Foreign Futures 17,087,000 6,620,000 6,285,000 1,934,000
OFF-EXCHANGE-TRADED FORWARD
CURRENCY CONTRACTS 12,945,000 14,618,000 4,014,000 4,079,000
<CAPTION>
SPECTRUM STRATEGIC
----------------------------------------------
FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED JUNE 30, 1996 DECEMBER 31, 1995
----------------------- ----------------------
ASSETS LIABILITIES ASSETS LIABILITIES
----------- ----------- ---------- -----------
$ $ $ $
<S> <C> <C> <C> <C>
EXCHANGE-TRADED CONTRACTS:
Financial Futures 48,025,000 39,880,000 28,704,000 16,932,000
Commodity Futures 132,768,000 10,239,000 51,920,000 11,250,000
Foreign Futures 56,332,000 18,641,000 31,941,000 11,889,000
OFF-EXCHANGE-TRADED FORWARD
CURRENCY CONTRACTS 2,756,000 2,749,000 71,000 48,000
<CAPTION>
SPECTRUM TECHNICAL
----------------------------------------------
FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED JUNE 30, 1996 DECEMBER 31, 1995
----------------------- ----------------------
ASSETS LIABILITIES ASSETS LIABILITIES
----------- ----------- ---------- -----------
$ $ $ $
<S> <C> <C> <C> <C>
EXCHANGE-TRADED CONTRACTS:
Financial Futures 67,263,000 142,296,000 45,660,000 26,140,000
Commodity Futures 56,827,000 18,077,000 19,938,000 11,023,000
Foreign Futures 103,809,000 57,216,000 50,015,000 19,011,000
OFF-EXCHANGE-TRADED FORWARD
CURRENCY CONTRACTS 28,520,000 47,313,000 21,986,000 18,280,000
</TABLE>
5. SUBSEQUENT EVENT
Effective September 1, 1996, brokerage fees were reduced to 33/48 of 1% of the
Net Assets (an 8.25% annual rate) as of the first day of the month with regard
to each of Spectrum Strategic and Spectrum Technical, and 11/24 of 1% of the
Net Assets (a 5.50% annual rate) as of the first day of the month with regard
to Spectrum Balanced.
6. UNAUDITED INTERIM INFORMATION
The unaudited financial statements included herein and the related financial
information in the footnotes include, in the opinion of management, all
adjustments (including normal and recurring adjustments) necessary for a fair
presentation of the financial position at June 30, 1996.
S-60
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of Demeter Management Corporation:
We have audited the accompanying statements of financial condition of Demeter
Management Corporation (a wholly-owned subsidiary of Dean Witter, Discover &
Co.) (the "Company") as of December 31, 1995 and 1994. These statements of
financial condition are the responsibility of the Company'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 statements of financial condition present fairly, in all
material respects, the financial position of Demeter Management Corporation as
of December 31, 1995 and 1994 in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
New York, New York
March 1, 1996
(Except for Note 1, for which the date is March 31, 1996.)
S-61
<PAGE>
DEMETER MANAGEMENT CORPORATION
(WHOLLY-OWNED SUBSIDIARY OF DEAN WITTER, DISCOVER & CO.)
STATEMENTS OF FINANCIAL CONDITION
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -------------------------
1996 1995 1994
------------ ------------ -----------
$ $ $
(UNAUDITED)
<S> <C> <C> <C>
Investments in affiliated partnerships
(Note 2)............................. 16,549,236 17,788,814 12,833,311
Income taxes receivable............... 153,137 -- --
Receivable from affiliated partner-
ship................................. 1,095 1,154 1,268
------------ ------------ -----------
TOTAL ASSETS...................... 16,703,468 17,789,968 12,834,579
============ ============ ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Payable to Parent (Note 3).......... 15,043,753 15,314,134 11,630,183
Accrued expenses.................... 25,554 32,579 20,079
------------ ------------ -----------
TOTAL LIABILITIES................. 15,069,307 15,346,713 11,650,262
------------ ------------ -----------
STOCKHOLDER'S EQUITY:
Common stock, no par value:
Authorized 1,000 shares;
Issued and outstanding 100 shares
at stated value of $500 per share. 50,000 50,000 50,000
Additional paid-in capital.......... 111,170,000 111,170,000 98,170,000
Retained earnings................... 1,484,161 2,293,255 1,034,317
------------ ------------ -----------
112,704,161 113,513,255 99,254,317
Less: Notes receivable from Parent (111,070,000) (111,070,000) (98,070,000)
(Note 4) ------------ ------------ -----------
TOTAL STOCKHOLDER'S EQUITY........ 1,634,161 2,443,255 1,184,317
------------ ------------ -----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY.............. 16,703,468 17,789,968 12,834,579
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-62
<PAGE>
DEMETER MANAGEMENT CORPORATION
(WHOLLY-OWNED SUBSIDIARY OF DEAN WITTER, DISCOVER & CO.)
NOTES TO STATEMENTS OF FINANCIAL CONDITION
(INFORMATION WITH RESPECT TO 1996 IS UNAUDITED)
1.BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES
Demeter Management Corporation ("Demeter") is a wholly-owned subsidiary of
Dean Witter, Discover & Co. (the "Parent"), which was formerly a wholly-owned
subsidiary of Sears, Roebuck and Co. ("Sears").
Demeter manages the following commodity pools as their sole general partner:
Dean Witter Cornerstone Fund II, Dean Witter Cornerstone Fund III, Dean Witter
Cornerstone Fund IV, Columbia Futures Fund, Dean Witter Diversified Futures
Fund Limited Partnership ("DWDFF"), Dean Witter Diversified Futures Fund II
L.P., Dean Witter Diversified Futures Fund III L.P., Dean Witter Multi-Market
Portfolio, L.P. (formerly, Dean Witter Principal Guaranteed Fund L.P.
("DWPGF")), Dean Witter Principal Guaranteed Fund II L.P. ("DWPGFII"), Dean
Witter Principal Plus Fund L.P., Dean Witter Principal Plus Fund Management
L.P., Dean Witter Portfolio Strategy Fund L.P. (formerly Dean Witter Principal
Secured Futures Fund L.P.), Dean Witter Select Futures Fund L.P. ("DWSFF"),
Dean Witter Global Perspective Portfolio L.P., Dean Witter World Currency Fund
L.P., Dean Witter Institutional Balanced Portfolio Account I L.P., Dean Witter
Institutional Account II L.P., DWFCM International Access Fund L.P., Dean
Witter Anchor Institutional Balanced Portfolio Account I L.P., Dean Witter
Spectrum Balanced L.P., Dean Witter Spectrum Strategic L.P., Dean Witter
Spectrum Technical L.P., DWR Chesapeake L.P. and DWR Institutional Balanced
Portfolio Account III L.P.
In November of 1995, Demeter entered into a limited partnership agreement as
General Partner in DWR/JWH Futures Fund L.P. ("JWH"), a commodity pool which
offered units to investors in an initial private offering period ending January
31, 1996 and began trading on February 1, 1996. Demeter's initial investment in
JWH was $75,000.
Management terminated DWPGFII as of March 31, 1996. DWPGFII was liquidated
and holders of units as of March 31, 1996 received a final distribution equal
to the net asset value per unit on that date multiplied by their respective
number of units.
Each of the commodity pools is a limited partnership organized to engage in
the speculative trading of commodity futures contracts, forward contracts on
foreign currencies and other commodity interests.
The results of operations of Demeter are included in the consolidated federal
income tax return of the Parent. Income tax expense is calculated on a separate
company basis.
Demeter reopened DWDFF for additional investment and on June 29, 1995 DWDFF
registered with the Securities and Exchange Commission 75,000 units which were
offered to investors for a limited time in a public offering.
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.
2.INVESTMENTS IN AFFILIATED PARTNERSHIPS
The limited partnership agreement of each commodity pool requires Demeter to
maintain a general partnership interest in each partnership, generally in an
amount equal to, but not less than, one percent of the aggregate capital
contributed to the partnership by all partners.
The total assets and partners' capital of all the funds managed by Demeter at
June 30, 1996, December 31, 1995 and December 31, 1994 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -------------------------
1996 1995 1994
------------- ------------- -----------
$ $ $
(UNAUDITED)
<S> <C> <C> <C>
Total assets......................... 1,007,299,365 1,091,082,360 907,037,211
Total liabilities.................... 25,029,889 20,934,451 22,472,852
Total partners' capital.............. 982,269,476 1,070,147,909 884,564,359
</TABLE>
Demeter's investments in the above limited partnerships are carried at market
value with changes in such market value reflected currently in operations.
S-63
<PAGE>
3.PAYABLE TO PARENT
The payable to Parent is primarily for amounts due for the purchase of
partnership investments and income tax payments made by the Parent on behalf of
Demeter.
4.NET WORTH REQUIREMENT
At June 30, 1996, December 31, 1995 and December 31, 1994, Demeter held non-
interest bearing notes from the Parent that were payable on demand. These notes
were received in connection with additional capital contributions aggregating
$111,070,000, $111,070,000 and $98,070,000, respectively.
The limited partnership agreement of each commodity pool requires Demeter to
maintain its net worth at an amount not less than 10% of the capital
contributions by all partners in each pool in which Demeter is the general
partner (15% if the capital contributions to any partnership are less than
$2,500,000, or $250,000, whichever is less).
In calculating this requirement, Demeter's interests in each limited
partnership and any amounts receivable from or payable to such partnerships are
excluded from net worth. Notes receivable from the Parent are included in net
worth for purposes of this calculation.
5.SUBSEQUENT EVENTS (UNAUDITED)
Management determined to reopen DWSFF for additional investment and on August
13, 1996, registered with the Securities and Exchange Commission 60,000 Units
to be offered to investors for a limited time in a public offering.
On September 6, 10, and 20, 1996, 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 Dean Witter Reynolds Inc. ("DWR"). Named defendants include DWR,
Demeter Management Corporation, Dean Witter Futures and Currency Management
Inc., Dean Witter, Discover & Co. (all such parties referred to hereafter as
the "Dean Witter Parties"), certain limited partnership commodity pools of
which Demeter is the general partner, and certain trading advisors to those
pools. Also, on September 18 and 20, 1996 similar purported class actions were
filed in the Supreme Court of the State of New York, New York County, against
the Dean Witter Parties and certain trading advisors on behalf of all
purchasers of interests in various limited partnership commodity pools sold by
DWR. Generally, these complaints allege, among other things, that the
defendants committed fraud, deceit, misrepresentation, breach of fiduciary
duty, fraudulent and unfair business practices, unjust enrichment, and
conversion in connection with the sale and operation of the various limited
partnership commodity pools. The complaints seek unspecified amounts of
compensatory and punitive damages and other relief. It is possible that
additional similar actions may be filed and that, in the course of these
actions, other parties could be added as defendants. The Dean Witter Parties
believe that they have strong defenses to, and they will vigorously contest,
the actions. Although the ultimate outcome of legal proceedings cannot be
predicted with certainty, it is the opinion of management of the Dean Witter
Parties that the resolution of the actions will not have a material adverse
effect on the financial condition of any of the Dean Witter Parties.
6. UNAUDITED INTERIM INFORMATION
The unaudited financial statement included herein and the related financial
information in the footnotes include in the opinion of management, all
adjustments (including normal and recurring adjustments) measuring for a fair
presentation of the financial position at June 30, 1996.
S-64
<PAGE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
DEAN WITTER SPECTRUM TECHNICAL L.P.
DEAN WITTER SPECTRUM BALANCED L.P.
SUPPLEMENT TO PROSPECTUS DATED APRIL 30, 1996
The Prospectus dated April 30, 1996 is supplemented by a Supplement dated
October 23, 1996. The Supplement is an integral part of, and must be read
together with, the Prospectus.
October 23, 1996
<PAGE>
DEAN WITTER SPECTRUM SERIES
SUPPLEMENT TO CUSTOMER BROCHURE
FOR DISTRIBUTION SOLELY IN THE COMMONWEALTH OF MASSACHUSETTS
Certain tables in the brochure to which this Supplement is attached reflect
historical performance results for managed futures, derived from the "Barclay
CTA Index" (the "Index"), as prepared by the Barclay Trading Group, Ltd. of
Fairfield, Iowa ("Barclay"). The Index is an unweighted index of the composite
performance of all commodity trading advisor programs included in Barclay's
database, each advisor having at least four years' prior performance history,
and each program having at least two years' performance results (321 programs
were included in the database in 1995).
Investors should be aware, however, that the Index reflects performance
results not only of public managed futures funds (such as the Spectrum
Series), but private managed futures funds, managed accounts and proprietary
accounts, which may have materially different fee structures and trading
strategies than public managed futures funds in general, and the Spectrum
Series in particular.
Accordingly, while it is believed that the Index accurately reflects the
performance of managed futures in general, it is not necessarily
representative of the performance of public managed futures funds as a
subclass of managed futures, and the inclusion of information from the Index
in the brochure is not intended to represent the results which may be achieved
by the Spectrum Series. See "The Spectrum Series--Performance Records" and
"The Trading Managers" in the Prospectus and the Prospectus Supplement for
performance information regarding the Partnerships and the trading managers.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
October 23, 1996
<PAGE>
DEAN WITTER SPECTRUM SERIES
SUPPLEMENT TO PROSPECTUS DATED APRIL 30, 1996,
PROSPECTUS SUPPLEMENT DATED OCTOBER 23, 1996, AND CUSTOMER BROCHURE
FOR DISTRIBUTION SOLELY IN THE STATE OF MISSOURI
. Investors should be aware that Spectrum Strategic had underperformed,
while Spectrum Balanced and Spectrum Technical had outperformed, the U.S.
Department of Labor Bureau of Labor Statistics Consumer Price Index (All Urban
Consumers--U.S. City Average--All Items) through June 1996. As regards the 18
other publicly-offered commodity pools operated by the General Partner, 8
underperformed and 10 outperformed such Index through June 1996 (or, in the
case of four such pools, the date of dissolution). See "The Spectrum Series--
Performance Records" and, as regards such other pools, the summary performance
information under "The General Partner--Description and Performance
Information of Commodity Pools Operated by the General Partner" in the
Prospectus and Prospectus Supplement.
. Investors should note, however, that the assets of most of such other
pools have been managed in whole or in part by persons other than the trading
managers for the Partnerships, and, even where such pools have been managed by
one of the trading managers, such pools either have different fee structures
or different trading programs have been employed. See "The Trading Managers"
in the Prospectus and Prospectus Supplement for performance information
regarding the Partnerships' trading managers.
-----------------------------
Certain tables in the brochure to which this Supplement is attached reflect
historical performance results for managed futures, derived from the "Barclay
CTA Index" (the "Index"), as prepared by the Barclay Trading Group, Ltd. of
Fairfield, Iowa ("Barclay"). The Index is an unweighted index of the composite
performance of all commodity trading advisor programs included in Barclay's
database, each advisor having at least four years' prior performance history,
and each program having at least two years' performance results (321 programs
were included in the database in 1995).
Investors should be aware, however, that the Index reflects performance
results not only of public managed futures funds (such as the Spectrum
Series), but private managed futures funds, managed accounts and proprietary
accounts, which may have materially different fee structures and trading
strategies than public managed futures funds in general, and the Spectrum
Series in particular.
Accordingly, while it is believed that the Index accurately reflects the
performance of managed futures in general, it is not necessarily
representative of the performance of public managed futures funds as a
subclass of managed futures, and the inclusion of information from the Index
in the brochure is not intended to represent the results which may be achieved
by the Spectrum Series. See "The Spectrum Series--Performance Records" and
"The Trading Managers" in the Prospectus and the Prospectus Supplement for
performance information regarding the Partnerships and the trading managers.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
October 23, 1996
