UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended June 30, 1996 or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from________________to_____________
Commission file number 33-80146
DEAN WITTER SPECTRUM STRATEGIC L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3782225
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
c/o Demeter Management Corp.
Two World Trade Center, New York, NY 62 Fl. 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 392-5454
(Former name, former address, and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 1996
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition
June 30, 1996 (Unaudited) and December 31, 1995...........2
Statements of Operations for the Quarters Ended
June 30, 1996 and 1995 (Unaudited) .......................3
Statements of Operations for the Six Months Ended
June 30, 1996 and 1995 (Unaudited) .......................4
Statements of Changes in Partners' Capital for
the Six Months Ended June 30, 1996 and 1995 (Unaudited)...5
Statements of Cash Flows for the Six Months Ended
June 30, 1996 and 1995 (Unaudited)........................6
Notes to Financial Statements (Unaudited)..............7-11
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations.........................................12-17
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..................... 18
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
June 30, December 31,
1996 1995
$ $
(Unaudited)
ASSETS
<S> <C> <C>
Equity in Commodity futures trading accounts:
Cash 38,872,293 29,593,927
Net unrealized gain on open contracts 917,324 1,819,403
Net option premiums 30,832 (19,873)
Total Trading Equity 39,820,449 31,393,457
Subscriptions receivable 2,224,620 1,547,750
Interest receivable (DWR) 129,454 108,075
Total Assets 42,174,523 33,049,282
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable 385,260 77,310
Accrued brokerage commissions (DWR) 296,746 212,825
Accrued management fees 135,655 97,291
Incentive fees payable - 198,924
Total Liabilities 817,661 586,350
Partners' Capital
Limited Partners (4,021,226.369 and
2,905,719.741 Units, respectively) 40,935,627 32,132,595
General Partner (41,379.149 and
29,872.079 Units, respectively) 421,235 330,337
Total Partners' Capital 41,356,862 32,462,932
Total Liabilities and Partners' Capital 42,174,523 33,049,282
NET ASSET VALUE PER UNIT 10.18 11.06
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Quarters Ended June 30,
1996 1995
$ $
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized 1,250,609 124,793
Net change in unrealized (456,592) (1,172,627)
Total Trading Results 794,017 (1,047,834)
Interest Income (DWR) 387,247 209,138
Total Revenues 1,181,264 (838,696)
EXPENSES
Brokerage commissions (DWR) 842,316 428,782
Management fees 385,060 196,014
Incentive fees 186,125 34,796
Total Expenses 1,413,501 659,592
NET LOSS (232,237) (1,498,288)
NET (LOSS) ALLOCATION
Limited Partners (230,283) (1,471,337)
General Partner (1,954) (26,951)
NET (LOSS) PER UNIT
Limited Partners (.01) (.74)
General Partner (.01) (.74)
<FN>
The accompanying footnotes are an integral part
of these financial statements.
/TABLE
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Six Months Ended June 30,
1996 1995
$
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized (65,275) 766,814
Net change in unrealized (902,079) (407,543)
Total Trading Results (967,354) 359,271
Interest Income (DWR) 720,784 343,248
Total Revenues (246,570) 702,519
EXPENSES
Brokerage commissions (DWR) 1,584,267 716,675
Management fees 724,237 327,623
Incentive fees 396,899 238,386
Total Expenses 2,705,403 1,282,684
NET LOSS (2,951,973) (580,165)
NET (LOSS) ALLOCATION
Limited Partners (2,922,871) (560,292)
General Partner (29,102) (19,873)
NET (LOSS) PER UNIT
Limited Partners (.88) (.18)
General Partner (.88) (.18)
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 1996
(Unaudited)
<CAPTION>
Units of
Partnership Limited General
Interest Partners Partner Total
<S> <C> <C> <C> <C>
Partners' Capital
December 31, 1994 1,190,794.333 $11,791,839 $127,090 $11,918,929
Continuous Offering 1,015,068.428 10,239,788 120,000 10,359,788
Net Loss - (560,292) (19,873) (580,165)
Redemptions (42,163.373) (437,097) - (437,097)
Partners' Capital
June 30, 1995 2,163,699.388 $21,034,238 $227,217 $21,261,455
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
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Six Months Ended June 30,
1996 1995
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss (2,951,973) (580,165)
Noncash item included in net loss:
Net change in unrealized 902,079 407,543
Increase in operating assets:
Net option premiums (50,705) (101,422)
Interest receivable (DWR) (21,379) (37,580)
Increase (decrease) in operating liabilities:
Accrued brokerage commissions (DWR) 83,921 83,928
Accrued management fees 38,364 38,367
Incentive fees payable (198,924) (18,841)
Net cash used for operating activities (2,198,617) (208,170)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in subscriptions receivable (676,870) 706,137
Continuous offering 13,111,881 10,359,788
Increase in redemptions payable 307,950 94,342
Redemptions of units (1,265,978) (437,097)
Net cash provided by financing activities 11,476,983 10,723,170
Net increase in cash 9,278,366 10,515,000
Balance at beginning of period 29,593,927 9,649,168
Balance at end of period 38,872,293 20,164,168
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
The financial statements include, in the opinion of management, all
adjustments necessary for a fair presentation of the results of
operations and financial condition. The financial statements and
condensed notes herein should be read in conjunction with the
Partnership's December 31, 1995 Annual Report on Form 10-K.
1. Organization
Dean Witter Spectrum Strategic L.P. (the "Partnership") is a
limited partnership organized to engage in the speculative trading
of futures and forward contracts, options on future contracts and
on physical commodities, and other commodity interests, including
foreign currencies, financial instruments, precious and industrial
metals, energy products and agriculturals. Demeter Management
Corporation ("the General Partner") has retained Blenheim
Investments, Inc., A. Gary Shilling & Co., Inc., and Willowbridge
Associates Inc. as the trading advisors of the Partnership. Both
the General Partner and the commodity broker, Dean Witter Reynolds,
Inc. ("DWR") are wholly owned subsidiaries of Dean Witter, Discover
& Co.
2. Related Party Transactions
The Partnership's cash is on deposit with DWR in commodity trading
accounts to meet margin requirements as needed. DWR pays interest
on these funds based on prevailing U.S. Treasury Bill rates.
Brokerage expenses incurred by the Partnership are paid to DWR.
<PAGE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. Financial Instruments
The Partnership trades futures and forward contracts in interest
rates, stock indices, commodities, currencies, petroleum and
precious metals. Futures and forwards represent contracts for
delayed delivery of an instrument at a specified date and price.
Risk arises from changes in the value of these contracts and the
potential inability of counterparties to perform under the terms of
the contracts. There are numerous factors which may significantly
influence the market value of these contracts, including interest
rate volatility. At June 30, 1996, open contracts were:
Contract or
Notional Amount
$
Exchange-Traded Contracts
Financial Futures:
Commitments to Purchase 12,105,000
Commitments to Sell 51,681,000
Options Written 1,692,000
Commodity Futures:
Commitments to Purchase 103,453,000
Commitments to Sell 15,129,000
Options Written 3,342,000
Foreign Futures:
Commitments to Purchase 12,262,000
Commitments to Sell 4,063,000
Off-Exchange-Traded Forward
Currency Contracts
Commitments to Purchase 7,111,000
Commitments to Sell 7,111,000
<PAGE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
A portion of the amounts indicated as off-balance-sheet risk in
forward currency contracts is due to offsetting forward commitments
to purchase and to sell the same currency on the same date in the
future. These commitments are economically offsetting, but are not
offset in the forward market until the settlement date.
The unrealized gain on open contracts are reported as a component
of "Equity in Commodity futures trading accounts" on the Statement
of Financial Condition and totaled $917,324 at June 30, 1996. This
amount related entirely to exchange-traded futures contracts.
Exchange-traded futures contracts held by the Partnership at June
30, 1996 mature through March 1997. Off-exchange-traded forward
currency contracts held by the Partnership at June 30, 1996 matured
through July 1996. The contract amounts in the above table
represent the Partnership's extent of involvement in the particular
class of financial instrument, but not the credit risk associated
with counterparty nonperformance. The credit risk associated with
these instruments is limited to the amounts reflected in the
Partnership's Statements of Financial Condition.
<PAGE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Partnership also has credit risk because DWR acts as the
futures commission merchant or the sole counterparty, with respect
to most of the Partnership's assets. Exchange-traded futures and
options contracts are marked to market on a daily basis, with
variations in value credited or charged to the Fund's account on a
daily basis. DWR, as the futures commission merchant for all of
the Partnership's exchange-traded futures and options contracts, is
required pursuant to regulations of the Commodity Futures Trading
Commission to segregate from its own assets and for the sole
benefit of its commodity customers, all funds held by DWR with
respect to exchange-traded futures and options contracts including
an amount equal to the net unrealized gain on all open futures
contracts, which funds totaled $39,789,617 at June 30, 1996. With
respect to the Partnership's off-exchange-traded forward currency
contracts, there are no daily settlements of variations in value
nor is there any requirement that an amount equal to the net
unrealized gain on open forward contracts be segregated. With
respect to those off-exchange-traded forward currency contracts,
the Partnership is at risk to the ability of DWR, the counterparty
on all such contracts, to perform.
<PAGE>
DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
For the quarter ended June 30, 1996, the average fair value of
financial instruments held for trading purposes was as follows:
Assets Liabilities
$ $
Exchange-Traded Contracts:
Financial Futures 48,025,000 39,880,000
Commodity Futures 132,768,000 10,239,000
Foreign Futures 56,332,000 18,641,000
Off-Exchange-Traded Forward
Currency Contracts 2,756,000 2,749,000
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity - The Partnership's assets are on deposit in separate
commodity interest trading accounts with DWR and are used by the
Partnership as margin to engage in commodity futures, forward
contracts on foreign currencies and other commodity interest
trading. DWR holds such assets in either bank accounts or in
securities approved by the Commodity Futures Trading Commission for
investment of customer funds. The Partnership's assets held by DWR
may be used as margin solely for the Partnership's trading. Since
the Partnership's sole purpose is to trade in commodity futures
contracts, forward contracts on foreign currencies and other
commodity interests, it is expected that the Partnership will
continue to own such liquid assets for margin purposes.
The Partnership's investment in commodity futures, forward
contracts and other commodity interests may be illiquid. If the
price of the futures contract for a particular commodity has
increased or decreased by an amount equal to the "daily limit",
positions in the commodity can neither be taken nor liquidated
unless traders are willing to effect trades at or within the limit.
Commodity futures prices have occasionally moved the daily limit
for several consecutive days with little or no trading. Such
market conditions could prevent the Partnership from promptly
liquidating its commodity futures positions.
<PAGE>
There is no limitation on daily price moves in trading forward
contracts on foreign currency. The markets for some world
currencies have low trading volume and are illiquid, which may
prevent the Partnership from trading in potentially profitable
markets or prevent the Partnership from promptly liquidating
unfavorable positions in such markets and subjecting it to
substantial losses. Either of these market conditions could result
in restrictions on redemptions.
Capital Resources - The Partnership does not have, nor does it
expect to have, any capital assets. Redemptions of additional
Units in the future will impact the amount of funds available for
investments in commodity futures and forward contracts and other
commodity interests. As redemptions are at the discretion of the
Limited Partners, it is not possible to estimate the amount and
therefore, the impact of future redemptions.
Results of Operations
For the Quarter and Six Months Ended June 30, 1996
For the quarter ended June 30, 1996, the Partnership's total
trading revenues including interest income were $1,181,264. During
the second quarter, the Partnership posted a small loss in Net
Asset Value per Unit. Trading gains during the quarter were offset
by brokerage commissions resulting in net trading losses. The most
significant losses were recorded in the metals markets as both
precious and base metals prices moved in a short-term volatile
pattern throughout the quarter. Additional losses were recorded in
global financial futures trading as prices in these markets moved
<PAGE>
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 unleaded gas futures during April. A majority of these
losses were 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. Smaller 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 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. Total expenses for the quarter were
$1,413,501, resulting in a net loss of $232,237. The value of an
individual Unit in the Partnership decreased from $10.19 at March
31, 1996 to $10.18 at June 30, 1996.
For the six months ended June 30, 1996, the Partnership's total
trading losses net of interest income were $246,570. During the
first six months, the Partnership posted a decrease in Net Asset
Value per Unit. The most significant losses for the period were
recorded during February as a result of sharp and sudden price
movement in many of the markets traded by the Partnership. As a
result, losses were recorded in financial futures from trading
global interest rate futures. Additional losses were recorded in
<PAGE>
financial futures trading during the second quarter as global
interest rate and stock index futures prices moved without
consistent direction. Losses were also recorded in the energy
markets during February, May and June from trading crude oil
futures and in April and May from trading natural and unleaded gas
futures. Trading losses in base metals during the second quarter
more than offset the gains in silver futures during January. A
portion of the overall losses for the Partnership were offset by
gains in the agricultural markets from long corn futures positions
as prices increased since early in the first quarter and from long
wheat futures positions as prices increased early in the second
quarter. 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. Smaller currency gains recorded
in June from transactions involving the Japanese yen also helped to
mitigate a portion of overall losses for the first half of the
year. Total expenses for the period were $2,705,403, resulting in
a net loss of $2,951,973. The value of an individual Unit in the
Partnership decreased from $11.06 at December 31, 1995 to $10.18 at
June 30, 1996.
For the Quarter and Six Months Ended June 30, 1995
For the quarter ended June 30, 1995, the Partnership's total
trading losses net of interest income were $838,696. During the
second quarter, the Partnership posted a decrease in Net Asset
Value per Unit. The most significant losses for the quarter were
recorded in the financial futures markets during June as a result
of trading losses in global interest rate and U.S. stock index
<PAGE>
futures. Additional trading losses were recorded in the currency
markets from transactions involving the German mark. Trading
losses were also recorded in the metals, agricultural and soft
commodities markets from trading gold, soybean products and corn,
along with cocoa and coffee futures. Trading gains in crude oil
helped to offset losses recorded in the energy markets from trading
natural gas futures throughout the quarter. Trading gains in
Japanese yen and government bond futures offset a portion of
overall losses recorded by the Partnership for the second quarter.
Total expenses for the period were $659,592, resulting in a net
loss of $1,498,288. The value of an individual Unit in the
Partnership decreased from $10.57 at March 31, 1995 to $9.83 at
June 30, 1995.
For the six months ended June 30, 1995, the Partnership's total
trading revenues including interest income were $702,519. During
the first six months, the Partnership posted a decrease in Net
Asset Value per Unit. Trading gains during the quarter were offset
by brokerage commissions resulting in net trading losses. The most
significant trading losses were recorded in the soft commodities
and metals markets throughout the first half of the year.
Additional losses were recorded in the agricultural markets
primarily due to losses recorded during the second quarter.
Trading losses were also recorded in U.S. stock index futures
during the second quarter and heating oil during the first quarter
of the year. Trading gains were recorded in the currency markets
as a result of a decrease in value of the U.S. dollar versus the
Japanese yen and the German mark. Additional trading gains were
<PAGE>
recorded in the financial futures markets as a result of trading
Japanese bond futures during February, March and May. Smaller
trading losses in the agricultural, metals and energy markets
offset a portion of overall gains for the first half of the year.
Total expenses for the period were $1,282,684, resulting in a net
loss of $580,165. The value of an individual Unit in the
Partnership decreased from $10.01 at December 31, 1994 to $9.83 at
June 30, 1995.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A) Exhibits. - None.
B) Reports on Form 8-K. - None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dean Witter Spectrum Strategic L.P.
(Registrant)
By: Demeter Management Corporation
(General Partner)
August 11, 1996 By: /s/ Patti L. Behnke
Patti L. Behnke
Chief Financial Officer
The General Partner which signed the above is the only party
authorized to act for the Registrant. The Registrant has no
principal executive officer, principal financial officer,
controller, or principal accounting officer and has no Board of
Directors.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Dean
Witter Spectrum Strategic L.P. and is qualified in its entirety by
references to such financial instruments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 38,872,293
<SECURITIES> 0
<RECEIVABLES> 2,354,074<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 42,174,523<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 42,174,523<F3>
<SALES> 0
<TOTAL-REVENUES> (246,570)<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,705,403
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,951,973)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,951,973)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,951,973)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include subscriptions receivable of $2,224,620 and interest
receivable of $129,454.
<F2>In addition to cash and receivables, total assets include net unrealized
gain on open contracts of $917,324 and net option premiums of $30,832.
<F3>Liabilities include redemptions payable of $385,260, accrued brokerage
commissions of $296,746, and accrued management fees of $135,655.
<F4>Total revenues includes realized trading revenue of $(65,275), net
change in unrealized of $(902,079) and interest income of $720,784.
</FN>
</TABLE>
