Dean Witter Spectrum Series
Monthly Report
May 1997
Dear Limited Partner:
The Net Asset Value per unit for each of the three Dean Witter Spectrum
Funds as of May 31, 1997 was as follows:
Funds N.A.V. % change for month
Spectrum Balanced $12.09 1.65%
Spectrum Strategic $11.69 0.80%
Spectrum Technical $13.09 -3.73%
In Spectrum Balanced, a balanced portfolio of stocks, bonds and managed
futures utilizing the futures, options and forwards markets, profits were
recorded during May in the managed futures portion of the portfolio from
long Australian bond futures positions as prices moved higher. Gains were
also recorded in the stock and bond portions of the balanced portfolio, as
U.S. stock and bond prices finished the month higher. A portion of the
Fund's gains was offset by losses recorded in the currency markets from
short positions in the Japanese yen as the value of the yen moved higher
versus the U.S. dollar and other major currencies early in the month.
Smaller currency losses were recorded from transactions involving the
French franc, German mark and Italian lire. Additional losses in the
managed futures component were recorded from trading crude oil, as prices
moved in a short-term volatile pattern.
In Spectrum Strategic, a Fund managed by three trading advisors who employ
fundamental trading methodologies in a diverse portfolio of futures,
options and forwards markets, small gains were posted for the month due
primarily from long copper and zinc futures positions as base metals prices
moved higher. Additional gains were recorded in the currency markets from
transactions involving the Japanese yen. Losses recorded from transactions
involving the British pound offset a portion of these currency gains. In
soft commodities, gains were recorded from long cocoa and sugar futures
positions as prices in these markets moved higher. A portion of the Fund's
overall gains was offset by losses recorded in the agricultural markets
from previously established long positions in soybean and wheat futures as
prices in these markets moved lower. Smaller losses were recorded from
trading crude oil and natural gas futures, as oil and gas prices moved in
an abrupt short-term volatile pattern. In stock index futures, losses were
recorded from trading the Hang Seng and S&P 500 index futures during the
month.
In Spectrum Technical, a Fund managed by three trading advisors who employ
long-term technical trend-following trading systems across a diverse
portfolio of futures, options and forwards markets, losses were recorded
during May primarily from previously established short Japanese yen
positions as the downward trend in the value of the yen relative to the
U.S. dollar reversed sharply higher early in May. As a result of this
abrupt upward move, long Japanese yen positions were established during mid-
month only to result in additional losses as the value of the yen moved
lower during late May. Smaller currency losses were recorded from
transactions involving the German mark, British pound and Canadian dollar.
In energy futures trading, oil and gas prices continued to move in a short-
term volatile pattern resulting in losses from trading crude oil and
unleaded gas futures. Small losses were recorded from long wheat and
soybean futures positions as prices in these markets moved lower. A
portion of the Fund's losses was offset by gains recorded from long coffee
futures positions as coffee prices continued to trend dramatically higher.
Additionally, gains were recorded in the financial futures markets as long
global stock index futures positions profited from an upward trend in
global equity prices during May.
Should you have any questions concerning this report, please feel free to
contact Demeter Management Corporation at Two World Trade Center, 62nd
Floor New York, NY 10048, or your Dean Witter Account Executive.
I hereby affirm, that to the best of my knowledge and belief, the
information contained in this report is accurate and complete. Past
performance is not a guarantee of future results.
Sincerely,
Mark J. Hawley
President
Demeter Management Corporation
General Partner
<TABLE>
Historical Fund Performance
Presented below is the percentage change in Net Asset Value per Unit from
the start of each calendar year the Fund has traded. Also provided is the
inception-to-date return and the annualized return since inception for
the Fund. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
RESULTS.
<CAPTION>
Funds Year Return
<S> <C> <C>
Spectrum Balanced
1994 (2 months) -1.7%
1995 22.8%
1996 -3.7%
1997 (5 months) 4.0%
Inception-to-Date Return: 20.9
Annualized Return: 7.6%
___________________________________________________________________________
_____________________________
Spectrum Strategic
1994 (2 months) 0.1%
1995 10.5%
1996 -3.5%
1997 (5 months) 9.6%
Inception-to-Date Return: 16.9%
Annualized Return: 6.2%
___________________________________________________________________________
_____________________________
Spectrum Technical
1994 (2 months) -2.2%
1995 17.6%
1996 18.4%
1997 (5 months) -3.8%
Inception-to-Date Return: 30.9%
Annualized Return: 11.0%
</TABLE>
<PAGE>
<TABLE>
Statements of Operations
For the Month Ended May 31, 1997
(Unaudited)
<CAPTION>
Dean Witter Spectrum
Balanced
Percent of
May 1, 1997
Beginning
Amount Net Asset Value
$ %
REVENUES
<S> <C> <C>
Trading Profit (Loss):
Realized (494,808) (2.50)
Net change in unrealized 842,985 4.26
Total Trading Results 348,177 1.76
Interest Income (DWR) 89,478 0.45
Total Revenues 437,655 2.21
EXPENSES
Brokerage commissions (DWR) 90,678 0.46
Management fees 20,609 0.10
Total Expenses 111,287 0.56
NET INCOME (LOSS) 326,368 1.65
Statements of Changes in Net Asset Value
For the Month Ended May 31, 1997
(Unaudited)
Dean Witter Spectrum Balanced
Units Amount Per Unit
$ $
<S> <C> <C> <C>
Net Asset Value,
May 1, 1997 1,663,855.145 19,784,295 11.89
Net Income (Loss) - 326,368 0.20
Redemptions (27,819.275) (336,335) 12.09
Subscriptions 33,138.046 400,639 12.09
Net Asset Value,
May 31, 1997 1,669,173.916 20,174,967 12.09
The accompanying notes are an integral part of these
financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Dean Witter Spectrum Strategic Dean Witter Spectrum Technical
Percent of
Percent of
May 1, 1997
May 1, 1997
Beginning
Beginning
Amount Net Asset Value Amount Net Asset
Value
$ % $ %
<C> <C> <C> <C>
1,105,509 2.03 (6,775,117) (4.86)
(302,856) (0.56) 2,510,791 1.80
802,653 1.47 (4,264,326) (3.06)
188,847 0.35 479,710 0.35
991,500 1.82 (3,784,616) (2.71)
374,282 0.69 959,148 0.69
181,470 0.33 465,040 0.33
555,752 1.02 1,424,188 1.02
435,748 0.80 (5,208,804) (3.73)
Dean Witter Spectrum Strategic Dean Witter Spectrum Technical
Units Amount Per Unit Units Amount Per Unit
$ $ $ $
<C> <C> <C> <C> <C> <C>
4,693,998.708 54,441,014 11.60 10,258,790.577 139,512,423 13.60
- 435,748 0.09 - (5,208,804) (0.51)
(28,595.137) (334,277) 11.69 (80,355.338) (1,051,851) 13.09
201,130.286 2,351,213 11.69 506,164.018 6,625,687 13.09
4,866,533.857 56,893,698 11.69 10,684,599.257 139,877,455 13.09
</TABLE>
<PAGE>
Dean Witter Spectrum Series L.P.
Notes to Financial Statements
(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", or
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 ("Demeter"). The commodity
broker is Dean Witter Reynolds Inc. ("DWR"). Both DWR and
Demeter are wholly-owned subsidiaries of Morgan Stanley,
Dean Witter, Discover & Co. ("MSDWD").
Demeter 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.
Brokerage and Related Transaction Fees and Costs , Brokerage
fees for Spectrum Balanced are accrued at a monthly rate of
11/24 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 33/48 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.
<PAGE>
Dean Witter Spectrum Series L.P.
Notes to Financial Statements -
(Continued)
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 Demeter. No distributions have been made to date.
Continuing Offering - Units of each Partnership are offered
at a price equal to 100% of the Net Asset Value per Unit as
of the opening of business on the first 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.
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 Demeter.
Thereafter, Units may be redeemed as of the end of any month
upon five business days advance notice by redemption form to
Demeter. 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.
<PAGE>
Dean Witter Spectrum Series L.P.
Notes to Financial Statements
(Continued)
3. Trading Advisors
Demeter, on behalf of each Partnership, retains certain
commodity trading advisors to make all trading decisions for
the Partnerships. The trading advisors for each Partnership
are as follows:
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 & Co. Inc. ("JWH")
Compensation to the trading advisors 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 advisor 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. Legal Matters
On September 6, 10, and 20, 1996 and on March 13, 1997,
similar purported class actions were filed in the Superior
Court of the State of California, County of Los Angeles, on
behalf of all purchasers of interests in limited partnership
commodity pools sold by DWR. Named defendants include DWR,
Demeter, Dean Witter Futures & Currency Management Inc.,
MSDWD (all such parties referred to hereafter as the "Dean
Witter Parties"), certain limited partnership commodity
pools of which Demeter is the general partner, and certain
trading advisors (including JWH) 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, and on November 14, 1996 in the Superior
Court of the State of Delaware, New Castle County against
the Dean Witter Parties and certain trading advisors
(including JWH) on behalf of all purchasers of interests in
various limited partnership commodity pools sold by DWR.
Generally, these complaints allege, among other things, that
the defendants committed fraud, deceit,
<PAGE>
Dean Witter Spectrum Series L.P.
Notes to Financial Statements
(Concluded)
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 or the results of operations of any of the Dean
Witter Parties.
