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 quarterly period ended June 30, 2000 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 No. 0-26280
MORGAN STANLEY 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 Corporation
Two World Trade Center, 62 Fl., New York, NY 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>
MORGAN STANLEY DEAN WITTER SPECTRUM STRATEGIC L.P.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2000
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition June 30, 2000
(Unaudited) and December 31, 1999....................2
Statements of Operations for the Quarters Ended
June 30, 2000 and 1999 (Unaudited)...................3
Statements of Operations for the Six Months Ended
June 30, 2000 and 1999 (Unaudited)...................4
Statements of Changes in Partners' Capital for the
Six Months Ended June 30, 2000 and 1999
(Unaudited)..........................................5
Statements of Cash Flows for the Six Months Ended
June 30, 2000 and 1999 (Unaudited)...................6
Notes to Financial Statements (Unaudited).........7-12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.13-23
Item 3. Quantitative and Qualitative Disclosures about
Market Risk ..................................23-36
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.............................37-38
Item 2. Changes in Securities and Use of Proceeds.....39-40
Item 5. Other Information.............................40-41
Item 6. Exhibits and Reports on Form 8-K..............41-42
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MORGAN STANLEY DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
June 30, December 31,
2000 1999 $
$
(Unaudited)
ASSETS
<S> <C> <C>
Equity in futures interests trading accounts:
Cash 75,676,687 97,808,328
Net unrealized gain on open contracts (Carr)4,790,559 9,563,813
Net unrealized gain on open contracts (MSIL)
21,569 -
Net unrealized gain on open contracts (MS & Co.) 9,544 ______ -___
Total net unrealized gain on open contracts 4,821,672 9,
563,813
Net option premiums 823,821 (11,653)
Total Trading Equity 81,322,180 107,360,488
Subscriptions receivable 1,509,140 1,743,958
Interest receivable (DWR) 338,224 339,582
Total Assets 83,169,544 109,444,028
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable 1,116,160 847,860
Accrued brokerage fees (DWR) 440,215 590,001
Accrued management fees 219,734 313,646
Total Liabilities 1,776,109 1,751,507
Partners' Capital
Limited Partners (7,114,495.810 and
6,723,390.378 Units, respectively) 80,549,064 106,542,362
General Partner (74,579.110 and
72,581.141 Units, respectively) 844,371 1,150,159
Total Partners' Capital 81,393,435 107,692,521
Total Liabilities and Partners' Capital 83,169,544 10
9,444,028
NET ASSET VALUE PER UNIT 11.32
15.85
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
MORGAN STANLEY DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Quarters Ended June 30,
2000 1999
$ $
REVENUES
<S>
<C> <C>
Trading profit (loss):
Realized (7,525,189) 1,731,364
Net change in unrealized 967,557 5,548,204
Total Trading Results (6,557,632) 7,279,568
Interest Income (DWR) 1,011,967 634,040
Total Revenues (5,545,665) 7,913,608
EXPENSES
Brokerage fees (DWR) 1,263,688 1,275,326
Management fees 640,157 690,687
Incentive fees 316,727 7,592
Total Expenses 2,220,572 1,973,605
NET INCOME (LOSS) (7,766,237) 5,940,003
NET INCOME (LOSS) ALLOCATION
Limited Partners (7,684,845)
5,876,107
General Partner (81,392) 63,896
NET INCOME (LOSS) PER UNIT
Limited Partners
(1.09) 0.92
General Partner
(1.09) 0.92
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
MORGAN STANLEY DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Six Months Ended June 30,
2000 1999
$ $
REVENUES
<S>
<C> <C>
Trading profit (loss):
Realized (23,162,078) 7,222,069
Net change in unrealized (4,742,141) 5,284,592
Total Trading Results (27,904,219) 12,506,661
Interest Income (DWR) 2,021,135 1,255,241
Total Revenues (25,883,084) 13,761,902
EXPENSES
Brokerage fees (DWR) 3,105,964 2,540,783
Management fees 1,613,245 1,376,970
Incentive fees 979,550
1,019,759
Total Expenses 5,698,759 4,937,512
NET INCOME (LOSS) (31,581,843) 8,824,390
NET INCOME (LOSS) ALLOCATION
Limited Partners (31,251,055) 8,730,234
General Partner (330,788) 94,156
NET INCOME (LOSS) PER UNIT
Limited Partners (4.53) 1.39
General Partner (4.53) 1.39
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
MORGAN STANLEY DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 2000 and 1999
(Unaudited)
<CAPTION>
Units of
Partnership Limited General
Interest Partners Partner Total
<S>
<C> <C> <C>
<C>
Partners' Capital,
December 31, 1998 6,096,199.701 $69,671,636 $750,139 $70,4
21,775
Offering of Units 625,437.180 7,351,975 50,000 7,401,975
Net Income
- 8,730,234 94,156 8,824,390
Redemptions (351,635.935) (4,203,781)
- (4,203,781)
Partners' Capital,
June 30, 1999 6,370,000.946 $81,550,064 $
894,295 $82,444,359
Partners' Capital,
December 31, 1999 6,795,971.519 $106,542,362 $1,150,159
$107,692,521
Offering of Units 978,091.930 12,494,628
25,000 12,519,628
Net Loss
- (31,251,055) (330,788)
(31,581,843)
Redemptions (584,988.529) (7,236,871) _____-__
(7,236,871)
Partners' Capital,
June 30, 2000 7,189,074.920 $80,549,064 $844,371
$81,393,435
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
MORGAN STANLEY DEAN WITTER SPECTRUM STRATEGIC L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Six Months Ended June 30,
2000 1999
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
<S>
<C> <C>
Net income (loss) (31,581,843) 8
,824,390
Noncash item included in net income (loss):
Net change in unrealized 4,742,141 (
5,284,592)
(Increase) decrease in operating assets:
Net option premiums (835,474) (
569,391)
Interest receivable (DWR) 1,358 (6,499)
Decrease in operating liabilities:
Accrued brokerage fees (DWR) (149,786) (488)
Accrued management fees (93,912)
(2,156)
Net cash provided by (used for) operating activities(27,917,516)
2,961,264
CASH FLOWS FROM FINANCING ACTIVITIES
Offering of Units 12,519,628 7
,401,975 Decrease in
subscriptions receivable 234,818 544,617
Increase in redemptions payable 268,300 114,849
Redemptions of Units (7,236,871)
(4,203,781)
Net cash provided by financing activities 5,785,875
3,857,660
Net increase (decrease) in cash (22,131,641) 6
,818,924
Balance at beginning of period 97,808,328
63,919,054
Balance at end of period 75,676,687
70,737,978
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
MORGAN STANLEY 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 of Morgan Stanley Dean
Witter Spectrum Strategic L.P. (the "Partnership"). The
financial statements and condensed notes herein should be read in
conjunction with the Partnership's December 31, 1999 Annual
Report on Form 10-K.
1. Organization
Morgan Stanley Dean Witter Spectrum Strategic L.P. is a Delaware
limited partnership organized to engage primarily in the
speculative trading of futures and forward contracts, options on
futures contracts, physical commodities and other commodity
interests, including but not limited to foreign currencies,
financial instruments, metals, energy and agricultural products
(collectively, "futures interests"). The Partnership is one of
the Morgan Stanley Dean Witter Spectrum Series of funds,
comprised of the Partnership, Morgan Stanley Dean Witter Spectrum
Commodity L.P., Morgan Stanley Dean Witter Spectrum Currency
L.P., Morgan Stanley Dean Witter Spectrum Global Balanced L.P.,
Morgan Stanley Dean Witter Spectrum Select L.P. and Morgan
Stanley Dean Witter Spectrum Technical L.P.
<PAGE>
MORGAN STANLEY DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
The general partner is Demeter Management Corporation
("Demeter"). The non-clearing commodity broker is Dean Witter
Reynolds Inc. ("DWR"). The trading advisors to the Partnership
are Blenheim Investments Inc. ("Blenheim"), Allied Irish Capital
Management, Ltd. ("AICM") and Eclipse Capital Management, Inc.
("Eclipse"), (collectively, the "Trading Advisors"). Carr
Futures Inc. ("Carr"), an unaffiliated clearing commodity broker,
provides clearing and execution services for Blenheim and AICM.
Morgan Stanley & Co., Inc. ("MS & Co.") and Morgan Stanley & Co.
International Limited ("MSIL") provide clearing and execution
services for Eclipse. Demeter, DWR, MS & Co. and MSIL are
wholly-owned subsidiaries of Morgan Stanley Dean Witter & Co.
Effective April 14, 2000, Willowbridge Associates Inc. was
terminated as a trading advisor to the Partnership.
2. Related Party Transactions
The Partnership's cash is on deposit with DWR, Carr, MS & Co. and
MSIL in futures interests trading accounts to meet margin
requirements as needed. DWR pays interest on these funds based on
a prevailing rate on U.S. Treasury bills. Brokerage fees are paid
to DWR.
<PAGE>
MORGAN STANLEY DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
3. Financial Instruments
The Partnership trades futures and forward contracts, options on
futures contracts, physical commodities and other commodity
interests, including but not limited to foreign currencies,
financial instruments, metals, energy and agricultural products.
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.
In June 1998, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standard ("SFAS") No.
133, "Accounting for Derivative Instruments and Hedging
Activities" effective for fiscal years beginning after June 15,
1999. In June 1999, the FASB issued SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of SFAS No. 133," which defers the required
implementation of SFAS No. 133 until fiscal years beginning after
June 15, 2000. However, the Partnership had previously elected
to adopt the provisions of SFAS No. 133 beginning with the fiscal
<PAGE>
MORGAN STANLEY DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
year ended December 31, 1998. SFAS No. 133 supersedes SFAS No.
119 and No. 105, which required the disclosure of average
aggregate fair values and contract/notional values, respectively,
of derivative financial instruments for an entity which carries
its assets at fair value. The application of SFAS No. 133 does
not have a significant effect on the Partnership's financial
statements.
The net unrealized gains on open contracts are reported as a
component of "Equity in futures interests trading accounts" on
the statements of financial condition and totaled $4,821,672 and
$9,563,813 at June 30, 2000 and December 31, 1999, respectively.
The $4,821,672 net unrealized gain on open contracts at June 30,
2000 and the $9,563,813 net unrealized gain on open contracts at
December 31, 1999 related to exchange-traded futures and futures-
styled option contracts.
Exchange-traded futures and futures-styled option contracts held
by the Partnership at June 30, 2000 and December 31, 1999 mature
through December 2001.
<PAGE>
MORGAN STANLEY DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Partnership has credit risk associated with counterparty non-
performance. The credit risk associated with the instruments in
which the Partnership is involved is limited to the amounts
reflected in the Partnership's statements of financial condition.
The Partnership also has credit risk because DWR, Carr, MS & Co.
and MSIL act as the futures commission merchants or the
counterparties, with respect to most of the Partnership's assets.
Exchange-traded futures and futures-styled options contracts are
marked to market on a daily basis, with variations in value
settled on a daily basis. Each of DWR, Carr, MS & Co. and MSIL,
as a futures commission merchant for all of the Partnership's
exchange-traded futures and futures-styled options contracts, are
required, pursuant to regulations of the Commodity Futures
Trading Commission ("CFTC"), to segregate from their own assets,
and for the sole benefit of their commodity customers, all funds
held by them with respect to exchange-traded futures and futures-
styled options contracts, including an amount equal to the net
unrealized gain on all open futures and futures-styled options
contracts, which funds, in the aggregate, totaled $80,498,359 and
$107,372,141 at June 30, 2000 and December 31, 1999,
respectively. With respect to the Partnership's off-exchange-
traded forward
<PAGE>
MORGAN STANLEY DEAN WITTER SPECTRUM STRATEGIC L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
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 Carr, MS
& Co. and MSIL, the counterparties on all of such contracts, to
perform. The Partnership has netting agreements with Carr and MS
& Co. These agreements, which seek to reduce the Partnership's,
Carr's and MS & Co.'s exposure on off-exchange-traded forward
currency contracts, should materially decrease the Partnership's
credit risk in the event of Carr's or MS & Co.'s bankruptcy or
insolvency.
Carr's parent, Credit Agricole Indosuez, has guaranteed to the
Partnership payment of the net liquidating value of the
transactions in the Partnership's account with Carr (including
foreign currency contracts).
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity - The Partnership deposits its assets with DWR as non-
clearing broker and Carr, MS & Co. and MSIL as clearing brokers
in separate futures trading accounts established for each Trading
Advisor, which assets are used as margin to engage in trading.
The assets are held in either non-interest bearing bank accounts
or in securities and instruments permitted by the CFTC for
investment of customer segregated or secured funds. The
Partnership's assets held by the commodity brokers may be used as
margin solely for the Partnership's trading. Since the
Partnership's sole purpose is to trade in futures, forwards and
options, it is expected that the Partnership will continue to own
such liquid assets for margin purposes.
The Partnership's investment in futures, forwards and options
may, from time to time, be illiquid. Most U.S. futures exchanges
limit fluctuations in prices during a single day by regulations
referred to as "daily price fluctuations limits" or "daily
limits". Trades may not be executed at prices beyond the daily
limit. If the price for a particular futures or options contract
has increased or decreased by an amount equal to the daily limit,
positions in that futures or options contract can neither be
taken nor liquidated unless traders are willing to effect trades
at or within the limit. Futures prices have occasionally moved
the daily limit for several consecutive days with little or no
<PAGE>
trading. These market conditions could prevent the Partnership
from promptly liquidating its futures or options contracts and
result in restrictions on redemptions.
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.
The Partnership has never had illiquidity affect a material
portion of its assets.
Capital Resources - The Partnership does not have, or expect to
have, any capital assets. Redemptions, exchanges and sales of
additional units of limited partnership interest ("Unit(s)") in
the future will affect the amount of funds available for
investment in futures interests in subsequent periods. It is not
possible to estimate the amount and therefore, the impact of
future redemptions of Units.
<PAGE>
Results of Operations
General. The Partnership's results depend on its Trading
Advisors and the ability of the Trading Advisors' trading
programs to take advantage of price movements or other profit
opportunities in the futures, forwards, and options markets. The
following presents a summary of the Partnership's operations for
the quarter and six months ended June 30, 2000 and 1999,
respectively, and a general discussion of its trading activities
during each period. It is important to note, however, that the
Trading Advisors trade in various markets at different times and
that prior activity in a particular market does not mean that
such market will be actively traded by the Trading Advisors or
will be profitable in the future. Consequently, the results of
operations of the Partnership are difficult to discuss other than
in the context of its Trading Advisors' trading activities on
behalf of the Partnership as a whole and how the Partnership has
performed in the past.
For the Quarter and Six Months Ended June 30, 2000
For the quarter ended June 30, 2000, the Partnership recorded
total trading losses net of interest income of $5,545,665 and
posted a decrease in Net Asset Value per Unit. The most
significant losses of approximately 6.0% were recorded in the
metals markets primarily during April, late May and early June
from long positions in aluminum and copper futures as prices
declined on technical factors. In the global interest rate
<PAGE>
futures markets, losses of approximately 4.6% were experienced
primarily during April from long positions in U.S. interest rate
futures as prices declined amid fears of higher interest rates
and a late month bounce in equity prices. In soft commodities,
losses of approximately 3.2% were experienced in early April from
long coffee futures positions as prices fell on technically based
selling. In the agricultural markets, losses of approximately
1.2% were incurred primarily during April from long positions in
soybeans and corn futures as prices dropped due to rapid spring
plantings and rain in the U.S. midwest. In the global stock
index futures markets, losses of approximately 0.7% were recorded
primarily during April and May from long positions in Nikkei
Index futures as Japanese equity prices declined due to the
weakness in most global technology issues and political
uncertainty in Japan. These losses were partially offset by
gains of approximately 6.5% recorded primarily during May in the
energy markets from long positions in natural gas futures as
prices continued their upward trend, as data released by the
American Gas Association further confirmed fears that inventory
levels remain low. Adding to supply concerns were fears that the
U.S. demand will outstrip production this summer, when
inventories are typically refilled for the winter. In the
currency markets, gains of approximately 1.1% were recorded
primarily during April from short positions in the euro as the
value of the European common currency dropped to record lows
versus the U.S. dollar. The euro's fall was attributed to the
<PAGE>
European Central Bank's ("ECB") passive stance towards its
currency and increasing concern that the ECB should be more
aggressive in combating inflation. Newly established long
positions in the euro experienced additional gains later in May
as its value suddenly strengthened relative to the U.S. dollar
amid renewed expectation of ECB support for the euro. Total
expenses for the three months ended June 30, 2000 were
$2,220,572, resulting in a net loss of $7,766,237. The value of
a Unit decreased from $12.41 at March 31, 2000 to $11.32 at June
30, 2000.
For the six months ended June 30, 2000, the Partnership recorded
total trading losses net of interest income of $25,883,084 and
posted a decrease in Net Asset Value per Unit. The most
significant losses of approximately 13.1% were recorded in the
metals markets primarily from long positions in aluminum and
copper futures as prices reversed lower in early February due
primarily to technically based selling. In late February and
late March, prices continued lower led downward by falling prices
of other base metals and the softening of oil prices. Additional
losses were recorded during April, late May and early June from
long positions in aluminum and copper futures as prices declined
on technical factors. In the global stock index futures markets,
losses of approximately 11.6% were incurred from short positions
in U.S. stock index futures as domestic equity prices moved
higher in early January on fears of an interest rate hike and
<PAGE>
reports of a major corporate merger. Additional losses were
recorded during February from short positions in NASDAQ 100 Index
futures as the NASDAQ Index climbed higher on strength in
computer-chip maker and biotechnology companies. In the global
interest rate futures markets, losses of approximately 10.0% were
experienced from short positions in U.S. Treasury bond futures as
interest rates at the longer-end of the yield curve declined
during the second half of January, thus resulting in domestic
bond prices being pushed higher. During February, losses were
incurred from short positions in German interest rate futures as
prices increased following a surge in U.S. bond prices. During
April, additional losses were recorded from long positions in
U.S. interest rate futures as prices declined amid fears of
higher interest rates and a late month bounce in equity prices.
In the currency markets, losses of approximately 8.7% were
recorded primarily during April from long positions in the
Japanese yen as the value of the yen weakened versus the U.S.
dollar amid fears of additional Bank of Japan intervention.
Losses were also recorded from short positions in the Japanese
yen as the value of the U.S. dollar weakened versus the yen
during May and June due primarily to the perception that interest
rates in the U.S. may have topped out. Additional losses were
recorded during January and February from long positions in the
euro as the value of the European common currency weakened versus
the U.S. dollar due to skepticism regarding Europe's economic
outlook. In soft commodities, losses of approximately 5.5% were
<PAGE>
recorded during January, February and early April from long
coffee futures positions as coffee prices declined in the wake of
forecasts for a bumper crop in Brazil and on technically based
selling. These losses were partially offset by gains of
approximately 18.2% recorded primarily during January in the
energy markets from long futures positions in crude oil and its
refined products as oil prices increased on growing speculation
that Organization of Petroleum Exporting Countries ("OPEC") would
extend production cuts beyond the deadline of March 2000.
Additional gains were recorded during March from short positions
in crude oil futures as prices declined after OPEC effectively
restored production levels to their year-earlier level.
Additional gains were recorded early in May from long futures
positions in crude oil as oil prices increased amid concerns over
tight gasoline supplies ahead of the peak driving summer season
and after comments from OPEC ministers who saw no need to raise
supplies further. Profits were also recorded primarily during
May from long positions in natural gas futures as prices
continued their upward trend, as data released by the American
Gas Association further confirmed fears that inventory levels
remain low. Total expenses for the six months ended June 30,
2000 were $5,698,759, resulting in a net loss of $31,581,843.
The value of a Unit decreased from $15.85 at December 31, 1999 to
$11.32 at June 30, 2000.
<PAGE>
For the Quarter and Six Months Ended June 30, 1999
For the quarter ended June 30, 1999, the Partnership recorded
total trading revenues including interest income of $7,913,608
and posted an increase in Net Asset Value per Unit. The most
significant gains of approximately 8.6% were recorded in the
energy markets primarily during April and June from long futures
positions in crude oil and its refined products, unleaded gas and
heating oil, as oil prices increased after another unexpected
drop in U.S. crude oil supplies and signs of growing demand for
gasoline. In the global interest rate futures markets, gains of
approximately 5.8% were recorded primarily during May and June
from short U.S. interest rate futures positions as domestic bond
prices fell in reaction to a higher-than-expected rise in the
Consumer Price Index and amid fears of a tighter Federal Reserve
monetary policy ahead of the Federal Open Market Committee
meeting in late June. In the metals markets, gains of
approximately 4.4% were recorded primarily from long copper
futures positions as copper prices soared during mid April to the
highest level since late December on a wave of fund buying and
during June on news that a major U.S. producer would cut back
production. These gains were partially offset by losses of
approximately 5.0% recorded in the currency markets primarily
from short Japanese yen positions as its value temporarily
strengthened relative to the U.S. dollar during mid-June on
stronger-than-expected gross domestic product data from Japan.
Additional losses were recorded during May from long positions in
<PAGE>
the euro relative to the U.S. dollar as the value of the European
common currency slid lower due to concerns regarding European
economic growth, on speculation that the European Central Bank
could lower interest rates and on news that the U.S. Federal
Reserve is adopting a tightening bias. In the agricultural
markets, losses of approximately 3.2% were experienced during May
from long positions in soybean futures as prices declined due to
favorable planting forecasts and a bearish USDA supply-demand
report. In the global stock index futures markets, losses of
approximately 0.9% were experienced primarily during April from
short S&P 500 Index futures positions as the Dow Jones Industrial
Average and S&P 500 Index reached record highs in response to an
interest rate cut by the European Central Bank aimed at boosting
their region's economy, strong sales at domestic retailers and
optimism about earnings from financial services companies. Total
expenses for the three months ended June 30, 1999 were
$1,973,605, resulting in net income of $5,940,003. The value of
a Unit increased from $12.02 at March 31, 1999 to $12.94 at June
30, 1999.
For the six months ended June 30, 1999, the Partnership recorded
total trading revenues including interest income of $13,761,902
and posted an increase in Net Asset Value per Unit. The most
significant gains of approximately 15.6% were recorded in the
energy markets primarily during March from long crude oil
positions as prices climbed higher due to confirmation of OPEC
<PAGE>
production cuts and supply concerns caused by an explosion at a
U.S. refinery. Additional gains were recorded as oil prices
increased at June month end after another unexpected drop in U.S.
crude oil supplies and signs of growing demand for gasoline. In
the global interest rate futures markets, gains of approximately
9.8% were recorded primarily during February from short U.S.
interest rate futures positions as prices dropped in reaction to
Federal Reserve Chairman Alan Greenspan's warnings in
Congressional testimony that a strong economy could reignite
inflation. A higher-than-expected rise in the Consumer Price
Index and fears of a tighter Federal Reserve monetary policy
ahead of the Federal Open Market Committee meeting resulted in
additional gains during May and June. In the metals markets,
gains of approximately 3.9% were recorded primarily from long
copper futures positions as copper prices soared during mid April
to the highest level since late December on a wave of fund buying
and during June on news that a major U.S. producer would cut back
production. These gains were partially offset by losses of
approximately 4.3% recorded in the global stock index futures
markets primarily during March from short S&P 500 Index futures
positions as equity prices increased in reaction to Wall Street
reaching a major milestone during mid-March, as the Dow Jones
Industrial Average hit 10,000 for the first time. Additional
losses were experienced as the S&P 500 Index reached record highs
during April in response to an interest rate cut by the European
Central Bank aimed at boosting their region's economy. In the
<PAGE>
currency markets, losses of approximately 3.7% were experienced
primarily during January from long Japanese yen positions after
an intervention by the Bank of Japan boosted the U.S. dollar
against the yen and helped ease concerns about the impact of a
strong yen on Japanese exports. Losses were also recorded during
March from short Japanese yen positions as the value of the yen
increased versus the U.S. dollar amid new signs that Japan's
economy may be on the mend and speculation that Japanese interest
rates may soon rise. Stronger-than-expected gross domestic
product data from Japan during June also pushed the yen higher,
thus resulting in losses for the Partnership's short yen
positions. In the agricultural markets, losses of approximately
3.3% were recorded primarily during May from long positions in
soybean futures as prices declined due to favorable planting
forecasts and a bearish USDA supply-demand report. Total expenses
for the six months ended June 30, 1999 were $4,937,512, resulting
in net income of $8,824,390. The value of a Unit increased from
$11.55 at December 31, 1998 to $12.94 at June 30, 1999.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Introduction
The Partnership is a commodity pool involved in the speculative
trading of futures interests. The market-sensitive instruments
held by the Partnership are acquired for speculative trading
purposes only and, as a result, all or substantially all of the
Partnership's assets are at risk of trading loss. Unlike an
<PAGE>
operating company, the risk of market-sensitive instruments is
central, not incidental, to the Partnership's main business
activities.
The futures interests traded by the Partnership involve varying
degrees of market risk. Market risk is often dependent upon
changes in the level or volatility of interest rates, exchange
rates, and prices of financial instruments and commodities.
Fluctuations in market risk based upon these factors result in
frequent changes in the fair value of the Partnership's open
positions, and, consequently, in its earnings and cash flow.
The Partnership's total market risk is influenced by a wide
variety of factors, including the diversification among the
Partnership's open positions, the volatility present within the
markets, and the liquidity of the markets. At different times,
each of these factors may act to increase or decrease the market
risk associated with the Partnership.
The Partnership's past performance is not necessarily indicative
of its future results. Any attempt to numerically quantify the
Partnership's market risk is limited by the uncertainty of its
speculative trading. The Partnership's speculative trading may
cause future losses and volatility (i.e. "risk of ruin") that far
<PAGE>
exceed the Partnership's experiences to date or any reasonable
expectations based upon historical changes in market value.
Quantifying the Partnership's Trading Value at Risk
The following quantitative disclosures regarding the
Partnership's market risk exposures contain "forward-looking
statements" within the meaning of the safe harbor from civil
liability provided for such statements by the Private Securities
Litigation Reform Act of 1995 (set forth in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934). All quantitative disclosures in this section are
deemed to be forward-looking statements for purposes of the safe
harbor, except for statements of historical fact.
The Partnership accounts for open positions using mark-to-market
accounting principles. Any loss in the market value of the
Partnership's open positions is directly reflected in the
Partnership's earnings, whether realized or unrealized, and cash
flow. Profits and losses on open positions of exchange-traded
futures interests are settled daily through variation margin.
The Partnership's risk exposure in the market sectors traded by
the Trading Advisors is estimated below in terms of Value at Risk
("VaR"). The VaR model used by the Partnership includes many
variables that could change the market value of the Partnership's
trading portfolio. The Partnership estimates VaR using a model
<PAGE>
based upon historical simulation with a confidence level of 99%.
Historical simulation involves constructing a distribution of
hypothetical daily changes in the value of a trading portfolio.
The VaR model takes into account linear exposures to price and
interest rate risk. Market risks that are incorporated in the
VaR model include equity and commodity prices, interest rates,
foreign exchange rates, and correlation among these variables.
The hypothetical changes in portfolio value are based on daily
percentage changes observed in key market indices or other market
factors ("market risk factors") to which the portfolio is
sensitive. The historical observation period of the Partnership's
VaR is approximately four years. The one-day 99% confidence
level of the Partnership's VaR corresponds to the negative change
in portfolio value that, based on observed market risk factors,
would have been exceeded once in 100 trading days.
VaR models, including the Partnership's, are continuously
evolving as trading portfolios become more diverse and modeling
techniques and systems capabilities improve. Please note that
the VaR model is used to numerically quantify market risk for
historic reporting purposes only and is not utilized by either
Demeter or the Trading Advisors in their daily risk management
activities.
<PAGE>
The Partnership's Value at Risk in Different Market Sectors
The following tables indicates the VaR associated with the
Partnership's open positions as a percentage of total Net Assets
by primary market risk category as of June 30, 2000 and 1999. At
June 30, 2000 and 1999, the Partnership's total capitalization
was approximately $81 million and $82 million, respectively.
Primary Market June 30, 2000 June 30, 1999
Risk Category Value at Risk Value at Risk
Commodity (1.62)% (2.79)%
Currency (0.91) (2.98)
Interest Rate (0.29) (1.83)
Equity (0.18) (2.41)
Aggregate Value at Risk (1.97)% (4.88)%
Aggregate Value at Risk represents the aggregate VaR of all the
Partnership's open positions and not the sum of the VaR of the
individual Market Categories listed above. Aggregate VaR will be
lower as it takes into account correlation among different
positions and categories.
The table above represents the VaR of the Partnership's open
positions at June 30, 2000 and 1999 only and is not necessarily
representative of either the historic or future risk of an
investment in the Partnership. Because the Partnership's only
business is the speculative trading of futures interests, the
<PAGE>
composition of its trading portfolio can change significantly
over any given time period, or even within a single trading day.
Any changes in open positions could positively or negatively
materially impact market risk as measured by VaR.
The table below supplements the quarter-end VaR by presenting the
Partnership's high, low and average VaR, as a percentage of total
Net Assets for the four quarterly reporting periods from July 1,
1999 through June 30, 2000.
Primary Market Risk Category High Low Average
Commodity (2.79)% (0.69)% (1.80)%
Currency (2.98) (0.91) (1.81)
Interest Rate (1.97) (0.29) (1.27)
Equity (2.41) (0.18) (1.18)
Aggregate Value at Risk (4.88)% (1.97)% (3.08)%
Limitations on Value at Risk as an Assessment of Market Risk
The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements. Margin requirements generally range between 2% and
15% of contract face value. Additionally, the use of leverage
causes the face value of the market sector instruments held by
the Partnership to typically be many times the total
capitalization of the Partnership. The value of the
Partnership's open positions thus creates a "risk of ruin" not
typically found in other investments. The relative size of the
positions held may cause
<PAGE>
the Partnership to incur losses greatly in excess of VaR within a
short period of time, given the effects of the leverage employed
and market volatility. The VaR tables above, as well as the past
performance of the Partnership, gives no indication of such "risk
of ruin". In addition, VaR risk measures should be viewed in
light of the methodology's limitations, which include the
following:
past changes in market risk factors will not always result
in accurate predictions of the distributions and correlations of
future market movements;
changes in portfolio value in response to market movements
may differ from those of the VaR model;
VaR results reflect past trading positions while future risk
depends on future positions;
VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
the historical market risk factor data used for VaR
estimation may provide only limited insight into losses that
could be incurred under certain unusual market movements.
The VaR tables above present the results of the Partnership's VaR
for each of the Partnership's market risk exposures and on an
aggregate basis at June 30, 2000 and for the end of the four
quarterly reporting periods from July 1, 1999 through June 30,
2000. Since VaR is based on historical data, VaR should not be
<PAGE>
viewed as predictive of the Partnership's future financial
performance or its ability to manage or monitor risk. There can
be no assurance that the Partnership's actual losses on a
particular day will not exceed the VaR amounts indicated above or
that such losses will not occur more than 1 in 100 trading days.
Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances not needed for margin. These balances and any market
risk they may represent are immaterial. At June 30, 2000 the
Partnership's cash balance at DWR was approximately 87% of its
total Net Asset Value. A decline in short-term interest rates
will result in a decline in the Partnership's cash management
income. This cash flow risk is not considered material.
Materiality, as used throughout this section, is based on an
assessment of reasonably possible market movements and any
associated potential losses, taking into account the leverage,
optionality and multiplier features of the Partnership's market
sensitive instruments.
Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership's
market risk exposures - except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
Partnership manages its primary market risk exposures -
constitute
<PAGE>
forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange
Act. The Partnership's primary market risk exposures as well as
the strategies used and to be used by Demeter and the Trading
Advisors for managing such exposures are subject to numerous
uncertainties, contingencies and risks, any one of which could
cause the actual results of the Partnership's risk controls to
differ materially from the objectives of such strategies.
Government interventions, defaults and expropriations, illiquid
markets, the emergence of dominant fundamental factors, political
upheavals, changes in historical price relationships, an influx
of new market participants, increased regulation and many other
factors could result in material losses as well as in material
changes to the risk exposures and the risk management strategies
of the Partnership. Investors must be prepared to lose all or
substantially all of their investment in the Partnership.
The following were the primary trading risk exposures of the
Partnership as of June 30, 2000, by market sectors. It may be
anticipated however, that these market exposures will vary
materially over time.
Commodity.
Energy. The primary market exposure in the Partnership at June
30, 2000 was in the energy sector. On June 30, 2000, the
Partnership's energy exposure was shared primarily by futures
<PAGE>
contracts in the crude oil and natural gas markets. Price
movements in these markets result from political developments in
the Middle East, weather patterns, and other economic
fundamentals. It is possible that volatility will remain high.
Significant profits and losses, which have been experienced in
the past, are expected to continue to be experienced in this
market. Natural gas has exhibited volatility in prices resulting
from weather patterns and supply and demand factors and may
continue in this choppy pattern.
Soft Commodities and Agriculturals. On June 30, 2000, the
Partnership had exposure in the markets that comprise these
sectors, mostly in the cocoa, lumber and cotton markets. Supply
and demand inequalities, severe weather disruption and market
expectations affect price movements in these markets.
Metals. The Partnership's metals market exposure at June 30,
2000 was primarily to fluctuations in the price of base metals.
During periods of volatility, base metals will affect performance
dramatically. Certain Trading Advisors will, from time to time,
trade precious metals, such as gold. Exposure was evident in the
gold market as gold prices were volatile during the quarter.
Demeter anticipates that the base metals will remain the primary
metals market exposure of the Partnership.
<PAGE>
Currency. The second largest market exposure at June 30, 2000 was
in the currency complex. The Partnership's currency exposure is
to exchange rate fluctuations, primarily fluctuations which
disrupt the historical pricing relationships between different
currencies and currency pairs. Interest rate changes as well as
political and general economic conditions influence these
fluctuations. The Partnership trades in a large number of
currencies, including cross-rates - i.e., positions between two
currencies other than the U.S. dollar. For the second quarter of
2000, the Partnership's major exposures were in outright U.S.
dollar positions. Outright positions consist of the U.S. dollar
vs. other currencies. These other currencies include the major
and minor currencies. Demeter does not anticipate that the risk
profile of the Partnership's currency sector will change
significantly in the future. The currency trading VaR figure
includes foreign margin amounts converted into U.S. dollars with
an incremental adjustment to reflect the exchange rate risk
inherent to the dollar-based Partnership in expressing VaR in a
functional currency other than dollars.
Interest Rate. The Partnership's exposure at June 30, 2000 in
this market complex was spread across the Japanese, U.S. and
European interest rate sectors. Interest rate movements directly
affect the price of the sovereign bond futures positions held by
<PAGE>
the Partnership and indirectly affect the value of its stock
index and currency positions. Interest rate movements in one
country as well as relative interest rate movements between
countries materially impact the Partnership's profitability. The
Partnership's primary interest rate exposure is generally to
interest rate fluctuations in the United States and the other G-7
countries. The G-7 countries consist of France, U.S., Britain,
Germany, Japan, Italy and Canada. Demeter anticipates that G-7
interest rates will remain the primary interest rate exposure of
the Partnership for the foreseeable future. The changes in
interest rates which have the most effect on the Partnership are
changes in long-term, as opposed to short-term rates. Most of
the speculative futures positions held by the Partnership are in
medium- to long- term instruments. Consequently, even a material
change in short-term rates would have little effect on the
Partnership, were the medium- to long-term rates to remain
steady.
Equity. The equity exposure at June 30, 2000 was primarily to
price risk in the G-7 countries. The stock index futures traded
by the Partnership are by law limited to futures on broadly based
indices. As of June 30, 2000, the Partnership's primary exposure
was in the S&P 500 (U.S.), CAC 40 (France) and Nikkei (Japan)
stock indices. The Partnership is primarily exposed to the risk
of adverse price trends or static markets in the U.S., European
and Japanese indices. Static markets would not cause major
<PAGE>
market changes but would make it difficult for the Partnership to
avoid being "whipsawed" into numerous small losses.
Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership as of June 30, 2000:
Foreign Currency Balances. The Partnership's primary foreign
currency balances at June 30, 2000 were in Australian dollars.
The Partnership controls the non-trading risk of these balances
by regularly converting these balances back into dollars upon
liquidation of the respective position.
Qualitative Disclosures Regarding Means of Managing Risk Exposure
The Partnership and the Trading Advisors, separately, attempt to
manage the risk of the Partnership's open positions in
essentially the same manner in all market categories traded.
Demeter attempts to manage market exposure by diversifying the
Partnership's assets among different Trading Advisors, each of
whose strategies focus on different market sectors and trading
approaches, and by monitoring the performance of the Trading
Advisors daily. In addition, the Trading Advisors establish
diversification guidelines, often set in terms of the maximum
margin to be committed to positions in any one market sector or
market-sensitive instrument.
<PAGE>
Demeter monitors and controls the risk of the Partnership's non-
trading instrument, cash. Cash is the only Partnership investment
directed by Demeter, rather than the Trading Advisors.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The following supplements Legal Proceedings previously disclosed
in the Partnership's Form 10-Q for the quarter ended March 31,
2000 and Form 10-K for the year ended December 31, 1999.
On October 25, 1996, the Market Surveillance Committee (the
"Committee") of the National Association of Securities Dealers
("NASD") filed a formal complaint against MS & Co. and seven
current and former traders, alleging violations of certain NASD
rules relating to manipulative and deceptive practices, locked
and crossed markets, and failure to supervise. Hearings were
held in June and July 1997. On April 13, 1998 the Committee
ruled that MS & Co. and the seven traders had engaged in
manipulative and deceptive practices and improperly locked or
crossed markets, but not that MS & Co. had failed to supervise
its traders. The Committee levied a fine of $1,000,000 on MS &
Co., a fine of $100,000 and a 90-day suspension on one of its
former traders, and fines of $25,000 and 30-day suspensions on
each of the remaining current and former traders. On January 18,
2000 the National Adjudicatory Council, which heard the appeal,
issued a ruling which upheld the Committee's April 1998 decision,
however, the National Adjudicatory Council reduced the firm's
fine to $495,000,
<PAGE>
reversed all previously imposed suspensions against the traders,
reduced the fine for each of six traders to $2,500 and dismissed
all charges against the seventh trader.
On January 11, 1999, the Securities and Exchange Commission
brought an action against 28 NASDAQ market makers, including MS &
Co., and 51 individuals, including one current and one former
trader employed by MS & Co., for certain conduct during 1994.
The core of the charges against MS & Co. concern improper or
undisclosed coordination of price quotes with other broker-
dealers and related reporting, recordkeeping and supervisory
deficiencies in violation of Sections 15(b)(4)(E), 15(c)(1) and
(2) and 17(a) of the Securities Exchange Act and Rules 15c1-2,
15c2-7 and 17a-3 promulgated thereunder. Without admitting or
denying the charges, MS & Co. consented to the entry of a cease
and desist order and to the payment of a civil penalty of
$350,000, disgorgement of $4,170 and to submit certain of its
procedures to an independent consultant for review. In addition,
one current and one former trader employed by MS & Co. accepted
suspensions of less than two months each and were fined $25,000
and $30,000 respectively.
<PAGE>
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Partnership, Morgan Stanley Dean Witter Spectrum Technical L.P.
("Spectrum Technical") and Morgan Stanley Dean Witter Spectrum
Global Balanced L.P. ("Spectrum Global Balanced") collectively
registered 10,000,000 Units pursuant to a Registration Statement on
Form S-1, which became effective on September 15, 1994 (SEC File
Number 33-80146). While such Units were not allocated to the
Partnership, Spectrum Technical and Spectrum Global Balanced at
that time, they were subsequently allocated for convenience
purposes as follows: the Partnership 4,000,000, Spectrum Technical
4,000,000 and Spectrum Global Balanced 2,000,000. The Partnership,
Spectrum Technical and Spectrum Global Balanced collectively
registered an additional 20,000,000 Units pursuant to a new
Registration Statement on Form S-1, which became effective on
January 31, 1996 (SEC File Number 333-00494); such Units were
allocated to the Partnership, Spectrum Technical and Spectrum
Global Balanced as follows: The Partnership 6,000,000, Spectrum
Technical 9,000,000 and Spectrum Global Balanced 5,000,000. The
Partnership, Spectrum Technical and Spectrum Global Balanced
collectively registered an additional 8,500,000 Units pursuant to
another Registration Statement on Form S-1, which became effective
on April 30, 1996 (SEC File Number 333-3222); such Units were
allocated to the Partnership, Spectrum Technical and Spectrum
Global Balanced as follows: The Partnership 2,500,000, Spectrum
Technical 5,000,000 and Spectrum Global Balanced 1,000,000.
<PAGE>
The Partnership registered an additional 6,500,000 Units pursuant
to another Registration Statement on Form S-1, which became
effective on February 28, 2000 (SEC File Number 333-90487).
The managing underwriter for the Partnership is DWR.
Units are being sold at monthly closings as of the last day of each
month at a price equal to 100% of the Net Asset Value of a Unit as
of the date of such monthly closing.
Through June 30, 2000, 10,627,406.027 Units were sold, leaving
8,372,593.973 Units unsold as of June 30, 2000. The aggregate
price of the Units sold through June 30, 2000 is $117,720,316.
Since DWR has paid all offering expenses and no other expenses are
chargeable against proceeds, 100% of the proceeds of the offering
have been applied to the working capital of the Partnership for use
in accordance with the "Investment Programs, Use of Proceeds and
Trading Policies" section of the Prospectus included as part of
each Registration Statement.
Item 5. OTHER INFORMATION
Effective July 1, 2000, Lewis A. Raibley, III resigned as Chief
Financial Officer and a Director of Demeter and Dean Witter
Futures Currency Management Inc. Effective July 10, 2000 Raymond
<PAGE>
E. Koch replaced Lewis A. Raibley, III as Chief Financial Officer
of Demeter.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
3.01 Form of Amended and Restated Limited Partnership Agreement
of the Partnership is incorporated by reference to Exhibit A of
the Partnership's Prospectus, dated March 6, 2000, filed
with the Securities and Exchange Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933, as amended, on
March 9, 2000.
3.02 Certificate of Limited Partnership, dated April 18, 1994,
is incorporated by reference to Exhibit 3.02 of the
Partnership's Registration Statement on Form S-1 (File No. 33-
80146) filed with the Securities and Exchange Commission on June
10, 1994.
10.01 Management Agreement, dated as of November 1, 1994,
among the Partnership, Demeter Management Corporation, and
Blenheim Investments, Inc. is incorporated by reference to
Exhibit 10.02 of the Partnership's Form 10-K (File No. 0-
26280) for fiscal year ended December 31, 1998.
10.02 Management Agreement, dated as of November 1, 1994,
among the Partnership, Demeter Management Corporation, and
Willowbridge Associates, Inc. is incorporated by reference to
Exhibit 10.03 of the Partnership's Form 10-K (File No. 0- 26280)
for fiscal year ended December 31, 1998.
10.03 Amended and Restated Customer Agreement, dated as of
December 1, 1997, between the Partnership and Dean Witter
Reynolds Inc. is incorporated by reference to Exhibit 10.08 of
the Partnership's Form 10-K (File No. 0-26280) for fiscal year
ended December 31, 1998.
10.04 Customer Agreement, dated as of December 1, 1997,
among the Partnership, Carr Futures, Inc., and Dean Witter
Reynolds Inc. is incorporated by reference to Exhibit 10.09 of
the Partnership's Form 10-K (File No. 0-26280) for fiscal year
ended December 31, 1998.
<PAGE>
10.05 International Foreign Exchange Master Agreement, dated
as of August 1, 1997, between the Partnership and Carr Futures,
Inc. is incorporated by reference to Exhibit 10.10 of the
Partnership's Form 10-K (File No. 0-26280) for fiscal year
ended December 31, 1998.
10.06 Subscription and Exchange Agreement and Power of
Attorney to be executed by each purchaser of Units is
incorporated by reference to Exhibit B of the Partnerships
Prospectus dated March 6, 2000, filed with the Securities and
Exchange Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933, as amended, on March 9, 2000.
10.07 Escrow Agreement, dated September 30, 1994, among the
Partnership, Demeter Management Corporation, Dean Witter
Reynolds Inc., and Chemical Bank is incorporated by
reference to Exhibit 10.07 of the Partnership's Form 10-K
(File No. 0-26280) for fiscal year ended December 31, 1998.
10.08 Management Agreement, dated as of May 1, 1999, among
Dean Witter Spectrum Strategic L.P., Demeter Management
Corporation, and Allied Irish Capital Management Ltd. is
incorporated by reference to Exhibit 10.04 of the
Partnership's Registration Statement on Form S-1 (File No. 333-
90487) filed with the Securities and Exchange Commission on
November 5, 1999.
10.09 Management Agreement, dated as of June 1, 2000, among
the Partnership, Demeter and Eclipse Capital Management, Inc.
is filed herewith.
10.10 Customer Agreement, dated as of June 1, 2000, between
Morgan Stanley & Co. Incorporated, the Partnership and Dean
Witter Reynolds Inc. is filed herewith.
(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.
Morgan Stanley Dean Witter Spectrum
Strategic L.P. (Registrant)
By: Demeter Management Corporation
(General Partner)
August 14, 2000 By:/s/ Raymond E. Koch__________
Raymond E. Koch
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.
