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 BALANCED L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3782232
(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 BALANCED 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............................................12-16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K......................17
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM BALANCED L.P.
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
June 30, December 31,
1995 1995
$ $
(Unaudited)
ASSETS
<S> <C> <C>
Equity in Commodity futures trading accounts:
Cash 18,153,795 13,409,068
Net unrealized gain on open contracts 165,468 392,428
Net option premiums received (120,200) -
Total Trading Equity 18,199,063 13,801,496
Subscriptions receivable 579,455 1,061,057
Interest receivable (DWR) 75,134 61,129
Total Assets 18,853,652 14,923,682
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable 346,795 38,746
Accrued brokerage commissions (DWR) 90,418 66,673
Accrued management fees 18,837 13,890
Incentive fees payable - 49,873
Total Liabilities 456,050 169,182
Partners' Capital
Limited Partners (1,673,582.146 and
1,209,758.681 Units, respectively) 18,204,494 14,604,689
General Partner (17,752.928 and
12,409.369 Units, respectively) 193,108 149,811
Total Partners' Capital 18,397,602 14,754,500
Total Liabilities and Partners' Capital 18,853,652 14,923,682
NET ASSET VALUE PER UNIT 10.88 12.07
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM BALANCED L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Quarters Ended June 30,
1996 1995
$ $
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized (217,926) 611,832
Net change in unrealized 50,264 (11,199)
Total Trading Results (167,662) 600,633
Interest Income (DWR) 216,373 92,565
Total Revenues 48,711 693,198
EXPENSES
Brokerage commissions (DWR) 264,288 104,505
Management fees 55,060 21,771
Incentive fees - 71,154
Total Expenses 319,348 197,430
NET INCOME (LOSS) (270,637) 495,768
NET INCOME (LOSS) ALLOCATION
Limited Partners (267,826) 487,913
General Partner (2,811) 7,855
NET INCOME (LOSS) PER UNIT
Limited Partners (.16) .80
General Partner (.16) .80
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM BALANCED L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Six Months Ended, June 30,
1996 1995
$ $
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized (1,190,031) 893,810
Net change in unrealized (226,960) 161,952
Total Trading Results (1,416,990) 1,055,762
Interest Income (DWR) 401,024 152,706
Total Revenues (1,015,967) 1,208,468
EXPENSES
Brokerage commissions (DWR) 494,446 170,162
Management fees 103,010 35,450
Incentive fees - 111,283
Total Expenses 597,456 316,895
NET INCOME (LOSS) (1,613,423) 891,573
NET INCOME (LOSS) ALLOCATION
Limited Partners (1,596,720) 874,955
General Partner (16,703) 16,618
NET INCOME (LOSS) PER UNIT
Limited Partners (1.19) 1.69
General Partner (1.19) 1.69
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM BALANCED L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<CAPTION>
Units of
Partnership Limited General
Interest Partners Partner Total
<S> <C> <C> <C> <C>
Partners' Capital
December 31, 1994 386,338.297 $3,701,277 $96,568 $3,797,845
Continuous Offering 411,008.407 4,496,397 - 4,496,397
Net Income - 874,955 16,618 891,573
Redemptions (5,539.382) (62,580) - (62,580)
Partners' Capital
June 30, 1995 791,807.322 $9,010,049 $113,186 $9,123,235
Partners' Capital
December 31, 1995 1,222,168.050 $14,604,689 $149,811 $14,754,500
Continuous Offering 520,786.541 5,763,236 60,000 5,823,236
Net Loss - (1,596,720) (16,703) (1,613,423)
Redemptions (51,619.517) (566,711) - (566,711)
Partners' Capital
June 30, 1996 1,691,335.074 $18,204,494 $193,108 $18,397,602
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM BALANCED L.P.
STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Six Months Ended, June 30,
1996 1995
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) (1,613,423) 891,573
Noncash item included in net income (loss):
Net change in unrealized 226,960 (161,952)
(Increase) decrease in operating assets:
Net option premiums 120,200 -
Interest receivable from DWR (14,005) (19,237)
Increase (decrease) in operating liabilities:
Accrued brokerage commissions (DWR) 23,745 23,375
Accrued management fees 4,947 4,869
Incentive fees payable (49,873) 4,934
Net cash provided by (used for) operating activities (1,301,449) 743,562
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in redemptions payable 308,049 18,432
Redemptions of units (566,711) (62,580)
Increase (decrease) in subscriptions receivable 481,602 (565,909)
Continuous offering 5,823,236 4,496,397
Net cash provided by financing activities 6,046,176 3,886,340
Net increase in cash 4,744,727 4,629,902
Balance at beginning of period 13,409,068 3,260,143
Balance at end of period 18,153,795 7,890,045
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
DEAN WITTER SPECTRUM BALANCED 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 Balanced 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 RXR, Inc. as the
trading advisor 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 BALANCED L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. Financial Instruments
The Partnership trades futures, forward contracts on futures and
related instruments 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 17,868,000
Commitments to Sell 10,786,000
Options Written 4,738,000
Commodity Futures:
Commitments to Purchase 2,192,000
Commitments to Sell 1,735,000
Foreign Futures:
Commitments to Purchase 15,290,000
Commitments to Sell 18,650,000
Off-Exchange-Traded Forward
Currency Contracts
Commitments to Purchase 11,032,000
Commitments to Sell 17,116,000
<PAGE>
DEAN WITTER SPECTRUM BALANCED 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 is reported as a component of
"Equity in Commodity futures trading accounts" on the Statement of
Financial Condition and totaled $165,468 at June 30, 1996. Of this
amount, $215,815 related to exchange-traded futures contracts and
($50,347) related to off-exchange-traded forward currency con-
tracts.
Exchange-traded futures contracts held by the Partnership at June
30, 1996 mature through December 1996. Off-exchange traded forward
currency contracts held by the Partnership at June 30, 1996 mature
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 BALANCED 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 settled on a daily basis. DWR, as the futures
commission merchant for all of the Partnership's exchange-traded
futures and options contracts, is required pursuant to regulations
of the Commodity Futures Trading 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 and options contracts, which funds totaled
$18,369,610 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 BALANCED 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 17,836,000 11,585,000
Commodity Futures 4,028,000 1,084,000
Foreign Futures 17,087,000 6,620,000
Off-Exchange-Traded Forward
Currency Contracts 12,945,000 14,618,000
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity - The Partnership's assets are on deposit in separate
commodity interest trading accounts with DWR and are used by the
Partnership as margin to engage in commodity futures, forward
contracts on foreign currencies and other commodity interest
trading. DWR holds such assets in either designated depositories
or in securities approved by the Commodity Futures Trading
Commission for investment of customer funds. The Partnership's
assets held by DWR may be used as margin solely for the
Partnership's trading. Since the Partnership's sole purpose is to
trade in commodity futures contracts, forward contracts on foreign
currencies and other commodity interests, it is expected that the
Partnership will continue to own such liquid assets for margin
purposes.
The Partnership's investment in commodity futures, 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 $48,711. During
the second quarter, 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 losses were recorded in the managed futures portion of
the balanced portfolio as a result of trendless movement in global
interest rate futures prices during May and June. Additional
losses were recorded in the bond portion of the balanced portfolio
<PAGE>
as U.S. Treasury bond futures prices moved lower during April and
May. Losses were also recorded in the managed futures portion of
the portfolio from trading in the currency markets as the value of
the Japanese yen traded in a narrow range during May. Smaller
losses were recorded as sugar, coffee and base metals futures
prices moved without consistent direction during the quarter.
Trading gains recorded in the agricultural markets from long corn
futures positions, as prices increased in April and early May,
offset a portion of overall losses within the managed futures
portion of the portfolio. Gains recorded during April from short
German mark and Swiss franc positions, as the value of these
currencies decreased relative to other world currencies, also
helped to mitigate losses during the quarter. Total expenses for
the quarter were $319,348, resulting in a net loss of $270,637.
The value of an individual Unit in the Partnership decreased from
$11.04 at March 31, 1996 to $10.88 at June 30, 1996.
For the six months ended June 30, 1996, the Partnership's total
trading losses net of interest income were $1,015,967. During the
first half of the year, the Partnership posted a decrease in Net
Asset Value per Unit. The most significant losses were recorded in
the bond portion of the balanced portfolio from long positions in
U.S. Treasury bond futures as prices moved dramatically lower
during February and into March. Smaller losses were recorded in
the bond portion of the balanced portfolio during the second
quarter. Additional losses were recorded in the managed futures
portion of the balanced portfolio as global interest rate futures
reversed their upward trend in February and later moved in a
<PAGE>
trendless pattern. Trading losses were also experienced in the
managed futures portion of the portfolio in the currency markets
during February as a sudden upward move occurred in the value of
most European currencies relative to the U.S. dollar. Additional
currency losses were recorded during May from transactions
involving the Japanese yen. Smaller losses were recorded in the
managed futures portion of the portfolio from trading soft
commodities and base metals futures due to trendless price movement
during the first six months of the year. A portion of the overall
losses was offset by gains in agricultural futures as long corn
futures positions profited during April and early May. In the
stock portion of the balanced portfolio, gains were recorded as S&P
500 Index futures prices moved higher. Total expenses for the
period were $597,456, resulting in a net loss of $1,613,423. The
value of an individual Unit in the Partnership decreased from
$12.07 at December 31, 1995 to $10.88 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 revenues including interest income were $693,198. During
the second quarter, the Partnership posted an increase in Net Asset
Value per Unit. The most significant gains were recorded in the
managed futures portion of the balanced portfolio from trading in
global interest rate futures throughout the quarter and in wheat,
crude oil and sugar markets in June. Additional trading gains were
recorded from long positions in the S&P 500 Index in the stock
portion of the balanced portfolio and from long U.S. Treasury bond
<PAGE>
positions in the bond portion of the balanced portfolio during the
second quarter. Trading losses in the managed futures portion of
the balanced portfolio from trading soybean products and both base
and precious metals offset a portion of overall gains for the
Partnership during the quarter. Total expenses for the period
were $197,430, resulting in net income of $495,768. The value of
an individual Unit in the Partnership increased from $10.72 at
March 31, 1995 to $11.52 at June 30, 1995.
For the six months ended June 30, 1995, the Partnership's total
trading revenues including interest income were $1,208,468. During
the first six months, the Partnership posted an increase in Net
Asset Value per Unit. The most significant gains were recorded in
the managed futures markets portion of the balanced portfolio from
trading in financial futures during the first and second quarter
and in the currency markets during the first quarter of the year.
Smaller gains were recorded in the managed futures portion of the
balanced portfolio from trading wheat, crude oil, natural gas, and
sugar. Additional trading gains were recorded from long positions
in the S&P 500 Index in the stock portion of the balanced portfolio
and from long U.S. Treasury bond future positions in the bond
portion of the balanced portfolio. In the managed futures portion
of the portfolio, smaller losses recorded in European bond, British
pound, German mark, soybean products and metals offset a portion of
overall Partnership gains for the first half of the year. Total
expenses for the period were $316,895, resulting in a net income
of $891,573. The value of an individual Unit in the
Partnership increased from $9.83 at December 31, 1994 to $11.52 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 Balanced L.P.
(Registrant)
By: Demeter Management Corporation
(General Partner)
August 12, 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 Balanced 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> 18,153,795
<SECURITIES> 0
<RECEIVABLES> 654,589<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,853,652<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 18,853,652<F3>
<SALES> 0
<TOTAL-REVENUES> (1,015,967)<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 597,456
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,613,423)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,613,423)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,613,423)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include subscriptions receivable of $579,455 and interest
receivable of $75,134.
<F2>In addition to cash and receivables, total assets include net unrealized
gain on open contracts of $165,468 and net options premiums received of
$(120,200).
<F3>Liabilities include redemptions payable of $346,795, accrued brokerage
commissions of $90,418 and accrued management fees of $18,837.
<F4>Total revenues includes realized trading revenue of $(1,190,031), net
change in unrealized of $(226,960) and interest income of $401,024.
</FN>
</TABLE>
