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 September 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 TECHNICAL L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3782231
(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 TECHNICAL L.P.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
September 30, 1996
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition
September 30, 1996 (Unaudited) and December 31, 1995.........2
Statements of Operations for the Quarters Ended
September 30, 1996 and 1995 (Unaudited) .....................3
Statements of Operations for the Nine Months Ended
September 30, 1996 and 1995 (Unaudited) .....................4
Statements of Changes in Partners' Capital for
the Nine Months Ended September 30, 1996 and 1995
(Unaudited)..................................................5
Statements of Cash Flows for the Nine Months Ended
September 30, 1996 and 1995 (Unaudited)......................6
Notes to Financial Statements (Unaudited)................7-12
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations............................................13-17
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..................... 18
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
September 30, December 31,
1996 1995
$ $
(Unaudited)
ASSETS
<S> <C> <C>
Equity in Commodity futures trading accounts:
Cash 81,984,299 52,705,410
Net unrealized gain on open contracts 9,159,685 4,086,548
Net option premiums 365,980 -
Total Trading Equity 91,509,964 56,791,958
Subscriptions receivable 573,939 3,091,196
Interest receivable (DWR) 283,744 192,688
Total Assets 92,367,647 60,075,842
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable 776,244 184,326
Accrued brokerage commissions (DWR) 592,747 387,839
Accrued management fees 287,392 177,298
Total Liabilities 1,656,383 749,463
Partners' Capital
Limited Partners (7,552,404.597 and
5,105,307.329 Units, respectively) 89,788,257 58,726,495
General Partner (77,637.388 and
52,150.079 Units, respectively) 923,007 599,884
Total Partners' Capital 90,711,264 59,326,379
Total Liabilities and Partners' Capital 92,367,647 60,075,842
NET ASSET VALUE PER UNIT 11.89 11.50
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Quarters Ended September 30,
1996 1995
$ $
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized (3,535,256) (1,021,628)
Net change in unrealized 5,659,492 (751,111)
Total Trading Results 2,124,236 (1,772,739)
Interest Income (DWR) 846,485 436,409
Total Revenues 2,970,721 (1,336,330)
EXPENSES
Brokerage commissions (DWR) 1,835,381 901,181
Management fees 855,453 411,969
Total Expenses 2,690,834 1,313,150
NET INCOME (LOSS) 279,887 (2,649,480)
NET INCOME (LOSS) ALLOCATION
Limited Partners 276,652 (2,622,565)
General Partner 3,235 (26,915)
NET INCOME (LOSS) PER UNIT
Limited Partners .01 (.72)
General Partner . 01 (.72)
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Nine Months Ended September 30,
1996 1995
$ $
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized 2,546,653 3,685,067
Net change in unrealized 5,073,137 (596,147)
Total Trading Results 7,619,790 3,088,920
Interest Income (DWR) 2,221,223 907,372
Total Revenues 9,841,013 3,996,292
EXPENSES
Brokerage commissions (DWR) 4,891,258 1,916,568
Management fees 2,252,425 876,146
Incentive fees 12,659 600,504
Total Expenses 7,156,342 3,393,218
NET INCOME 2,684,671 603,074
NET INCOME (LOSS) ALLOCATION
Limited Partners 2,656,548 604,206
General Partner 28,123 (1,132)
NET INCOME PER UNIT
Limited Partners .39 .97
General Partner .39 .97
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Nine Months Ended September 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 1,526,204.420 $14,771,789 $159,265 $14,931,054
Continuous Offering 2,913,672.435 31,919,902 345,000 32,264,902
Net Income (Loss) - 604,206 (1,132) 603,074
Redemptions (119,182.897) (1,340,382) - (1,340,382)
Partners' Capital
September 30, 1995 4,320,693.958 $45,955,515 $503,133 $46,458,648
Partners' Capital
December 31, 1995 5,157,457.408 58,726,495 599,884 59,326,379
Continuous Offering 2,814,749.534 32,381,339 295,000 32,676,339
Net Income - 2,656,548 28,123 2,684,671
Redemptions (342,164.957) (3,976,125) - (3,976,125)
Partners' Capital
September 30, 1996 7,630,041.985 89,788,257 923,007 90,711,264
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Nine Months Ended September 30,
1996 1995
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income 2,684,671 603,074
Noncash item included in net income:
Net change in unrealized (5,073,137) 596,147
Increase in operating assets:
Interest receivable (DWR) (91,056) (104,147)
Net option premiums (365,981) -
Increase (decrease) in operating liabilities:
Accrued brokerage commissions (DWR) 204,908 229,210
Accrued management fees 110,095 104,782
Incentive fees payable - (19,678)
Net cash provided by (used for) operating activities (2,530,500) 1,409,388
CASH FLOWS FROM FINANCING ACTIVITIES
(Increase) decrease in subscriptions receivable 2,517,257 (1,511,699)
Continuous offering 32,676,339 32,264,902
Increase in redemptions payable 591,918 116,983
Redemption of units (3,976,125) (1,340,382)
Net cash provided by financing activities 31,809,389 29,529,804
Net increase in cash 29,278,889 30,939,192
Balance at beginning of period 52,705,410 11,829,496
Balance at end of period 81,984,299 42,768,688
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
DEAN WITTER SPECTRUM TECHNICAL 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 Technical L.P. (the "Partnership") is a
limited partnership organized to engage in the speculative trading
of futures and forward contracts, options on futures contracts and
on physical commodities, and other commodity interests, including
foreign currencies, financial instruments, precious and industrial
metals, energy products and agriculturals. The general partner of
the Partnership, Demeter Management Corporation ("the General
Partner"), has retained Campbell & Company, Inc., Chesapeake
Capital Corporation and John W. Henry & Company, Inc. as the
trading advisors of the Partnership. The commodity broker is Dean
Witter Reynolds Inc. ("DWR"). Both the General Partner and DWR are
wholly owned subsidiaries of Dean Witter, Discover & Co.
2. Summary of Significant Accounting Policies
Effective September 1, 1996, brokerage fees are reduced to 33/48 of
1% of the Net Assets as of the first day of the month.
<PAGE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. 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.
4. Financial Instruments
The Partnership trades futures, options and forward contracts in
interest rates, stock indices, commodities, currencies, petroleum
and precious metals. Futures and forwards represent contracts for
delayed delivery of an instrument at a specified date and price.
Risk arises from changes in the value of these contracts and the
potential inability of counterparties to perform under the terms of
the contracts. There are numerous factors which may significantly
influence the market value of these contracts, including interest
rate volatility. At September 30, 1996, open contracts were:
Contract or
Notional Amount
$
Exchange-Traded Contracts
Financial Futures:
Commitments to Purchase 166,274,000
Commitments to Sell 126,567,000
Commodity Futures:
Commitments to Purchase 27,118,000
Commitments to Sell 87,666,000
Foreign Futures:
Commitments to Purchase 197,109,000
Commitments to Sell 23,810,000
Off-Exchange-Traded Forward
Currency Contracts
Commitments to Purchase 36,658,000
Commitments to Sell 21,877,000
<PAGE>
DEAN WITTER SPECTRUM TECHNICAL 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 net 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 $9,159,685 at
September 30, 1996. Of this amount, $9,302,865 related to
exchange-traded futures contracts and $(143,180) related to off-
exchange-traded forward currency contracts.
Exchange-traded futures contracts held by the Partnership at
September 30, 1996 mature through September 1997. Off-exchange-
traded forward currency contracts held by the Partnership at
September 30, 1996 mature through December 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 Statement of Financial
Condition.
<PAGE>
DEAN WITTER SPECTRUM TECHNICAL 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 contracts, which totaled $91,287,164 at
September 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 TECHNICAL L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the nine months ended September 30, 1996, the average fair
value of financial instruments held for trading purposes was as
follows:
Assets Liabilities
$ $
Exchange-Traded Contracts
Financial Futures 102,290,000 126,529,000
Options on Financial Futures 3,055,000 -
Commodity Futures 46,914,000 34,207,000
Options on Commodity Futures 3,815,000 -
Foreign Futures 138,120,000 46,020,000
Options on Foreign Futures 4,617,000 -
Off-Exchange-Traded Forward
Currency Contracts 32,525,000 44,829,000
4. Legal Matters
On September 6, 10, and 20, 1996, similar purported class actions
were filed in the Superior Court of the State of California, County
of Los Angeles, on behalf of all purchasers of interests in limited
partnership commodity pools sold by DWR. Named defendants include
DWR, the General Partner, Dean Witter Futures and Currency
Management Inc., Dean Witter, Discover & Co. (all such parties
referred to hereafter as the "Dean Witter Parties"), certain
limited partnership commodity pools of which Demeter is the general
partner, and certain trading advisors to those pools. Also, on
September 18 and 20, 1996 similar purported class actions were
filed in the Supreme Court of the State of New York, New York
County, against the Dean Witter Parties and certain trading
advisors on behalf of all purchasers of interests in various
limited partnership commodity pools sold by DWR. Generally, these
complaints allege, among other things, that the defendants
<PAGE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
committed fraud, deceit, misrepresentation, breach of
fiduciary duty, fraudulent and unfair business practices, unjust
enrichment, and conversion in connection with the sale and
operation of the various limited partnership commodity pools. The
complaints seek unspecified amounts of compensatory and punitive
damages and other relief. It is possible that additional similar
actions may be filed and that, in the course of these actions,
other parties could be added as defendants. The Dean Witter
Parties believe that they have strong defenses to, and they will
vigorously contest, the actions. Although the ultimate outcome of
legal proceedings cannot be predicted with certainty, it is the
opinion of management of the Dean Witter Parties that the
resolution of the actions will not have a material adverse effect
on the financial condition or the results of operations of any of
the Dean Witter Parties.
<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 and 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 contracts and other commodity
interests. As redemptions are at the discretion of Limited
Partners, it is not possible to estimate the amount and therefore,
the impact of future redemptions.
Results of Operations
For the Quarter and Nine Months Ended September 30, 1996
For the quarter ended September 30, 1996, the Partnership's total
trading revenues including interest income were $2,970,721. During
the third quarter, the Partnership posted an increase in Net Asset
Value per Unit. The most significant trading gains were recorded
in the energy markets from long positions in crude, heating and gas
oil futures as prices in these markets trended higher throughout
the quarter. Additional gains were recorded in the financial
futures markets from long Australian, European and Japanese bond
<PAGE>
futures positions as global interest rate futures prices moved
steadily higher between July and September. Gains were also
recorded in metals as a downward move in gold and aluminum futures
prices during September resulted in gains for the Partnership's
short positions. A portion of the overall gains for the quarter
was offset by losses experienced in the currency, soft commodities
and agricultural markets. In the currency markets, losses were
recorded during August from short Australian dollar positions as
the Australian dollar value reversed higher relative to the U.S.
dollar and other world currencies, and from long Swiss franc
positions as its value decreased during late August. Additional
losses were recorded in the agricultural markets as soybean and
corn futures prices moved in an inconsistent pattern during a
majority of the quarter. In soft commodities, losses were recorded
as a result of trendless movement in coffee, cotton and sugar
prices throughout most of the quarter. Total expenses for the
quarter were $2,690,834, resulting in net income of $279,887. The
value of an individual Unit in the Partnership increased from
$11.88 at June 30, 1996 to $11.89 at September 30, 1996.
For the nine months ended September 30, 1996, the Partnership's
total trading revenues including interest income were $9,841,013.
During the first nine months of the year, the Partnership posted a
loss in Net Asset Value per Unit. The most significant gains were
recorded in the energy markets from long crude oil futures
positions as prices trended higher during a majority of the second
and third quarters. In the currency markets, gains were recorded
from short Japanese yen positions as the value of the yen moved
<PAGE>
lower relative to the U.S. dollar. Additional currency gains were
recorded from short Swiss franc and German mark positions as the
value of these currencies moved lower relative to the U.S. dollar
and other world currencies during January and April. Gains were
also recorded in the metals markets during June and September from
short gold futures positions as prices moved lower. In financial
futures trading, gains experienced during the third quarter from a
steady upward move in global interest rate futures prices more than
offset losses recorded during the first half of the year, as well
as losses experienced from global stock index futures trading
throughout the first nine months of the year. A portion of the
Partnership's overall gains was offset by losses in soft
commodities as a result of choppy price movement in coffee and
cotton futures during a majority of the first nine months of the
year. Total expenses for the period were $7,156,342, resulting in
net income of $2,684,671. The value of an individual Unit in the
Partnership increased from $11.50 at December 31, 1995 to $11.89 at
September 30, 1996.
For the Quarter and Nine Months Ended September 30, 1995
For the quarter ended September 30, 1995, the Partnership's total
trading losses net of interest income were $1,336,330. During the
third quarter, the Partnership posted a decrease loss in Net Asset
Value per Unit. The most significant losses resulted from trading
in global interest rate, metals and energy futures, as trendless
price movement prevailed across a majority of the markets in each
of these sectors for much of the third quarter. Smaller losses
were recorded in soft commodities and agricultural futures trading
<PAGE>
as a result of price break-outs followed by choppy and short-term
volatile movement. Trading profits in the currency markets,
primarily as a result of a declining trend in the value of the
Japanese yen relative to the U.S. dollar, helped to offset a
portion of losses in other sectors. Total expenses for the period
were $1,313,150, resulting in a net loss of $2,649,480. The value
of an individual Unit in the Partnership decreased from $11.47 at
June 30, 1995 to $10.75 at September 30, 1995.
For the nine months ended September 30, 1995, the Partnership's
total trading revenues including interest income were $3,996,292.
During the first nine months of the year, the Partnership posted an
increase in Net Asset Value per Unit. The most significant profits
for this period resulted from trading in global interest rate
futures, as prices in U.S. and Japanese bond futures contracts
trended higher in the first half of 1995. In currency trading,
trending movement in the value of the Japanese yen throughout the
first nine months of the year and in major European currencies in
the year's first quarter resulted in Partnership gains. Additional
profits were recorded from trading in global stock index futures as
U.S. stock prices trended higher. Losses across a majority of
traditional commodities, including metals, energies and soft
commodities, resulting from trendless price movement for much of
1995, offset a portion of the profits in other sectors. Total
expenses for the period were $3,393,218, resulting in net income of
$603,074. The value of an individual Unit in the Partnership
increased from $9.78 at December 31, 1994 to $10.75 at September
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 Technical L.P.
(Registrant)
By: Demeter Management Corporation
(General Partner)
November 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 Technical L.P. and is qualified in its entirety by
reference to such financial instruments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 81,984,299
<SECURITIES> 0
<RECEIVABLES> 857,683<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 92,367,647<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 92,367,647<F3>
<SALES> 0
<TOTAL-REVENUES> 9,841,013<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,156,342
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,684,671
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,684,671
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,684,671
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include subscription receivable of $573,939 and interest
receivable of $283,744.
<F2>In addition to cash and receivables, total assets include net unrealized
gain on open contracts of $9,159,685 and net option premiums of $365,980.
<F3>Liabilities include redemptions payable of $776,244, accrued brokerage
commissions of $592,747 and accrued management fees of $287,392.
<F4>Total revenues includes realized trading revenue of $2,546,653, net
change in unrealized of $5,073,137 and interest income of $2,221,223.
</FN>
</TABLE>
