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 March 31, 1997 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. 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
March 31, 1997
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition March 31, 1997
(Unaudited) and December 31, 1996........................2
Statements of Operations for the Quarters Ended
March 31, 1997 and 1996 (Unaudited)......................3
Statements of Changes in Partners' Capital for the
Quarters Ended March 31, 1997 and 1996 (Unaudited).......4
Statements of Cash Flows for the Quarters Ended
March 31, 1997 and 1996 (Unaudited)......................5
Notes to Financial Statements (Unaudited)..........6-11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... ..12-16
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.................................17-18
Item 6. Exhibits and Reports on Form 8-K.....................19
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
March 31, December 31,
1997 1996
$ $
(Unaudited)
ASSETS
<S> <C> <C>
Equity in Commodity futures trading accounts:
Cash 123,942,552 106,460,248
Net unrealized gain on open contracts 4,434,851 2,533,889
Net option premiums 33,744 328,955
Total Trading Equity 128,411,147 109,323,092
Subscriptions receivable 10,532,184 5,117,123
Interest receivable (DWR) 431,837 381,841
Total Assets 139,375,168 144,822,056
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accrued brokerage commissions (DWR) 892,671 776,253
Redemptions payable 468,464 683,809
Accrued management fees 432,810 376,365
Total Liabilities 1,793,945 1,836,427
Partners' Capital
Limited Partners (9,713,045.996 and
8,216,910.942 Units, respectively) 136,096,059 111,852,280
General Partner (105,994.711 and
83,258.292 Units respectively) 1,485,164 1,133,349
Total Partners' Capital 137,581,223 112,985,629
Total Liabilities and Partners' Capital 139,375,168 114,822,056
NET ASSET VALUE PER UNIT 14.01 13.61
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 March 31,
1997 1996
$ $
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized 4,018,527 1,441,709
Net change in unrealized 1,900,962 (568,369)
Total Trading Results 5,919,489 873,340
Interest Income (DWR) 1,189,432 617,547
Total Revenues 7,108,921 1,490,887
EXPENSES
Brokerage commissions (DWR) 2,505,005 1,397,737
Management fees 1,214,548 638,965
Incentive fees 230,786 12,659
Total Expenses 3,950,339 2,049,361
NET INCOME (LOSS) 3,158,582 (558,474)
NET INCOME (LOSS) ALLOCATION
Limited Partners 3,126,767 (553,148)
General Partner 31,815 (5,326)
NET INCOME (LOSS) PER UNIT
Limited Partners .40 (.08)
General Partner .40 (.08)
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 Quarters Ended March 31, 1997 and 1996
(Unaudited)
<CAPTION>
Units of
Partnership Limited General
Interest Partners Partner Total
<S> <C> <C> <C> <C>
Partners' Capital
December 31, 1995 5,157,457.408 $58,726,495 $599,884 $59,326,379
Continuous Offering 1,086,476.234 12,433,034 115,000 12,548,034
Net Loss - (553,148) (5,326) (558,474)
Redemptions (69,216.116) (800,851) - (800,851)
Partners' Capital
March 31, 1996 6,174,717.526 $69,805,530 $709,558 $70,515,088
Partners' Capital
December 31, 1996 8,300,169.234 $111,852,280 $1,133,349 $112,985,629
Continuous Offering 1,660,884.134 23,125,940 320,000 23,445,940
Net Income - 3,126,767 31,815 3,158,582
Redemptions (142,012.661) (2,008,928) - (2,008,928)
Partners' Capital
March 31, 1997 9,819,040.707 $136,096,059 $1,485,164 $137,581,223
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 Quarters Ended March 31,
1997 1996
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) 3,158,582 (558,474)
Noncash item included in net income (loss):
Net change in unrealized (1,900,962) 568,369
(Increase) decrease in operating assets:
Net option premiums 295,211 -
Interest receivable (DWR) (49,996) (22,379)
Increase in operating liabilities:
Accrued brokerage commissions (DWR) 116,418 97,508
Accrued management fees 56,445 44,575
Net cash provided by operating activities 1,675,698 129,599
CASH FLOWS FROM FINANCING ACTIVITIES
Continuous offering 23,445,940 12,548,034
Increase in subscriptions receivable (5,415,061) (433,270)
Increase (decrease) in redemptions payable (215,345) 237,478
Redemptions of units (2,008,928) (800,851)
Net cash provided by financing activities 15,806,606 11,551,391
Net increase in cash 17,482,304 11,680,990
Balance at beginning of period 106,460,248 52,705,410
Balance at end of period 123,942,552 64,386,400
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, 1996 Annual Report on Form 10K.
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 future
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 ("Demeter"), has retained Campbell &
Company, Inc., Chesapeake Capital Corporation and John W. Henry &
Company, Inc. ("JWH") as the trading advisors of the Partnership.
Both Demeter and DWR are wholly owned subsidiaries of Dean
Witter, Discover & Co. ("DWD").
<PAGE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
3. Financial Instruments
The Partnership trades futures, forward contracts 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 March
31, 1997 and December 31, 1996 open contracts were:
<PAGE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Contract or Notional Amount
March 31, 1997 December 31, 1996
$ $
Exchange-Traded Contracts
Financial Futures:
Commitments to Purchase 25,100,000 113,494,000
Commitments to Sell 401,686,000 88,136,000
Options Written - 4,505,000
Commodity Futures:
Commitments to Purchase 72,985,000 21,658,000
Commitments to Sell 26,307,000 51,283,000
Foreign Futures:
Commitments to Purchase 67,857,000 112,745,000
Commitments to Sell 133,701,000 81,929,000
Off-Exchange-Traded
Forward Currency Contracts
Commitments to Purchase 28,354,000 40,864,000
Commitments to Sell 26,186,000 24,397,000
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 $4,434,851 and
$2,533,889 at March 31, 1997 and December 31, 1996, respectively.
Of the
<PAGE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
$4,434,851 net unrealized gain on open contracts at March 31,
1997, $4,600,101 was related to exchange-traded futures contracts
and $(165,250) related to off-exchange-traded forward currency
contracts. Of the $2,533,889 net unrealized gain on open
contracts at December 31, 1996, $2,802,603 related to exchange-
traded futures contracts and $(268,714) related to off-exchange-
traded forward currency contracts.
Exchange-traded futures contracts held by the Partnership at
March 31, 1997 and December 31, 1996, mature through March 1998
and December 1997, respectively. Off-exchange-traded forward
currency contracts held by the Partnership at March 31, 1997 and
December 31, 1996, mature through June 1997, and March 1997,
respectively. 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 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 funds totaled $128,542,653 and
$109,262,851 at March 31, 1997 and December 31, 1996,
respectively. 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
<PAGE>
DEAN WITTER SPECTRUM TECHNICAL L.P.
NOTES TO FINANCIAL STATEMENTS - (CONCLUDED)
the ability of DWR, the counterparty on all such contracts, to
perform.
For the quarter ended March 31, 1997 and the year ended December
31, 1996, the average fair value of financial instruments held
for trading purposes was as follows:
March 31, 1997
Assets Liabilities
$ $
Exchange-Traded Contracts:
Financial Futures 75,465,000 209,044,000
Options on Financial Futures 7,201,000 1,126,000
Commodity Futures 47,688,000 37,827,000
Options on Commodity Futures 3,296,000 -
Foreign Futures 170,096,000 66,518,000
Options on Foreign Futures 7,329,000 -
Off-Exchange-Traded Forward
Currency Contracts 32,433,000 32,103,000
December 31, 1996
Assets Liabilities
$ $
Exchange-Traded Contracts:
Financial Futures 131,914,000 117,625,000
Options on Financial Futures 5,437,000 375,000
Commodity Futures 40,606,000 45,449,000
Options on Commodity Futures 5,157,000 -
Foreign Futures 144,435,000 60,257,000
Options on Foreign Futures 7,143,000 -
Off-Exchange-Traded Forward
Currency Contracts 35,572,000 39,498,000
<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 trading commodity futures and
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 contracts,
forward contracts and other commodity interests may be illiquid.
If the price for 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.
There is no limitation on daily price moves in trading forward
contracts on foreign currencies. 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.
<PAGE>
Results of Operations
For the Quarter Ended March 31, 1997
For the quarter ended March 31, 1997, the Partnership's total
trading revenues including interest income were $7,108,921.
During the first quarter, the Partnership posted an increase in
Net Asset Value per Unit. The most significant gains were
recorded in the currency markets during January and February.
These gains were recorded from short positions in the German mark
and Swiss franc as the value of the U.S. dollar strengthened
versus these currencies. Additional trading gains were recorded
from short gold futures positions as prices moved lower during
January. Gains were also recorded from long coffee futures
positions, as prices trended higher and from short positions in
gas and oil futures, as prices trended lower in February.
Smaller gains were recorded from long positions in agricultural
futures as prices trended higher during February and March. In
financial futures trading, gains recorded during January in
global stock index futures more than offset losses experienced as
a result of short-term volatile price movement in global interest
rate futures during February and March. A portion of the overall
Fund gains was offset by losses recorded in March from short
positions in the Swiss franc and the German mark as the value of
these currencies
<PAGE>
increased versus the U.S. dollar, after trending lower
previously. Losses were also recorded during March from short
positions in the energy markets as oil and gas prices reversed
higher, thus giving back a portion of February's profits. Total
expenses for the period were $3,950,339, generating net income of
$3,158,582. The value of an individual Unit in the Partnership
increased from $13.61 at December 31, 1996 to $14.01 at March 31,
1997.
For the Quarter Ended March 31, 1996
For the quarter ended March 31, 1996, the Partnership's total
trading revenues including interest income were $1,490,887.
During the third quarter, the Partnership posted a decrease in
Net Asset Value per Unit. The most significant losses were
recorded in the currency markets during February. These losses
were recorded as a result of a sharp and sudden reversal in the
downward move in the value of the Japanese yen and most European
currencies, which had proved profitable for the Partnership in
January. Trading gains recorded during March from transactions
involving the Australian dollar and Japanese yen offset a portion
of the overall losses experienced within this market sector
during
<PAGE>
February. Additional losses were recorded in the financial
futures markets as global interest rate futures prices reversed
during February resulting in a give back of January's gains
within this sector. In the energy markets, short-term volatile
movement in gas and oil prices resulted in losses for the
Partnership during January and February. However, a portion of
these losses was offset by gains in crude oil futures during
March. Smaller losses were recorded in the agricultural, soft
commodities and metals markets during the quarter. The most
significant losses were recorded in the currency markets during
February. These losses were recorded as a result of a sharp and
sudden reversal in the downward move in the value of the Japanese
yen and most European currencies, which proved profitable for the
Partnership in January. Trading gains recorded during March from
transactions involving the Australian dollar and Japanese yen
offset a portion of the overall losses experienced within this
market sector during February. Smaller losses were recorded in
the agricultural, soft commodities and metals markets during the
quarter. Total expenses for the period were $2,049,361,
resulting in a net loss of $558,474. The value of an individual
unit in the Partnership decreased from $11.50 at December 31,
1995 to $11.42 at March 31, 1996.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On September 6, 10, and 20, 1996, and on March 13, 1997, similar
purported class actions were filed in the Superior Court of the
State of California, County of Los Angeles, on behalf of all
purchasers of interests in limited partnership commodity pools
sold by DWR. Named defendants include DWR, Demeter, Dean Witter
Futures & Currency Management, Inc., DWD (all such parties
referred to hereafter as the "Dean Witter Parties"), certain
limited partnership commodity pools of which Demeter is the
general partner, and certain trading advisors (including JWH) to
those pools. Similar purported class actions were also filed on
September 18 and 20, 1996 in the Supreme Court of the State of
New York, New York County, and on November 14, 1996 in the
Superior Court of the State of Delaware, New Castle County,
against the Dean Witter Parties and certain trading advisors
(including JWH) on behalf of all purchasers of interests in
various limited partnership commodity pools sold by DWR.
Generally, these complaints allege, among other things, that the
defendants committed fraud, deceit, misrepresentation, breach of
fiduciary duty, fraudulent and unfair business practices, unjust
enrichment, and conversion in connection with the sale and
operation of the
<PAGE>
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 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)
May 14, 1997 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.
<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> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 123,942,552
<SECURITIES> 0
<RECEIVABLES> 10,964,021<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 139,375,168<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 139,375,168<F3>
<SALES> 0
<TOTAL-REVENUES> 7,108,921<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,950,339
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,158,582
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,158,582
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,158,582
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include subscription receivable of $10,532,184 and interest
receivable of $431,837.
<F2>In addition to cash and receivables, total assets include net unrealized
gain on open contracts of $4,434,851 and net option premiums of $33,744.
<F3>Liabilities include redemptions payable of $468,464, accrued brokerage
commissions of $892,671 and accrued management fees of $432,810.
<F4>Total revenue includes realized trading revenue of $4,018,527, net
change in unrealized of $1,900,962 and interest income of $1,189,432.
</FN>
</TABLE>
