0000925306-01-500005.txt : 20011030
0000925306-01-500005.hdr.sgml : 20011030
ACCESSION NUMBER: 0000925306-01-500005
CONFORMED SUBMISSION TYPE: 424B3
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20011026
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: MORGAN STANLEY DEAN WITTER SPECTRUM SELECT LP
CENTRAL INDEX KEY: 0000873799
STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798]
IRS NUMBER: 133619290
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 424B3
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-01918
FILM NUMBER: 1767651
BUSINESS ADDRESS:
STREET 1: 1221 AVE. OF THE AMERICAS, 23RD FL.
CITY: NEW YORK
STATE: NY
ZIP: 10020
BUSINESS PHONE: 2123928899
FORMER COMPANY:
FORMER CONFORMED NAME: DEAN WITTER SPECTRUM SELECT LP
DATE OF NAME CHANGE: 19980507
FORMER COMPANY:
FORMER CONFORMED NAME: WITTER DEAN SELECT FUTURES FUND LP
DATE OF NAME CHANGE: 19930328
424B3
1
c22049.txt
SPECTRUM SELECT
-------------------
Presorted
First Class Mail
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PAID
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S. Hackensack, N.J.
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[MORGAN STANLEY LOGO]
c/o Morgan Stanley Trust Company,
Attention:Managed Futures, 7th Floor,
Harborside Financial Center Plaza Two
Jersey City, NJ 07311-3977
ADDRESS SERVICE REQUESTED
[RECYCLE LOGO] printed on recycled paper
----------------------------------
Morgan Stanley Dean Witter
Spectrum Series
----------------------------------
[GRAPHIC OMITTED]
September 2001
Monthly Report
This Monthly Report supplements
the Spectrum Funds' Prospectus
dated March 23, 2001.
[MORGAN STANLEY LOGO]
October 31, 2001
MORGAN STANLEY DEAN WITTER SPECTRUM SERIES
HISTORICAL FUND PERFORMANCE
Presented below is the percentage change in Net Asset Value per Unit from the
start of every calendar year each Fund has traded. Also provided is the
inception-to-date return and the annualized return since inception for each
Fund. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
FUNDS
-----
SPECTRUM COMMODITY YEAR RETURN
---- ------
1998 -34.3%
1999 15.8%
2000 3.2%
2001 (9 months) -24.8%
Inception-to-Date Return: -41.0%
Annualized Return: -13.1%
--------------------------------------------------------------------------------
SPECTRUM CURRENCY YEAR RETURN
---- ------
2000 (6 months) 11.7%
2001 (9 months) 0.1%
Inception-to-Date Return: 11.8%
Annualized Return: 9.3%
--------------------------------------------------------------------------------
SPECTRUM GLOBAL BALANCED
YEAR RETURN YEAR RETURN
---- ------ ---- ------
1994 (2 months) -1.7% 1998 16.4%
1995 22.8% 1999 0.7%
1996 -3.6% 2000 0.9%
1997 18.2% 2001 (9 months) -3.8%
Inception-to-Date Return: 56.4%
Annualized Return: 6.7%
--------------------------------------------------------------------------------
SPECTRUM SELECT
YEAR RETURN YEAR RETURN
---- ------ ---- ------
1991 (5 months) 31.2% 1996 5.3%
1992 -14.4% 1997 6.2%
1993 41.6% 1998 14.2%
1994 -5.1% 1999 -7.6%
1995 23.6% 2000 7.1%
2001 (9 months) 10.1%
Inception-to-Date Return: 159.5%
Annualized Return: 9.8%
--------------------------------------------------------------------------------
SPECTRUM STRATEGIC
YEAR RETURN YEAR RETURN
---- ------ ---- ------
1994 (2 months) 0.1% 1998 7.8%
1995 10.5% 1999 37.2%
1996 -3.5% 2000 -33.1%
1997 0.4% 2001 (9 months) -2.8%
Inception-to-Date Return: 3.1%
Annualized Return: 0.4%
--------------------------------------------------------------------------------
SPECTRUM TECHNICAL
YEAR RETURN YEAR RETURN
---- ------ ---- ------
1994 (2 months) -2.2% 1998 10.2%
1995 17.6% 1999 -7.5%
1996 18.3% 2000 7.8%
1997 7.5% 2001 (9 months) 1.9%
Inception-to-Date Return: 63.8%
Annualized Return: 7.4%
DEMETER MANAGEMENT CORPORATION
c/o Morgan Stanley Trust Company,
Attention: Managed Futures, 7th Floor,
Harborside Financial Center Plaza Two,
Jersey City, NJ 07311-3977
Telephone (201) 876-4647
MORGAN STANLEY DEAN WITTER SPECTRUM SERIES
MONTHLY REPORT
SEPTEMBER 2001
Dear Limited Partner:
The Net Asset Value per Unit for each of the six Morgan Stanley Dean Witter
Spectrum Funds as of September 30, 2001 was as follows:
FUNDS N.A.V. % CHANGE FOR MONTH
----- ------ ------------------
Spectrum Commodity $ 5.90 -5.17%
Spectrum Currency $11.18 0.97%
Spectrum Global Balanced $15.64 -1.22%
Spectrum Select $25.95 6.69%
Spectrum Strategic $10.31 3.81%
Spectrum Technical $16.38 8.24%
SPECTRUM COMMODITY
Spectrum Commodity, a long-only commodity fund, decreased in value during
September primarily due to losses recorded in the energy markets from long
natural gas futures positions as prices fell as a result of expectations for a
rise in supplies. In the agricultural markets, losses were experienced from long
positions in corn and wheat futures as prices moved lower. In the metals
markets, losses were incurred from long positions in copper and aluminum futures
as prices declined earlier in the month due to higher inventories and weak
demand. A portion of the Fund's overall losses was offset by gains recorded in
the soft commodities markets from long cocoa futures positions as prices moved
higher on expectations that global demand will outpace production.
SPECTRUM CURRENCY
Spectrum Currency increased in value during September primarily due to
gains recorded from previously established short positions in the South African
rand as its value trended lower relative to the U.S. dollar as investors
targeted the emerging market currency while global economic jitters persisted. A
portion of the Fund's overall gains was offset by losses recorded from
previously established long positions in the euro and Japanese yen as their
values reversed lower and the U.S. dollar strengthened amid newly released
optimistic economic data and the Bank of Japan's surprise interventions, which
boosted the U.S. dollar.
SPECTRUM GLOBAL BALANCED
Spectrum Global Balanced decreased in value during September primarily due
to losses recorded in the global stock index futures markets from long positions
in DAX, FTSE and S&P 500 Index
futures as equity prices continued their decline amid worries regarding global
economic uncertainty. In the energy markets, losses were incurred from
previously established long futures positions in crude oil and its refined
products as the trend in oil prices reversed sharply lower due to newly
heightened concerns over the effects of a global economic slowdown on oil
demand. A portion of the Fund's overall losses was offset by gains recorded in
the global interest rate futures markets from previously established long
positions in short-term U.S. and European interest rate futures as prices
continued trending higher following an interest rate cut by the U.S. Federal
Reserve and as investors sought a safe-haven from declining stock prices.
SPECTRUM SELECT
Spectrum Select increased in value during September primarily due to gains
recorded in the global stock index futures markets from previously established
short positions in DAX, Nikkei and S&P 500 Index futures as the trend in equity
prices continued sharply lower amid worries regarding global economic
uncertainty. In the global interest rate futures markets, profits were recorded
from previously established long positions in short-term U.S. and European
interest rate futures as prices continued trending higher following an interest
rate cut by the U.S. Federal Reserve and as investors sought a safe-haven from
declining stock prices. A portion of the Fund's overall gains was offset by
losses recorded later in the month in the currency markets from previously
established long positions in the Japanese yen as its value suddenly reversed
lower relative to the U.S. dollar following surprise interventions by the Bank
of Japan. In the energy markets, losses were experienced from previously
established long futures positions in crude oil and its refined products as the
trend in oil prices reversed lower due to near-term concerns over the effects of
a global economic slowdown on oil demand.
SPECTRUM STRATEGIC
Spectrum Strategic increased in value during September primarily due to
gains recorded in the global interest rate futures markets from long positions
in short-term U.S. and European interest rate futures as prices rose following
an interest rate cut by the U.S. Federal Reserve and as investors sought a
safe-haven from declining stock prices. In the soft commodities markets, profits
were recorded from long cocoa futures positions as prices moved higher on
expectations that global demand will outpace production. In the energy markets,
gains were recorded from short positions in crude oil futures as oil prices
reversed lower due to near-term concerns over the effects of a global economic
slowdown on oil demand. A portion of the Fund's overall gains was offset by
losses recorded later in the month in the currency markets from long positions
in the Japanese yen as its value weakened relative to the U.S. dollar following
interventions by the Bank of Japan.
SPECTRUM TECHNICAL
Spectrum Technical increased in value during September primarily due to
gains recorded in the global interest rate futures markets from previously
established long positions in short-term U.S. and European interest rate futures
as prices continued trending higher following an interest rate cut by the U.S.
Federal Reserve and as investors sought a safe-haven from declining stock
prices. In the global stock index futures markets, gains were recorded from
previously established short positions in DAX Index futures as the trend in
equity prices continued sharply lower amid worries regarding global economic
uncertainty. In the metals markets, profits were recorded from previously
established long positions in gold futures as prices continued moving higher,
boosted by falling equity prices and uncertainty linked to possible U.S.
military action. In the currency markets, gains were recorded from previously
established long positions in the Swiss franc as its value continued its
strengthening trend relative to the U.S. dollar due to the sharp decline in
stock prices and as investors sought refuge in this safe haven currency amid
fears of global economic and political turmoil. A portion of the Fund's overall
gains was offset by losses recorded in the energy markets from previously
established long futures positions in crude oil and its refined products as the
trend in oil prices reversed lower due to near-term concerns over the effects of
a global economic slowdown on oil demand.
Should you have any questions concerning this report, please feel free to
contact Demeter Management Corporation, c/o Morgan Stanley Trust Company,
Attention: Managed Futures, 7th Floor, Harborside Financial Center Plaza Two,
Jersey City, NJ 07311-3977 or your Morgan Stanley Financial Advisor.
I hereby affirm, that to the best of my knowledge and belief, the
information contained in this report is accurate and complete. Past performance
is not a guarantee of future results.
Sincerely,
/s/ Robert E. Murray
Robert E. Murray
Chairman
Demeter Management Corporation
General Partner
MORGAN STANLEY DEAN WITTER SPECTRUM SERIES
STATEMENTS OF OPERATIONS
FOR THE MONTH ENDED SEPTEMBER 30, 2001
(UNAUDITED)
MORGAN STANLEY DEAN WITTER MORGAN
STANLEY DEAN WITTER MORGAN STANLEY DEAN WITTER
SPECTRUM COMMODITY
SPECTRUM CURRENCY SPECTRUM GLOBAL BALANCED
-------------------------- --------
------------------ --------------------------
PERCENTAGE OF
PERCENTAGE OF PERCENTAGE OF
SEPTEMBER 1, 2001
SEPTEMBER 1, 2001 SEPTEMBER 1, 2001
BEGINNING
BEGINNING BEGINNING
AMOUNT NET ASSET VALUE AMOUNT
NET ASSET VALUE AMOUNT NET ASSET VALUE
-------------------------- --------
------------------ --------------------------
$ % $
% $ %
REVENUES
Trading profit (loss):
Realized (613,579) (4.28)
(677,093) (1.99) (2,721,641) (4.82)
Net change in unrealized (72,416) (.50) 1,126,734
3.30 2,161,962 3.83
-------- ----- -------
--- -------- -----
Total Trading Results (685,995) (4.78) 449,641
1.31 (559,679) (.99)
Interest income (Note 2) 30,051 .21 66,914
.20 145,303 .26
-------- ----- -------
--- -------- -----
Total Revenues (655,944) (4.57) 516,555
1.51 (414,376) (.73)
-------- ----- -------
--- -------- -----
EXPENSES
Brokerage fees (Note 2) 54,969 .38 130,695
.38 216,455 .38
Management fees (Notes 2 & 3) 29,874 .22 56,824
.16 58,820 .11
-------- ----- -------
--- -------- -----
Total Expenses 84,843 .60 187,519
.54 275,275 .49
-------- ----- -------
--- -------- -----
NET INCOME (LOSS) (740,787) (5.17) 329,036
.97 (689,651) (1.22)
======== ===== =======
=== ======== =====
MORGAN STANLEY DEAN WITTER SPECTRUM SERIES
STATEMENTS OF CHANGES IN NET ASSET VALUE
FOR THE MONTH ENDED SEPTEMBER 30, 2001
(UNAUDITED)
MORGAN STANLEY DEAN WITTER MORGAN
STANLEY DEAN WITTER MORGAN STANLEY DEAN WITTER
SPECTRUM COMMODITY SPECTRUM
CURRENCY SPECTRUM GLOBAL BALANCED
------------------------------- ----------------
--------------- -------------------------------
UNITS AMOUNT PER UNIT UNITS
AMOUNT PER UNIT UNITS AMOUNT PER UNIT
----- ------ -------- ----- ---
--- -------- ----- ------ --------
$ $
$ $ $ $
Net Asset Value,
September 1, 2001 2,306,298.372 14,339,685 6.22 3,077,880.983
34,094,303 11.08 3,566,482.976 56,466,948 15.83
Net Income (Loss) -- (740,787) (.32) --
329,036 .10 -- (689,651) (.19)
Redemptions (36,634.057) (216,141) 5.90 (8,844.111)
(98,877) 11.18 (27,245.536) (426,120) 15.64
Subscriptions 33,670.000 198,653 5.90 167,157.517
1,868,821 11.18 36,780.674 575,250 15.64
------------- ---------- ------------- ----
------ ------------- ----------
Net Asset Value,
September 30, 2001 2,303,334.315 13,581,410 5.90 3,236,194.389
36,193,283 11.18 3,576,018.114 55,926,427 15.64
============= ========== =============
========== ============= ==========
The accompanying notes are an integral part of these financial statements.
MORGAN STANLEY DEAN WITTER SPECTRUM SERIES
STATEMENTS OF OPERATIONS
FOR THE MONTH ENDED SEPTEMBER 30, 2001
(UNAUDITED)
MORGAN STANLEY DEAN WITTER MORGAN
STANLEY DEAN WITTER MORGAN STANLEY DEAN WITTER
SPECTRUM SELECT
SPECTRUM STRATEGIC SPECTRUM TECHNICAL
-------------------------- --------
------------------ --------------------------
PERCENTAGE OF
PERCENTAGE OF PERCENTAGE OF
SEPTEMBER 1, 2001
SEPTEMBER 1, 2001 SEPTEMBER 1, 2001
BEGINNING
BEGINNING BEGINNING
AMOUNT NET ASSET VALUE AMOUNT
NET ASSET VALUE AMOUNT NET ASSET VALUE
-------------------------- --------
------------------ --------------------------
$ % $
% $ %
REVENUES
Trading profit (loss):
Realized 8,913,773 3.77
1,406,223 2.07 19,011,111 7.41
Net change in unrealized 9,144,225 3.86
1,617,950 2.38 3,697,537 1.44
---------- ---- --------
- ---- ---------- ----
Total Trading Results 18,057,998 7.63
3,024,173 4.45 22,708,648 8.85
Interest income (Note 2) 518,978 .22
145,651 .21 569,492 .22
---------- ---- --------
- ---- ---------- ----
Total Revenues 18,576,976 7.85
3,169,824 4.66 23,278,140 9.07
---------- ---- --------
- ---- ---------- ----
EXPENSES
Brokerage fees (Note 2) 1,429,151 .60
410,271 .60 1,550,127 .60
Incentive fees (Note 3) 729,435 .31 -
- -- -- --
Management fees (Notes 2 & 3) 591,373 .25
169,767 .25 588,386 .23
---------- ---- --------
- ---- ---------- ----
Total Expenses 2,749,959 1.16
580,038 .85 2,138,513 .83
---------- ---- --------
- ---- ---------- ----
NET INCOME 15,827,017 6.69
2,589,786 3.81 21,139,627 8.24
========== ====
========= ==== ========== ====
MORGAN STANLEY DEAN WITTER SPECTRUM SERIES
STATEMENTS OF CHANGES IN NET ASSET VALUE
FOR THE MONTH ENDED SEPTEMBER 30, 2001
(UNAUDITED)
MORGAN STANLEY DEAN WITTER MORGAN STANLEY
DEAN WITTER MORGAN STANLEY DEAN WITTER
SPECTRUM SELECT SPECTRUM
STRATEGIC SPECTRUM TECHNICAL
------------------------------- -----------------
-------------- -------------------------------
UNITS AMOUNT PER UNIT UNITS
AMOUNT PER UNIT UNITS AMOUNT PER UNIT
----- ------ -------- ----- ----
-- -------- ----- ------ --------
$ $ $
$ $ $
Net Asset Value,
September 1, 2001 9,726,859.893 236,549,018 24.32 6,835,722.876
67,906,985 9.93 16,950,840.140 256,572,782 15.14
Net Income -- 15,827,017 1.63 --
2,589,786 .38 -- 21,139,627 1.24
Redemptions (65,699.853) (1,704,911) 25.95 (93,811.434)
(967,196) 10.31 (156,650.744) (2,565,939) 16.38
Subscriptions 93,466.610 2,425,459 25.95 31,601.649
325,813 10.31 151,294.821 2,478,209 16.38
------------- ----------- ------------- -----
----- -------------- -----------
Net Asset Value,
September 30, 2001 9,754,626.650 253,096,583 25.95 6,773,513.091
69,855,388 10.31 16,945,484.217 277,624,679 16.38
============= =========== =============
========== ============== ===========
The accompanying notes are an integral part of these financial statements.
MORGAN STANLEY DEAN WITTER SPECTRUM SERIES
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION--Morgan Stanley Dean Witter Spectrum Commodity L.P. ("Spectrum
Commodity"), Morgan Stanley Dean Witter Spectrum Currency L.P. ("Spectrum
Currency"), Morgan Stanley Dean Witter Spectrum Global Balanced L.P. ("Spectrum
Global Balanced"), Morgan Stanley Dean Witter Spectrum Select L.P. ("Spectrum
Select"), Morgan Stanley Dean Witter Spectrum Strategic L.P. ("Spectrum
Strategic") and Morgan Stanley Dean Witter Spectrum Technical L.P. ("Spectrum
Technical") (individually, a "Partnership" or collectively, the "Partnerships"),
are limited partnerships organized to engage primarily in the speculative
trading of futures, forward, and options contracts on physical commodities and
other commodity interests, including, but not limited to foreign currencies,
financial instruments, metals, energy and agricultural products (collectively,
"futures interests").
The general partner for each Partnership is Demeter Management Corporation
("Demeter"). The non-clearing commodity broker for the Partnerships is Morgan
Stanley DW Inc. ("Morgan Stanley DW"). The clearing commodity brokers for the
Partnerships are Morgan Stanley & Co. Incorporated ("MS & Co.") and Morgan
Stanley & Co. International Limited ("MSIL"). Morgan Stanley Dean Witter
Commodities Management, Inc. ("MSCM") is the trading advisor to Spectrum
Commodity. Demeter, Morgan Stanley DW, MS & Co., MSIL and MSCM are wholly-owned
subsidiaries of Morgan Stanley Dean Witter & Co.
Demeter is required to maintain a 1% minimum interest in the equity of each
Partnership and income (losses) are shared by Demeter and the Limited Partners
based upon their proportional ownership interests.
USE OF ESTIMATES--The financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, which
require management to make estimates and assumptions that affect the reported
amounts in the financial statements and related disclosures. Management believes
that the estimates utilized in the preparation of the financial statements are
prudent and reasonable. Actual results could differ from those estimates.
MORGAN STANLEY DEAN WITTER SPECTRUM SERIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
REVENUE RECOGNITION--Futures interests are open com-mitments until settlement
date. They are valued at market on a daily basis and the resulting net change in
unrealized gains and losses is reflected in the change in unrealized profits
(losses) on open contracts from one period to the next in the statements of
operations. Monthly, Morgan Stanley DW pays each Partnership interest income on
80% of its average daily "Net Assets" (as defined in the limited partnership
agreements) for the month in the case of Spectrum Commodity, Spectrum Currency,
Spectrum Select, Spectrum Strategic and Spectrum Technical, and on 100% in the
case of Spectrum Global Balanced. The inter- est rate is equal to a prevailing
rate on U.S. Treasury bills. For purposes of such interest payments, Net Assets
do not include monies due the Partnerships on futures interests, but not
actually received.
NET INCOME (LOSS) PER UNIT--Net income (loss) per unit of limited partnership
interest ("Unit(s)") is computed
using the weighted average number of Units outstanding during the period.
BROKERAGE AND RELATED TRANSACTION FEES AND COSTS--The brokerage fees for
Spectrum Commodity, Spectrum Currency and Spectrum Global Balanced are accrued
at a flat monthly rate of 1/12 of 4.6% (a 4.6% annual rate) of Net Assets as of
the first day of each month.
Brokerage fees for Spectrum Select, Spectrum Strategic and Spectrum Technical
are accrued at a flat monthly rate
of 1/12 of 7.25% (a 7.25% annual rate) of Net Assets as of the first day of each
month.
Such brokerage fees currently cover all brokerage commis-sions, transaction fees
and costs and ordinary administrative and continuing offering expenses.
OPERATING EXPENSES--The Partnerships incur monthly management fees and may incur
incentive fees. All common administrative and continuing offering expenses
including legal, auditing, accounting, filing fees and other related expenses
are borne by Morgan Stanley DW through the brokerage fees paid by each
Partnership.
INCOME TAXES--No provision for income taxes has been made in the accompanying
financial statements, as part- ners are individually responsible for reporting
income or
MORGAN STANLEY DEAN WITTER SPECTRUM SERIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
loss based upon their respective share of each Partnership's revenues and
expenses for income tax purposes.
DISTRIBUTIONS--Distributions, other than redemptions of Units, are made on a
pro-rata basis at the sole discretion of Demeter. No distributions have been
made to date.
CONTINUING OFFERING--Units of each Partnership are offered at a price equal to
100% of the Net Asset Value per Unit as of the close of business on the last day
of the month. No selling commissions or charges related to the continuing
offering of Units are paid by the Limited Partners or the Partnership. Morgan
Stanley DW pays all such costs.
REDEMPTIONS--Limited Partners may redeem some or all of their Units at 100% of
the Net Asset Value per Unit as of the end of the last day of any month that is
at least six months after the closing at which a person first becomes a Limited
Partner, upon five business days advance notice by redemption form to Demeter.
Thereafter, Units redeemed on or prior to the last day of the twelfth month
after such Units were purchased will be subject to a redemption charge equal to
2% of the Net Asset Value of a Unit on the date of such redemption. Units
redeemed after the last day of the twelfth month and on or prior to the last day
of the twenty-fourth month after which such Units were purchased will be subject
to a redemption charge equal to 1% of the Net Asset Value of a Unit on the date
of such redemption. Units redeemed after the last day of the twenty-fourth month
after which such Units were purchased will not be subject to a redemption
charge. The foregoing redemption charges will be paid to Morgan Stanley DW.
Redemptions must be made in whole Units, in a minimum amount of 50 Units, unless
a Limited Partner is redeeming his entire interest in a Partnership.
EXCHANGES--On the last day of the first month which occurs more than six months
after a person first becomes a Limited Partner in any of the Partnerships, and
at the end of each month thereafter, Limited Partners may exchange their
investment among the Partnerships (subject to certain restrictions outlined in
the Limited Partnership Agreement) without paying additional charges.
DISSOLUTION OF THE PARTNERSHIPS--Spectrum Commodity will terminate on December
31, 2027. Spectrum Currency, Spectrum Global Balanced, Spectrum Strategic and
Spectrum Technical will terminate on December 31, 2035
MORGAN STANLEY DEAN WITTER SPECTRUM SERIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
and Spectrum Select will terminate on December 31, 2025 regardless of financial
condition at such time, or at an earlier date if certain conditions occur as
defined in each Partnership's Limited Partnership Agreement.
2. RELATED PARTY TRANSACTIONS
The Partnerships pay brokerage fees to Morgan Stanley DW as described in Note 1.
Spectrum Commodity pays manage-ment fees and incentive fees (if applicable) to
MSCM. Each Partnership's cash is on deposit with Morgan Stanley DW, MS & Co. and
MSIL in futures interests trading accounts to meet margin requirements as
needed. Morgan Stanley DW pays interest on these funds as described in Note 1.
3. TRADING ADVISORS
Demeter, on behalf of each Partnership, retains certain commodity trading
advisors to make all trading decisions for the Partnerships. The trading
advisors for each Partnership are as follows:
Morgan Stanley Dean Witter Spectrum Commodity L.P.
Morgan Stanley Dean Witter Commodities
Management Inc.
Morgan Stanley Dean Witter Spectrum Currency L.P.
John W. Henry & Company, Inc. ("JWH")
Sunrise Capital Partners, LLC
Morgan Stanley Dean Witter Spectrum Global Balanced L.P.
RXR, Inc.
Morgan Stanley Dean Witter Spectrum Select L.P.
EMC Capital Management, Inc.
Rabar Market Research, Inc.
Sunrise Capital Management Inc.
Northfield Trading L.P.
Morgan Stanley Dean Witter Spectrum Strategic L.P.
Allied Irish Capital Management, Ltd.
Blenheim Capital Management, L.L.C.
(formerly known as Blenheim Investments, Inc.)
Eclipse Capital Management Inc.
Morgan Stanley Dean Witter Spectrum Technical L.P.
Campbell & Company, Inc. ("Campbell")
Chesapeake Capital Corporation ("Chesapeake")
John W. Henry & Company, Inc.
MORGAN STANLEY DEAN WITTER SPECTRUM SERIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Compensation to the trading advisors by the Partnerships consists of a
management fee and an incentive fee as follows:
MANAGEMENT FEE--The management fee for Spectrum Commodity is accrued at a rate
of 5/24 of 1% of Net Assets on the first day of each month (a 2.5% annual rate).
The management fee for Spectrum Currency is accrued at a rate of 1/12 of 2% of
Net Assets on the first day of each month (a 2% annual rate).
The management fee for Spectrum Global Balanced is accrued at a rate of 5/48 of
1% of Net Assets on the first day of each month (a 1.25% annual rate).
The management fee for Spectrum Select is accrued at a rate of 1/4 of 1% of Net
Assets on the first day of each month (a 3% annual rate).
The management fee for Spectrum Strategic is accrued at a rate of 1/12 of 3% per
month of Net Assets on the first day of each month (a 3% annual rate).
The management fee for Spectrum Technical is accrued at a rate of 1/12 of 2% of
Net Assets allocated to JWH on the first day of each month, 1/12 of 3% of Net
Assets allocated to Campbell on the first day of each month, and 1/12 of 4% of
Net Assets allocated to Chesapeake on the first day of each month (annual rates
of 2%, 3% and 4% respectively).
INCENTIVE FEE--Spectrum Commodity pays an annual incentive fee equal to 17.5% of
Partnership's trading profits, as determined from the end of the last period in
which an incentive fee was earned.
Spectrum Currency pays a monthly incentive fee equal to 20% of the trading
profits experienced with respect to each trading advisor's allocated Net Assets
as of the end of each month.
Spectrum Global Balanced, Spectrum Select and Spectrum Strategic each pay a
monthly incentive fee equal to 15% of the trading profits experienced with
respect to each trading advisor's allocated Net Assets as of the end of each
calendar month.
MORGAN STANLEY DEAN WITTER SPECTRUM SERIES
NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)
Spectrum Technical pays a monthly incentive fee equal to 20% of the trading
profits experienced with respect to the Net Assets allocated to Campbell and JWH
and 19% of the trading profits experienced with respect to the Net Assets
allocated to Chesapeake as of the end of each cal-endar month.
Trading profits for the Partnerships represent the amount by which profits from
futures, forwards and options trad- ing exceed losses after brokerage and
management fees are deducted.
For all Partnerships, when trading losses are incurred, no incentive fees will
be paid in subsequent months until all such losses are recovered. Cumulative
trading losses are adjusted on a pro-rata basis for the net amount of each
month's subscriptions and redemptions.