Item 1. BUSINESS
(a) General Development of Business. Dean Witter Global
Perspective Portfolio L.P. (the "Partnership") is a Delaware
limited partnership formed to engage in the speculative
trading of commodity futures contracts and other commodity
interests, including, but not limited to, forward contracts
on foreign currencies and options on futures contracts and
physical commodities.
Units of limited partnership interest in the
Partnership were registered pursuant to a Registration
Statement on Form S-1 (File No. 33-42360) which became
effective on December 31, 1991. The offering of units was
underwritten on a "best efforts" basis by Dean Witter
Reynolds Inc. ("DWR"). The Partnership's general partner is
Demeter Management Corporation ("Demeter"). Both DWR and
Demeter are wholly-owned subsidiaries of Morgan Stanley,
Dean Witter, Discover & Co. ("MSDWD").
Through July 31, 1997, the sole commodity broker for
the Partnership's transactions was DWR. On July 31, 1997,
DWR closed the sale of its institutional futures business
and foreign currency trading operations to Carr Futures,
Inc. ("Carr"), a subsidiary of Credit Agricole Indosuez.
Following the sale, Carr became the clearing commodity
broker for the Partnership's futures and futures options
trades and the counterparty on the Partnership's foreign
currency
trades. DWR serves as the non-clearing commodity broker for
the Partnerships with Carr providing all clearing services
for the Partnerships' transactions.
The Partnership commenced operations on March 1, 1992.
The Partnership's net asset value per unit, as of December
31, 1997, was $967.23, representing an increase of 11.16
percent from the net asset value per unit of $870.11 at
December 31, 1996. For a more detailed description of the
Partnership's business see subparagraph (c).
(b) Financial Information about Industry Segments. The
Partnership's business comprises only one segment for
financial reporting purposes, speculative trading of
commodity futures contracts and other commodity interests.
The relevant financial information is presented in Items 6
and 8.
(c) Narrative Description of Business. The Partnership
is in the business of speculative trading in commodity
futures contracts and other commodity interests, pursuant to
trading instructions provided by ELM Financial, Inc., EMC
Capital Management, Inc., and Millburn Ridgefield
Corporation, its independent trading advisors (the "Trading
Advisors"). For a detailed description of the different
facets of the Partnership's business, see those portions of
the Partnership's Prospectus, dated December 31, 1991,
filed as part of the Registration Statement on Form S-1 (see
"Documents Incorporated by Reference" Page 1), set forth on
the next page.
Facets of Business
1. Summary 1. "Summary of the Prospectus" (Pages 1-6).
2. Commodity Markets 2. "The Commodities Markets" (Pages 66-72).
3. Partnership's Commodity 3. "Trading Policies" (Page Trading Arrangements and 61). "The Trading Policies Managers" (Pages 32-61).
4. Management of the Part- 4. "The Management Agreement" nership (Pages 63-66). "The General Partner" (Pages 28-30) "The Commodity Broker" (Pages 61-63),and "The Limited Partner- ship Agreement" (Pages 75-78).
5. Taxation of the Partner- 5. "Federal Income Tax ship's Limited Partners Aspects" and "State and Local Income Tax Aspects" (Pages 81-89).
(d) Financial Information About Foreign and Domestic Operations and Export Sales.
The Partnership has not engaged in any operations in
foreign countries; however, the Partnership (through the
commodity brokers) enters into forward contract transactions
where foreign banks are the contracting party, and trades in
futures interests on foreign exchanges.
Item 2.
Item 2. PROPERTIES The executive and administrative offices are located
within the offices of DWR. The DWR offices utilized by the
Partnership are located at Two World Trade Center, 62nd
Floor, New York, NY 10048.
Item 3.
Item 3. 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. ("DWFCM"), MSDWD (all such parties referred
to hereafter as the "Dean Witter Parties"), certain other
limited partnership commodity pools of which Demeter is the
general partner, and certain trading advisors to those
pools. On June 16, 1997, the plaintiffs in the above
actions filed a consolidated amended complaint, alleging,
among other things, that the defendants committed fraud,
deceit, negligent misrepresentation, various violations of
the California Corporations Code, intentional and negligent
breach of fiduciary duty, fraudulent and unfair business
practices, unjust enrichment, and conversion in the sale and
operation of the various limited partnerships commodity
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 on behalf of all purchasers of interests in various
limited partnership commodity pools, including the
Partnership sold by DWR. A consolidated and amended
complaint in the action pending in the Supreme
Court of the State of New York was filed on August 13, 1997,
alleging that the defendants committed fraud, breach of
fiduciary duty, and negligent misrepresentation in the sale
and operation of the various limited partnership commodity
pools. On December 16, 1997, upon motion of the plaintiffs,
the action pending in the Superior Court of the State of
Delaware was voluntarily dismissed without prejudice. 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.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5.
Item 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND RELATED SECURITY HOLDER MATTERS
There is no established public trading market for the
Units of Limited Partnership Interest in the Partnership.
The number of holders of Units at December 31, 1997 was
approximately 2,638. No distributions have been made by the
Partnership since it commenced trading operations on March
1, 1992. Demeter has sole discretion to decide what
distributions, if any, shall be made to investors in the
Partnership. No determination has yet been made as to
future distributions.
Item 7.
Item 7. 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 Carr,
the commodity brokers, and are used by the Partnership as margin
to engage in commodity futures, forward contracts and other
commodity interest trading. DWR and Carr hold such assets in
either designated depositories or in securities approved by the
Commodity Futures Trading Commission ("CFTC") for investment of
customer funds. The Partnership's assets held by DWR and Carr
may be used as margin solely for the Partnership's trading.
Since the Partnership's sole purpose is to trade in commodity
futures contracts 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 a 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.
Market Risk. The Partnership trades futures, options and
forward contracts in interest rates, stock indices, commodities
and currencies. In entering into these contracts there exists a
risk to the Partnership (market risk) that such contracts may be
significantly influenced by market conditions, such as interest
rate volatility, resulting in such contracts being less valuable.
If the markets should move against all of the futures interest
positions held by the Partnership at the same time, and if the
Trading Advisors were unable to offset futures interest positions
of the Partnership, the Partnership could lose all of its assets
and the Limited Partners would realize a 100% loss. The
Partnership has established Trading Policies, which include
standards for liquidity and leverage which help control market
risk. Both the Trading Advisors and Demeter monitor the
Partnership's trading activities on a daily basis to ensure
compliance with the Trading Policies. Demeter may
(under terms of the Management Agreements) override the trading
instructions of a Trading Advisor to the extent necessary to
comply with the Partnership's
Trading Policies.
Credit Risk. In addition to market risk, in entering into
futures, options and forward contracts there is a credit risk to
the Partnership that the counterparty on a contract will not be
able to meet its obligations to the
Partnership. The ultimate counterparty of the Partnership for
futures contracts traded in the United States and most foreign
exchanges on which the Partnership trades is the clearinghouse
associated with such exchange. In general, a clearinghouse is
backed by the membership of the exchange and will act in the
event of non-performance by one of its members or one of its
member's customers, and, as such, should significantly reduce
this credit risk. For example, a clearinghouse may cover a
default by (i) drawing upon a defaulting member's mandatory
contributions and/or non-defaulting members' contributions to a
clearinghouse guarantee fund, established lines or letters of
credit with banks, and/or the clearinghouse's surplus capital and
other available assets of the exchange and clearinghouse, or (ii)
assessing its members. In cases where the Partnership trades on
a foreign exchange where the clearinghouse is not funded or
guaranteed by the membership or where the exchange is a
"principals' market" in which performance is the responsibility
of the exchange member and not the exchange or a clearinghouse,
or when the Partnership enters into off-exchange contracts with a
counterparty, the sole recourse of the Partnership will be the
clearinghouse, the exchange member or the off-exchange contract
counterparty, as the case may be.
There can be no assurance that a clearinghouse, exchange or
other exchange member will meet its obligations to the
Partnership, and the
Partnership is not indemnified against a default by such parties
from Demeter or MSDWD or DWR. Further, the law is unclear as to
whether a commodity broker has any obligation to protect its
customers from loss in the event of an
exchange, clearinghouse or other exchange member default on
trades effected for the broker's customers; any such obligation
on the part of the broker appears even less clear where the
default occurs in a non-US jurisdiction.
Demeter deals with the credit risks of all partnership's for
which it serves as General Partner in several ways. First, it
monitors each partnership's credit exposure to each exchange on a
daily basis, calculating not only the amount of margin required
for it but also the amount of its unrealized gains at each
exchange, if any. The Commodity Brokers inform each partnership,
as with all their customers, of its net margin requirements for
all its existing open positions, but do not break that net figure
down, exchange by exchange. Demeter, however, has installed a
system which permits it to monitor each partnership's potential
margin liability, exchange by exchange. Demeter is then able to
monitor the individual partnership's potential net credit
exposure to each exchange by adding the unrealized trading gains
on that exchange, if any, to the partnership's margin liability
thereon.
Second, as discussed earlier, each partnership's trading
policies limit the amount of partnership Net Assets that can be
committed at any given time to futures contracts and require, in
addition, a certain minimum amount of diversification in the
partnership's trading, usually over several different
products. One of the aims of such trading policies has been to
reduce the credit exposure of any partnership to any single
exchange and, historically, such partnership exposure has
typically amounted to only a small percentage of
its total Net Assets. On those relatively few occasions where a
partnership's credit exposure has climbed above that level,
Demeter has dealt with the situations on a case by case basis,
carefully weighing whether the increased level of credit exposure
remained appropriate. Demeter expects to continue to deal with
such situations in a similar manner in the future.
Third, Demeter has secured, with respect to Carr acting as
the clearing broker for the partnerships, a guarantee by Credit
Agricole Indosuez, Carr's parent, of the payment of the "net
liquidating value" of the transactions (futures, options and
forward contracts) in each partnership's account. As of December
31, 1997, Credit Agricole Indosuez' total capital was over $3.25
billion and it is currently rated AA2 by Moody's. With respect
to forward contract trading, the partnerships trade with only
those counterparties which Demeter, together with DWR, have
determined to be creditworthy. At the date of this filing, the
partnerships deal only with Carr as their counterparty on forward
contracts. The guarantee by Carr's parent, discussed above,
covers these forward contracts.
See "Financial Instruments" under Notes to Financial
Statements in the Partnership's 1997 Annual Report to Partners,
incorporated by reference in this Form 10-K.
Capital Resources. The Partnership does not have, nor does
it expect to have, any capital assets. Redemptions of additional
Units of Limited Partnership Interest in the future will affect
the amount of funds available
for investments in subsequent periods. 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. As of December 31, 1997, the
Partnership's total capital was $20,968,795, a decrease of
$674,210 from the Partnership's total capital of $21,643,005, at
December 31, 1996. For the year ended December 31, 1997, the
Partnership generated net income of $2,420,203 and total
redemptions aggregated $3,094,413.
For the year ended December 31, 1997, the Partnership's
total trading revenues, including interest income, were
$4,917,569. The Partnership's total expenses for the year were
$2,497,366, resulting in net income of $2,420,203. The value of
an individual unit in the Partnership increased from $870.11 at
December 31, 1996 to $967.23 at December 31, 1997.
As of December 31, 1996, the Partnership's total capital was
$21,643,005, a decrease of $2,701,511 from the Partnership's
total capital of $24,344,516 at December 31, 1995. For the year
ended December 31, 1996, the Partnership generated net income of
$1,766,076 and total redemptions aggregated $4,467,587.
For the year ended December 31, 1996, the Partnership's
total trading revenues, including interest income, were
$4,375,881. The Partnership's total
expenses for the year were $2,609,805, resulting in net income of
$1,766,076. The value of an individual unit in the Partnership
increased from $796.35 at December 31, 1995 to $870.11 at
December 31, 1996.
As of December 31, 1995, the Partnership's total capital was
$24,344,516,
a decrease of $4,291,994 from the Partnership's total capital of
$28,636,510 at December 31, 1994. For the year ended December
31, 1995, the Partnership generated net income of $4,586,655 and
total redemptions aggregated $8,878,649.
For the year ended December 31, 1995, the Partnership's
total trading revenues, including interest income, were
$7,723,714. The Partnership's total expenses for the year were
$3,137,059, resulting in net income of $4,586,655. The value of
an individual unit in the Partnership increased from $682.05 at
December 31, 1994 to $796.35 at December 31, 1995.
The Partnership's overall performance record represents
varied results of trading in different commodity markets. For a
further description of trading results, refer to the letter to
the Limited Partners in the accompanying 1997 Annual Report to
Partners, incorporated by reference in this Form 10-K. The
Partnership's gains and losses are allocated among its Limited
Partners for income tax purposes.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item appears in the
attached 1997 Annual Report to Partners and is incorporated by
reference in this Annual Report on Form 10-K.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10.
Item 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE REGISTRANT
General Partner
Demeter, a Delaware corporation, was formed on August 18,
1977 to act as a commodity pool operator and is registered with
the CFTC as a commodity pool operator and currently is a member
of the National Futures Association ("NFA") in such capacity.
Demeter is wholly-owned by MSDWD and is an affiliate of DWR.
MSDWD, DWR and Demeter may each be deemed to be "promoters"
and/or a "parent" of the Partnership within the meaning of the
federal securities laws.
On July 21, 1997, MSDWD, the sole shareholder of Demeter,
appointed a new Board of Directors consisting of Richard M.
DeMartini, Mark J. Hawley, Lawrence Volpe, Joseph G. Siniscalchi,
Edward C. Oelsner III, and Robert E. Murray.
Dean Witter Reynolds Inc.
DWR is a financial services company which provides to its
individual, corporate and institutional clients services as a
broker in securities and commodity interest contracts, a dealer
in corporate, municipal and government securities, an investment
adviser and an agent in the sale of life insurance and various
other products and services. DWR is a member firm of the New
York Stock Exchange, the American Stock Exchange, the Chicago
Board Options Exchange, and other major securities exchanges.
DWR is registered with the CFTC as a futures commission
merchant and is a
member of the NFA in such capacity. As of December 31, 1997, DWR
is servicing its clients through a network of 401 branch offices
with approximately 10,155 account executives servicing individual
and institutional client accounts.
Directors and Officers of the General Partner
The directors and officers of Demeter as of December 31,
1997 are as follows:
Richard M. DeMartini, age 45, is the Chairman of the Board
and a Director of Demeter. Mr. DeMartini is also Chairman of the
Board and a Director of Dean Witter Futures & Currency Management
Inc. ("DWFCM"). Mr. DeMartini is president and chief operating
officer of MSDWD's Individual Asset Management Group. He was
named to this position in May of 1997 and is responsible for Dean
Witter InterCapital, Van Kampen American Capital, insurance
services, managed futures, unit trust, investment consulting
services, Dean Witter Realty, and NOVUS Financial Corporation.
Mr. DeMartini is a member of the MSDWD management committee, a
director of the InterCapital funds, a trustee of the TCW/DW funds
and a trustee of the Van Kampen American Capital and Morgan
Stanley retail funds. Mr. DeMartini has been with Dean Witter
his entire career, joining the firm in 1975 as an account
executive. He served as a branch manager, regional director and
national sales director, before being appointed president and
chief operating officer of the Dean Witter Consumer Markets. In
1988 he was named president and chief operating officer of Sears'
Consumer Banking Division and in January 1989 he became president
and chief operating officer of Dean Witter Capital. Mr.
DeMartini
has served as chairman of the board of the Nasdaq Stock Market,
Inc. and vice chairman of the board of the National Association
of Securities Dealers, Inc. A native of San Francisco, Mr.
DeMartini holds a bachelor's degree in marketing from San Diego
State University.
Mark J. Hawley, age 54, is President and a Director of
Demeter. Mr. Hawley is also President and a Director of DWFCM.
Mr. Hawley joined DWR in February 1989 as Senior Vice President
and is currently the Executive Vice President and Director of
DWR's Managed Futures Department. From 1978 to 1989, Mr. Hawley
was a member of the senior management team at Heinold Asset
Management, Inc., a CPO, and was responsible for a variety of
projects in public futures funds. From 1972 to 1978, Mr. Hawley
was a Vice President in charge of institutional block trading for
the Mid-West at Kuhn Loeb & Company.
Lawrence Volpe, age 50, is a Director of Demeter and DWFCM.
Mr. Volpe joined DWR as a Senior Vice President and Controller in
September 1983, and currently holds those positions. From July
1979 to September 1983, he was associated with E.F. Hutton &
Company Inc. and prior to his departure, held the positions of
First Vice President and Assistant controller. From 1970 to July
1979, he was associated with Arthur Anderson & Co. and prior to
his departure served as audit manager in the financial services
division.
Joseph G. Siniscalchi, age 52, is a Director of Demeter.
Mr. Siniscalchi joined DWR in July 1984 as a First Vice
President, Director of General Accounting and served as a Senior
Vice President and Controller for DWR's Securities division
through 1997. He is currently Executive Vice
President and Director of the Operations Division of DWR. From
February 1980 to July 1984, Mr. Siniscalchi was Director of
Internal Audit at Lehman Brothers Kuhn Loeb, Inc.
Edward C. Oelsner, III, age 55, is a Director of Demeter.
Mr. Oelsner is currently an Executive Vice President and head of
the Product Development Group at Dean Witter InterCapital Inc.,
an affiliate of DWR. Mr. Oelsner joined DWR in 1981 as a Managing
Director in DWR's Investment Banking Department specializing in
coverage of regulated industries and, subsequently, served as
head of the DWR Retail Products Group. Prior to joining DWR, Mr.
Oelsner held positions at The First Boston Corporation as a
member of the Research and Investment Banking Departments from
1967 to 1981. Mr. Oelsner received his M.B.A. in Finance from
the Columbia University Graduate School of Business in 1966 and
an A.B. in Politics from Princeton University in 1964.
Robert E. Murray, age 37, is a Director of Demeter. Mr.
Murray is also a Director of DWFCM. Mr. Murray is currently a
Senior Vice President of DWR's Managed Futures Department and is
the Senior Administrative Officer of DWFCM. Mr. Murray began his
career at DWR in 1984 and is currently the Director of Product
Development for the Managed Futures Department. He is
responsible for the development and maintenance of the
proprietary Fund Management System utilized by DWFCM and Demeter
in organizing information and producing reports for monitoring
clients' accounts. Mr. Murray currently serves as a Director of
the Managed Funds Association. Mr. Murray graduated from Geneseo
State
University in May 1983 with a B.A. degree in Finance.
Patti L. Behnke, age 37, is Vice President and Chief Financial
Officer of Demeter. Ms. Behnke joined DWR in April 1991 as Assistant
Vice President of Financial Reporting and is currently a First Vice
President and Director of Financial Reporting and Managed Futures
Accounting in the Individual Asset Management Group. Prior to joining
DWR, Ms. Behnke held positions of increasing responsibility at L.F.
Rothschild & Co. and Carteret Savings Bank. Ms. Behnke began her
career at Arthur Anderson & Co., where she was employed in the audit
division from 1982-1986. She is a member of the AICPA and the New
York State Society of Certified Public Accountants.
Item 11.
Item 11. EXECUTIVE COMPENSATION
The Partnership has no directors and executive officers. As a
limited partnership, the business of the Partnership is managed by
Demeter which is responsible for the administration of the business
affairs of the Partnership but receives no compensation for such
services.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners - As of
December 31, 1997, there were no persons known to be beneficial owners
of more than 5 percent of the Units of Limited Partnership Interest in
the Partnership.
(b) Security Ownership of Management - At December 31, 1997,
Demeter owned 715.962 Units of General Partnership Interest
representing a 3.30 percent interest in the Partnership.
(c) Changes in Control - None
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Refer to Note 2 - "Related Party Transactions" of "Notes to Financial Statements", in
the accompanying 1997 Annual Report to Partners, incorporated by reference in this
Form 10-K. In its capacity as the Partnership's retail commodity broker, DWR
received commodity brokerage commissions (paid and accrued by the Partnership) of
$1,509,723 for the period ended December 31, 1997.
PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) 1. Listing of Financial Statements
The following financial statements and report of independent
accountants, all
appearing in the accompanying 1997 Annual Report to Partners, are
incorporated by reference in this Form 10-K:
- Report of Deloitte & Touche LLP, independent auditors, for the years ended December 31, 1997, 1996 and 1995.
- Statements of Financial Condition as of December 31, 1997 and 1996.
- Statements of Operations, Changes in Partners' Capital, and Cash Flows for the years ended December 31, 1997, 1996 and 1995.
- Notes to Financial Statements.
With the exception of the aforementioned information and the
information incorporated in Items 7, 8 and 13, the 1997 Annual Report
to Partners is not deemed to be filed with this report.
2. Listing of Financial Statement Schedules
No financial statement schedules are required to be filed with
this report.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Partnership during
the last quarter of the period covered by this report.
(c) Exhibits
Refer to Exhibit Index on Page E-1.
SIGNATURES
Pursuant to the requirement of Sections 13 or 15(d) 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 GLOBAL PERSPECTIVE PORTFOLIO FUND
(Registrant)
BY: Demeter Management Corporation, General Partner
March 24, 1998 BY: /s/ Mark J. Hawley Mark J. Hawley, Director and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Demeter Management Corporation.
BY: /s/ Mark J. Hawley March 24, Mark J. Hawley, Director and President
/s/ Richard M. DeMartini March 24, Richard M. DeMartini, Director and Chairman of the Board
/s/ Lawrence Volpe March 24, Lawrence Volpe, Director
/s/ Joseph G. Siniscalchi March 24, Joseph G. Siniscalchi, Director
/s/ Edward C. Oelsner III March 24, Edward C. Oelsner III, Director
/s/ Robert E. Murray March 24, Robert E. Murray, Director
/s/ Patti L. Behnke March 24, Patti L. Behnke, Chief Financial Officer and Principal Accounting Officer
EXHIBIT INDEX ITEM METHOD OF FILING -3. Limited Partnership Agreement of the Partnership, dated as of November 7, 1991. (1)
- -10. Management Agreements among the Partnership, Demeter and A.O. Management, (2) Inc., Chang Crowell and Millburn each dated as of December 31, 1991.
- -10. Customer Agreement Between the Partnership and DWR dated as of December 31, 1991. (3)
- -10. Management Agreement among the Partnership, Demeter Management Corporation and ELM Financial (6) Incorporated dated as of May 1, 1994.
- -10. Management Agreement among the Partnership, Demeter Management Corporation and EMC Capital (7) Managements, Inc. dated as of June 1, 1994.
- -13. December 31, 1997 Annual Report to Limited Partners. (4)
- -21. Supplement (dated April 27, 1992) to the Prospectus. (5)
(1) Incorporated by reference to Exhibit 3.01 and Exhibit 3.02 of the Partnership's Registration Statement on Form S-1.
(2) Incorporated by reference to Exhibit 10.02 of the Partnership's Registration Statement on Form S-1.
(3) Incorporated by reference to Exhibit 10.01 of the Partnership's Registration Statement on Form S-1.
(4) Filed herewith.
(5) Incorporated by reference to the Partnership's Registration Statement on Form S-1, Post Effective Amendment Number 1.
(6) Incorporated by reference to Exhibit 10.03 of the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 1994.
(7) Incorporated by reference to Exhibit 10.04 of the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 1994.
Global Perspective Portfolio
December 31, 1997 Annual Report
[LOGO] DEAN WITTER
DEAN WITTER Two World Trade Center 62nd Floor New York, NY 10048 Telephone (212) 392-8899
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P. ANNUAL REPORT
Dear Limited Partner:
This marks the sixth annual report for the Global Perspective Portfolio L.P. (the "Fund"). The Fund began the year trading at a Net Asset Value per Unit of $870.11 and finished 1997 at a Net Asset Value per Unit of $967.23, a net gain of 11.1%. The Fund has decreased by 3.3% since its inception of trading in March 1992 ( a compound annualized return of -.6%).
The Fund posted gains during January due primarily to a decline in value of most major world currencies relative to the U.S. dollar. Additional gains were recorded from short gold futures positions as gold prices, which had moved lower late in 1996, continued to decline. Additional gains were recorded by the Fund during February as the value of the U.S. dollar continued to strengthen relative to most world currencies. Smaller gains were recorded from short positions in the energy markets as oil and gas prices moved lower. Performance during March resulted in a portion of previous months' profits being given back as many of the markets that produced gains in January and February experienced trend reversals and choppy price movement. The most significant losses were recorded in the energy markets as oil and gas prices reversed higher early in the month. Smaller losses were recorded in the currency markets as the value of most European currencies reversed higher versus the U.S. dollar.
Losses were experienced during April as the difficult trading environment that began in March continued. The most significant losses were recorded in the financial futures
markets as international bond prices moved in a trendless pattern and domestic bond prices rallied higher late in the month after showing signs of trending lower previously. The Fund posted profits during May from long Australian bond futures positions as prices in this market trended higher. Smaller gains were recorded from short Japanese bond futures positions. Trading gains were also recorded from long global stock index futures positions as global equity prices trended higher. During June, gains were recorded from long global bond futures positions as prices trended higher. Smaller gains were recorded in the agricultural markets from short positions as soybean, corn and wheat futures prices decreased.
During July, the Fund posted significant profits from long positions in global interest rate futures as U.S., Australian, European and Japanese interest rate futures prices trended higher. Additional gains were recorded from short European currency positions as the U.S. dollar again strengthened. A sharp trend reversal in global interest rate futures prices during August resulted in a give-back of a portion of July's profits. Additional losses were recorded in the currency markets as the value of most European currencies increased relative to the U.S. dollar after moving lower previously. The Fund recorded relatively flat performance during September as gains in global financial futures offset losses in a majority of the other markets traded.
A sharp trend reversal in international interest rate futures prices during October resulted in a give-back of a portion of September's profits. Additional losses were recorded as a result of short-term volatility in domestic bond and stock index futures throughout a majority of the month. Trading gains recorded in the agricultural markets offset a small portion of these losses. During November, small losses were recorded as gains in currencies from short Japanese yen positions and in metals from short gold
futures positions were offset by losses in financial futures from trading Japanese bond futures. The Fund posted profits during December primarily from short oil and gas futures positions as prices in these markets moved lower on news of OPEC's decision to raise production supplies. Gains were also recorded in the metals markets.
Overall, the Fund recorded net profits primarily as a result of sustained price trends in the currency markets throughout much of the year. The Fund also recorded profits from long global interest rate futures positions during July. Additionally, the Fund's diversification over a variety of market complexes allowed the Fund to record smaller trading gains in traditional commodities, particularly in the energy and metals markets, late in the year.
Should you have any questions concerning this report, please feel free to contact Demeter Management Corporation at Two World Trade Center, 62nd Floor, New York, NY 10048, or your Dean Witter Account Executive.
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/ Mark J. Hawley
Mark J. Hawley President Demeter Management Corporation General Partner
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P. INDEPENDENT AUDITORS' REPORT
The Limited Partners and the General Partner:
We have audited the accompanying statements of financial condition of Dean Witter Global Perspective Portfolio L.P. (the "Partnership") as of December 31, 1997 and 1996 and the related statements of operations, changes in partners' capital, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the financial position of Dean Witter Global Perspective Portfolio L.P. as of December 31, 1997 and 1996 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997 in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche, LLP
February 17, 1998 New York, New York
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P. STATEMENTS OF FINANCIAL CONDITION
The accompanying notes are an integral part of these financial statements.
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P. STATEMENTS OF OPERATIONS
STATEMENT OF CHANGES IN PARTNERS' CAPITAL FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
The accompanying notes are an integral part of these financial statements.
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P. STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of these financial statements.
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P. NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION--Dean Witter Global Perspective Portfolio L.P. (the "Partnership") is a limited partnership organized to engage in the speculative trading of futures contracts, and forward contracts, and options on futures contracts and physical commodities, and other commodity interests. The general partner for the Partnership is Demeter Management Corporation ("Demeter"). Demeter is a wholly-owned subsidiary of Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD").
On May 31, 1997, Morgan Stanley Group Inc. was merged with and into Dean Witter, Discover & Co. ("DWD"). At the time DWD changed its corporate name to MSDWD.
Through February 28, 1997, Demeter retained Abacus Asset Management Inc. ("AAM"), ELM Financial, Inc. ("ELM"), EMC Capital Management, Inc. ("EMC"), and Millburn Ridgefield Corporation ("Millburn") as the trading advisors of the Partnership.
Effective March 1, 1997 AAM was removed as a trading advisor to the Partnership and assets previously managed by AAM were reallocated among the remaining trading advisors.
Through July 31, 1997, the sole commodity broker for the Partnership's transactions was Dean Witter Reynolds Inc. ("DWR") also a subsidiary of MSDWD. On July 31, 1997, DWR closed the sale of its institutional futures business and foreign currency trading operations to Carr Futures Inc. ("Carr"), a subsidiary of Credit Agricole Indosuez. Following the sale, Carr became the clearing commodity broker for the Partnership's futures and futures options trades and the counterparty on the Partnership's foreign currency trades. DWR will continue to serve as the non-clearing commodity broker for the Partnerships with Carr providing all clearing services for the Partnership's transactions.
Demeter is required to maintain a 1% minimum interest in the equity of the Partnership and income (losses) are shared by the General and Limited Partners based upon their proportional ownership interests.
BASIS OF ACCOUNTING--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the financial statements.
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P. NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
REVENUE RECOGNITION--Commodity futures contracts, commodity options and forward contracts on foreign currencies are open commitments until settlement date. They are valued at market and the resulting unrealized gains and losses are reflected in income. Monthly, DWR pays the Partnership interest income based upon 80% of the average daily Net Assets for the month at a rate equal to the average yield on 13-week U.S. Treasury Bills issued during such month.
For purposes of such interest payments, Net Assets do not include monies due the Partnership on forward contracts and other commodity interests, but not actually received.
NET INCOME (LOSS) PER UNIT--Net income (loss) per Unit is computed using the weighted average number of units outstanding during the period.
EQUITY IN COMMODITY FUTURES TRADING ACCOUNTS--The Partnership's asset "Equity in Commodity futures trading accounts" consists of cash on deposit at DWR and Carr to be used as margin for trading and the net asset or liability related to unrealized gains or losses on open contracts. The asset or liability related to the unrealized gains or losses on forward contracts is presented as a net amount in each period due to master netting agreements.
BROKERAGE COMMISSIONS AND RELATED TRANSACTION FEES AND COSTS--The Partnership accrues brokerage commissions on a half-turn basis at 80% of DWR's published non-member rates. Transaction fees and costs are accrued on a half-turn basis.
Prior to September 1, 1996, brokerage commissions were capped at 3/4 of 1% per month of the Net Assets allocated to each trading advisor as defined in the Limited Partnership Agreement.
Effective September 1, 1996, brokerage commissions and transaction fees chargeable to the Partnership have been capped at 13/20 of 1% per month of the Partnership's month-end Net Assets as defined in the Limited Partnership Agreement.
OPERATING EXPENSES--The Partnership bears all operating expenses related to its trading activities, to a maximum of 1/4 of 1% annually of the Partnership's average month-end Net Assets. These include filing fees, clerical, administrative, auditing, accounting, mailing, printing, and other incidental operating expenses as permitted by the Limited Partnership
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P. NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Agreement. In addition, the Partnership incurs a monthly management fee and may incur an incentive fee. Demeter bears all other operating expenses.
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 any month upon five business days advance notice by redemption form to Demeter.
DISTRIBUTIONS--Distributions, other than on redemptions of Units, are made on a pro-rata basis at the sole discretion of Demeter. No distributions have been made to date.
INCOME TAXES--No provision for income taxes has been made in the accompanying financial statements, as partners are individually responsible for reporting income or loss based upon their respective share of the Partnership's revenues and expenses for income tax purposes.
DISSOLUTION OF THE PARTNERSHIP--The Partnership will terminate on December 31, 2025 or at an earlier date if certain conditions set forth in the Limited Partnership Agreement occur.
2. RELATED PARTY TRANSACTIONS
The Partnership's cash is on deposit with DWR and Carr in commodity trading accounts to meet margin requirements as needed. DWR pays interest on these funds as described in Note 1. Under its Customer Agreement with DWR, the Partnership pays DWR brokerage commissions as described in Note 1.
3. TRADING ADVISORS
Compensation to ELM, EMC and Millburn consists of a management fee and an incentive fee as follows:
MANAGEMENT FEE--The Partnership pays a monthly management fee equal to 1/4 of 1% per month of the Partnership's adjusted Net Assets, as defined in the Limited Partnership Agreement, as of the last day of each month.
INCENTIVE FEE--The Partnership will pay a quarterly incentive fee to each trading advisor equal to 17.5% of the trading advisor's "Trading Profits", as defined in the Limited Partnership Agreement, experienced by the Net Assets allocated to such trading advisor as of the end of each calendar quarter. If a trading advisor
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P. NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
has experienced "Trading Losses" with respect to its allocated Net Assets at the time of any supplemental closing, the trading advisor must earn back such losses plus a pro rata amount related to the funds allocated to the trading advisor at such supplemental closing before the trading advisor is eligible for an incentive fee. Such incentive fee is accrued in each month in which "Trading Profits" occur. In those months in which "Trading Profits" are negative, previous accruals, if any, during the incentive period will be reduced. In those instances in which a Limited Partner redeems an investment, the incentive fee (if earned through a redemption date) is to be paid to such advisor on those redemptions in the month of such redemptions.
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 December 31, 1997 and 1996, open contracts were:
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.
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P. NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The unrealized gains on open contracts are reported as a component of "Equity in Commodity futures trading accounts" on the Statements of Financial Condition and totaled $1,204,698 and $1,076,373 at December 31, 1997 and 1996, respectively.
Of the $1,204,698 net unrealized gain on open contracts at December 31, 1997, $1,259,832 related to exchange-traded futures contracts and $(55,134) related to off-exchange-traded forward currency contracts.
Of the $1,076,373 net unrealized gain on open contracts at December 31, 1996, $1,046,658 related to exchange- traded futures contracts and $29,715 related to off-exchange-traded forward currency contracts.
Exchange-traded futures contracts held by the Partnership at December 31, 1997 and 1996 mature through December 1998 and June 1998, respectively.Off-exchange- traded forward currency contracts held by the Partnership at December 31, 1997 and 1996 mature through March 1998 and January 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.
The Partnership also has credit risk because either DWR or Carr acts as the futures commission merchant or the 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 and Carr, as the futures commission merchants for all of the Partnership's exchange-traded futures and options contracts, are required pursuant to regulations of the Commodity Futures Trading Commission to segregate from their own assets, and for the sole benefit of their commodity customers, all funds held by them with respect to exchange-traded futures and option contracts including an amount equal to the net unrealized gain on all open futures contracts, which funds totaled $20,945,026 and $21,838,132 at December 31, 1997 and 1996, respectively. With respect to the Partnership's off-exchange-traded forward currency and option contracts, there are no daily settlements of variations
Dean Witter Global Perspective Portfolio L.P. NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
in value nor is there any requirement that an amount equal to the net unrealized gain on open forward and option contracts be segregated. With respect to those off-exchange-traded forward currency contracts, the Partnership is at risk to the ability of Carr, the sole counterparty on all of such contracts, to perform. Carr's parent, Credit Agricole Indosuez, has guaranteed Carr's obligations to the Partnership.
For the years ended December 31, 1997 and 1996, the average fair value of financial instruments held for trading purposes was as follows:
5. LEGAL MATTERS
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., MSDWD (all such parties referred to hereafter as the "Dean Witter Parties"), certain other limited partnership commodity pools of which Demeter is the general partner, and certain trading advisors to those pools. On June 16, 1997, the plaintiffs in the above actions filed a consolidated amended complaint alleging, among other things, that the defendants committed fraud, deceit, negligent misrepresentation,
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P. NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)
various violations of the California Corporations Code, intentional and negligent breach of fiduciary duty, fraudulent and unfair business practices, unjust enrichment, and conversion in the sale and operation of the various limited partnerships commodity 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 on behalf of all purchasers of interest, in various limited partnership commodity pools, sold by DWR. A consolidated and amended complaint in the action pending in the Supreme Court of the State of New York was filed on August 13, 1997, alleging that the defendants committed fraud, breach of fiduciary duty, and negligent misrepresentation in the sale and operation of the various limited partnership commodity pools. On December 16, 1997, upon motion of the plaintiffs, the action pending in the Superior Court of the State of Delaware was voluntarily dismissed without prejudice. 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.
DEAN WITTER REYNOLDS INC. Two World Trade Center 62nd Floor New York, NY 10048 FIRST-CLASS MAIL ZIP + 4 PRESORT U.S. POSTAGE PAID BROOKLYN, NY PERMIT NO. 148