THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the period ended June 30, 1995 or
[ ] Transition report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the transition period from ________________to_____________
Commission File Number 0-13299
DEAN WITTER CORNERSTONE FUND III
(Exact name of registrant as specified in its charter)
New York l3-3l909l9
(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 changes
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
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<TABLE>
DEAN WITTER CORNERSTONE FUND III
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 1995
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C>
Statements of Financial Condition
June 30, 1995 (Unaudited) and December 31, 1994............2
Statements of Operations for the Quarters Ended
June 30, 1995 and 1994 (Unaudited).........................3
Statements of Operations for the Six Months Ended
June 30, 1995 and 1994 (Unaudited).........................4
Statements of Cash Flows for the Six Months Ended
June 30, 1995 and 1994 (Unaudited).........................5
Statements of Changes in Partners' Capital for the
Six Months Ended June 30, 1995 and 1994 (Unaudited)........6
Notes to Financial Statements (Unaudited)............... 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............10-13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................... 14
</TABLE>
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<TABLE>
DEAN WITTER CORNERSTONE FUND III
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited)
ASSETS
<S> <C> <C>
Equity in commodity futures trading accounts:
Cash $ 46,714,692 $ 42,884,780
Net unrealized gain on open contracts 1,233,184 5,016,857
Total Trading Equity 47,947,876 47,901,637
Receivable from DWR 182,808 213,589
Interest receivable (DWR) 181,793 193,048
Total Assets $ 48,312,477 $ 48,308,274
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable $ 752,878 $ 666,178
Common administrative expenses payable 239,576 266,405
Accrued management fees 159,138 158,895
Accrued brokerage commissions (DWR) 145,360 200,604
Accrued transaction fees and costs 27,026 13,739
Total Liabilities 1,323,978 1,305,821
Partners' Capital
Limited Partners (20,667.594 and
23,505.598 Units, respectively) 46,135,544 46,250,611
General Partner (382.103 Units) 852,955 751,842
Total Partners' Capital 46,988,499 47,002,453
Total Liabilities and Partners' Capital $ 48,312,477 $ 48,308,274
NET ASSET VALUE PER UNIT $ 2,232.26 $ 1,967.64
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER CORNERSTONE FUND III
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Quarters Ended June 30,
1995 1994
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized $ 8,003,588 $ 4,023,819
Net change in unrealized (3,928,861) 299,050
Total Trading Results 4,074,727 4,322,869
Interest Income (DWR) 558,636 409,135
Total Revenues 4,633,363 4,732,004
EXPENSES
Brokerage commissions (DWR) 808,499 1,033,502
Management fees 481,671 513,468
Transaction fees and costs 168,113 108,636
Common administrative expenses - 31,737
Total Expenses 1,458,283 1,687,343
NET INCOME $ 3,175,080 $ 3,044,661
Limited Partners 3,120,117 2,996,037
General Partner 54,963 48,624
Net income (loss) per unit $ 143.84 $ 120.03
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER CORNERSTONE FUND III
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Six Months Ended June 30,
1995 1994
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized $ 11,836,860 $ (10,822)
Net change in unrealized (3,783,673) 373,314
Total Trading Results 8,053,187 362,492
Interest Income (DWR) 1,084,659 743,809
Total Revenues 9,137,846 1,106,301
EXPENSES
Brokerage commissions (DWR) 2,029,632 2,154,519
Management fees 933,853 1,022,785
Transaction fees and costs 283,803 207,595
Administrative expenses 21,158 58,949
Total Expenses 3,268,446 3,443,848
NET INCOME (LOSS) $ 5,869,400 $ (2,337,547)
Limited Partners 5,768,287 (2,302,535)
General Partner 101,113 (35,012)
Net income (loss) per unit $ 264.62 $ (86.42)
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER CORNERSTONE FUND III
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Six Months Ended June 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ 5,869,400 $ (2,337,547)
Noncash item included in net income (loss):
Net change in unrealized 3,783,673 (373,314)
(Increase) decrease in operating assets:
Receivable from DWR 30,781 (53,421)
Interest receivable (DWR) 11,255 (28,578)
Increase (decrease) in operating liabilities:
Common administrative expenses payable (26,829) 58,949
Accrued management fees 243 (10,867)
Accrued brokerage commissions (DWR) (55,244) (30,764)
Accrued transaction fees and costs 13,287 (2,656)
Net cash provided by (used for) operating activities 9,626,566 (2,778,198)
CASH FLOWS FROM FINANCING ACTIVITIES
Offering of units 40,000 3,771,245
Increase (decrease) in redemptions payable 86,700 (64,291)
Redemptions of units (5,923,354) (4,629,382)
Net cash used for financing activities (5,796,654) (922,428)
Net increase (decrease) in cash 3,829,912 (3,700,626)
Balance at beginning of period 42,884,780 50,843,284
Balance at end of period $46,714,692 $47,142,658
<FN>
The accompanying footnotes are an integral part
of these financial statements.
<PAGE>
</TABLE>
<TABLE>
DEAN WITTER CORNERSTONE FUND III
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
<CAPTION>
Units of
Partnership Limited General
Interest Partners Partner Total
<S> <C> <C> <C> <C>
Partners' Capital
December 31, 1993 25,673.805 $55,270,605 $ 886,088 $56,156,693
Continuous Offering 1,865.852 3,771,245 - 3,771,245
Net Loss - (2,302,535) (35,012) (2,337,547)
Redemptions (2,330.785) (4,581,062) (48,320) (4,629,382)
Partners' Capital
June 30, 1994 25,208.872 $52,158,253 $802,756 $52,961,009
Partners' Capital
December 31, 1994 23,887.701 $46,250,611 $ 751,842 $47,002,453
Continuous Offering 21.629 40,000 - 40,000
Net Income - 5,768,287 101,113 5,869,400
Redemptions (2,859.633) (5,923,354) - (5,923,354)
Partners' Capital
June 30, 1995 21,049.697 $46,135,544 $ 852,955 $46,988,499
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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DEAN WITTER CORNERSTONE FUND III
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, 1994 Annual Report on Form 10-K.
1. Organization
Dean Witter Cornerstone Fund III (the "Partnership") is a limited
partnership organized to engage in the speculative trading of
commodity futures contracts and forward contracts on foreign
currencies. The Partnership is one of the Dean Witter Cornerstone
Funds, comprised of Dean Witter Cornerstone Fund II, Dean Witter
Cornerstone Fund III, and Dean Witter Cornerstone Fund IV.
2. Summary of Significant Accounting Policies
Net Income (Loss) per Unit - Net income (loss) per unit was
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 Dean Witter Reynolds Inc. ("DWR") to be used as
margin for trading and the net asset or liability related to
unrealized gains on open contracts.
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DEAN WITTER CORNERSTONE III
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The asset or liability related to the unrealized gains or losses on
forward contracts is presented as a net amount because the
Partnership has a master netting agreement with DWR.
3. Trading Managers
The trading managers who make all trading decisions for the
Partnership are as follows:
Computerized Commodity Advisory, Inc.
Sunrise Commodities, Inc.
4. Related Party Transactions
Both Demeter Management Corporation (the "General Partner") and the
commodity broker DWR are wholly owned subsidiaries of Dean Witter,
Discover & Co. 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 current 13-week U.S.
Treasury Bill rates. Brokerage expenses incurred by the
Partnership are paid to DWR.
5. Off-Balance Sheet Risk
The Partnership trades futures 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
<PAGE>
DEAN WITTER CORNERSTONE III
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the contracts. There are numerous factors which may significantly
influence the market value of these contracts, including interest
rate volatility. At June 30, 1995, open contracts were:
Contract or
Notional Amount
Exchange Traded Contracts:
Financial Futures:
Commitments to Purchase $130,339,000
Commitments to Sell $ 16,248,000
Commodity Futures:
Commitments to Purchase $ 44,161,000
Commitments to Sell $ 14,886,000
Foreign Futures:
Commitments to Purchase $135,919,000
Commitments to Sell $ 22,837,000
The unrealized gains and losses on open contracts is reported as a
component of "Equity in Commodity Futures Trading Accounts" on the
Statement of Financial Condition and totaled $1,233,184 at June 30,
1995 and are related to exchange traded futures contracts.
Exchange Traded Futures Contracts held by the Partnership at June
30, 1995 mature through December 1995.
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 CORNERSTONE III
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
The Partnership also has credit risk because the sole counterparty,
with respect to most of the Partnership's assets, is DWR. Exchange
traded futures contracts are marked to market on a daily basis,
with variations in value credited or charged to the Fund's account
on a daily basis. DWR, as the futures commission merchant for all
of the Partnership's exchange traded futures 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 contracts including an amount equal to the net
unrealized gain on all open futures contracts. With respect to the
Partnership's off-exchange traded foreign currency forward
contracts, there are no daily settlements of variations in value.
<PAGE>
Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Liquidity The Partnership's assets are deposited in separate
commodity trading accounts with DWR and are used by the Partnership
as margin to engage in trading commodity futures contracts and
forward contracts on foreign currency. DWR holds such assets in
either bank accounts 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 and forward contracts on
foreign currency, it is expected that the Partnership will continue
to own such liquid assets for margin purposes.
The Partnership's investment in commodity futures 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 currency. The markets for some world
currencies have low trading volume and are illiquid, which may
prevent the Partnership from trading in 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 and exchanges of
Units in the future will impact the amount of funds available for
investments in commodity futures contracts and other commodity
interests.
Results of Operations
For the Quarter and Six Months Ended June 30, 1995
For the quarter ended June 30, 1995, the Partnership's total
trading revenues including interest income were $4,633,363. During
the second quarter, the Partnership posted a gain in Net Asset
Value per Unit. The most significant trading gains were recorded
in global interest rate futures during April and May. As bond
prices moved higher globally, the Partnership was able to take
advantage of the resulting trends and record trading gains from
U.S. Treasury bond and Treasury note futures, as well as from
Japanese government bond, Australian bond and European bond
futures. Smaller gains were experienced from trading Nikkei and
S&P 500 stock index futures. Gains in June from trading wheat and
coffee futures also contributed to the overall Partnership gains,
although losses in soybean products, livestock and cotton resulted
in net losses for the agricultural and soft commodities complexes.
April's losses in the agricultural and soft commodities markets,
were coupled with losses recorded in metals and energy futures.
These losses offset a portion of the Partnership's overall gains
for the quarter. Total expenses for the period were $1,458,283,
resulting in net income of $3,175,080. The value of an individual
Unit in the Partnership increased from $2,088.42 at March 31, 1995
to $2,232.26 at June 30, 1995.
For the six months ended June 30, 1995, the Partnership's total
trading revenues including interest income were $9,137,846. During
the first six months, the Partnership posted a gain in Net Asset
Value per Unit. The most significant trading gains were recorded
in global interest rate futures, as bond prices trended higher
between February and May. Gains in U.S., Japanese, Australian and
European interest rate futures resulted in strong gains for the
Partnership. Gains were recorded in currency trading, as the U.S.
dollar weakened versus the Japanese yen and a majority of the major
European currencies during February, March and April. Smaller
gains were also recorded throughout the first half in Nikkei and
S&P 500 stock index futures. Trading losses recorded in the
soybean products, aluminum, gold, cotton, pork bellies, crude oil
and heating oil offset a portion of the overall gains experienced
by the Partnership during the first half of the year. Total
expenses for the period were $3,268,446, resulting in net income of
$5,869,400. The value of an individual Unit in the Partnership
increased from $1,967.64 at December 31, 1994 to $2,232.26 at June
30, 1995.
For the Quarter and Six Months Ended June 30, 1994
For the quarter ended June 30, 1994, the Partnership's total
trading revenues including interest income were $4,732,004. During
the second quarter, the Partnership posted a gain in Net Asset
Value per Unit. The most significant trading gains were recorded
in the coffee markets throughout the quarter. Additional gains
were recorded in the energy markets from trading crude oil in May
and June. Smaller profits were recorded in the currency markets as
the U.S. dollar decreased in value versus most major European
currencies, specifically the Swiss franc and German mark, in June.
Losses in the agricultural, metals and financial markets from
trading in the soy group, silver and Japanese government bond
futures offset a portion of overall Fund gains for the second
fiscal quarter. Total expenses for the period were $1,687,343,
resulting in net income of $3,044,661. The value of an individual
Unit in the Partnership increased from $1,980.86 at March 31, 1994
to $2,100.89 at June 30, 1994.
For the six months ended June 30, 1994, the Partnership's total
trading revenues including interest income were $1,106,301. During
the first six months, the Partnership posted a net loss in Net
Asset Value per Unit. The most significant trading losses were
recorded in the currency markets during January as a result of
short-term volatility in the value of the Japanese yen and in
February as a result of transactions involving the U.S. dollar
versus major European currencies. Additional losses were recorded
in the financial markets from transactions involving the Japanese
government bond and the Nikkei stock index futures in January and
February. Trading losses were also recorded in the energy markets
from trading crude oil in January and March and in the agricultural
market from trading in the soy group markets for the majority of
the first six months of the year. Trading gains in the
international markets from coffee in April, May and June, crude oil
in May and June, and in the metals markets, specifically aluminum,
offset a portion of the Partnership's losses. Total expenses for
the period were $3,443,848, resulting in a net loss of $2,337,547.
The value of an individual Unit in the Partnership decreased from
$2,187.31 at December 31, 1993 to $2,100.89 at June 30, 1994.
<PAGE>
PART II. OTHER INFORMATION
Item 6. - EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits - None.
(B) Reports on Form 8-K - None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dean Witter Cornerstone Fund III
(Registrant)
By: Demeter Management Corporation
(General Partner)
August 11, 1995 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.
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> The schedule contains summary financial information
extracted from Dean Witter Cornerstone III and is qualified in its
entirety by reference to such financial instruments.
<CIK> 0000737000
<NAME> DEAN WITTER CORNERSTONE FUND III
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 46,714,692
<SECURITIES> 0
<RECEIVABLES> 364,601
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 48,312,477<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 48,312,477<F2>
<SALES> 0
<TOTAL-REVENUES> 9,137,846<F3>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,268,446
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,869,400
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,869,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,869,400
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net
unrealized gain on open contracts of $1,233.184.
<F2>Liabilities include redemptions payable of $752,878, accrued
management fees of $159,138, common administrative expenses payable
of $239,576, and accrued brokerage commissions of $145,360.
<F3>Total revenue includes realized trading revenue of $11,836,860,
net change in unrealized of ($3,783,673) and interest income of
$1,084,659.
</FN>
</TABLE>
