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 l3 or l5 (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 _________________to______________.
Commission File Number 0-15442
DEAN WITTER CORNERSTONE FUND IV
(Exact name of registrant as specified in its charter)
New York 13-3393597
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
c/o Demeter Management Corp.
Two World Trade Center, New York, NY 62 Fl. 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 392-5454
(Former name, former address, and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
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<TABLE>
DEAN WITTER CORNERSTONE FUND IV
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)...............7-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...............11-15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K....................16
</TABLE>
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<TABLE>
DEAN WITTER CORNERSTONE FUND IV
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited)
ASSETS
<S> <C> <C>
Equity in commodity futures trading accounts:
Cash $117,418,370 $111,508,180
Net unrealized gain on open contracts 636,257 268,291
Total Trading Equity 118,054,627 111,776,471
Interest receivable (DWR) 408,226 434,153
Total Assets $118,462,853 $112,210,624
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable $ 1,593,631 $ 1,589,622
Accrued management fees 392,534 371,606
Common administrative expenses payable 302,544 357,130
Accrued brokerage commissions (DWR) 7,200 -
Accrued transaction fees and costs 360 -
Total Liabilities 2,296,269 2,318,358
Partners' Capital
Limited Partners (41,071.733 and
46,994.002 Units, respectively) 114,387,240 108,418,306
General Partner (638.889 Units) 1,779,344 1,473,960
Total Partners' Capital 116,166,584 109,892,266
Total Liabilities and Partners' Capital $118,462,853 $112,210,624
NET ASSET VALUE PER UNIT $ 2,785.06 $ 2,307.07
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER CORNERSTONE FUND IV
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Quarters Ended June 30,
1995 1994
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized $ 13,459,422 $(7,161,011)
Net change in unrealized (16,823,526) 8,369,530
Total Trading Results (3,364,104) 1,208,519
Interest Income (DWR) 1,249,614 975,757
Total Revenues (2,114,490) 2,184,276
EXPENSES
Management fees 1,222,016 1,261,301
Brokerage commissions (DWR) 466,867 1,351,253
Transaction fees and costs 25,634 80,701
Common administrative expenses - 59,835
Incentive fees - 7,659
Total Expenses 1,714,517 2,760,749
NET LOSS $ (3,829,007) $ (576,473)
Limited Partners (3,770,994) (568,869)
General Partner (58,013) (7,604)
Net loss per unit $ (90.80) $ (11.90)
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER CORNERSTONE FUND IV
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Six Months Ended June 30,
1995 1994
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized $ 23,221,027 $ (9,993,830)
Net change in unrealized 367,966 8,631,093
Total Trading Results 23,588,993 (1,362,737)
Interest Income (DWR) 2,494,527 1,793,136
Total Revenues 26,083,520 430,399
EXPENSES
Management fees 2,348,957 2,549,871
Brokerage commissions (DWR) 1,761,793 2,863,223
Transaction fees and costs 106,358 191,836
Common administrative expenses 39,890 108,963
Incentive fees - 7,659
Total Expenses 4,256,998 5,721,552
NET INCOME (LOSS) $ 21,826,522 $ (5,291,153)
Limited Partners 21,521,138 (5,222,283)
General Partner 305,384 (68,870)
Net income (loss) per unit $ 477.99 $ (107.79)
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER CORNERSTONE FUND IV
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) $ 21,826,522 $ (5,291,153)
Noncash item included in net income (loss):
Net change in unrealized (367,966) (8,631,093)
(Increase) decrease in operating assets:
Interest receivable (DWR) 25,927 (85,829)
Increase (decrease) in operating liabilities:
Accrued management fees 20,928 21,187
Common administrative expenses payable (54,586) 108,964
Accrued brokerage commissions (DWR) 7,200 -
Accrued transaction fees and costs 360 -
Net cash provided by (used for) operating activities 21,458,385 (13,877,924)
CASH FLOWS FROM FINANCING ACTIVITIES
Offering of units 172,049 16,614,060
Increase in redemptions payable 4,009 358,745
Redemptions of units (15,724,253) (7,630,662)
Net cash provided by (used for) financing activities (15,548,195) 9,342,143
Net increase (decrease) in cash 5,910,190 (4,535,781)
Balance at beginning of period 111,508,180 124,788,050
Balance at end of period $117,418,370 $120,252,269
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER CORNERSTONE FUND IV
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 46,526.304 $123,481,403 $1,719,227 $125,200,630
Continuous Offering 6,360.951 16,614,060 - 16,614,060
Net Loss - (5,222,283) (68,870) (5,291,153)
Redemptions (2,990.021) (7,630,662) - (7,630,662)
Partners' Capital
June 30, 1994 49,897.234 $127,242,518 $1,650,357 $128,892,875
Partners' Capital
December 31, 1994 47,632.891 $108,418,306 $1,473,960 $109,892,266
Continuous Offering 63.107 172,049 - 172,049
Net Income - 21,521,138 305,384 21,826,522
Redemptions (5,985.376) (15,724,253) - (15,724,253)
Partners' Capital
June 30, 1995 41,710.622 $114,387,240 $1,779,344 $116,166,584
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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DEAN WITTER CORNERSTONE FUND IV
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 IV (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 FUND IV
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:
John W. Henry & Co., 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 ("DWDC"). 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 and currencies. 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
<PAGE>
DEAN WITTER CORNERSTONE FUND IV
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
contracts, including interest rate volatility. At June 30, 1995,
open contracts were:
Contract or
Notional Amount
Exchange Traded Contracts:
Financial Futures:
Commitments to Purchase $ 6,858,000
Commitments to Sell $ 18,776,000
Off Exchange Traded Contracts:
Forward Currency Contracts:
Commitments to Purchase $179,208,000
Commitments to Sell $131,669,000
A portion of the amounts indicated as off-balance sheet risk in
forward currency contracts is due to offsetting forward commitments
to purchase and to sell the same currency on the same date in the
future. These commitments are economically offsetting, but are not
offset in the forward market until the settlement date.
The unrealized 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 $636,257 at June 30,
1995. Of the $636,257 net unrealized gain on open contracts as of
June 30, 1995, ($47,687) related to exchange traded futures
contracts and $683,944 related to off-exchange traded forward
currency contracts.
<PAGE>
DEAN WITTER CORNERSTONE FUND IV
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
Exchange Traded Futures Contracts held by the Partnership at June
30, 1995 mature through September 1995. Off Exchange Traded
Forward Currency Contracts held by the Partnership at June 30, 1995
mature through August 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
to the amounts reflected in the Partnership's Statements of
Financial Condition.
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 losses including interest income were $2,114,490. During
the second quarter, the Partnership posted a loss in Net Asset
Value per Unit. The most significant trading losses were recorded
in this currency only Fund during May as a result of a reversal in
the downward price trend of the U.S. dollar versus the major
European currencies and the Japanese yen. The majority of these
losses were recorded from transactions involving the German mark,
French franc, Norwegian kroner and Japanese yen. Smaller losses in
June compounded the Partnership's overall losses for the quarter
due to small losses recorded in transactions involving the Japanese
yen, French franc and British pound. In April, gains recorded from
transactions involving the Japanese yen, Australian and New Zealand
dollars and the Spanish peseta helped to offset a portion of the
losses that followed in May and June. Total expenses for the
period were $1,714,517, resulting in a net loss of $3,829,007. The
value of an individual Unit in the Partnership decreased from
$2,875.86 at March 31, 1995 to $2,785.06 at June 30, 1995.
For the six months ended June 30, 1995, the Partnership's total
trading gains including interest income were $26,083,520. During
the first six months, the Partnership posted a gain in Net Asset
Value per Unit. The most significant trading gains were recorded
during March as a result of the increased value in world currencies
versus the U.S. and Canadian dollars. The majority of the gains
recorded in March were from transactions involving the Japanese
yen, German mark and Swiss franc. Additional gains were the result
of trading involving the French franc and Norwegian kroner. In
February, gains were also recorded from transactions involving the
German mark, Swiss and French francs and the Norwegian kroner both
versus the U.S. dollar and in crossrate trading versus the Canadian
dollar. Small gains were recorded in April, as the downward trend
in the U.S. dollar continued and the Partnership was able to
experience gains from transactions involving the Japanese yen,
Australian and New Zealand dollars and Spanish peseta. However,
the Partnership began the year with losses as a result of a
volatile but trendless currency environment throughout January. In
May, the Partnership also sustained losses in trading as a result
of a reversal in the U.S. dollar from its previous decline against
the major world currencies, primarily the German mark, French
franc, Norwegian kroner and Japanese yen. Losses were also
experienced in crossrate trading versus the Canadian, New Zealand
and Australian dollars. The short-term choppy environment that
followed this reversal continued into June and resulted in losses
from transactions involving the Japanese yen, British pound and
French franc. Total expenses for the period were $4,256,998,
resulting in net income of $21,826,522. The value of an individual
Unit in the Partnership increased from $2,307.07 at December 31,
1994 to $2,785.06 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 and interest income were $2,184,276. During the
second quarter, the Partnership posted a loss in Net Asset Value
per Unit. The most significant trading gains were recorded in this
currency only Fund during June as a result of the U.S. dollar's
decline versus most major European currencies. The majority of
these gains resulted from long positions in the Swiss franc and
German mark. Additional gains were recorded in the French franc
and British pound. A sudden increase in the value of the U.S.
dollar versus most global currencies on April 5th followed by
trendless market conditions resulted in losses for the Partnership
during the first two months of the quarter. Total expenses for
the period were $2,760,749, resulting in a net loss of $576,473.
The value of an individual Unit in the Partnership decreased from
$2,595.07 at March 31, 1994 to $2,583.17 at June 30, 1994.
For the six months ended June 30, 1994, the Partnership's total
trading gains including interest income were $430,399. During the
first six months, the Partnership posted a loss in Net Asset Value
per Unit. The most significant trading losses were recorded in
this currency only Fund 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, specifically the British pound. Trading gains
in the Australian dollar in January and in the Canadian dollar
during February coupled with gains in the Swiss franc and German
mark during June offset a portion of the Partnership's losses for
the period. Total expenses for the period were $5,721,552,
resulting in a net loss of $5,291,153. The value of an individual
Unit in the Partnership decreased from $2,690.96 at December 31,
1993 to $2,583.17 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 IV
(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 IV and is qualified in its
entirety by reference to such financial instruments.
<CIK> 0000808373
<NAME> DEAN WITTER CORNERSTONE FUND IV
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 117,418,370
<SECURITIES> 0
<RECEIVABLES> 408,226
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 118,462,853<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 118,462,853<F2>
<SALES> 0
<TOTAL-REVENUES> 26,083,520<F3>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,256,998
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 21,826,522
<INCOME-TAX> 0
<INCOME-CONTINUING> 21,826,522
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,826,522
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net
unrealized gain on open contracts of $636.257.
<F2>Liabilities include redemptions payable of $1,593,631, accrued
management fees of $392,534 and common administrative expenses
payable of $302,544.
<F3>Total revenue includes realized trading revenue of $23,221,027,
net change in unrealized of $367,966 and interest income of
$2,494,527.
</FN>
</TABLE>
