UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the period ended March 31, 1996 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
<PAGE>
<TABLE>
DEAN WITTER CORNERSTONE FUND IV
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 1996
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition
March 31, 1996 (Unaudited) and December 31, 1995...........2
Statements of Operations for the Quarters Ended
March 31, 1996 and 1995 (Unaudited)........................3
Statements of Changes in Partners' Capital for the
Quarters Ended March 31, 1996 and 1995
(Unaudited)................................................4
Statements of Cash Flows for the Quarters Ended
March 31, 1996 and 1995 (Unaudited)........................5
Notes to Financial Statements (Unaudited)................6-9
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>
<PAGE>
<TABLE>
DEAN WITTER CORNERSTONE FUND IV
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
March 31, December 31,
1996 1995
$ $
(Unaudited)
ASSETS
<S> <C> <C>
Equity in Commodity futures trading accounts:
Cash 99,175,103 104,927,961
Net unrealized gain on open contracts 1,434,910 70,143
Total Trading Equity 100,610,013 104,998,104
Interest receivable (DWR) 331,384 364,747
Total Assets 100,941,397 105,362,851
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable 1,230,073 1,044,804
Accrued management fees 334,614 349,039
Common administrative expenses payable 170,261 267,788
Accrued brokerage commissions (DWR) 49,896 32,580
Accrued transaction fees and costs 2,494 1,629
Total Liabilities 1,787,338 1,695,840
Partners' Capital
Limited Partners (34,331.535 and
35,905.625 Units, respectively) 97,342,573 101,854,654
General Partner (638.889 Units) 1,811,486 1,812,357
Total Partners' Capital 99,154,059 103,667,011
Total Liabilities and Partners' Capital 100,941,397 105,362,851
NET ASSET VALUE PER UNIT 2,835.37 2,836.73
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER CORNERSTONE FUND IV
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Quarters Ended March 31,
1996 1995
$ $
<S> <C> <C>
REVENUES
Trading profit (loss):
Realized (487,455) 9,761,605
Net change in unrealized 1,364,767 17,191,492
Total Trading Results 877,312 26,953,097
Interest Income (DWR) 1,020,421 1,244,913
Total Revenues 1,897,733 28,198,010
EXPENSES
Management fees 1,021,255 1,126,941
Brokerage commissions (DWR) 843,558 1,294,926
Transaction fees and costs 50,233 80,724
Common administrative expenses 8,811 39,890
Total Expenses 1,923,857 2,542,481
NET INCOME (LOSS) (26,124) 25,655,529
NET INCOME (LOSS) ALLOCATION:
Limited Partners (25,253) 25,292,132
General Partner (871) 363,397
NET INCOME (LOSS) PER UNIT:
Limited Partners (1.36) 568.79
General Partner (1.36) 568.79
<FN>
The accompanying footnotes are an integral part
of these financial statements.
<PAGE>
</TABLE>
<TABLE>
DEAN WITTER CORNERSTONE FUND IV
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Quarters Ended March 31, 1996 and 1995
(Unaudited)
<CAPTION>
Units of
Partnership Limited General
Interest Partners Partner Total
<S> <C> <C> <C> <C>
Partners' Capital
December 31, 1994 47,632.891 $108,418,306 $1,473,960 $109,892,266
Offering of Units 10.467 23,746 - 23,746
Net Income - 25,292,132 363,397 25,655,529
Redemptions (3,951.694) (9,920,321) - (9,920,321)
Partners' Capital
March 31, 1995 43,691.664 $123,813,863 $1,837,357 $125,651,220
Partners' Capital
December 31, 1995 36,544.514 $101,854,654 $1,812,357 $103,667,011
Offering of Units 17.140 48,482 - 48,482
Net Loss - (25,253) (871) (26,124)
Redemptions (1,591.230) (4,535,310) - (4,535,310)
Partners' Capital
March 31, 1996 34,970.424 $97,342,573 $1,811,486 $99,154,059
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER CORNERSTONE FUND IV
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Quarters Ended March 31,
1996 1995
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) (26,124) 25,655,529
Noncash item included in net income (loss):
Net change in unrealized (1,364,767) (17,191,492)
Decrease in operating assets:
Interest receivable (DWR) 33,363 5,109
Increase (decrease) in operating liabilities:
Accrued management fees (14,425) 64,281
Common administrative expenses payable (97,527) 39,890
Accrued brokerage commissions (DWR) 17,316 -
Accrued transaction fees and costs 865 -
Net cash provided by (used for) operating activities (1,451,299) 8,573,317
CASH FLOWS FROM FINANCING ACTIVITIES
Offering of units 48,482 23,746
Increase in redemptions payable 185,269 3,525,211
Redemptions of units (4,535,310) (9,920,321)
Net cash used for financing activities (4,301,559) (6,371,364)
Net increase (decrease) in cash (5,752,858) 2,201,953
Balance at beginning of period 104,927,961 111,508,180
Balance at end of period 99,175,103 113,710,133
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
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, 1995 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. The
General Partner for the Partnership is Demeter Management
Corporation (the "General Partner"). The commodity broker is Dean
Witter Reynolds Inc. ("DWR"). The trading advisors who make all
trading decisions for the Partnership are John W. Henry & Co., Inc.
and Sunrise Capital Management. Both the General Partner and DWR
are wholly owned subsidiaries of Dean Witter, Discover & Co.
2. Related Party Transactions
The Partnership's cash is on deposit with DWR in commodity trading
accounts to meet margin requirements as needed. DWR pays interest
on these funds based on current 13-week U.S. Treasury Bill rates.
Brokerage expenses incurred by the Partnership are paid to DWR.
<PAGE>
DEAN WITTER CORNERSTONE FUND IV
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. Financial Instruments
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
contracts, including interest rate volatility. At March 31 1996,
open contracts were:
Contract or
Notional Amount
$
Exchange-Traded Contracts
Financial Futures:
Commitments to Purchase 22,853,000
Commitments to Sell 116,899,000
Off-Exchange-Traded Forward
Currency Contracts
Commitments to Purchase 309,776,000
Commitments to Sell 103,968,000
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.
<PAGE>
DEAN WITTER CORNERSTONE FUND IV
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The unrealized gain on open contracts is reported as a component of
"Equity in Commodity futures trading accounts" on the Statement of
Financial Condition and totaled $1,434,910 at March 31, 1996. Of
this amount $879,588 related to exchange-traded futures contracts
and $555,322 related to off-exchange-traded forward currency
contracts.
Exchange-traded futures contracts held by the Partnership at March
31, 1996 mature through June 1996. Off-exchange-traded forward
currency contracts held by the Partnership at March 31, 1996 mature
through June 1996. 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 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 settled or charged to the Fund's account
<PAGE>
DEAN WITTER CORNERSTONE FUND IV
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
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 gains or losses on all open futures contracts, which
funds totaled $100,054,691 at March 31, 1996. With respect to the
Partnership's off-exchange traded forward currency contracts, there
are no daily settlements of variations in value nor is there any
requirement that an amount equal to the net unrealized gain on open
forward contracts be segregated. With respect to those off-
exchange-traded forward currency contracts, the Partnership is at
risk to the ability of DWR, the counterparty on all of such
contracts, to perform.
For the quarter ended March 31, 1996, the average fair value of
financial instruments held for trading purposes was as follows:
Assets Liabilities
$ $
Exchange-Traded Financial
Futures Contracts 13,692,000 100,967,000
Off-Exchange-Traded Foreign
Currency Contracts 258,678,000 221,591,000
<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 designated depositories or in securities
approved by the Commodity Futures Trading Commission for investment
of customer funds. The Partnership's assets held by DWR may be
used as margin solely for the Partnership's trading. Since the
Partnership's sole purpose is to trade in commodity futures
contracts 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
<PAGE>
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. 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
For the Quarter Ended March 31, 1996
For the quarter ended March 31, 1996, the Partnership's total
trading revenues including interest income were $1,897,733. During
the first quarter, the Partnership posted a small loss in Net Asset
Value per Unit. During February, losses were recorded from
previously established short positions in the Japanese yen as the
value of the yen moved dramatically higher. Losses were also
recorded during February from transactions involving several
European currencies, particularly the German mark, Norwegian krone
and both the French and Swiss francs. A majority of the losses
recorded during February were offset by gains recorded in January
and March. During January and March, short positions in the
Japanese yen profited from a decline in the value of the yen versus
<PAGE>
the U.S. dollar. Additional profits were recorded during March
from long positions in the Australian dollar as the value of the
Australian dollar moved higher relative to the U.S. dollar and
other world currencies. These gains, coupled with smaller gains
recorded from transactions involving the New Zealand dollar during
both January and March, mitigated the losses recorded during
February. Total expenses for the period were $1,923,857, resulting
in a net loss of $26,124. The value of an individual Unit in the
partnership decreased from $2,836.73 at December 31, 1995 to
$2,835.37 at March 31, 1996.
For the Quarter Ended March 31, 1995
For the quarter ended March 31, 1995, the Partnership's total
trading revenues including interest income were $28,198,010.
During the first quarter, the Partnership posted a gain in Net
Asset Value per Unit. The most significant trading gains were
recorded in this currency only Fund during the last two months of
the quarter. During February, the majority of these gains recorded
by the Partnership were due primarily to an increase in value of
world currencies such as the German mark, Swiss and French franc
and the Norwegian kroner relative to the U.S. and Canadian dollar.
Trading losses from transactions involving the British pound and
New Zealand dollar offset a portion of overall gains for the month.
Trading gains were also recorded during March as a result of the
continued downward trend in the value of the U.S. dollar versus the
Japanese yen, German mark and Swiss franc. Additionally, smaller
gains were recorded from transactions involving the French franc
and Norwegian kroner. Small losses from transactions involving the
<PAGE>
British pound and New Zealand dollar offset a portion of overall
gains for the Partnership during March. During the first month of
the quarter, the Partnership posted net losses. The majority of
the losses were the result of a decline in the value of the U.S.
dollar that began in late December and continued into early
January, resulting in losses from previously established positions.
As the month progressed, the partnership reversed positions only to
experience additional losses when the U.S. dollar strengthened on
January 31 in reaction to President Clinton's decision to support
the Mexican peso. Total expenses for the period were $2,542,481,
generating net income of $25,655,529. The value of an individual
Unit in the Partnership increased from $2,307.07 at December 31,
1994 to $2,875.86 at March 31, 1995.
<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)
May 8, 1996
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.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Dean
Witter Cornerstone Fund IV and is qualified in its entirety by reference
to such financial instruments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 99,175,103
<SECURITIES> 0
<RECEIVABLES> 331,384
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 100,941,397<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 100,941,397<F2>
<SALES> 0
<TOTAL-REVENUES> 1,897,733<F3>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,923,857
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (26,124)
<INCOME-TAX> 0
<INCOME-CONTINUING> (26,124)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,124)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net unrealized
loss on open contracts of $1,434,910.
<F2>Liabilities include redemptions payable of $1,230,073, accrued management
fees of $334,614, common administrative expenses payable of $170,261,
accrued brokerage commissions of $49,896 and accrued transaction fees
and costs of $2,494.
<F3>Total revenue includes realized trading revenue of $(487,455), net change
in unrealized of $1,364,767 and interest income of $1,020,421.
</FN>
</TABLE>
