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 September 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 No. 33-25041
DEAN WITTER PRINCIPAL GUARANTEED FUND II L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3498819
(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 PRINCIPAL GUARANTEED FUND II L.P.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
September 30, 1995
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition
September 30, 1995 (Unaudited) and December 31, 1994.....2
Statements of Operations for the Quarters Ended
September 30, 1995 and 1994 (Unaudited)..................3
Statements of Operations for the Nine Months Ended
September 30, 1995 and 1994 (Unaudited)..................4
Statements of Changes in Partners' Capital for
the Nine Months Ended September 30, 1995 and 1994
(Unaudited)..............................................5
Statements of Cash Flows for the Nine Months Ended
September 30, 1995 and 1994 (Unaudited)..................6
Notes to Financial Statements.........................7-10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations........................................11-14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................... 15
</TABLE>
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<TABLE>
DEAN WITTER PRINCIPAL GUARANTEED FUND II L.P.
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
September 30, December 31,
1995 1994
(Unaudited)
ASSETS
<S> <C> <C>
Equity in commodity futures trading accounts:
Cash $ 6,003,989 $ 23,482,196
Net unrealized gain on open contracts - 483,674
Total Trading Equity 6,003,989 23,965,870
Interest receivable (DWR) 33,399 116,947
Total Assets $ 6,037,388 $ 24,082,817
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable $ 432,526 314,454
Accrued brokerage fees (DWR) - 15,433
Accrued management fees - 10,583
Accrued transaction fees and costs - 864
Total Liabilities 432,526 341,334
Partners' Capital
Limited Partners (4,974.481 and
23,908.041 Units, respectively) 5,145,590 23,308,615
General Partner (444 Units) 459,272 432,868
Total Partners' Capital 5,604,862 23,741,483
Total Liabilities and Partners' Capital $ 6,037,388 $ 24,082,817
NET ASSET VALUE PER UNIT $ 1,034.40 $ 974.93
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER PRINCIPAL GUARANTEED FUND II L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Quarters Ended September 30,
1995 1994
<S> <C> <C>
REVENUES
Trading profit (loss):
Realized $ - $ 415,774
Net change in unrealized - (1,377,019)
Total Trading Results - (961,245)
Interest Income (DWR) 135,067 290,828
Total Revenues 135,067 (670,417)
EXPENSES
Letter of credit fees 21,736 78,856
Transaction fees and costs 2,993 53,213
Brokerage fees (DWR) - 176,640
Management fees - 121,107
Total Expenses 24,729 429,816
NET INCOME (LOSS) $ 110,338 $ (1,100,233)
Limited Partners 103,977 (1,082,657)
General Partner 6,361 (17,576)
$ 110,338 $ (1,100,233)
NET INCOME (LOSS) PER UNIT
Limited Partners $ 14.34 $ (39.58)
General Partner $ 14.34 $ (39.58)
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER PRINCIPAL GUARANTEED FUND II L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Nine Months Ended September 30,
1995 1994
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized $ 1,177,944 $ 106,894
Net change in unrealized (483,674) (1,734,523)
Total Trading Results 694,270 (1,627,629)
Interest Income (DWR) 769,860 798,249
Total Revenues 1,464,130 (829,380)
EXPENSES
Letter of credit fees 147,449 256,462
Brokerage fees (DWR) 103,290 1,217,201
Management fees 70,827 834,485
Transaction fees and costs 40,216 264,066
Total Expenses 361,782 2,572,214
NET INCOME (LOSS) $ 1,102,348 $ (3,401,594)
Limited Partners 1,075,944 (3,262,342)
General Partner 26,404 (139,252)
$ 1,102,348 $ (3,401,594)
NET INCOME (LOSS) PER UNIT
Limited Partners $ 59.47 $ (111.02)
General Partner $ 59.47 $ (111.02)
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER PRINCIPAL GUARANTEED FUND II L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Nine Months Ended September 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 33,689.267 $33,985,223 $1,761,373 $35,746,596
Net Loss - (3,262,342) (139,252) (3,401,594)
Redemptions (7,331.940) (6,104,046) (1,200,301) (7,304,347)
Partners' Capital
September 30, 1994 26,357.327 $24,618,835 $ 421,820 $25,040,655
Partners' Capital
December 31, 1994 24,352.041 $23,308,615 $ 432,868 $23,741,483
Net Income - 1,075,944 26,404 1,102,348
Redemptions (18,933.560) (19,238,969) - (19,238,969)
Partners' Capital
September 30, 1995 5,418.481 $ 5,145,590 $ 459,272 $ 5,604,862
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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<TABLE>
DEAN WITTER PRINCIPAL GUARANTEED FUND II L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Nine Months Ended September 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ 1,102,348 $ (3,401,594)
Noncash item included in net income (loss):
Net change in unrealized 483,674 1,734,523
(Increase) decrease in operating assets:
Interest receivable (DWR) 83,548 (14,596)
Net option premiums paid - 96,432
Decrease in operating liabilities:
Accrued brokerage fees (DWR) (15,433) (178,772)
Accrued management fees (10,583) (121,557)
Accrued transaction fees and costs (864) (16,072)
Net cash provided by (used for) operating activities 1,642,690 (1,901,636)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in redemptions payable 118,072 38,461
Redemptions of units (19,238,969) (7,304,347)
Net cash used for financing activities (19,120,897) (7,265,886)
Net decrease in cash (17,478,207) (9,167,522)
Balance at beginning of period 23,482,196 34,573,935
Balance at end of period $6,003,989 $25,406,413
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
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DEAN WITTER PRINCIPAL GUARANTEED FUND II L.P.
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 Principal Guaranteed Fund II L.P. (the "Partnership")
is a limited partnership organized to engage in the speculative
trading of commodity futures contracts, commodity options contracts
and forward contracts on foreign currencies. Demeter Management
Corporation (the "General Partner") originally Commodities
Corporation (U.S.A.) N.V. ("C.C.") as trading manager of the
Partnership to make all trading decisions and retain trading
advisors. The Partnership has a guaranteed redemption date of
March 31, 1996 on which each investor redeeming is guaranteed a
minimum of $1,000 per unit. The commodity broker is Dean Witter
Reynolds Inc. ("DWR").
On April 20, 1995, with the Net Asset Value per Unit of the
Partnership above $1,000, the General Partner determined it was in
the best interest of investors and the Partnership to terminate
trading and to recommend that investors redeem their units. All
trading was terminated and all open positions were liquidated or
paired off on April 20, 1995.
<PAGE>
DEAN WITTER PRINCIPAL GUARANTEED FUND II L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
All assets are being held in an account with DWR. DWR is paying
the Partnership interest on 100% of its assets at the prevailing
rate on 13 week U.S. Treasury Bills. The Partnership will receive
the interest until the investors redeem their Units or until the
guaranteed redemption date. No further commodity trading will be
undertaken for the Partnership's account. The Partnership will be
obligated to continue paying a Letter of Credit fee at an annual
rate of 1.125% until the guaranteed redemption date. No other fees
will be charged to the Partnership.
The General Partner 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 interest.
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.
<PAGE>
DEAN WITTER PRINCIPAL GUARANTEED FUND II L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Equity in Commodity Futures Trading Accounts - At December 31, 1994
the Partnership's asset "Equity in Commodity Futures Trading
Accounts" consisted of cash on deposit at DWR 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 was
presented as a net amount because the Partnership has a master
netting agreement with DWR.
3. Related Party Transactions
Both the General Partner and DWR are wholly owned subsidiaries of
Dean Witter, Discover & Co. The Partnership's cash is on deposit
with DWR in commodity trading accounts and until the termination of
trading were used 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 until the
termination of trading were paid to DWR.
4. Off-Balance Sheet Risk
The Partnership has credit risk because the sole counterparty, with
respect to all of the Partnership's assets, is DWR. DWR 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
<PAGE>
DEAN WITTER PRINCIPAL GUARANTEED FUND II L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
equal to the net unrealized gain on all open futures contracts
which funds totalled $6,003,989 at September 30, 1995.
<PAGE>
Item 2. 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. As discussed further
in Note 1 to the Partnership's financial statements, the Partner-
ship terminated commodity trading and liquidated or paired off all
open positions on April 20, 1995. Therefore, the liquidity risks
associated with commodity futures, forward contracts and commodity
interest trading are no longer present. The assets are being held
in an account at DWR, who is paying the Partnership interest at the
prevailing rate on 13 week U.S. Treasury Bills. Partnership assets
will be used to fund future redemptions.
Capital Resources - The Partnership does not have, nor does it
expect to have, any capital assets. 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 and Nine Months Ended September 30, 1995
For the quarter ended September 30, 1995, the Partnership's
interest income was $135,067 and total expenses were $24,729,
resulting in net income of $110,338. As further described in Note
1 to the Financial Staements, the Partnership ceased trading in
April 1995. As a result, the results of operations for the quarter
ended September 30, 1995 consists of interest income, partially
offset by letter of credit fees and other transaction fees and
costs. The value of an individual Unit in the Partnership
<PAGE>
increased from $1,020.06 at June 30, 1995 to $1,034.40 at September
30, 1995.
For the nine months ended September 30, 1995, the Partnership's
total trading gains including interest income were $1,464,130.
During the first nine months, the Partnership posted a gain in Net
Asset Value per Unit. Consistent with the Partnership's guarantee
structure, 83% of the assets were held in reserve until the April
20, 1995 termination of trading while 17% of assets were allocated
to futures trading. Assets held in reserve earn interest at
current U.S. Treasury Bill rates. Assets allocated to trading
earned gains during February, March and early April in the currency
markets as a result of a decrease in value of the U.S., Canadian
and Australian dollar versus the Japanese yen and major European
currencies such as the Swiss franc, German mark and French franc.
Additional gains were recorded in the financial futures markets as
a result of trading Japanese and U.S. interest rate futures during
the first quarter. Trading gains were also recorded from trading
cotton, crude oil and S&P 500 futures. Smaller losses in the
metals markets from trading both base and precious metals and in
the agricultural markets from trading soybean products, corn and
wheat futures offset a portion of overall gains for the Partnership
for the first half of the year. Total expenses for the period were
$361,782, resulting in net income of $1,102,348. The value of an
individual Unit in the Partnership increased from $974.93 at
December 31, 1994 to $1,034.40 at September 30, 1995.
<PAGE>
For the Quarter and Nine Months Ended September 30, 1994
For the quarter ended September 30, 1994, the Partnership's total
trading losses net of interest income were $670,417. During the
third quarter, the Partnership posted a loss in Net Asset Value per
Unit. The most significant losses were recorded in the financial
and metals markets. In the financial markets, the majority of the
losses resulted from trendless price movement in U.S. and global
interest rate futures prices and from losses recorded in the S&P
500 futures index. In the metals markets, the Partnership recorded
losses from trading precious metals during July and August.
Additional trading losses in the international markets were the
result of trading cotton and sugar futures during July and
September. Smaller losses were also recorded in the currency
markets during the quarter. Trading gains in the agricultural
markets from trading soybean products, wheat and corn futures, and
in the energy markets from trading natural and unleaded gas and
crude oil offset a portion of overall losses for the Partnership
during the quarter. The total expenses for the period were
$429,816 resulting in a net loss of $1,100,233. The value of an
individual Unit in the Partnership decreased from $989.63 at June
30, 1994 to $950.05 at September 30, 1994.
For the nine months ended September 30, 1994, the Partnership's
total trading losses net of interest income were $829,380. During
the first nine months, the Partnership posted a loss in Net Asset
Value per Unit. The most significant trading losses were recorded
in the currency, agricultural, and metals markets. In the currency
<PAGE>
markets, the Partnership recorded losses from transactions
involving the U.S. dollar versus the Australian dollar during the
first and second quarters and versus most major European currencies
throughout the year. In the agricultural markets, losses were
recorded from overall trendless price movement in soybean products
and wheat. In the metals markets, the majority of losses recorded
were the result of trading precious metals. Additional losses were
recorded in the financial markets from trading in U.S. and
international interest rate futures and stock index futures.
Trading gains in the international markets as a result of the
strong upward trend in coffee prices were recorded during the
second quarter. Smaller gains recorded in the energy markets from
trading crude oil also offset a portion of overall losses for the
Partnership during the first nine months of the year. The total
expenses for the period were $2,572,214, resulting in a net loss of
$3,401,594. The value of an individual Unit in the Partnership
decreased from $1,061.07 at December 31, 1993 to $950.05 at
September 30, 1994.
<PAGE>
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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 Principal Guaranteed
Fund II L.P. (Registrant)
By: Demeter Management Corporation
(General Partner)
November 9, 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 fnancial information
extracted from Dean Witter Principal Guaranteed Fund II L.P. and is
qualified in its entirety by references to such financial
instruments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 6,003,989
<SECURITIES> 0
<RECEIVABLES> 33,399
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,037,388
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,037,388<F1>
<SALES> 0
<TOTAL-REVENUES> 1,464,130<F2>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 361,782
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,102,348
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,102,348
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,102,348
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Liabilities are redemptions payable of $432,526.
<F2>
Total revenues includes realized trading revenue of $1,177,944,
net change in unrealized of ($483,674) and interest income of
$769,860.
</FN>
</TABLE>
