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 from to
Commission File No. 33-25041
DEAN WITTER PRINCIPAL PLUS FUND L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3541588
(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 PRINCIPAL PLUS FUND L.P.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 1996
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition
March 31, 1996 (Unaudited) and December 31, 1995... 2
Consolidated Statements of Operations for the
Quarters Ended March 31, 1996 and 1995 (Unaudited)... 3
Consolidated Statements of Changes in Partners'
Capital for the Quarters Ended March 31, 1996 and
1995 (Unaudited)..................................... 4
Consolidated Statements of Cash Flows for the
Quarters Ended March 31, 1996 and 1995 (Unaudited)....5
Notes to Consolidated Financial Statements
(Unaudited)........................................6-10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations..............................1-14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........ 15
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER PRINCIPAL PLUS FUND L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
March 31, December 31,
1996 1995
$ $
(Unaudited)
ASSETS
<S> <C> <C>
Equity in Commodity futures trading accounts:
Cash 7,903,607 8,897,293
Net unrealized gain on open contracts 186,018 787,729
Total Trading Equity 8,089,625 9,685,022
Investment in U.S. Treasury Bills 49,053,420 -
Interest receivable (DWR) 30,199 28,912
Investment in zero-coupon U.S. Treasury
Securities - 32,867,974
Total Assets 57,173,244 42,581,908
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable 1,288,042 1,148,358
Accrued brokerage fee (DWR) 198,794 141,131
Accrued administration fees 198,269 240,726
Accrued management fees 49,699 35,283
Accrued transaction fees and costs 7,735 1,777
Total Liabilities 1,742,539 1,567,275
Minority interest 150,884 242,689
Partners' Capital
Limited Partners (38,250.088 and
25,314.968 Units, respectively) 54,169,528 39,547,302
General Partner (783 Units) 1,110,293 1,224,642
Total Partners' Capital 55,279,821 40,771,944
Total Liabilities and Partners' Capital 57,173,244 42,581,908
NET ASSET VALUE PER UNIT 1,416.23 1,562.26
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER PRINCIPAL PLUS FUND L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Quarters Ended March 31,
1996 1995
$ $
<S> <C> <C>
REVENUES
Trading profit (loss):
Realized (2,670,129) 2,338,470
Net change in unrealized (601,711) 1,381,512
Total Trading Results 3,271,840 3,719,982
Interest Income 696,037 1,230,016
Change in valuation of Yield Pool (2,671,047) -
Total Revenues (5,246,850) 4,949,998
EXPENSES
Brokerage fees 538,896 654,838
Management fees 134,121 163,710
Transaction fees and costs 47,931 31,012
Administrative expenses 26,000 22,000
Total Expenses 746,948 871,560
INCOME (LOSS) BEFORE MINORITY INTEREST (5,993,798) 4,078,438
Minority interest in (income) losses 91,805 (63,780)
NET INCOME (LOSS) (5,901,993) 4,014,658
NET INCOME (LOSS) ALLOCATION
Limited Partners (5,787,644) 3,946,854
General Partner (114,349) 67,804
NET INCOME (LOSS) PER UNIT
Limited Partners (146.03) 84.89
General Partner (146.03) 84.89
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER PRINCIPAL PLUS FUND L.P.
CONSOLIDATED 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 47,286.564 $61,577,369 $1,036,851 $62,614,220
Net Income - 3,946,854 67,804 4,014,658
Redemptions (2,771.878) (3,906,536) - (3,906,536)
Partners' Capital
March 31, 1995 44,514.686 $61,617,687 $1,104,655 $62,722,342
Partners' Capital
December 31, 1995 26,097.968 $39,547,302 $1,224,642 $40,771,944
Subscriptions 13,844.606 21,697,912 - 21,697,912
Net Loss - (5,787,644) (114,349) (5,901,993)
Redemptions (909.486) (1,288,042) - (1,288,042)
Partners' Capital
March 31, 1996 39,033.088 $54,169,528 $1,110,293 $55,279,821
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER PRINCIPAL PLUS FUND L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Quarters Ended March 31,
1996 1995
$ $
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) (5,901,993) 4,014,658
Noncash item included in net income (loss):
Net change in unrealized 601,711 (1,381,512)
(Increase) decrease in operating assets:
Investment in U.S. Treasury Bills (49,053,420) -
Interest receivable (DWR) (1,287) (7,214)
Investment in zero-coupon U.S.
Treasury Securities 32,867,974 1,585,304
Net option premiums - (332,000)
Increase (decrease) in operating liabilities:
Accrued brokerage fees (DWR) 57,663 3,541
Accrued administration fees (42,457) (18,816)
Accrued management fees 14,416 885
Accrued transaction fees and costs 5,958 1,693
Net cash provided by (used for) operating activities (21,451,435) 3,866,539
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in redemptions payable 139,684 885,950
Minority interest (91,805) 63,780
Redemptions of units (1,288,042) (3,906,536)
Subscription of units 21,697,912 -
Net cash provided by (used for) financing activities 20,457,749 (2,956,806)
Net increase (decrease) in cash (993,686) 909,733
Balance at beginning of period 8,897,293 5,915,049
Balance at end of period 7,903,607 6,824,782
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED 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 consolidated 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 Principal Plus Fund 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. The General Partner for
the Partnership is Demeter Management Corporation (the "General
Partner"). The General Partner has retained RXR Inc. as the
trading manager of the Trading Company. Both the General Partner
and DWR are wholly-owned subsidiaries of Dean Witter, Discover &
Co. On February 1, 1996 the Partnership concluded a public
offering and $21,697,912 representing 13,844,606 additional units
was added to the Fund.
<PAGE>
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Revenue Recognition
The Yield Pool is valued at the lesser of cost plus accreted
interest or market value. For the quarter ended March 31, 1996,
$471,227 of interest income has been accreted on the Yield Pool.
At March 31, 1996, the cost of the Yield Pool was $51,253,240 and
the accreted interest receivable thereon was $421,228. The market
value of the Yield Pool on March 31, 1996 is approximately
$49,053,420.
3. 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.
4. Financial Instruments
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
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 45,612,000
Commitments to Sell 76,751,000
Commodity Futures Contracts
Commitments to Purchase 19,053,000
Commitments to Sell 418,000
Foreign Futures:
Commitments to Purchase 22,233,000
Commitments to Sell 18,365,000
Off-Exchange-Traded Forward
Currency Contracts
Commitments to Purchase 27,492,000
Commitments to Sell 22,711,000
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 gain on open contracts is reported as a component of
"Equity in Commodity futures trading accounts" on the Statement of
Financial Condition and totaled $186,018 at March 31, 1996. Of
this amount, $153,324 was related to exchange-traded futures
contracts and $32,694 related to off-exchange-traded forward
currency contracts.
<PAGE>
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Exchange-traded futures contracts held by the Partnership at March
31, 1996 mature through September 1996. Off-exchange-traded
forward currency contracts held at March 31, 1996 mature through
April 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 non-performance. 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 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 on all open futures contracts, which funds
totaled $8,056,941 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
<PAGE>
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
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 Contracts:
Financial Futures 44,286,000 27,904,000
Commodity Futures 10,987,000 1,868,000
Foreign Futures 35,569,000 8,931,000
Off-Exchange-Traded Forward
Currency Contracts 27,317,000 27,178,000
<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 and are used by the
Partnership as margin to engage in commodity futures, forward
contracts and other commodity interest trading. 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, forward contracts on foreign currency 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, forward
contracts and other commodity interests may be illiquid. If the
price for the 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
<PAGE>
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.
Capital Resources - The Partnership does not have, nor does it
expect to have, any capital assets. Redemptions of additional
Units in the future will impact the amount of funds available for
investments in commodity futures and forward 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
losses, consisting of net trading losses, a decrease in the value
of the Yield Pool and interest income were $5,246,850. During the
first quarter, the Partnership posted a loss in Net Asset Value per
Unit. The most significant losses were recorded in the bond
portion of the balanced portfolio from long positions in U.S.
Treasury bond futures as prices moved dramatically lower during
February and into March. Additionally, losses during the quarter
were attributed to a decline in value of the zero-coupon United
States Treasury securities held in the guarantee portion of the
Partnership. Losses were also recorded in the managed futures
<PAGE>
portion of the balanced portfolio in February as global interest
rate futures also reversed their upward trend. Trading losses were
also experienced in the managed futures portion of the portfolio in
the currency markets during February as a sudden upward move
occurred in the value of most european currencies relative to the
U.S. dollar. A portion of these losses was offset by gains from
short positions in the Japanese yen during January and March.
Smaller losses were recorded in the managed futures portion of the
portfolio from trading soft commodities, base metals and energy
futures during the first quarter. A small portion of the overall
losses for the quarter was offset by gains in the stock portion of
the balanced portfolio as S&P 500 index futures prices moved higher
during the quarter. Total expenses for the quarter were $746,948,
resulting in a net loss before minority interest of $5,993,798.
The minority interest in such loss was $91,805, resulting in a net
loss of $5,901,993 for the Partnership. The value of an individual
Unit in the Partnership decreased from $1,562.26 at December 31,
1995 to $1,416.23 at March 31, 1996.
For the Quarter ended March 31, 1995
For the quarter ended March 31, 1995, the Partnership's total
revenues, consisting of net trading revenues and interest income
including interest accretion on the yield pool were $4,949,998.
During the first quarter, the Partnership posted a gain in Net
Asset Value per Unit. The most significant gains were recorded in
the managed futures portion of the balanced portfolio from trading
in the financial futures and currency markets. Smaller gains were
recorded in the managed futures portion of the balanced portfolio
<PAGE>
from trading natural gas, cotton and aluminum. Additionally,
trading gains were recorded from long positions in the S&P 500
Index in the stock portion of the balanced portfolio and from long
U.S. Treasury bond futures positions in the bond portion of the
balanced portfolio. In the managed futures portion of the
portfolio, smaller losses recorded in European bond, British pound,
coffee and soybean products offset a portion of overall Partnership
gains for the quarter. Total expenses for the quarter were
$871,560, resulting in income before minority interest of
$4,078,438. The minority interest in such income was $63,780,
generating net income of $4,014,658 for the Partnership. The value
of an individual Unit in the Partnership increased from $1,324.14
at December 31, 1994 to $1,409.03 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 Principal Plus
Fund L.P. (Registrant)
By: Demeter Management Corporation
(General Partner)
May 7, 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 Principal Plus Fund L.P. 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> 7,903,607
<SECURITIES> 0
<RECEIVABLES> 30,199
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 57,173,244<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 57,173,244<F2>
<SALES> 0
<TOTAL-REVENUES> (5,246,850)<F3>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 746,948
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,901,993)<F4>
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,901,993)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,901,993)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net unrealized
gain on open contracts of $186,018 and Investment in U.S. Treasury Bills
of $49,053,420.
<F2>Liabilities include redemptions payable of $1,288,042, accrued brokerage
fee of $198,269 and accrued transaction fees and costs of $7,735.
<F3>Total revenues includes realized trading revenue of $(1,670,129), net
change in unrealized of $(601,711), interest income of $696,037 and
change in valuation of Yield Pool of $(2,671,047).
<F4>Income-Pretax, Income Continuing and Net Income includes minority interest
in income of $91,805.
</FN>
</TABLE>
