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 quarterly period ended September 30, 1998 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. 0-18314
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 Corporation
Two World Trade Center, 62 Fl., New York, NY 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
September 30, 1998
<CAPTION>
PART I. FINANCIAL INFORMATION
<S>
<C>
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition
September 30, 1998 (Unaudited) and December 31, 1997.......2
Consolidated Statements of Operations for the
Quarters Ended September 30, 1998 and 1997 (Unaudited)....3
Consolidated Statements of Operations for the Nine
Months Ended September 30, 1998 and 1997 (Unaudited).......4
Consolidated Statements of Changes in Partners'
Capital for the Nine Months Ended September 30, 1998 and
1997 (Unaudited)...........................................5
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1998 and 1997
(Unaudited)................................................6
Notes to Consolidated Financial Statements
(Unaudited).............................................7-12
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations......................................13-22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..................................23
Item 6. Exhibits and Reports on Form 8-K........
...........23
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
DEAN WITTER PRINCIPAL PLUS FUND L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
September 30, December 31,
1998 1997
$ $
(Unaudited)
ASSETS
<S> <C> <C>
Equity in Commodity futures trading accounts:
Cash 7,957,043 8,956,497
Net unrealized gain on open contracts 2,164,295 779,432
Net option premiums - (719,950)
Total Trading Equity 10,121,338 9,015,979
Investment in zero-coupon U.S. Treasury
Securities 42,567,265 45,239,044
Interest receivable (DWR) 33,178
39,109
Total Assets 52,721,781 54,294,132
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable 2,001,215 723,025
Accrued administrative expenses 212,056 159,640
Accrued brokerage fee (DWR) 175,032 181,150
Accrued management fee 43,758 45,287
Incentive fee payable 33,426 -
Total Liabilities 2,465,487 1,109,102
Minority Interest 297,892 239,168
Partners' Capital
Limited Partners (26,851.888 and
30,223.237 Units, respectively) 48,516,752 51,607,436
General Partner (308 and
783 Units, respectively) 1,441,650 1,338,426
Total Partners' Capital 49,958,402 52,945,862
Total Liabilities and Partners' Capital 52,721,781
54,294,132
NET ASSET VALUE PER UNIT 1,839.42 1,707.59
<FN>
The accompanying notes 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 September 30,
1998 1997
$ $
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized (421,807) 3,667,459
Net change in unrealized 2,057,075 (630,549)
Total Trading Results 1,635,268 3,036,910
Interest Income 704,230 758,382
Change in value of Yield Pool -
1,139,825
Total Revenues 2,339,498 4,935,117
EXPENSES
Brokerage fees 512,854 556,582
Management fees 128,214 139,145
Incentive fees 33,426 -
Transaction fees and costs 27,514 24,488
Administrative expenses 21,000 29,000
Total Expenses 723,008 749,215
NET INCOME BEFORE MINORITY INTEREST1,616,490 4
,185,902
Minority interest in income (33,358) (68,566)
NET INCOME 1,583,132
4,117,336
NET INCOME ALLOCATION
Limited Partners 665,524 4,017,690
General Partner 917,608 99,646
NET INCOME PER UNIT
Limited Partners 56.05 127.27
General Partner 56.05 127.27
<FN>
The accompanying notes 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 Nine Months Ended September 30,
1998 1997
$ $
REVENUES
<S> <C> <C>
Trading profit:
Realized 2,407,913 4,684,151
Net change in unrealized 1,384,863 693,265
Total Trading Results 3,792,776 5,377,416
Interest Income 2,168,276 2,250,466
Change in value of Yield Pool 210,432 1,079,210
Total Revenues 6,171,484 8,707,092
EXPENSES
Brokerage fees (DWR) 1,594,817 1,651,877
Management fees 398,705 412,709
Transaction fees and costs 76,539 88,079
Administrative expenses 68,000 83,000
Incentive fees 33,426 -
Total Expenses 2,171,487 2,235,665
INCOME BEFORE MINORITY INTEREST 3,999,997 6,471,427
Minority interest in income (58,725) (101,526)
NET INCOME 3,941,272 6,369,901
NET INCOME ALLOCATION
Limited Partners 2,964,323 6,217,620
General Partner 976,949 152,281
NET INCOME PER UNIT
Limited Partners 131.83 194.49
General Partners 131.83 194.49
<FN>
The accompanying notes 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 Nine Months Ended September 30, 1998 and 1997
(Unaudited)
<CAPTION>
Units of
Partnership Limited General
Interest Partners Partner Total
<S> <C> <C>
<C> <C>
Partners' Capital
December 31, 1996 35,036.485 $50,688,703 $1,160,110
$51,848,813
Net Income - 6,217,620 152,281
6,369,901
Redemptions (3,606.829) (5,594,892) -
(5,594,892)
Partners' Capital
September 30, 1997 31,429.656 $51,311,431 $1,312,391
$52,623,822
Partners' Capital
December 31, 1997 31,006.237 $51,607,436 $1,338,426
$52,945,862
Net Income - 2,964,323 976,949 3,941,272
Redemptions (3,846.349) (6,055,007) (873,725)
(6,928,732)
Partners' Capital
September 30, 1998 27,159.888 $48,516,752 $1,441,650
$49,958,402
<FN>
The accompanying notes 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 Nine Months Ended September 30,
1998 1997
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income 3,941,272 6
,369,901
Noncash item included in net income:
Net change in unrealized (1,384,863) (
693,265)
(Increase) decrease in operating assets:
Net option premiums (719,950) 724,000
Investment in Zero-coupon U.S.
Treasury Securities 2,671,779 2
,170,767
Interest receivable (DWR) 5,931 (10,113)
Increase (decrease) in operating liabilities:
Accrued administrative expenses 52,416 6,817
Accrued brokerage fees (DWR) (6,118) (1,050)
Accrued management fees (1,529) (262)
Incentive fee payable 33,426 -
Accrued transaction fees and costs -
(1,080)
Net cash provided by operating activities 4,592,364
8,565,715
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in redemptions payable1,278,190
(110,932)
Increase in minority interest 58,724 101,525
Redemptions of units (6,928,732)
(5,594,892)
Net cash used for financing activities (5,591,818)
(5,604,299)
Net increase (decrease) in cash (999,454) 2
,961,416
Balance at beginning of period 8,956,497
6,625,325
Balance at end of period 7,957,043
9,586,741
<FN>
The accompanying notes 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 of Dean Witter Principal
Plus Fund L.P. (the "Partnership"). The consolidated financial
statements and condensed notes herein should be read in
conjunction with the Partnership's December 31, 1997 Annual
Report on Form 10-K.
1. Organization
Dean Witter Principal Plus Fund L.P. is a limited partnership
organized to engage in the speculative trading of commodity
futures contracts, commodity options contracts and forward
contracts on foreign currencies (collectively, "futures
interests"). The general partner is Demeter Management
Corporation ("Demeter"). The non-clearing commodity broker is
Dean Witter Reynolds Inc. ("DWR"), an affiliate of Demeter. The
clearing commodity broker is Carr Futures Inc. ("Carr"),
providing clearing and execution services. Demeter has retained
as the trading manager RXR Inc. (the "Trading Manager"). Both
Demeter and DWR are wholly-owned subsidiaries of Morgan Stanley
Dean Witter & Co. ("MSDW").
2. Revenue Recognition
The investment in zero-coupon U.S. Treasury Securities (the
"Yield
<PAGE>
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Pool"), maintained to provide for the Partnership's guaranteed
return, is valued at the lesser of cost plus accreted interest or
market value. For the nine months ended September 30, 1998,
$1,832,003 of interest income has been accreted on the Yield
Pool. At September 30, 1998, the cost of the Yield Pool was
$36,678,802 and the accreted interest receivable thereon was
$5,888,463. The market value of the Yield Pool on September 30,
1998 was approximately $45,296,488.
3. Related Party Transactions
The Partnership's cash is on deposit with DWR and Carr in futures
interest 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, options and forward contracts in
interest rates, stock indices, commodities 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
<PAGE>
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
influence the market value of these contracts, including interest
rate volatility. At September 30, 1998 and December 31, 1997,
open contracts were:
Contract or Notional Amount
September 30, 1998 December 31, 1997
$ $
Exchange-Traded Contracts
Financial Futures:
Commitments to Purchase 74,480,000 56,150,000
Commitments to Sell 599,000 7,527,000
Commodity Futures:
Commitments to Purchase 1,806,000 -
Commitments to Sell 966,000 5,700,000
Foreign Futures:
Commitments to Purchase 174,045,000 50,112,000
Commitments to Sell 8,233,000 28,881,000
Off-Exchange-Traded
Forward Currency Contracts
Commitments to Purchase 7,749,000 2,606,000
Commitments to Sell 2,991,000 11,542,000
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 net unrealized gains on open contracts are reported as a
component of "Equity in Commodity futures trading accounts" on
the Consolidated Statements of Financial Condition and totaled
$2,164,295 and $779,432 at September 30, 1998 and December 31,
1997, respectively.
<PAGE>
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Of the $2,164,295 net unrealized gain on open contracts at
September 30, 1998, $1,826,431 related to exchange-traded futures
contracts and $337,864 related to off-exchange-traded forward
currency contracts.
Of the $779,432 net unrealized gain on open contracts at December
31, 1997, $748,223 related to exchange-traded futures contracts
and $31,209 related to off-exchange-traded forward currency
contracts.
Exchange-traded futures contracts held by the Partnership at
September 30, 1998 and December 31, 1997 mature through December
1998 and March 1998, respectively. Off-exchange-traded forward
currency contracts held by the Partnership at September 30, 1998
and December 31, 1997 mature through December 1998 and March
1998, respectively.
The contract amounts in the above table represent the
Partnership's extent of involvement in a 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 Consolidated Statements of Financial Condition.
<PAGE>
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Partnership also has credit risk because DWR and Carr act as
the futures commission merchants or the counterparties, with
respect to most of the Partnership's assets. Exchange-traded
futures and futures styled options contracts are marked to market
on a daily basis, with variations in value settled on a daily
basis. Each of DWR and Carr, as a futures commission merchant
for the Partnership's exchange-traded futures and futures styled
options contracts, are required, pursuant to regulations of the
Commodity Futures Trading Commission ("CFTC"), to segregate from
their own assets and for the sole benefit of their commodity
customers, all funds held by them with respect to exchange-traded
futures and futures styled options contracts, including an amount
equal to the net unrealized gain on all open futures and futures
styled options contracts, which funds, in the aggregate, totaled
$9,783,474 and $9,704,720 at September 30, 1998 and December 31,
1997, respectively. 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 Carr, the sole counterparty on all such contracts,
to perform. Carr's parent, Credit Agricole Indosuez, has
guaranteed to the Partnership payment of the net liquidating
value of the transactions in the Partnership's account with Carr
<PAGE>
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
(including foreign currency contracts).
For the nine months ended September 30, 1998 and the year ended
December 31, 1997, the average fair value of financial
instruments held for trading purposes was as follows:
September 30, 1998
Assets Liabilities
$ $
Exchange-Traded Contracts:
Financial Futures 56,260,000 13,012,000
Options on Financial Futures - 1,885,000
Commodity Futures 1,004,000 3,035,000
Foreign Futures 80,844,000 37,233,000
Off-Exchange-Traded Forward
Currency Contracts 15,467,000 15,988,000
December 31, 1997
Assets Liabilities
$ $
Exchange-Traded Contracts:
Financial Futures 61,485,000 17,437,000
Options on Financial Futures 2,226,000 4,442,000
Commodity Futures 5,800,000 4,475,000
Foreign Futures 37,032,000 32,469,000
Off-Exchange-Traded Forward
Currency Contracts 16,304,000 23,711,000
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity - Assets of the Partnership are deposited with DWR as
non-clearing broker and Carr as clearing broker in separate
futures interest trading accounts established for the Trading
Manager and are used by the Partnership as margin to engage in
futures interest trading. Such assets are held in either non-
interest bearing bank accounts or in securities approved by the
CFTC for investment of customer funds. The Partnership's assets
held by DWR and Carr may be used as margin solely for the
Partnership's trading. Since the Partnership's sole purpose is
to trade in futures interests, it is expected that the
Partnership will continue to own such liquid assets for margin
purposes.
The Partnership's investment in futures interests may, from time
to time, be illiquid. Most United States futures exchanges limit
fluctuations in certain futures interest prices during a single
day by regulations referred to as "daily price fluctuations
limits" or "daily limits". Pursuant to such regulations, during
a single trading day no trades may be executed at prices beyond
the daily limit. If the price of a particular futures interest
has increased or decreased by an amount equal to the daily limit,
positions in such futures interest can neither be taken nor
liquidated unless traders are willing to effect trades at or
within the limit. Futures interests prices have occasionally
moved the daily limit for several consecutive days with little or
no trading. Such market conditions could prevent the Partnership
<PAGE>
from promptly liquidating its futures interests and result in
restrictions on redemptions.
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 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. Future redemptions of Units
of Limited Partnership Interest will affect the amount of funds
available for investment in futures interests in subsequent
periods. Since they are at the discretion of the 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, 1998
For the quarter ended September 30, 1998, the Partnership
recorded total trading revenues including interest income and
change in value of the Yield Pool of $2,339,498 and posted an
increase in New Asset Value per Unit. The most significant gains
were recorded in the global bond futures component of the
balanced
<PAGE>
portfolio from long positions in U.S. Treasury note futures and
Treasury bond futures. Domestic bond prices soared higher during
August as investors flocked to these "safe havens" amid the
political and economic upheaval in Russia and other emerging
market currencies. During September, bond prices continued to
climb due to the scandal plaguing the White House, the
anticipation of the Federal Reserve's late month interest rate
cut and the reported losses by several major hedge funds.
Additional profits were recorded from long European and Japanese
bond futures as prices in these markets also moved higher amid
global economic and political uncertainty. Long S&P 500 Index
futures positions produced losses for the stock index futures
component as domestic equity prices plunged during mid-July and
again during August on fears that the troubles plaguing Russia,
Japan, and Latin America would have a negative effect on the U.S.
economy. In currencies, crossrate transactions involving the
Australian dollar versus other major currencies resulted in gains
as the Australian currency declined during August and September
versus the German mark and the Japanese yen. Smaller currency
gains were recorded from trading the Spanish peseta and the
Italian lira. Trading in the managed futures component provided
mixed results. In the agricultural markets, short positions in
corn and lean hog futures were profitable during August as prices
in these markets continued to trend lower amid large supplies and
weaker exports. In metals, losses resulted from trading base
metals as prices moved in a short-term volatile pattern during
July. In soft commodities, additional losses were incurred from
long cotton futures positions
<PAGE>
as cotton prices finished July sharply lower. Smaller losses
were experienced in the energy markets during September. Total
expenses for the three months ended September 30, 1998 were
$723,008, resulting in net income before minority interest of
$1,616,490. The minority interest in such income was $33,358,
resulting in net income of $1,583,132. The value of an
individual Unit in the Partnership increased from $1,783.37 at
June 30, 1998 to $1,839.42 at September 30, 1998.
For the nine months ended September 30, 1998, the Partnership
recorded total trading revenues including interest income and
change in value of the Yield Pool of $6,171,484 and posted an
increase in Net Asset Value per Unit. The most significant gains
were recorded in the bond futures component of the balanced
portfolio from long positions in U.S. interest rate futures,
particularly five-year Treasury note futures during August and
September. Additional gains in this sector were recorded from
long European bond futures positions. The recent worldwide
economic and political instability created an extremely positive
environment for bond prices during the third quarter, thus
resulting in gains for the Partnership's long positions. The
stock index futures component contributed smaller gains from long
S&P 500 Index futures positions as domestic stock prices climbed
to record highs during the first and second quarters. Results in
the managed futures component were mixed. Short corn and
livestock futures positions produced smaller profits as prices
<PAGE>
fell in these markets during late August. Gains were recorded
during the first quarter from short crude oil futures positions
as oil prices declined on reports of a potential agreement
between the U.N. and Iraq. A portion of the Partnership's
overall gains was offset by losses experienced in the soft
commodities and currency markets. Long cotton futures positions
resulted in losses as cotton prices reversed lower during July on
news of improved weather conditions. Transactions involving the
British pound during July and the Australian dollar during April,
June and August resulted in smaller year-to-date losses. In
metals, short positions in base metals early in the third quarter
proved unfavorable as prices moved higher in July. Total
expenses for the nine months ended September 30, 1998 were
$2,171,487, resulting in net income before minority interest of
$3,999,997. The minority interest in such income was $58,725
resulting in net income of $3,941,272. The value of an
individual Unit in the Partnership increased from $1,707.59 at
December 31, 1997 to $1,839.42 at September 30, 1998.
For the Quarter and Nine Months Ended September 30, 1997
For the quarter ended September 30, 1997, the Partnership
recorded total trading revenues including interest income and
change in value of the Yield Pool of $4,935,117 and posted an
increase in Net Asset Value per Unit. The most significant gains
were recorded in the stock and bond portions of the balanced
portfolio as domestic stock and bond futures prices moved higher
during July and September. Additional gains were recorded in the
<PAGE>
managed futures portion of the portfolio as long global interest
rate futures positions also profited from an upward price move
during July and September. Additional profits during the quarter
were attributed to an increase in the market value of the zero-
coupon U.S. Treasury Securities held in the guarantee portion of
the Partnership. In currencies, gains were recorded from short
positions in the New Zealand and Singapore dollars as the value
of these currencies declined relative to the U.S. dollar during
July. Smaller gains were recorded in energy futures as long
natural gas futures positions profited from a dramatic upward
price move during August and September. These gains were
partially offset by losses recorded from trendless price movement
in soft commodities and agricultural futures throughout a
majority of the quarter. Total expenses for the three months
ended September 30, 1997 were $749,215, resulting in net income
before minority interest of $4,185,902. The minority interest in
such income was $68,566 resulting in net income of $4,117,336 for
the Partnership. The value of an individual Unit in the
Partnership increased from $1,547.07 at June 30, 1997 to
$1,674.34 at September 30, 1997.
For the nine months ended September 30, 1997, the Partnership
recorded total trading revenues including interest income and
change in value of the Yield Pool of $8,707,092 and posted an
increase in Net Asset Value per Unit. The most significant gains
were recorded in the managed futures portion of the portfolio as
the value of the U.S. dollar strengthened versus most other
<PAGE>
currencies during January, February and July. As a result, gains
were recorded from short positions in the Singapore dollar,
Italian lira and Spanish peseta. Additional currency gains were
recorded from transactions involving the German mark and French
franc. In the stock portion of the balanced portfolio, long S&P
500 Index futures positions profited from a strong increase in
domestic equity prices during the first three quarters. Smaller
gains were recorded during the third quarter from long U.S. and
international bond futures positions as prices in these markets
moved higher. These gains were partially offset by losses from
trendless price movement in agricultural futures and soft
commodities throughout a majority of the year. Smaller losses
recorded in energy futures, as crude oil prices moved in a choppy
pattern during the second and third quarter, also offset a
portion of the Partnership's overall gains. Total expenses for
the nine months ended September 30, 1997 were $2,235,665,
resulting in net income before minority interest of $6,471,427.
The minority interest in such income was $101,526, resulting in
net income of $6,369,901 for the Partnership. The value of an
individual Unit in the Partnership increased from $1,479.85 at
December 31, 1996 to $1,674.34 at September 30, 1997.
Year 2000 Problem - Commodity pools, like financial and business
organizations and individuals around the world, depend on the
smooth functioning of computer systems. Many computer systems in
use today cannot recognize the computer code for the year 2000,
but revert to 1900 or some other date. This is commonly known as
<PAGE>
the "Year 2000 Problem". The Partnership could be adversely
affected if computer systems used by it or any third party with
whom it has a material relationship do not properly process and
calculate date-related information and data concerning dates on
or after January 1, 2000. Such a failure could have a negative
impact on the handling or determination of futures trades and
prices and the services provided the Partnership.
MSDW began its planning in response to the Year 2000 Problem in
1995 and currently has several hundred employees working on such
response. It has developed its own Year 2000 compliance plan to
deal with the problem and had the plan approved by the company's
executive management, Board of Directors and Information
Technology Department. Demeter is coordinating with MSDW in
taking steps that both believe are reasonably designed to address
the Year 2000 Problem with respect to Demeter's computer systems
that relate to the Partnership. This includes hardware and
software upgrades, systems consulting and computer maintenance.
Beyond the challenge facing internal computer systems, the
systems failure of any of the third parties with whom the
Partnership has a material relationship - the futures exchanges
and clearing organizations through which it trades, Carr, or the
Trading Manager - could result in a material financial risk to
the Partnership. Regarding the futures exchanges, all U.S.
futures exchanges will be subject to the monitoring of the CFTC
for their Year 2000 preparedness and the major foreign futures
<PAGE>
exchanges are also expected to be subject to market-wide testing
of their Year 2000 compliance during 1999. With respect to Carr
and the Trading Manager, Demeter intends to monitor their
progress throughout 1999 in their Year 2000 compliance and, where
applicable, to test its external interface with Carr and the
Trading Manager.
Finally, MSDW has begun developing various "contingency plans" in
the event that the systems of such third parties fail, and
Demeter intends to consult closely with MSDW in implementing
those plans. MSDW has also recently reported that its
development of such contingency plans is proceeding on schedule.
Despite the best efforts of both Demeter and MSDW, however, there
can be no assurance that the above steps will be sufficient to
avoid any adverse impact to the Partnership, whether from
failures in their own computer systems or those of Carr, the
Trading Manager or any other third party.
Risks Associated with the Euro - On January 1, 1999, eleven
countries in the European Union intend to establish fixed
conversion rates on their existing sovereign currencies and
convert to a common single currency (the "euro"). During a three-
year transition period, the existing sovereign currencies will
continue to exist but only as a fixed denomination of the euro.
Conversion to the euro will prevent the Trading Manager from
trading in certain currencies and thereby limit its ability to
take advantage of potential market opportunities that might
<PAGE>
otherwise have existed had separate currencies been available to
trade, and could result in losses with respect to those
positions.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Previously filed. See Form 10-Q for the quarter ended March 31,
1998.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K - No reports have been filed for the quarter
ended September 30, 1998.
<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)
November 10, 1998 By:/s/ Lewis A. Raibley, III
Lewis A. Raibley, III
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.
<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 statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 7,957,043
<SECURITIES> 42,567,265
<RECEIVABLES> 33,178
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 52,721,781<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 52,721,781<F2>
<SALES> 0
<TOTAL-REVENUES> 6,171,484<F3>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,171,487
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,941,272<F4>
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,941,272
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,941,272
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash, securities and receivables, total assets
include net unrealized gain on open contracts of $2,164,295.
<F2>Liabilities include redemptions payable of $2,001,215, accrued
brokerage fees of $175,032, accrued administrative expenses of $212,056,
accrued management fee of $43,758 and incentive fee payable of $33,426.
<F3>Total revenues includes realized trading revenue of $2,407,913, net
change in unrealized of $1,384,863, interest income of $2,168,276 and
change in valuation of Yield Pool of $210,432.
<F4>Income-Pretax, Income Continuing and Net Income includes minority
interest in income of $58,725.
</FN>
</TABLE>
