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. 0-19046
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3589337
(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 PORTFOLIO STRATEGY FUND L.P.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
September 30, 1998
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition
September 30, 1998 (Unaudited) and December 31, 1997....2
Statements of Operations for the Quarters Ended
September 30, 1998 and 1997 (Unaudited).................3
Statements of Operations for the Nine Months Ended
September 30, 1998 and 1997 (Unaudited).................4
Statements of Changes in Partners' Capital for the
Nine Months Ended September 30, 1998 and 1997
(Unaudited).............................................5
Statements of Cash Flows for the Nine Months Ended
September 30, 1998 and 1997 (Unaudited).................6
Notes to Financial Statements (Unaudited) ...........7-12
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations.......................................13-21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...................................22
Item 6. Exhibits and Reports on Form 8-
K....................22
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
September 30, December 31,
1998 1997
$ $
(Unaudited)
ASSETS
<S> <C> <C>
Equity in Commodity futures trading accounts:
Cash 114,236,426 125,280,410
Net unrealized gain on open contracts 22,251,369 9,771,078
Total Trading Equity 136,487,795 135,051,488
Interest receivable (DWR) 408,788
493,617
Total Assets 136,896,583 135,545,105
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable 1,898,304 583,707
Incentive fee payable 1,767,966 801,115
Management fee payable 455,931 451,563
Accrued administrative expenses 117,355 76,076
Total Liabilities 4,239,556 1,912,461
Partners' Capital
Limited Partners (51,164.999 and
55,349.245 Units, respectively) 131,180,238 131,363,711
General Partner (576 and 956
Units, respectively) 1,476,789 2,268,933
Total Partners' Capital 132,657,027 133,632,644
Total Liabilities and Partners' Capital 136,896,583 135,5
45,105
NET ASSET VALUE PER UNIT 2,563.87 2,373.36
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Quarters Ended September 30,
1998 1997
$ $
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized (6,711,476) 3,664,017
Net change in unrealized 25,524,956 1,746,864
Total Trading Results 18,813,480 5,410,881
Interest Income (DWR) 1,254,217 1,170,468
Total Revenues 20,067,697 6,581,349
EXPENSES
Incentive fees 1,767,966 717,178
Brokerage commissions (DWR) 1,381,577 1,391,910
Management fees 1,280,597 1,144,447
Transaction fees and costs 100,305 131,438
Administrative expenses 32,000 11,000
Total Expenses 4,562,445 3,395,973
NET INCOME 15,505,252 3,185,376
NET INCOME ALLOCATION
Limited Partners 15,223,733 3,059,320
General Partner 281,519 126,056
NET INCOME PER UNIT
Limited Partners 294.48 131.85
General Partner 294.48 131.85
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Nine Months Ended September 30,
1998 1997
$ $
REVENUES
<S> <C> <C>
Trading profit:
Realized 3,651,115 1,147,215
Net change in unrealized 12,480,291 3,256,682
Total Trading Results 16,131,406 4,403,897
Interest Income (DWR) 3,893,659 2,940,741
Total Revenues 20,025,065 7,344,638
EXPENSES
Brokerage commissions (DWR) 4,243,499 2,964,619
Management fees 3,848,949 2,870,169
Incentive fees 1,767,966 1,126,398
Transaction fees and costs 306,165 273,861
Administrative expenses 83,000 29,000
Total Expenses 10,249,579 7,264,047
NET INCOME 9,775,486 80,591
NET INCOME ALLOCATION
Limited Partners 9,593,359 29,969
General Partner 182,127 50,622
NET INCOME PER UNIT
Limited Partners 190.51 52.95
General Partners 190.51 52.95
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
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 40,937.953 $85,273,194 $2,038,949
$87,312,143
Offering of Units 18,765.082 43,031,474 -
43,031,474
Net Income - 29,969 50,622 80,591
Redemptions (2,612.159) (5,638,144) -
(5,638,144)
Partners' Capital
September 30, 1997 57,090.876 $122,696,493 $2,089,571
$124,786,064
Partners' Capital
December 31, 1997 56,305.245 $131,363,711 $2,268,933
$133,632,644
Net Income - 9,593,359 182,127
9,775,486
Redemptions (4,564.246) (9,776,832) (974,271)
(10,751,103)
Partners' Capital
September 30, 1998 51,740.999 $131,180,238 $1,476,789
$132,657,027
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
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 9,775,486 80,591
Noncash item included in net income:
Net change in unrealized (12,480,291) (
3,256,682)
(Increase) decrease in operating assets:
Interest receivable (DWR) 84,829 (
135,350)
Due from DWR - (26,346)
Increase (decrease) in operating liabilities:
Incentive fee payable 966,851 (
2,587,891)
Management fee payable 4,368 115,492
Accrued administrative expenses 41,279 (21,253)
Accrued brokerage commissions (DWR) - 135,566
Accrued transaction fees and costs -
12,500
Net cash used for operating activities (1,607,478) (
5,683,373)
CASH FLOWS FROM FINANCING ACTIVITIES
Offering of units - 4
3,031,474
Increase (decrease) in redemptions payable1,314,597 (
306,826)
Redemptions of units (10,751,103)
(5,638,144)
Net cash provided by (used for) financing activities (
9,436,506) 37,086,504
Net increase (decrease) in cash (11,043,984) 3
1,403,131
Balance at beginning of period 125,280,410 8
7,847,358
Balance at end of period 114,236,426 1
19,250,489
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
DEAN WITTER PORTFOLIO STRATEGY FUND 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 of Dean Witter Portfolio
Strategy Fund L.P. (the "Partnership"). The 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 Portfolio Strategy Fund L.P., (formerly, Dean Witter
Principal Secured Futures Fund), 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"). Demeter Management Corporation ("Demeter"), the
general partner, has retained John W. Henry & Company Inc. ("JWH"
or the "Trading Manager") as the trading manager of the
Partnership. 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. Both Demeter and DWR are wholly-
owned subsidiaries of Morgan Stanley Dean Witter & Co. ("MSDW").
2. Related Party Transactions
The Partnership's cash is on deposit with DWR and Carr in
<PAGE>
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
3. 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
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 329,239,000 231,632,000
Commitments to Sell 11,244,000 83,000,000
Commodity Futures:
Commitments to Purchase 20,447,000 20,890,000
Commitments to Sell 24,597,000 51,155,000
Foreign Futures:
Commitments to Purchase 671,242,000 198,296,000
Commitments to Sell 20,291,000 85,638,000
Off-Exchange-Traded
Forward Currency Contracts
Commitments to Purchase 236,639,000 78,711,000
Commitments to Sell 65,733,000 126,515,000
<PAGE>
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 gain on open contracts is reported as a
component of "Equity in Commodity futures trading accounts" on
the Statements of Financial Condition and totaled $22,251,369 and
$9,771,078 at September 30, 1998 and December 31, 1997,
respectively.
Of the $22,251,369 net unrealized gain on open contracts at
September 30, 1998, $19,395,402 related to exchange-traded
futures contracts and $2,855,967 related to off-exchange-traded
forward currency contracts.
Of the $9,771,078 net unrealized gain on open contracts at
December 31, 1997, $9,025,112 related to exchange-traded futures
contracts and $745,966 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 September
1999 and December 1998, respectively. Off-exchange-traded
forward
<PAGE>
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
currency contracts held 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 Statements of Financial Condition.
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, is 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 option 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
$133,631,828 and $134,305,522 at September 30, 1998 and December
<PAGE>
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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
(including foreign currency contracts).
For the nine months ended September 30, 1998 and for 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 223,422,000 99,810,000
Commodity Futures 15,206,000 41,029,000
Foreign Futures 294,460,000 104,405,000
Off-Exchange-Traded Forward
Currency Contracts 212,687,000 247,202,000
<PAGE>
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
December 31, 1997
Assets Liabilities
$ $
Exchange-Traded Contracts:
Financial Futures 164,149,000 101,742,000
Commodity Futures 21,882,000 32,801,000
Foreign Futures 101,980,000 48,040,000
Off-Exchange-Traded Forward
Currency Contracts 116,463,000 112,657,000
<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 for 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 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 of
$20,067,697 and posted an increase in Net Asset Value per Unit.
The most significant gains were recorded during August and
September, and to a lesser extent during July, in the financial
futures markets from long positions in German, U.S. and Japanese
<PAGE>
bond futures as prices in these markets were driven sharply
higher due to a "flight-to-quality" by investors seeking refuge
from the recent volatility in the global financial markets.
Smaller gains were recorded from long positions in British,
Italian and Spanish bond futures as prices in these European
markets also moved higher as investors sought a "safe haven" amid
the uncertainty in many of the world's economies. Additional
gains were recorded in the agricultural markets during July and
August from short corn futures positions as grain prices
increased due to reports of abundant supplies and decreasing
demand from overseas. These gains were partially offset by
losses incurred from transactions involving the British pound as
its value failed to move with consistent direction throughout a
majority of the quarter. Smaller currency losses were
experienced from short Japanese yen positions during September as
the value of the yen strengthened versus the U.S. dollar as a
Japanese finance official hinted that Japan was ready to
intervene to support the yen. Due to this upward move in the
yen, new long positions were established, only to experienced
additional losses later in the month as the Japanese government
failed to unveil any initiatives towards economic reform. In
metals, losses were recorded during September from short silver
futures positions as precious metals prices were driven higher by
the weakness in the U.S. dollar. Smaller losses were recorded in
the soft commodities markets during July and in the energy
markets during September. Total expenses for the three months
ended September 30, 1998 were $4,562,445, resulting in net income
<PAGE>
of $15,505,252. The value of an individual Unit in the
Partnership increased from $2,269.39 at June 30, 1998 to
$2,563.87 at September 30, 1998.
For the nine months ended September 30, 1998, the Partnership
recorded total trading revenues including interest income of
$20,025,065 and posted an increase in Net Asset Value per Unit.
The most significant trading gains were recorded in the global
bond futures markets as long positions in German, U.S. and
Japanese bond futures profited from an upward price trend during
the third quarter. This upward trend was due to a "flight-to-
quality" by investors seeking a safe haven from the recent
volatility plaguing many of the world's stock markets.
Additional profits were recorded from long positions in Italian,
British and Spanish bond futures as prices in these markets also
moved higher. In the energy markets, gains were recorded from
short crude oil futures positions as oil prices moved downward
for a majority of the first quarter. Following a spike higher in
late March, oil prices preceded to move lower during the second
quarter and early third quarter. Smaller gains were recorded
during July and August in the agricultural markets from short
corn futures positions as prices increased due to rising supply
and declining demand. These gains were partially offset by
losses recorded in the currency markets from transactions
involving the British pound as its value moved in a trendless
pattern relative to the U.S. dollar during the second and third
quarters. Similarly, gold futures trading during May and mid-
<PAGE>
June added to losses incurred during the first nine months of
1998 as a result of choppy price movement. Additional losses in
metals were recorded from short silver futures positions as
precious metals prices were pushed higher by a weakness in the
U.S. dollar during September. Total expenses for the nine months
ended September 30, 1998 were $10,249,579, resulting in net
income of $9,775,486. The value of an individual Unit in the
Partnership increased from $2,373.36 at December 31, 1997 to
$2,563.87 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 of
$6,581,349 and posted an increase in Net Asset Value per Unit.
The most significant gains were recorded in the financial futures
markets due primarily to an upward trend in global interest rate
futures prices during July and September. In global stock index
futures, gains recorded from short positions in the Nikkei Index
futures was more than offset from trading losses recorded in
Australian stock index futures. In metals, gains were recorded
from short silver and gold futures positions during July and from
long silver futures positions during September as silver prices
moved higher. A portion of the Partnership's overall gains was
offset by losses recorded in the energy markets from trading
crude and heating oil futures as oil prices moved in a short-term
volatile pattern throughout the quarter. In soft commodities,
losses were recorded from choppy price movement during July and
September, primarily from trading coffee futures. In currencies,
losses
<PAGE>
recorded from transactions involving the British pound as its
value moved in an inconsistent pattern during the quarter, more
than offset gains from short positions in the German mark during
July. Total expenses for the three months ended September 30,
1997 were $3,395,973, resulting in net income of $3,185,376. The
value of an individual Unit in the Partnership increased from
$2,053.89 at June 30, 1997 to $2,185.74 at September 30, 1997.
For the nine months ended September 30, 1997, the Partnership
recorded total trading revenues including interest income of
$7,344,638 and posted an increase in Net Asset Value per Unit.
The most significant gains were recorded in the financial futures
and metals markets. In financial futures trading, gains recorded
from an upward price trend in global interest rate futures during
July and September more than offset the losses experienced as a
result of short-term price volatility during the first four
months of the year. Additional gains were recorded from trading
Nikkei Index futures during the second and third quarter. In
metals, gains were recorded from short gold futures positions as
prices decreased during January, April, June and July.
Additional gains were recorded from trading silver futures during
July and September. A portion of the Partnership's overall gains
for the first nine months of the year was offset by losses from
trading energy futures as oil prices moved without consistent
direction for a majority of the year. In currencies, losses were
recorded from transactions involving the British pound as the
value of the pound moved in a trendless pattern during the first
and third quarters. Additional currency losses were recorded
<PAGE>
from trading the Swiss franc during the second quarter and in
August and September. A portion of these currency losses was
offset by gains experienced during July from short German mark
positions as the value of the U.S. dollar increased versus the
German mark. Total expenses for the nine months ended September
30, 1997 were $7,264,047 resulting in net income of $80,591. The
value of an individual Unit in the Partnership increased from
$2,132.79 at December 31, 1996 to $2,185.74 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
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
<PAGE>
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
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
<PAGE>
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
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 Portfolio Strategy
Fund L.P. (Registrant)
By: Demeter Management
Corporation
(General Partner)
November 13, 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 Portfolio Strategy 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> 114,236,426
<SECURITIES> 0
<RECEIVABLES> 408,788<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 136,896,583<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 136,896,583<F3>
<SALES> 0
<TOTAL-REVENUES> 20,025,065<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,249,579
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,775,486
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,775,486
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,775,486
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include interest receivable of $408,788.
<F2>In addition to cash and receivables, total assets include net
unrealized gain on open contracts of $22,251,369.
<F3>Liabilities include redemptions payable of $1,898,304,incentive fees
payable of $1,767,966, management fee payable of $455,931 and accrued
administrative expenses of $117,355.
<F4>Total revenues includes realized trading revenue of $3,651,115, net
change in unrealized of $12,480,291 and interest income of $3,893,659.
</FN>
</TABLE>
