UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required]
For the period ended December 31, 1996 or
[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from ________________to___________________
Commission File Number 33-71654
DWFCM INTERNATIONAL ACCESS FUND L.P.
(Exact name of registrant as specified in its Limited Partnership Agreement)
DELAWARE 13-3700691
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
c/o Demeter Management Corporation
Two World Trade Center, New York, N.Y. - 62nd Flr. 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 392-5454
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment of this Form 10K. [ X ]
State the aggregate market value of the Units of Limited Partnership Interest
held by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which units were sold, or the average bid
and asked prices of such units, as of a specified date within 60 days prior to
the date of filing: $48,368,318.56 at January 31, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)
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<TABLE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 1996
<CAPTION>
Page No.
<S> <C>
DOCUMENTS INCORPORATED BY REFERENCE. . . . . . . . . . . . . . . . . 1
Part I .
Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . 2-3
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . 4
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . 4-5
Item 4. Submission of Matters to a Vote of Security Holders . . .5
Part II.
Item 5. Market for the Registrant's Partnership Units and
Related Security Holder Matters . . . . . . . . . . . . .6
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . .7
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . .8-13
Item 8. Financial Statements and Supplementary Data. . . . . . .13
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . .13
Part III.
Item 10. Directors, Executive Officers, Promoters and
Control Persons of the Registrant . . . . . . . . . 14-17
Item 11. Executive Compensation . . . . . . . . . . . . . . . . 17
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . 17
Item 13. Certain Relationships and Related Transactions . . . . 18
Part IV.
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . 19
</TABLE>
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<TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference as follows:
<CAPTION>
Documents Incorporated Part of Form 10-K
<S> <C>
Partnership's Registration Statement
On Form S-1, File No. 33-71654. I and IV
December 31, 1996 Annual Report for
the DWFCM International Access Fund L.P. II and IV
</TABLE>
<PAGE>
PART I
Item 1. BUSINESS
(a) General Development of Business. DWFCM International Access Fund
L.P. (the "Partnership") is a Delaware limited partnership formed to
engage in the speculative trading of futures and forward contracts and
options on futures contracts and on physical commodities, and other
commodity interests, including foreign currencies, financial instruments,
precious and industrial metals, energy products and agriculturals.
Units of limited partnership interest in the Partnership were
registered pursuant to a Registration Statement on Form S-1 (File No. 33-
71654) which became effective on February 3, 1994. The offering of units
was underwritten on a "best efforts" basis by Dean Witter Reynolds Inc.
("DWR"), a commodity broker and an affiliated corporation of the
Partnership's general partner, Demeter Management Corporation ("Demeter").
The Partnership commenced operations on March 3, 1994. The Partnership's
net asset value per unit, as of December 31, 1996 was $1,174.35,
representing an increase of 3.97 percent from the net asset value per unit
of $1,129.51 at December 31, 1995. For a more detailed description of the
Partnership's business see subparagraph (c).
(b) Financial Information about Industry Segments. The
Partnership's business comprises only one segment for financial reporting
purposes, speculative trading of commodity futures contracts and other
commodity interests. The relevant financial information is presented in
Items 6 and 8.
(c) Narrative Description of Business. The Partnership is in the
business of speculative trading in commodity futures contracts and other
commodity interests, pursuant to trading instructions provided by
Dean Witter Futures & Currency Management Inc. ("DWFCM"), a wholly-owned
<PAGE>
subsidiary of Dean Witter, Discover & Co. ("DWD") and an affiliate of DWR,
and Demeter. For a detailed description of the different facets of the
Partnership's business, see those portions of the Partnership's
Prospectus, dated February 3, 1994, filed as part of the Registration
Statement on Form S-1 ( File No. 33-71654) (the "Prospectus") (see
"Documents Incorporated by Reference" Page 1), set forth below.
Facets of Business
1. Summary 1. "Summary of the Prospectus"
(Pages 2-10).
2. Commodities Markets 2. "The Commodities Markets"
(Pages 62-69).
3. Partnership's Trading 3. "Trading Policies" (Page 58)
Arrangements and "The Trading Manager"
Policies (Pages 40-43).
4.Management of the Part- 4. "The Management Agreements"
nership (Pages 60-62). "The General
Partner" (Pages 35-37) and
"The Commodity Broker" (Pages
59-60). "The Limited
Partnership Agreement" (Pages
71-76).
5. Taxation of the Partner- 5. "Material Federal Income Tax
ship's Limited Partners Considerations" and "State
and Local Income Tax Aspects"
(Pages 80-87).
(d) Financial Information About Foreign and Domestic Operations and
Export Sales.
The Partnership has not engaged in any operations in foreign countries;
however, the Partnership (through the commodity broker) enters into forward
contract transactions where foreign banks are the contracting party, and
futures contracts on foreign exchanges.
<PAGE>
Item 2. PROPERTIES
The executive and administrative offices are located within the
offices of DWR. The DWR offices utilized by the Partnership are located
at Two World Trade Center, 62nd Floor, New York, NY 10048.
Item 3. LEGAL PROCEEDINGS
On September 6, 10, and 20, 1996, similar purported class actions
were filed in the Superior Court of the State of California, County of Los
Angeles, on behalf of all purchasers of interests in limited partnership
commodity pools sold by DWR. Named defendants include DWR, Demeter, DWFCM
DWD (all such parties referred to hereafter as the "Dean Witter Parties"),
certain limited partnership commodity pools of which Demeter is the
general partner, and certain trading advisors to those pools. Similar
purported class actions were also filed on September 18 and 20, 1996, in
the Supreme Court of the State of New York, New York County, and on
November 14, 1996 in the Superior Court of the State of Delaware, New
Castle County, against the Dean Witter Parties and certain trading
advisors on behalf of all purchasers of interests in various limited
partnership commodity pools sold by DWR. Generally, these complaints
allege, among other things, that the defendants committed fraud, deceit,
misrepresentation, breach of fiduciary duty, fraudulent and unfair
business practices, unjust enrichment, and conversion in connection with
the sale and operation of the various limited partnership commodity pools.
The complaints seek unspecified amounts of compensatory and punitive
damages and other relief. It is possible that additional similar actions
may be filed and that, in the course of these actions, other parties could
be added as defendants. The Dean Witter Parties believe that they have
strong defenses to, and they will vigorously contest, the actions.
<PAGE>
Although the ultimate outcome of legal proceedings cannot be predicted
with certainty, it is the opinion of management of the Dean Witter Parties
that the resolution of the actions will not have a material adverse effect
on the financial condition or the results of operations of any of the Dean
Witter Parties.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND RELATED
SECURITY HOLDER MATTERS
There is no established public trading market for the Units of
Limited Partnership Interest in the Partnership. The number of holders
of Units at December 31, 1996 was approximately 4,330. No distributions
have been made by the Partnership since it commenced trading operations.
Demeter has sole discretion to decide what distributions, if any, shall be
made to investors in the Partnership. No determination has yet been made
as to future distributions.
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<TABLE>
Item 6. SELECTED FINANCIAL DATA (in dollars)
<CAPTION>
For the
Period from
March 3, 1994
(commencement of
For the Years Ended December 31, operations to
<S> <C> <C> <C>
1996 1995 December 31, 1994
Total Revenues
(including interest) 6,553,585 22,294,669 (239,216)
Net Income (Loss) 1,278,934 13,807,092 (5,561,597)
Net Income (Loss)
Per Unit (Limited
& General Partners) 44.84 202.74 (73.23)
Total Assets 45,730,849 55,136,973 61,279,429
Total Limited
Partners' Capital 43,960,184 52,842,505 59,707,586
Net Asset Value Per
Unit of Limited
Partnership Interest 1,174.35 1,129.51 926.77
</TABLE>
<PAGE>
Item 7. 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, the commodity broker, 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 ("CFTC") for investment of customer
funds. The Partnership's assets held by DWR may be used as margin solely
for the Partnership's trading. Since the Partnership's sole purpose is
to trade in commodity futures contracts and 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 contracts, forward
contracts and other commodity interests may be illiquid. If the price for
a futures contract for a particular commodity has increased or decreased
by an amount equal to the "daily limit", positions in the commodity can
neither be taken nor liquidated unless traders are willing to effect
trades at or within the limit. Commodity futures prices have occasionally
moved the daily limit for several consecutive days with little or no
trading. Such market conditions could prevent the Partnership from
promptly liquidating its commodity futures positions.
There is no limitation on daily price moves in trading forward
contracts on foreign currencies. 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.
<PAGE>
Either of these market conditions could result in restrictions on
redemptions.
Market Risk. The Partnership trades futures, options and forward
contracts in interest rates, stock indices, commodities and currencies.
In entering into these contracts there exists a risk to the Partnership
(market risk) that such contracts may be significantly influenced by
market conditions, such as interest rate volatility, resulting in such
contracts being less valuable. If the markets should move against all of
the futures interest positions held by the Partnership at the same time,
and if the Trading Advisor were unable to offset futures interest
positions of the Partnership, the Partnership could lose all of its assets
and the Limited Partners would realize a 100% loss. The Partnership has
established Trading Policies, which include standards for liquidity and
leverage which help control market risk. Both the Trading Advisor and
Demeter monitor the Partnership's trading activities on a daily basis to
ensure compliance with the Trading Policies. Demeter may (under terms of
the Management Agreement) override the trading instructions of the Trading
Advisor to the extent necessary to comply with the Partnership's Trading
Policies.
Credit Risk. In addition to market risk, the Partnership is subject
to credit risk in that a counterparty may not be able to meet its
obligations to the Partnership. The counterparty of the Partnership for
futures contracts traded in the United States and most foreign exchanges
on which the Partnership trades is the clearinghouse associated with such
exchange. In general, a clearinghouse is backed by the membership of the
exchange and will act in the event of non-performance by one of its
members or one of its member's customers, and as such, should
<PAGE>
significantly reduce this credit risk. In cases where the Partnership
trades on exchanges where the clearinghouse is not funded or guaranteed by
the membership, or where the exchange is a "principals' market" in which
performance is the responsibility of the exchange member and not the
exchange or a clearinghouse, or when the Partnership enters into off-
exchange contracts with a counterparty, the sole recourse of the
Partnership will be the clearinghouse, the exchange member or the off-
exchange contract counterparty, as the case may be. With respect to
futures contracts, DWR, in its business as an inter-national commodity
broker, constantly monitors the creditworthiness of the exchanges and
clearing members of the foreign exchanges with which it does business for
clients, including the Partnership. DWR employees also from time to time
serve on supervisory or management committees of such exchanges.If DWR
believed that there was a problem with the creditworthiness of an exchange
on which the Partnership deals, it would so advise Demeter. With respect
to exchanges of which DWR is not a member, DWR acts only through clearing
brokers it has determined to be creditworthy. If DWR believed that a
clearing broker with which it deals on behalf of clients were not
creditworthy, it would terminate its relationship with such broker.
While DWR monitors the creditworthiness and risks involved in
dealing on the various exchanges (and their clearinghouses) and with other
exchange members, there can be no assurance that an exchange (or its
clearinghouse) or other exchange member will be able to meet its
obligations to the Partnership. DWR has not undertaken to indemnify the
Partnership against any loss. Further, the law is unclear, particularly
with respect to trading in various non-U.S. jurisdictions, as to whether
DWR has any obligation to protect the Partnership from any liability in
<PAGE>
the event that an exchange or its clearinghouse or another exchange member
defaults on its obligations on trades effected for the Partnership.
Although DWR monitors the creditworthiness of the foreign exchanges
and clearing brokers with which it does business for clients, DWR does not
have the capability to precisely quantify the Partnership's exposure to
risks inherent in its trading activities on foreign exchanges, and, as a
result, the risk is not monitored by DWR on an individual client basis
(including the Partnership). In this regard, DWR must clear its customer
trades through one or more other clearing brokers on each exchange where
DWR is not a clearing member. Such other clearing brokers calculate the
net margin requirements of DWR in respect of the aggregate of all of DWR's
customer positions carried in DWR's omnibus account with that clearing
broker. Similarly, DWR calculates a net margin requirement for the
exchange-traded futures positions of each of its customers, including the
Partnership. Neither DWR nor DWR's respective clearing brokers on each
foreign futures exchange calculates the margin requirements of an
individual customer, such as the Partnership, in respect of the customer's
aggregate contract positions on any particular exchange.With respect to
forward contract trading, the Partnership trades with only those
counterparties which Demeter, together with DWR, have determined to be
creditworthy. As set forth in the Partnership's Trading Policies, in
determining creditworthiness, Demeter and DWR consult with the Corporate
Credit Department of DWR. Currently, the Partnership deals solely with
DWR as its counterparty on forward contracts. While DWR and Demeter
monitor creditworthiness and risk involved in dealing on the various
exchanges and with counterparties, there can be no assurance that an
exchange or counterparty will be able to meet its obligations to the
<PAGE>
Partnership. See Note 3, "Financial Instruments" - to the Partnership's
Financial Statements in its 1996 Annual Report to Partners, incorporated
by reference in this Form 10-K.
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, forward contracts on foreign currencies and other
commodity interests in subsequent periods. 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. As of December 31, 1996, the Partnership's
total capital was $44,794,454, a decrease of $8,850,465 from the
Partnership's total capital of $53,644,919 at December 31, 1995. For the
year ended December 31, 1996, the Partnership generated net income of
$1,278,934, and total redemptions aggregated $10,129,399.
For the year ended December 31, 1996, the Partnership's total
trading revenues including interest income were $6,553,585. The
Partnership's total expenses for the year were $5,274,651, resulting in
net income of $1,278,934. The value of an individual unit in the
Partnership increased from $1,129.51 at December 31, 1995 to $1,174.35 at
December 31, 1996.
As of December 31, 1995, the Partnership's total capital was
$53,644,919, a decrease of $6,721,053 from the Partnership's total capital
of $60,365,972 at December 31, 1994. For the year ended December 31,
1995, the Partnership generated net income of $13,807,092 and total
redemptions aggregated $20,528,145.
For the year ended December 31, 1995, the Partnership's total
trading revenues including interest income were $22,294,669. The
<PAGE>
Partnership's total expenses for the year were $8,487,577, resulting in
net income of $13,807,092. The value of an individual unit in the
partnership increased from $926.77 at December 31, 1994 to $1,129.51 at
December 31, 1995.
As of December 31, 1994, the Partnership's total capital was
$60,365,972, an increase of $60,363,972 from the Partnership's total
capital of $2,000 at March 3, 1994. For the period March 3, 1994 to
December 31, 1994, the Partnership incurred a net loss of $5,561,597,
total subscriptions aggregated $68,115,437 and total redemptions
aggregated $2,189,868.
For the period ended December 31, 1994, the partnership's total
trading losses net of interest income were $239,216. The Partnership's
total expenses for the period were $5,322,381, resulting in a net loss of
$5,561,597. The value of an individual unit in the Partnership decreased
from $1,000.00 at March 3, 1994 to $926.77 at December 31, 1994.
The Partnership's overall performance record represents varied
results of trading in different commodity markets. For a further
description of trading results, refer to the letter to the Limited
Partners in the accompanying 1996 Annual Report to Partners, incorporated
by reference in this Form 10-K. The Partnership's gains and losses are
allocated among its Limited Partners for income tax purposes.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item appears in the attached 1996
Annual Report to Partners and is incorporated by reference in this Annual
Report on Form 10-K.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS OF THE REGISTRANT
General Partner
Demeter, a Delaware corporation, was formed on August 18, 1977 to
act as a commodity pool operator and is registered with the CFTC as a
commodity pool operator and currently is a member of the National Futures
Association ("NFA") in such capacity. Demeter is wholly-owned by DWD and
is an affiliate of DWR and DWFCM. DWD, DWR and Demeter may each be deemed
to be "promoters" and/or a "parent" of the Partnership within the meaning
of the federal securities laws.
Dean Witter Reynolds Inc.
DWR is a financial services company which provides to its
individual, corporate and institutional clients services as a broker in
securities and commodity interest contracts, a dealer in corporate,
municipal and government securities, an investment banker, an investment
adviser and an agent in the sale of life insurance and various other
products and services. DWR is a member firm of the New York Stock
Exchange, the American Stock Exchange, the Chicago Board Options Exchange,
and other major securities exchanges, and is a clearing member of the
Chicago Board of Trade, the Chicago Mercantile Exchange, the Commodity
Exchange Inc., and other major commodities exchanges.
DWR is registered with the CFTC as a futures commission merchant and
is a member of the NFA in such capacity. DWR is currently servicing its
clients through a network of 371 branch offices with approximately 9,080
account executives servicing individual and institutional client accounts.
<PAGE>
Directors and Officers of the General Partner
The directors and officers of Demeter as of December 31, 1996 are
as follows:
Richard M. DeMartini, age 44, is the Chairman of the Board and a
Director of Demeter. Mr. DeMartini is also the Chairman of the Board and
a Director of DWFCM, a registered commodity trading advisor. Mr.
DeMartini has served as President and Chief Operating Officer of Dean
Witter Capital, a division of DWR since January 1989. From January 1988
until January 1989, Mr. DeMartini served as President and Chief Operating
Officer of the Consumer Banking Division of DWD, and from May 1985 until
January 1988 was President and Chief Executive Officer of the Consumer
Markets Division of DWD. Mr. DeMartini currently serves as a Director of
DWD and DWR, and has served as an officer of DWR for the past five years.
Mr. DeMartini has been with DWD and its affiliates for 22 years.
Mark J. Hawley, age 53, is President and a Director of Demeter. Mr.
Hawley joined DWR in February 1989 and currently serves as Executive Vice
President and Director of DWR's Managed Futures and Precious Metals
Department. Mr. Hawley also serves as President of DWFCM. From 1978 to
1989, Mr. Hawley was a member of the senior management team at Heinold
Asset Management, Inc., a commodity pool operator, and was responsible for
a variety of projects in public futures funds. From 1972 to 1978, Mr.
Hawley was a Vice President in charge of institutional block trading for
the Mid-West at Kuhn Loeb & Co.
Lawrence Volpe, age 49, is a Director of Demeter and DWFCM. Mr.
Volpe joined DWR as a Senior Vice President and Controller in September
1983, and currently holds those positions. From July 1979 to September
1983, he was associated with E.F. Hutton & Company Inc. and prior to his
departure, held the positions of First Vice President and
<PAGE>
Assistant Controller. From 1970 to July 1979, he was associated with
Arthur Anderson & Co. and prior to his departure he served as audit
manager in the financial services division.
Joseph G. Siniscalchi, age 51, is a Director of Demeter. Mr.
Siniscalchi joined DWR in July 1984 as a First Vice President, Director
of General Accounting. He is currently Senior Vice President and
Controller of the Dean Witter Financial Division of DWR. From February
1980 to July 1984, Mr. Siniscalchi was Director of Internal Audit at
Lehman Brothers Kuhn Loeb, Inc.
Laurence E. Mollner, age 55, is a Director of Demeter. Mr. Mollner
joined DWR in May 1979 as Vice President and Director of Commercial Sales.
He is currently Executive Vice President and Deputy Director of the
Futures Markets Division of DWR.
Edward C. Oelsner III, age 54, is a Director of Demeter. Mr.
Oelsner joined DWR in March 1981 as a Managing Director in the Corporate
Finance Department. He currently manages DWR's Retail Products Group
within the Corporate Finance Department. While Mr. Oelsner has extensive
experience in the securities industry, he has no experience in commodity
interests trading.
Robert E. Murray, age 36, is a Director of Demeter. Mr. Murray is
currently a Senior Vice President of the DWR Managed Futures Division and
is a Director and the Senior Administrative Officer of DWFCM. Mr. Murray
graduated from Geneseo State University in May 1983 with a B.A. degree in
Finance. Mr. Murray began at DWR in 1984 and is currently the Director
of Product Development for the Managed Futures Division and is responsible
for the development and maintenance of the proprietary Fund Management
System utilized by Demeter and DWFCM for organizing information and
producing reports for monitoring investors' accounts.
<PAGE>
Patti L. Behnke, age 36, is Vice President and Chief Financial
Officer of Demeter. Ms. Behnke joined DWR in 1991 as Assistant Vice
President of Financial Reporting and is currently First Vice President and
Director of Financial Reporting and Managed Futures Accounting in the
Capital Markets division of DWR. From August 1988 to September 1990, Ms.
Behnke was Assistant Controller of L.F. Rothschild & Co. and from
September 1986 to August 1988, she was associated with Carteret Savings
Bank as Assistant Vice President - Financial Analysis. From April 1982 to
September 1986, Ms. Behnke was an auditor at Arthur Andersen & Co.
Item 11. EXECUTIVE COMPENSATION
The Partnership has no directors and executive officers. As a
limited partnership, the business of the Partnership is managed by Demeter
which is responsible for the administration of the business affairs of the
Partnership but receives no compensation for such services.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners - As of
December 31, 1996, there was no person as beneficial owner of more than 5
percent of the Units of Limited Partnership Interest in the Partnership.
(b) Security Ownership of Management - At December 31, 1996,
Demeter owned 710.409 Units of General Partnership Interest representing
a 1.86 percent interest in the Partnership.
(c) Changes in Control - None
<PAGE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Refer to Note 2 - "Related Party Transactions" of "Notes to
Financial Statements", in the accompanying 1996 Annual Report to Partners,
incorporated by reference in this Form 10-K. In its capacity as the
Partnership's retail commodity broker, DWR received commodity brokerage
commissions (paid and accrued by the Partnership) of $3,548,366 for the
year ended December 31, 1996. In its capacity as the Partnership's
trading manager, DWFCM received management fees of $1,401,716 for the year
ended December 31, 1996.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Listing of Financial Statements
The following financial statements and report of independent public
accountants, all appearing in the accompanying 1996 Annual Report to
Partners, are incorporated by reference in this Form 10-K:
- Report of Deloitte & Touche LLP, independent auditors, for the
years ended December 31, 1996 and 1995, and the period from
March 3, 1994 (commencement of operations) to December 31,
1994.
- Statements of Financial Condition as of December 31, 1996 and
December 31, 1995.
- Statements of Operations, Changes in Partners' Capital, and
Cash Flows for the years ended December 31, 1996 and 1995 and
the period from March 3, 1994 (commencement of operations) to
December 31, 1994.
- Notes to Financial Statements.
With exception of the aforementioned information and the information
incorporated in Items 7, 8 and 13, the 1996 Annual Report to Partners is
not deemed to be filed with this report.
2. Listing of Financial Statement Schedules
No financial statement schedules are required to be filed with this
report.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Partnership during the
last quarter of the period covered by this report.
(c) Exhibits
Refer to Exhibit Index on Page E-1.
<PAGE>
SIGNATURES
Pursuant to the requirement of Sections 13 or 15(d) 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.
DWFCM INTERNATIONAL ACCESS FUND L.P.
(Registrant)
BY: Demeter Management Corporation,
General Partner
March 27, 1997 BY: /s/ Mark J. Hawley
Mark J. Hawley, Director and
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Demeter Management Corporation.
BY: /s/ Mark J. Hawley March 27, 1997
Mark J. Hawley, Director and
President
/s/ Richard M. DeMartini March 27, 1997
Richard M. DeMartini, Director
and Chairman of the Board
/s/ Lawrence Volpe March 27, 1997
Lawrence Volpe, Director
/s/ Laurence E. Mollner March 27, 1997
Laurence E. Mollner, Director
/s/ Joseph G. Siniscalchi March 27, 1997
Joseph G. Siniscalchi, Director
/s/ Edward C. Oelsner III March 27, 1997
Edward C. Oelsner III, Director
/s/ Robert E. Murray March 27, 1997
Robert E. Murray, Director
/s/ Patti L. Behnke March 27, 1997
Patti L. Behnke, Chief Financial
Officer and Principal Accounting
Officer
<PAGE>
EXHIBIT INDEX
ITEM METHOD OF FILING
-3. Limited Partnership Agreement of
the Partnership, dated as of
March 1, 1994. (1)
- -10. Form of the Management Agreements among
the Partnership, Demeter Management (2)
Corporation and DWFCM (the Trading
Advisor) dated as of March 1, 1994.
- -10. Customer Agreement Between the
Partnership and Dean Witter
Reynolds Inc., dated as of (3)
March 1, 1994.
- -13. December 31, 1996 Annual Report to Limited Partners. (4)
(1) Incorporated by reference to Exhibit 3.01 and Exhibit 3.02 of the
Partnership's Registration Statement on Form S-1 (File No. 33-71654).
(2) Incorporated by reference to Exhibit 10.02 of the Partnership's
Registration Statement on Form S-1 (File No. 33-71654).
(3) Incorporated by reference to Exhibit 10.01 of the Partnership's
Registration Statement on Form S-1 (File No. 33-71654).
(4) Filed herewith.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Dean
Witter DWFCM International Access Fund L.P. and is qualified in its
entirety by references to such financial instruments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 44,917,336
<SECURITIES> 0
<RECEIVABLES> 152,193
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 45,730,849<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 45,730,849<F2>
<SALES> 0
<TOTAL-REVENUES> 6,553,585<F3>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,274,651
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,278,934
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,278,934
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,278,934
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net unrealized
gain on open contracts of $622,794 and due from DWR of $38,526.
<F2>Liabilities include redemptions payable of $649,420, accrued management
fees of $113,798, and common administrative expenses payable of $100,120,
accrued brokerage commissions of $59,631, and accrued transaction fees
and costs of $13,426.
<F3>Total revenues include realized trading revenue of $5,018,781, net change
in unrealized of $307,152 and interest income of $1,841,956.
</FN>
</TABLE>
<PAGE>
International
Access
Fund
December 31, 1996
Annual Report
[LOGO]DEAN WITTER
<PAGE>
DEAN WITTER
Two World Trade Center
62nd Floor
New York, NY 10048
Telephone (212) 392-8899
DWFCM INTERNATIONAL ACCESS FUND L.P.
ANNUAL REPORT
1996
Dear Limited Partner:
This marks the third annual report for the DWFCM International Access Fund L.P.
(the "Fund"). The Fund began the year at a Net Asset Value per Unit of
$1,129.51 and increased in value by 4.0% to close the year at a Net Asset Value
of $1,174.35. Since its inception in March of 1994, the Fund has increased by
17.4% (a compound annual return of 5.8%).
Gains were recorded during January from short positions in the Japanese yen and
most major European currencies. Additional gains were recorded from long global
interest rate futures positions as prices in these markets increased during the
month. A portion of these gains was offset by losses from long positions in
energy futures as gas and oil prices reversed lower after an upward move late
in 1995. Significant losses were recorded in February as a result of a series
of sharp trend reversals higher in the value of the Japanese yen and most major
European currencies. Additional losses were recorded in the energy markets, as
a result of inconsistent price movement, and in financial futures, as a result
of a sharp reversal lower in the previous upward move in global interest rate
futures prices. Small gains were recorded in March from newly established long
positions in the energy markets as oil and gas futures prices finished the
month higher. Additional gains were recorded in currencies from long Australian
dollar positions as its value increased relative to the U.S. dollar.
Trading gains posted during April were due primarily to a downward move in the
value of the German mark and Swiss franc relative to the U.S. dollar. Smaller
gains were recorded from trading in the energy futures markets. Sharp
<PAGE>
trend reversals in a majority of the markets traded resulted in losses during
May. The most significant losses were recorded in metals from long copper
futures positions as prices moved dramatically lower on May 17 and 20. Smaller
losses were recorded in financial futures. During June, global interest rate
and stock index futures prices moved in a choppy pattern, resulting in losses
for the Fund. Smaller losses were recorded in the currency markets. A portion
of these losses was offset by gains from short copper futures positions as
prices moved dramatically lower on news of significant losses in copper by
Sumitomo Corporation.
During July, long Swiss franc, French franc and German mark positions profited
from an upward move in value relative to the U.S. dollar. Additional gains were
recorded from long global interest rate futures positions. Trend reversals and
choppy movement in the currency markets resulted in losses for the Fund during
August, thus giving back a portion of July's gains. Smaller losses were
recorded from trading soft commodities and metals. Gains from long energy
futures positions offset a portion of these losses. A strong upward move in
global interest rate futures prices during September resulted in gains for the
Fund's long positions. Additional gains were recorded in the energy markets as
oil and gas prices continued to trend higher.
Gains were recorded during October from long British pound positions as the
value of the pound surged higher relative to the U.S. dollar. Additional gains
were recorded from long global interest rate futures positions as prices
continued to trend higher. Gains were recorded in November as long positions in
global interest rate futures and the British pound profited from a continued
upward price trend. Smaller gains were recorded in metals trading from long
copper and short gold futures positions. Losses were recorded during December
as a result of sudden and dramatic reversal lower in global interest rate
futures prices early in the month. Additional losses were recorded as the value
of the British pound decreased sharply during the first week of December.
<PAGE>
After experiencing a considerable decline in the first half of the year
(particularly in February), the Fund rebounded significantly during September,
October and November by taking advantage of strong price trends in global
financial futures and currency markets. A portion of these gains were given
back during December due to significant trend reversals in global bonds and
currencies. Overall, the Fund was able to overcome the difficult performance
during the first half of the year and December and post modest gains as a
result of profits experienced during the year's strongest months (September-
November).
Should you have any questions concerning this report, please feel free to
contact Demeter Management Corporation at Two World Trade Center, 62nd Floor,
New York, NY 10048, or your Dean Witter Account Executive.
I hereby affirm, that to the best of my knowledge and belief, the information
contained in this report is accurate and complete. Past performance is not a
guarantee of future results.
Sincerely,
/s/ Mark J. Hawley
Mark J. Hawley
President
Demeter Management Corporation
General Partner
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
INDEPENDENT AUDITORS' REPORT
The Limited Partners and the General Partner:
We have audited the accompanying statements of financial condition of DWFCM
International Access Fund L.P. (the "Partnership") as of December 31, 1996 and
1995 and the related statements of operations, changes in partners' capital,
and cash flows for the years ended December 31, 1996 and 1995 and the period
from March 3, 1994 (commencement of operations) to December 31, 1994. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of DWFCM International Access Fund L.P. as of
December 31, 1996 and 1995 and the results of its operations and its cash flows
for the years ended December 31, 1996 and 1995 and the period from March 3,
1994 (commencement of operations) to December 31, 1994 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
February 17, 1997
New York, New York
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1995
---------- ----------
$ $
<S> <C> <C>
ASSETS
Equity in Commodity futures trading
accounts:
Cash 44,917,336 53,843,646
Net unrealized gain on open contracts 622,794 929,946
---------- ----------
Total Trading Equity 45,540,130 54,773,592
Interest receivable (DWR) 152,193 197,923
Due from DWR 38,526 165,458
---------- ----------
Total Assets 45,730,849 55,136,973
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 649,420 1,058,634
Accrued management fee (DWFCM) 113,798 136,687
Accrued administrative expenses 100,120 147,774
Accrued brokerage commissions (DWR) 59,631 126,849
Accrued transaction fees and costs 13,426 22,110
---------- ----------
Total Liabilities 936,395 1,492,054
---------- ----------
PARTNERS' CAPITAL
Limited Partners (37,433.592
and 46,783.554 Units, respectively) 43,960,184 52,842,505
General Partner (710.409 Units) 834,270 802,414
---------- ----------
Total Partners' Capital 44,794,454 53,644,919
---------- ----------
Total Liabilities and Partners' Capital 45,730,849 55,136,973
========== ==========
NET ASSET VALUE PER UNIT 1,174.35 1,129.51
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
MARCH 3, 1994
FOR THE (COMMENCEMENT
YEARS ENDED OF
DECEMBER 31, OPERATIONS)
--------------------- TO DECEMBER
1996 1995 31, 1994
--------- ---------- -------------
<S> <C> <C> <C>
$ $ $
REVENUES
Trading Profit (Loss):
Realized 5,018,781 22,979,666 (6,286,520)
Net change in unrealized (307,152) (3,418,005) 4,347,951
--------- ---------- ----------
Total Trading Results 4,711,629 19,561,661 (1,938,569)
Interest income (DWR) 1,841,956 2,733,008 1,699,353
--------- ---------- ----------
Total Revenues 6,553,585 22,294,669 (239,216)
--------- ---------- ----------
EXPENSES
Brokerage commissions (DWR) 3,548,366 4,994,346 3,324,472
Management fees (DWFCM) 1,401,716 1,856,924 1,418,368
Transaction fees and costs 232,569 386,241 163,844
Administrative expenses 92,000 80,000 97,025
Incentive fees (DWFCM) -- 1,170,066 318,672
--------- ---------- ----------
Total Expenses 5,274,651 8,487,577 5,322,381
--------- ---------- ----------
NET INCOME (LOSS) 1,278,934 13,807,092 (5,561,597)
========= ========== ==========
NET INCOME (LOSS) ALLOCATION:
Limited Partners 1,247,078 13,663,064 (5,498,497)
General Partner 31,856 144,028 (63,100)
NET INCOME (LOSS) PER UNIT:
Limited Partners 44.84 202.74 (73.23)
General Partner 44.84 202.74 (73.23)
</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 AND THE PERIOD FROM MARCH 3,
1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
----------- ----------- ------- -----------
<S> <C> <C> <C> <C>
$ $ $
Partners' Capital,
March 3, 1994 2.000 1,000 1,000 2,000
Initial Offering 20,265.008 20,040,008 225,000 20,265,008
Supplemental
Offerings 47,153.068 47,353,943 496,486 47,850,429
Net Loss -- (5,498,497) (63,100) (5,561,597)
Redemptions (2,284.236) (2,188,868) (1,000) (2,189,868)
----------- ----------- ------- -----------
Partners' Capital, December
31, 1994 65,135.840 59,707,586 658,386 60,365,972
Net Income -- 13,663,064 144,028 13,807,092
Redemptions (17,641.877) (20,528,145) -- (20,528,145)
----------- ----------- ------- -----------
Partners' Capital,
December 31, 1995 47,493.963 52,842,505 802,414 53,644,919
Net Income -- 1,247,078 31,856 1,278,934
Redemptions (9,349.962) (10,129,399) -- (10,129,399)
----------- ----------- ------- -----------
Partners' Capital, December
31, 1996 38,144.001 43,960,184 834,270 44,794,454
=========== =========== ======= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
MARCH 3, 1994
FOR THE (COMMENCEMENT
YEARS ENDED OF OPERATIONS)
DECEMBER 31, TO DECEMBER
------------------------ 31,
1996 1995 1994
----------- ----------- --------------
<S> <C> <C> <C>
$ $ $
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) 1,278,934 13,807,092 (5,561,597)
Noncash item included in net income
(loss):
Net change in unrealized 307,152 3,418,005 (4,347,951)
(Increase) decrease in
operating assets:
Interest receivable (DWR) 45,730 38,546 (236,469)
Due from DWR 126,932 12,912 (178,370)
Increase (decrease) in operating
liabilities:
Accrued management fee (DWFCM) (22,889) (15,724) 152,411
Accrued administrative
expenses (47,654) 65,774 82,000
Accrued brokerage commissions (DWR) (67,218) 75,769 51,080
Accrued transaction fees and costs (8,684) 18,608 3,502
----------- ----------- -----------
Net cash provided by (used for) op-
erating
activities 1,612,303 17,420,982 (10,035,394)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Offering of units -- -- 68,115,437
Increase (decrease) in redemptions
payable (409,214) 434,170 624,464
Redemptions of Units (10,129,399) (20,528,145) (2,189,868)
----------- ----------- -----------
Net cash provided by (used for)
financing activities (10,538,613) (20,093,975) 66,550,033
----------- ----------- -----------
Net increase (decrease) in cash (8,926,310) (2,672,993) 56,514,639
Balance at beginning of period 53,843,646 56,516,639 2,000
----------- ----------- -----------
Balance at end of period 44,917,336 53,843,646 56,516,639
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION--DWFCM International Access Fund L.P. (the "Partnership") is a
limited partnership organized to engage in speculative trading of futures
contracts and forward contracts, and options on futures contracts and physical
commodities, and other commodity interests. The general partner for the
Partnership is Demeter Management Corporation ("Demeter"). The commodity broker
is Dean Witter Reynolds Inc. ("DWR"). The Trading Manager is Dean Witter
Futures & Currency Management Inc. ("DWFCM"). DWR, Demeter and DWFCM are all
wholly-owned subsidiaries of Dean Witter, Discover & Co. ("DWD").
Demeter 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 interests.
BASIS OF ACCOUNTING--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts in the financial statements.
REVENUE RECOGNITION--Commodity futures contracts and other commodity interests
are open commitments until settlement date. They are valued at market and the
resulting unrealized gains and losses are reflected in income. Monthly, DWR
pays the Partnership interest income based upon 80% of the average daily Net
Assets for the month at a rate equal to the average yield on 13-Week U.S.
Treasury Bills issued during such month. For purposes of such interest
payments, Net Assets do not include monies due the Partnership on forward
contracts and other commodity interests, but not actually received.
NET INCOME (LOSS) PER UNIT--Net income (loss) per Unit is computed using the
weighted average number of units outstanding during the period.
EQUITY IN COMMODITY FUTURES TRADING ACCOUNTS--The Partnership's asset "Equity
in Commodity futures trading accounts" consists 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 is presented as a net amount
because the Partnership has a master netting agreement with DWR.
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
BROKERAGE COMMISSIONS AND RELATED TRANSACTION FEES AND COSTS--The Partnership
accrues brokerage commissions on a half-turn basis at 80% of DWR's published
non-member rates. Transactions fees and costs are accrued on a half-turn basis.
Prior to September 1, 1996, brokerage commissions were capped at 3/4 of 1% per
month of the Partnership's adjusted month-end Net Assets as defined in the
Limited Partnership Agreement. Transactions fees and costs were accrued on a
half-turn basis to a maximum of 1/12 of 1% per month of the Partnership's
adjusted month-end Net Assets.
Effective September 1, 1996, brokerage commissions and transaction fees
chargeable to the Partnership have been capped at 13/20 of 1% per month of the
Partnership's month-end Net Assets (as defined in the Limited Partnership
Agreement).
OPERATING EXPENSES--The Partnership bears all operating expenses related to its
trading activities, to a maximum of 1/4 of 1% annually of the Partnership's
average month-end Net Assets. These include filing fees, legal, auditing,
accounting, mailing, printing and other incidental expenses as permitted by the
Limited Partnership Agreement. In addition, the Partnership incurs a monthly
management fee and may incur an incentive fee. Demeter bears all other
operating expenses.
OFFERING OF UNITS--Units were offered at a price equal to 100% of the Net Asset
Value per Unit as of March 31, April 30, May 31, and June 30, 1994. On August
1, 1994 additional units were subscribed through a private placement at a price
equal to 100% of the Net Asset Value per Unit on July 31, 1994.
REDEMPTIONS--Limited Partners may redeem some or all of their Units at 100% of
the Net Asset Value per Unit on the last day that is six months after the
closing at which a person first became a limited partner, upon five business
days advance notice by redemption form to Demeter. Thereafter, Units may be
redeemed as of the end of any month upon five business days advance notice by
redemption form to Demeter. However, any Units redeemed at or prior to the end
of the sixth or ninth month following the closing at which such person first
became a limited partner, may be assessed a redemption charge equal to 2% or 1%
respectively, of the Net Asset Value per Unit on the date of the trading
redemption. Limited Partners who obtained their units via an exchange from
another DWR sponsored commodity pool are not subject to the six-month holding
period or the redemption charges.
DISTRIBUTIONS--Distributions, other than on redemptions of Units, are made on a
pro-rata basis at
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
the sole discretion of Demeter. No distributions have been made to date.
INCOME TAXES--No provision for income taxes has been made in the accompanying
financial statements, as partners are individually responsible for reporting
income or loss based upon their respective share of the Partnership's revenues
and expenses for income tax purposes.
DISSOLUTION OF THE PARTNERSHIP--The Partnership will terminate on December 31,
2025 or at an earlier date if certain conditions set forth in the Limited
Partnership Agreement occur.
2. RELATED PARTY TRANSACTIONS
Under its Customer Agreement with DWR, the Partnership pays brokerage
commissions to DWR as described in Note 1. 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 as described in Note 1.
Demeter, on behalf of the Partnership and itself, has entered into a Management
Agreement with DWFCM to make all trading decisions for the Partnership.
Compensation to DWFCM by the Partnership consists of a management fee and an
incentive fee as follows:
MANAGEMENT FEE--The Partnership pays a monthly management fee equal to 1/4 of
1% of the Partnership's adjusted Net Assets, as defined, as of the last day of
each month.
INCENTIVE FEE--The Partnership will pay a quarterly incentive fee equal to 15%
of the "Trading Profits", as defined, earned by the Partnership as of the end
of each calendar quarter. If the trading advisor has experienced "Trading
Losses" with respect to its allocated Net Assets at the time of any
supplemental closing, the trading advisor must earn back such losses plus a pro
rata amount related to the funds allocated to the trading advisor at such
supplemental closing before the trading advisor is eligible for an incentive
fee. Such incentive fee is accrued in each month in which "Trading Profits"
occur. In those months in which "Trading Profits" are negative, previous
accruals, if any, during the incentive period will be reduced. In those
instances, in which a Limited Partner redeems an investment, the incentive fee
(if earned through a redemption date) is to be paid to such advisor on those
redemptions in the month of such redemptions.
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. 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 the contracts. There are numerous factors which may significantly
influence the market value of these contracts, including interest rate
volatility. At December 31, 1996 and 1995, open contracts were:
<TABLE>
<CAPTION>
CONTRACT OR NOTIONAL AMOUNT
---------------------------
1996 1995
------------- -------------
$ $
<S> <C> <C>
EXCHANGE-TRADED CONTRACTS
Financial Futures:
Commitments to Purchase -- 136,410,000
Commodity Futures:
Commitments to Purchase 4,997,000 16,902,000
Commitments to Sell 6,129,000 2,691,000
Foreign Futures:
Commitments to Purchase 52,700,000 264,664,000
Commitments to Sell 64,893,000 31,166,000
OFF-EXCHANGE-TRADED FORWARD
CURRENCY CONTRACTS
Commitments to Purchase 181,503,000 266,891,000
Commitments to Sell 205,068,000 275,289,000
</TABLE>
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 gains on open contracts are reported as a component of "Equity
in Commodity futures trading accounts" on the Statements of Financial Condition
and totaled $622,794 and $929,946 at December 31, 1996 and 1995, respectively.
Of the $622,794 net unrealized gain on open contracts at December 31, 1996,
$881,994 related to exchange-traded futures contracts and $(259,200) related to
off-exchange-traded forward currency contracts. Of the $929,946 net unrealized
gain on open contracts at December 31, 1995, $2,665,070 related to exchange-
traded futures contracts and $(1,735,124) related to off-exchange-traded
forward currency contracts.
Exchange-traded futures contracts held by the Partnership at December 31, 1996
and 1995 mature through June 1997 and September 1996, respectively. Off-
exchange-traded forward currency contracts held
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
by the Partnership at December 31, 1996 and 1995 mature through February 1997
and February 1996, respectively. The contract amounts in the above table
represent the Partnership's extent of involvement in the particular class of
financial instrument, but not the credit risk associated with counterparty
nonperformance.
The credit risk associated with these instruments is limited to the amounts
reflected in the Partnership's Statements of Financial Condition.
The Partnership also has credit risk because DWR acts as the futures commission
merchant or the sole counterparty, with respect to most of the Partnership's
assets. 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 gain on all
open futures contracts, which funds totaled $45,799,330 and $56,508,716 at
December 31, 1996 and 1995, 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 DWR, the counterparty on all of such contracts, to
perform.
For the years ended December 31, 1996 and 1995, the average fair value of
financial instruments held for trading purposes was as follows:
<TABLE>
<CAPTION>
1996
-----------------------
ASSETS LIABILITIES
----------- -----------
$ $
<S> <C> <C>
EXCHANGE-TRADED CONTRACTS:
Financial Futures 32,533,000 14,853,000
Commodity Futures 7,299,000 5,251,000
Foreign Futures 116,399,000 43,410,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS 261,668,000 261,020,000
</TABLE>
<TABLE>
<CAPTION>
1995
-----------------------
ASSETS LIABILITIES
----------- -----------
$ $
<S> <C> <C>
EXCHANGE-TRADED CONTRACTS:
Financial Futures 49,469,000 30,684,000
Commodity Futures 4,455,000 9,737,000
Foreign Futures 152,480,000 62,777,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS 243,901,000 346,270,000
</TABLE>
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)
4. LEGAL MATTERS
On September 6, 10, and 20, 1996, similar purported class actions were filed in
the Superior Court of the State of California, County of Los Angeles, on behalf
of all purchasers of interests in limited partnership commodity pools sold by
DWR. Named defendants include DWR, Demeter, DWFCM, DWD (all such parties
referred to hereafter as the "Dean Witter Parties"), certain limited
partnership commodity pools of which Demeter is the general partner, and
certain trading advisors to those pools. Similar purported class actions were
also filed on September 18 and 20, 1996, in the Supreme Court of the State of
New York, New York County, and on November 14, 1996 in the Superior Court of
the State of Delaware, New Castle County, against the Dean Witter Parties and
certain trading advisors on behalf of all purchasers of interests in various
limited partnership commodity pools sold by DWR. Generally, these complaints
allege, among other things, that the defendants committed fraud, deceit,
misrepresentation, breach of fiduciary duty, fraudulent and unfair business
practices, unjust enrichment, and conversion in connection with the sale and
operation of the various limited partnership commodity pools. The complaints
seek unspecified amounts of compensatory and punitive damages and other relief.
It is possible that additional similar actions may be filed and that, in the
course of these actions, other parties could be added as defendants. The Dean
Witter Parties believe that they have strong defenses to, and they will
vigorously contest, the actions. Although the ultimate outcome of legal
proceedings cannot be predicted with certainty, it is the opinion of management
of the Dean Witter Parties that the resolution of the actions will not have a
material adverse effect on the financial condition or the results of operations
of any of the Dean Witter Parties.
<PAGE>
DEAN WITTER REYNOLDS INC.
Two World Trade Center
62nd Floor
New York, NY 10048
FIRST-CLASS MAIL
ZIP + 4 PRESORT
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PERMIT NO. 148
