UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the period ended December 31, 1997 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 10-K.[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: $46,176,004.51 at January 31, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)
<PAGE>
<TABLE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 1997
<CAPTION>
Page No.
<S> <C>
DOCUMENTS INCORPORATED BY REFERENCE. . . . . . . . . . . . . . . . .
1
Part I .
Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . 2-4
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . 5-6
Item 4. Submission of Matters to a Vote of Security Holders . . 6
Part II.
Item 5. Market for the Registrant's Partnership Units and
Related Security Holder Matters . . . . . . . . . . . . 7
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . 9-16
Item 8. Financial Statements and Supplementary Data. . . . . . 16
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . 16
Part III.
Item10. Directors, Executive Officers, Promoters and
Control Persons of the Registrant . . . . . . . . 17-21
Item11. Executive Compensation . . . . . . . . . . . . . . . 21-22
Item12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . 22
Item13. Certain Relationships and Related Transactions . . . . 22
Part IV.
Item14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . 23
</TABLE>
<PAGE>
<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, 1997 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"). The
Partnership's general partner is Demeter Management
Corporation ("Demeter"). DWR and Demeter are wholly-owned
subsidiaries of Morgan Stanley, Dean Witter, Discover & Co.
("MSDWD"). Through July 31, 1997, the sole commodity broker
for the Partnership's transactions was DWR, also a
subsidiary of MSDWD. On July 31, 1997, DWR closed the sale
of its institutional futures business and foreign currency
trading operations to Carr Futures, Inc. ("Carr"), a
subsidiary of Credit Agricole Indosuez. Following the sale,
Carr became the clearing commodity broker for the
Partnership's futures and futures options trades and the
counterparty on the Partnership's foreign currency
<PAGE>
trades. DWR serves as the non-clearing commodity broker for
the Partnerships with Carr providing all clearing services
for the Partnerships' transactions.
The Partnership commenced operations on March 3, 1994.
The Partnership's net asset value per unit, as of December
31, 1997 was $1,482.22, representing an increase of 26.21
percent from the net asset value per unit of $1,174.35 at
December 31, 1996. 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
subsidiary of MSDWD 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-
<PAGE>
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 Arrangements and
58). "The Trading Manager"
Policies (Pages 40-43).
4. Management of the Part- 4. "The Management Agree-
nership ments" (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 brokers) 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, and on March 13,
1977, 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, MSDWD (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. On
June 16, 1997, the plaintiffs in the above actions filed a
consolidated amended complaint, alleging, among other
things, that the defendants committed fraud, deceit,
negligent misrepresentation, various violations of the
California Corporations Code, intentional and negligent
breach of fiduciary duty, fraudulent and unfair business
practices, unjust enrichment, and conversion in the sale and
operation of the various limited partnerships commodity
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
<PAGE>
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. A
consolidated and amended complaint in the action pending in
the Supreme Court of the State of New York was filed on
August 13, 1997, alleging that the defendants committed
fraud, breach of fiduciary duty, and negligent
misrepresentation in the sale and operation of the various
limited partnership commodity pools. On December 16, 1997,
upon motion of the plaintiffs, the action pending in the
Superior Court of the State of Delaware was voluntarily
dismissed without prejudice. 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.
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, 1997 was
approximately 3,839. 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.
<PAGE>
<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
1997 1996 1995
December 31, 1994
<S> <C> <C> <C>
<C>
Total Revenues
(including interest) 16,257,872 6,553,585 22,294,669
(239,216)
Net Income (Loss) 10,627,032 1,278,934 13,807,092
(5,561,597)
Net Income (Loss)
Per Unit (Limited
& General Partners) 307.87 44.84 202.74
(73.23)
Total Assets 48,991,106 45,730,849 55,136,973
61,279,429
Total Limited
Partners' Capital 46,949,644 43,960,184 52,842,505
59,707,586
Net Asset Value Per
Unit of Limited
Partnership Interest 1,482.22 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 and
Carr, the commodity brokers, and are used by the Partnership
as margin to engage in commodity futures, forward contracts
and other commodity interest trading. DWR and Carr hold
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 and Carr 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.
<PAGE>
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. 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
<PAGE>
(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, in entering
into futures, options and forward contracts there is a
credit risk to the Partnership that the counterparty on a
contract will not be able to meet its obligations to the
Partnership. The ultimate 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 significantly reduce this credit risk. For example,
a clearinghouse may cover a default by (i) drawing upon a
defaulting member's mandatory contributions and/or non-
defaulting members' contributions to a clearinghouse
guarantee fund, established lines or letters of credit with
banks, and/or the clearinghouse's surplus capital and other
available assets of the exchange and clearinghouse, or (ii)
assessing its members. In cases where the Partnership
trades on a foreign exchange 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
<PAGE>
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.
There can be no assurance that a clearinghouse,
exchange or other exchange member will meet its obligations
to the Partnership, and the Partnership is not indemnified
against a default by such parties from Demeter or MSDWD or
DWR. Further, the law is unclear as to whether a commodity
broker has any obligation to protect its customers from loss
in the event of an exchange, clearinghouse or other exchange
member default on trades effected for the broker's
customers; any such obligation on the part of the broker
appears even less clear where the default occurs in a non-US
jurisdiction.
Demeter deals with these credit risks of all
partnership's for which it serves as General Partner in
several ways. First, it monitors each partnership's credit
exposure to each exchange on a daily basis, calculating not
only the amount of margin required for it but also the
amount of its unrealized gains at each exchange, if any.
The Commodity Brokers inform each partnership, as with all
their customers, of its net margin requirements for all its
existing open positions, but do not break that net figure
down, exchange by exchange. Demeter, however, has installed
a system which permits it to monitor each partnership's
<PAGE>
potential margin liability, exchange by exchange. Demeter
is then able to monitor the individual partnership's
potential net credit exposure to each exchange by adding the
unrealized trading gains on that exchange, if any, to the
partnership's margin liability thereon.
Second, as discussed earlier, each partnership's
trading policies limit the amount of partnership Net Assets
that can be committed at any given time to futures contracts
and require, in addition, a certain minimum amount of
diversification in the partnership's trading, usually over
several different products. One of the aims of such trading
policies has been to reduce the credit exposure of any
partnership to any single exchange and, historically, such
partnership exposure has typically amounted to only a small
percentage of its total Net Assets. On those relatively few
occasions where a partnership's credit exposure has climbed
above that level, Demeter has dealt with the situations on a
case by case basis, carefully weighing whether the increased
level of credit exposure remained appropriate. Demeter
expects to continue to deal with such situations in a
similar manner in the future.
Third, Demeter has secured, with respect to Carr acting
as the clearing broker for the partnerships, a guarantee by
Credit Agricole Indosuez, Carr's parent, of the payment of
the "net liquidating value" of the transactions (futures,
options and forward contracts) in each
<PAGE>
partnership's account. As of December 31, 1997, Credit
Agricole Indosuez' total capital was over $3.25 billion and
it is currently rated AA2 by Moody's.
With respect to forward contract trading, the
partnerships trade with only those counterparties which
Demeter, together with DWR, have determined to be
creditworthy. At the date of this filing, the partnerships
deal only with Carr as their counterparty on forward
contracts. The guarantee by Carr's parent, discussed above,
covers these forward contracts.
See "Financial Instruments" under Notes to Financial
Statements in the Partnership's 1997 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 of Limited Partnership Interest in the
future will affect the amount of funds available for
investments 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, 1997, the
Partnership's total capital was $48,002,629, an increase of
$3,208,175 from the Partnership's total capital of
$44,794,454, at December 31, 1996. For
<PAGE>
the year ended December 31, 1997, the Partnership generated
net income of $10,672,032 and total redemptions aggregated
$7,418,857.
For the year ended December 31, 1997, the Partnership's
total trading revenues, including interest income, were
$16,257,872. The Partnership's total expenses for the year
were $5,630,840, resulting in net income of $10,627,032.
The value of an individual unit in the Partnership increased
from $1,174.35 at December 31, 1996 to $1,482.22 at December
31, 1997.
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
<PAGE>
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 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.
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 1997
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 1997 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 MSDWD
and is an affiliate of DWR and DWFCM. MSDWD, 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.
On July 21, 1997, MSDWD, the sole shareholder of
Demeter, appointed a new Board of Directors consisting of
Richard M. DeMartini, Mark J. Hawley, Lawrence Volpe, Joseph
G. Siniscalchi, Edward C. Oelsner III, and Robert E. Murray.
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 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
<PAGE>
exchanges.
DWR is registered with the CFTC as a futures commission
merchant and is a member of the NFA in such capacity. As of
December 31, 1997, DWR is servicing its clients through a
network of approximately 401 branch offices with
approximately 10,155 account executives servicing individual
and institutional client accounts.
Directors and Officers of the General Partner
The directors and officers of Demeter as of December
31, 1997 are as follows:
Richard M. DeMartini, age 45, is the Chairman of the Board
and a Director of Demeter. Mr. DeMartini is also Chairman of the
Board and a Director of Dean Witter Futures & Currency Management
Inc. ("DWFCM"). Mr. DeMartini is president and chief operating
officer of MSDWD's Individual Asset Management Group. He was
named to this position in May of 1997 and is responsible for Dean
Witter InterCapital, Van Kampen American Capital, insurance
services, managed futures, unit trust, investment consulting
services, Dean Witter Realty, and NOVUS Financial Corporation.
Mr. DeMartini is a member of the MSDWD management committee, a
director of the InterCapital funds, a trustee of the TCW/DW funds
and a trustee of the Van Kampen American Capital and Morgan
Stanley retail funds. Mr. DeMartini has been with Dean
<PAGE>
Witter his entire career, joining the firm in 1975 as an account
executive. He served as a branch manager, regional director and
national sales director, before being appointed president and
chief operating officer of the Dean Witter Consumer Markets. In
1988 he was named president and chief operating officer of Sears'
Consumer Banking Division and in January 1989 he became president
and chief operating officer of Dean Witter Capital. Mr.
DeMartini has served as chairman of the board of the Nasdaq Stock
Market, Inc. and vice chairman of the board of the National
Association of Securities Dealers, Inc. A native of San
Francisco, Mr. DeMartini holds a bachelor's degree in marketing
from San Diego State University.
Mark J. Hawley, age 54, is President and a Director of
Demeter. Mr. Hawley is also President and a Director of DWFCM.
Mr. Hawley joined DWR in February 1989 as Senior Vice President
and is currently the Executive Vice President and Director of
DWR's Managed Futures Department. From 1978 to 1989, Mr. Hawley
was a member of the senior management team at Heinold Asset
Management, Inc., a CPO, 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 & Company.
Lawrence Volpe, age 50, 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
<PAGE>
the positions of First Vice President and Assistant Controller.
From 1970 to July 1979, he was associated with Arthur Anderson &
Co. and prior to his departure served as audit manager in the
financial services division.
Joseph G. Siniscalchi, age 52, is a Director of Demeter.
Mr. Siniscalchi joined DWR in July 1984 as a First Vice
President, Director of General Accounting and served as a Senior
Vice President and Controller for DWR's Securities division
through 1997. He is currently Executive Vice President and
Director of the Operations Division of DWR. From February 1980
to July 1984, Mr. Siniscalchi was Director of Internal Audit at
Lehman Brothers Kuhn Loeb, Inc.
Edward C. Oelsner, III, age 55, is a Director of Demeter.
Mr. Oelsner is currently an Executive Vice President and head of
the Product Development Group at Dean Witter InterCapital Inc.,
an affiliate of DWR. Mr. Oelsner joined DWR in 1981 as a
Managing Director in DWR's Investment Banking Department
specializing in coverage of regulated industries and,
subsequently, served as head of the DWR Retail Products Group.
Prior to joining DWR, Mr. Oelsner held positions at The First
Boston Corporation as a member of the Research and Investment
Banking Departments from 1967 to 1981. Mr. Oelsner received his
M.B.A. in Finance from the Columbia University Graduate School of
Business in 1966 and an A.B. in Politics from Princeton
University in 1964.
Robert E. Murray, age 37, is a Director of Demeter. Mr.
Murray is also a Director of DWFCM. Mr. Murray is currently a
Senior Vice President of DWR's
<PAGE>
Managed Futures Department and is the Senior Administrative
Officer of DWFCM. Mr. Murray began his career at DWR in 1984 and
is currently the Director of Product Development for the Managed
Futures Department. He is responsible for the development and
maintenance of the proprietary Fund Management System utilized by
DWFCM and Demeter in organizing information and producing reports
for monitoring clients' accounts. Mr. Murray currently serves as
a Director of the Managed Funds Association. Mr. Murray
graduated from Geneseo State University in May 1983 with a B.A.
degree in Finance.
Patti L. Behnke, age 37, is Vice President and Chief
Financial Officer of Demeter. Ms. Behnke joined DWR in April
1991 as Assistant Vice President of Financial Reporting and is
currently a First Vice President and Director of Financial
Reporting and Managed Futures Accounting in the Individual Asset
Management Group. Prior to joining DWR, Ms. Behnke held
positions of increasing responsibility at L.F. Rothschild & Co.
and Carteret Savings Bank. Ms. Behnke began her career at Arthur
Anderson & Co., where she was employed in the audit division from
1982-1986. She is a member of the AICPA and the New York State
Society of Certified Public Accountants.
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
<PAGE>
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, 1997, there were no persons known to be
beneficial owners of more than 5 percent of the Units of
Limited Partnership Interest in the Partnership.
(b) Security Ownership of Management - At December 31,
1997, Demeter owned 710.409 Units of General Partnership
Interest representing a 2.19 percent interest in the
Partnership.
(c) Changes in Control - None
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Refer to Note 2 - "Related Party Transactions" of
"Notes to Financial Statements", in the accompanying 1997
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
$2,944,705 for the year ended December 31, 1997. In its
capacity as the Partnership's trading manager, DWFCM
received management fees of $1,393,730 and incentive fees of
$1,009,675 for the year ended December 31, 1997.
<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 1997 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, 1997,
1996 and 1995.
- Statements of Financial Condition as of
December 31, 1997
and December 31, 1996.
- Statements of Operations, Changes in
Partners' Capital, and Cash Flows for the years
ended December 31, 1997, 1996 and 1995.
- Notes to Financial Statements.
With exception of the aforementioned information and
the information incorporated in Items 7, 8 and 13, the 1997
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 24, 1998 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 24,
1998
Mark J. Hawley, Director and
President
/s/ Richard M. DeMartini March 24,
1998
Richard M. DeMartini, Director
and Chairman of the Board
/s/ Lawrence Volpe March 24,
1998
Lawrence Volpe, Director
/s/ Joseph G. Siniscalchi March 24,
1998
Joseph G. Siniscalchi, Director
/s/ Edward C. Oelsner III March 24,
1998
Edward C. Oelsner III, Director
/s/ Robert E. Murray March
24, 1998
Robert E. Murray, Director
/s/ Patti L. Behnke March 24,
1998
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, 1997 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>
International
Access
Fund
December 31, 1997
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
1997
Dear Limited Partner:
This marks the fourth 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
$1,174.35 and increased in value by 26.2% to close the year at a Net Asset
Value of $1,482.22. Since its inception in March of 1994, the Fund has
increased by 48.2% (a compound annual return of 10.8%).
Gains were recorded during January as a result of a strengthening in the value
of the U.S. dollar versus most world currencies. Additional gains were recorded
in the metals markets from short gold futures positions as gold prices, which
began to move lower in December 1996, continued to decline. In February, gains
were recorded in currencies as the value of the U.S. dollar continued to
strengthen relative to most global currencies. Gains were also recorded in the
energy markets from short positions as gas and oil prices moved lower. March's
performance resulted in a portion of previous months' profits being given back
as many of the markets that produced gains in January and February experienced
trend reversals and choppy price movement. The most significant losses were
recorded in the currency markets as the value of most European currencies
reversed higher. Additional losses were recorded in the energy and financial
futures markets as prices in these markets moved in a choppy pattern.
Losses were experienced during April as the difficult trading environment that
began in March continued. The most significant losses were recorded in the
financial futures markets as domestic bond prices rallied higher late in the
month after showing signs of trending lower
<PAGE>
previously. Small losses were recorded during May as profits in soft
commodities and financial futures were more than offset by losses in the energy
and currency markets. During June, profits were recorded from long global
interest rate and stock index futures positions as prices in these markets
moved higher. Additional gains were recorded in the currency markets from long
Japanese yen positions as the yen's value increased relative to the U.S.
dollar.
During July, significant profits were recorded from long positions in global
interest rate futures as U.S., Australian, European and Japanese interest rate
futures prices trended higher. Additional gains were recorded from short
European currency positions as the U.S. dollar again strengthened relative to
the German mark. During August, a sharp trend reversal in global interest rate
futures prices resulted in a giveback of a portion of July's profits.
Additional losses were recorded in the currency markets as the value of most
European currencies increased relative to the U.S. dollar after decreasing
previously. A strong upward move in international interest rate futures prices
during September resulted in gains for the Fund's long positions. Additional
gains were recorded from short Nikkei index futures positions as Japanese
equity prices moved lower. In currency trading, gains were recorded from long
German mark positions as their value moved higher versus the U.S. dollar and
from short Malaysian ringgit positions as their value decreased relative to the
U.S. dollar.
A sharp trend reversal in international interest rate futures prices during
October resulted in a give-back of a portion of September's profits. Additional
losses were recorded as a result of short-term volatility in domestic bond and
stock index futures throughout a majority of the month.
During November and December, profits were recorded in the currency markets
from short Japanese yen positions as the value of the yen decreased relative to
the U.S. dollar and other world currencies amid concerns over the stability
<PAGE>
of the Asian economy. Additional profits were recorded from short gold futures
positions as gold prices declined to their lowest level in over twelve years.
1997 was the third consecutive strong year for the Fund as profits were
recorded from sustained price movements in the currency markets during January
and February and then again in November and December from short Japanese yen
positions as the value of the U.S. dollar increased versus the yen. Additional
gains were also recorded from long global interest rate futures positions
during June and July. Looking ahead, we remain confident in DWFCM's time tested
methodology and in its ability to profit over long-term periods.
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, 1997 and
1996 and the related statements of operations, changes in partners' capital,
and cash flows for each of the three years in the period ended December 31,
1997. 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, 1997 and 1996 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
February 17, 1998
New York, New York
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1997 1996
---------- ----------
$ $
<S> <C> <C>
ASSETS
Equity in Commodity futures trading
accounts:
Cash 43,146,223 44,917,336
Net unrealized gain on open contracts 5,689,588 622,794
---------- ----------
Total Trading Equity 48,835,811 45,540,130
Interest receivable (DWR) 155,295 152,193
Due from DWR -- 38,526
---------- ----------
Total Assets 48,991,106 45,730,849
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Incentive fee payable (DWFCM) 437,418 --
Redemptions payable 343,450 649,420
Accrued management fee (DWFCM) 122,264 113,798
Accrued administrative expenses 85,345 100,120
Accrued brokerage commissions (DWR) -- 59,631
Accrued transaction fees and costs -- 13,426
---------- ----------
Total Liabilities 988,477 936,395
---------- ----------
PARTNERS' CAPITAL
Limited Partners (31,675.130 and 37,433.592 Units,
respectively) 46,949,644 43,960,184
General Partner (710.409 Units) 1,052,985 834,270
---------- ----------
Total Partners' Capital 48,002,629 44,794,454
---------- ----------
Total Liabilities and Partners' Capital 48,991,106 45,730,849
========== ==========
NET ASSET VALUE PER UNIT 1,482.22 1,174.35
========== ==========
</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 YEARS
ENDED
DECEMBER 31,
--------------------------------
1997 1996 1995
---------- --------- ----------
<S> <C> <C> <C>
$ $ $
REVENUES
Trading Profit (Loss):
Realized 9,351,615 5,018,781 22,979,666
Net change in unrealized 5,066,794 (307,152) (3,418,005)
---------- --------- ----------
Total Trading Results 14,418,409 4,711,629 19,561,661
Interest income (DWR) 1,839,463 1,841,956 2,733,008
---------- --------- ----------
Total Revenues 16,257,872 6,553,585 22,294,669
---------- --------- ----------
EXPENSES
Brokerage commissions (DWR) 2,944,705 3,548,366 4,994,346
Management fees (DWFCM) 1,393,730 1,401,716 1,856,924
Incentive fees (DWFCM) 1,009,675 -- 1,170,066
Transaction fees and costs 186,730 232,569 386,241
Administrative expenses 96,000 92,000 80,000
---------- --------- ----------
Total Expenses 5,630,840 5,274,651 8,487,577
---------- --------- ----------
NET INCOME 10,627,032 1,278,934 13,807,092
========== ========= ==========
NET INCOME ALLOCATION:
Limited Partners 10,408,317 1,247,078 13,663,064
General Partner 218,715 31,856 144,028
NET INCOME PER UNIT:
Limited Partners 307.87 44.84 202.74
General Partner 307.87 44.84 202.74
</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
$ $ $
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
Net Income -- 10,408,317 218,715 10,627,032
Redemptions (5,758.462) (7,418,857) -- (7,418,857)
----------- ----------- --------- -----------
Partners' Capital,
December 31, 1997 32,385.539 46,949,644 1,052,985 48,002,629
=========== =========== ========= ===========
</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 YEARS
ENDED
DECEMBER 31,
------------------------------------
1997 1996 1995
---------- ----------- -----------
<S> <C> <C> <C>
$ $ $
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income 10,627,032 1,278,934 13,807,092
Noncash item included in net income:
Net change in unrealized (5,066,794) 307,152 3,418,005
(Increase) decrease in
operating assets:
Interest receivable (DWR) (3,102) 45,730 38,546
Due from DWR 38,526 126,932 12,912
Increase (decrease) in operating
liabilities:
Incentive fee payable (DWFCM) 437,418 -- --
Accrued management fee (DWFCM) 8,466 (22,889) (15,724)
Accrued administrative
expenses (14,775) (47,654) 65,774
Accrued brokerage commissions (DWR) (59,631) (67,218) 75,769
Accrued transaction fees and costs (13,426) (8,684) 18,608
---------- ----------- -----------
Net cash provided by operating
activities 5,953,714 1,612,303 17,420,982
---------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in redemptions
payable (305,970) (409,214) 434,170
Redemptions of Units (7,418,857) (10,129,399) (20,528,145)
---------- ----------- -----------
Net cash used for financing activities (7,724,827) (10,538,613) (20,093,975)
---------- ----------- -----------
Net decrease in cash (1,771,113) (8,926,310) (2,672,993)
Balance at beginning of period 44,917,336 53,843,646 56,516,639
---------- ----------- -----------
Balance at end of period 43,146,223 44,917,336 53,843,646
========== =========== ===========
</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, 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"). Demeter is a wholly-
owned subsidiary of Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD").
On May 31, 1997, Morgan Stanley Group Inc. was merged with and into Dean
Witter, Discover & Co. ("DWD"). At the time DWD changed its corporate name to
Morgan Stanley, Dean Witter, Discover & Co.
The Trading Manager is Dean Witter Futures & Currency Management Inc.
("DWFCM").
Through July 31, 1997, the sole commodity broker for the Partnership's
transactions was Dean Witter Reynolds Inc. ("DWR"), also a subsidiary of MSDWD.
On July 31, 1997, DWR closed the sale of its institutional futures business and
foreign currency trading operations to Carr Futures Inc. ("Carr"), a subsidiary
of Credit Agricole Indosuez. Following the sale, Carr became the clearing
commodity broker for the Partnership's futures and futures options trades and
the counterparty on the Partnership's foreign currency trades. DWR will
continue to serve as a non-clearing commodity broker for the Partnership with
Carr providing all clearing services for Partnership transactions.
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
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
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 and
Carr 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 in each period due to master netting agreements.
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.
REDEMPTIONS--Limited Partners may redeem some or all of their Units at 100% of
the Net Asset Value per Unit as of the end of any month, upon five business
days advance notice by redemption form to Demeter.
DISTRIBUTIONS--Distributions, other than on redemptions of Units, are made on a
pro-rata basis at the sole discretion of Demeter. No distributions have been
made to date.
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
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 and Carr 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.
3. FINANCIAL INSTRUMENTS
The Partnership trades futures and forward contracts in interest rates, stock
indices, commodities,
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
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, 1997 and
1996, open contracts were:
<TABLE>
<CAPTION>
CONTRACT OR NOTIONAL AMOUNT
---------------------------
1997 1996
------------- -------------
$ $
<S> <C> <C>
EXCHANGE-TRADED CONTRACTS
Financial Futures:
Commitments to Purchase 18,689,000 --
Commodity Futures:
Commitments to Purchase 1,916,000 4,997,000
Commitments to Sell 15,338,000 6,129,000
Foreign Futures:
Commitments to Purchase 53,487,000 52,700,000
Commitments to Sell 20,289,000 64,893,000
OFF-EXCHANGE-TRADED FORWARD
CURRENCY CONTRACTS
Commitments to Purchase 109,180,000 181,503,000
Commitments to Sell 205,569,000 205,068,000
</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 $5,689,588 and $622,794 at December 31, 1997 and 1996,
respectively.
Of the $5,689,588 net unrealized gain on open contracts at December 31, 1997,
$995,339 related to exchange-traded futures contracts and $4,694,249 related to
off-exchange-traded forward currency contracts.
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.
Exchange-traded futures contracts held by the Partnership at December 31, 1997
and 1996 mature through March 1998 and June 1997, respectively. Off-exchange-
traded forward currency contracts held by the Partnership at December 31, 1997
and 1996 mature through April 1998 and February 1997, respectively.
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
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 either DWR or Carr acts as the
futures commission merchant or the 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 and Carr,
as the futures commission merchants for the Partnership's exchange-traded
futures contracts, are required pursuant to regulations of the Commodity
Futures Trading Commission 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 contracts including an amount equal to the net
unrealized gain on all open futures contracts, which funds totaled $44,141,562
and $45,799,330 at December 31, 1997 and 1996, 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 of such contracts, to perform. Carr's parent, Credit
Agricole Indosuez, has guaranteed Carr's obligations to the Partnership.
For the years ended December 31, 1997 and 1996, the average fair value of
financial instruments held for trading purposes was as follows:
<TABLE>
<CAPTION>
1997
-----------------------
ASSETS LIABILITIES
----------- -----------
$ $
<S> <C> <C>
EXCHANGE-TRADED CONTRACTS:
Financial Futures 18,852,000 25,164,000
Commodity Futures 3,726,000 9,818,000
Foreign Futures 65,551,000 41,413,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS 156,224,000 189,458,000
</TABLE>
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<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>
4. LEGAL MATTERS
On September 6, 10, and 20, 1996, and on March 13, 1997, 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, MSDWD (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. On June 16, 1997,
the plaintiffs in the above actions filed a consolidated amended complaint,
alleging, among other things, that the defendants committed fraud, deceit,
negligent misrepresentation, various violations of the California Corporations
Code, intentional and negligent breach of fiduciary duty, fraudulent and unfair
business practices, unjust enrichment, and conversion in the sale and operation
of the various limited partnerships commodity 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. A
consolidated and amended complaint in the action pending in the Supreme Court
of the State of New York was filed on August 13, 1997, alleging that the
defendants committed fraud, breach of fiduciary duty, and negligent
misrepresentation in the sale and operation of the various limited partnership
commodity pools. On December 16, 1997, upon motion of the plaintiffs, the
action pending in the Superior Court of the State of Delaware was voluntarily
dismissed without prejudice. 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
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)
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
U.S. POSTAGE PAID
BROOKLYN, NY
PERMIT NO. 148
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from
DWFCM International Access Fund L.P. and is qualified in its entirety by
reference to such financial instruments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 43,146,223
<SECURITIES> 0
<RECEIVABLES> 155,295<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 48,991,106<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 48,991,106<F3>
<SALES> 0
<TOTAL-REVENUES> 16,257,872<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,630,840
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,627,032
<INCOME-TAX> 0
<INCOME-CONTINUING> 10,627,032
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,627,032
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include interest receivable of $155,295 and due from DWR
of $0.
<F2>In addition to cash and receivables, total assets include net unrealized
gain on open contracts of $5,689,588.
<F3>Liabilities include redemptions payable of $343,450, accrued brokerage
commissions of $0, accrued management fees of $122,264, accrued
administrative expenses payable of $85,345 and accrued transaction fees
and costs of $0 and incentive fees payable of $437,418.
<F4>Total revenue includes realized trading revenue of $9,351,615, net
change in unrealized of $5,066,794 and interest income of $1,839,463.
</FN>
</TABLE>
