UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1999 or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File No. 0-26282
DWFCM INTERNATIONAL ACCESS FUND L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3775071
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
c/o Demeter Management Corporation
Two World Trade Center, 62 Fl., New York, NY 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 392-5454
(Former name, former address, and former fiscal year, if changed
since last report)
Indicate by check-mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
<PAGE>
<TABLE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 1999
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<S>
<C>
Statements of Financial Condition
June 30, 1999 (Unaudited) and December 31, 1998 ..........2
Statements of Operations for the Quarters Ended
June 30, 1999 and 1998 (Unaudited)........................3
Statements of Operations for the Six Months Ended
June 30, 1999 and 1998 (Unaudited)........................4
Statements of Changes in Partners' Capital
for the Six Months Ended June 30, 1999 and
1998 (Unaudited)..........................................5
Statements of Cash Flows for the Six Months Ended
June 30, 1999 and 1998 (Unaudited)........................6
Notes to Financial Statements (Unaudited)..............7-
11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......12-20
Item 3. Quantitative and Qualitative Disclosures about
Market Risk ...................................... 21-31
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.................................... 32
Item 6. Exhibits and Reports on Form 8-K..................... 32
<PAGE>
</TABLE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DWFCM INTERNATIONAL ACCESS FUND L.P.
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
June 30, December 31,
1999 1998
$ $
(Unaudited)
ASSETS
<S> <C> <C>
Equity in futures interests trading accounts:
Cash 39,026,396 46,211,886
Net unrealized gain (loss) on open contracts 555,489
(446,189)
Total Trading Equity 39,581,885 45,765,697
Interest receivable (DWR) 121,009 138,824
Total Assets 39,702,894 45,904,521
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable 202,453 239,917
Accrued management fees (DWFCM) 99,011 114,567
Accrued administrative expenses 98,468 77,869
Total Liabilities 399,932 432,353
Partners' Capital
Limited Partners (27,194.744 and
28,862.490 Units, respectively) 38,824,121 44,949,810
General Partner (335.409 Units) 478,841 522,358
Total Partners' Capital 39,302,962 45,472,168
Total Liabilities and Partners' Capital 39,702,894 45,
904,521
NET ASSET VALUE PER UNIT 1,427.63 1,557.38
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Quarters Ended June 30,
1999 1998
$ $
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized (371,300) (5,163,150)
Net change in unrealized 423,618 5,571,124
Total Trading Results 52,318 407,974
Interest Income (DWR) 358,651 433,352
Total Revenues 410,969 841,326
EXPENSES
Brokerage commissions (DWR) 523,146 655,531
Management fees (DWFCM) 303,835 326,232
Transaction fees and costs 33,304 41,258
Administrative expenses 18,000 18,000
Total Expenses 878,285 1,041,021
NET LOSS (467,316) (199,695)
NET LOSS ALLOCATION
Limited Partners (461,650) (195,568)
General Partner (5,666)
(4,127)
NET LOSS PER UNIT
Limited Partners (16.90)
(5.81) General Partner
(16.90) (5.81)
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Six Months Ended June 30,
1999 1998
$ $
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized (3,651,008) 861,015
Net change in unrealized 1,001,678 (2,082,753)
Total Trading Results (2,649,330) (1,221,738)
Interest Income (DWR) 740,620 892,517
Total Revenues (1,908,710) (329,221)
EXPENSES
Brokerage commissions (DWR) 1,096,111 1,216,470
Management fees (DWFCM) 623,730 673,210
Transaction fees and costs 73,205 88,337
Administrative expenses 36,000 38,000
Total Expenses 1,829,046 2,016,017
NET LOSS (3,737,756) (2,345,238)
NET LOSS ALLOCATION
Limited Partners (3,694,239) (2,293,842)
General Partner (43,517)
(51,396)
NET LOSS PER UNIT
Limited Partners
(129.75) (72.34) General
Partner (129.75)
(72.34) <FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 1999 and 1998
(Unaudited)
<CAPTION>
Units of
Partnership Limited General
Interest Partners Partner Total
<S> <C> <C> <C>
<C>
Partners' Capital,
December 31, 1997 32,385.539 $46,949,644 $1,052,985
$48,002,629
Net Loss - (2,293,842) (51,396)
(2,345,238)
Redemptions (1,535.088) (2,162,071) -
(2,162,071)
Partners' Capital,
June 30, 1998 30,850.451 $42,493,731 $1,001,589
$43,495,320
Partners' Capital,
December 31, 1998 29,197.899 $44,949,810 $522,358
$45,472,168
Net Loss - (3,694,239) (43,517)
(3,737,756)
Redemptions (1,667.746) (2,431,450) -
(2,431,450)
Partners' Capital,
June 30, 1999 27,530.153 $38,824,121 $478,841
$39,302,962
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Six Months Ended June 30,
1999 1998
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss (3,737,756)
(2,345,238)
Noncash item included in net loss:
Net change in unrealized (1,001,678) 2
,082,753
Decrease in operating assets:
Interest receivable (DWR) 17,815 16,708
Increase (decrease) in operating liabilities:
Accrued management fees (DWFCM) (15,556) (12,759)
Accrued administrative expenses 20,599 38,000
Incentive fee payable (DWFCM) -
(437,418)
Net cash used for operating activities (4,716,576)
(657,954)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in redemptions payable (37,464) (
146,274)
Redemptions of units (2,431,450)
(2,162,071)
Net cash used for financing activities (2,468,914)
(2,308,345)
Net decrease in cash (7,185,490) (
2,966,299)
Balance at beginning of period 46,211,886
43,146,223
Balance at end of period 39,026,396
40,179,924
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
The financial statements include, in the opinion of management,
all adjustments necessary for a fair presentation of the results
of operations and financial condition of DWFCM International
Access Fund L.P. (the "Partnership"). The financial statements
and condensed notes herein should be read in conjunction with the
Partnership's December 31, 1998 Annual Report on Form 10-K.
1. Organization
DWFCM International Access Fund L.P. is a limited partnership
organized to engage primarily in the speculative trading of
futures and forward contracts, physical commodities, and other
commodity interests including foreign currencies, financial
instruments, metals, energy and agricultural products
(collectively, "futures interests"). The general partner for the
Partnership is Demeter Management Corporation ("Demeter"). The
non-clearing commodity broker is Dean Witter Reynolds Inc.
("DWR") and an unaffiliated clearing commodity broker, Carr
Futures Inc. ("Carr"), provides clearing and execution services.
The Trading Manager is Dean Witter Futures & Currency Management
Inc. ("DWFCM" or the "Trading Manager"). Demeter, DWR, and DWFCM
are wholly-owned subsidiaries of Morgan Stanley Dean Witter & Co.
("MSDW").
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. Related Party Transactions
The Partnership's cash is on deposit with DWR and Carr in futures
interests trading accounts to meet margin requirements as needed.
DWR pays interest on these funds based on current 13-week U.S.
Treasury bill rates. The Partnership pays brokerage commissions
to DWR. Management and incentive fees (if any) incurred by the
Partnership are paid to DWFCM.
3. Financial Instruments
The Partnership trades futures and forward contracts, physical
commodities and other commodities interests including foreign
currencies financial instruments, metals, energy, and
agricultural products. 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.
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
effective for fiscal years beginning after June 15, 1999. The
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Partnership elected to adopt the provisions of SFAS No. 133
beginning with the fiscal year that ended December 31, 1998.
SFAS No. 133 supersedes SFAS No. 119 and No. 105, which required
the disclosure of average aggregate fair values and
contract/notional values, respectively, of derivative financial
instruments for an entity which carries its assets at fair value.
The application of SFAS No. 133 does not have a significant
effect on the Partnership's financial statements.
The net unrealized gain (loss) on open contracts is reported as a
component of "Equity in futures interests trading accounts" on
the Statements of Financial Condition and totaled $555,489 and
$(446,189) at June 30, 1999 and December 31, 1998, respectively.
Of the $555,489 net unrealized gain on open contracts at June 30,
1999, $448,780 related to exchange-traded futures contracts and
$106,709 related to off-exchange-traded forward currency
contracts.
Of the $446,189 net unrealized loss on open contracts at December
31, 1998, $1,485,813 related to exchange-traded futures contracts
and $(1,932,002) related to off-exchange-traded forward currency
contracts.
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Exchange-traded futures contracts held by the Partnership at June
30, 1999 and December 31, 1998 mature through December 1999 and
June 1999, respectively. Off-exchange-traded forward currency
contracts held by the Partnership at June 30, 1999 and December
31, 1998 mature through September 1999 and March 1999,
respectively.
The Partnership is subject to the credit risk associated with
counterparty non-performance. The credit risk associated with
the instruments in which the Partnership is involved is limited
to the amounts reflected in the Partnership's Statements of
Financial Condition. DWR and Carr act as the futures commission
merchants or the counterparties 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. Each of DWR and Carr, as a futures
commission merchant for all of the Partnership's exchange-traded
futures contracts, are required, pursuant to regulations of the
Commodity Futures Trading Commission ("CFTC") to segregate from
their own assets, and for the sole benefit of their commodity
customers, all funds held by them with respect to exchange-traded
futures contracts, including an amount equal to the net
unrealized gain (loss) on all open futures contracts, which
funds, in the aggregate, totaled $39,475,176 and $47,697,699 at
June 30, 1999 and December 31, 1998, respectively.
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
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 to the
Partnership payment of the net liquidating value of the
transactions in the Partnership's account with Carr (including
foreign currency contracts).
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity - Assets of the Partnership are deposited with DWR as
non-clearing broker and Carr as clearing broker in separate
futures interest trading accounts. Such assets are held in either
non-interest bearing bank accounts or in securities approved by
the CFTC for investment of customer funds. The Partnership's
assets held by DWR and Carr may be used as margin solely for the
Partnership's trading. Since the Partnership's sole purpose is
to trade in futures interests, it is expected that the
Partnership will continue to own such liquid assets for margin
purposes.
The Partnership's investment in futures interests may, from time
to time, be illiquid. Most United States futures exchanges limit
fluctuations in certain futures interest prices during a single
day by regulations referred to as "daily price fluctuations
limits" or "daily limits". Pursuant to such regulations, during
a single trading day no trades may be executed at prices beyond
the daily limit. If the price for a particular futures interest
has increased or decreased by an amount equal to the daily limit,
positions in such futures interest can neither be taken nor
liquidated unless traders are willing to effect trades at or
within the limit. Futures interests prices have occasionally
moved the daily limit for several consecutive days with little or
no trading. Such market conditions could prevent the Partnership
from promptly liquidating its futures interests and result in
restrictions on redemptions.
<PAGE>
There is no limitation on daily price moves in trading forward
contracts on foreign currency. The markets for some world
currencies have low trading volume and are illiquid, which may
prevent the Partnership from trading in potentially profitable
markets or from promptly liquidating unfavorable positions,
subjecting it to substantial losses. Either of these market
conditions could result in restrictions on redemptions.
Capital Resources. The Partnership does not have, nor does it
expect to have, any capital assets. Future redemptions of Units
of Limited Partnership Interest ("Unit(s)") will affect the
amount of funds available for investment in futures interests in
subsequent periods. Since they are at the discretion of Limited
Partners, it is not possible to estimate the amount and
therefore, the impact of future redemptions.
Results of Operations
For the Quarter and Six Months Ended June 30, 1999
For the quarter ended June 30, 1999, the Partnership recorded
total trading revenues including interest income of $410,969, and
after expenses, posted a decrease in Net Asset Value per Unit.
The most significant net trading losses were experienced in the
metals markets from long positions in copper, zinc and aluminum
futures as base metals prices declined significantly during late
May amid a large supply, low demand and the possibility of a
production cut in the near future being judged unlikely. During
June, additional losses were incurred in this market complex from
short copper futures positions as prices moved higher due to a
<PAGE>
drop in warehouse stocks. In the global stock index futures
markets, losses were recorded during mid-April and May from long
S&P 500 Index futures positions as domestic equity prices dropped
following stronger-than-expected Consumer Price Index data and
indications by the Federal Open Market Committee that the U.S.
Federal Reserve is shifting towards a tightening bias. These
losses were partially offset by gains recorded in the currency
markets during April and May from short Swedish kroner positions
as its value weakened versus the U.S. dollar on speculation as to
when Sweden will join Europe's Monetary Union and due to a
decline in oil prices. In the global interest rate futures
markets, gains were recorded from long Japanese government bonds
as prices rallied during April after the Japanese government
proposed no new economic spending plans and on comments by a
Senior Finance Ministry official that the supply-demand balance
in the market will deteriorate. In the energy markets, gains
were recorded during April from long natural gas futures
positions as prices climbed following reports that showed a
increase in storage stocks that was well-below market
expectations. Total expenses for the three months ended June 30,
1999 were $878,285, resulting in a net loss of $467,316. The
value of a Unit decreased from $1,444.53 at March 31, 1999 to
$1,427.63 at June 30, 1999.
For the six months ended June 30, 1999, the Partnership recorded
total trading losses net of interest income of $1,908,710 and
posted a decrease in Net Asset Value per Unit. The most
<PAGE>
significant losses were experienced in the metals markets from
long positions in zinc, aluminum and copper futures as base
metals prices declined significantly in late May amid a large
supply, low demand and the possibility of a production cut in the
near future being judged unlikely. During June, additional
losses were incurred in this market complex from short copper
futures positions as prices moved higher due to a drop in
warehouse stocks. In the global interest rate futures markets,
losses were recorded throughout a majority of the first quarter
from short Japanese bond futures positions as prices increased
amid growing speculation that the Bank of Japan may underwrite
Japanese government bonds. Fears that a rise in Japanese bond
yields would lead many Japanese money managers to repatriate
assets from foreign investments to yen-denominated debt also
pushed prices higher. Additional losses were recorded during
February and March from short German government bond futures
positions as prices increased on reports that Germany's
industrial production showed a sharp increase, creating hopes
that Europe's biggest economy could be strengthening. In the
currency markets, losses were experienced throughout a majority
of the first quarter from long Australian dollar positions as its
value dropped significantly relative to the U.S. dollar on
speculation regarding potential currency devaluations in the
Asian region. Losses recorded from short British pound positions
in March offset profits recorded in February as its value
strengthened versus the U.S. dollar as the market scaled back the
chances of a British interest rate cut following an announcement
of a budget that was more generous than expected. These losses
<PAGE>
were partially offset by gains recorded in the energy markets
during March from long positions in crude and heating oil futures
as prices moved significantly higher on news that both OPEC and
non-OPEC countries had reached an agreement to cut total output
by approximately two million barrels a day beginning April 1st.
Total expenses for the six months ended June 30, 1999 were
$1,829,046, resulting in a net loss of $3,737,756. The value of
a Unit decreased from $1,557.38 at December 31, 1998 to $1,427.63
at June 30, 1999.
For the Quarter and Six Months Ended June 30, 1998
For the quarter ended June 30, 1998, the Partnership recorded
total trading revenues including interest income of $841,326, and
after expenses, posted a decrease in Net Asset Value per Unit.
The most significant net trading losses were recorded in the
financial futures markets during April and June. In April,
losses were recorded from long global bond futures positions as
Australian, Japanese and European interest rate futures prices
reversed lower after trending higher previously. This trend
higher in global interest rate futures prices re-emerged during
May. However, additional losses were recorded during June as
this upward move reversed sharply lower during mid-month in
reaction to the Federal Reserve's intervention to halt the
downward slide of the Japanese yen. Additional losses were
recorded from trading global stock index futures during April and
June. Smaller losses were recorded in the energy markets from
short natural gas futures positions as prices reversed higher
during June after trending lower previously. A portion of the
<PAGE>
Partnership's overall losses was offset by gains recorded in the
currency markets during May from short Japanese yen positions as
the value of the yen reached its lowest level relative to the
U.S. dollar since 1991. Additional gains were recorded during
June from short South African rand positions as its value also
trended lower versus the U.S. dollar despite intervention by the
South African government late in the quarter. Currency gains
were also recorded from trading the Swedish krona and Australian
dollar throughout the quarter. In metals, small gains were
recorded from short positions in aluminum futures as prices
declined. Total expenses for the three months ended June 30,
1998 were $1,041,021, resulting in a net loss of $199,695. The
value of a Unit decreased from $1,415.69 at March 31, 1998 to
$1,409.88 at June 30, 1998.
For the six months ended June 30, 1998, the Partnership recorded
total trading losses net of interest income of $329,221 and
posted a decrease in Net Asset Value per Unit. The most
significant losses were recorded in the financial futures and
metals markets. In financial futures, losses were recorded from
trading Australian bond futures as prices in this market were
subject to sharp trend reversals during the first six months of
the year. Additional losses recorded during the second quarter
from short Nikkei Index futures positions more than offset
profits recorded during the first quarter from long European bond
futures positions. Losses were also recorded in the metals
markets from long silver futures positions as silver prices
reversed sharply lower in February after rallying higher during
<PAGE>
January. Additional losses were recorded from trading gold
futures during a majority of the first half of the year. Smaller
losses were recorded from trading base metals futures during
March and May. In currency trading, significant losses recorded
during the first quarter from short-term volatility in the
Japanese yen were offset during the second quarter as short
Japanese yen positions profited from a sharp move lower in the
value of the yen. Additional gains in the second quarter from
trading the Swedish krona and South African rand offset losses
recorded in European currencies during the first six months of
the year. Small gains were recorded in the energy markets from
short oil futures positions. Total expenses for the six months
ended June 30, 1998 were $2,016,017, resulting in a net loss of
$2,345,238. The value of a Unit decreased from $1,482.22 at
December 31, 1997 to $1,409.88 at June 30, 1998.
Year 2000 Problem. Commodity pools, like financial and business
organizations and individuals around the world, depend on the
smooth functioning of computer systems. Many computer systems in
use today cannot recognize the computer code for the year 2000,
but revert to 1900 or some other date. This is commonly known as
the "Year 2000 Problem". The Partnership could be adversely
affected if computer systems used by it or any third party with
whom it has a material relationship do not properly process and
calculate date-related information and data concerning dates on
or after January 1, 2000. Such a failure could adversely affect
the handling or determination of futures trades and prices and
other services.
<PAGE>
MSDW began its planning for the Year 2000 Problem in 1995, and
currently has several hundred employees working on the matter. It
has developed its own Year 2000 compliance plan to deal with the
problem and had the plan approved by the company's executive
management, Board of Directors and Information Technology
Department. Demeter is coordinating with MSDW to address the Year
2000 Problem with respect to Demeter's computer systems that
affect the Partnership. This includes hardware and software
upgrades, systems consulting and computer maintenance.
Beyond the challenge facing internal computer systems, the
systems failure of any of the third parties with whom the
Partnership has a material relationship - the futures exchanges
and clearing organizations through which it trades, Carr, or the
Trading Manager - could result in a material financial risk to
the Partnership. All U.S. futures exchanges are subject to
monitoring by the CFTC of their Year 2000 preparedness and the
major foreign futures exchanges are also expected to be subject
to market-wide testing of their Year 2000 compliance during 1999.
Demeter intends to monitor the progress of Carr and the Trading
Manager throughout 1999 in their Year 2000 compliance and, where
applicable, to test its external interface with Carr and the
Trading Manager.
A worst case scenario would be one in which trading of contracts
on behalf of the Partnership becomes impossible as a result of
<PAGE>
the Year 2000 problem encountered by any third parties. A less
catastrophic but more likely scenario would be one in which
trading opportunities diminish as a result of technical problems
resulting in illiquidity and fewer opportunities to make
profitable trades. MSDW has begun developing various "contingency
plans" in the event that the systems of such third parties fail.
Demeter intends to consult closely with MSDW in implementing
those plans. Despite the best efforts of both Demeter and MSDW,
however, it is possible that these steps will not be sufficient
to avoid any adverse impact to the Partnership.
Risks Associated With the Euro. On January 1, 1999, eleven
countries in the European Union established fixed conversion
rates on their existing sovereign currencies and converted to a
common single currency (the "euro"). During a three-year
transition period, the sovereign currencies will continue to
exist but only as a fixed denomination of the euro. Conversion
to the euro prevents the Trading Manager from trading in certain
currencies and thereby limits its ability to take advantage of
potential market opportunities that might otherwise have existed
had separate currencies been available to trade. This could
adversely affect the performance results of the Partnership.
<PAGE>
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures interests. The market sensitive
instruments held by the Partnership are acquired solely for
speculative trading purposes and, as a result, all or
substantially all of the Partnership's assets are subject to the
risk of trading loss. Unlike an operating company, the risk of
market sensitive instruments is integral, not incidental, to the
Partnership's primary business activities.
The futures interests traded by the Partnership involve varying
degrees of related market risk. Such market risk is often
dependent upon changes in the level or volatility of interest
rates, exchange rates, and/or market values of financial
instruments and commodities. Fluctuations in related market risk
based upon the aforementioned factors result in frequent changes
in the fair value of the Partnership's open positions, and,
consequently, in its earnings and cash flow.
The Partnership's total market risk is influenced by a wide
variety of factors, including the diversification effects among
the Partnership's existing open positions, the volatility present
within the market(s), and the liquidity of the market(s). At
varying times, each of these factors may act to exacerbate or
mute the market risk associated with the Partnership.
<PAGE>
The Partnership's past performance is not necessarily indicative
of its future results. Any attempt at quantifying the
Partnership's market risk must be qualified by the inherent
uncertainty of its speculative trading, which may cause future
losses and volatility (i.e. "risk of ruin") far in excess of the
Partnership's experience to date and/or any reasonable
expectation premised upon historical changes in the fair value of
its market sensitive instruments.
Quantifying the Partnership's Trading Value at Risk
The following quantitative disclosure regarding the Partnership's
market risk exposures contain "forward-looking statements" within
the meaning of the safe harbor from civil liability provided for
such statements by the Private Securities Litigation Reform Act
of 1995 (set forth in Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934). All
quantitative disclosures in this section are deemed to be forward-
looking statements for purposes of the safe harbor, except for
statements of historical fact.
The Partnership accounts for open positions on the basis of mark-
to-market accounting principles. As such, any loss in the fair
value of the Partnership's open positions is directly reflected
in the Partnership's earnings, whether realized or unrealized,
and the Partnership's cash flow, as profits and losses on open
positions of exchange-traded futures interests are settled daily
through variation margin.
<PAGE>
The Partnership's risk exposure in the various market sectors
traded by the Trading Manager is estimated below in terms of
Value at Risk ("VaR"). The VaR model employed by the Partnership
incorporates numerous variables that could impact the fair value
of the Partnership's trading portfolio. The Partnership
estimates VaR using a model based on historical simulation with a
confidence level of 99%. Historical simulation involves
constructing a distribution of hypothetical daily changes in
trading portfolio value. The VaR model generally takes into
account linear exposures to price and interest rate risk. Market
risks that are incorporated in the VaR model include equity and
commodity prices, interest rates, foreign exchange rates, as well
as correlation that exists among these variables. The
hypothetical changes in portfolio value are based on daily
observed percentage changes in key market indices or other market
factors ("market risk factors") to which the portfolio is
sensitive. In the case of the Partnership's VaR, the historical
observation period is approximately four years. The
Partnership's one-day 99% VaR corresponds to the negative change
in portfolio value that, based on observed market risk factor
moves, would have been exceeded once in 100 trading days.
VaR models such as the Partnership's are continually evolving as
trading portfolios become more diverse and modeling techniques
and systems capabilities improve. It must also be noted that the
VaR model is used to quantify market risk for historic reporting
<PAGE>
purposes only and is not utilized by either Demeter or the
Trading Manager in their daily risk management activities.
The Partnership's Value at Risk in Different Market Sectors
The following table indicates the VaR associated with the
Partnership's open positions as a percentage of total Net Assets
by market category as of June 30, 1999. As of June 30, 1999, the
Partnership's total capitalization was approximately $39 million.
Primary Market June 30, 1999
Risk Category Value at Risk
Currency (2.09)%
Interest Rate (1.99)
Commodity (0.97)
Equity (0.48)
Aggregate Value at Risk (3.19)%
Aggregate value at risk represents the aggregate VaR of the
Partnership's open positions and not the sum of the VaR of the
individual categories listed above. Aggregate VaR will be lower
as it takes into account correlation among different positions
and categories.
The table above represents the VaR of the Partnership's open
positions at June 30, 1999 only and is not necessarily
representative of either the historic or future risk of an
investment in the Partnership. As the Partnership's sole
business is the speculative trading of primarily futures
interests, the composition of its portfolio of open positions can
change significantly over any given time period or even within a
<PAGE>
single trading day. Such changes in open positions could
materially impact market risk as measured by VaR either
positively or negatively.
The table below supplements the quarter-end VaR by presenting the
Partnership's high, low and average VaR as a percentage of total
Net Asets for the four quarterly reporting periods from July 1,
1998 through June 30, 1999.
Primary Market Risk Category High Low Average
Currency (2.29)% (1.10)% (1.91)%
Interest Rate (1.99) (0.53) (1.32)
Commodity (1.09) (0.43) (0.88)
Equity (0.75) (0.23) (0.44)
Aggregate Value at Risk (3.19)% (1.47)% (2.48)%
Limitations on Value at Risk as an Assessment of Market Risk
The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements, as such margin requirements generally range between
2% and 15% of contract face value. Additionally, due to the use
of leverage, the face value of the market sector instruments held
by the Partnership is typically many times the total
capitalization of the Partnership. The financial magnitude of
the Partnership's open positions thus creates a "risk of ruin"
not typically found in other investment vehicles. Due to the
relative size of the positions held, certain market conditions
may cause the Partnership to incur losses greatly in excess of
<PAGE>
VaR within a short period of time. The foregoing VaR tables, as
well as the past performance of the Partnership, gives no
indication of such "risk of ruin". In addition, VaR risk measures
should be interpreted in light of the methodology's limitations,
which include the following: past changes in market risk factors
will not always yield accurate predictions of the distributions
and correlations of future market movements; changes in portfolio
value in response to market movements may differ from the
responses implicit in a VaR model; published VaR results reflect
past trading positions while future risk depends on future
positions; VaR using a one-day time horizon does not fully
capture the market risk of positions that cannot be liquidated or
hedged within one day; and the historical market risk factor data
used for VaR estimation may provide only limited insight into
losses that could be incurred under certain unusual market
movements.
The foregoing VaR tables present the results of the Partnership's
VaR for each of the Partnership's market risk exposures and on an
aggregate basis at June 30, 1999 and for the end of the four
quarterly reporting periods from July 1, 1998 through June 30,
1999. Since VaR is based on historical data, VaR should not be
viewed as predictive of the Partnership's future financial
performance or its ability to manage and monitor risk and there
can be no assurance that the Partnership's actual losses on a
particular day will not exceed the VaR amounts indicated or that
such losses will not occur more than 1 in 100 trading days.
<PAGE>
Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances not needed for margin. However, such balances, as well
as any market risk they may represent, are immaterial. The
Partnership also maintains a substantial portion (approximately
84%) of its available assets in cash at DWR. A decline in short-
term interest rates will result in a decline in the Partnership's
cash management income. This cash flow risk is not considered
material.
Materiality, as used throughout this section, is based on an
assessment of reasonably possible market movements and the
potential losses caused by such movements, taking into account
the leverage, optionality and multiplier features of the
Partnership's market sensitive instruments.
Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership's
market risk exposures - except for (i) those disclosures that are
statements of historical fact and (ii) the descriptions of how
the Partnership manages its primary market risk exposures -
constitute forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. The Partnership's primary market risk
exposures as well as the strategies used and to be used by
Demeter and the Trading Manager for managing such exposures are
subject to numerous uncertainties, contingencies and risks, any
one of which could cause the actual results of the Partnership's
<PAGE>
risk controls to differ materially from the objectives of such
strategies. Government interventions, defaults and expro-
priations, illiquid markets, the emergence of dominant
fundamental factors, political upheavals, changes in historical
price relationships, an influx of new market participants,
increased regulation and many other factors could result in
material losses as well as in material changes to the risk
exposures and the risk management strategies of the Partnership.
Investors must be prepared to lose all or substantially all of
their investment in the Partnership.
The following were the primary trading risk exposures of the
Partnership as of June 30, 1999, by market sector. It may be
anticipated, however, that these market exposures will vary
materially over time.
Currency. The primary trading risk exposure in the Partner-
ship is in the currency complex. The Partnership's currency
exposure is in exchange rate fluctuations, primarily fluctuations
that disrupt the historical pricing relationships between
different currencies and currency pairs. Interest rate changes
as well as political and general economic conditions influence
these fluctuations. The Partnership trades in a large number of
currencies, including cross-rates i.e., positions between two
currencies other than the U.S. dollar. For the second quarter of
1999, the Partnership's major exposures were in the Euro currency
crosses, Swedish Kroner and outright U.S. dollar positions.
(Outright positions consist of the U.S. dollar vs. other
<PAGE>
currencies. These other currencies include the major and minor
currencies). Demeter does not anticipate that the risk profile
of the Partnership's currency sector will change significantly in
the future. The currency trading VaR figure includes foreign
margin amounts converted into U.S. dollars with an incremental
adjustment to reflect the exchange rate risk inherent to the
dollar-based Partnership in expressing VaR in a functional
currency other than dollars.
Interest Rate. The second largest exposure for the quarter
ended June 30, 1999 was in the interest rate sector. Exposure
was spread across the U.S., Australian, British, Euro and
Japanese interest rate markets. Interest rate movements directly
affect the price of the soverign bond positions held by the
Partnership and indirectly affect the value of its stock index
and currency positions. Interest rate movements in one country
as well as relative interest rate movements between countries
materially impact the Partnership's profitability. The
Partnership's primary interest rate exposure is generally to
interest rate fluctuations in the G-7 countries and Australia.
Demeter anticipates that G-7 and Australian interest rates will
remain the primary interest rate exposure of the Partnership for
the foreseeable future. The changes in interest rates, which
have a substantial effect on the Fund, are changes in long-term
and medium-term instruments. Consequently, even a material
change in short-term rates would have little effect on the
Partnership were the medium-to-long-term rates to remain steady.
<PAGE>
Commodity.
Metals. The next largest exposure was in the precious
metals markets. While the Partnership's exposure on June 30,
1999 was both in the base and precious metals, the Partnership
generally risks more in base metals. Demeter anticipates that
base metals will remain the primary metals market exposure of the
Partnership.
Energy. On June 30, 1999, the Partnership's energy
exposure was in the London and New York crude oil markets. Price
movements in these markets result from political developments in
the Middle East, weather patterns, and other economic
fundamentals. As oil prices continue to break out of low price
ranges achieved in 1998, it is possible that volatility will
continue to increase as well. Significant profits and losses
have been and are expected to continue to be experienced in these
markets.
Equity. The Partnership's equity exposure on June 30, 1999
was limited to price risk in the Nikkei index (Japan). The stock
index futures traded by the Partnership are by law limited to
futures on broadly based indices. Demeter anticipates little, if
any, trading in non-G-7 stock indices. The Partnership is
primarily exposed to the risk of adverse price trends or static
markets in the U.S. and Japanese stock indices. (Static markets
would not cause major market changes but would make it difficult
for the Partnership to avoid being "whipsawed" into numerous
small losses).
<PAGE>
Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership as of June 30, 1999:
Foreign Currency Balances. The Partnership's foreign cur-
rency balances are in Japanese yen, British pounds, euros, Swiss
Francs, and Australian dollars. The Partnership controls the non-
trading risk of these balances by regularly converting these
balances back into dollars upon liquidation of the respective
position.
Qualitative Disclosures Regarding Means of Managing Risk Exposure
The means by which the Partnership and the Trading Manager,
severally, attempt to manage the risk of the Partnership's open
positions are essentially the same in all market categories
traded. Demeter attempts to manage the Partnership's market
exposure by (i) diversifying the Partnership's assets among
different market sectors and trading approaches, and (ii),
monitoring the performance of the Trading Manager on a daily
basis. In addition, the Trading Manager establishes diversi-
fication guidelines, often set in terms of the maximum margin to
be committed to positions in any one market sector or market
sensitive instrument.
Demeter monitors and controls the risk of the Partnership's non-
trading instrument, cash, which is the only Partnership
investment directed by Demeter, rather than the Trading Manager.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The following supplements Legal Proceedings previously disclosed
in the Partnership's 1998 Form 10-K:
With respect to the plaintiffs' consolidated action in
California, on July 1, 1999, the Superior Court of the State of
California, ruling from the bench, denied the plaintiffs' motion
to have their lawsuit certified as a class action, stating, among
other things, that plaintiffs' lawsuit did not present common
questions of fact.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits - None.
(B) Reports on Form 8-K. - None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DWFCM International Access Fund
L.P.
(Registrant)
By: Demeter Management Corporation
(General Partner)
August 13, 1999 By: /s/ Lewis A. Raibley, III
Lewis A. Raibley, III
Director and Chief Financial
Officer
The General Partner which signed the above is the only party
authorized to act for the Registrant. The Registrant has no
principal executive officer, principal financial officer,
controller, or principal accounting officer and has no Board of
Directors.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from
DWFCM International Access Fund L.P. and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 39,026,396
<SECURITIES> 0
<RECEIVABLES> 121,009<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 39,702,894<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 39,702,894<F3>
<SALES> 0
<TOTAL-REVENUES> (1,908,710)<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,829,046
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,737,756)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,737,756)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,737,756)
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include interest receivable of $121,009.
<F2>In addition to cash and receivables, total assets include net
unrealized gain on open contracts of $555,489.
<F3>Liabilities include redemptions payable of $202,453, accrued
management fees of $99,011, and accrued administrative expenses
of $98,468.
<F4>Total revenue includes realized trading revenue of $(3,651,008),
net change in unrealized of $1,001,678 and interest income of
$740,620.
</FN>
</TABLE>
