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 period ended March 31, 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
March 31, 1999
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition
March 31, 1999 (Unaudited) and December 31, 1998 .....2
Statements of Operations for the Quarters Ended
March 31, 1999 and 1998 (Unaudited)...................3
Statements of Changes in Partners' Capital
for the Quarters Ended March 31, 1999 and 1998
(Unaudited)...........................................4
Statements of Cash Flows for the Quarters Ended
March 31, 1999 and 1998 (Unaudited)...................5
Notes to Financial Statements (Unaudited)..........6-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..11-17
Item 3. Quantitative and Qualitative Disclosures about
Market Risk . . . . . . . . . . . . . . . . . 17-28
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.............................. 29
Item 6. Exhibits and Reports on Form 8-K................ 29
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DWFCM INTERNATIONAL ACCESS FUND L.P.
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
March 31, December 31,
1999 1998
$ $
(Unaudited)
ASSETS
<S> <C> <C>
Equity in futures interests trading accounts:
Cash 41,242,379 46,211,886
Net unrealized gain (loss) on open contracts 131,871 (446,189)
Total Trading Equity 41,374,250 45,765,697
Interest receivable (DWR) 130,863 138,824
Due from DWR 19,018 -
Total Assets 41,524,131 45,904,521
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable 535,131 239,917
Accrued management fee (DWFCM) 103,542 114,567
Accrued administrative expenses 88,420 77,869
Total Liabilities 727,093 432,353
Partners' Capital
Limited Partners (27,907.063 and
28,862.490 Units, respectively) 40,312,531 44,949,810
General Partner (335.409 Units) 484,507 522,358
Total Partners' Capital 40,797,038 45,472,168
Total Liabilities and Partners' Capital 41,524,131 45,904,521
NET ASSET VALUE PER UNIT 1,444.53 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 March 31,
1999 1998
$ $
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized (3,279,708) 6,024,165
Net change in unrealized 578,060 (7,653,877)
Total Trading Results (2,701,648) (1,629,712)
Interest Income (DWR) 381,969 459,165
Total Revenues (2,319,679) (1,170,547)
EXPENSES
Brokerage commissions (DWR) 572,965 560,939
Management fee (DWFCM) 319,895 346,978
Transaction fees and costs 39,901 47,079
Administrative expenses 18,000 20,000
Total Expenses 950,761 974,996
NET LOSS (3,270,440) (2,145,543)
NET LOSS ALLOCATION
Limited Partners (3,232,589)
(2,098,274)
General Partner
(37,851) (47,269)
NET LOSS PER UNIT
Limited Partners (112.85)
(66.53)
General Partner
(112.85) (66.53)
<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 Quarters Ended March 31, 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 - (2,098,274) (47,269)
(2,145,543)
Redemptions (849.917) (1,212,559) -
(1,212,559)
Partners' Capital
March 31, 1998 31,535.622 $43,638,811 $1,005,716
$44,644,527
Partners' Capital
December 31, 1998 29,197.899 $44,949,810 $522,358
$45,472,168
Net Loss - (3,232,589) (37,851)
(3,270,440)
Redemptions (955.427) (1,404,690)
- - (1,404,690)
Partners' Capital
March 31, 1999 28,242.472 $40,312,531 $484,507
$40,797,038
<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 Quarters Ended March 31,
1999 1998
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss (3,270,440)
(2,145,543)
Noncash item included in net loss:
Net change in unrealized (578,060) 7
,653,877
(Increase) decrease in operating assets:
Interest receivable (DWR) 7,961 (3,039)
Due from DWR (19,018) -
Increase (decrease) in operating liabilities:
Accrued management fee (DWFCM) (11,025) (8,698)
Accrued administrative expenses 10,551 20,000
Incentive fee payable -
(437,418)
Net cash provided by (used for) operating activities (3
,860,030) 5,079,179
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in redemptions payable 295,214 325,029
Redemptions of units (1,404,690)
(1,212,559)
Net cash used for financing activities (1,109,476)
(887,530)
Net increase (decrease) in cash (4,969,507) 4
,191,649
Balance at beginning of period 46,211,886
43,146,223
Balance at end of period 41,242,379
47,337,872
<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 has elected to adopt the provisions of SFAS No. 133
beginning with the fiscal year 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 on open contracts is reported as a
component of "Equity in futures interests trading accounts" on
the Statements of Financial Condition and totaled $131,871 and
$(446,189) at March 31, 1999 and December 31, 1998, respectively.
Of the $131,871 net unrealized gain on open contracts at March
31, 1999, $65,064 related to exchange-traded futures contracts
and $66,807 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
March 31, 1999 and December 31, 1998 mature through June 1999.
Off-exchange-traded forward currency contracts held by the
Partnership
at March 31, 1999 and December 31, 1998 mature through June 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 on all open futures contracts, which funds, in
the aggregate, totaled $ 41,307,443 and $47,697,699 at March 31,
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 Ended March 31, 1999
For the quarter ended March 31, 1999, the Partnership recorded
total trading losses net of interest income of $2,319,679 and
posted a decrease in Net Asset Value per Unit. The most
significant losses were experienced in the currency markets
earlier in the 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
<PAGE>
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. In the global
interest rate futures markets, losses were recorded throughout a
majority of the quarter from short Japanese government 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 metals markets, losses were
experienced during March from long silver futures positions as
prices retreated after Berkshire Hathaway's annual report failed
to provide any new information on the company's silver positions.
In the global stock index futures markets, losses were recorded
during February from long S&P 500 Index futures positions as
domestic equity prices moved lower on concerns that the Federal
Reserve may raise interest rates in an effort to control
inflation. These losses 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
which was largely attributed to the news that both OPEC and non-
OPEC countries had reached an agreement to cut total output by
<PAGE>
approximately two million barrels a day beginning April 1st.
Total expenses for the three months ended March 31, 1999 were
$950,761, resulting in a net loss of $3,270,440. The value of a
Unit decreased from $1,557.38 at December 31, 1998 to $1,444.53
at March 31, 1999.
For the Quarter Ended March 31, 1998
For the quarter ended March 31, 1998, the Partnership recorded
total trading losses net of interest income of $1,170,547 and
posted a decrease in Net Asset Value per Unit. The most
significant losses were recorded in currency markets due
primarily to short-term volatility caused by the economic
instability in the Far East. During January, the previous upward
trend in the value of the U.S. dollar reversed lower in response
to the Japanese government's proposed economic stimulus package.
This reversal resulted in losses for previously established short
Japanese yen positions. Additional currency losses were recorded
in February as the value of the yen moved without consistent
direction. Smaller losses were recorded from transactions
involving the German mark, Australian dollar and British pound.
A portion of these losses was offset by gains in March from
transactions involving the German mark, Swiss franc and Japanese
yen. In metals, losses were recorded from long silver futures
positions as silver prices reversed lower in February after
rallying higher during January. Smaller losses were recorded
from trading base metals futures during March. A portion of the
Partnership's overall losses for the quarter was offset by gains
in financial futures trading. The most significant gains were
<PAGE>
recorded from long European bond futures positions, as well as
from long S&P 500 Index futures positions, as prices in these
markets trended higher throughout a majority of the quarter. In
the energy markets, gains were recorded from short crude and
heating oil futures positions as prices trended lower during
January and February before reversing higher during March. Total
expenses for the three months ended March 31, 1998 were $974,996,
resulting in a net loss of $2,145,543. The value of a Unit
decreased from $1,482.22 at December 31, 1997 to $1,415.69 at
March 31, 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.
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
<PAGE>
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 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,
<PAGE>
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.
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
<PAGE>
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.
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 disclosures regarding the
Partnership's market risk exposures contain "forward-looking
statements" within the meaning of the safe harbor from civil
liability provided for
<PAGE>
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.
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
<PAGE>
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
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 March 31, 1999. As of March 31, 1999,
the Partnership's total capitalization was approximately $41
million.
<PAGE>
Primary Market March 31, 1999
Risk Category Value at Risk
Currency (2.18)%
Interest Rate (0.94)
Equity (0.75)
Commodity (1.09)
Aggregate Value at Risk (2.54)%
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 March 31, 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 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 assets for the four quarterly reporting periods from April 1,
1998 through March 31, 1999.
<PAGE>
Primary Market Risk Category High Low Average
Currency (2.29)% (1.10)% (1.94)%
Interest Rate (1.84) (0.53) (1.12)
Equity (0.75) (0.23) (0.46)
Commodity (1.09) (0.43) (0.88)
Aggregate Value at Risk (3.14)% (1.47)% (2.47)%
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 require-
ments, 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 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
<PAGE>
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 March 31, 1999 and for the end of the four
quarterly reporting periods from April 1, 1998 through March 31,
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.
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
88%) 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.
<PAGE>
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 risk controls to differ materially
from the objectives of such strategies. Government interventions,
defaults and expropriations, 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.
<PAGE>
The following were the primary trading risk exposures of the
Partnership as of March 31, 1999, by market sector. It may be
anticipated however, that these market exposures will vary
materially over time.
Currency. The primary exposure in the Partnership 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 first quarter of 1999, the Partnership's major
exposures were in the Euro currency crosses and outright U.S.
dollar positions. (Outright positions consist of the U.S. dollar
vs. other 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 Value at Risk
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 Value at
Risk in a functional currency other than dollars.
Interest Rate. The second largest exposure this quarter was
in the interest rate sector. Exposure was spread across the U.S.
Australian, British, and Japanese interest rate markets. Interest
<PAGE>
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
the most 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.
Equity. The Partnership's equity exposure on March 31, 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).
Commodity.
Metals. The next largest exposure was in the precious metals
markets. While the Partnership's exposure on March 31, 1999 was
solely in the silver and gold markets, the Partnership generally
<PAGE>
risks more in base metals. Demeter anticipates that base metals
will remain the primary metals market exposure of the Partnership.
Energy. On March 31, 1999, the Partnership's energy exposure
was shared by futures contracts in the oil and natural gas markets.
Price movements in these markets result from political developments
in the Middle East, weather patterns, and other economic
fundamentals. As oil prices have broken out of low price ranges
achieved in 1998, it is possible that volatility will increase as
well. Significant profits and losses have been and are expected to
continue to be experienced in this market. Natural gas, also a
primary energy market exposure, has exhibited more volatility than
the oil markets on an intra day and daily basis. It is expected to
continue this choppy pattern.
Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposures of the
Partnership as of March 31, 1999:
Foreign Currency Balances. The Partnership's foreign currency
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)
<PAGE>
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 diversification 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 Item 3. of the Partnership's 1998 Form 10-K:
On April 12, 1999, the defendants filed a motion in the
California action to oppose certification by the court of the
class in the California litigation.
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)
May 17, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 41,242,379
<SECURITIES> 0
<RECEIVABLES> 149,881<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 41,524,131<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 41,524,131<F3>
<SALES> 0
<TOTAL-REVENUES> (2,319,679)<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 950,761
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,270,440)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,270,440)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,270,440)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include interest receivable of $130,863 and due
from DWR of $19,018.
<F2>In addition to cash and receivables, total assets include net
unrealized gain on open contracts of $131,871.
<F3>Liabilities include redemptions payable of $535,131, accrued
management fees of $103,542, and accrued administrative expenses
of $88,420.
<F4>Total revenue includes realized trading revenue of $(3,279,708),
net change in unrealized of $578,060 and interest income of
$381,969.
</FN>
</TABLE>
