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, 2000 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, 2000
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition
June 30, 2000 (Unaudited) and December 31, 1999 ..........2
Statements of Operations for the Quarters Ended
June 30, 2000 and 1999 (Unaudited)........................3
Statements of Operations for the Six Months Ended
June 30, 2000 and 1999 (Unaudited)........................4
Statements of Changes in Partners' Capital
for the Six Months Ended June 30, 2000 and
1999 (Unaudited)..........................................5
Statements of Cash Flows for the Six Months Ended
June 30, 2000 and 1999 (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 ...................................... 21-32
Part II. OTHER INFORMATION
Item 1. Legal Proceedings..................................33-34
Item 5. Other Information..................................34-35
Item 6. Exhibits and Reports on Form 8-K......................35
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DWFCM INTERNATIONAL ACCESS FUND L.P.
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
June 30, December 31,
2000 1999 $
$
(Unaudited)
ASSETS
<S> <C> <C>
Equity in futures interests trading accounts:
Cash 36,753,309 36,135,527
Net unrealized loss on open contracts (MSIL)
(175,763) - Net
unrealized gain (loss) on open contracts (Carr) (632,480)
608,697
Net unrealized loss on open contracts (MS & Co.)
(1,511,022) ______-____
Total net unrealized gain (loss) on open contracts(2,319,265)
608,697
Total Trading Equity 34,434,044 36,744,224
Interest receivable (DWR) 133,815 130,006
Total Assets 34,567,859 36,874,230
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable 327,318 526,756
Accrued management fees (DWFCM) 86,218 92,010
Accrued administrative expenses 80,656 70,250
Total Liabilities 494,192 689,016
Partners' Capital
Limited Partners (22,980.359 and
25,255.755 Units, respectively) 33,583,500 35,710,955
General Partner (335.409 Units) 490,167 474,259
Total Partners' Capital 34,073,667 36,185,214
Total Liabilities and Partners' Capital34,567,859 36,87
4,230
NET ASSET VALUE PER UNIT 1,461.40 1,413.97
<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,
2000 1999
$ $
<S> <C> <C>
REVENUES
Trading profit (loss):
Realized
4,574,677 (371,300) Net
change in unrealized
(4,217,008) 423,618
Total Trading Results 357,669 52,318
Interest Income (DWR) 408,971 358,651
Total Revenues 766,640 410,969
EXPENSES
Brokerage commissions (DWR) 421,107 523,146
Management fees (DWFCM) 267,584 303,835
Transaction fees and costs 23,283 33,304
Administrative expenses 18,000 18,000
Total Expenses 729,974 878,285
NET INCOME (LOSS) 36,666 (467,316)
NET INCOME (LOSS) ALLOCATION
Limited Partners 36,538 (461,650)
General Partner 128 (5,666)
NET INCOME (LOSS) PER UNIT
Limited Partners
0.38 (16.90)
General Partner
0.38 (16.90)
<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,
2000 1999
$ $
<S> <C> <C>
REVENUES
Trading profit (loss):
Realized 4,919,444 (3,651,008)
Net change in unrealized
(2,927,962) 1,001,678
Total Trading Results 1,991,482 (2,649,330)
Interest Income (DWR) 792,852 740,620
Total Revenues 2,784,334 (1,908,710)
EXPENSES
Brokerage commissions (DWR) 975,251 1,096,111
Management fees (DWFCM) 534,714 623,730
Transaction fees and costs 58,911 73,205
Administrative expenses 36,000 36,000
Total Expenses 1,604,876 1,829,046
NET INCOME (LOSS) 1,179,458 (3,737,756)
NET INCOME (LOSS) ALLOCATION
Limited Partners 1,163,550 (3,694,239)
General Partner 15,908 (43,517)
NET INCOME (LOSS) PER UNIT
Limited Partners
47.43 (129.75)
General Partner
47.43 (129.75)
<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, 2000 and 1999
(Unaudited)
<CAPTION>
Units of
Partnership Limited General
Interest Partners Partner Total
<S>
<C> <C> <C>
<C>
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
Partners' Capital,
December 31, 1999 25,591.164 $35,710,955 $474,259 $36,185,214
Net Income
- 1,163,550 15,908 1,179,458
Redemptions (2,275.396) (3,291,005) ____-___
(3,291,005)
Partners' Capital,
June 30, 2000 23,315.768 $33,583,500 $490,167 $34,073,667
<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,
2000 1999
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
<S>
<C> <C>
Net income (loss) 1,179,458 (
3,737,756) Noncash
item included in net income (loss):
Net change in unrealized 2,927,962 (
1,001,678)
(Increase) decrease in operating assets:
Interest receivable (DWR) (3,809) 17,815
Increase (decrease) in operating liabilities:
Accrued management fees (DWFCM) (5,792) (15,556)
Accrued administrative expenses 10,406
20,599
Net cash provided by (used for) operating activities4,108,225
(4,716,576)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in redemptions payable (199,438) (37,464)
Redemptions of Units (3,291,005)
(2,431,450)
Net cash used for financing activities (3,490,443)
(2,468,914)
Net increase (decrease) in cash 617,782 (
7,185,490)
Balance at beginning of period 36,135,527
46,211,886
Balance at end of period 36,753,309
39,026,396
<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, 1999 Annual Report on Form 10-K.
1. Organization
DWFCM International Access Fund L.P. is a Delaware 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"). Morgan Stanley & Co., Inc.
("MS & Co.") and Morgan Stanley & Co. International Limited
("MSIL") provide clearing and execution services. Prior to May
2000, Carr Futures Inc. provided clearing and execution services.
The trading manager is Dean Witter Futures & Currency Management
Inc. ("DWFCM" or the "Trading Manager"). Demeter, DWR, DWFCM, MS
&
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Co. and MSIL are wholly-owned subsidiaries of Morgan Stanley Dean
Witter & Co.
2. Related Party Transactions
The Partnership's cash is on deposit with DWR, MS & Co., and MSIL
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.
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In June 1998, the Financial Accounting Standards Board ("FASB")
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. In June 1999, the FASB issued SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of SFAS No. 133," which defers the required
implementation of SFAS No. 133 until fiscal years beginning after
June 15, 2000. However, the Partnership had previously 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 (loss) on open contracts is reported as a
component of "Equity in futures interests trading accounts" on
the statements of financial condition and totaled $(2,319,265)
and $608,697 at June 30, 2000 and December 31, 1999,
respectively.
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Of the $2,319,265 net unrealized loss on open contracts at June
30, 2000, $44,397 related to exchange-traded futures contracts
and $(2,363,662) related to off-exchange-traded forward currency
contracts.
Of the $608,697 net unrealized gain on open contracts at December
31, 1999, $465,072 related to exchange-traded futures contracts
and $143,625 related to off-exchange-traded forward currency
contracts.
Exchange-traded futures contracts held by the Partnership at June
30, 2000 and December 31, 1999 mature through September 2000.
Off-exchange-traded forward currency contracts held by the
Partnership at June 30, 2000 and December 31, 1999 mature through
September 2000 and March 2000, respectively.
The Partnership has credit risk associated with counterparty
nonperformance. 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.
The Partnership also has credit risk because DWR, MS & Co., and
MSIL act as the futures commission merchants or the
counterparties
<PAGE>
DWFCM INTERNATIONAL ACCESS FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
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, MS & Co., and
MSIL each as a futures commission merchant for 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 $36,797,706 and $36,600,599 at
June 30, 2000 and December 31, 1999, 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 MS & Co., the sole
counterparty on all of such contracts, to perform. The
Partnership has a netting agreement with MS & Co. This
agreement, which seeks to reduce both the Partnership's and MS &
Co.'s exposure on off-exchange-traded forward currency contracts,
should materially decrease the Partnership's credit risk in the
event of MS & Co.'s bankruptcy or insolvency.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity - The Partnership deposits its assets with DWR as non-
clearing broker and MS & Co. and MSIL as clearing brokers in
separate futures trading accounts established for the Trading
Manager, which assets are used as margin to engage in trading.
The assets are held in either non-interest-bearing bank accounts
or in securities and instruments permitted by the CFTC for
investment of customer segregated or secured funds. The
Partnership's assets held by the commodity brokers may be used as
margin solely for the Partnership's trading. Since the
Partnership's sole purpose is to trade in futures and forwards,
it is expected that the Partnership will continue to own such
liquid assets for margin purposes.
The Partnership's investment in futures and forwards may, from
time to time, be illiquid. Most U.S. futures exchanges limit
fluctuations in prices during a single day by regulations
referred to as "daily price fluctuations limits" or "daily
limits". Trades may not be executed at prices beyond the daily
limit. If the price for a particular futures contract has
increased or decreased by an amount equal to the daily limit,
positions in that futures contract can neither be taken nor
liquidated unless traders are willing to effect trades at or
within the limit. Futures prices have occasionally moved the
daily limit for several consecutive days with little or no
trading. These market conditions could
<PAGE>
prevent the Partnership from promptly liquidating its futures
contracts and result in restrictions on redemptions.
There is no limitation on daily price moves in trading forward
contracts on foreign currency. The markets for some world
currencies have low trading volume and are illiquid, which may
prevent the Partnership from trading in potentially profitable
markets or prevent the Partnership from promptly liquidating
unfavorable positions in such markets, subjecting it to
substantial losses. Either of these market conditions could
result in restrictions on redemptions.
The Partnership has never had illiquidity affect a material
portion of its assets.
Capital Resources. The Partnership does not have, or expect to
have, any capital assets. Redemptions of additional units of
limited partnership interest ("Unit(s)") in the future will
affect the amount of funds available for investment in futures
interests in subsequent periods. It is not possible to estimate
the amount and therefore, the impact of future redemptions of
Units.
Results of Operations
General. The Partnership's results depend on its Trading Manager
and the ability of the Trading Manager's trading programs to take
advantage of price movements or other profit opportunities in the
<PAGE>
futures and forwards markets. The following presents a summary
of the Partnership's operations for the quarter and six months
ended June 30, 2000 and 1999, respectively, and a general
discussion of its trading activities during each period. It is
important to note, however, that the Trading Manager trades in
various markets at different times and that prior activity in a
particular market does not mean that such market will be actively
traded by the Trading Manager or will be profitable in the
future. Consequently, the results of operations of the
Partnership are difficult to discuss other than in the context of
its Trading Manager's trading activities on behalf of the
Partnership as a whole and how the Partnership has performed in
the past.
For the Quarter and Six Months Ended June 30, 2000
For the quarter ended June 30, 2000, the Partnership recorded
total trading revenues including interest income of $766,640 and
posted an increase in Net Asset Value per Unit. The most
significant gains of approximately 11.6% were recorded in the
energy markets primarily during May from long positions in
natural gas futures as prices continued their upward trend on
fears that inventory levels remain low and that U.S. demand will
outstrip production this summer, when inventories are typically
refilled for the winter. Additional gains were recorded during
May and June from long futures positions in crude oil and its
<PAGE>
related products as the previous upward movement in oil prices re-
emerged amid rising concerns regarding supplies and production
levels. These gains were partially offset by losses of
approximately 7.4% recorded throughout a majority of the quarter
primarily from long positions in U.S. interest rate futures as
prices declined on inflation fears provoked by stronger-than-
forecasted U.S. economic data. Losses were also recorded
throughout the majority of the quarter from short positions in
German bund futures as prices were pushed higher by the rise in
U.S. prices. In the global stock index futures markets, losses
of approximately 1.9% were incurred primarily during April from
long positions in S&P 500 Index futures as fears of inflation
negatively impacted domestic equity prices. In the currency
markets, losses of approximately 1.4% were experienced primarily
during April and early May from long positions in the Japanese
yen as its value weakened relative to the U.S. dollar amid fears
of an additional Bank of Japan intervention and as Japanese
consumer confidence remained sluggish. In the metals markets,
losses of approximately 0.9% were recorded primarily during June
from short aluminum futures positions as prices increased on
consumer and speculative buying. Total expenses for the three
months ended June 30, 2000 were $729,974, resulting in net income
of $36,666. The value of a Unit increased from $1,461.02 at
March 31, 2000 to $1,461.40 at June 30, 2000.
<PAGE>
For the six months ended June 30, 2000, the Partnership recorded
total trading revenues including interest income of $2,784,334
and posted an increase in Net Asset Value per Unit. The most
significant gains of approximately 16.8% were recorded in the
energy markets primarily during May from long positions in
natural gas futures as prices continued their upward trend on
fears that inventory levels remain low and that U.S. demand will
outstrip production this summer, when inventories are typically
refilled for the winter. Additional gains were recorded during
February from long positions in crude oil futures as prices
increased due to a combination of cold weather, declining
inventories and increasing demand. Oil prices also increased
during June in reaction to the dismissal by OPEC of a price
setting mechanism and a promise of a modest production increase.
In the currency markets, gains of approximately 1.2% were
recorded primarily during January from short positions in the
Swedish krona, the euro and the Swiss franc as the value of these
European currencies weakened relative to the U.S. dollar, hurt by
skepticism about Europe's economic outlook and lack of support
from European officials. During April, profits were recorded
from short positions in the euro as the value of the European
common currency dropped to record lows versus the U.S. dollar and
British pound. These gains were partially offset by losses of
approximately 8.5% recorded throughout a majority of the second
quarter from long positions in U.S. interest rate futures as
prices declined on inflation fears provoked by stronger-than-
<PAGE>
forecasted U.S. economic data. Losses were also recorded
throughout the majority of the second quarter from short
positions in German bund futures as prices were pushed higher by
the rise in U.S. prices. In the global stock index futures
markets, losses of approximately 3.6% were incurred throughout a
majority of the first quarter and during April from long
positions in S&P 500 Index futures as domestic stock prices
declined due to volatility in the technology sector and fears
that the Federal Reserve will be forced to take aggressive action
to slow the economy. In the metals markets, losses of
approximately 3.3% were experienced primarily from long positions
in base metal futures as a previous upward price trend reversed
sharply lower during February in response to interest rate hikes
across the globe. During June, smaller losses were recorded from
short aluminum futures positions as prices increased on consumer
and speculative buying. Total expenses for the six months ended
June 30, 2000 were $1,604,876, resulting in net income of
$1,179,458. The value of a Unit increased form $1,413.97 at
December 31, 1999 to $1,461.40 at June 30, 2000.
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 of approximately 3.9%
were experienced in the metals markets primarily from long
<PAGE>
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 drop in
warehouse stocks. In the global stock index futures markets,
losses of approximately 0.9% were recorded primarily 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 of approximately 2.0% recorded in the currency markets
primarily 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 of approximately 1.0% were recorded
primarily 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 of approximately
0.6% were recorded primarily during April from long natural gas
futures positions as prices climbed following reports that showed
<PAGE>
an 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
significant losses of approximately 4.6% were experienced in the
metals markets primarily 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 of approximately 3.0% were recorded
primarily from short Japanese bond futures positions throughout a
majority of the first quarter 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
<PAGE>
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
of approximately 2.3% were experienced primarily from long
Australian dollar positions throughout a majority of the first
quarter 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 were partially offset by gains of approximately 2.4%
recorded in the energy markets primarily 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.
<PAGE>
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Introduction
The Partnership is a commodity pool involved in the speculative
trading of futures interests. The market-sensitive instruments
held by the Partnership are acquired for speculative trading
purposes only and, as a result, all or substantially all of the
Partnership's assets are at risk of trading loss. Unlike an
operating company, the risk of market-sensitive instruments is
central, not incidental, to the Partnership's main business
activities.
The futures interests traded by the Partnership involve varying
degrees of market risk. Market risk is often dependent upon
changes in the level or volatility of interest rates, exchange
rates, and prices of financial instruments and commodities.
Fluctuations in market risk based upon these 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 among the
Partnership's open positions, the volatility present within the
markets, and the liquidity of the markets. At different times,
each of these factors may act to increase or decrease the market
risk associated with the Partnership.
<PAGE>
The Partnership's past performance is not necessarily indicative
of its future results. Any attempt to numerically quantify the
Partnership's market risk is limited by the uncertainty of its
speculative trading. The Partnership's speculative trading may
cause future losses and volatility (i.e. "risk of ruin") that far
exceed the Partnership's experiences to date or any reasonable
expectations based upon historical changes in market value.
Quantifying the Partnership's Trading Value at Risk
The following quantitative disclosures regarding the Partner-
ship'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 using mark-to-market
accounting principles. Any loss in the market value of the
Partnership's open positions is directly reflected in the
Partnership's earnings, whether realized or unrealized, and its
cash flow. 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 market sectors traded by
the Trading Manager is estimated below in terms of Value at Risk
("VaR"). The VaR model used by the Partnership includes many
variables that could change the market value of the Partnership's
trading portfolio. The Partnership estimates VaR using a model
based upon historical simulation with a confidence level of 99%.
Historical simulation involves constructing a distribution of
hypothetical daily changes in the value of a trading portfolio.
The VaR model 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, and correlation among these variables.
The hypothetical changes in portfolio value are based on daily
percentage changes observed in key market indices or other market
factors ("market risk factors") to which the portfolio is
sensitive. The historical observation period of the Partner-
ship's VaR is approximately four years. The one-day 99%
confidence level of the Partnership's VaR corresponds to the
negative change in portfolio value that, based on observed market
risk factors, would have been exceeded once in 100 trading days.
VaR models, including the Partnership's, are continuously
evolving as trading portfolios become more diverse and modeling
techniques and systems capabilities improve. Please note that
the VaR model is used to numerically quantify market risk for
<PAGE>
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 tables indicate the VaR associated with the
Partnership's open positions as a percentage of total Net Assets
by primary market risk category as of June 30, 2000 and 1999. As
of June 30, 2000 and 1999, the Partnership's total capitalization
was approximately $34 million and $39 million, respectively.
Primary Market June 30, 2000 June 30, 1999
Risk Category Value at Risk Value at Risk
Currency (1.62)% (2.09)%
Interest Rate (1.82) (1.99)
Commodity (2.10) (0.97)
Equity (0.07) (0.48)
Aggregate Value at Risk (2.95)% (3.19)%
Aggregate Value at Risk represents the aggregate VaR of all the
Partnership's open positions and not the sum of the VaR of the
individual Market 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, 2000 and 1999 only and is not necessarily
<PAGE>
representative of either the historic or future risk of an
investment in the Partnership. Because the Partnership's only
business is the speculative trading of futures interests, the
composition of its trading portfolio can change significantly
over any given time period, or even within a single trading day.
Any changes in open positions could positively or negatively
materially impact market risk as measured by VaR.
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 July 1,
1999 through June 30, 2000.
Primary Market Risk Category High Low Average
Currency (2.18)% (1.62)% (1.93)%
Interest Rate (1.99) (0.94) (1.61)
Commodity (2.28) (0.97) (1.61)
Equity (1.43) (0.07) (0.68)
Aggregate Value at Risk (3.79)% (2.52)% (3.11)%
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. Margin requirements generally range between 2% and
15% of contract face value. Additionally, the use of leverage
causes the face value of the market sector instruments held by
the Partnership to typically be many times the total
<PAGE>
capitalization of the Partnership. The value of the
Partnership's open positions thus creates a "risk of ruin" not
typically found in other investments. The relative size of the
positions held may cause the Partnership to incur losses greatly
in excess of VaR within a short period of time, given the effects
of the leverage employed and market volatility. The VaR tables
above, as well as the past performance of the Partnership, gives
no indication of such "risk of ruin". In addition, VaR risk
measures should be viewed in light of the methodology's
limitations, which include the following:
past changes in market risk factors will not always result
in accurate predictions of the distributions and correlations of
future market movements;
changes in portfolio value in response to market movements
may differ from those of the VaR model;
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.
<PAGE>
The VaR tables above 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, 2000 and for the end of the four
quarterly reporting periods from July 1, 1999 through June 30,
2000. 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 or monitor risk. There can
be no assurance that the Partnership's actual losses on a
particular day will not exceed the VaR amounts indicated above 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. At June
30, 2000 the Partnership's cash balance at DWR was approximately
97% of its total Net Asset Value. 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 any
associated potential losses, taking into account the leverage,
<PAGE>
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 (A) those disclosures that are
statements of historical fact and (B) 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 June 30, 2000, by market sector. It may be
anticipated however, that these market exposures will vary
materially over time.
Currency. The Partnership's currency exposure at June 30, 2000
was to exchange rate fluctuations, primarily fluctuations which
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
2000, 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 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.
<PAGE>
Interest Rate. The market exposure at June 30, 2000 in the
interest rate complex was spread across German and Japanese
interest rate sectors. Interest rate movements directly affect
the price of the sovereign bond futures 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 United States and the other G-7
countries. The G-7 countries consist of France, U.S., Britain,
Germany, Japan, Italy and Canada. However, the Partnership also
takes futures positions in the government debt of smaller nations
- e.g. 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 Partnership are
changes in long-term, as opposed to short-term, rates. Most of
the speculative interest rate futures positions held by the
Partnership are in medium- to long-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.
Energy. On June 30, 2000, the Partnership's energy exposure was
shared primarily by futures contracts in the crude oil and
natural gas markets. Price movements in these markets result
from political developments in the Middle East, weather patterns,
and other economic fundamentals. It is possible that volatility
will remain high. Significant profits and losses, which have
been experienced in the past, are expected to continue to be
experienced in this market. Natural gas has exhibited volatility
in prices resulting from weather patterns and supply and demand
factors and may continue in this choppy pattern.
Metals. The Partnership's primary metals market exposure at June
30, 2000 was to fluctuations in the price of aluminum and
nickel.
Equity. Exposure to stock indices on June 30, 2000 was limited
to a small position in the Nikkei stock index.
Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership as of June 30, 2000:
Foreign Currency Balances. The Partnership's primary foreign
currency balances are in euros and Japanese yen. The Partnership
<PAGE>
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 Partnership and the Trading Manager, separately, attempt to
manage the risk of the Partnership's open positions in
essentially the same manner in all market categories traded.
Demeter attempts to manage market exposure by diversifying the
Partnership's assets among different market sectors and trading
approaches, and monitoring the performance of the Trading Manager
daily. 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. Cash 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 Form 10-Q for the quarter ended March 31,
2000 and Form 10-K for the year ended December 31, 1999.
On October 25, 1996, the Market Surveillance Committee (the
"Committee") of the National Association of Securities Dealers
("NASD") filed a formal complaint against MS & Co. and seven
current and former traders, alleging violations of certain NASD
rules relating to manipulative and deceptive practices, locked
and crossed markets, and failure to supervise. Hearings were
held in June and July 1997. On April 13, 1998 the Committee
ruled that MS & Co. and the seven traders had engaged in
manipulative and deceptive practices and improperly locked or
crossed markets, but not that MS & Co. had failed to supervise
its traders. The Committee levied a fine of $1,000,000 on MS &
Co., a fine of $100,000 and a 90-day suspension on one of its
former traders, and fines of $25,000 and 30-day suspensions on
each of the remaining current and former traders. On January 18,
2000 the National Adjudicatory Council, which heard the appeal,
issued a ruling which upheld the Committee's April 1998 decision,
however, the National Adjudicatory Council reduced the firm's
fine to $495,000, reversed all previously imposed suspensions
<PAGE>
against the traders, reduced the fine for each of six traders to
$2,500 and dismissed all charges against the seventh trader.
On January 11, 1999, the Securities and Exchange Commission
brought an action against 28 NASDAQ market makers, including MS &
Co., and 51 individuals, including one current and one former
trader employed by MS & Co., for certain conduct during 1994.
The core of the charges against MS & Co. concerns improper or
undisclosed coordination of price quotes with other broker-
dealers and related reporting, recordkeeping and supervisory
deficiencies in violation of Sections 15(b)(4)(E), 15(c)(1) and
(2) and 17(a) of the Securities Exchange Act and Rules 15c1-2,
15c2-7 and 17a-3 promulgated thereunder. Without admitting or
denying the charges, MS & Co. consented to the entry of a cease
and desist order and to the payment of a civil penalty of
$350,000, disgorgement of $4,170 and to submit certain of its
procedures to an independent consultant for review. In addition,
one current and one former trader employed by MS & Co. accepted
suspensions of less than two months each and were fined $25,000
and $30,000 respectively.
Item 5. OTHER INFORMATION
Effective July 1, 2000, Lewis A. Raibley, III resigned as
Chief Financial Officer and a Director of Demeter and DWFCM.
<PAGE>
Effective July 10, 2000, Raymond E. Koch replaced Lewis A.
Raibley, III as Chief Financial Officer of Demeter.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
3.01 Limited Partnership Agreement of the Partnership, dated as
of March 1, 1994 is 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).
10.01Form of the Management Agreements among the Partnership,
Demeter Management Corporation and DWFCM (the Trading
Manager) dated as of March 1, 1994 is incorporated by
reference to Exhibit 10.02 of the Partnership's
Registration Statement on Form S-1 (File No. 33-71654).
10.02Amended and Restated Customer Agreement, dated as of
December 1, 1997, between the Partnership and Dean Witter
Reynolds Inc. is incorporated by reference to Exhibit 10.02
to Partnership's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 (File No. 0-26282).
10.03 Customer Agreement, dated as of December 1, 1997, among
the Partnership, Carr Futures, Inc., and Dean Witter Reynolds
Inc. is incorporated by reference to Exhibit 10.03 to
Partnership's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 (File No. 0-26282).
10.04International Foreign Exchange Master Agreement, dated as
of August 1, 1997, between the Partnership and Carr
Futures, Inc. is incorporated by reference to Exhibit 10.04
to Partnership's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 (File No. 0-26282).
10.05Customer Agreement, dated as of May 1, 2000 between Morgan
Stanley & Co. Incorporated, the Partnership and Dean Witter
Reynolds Inc. is filed herewith.
(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 10, 2000 By:/s/ Raymond E.
Koch_______________
Raymond E. Koch
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.
