WITTER DEAN CORNERSTONE FUND II, POS AM, 1999-04-28

WITTER DEAN CORNERSTONE FUND II
POS AM, 1999-04-28
REAL ESTATE INVESTMENT TRUSTS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1999

REGISTRATION NO. 2-88587
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

POST-EFFECTIVE AMENDMENT NO. 27

TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
DEAN WITTER CORNERSTONE FUND II
DEAN WITTER CORNERSTONE FUND III
DEAN WITTER CORNERSTONE FUND IV

(Exact name of registrants as specified in their Limited Partnership Agreements)

<TABLE>
<S> <C> <C>
NEW YORK 6799 13-3212871
(State of organization) (Primary Standard Industrial 13-3190919
Classification Code Number) 13-3393597
(IRS Employer
Identification Numbers)
</TABLE>

TWO WORLD TRADE CENTER, 62ND FLOOR
NEW YORK, NEW YORK 10048
(212) 392-8899
(Address, including zip code and telephone number, including area code,
of registrants' principal executive offices)

ROBERT E. MURRAY
DEMETER MANAGEMENT CORPORATION
TWO WORLD TRADE CENTER, 62ND FLOOR
NEW YORK, NEW YORK 10048
(212) 392-8899
(Name, address, including zip code and telephone number,
including area code, of agent for service)

COPIES OF COMMUNICATIONS TO:

<TABLE>
<S> <C>
EDWIN L. LYON, ESQ. MICHAEL T. GREGG, ESQ.
CADWALADER, WICKERSHAM & TAFT DEAN WITTER REYNOLDS INC.
1333 NEW HAMPSHIRE AVENUE, N.W. TWO WORLD TRADE CENTER, 66TH FLOOR
WASHINGTON, D.C. 20036 NEW YORK, NEW YORK 10048
(202) 862-2200 (212) 392-5530
</TABLE>

------------------------
Approximate Date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933 CHECK THE FOLLOWING BOX. /X/
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. / /
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. / /
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(D)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. / /
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. / /
------------------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

This Registration Statement relates to 14,577.947 unsold Units of Limited
Partnership Interest as of March 1, 1999.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
DEAN WITTER CORNERSTONE FUNDS

CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
ITEM LOCATION IN
NO. REGISTRATION ITEM PROSPECTUS
- ---- ----------------- -----------
<C> <S> <C>
1. Forepart of the Registration Statement and Outside Front
Cover Page of Prospectus................................ Facing Page; Front Cover Pages.
2. Inside Front and Outside Back Cover Pages of
Prospectus.............................................. Inside Front Cover Page; Table of Contents.
3. Summary Information, Risk Factors, and Ratio of Earnings
to Fixed Charges........................................ Summary of the Prospectus; The Cornerstone
Funds; Description of Charges to Each
Partnership; Risk Factors; Investment
Program, Use of Proceeds and Trading
Policies; The General Partner; The Commodity
Brokers.
4. Use of Proceeds......................................... Investment Program, Use of Proceeds and
Trading Policies.
5. Determination of Offering Price......................... Plan of Distribution and Exchange Procedure.
6. Dilution................................................ Not Applicable.
7. Selling Security Holders................................ Not Applicable.
8. Plan of Distribution.................................... Plan of Distribution and Exchange Procedure.
9. Description of Securities to be Registered.............. The Limited Partnership Agreements.
10. Interests of Named Experts and Counsel.................. Not Applicable.
11. Information with Respect to the Registrant
(a) Description of Business............................ Summary of the Prospectus; Risk Factors; The
Cornerstone Funds; The Trading Managers; The
Commodities Market; The Limited Partnership
Agreements.
(b) Description of Property............................. Not Applicable.
(c) Legal Proceedings................................... Certain Litigation; The Trading Managers.
(d) Market Price of and Dividends on the Registrant's
Common Equity and Related Stockholder Matters....... Risk Factors.
(e) Financial Statements................................ Independent Auditors' Reports.
(f) Selected Financial Data............................. Selected Financial Data.
(g) Supplementary Financial Information................. Selected Financial Data.
(h) Management's Discussion and Analysis of Financial
Condition and Results of Operations................. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.
(i) Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................. Not Applicable.
(j) Quantitative and Qualitative Disclosures about
Market Risk......................................... Quantitative and Qualitative Disclosures
About Market Risk.
(k) Directors and Executive Officers.................... The General Partner.
(l) Executive Compensation.............................. Summary of the Prospectus; Conflicts of
Interest; Fiduciary Responsibility; Risk
Factors; The Trading Managers; The General
Partner; The Commodity Brokers.
</TABLE>

ii
<PAGE>

<TABLE>
DEAN WITTER CORNERSTONE FUNDS
CROSS REFERENCE SHEET

<CAPTION>
ITEM LOCATION IN
NO. REGISTRATION ITEM PROSPECTUS
- ---- ----------------- -----------
<C> <S> <C>
(m) Security Ownership of Certain Beneficial Owners and
Management.......................................... Capitalization; The General Partner; The
Trading Managers; Independent Auditors'
Reports.
(n) Certain Relationships and Related Transactions...... Summary of the Prospectus; Conflicts of
Interest; Fiduciary Responsibility;
Description of Charges to Each Partnership;
Risk Factors; The Trading Managers; The
General Partner; The Commodity Brokers.
12. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities.............................. Fiduciary Responsibility.
</TABLE>

iii
<PAGE>
THE INFORMATION IN THIS SUPPLEMENT IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS SUPPLEMENT IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION: APRIL 28, 1999

14,577.947 UNITS OF

DEAN WITTER CORNERSTONE FUND II
DEAN WITTER CORNERSTONE FUND III
DEAN WITTER CORNERSTONE FUND IV
------------------------
SUPPLEMENT
TO PROSPECTUS
DATED AUGUST 28, 1996

YOU SHOULD READ THIS SUPPLEMENT TOGETHER WITH THE PROSPECTUS DATED AUGUST 28,
1996. ALL CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED IN THIS SUPPLEMENT
HAVE THE SAME MEANINGS AS USED IN THE PROSPECTUS. ALL PAGE AND SECTION
REFERENCES IN THIS SUPPLEMENT RELATE TO THE PROSPECTUS, EXCEPT REFERENCES TO
PAGES PRECEDED BY "S-," WHICH RELATE TO THIS SUPPLEMENT.

EXCHANGE PRIVILEGE

You may redeem Units in any Cornerstone Fund and with the proceeds from the
redemption you may purchase Units of one or more of the other Cornerstone Funds.
The price you pay will equal 100% of the Net Asset Value per Unit on the date of
purchase. You may only effect an Exchange as of the last day of a calendar month
upon at least 15 days prior written notice to the General Partner.

THE RISKS

THESE ARE SPECULATIVE SECURITIES. YOU COULD LOSE ALL OR SUBSTANTIALLY ALL OF
YOUR INVESTMENT IN THE PARTNERSHIPS. READ THE PROSPECTUS AND THIS SUPPLEMENT
BEFORE YOU DECIDE TO EFFECT AN EXHANGE. SEE "RISK FACTORS" BEGINNING ON PAGE 9
OF THE PROSPECTUS.

* The performance of each Partnership has been volatile and the Net Asset
Value per Unit for each Partnership may fluctuate significantly.

* There is no secondary market for Units and you may only redeem your Units
on the last day of any calendar month upon at least 15 days prior written
notice to the General Partner.

* In order for each Partnership to cover its expenses, each Partnership
must earn annual net Trading Profits (after taking into account estimated
interest income, based on current rates of 4.25%) of the following
percentages of average annual Net Assets:

<TABLE>
<S> <C>
Cornerstone II.................... 7.10%
Cornerstone III................... 7.92%
Cornerstone IV.................... 4.63%
</TABLE>

------------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF
PARTICIPATING IN ANY ONE OF THESE POOLS NOR HAS THE COMMISSION PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT.

------------------------

MORGAN STANLEY DEAN WITTER

DEAN WITTER REYNOLDS INC.
THE DATE OF THIS SUPPLEMENT IS APRIL , 1999.

<PAGE>
TABLE OF CONTENTS

PAGE
Risk Factors............................................................... S-1
Potential Inability to Trade or Report Results Because of Year 2000
Problems............................................................... S-1
Euro Conversion Limits a Trading Manager's Ability to Trade Certain
Individual Currencies and Could Result in Trading Losses............... S-1
The Cornerstone Funds...................................................... S-2
Selected Financial Data.................................................... S-5
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... S-7
Quantitative and Qualitative Disclosures About Market Risk................. S-11
Description of Charges to Each Partnership................................. S-18
Capitalization............................................................. S-20
The Trading Managers....................................................... S-20
The General Partner........................................................ S-32
The Commodity Brokers...................................................... S-34
Certain Litigation......................................................... S-36
Plan of Distribution and Exchange Procedure................................ S-37
Material Federal Income Tax Considerations................................. S-37
Experts.................................................................... S-38
Independent Auditors' Report to the Limited Partners and Demeter........... S-39
Statements of Financial Condition and Statements of Operations........... S-40
Statements of Changes in Partners' Capital............................... S-43
Statements of Cash Flows................................................. S-44
Notes to Financial Statements............................................ S-46
Independent Auditors' Report to the Board of Directors of Demeter.......... S-53
Statements of Financial Condition........................................ S-54
Notes to Statements of Financial Condition............................... S-55
Amended Annex A-Request for Exchange....................................... A-1

<PAGE>

YOU SHOULD REVIEW THE FOLLOWING INFORMATION WITH THE PROSPECTUS BECAUSE THE
INFORMATION CONTAINED IN THIS SUPPLEMENT UPDATES AND REPLACES PORTIONS OF THE
PROSPECTUS.

RISK FACTORS

THE FOLLOWING INFORMATION UPDATES AND SUPPLEMENTS THE INFORMATION UNDER
"RISK FACTORS--RISKS RELATING TO THE PARTNERSHIPS" ON PAGES 12-13.

POTENTIAL INABILITY TO TRADE OR REPORT RESULTS BECAUSE OF YEAR 2000
PROBLEMS. 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 Partnerships could be adversely affected if
computer systems used by them or any third party with whom they have 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.

Morgan Stanley Dean Witter & Co. ("MSDW"), the parent of the General
Partner, 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. The General Partner is co-ordinating with MSDW to address the Year
2000 Problem with respect to the General Partner's computer systems. 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 Partnerships have a material
relationship--the futures exchanges and clearing organizations through which
they trade, Carr Futures, Inc. ("CFI"), the Partnerships' clearing commodity
broker (see "The Commodity Brokers" in this Supplement), and their respective
Trading Managers--could result in a material financial risk to the Partnerships.
All US 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. The
General Partner intends to monitor the progress of CFI and each Trading Manager
throughout 1999 in their Year 2000 compliance and, where applicable, to test its
external interface with CFI and the Trading Managers.

A worst case scenario would be one in which trading of contracts on behalf
of the Partnerships 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. The General Partner intends to consult
closely with MSDW in implementing those plans. Despite the best efforts of both
the General Partner and MSDW, however, it is possible that those steps will not
be sufficient to avoid any adverse impact to the Partnerships.

THE FOLLOWING UPDATES AND SUPPLEMENTS THE INFORMATION UNDER "RISK
FACTORS--RISKS RELATING TO THE TRADING MANAGERS" ON PAGES 13-15.

EURO CONVERSION LIMITS A TRADING MANAGER'S ABILITY TO TRADE CERTAIN
INDIVIDUAL CURRENCIES AND COULD RESULT IN TRADING LOSSES. 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 each Trading Manager from trading in certain currencies and
thereby limits their ability to take advantage of potential market opportunities
that previously existed when separate

S-1
<PAGE>

currencies were available to trade. This could adversely affect the performance
results of the Partnerships.

THE CORNERSTONE FUNDS

THE FOLLOWING INFORMATION UPDATES AND REPLACES THE FIRST THROUGH FIFTH
PARAGRAPHS UNDER "THE CORNERSTONE FUNDS--THE OFFERING OF UNITS" ON PAGE 19.

In January 1985, Cornerstone II and III commenced their Continuing Offering
of unsold Units and in May 1987, Cornerstone IV joined that Continuing Offering.
Capital contributions from the sale of Units have been accepted by the
Partnerships at the 170 Monthly Closings held through March 1, 1999.

Units in each Cornerstone Fund are only available pursuant to an Exchange
as of the last day of each month. As of March 1, 1999, there were 14,577.947
Units remaining available for Exchange. Following is a summary of certain
information relating to the Exchange of Units in each Partnership since its
commencement of operations through March 1, 1999:

<TABLE>
<CAPTION>
CORNERSTONE II CORNERSTONE III CORNERSTONE IV
-------------- --------------- --------------
<S> <C> <C> <C>
Units sold/exchanged..................... 41,703.528 74,405.186 100,633.696
Net proceeds received.................... $ 65,642,656 $ 137,132,762 $168,060,778
Net Assets............................... $ 30,299,012 $ 38,701,681 $111,828,308
Net Asset Value per Unit................. $ 4,100.22 $ 3,199.90 $ 4,663.24
General Partner contributions............ $ 685,975 $ 1,037,606 $ 2,047,422
Units of General Partnership Interest.... 117.400 142.103 268.889
Number of Limited Partners............... 2,638 4,525 7,757
</TABLE>

THE FOLLOWING INFORMATION UPDATES AND REPLACES THE PERFORMANCE INFORMATION
CONTAINED ON PAGES 20-23. THE FOOTNOTES ON PAGE 24 ARE AN INTEGRAL PART OF THE
FOLLOWING TABLES.

PERFORMANCE RECORDS

Performance of Cornerstone II

Capsule I sets forth the actual performance record of Cornerstone II from
January 1, 1994 through February 28, 1999. As of the date of this Supplement,
all funds received at Monthly Closings are being allocated approximately
two-thirds to John W. Henry & Company, Inc. and approximately one-third to
Northfield Trading L.P., and the funds allocated to JWH are allocated to its
Original Investment Program, Global Diversified Portfolio, and International
Foreign Exchange Program. In the future, allocations and/or reallocations may be
made among such systems and/or additional systems. See "The Trading
Managers--Dean Witter Cornerstone Fund II."

Performance of Cornerstone III

Capsule II sets forth the actual performance record of Cornerstone III from
January 1, 1994 through February 28, 1999. As of the date of this Supplement,
all funds received at Monthly Closings are being allocated approximately
one-half to Sunrise Capital Management, Inc., and approximately one-quarter each
to Welton Investment Corporation and Abraham Trading Company. See "The Trading
Managers--Dean Witter Cornerstone Fund III."

Performance of Cornerstone IV

Capsule III sets forth the actual performance record of Cornerstone IV from
January 1, 1994 through February 28, 1999. Since the commencement of trading on
May 1, 1987, Cornerstone IV's trading has been directed by its two initial
Trading Managers, JWH and Sunrise. As of the date of this Supplement, all funds
received by Cornerstone IV at Monthly Closings are being allocated

S-2
<PAGE>

equally between its Trading Managers. See "The Trading Managers--Dean Witter
Cornerstone Fund IV."

------------------

Investors are cautioned that the information set forth in each capsule
performance summary is not indicative of, and has no bearing on, any trading
results which may be attained by the Partnerships in the future, since past
results are not a guarantee of future results. The Partnerships cannot assure
investors that profits will be made or that they will be able to avoid incurring
substantial losses. Investors should also note that interest income may
constitute a significant portion of a commodity pool's total income and, in
certain instances, may generate profits where there have been realized or
unrealized losses from commodity trading.

CAPSULE I
PERFORMANCE OF CORNERSTONE II

<TABLE>
<C> <S>
Type of Pool: Publicly-Offered Pool
Inception of Trading: January 1985
Aggregate Subscriptions: $65,642,656
Current Capitalization: $30,299,012
Current Net Asset Value per Unit: $4,100.22
Worst Monthly Percent Drawdown: (11.74)% (9/89)
Worst Month-end Peak-to-Valley: (32.70)% (16 months, 7/88-10/89)
Cumulative Return Since Inception: 320.54%
</TABLE>
<TABLE>
<CAPTION>
MONTHLY PERFORMANCE
--------------------------------------------------------------------
MONTH 1999 1998 1997 1996 1995 1994
- --------------------------------- ---------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
% % % % % %
January.......................... (4.14) (1.75) 3.58 1.98 (2.85) (3.17)
February......................... 2.03 (0.93) 2.67 (6.13) 10.88 0.12
March............................ (1.49) 1.51 0.07 13.73 3.16
April............................ (2.92) (0.53) 4.76 4.18 (2.59)
May.............................. 4.49 (0.95) (3.14) (0.37) 3.84
June............................. 6.57 (2.46) 2.60 (0.29) 2.50
July............................. (0.64) 4.83 (4.06) (3.82) (3.86)
August........................... 6.79 0.00 (3.28) (0.46) (4.70)
September........................ 0.96 (1.13) 5.37 (2.52) 0.77
October.......................... 1.47 2.47 10.42 (0.40) (5.31)
November......................... (4.85) 1.71 5.53 3.20 3.35
December......................... 4.97 5.33 (1.90) 4.00 (2.80)
Compound Annual/Period Rate of
Return......................... (2.19) 12.54 18.05 11.47 26.50 (8.93)
(2 Months)
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

S-3
<PAGE>

CAPSULE II
PERFORMANCE OF CORNERSTONE III

<TABLE>
<C> <S>
Type of Pool: Publicly-Offered Pool
Inception of Trading: January 1985
Aggregate Subscriptions: $137,132,762
Current Capitalization: $38,709,239
Current Net Asset Value per Unit: $3,199.90
Worst Monthly Percent Drawdown: (18.28)% (2/89)
Worst Month-end Peak-to-Valley: (32.35)% (9 months, 2/89-10/89)
Cumulative Return Since Inception: 228.19%
</TABLE>
<TABLE>
<CAPTION>
MONTHLY PERFORMANCE
--------------------------------------------------------------------
MONTH 1999 1998 1997 1996 1995 1994
- --------------------------------- ---------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
% % % % % %
January.......................... (4.26) (0.95) 3.12 2.09 (7.31) (10.58)
February......................... 2.31 4.08 6.63 (15.04) 1.88 (3.06)
March............................ 2.70 (1.31) (0.93) 12.40 4.47
April............................ (2.63) (1.60) 9.35 2.44 (3.23)
May.............................. 1.40 1.81 (5.33) 4.24 3.78
June............................. 0.75 1.11 1.95 0.10 5.60
July............................. (1.31) 7.33 (3.95) (4.17) (3.86)
August........................... 9.93 (6.45) (1.06) 1.89 (6.49)
September........................ 1.44 0.64 4.17 0.63 3.82
October.......................... (5.74) (4.50) 13.53 (1.66) 4.08
November......................... (1.59) 1.52 5.14 6.35 0.09
December......................... 1.51 2.37 1.01 9.37 (3.68)
Compound Annual/Period Rate of
Return......................... (2.05) 9.13 10.24 8.24 27.50 (10.04)
(2 Months)
</TABLE>

CAPSULE III
PERFORMANCE OF CORNERSTONE IV

<TABLE>
<C> <S>
Type of Pool: Publicly-Offered Pool
Inception of Trading: May 1987
Aggregate Subscriptions: $168,060,778
Current Capitalization: $111,820,749
Current Net Asset Value per Unit: $4,663.24
Worst Monthly Percent Drawdown: (21.04)% (9/89)
Worst Month-end Peak-to-Valley: (45.21)% (3 months, 7/89-9/89)
Cumulative Return Since Inception: 378.28%
</TABLE>
<TABLE>
<CAPTION>
MONTHLY PERFORMANCE
--------------------------------------------------------------------
MONTH 1999 1998 1997 1996 1995 1994
- --------------------------------- ---------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
% % % % % %
January.......................... (2.37) (1.58) 5.34 3.19 (7.65) (1.12)
February......................... 0.84 (3.16) 6.55 (5.78) 6.27 (2.75)
March............................ 2.51 1.45 2.80 27.02 0.29
April............................ (3.44) 1.23 2.97 2.39 (3.19)
May.............................. 4.89 (5.54) 1.19 (4.83) (3.65)
June............................. 11.31 1.36 (0.23) (0.62) 6.72
July............................. 0.37 8.45 (3.51) (1.06) (4.21)
August........................... 0.78 2.68 (2.69) 5.49 (3.57)
September........................ (3.11) 0.45 0.32 (0.06) 1.66
October.......................... 4.86 3.12 8.80 0.74 4.93
November......................... (4.24) 4.15 4.25 (2.57) (6.82)
December......................... (1.49) 4.38 1.76 (0.52) (2.73)
Compound Annual/Period Rate of
Return......................... (1.55) 6.80 38.41 12.97 22.96 (14.27)
(2 Months)
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

S-4
<PAGE>

THE FOLLOWING INFORMATION UPDATES AND SUPPLEMENTS "FOOTNOTES TO CAPSULES I,
II AND III" ON PAGE 24.

The Worst Monthly Percent Drawdown and the Worst Month-end Peak-to-Valley,
as set forth in Capsules I, II, and III, represent the largest such amounts
since each Partnership commenced operations.

"Monthly Rate of Return" is the percentage change in Net Asset Value per
Unit from one month to another.

SELECTED FINANCIAL DATA

THE FOLLOWING INFORMATION UPDATES AND REPLACES "SELECTED FINANCIAL DATA" ON
PAGES 25-26.

The following are the results of operations of Cornerstone II, III and IV
for the years ended December 31, 1998, 1997, 1996, 1995, and 1994. For the
complete financial statements of the Partnerships, see pages S-39-S-51 of this
Supplement.

<TABLE>
<CAPTION>
DEAN WITTER CORNERSTONE FUND II
-----------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
$ $ $ $ $
<S> <C> <C> <C> <C> <C>
REVENUES
Trading Profit (loss):
Realized 5,592,885 6,363,803 7,321,679 11,081,716 (878,688)
Net change in unrealized 52,473 687,245 (2,051,673) (947,973) 556,567
----------- ----------- ----------- ----------- -----------
Total Trading Results 5,645,358 7,051,048 5,270,006 10,133,743 (322,121)
Interest income (DWR) 1,180,971 1,228,298 1,179,784 1,471,022 1,153,003
----------- ----------- ----------- ----------- -----------
Total Revenues 6,826,329 8,279,346 6,449,790 11,604,765 830,882
----------- ----------- ----------- ----------- -----------
EXPENSES
Brokerage commissions (DWR) 1,401,238 1,383,112 1,719,932 1,864,093 2,336,047
Management fees 1,224,365 1,159,248 1,167,223 1,307,872 1,346,905
Incentive fees 426,277 650,800 329,590 381,720 --
Transaction fees and costs 133,569 128,692 170,971 160,238 194,384
Common administrative expenses 44,337 41,330 14,612 8,183 49,101
----------- ----------- ----------- ----------- -----------
Total Expenses 3,229,786 3,363,182 3,402,328 3,722,106 3,926,437
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) 3,596,543 4,916,164 3,047,462 7,882,659 (3,095,555)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) PER UNIT FOR PERIOD
Limited Partners 467.12 569.56 324.71 592.90 (219.47)
General Partner 467.12 569.56 324.71 592.90 (219.47)
TOTAL ASSETS AT END OF PERIOD 32,113,096 31,431,023 30,046,842 31,558,306 32,062,117
TOTAL NET ASSETS AT END OF PERIOD 31,396,729 30,487,741 29,046,170 30,828,888 31,372,002
NET ASSET VALUE PER UNIT AT END OF PERIOD
Limited Partners 4,192.04 3,724.92 3,155.36 2,830.65 2,237.75
General Partner 4,192.04 3,724.92 3,155.36 2,830.65 2,237.75
</TABLE>

S-5
<PAGE>
SELECTED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
DEAN WITTER CORNERSTONE FUND III
-----------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
$ $ $ $ $
<S> <C> <C> <C> <C> <C>
REVENUES
Trading Profit (loss):
Realized 5,912,923 7,439,669 8,925,181 14,260,042 913,869
Net change in unrealized 164,515 (642,508) (2,997,491) 561,437 (1,350,056)
----------- ----------- ----------- ----------- -----------
Total Trading Results 6,077,438 6,797,161 5,927,690 14,821,479 (436,187)
Interest income (DWR) 1,640,345 1,786,271 1,657,400 2,061,461 1,744,148
----------- ----------- ----------- ----------- -----------
Total Revenues 7,717,783 8,583,432 7,585,090 16,882,940 1,307,961
----------- ----------- ----------- ----------- -----------
EXPENSES
Brokerage commissions (DWR) 2,088,096 2,294,914 2,772,496 3,499,743 4,417,718
Management fees 1,682,394 1,728,062 1,629,715 1,828,013 2,014,028
Transaction fees and costs 212,795 229,570 379,973 502,332 434,287
Common administrative expenses 76,892 69,344 24,702 21,158 122,423
----------- ----------- ----------- ----------- -----------
Total Expenses 4,060,177 4,321,890 4,806,886 5,851,246 6,988,456
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) 3,657,606 4,261,542 2,778,204 11,031,694 (5,680,495)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) PER UNIT FOR PERIOD
Limited Partners 273.45 278.01 206.83 541.04 (219.67)
General Partner 273.45 278.01 206.83 541.04 (219.67)
TOTAL ASSETS AT END OF PERIOD 40,759,850 41,782,326 43,137,470 48,156,795 48,308,274
TOTAL NET ASSETS AT END OF PERIOD 40,299,819 41,114,374 42,035,358 46,949,674 47,002,453
NET ASSET VALUE PER UNIT AT END OF PERIOD
Limited Partners 3,266.97 2,993.52 2,715.51 2,508.68 1,967.64
General Partner 3,266.97 2,993.52 2,715.51 2,508.68 1,967.64
</TABLE>
<TABLE>
<CAPTION>
DEAN WITTER CORNERSTONE FUND IV
-----------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
$ $ $ $ $
REVENUES
<S> <C> <C> <C> <C> <C>
Trading Profit (loss):
Realized 15,855,401 42,691,318 10,304,825 27,041,974 (10,447,878)
Net change in unrealized (4,642,364) (3,515,408) 5,260,377 (198,148) (1,726,877)
----------- ----------- ----------- ----------- -----------
Total Trading Results 11,213,037 39,175,910 15,565,202 26,843,826 (12,174,755)
Interest income (DWR) 4,462,904 4,200,571 3,924,420 4,912,698 4,129,344
----------- ----------- ----------- ----------- -----------
Total Revenues 15,675,941 43,376,481 19,489,622 31,756,524 (8,045,411)
----------- ----------- ----------- ----------- -----------
EXPENSES
Management fees 4,817,623 4,287,974 3,904,737 4,575,372 4,952,206
Brokerage commissions (DWR) 2,170,551 2,656,715 3,781,486 2,776,225 5,336,659
Incentive fees 594,331 1,594,371 -- -- 7,659
Common administrative expenses 147,731 134,041 47,685 39,890 228,633
Transaction fees and costs 114,925 171,578 222,993 168,718 339,083
----------- ----------- ----------- ----------- -----------
Total Expenses 7,845,161 8,844,679 7,956,901 7,560,205 10,864,240
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) 7,830,780 34,531,802 11,532,721 24,196,319 (18,909,651)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) PER UNIT FOR PERIOD
Limited Partners 301.39 1,230.81 367.93 529.66 (383.89)
General Partner 301.39 1,230.81 367.93 529.66 (383.89)
TOTAL ASSETS AT END OF PERIOD 117,323,711 121,378,550 97,292,310 105,362,851 112,210,624
TOTAL NET ASSETS AT END OF PERIOD 115,241,099 118,409,744 95,496,244 103,667,011 109,892,266
NET ASSET VALUE PER UNIT AT END OF PERIOD
Limited Partners 4,736.86 4,435.47 3,204.66 2,836.73 2,307.07
General Partner 4,736.86 4,435.47 3,204.66 2,836.73 2,307.07
</TABLE>

S-6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

THE FOLLOWING INFORMATION REPLACES THE FIRST PARAGRAPH UNDER "LIQUIDITY" ON
PAGE 26.

Liquidity. The assets of each Partnership are deposited with DWR as
non-clearing broker and with CFI as clearing broker (see "The Commodity Brokers"
beginning on page S-35) in separate futures interest trading accounts
established for each Trading Manager and are used by each Partnership as margin
to engage in trading. The assets will either be invested together with other
customer segregated and secured funds or will be held in non-interest bearing
bank accounts. See "Investment Program, Use of Proceeds and Trading Policies."
Each Partnership's assets held by DWR and CFI may be used as margin solely for
such Partnership's trading. Since each Partnership's sole purpose is to trade in
commodity interests, it is expected that each Partnership will continue to own
liquid assets for margin purposes.

THE FOLLOWING INFORMATION UPDATES AND SUPPLEMENTS THE INFORMATION UNDER THE
SUBCAPTION "RESULTS OF OPERATIONS" ON PAGES 26-34.

CORNERSTONE II

Results of Operations for 1996. Cornerstone II posted gains for the year
primarily by taking advantage of price trends in the financial futures, currency
and energy markets during the months of September through November. Additional
gains were recorded in the currency markets during the second quarter. These
profits contributed to the Partnership's overall gains in 1996, and more than
offset certain losses incurred as a result of trend reversals and choppy price
movement earlier in the year.

For the year ended December 31, 1996, the Partnership's total trading
revenues, including interest income, were $6,449,790. The Partnership's total
expenses for the year were $3,402,328, resulting in net income of $3,047,462.
The Net Asset Value of a Unit increased from $2,830.65 at December 31, 1995 to
$3,155.36 at December 31, 1996.

Results of Operations for 1997. Cornerstone II experienced a profitable
year in 1997, as the Partnership recorded gains resulting from strong price
trends in the currency markets. The strengthening in the value of the U.S.
dollar relative to the Japanese yen and German mark early in the year, as well
as versus the Japanese yen and most Pacific Rim currencies during the fourth
quarter, largely contributed to the Partnership's overall success. Additional
profits were recorded during July from long global interest rate futures
positions as prices in these markets made a strong upward move.

For the year ended December 31, 1997, the Partnership's total trading
revenues, including interest income, were $8,279,346. The Partnership's total
expenses for the year were $3,363,182, resulting in net income of $4,916,164.
The Net Asset Value of a Unit increased from $3,155.36 at December 31, 1996 to
$3,724.92 at December 31, 1997.

Results of Operations for 1998. Cornerstone II recorded its fourth
consecutive year of double-digit returns, with the most significant gains being
recorded from long global bond futures positions. Profits were recorded from a
"flight-to-quality" during the third quarter as stock prices plunged and
uncertainty plagued the global economic community. The Partnership also profited
in the interest rate futures markets during December from short positions in
Japanese government bond futures as prices declined sharply following a spike
higher in Japanese interest rates. Additional profits were recorded during July
from short futures positions in crude oil as prices fell on speculation that
further production cuts would not occur. Trading in currencies was also
profitable for the Partnership, as gains were recorded from short positions in
the South African rand during June due to a devaluation in that nation's
currency versus the U.S. dollar and from long Japanese yen positions during
October as the yen's value strengthened amid optimism for economic reform in
Japan.

S-7
<PAGE>

For the year ended December 31, 1998, the Partnership's total trading
revenues, including interest income, were $6,826,329. Total expenses for the
period were $3,229,786, resulting in net income of $3,596,543. The Net Asset
Value of a Unit increased from $3,724.92 at December 31, 1997 to $4,192.04 at
December 31, 1998.

To enhance the foregoing comparison of results of operations from year to
year, prospective investors can examine, line by line, the Partnership's
Statement of Operations and Statement of Financial Condition.

In regard to expenses of the Partnership, brokerage commissions and
transaction fees and costs charged fluctuate based on the volume of trading by
the Partnership's Trading Managers. These expenses increased in the aggregate in
1998 as a result of the presence of fewer long-term price trends in futures
markets in which the Partnerships' Trading Managers concentrate their
participation.

Management fees are charged at a 4% annual rate of Net Assets and fluctuate
based only on the size of the Partnership's Net Assets. These fees increased in
1998 as a result of an increase in the average Net Assets of the Partnership.
Incentive fees are only paid on an annual basis or on any redeemed Units on a
monthly basis if the Partnership is profitable on a cumulative basis since the
last annual period for which incentive fees were paid. Incentive fees were paid
in 1998.

Common administrative expenses are used to pay legal, accounting, auditing,
printing, and distribution costs. These expenses increased during 1998 as a
result of increased audit and tax fees and increased printing expenses.

CORNERSTONE III

Results of Operations for 1996. Cornerstone III recorded net profits during
1996, due primarily to the strong trends experienced in the currency, energy and
financial futures markets during the months of September through November. The
Partnership recorded additional gains in commodities and currencies during the
second quarter, which helped mitigate the losses experienced in the beginning of
the year from trend reversals and choppy price movements.

For the year ended December 31, 1996, the Partnership's total trading
revenues, including interest income, were $7,585,090. The Partnership's total
expenses for the year were $4,806,886, resulting in net income of $2,778,204.
The Net Asset Value of a Unit increased from $2,508.68 at December 31, 1995 to
$2,715.51 at December 31, 1996.

Result of Operations for 1997. Cornerstone III experienced a profitable
year in 1997, due primarily to participation in strong price trends in the
currency and agricultural markets during January and February, and in the
financial futures markets during July. These gains, coupled with smaller profits
from short gold futures positions as gold prices declined late in the year,
helped to mitigate the losses experienced from trend reversals and choppy price
movements in global interest rate futures and currencies during August and
October.

For the year ended December 31, 1997, the Partnership's total trading
revenues, including interest income, were $8,583,432. The Partnership's total
expenses for the year were $4,321,890, resulting in net income of $4,261,542.
The Net Asset Value of a Unit increased from $2,715.51 at December 31, 1996 to
$2,993.52 at December 31, 1997.

Results of Operations for 1998. Cornerstone III experienced a profitable
year in 1998, with the majority of the gains being recorded in the global
financial futures markets. In global interest rate futures, profits were
recorded early in the year from long positions in Japanese government bonds as
prices moved steadily higher in reaction to declining interest rates in Japan.
Later in the

S-8
<PAGE>

year, profits were recorded in this same market from short positions as prices
moved lower following a sharp spike higher in Japanese bond yields during
December. Additional gains were recorded from long positions in European and
U.S. bond futures as prices were pushed higher in a "flight-to-quality" during
the third quarter. Gains were also recorded from long positions in U.S. and
European stock index futures as equity prices reached record levels during the
first half of 1998.

For the year ended December 31, 1998, the Partnership's total trading
revenues, including interest income, were $7,717,783. Total expenses for the
period were $4,060,177, resulting in net income of $3,657,606. The Net Asset
Value of a Unit increased from $2,993.52 at December 31, 1997 to $3,266.97 at
December 31, 1998.

Interest income to the Partnership is derived from 80% of its assets
earning interest at the prevailing rate paid on U.S. Treasury bills. The size of
the assets and the fluctuation of interest rates affect the resulting interest
income totals for each year. During 1998, a decrease in the rates on U.S.
Treasury bills and in Net Assets resulted in a decrease in interest income to
the Partnership.

In regard to expenses of the Partnership, brokerage commissions and
transaction fees and costs charged fluctuate based on the volume of trading by
the Partnership's Trading Managers. These expenses declined in the aggregate in
1998 as a result of the presence of more long-term price trends in futures
markets in which the Partnership's Trading Managers concentrate their
participation.

Management fees are charged at a 4% annual rate of Net Assets and fluctuate
based only on the size of the Partnership's Net Assets. Management fees
decreased in 1998 as a result of a decrease in the average Net Assets of the
Partnership. Incentive fees are only paid on an annual basis or on any redeemed
Units on a monthly basis if the Partnership is profitable on a cumulative basis
since the last annual period for which incentive fees were paid. Incentive fees
were not paid in 1998.

Common administrative expenses are used to pay legal, accounting, auditing,
printing, and distribution costs. These expenses increased in 1998 as a result
of increased audit and tax fees and increased printing expenses.

CORNERSTONE IV

Results of Operations for 1996. Cornerstone IV experienced a profitable
year in 1996, due primarily to gains recorded during the fourth quarter. The
Partnership profited from a sustained upward trend in the value of the British
pound during the months of October through November and a steady decline in the
value of both the Japanese yen and the Swiss Franc relative to the U.S. dollar
during the fourth quarter. These gains more than offset losses recorded from
sharp trend reversals and choppy price movement during the first nine months of
the year.

For the year ended December 31, 1996, the Partnership's total trading
revenues, including interest income, were $19,489,622. The Partnership's total
expenses for the year were $7,956,901, resulting in net income of $11,532,721.
The Net Asset Value of a Unit increased from $2,836.73 at December 31, 1995 to
$3,204.66 at December 31, 1996.

Results of Operations for 1997. Cornerstone IV recorded strong profits
during 1997, due primarily to a strengthening in the value of the U.S. dollar
relative to most major world currencies throughout the year. The most
significant gains were recorded from short positions in the Japanese yen during
January and February. Additional profits were recorded during July as the value
of the U.S. dollar increased versus most European and Pacific Rim currencies.

S-9
<PAGE>

November and December also proved to be profitable months for the Partnership as
short positions in the Japanese yen and other Pacific Rim currencies experienced
gains in the wake of the Asian currency crisis.

For the year ended December 31, 1997, the Partnership's total trading
revenues, including interest income, were $43,376,481. The Partnership's total
expenses for the year were $8,844,679, resulting in net income of $34,531,802.
The Net Asset Value of a Unit increased from $3,204.66 at December 31, 1996 to
$4,435.47 at December 31, 1997.

Results of Operations for 1998. Cornerstone IV profited during 1998 due
primarily to significant gains in the second quarter from short South African
rand positions as the rand was devalued versus the U.S. dollar on concerns
regarding the South African economy. Additional gains were recorded from short
positions in the rand during August as the concerns regarding the economies of
emerging countries continued due to the collapse of the Russian ruble. Smaller
profits were recorded during the fourth quarter from long Japanese yen positions
as the yen's value strengthened versus the U.S. dollar amid optimism regarding
the financial crisis in Japan.

For the year ended December 31, 1998, the Partnership's total trading
revenues, including interest income, were $15,675,941. Total expenses for the
period were $7,845,161, resulting in net income of $7,830,780. The Net Asset
Value of a Unit increased from $4,435.47 at December 31, 1997 to $4,736.86 at
December 31, 1998.

To enhance the foregoing comparisons of results of operations from year to
year, prospective investors can examine, line by line, the Partnership's
Statement of Operations and Statement of Financial Condition.

In regard to expenses of the Partnership, brokerage commissions and
transaction fees and costs charged fluctuate based on the volume of trading by
the Partnership's Trading Managers. These expenses declined in the aggregate in
1998 as a result of the presence of more long-term price trends in futures
markets in which the Partnership's Trading Managers concentrate their
participation.

Management fees are charged at a 4% annual rate of Net Assets and fluctuate
based only on the size of the Partnership's Net Assets. Management fees
increased in 1998 as a result of an increase in the average Net Assets of the
Partnership. Incentive fees are only paid on an annual basis or on any redeemed
Units on a monthly basis if the Partnership is profitable on a cumulative basis
since the last annual period for which incentive fees were paid. Incentive fees
were paid in 1998.

Since they began trading in 1985 through February 28, 1999, the Net Asset
Values per Unit of Cornerstone II and III have increased by 320.54% (a compound
annualized return of 10.68%) and 228.19% (a compound annualized return of
8.76%), respectively. Since it began trading in 1987 through February 28, 1999,
the Net Asset Value per Unit of Cornerstone IV has increased by 378.28% (a
compound annualized return of 14.14%).

THE FOLLOWING INFORMATION REPLACES THE FIRST FOUR PARAGRAPHS ON PAGE 35
UNDER "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS--FINANCIAL INSTRUMENTS."

S-10
<PAGE>

There can be no assurance that a clearinghouse, exchange or other exchange
member will meet its obligations to the Partnerships, and the Partnerships are
not indemnified against a default by such parties from the General Partner or
DWR. Further, the law is unclear as to whether a commodity broker has any
obligation to protect its customers from loss in the event of an exchange,
clearinghouse or other exchange member default on trades effected for the
broker's customers; any such obligation on the part of the broker is even less
clear when the default occurs in a non-US jurisdiction.

The General Partner deals with the credit risks of the Partnerships in
several ways. First, it monitors each Partnership's credit exposure to each
exchange on a daily basis, calculating not only the amount of margin required
for the Partnership but also the amount of its unrealized gains at each
exchange, if any. The Commodity Brokers inform each Partnership, as with all
their customers, of its net margin requirements for all its existing open
positions, but do not break that net figure down, exchange by exchange. The
General Partner, however, has installed a system which permits it to monitor
each Partnership's potential margin liability, exchange by exchange. The General
Partner is then able to monitor the individual Partnership's potential net
credit exposure to each exchange by adding the unrealized trading gains on that
exchange, if any, to the Partnership's margin liability for that exchange.

Second, each Partnership's trading policies limit the amount of Partnership
Net Assets that can be committed at any given time to futures contracts and
require, in addition, a certain minimum amount of diversification in the
Partnership's trading, usually over several different products. One of the aims
of the trading policies has been to reduce the credit exposure of any
Partnership to any single exchange and, historically, such Partnership exposure
has typically amounted to only a small percentage of its total Net Assets. On
those relatively few occasions where a Partnership's credit exposure may climb
above that level, the General Partner deals with the situation on a case by case
basis, carefully weighing whether the increased level of credit exposure remains
appropriate.

Third, the General Partner has secured, with respect to CFI acting as the
clearing broker for the Partnerships, a guarantee by Credit Agricole Indosuez,
CFI's parent, of the payment of the "net liquidating value" of the transactions
(futures, options and forward contracts) in each Partnership's account. As of
December 31, 1997, Credit Agricole Indosuez' total equity was $6.28 billion, and
its senior unsecured debt is currently rated AA2 by Moody's.

See "Selected Financial Data" and "Independent Auditors' Report."

Inflation has not been, and is not expected to be, a major factor in the
Partnerships' operations.

THE FOLLOWING SECTION IS TO BE INSERTED BEFORE "DESCRIPTION OF CHANGES TO
EACH PARTNERSHIP" ON PAGE 37.

QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
INTRODUCTION

Each Partnership is a commodity pool engaged primarily in the speculative
trading of commodity interests. The market sensitive instruments held by each
Partnership are acquired solely for speculative trading purposes and, as a
result, all or substantially all of each 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 each Partnership's primary business
activities.

The commodity interests traded by each 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.

S-11
<PAGE>

Fluctuations in related market risk based upon the aforementioned factors result
in frequent changes in the fair value of each Partnership's open positions, and,
consequently, in its earnings and cash flow.

Each 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 each Partnership.

Each Partnership's past performance is not necessarily indicative of its
future results. Any attempt at quantifying a 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 such
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 each 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.

Each Partnership accounts for open positions on the basis of mark-to-market
accounting principles. As such, any loss in the fair value of a Partnership's
open positions is directly reflected in such Partnership's earnings, whether
realized or unrealized, and such Partnership's cash flow, as profits and losses
on open positions of exchange-traded commodity interests are settled daily
through variation margin.

Each Partnership's risk exposure in the various market sectors traded by
the Trading Managers is estimated below in terms of Value at Risk ("VaR"). The
VaR model employed by each Partnership incorporates numerous variables that
could impact the fair value of such Partnership's trading portfolio. Each
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 each Partnership's VaR, the historical observation period is
approximately four years. Each 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 each 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 the
General Partner or the Trading Managers in their daily risk management
activities.

EACH PARTNERSHIP'S VALUE AT RISK IN DIFFERENT MARKET SECTORS

The following tables indicate the VaR associated with each Partnership's
open positions, as a percentage of total net assets, by market risk category as
of December 31, 1998.

S-12
<PAGE>

CORNERSTONE II:

As of December 31, 1998, the Partnership's total capitalization was
approximately $31 million.

<TABLE>
<CAPTION>
MARKET CATEGORY VAR
------------------------------------------------------------------ -----
<S> <C>
Interest Rate..................................................... (.87)%
Currency.......................................................... (.85)
Equity............................................................ (.22)
Commodity......................................................... (.61)
Aggregate Value at Risk........................................... (1.34)%
</TABLE>

CORNERSTONE III:

As of December 31, 1998, the Partnership's total capitalization was
approximately $40 million.

<TABLE>
<CAPTION>
MARKET CATEGORY VAR
------------------------------------------------------------------ -----
<S> <C>
Interest Rate..................................................... (1.32)%
Currency.......................................................... (.72)
Equity............................................................ (.91)
Commodity......................................................... (.73)
Aggregate Value at Risk........................................... (1.61)%
</TABLE>

CORNERSTONE IV:

As of December 31, 1998, the Partnership's total capitalization was
approximately $115 million.

<TABLE>
<CAPTION>
MARKET CATEGORY VAR
------------------------------------------------------------------ -----
<S> <C>
Currency.......................................................... (.79)%
Aggregate Value at Risk........................................... (.79)%
</TABLE>

Aggregate value at risk represents the aggregate VaR of each 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 tables above represent the VaR of each Partnership's open positions at
December 31, 1998 only and are not necessarily representative of either the
historic or future risk of an investment in such Partnerships. As each
Partnership's sole business is the speculative trading of primarily commodity
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 tables below supplement the year end VaR by presenting each
Partnership's high, low and average VaR, as a percentage of total net assets,
for the four quarterly reporting periods from January 1, 1998 through December
31, 1998.

CORNERSTONE II

<TABLE>
<CAPTION>
PRIMARY MARKET RISK CATEGORY HIGH LOW AVERAGE
---------------------------------------- ----- ----- -------
<S> <C> <C> <C>
Interest Rate........................... (1.21)% (.59)% (.96)%
Currency................................ (1.84) (.85) (1.46)
Equity.................................. (.41) (.22) (.29)
Commodity............................... (.80) (.58) (.68)
Aggregate Value at Risk................. (2.39)% (1.34)% (1.83)%
</TABLE>

S-13
<PAGE>

CORNERSTONE III

<TABLE>
<CAPTION>
PRIMARY MARKET RISK CATEGORY HIGH LOW AVERAGE
---------------------------------------- ----- ----- -------
<S> <C> <C> <C>
Interest Rate........................... (1.74)% (.63)% (1.20)%
Currency................................ (1.75) (.72) (1.09)
Equity.................................. (.94) (.08) (.64)
Commodity............................... (.93) (.66) (.75)
Aggregate Value at Risk................. (2.24)% (1.61)% (1.95)%
</TABLE>

CORNERSTONE IV

<TABLE>
<CAPTION>
PRIMARY MARKET RISK CATEGORY HIGH LOW AVERAGE
---------------------------------------- ----- ----- -------
<S> <C> <C> <C>
Currency................................ (2.04)% (.79)% (1.58)%
Aggregate Value at Risk................. (2.04)% (.79)% (1.58)%
</TABLE>

LIMITATIONS ON VALUE AT RISK AS AN ASSESSMENT OF MARKET RISK

The face value of the market sector instruments held by each 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 each Partnership is typically many times the total
capitalization of each such Partnership. The financial magnitude of a
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 a 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 each Partnership, give 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 each Partnership's VaR for
each such Partnership's market risk exposures and on an aggregate basis at
December 31, 1998 and for the end of quarter periods during calendar 1998. Since
VaR is based on historical data, VaR should not be viewed as predictive of a
Partnership's future financial performance or its ability to manage and monitor
risk and there can be no assurance that a Partnership's actual losses on a
particular day will not exceed the VaR amounts indicated below or that such
losses will not occur more than once in 100 trading days.

NON-TRADING RISK

Each 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. Each Partnership also maintains a substantial
portion (approximately 87-98%) of its available assets in cash at DWR. A decline
in short-term interest rates will result in a decline in a 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 a Partnership's market sensitive instruments.

S-14
<PAGE>

QUALITATIVE DISCLOSURES REGARDING PRIMARY TRADING RISK EXPOSURES

The following qualitative disclosures regarding each Partnership's market
risk exposures -- except for (i) those disclosures that are statements of
historical fact and (ii) the descriptions of how a 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. Each Partnership's primary market risk exposures as
well as the strategies used and to be used by the General Partner and the
Trading Managers for managing such exposures are subject to numerous
uncertainties, contingencies and risks, any one of which could cause the actual
results of each 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 each Partnership. Investors must be prepared to
lose all or substantially all of their investment in a Partnership.

CORNERSTONE II

The following were the primary trading risk exposures of the Partnership as
of December 31, 1998, by market sector. It may be anticipated, however, that
these market exposures will vary materially over time.

Interest Rate. Interest rate risk is the principal market exposure of the
Partnership. Interest rate movements directly affect the price of the sovereign
bond futures positions held by the Partnership and indirectly 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
to interest rate fluctuations in the United States and the other G-7 countries.
However, the Partnership also takes futures positions in the government debt of
smaller nations -- e.g. Australia. The General Partner anticipates that G-7
interest rates will remain the primary market 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 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.

Currency. The Partnership's currency exposure is to exchange rate
fluctuations, primarily fluctuations which disrupt the historical pricing
relationships between different currencies and currency pairs. These
fluctuations are influenced by interest rate changes, as well as political and
general economic conditions. The Partnership trades in a large number of
currencies, including cross-rates -- i.e., positions between two currencies
other than the U.S. dollar. However, the Partnership's major exposures have
typically been in the dollar/Swiss franc, dollar/yen, dollar/ mark and
dollar/pound positions. The General Partner does not anticipate that the risk
profile of the Partnership's currency sector will change significantly in the
future, although it is difficult at this point to predict the effect of the
introduction of the Euro on the Trading Managers' currency trading strategies.

Equity. The Partnership's primary equity exposure is to equity price risk
in the G-7 countries. The stock index futures traded by the Partnership are by
law limited to futures on broadly based indices. As of December 31, 1998, the
Partnership's primary exposures were in the S&P 500, All Ordinaries (Australia)
and Nikkei (Japan) stock indices. The Partnership is primarily exposed to the
risk of adverse price trends or static markets in the major U.S., European and
Japanese 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).

S-15
<PAGE>

Commodity.

Metals. The Partnership's primary metals market exposure is to fluctuations
in the price of gold and silver. Although certain of the Trading Managers will
from time to time trade base metals such as aluminum and copper, the principal
market exposures of the Partnership have consistently been in the precious
metals, gold and silver. The Trading Managers' gold trading has been
increasingly limited due to the long-lasting and mainly non-volatile decline in
the price of gold over the last 10-15 years. However, silver prices have
remained volatile over this period, and the Trading Managers have from time to
time taken substantial positions as they have perceived market opportunities to
develop. The General Partner anticipates that gold and silver will remain the
primary metals market exposure for the Partnership.

Soft Commodities. The Partnership's primary commodities exposure is to
fluctuations in the price of soft commodities which are often directly affected
by severe or unexpected weather conditions. Grains, coffee, and cotton accounted
for the substantial bulk of the Partnership's commodities exposure as of
December 31, 1998. In the past, the Partnership has had material market exposure
to live cattle and hogs/bellies and may do so again in the future. However, the
General Partner anticipates that the Trading Managers will maintain an emphasis
on grains, coffee, and cotton, in which the Partnership has historically taken
its largest positions.

Energy. The Partnership's primary energy market exposure is to gas and oil
price movements, often resulting from political developments in the Middle East.
Although the Trading Managers trade natural gas to a limited extent, oil is by
far the dominant energy market exposure of the Partnership. Oil prices are
currently depressed, but they can be volatile and substantial profits and losses
have been and are expected to continue to be experienced in this market.

CORNERSTONE III

Interest Rate. Interest rate risk is the principal market exposure of the
Partnership. Interest rate movements directly affect the price of the sovereign
bond futures positions held by the Partnership and indirectly 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
to interest rate fluctuations in the United States and the other G-7 countries.
However, the Partnership also takes futures positions in the government debt of
smaller nations -- e.g. New Zealand and Australia. The General Partner
anticipates that G-7 interest rates will remain the primary market 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 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.

Currency. The Partnership's currency exposure is to exchange rate
fluctuations, primarily fluctuations which disrupt the historical pricing
relationships between different currencies and currency pairs. These
fluctuations are influenced by interest rate changes, as well as political and
general economic conditions. The Partnership trades in a large number of
currencies, including cross-rates -- i.e., positions between two currencies
other than the U.S. dollar. However, the Partnership's major exposures have
typically been in the dollar/yen, dollar/mark and dollar/ pound positions. The
General Partner does not anticipate that the risk profile of the Partnership's
currency sector will change significantly in the future, although it is
difficult at this point to predict the effect of the introduction of the Euro on
the Trading Managers' currency trading strategies.

S-16
<PAGE>

Equity. The Partnership's primary equity exposure is to equity price risk
in the G-7 countries. The stock index futures traded by the Partnership are by
law limited to futures on broadly based indices. As of December 31, 1998, the
Partnership's primary exposures were in the S&P 500, Financial Times (England),
and NASDAQ 100 stock indices. The General Partner 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 major U.S., European and
Japanese 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 Partnership's primary metals market exposure is to fluctuations
in the price of gold and silver. Although certain of the Trading Managers will
from time to time trade base metals such as aluminum, copper, nickel, zinc and
lead, the principal market exposures of the Partnership have consistently been
in the precious metals, gold and silver (and, to a much lesser extent,
platinum). The Trading Managers' gold trading has been increasingly limited due
to the long-lasting and mainly non-volatile decline in the price of gold over
the last 10-15 years. However, silver prices have remained volatile over this
period, and the Trading Managers have from time to time taken substantial
positions as they have perceived market opportunities to develop. The General
Partner anticipates that gold and silver will remain the primary metals market
exposure for the Partnership.

Soft Commodities. One of the Partnership's primary commodities exposure is
to fluctuations in the price of soft commodities, which are often directly
affected by severe or unexpected weather conditions. Grains, soybean oil and
sugar accounted for the substantial bulk of the Partnership's commodities
exposure at December 31, 1998. In the past the Partnership has had material
market exposure to live cattle and hogs/bellies and may do so again in the
future. However, the General Partner anticipates that the Trading Managers will
maintain an emphasis on grains, soybean oil and sugar, in which the Partnership
has historically taken its largest positions.

CORNERSTONE IV

Currency. The Partnership's currency exposure is to exchange rate
fluctuations, primarily fluctuations which disrupt the historical pricing
relationships between different currencies and currency pairs. These
fluctuations are influenced by interest rate changes, as well as political and
general economic conditions. The Partnership trades in a large number of
currencies, including cross-rates -- i.e., positions between two currencies
other than the U.S. dollar. However, the Partnership's major exposures have
typically been in the dollar/yen, dollar/mark, dollar/ Australian dollar and
dollar/pound positions. The General Partner does not anticipate that the risk
profile of the Partnership's currency sector will change significantly in the
future, although it is difficult at this point to predict the effect of the
introduction of the Euro on the Trading Managers' currency trading strategies.

S-17
<PAGE>

QUALITATIVE DISCLOSURES REGARDING NON-TRADING RISK EXPOSURE

The following was the only non-trading risk exposure of each Partnership as
of December 31, 1998:

FOREIGN CURRENCY BALANCES. Each Partnership's primary foreign currency
balances are in Japanese yen, German marks, British pounds, and French francs
and euros. Each Partnership controls the non-trading risk of these balances by
regularly converting these balances back into dollars (no less frequently than
twice a month, and more frequently if a particular foreign currency balance
becomes unusually high).

QUALITATIVE DISCLOSURES REGARDING MEANS OF MANAGING RISK EXPOSURE

The means by which each Partnership and the Trading Managers, severally,
attempt to manage the risk of the Partnership's open positions are essentially
the same in all market categories traded. The General Partner attempts to manage
each Partnership's market exposure by (i) diversifying a Partnership's assets
among different Trading Managers, each of whose strategies focus on different
market sectors and trading approaches, and (ii), monitoring the performance of
the Trading Managers on a daily basis. In addition, the Trading Managers
establish diversification guidelines often set in terms of the maximum margin to
be committed to positions in any one market sector or market sensitive
instrument. One should be aware that certain Trading Managers treat their risk
control policies as strict rules, whereas others treat such policies as general
guidelines.

The General Partner monitors and controls the risk of each Partnership's
non-trading instrument, cash, which is the only Partnership investment directed
by the General Partner, rather than the Trading Managers.

DESCRIPTION OF CHARGES TO EACH PARTNERSHIP

THE FOLLOWING INFORMATION UPDATES AND SUPPLEMENTS "DESCRIPTION OF CHARGES
TO EACH PARTNERSHIP--1. COMMODITY BROKER" ON PAGE 39.

As more fully described under "The Commodity Brokers" on page S-35, DWR
sold its institutional futures and foreign currency trading operations in 1997
to CFI. Since that transaction, DWR has served as the non-clearing commodity
broker for the Partnerships, and CFI has served as the clearing commodity broker
for the Partnerships' commodity interests trades and as the counterparty on the
Partnerships' foreign currency forward contracts.

DWR, as the non-clearing commodity broker for the Partnerships, continues
to charge each Partnership a roundturn brokerage commission for each commodity
interest contract traded equal to 80% of DWR's published non-member rate (which
is currently an average rate of $75), which DWR may change from time to time. In
addition, CFI, as the clearing commodity broker, now charges the Partnerships
the transaction fees and costs incurred on each trade executed on behalf of the
Partnerships, including floor brokerage fees, exchange fees, clearinghouse fees,
NFA fees, "give up" fees, any taxes (other than income taxes), any third party
clearing costs, costs associated with taking delivery of commodity interests,
and fees for execution of forward contract transactions. The aggregate
transaction fees and costs and brokerage commissions continue to be capped at
13/20 of 1% per month (a 7.8% annual rate) of each Partnership's Net Assets at
month-end allocated to each Trading Manager. In addition, these fees and costs
continue to be subject to the 14% annual cap on aggregate brokerage commissions,
transaction fees and costs, and net excess interest and compensating balance
benefits.

FOR A BREAKDOWN OF EACH PARTNERSHIP'S EXPENSES FOR EACH OF THE THREE YEARS
ENDED DECEMBER 31, 1998, SEE "SELECTED FINANCIAL DATA" BEGINNING ON PAGE S-5 AND
EACH PARTNERSHIP'S STATEMENTS OF OPERATIONS BEGINNING ON PAGE S-40.

S-18
<PAGE>

THE FOLLOWING INFORMATION UPDATES THE BREAK EVEN INFORMATION UNDER "SUMMARY
OF THE PROSPECTUS--THE DEAN WITTER CORNERSTONE FUNDS" ON PAGES 1-2 AND 6, AND
"DESCRIPTION OF CHARGES TO EACH PARTNERSHIP--4. BREAK EVEN ANALYSIS" ON PAGES
42-43.

<TABLE>
<CAPTION>
CORNERSTONE II CORNERSTONE III CORNERSTONE IV
-------------- --------------- --------------
<S> <C> <C> <C>
$ $ $
Selling Price per Unit (as of February
28, 1999) (1).......................... 4,100.22 3,199.90 4,663.24
Management Fee (2)....................... 170.84 133.33 194.30
Brokerage Commissions (3)................ 235.76 205.11 166.94
Less: Interest Income (4)................ (139.41) (108.80) (158.55)
Transaction Costs (5).................... 19.68 18.88 7.46
Administrative Expenses (6).............. 4.10 4.80 5.60
Incentive Fee (7)........................ -- -- --
Amount of Trading Income Required for a
Limited Partner to Recoup its
Investment at the End of One Year...... 290.97 253.32 215.75
Percentage of Selling Price.............. 7.10% 7.92% 4.63%

<FN>
- ------------------------------

(1) Units of each Partnership are offered for sale in Exchanges at Monthly
Closings to be held as of the last day of each month at a purchase price
equal to 100% of the Net Asset Value of the Unit.

(2) Monthly management fees are equal to 1/3 of 1% of the Net Assets allocated
to each Trading Manager on the last day of each month (a 4% annual rate).

(3) Each Partnership pays brokerage commissions at an average rate of
approximately $75 per roundturn. Effective September 1, 1996, aggregate
brokerage commissions and transaction fees and costs with respect to each
Trading Manager's allocated Net Assets were capped at 13/20 of 1% per month
(a maximum 7.8% annual rate) (in the case of Trading Managers which employ
multiple trading systems in trading on behalf of a Partnership, the
foregoing 13/20 of 1% cap is applied on a per trading system basis).
Brokerage commissions have averaged 5.82%, 7.23% and 3.58% of average annual
Net Assets of Cornerstone II, III and IV, respectively. For purposes of the
above table, the rates utilized reflect the reduced brokerage commissions
which would have been paid had the new monthly cap been employed earlier. As
such, brokerage commissions were assumed to be 5.75%, 6.41% and 3.58% for
Cornerstone II, III and IV, respectively.

(4) DWR credits each Partnership at month-end with interest income on 80% of
such Partnership's average daily Net Assets for the month at a rate equal to
the average yield on 13-week U.S. Treasury bills issued during such month.
Such rate was estimated at 4.25%.

(5) Transaction fees and costs have averaged 0.48%, 0.59% and 0.16% of average
annual Net Assets of Cornerstone II, III and IV, respectively. For purposes
of the above table, transaction fees and costs were assumed to be the
foregoing percentages. Effective September 1, 1996, aggregate transaction
fees and costs and brokerage commissions were capped at 13/20 of 1% per
month of a Partnership's month-end Net Assets allocated to each Trading
Manager.

(6) Administrative expenses have averaged 0.10%, 0.15% and 0.12% of average
annual Net Assets of Cornerstone II, III and IV, respectively. For purposes
of the above table, administrative expenses were assumed to be the foregoing
percentages.

(7) Incentive fees are assumed to be zero because each Trading Manager's trading
profits are assumed to equal expenses.
</FN>
</TABLE>
S-19
<PAGE>
CAPITALIZATION

THE FOLLOWING UPDATES AND REPLACES "CAPITALIZATION" ON PAGES 47-48.

The following table sets forth the actual capitalization of the
Partnerships as of February 28, 1999. Since unsold Units may only be sold in
Exchanges, which requires a redemption of Units from one Partnership and the
purchase of Units in one or two of the other Partnerships, it is impractical to
provide a pro forma table reflecting the capitalization of the Partnerships if
all unsold Units are sold, since redemptions would, of necessity, offset sales.

There is no difference insofar as sharing of profits and losses is
concerned between Units of Limited Partnership Interest and Units of General
Partnership Interest.

<TABLE>
<CAPTION>
AMOUNT
OUTSTANDING
AS OF
FEBRUARY 28,
TITLE OF CLASS 1999
------------------------------------------------ -------------
<S> <C>
$
Cornerstone II:
Limited Partnership Interest.................. 29,817,646
General Partnership Interest.................. 481,366
-----------
Total...................................... 30,299,012
-----------
-----------
Cornerstone III:
Limited Partnership Interest.................. 38,254,524
General Partnership Interest.................. 454,715
-----------
Total...................................... 38,709,239
-----------
-----------
Cornerstone IV:
Limited Partnership Interest.................. 110,566,855
General Partnership Interest.................. 1,253,894
-----------
Total...................................... 111,820,749
-----------
-----------
</TABLE>

THE TRADING MANAGERS

CERTAIN CHANGES RELATING TO THE TRADING MANAGERS ARE PROVIDED BELOW.

DEAN WITTER CORNERSTONE FUND II

1. ABACUS TRADING CORPORATION
(CURRENT ALLOCATION -- 0%)

THE FOLLOWING UPDATES AND SUPPLEMENTS THE INFORMATION RELATING TO ABACUS
TRADING CORPORATION BEGINNING ON PAGE 51.

Effective February 28, 1997, Abacus Trading Corporation ceased to be a
Trading Manager for Cornerstone II.

2. JOHN W. HENRY & COMPANY, INC. ("JWH"REGISTERED)
(CURRENT ALLOCATION -- 82.98%)

THE FOLLOWING UPDATES AND SUPPLEMENTS THE INFORMATION RELATING TO JWH
BEGINNING ON PAGE 54.

The following persons have changed titles and/or positions as follows:

Mr. Mark H. Mitchell, vice chairman, counsel and director.

Ms. Elizabeth A.M. Kenton, senior vice president, compliance.

Mr. David M. Kozak, senior vice president, general counsel, and
secretary.

Mr. Kevin S. Koshi, senior vice president, proprietary trading.

S-20
<PAGE>

Mr. Chris E. Deakins, vice president, investor services.

Ms. Nancy O. Fox, vice president, investment support.

The following persons have been added as principals of JWH:

Mr. Verne O. Sedlacek is the president and chief operating officer and a
member of the JWH Investment Policy Committee. He is responsible for the
day-to-day management of the firm. Mr. Sedlacek is also the president and
director of Westport Capital Management Corporation and the president of Global
Capital Management Limited and vice president of JWH Financial Products, Inc.
Prior to joining JWH in July 1998, Mr. Sedlacek was the executive vice president
and chief financial officer of Harvard Management Company, Inc., a wholly-owned
subsidiary of Harvard University, which at the time of his departure managed
approximately $14 billion of University-related funds. At Harvard Management
Company, he was responsible for managing the areas of personnel, budgets,
systems, performance analysis, contracts, credit, compliance, custody,
operations, cash management, securities lending and market risk evaluation; he
joined Harvard Management in March 1983.

Mr. Sedlacek currently serves on the Board of Directors of the FIA and the
Chicago Mercantile Exchange, and is a member of the Global Markets Advisory
Committee of the CFTC. He received an A.B. in Economics from Princeton
University, and an M.B.A in Accounting from New York University and was
certified as a C.P.A. by the State of New York in 1978.

Mr. E. Lyndon Tefft is a senior vice president and the chief financial
officer. He is also the treasurer of Westport Capital Management Corporation and
JWH Asset Management, Inc. and vice president of JWH Financial Products, Inc.
Prior to joining JWH in October 1998, Mr. Tefft was the Director of MIS and a
vice president at Harvard Management Company, Inc. where he was responsible for
directing the design, development, and operation of global equity, bond, and
derivative trading, accounting, and settlement systems beginning in May 1994.
Mr. Tefft was the director of the Office of Financial Systems (controller) at
Harvard University from July 1983 to April 1994. He was responsible for the
University's centralized controllership, financial reporting, debt management,
and financial operations. Mr. Tefft received a B.S. in Industrial Management
from Purdue University, and an M.B.A. from Wharton School of Business at the
University of Pennsylvania.

Dr. Mark S. Rzepczynski is a senior vice president, research and trading
and a member of the JWH Investment Policy Committee. He is also a vice president
of JWH Financial Products, Inc. Prior to joining JWH in May 1998, he was vice
president and director of taxable credit and quantitative research in the fixed
income division of Fidelity Management and Research from May 1995 to April 1998,
where he oversaw credit and quantitative research recommendations for all
Fidelity taxable fixed income funds. From April 1993 to April 1995, he was a
portfolio manager and director of research for CSI Asset Management, Inc., a
fixed income money management subsidiary of Prudential Insurance. Dr.
Rzepczynski has a B.A. (Cum Laude) Honors in Economics from Loyola University of
Chicago, and an A.M. and Ph.D. in Economics from Brown University.

Mr. Matt Driscoll is a vice president, trading and chief trader. He is also
a member of the JWH Investment Policy Committee. He is responsible for the
supervision and administration of all aspects of order execution strategies and
implementation of trading policies and procedures. Mr. Driscoll joined JWH in
March 1991 as a member of the trading department. Since joining the firm, he has
held positions of increasing responsibility as they relate to the development
and implementation of JWH's trading strategies and procedures; he has played a
major role in the development of JWH's 24 hour trading operation. Mr. Driscoll
attended Pace University.

Mr. Julius A. Staniewicz is a vice president, senior strategist and a
member of the JWH Investment Policy Committee. He is also President of JWH Asset
Management, Inc. and JWH Financial Products, Inc., and a vice president of
Westport Capital Management Corporation. He

S-21
<PAGE>

joined JWH in March of 1992. Mr. Staniewicz received a B.A. in Economics from
Cornell University.

Mr. Andrew D. Willard, vice president, information technology.

Mr. Paul D. Braica, vice president, analytics.

Ms. Florence Y. Sofer, vice president, marketing.

Mr. William G. Kelley, vice president, investor services, international.

Mr. Robert B. Lendrim, vice president, investor services.

The following persons are no longer principals or employees of JWH: David
R. Bailin, Peter F. Karpen, James E. Johnson, Jr., Mary Beth Hardy, Barry S.
Fox, Glenda G. Twist, Michael D. Gould, Jack M. Ryng, Michael J. Scoyni, John
A.F. Ford, Chris J. Lautenslager, Melanie Caldwell, Kevin J. Treacy, Lynn
Lubell, Wendy B. Goodyear, Mark W. Sprankel, Kenneth S. Webster, and Michael P.
Flannery.

Legal Concerns

There neither now exists nor has there ever previously been any
administrative, civil, or criminal action against JWH or its principals which is
material.

Employees and principals of JWH (other than Mr. Henry) are not permitted to
trade in futures, options on futures or forward contracts. However, such
principals and employees may invest in investment vehicles that trade futures,
options on futures, or forward contracts, when an independent trader manages
trading in that vehicle, and in the JWH Employee Fund, L.P., for which JWH is
the CTA. The records of these accounts also will not be made available to
clients.

THE FOLLOWING INFORMATION UPDATES AND REPLACES THE INFORMATION CONTAINED IN
"THE INVESTMENT POLICY COMMITTEE" ON PAGE 57:

Investment Policy Committee

The Investment Policy Committee ("IPC") is a senior level advisory group,
broadly responsible for evaluating and overseeing the firm's trading policies.
The IPC provides a forum for shared responsibility for the development and
implementation of investment policies. The IPC meets periodically to discuss
issues relating to implementation of the firm's investment process and its
application to markets, including research on new investments and strategies in
relation to the trading models JWH employs. Typical issues analyzed by the IPC
include liquidity, position size, capacity, performance cycles, and new product
and market strategies. The IPC also examines regularly the impact of changing
market conditions on the firm's strategic allocation program, a multi-program
trading strategy which is currently part of an exclusivity arrangement with one
fund manager.

Composition of the IPC, and participation in its discussions and its
decisions by non-members, may vary over time. All recommendations of the IPC are
subject to final approval by the chairman. The IPC does not make day-to-day
trading decisions.

S-22
<PAGE>

THE FOLLOWING INFORMATION UPDATES AND REPLACES THE INFORMATION CONTAINED IN
"TRADING TECHNIQUES," "PROGRAM MODIFICATIONS," "LEVERAGE," AND "ADDITION,
REDEMPTION AND REALLOCATION OF CAPITAL FOR COMMODITY POOL OR FUND ACCOUNTS" ON
PAGES 57-59.

JWH Investment Policies

Commencement of Trading. Each new allocation to JWH will encounter a
startup period during which it may incur certain risks related to the initial
investment of assets. For instance, an amount may commence trading following
sustained moves in a number of markets which are subsequently retraced after the
amount enters the market.

In an effort to manage such risk, JWH has developed procedures governing
the appropriate timing for the commencement of trading and the appropriate means
of moving toward full portfolio commitment for new allocations. JWH, at its
discretion, may delay the actual start of trading for a new allocation for an
extended period of time or adjust position size in relation to account equity in
certain markets or in an entire program. The firm may also invest a new
allocation more slowly than it would a more mature account. These procedures may
be modified from time to time, and no assurance is given that they will be
successful in moving an allocation toward full portfolio commitment without
substantial losses which might have been avoided, or foregoing substantial
profits which might have been achieved, by other means of initiating investment
in the markets.

Duration of Positions Held. JWH's historical performance demonstrates
that, because trends often last longer than most market participants expect,
significant returns can be generated from positions held over a long period of
time. Therefore, profitable positions are allowed to mature; positions held for
two to four months are not unusual, and positions have been held for more than
one year. Losing positions are generally pared relatively quickly, with most
closing within a few days or weeks. However, if the JWH system detects a
profitable underlying trend, a losing position may be retained in order to
capture the potential benefits of participating in that trend. Throughout the
investment process, risk controls designed to reduce the possibility of an
extraordinary loss in any one market are maintained.

Discretionary Aspects. JWH at its sole discretion may override
computer-generated signals and may at times use discretion in the application of
its quantitative models, which may affect performance positively or negatively.
This could occur, for example, when JWH determines that markets are illiquid or
erratic, such as may occur cyclically during holiday seasons, or on the basis of
irregularly occurring market events. Subjective aspects of JWH's quantitative
models also include the determination of position size in relation to account
equity, timing of commencement of trading an account, contracts and contract
months traded, and effective trade execution.

Program Modifications. Proprietary research is conducted on an ongoing
basis to refine the JWH investment strategies and attempt to reduce volatility
while maintaining the potential for excellent performance. While the basic
philosophy underlying the firm's investment methodology has remained intact
throughout its history, the potential benefits of employing more than one
investment methodology, or in varying combinations, is a subject of continual
testing, review and evaluation. Extensive research may suggest substitution of
alternative investment methodologies with respect to particular contracts; this
may occur, for example, when the testing of a different methodology has
indicated that its use might have resulted in different historical performance.
In addition, risk management research and analysis may suggest modifications
regarding the relative weighting among various contracts, the addition or
deletion of particular contracts for a program, or a change in position size in
relation to account equity. However, most investment programs maintain a
consistent portfolio composition to allow opportunities in as many major market
trends as possible. In total, JWH participates in over 60 markets, encompassing
interest rates, foreign exchange, and commodities such as agricultural products,
energy and precious metals.

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All cash in a JWH investment program is available to be used to trade in a
JWH program, although the amounts committed to margin will vary from time to
time. As capital in each JWH program increases, additional emphasis and
weighting may be placed on certain markets which historically have demonstrated
the greatest liquidity and profitability. Furthermore, the weighting of capital
committed to various markets in the investment programs is dynamic, and JWH may
vary the weighting at its discretion as market conditions, liquidity, position
limit considerations and other factors warrant. Investors generally will not be
informed of such changes.

Position Size. Adjustments in position size in relation to account equity
have been and continue to be an integral part of JWH's investment strategy. At
its discretion, JWH may adjust the size of a position in relation to equity in
the account that is taken in certain markets or entire programs. Such
adjustments may be made at certain times for some programs but not for others.
Factors which may affect the decision to adjust the size of a position in
relation to account equity include ongoing research, program volatility, current
market volatility, risk exposure, and subjective judgment, and evaluation of
these and other general market conditions. Such decisions to change the size of
a position may positively or negatively affect performance and will alter risk
exposure for an account. Adjustments in position size relative to account equity
may lead to greater profits or losses, more frequent and larger margin calls,
and greater brokerage expense. No assurance is given that such adjustments will
be to the financial advantage of JWH clients. JWH reserves the right to alter,
at its sole discretion and without notification to clients, its policy regarding
adjustments in position size relative to account equity.

Addition, Redemption and Reallocation of Capital for Commodity Pool or Fund
Accounts. JWH has developed the following procedures for fund accounts that
provide for the addition, redemption and/or reallocation of capital. Investors
who purchase or redeem units in a fund are most frequently permitted to do so at
a price equal to the net asset value per unit (NAV) on the close of business on
the last business day of the month or quarter. In addition, funds may reallocate
capital among advisors at the close of business on the last business day of the
month. In order to provide market exposure commensurate with equity in the JWH
account on the date of these transactions, JWH may, at its sole discretion,
adjust its investment of the assets associated with the addition, redemption and
reallocation of capital as near as possible to the close of business on the last
business day of the month to reflect the amount then available for trading. The
intention is to provide for additions, redemptions and reallocations at an NAV
that will be the same for each of these transactions, and to eliminate possible
variations in NAVs that could occur as a result of inter-day price changes if,
for example, additions were calculated on the first day of the subsequent month.
Therefore, JWH requests all fund managers to notify JWH three days in advance of
month-end modifications.

Based on JWH's determination of liquidity or other market conditions, JWH
may decide to commence trading earlier in the day on, or before, the last
business day of the month, or at its sole discretion, delay adjustments to
trading for an account to a date or time after the close of business on the last
day of the month. No assurance is given that JWH will be able to achieve the
objectives described above in connection with funding level changes. The use of
discretion by JWH in the application of this procedure may affect performance
positively or negatively.

Physical or Cash Commodities

In addition to futures contracts, JWH may from time to time for certain
clients trade spot and forward contracts on physical or cash commodities,
including specifically gold bullion, when it believes that such markets offer
comparable or superior market liquidity or a greater ability to execute
transactions at a single price. Such transactions, as opposed to futures
transactions, relate to the purchase and sale of specific physical commodities.
Whereas futures contracts are generally uniform except for price and delivery
time, cash contracts may differ from each other with respect to such terms as
quantity, grade, mode of shipment, terms of payment, penalties, risk of loss and
the like. There is no limitation on the daily price movements of spot or forward

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<PAGE>

contracts transacted through banks, brokerage firms or dealers, and those
entities are not required to continue to make markets in any commodity. In
addition, the CFTC does not comprehensively regulate such transactions, which
are subject to the risk of the foregoing entities' failure, inability or refusal
to perform with respect to such contracts. No such trading has previously been
undertaken on behalf of the Partnerships, nor will any such trading be
undertaken on behalf of the Partnerships without the consent of the General
Partner. It has not been determined at this time whether any such trading will
be undertaken on behalf of the Partnerships in the future.

THE FOLLOWING INFORMATION UPDATES AND REPLACES THE INFORMATION CONTAINED IN
"THE ORIGINAL INVESTMENT PROGRAM" ON PAGE 59.

The Original Investment Program. The Original Investment Program seeks to
capitalize on long-term trends in broad spectrum of world wide financial and
nonfinancial markets. The Program always maintains a position--long or short--in
every market traded. Historically, it has had a low statistical correlation to
the S&P 500.

In 1992, a broad research effort was initiated to enhance the risk-reward
ratios of the Original Investment Program, without changing its fundamental
trading approach. Except for the removal of a few markets traded, the program
had remained virtually unchanged from its inception in 1982 through the middle
of 1992. After extensive testing, a number of strategic adjustments were made
beginning in July 1992: global markets were added; sector allocations were
shifted, with greater weighting given to financial markets; some contracts which
had become too illiquid to support sizeable assets were eliminated; and overall
position size relative to account equity was reduced. The quantitative model
underlying the program was not changed. Today, the Original Investment Program
is one of JWH's largest and best-performing programs, manifesting lower
volatility since 1992.

THE FOLLOWING INFORMATION UPDATES AND REPLACES THE INFORMATION CONTAINED IN
"THE GLOBAL DIVERSIFIED PORTFOLIO" ON PAGE 59.

The Global Diversified Portfolio. The Global Diversified Portfolio is one
of JWH's most diversified programs. The Global Diversified Portfolio is designed
to identify and capitalize on long-term price movements in a spectrum of
financial and nonfinancial markets using a systematic approach. The program does
not maintain continuous positions and, in fact, may take a neutral stance (i.e.,
no position) if a long-term trend fails to develop or during periods of non-
trending markets.

THE FOLLOWING INFORMATION UPDATES AND REPLACES THE INFORMATION CONTAINED IN
"INTERNATIONAL FOREIGN EXCHANGE PROGRAM" ON PAGE 59.

The International Foreign Exchange Program. The International Foreign
Exchange Program (Forex) is designed to identify and capitalize on intermediate
and long-term price movements in a broad range of major and minor currencies on
the interbank market. Positions are taken as outrights against the U.S. dollar,
or cross rates, which eliminates dependence on the dollar. Forex attempts to
take a position if a trend is identified and attempts to eliminate the position
quickly--i.e. a neutral stance is taken--if long-term trends fail to continue or
during periods of nontrending markets.

THE FOLLOWING INFORMATION UPDATES AND REPLACES THE INFORMATION CONTAINED IN
"OTHER JWH PROGRAMS" BEGINNING ON PAGE 59.

OTHER JWH PROGRAMS

In addition to the Original Investment Program, the Global Diversified
Portfolio and the International Foreign Exchange Program, JWH currently operates
eight different programs in three categories for U.S. and foreign investors,
none of which are utilized by JWH for Cornerstone II or Cornerstone IV. Each
program is operated separately and independently.

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<PAGE>

Broadly Diversified Programs

The JWH Global AnalyticsTM Family of Programs, which began trading client
capital in June 1997, seeks to identify and invest in a wide range of price
trends--from very short to exceptionally long term. The firm's most broadly
diversified investment program, JWH GlobalAnalytics remains neutral if no
substantive trends are apparent, and builds or reduces positions over time as
the system indicates. The program invests in both financial and commodity
markets, including certain energy and agricultural contracts not available
through other JWH investment programs.

Financial Programs

The Financial and Metals Portfolio seeks to identify and capitalize on
intermediate and long-term price movements in global financial and precious
metals markets. If a trend is identified, the program attempts to take a
position; in nontrending market environments, the program may remain neutral or
liquidate open positions.

The World Financial Perspective began trading client capital in 1987 and
seeks to capitalize on long-term price movements in financial, metals and energy
markets and holds positions from multiple currency perspectives, including the
British pound, German mark, Japanese yen, Swiss franc, and the U.S. dollar. This
program always maintains a position--long or short--in every market traded.

Using a more conservative approach to position size in relation to account
equity than in the other JWH programs, The International Currency and Bond
Portfolio, which began trading client capital in 1993, seeks to identify and
capitalize on intermediate and long-term price movements in the world's bond and
foreign exchange markets. If a trend is identified, the program will take a
position; in nontrending market environments, the program may liquidate
positions and remain neutral.

The Global Financial Portfolio, which began trading client capital in June
1994, seeks to identify and capitalize on long-term price movements in a small
group of energy, metals, and financial markets. The program always maintains a
position--long or short--in every market traded.

The Worldwide Bond Program, which began trading client capital in 1996,
seeks to capitalize on intermediate and long-term trends by investing through
financial futures in the long-term portion of global interest rate markets. The
program may take a neutral stance during periods of nontrending markets.

Foreign Exchange Programs

The G-7 Currency Portfolio, which began trading client capital in 1991
seeks to identify and capitalize on the intermediate and long-term price
movements in the highly liquid currencies of the Group of Seven industrialized
nations and Switzerland. The program attempts to take a position if a trend is
identified, and takes a neutral stance during periods of nontrending markets.
Not all of these currencies are traded at all times.

The Dollar Program began trading client capital in 1996 and seeks to
identify and capitalize on the intermediate and long-term price movements in the
foreign exchange sector, trading major currencies against the U.S. dollar
(outright trading). The program may employ a neutral stance during periods of
nontrending markets. The program invests in the Japanese yen, German mark, Swiss
franc, and British pound. Because this program invests in a limited number of
contracts, it may experience greater volatility than other JWH foreign exchange
programs.

As of February 28, 1999, the aggregate amount of funds under management
pursuant to the Original Investment Program was approximately $296 million; the
aggregate amount of funds under management pursuant to the Global Diversified
Portfolio was approximately $143 million;

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<PAGE>

for information on these accounts, see "JWH Exclusive Fund Accounts," below);
and the aggregate amount of funds under management pursuant to the International
Foreign Exchange Program was $88 million. As of February 28, 1999, the aggregate
amount of all funds under management pursuant to all JWH programs was
approximately $2.2 billion.

As of February 28, 1999, JWH was managing approximately $25.1 million of
Cornerstone II pursuant to its Original Investment Program and Global
Diversified Portfolio. Such amount and the percentage of assets of Cornerstone
II managed by JWH will change as a result of allocations of assets from the
Exchange of Units of Cornerstone II, allocations and reallocations among Trading
Managers and/or trading systems, and the performance of JWH and the other
Trading Manager for Cornerstone II.

Closed Programs

InterRateTM began trading client capital in 1988 and closed in 1996. This
program was designed to enhance returns available in short-term instruments
investing in U.S. Treasury bills to provide both secure income and collateral
for a portfolio of interbank forward and exchange-traded futures contracts. The
Yen Financial Portfolio, which began trading client capital in 1992 and closed
in 1997, offered investors access to a select group of Japanese financial
futures. The program was designed to capitalize on intermediate and long-term
price movements and attempted to exit the markets during periods when sustained
trends were not identified. The Delevered Yen Financial and Metals Profile,
which began trading client capital in 1995 and closed in 1996, was opened at the
request of a client. This program was traded at approximately one half of the
position size of traditional Financial and Metals Portfolio and was traded from
the perspective of the Japanese yen.

JWH EXCLUSIVE FUND ACCOUNTS

Pursuant to a special JWH multi-program trading strategy that is currently
the subject of an exclusive arrangement with one client operating two funds (the
"Exclusive Fund Accounts"), JWH can make various discretionary trading
adjustments for the accounts of those funds, including ongoing allocations and
reallocations of fund assets among the investment programs and periodic trading
leverage adjustments. As a result of a change made to these accounts on May 8,
1998, these accounts have traded differently than the other accounts in the
respective JWH investment programs. These modified programs are not currently
available for investment by other clients. As of February 28, 1999, JWH was
managing approximately $107 million in the Original Investment Program Exclusive
Fund Account and $49 million in the Global Diversified Portfolio Exclusive Fund
Account.

THE FOLLOWING INFORMATION IS ADDED BEFORE "DEAN WITTER CORNERSTONE III" ON
PAGE 60.

3. NORTHFIELD TRADING L.P.
(CURRENT ALLOCATION -- 17.02%)

Beginning April 16, 1997, Northfield Trading L.P. became a Trading Manager
for
Cornerstone II.

Northfield is a Delaware limited partnership with its principal place of
business at 3609 S. Wadsworth, Suite 250, Denver, Colorado 80235-2110.
Northfield was formed in August 1990. The limited partnership was formed to use
emerging computer technology to develop systematic approaches to trading.
Northfield became registered in March 1990 as a commodity trading advisor and in
November 1990 as commodity pool operator with the CFTC, and is a trading advisor
and commodity pool operator member of the National Futures Association, the
futures industry self-regulatory organization. Northfield is not affiliated with
the General Partner or DWR or any of the other Trading Managers for the
Partnership.

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<PAGE>
There have been no administrative, civil or criminal actions, pending, on
appeal or concluded against Northfield or its principals during the five years
preceding the date of this Prospectus.

PRINCIPALS OF NORTHFIELD

Northfield Investment L.P. ("NILP"), the general partner of Northfield, is
a Delaware limited partnership, whose general partner is Northfield Investment
Company, an entity owned equally by Douglas Bry and Philip Spertus, and whose
limited partners are Douglas Bry, Philip Spertus and members of their families.
NILP's sole function is to serve as the general partner of Northfield.

Douglas Bry is the President of Northfield. Mr. Bry has an extensive
history, dating from 1972, in analyzing and understanding complex databases
through the use of computerized statistical approaches. In January 1987, Mr. Bry
and Philip Spertus formed Technical Trading Strategies, Inc. ("TTS"), an
Illinois corporation of which Mr. Bry is the President. In conjunction with Mr.
Spertus and through TTS, Mr. Bry developed and marketed the "Volatility Breakout
System," a trading methodology that was offered for sale to the public. In
December 1987, Douglas Bry and Philip Spertus formed Northfield Trading Company
("NTC"), also an Illinois corporation of which Mr. Bry is President. NTC's
primary business was to provide brokerage services to customers by introducing
their accounts to clearing firms on a commission basis. NTC also provided
discretionary trading advice to customers, and licensed proprietary trading
software to introducing brokers and CTAs. Mr. Bry, an attorney, graduated from
Beloit College in 1974 with a B.A. in Philosophy and Sociology and obtained his
J.D. from the University of Colorado in 1978. From September 1978 until June
1982, he was a trial attorney with the Defender Association of Philadelphia, and
from June 1982 through January 1987, he was a Senior Trial Deputy with the
Colorado State Public Defender. Mr. Bry began trading futures for his own
account in 1985 and became registered with the CFTC as a CTA in 1986. In June
1997, Mr. Bry was elected to a second two-year term on the Board of Directors of
the Managed Funds Association and currently serves as Chairperson of the
Emerging Manager Council. In January 1997, he was elected to the National
Futures Association's Board of Directors in the Commodity Trading Advisor
category and in February 1998, he was elected to the Executive Committee of the
National Futures Association.

Philip Spertus is Vice President of Northfield. Mr. Spertus graduated from
the Massachusetts Institute of Technology in 1956. From 1979 to 1992, Mr.
Spertus served in various senior capacities, including positions of Chairman and
President, with Intercraft Industries Inc., a multinational manufacturer of
picture frames and related products. In 1992, Intercraft Industries was sold to
Newell Corporation and Mr. Spertus assumed the position of Vice President with
Newell until late 1993. Philip Spertus owned a special seat and was a registered
Broker/Dealer and member of the Chicago Board Options Exchange from August 1984
through February 1986. He has traded futures for his own account since 1983 but
is not currently doing so. Mr. Spertus serves as Chairman of both TTS and NTC.

Northfield and its principals may trade commodity interests for their own
proprietary accounts. Such trades may or may not be in accordance with the
Northfield trading system described below.

THE NORTHFIELD TRADING SYSTEM

Douglas Bry has sole management authority over the day to day activities of
Northfield and is primarily responsible for its nondiscretionary, technical
trading program.

Northfield makes trading decisions pursuant to a multiple-system, technical
approach (the "Diversified Program") that was conceived, tested and refined by
Douglas Bry and Philip Spertus. The approach is fully computerized and
nondiscretionary. Money management principles are a

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<PAGE>
critical element in the Diversified Program and have been carefully constructed
and are rigorously applied to minimize risk exposure and to protect asset
appreciation.

Northfield's approach is purely technical. A technical approach utilizes
price action itself as analyzed by charts, numerical indicators, pattern
recognition, or other techniques designed to provide information about market
direction. Since sustained price moves offer the greatest opportunity for profit
with the least amount of risk, Northfield has focused on studying the
characteristics of "random" versus "non-random" market behavior. The resulting
systems are highly sensitive to changes in price discretion and volatility, and
often detect non-random behavior before a trend is obvious. In order to validate
the trading methodology, extensive testing was conducted on over 13 years of
price history in more than 50 markets worldwide.

Northfield is very sensitive to the risk of "curve-fitting" results to
particular markets or time periods, and, as a result, utilizes a similar
approach in each market that it trades. The decision to subject all markets to
similar trading rules has led to the identification of techniques that work
independent of the market to which they are applied.

Northfield implements its systems via proprietary software that generates
and prints orders, monitors the markets in real time, and keeps track of
positions. The selection of trades is not subject to intervention by
Northfield's principals. No override of the Diversified Program will take place
absent extraordinary circumstances which Northfield believes threaten the
customer's capital, such as an outbreak of war, a major natural disaster or a
threat to the integrity of exchange clearing systems. A full-time staff of
computer programmers works with the principals of Northfield to refine existing
systems and develop new ones.

As of February 28, 1999 the aggregate amount of funds under Northfield's
management was approximately $46.2 million ("notional funds" excluded). As of
February 28, 1999, Northfield was managing approximately $5.6 million of
Cornerstone II.

DEAN WITTER CORNERSTONE FUND III

1. WELTON INVESTMENT CORPORATION (FORMERLY, WELTON INVESTMENT SYSTEMS
CORPORATION)
(CURRENT ALLOCATION -- 33.80%)

THE FOLLOWING INFORMATION UPDATES AND SUPPLEMENTS THE INFORMATION RELATING
TO WELTON INVESTMENT CORPORATION BEGINNING ON PAGE 60.

Welton Investment Corporation ("WIC") is a Delaware corporation which was
merged in July 1997 from Welton Investment Systems Corporation, a California
corporation originally formed in 1988.

The following persons have changed titles and/or positions as follows:

Patrick L. Welton is the Chief Executive Officer, and Chairman of Welton
Investment Corporation.

Annette L. Welton is a Cofounder of Welton Investment Corporation, a
Director, Chief Operational and Chief Financial Officer.

WIC and its principals trade futures, options and securities for their own
accounts and provide management services to other clients. Investments made on
behalf of WIC, its principals, and its clients, as well as any policies related
thereto, will remain confidential. In the course of such trading, WIC or its
principals may take positions in their own accounts which are in the same market
and in the same direction as positions advocated for clients. In a case where
WIC or its principals place the same trade orders for their accounts as they do
for their clients in a single block order with a brokerage firm, the brokerage
firm shall allocate the trade fill prices assigned to each account in a manner
consistent with that firm's policy. This equalizes the likelihood of WIC or its
principals receiving a superior or inferior price compared to any of their
clients or, in

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<PAGE>

the case of a partial fill of a block order, equalizes the likelihood of WIC or
its principals receiving a trade that some customers will not receive or vice
versa.

THE FOLLOWING INFORMATION UPDATES AND REPLACES THE SIXTH SENTENCE OF THE
FOURTH PARAGRAPH ON PAGE 62.

Assets committed to meet minimum exchange margin for all positions usually
remain between 5% and 20% of the trading size of the account.

THE FOLLOWING INFORMATION UPDATES AND SUPPLEMENTS THE INFORMATION CONTAINED
IN THE THIRD PARAGRAPH UNDER "DIVERSIFIED PORTFOLIO" ON PAGE 63.

As of February 28, 1999, the aggregate amount of funds under management
pursuant to the Diversified Portfolio program was approximately $152 million
("notional funds" excluded). As of February 28, 1999, the aggregate amount of
funds under management pursuant to all WIC's programs was approximately $177
million ("notional funds" excluded). As of February 28, 1999, WIC was managing
approximately $13.1 million of Cornerstone III pursuant to its Diversified
Portfolio program.

2. ABRAHAM TRADING CO.
(CURRENT ALLOCATION -- 20.78%)

THE FOLLOWING INFORMATION UPDATES AND SUPPLEMENTS THE INFORMATION RELATING
TO ABRAHAM TRADING CO. ON PAGE 67.

Craig L. Caudle is no longer an employee of ATC. Edward C. Abraham is no
longer involved in the day-to-day trading and marketing of the firm, but remains
as an employee.

There have been no administrative, civil or criminal actions, pending, on
appeal or concluded against ATC or its principals during the five years
preceding the date of this Prospectus.

THE FOLLOWING INFORMATION UPDATES AND SUPPLEMENTS THE INFORMATION RELATING
TO ABRAHAM TRADING CO. ON PAGE 69.

DESCRIPTION OF ORDERS AND ORDER PLACEMENT

ATC determines the timing and method by which orders are placed and will
place all orders for futures contracts directly with the FCM's trading desk or
floor brokers. ATC also will select the types of orders placed. Order placement
will vary in accordance with the type of market encountered and the type of
order that can be used on the exchange or market on which a particular commodity
interest is traded.

ATC trades all customer accounts in parallel, making equivalent trades for
all accounts and apportioning the number of each commodity interest traded
ratably among the accounts in a neutral manner based on the capital in each
account.

Since all trading methods and strategies utilized by ATC are proprietary
and confidential, the foregoing discussion is necessarily of a general nature.

THE FOLLOWING INFORMATION UPDATES AND REPLACES THE INFORMATION CONTAINED IN
THE LAST PARAGRAPH ON PAGE 69.

As of February 28, 1999, the aggregate amount of funds under ATC's
management was approximately $15.2 million and was managing approximately $8
million of Cornerstone III pursuant to its Diversified Program.

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<PAGE>

3. SUNRISE CAPITAL MANAGEMENT, INC.
(CURRENT ALLOCATION -- 45.42%)

THE FOLLOWING REPLACES THE INFORMATION CONTAINED IN THE FIRST FOUR
PARAGRAPHS UNDER "DESCRIPTION OF SUNRISE'S TRADING APPROACH" ON PAGE 72.

DESCRIPTION OF SUNRISE'S TRADING PROGRAMS

Sunrise has historically traded four programs, all of which are traded in
accordance with the description below.

Sunrise utilizes technical trend-following systems, trading a wide
continuum of time windows. Most of these time frames are decidedly long term by
industry standards. Pro-active money management strategies are designed to
protect open profits and to minimize exposure to non-directional markets.

Effective November 1, 1993, the General Partner reallocated the assets of
Cornerstone III managed by Sunrise in proportions of approximately 50% pursuant
to the Diversified Program and approximately 50% to the CIMCO portfolio.

The Sunrise Diversified Program may follow approximately twenty different
markets. These markets may include, but are not limited to, precious and
industrial metals, grains, petroleum products, soft commodities, domestic and
foreign interest rate futures, stock indices (including S&P 500), currencies and
their crossrates.

The Sunrise CIMCO -- Diversified Financial Program was designed by Sunrise
to participate exclusively in the highly liquid financial markets. This program
trades the major currencies as outrights against the U.S.dollar and selectively
against each other. Interest rate futures, both long and short term (including
U.S. and foreign bonds, notes and Euro products), stock indices (including S&P
500), natural gas, precious and industrial metals (including aluminum, gold,
silver and copper) and crude oil are also traded in this program. These
commodity interests are traded on futures exchanges but may also be traded in
the interbank or cash markets when appropriate.

The Sunrise Currency Program follows approximately ten different major and
minor currency markets, which may include, but are not limited to, the Japanese
yen, British pound, Euro Currency, Swiss franc, Canadian dollar, Australian
dollar, Swedish krona, New Zealand dollar, Singapore dollar, and South African
rand. The Currency Program trades currency futures contracts on the
International Monetary Market (IMM) Division of the Chicago Mercantile Exchange
and forward currency contracts in the interbank markets. In order to achieve
adequate diversification for the Currency Program, major and minor currencies
are traded as crossrates selectively against each other and/or as outrights
against the U.S. dollar.

THE FOLLOWING INFORMATION REPLACES THE SECOND FULL PARAGRAPH ON PAGE 73.

Trend-following trading systems, such as those employed by Sunrise, will
seldom effect market entry or exit at the most favorable price in the particular
market trend. Rather, this type of trading system seeks to close out losing
positions quickly and to hold portions of profitable positions for as long as
the trading system determines that the particular market trend continues to
offer reasonable profit potential. The number of losing transactions may exceed
substantially the number of profitable transactions. However, if Sunrise's
approach is successful, these losses should be more than offset by gains.

THE FOLLOWING INFORMATION UPDATES AND REPLACES THE INFORMATION CONTAINED IN
THE LAST PARAGRAPH ON PAGE 73 AND THE FIRST PARAGRAPH ON PAGE 74.

As of February 28, 1999, the aggregate amount of funds under management
pursuant to the Diversified Program was $96.6 million and $68.9 million pursuant
to the CIMCO portfolio. As of

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<PAGE>

February 28, 1999, the aggregate amount under management pursuant to all
Sunrise's programs was $535.3 million.

As of February 28, 1999, Sunrise was managing approximately $17.5 million
of Cornerstone III. Such amount and percentage of assets of Cornerstone III
managed by Sunrise will change as a result of allocations of net proceeds from
the Exchange of Units of Cornerstone III, allocations and reallocations among
trading managers and/or trading systems, and the performance of Sunrise and
other trading managers for Cornerstone III.

DEAN WITTER CORNERSTONE FUND IV

1. JOHN W. HENRY & COMPANY, INC.
(CURRENT ALLOCATION -- 61.14%)

THE FOLLOWING UPDATES AND REPLACES THE FIRST SENTENCE OF THE SECOND
PARAGRAPH OF THE INFORMATION RELATING TO JOHN W. HENRY & COMPANY, INC. ON PAGE
74.

As of February 28, 1999, JWH was managing approximately $68.4 of
Cornerstone IV pursuant to its International Foreign Exchange Program.

2. SUNRISE CAPITAL MANAGEMENT, INC.
(CURRENT ALLOCATION -- 38.86%)

THE FOLLOWING UPDATES AND REPLACES THE LAST SENTENCE OF THE FIRST PARAGRAPH
OF THE INFORMATION RELATING TO SUNRISE CAPITAL MANAGEMENT, INC. ON PAGE 74.

Sunrise normally commits between 5 and 25% of an account's equity as margin
on open positions pursuant to its trading system.

THE FOLLOWING UPDATES AND REPLACES THE FIRST SENTENCE OF THE SECOND
PARAGRAPH OF THE INFORMATION RELATING TO SUNRISE CAPITAL MANAGEMENT, INC. ON
PAGE 74.

As of February 28, 1999, Sunrise was managing approximately $43.5 million
of Cornerstone IV pursuant to the Sunrise Currency Program.

THE GENERAL PARTNER

THE FOLLOWING UPDATES AND SUPPLEMENTS THE INFORMATION UNDER "THE GENERAL
PARTNER" ON PAGE 78.

The General Partner and DWR are each wholly-owned subsidiaries of Morgan
Stanley Dean Witter & Co. ("MSDW"). MSDW was created in 1997 when Dean Witter,
Discover & Co. (which at that time was the parent company of DWR and the General
Partner) merged with Morgan Stanley Group Inc. Each of MSDW, DWR and the General
Partner may be deemed to be a "parent" and "promoter" of the Partnerships within
the meaning of the federal securities laws.

As reflected in MSDW's 1998 Annual Report and Form 10-Q for the quarter
ended February 28, 1999 (unaudited), MSDW had total shareholders' equity of
$14,119 million and total assets of $317,590 million as of November 30, 1998 and
total shareholders' equity of $14,837 million and total assets of $321,778
million as of February 28, 1999 (unaudited). Additional financial information
regarding MSDW is included in the financial statements filed as part of such
Annual Report and Form 10-Q. MSDW will provide to investors, upon request,
copies of its most recent Forms 10-K, 10-Q and 8-K, as filed from time to time
with the SEC. Such reports will be available for review or copying at the
offices of the SEC, 450 Fifth Street, N.W., Room 1024, Judiciary Plaza,
Washington, D.C. 20549 or will be available at no charge by writing to MSDW at
1585 Broadway, New York, New York 10036 (Attn: Investor Relations).

THE FOLLOWING UPDATES AND REPLACES THE INFORMATION UNDER "DIRECTORS AND
OFFICERS OF THE GENERAL PARTNER" ON PAGE 78-79.

S-32
<PAGE>
DIRECTORS AND OFFICERS OF THE GENERAL PARTNER

Mark J. Hawley, age 55, is Chairman of the Board and a Director of the
General Partner. Mr. Hawley is also Chairman of the Board and a Director of Dean
Witter Futures & Currency Management Inc. ("DWFCM"). Mr. Hawley joined DWR in
February 1989 as Senior Vice President and is currently the Executive Vice
President and Director of DWR's Product Management for Individual Asset
Management. In this capacity, Mr. Hawley is responsible for directing the
activities of the firm's Managed Futures, Insurance, and Unit Investment Trust
Business. From 1978 to 1989, Mr. Hawley was a member of the senior management
team at Heinold Asset Management, Inc., a CPO, and was responsible for a variety
of projects in public futures funds. From 1972 to 1978, Mr. Hawley was a Vice
President in charge of institutional block trading for the Mid-West at Kuhn Loeb
& Company.

Robert E. Murray, age 37, is President and a Director of the General
Partner. Mr. Murray is also President and a Director of DWFCM. Mr. Murray is
currently a Senior Vice President of DWR's Managed Futures Department. Mr.
Murray began his career at DWR in 1984 and is currently the Director of the
Managed Futures Department. In this capacity, Mr. Murray is responsible for
overseeing all aspects of the firm's Managed Futures Department. Mr. Murray
currently serves as a Director of the Managed Funds Association, an industry
association for investment professionals in futures, hedge funds and other
alternative investments. Mr. Murray graduated from Geneseo State University in
May 1983 with a B.A. degree in Finance.

Mitchell M. Merin, age 45, is a Director of the General Partner. Mr. Merin
was appointed the chief operating officer of asset management for MSDW in
December 1998 and the President and chief executive officer of Morgan Stanley
Dean Witter Advisors in February 1998. He has been an Executive Vice President
of DWR since 1990, during which time he has been director of DWR's Taxable Fixed
Income and Futures divisions, managing director in Corporate Finance and
corporate treasurer. Mr. Merin received his Bachelor's degree from Trinity
College in Connecticut and his M.B.A. degree in finance and accounting from the
Kellogg Graduate School of Management of Northwestern University in 1977.

Joseph G. Siniscalchi, age 53, is a Director of the General Partner. Mr.
Siniscalchi joined DWR in July 1984 as a First Vice President, Director of
General Accounting. He is currently Senior Vice President and Controller of the
Financial Markets Division of DWR. From February 1980 to July 1984, Mr.
Siniscalchi was Director of Internal Audit at Lehman Brothers Kuhn Loeb, Inc.

Edward C. Oelsner III, age 56, is a Director of the General Partner. Mr.
Oelsner is currently an Executive Vice President and head of the Product
Development Group at Morgan Stanley Dean Witter Advisors, an affiliate of DWR.
Mr. Oelsner joined DWR in 1981 as a Managing Director in DWR's Investment
Banking Department specializing in coverage of regulated industries and,
subsequently, served as head of the DWR Retail Products Group. Prior to joining
DWR, Mr. Oelsner held positions at The First Boston Corporation as a member of
the Research and Investment Banking Departments from 1967 to 1981. Mr. Oelsner
received his M.B.A. in Finance from the Columbia University Graduate School of
Business in 1966 and an A.B. in Politics from Princeton University in 1964. Mr.
Oelsner joined DWR in March 1981 as a Managing Director in the Corporate Finance
Department. He currently manages DWR's Retail Products Group within the
Corporate Finance Department. While Mr. Oelsner has extensive experience in the
securities industry, he has no experience in futures interests trading.

Richard A. Beech, age 47, is a Director of the General Partner. Mr. Beech
has been associated with the futures industry for over 23 years. He has been at
DWR since August 1984, where he is presently Senior Vice President and head of
Branch Futures. Mr. Beech began his career at the Chicago Mercantile Exchange,
where he became the Chief Agricultural Economist doing market analysis,
marketing and compliance. Prior to joining DWR, Mr. Beech also had worked at two
investment banking firms in operations, research, managed futures and sales
management.

S-33
<PAGE>

Ray Harris, age 42, is a Director of the General Partner. Mr. Harris is
currently Senior Vice President, Planning and Administration for Morgan Stanley
Dean Witter Asset Management and has worked at DWR or its affiliates since July
1982, serving in both financial and administrative capacities. From August 1994
to January 1999, he worked in two separate DWR affiliates, Discover Financial
Services and Novus Financial Corp., culminating as Senior Vice President. Mr.
Harris received his B.A. degree from Boston College and his M.B.A. in finance
from the University of Chicago.

Lewis A. Raibley, III, age 36, is Vice President, Chief Financial Officer,
and a Director of the General Partner. Mr. Raibley is also a Director of DWFCM.
Mr. Raibley is currently Senior Vice President and Controller in the Individual
Asset Management Group of MSDW. From July 1997 to May 1998, Mr. Raibley served
as Senior Vice President and Director in the Internal Reporting Department of
MSDW and prior to that, from 1992 to 1997, he served as Senior Vice President
and Director in the Financial Reporting and Policy Division of Dean Witter
Discover & Co. ("DWD"). He has been with DWD and its affiliates since June 1986.

Laurence E. Mollner, Richard M. DeMartini, and Lawrence Volpe are no longer
Directors of the General Partner. Patti L. Behnke is no longer a Vice President
and Chief Financial Officer of the General Partner.

The General Partner and its officers and directors may, from time to time,
trade commodity interest contracts for their own proprietary accounts. The
records of trading in such accounts will not be made available to Limited
Partners for inspection.

As of December 31, 1998 the General Partner had contributed a total of
$2,189,975 to Cornerstone II, III and IV in order to meet its minimum capital
requirements. Such contribution is evidenced by approximately 117.400 units of
general partnership interest of Cornerstone II, 142.103 units of general
partnership interest of Cornerstone III and 268.889 units of general partnership
interest of Cornerstone IV. Each such unit of general partnership interest has a
net asset value equal to the Net Asset Value of a Unit of Limited Partnership
Interest of the respective Partnership. The General Partner has agreed to make
additional contributions to each Partnership so that the General Partner's
aggregate capital contribution will at all times be equal to the sum of (i) the
lesser of $100,000 or 3% of the first $10,000,000 in aggregate capital
contributions to such Partnership by all partners (including the General
Partner's contribution) and (ii) 1% of any such aggregate capital contributions
in excess of $10,000,000; but not less than $50,000. The General Partner and its
principals are not obligated to purchase Units of Limited Partnership Interest
and do not presently own any Units of Cornerstone II.

THE FOLLOWING UPDATES AND REPLACES "THE COMMODITY BROKER" ON PAGES 79-80.

THE COMMODITY BROKERS

DESCRIPTION OF THE COMMODITY BROKERS

DWR, a Delaware corporation, acts as the Partnerships' non-clearing
commodity broker, and Carr Futures Inc. ("CFI"; together with DWR, the
"Commodity Brokers"), a Delaware corporation, acts as the clearing broker for
the Partnerships' commodity interests trades and as the counterparty on the
Partnerships' foreign currency forward contracts. DWR also serves as the
non-clearing commodity broker for all but one of the other commodity pools for
which Demeter serves as general partner and commodity pool operator, and CFI
serves as the clearing broker and foreign currency forward counterparty for such
commodity pools.

DWR is a principal operating subsidiary of MSDW, which is a publicly-owned
company. DWR is a financial services company which provides to its individual,
corporate and institutional clients services as a broker in securities and
commodity interests, a dealer in corporate, municipal and government securities,
an investment adviser, and an agent in the sale of life

S-34
<PAGE>

insurance and various other products and services. DWR is a member firm of the
New York Stock Exchange, the American Stock Exchange, the Chicago Board Options
Exchange, other major securities exchanges, and the National Association of
Securities Dealers, Inc. ("NASD"). DWR is registered with the CFTC as a futures
commission merchant and is a member of the NFA in such capacity. DWR is
currently servicing its clients through a network of 438 offices nationwide with
over 11,000 financial advisors servicing individual and institutional client
accounts.

CFI is a subsidiary of Credit Agricole Indosuez, which had total equity of
approximately $6.28 billion at December 31, 1997 and which is itself a
subsidiary of Caisse Nationale de Credit Agricole, one of the ten largest banks
in the world. CFI's parent has guaranteed to each Partnership payment of the net
liquidating value of the transactions in the Partnership's account with CFI. CFI
has been registered under the CEAct as a futures commission merchant and has
been a member of the NFA in such capacity since August 1987. CFI's global
headquarters is located at 10 South Wacker Drive, Suite 1100, Chicago, Illinois
60606. CFI acts as a commodity broker to individuals, corporate and
institutional clients and is a clearing member of the Chicago Board of Trade,
the Chicago Mercantile Exchange, the Commodity Exchange Inc., and other major
commodities exchanges.

In 1997, following the merger of the parent of DWR and Morgan Stanley Group
Inc., DWR sold its institutional futures business and foreign currency trading
operations (including futures exchange and clearinghouse memberships, equipment,
records and relevant personnel) to CFI. The sale did not involve or otherwise
affect the operations or personnel of DWR's Managed Futures Department or
Demeter Management Corporation, the general partner of the Partnerships. Because
DWR no longer maintained a futures clearing and foreign currency business, and
so as to provide continuity of trading operations, the Partnerships' futures
clearing and foreign currency accounts (along with the accounts of Demeter's
other commodity pools), were transferred to CFI. While CFI now acts as the
counterparty on the Partnerships' foreign currency trades and acts as the
clearing broker for the Partnerships' futures contracts and futures options
trades, DWR acts as the non-clearing commodity broker for the Partnerships and
continues to hold most (70-80%) of the Partnerships' assets.

BROKERAGE ARRANGEMENTS

In light of DWR's role as the non-clearing commodity broker and CFI's role
as the clearing commodity broker, the Partnership's brokerage arrangements
discussed in "Conflicts of Interest--Relationship of the General Partner to the
Commodity Broker" and "--Customer Agreement with DWR" and "Description of
Charges to Each Partnership--1. Commodity Broker" should be read to reflect such
change.

RELATED RISK FACTORS

THE FOLLOWING UPDATES "RISK FACTORS--SPECIAL RISKS ASSOCIATED WITH FORWARD
TRADING" ON PAGE 10.

The risks relating to the principal on the forward trades should now be
read as applying solely to CFI, which, as described above, is the counterparty
on the Partnerships' foreign currency forward contract trades.

THE FOLLOWING REPLACES THE FOURTH SENTENCE OF THE FIRST PARAGRAPH UNDER
"RISK FACTORS--SPECIAL RISKS ASSOCIATED WITH TRADING ON FOREIGN EXCHANGES" ON
PAGE 10.

The General Partner attempts to monitor and control the credit exposure of
trading on foreign exchanges. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Financial Instruments" beginning
on page 34, as updated by the information beginning on page S-10.

S-35
<PAGE>
THE FOLLOWING REPLACES "RISK FACTORS--THE PARTNERSHIPS HAVE CREDIT RISKS TO
DWR" ON PAGE 11.

THE PARTNERSHIPS HAVE CREDIT RISK TO THE COMMODITY BROKERS. The
Partnerships have credit risk because DWR and CFI act as the futures commission
merchants or the counterparty with respect to most of the Partnerships' assets.
Exchange-traded futures and futures styled options contracts are marked to
market on a daily basis, with variations in value credited or charged to a
Partnership's account on a daily basis. Each of DWR and CFI, as a futures
commission merchant for each Partnership's exchange-traded futures contracts, is
required, pursuant to CFTC regulations, to segregate from its own assets, and
for the sole benefit of its commodity customers, all funds held by it with
respect to exchange-traded futures and futures styled options contracts,
including an amount equal to the net unrealized gain on all open futures and
futures styled options contracts. With respect to a Partnership's
off-exchange-traded foreign currency forward contracts with CFI, there are no
daily settlements of variations in value.

THE FOLLOWING SECTION IS TO BE INSERTED BEFORE "THE COMMODITIES MARKET" ON
PAGE 80.

CERTAIN LITIGATION

At any given time, DWR is involved in numerous legal actions, some of which
seek significant damages.

On May 16, 1996, an NASD arbitration panel awarded damages and costs
against DWR and one of its account executives in the amount of approximately
$1.1 million, including punitive damages, to three customers who alleged, among
other things, fraud and misrepresentation in connection with their individually
managed futures accounts (not commodity pools).

On September 6, 10, and 20, 1996, and on March 13, 1997, similar purported
class actions were filed in the Superior Court of the State of California,
County of Los Angeles, on behalf of all purchasers of interests in limited
partnership commodity pools sold by DWR. Named defendants include DWR, Demeter,
Dean Witter Futures and Currency Management Inc., MSDW (all such parties
referred to hereafter as the "Dean Witter Parties"), the Partnerships and
certain other limited partnership commodity pools of which Demeter is the
general partner, and certain trading advisors to those pools. On June 16, 1997,
the plaintiffs in the above actions filed a consolidated amended complaint,
alleging, among other things, that the defendants committed fraud, deceit,
negligent misrepresentation, various violations of the California Corporations
Code, intentional and negligent breach of fiduciary duty, fraudulent and unfair
business practices, unjust enrichment, and conversion in the sale and operation
of the various limited partnerships commodity pools. Similar purported class
actions were also filed on September 18 and 20, 1996 in the Supreme Court of the
State of New York, New York County, and on November 14, 1996 in the Superior
Court of the State of Delaware, New Castle County, against the Dean Witter
Parties and certain trading advisors on behalf of all purchasers of interests in
various limited partnership commodity pools, including the Partnerships, sold by
DWR. A consolidated and amended complaint in the action pending in the Supreme
Court of the State of New York was filed on August 13, 1997, alleging that the
defendants committed fraud, breach of fiduciary duty, and negligent
misrepresentation in the sale and operation of the various limited partnership
commodity pools.

S-36
<PAGE>

compensatory and punitive damages and other relief. It is possible that
additional similar actions may be filed and that, in the course of these
actions, other parties could be added as defendants. The Dean Witter Parties
believe that they and the Partnerships have strong defenses to, and they will
vigorously contest, the actions. Although the ultimate outcome of legal
proceedings cannot be predicted with certainty, it is the opinion of management
of the Dean Witter Parties that the resolution of the actions will not have a
material adverse effect on the financial condition or the results of operations
of any of the Dean Witter Parties or the Partnerships.

During the five years preceding the date of this Prospectus, other than as
described above, there have been no material criminal, civil or administrative
actions pending, on appeal or concluded against DWR, Demeter or any of their
principals, which DWR or Demeter believes would be material to an investor's
decision to invest in the Partnerships.

At any given time, CFI is involved in various legal actions. On July 31,
1992, a CFTC Administrative Law Judge ("ALJ") ordered CFI to pay a former client
of the firm approximately $1.7 million in damages, plus interest and costs,
based upon certain alleged misrepresentations made by a former account
executive. Al Baraka Investment and Development Corp. vs. Indosuez Carr Futures,
Inc. (CFTC Docket No. 91-R-126). On May 3, 1993, the CFTC issued an Order of
Summary Affirmance, which affirmed the ALJ's decision, and the U.S. Court of
Appeals for the Seventh Circuit affirmed the CFTC order in June, 1994.

During the five years preceding the date of this Prospectus, other than as
described above, there have been no material criminal, civil or administrative
actions pending, on appeal or concluded against CFI or any of its principals,
which CFI believes would be material to an investor's decision to invest in the
Partnerships.

PLAN OF DISTRIBUTION AND EXCHANGE PROCEDURE

THE FOLLOWING UPDATES THE INFORMATION UNDER "SUMMARY OF THE
PROSPECTUS--PURCHASE OF UNITS PURSUANT TO AN EXCHANGE--SECURITIES AVAILABLE FOR
EXCHANGE" ON PAGE 7 AND "PLAN OF DISTRIBUTION AND EXCHANGE PROCEDURE" ON PAGE
91.

As of February 28, 1999, 14,577.947 unsold Units of Limited Partnership
Interest were available for purchase pursuant to Exchanges.

MATERIAL FEDERAL INCOME TAX CONSIDERATIONS

THE FOLLOWING SUPPLEMENTS THE INFORMATION UNDER "MATERIAL FEDERAL INCOME
TAX CONSIDERATIONS" ON PAGES 92-99.

The Taxpayer Relief Act of 1997, among other things, provides that
long-term capital gains for individual Limited Partners are taxed at a maximum
marginal rate of 20%. Prospective investors should consult their tax advisors
regarding this change and other changes in federal, state and local tax laws.

S-37
<PAGE>
EXPERTS

THE FOLLOWING INFORMATION UPDATES AND REPLACES THE INFORMATION UNDER
"EXPERTS" ON PAGE 100.

The statements of financial condition of Dean Witter Cornerstone Fund II,
Dean Witter Cornerstone Fund III and Dean Witter Cornerstone Fund IV as of
December 31, 1998 and 1997, and the related statements of operations, changes in
partners' capital and cash flows for the years ended December 31, 1998, 1997 and
1996, and the statements of financial condition of Demeter Management
Corporation as of November 30, 1998 and 1997 included in this Prospectus
Supplement, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports appearing herein, and have been so included in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing. Deloitte & Touche LLP also acts as independent auditors
for MSDW.

S-38
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Limited Partners and the General Partner of
Dean Witter Cornerstone Fund II
Dean Witter Cornerstone Fund III
Dean Witter Cornerstone Fund IV:

We have audited the accompanying statements of financial condition of Dean
Witter Cornerstone Fund II, Dean Witter Cornerstone Fund III and Dean Witter
Cornerstone Fund IV (collectively, the "Partnerships"), as of December 31, 1998
and 1997 and the related statements of operations, changes in partners' capital,
and cash flows for each of the three years in the period ended December 31,
1998. These financial statements are the responsibility of the Partnerships'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Dean Witter Cornerstone Fund II, Dean
Witter Cornerstone Fund III and Dean Witter Cornerstone Fund IV, at December 31,
1998 and 1997 and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles.

/s/ Deloitte & Touche LLP

February 15, 1999
New York, New York

S-39
<PAGE>
DEAN WITTER CORNERSTONE FUND II
STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1998 1997
---------- ----------
ASSETS $ $
<S> <C> <C>
Equity in futures interests trading accounts:
Cash 29,949,571 29,293,294
Net unrealized gain on open contracts 2,056,152 2,003,679
---------- ----------
Total Trading Equity 32,005,723 31,296,973
Interest receivable (DWR) 91,948 106,167
Due from DWR 15,425 27,883
---------- ----------
Total Assets 32,113,096 31,431,023
---------- ----------
---------- ----------
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Accrued incentive fees 413,951 618,270
Redemptions payable 173,375 199,022
Accrued management fees 106,613 104,350
Accrued administrative expenses 22,428 21,640
---------- ----------
Total Liabilities 716,367 943,282
---------- ----------
PARTNERS' CAPITAL
Limited Partners (7,372.211 and 7,967.401 Units,
respectively) 30,904,584 29,677,943
General Partner (117.400 and 217.400 Units, respectively) 492,145 809,798
---------- ----------
Total Partners' Capital 31,396,729 30,487,741
---------- ----------
Total Liabilities and Partners' Capital 32,113,096 31,431,023
---------- ----------
---------- ----------
NET ASSET VALUE PER UNIT 4,192.04 3,724.92
---------- ----------
---------- ----------
</TABLE>

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------------------------------------
1998 1997 1996
---------- ---------- ----------
REVENUES $ $ $
Trading Profit (loss):
<S> <C> <C> <C>
Realized 5,592,885 6,363,803 7,321,679
Net change in unrealized 52,473 687,245 (2,051,673)
---------- ---------- ----------
Total Trading Results 5,645,358 7,051,048 5,270,006
Interest income (DWR) 1,180,971 1,228,298 1,179,784
---------- ---------- ----------
Total Revenues 6,826,329 8,279,346 6,449,790
---------- ---------- ----------
EXPENSES
Brokerage commissions (DWR) 1,401,238 1,383,112 1,719,932
Management fees 1,224,365 1,159,248 1,167,223
Incentive fees 426,277 650,800 329,590
Transaction fees and costs 133,569 128,692 170,971
Common administrative expenses 44,337 41,330 14,612
---------- ---------- ----------
Total Expenses 3,229,786 3,363,182 3,402,328
---------- ---------- ----------
NET INCOME 3,596,543 4,916,164 3,047,462
---------- ---------- ----------
---------- ---------- ----------
NET INCOME ALLOCATION:
Limited Partners 3,514,833 4,792,341 2,976,870
General Partner 81,710 123,823 70,592
NET INCOME PER UNIT:
Limited Partners 467.12 569.56 324.71
General Partner 467.12 569.56 324.71
</TABLE>

The accompanying notes are an integral part of these financial statements.

S-40
<PAGE>
DEAN WITTER CORNERSTONE FUND III
STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1998 1997
---------- ----------
ASSETS $ $
Equity in futures interests trading accounts:
<S> <C> <C>
Cash 38,504,975 39,762,715
Net unrealized gain on open contracts 2,102,810 1,938,295
Net option premiums (50,047) (158,765)
---------- ----------
Total Trading Equity 40,557,738 41,542,245
Interest receivable (DWR) 120,465 145,100
Due from DWR 81,647 94,981
---------- ----------
Total Assets 40,759,850 41,782,326
---------- ----------
---------- ----------
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 220,184 429,759
Accrued management fees 135,067 138,480
Accrued administrative expenses 104,780 99,713
---------- ----------
Total Liabilities 460,031 667,952
---------- ----------
PARTNERS' CAPITAL
Limited Partners (12,193.413 and 13,352.334 Units,
respectively) 39,835,572 39,970,539
General Partner (142.103 and 382.103 Units, respectively) 464,247 1,143,835
---------- ----------
Total Partners' Capital 40,299,819 41,114,374
---------- ----------
Total Liabilities and Partners' Capital 40,759,850 41,782,326
---------- ----------
---------- ----------
NET ASSET VALUE PER UNIT 3,266.97 2,993.52
---------- ----------
---------- ----------
</TABLE>

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------------------------------------
1998 1997 1996
---------- ---------- ----------
REVENUES $ $ $
Trading Profit (loss):
<S> <C> <C> <C>
Realized 5,912,923 7,439,669 8,925,181
Net change in unrealized 164,515 (642,508) (2,997,491)
---------- ---------- ----------
Total Trading Results 6,077,438 6,797,161 5,927,690
Interest income (DWR) 1,640,345 1,786,271 1,657,400
---------- ---------- ----------
Total Revenues 7,717,783 8,583,432 7,585,090
---------- ---------- ----------
EXPENSES
Brokerage commissions (DWR) 2,088,096 2,294,914 2,772,496
Management fees 1,682,394 1,728,062 1,629,715
Transaction fees and costs 212,795 229,570 379,973
Common administrative expenses 76,892 69,344 24,702
---------- ---------- ----------
Total Expenses 4,060,177 4,321,890 4,806,886
---------- ---------- ----------
NET INCOME 3,657,606 4,261,542 2,778,204
---------- ---------- ----------
---------- ---------- ----------
NET INCOME ALLOCATION:
Limited Partners 3,564,790 4,155,313 2,699,171
General Partner 92,816 106,229 79,033
NET INCOME PER UNIT:
Limited Partners 273.45 278.01 206.83
General Partner 273.45 278.01 206.83
</TABLE>

The accompanying notes are an integral part of these financial statements.

S-41
<PAGE>
DEAN WITTER CORNERSTONE FUND IV
STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1998 1997
----------- -----------
ASSETS $ $
Equity in futures interests trading accounts:
<S> <C> <C>
Cash 119,800,551 119,181,131
Net unrealized gain (loss) on open contracts (2,827,252) 1,815,112
----------- -----------
Total Trading Equity 116,973,299 120,996,243
Interest receivable (DWR) 350,412 382,307
----------- -----------
Total Assets 117,323,711 121,378,550
----------- -----------
----------- -----------
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Accrued incentive fees 1,154,685 1,594,371
Redemptions payable 459,703 899,127
Accrued management fees 389,518 403,011
Accrued administrative expenses 78,706 72,297
----------- -----------
Total Liabilities 2,082,612 2,968,806
----------- -----------
PARTNERS' CAPITAL
Limited Partners (24,059.670 and 26,057.228 Units,
respectively) 113,967,408 115,575,973
General Partner (268.889 and 638.889 Units,
respectively) 1,273,691 2,833,771
----------- -----------
Total Partners' Capital 115,241,099 118,409,744
----------- -----------
Total Liabilities and Partners' Capital 117,323,711 121,378,550
----------- -----------
----------- -----------
NET ASSET VALUE PER UNIT 4,736.86 4,435.47
----------- -----------
----------- -----------
</TABLE>

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------------------------------------
1998 1997 1996
---------- ---------- ----------
REVENUES $ $ $
Trading Profit (loss):
<S> <C> <C> <C>
Realized 15,855,401 42,691,318 10,304,825
Net change in unrealized (4,642,364) (3,515,408) 5,260,377
---------- ---------- ----------
Total Trading Results 11,213,037 39,175,910 15,565,202
Interest income (DWR) 4,462,904 4,200,571 3,924,420
---------- ---------- ----------
Total Revenues 15,675,941 43,376,481 19,489,622
---------- ---------- ----------
EXPENSES
Management fees 4,817,623 4,287,974 3,904,737
Brokerage commissions (DWR) 2,170,551 2,656,715 3,781,486
Incentive fees 594,331 1,594,371 --
Common administrative expenses 147,731 134,041 47,685
Transaction fees and costs 114,925 171,578 222,993
---------- ---------- ----------
Total Expenses 7,845,161 8,844,679 7,956,901
---------- ---------- ----------
NET INCOME 7,830,780 34,531,802 11,532,721
---------- ---------- ----------
---------- ---------- ----------
NET INCOME ALLOCATION:
Limited Partners 7,611,778 33,745,453 11,297,656
General Partner 219,002 786,349 235,065
NET INCOME PER UNIT:
Limited Partners 301.39 1,230.81 367.93
General Partner 301.39 1,230.81 367.93
</TABLE>

The accompanying notes are an integral part of these financial statements.

S-42
<PAGE>

DEAN WITTER CORNERSTONE FUNDS
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
----------- -------- ------- -----
<S> <C> <C> <C> <C>
$ $ $
DEAN WITTER CORNERSTONE FUND II
Partners' Capital, December 31, 1995 10,891.098 30,213,505 615,383 30,828,888
Offering of units 56.043 155,468 -- 155,468
Net income -- 2,976,870 70,592 3,047,462
Redemptions (1,741.799) (4,985,648) -- (4,985,648)
----------- ------------ ---------- ------------
Partners' Capital, December 31, 1996 9,205.342 28,360,195 685,975 29,046,170
Offering of units 94.328 314,932 -- 314,932
Net income -- 4,792,341 123,823 4,916,164
Redemptions (1,114.869) (3,789,525) -- (3,789,525)
----------- ------------ ---------- ------------
Partners' Capital, December 31, 1997 8,184.801 29,677,943 809,798 30,487,741
Offering of units 9.990 38,137 -- 38,137
Net income -- 3,514,833 81,710 3,596,543
Redemptions (705.180) (2,326,329) (399,363) (2,725,692)
----------- ------------ ---------- ------------
Partners' Capital, December 31, 1998 7,489.611 30,904,584 492,145 31,396,729
----------- ------------ ---------- ------------
----------- ------------ ---------- ------------

DEAN WITTER CORNERSTONE FUND III
Partners' Capital, December 31, 1995 18,714.921 45,991,101 958,573 46,949,674
Offering of units 3.594 8,388 -- 8,388
Net income -- 2,699,171 79,033 2,778,204
Redemptions (3,238.809) (7,700,908) -- (7,700,908)
----------- ------------ ---------- ------------
Partners' Capital, December 31, 1996 15,479.706 40,997,752 1,037,606 42,035,358
Offering of units 1.841 5,000 -- 5,000
Net income -- 4,155,313 106,229 4,261,542
Redemptions (1,747.110) (5,187,526) -- (5,187,526)
----------- ------------ ---------- ------------
Partners' Capital, December 31, 1997 13,734.437 39,970,539 1,143,835 41,114,374
Offering of units 5.184 15,998 -- 15,998
Net income -- 3,564,790 92,816 3,657,606
Redemptions (1,404.105) (3,715,755) (772,404) (4,488,159)
----------- ------------ ---------- ------------
Partners' Capital, December 31, 1998 12,335.516 39,835,572 464,247 40,299,819
----------- ------------ ---------- ------------
----------- ------------ ---------- ------------

DEAN WITTER CORNERSTONE FUND IV
Partners' Capital, December 31, 1995 36,544.514 101,854,654 1,812,357 103,667,011
Offering of units 37.715 108,665 -- 108,665
Net income -- 11,297,656 235,065 11,532,721
Redemptions (6,783.053) (19,812,153) -- (19,812,153)
----------- ------------ ---------- ------------
Partners' Capital, December 31, 1996 29,799.176 93,448,822 2,047,422 95,496,244
Offering of units 57.083 223,794 -- 223,794
Net income -- 33,745,453 786,349 34,531,802
Redemptions (3,160.142) (11,842,096) -- (11,842,096)
----------- ------------ ---------- ------------
Partners' Capital, December 31, 1997 26,696.117 115,575,973 2,833,771 118,409,744
Offering of units 60.266 269,706 -- 269,706
Net income -- 7,611,778 219,002 7,830,780
Redemptions (2,427.824) (9,490,049) (1,779,082) (11,269,131)
----------- ------------ ---------- ------------
Partners' Capital, December 31, 1998 24,328.559 113,967,408 1,273,691 115,241,099
----------- ------------ ---------- ------------
----------- ------------ ---------- ------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

S-43
<PAGE>
DEAN WITTER CORNERSTONE FUNDS
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------
1998 1997 1996
----------- ----------- -----------
Dean Witter Cornerstone Fund II $ $ $
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income 3,596,543 4,916,164 3,047,462
Noncash item included in net income:
Net change in unrealized (52,473) (687,245) 2,051,673
(INCREASE) DECREASE IN OPERATING ASSETS:
Interest receivable (DWR) 14,219 (8,352) 9,670
Due from DWR 12,458 95,444 (97,802)
INCREASE (DECREASE) IN OPERATING LIABILITIES:
Accrued incentive fees (204,319) 301,520 9,183
Accrued management fees 2,263 4,998 (4,886)
Accrued administrative expenses 788 (30,699) (28,975)
Accrued brokerage commissions (DWR) -- (83,967) (10,486)
Accrued transaction fees and costs -- (5,558) (1,399)
----------- ----------- -----------
Net cash provided by operating activities 3,369,479 4,502,305 4,974,440
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Offering of units 38,137 314,932 155,468
Increase (decrease) in redemptions payable (25,647) (243,684) 307,817
Redemptions of units (2,725,692) (3,789,525) (4,985,648)
----------- ----------- -----------
Net cash used for financing activities (2,713,202) (3,718,277) (4,522,363)
----------- ----------- -----------
Net increase in cash 656,277 784,028 452,077
Balance at beginning of period 29,293,294 28,509,266 28,057,189
----------- ----------- -----------
Balance at end of period 29,949,571 29,293,294 28,509,266
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
DEAN WITTER CORNERSTONE FUND III
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income 3,657,606 4,261,542 2,778,204
Noncash item included in net income:
Net change in unrealized (164,515) 642,508 2,997,491
(INCREASE) DECREASE IN OPERATING ASSETS:
Net option premiums (108,718) (132,647) 291,412
Interest receivable (DWR) 24,635 (6,733) 21,313
Due from DWR 13,334 27,720 1,755
INCREASE (DECREASE) IN OPERATING LIABILITIES:
Accrued management fees (3,413) (3,907) (16,243)
Accrued administrative expenses 5,067 (37,835) (84,488)
Accrued brokerage commissions (DWR) -- (129,098) (37,030)
Accrued transaction fees and costs -- (12,349) (8,629)
----------- ----------- -----------
Net cash provided by operating activities 3,423,996 4,609,201 5,943,785
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Offering of units 15,998 5,000 8,388
Increase (decrease) in redemptions payable (209,575) (250,971) 41,381
Redemptions of units (4,488,159) (5,187,526) (7,700,908)
----------- ----------- -----------
Net cash used for financing activities (4,681,736) (5,433,497) (7,651,139)
----------- ----------- -----------
Net decrease in cash (1,257,740) (824,296) (1,707,354)
Balance at beginning of period 39,762,715 40,587,011 42,294,365
----------- ----------- -----------
Balance at end of period 38,504,975 39,762,715 40,587,011
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

S-44
<PAGE>
DEAN WITTER CORNERSTONE FUNDS
STATEMENTS OF CASH FLOWS (CONTINUED)

The accompanying notes are an integral part of these financial statements.

S-45
<PAGE>
DEAN WITTER CORNERSTONE FUNDS
NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION--Dean Witter Cornerstone Fund II ("Cornerstone II"), Dean
Witter Cornerstone Fund III ("Cornerstone III"), and Dean Witter Cornerstone
Fund IV ("Cornerstone IV"), (individually, a "Partnership", or collectively, the
"Partnerships") are limited partnerships organized to engage in the speculative
trading of commodity futures contracts and forward contracts on foreign
currencies (collectively, "futures interests"). The general partner for each
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. Demeter and DWR are wholly-owned subsidiaries of Morgan
Stanley Dean Witter & Co. ("MSDW").

On May 31, 1997, Morgan Stanley Group Inc. was merged with and into Dean
Witter, Discover & Co. ("DWD"). At that time, DWD changed its corporate name to
Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD"). Effective February 19,
1998, MSDWD changed its corporate name to Morgan Stanley Dean Witter & Co.

Demeter is required to maintain a 1% minimum interest in the equity of each
Partnership and income (losses) are shared by the General and Limited Partners
based upon their proportional ownership interests.

USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

REVENUE RECOGNITION--Futures interests are open commitments until
settlement date. They are valued at market and the resulting unrealized gains
and losses are reflected in income. Monthly, DWR pays each Partnership interest
income based upon 80% of its average daily Net Assets at a rate equal to the
average yield on 13-Week U.S. Treasury bills issued during such month. For
purposes of such interest payments in Dean Witter Cornerstone Fund IV, Net
Assets do not include monies due the Partnership on futures interests, but not
actually received.

NET INCOME (LOSS) PER UNIT--Net income (loss) per Unit is computed using
the weighted average number of units outstanding during the period.

EQUITY IN FUTURES INTERESTS TRADING ACCOUNTS----Each Partnership's asset
"Equity in futures interests trading accounts" consists of cash on deposit at
DWR and Carr to be used as margin for trading, the net asset or liability
related to unrealized gains or losses on open contracts and the net option
premiums paid and/or received. The asset or liability related to the unrealized
gains or losses on forward contracts is presented as a net amount due to master
netting agreements.

BROKERAGE COMMISSIONS AND RELATED TRANSACTION FEES AND COSTS--Brokerage
commissions for each Partnership are accrued at 80% of DWR's published
non-member rates on a half-turn basis. Related transaction fees and costs are
accrued on a half-turn basis.

From January 1, 1996 through August 31, 1996, brokerage commissions were
capped at 3/4 of 1% per month (a 9% maximum annual rate) of the adjusted Net
Assets allocated to each trading program employed by the Partnerships' Trading
Managers.

Since September 1, 1996, brokerage commissions and transaction fees have
been capped at 13/20 of 1% per month (a 7.8% maximum annual rate) of the
adjusted Net Assets, allocated to each trading program employed by the
Partnerships' Trading Managers.

S-46
<PAGE>
DEAN WITTER CORNERSTONE FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

OPERATING EXPENSES--Each Partnership has entered into an exchange agreement
pursuant to which certain common administrative expenses (i.e., legal, auditing,
accounting, filing fees and other related expenses) are shared by each of the
Partnerships based upon the number of Units of each Partnership outstanding
during the month in which such expenses are incurred. In addition, the
Partnerships incur monthly management fees and may incur incentive fees. Demeter
bears all other operating expenses.

INCOME TAXES--No provision for income taxes has been made in the
accompanying financial statements, as partners are individually responsible for
reporting income or loss based upon their respective share of each Partnership's
revenues and expenses for income tax purposes.

DISTRIBUTIONS----Distributions, other than on redemptions of Units, are
made on a pro-rata basis at the sole discretion of Demeter. No distributions
have been made to date.

REDEMPTIONS--Limited Partners may redeem some or all of their Units at 100%
of the Net Asset Value per Unit as of the last day of any month upon fifteen
days advance notice by redemption form to Demeter.

EXCHANGES--Limited Partners may transfer their investment among the
Partnerships (subject to certain restrictions outlined in the Limited
Partnership Agreement) without paying additional charges.

DISSOLUTION OF THE PARTNERSHIP--Each Partnership will terminate on
September 30, 2025 regardless of its financial condition at such time, upon a
decline in Net Assets to less than $250,000, a decline in the Net Asset Value
per Unit to less than $250, or under certain other circumstances defined in each
Limited Partnership Agreement.

2. RELATED PARTY TRANSACTIONS

Each Partnership pays brokerage commissions to DWR on trades executed on
its behalf as described in Note 1. Each 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 as described in Note 1.

3. TRADING MANAGERS

Demeter, on behalf of each Partnership, retains certain commodity trading
managers to make all trading decisions for the Partnerships. The trading
managers for each Partnership as of December 31, 1998 were as follows:

Dean Witter Cornerstone Fund II
Northfield Trading L.P.
John W. Henry & Company, Inc. ("JWH")

Dean Witter Cornerstone Fund III
Abraham Trading Company
Welton Investment Corporation (formerly, Welton Investment Systems
Corporation, Inc.)
Sunrise Capital Management, Inc.

Dean Witter Cornerstone Fund IV
John W. Henry & Company, Inc.
Sunrise Capital Management, Inc.

S-47
<PAGE>
DEAN WITTER CORNERSTONE FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Compensation to the trading managers by the Partnerships consists of a
management fee and an incentive fee as follows:

MANAGEMENT FEE--The management fee is accrued at the rate of 1/3 of 1% per
month (a 4% annual rate) of the Net Assets under management by each trading
managers at each month end.

INCENTIVE FEE--Each Partnership pays an annual incentive fee equal to 15%
of the "New Appreciation" in Net Assets, as defined in the Limited Partnership
Agreements, as of the end of each annual incentive period ending December 31,
except for Dean Witter Cornerstone Fund IV, which pays incentive fees at the end
of each annual incentive period ending May 31. Such incentive fee is accrued in
each month in which New Appreciation occurs. In those months in which New
Appreciation is negative, previous accruals, if any, during the incentive period
will be reduced. In those instances in which a Limited Partner redeems an
investment, the incentive fee (if earned through a redemption date) is to be
paid on those redemptions to the trading advisor in the month of such
redemption.

4. FINANCIAL INSTRUMENTS

The Partnerships trade futures and forward contracts in interest rates,
stock indices, commodities, currencies, petroleum and precious metals. 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. Each Partnership has elected to adopt the provisions of SFAS
No. 133 for 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.

At December 31, 1997, open contracts were:

<TABLE>
<CAPTION>
CORNERSTONE II
-----------------
CONTRACT OR
NOTIONAL AMOUNT
----------
$
<S> <C>
EXCHANGE-TRADED CONTRACTS
Financial Futures:
Commitments to Purchase................................ 30,057,000
Commitments to Sell.................................... 13,539,000
Commodity Futures:
Commitments to Purchase................................ 6,148,000
Commitments to Sell.................................... 15,082,000
Foreign Futures:
Commitments to Purchase................................ 25,543,000
Commitments to Sell.................................... 20,799,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS
Commitments to Purchase................................ 17,705,000
Commitments to Sell.................................... 46,518,000
</TABLE>

S-48
<PAGE>
DEAN WITTER CORNERSTONE FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
CORNERSTONE III
-----------------
CONTRACT OR
NOTIONAL AMOUNT
----------
$
<S> <C>
EXCHANGE-TRADED CONTRACTS
Financial Futures:
Commitments to Purchase................................ 50,242,000
Commitments to Sell.................................... 21,172,000
Commodity Futures:
Commitments to Purchase................................ 8,055,000
Commitments to Sell.................................... 31,622,000
Foreign Futures:
Commitments to Purchase................................ 50,870,000
Commitments to Sell.................................... 42,064,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS
Commitments to Purchase................................ 27,863,000
Commitments to Sell.................................... 41,794,000
</TABLE>

<TABLE>
<CAPTION>
CORNERSTONE IV
-----------------
CONTRACT OR
NOTIONAL AMOUNT
-----------------
$
<S> <C>
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS
Commitments to Purchase................................ 218,670,000
Commitments to Sell.................................... 427,237,000
</TABLE>

A portion of the amounts indicated as off-exchange-traded forward currency
contracts is offset by forward commitments to purchase and to sell the same
currency on the same date in the future. These commitments are economically
offsetting, but are not offset in the forward market until the settlement date.

The unrealized gains (losses) on open contracts are reported as a component
of "Equity in futures interests trading accounts" on the Statements of Financial
Condition and totaled at December 31, 1998 and 1997, respectively, $2,056,152
and $2,003,679 for Cornerstone II, $2,102,810 and $1,938,295 for Cornerstone III
and $(2,827,252) and $1,815,112 for Cornerstone IV.

For Cornerstone II, of the $2,056,152 net unrealized gain on open contracts
at December 31, 1998, $2,421,869 related to exchange-traded futures contracts
and $(365,717) related to off-exchange-traded forward currency contracts. Of the
$2,003,679 net unrealized gain on open contracts at December 31, 1997,
$1,675,343 related to exchange-traded futures contracts and $328,336 related to
off-exchange-traded forward currency contracts.

For Cornerstone III, of the $2,102,810 net unrealized gain on open
contracts at December 31, 1998, $2,250,314 related to exchange-traded futures
and futures-styled options contracts and $(147,504) related to
off-exchange-traded forward currency contracts. Of the $1,938,295 net unrealized
gain on open contracts at December 31, 1997, $2,168,497 related to
exchange-traded futures contracts and $(230,202) related to off-exchange-traded
forward currency contracts.

For Cornerstone IV, of the $(2,827,252) net unrealized loss on open
contracts at December 31, 1998 all related to off-exchange-traded forward
currency contracts. Of the $1,815,112 net unrealized gain on open contracts at
December 31, 1997 all related to off-exchange-traded forward currency contracts.

S-49
<PAGE>
DEAN WITTER CORNERSTONE FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The contract amounts in the above table represent the Partnership's extent
of involvement in the particular class of financial instrument, but not the
credit risk associated with counterparty nonperformance. The credit risk
associated with the instruments in which the Partnership is involved is limited
to the amounts reflected in the Partnership's Statements of Financial Condition.

Exchange-traded contracts and off-exchange-traded forward currency
contracts held by the Partnerships at December 31, 1998 and 1997 mature as
follows:

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
CORNERSTONE II
Exchange-Traded Contracts..................... December 1999 December 1998
Off-Exchange-Traded
Forward Currency
Contracts................................ March 1999 March 1998

CORNERSTONE III
Exchange-Traded Contracts..................... June 1999 June 1998
Off-Exchange-Traded
Forward Currency
Contracts................................ March 1999 March 1998

CORNERSTONE IV
Exchange-Traded Contracts..................... -- September 1998
Off-Exchange-Traded
Forward Currency
Contracts................................ March 1999 April 1998
</TABLE>

The Partnerships also have credit risk because DWR and Carr act as the
futures commission merchants or the counterparties, with respect to most of the
Partnerships' assets. Exchange-traded futures and futures-styled options
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 each Partnership's exchange-traded futures and futures-styled options
contracts, are required, pursuant to regulations of the Commodity Futures
Trading Commission, to segregate from their own assets, and for the sole benefit
of their commodity customers, all funds held by them with respect to
exchange-traded futures and futures-styled options contracts, including an
amount equal to the net unrealized gain on all open futures and futures-styled
options contracts, which funds, in the aggregate, totaled at December 31, 1998
and 1997 respectively, $32,371,440 and $30,968,637 for Cornerstone II,
$40,755,289 and $41,931,212 for Cornerstone III, and $119,800,551 and
$119,181,131 for Cornerstone IV. With respect to each 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 Partnerships are at risk to
the ability of Carr, the sole counterparty on all such contracts, to perform.
Carr's parent, Credit Agricole Indosuez, has guaranteed to the Partnerships
payment of the net liquidating value of the transactions in the Partnerships'
account with Carr (including foreign currency contracts).

S-50
<PAGE>
DEAN WITTER CORNERSTONE FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

For the year ended December 31, 1997 the average fair value of financial
instruments held for trading purposes was as follows:

<TABLE>
<CAPTION>
CORNERSTONE II
ASSETS LIABILITIES
----------- -----------
$ $
<S> <C> <C>
EXCHANGE-TRADED CONTRACTS:
Financial Futures............................... 32,004,000 25,556,000
Commodity Futures............................... 14,417,000 12,696,000
Foreign Futures................................. 26,042,000 10,396,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS....... 36,907,000 46,749,000

CORNERSTONE III
ASSETS LIABILITIES
----------- -----------
$ $
EXCHANGE-TRADED CONTRACTS:
Financial Futures............................... 82,881,000 46,462,000
Options on Financial Futures.................... 698,000 64,639,000
Commodity Futures............................... 26,095,000 21,377,000
Options on Commodity Futures.................... 1,117,000 4,712,000
Foreign Futures................................. 44,764,000 26,219,000
Options on Foreign Futures...................... 7,229,000 --
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS....... 12,599,000 13,558,000

CORNERSTONE IV
ASSETS LIABILITIES
----------- -----------
$ $
EXCHANGE-TRADED CONTRACTS:
Financial Futures............................... 34,008,000 57,577,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS....... 299,407,000 414,754,000
</TABLE>

5. LEGAL MATTERS

On September 6, 10, and 20, 1996, and on March 13, 1997, similar purported
class actions were filed in the Superior Court of the State of California,
County of Los Angeles, on behalf of all purchasers of interests in limited
partnership commodity pools sold by DWR. Named defendants include DWR, Demeter,
Dean Witter Futures & Currency Management Inc., MSDW (all such parties referred
to hereafter as the "Dean Witter Parties"), the Partnerships, certain other
limited partnership commodity pools of which Demeter is the general partner, and
certain trading advisors to those pools. On June 16, 1997, the plaintiffs in the
above actions filed a consolidated amended complaint, alleging, among other
things, that the defendants committed fraud, deceit, negligent
misrepresentation, various violations of the California Corporations Code,
intentional and negligent breach of fiduciary duty, fraudulent and unfair
business practices, unjust enrichment, and conversion in the sale and operation
of the various limited partnerships commodity pools. Similar purported class
actions were also filed on September 18, and 20, 1996, in the Supreme Court of
the State of New York, New York County, and on November 14, 1996 in the Superior
Court of the State of Delaware, New Castle County, against the Dean Witter
Parties and certain trading advisors on behalf of all purchasers of interests in
various limited partnership commodity pools, including the Partnerships, sold by
DWR. A consolidated and amended complaint in the action pending in the Supreme
Court of the State of New York was filed on August 13, 1997, alleging that the
defendants committed fraud, breach of fiduciary duty, and negligent
misrepresentation in the sale and operation of the various limited partnership
commodity pools.

S-51
<PAGE>
DEAN WITTER CORNERSTONE FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

On December 16, 1997, upon motion of the plaintiffs, the action pending in
the Supreme Court of the State of Delaware was voluntarily dismissed without
prejudice. The New York Supreme Court dismissed the New York action in November
1998, but granted plaintiffs leave to file an amended complaint, which they did
in early December 1998. The defendants have filed a motion to dismiss the
amended complaint with prejudice on February 1, 1999. On April 12, 1999, the
defendants also filed a motion in the California action to oppose certification
by the court of the class in the California litigation. The complaints seek
unspecified amounts of compensatory and punitive damages and other relief. It is
possible that additional similar actions may be filed and that, in the course of
these actions, other parties could be added as defendants. The Dean Witter
Parties believe that they and the Partnerships have strong defenses to, and they
will vigorously contest, the actions. Although the ultimate outcome of legal
proceedings cannot be predicted with certainty, it is the opinion of management
of the Dean Witter Parties that the resolution of the actions will not have a
material adverse effect on the financial condition or the results of operations
of any of the Dean Witter Parties or the Partnerships.

S-52
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
Demeter Management Corporation:

We have audited the accompanying statements of financial condition of Demeter
Management Corporation (a wholly-owned subsidiary of Morgan Stanley Dean Witter
& Co.) (the "Company") as of November 30, 1998 and 1997. These statements of
financial condition are the responsibility of the Company's management. Our
responsibility is to express an opinion on these statements of financial
condition based on our audit.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of financial condition is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of financial condition.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall statement of
financial condition presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such statements of financial condition present fairly, in all
material respects, the financial position of Demeter Management Corporation at
November 30, 1998 and 1997 in conformity with generally accepted accounting
principles.

/s/ Deloitte & Touche LLP

January 11, 1999
New York, New York

S-53
<PAGE>
DEMETER MANAGEMENT CORPORATION
(WHOLLY-OWNED SUBSIDIARY OF MORGAN STANLEY DEAN WITTER & CO. ("MSDW"))

STATEMENTS OF FINANCIAL CONDITION

NOVEMBER 30,
FEBRUARY 28, ------------------------------
ASSETS 1999 1998 1997
------------ ------------ ------------
(UNAUDITED)
$ $ $
<S> <C> <C> <C>
Investments in affiliated partnerships (Note 2) 17,793,747 16,959,248 22,016,069
Income taxes receivable 305,150 708,505 429,885
Receivable from affiliated partnership 20,632 25,716 968
------------ ------------ ------------
Total Assets 18,119,529 17,693,469 22,446,922
------------ ------------ ------------
------------ ------------ ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Payable to MSDW (Note 3) 11,824,302 11,648,971 17,995,100
Accrued expenses 54,341 62,198 34,072
------------ ------------ ------------
Total Liabilities 11,878,643 11,711,169 18,029,172
------------ ------------ ------------

STOCKHOLDER'S EQUITY:
Common stock, no par value:
Authorized 1,000 shares; Issued and outstanding
100 shares at stated value of $500 per share 50,000 50,000 50,000
Additional paid-in capital 111,170,000 111,170,000 111,170,000
Retained earnings 6,090,886 5,832,300 4,267,750
------------ ------------ ------------
117,310,886 117,052,300 115,487,750
Less: Notes receivable from MSDW (Note 4) (111,070,000) (111,070,000) (111,070,000)
------------ ------------ ------------

Total Stockholder's Equity 6,240,886 5,982,300 4,417,750
------------ ------------ ------------

Total Liabilities and Stockholder's Equity 18,119,529 17,693,469 22,446,922
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

The accompanying notes are an integral part of this financial statement.

S-54
<PAGE>
DEMETER MANAGEMENT CORPORATION
(WHOLLY-OWNED SUBSIDIARY OF MORGAN STANLEY DEAN WITTER & CO.)

NOTES TO STATEMENTS OF FINANCIAL CONDITION
(THE INFORMATION RELATED TO 1999 IS UNAUDITED.)

1. BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES

Demeter Management Corporation ("Demeter") is a wholly-owned subsidiary of
Morgan Stanley Dean Witter & Co. ("MSDW").

On May 31, 1997, Morgan Stanley Group Inc. ("Morgan Stanley") was merged with
and into Dean Witter, Discover & Co. ("DWD"). At that time, DWD changed its
corporate name to Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD").
Effective February 19, 1998, MSDWD changed its corporate name to Morgan Stanley
Dean Witter & Co. Prior to the merger, DWD's fiscal year ended on December 31.
Subsequent to the merger, MSDW and Demeter adopted a fiscal year end of November
30.

Demeter manages the following commodity pools as sole general partner: Dean
Witter Cornerstone Fund II, Dean Witter Cornerstone Fund III, Dean Witter
Cornerstone Fund IV, Columbia Futures Fund, Dean Witter Diversified Futures Fund
Limited Partnership, Dean Witter Diversified Futures Fund II L.P., Dean Witter
Diversified Futures Fund III L.P., Dean Witter Multi-Market Portfolio L.P.
(formerly, Dean Witter Principal Guaranteed Fund L.P.), Dean Witter Principal
Plus Fund L.P., Dean Witter Principal Plus Fund Management L.P., Dean Witter
Portfolio Strategy Fund L.P. (formerly, Dean Witter Principal Secured Futures
Fund L.P.) ("DWPSF"), Dean Witter Global Perspective Portfolio L.P., Dean Witter
World Currency Fund L.P., Dean Witter Institutional Account II L.P. ("DWIA II"),
DWFCM International Access Fund L.P., Dean Witter Anchor Institutional Balanced
Portfolio Account L.P. ("Anchor"), Dean Witter Spectrum Global Balanced L.P.
(formerly, Dean Witter Spectrum Balanced L.P.), Dean Witter Spectrum Strategic
L.P., Dean Witter Spectrum Technical L.P., Dean Witter Spectrum Select L.P.
(formerly, Dean Witter Select Futures Fund L.P.), DWR Chesapeake L.P., DWR
Institutional Balanced Portfolio Account III L.P., ("DWIBP III"), DWR/JWH
Futures Fund L.P., Morgan Stanley Tangible Asset Fund L.P. ("MSTAF"), DWR/Market
Street Futures Fund L.P. ("MKTST"), Morgan Stanley Dean Witter Charter Graham
L.P. ("Charter Graham"), Morgan Stanley Dean Witter Charter Millburn L.P.
("Charter Millburn"), and Morgan Stanley Dean Witter Charter Welton L.P.
("Charter Welton").

Each of the commodity pools is a limited partnership organized to engage in the
speculative trading of commodity futures contracts, forward contracts on foreign
currencies and other commodity interests.

Demeter reopened DWPSF for additional investment and on May 12, 1997, DWPSF
registered with the SEC 50,000 units which were offered to investors for a
limited time in a public offering.

On July 31, 1997, Demeter entered into a limited partnership agreement as
general partner in MSTAF. On November 4, 1997, MSTAF registered with the SEC
5,000,000 units and began trading on January 2, 1998. Units were made available
to investors in a public offering that ended March 12, 1998 ("Offering Period").
Subsequently, MSTAF, Demeter, the trading advisor and Dean Witter Reynolds
agreed to extend the Offering Period until no later than October 16, 1998
("Extended Offering Period"), and offered to the public unsold units remaining
at the end of the Offering Period.

On September 18, 1997, Demeter ceased trading activities in Anchor and
subsequently distributed its net assets.

S-55
<PAGE>

In January of 1998, Demeter entered into a limited partnership agreement as
general partner in MKTST, which offers units to investors in a continuing
private offering. MKTST began trading on October 1, 1998.

On April 20, 1998, Dean Witter Spectrum Balanced L.P. changed its name to Dean
Witter Spectrum Global Balanced L.P.

On April 20, 1998, Dean Witter Select Futures Fund L.P. changed its name to Dean
Witter Spectrum Select L.P. ("DWSF"). Effective May 1, 1998 DWSF became part of
the Spectrum family of funds and consequently revised its fee structure,
instituted an exchange provision with other funds in the Spectrum family and is
offered to investors in a continuing public offering.

On April 30, 1998, Demeter ceased trading activities in DWIA II and subsequently
distributed its net assets.

On May 11, 1998, Demeter registered with the SEC 5,000,000 additional units of
Dean Witter Spectrum Technical L.P. and 1,500,000 units of DWSF, both of which
are being offered to investors in a continuing public offering with previously
registered units of Dean Witter Spectrum Strategic L.P. and Dean Witter Spectrum
Global Balanced L.P.

On July 15, 1998, Demeter entered into a limited partnership agreement as
general partner in the Morgan Stanley Dean Witter Charter Series. The three
partnerships that comprise the Charter Series are Morgan Stanley Dean Witter
Charter Graham L.P. ("Charter Graham"), Morgan Stanley Dean Witter Charter
Millburn L.P. ("Charter Millburn") and Morgan Stanley Dean Witter Charter Welton
L.P. ("Charter Welton"). On July 29, 1998, the Charter Series individually
registered with the SEC 3,000,000 units of Charter Graham, 3,000,000 units of
Charter Millburn and 3,000,000 units of Charter Welton to be offered to
investors for a limited time in a public offering.

On September 30, 1998, Demeter ceased trading activities in DWIBP III, and
subsequently distributed its net assets.

INCOME TAXES--The results of operations of Demeter are included in the
consolidated federal income tax return of MSDW, computed on a separate company
basis and due to MSDW.

USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2. INVESTMENTS IN AFFILIATED PARTNERSHIPS

The limited partnership agreement of each commodity pool requires Demeter to
maintain a general partnership interest in each partnership, generally in an
amount equal to, but not less than 1 percent of the aggregate capital
contributed to the partnership by all partners.

The total assets, liabilities and partners' capital of all the funds managed by
Demeter at February 28, 1999, and November 30, 1998 and 1997 were as follows:

<TABLE>
<CAPTION>
FEBRUARY 28, 1999
(UNAUDITED) 1998 1997
----------------- -------------- --------------
<S> <C> <C> <C>
$ $ $
Total assets........................ 1,371,547,320 1,316,093,947 1,195,307,516
Total liabilities................... 26,195,171 21,644,069 19,346,113
Total partners' capital............. 1,345,352,149 1,294,449,878 1,175,961,403
</TABLE>

Demeter's investments in such limited partnerships are carried at market value
with changes in such market value reflected currently in operations.

S-56
<PAGE>
3. PAYABLE TO MSDW

The payable to MSDW is primarily for amounts due for the purchase of partnership
investments, income tax payments made by MSDW on behalf of Demeter and the
cumulative results of operations.

4. NET WORTH REQUIREMENT

At February 28, 1999, November 30, 1998 and 1997, Demeter held non-interest
bearing notes from MSDW that were payable on demand. These notes were received
in connection with additional capital contributions aggregating $111,070,000.

The limited partnership agreement of each commodity pool requires Demeter to
maintain its net worth at an amount not less than 10% of the capital
contributions by all partners in each pool in which Demeter is the general
partner (15% if the capital contributions to any partnership are less than
$2,500,000, or $250,000, whichever is less).

In calculating this requirement, Demeter's interests in each limited partnership
and any amounts receivable from or payable to such partnerships are excluded
from net worth. Notes receivable from MSDW are included in net worth for
purposes of this calculation.

5. LEGAL MATTERS

On September 6, 10, and 20, 1996, and on March 13, 1997, similar purported class
actions were filed in the Superior Court of the State of California, County of
Los Angeles, on behalf of all purchasers of interests in limited partnership
commodity pools sold by DWR, an affiliate of Demeter. Named defendants include
DWR, Demeter, Dean Witter Futures and Currency Management Inc., MSDW (all such
parties referred to hereafter as the "Dean Witter Parties"), certain limited
partnership commodity pools of which Demeter is the general partner, and certain
trading advisors to those pools. On June 16, 1997, the plaintiffs in the above
actions filed a consolidated amended complaint, alleging, among other things,
that the defendants committed fraud, deceit, negligent misrepresentation,
various violations of the California Corporations Code, intentional and
negligent breach of fiduciary duty, fraudulent and unfair business practices,
unjust enrichment, and conversion in the sale and operation of the various
limited partnership commodity pools. Similar purported class actions were also
filed on September 18 and 20, 1996 in the Supreme Court of the State of New
York, New York County, and on November 14, 1996 in the Superior Court of the
State of Delaware, New Castle County, against the Dean Witter Parties and
certain trading advisors on behalf of all purchasers of interests in various
limited partnership commodity pools sold by DWR. A consolidated and amended
complaint in the action pending in the Supreme Court of the State of New York
was filed on August 13, 1997, alleging that the defendants committed fraud,
breach of fiduciary duty, and negligent misrepresentation in the sale and
operation of the various limited partnership commodity pools.

On December 16, 1997, upon motion of the plaintiffs, the action pending in the
Superior Court of the State of Delaware was voluntarily dismissed without
prejudice. The New York Supreme Court dismissed the New York action in November
1998, but granted plaintiffs leave to file an amended complaint, which they did
in early December 1998. The defendants have filed a motion to dismiss the
amended complaint with prejudice on February 1, 1999. On April 12, 1999 the
defendants also filed a motion in the California action to oppose certification
by the court of the class in the California litigation. The complaints seek
unspecified amounts of compensatory and punitive damages and other relief. It is
possible that additional similar actions may be filed and that, in the course of
these actions, other parties could be added as defendants. The Dean Witter
Parties believe that they have strong defenses to, and they will vigorously
contest, the actions. Although the ultimate outcome of legal proceedings cannot
be predicted with certainty, it is the opinion of management of the Dean Witter
Parties that the resolution of the actions will not have a material adverse
effect on the financial condition or the results of operations of any of the
Dean Witter Parties.

S-57
<PAGE>
AMENDED ANNEX A TO LIMITED PARTNERSHIP AGREEMENT

THIS REQUEST SHOULD BE DELIVERED TO A LIMITED PARTNER'S LOCAL DWR BRANCH OFFICE
AND MUST BE RECEIVED BY THE GENERAL PARTNER AT LEAST 15 DAYS PRIOR TO THE LAST
DAY OF THE CALENDAR MONTH IN WHICH AN EXCHANGE IS TO BE EFFECTIVE.

DEAN WITTER CORNERSTONE FUNDS
REQUEST FOR EXCHANGE

EACH PARTNERSHIP WILL EXCHANGE UNITS OF LIMITED PARTNERSHIP INTEREST ONLY IN
WHOLE UNITS OR IN MULTIPLES OF $1,000, UNLESS A LIMITED PARTNER IS LIQUIDATING
HIS ENTIRE INTEREST IN SUCH PARTNERSHIP.

___________________________, 19___
(Please date)

DEAN WITTER CORNERSTONE FUNDS
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Managed Futures Account Department

Dear Sirs:

I hereby request an Exchange, as of the last day of the next calendar month
occurring at least 15 days after receipt of this request, as defined in and
subject to all of the terms and conditions of the Limited Partnership Agreement
of the partnership(s) specified below. I hereby authorize Demeter Management
Corporation to redeem the following quantity of Units of Limited Partnership
Interest ("Units") set forth opposite the name of each such partnership at the
respective Net Asset Value thereof, as defined therein, less any amounts
specified in Section 11(b) of each such Limited Partnership Agreement, and to
utilize the net proceeds thereof to purchase Units in the partnership(s)
specified below.

<TABLE>
<CAPTION>
SPECIFY QUANTITY OF UNITS SPECIFY PARTNERSHIP IN
TO BE REDEEMED WHICH UNITS TO
(CHECK BOX AND INSERT BE PURCHASED
NAME OF PARTNERSHIP NUMBER, IF APPLICABLE (CHECK APPLICABLE BOX)
------------------- ------------------------- ----------------------
<S> <C> <C>
Dean Witter / / --------- Whole Units or / / Dean Witter Cornerstone Fund III
Cornerstone Fund II / / $ --,000 of Units or or
/ / Entire Interest / / Dean Witter Cornerstone Fund IV
----------------------------------
Dean Witter / / --------- Whole Units or / / Dean Witter Cornerstone Fund II
Cornerstone Fund III / / $ --,000 of Units or or
/ / Entire Interest / / Dean Witter Cornerstone Fund IV
----------------------------------
Dean Witter / / --------- Whole Units or / / Dean Witter Cornerstone Fund II
Cornerstone Fund IV / / $ --,000 of Units or or
/ / Entire Interest / / Dean Witter Cornerstone Fund III
----------------------------------
</TABLE>

A-1
<PAGE>
I understand that this Exchange will be effective as of the last day of the
next calendar month occurring at least 15 days after this Request for Exchange
is received by the above addressee. I understand that I may not Exchange any
Units before the last business day of any calendar month which occurs more than
180 days after I first became a limited partner of any of the above
partnerships. I (either in my individual capacity or as an authorized
representative of any entity, if applicable) hereby represent and warrant that I
am the true, lawful, beneficial owner of the Unit or Units to which this Request
for Exchange relates, with full power and authority to request an Exchange of
such Units. Such Units are not subject to any pledge or otherwise encumbered in
any fashion.

I hereby certify that the representations and warranties and all other
information set forth in the Subscription Agreement and Power of Attorney
delivered in connection with my initial purchase of Units being redeemed hereby
is true and correct as of the date hereof. I have received the Prospectus, dated
August 28, 1996, and the Supplement to Prospectus, dated May v, 1999, relating
to the above partnerships delivered to me, or any later supplement to such
Prospectus relating to the specific offering of Units which I am purchasing on
this Exchange. I represent and warrant that I have either: (a) net worth of at
least $75,000 (exclusive of home, furnishings, and automobiles); or (b) net
worth of at least $30,000 (exclusive of home, furnishings, and automobiles) and
annual gross income of at least $30,000. However, if I am a resident and/or
subject to regulation by one of the following states, my net worth and/or income
satisfies the requirements of such state (if this Exchange is by spouses as
joint owners, their joint net worth and annual income may be used to satisfy
applicable state suitability requirements; as used below, "NW" means net worth
exclusive of home, furnishings, and automobiles; "AI" means annual gross income;
and "TI" means annual taxable income for federal income tax purposes):

<TABLE>
<S> <C>
ARIZONA (a) $250,000 NW and investment may not exceed 10% of NW, or
(b) $75,000 NW, $75,000 AI and investment may not exceed 10%
of NW.
CALIFORNIA $100,000 NW and $50,000 AI.
MAINE (a) $100,000 NW, or (b) $35,000 NW and $35,000 AI.
MASSACHUSETTS (a) $175,000 NW and investment may not exceed 10% of NW, or
PENNSYLVANIA (b) $100,000 NW, $50,000. TI during the last calendar year
and anticipated during the current calendar year and
investment may not exceed 10% of NW.
MICHIGAN (a) Solely as to Michigan residents who purchased Units in
any of the Partnerships on or before May 3, 1992: (i)
$100,000 NW and investment may not exceed 10% of NW, or (ii)
$50,000 NW, $50,000 AI and investment may not exceed 10% of
NW; (b) solely as to Michigan residents who purchased Units
in any of the Partnerships, or who purchased Units in any of
the Partnerships on or after May 4, 1992: (i) $225,000 NW
and investment may not exceed 10% of NW, or (ii) $60,000 NW,
$60,000 AI and investment may not exceed 10% of NW.
VERMONT (1) Solely as to Vermont residents who purchased Units in
any of the Partnerships prior to May 31, 1993: (a) $75,000
NW, or (b) $30,000 NW and $30,000 AI; (2) solely as to
Vermont residents who purchased Units in any of the
Partnerships on or after May 31, 1993: (a) $150,000 NW, or
(b) $45,000 NW and $45,000 AI.
WASHINGTON (a) $150,000 NW, or (b) $45,000 NW and $45,000 AI.
</TABLE>

I authorize Demeter Management Corporation, pursuant to the aforementioned
Power of Attorney, to take all such further actions and file all such further
documents, pursuant to said Power of Attorney and in accordance with the terms
thereof, as may be necessary to effectuate the transactions described herein.

A-2
<PAGE>
SIGNATURES MUST BE IDENTICAL TO NAME(S)
IN WHICH UNITS OF LIMITED PARTNERSHIP INTEREST ARE REGISTERED

<TABLE>
<S> <C>
------------------------------------ ---------------------------------------------------------
Print DWR Account Number Type or Print Name of Partner

---------------------------------------------------------
Street

---------------------------------------------------------
City State Zip Code

Individual Partner(s) or assignee(s)

X
---------------------------------------------------------

X
---------------------------------------------------------
(Signature(s) of partner(s) or assignee(s))

Entity Partner (or assignee)

---------------------------------------------------------
(Name of Entity)

By: X
---------------------------------------------------------
(Authorized officer, partner, trustee, or custodian.
If a corporation, include certified
copy of authorizing resolution.)
</TABLE>

If Individual Retirement Account or other self-directed employee benefit plan,
please also complete the following:

--------------------------------------
(Name of Plan Participant)

X
--------------------------------------
(Signature of Plan Participant)

A-3
<PAGE>
DEAN WITTER CORNERSTONE FUND II
DEAN WITTER CORNERSTONE FUND III
DEAN WITTER CORNERSTONE FUND IV

SUPPLEMENT TO THE PROSPECTUS DATED AUGUST 28, 1996

The Prospectus dated August 28, 1996 is supplemented by a Supplement dated
May , 1999. The Supplement is an integral part of, and must be read together
with, the Prospectus.

May , 1999

<PAGE>

DEAN WITTER CORNERSTONE FUNDS

250,000 UNITS OF LIMITED PARTNERSHIP INTEREST

THESE ARE SPECULATIVE SECURITIES AND INVOLVE A HIGH DEGREE OF RISK. THESE
SECURITIES ARE SUITABLE FOR INVESTMENT ONLY BY A PERSON WHO CAN AFFORD TO
LOSE HIS ENTIRE INVESTMENT. "RISK FACTORS" (PAGE 9) AND "CONFLICTS OF
INTEREST" (PAGE 16).

TRANSFERABILITY OF THE UNITS IS RESTRICTED AND THERE IS AND WILL BE NO PUBLIC
MARKET THEREFOR. UNITS ARE ONLY REDEEMABLE ON THE LAST DAY OF ANY MONTH UPON
AT LEAST 15 DAYS' PRIOR WRITTEN NOTICE TO THE GENERAL PARTNER. SEE "THE
LIMITED PARTNERSHIP AGREEMENTS-RESTRICTIONS ON TRANSFERS OR ASSIGNMENTS" AND
"REDEMPTIONS."
The Dean Witter Cornerstone Funds (the "Cornerstone Funds") are
three New York limited partnerships engaged individually in the speculative
trading of commodity interest contracts. The three partnerships that comprise
the Cornerstone Funds are Dean Witter Cornerstone Fund II ("Cornerstone II"),
Dean Witter Cornerstone Fund III ("Cornerstone III") and Dean Witter
Cornerstone Fund IV ("Cornerstone IV") (individually a "Partnership" and
collectively the "Partnerships").
Each Partnership allows its Limited Partners to shift their
investment among Partnerships by permitting a Limited Partner to redeem Units
of Limited Partnership Interest ("Units") and, with the net proceeds of such
redemption, purchase Units of one or more Partnerships at a price equal to
100% of the "Net Asset Value" thereof (assets less liabilities, divided by
number of Units) (hereafter referred to as an "Exchange"). An Exchange may
only be effected as of the last day of a calendar month and if certain
additional conditions are satisfied. See "Plan of Distribution and Exchange
Procedure." UNITS ARE ONLY BEING OFFERED AND SOLD IN EXCHANGES; NO NEW
INVESTORS MAY PURCHASE UNITS, NOR MAY CURRENT INVESTORS PURCHASE ADDITIONAL
UNITS.
The Partnerships are not mutual funds or any other type of
investment company within the meaning of the Investment Company Act of 1940,
as amended, and are not subject to regulation thereunder.
An investment in the Partnerships involves significant risks,
including the following:

* Commodity interest trading is speculative and volatile. The
Partnerships' trading has been volatile. Such volatility could
result in an investor losing all or a substantial part of his
investment.

* There are substantial charges to each of the Partnerships by
their respective Trading Managers and DWR. Based on ex-
penses during the period of January 1991-June 1996, Cornerstone II,
Cornerstone III and Cornerstone IV would be required to earn annual trading
profits (after taking into account estimated interest income based upon
current rates of 5%) of 7.57%, 8.17%, and 4.97%, respectively, of average
annual Net Assets in order to break even (earning profit sufficient to recoup
an investor's initial investment after one year).

* No secondary market for Units exist. Certain market
conditions may result in possible delays in, or inability to pay,
redemptions.
* Conflicts of interest between and among the Trading Managers,
the General Partner, DWR, their affiliates and each Partnership may adversely
affect the trading performance of such Partnership. See "Conflicts of
Interest."
* Each Partnership's profitability is largely dependent on the
collective performance of its Trading Managers.
* While the General Partner does not intend to make any
distributions, profits earned by a Partnership in any year will result in
taxable income to investors.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Organizational
Price to the Selling and Offering Proceeds to the
Public Commissions Expenses Partnerships
Per Unit (1) (1) (1)(2) (1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Maximum for all Partnerships
(250,000 Units) (1) (1) (1)(2) (1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

COVER PAGE CONTINUED AND NOTES TO THE ABOVE TABLE ARE ON PAGE (I)

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF
PARTICIPATING IN ANY ONE OF THESE POOLS NOR HAS THE COMMISSION PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS.

DEAN WITTER REYNOLDS INC.

The date of this Prospectus is August 28, 1996.

<PAGE>

As of June 30, 1996, Cornerstone II had "Net Assets" (as defined
herein) of $28,942,618 and the Net Asset Value of a Unit thereof was $2,823.08.
Cornerstone II's assets are allocated for management between Abacus Trading
Corporation and John W. Henry & Company, Inc. As of June 30, 1996,
Cornerstone III had Net Assets of $39,178,794 and the Net Asset Value of a
Unit thereof was $2,275.15. Cornerstone III's assets are allocated for
management among Welton Investment Systems Corporation, Abraham Trading Co.
and Sunrise Capital Management, Inc. As of June 30, 1996, Cornerstone IV had
Net Assets of $97,586,050 and the Net Asset Value of a Unit thereof was
$2,947.54. Cornerstone IV's assets are allocated for management between John W.
Henry & Company, Inc. and Sunrise Capital Management, Inc.

Notes to table on front cover page:

(1) Units are offered for Exchange at Exchange Dates to be held as of the
last day of each month (each, an "Exchange Date"). Units are redeemed at 100%
of the Net Asset Value thereof as of the close of business on the Exchange
Date, and Units in one or more of the Partnerships are purchased at a price
per Unit equal to 100% of the Net Asset Value of a Unit as of the first day
of the month following the Exchange Date. No selling commission or other
charges will be payable in connection with Exchanges.

Employees of DWR will not be paid any up-front fees with respect to the
purchase of a Unit in connection with an Exchange. However, until a
Partnership terminates, DWR will compensate those of its employees and
certain other selling agents ("Additional Sellers") who participated in the
sale of Units and continue to render certain services to Limited Partners by
paying them up to 35% of the brokerage commissions generated by outstanding
Units sold by them and received by DWR as commodity broker for each
Partnership. During the period July 1995-June 1996, such compensation
resulted in average annual payments of approximately $45, $43, and $22 per
Unit of Cornerstone II, III and IV, respectively. Such additional
compensation paid by DWR may be deemed to be underwriting compensation. No
part of such compensation will be paid by a Partnership and, accordingly, Net
Assets will not be reduced as a result of such compensation. Each person
receiving such continuing compensation must be a DWR employee at the time of
receipt of payment and must be properly registered with the Commodity Futures
Trading Commission ("CFTC"). Such compensation is to be paid in recognition
of the employees' continuing services to the Limited Partners of the
Partnerships. The Selling Agreement among DWR and the Partnerships provides
that such compensation may only be paid by DWR as long as such services are
provided.

DWR has agreed to indemnify any Additional Sellers against certain civil
liabilities, including liabilities under the Securities Act of 1933. DWR will
be indemnified by each Partnership against certain civil liabilities.

(2) DWR will pay all expenses incurred in connection with the offering of
Units pursuant to this Prospectus, and will not be reimbursed therefor.
_____________________
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE
MATTERS DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY ANY PERSON WITHIN ANY JURISDICTION
IN WHICH SUCH OFFER IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM SUCH OFFER WOULD BE
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
OF ITS ISSUE.
_____________________

The Partnerships are subject to the informational requirements of
the Securities Exchange Act of 1934 and in accordance therewith file, or will
file, reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC"). These reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the SEC at the SEC's office at 450 Fifth Street, N.W., Room
1024, Judiciary Plaza, Washington, D.C. 20549, and at its regional offices
located at 7 World Trade Center, Suite 1300, New York, New York 10048; and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of the SEC at 450
Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington, D.C. 20549, and
at the regional offices described above at prescribed rates. The SEC
maintains a web site containing reports, proxy and information statements and
other information regarding registrants that file electronically with the
SEC. The address of such site is: http://www.sec.gov.

The Partnerships have filed with the SEC, in Washington, D.C., a
Registration Statement on Form S-1 under the Securities Act of 1933 with
respect to the Units offered hereby. This Prospectus does not contain

<PAGE>
all the information included in the Registration Statement, certain items of
which are omitted in accordance with the Rules and Regulations of the SEC.
For further information about the Partnerships and the Units offered hereby,
reference is made to the Registration Statement and the exhibits thereto.
The Partnerships must furnish all Limited Partners annual and
monthly reports complying with CFTC requirements. The annual reports will
contain audited, and the monthly reports unaudited, financial information.
The audited financial statements will be examined and reported upon by
independent certified public accountants.

RISK DISCLOSURE STATEMENT

YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION
PERMITS YOU TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE
AWARE THAT FUTURES AND OPTIONS TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS
WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF
THE POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN
ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW
YOUR PARTICIPATION IN THE POOL.

FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR
MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE
POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS
TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT
CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THESE POOLS
BEGINNING AT PAGE 37 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO
BREAK EVEN, THAT IS TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE
42.

THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER
FACTORS NECESSARY TO EVALUATE YOUR PARTICIPATION IN THESE COMMODITY POOLS.
THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN THESE COMMODITY POOLS, YOU
SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF
THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT BEGINNING AT PAGE 9.
YOU SHOULD ALSO BE AWARE THAT THESE COMMODITY POOLS MAY TRADE
FOREIGN FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED
OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED
STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR
DIMINISHED PROTECTION TO THE POOLS AND THEIR PARTICIPANTS. FURTHER, UNITED
STATES REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THE
RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES JURISDICTIONS
WHERE TRANSACTIONS FOR THE POOLS MAY BE EFFECTED.
_______________________

<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Risk Disclosure Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (ii)
Summary of the Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Risks Relating to Commodity Trading and the
Commodities Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Risks Relating to the Partnerships . . . . . . . . . . . . . . . . . . . . . . . 12
Risks Relating to the Trading Managers. . . . . . . . . . . . . . . . . . . . . . 13
Taxation and Regulatory Risks. . . . . . . . . . . . . . . . . . . . . . . . . . 15
Conflicts of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Relationship of the General Partner to the
Commodity Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Accounts of Affiliates of the General Partner . . . . . . . . . . . . . . . . . . 17
Management of Other Accounts by Each Trading
Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Customer Agreement with DWR. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Other Commodity Pools. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Fiduciary Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
The Cornerstone Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The Offering of Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Performance Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Managementis Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . 26
Description of Charges to Each Partnership. . . . . . . . . . . . . . . . . . . . . . 37
1. Commodity Broker. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2. Trading Managers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3. Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4. Break-Even Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Investment Program, Use of Proceeds and Trading Policies . . . . . . . . . . . . . . 43
Differences among the Cornerstone Funds. . . . . . . . . . . . . . . . . . . . . 43
Cornerstone II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Cornerstone III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Cornerstone IV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Summary of Differences among Partnerships. . . . . . . . . . . . . . . . . . . . 45
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Trading Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
General Description of Trading Systems. . . . . . . . . . . . . . . . . . . . . . . . 48
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Trading by the Trading Managers. . . . . . . . . . . . . . . . . . . . . . . . . 49
The Trading Managers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Dean Witter Cornerstone Fund II. . . . . . . . . . . . . . . . . . . . . . . . . 51
1. Abacus Trading Corporation. . . . . . . . . . . . . . . . . . . . . . . . . 51
2. John W. Henry & Company, Inc.. . . . . . . . . . . . . . . . . . . . . . . 54
Dean Witter Cornerstone Fund III. . . . . . . . . . . . . . . . . . . . . . . . . 60
1. Welton Investment Systems Corporation. . . . . . . . . . . . . . . . . . . 60
2. Abraham Trading Co.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
3. Sunrise Capital Management, Inc.. . . . . . . . . . . . . . . . . . . . . . 71
Dean Witter Cornerstone Fund IV. . . . . . . . . . . . . . . . . . . . . . . . . 74
1. John W. Henry & Company, Inc.. . . . . . . . . . . . . . . . . . . . . . . 74
2. Sunrise Capital Management, Inc.. . . . . . . . . . . . . . . . . . . . . . 74
The Management Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Apportionment of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Liability and Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 76
Obligations to a Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Speculative Position Limits. . . . . . . . . . . . . . . . . . . . . . . . . . . 77
The General Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Directors and Officers of the General Partner . . . . . . . . . . . . . . . . . . 78

<CAPTION>
Page
<S> <C>
The Commodity Broker. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Description of the Commodity Broker. . . . . . . . . . . . . . . . . . . . . . . 79
Brokerage Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
The Commodities Market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Futures Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Forward Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Commodity Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Hedgers and Speculators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Commodity Exchanges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Speculative Position Limits. . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Daily Limits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Margins. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Redemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
The Exchange Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
The Limited Partnership Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . 86
Nature of the Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Management of Partnerships Affairs. . . . . . . . . . . . . . . . . . . . . . . . 87
Sharing of Profits and Losses. . . . . . . . . . . . . . . . . . . . . . . . . . 87
Additional Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Restrictions on Transfers or Assignments. . . . . . . . . . . . . . . . . . . . . 89
Term of the Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Amendments; Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Reports to Limited Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Plan of Distribution and Exchange Procedure. . . . . . . . . . . . . . . . . . . . . 91
Purchases by Employee Benefit Plans-ERISA
Considerations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Material Federal Income Tax Considerations. . . . . . . . . . . . . . . . . . . . . . 92
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Partnership Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Partnership Taxation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Cash Distributions and Redemptions. . . . . . . . . . . . . . . . . . . . . . . . 94
Gain or Loss on Trading Activity. . . . . . . . . . . . . . . . . . . . . . . . . 94
Taxation of Limited Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Tax Audits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
State and Local Income Tax Aspects. . . . . . . . . . . . . . . . . . . . . . . . . . 99
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Certain Terms and Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 100
Blue Sky Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Dean Witter Cornerstone Fund II
Dean Witter Cornerstone Fund III
Dean Witter Cornerstone Fund IV. . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Independent Auditors' Report
Statements of Financial Condition
Statements of Operations
Statements of Changes in Partners' Capital
Statements of Cash Flows
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
Demeter Management Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . F-12
Independent Auditors' Report
Statements of Financial Condition
Notes to Statements of Financial Condition. . . . . . . . . . . . . . . . . . . . F-14
(certain information relating to the financial
condition of Demeter Management
Corporation's parent is contained in "The General
Partner")
Exhibit A-Form of Limited Partnership Agreement. . . . . . . . . . . . . . . . . . . A-1
Annex-Request for Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . A-18
Annex-Request for Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
</TABLE>

iii

<PAGE>
SUMMARY OF THE PROSPECTUS
The date of this Prospectus is August 28, 1996.

The following is a summary of this Prospectus. This Prospectus
contains more detailed information under the captions referred to below, and
this summary is qualified in its entirety by the information appearing
elsewhere herein.

Offering Restricted to Exchanges

The Board of Directors of Demeter Management Corporation, the
general partner (the "General Partner") of Dean Witter Cornerstone Funds II,
III and IV (collectively, the "Cornerstone Funds") determined to close the
Cornerstone Funds to new investment, effective September 30, 1994. After
such date (i) no new investors have been nor will be permitted to purchase
Units and (ii) Limited Partners have not been and will not be permitted to
purchase additional Units. Each of the Cornerstone Funds has and will
continue to trade and operate as described in this Prospectus, and the
Exchange and redemption privileges of Limited Partners will continue
uninterrupted. If certain conditions are satisfied, a Limited Partner may
redeem his Units as of the last day of any calendar month (an "Exchange
Date") and, with the net proceeds of such redemption, purchase Units of one
or more other Partnerships (hereafter referred to as an "Exchange") at a
price per Unit equal to 100% of the Net Asset Value thereof on the first day
of the month following the Exchange Date (a "Monthly Closing"). No selling
commissions or other charges will be paid on Units issued on an Exchange. An
Exchange will be effected for a Limited Partner only if each of the following
conditions is satisfied immediately prior to the Exchange: (i) the
Partnership redeeming Units has assets sufficient to discharge its
liabilities and redeem Units; (ii) the General Partner has received a
properly completed Request for Exchange at least 15 days prior to the date on
which such Exchange is to be effective; and (iii) the Partnership issuing
Units has a sufficient number of Units registered and qualified for sale
under federal and applicable state securities laws pursuant to a current
Prospectus. The General Partner will endeavor to have Units registered and
qualified for sale to Limited Partners at the end of each calendar month, but
there can be no assurance that any or a sufficient number of Units will be
available for sale when an Exchange is requested. If Units are not
registered or qualified for sale under either federal or applicable state law
or pursuant to a current Prospectus, the General Partner will not be able to
effect the Exchange for a Limited Partner. An Exchange can be made only in
whole Units or in multiples of $1,000, unless a Limited Partner is
liquidating his entire interest in a Partnership.

Suitability Standards

Each investor (or person entitled to exercise control over assets
of such investor's account under an Individual Retirement Account or other
employee benefit plan) must represent and warrant in the Exchange Agreement
that such investor and/or other person has received this Prospectus and
Disclosure Document and satisfies certain suitability standards described in
the Exchange Agreement.

The Dean Witter Cornerstone Funds

The Cornerstone Funds are three New York limited partnerships which
are currently engaged individually in the speculative trading of a diverse
group of commodity interest contracts. The Cornerstone Funds are Dean Witter
Cornerstone Fund II ("Cornerstone II"), Dean Witter Cornerstone Fund III
("Cornerstone III") and Dean Witter Cornerstone Fund IV ("Cornerstone IV")
(individually a "Partnership" and collectively the "Partnerships"). Dean
Witter Cornerstone Fund I was terminated and dissolved effective December 31,
1991. The offices of each Partnership are located at Two World Trade Center,
62nd Floor, New York, New York 10048, telephone (212) 392-5453. Units of each
Partnership are publicly offered for sale on a continuous basis only to
existing Limited Partners pursuant to the Exchange privilege at Monthly
Closings. See "Plan of Distribution and Exchange Procedure."
The general partner and commodity pool operator of each Partnership
is Demeter Management Corporation ("Demeter" or the "General Partner"), a
Delaware corporation. The General Partner and Dean Witter Reynolds Inc.
("DWR"), the selling agent and commodity broker for the Partnerships, are
each wholly-owned subsidiaries of Dean Witter, Discover & Co. See "Conflicts
of Interest," "The General Partner" and "The Commodity Broker." All trading
decisions for each Partnership are made by the respective trading managers
(each a "Trading Manager" and collectively the "Trading Managers") with
respect to the funds allocated to such Trading Managers, except that the
General Partner may override instructions of a Trading Manager and make
trading decisions under certain circumstances. See "The Management
Agreements."

<PAGE>
Each Partnership trades pursuant to the trading systems, methods
and strategies utilized by the Trading Managers retained by the General
Partner for each Partnership as described under "The Trading Managers."
Although the General Partner believes that each Partnership offers its
Limited Partners a different level of risk and, correspondingly, a different
potential rate of return on their investment, all speculative trading of
commodity futures contracts and other commodity interests is inherently risky
and there can be no assurance that the General Partner can achieve a desired
rate of return or effectively reduce the risk arising from an investment in
any of the Partnerships or that the performance results of each Partnership
will necessarily correlate with the level of risk projected by the General
Partner for each Partnership.

Based on the annual fees and expenses of Cornerstone II,
Cornerstone III and Cornerstone IV during the period from January 1991-June
1996 (note that only the management fees are fixed, and that the brokerage
commissions and transaction fees and costs are capped, but not otherwise
fixed), each Partnership would be required to earn average trading profits
(after taking into account estimated interest income based upon current rates
of 5%) of 7.57%, 8.17% and 4.97%, respectively, of such Partnership's average
annual Net Assets in order to break even (earning profits sufficient to
recoup an investor's initial investment after one year). Effective September
1, 1996, a new cap on aggregate brokerage commissions and transaction fees
and costs will take effect. See "Description of Charges to Each Partnership-B
reak Even Analysis" and each Partnership's financial statements. By reason
of the foregoing, investors should consider an investment in a Partnership as
a long-term investment.

Dean Witter Cornerstone Fund II

Cornerstone II seeks as its investment objective the maximum rate
of capital appreciation consistent with a medium percentage of assets
committed as margin. During the period from July 1995-June 1996, the Trading
Managers for Cornerstone II collectively committed on average between 10 and
30% of the Net Assets of Cornerstone II as margin. See "Differences among the
Cornerstone Funds" and "The Commodities Market-Margins." The Trading Managers
for Cornerstone II are Abacus Trading Corporation ("Abacus") and John W.
Henry & Company, Inc. ("JWH"). See "The Trading Managers-Dean Witter
Cornerstone Fund II."

Dean Witter Cornerstone Fund III

Cornerstone III seeks as its investment objective the maximum rate
of capital appreciation consistent with a high percentage of assets committed
as margin. During the period from July 1995-June 1996, the Trading Managers
for Cornerstone III collectively committed on average between 10 and 45% of
the Net Assets of Cornerstone III as margin. See "Differences among the
Cornerstone Funds" and "The Commodities Market-Margins." The Trading Managers
for Cornerstone III are currently Sunrise Capital Management, Inc.
("Sunrise"), Welton Investment Systems Corporation ("WISC") and Abraham
Trading Co. ("ATC"). See "The Trading Managers-Dean Witter Cornerstone Fund
III."

Dean Witter Cornerstone Fund IV

Unlike the other Partnerships, Cornerstone IV was organized to
trade exclusively in a portfolio of diverse world currencies, primarily in an
effort to profit from changes in the value between and among various
currencies. Cornerstone IV's investment objective is to profit from the
speculative trading of futures and forward contracts and other commodity
interests on currencies and from favorable price relationships between and
among various currencies. Cornerstone IV seeks as its investment objective
the maximum rate of capital appreciation consistent with a medium to high
percentage of assets committed as margin. During the period from July
1995-June 1996, the Trading Managers for Cornerstone IV collectively committed
on average between 5 and 35% of the Net Assets of Cornerstone IV as margin. See
"Differences among the Cornerstone Funds" and "The Commodities
Market-Margins." The Trading Managers for Cornerstone IV are JWH and Sunrise.
See "The Trading Managers-Dean Witter Cornerstone Fund IV."

Performance

Cornerstone II and III began trading on January 2, 1985 and
Cornerstone IV began trading on May 1, 1987. The actual performance
summaries of these Partnerships from January 1, 1991 through June 30, 1996 is
set forth in Capsules I, II and III, respectively, under "The Cornerstone
Funds-Performance Records" and is summarized in "Selected Financial Data."

<PAGE>
Fiscal Year

The fiscal years of each of the Partnerships begins on January 1 of
each year and ends on the following December 31.

Conflicts of Interest

Significant actual and potential conflicts of interest exist in the
structure and operation of each Partnership, principally arising from the
affiliation between the General Partner and DWR, and the trading of other
accounts of, or managed by the General Partner, DWR, the Trading Managers and
their affiliates. See "Conflicts of Interest," "The Trading Managers," "The
General Partner," and "The Commodity Broker."

Risk Factors

As a general matter, an investment in the Partnerships is
speculative and involves substantial risk, including the risk of loss of a
Limited Partner's entire investment. Risks of an investment in the
Partnerships include:

RISKS RELATING TO COMMODITY INTERESTS TRADING

* Commodity interests trading is speculative and volatile.
The Partnerships' trading has been volatile. Such volatility could result in
an investor losing all or a substantial part of his investment.

* Commodity interests trading is highly leveraged and
relatively small price movements can result in significant losses to a
Partnership.
* Commodity interests trading may be illiquid and in
certain situations prevent a Partnership from limiting its loss on an
unfavorable position.
* Trading in forward contracts may subject a Partnership to
losses if a counterparty is unable to meet its obligations.
* Trading on foreign exchanges may result in a Partnership
having less regulatory protection available. In addition, a Partnership may
suffer losses due to exchange rate changes.
* Trading in futures options can be extremely expensive if
market volatility is incorrectly predicted.

* The Partnerships have credit risk because DWR acts as the
futures commission merchant or the sole counterparty with respect to most of
the Partnerships' assets.

* Speculative position limits may result in a Partnership
having to liquidate profitable positions.

RISKS RELATING TO THE PARTNERSHIPS

* Past results are not necessarily indicative of future
results.
* Substantial charges to each Partnership regardless of
whether a Partnership realizes profits.
* Restricted investment liquidity in the Units, absence of
a secondary market, ability to assign or transfer restricted, redemptions
limited to monthly.
* Significant actual and potential conflicts of interest
exist involving the General Partner, the Trading Managers, DWR, and their
affiliates.
* Limited Partners do not participate in the management of
the Partnerships or in the conduct of their business.

* Limited Partners must rely on the General Partner's
selection of Trading Managers.

RISKS RELATING TO THE TRADING MANAGERS
* A Partnership will not be profitable unless the Trading
Managers for the Partnership are collectively successful with their trading
strategies.
* Factors outside the control of a Trading Manager may
reduce the profitability of a trading strategy or require an alteration in
the strategy.
* A Management Agreement may not be renewed, may be renewed
on less favorable terms to a Partnership, or may be terminated by a Trading
Manager such that the Trading Manager will no longer be available to the
Partnership.

* Assets may be reallocated among the Trading Managers, or
from a Trading Manager to an additional Trading Manager, and the Trading
Manager with increased assets or the new Trading Manager may subsequently
incur trading losses.

<PAGE>
* Substantial increases in assets to a Trading Manager
may adversely affect its performance.

TAXATION RISKS

* If the tax laws and/or certain facts and circumstances
change, a Partnership may be taxed as a corporation.
* While the General Partner does not intend to make any
distributions, profits earned in any year will result in
taxable income to investors.
* Deductibility of certain of a Partnership's expenses may
be limited.
* A Partnership's tax return may be audited by the Internal
Revenue Service.

Only the General Partner will be liable for a Partnership's
obligations (including margin calls) to the extent that the Partnership's
assets, including amounts contributed by the Limited Partners and amounts
paid to Limited Partners upon redemptions, distributions or otherwise
(together with interest thereon), are insufficient to meet those obligations.
See "Risk Disclosure Statement," "Risk Factors," "Conflicts of Interest,"
"Description of Charges to Each Partnership," and "The Limited Partnership
Agreements-Nature of the Partnerships."

Description of Charges to Each Partnership

Each Partnership is subject to substantial charges which are
summarized below and described in detail under "Description of Charges to
Each Partnership." The 13/20 of 1% of Net Assets monthly cap on aggregate
brokerage commissions and transaction fees and costs is effective September 1,
1996, and represents a reduction from current caps on such charges.

<TABLE>
<CAPTION>
ENTITY FORM OF COMPENSATION AMOUNT OF COMPENSATION
------ -------------------- ----------------------
<S> <C> <C>
DWR (as Commodity Broker) . . . Brokerage Commissions. Roundturn commissions (covering both the
opening and liquidating of a commodity
interest) at 80% of DWR's published
non-member rates (an average rate of $75).
Commissions (together with the transaction
fees and costs described below) with
respect to each Trading Manager's allocated
Net Assets are capped at (i) 13/20 of 1%
per month (a maximum 7.8% annual rate)
(in the case of Trading Managers which
employ multiple trading systems in trading
on behalf of a Partnership, the foregoing
13/20 of 1% cap is applied on a per trading
system basis) of the Net Assets at
month-end allocated to such Trading Manager
or trading system; and (ii) 14% annually of
the Partnership's average monthly Net
Assets, aggregated with net excess interest
and compensating balance benefits, and
transaction fees and costs, as described
below.

Transaction fees for the execution of each Forward currency contract fees average
Partnership's forward contract transactions, $3-$6 per roundturn trade, execution of cash
the execution of cash transactions relating contract transactions relating to EFP
to exchange of futures for physicals ("EFP") transactions are approximately $2.50 per
transactions, and the use cash contract, and the use of
</TABLE>
4

of DWR's institutional and over-night execution the institutional trading desk or overnight
facilities. execution facility may be up to $3 per
roundturn (the amount of such fees is
included in the transaction fees described
under "Other" and is subject to the caps
described therein).

Financial benefit to DWR from interest earned The aggregate of (i) brokerage commissions
on Partnerships' assets in excess of the rate and transaction fees and costs payable by
paid to the Partnerships and from compensating the Partnership, as described above and
balance treatment in connection with its below, and (ii) net excess interest and
designation of a bank or banks in which the compensating balance benefits to DWR (after
Partnerships' assets are deposited. crediting the Partnership with interest) are
capped at 14% annually of the Partnership's
average monthly Net Assets as of the last
day of each month during a calendar year.

Trading Managers. . . . . . . Monthly Management Fee. 1/3 of 1% of Net Assets allocated to each
Trading Manager on the last day of each
month (a 4% annual rate).

Annual Incentive Fee. 15% of the New Appreciation (as defined
under "Description of Charges to Each
Partnership-2. Trading Managers") in a
Partner-ship's Net Assets as a whole as of
the end of each annual incentive period.

Other. . . . . . . . . . . All transaction fees and costs incurred in Transaction fees and costs have averaged
connection with each Partnership's commodity less than 1% per year of each Partnership's
trading activities (including floor brokerage average Net Assets. Such fees and costs are
fees, exchange fees, clearinghouse fees, and included in: (i) the cap on brokerage
NFA fees, "give up" or transfer fees (fees commissions; and (ii) the cap on aggregate
charged by one clearing brokerage firm to brokerage commissions, net excess interest
transfer a trading position to another clearing and compensating balance benefits, and
firm), and any costs associated with taking transaction fees and costs described above.
delivery under commodity interests.

Direct expense and Common Administrative Proportionate shares of Common
Expenses, which include printing and mailing, Administrative Expenses (which have
re-porting, legal, accounting, auditing and averaged $281,150 per annum for the period
extraordinary expenses incurred in connection January 1, 1991-June 30, 1996) are allocated
with operating the Partnerships and registering to each of the Partnerships based on the
and qualifying Units for sale to Limited number of Units of each Partnership
Partners pursuant to a current Prospectus. outstanding during the month in which such
expenses are incurred.

</TABLE>
5

<PAGE>

Based on the annual fees and expenses of Cornerstone II,
Cornerstone III and Cornerstone IV, in order for a Limited Partner to break
even (earning profits sufficient to recoup its initial investment) upon
redemption after one year, Cornerstone II, Cornerstone III and Cornerstone IV
must earn annual trading profits (after taking into account estimated
interest income based upon current rates of 5%) of $213.61, $185.80, and
$146.39, respectively per Unit. Such amount expressed as a percentage of the
selling price of a Unit of Cornerstone II, Cornerstone III and Cornerstone IV
(as of June 30, 1996) equals 7.57%, 8.17% and 4.97%, respectively, of such
Partnership's average annual Net Assets. This assumes that each Trading
Manager's gross profits equal expenses such that no incentive fees are earned
by the Trading Manager. See "Description of Charges to Each Partnership - 4.
Break Even Analysis." For the actual amount paid by each Partnership in
fiscal year 1995, for each category of expenses, see "Description of Charges
to Each Partnership."

The recent statements of financial condition of Cornerstone II, III
and IV and the related statements of operations and changes in partners'
capital are set forth beginning at page F-2 of this Prospectus. Such
financial statements describe, among other things, the fees and expenses
incurred by the Partnerships during the periods shown and are summarized
under "Selected Financial Data."

Common Expenses

The Partnerships have entered into the Dean Witter Cornerstone
Funds Exchange Agreement (the "Exchange Agreement") permitting the Limited
Partners to have the Exchange privilege described above. The Exchange
Agreement provides that Common Administrative Expenses of the Partnerships
will be shared by such Partnerships based on the number of Units of each
Partnership outstanding during the month in which such expenses are incurred,
so that each outstanding Unit will be charged at the end of a month the same
dollar amount for Common Administrative Expenses. See "The Exchange
Agreement."

Distributions

Each Partnership will make distributions, if any, at the sole
discretion of the General Partner (the General Partner has not previously
made any distribution of profits and it is currently the intention of the
General Partner not to make distributions). It is possible that no
distributions will be made in some years in which a Partnership has taxable
profits, realized or unrealized. However, a Limited Partner of such
Partnership will nevertheless be required to take his share of such profits
into income for federal tax purposes. Since it is not the practice or
intention of the General Partner to distribute any profits of the
Partnerships, investors will have to depend on redemptions or limited
transfer rights to realize on an investment in a Partnership. See "Material
Federal Income Tax Considerations."

Transferability of Units

The assignability or transferability of Units of each Partnership
is limited by the applicable Limited Partnership Agreement and no assignee or
transferee may become a substituted limited partner without the consent of
the General Partner, which consent the General Partner may withhold in its
sole discretion. See "The Limited Partnership Agreements-Restrictions on
Transfers or Assignments."

Term

Each Partnership will terminate on September 30, 2025, or upon the
election of Limited Partners owning more than 50% of its outstanding Units,
or upon the prior withdrawal, insolvency or dissolution of the General
Partner (unless a new general partner has been elected), or upon a decline in
the Net Asset Value of a Unit to less than $250, or upon a decline in the
Partnership's aggregate Net Assets to or below $250,000, or upon a
determination by the General Partner that the Partnership's aggregate Net
Assets in relation to the operating expenses of the Partnership make it
unreasonable or imprudent to continue the business of the Partnership, or
upon the occurrence of any other event which shall make it unlawful for the
Partnership to continue. Cornerstone IV will also terminate upon the
enactment of any law or adoption of any rule, regulation or policy by any
regulatory authority having jurisdiction which makes it unlawful,
unreasonable or imprudent for the principal business of the Partnership to be
continued. In certain market conditions, the Net Asset Value of a Unit could
fall to less than $250 or a Partnership's aggregate Net Assets could fall to
less than $250,000. In either case, the Partnership would terminate but the
Net Asset Value of a Unit or the Net Assets of a Partnership, as the case may
be, could decline to zero either prior to such termination or thereafter
without

<PAGE>
the Partnership being able to liquidate its positions in the
commodity futures market. See "Risk Factors Risks-Relating to Commodity
Trading and the Commodities Markets-Commodity Trading May Be Illiquid" and
"The Limited Partnership Agreements-Term of the Partnerships."

Purchase of Units Pursuant to an Exchange

Securities Available for Exchange

As of July 1, 1996, up to 14,839.443 unsold Units of Limited
Partnership Interest ("Units") were available for purchase pursuant to
Exchanges. A total of 250,000 Units were initially registered with the SEC.

Plan of Distribution

Units issued to a Limited Partner in an Exchange will be sold at a
price per Unit equal to 100% of the Net Asset Value thereof as of the Monthly
Closing. No selling commissions or other charges are payable in connection
with Exchanges.

Employees of DWR and certain Additional Sellers, if any, will
receive compensation from DWR, and not from the Partnerships, out of the
commodity brokerage commissions paid to DWR by the Partnerships. During the
period July 1995-June 1996, such compensation to employees of DWR equaled
approximately 1.63%, 1.90% and 0.77% of the average annual Net Assets of
Cornerstone II, III and IV, respectively, and resulted in average annual
payments to such persons of approximately $45, $43 and $22 per Unit of
Cornerstone II, III and IV, respectively. Such continuing compensation is in
consideration of certain additional services provided to Limited Partners by
such persons on a continuing basis and may be deemed to be additional
underwriting compensation to DWR. See "Plan of Distribution and Exchange
Procedure."

Use of Proceeds

The net proceeds received at a Monthly Closing from Exchanges of
Units will be divided among the Partnerships, based on the number of Units
issued by each Partnership in that Monthly Closing and the Net Asset Value of
each Unit issued. The net proceeds received by a Partnership in an Exchange
will be deposited in the Partnership's commodity trading accounts with DWR
and used to trade commodity futures contracts and other commodity interests.
See "Investment Program, Use of Proceeds and Trading Policies."

Interest on Partnership Assets

Each Partnership's assets are deposited with DWR in separate
commodity trading accounts established by DWR for each Trading Manager, and
are either held in non-interest-bearing bank accounts or invested in
securities approved by the Commodity Futures Trading Commission ("CFTC") for
investment of customer funds. DWR currently credits each Partnership at
month-end with interest income on 80% of such Partnership's average daily Net
Assets for the month at a rate equal to the average yield on 13-week U.S.
Treasury Bills issued during such month. In the case of Cornerstone IV, for
purposes of such interest payments, Net Assets do not include monies due the
Partnership on or with respect to forward contracts and other commodity
interests but not actually received by it from banks, brokers, dealers and
other persons. No Partnership receives interest income on the balance of its
assets held by DWR. Each Partnership's assets held by DWR may be used as
margin solely for such Partnership's trading. DWR benefits from interest
earned on the Partnerships' funds in excess of the rate paid to the
Partnerships. DWR also benefits from compensating balance treatment in
connection with its designation of a bank or banks in which the Partnerships'
assets are deposited (i.e., DWR receives favorable loan rates from such bank
or banks by reason of such deposits). It is not possible to quantify
compensating balance benefits at present; however, while it is anticipated
that such benefits will exceed the interest required to be credited to each
Partnership, it is estimated that they should not exceed 4% of each
Partnership's annual average Net Assets after such credits. To the extent
such benefits to DWR exceed the interest DWR is obligated to credit to the
Partnerships, they will not be shared with the Partnerships. Notwithstanding
the foregoing, the aggregate of (i) the brokerage commissions and transaction
fees and costs payable by a Partnership, and (ii) the net excess interest and
compensating balance benefits to DWR (after crediting the Partnership with
interest as described above) shall not exceed 14% annually of the
Partnership's average month-end Net Assets during each calendar year. See
"Investment Program, Use of Proceeds and Trading Policies."

<PAGE>
Redemption of Units

A Limited Partner may require each Partnership to redeem all or
part of his Units, effective as of the last day of any month, at 100% of the
Net Asset Value thereof on such date. A redemption may be made only in whole
Units or in multiples of $1,000 (which may result in redemption of fractional
Units), unless a Limited Partner is redeeming his entire interest in a
Partnership. The right to obtain redemptions is contingent upon the
redeeming Partnership having assets sufficient to discharge its liabilities
as of the end of the applicable month and the General Partner's receipt of a
properly executed Request for Redemption at least 15 days prior to the date
on which such redemption is to be effective. A Partnership may be forced to
liquidate open positions to satisfy redemptions in the event it does not have
sufficient cash on hand. The General Partner will endeavor to pay
redemptions within 10, and no later than 20, business days after the end of
the month and payment will generally be made by crediting the Limited
Partner's customer account with DWR. See "Redemptions."
When a Limited Partner redeems his Units, either to Exchange his
Units for Units of another Partnership or to liquidate his investment, on any
date other than the date as of which the annual incentive fee is payable by
the relevant Partnership, an accrued incentive fee, if applicable, will be
deducted from the Net Asset Value of such Units. Each Partnership will pay
its Trading Managers the incentive fee accrued on any such Units as if the
redemption date were the date on which such Partnership paid the incentive
fee. Any amount so paid to Trading Managers for such Partnership will be
deducted from any subsequent incentive fee which includes New Appreciation
allocable to such redeemed Units. See "Description of Charges to Each
Partnership-2. Trading Managers-(b) Annual Incentive Fee."
In addition to the information and reports described below under
"The Limited Partnership Agreements-Reports to Limited Partners," the General
Partner will provide Limited Partners with such other information and will
comply with any such procedures in connection with redemptions as in the
future are specifically required under Securities and Exchange Commission
("SEC") rules and policies for commodity pools and similar investment
vehicles.

Tax Considerations

In the opinion of the General Partner's tax counsel, the
Partnerships will be classified as partnerships for federal income tax
purposes and not as associations taxable as corporations. Accordingly, the
Partnerships will not be subject to federal income tax. Each Limited Partner
in computing his federal income tax liability for a taxable year will be
required to take into account his distributive share of all items of
Partnership income, gain, loss, deduction or credit for the taxable year of
each Partnership ending within or with such taxable year of the Limited
Partner, regardless of whether such Limited Partner has received any
distributions from the Partnership. Such items of Partnership gain or loss
retain their character (e.g., capital or ordinary) when allocated to the
Partners. Moreover, all such allocations will increase or decrease each
Partner's tax basis in his Units. The allocation provisions are designed to
reconcile tax allocations to economic allocations; however, no assurance can
be given that the Internal Revenue Service will not challenge such
allocation, especially in light of recently issued final regulations. See
"Material Federal Income Tax Considerations."
Cash distributions by a Partnership and amounts received or deemed
received upon the partial or complete redemption of a Limited Partner's Units
(either with respect to an Exchange of Units for Units of another Partnership
or in liquidation of part or all of a Limited Partner's investment) that do
not exceed a Limited Partner's aggregate basis in his Units are not taxable.
However, to the extent cash distributions and amounts received or deemed
received upon the partial redemption of a Limited Partner's Units exceed a
Limited Partner's aggregate tax basis in his Units, the excess will be
taxable to the Partner as though it were gain on the sale of his Units. Loss
will be recognized on a redemption of Units only if a Limited Partner redeems
or Exchanges all of his Units in a Partnership and, following the complete
redemption, such Partner has remaining tax basis in the Partnership. In such
case, the Partner will recognize loss to the extent of the remaining basis.
Subject to an exception for certain types of Partnership assets, such gain or
loss (assuming that the Units constitute capital assets) will be either
short-term capital gain or loss or long-term capital gain or loss depending
upon the length of time the Units were held prior to the distribution or
redemption. See "Material Federal Income Tax Considerations."
The General Partner has been advised that, in the opinion of its
counsel, a Limited Partner who is a nonresidential alien individual, foreign
corporation, foreign trust, or foreign estate (a "Foreign Limited Partner")
should not be engaged in a trade or business in the United States, and should
not be subject to United States federal

<PAGE>
income tax, solely because such Foreign Limited Partner is a
limited partner in a Partnership. In the event a Partnership's activities
should in the future not fall within certain safe harbors from U.S. trade or
business status, there is a risk that all of a Foreign Limited Partner's
distributive share of income of the Partnership would be treated as
effectively connected with the conduct of a trade or business in the United
States. In that event, the Foreign Limited Partner would be taxed at regular
rates applicable to U.S. taxpayers and, if a foreign corporation, could be
subject to a 30% branch profits tax. See "Material Federal Income Tax
Considerations."
Tax exempt Limited Partners, see "Purchase by Employee Benefit
Plan-ERISA Considerations."

RISK FACTORS

In addition to the Risk Disclosure Statements appearing at the
beginning of this Prospectus, Limited Partners should consider the following
risks before effecting Exchanges:

RISKS RELATING TO COMMODITY TRADING AND THE COMMODITIES MARKETS

COMMODITY TRADING IS VOLATILE. Commodity interest contract prices
are highly volatile; and the Partnerships' trading has been volatile. See
"The Cornerstone Funds-Performance Records." Price movements of commodity
interest contracts are influenced by, among other things: changing supply and
demand relationships; weather; agricultural, trade, fiscal, monetary and
exchange control programs and policies of governments; national and
international political and economic events and policies; and changes
in interest rates.

Each Partnership is also subject to the risk of failure of any of
the exchanges on which it trades or of their clearinghouses, if any. In
addition, under certain circumstances, such as the inability of a customer of
a Partnership's commodity broker or the commodity broker itself to satisfy
substantial deficiencies in such customer's account, a Partnership may be
subject to a risk of loss of its funds on deposit with such commodity broker.
See "The Commodities Markets."

COMMODITY TRADING IS HIGHLY LEVERAGED. Because of the low margin
deposits normally required in commodity interest contract trading (typically
between 2 and 15% of the value of the contract purchased or sold), an
extremely high degree of leverage is typical of a commodity trading account.
As a result, a relatively small price movement in a commodity interest
contract may result in immediate and substantial losses to the investor. For
example, if at the time of purchase 10% of the price of a contract is
deposited as margin, a 10% decrease in the price of the contract would, if
the contract is then closed out, result in a total loss of the margin deposit
before any deduction for brokerage commissions. A decrease of more than 10%
would result in a loss of more than the total margin deposit. The
Partnerships' trading is highly leveraged. See "The Commodities
Market-Margins" and "The Limited Partnership Agreements-Nature of the
Partnerships."

COMMODITY TRADING MAY BE ILLIQUID. Most United States commodity
exchanges limit fluctuations in certain commodity interest contract prices
during a single day by regulations referred to as "daily price fluctuation
limits" or "daily limits." Pursuant to such regulations, during a single
trading day no trades may be executed at prices beyond the daily limits. Once
the price of a contract for a particular commodity has increased or decreased
by an amount equal to the daily limit, positions in the commodity can be
neither taken nor liquidated unless traders are willing to effect trades at
or within the limit. Prices in various commodities have occasionally moved
the daily limit for several consecutive days with little or no trading.
Similar occurrences could prevent a Partnership from promptly liquidating its
unfavorable positions and subject it to substantial losses. While daily
limits may reduce or effectively eliminate the liquidity of a particular
market, they do not limit ultimate losses, and may in fact substantially
increase losses because they may prevent the liquidation of unfavorable
positions. There is no limitation on daily price moves in trading currency
forward contracts.

In addition, a Partnership may not be able to execute trades at
favorable prices if little trading in the contracts involved is taking place.
Under certain circumstances, a Partnership may be required to accept or make
delivery of the underlying commodity if the position cannot be liquidated
prior to its expiration date. It also is possible that an exchange or the
CFTC might suspend trading in a particular contract, order immediate
liquidation and settlement of a particular contract, or order that trading in
a particular contract be conducted for liquidation only. During periods in
October 1987, for example, trading in certain stock index futures was too
illiquid for markets to function efficiently and was at one point actually
suspended. See "The Commodities Market." The principals who deal in the
forward contract markets are not required to continue to make markets in the
forward con-

<PAGE>
tracts they trade. There have been periods during which certain
participants in forward markets have refused to quote prices for forward
contracts or have quoted prices with an unusually wide spread between the
price at which they are prepared to buy and that at which they are prepared
to sell.

SPECIAL RISKS ASSOCIATED WITH FORWARD TRADING. Each Partnership
trades in forward contracts. Cornerstone IV engages in a substantial
amount of trading in forward contracts for diverse world currencies, and
Cornerstone II and III engage in a significant amount of such trading. A
forward contract is a contractual obligation to purchase or sell a specified
quantity of a commodity at a specified date in the future at a specified
price and, therefore, is similar to a futures contract. However, forward
contracts are not traded on exchanges and, as a consequence, investors in
forward contracts are not afforded the regulatory protections of such
exchanges or the CFTC; rather, banks and dealers act as principals in such
markets. Neither the CFTC nor banking authorities regulate trading in
forward contracts on currencies, and foreign banks may not be regulated by
any United States governmental agency.

Generally, when a Trading Manager for a Partnership instructs the
Partnership to either sell or buy a particular currency, DWR will do
back-to-back principal trades in order to carry out such instructions. DWR,
as principal, will arrange bank lines of credit and contract with a United
States or foreign bank or dealer to make or take future delivery of a
specified quantity of currency at a negotiated price. DWR, again as
principal, will in turn contract with the Partnership to make or take future
delivery of the same specified quantity of currency at the same price. DWR
will charge the Partnership a transaction fee for effecting a forward contract
transaction, but will not attempt to profit from any mark-up or spread on
the trade with the Partnership.

Because performance of forward contracts is not guaranteed by any
exchange or clearinghouse, the Partnerships will be subject to the risk of
the inability or refusal to perform with respect to such contracts on the
part of the principals or agents with or through which the Partnerships
trade. Currently the sole counterparty with whom the Partnerships trade is
DWR. Any such failure or refusal, whether due to insolvency, bankruptcy or
other causes, could subject a Partnership to substantial losses. The
Partnerships and DWR will trade forward contracts only with banks, brokers,
dealers and other financial institutions which the General Partner, in
conjunction with DWR, has determined to be creditworthy.

The CFTC has published for comment in the United States Federal
Register a statement concerning its jurisdiction over transactions in the
foreign currency markets, including transactions of the type which may be
engaged in by the Partnerships. In the future, the CFTC might assert that
forward contracts of the type entered into by the Partnerships constitute
unauthorized futures contracts subject to the CFTC's jurisdiction and attempt
to prohibit the Partnerships from participating in transactions in such
contracts. If the Partnerships were restricted in their ability to trade in
the currency markets, the trading strategies of certain Trading Managers
could be materially affected.

SPECIAL RISKS ASSOCIATED WITH TRADING ON FOREIGN EXCHANGES. The
Partnerships trade in futures, forward and option contracts on exchanges
located outside the United States where CFTC regulations do not apply. Some
foreign exchanges, in contrast to domestic exchanges, are "principals'
markets" in which performance with respect to a contract is the
responsibility only of the individual member with whom the trader has entered
into a contract and not of the exchange or clearinghouse, if any. In the
case of trading on such foreign exchanges, a Partnership will be subject to
the risk of the inability of, or refusal by, the counterparty to perform with
respect to such contracts. Although DWR monitors the creditworthiness of the
foreign exchanges and clearing brokers with which it does business for
clients, DWR does not have the capability to precisely quantify the
Partnerships' exposure to risks inherent in their trading activities on
foreign exchanges, and, as a result, the risk is not monitored by DWR on an
individual client basis (including the Partnerships).

Trading on foreign exchanges may involve certain risks not
applicable to trading on United States exchanges, such as the risks of
exchange controls, expropriation, burdensome or confiscatory taxation,
moratoriums, or political or diplomatic events. In addition, certain of
these foreign markets are newly formed and may lack personnel experienced in
floor trading as well as in monitoring floor traders for compliance with
exchange rules.
Furthermore, as the Partnerships determine their respective Net
Assets in United States dollars, with respect to trading on foreign markets,
the Partnerships will be subject to the risk of fluctuation in the exchange
rate between the local currency and dollars and to the possibility of
exchange controls. Unless a Partnership hedges itself against fluctuations
in exchange rates between the United States dollar and the currencies in
which trading is done on such foreign exchanges, any profits which the
Partnership might realize in such trading could be eliminated as a result of
adverse changes in exchange rates, and the Partnership could even incur
losses as a result of any such changes. See "The Commodities
Market-Regulations."

Cornerstone II and Cornerstone III trade on the following foreign
futures exchanges: the Deutsche Terminborse,

<PAGE>

the Hong Kong Futures Exchange Ltd., the International Petroleum
Exchange of London, the London Commodity Exchange, the London International
Financial Futures Exchange Ltd., the London Metals Exchange, the Marche a
Terme International de France, the MEFF Renta Fija, the Montreal Exchange,
the Sydney Futures Exchange, the Singapore International Monetary Exchange,
the Tokyo International Financial Futures Exchange and the Tokyo Stock
Exchange. Cornerstone IV currently does not trade on any foreign exchanges.
From time to time the Partnerships may trade on other foreign exchanges.

SPECIAL RISKS ASSOCIATED WITH TRADING OF COMMODITY OPTIONS.
Options on futures contracts and options on physical commodities are traded
on United States commodity exchanges and may be traded by the Partnerships on
certain foreign exchanges. Each such option is a right, purchased for a
certain price, to either buy or sell the underlying futures contract or
physical commodity during a certain period of time for a fixed price. Such
trading involves risks substantially similar to those involved in trading
futures contracts in that options are speculative and highly leveraged.
Specific market movements of the commodities or futures contracts underlying
an option cannot accurately be predicted. The purchaser of an option is
subject to the risk of losing the entire purchase price of the option. The
writer of an option is subject to the risk of loss resulting from the
difference between the premium received for the option and the price of the
commodity or futures contract underlying the option which the writer must
purchase or deliver upon exercise of the option. See "The Commodities Market-
Commodity Options."

CORNERSTONE IV--LACK OF DIVERSIFICATION. Cornerstone II and III
each trade a large number of diverse commodities. However, Cornerstone IV
concentrates its trading exclusively in a portfolio of diverse world
currencies. Cornerstone II and III have also engaged in a significant amount
of foreign currency forward trading. In the case of Cornerstone IV, the
limitation to trading only currencies results in greater concentration of
investment, which may in turn result in increased volatility in Cornerstone
IV's performance compared with that of the other two Partnerships and the
other more diversified accounts managed by its Trading Managers. However,
some diversification of Cornerstone IV's portfolio is achieved by trading a
relatively large number of different and distinctive world currencies and by
the various relationships that are created by trading different currencies
against one another. The effect of governmental intervention may be
particularly significant at certain times in the currency markets traded by
Cornerstone IV and the other Partnerships. Such intervention (as well as
other factors) may cause such markets to move rapidly in the same direction
at certain times. Because of the possible correlation among the prices of
currencies in which Cornerstone IV trades, the lack of diversification among
different commodities in Cornerstone IV's trading may increase its
volatility. Unlike the other Partnerships, Cornerstone IV will not trade in
other commodities in the foreseeable future; diversified trading could reduce
the volatility of trading results due to differences in the factors affecting
price behavior in markets other than the currency markets. See "Differences
among the Cornerstone Funds."

THE PARTNERSHIPS HAVE CREDIT RISK TO DWR. The Partnerships have
credit risk because DWR acts as the futures commission merchant or the sole
counterparty with respect to most of the Partnerships' assets. Exchange-trade
d futures contracts are marked to market on a daily basis, with variations in
value credited or charged to a Partnership's account on a daily basis. DWR,
as futures commission merchant for each Partnership's exchange- traded
futures contracts, is required, pursuant to CFTC regulations, to segregate
from its own assets, and for the sole benefit of its commodity customers, all
funds held by DWR with respect to exchange-traded futures contracts,
including an amount equal to the net unrealized gain on all open futures
contracts. With respect to a Partnership's off-exchange-traded foreign
currency forward contracts, there are no daily settlements of variations in
value. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Financial Instruments."

POSSIBLE EFFECTS OF SPECULATIVE POSITION LIMITS. The CFTC and
United States commodity exchanges have established limits referred to as
"speculative position limits" or "position limits" on the maximum net long or
net short commodity interest position which any person or group of persons
may own, hold or control in particular commodity interest contracts.

All commodity accounts owned, controlled or managed by each Trading
Manager and its principals and affiliates will be combined for position limit
purposes, to the extent they may be applicable. The Trading Managers are the
trading advisors for other commodity pools and/or numerous individual
accounts and will in the future manage additional accounts. In this connection,
each Management Agreement provides that if speculative position limits are
exceeded by a Trading Manager or any of its principals or affiliates in the
opinion of independent counsel (who must be other than counsel to the
Partnerships) or in the opinion of the CFTC or any regulatory body, exchange,
or board, such Trading Manager and its principals and affiliates will
promptly liquidate positions in all of their accounts, including the
Partnership's account, as nearly as possible in proportion to their
respective equities to the extent necessary to comply with applicable
position limits. While each Trading Manager believes that established
position limits, where applicable, will not adversely affect its contemplated
trading for a Partnership, it is possible that, from time to time, the
trading system or instructions of a Trading Manager to a Partnership may have
to be modified, and that positions held by

<PAGE>

such Partnership may have to be liquidated, in order to avoid
exceeding such limits. Such modification or liquidation, if required, could
adversely affect the operations and profitability of a Partnership. See
"Conflicts of Interest-Management of Other Accounts by Each Trading Manager."
Each Partnership is also subject to the same speculative position limits and
may have to modify or liquidate positions if such limits are, or are about to
be, exceeded by the Partnership as a whole. Speculative position limits are
not applicable to forward contract trading, although the principals with
which DWR or a Partnership may deal in the forward markets may limit the
positions available to DWR or the Partnerships as a consequence of credit con-
siderations.

RISKS RELATING TO THE PARTNERSHIPS

PAST RESULTS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE.
Investors must consider the uncertain significance of past performance in
determining whether or not to Exchange Units of one Partnership for Units in
another Partnership, and should not place any substantial degree of reliance
on the past performance records of the Trading Managers or the Partnerships.
It should not be assumed that trading decisions made by the Trading Managers
in the future will be profitable or will result in performance for the
Partnerships comparable to such Trading Managers' past performance.
Neither the past performance results of the Trading Managers nor
the past performance results of the Partnerships are necessarily indicative
of the future performance of the Partnerships.

SUBSTANTIAL CHARGES TO EACH PARTNERSHIP. Each Partnership incurs
substantial charges from payment of brokerage commissions to DWR, management
and incentive fees to its Trading Managers, its direct expenses and its share
of Common Administrative Expenses pursuant to the Exchange Agreement. For the
years ended December 31, 1995, 1994 and 1993: (i) Cornerstone II had total
expenses of $3,722,106, $3,926,437, and $3,161,539, respectively; (ii)
Cornerstone III had total expenses of $5,851,246, $6,988,456, and $7,462,328,
respectively; and (iii) Cornerstone IV had total expenses of $7,560,205,
$10,864,240, and $13,603,400, respectively. Based on the annual fees and
expenses of Cornerstone II, III and IV during the period from January
1991-June 1996 (note that only the management fees are fixed and that brokerage
commissions and transaction fees and costs are capped, but not otherwise
fixed), Cornerstone II, Cornerstone III and Cornerstone IV will be required
to earn annual net trading profits (after taking into account estimated
interest income based upon current rates of 5%) of 7.57%, 8.17% and 4.97%,
respectively, of such Partnership's average annual Net Assets in order to
break even (earning profits sufficient to recoup an investor's initial
investment after one year). Each Partnership will be required to earn gross
profits in excess of such amounts before realizing any net profits. See
"Description of Charges to Each Partnership."

RESTRICTED INVESTMENT LIQUIDITY IN THE UNITS. The Units cannot be
assigned or transferred except on the terms and conditions set forth in each
Limited Partnership Agreement, and there is and will be no public market for
the Units. See "The Limited Partnership Agreements--Restrictions on
Transfers or Assignments." Limited Partners of a Partnership may require such
Partnership to redeem all or part of their Units as of the last day of any
month at the Net Asset Value thereof. However, redemptions may be made only
in whole Units or in multiples of $1,000, unless a Limited Partner is
redeeming his entire interest in a Partnership. The right to obtain payment
on redemption is contingent upon (a) the Partnership having assets sufficient
to discharge its liabilities on the effective date of the redemption, and (b)
the receipt by the General Partner of a Request for Redemption in the form
annexed to the Limited Partnership Agreement (or any other form approved by
the General Partner) at least 15 days prior to the date on which such
redemption is to be effective. All liabilities of the Partnerships are
accrued daily and are reflected in the daily Net Asset Value of the
Partnerships. Under certain circumstances (including, but not limited to, a
Partnership's inability to liquidate or a delay in liquidating positions or
the default or delay in payments due a Partnership from dealers, brokers,
banks, or other persons), a Partnership may delay payment to Limited Partners
requesting redemptions of the proportionate part of the redemption requests
represented by the sums which are the subject of any such default or delay.
See "Redemptions."

CONFLICTS OF INTEREST IN THE PARTNERSHIPS' STRUCTURE. Actual and
potential conflicts of interest exist in the structure and operation of each
Partnership's business. These conflicts include (a) the conflict between the
duties of the General Partner and each Trading Manager to act in the best
interests of each Partnership, and the advantage to the General Partner, as
an affiliate of the commodity broker for each Partnership, resulting from the
trading of each Partnership's account by its Trading Managers, and (b) the
probable competition with each Partnership by the General Partner, each
Trading Manager and other commodity pools organized, managed or advised by
such persons, their principals or affiliates, and customers (including
officers, directors and employees of the General Partner and DWR). See
"Conflicts of Interest," "The Trading Managers" and "The Commodity Broker."

LIMITED PARTNERS DO NOT PARTICIPATE IN MANAGEMENT. Limited
Partners do not participate in the manage

<PAGE>
ment of a Partnership or in the conduct of its business. See "The
Limited Partnership Agreements-Management of Partnership Affairs." However,
each Limited Partnership Agreement provides that certain actions may be taken
upon the affirmative vote of Limited Partners owning more than 50% of the
Units then owned by Limited Partners, provided that no such action may be
taken unless independent counsel (who must be other than counsel to the
Partnership) has rendered an opinion to the effect that the action to be
taken will not adversely affect the limited liability of the Limited Partners
or the federal tax status of the Partnership and that the action is permitted
under the New York Uniform Limited Partnership Act (the "Partnership Act")
(or, in lieu thereof, a court of competent jurisdiction has rendered a final
order to such effect). See "The Limited Partnership Agreements-Amendments;
Meetings."

RELIANCE ON THE GENERAL PARTNER. A Limited Partner is relying on
the ability of the General Partner to select and monitor the Trading Managers
for each Partnership, including the existing Trading Managers and any new
Trading Managers retained by the General Partner. The selection by the
General Partner of the current Trading Managers for each Partnership involved
numerous considerations. The General Partner evaluated the performance
record of each Trading Manager and determined which Trading Managers were
suitable for a Partnership's trading policies and investment objectives. The
General Partner reviewed other aspects of each Trading Manager (including the
prospective Trading Manager's trading system, experience, volatility of
trading, commodities traded, amount of management and incentive fees normally
charged, reputation of the Trading Manager and its personnel, and amount of
funds under management), and made certain subjective judgments in retaining
Trading Managers for each Partnership. Although the General Partner
carefully weighed the above factors in making its selections, other factors
not considered by the General Partner may also be important. The General
Partner has terminated and replaced Trading Managers in the past, and in the
future, it may be required to terminate and replace Trading Managers, or
retain additional Trading Managers, by reason of poor performance or for
other reasons. See "Differences among the Cornerstone Funds."

RISKS RELATING TO THE TRADING MANAGERS

RELIANCE ON THE TRADING MANAGERS. Under each Management Agreement,
each Trading Manager has exclusive responsibility for making trading
decisions with respect to the Net Assets of a Partnership allocated to it,
except in certain limited situations. No assurance can be given that the
respective trading systems and strategies utilized by the Trading Managers will
prove successful under all or any market conditions.

INFLUENCES ON TRADING STRATEGIES. Any factor which may lessen the
prospect of major trends in the future (for example, increased governmental
control of, or participation in, the currency markets) may reduce the Trading
Managers' ability to trade profitably in the future. Any factor which would
make it more difficult to execute timely trades, such as a significant
lessening of liquidity in a particular market, would also be detrimental to
profitability. As a result of these factors and the general volatility of
commodity interests markets, investors should view their investment as long
term (at least two years) in order to permit the strategies of the Trading
Managers to function over time. Further, Trading Managers may alter their
strategies from time to time in an attempt to better evaluate market
movements. As a result of such periodic modifications, it is possible that
the trading strategies used by the Trading Managers in the future may be
different from those presently in use. There appears to be a tendency for the
rates of return achieved by commodity trading advisors to diminish as equity
under management increases. None of the Trading Managers has agreed to limit
the amount of additional equity which it may manage. There can be no
assurance whatsoever as to the effect such increased equity will have on
performance. Moreover, somewhat different trading strategies may be required
for accounts of differing sizes or trading objectives.

NEW TRADING MANAGERS. The General Partner in the future may
designate additional Trading Managers to manage the funds of a Partnership
and may reallocate funds among the Trading Managers for each Partnership or
among a particular Trading Manager's trading systems. There is no maximum or
minimum limit on the amount of funds which may be allocated to a Trading
Manager, although certain Trading Managers have the right to reject
additional funds. Under certain circumstances, the General Partner will have
to obtain the prior consent of the Trading Managers for Cornerstone IV before
appointing additional Trading Managers for that Partnership. See "The
Management Agreements." A portion of the Net Assets of each Partnership may
be subject to management by Trading Managers and/or trading systems that have
not yet been chosen by the General Partner. Such additional Trading Managers
and/or trading systems would be selected without prior notice to, or approval
from, Limited Partners, who will not have the opportunity to review the
performance record of newly appointed Trading Managers prior to their
appointment or the performance record of such systems prior to their
implementation.

EXPIRATION OR TERMINATION OF MANAGEMENT AGREEMENTS. The Management
Agreement with each Trading Manager will continue in effect for a specified
period and thereafter will be renewed automatically for an additional term
unless any party thereto, upon written notice timely given, notifies the
other party of its intention

<PAGE>

not to renew. In addition, each Management Agreement is terminable
by the Partnership at any time without penalty on prior written notice timely
given and under certain other circumstances. See "The Management
Agreements." Upon the expiration or termination of a Management Agreement,
the General Partner will attempt to renegotiate such Agreement or make other
arrangements for providing trading advice as long as the affected Partnership
intends to continue trading. In the selection of any Trading Manager upon
the expiration or termination of a Management Agreement (including any
retention of a Trading Manager thereafter), the General Partner will take
into account all relevant factors, including the prospective Trading
Manager's trading performance, experience, volatility of trading, commodities
traded, amount of management and incentive fees normally charged, reputation
of the Trading Manager and its personnel, and amount of funds under
management, as well as the trading policies and investment objectives of the
relevant Partnership. The General Partner will attempt to enter into a
management agreement with each Trading Manager which is substantially similar
to the Management Agreements described in this Prospectus; however, there can
be no assurance that the services of a Trading Manager will be available on
the same or similar terms.

DISTORTIONS PRODUCED BY ANNUAL INCENTIVE FEE ARRANGEMENT. Each
Partnership has agreed to pay its Trading Managers an annual incentive fee
based on New Appreciation at the end of its annual incentive period. When
such incentive fee is paid by a Partnership, each outstanding Unit owned by a
Limited Partner of such Partnership will pay a proportionate amount of such
incentive fee. Such arrangement creates distortions in the case of a Limited
Partner who redeems or Exchanges Units at any time other than at the end of
an incentive period. For example, since incentive fees are accrued at the
end of each month, a Limited Partner redeeming Units or effecting an Exchange
at the end of a month when there is an accrued incentive fee will be charged
an incentive fee. If the Partnership's New Appreciation subsequently
declines, such Limited Partner will pay a disproportionate amount of the
incentive fee relative to the amount that other remaining Limited Partners
actually pay at the end of an incentive period. Conversely, a Limited
Partner who purchases Units in an Exchange during an incentive period may be
charged an incentive fee at the end of such period even though the value of
his Units has remained the same or declined since purchase. On the other
hand, a Limited Partner may purchase Units in an Exchange following a decline
in Net Assets and may experience an increase in the value of such Units
without being charged an incentive fee at the end of such period. See
"Description of Charges to Each Partnership."

THE EFFECT OF MULTIPLE TRADING MANAGERS. The Trading Managers for
each Partnership make trading decisions independent of each other. Thus,
there is the possibility that a Partnership could hold opposite positions in
the same or similar commodity interests contracts at or about the same time
or during the same period of time, with no net change in holdings. The
General Partner has not prepared combined composite performance records of
the Trading Managers for each Partnership which analyze if this has in the
past or might in the future occur. There is also the possibility that
Trading Managers for one or more Partnerships may from time to time enter
identical orders and, therefore, compete for the same trades. This
competition could prevent the orders from being executed at desired prices.
The performance record of each Trading Manager does not reflect the impact
that such factors may have on the overall performance of a Partnership.

UNEQUAL ALLOCATION OF A PARTNERSHIP'S ASSETS AMONG TRADING
MANAGERS. The Net Assets of a Partnership may be allocated unequally among
its Trading Managers and this may affect the performance results of such
Partnership. For example, a Trading Manager may experience a high monthly
rate of return but may only be managing a small percentage of a Partnership's
Net Assets. In this case, such Trading Manager's performance could have an
insignificant effect on the Net Assets of a Partnership and the Net Asset
Value of its Units. See The "Management Agreements." The General Partner has
generally reallocated the assets of the Partnerships unequally among its
Trading Managers, and this may have the effect described above. Furthermore,
in the case of certain Trading Managers which trade several different
systems, the General Partner may reallocate the assets allocated to a Trading
Manager among such Trading Manager's trading systems. Consequently, the
assets of a particular Partnership may be allocated unequally among a Trading
Manager's trading systems, and this, too, may affect the performance results
of the Partnership in the manner described above. See "The Trading
Managers." Although each Trading Manager's margin requirements and brokerage
commissions will be satisfied from the Net Assets of a Partnership allocated
to such Trading Manager, a Trading Manager may incur losses of such magnitude
that it is unable to meet margin calls from the Net Assets allocated to it.
If this occurs, the General Partner is authorized under each Management
Agreement to reallocate funds among the Trading Managers for each Partnership
and may be required to take funds from more successful Trading Managers.
This could adversely affect the performance of such other Trading Managers
and the Partnership.

NEW TRADING MANAGERS MAY BE ADDED. The General Partner, in the
future, may designate additional Trading Managers to manage the funds of a
Partnership and may reallocate funds among the Trading Managers

<PAGE>

for each Partnership or among a particular Trading Manager's
trading systems. There is no maximum limit on the amount of funds which may
be allocated to a Trading Manager. A portion of the Net Assets of each
Partnership may in the future be subject to management by Trading Managers
and/or trading systems that have not yet been chosen by the General Partner.
Such additional Trading Managers and/or trading systems would be selected
without prior notice to, or approval from, Limited Partners, who will not
have the opportunity to review the performance record of newly appointed
Trading Managers prior to their appointment or the performance record of such
systems prior to their implementation.

TAXATION AND REGULATORY RISKS

POSSIBILITY OF TAXATION AS A CORPORATION. The General Partner has
been advised by its legal counsel, Cadwalader, Wickersham & Taft, that under
current United States federal income tax (hereinafter "federal income tax")
laws and regulations, each Partnership will be classified as a partnership and
not as an association taxable as a corporation. That status has not been
confirmed by a ruling from, and such advice is not binding upon, the United
States Internal Revenue Service (the "Internal Revenue Service"). No such
ruling has been or will be requested. The facts and authorities relied upon
by counsel in their opinion may change in the future. If a Partnership were
taxed as a corporation for federal income tax purposes, income or loss of
such Partnership would not be passed through to Partners and the Partnership
would be subject to tax on its income at the rates of tax applicable to
corporations, without any deductions for distributions to the Partners. In
addition, all or a portion of distributions made to the Partners could be
taxable as dividends or capital gains. See "Material Federal Income Tax
Considerations."

PARTNERS' TAX LIABILITY MAY EXCEED DISTRIBUTIONS. If a Partnership
realizes profit for a taxable year, such profit will be taxable to the
Partners in accordance with their distributive shares of Partnership profit,
whether or not the profit actually has been distributed to its Partners.
Accordingly, taxes payable by Partners with respect to Partnership profit may
exceed the amount of Partnership distributions, if any, for a taxable year.
Further, a Partnership may sustain losses offsetting such profit in a
succeeding taxable year, so that Partners may never receive the profit on
which they were taxed in the prior year. See "Material Federal Income Tax
Considerations."
POSSIBLE LIMITATION ON DEDUCTION OF CERTAIN EXPENSES. The
deductibility of certain miscellaneous itemized deductions is limited to the
extent such expenses exceed 2% of the adjusted gross income of an individual,
trust or estate. In addition, certain of an individual's itemized deductions
are reduced by an amount equal to the lesser of (i) 3% of such individual's
adjusted gross income over a certain threshold amount and (ii) 80% of such
itemized deductions. Based upon the activities of the Partnerships, the
General Partner has been advised by its legal counsel that various expenses
incurred by the Partnerships should not be subject to these limitations
except to the extent that the Internal Revenue Service promulgates
regulations that so provide. See "Material Federal Income Tax
Considerations."

POSSIBILITY OF TAX AUDIT. There can be no assurance that the
Partnerships' tax returns will not be audited by the Internal Revenue Service
or that adjustments to such returns will not be made as a result of such
audits. If an audit results in an adjustment, Limited Partners may be
required to file amended returns (which may themselves also be audited) and
to pay back taxes plus interest and/or penalties that may then be due. See
"Material Federal Income Tax Considerations."

ABSENCE OF REGULATIONS APPLICABLE TO SECURITIES MUTUAL FUNDS AND
THEIR ADVISERS. The Partnerships are not registered as investment companies
or "mutual funds" under the Investment Company Act of 1940, as amended (or
any similar state law), and neither the General Partner nor any Trading
Manager is registered as an investment adviser under the Investment Advisers
Act of 1940, as amended (or any similar state law). Investors, therefore, are
not accorded the protective measures provided by such legislation. However,
in accordance with the provisions of the Commodity Exchange Act, as amended
(the "CEAct"), the regulations of the CFTC thereunder and the NFA rules, the
General Partner is registered as a commodity pool operator, the Trading
Managers are registered as commodity trading advisors, and DWR is registered
as a futures commission merchant, each subject to regulation by the CFTC and
each a member of the NFA in such respective capacities.

THE FOREGOING RISK FACTORS DO NOT PURPORT TO BE A COMPLETE
EXPLANATION OF ALL OF THE RISKS INVOLVED IN AN INVESTMENT IN THE
PARTNERSHIPS. LIMITED PARTNERS SHOULD READ THIS PROSPECTUS IN ITS ENTIRETY
BEFORE DETERMINING WHETHER TO EFFECT EXCHANGES.

<PAGE>
CONFLICTS OF INTEREST

RELATIONSHIP OF THE GENERAL PARTNER TO THE COMMODITY BROKER

The General Partner is a wholly-owned subsidiary of Dean Witter,
Discover & Co., a principal subsidiary of which, DWR, acts as the commodity
broker for each Partnership pursuant to a Customer Agreement. In such
capacity, DWR receives brokerage commissions for commodity transactions
effected for each Partnership pursuant to the instructions of its Trading
Managers. Because the General Partner is an affiliate of DWR, there has been
no arm's-length negotiation of brokerage commission rates applicable to any
Partnership transactions. Moreover, the General Partner has a disincentive
to replace DWR as the commodity broker for the Partnerships. Most customers
of DWR who maintain commodity trading accounts over $1,000,000 pay
commissions at negotiated rates which are substantially less than the rate
which is paid by each Partnership. Seventeen of the 23 currently active
commodity pools for which Demeter acts as general partner are charged
brokerage commissions on a roundturn basis (i.e., a charge for entering and
exiting each commodity interest transaction), and six of such commodity pools
are charged flat-rate asset-based brokerage fees.

While each Customer Agreement is nonexclusive, so that each
Partnership has the right to seek lower commission rates from other brokers
at any time, the General Partner believes that the Customer Agreement and
other arrangements between each Partnership and DWR are fair, reasonable and
competitive, and represent the best price and services available, considering
the matters discussed in this paragraph below and in the immediately
succeeding paragraph. The General Partner, an affiliate of DWR, provides
ongoing services to the Partnerships, which include evaluating, retaining,
monitoring and terminating Trading Managers for the Partnerships and
administering the redemption and Exchange of Units, and the General Partner
has financial obligations as the general partner of the Partnerships. A
significant portion of the brokerage commissions paid to DWR by each
Partnership will be paid by DWR to its employees and certain Additional
Sellers for providing continuing assistance to Limited Partners to whom they
have sold Units. Such DWR employees and Additional Sellers who provide
continuing advice to Limited Partners as to when and whether to redeem or
Exchange Units may have a conflict of interest by reason of their receipt of
a portion of the brokerage commissions paid to DWR by the Partnerships.
The General Partner has reviewed, and will continue to review, the
brokerage arrangements at least annually to ensure that they are fair,
reasonable and competitive, and that they represent the best price and
services available, taking into consideration the size and trading activity
of each Partnership and the services provided, and costs, expenses, and risk
borne, by DWR and the General Partner. See "The Commodity Broker" and
"Fiduciary Responsibility."

Each Partnership trades in currency forward contracts. Cornerstone
II, III and IV each engage in differing amounts of trading in the forward
markets and may do so through affiliates of the General Partner (all of the
Partnerships' forward trading is currently done through DWR). Such forward
trading may also be done through other dealers which are not affiliated with
the General Partner under certain circumstances. See "Risk Factors-Risks
Relating to Commodity Trading and the Commodities Markets-Forward Trading."
The General Partner has a conflict of interest in selecting its affiliates as
the parties with and through which the Partnerships will execute their
forward trades and selecting other entities which might be able to make a
better price or superior execution available to the Partnerships. The
General Partner will review the Partnerships' forward trading arrangements on
an annual basis in an attempt to determine whether such arrangements are
competitive with those of other comparable pools in light of the
circumstances. See "Risk Factors-Risks Relating to Commodity Trading and the
Commodities Markets-Forward Trading" and "The Commodities Market." Each
Trading Manager has complete discretion to determine which trades the
Partnership should make in futures contracts and other commodity interests in
respect of the funds allocated to the Trading Manager, and the General
Partner has no authority to intervene in the selection of trades, except to
override trading instructions which would result in a violation of the
Partnership's trading policies or to the extent necessary to fund any
distributions, redemptions, Exchanges or reallocations among Trading Managers
or to pay expenses of the Partnership. Since the General Partner is an
affiliate of DWR, the General Partner has a conflict of interest between its
responsibility to prevent each Trading Manager from engaging in excessive
trading and its interest in allowing each Trading Manager to generate
brokerage commissions for the benefit of DWR up to, but not exceeding, the
caps on brokerage commissions.

DWR and the General Partner may, from time to time, be subject to
conflicting demands in respect of their obligations to the Partnerships and
other commodity pools. Also, certain pools may generate larger brokerage
commissions to DWR, resulting in increased payments to DWR employees. Since
DWR employees may receive

<PAGE>
greater compensation from the sale of units of one pool over
another, such employees are subject to a conflict of interest in providing
advice to Limited Partners.

ACCOUNTS OF AFFILIATES OF THE GENERAL PARTNER

While the General Partner does not trade futures interests for its
own account (other than indirectly as a consequence of its position as
general partner of commodity pools), certain of the officers, directors and
employees of the General Partner and DWR, their affiliates, and officers,
directors and employees of such affiliates, may from time to time trade
commodity futures contracts and other commodity interests for their own
proprietary accounts. In addition, DWR is a large futures commission merchant
, handling substantial customer business in physical commodities and futures
contracts, and is a clearing member of all major commodity exchanges in the
United States. Thus, DWR may effect transactions for the account of each
Partnership in which the other parties to the transactions are officers,
directors, affiliates, employees, customers or correspondents of DWR or the
General Partner. Such persons might also compete with a Partnership in
bidding on purchases or sales of contracts without knowing that such
Partnership is also bidding. Transactions for the officers, directors,
affiliates, employees, customers and correspondents of DWR or the General
Partner might be effected when similar trades for one or more Partnerships
are not executed or are executed at less favorable prices. Limited Partners
will not be permitted to inspect the trading records of the General Partner,
DWR or persons related to them in light of their confidential nature.

The Limited Partnership Agreements provide that no person may
receive, directly or indirectly, any advisory, management, or incentive fee
for investment advice who shares or participates in commodity brokerage
commissions from transactions with the Partnerships. No commodity broker for
the Partnerships may pay, directly or indirectly, rebates or "give-ups" to
the General Partner or any Trading Manager, and such prohibitions may not be
circumvented by any reciprocal business arrangements.

MANAGEMENT OF OTHER ACCOUNTS BY EACH TRADING MANAGER

Each Management Agreement allows the Trading Manager to manage
commodity accounts in addition to the Partnership's account. Each Trading
Manager and its principals and affiliates may at any time be trading their
own proprietary accounts, advising accounts for other commodity pools and/or
individual customers, and operating other commodity pools and will continue
such activities in the future. Some Trading Managers may also operate more
than one trading system in their management of accounts, some of which
systems may not be used in trading for the Partnerships. Such other trading
systems have in the past and may in the future experience significantly
different performance results than the systems used in trading for the
Partnerships. A Trading Manager may have a conflict of interest in rendering
advice because its compensation for managing some other accounts may exceed
its compensation for managing the Partnership's account, and therefore may
provide an incentive to favor such other accounts. Moreover, if a Trading
Manager makes trading decisions for such accounts and the Partnership's
account at or about the same time, the Partnership may be competing with such
other accounts for the same or similar positions. While the records of the
Trading Manager's own account and accounts managed by it will not be made
available to Limited Partners, each Management Agreement permits the General
Partner access to such records in order to determine that the Partnership's
account is traded fairly. Each Management Agreement also provides that the
Trading Manager will deal with the Partnership in a fiduciary capacity to the
extent recognized by applicable law and will not enter into transactions
where it knowingly or deliberately favors itself or another client over the
Partnership.

CUSTOMER AGREEMENT WITH DWR

Each Partnership has opened a separate commodity trading account
with DWR for each of its Trading Managers pursuant to its Customer Agreement.
Under each such agreement, all funds, commodities and securities positions
and credits carried for each Partnership are held as security for such
Partnership's obligations to DWR; the margins required to initiate or
maintain open positions will be as from time to time established by DWR; and
DWR may close out positions, purchase commodities or cancel orders at any
time it deems necessary for its protection, without the consent of the
Partnership. Each Partnership also has agreed to indemnify and defend DWR,
its stockholders, employees, officers, directors and affiliates against
certain liabilities incurred by them by reason of acting as such
Partnership's commodity broker. DWR, the General Partner or the Limited
Partners of the Partnership by majority vote (subject to receipt of opinion
of independent legal counsel that such vote would not constitute participation
in the control of the Partnership's business and thus

<PAGE>
deny the Limited Partners limited liability) may terminate the
brokerage relationship and close the Partnership's commodity account at DWR
at any time upon 60 days' notice. If so terminated, the Partnership would
have to negotiate a new customer agreement with a commodity broker upon terms
and conditions, including brokerage commission rates, which cannot now be
determined.

OTHER COMMODITY POOLS

The General Partner is or has been the general partner for 25 other
commodity pools. DWR is the commodity broker for such pools and several other
commodity pools. Each may in the future establish and/or be the general
partner or commodity broker for additional commodity pools, and any such
pools may be said to be in competition with the Partnerships in that any one
or more such pools might compete with the Partnerships for the execution of
trades.

FIDUCIARY RESPONSIBILITY

Investors should be aware that the General Partner has a fiduciary
duty under the Partnership Act to the Limited Partners of each Partnership to
exercise good faith and fairness in all dealings affecting such Partnership.
The General Partner's fiduciary duty to the Limited Partners under each
Limited Partnership Agreement is in accordance with the fiduciary duty owed
to limited partners by a general partner under New York law. The Limited
Partnership Agreements prohibit the Limited Partners from limiting, by any
means, the fiduciary duty of the General Partner owed to the Limited Partners
under statutory or common law. In the event that a Limited Partner believes
that the General Partner has violated its responsibility, such Limited
Partner may seek legal relief for himself and all other similarly situated
Limited Partners or on behalf of the Partnership under the Partnership Act,
the CEAct, applicable federal and state securities laws and other applicable
laws to recover damages from, or to require an accounting by, the General
Partner. The Trading Managers for each Partnership have a fiduciary duty
under applicable law to that Partnership.

Each Partnership has agreed to indemnify the General Partner and
its stockholder, directors, officers, employees and controlling persons for
actions or omissions relating to such Partnership, and also has agreed to
indemnify each Trading Manager, and their respective stockholders, directors,
officers and employees against all liabilities incurred in the performance of
services for such Partnership, provided that in each case such actions or
omissions were not the result of bad faith, misconduct or negligence or were
done in good faith in the reasonable belief that the actions or omissions
were in, or not opposed to, the best interests of such Partnership, and
provided, further, that in any action brought by a Limited Partner in the
right of the Partnership, the General Partner may only be indemnified to the
extent and subject to the conditions specified in the Partnership Act. Each
Partnership has agreed to certain other indemnities of its Trading Managers
in connection with the offer and sale of Units. See "The Management
Agreements." Under the terms of each Limited Partnership Agreement, no
indemnification of the General Partner or its affiliates by the Partnership
will be permitted for losses resulting from liabilities incurred for
violation of federal or state securities laws in connection with the
registration, offer or sale of the Units.
Each Partnership has agreed to certain other indemnities of its
respective Trading Managers in connection with the offer and sale of Units
arising from material misrepresentations or omissions unrelated to the
Trading Managers.
DWR assumes no responsibility under the Customer Agreement except
for rendering in good faith the services required of it thereunder. The
Customer Agreement provides that DWR, its stockholder, directors, officers,
employees and its or their respective successors or assigns will not be
liable to a Partnership, its partners or any of its or their respective
successors or assigns except by reason of acts of, or omissions due to, bad
faith, misconduct or negligence, or for not having acted in good faith in the
reasonable belief that such actions or omissions were in, or not opposed to,
the best interests of the Partnership, or by reason of any material breach of
the Customer Agreement. The Customer Agreement also provides that each
Partnership will indemnify DWR, its stockholder, directors, officers,
employees and its or their respective successors or assigns from and against
all liabilities incurred in the performance of the services required by the
Customer Agreement, provided that a court upon entry of final judgment finds
(or, if no final judgment is entered, by an opinion rendered to the
Partnership by independent counsel) that such liability was not the result of
bad faith, misconduct or negligence or that the conduct which was the basis
for such liability was done in the good faith belief that it was in, or not
opposed to, the best interests of the Partnership. The Customer Agreement
also provides

<PAGE>

that DWR will indemnify each Partnership, the partners of the
Partnership and its or their respective successors or assigns from and
against all liabilities incurred as a result of the performance of the
services required by the Customer Agreement, provided that such liability
arises from conduct of DWR which has been found by a court upon entry of
final judgment (or, if no final judgment is entered, by an opinion rendered
to the Partnership by independent counsel) to be the result of bad faith,
misconduct or negligence, or for conduct not done in the good faith belief
that it was in, or not opposed to, the best interests of the Partnership or
by reason of any material breach of the Customer Agreement. Note that, with
respect to indemnification for liabilities arising under the 1933 Act for
directors, officers or controlling persons of the Partnership or the General
Partner, it is the opinion of the SEC that such indemnification is against
public policy, as expressed in the 1933 Act, and is therefore unenforceable.
The CFTC has issued a statement of policy relating to indemnification of
officers and directors of a futures commission merchant and its controlling
persons under which the CFTC has taken the position that whether such an
indemnification is consistent with the policies expressed in the CEAct will
be determined by the CFTC on a case-by-case basis.

THE CORNERSTONE FUNDS

Cornerstone II and III were formed as limited partnerships on
December 7, 1983 and commenced trading operations on January 2, 1985, while
Cornerstone IV was formed as a limited partnership on December 11, 1986 and
commenced trading operations on May 1, 1987. The Partnerships are each
currently engaged in the speculative trading of a diverse group of commodity
interest contracts. Each Partnership trades pursuant to the trading systems,
method, and strategies utilized by the Trading Managers retained by the
General Partner for each Partnership as described under "The Trading
Managers."

THE OFFERING OF UNITS

In January 1985, Cornerstone II and III commenced their Continuing
Offering of unsold Units and in May 1987, Cornerstone IV joined that
Continuing Offering. Capital contributions from the sale of Units have been
accepted by such Partnerships at the 136 Monthly Closings held as of June 30,
1996. As of July 1, 1996, there were 14,675.65 unsold Units available for
Exchange.

As of June 30, 1996, Cornerstone II has sold an aggregate of
41,586.710 Units and received net proceeds of $65,253,651. Included in these
numbers are Exchanges of Units in Cornerstone III and IV for Units in
Cornerstone II. As of June 30, 1996, Cornerstone II had Net Assets of
$28,942,618 and the Net Asset Value of a Unit thereof was $2,823.08.

As of June 30, 1996, Cornerstone III has sold an aggregate of
74,394.567 Units and received net proceeds of $137,103,376. Included in these
numbers are Exchanges of Units in Cornerstone II and IV for Units in
Cornerstone III. As of June 30, 1996, Cornerstone III had Net Assets of
$39,178,794 and the Net Asset Value of a Unit thereof was $2,275.15.

As of June 30, 1996, Cornerstone IV has sold an aggregate of
100,499.637 Units and received net proceeds of $167,510,620. Included in these
numbers are Exchanges of Units in Cornerstone II and Cornerstone III for
Units in Cornerstone IV. As of June 30, 1996, Cornerstone IV had Net Assets
of $97,586,050 and the Net Asset Value of a Unit thereof was $2,947.54.

In connection with the offering of Units, the General Partner
contributed $511,389, $749,244 and $1,549,805 to Cornerstone II, III and IV,
respectively, and, as of June 30, 1996, the General Partner owned 217.400,
382.103 and 638.889 Units of General Partnership Interest in Cornerstone II,
III and IV, respectively. As of June 30, 1996, Cornerstone II had 3,598
Limited Partners, Cornerstone III had 6,233 Limited Partners, and Cornerstone
IV had 10,533 Limited Partners.

Prior to October 1, 1994, DWR was reimbursed by the Partnerships
for certain continuing offering expenses by means of a "Continuing Expense
Charge" added to the sales price of Units sold in the Continuing Offering.
DWR has been reimbursed in full for the initial offering expenses of
Cornerstone II, III and IV, and as of June 30, 1996, had approximately
$113,930 in excess reimbursed continuing offering expenses. During the
Continuing Offering, DWR has been able to contribute periodically aggregate
excess reimbursement of $1,418,000 to the Partnerships (which includes amounts
to Cornerstone I) as follows: Cornerstone II, $264,079; Cornerstone III,
$633,109; and Cornerstone IV, $379,335. Because the sale of Units to
investors (other than pursuant to Exchanges) has been terminated, DWR will not
collect any additional continuing expense charges.

<PAGE>
PERFORMANCE RECORDS

PERFORMANCE OF DEAN WITTER CORNERSTONE FUND II

Capsule I sets forth the actual performance record of Cornerstone
II from January 1, 1991 through June 30, 1996. As of the date of this
Prospectus, all funds received at Monthly Closings have been allocated
two-thirds to JWH and one-third to Abacus. As of the date of this
Prospectus, the funds allocated to JWH are allocated to the Original
Investment Program, the Global Diversified and the International Foreign
Exchange Program. In the future, allocations and/or reallocations may be
made among such systems and/or additional systems. See "The Trading
Managers-Dean Witter Cornerstone Fund II."

PERFORMANCE OF DEAN WITTER CORNERSTONE FUND III

Capsule II sets forth the actual performance record of Cornerstone
III from January 1, 1991 through June 30, 1996. As of the date of this
Prospectus, Sunrise will receive approximately one-half, and WISC and Abraham
will each receive approximately one-quarter, of the proceeds of any Exchanges
of Cornerstone III. See "The Trading Managers-Dean Witter Cornerstone Fund
III."

PERFORMANCE OF DEAN WITTER CORNERSTONE FUND IV

Capsule IV sets forth the actual performance record of Cornerstone
IV from January 1, 1991 through June 30, 1996. Since the commencement of
trading on May 1, 1987, Cornerstone IV's trading has been directed by its
initial two Trading Managers, JWH and Sunrise. See "The Trading
Managers-Dean Witter Cornerstone Fund IV." As of the date of this
Prospectus, all funds received by Cornerstone IV at Monthly Closings have
been allocated equally among its Trading Managers, except for certain periods
in which the General Partner allocated assets between JWH and Sunrise based
on their respective percentage of total assets managed.

_______________

INVESTORS ARE CAUTIONED THAT THE INFORMATION SET FORTH IN CAPSULES
I, II AND III AND THE FOOTNOTES THERETO IS NOT INDICATIVE OF, AND HAS NO
BEARING ON, ANY TRADING RESULTS WHICH MAY BE ATTAINED BY CORNERSTONE II, III
AND IV, RESPECTIVELY, IN THE FUTURE, SINCE PAST RESULTS ARE NOT A GUARANTEE
OF FUTURE RESULTS. THERE CAN BE NO ASSURANCE THAT ANY PARTNERSHIP WILL MAKE
ANY PROFITS AT ALL OR WILL BE ABLE TO AVOID INCURRING SUBSTANTIAL LOSSES.
INVESTORS SHOULD ALSO NOTE THAT INTEREST INCOME MAY CONSTITUTE A SIGNIFICANT
PORTION OF A COMMODITY POOL'S TOTAL INCOME AND, IN CERTAIN INSTANCES, MAY
GENERATE PROFITS WHERE THERE HAVE BEEN REALIZED OR UNREALIZED LOSSES FROM
COMMODITY TRADING.

<PAGE>
CAPSULE I

PERFORMANCE OF DEAN WITTER CORNERSTONE FUND II

<TABLE>
<S> <C>
Type of Pool: Publicly-Offered Pool
Inception of Trading: January 1985
Aggregate Subscriptions: $65,253,651
Current Capitalization: $28,942,618
Current Net Asset Value per Unit: $2,823.08
Worst Monthly Percent Drawdown: (9.76)% (January 1992)
Worst Month-end Peak-to-Valley: (22.29)% (5 months, 1/92-5/92)
</TABLE>

<TABLE>
<CAPTION>
Monthly
Rate of
Return(a) 1996 1995 1994 1993 1992 1991
--------- ---- ---- ---- ---- ---- ----
% % % % % %
<S> <C> <C> <C> <C> <C> <C>
January 1.98 (2.85) (3.17) (3.97) (9.76) (3.62)
February (6.13) 10.88 0.12 7.79 (6.72) (0.78)
March 0.07 13.73 3.16 (0.07) (1.84) 7.14
April 4.76 4.18 (2.59) 3.10 (3.08) (0.60)
May (3.14) (0.37) 3.84 0.82 (2.96) 2.01
June 2.60 (0.29) 2.50 (0.89) 8.27 2.41
July (3.82) (3.86) 7.92 10.24 (9.38)
August (0.46) (4.70) (5.45) 10.80 (3.85)
September (2.52) 0.77 (1.69) (5.19) 3.48
October (0.40) (5.31) (2.62) (1.08) (2.44)
November 3.20 3.35 (0.30) 2.01 (2.10)
December 4.00 (2.80) 3.87 0.34 21.15

Compound
Annual
(Period) (0.27) 26.50 (8.93) 7.81 (1.34) 10.98
Rate of Return(b)
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE
OF FUTURE RESULTS

<PAGE>
CAPSULE II

PERFORMANCE OF DEAN WITTER CORNERSTONE FUND III

<TABLE>
<S> <C>
Type of Pool: Publicly-Offered Pool
Inception of Trading: January 1985
Aggregate Subscriptions: $137,103,376
Current Capitalization: $39,178,794
Current Net Asset Value per Unit: $2,275.15
Worst Monthly Percent Drawdown: (15.04)% (February 1996)
Worst Month-end Peak-to-Valley (31.35)% (52 months, 10/90-1/95)
</TABLE>

<TABLE>
<CAPTION>
Monthly
Rate of
Return(a) 1996 1995 1994 1993 1992 1991
--------- ---- ---- ---- ---- ---- ----
% % % % % %
<S> <C> <C> <C> <C> <C> <C>
January 2.09 (7.31) (10.58) (5.57) (10.46) (14.74)
February (15.04) 1.88 (3.06) 8.96 (7.07) (3.26)
March (0.93) 12.40 4.47 (2.60) (7.16) 17.34
April 9.35 2.44 (3.23) 4.13 (0.13) (1.53)
May (5.33) 4.24 3.78 1.60 (0.36) 0.99
June 1.95 0.10 5.60 0.17 10.37 8.37
July (4.17) (3.86) 4.79 11.46 (12.21)
August 1.89 (6.49) (9.31) 7.63 (9.18)
September 0.63 3.82 (4.97) (4.16) 2.40
October (1.66) 4.08 (6.08) (6.21) (0.11)
November 6.35 0.09 (2.42) 0.44 (0.53)
December 9.37 (3.68) 8.32 (3.25) 32.33

Compound
Annual
(Period) (9.31) 27.50 (10.04) (4.78) (11.08) 11.97
Rate of Return(b)

</TABLE>
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF
FUTURE RESULTS

<PAGE>
CAPSULE III

PERFORMANCE OF DEAN WITTER CORNERSTONE FUND IV

<TABLE>
<S> <C>
Type of Pool: Publicly-Offered Pool
Inception of Trading: January 1985
Aggregate Subscriptions: $167,505,645
Current Capitalization: $97,586,050
Current Net Asset Value per Unit: $2,947.54
Worst Monthly Percent Drawdown: (10.12)% (January 1992)
Worst Month-end Peak-to-Valley (37.85)% (18 months, 8/93-1/95)
</TABLE>

Monthly
Rate of
Return(a) 1996 1995 1994 1993 1992 1991
--------- ---- ---- ---- ---- ---- ----
% % % % % %
<S> <C> <C> <C> <C> <C> <C>
January 3.19 (7.65) (1.12) (5.29) (9.64) (10.12)
February (5.78) 6.27 (2.75) 12.92 (7.40) (6.91)
March 2.80 27.02 0.29 (2.55) 1.60 26.00
April 2.97 2.39 (3.19) 0.03 (6.40) 1.83
May 1.19 (4.83) (3.65) 3.95 2.71 1.24
June (0.23) (0.62) 6.72 0.92 15.10 9.45
July (1.06) (4.21) 5.87 7.47 (9.47)
August 5.49 (3.57) (5.57) 17.25 (8.50)
September (0.06) 1.66 (2.10) (4.21) 6.69
October 0.74 4.93 (7.48) (0.99) (5.29)
November (2.57) (6.82) (7.50) 0.60 5.26
December (0.52) (2.73) (0.78) (2.40) 27.40

Compound
Annual
(Period) 3.91 22.96 (14.27) (9.12) 10.37 33.52
Rate of Return(b)

</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF
FUTURE RESULTS

<PAGE>
DEAN WITTER CORNERSTONE FUNDS II, III, and IV

FOOTNOTES TO CAPSULES I, II AND III

"Drawdown" means decline in net asset value per unit. "Worst
Month-End Peak-to-Valley" as used herein is equivalent to the "drawdown"
experienced by a Partnership, determined in accordance with CFTC Rule 4.10
and represents the greatest percentage decline from any month-end net asset
value per unit which occurs without such month-end net asset value per unit
being equaled or exceeded as of a subsequent month-end. In dollar terms, for
example, if the net asset value per unit of a Partnership declined by $1 in
each of January and February, increased by $1 in March and declined again by
$2 in April, a "peak-to-valley drawdown" analysis conducted as of the end of
April would consider that "drawdown" to be still continuing and to be $3 in
amount, whereas if the net asset value of a unit had increased by $2 in
March, the January-February drawdown would have ended as of the end of
February at the $2 level. Such "drawdowns" are measured on the basis of
month-end net asset values only, and do not reflect intra-month figures.
(a) "Monthly Rate of Return" is calculated by dividing Net
Performance by Beginning Net Asset Value. See Footnotes (b) and (k) above.
Annual (Period) Rate of Return is calculated by taking the change in Net
Asset Value per Unit during the year (period) and dividing it by the Net
Asset Value per Unit at the beginning of the year (period).
(b) "Compound Annual Rate of Return" is calculated by multiplying
on a compound basis each of the monthly rates of return and not by adding or
averaging such monthly rates of return. For periods of less than one year,
the results are year-to-date.

<PAGE>
SELECTED FINANCIAL DATA

The following is the results of operations of Cornerstone II, III
and IV for the six months ended June 30, 1996 and 1995 (Unaudited) and the
years ended December 31, 1995, 1994, 1993, 1992 and 1991. For the complete
financial statements of the Partnerships, see page F-2 of this Prospectus. For
performance information with respect to each Partnership, see "The
Cornerstone Funds-Performance Records."

<TABLE>
<CAPTION>
DEAN WITTER CORNERSTONE FUND II
---------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEARS ENDED
JUNE 30, DECEMBER 31,
------------------------ ------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ $ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Trading Profit (Loss):
Realized 2,187,355 12,177,479 11,081,716 (878,688) 2,539,342 7,025,818 (24,586)
Net change in unrealized (1,305,646) (2,585,376) (947,973) 556,567 2,029,459 (5,295,641) 5,681,831
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Trading Results 881,709 9,592,103 10,133,743 (322,121) 4,568,801 1,730,177 5,657,245
Interest income (DWR) 600,791 797,905 1,471,022 1,153,003 694,085 730,244 1,191,975
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Revenues 1,482,500 10,390,008 11,604,765 830,882 5,262,886 2,460,421 6,849,220
---------- ---------- ---------- ---------- ---------- ---------- ----------
EXPENSES
Brokerage commissions (DWR) 915,764 1,012,805 1,864,093 2,336,047 1,773,947 1,757,227 2,257,402
Management fees 593,095 689,946 1,307,872 1,346,905 1,157,221 1,051,459 1,099,252
Transaction fees and costs 77,861 78,951 160,238 194,384 141,974 146,367 162,302
Common Administrative Expenses 5,498 8,184 8,183 49,101 68,511 69,697 63,844
Incentive fees -- 533,049 381,720 -- 19,886 461 311,167
Amortization of organization
costs -- -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Expenses 1,592,218 2,322,935 3,722,106 3,926,437 3,161,539 3,025,211 3,893,967
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) (109,718) 8,067,073 7,882,659 (3,095,555) 2,101,347 (564,790) 2,955,253
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------

NET INCOME (LOSS) PER UNIT
FOR PERIOD
Limited Partners (7.57) 599.36 592.90 (219.47) 178.05 (30.96) 228.53
General Partner (7.57) 599.36 592.90 (219.47) 178.05 (30.96) 228.53
TOTAL ASSETS AT END OF PERIOD 29,438,133 34,846,208 31,558,306 32,062,117 32,511,448 27,333,796 30,907,357
TOTAL NET ASSETS AT THE END
OF PERIOD 28,942,618 33,425,976 30,828,888 31,372,002 31,941,373 26,579,165 29,919,471
NET ASSET VALUE PER UNIT AT
THE END OF PERIOD
Limited Partners 2,823.08 2,837.11 2,830.65 2,237.75 2,457.22 2,279.17 2,310.13
General Partner 2,823.08 2,837.11 2,830.65 2,237.75 2,457.22 2,279.17 2,310.13
</TABLE>

<TABLE>
<CAPTION>
DEAN WITTER CORNERSTONE FUND III
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Trading Profit (Loss):
Realized 2,878,851 11,836,860 14,260,042 913,869 (627,751) 8,714,136 3,664,662
Net change in unrealized (5,375,435) (3,783,673) 561,437 (1,350,056) 3,815,157 (10,192,893) 10,995,272
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Trading Results (2,496,584) 8,053,187 14,821,479 (436,187) 3,187,406 (1,478,757) 14,659,934
Interest income (DWR) 852,476 1,084,659 2,061,461 1,744,148 1,445,561 1,771,620 2,686,389
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Revenues (1,644,108) 9,137,846 16,882,940 1,307,961 4,632,967 292,863 17,346,323
---------- ---------- ---------- ---------- ---------- ---------- ----------
EXPENSES
Brokerage commissions (DWR) 1,642,356 2,029,632 3,499,743 4,417,718 4,587,865 5,203,792 6,004,327
Management fees 830,166 933,853 1,828,013 2,014,028 2,375,033 2,536,398 2,474,621
Incentive fees -- -- -- -- -- -- 73,298
Transaction fees and costs 207,271 283,803 502,332 434,287 348,493 390,742 419,603
Common Administrative Expenses 9,357 21,158 21,158 122,423 150,937 154,323 140,023
Amortization of organization
costs -- -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Expenses 2,689,150 3,268,446 5,851,246 6,988,456 7,462,328 8,285,255 9,111,872
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) (4,333,258) 5,869,400 11,031,694 (5,680,495) (2,829,361) (7,992,392) 8,234,451
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) PER UNIT
FOR PERIOD
Limited Partners (233.53) 264.62 541.04 (219.67) (109.91) (286.23) 276.20
General Partners (233.53) 264.62 541.04 (219.67) (109.91) (286.23) 276.20
TOTAL ASSETS AT END OF PERIOD 40,128,967 48,312,477 48,156,795 48,308,274 57,323,283 61,615,811 76,220,509
TOTAL NET ASSETS AT THE END
OF PERIOD 39,178,794 46,988,499 46,949,674 47,002,453 56,156,693 60,300,087 74,390,400
NET ASSET VALUE PER UNIT AT
THE END OF PERIOD
Limited Partners 2,275.15 2,232.26 2,508.68 1,967.64 2,187.31 2,297.22 2,583.45
General Partner 2,275.15 2,232.26 2,508.68 1,967.64 2,187.31 2,297.22 2,583.45
</TABLE>

<PAGE>
SELECTED FINANCIAL DATA (CONTINUED)

<TABLE>
<CAPTION>
DEAN WITTER CORNERSTONE FUND IV
---------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEARS ENDED
JUNE 30, DECEMBER 31,
------------------------ ------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ $ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Trading Profit (Loss):
Realized 3,377,864 23,221,027 27,041,974 (10,447,878) (4,335,118) 34,953,946 9,396,518
Net change in unrealized 2,509,113 367,966 (198,148) (1,726,877) 717,487 (16,706,667) 21,141,765
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Trading Results 5,886,977 23,588,993 26,843,826 (12,174,755) (3,617,631) 18,247,279 30,538,283
Interest income (DWR) 2,039,400 2,494,527 4,912,698 4,129,344 2,937,637 2,509,220 2,873,355
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Revenues 7,926,377 26,083,520 31,756,524 (8,045,411) (697,994) 20,756,499 33,411,638
---------- ---------- ---------- ---------- ---------- ---------- ----------
EXPENSES
Management fees 2,030,247 2,348,957 4,575,372 4,952,206 4,945,676 3,806,489 2,826,553
Incentive fees -- -- -- -- 1,400,473 1,415,723 3,512,191
Brokerage commissions (DWR) 1,888,542 1,761,793 2,776,225 5,336,659 6,634,741 4,544,067 3,905,849
Transaction fees and costs 109,211 106,358 168,718 339,083 398,959 264,789 230,259
Common Administrative Expenses 18,143 39,890 39,890 228,633 223,551 192,980 158,616
Amortization of organization
costs -- -- -- 7,659 -- 800 2,400
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Expenses 4,046,143 4,256,998 7,560,205 10,864,240 13,603,400 10,224,848 10,635,868
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) 3,880,234 21,826,522 24,196,319 (18,909,651) (14,283,394) 10,531,651 22,775,770
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------

NET INCOME (LOSS) PER UNIT
FOR PERIOD
Limited Partners 110.81 477.99 529.66 (383.89) (270.10) 278.32 673.46
General Partner 110.81 477.99 529.66 (383.89) (270.10) 278.32 673.46

TOTAL ASSETS AT END OF PERIOD 99,947,950 118,462,852 105,362,851 112,210,624 127,032,391 109,126,365 94,940,630
TOTAL NET ASSETS AT THE END
OF PERIOD 97,586,050 116,166,584 103,667,011 109,892,266 125,200,630 104,024,062 90,423,078
NET ASSET VALUE PER UNIT AT
THE END OF PERIOD
Limited Partners 2,947.54 2,785.06 2,836.73 2,307.07 2,690.96 2,961.06 2,682.74
General Partners 2,947.54 2,785.06 2,836.73 2,307.07 2,690.96 2,961.06 2,682.74
</TABLE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

LIQUIDITY. The assets of Cornerstone II, III and IV are deposited
with DWR in separate commodity trading accounts established by DWR for each
Trading Manager and are used by each Partnership as margin to engage in
trading. DWR holds such assets in either non-interest-bearing bank accounts
or in securities approved by the CFTC for investment of customer funds. See "I
nvestment Program, Use of Proceeds and Trading Policies." Each Partnership's
assets held by DWR may be used as margin solely for such Partnerships
trading. Since each Partnership's sole purpose is to trade in commodity
futures contracts and other commodity interests, it is expected that each
Partnership will continue to own such liquid assets for margin purposes.

The Partnerships' investment in commodity futures contracts and
other commodity interests may be illiquid. See "Risk Factors-Risks Relating
to Commodity Trading and the Commodities Markets-Commodity Trading May be
Illiquid." If the price for a futures contract for a particular commodity has
increased or decreased by an amount equal to the "daily limit," positions in
the commodity can neither be taken nor liquidated unless traders are willing
to effect trades at or within the limit. Commodity futures prices have
occasionally moved the daily limit for several consecutive days with little
or no trading. Such market conditions could prevent a Partnership from
promptly liquidating its commodity futures positions and result in
restrictions on redemptions. See "Redemptions." Cornerstone IV may be subject
to additional liquidity risks because it trades exclusively in world
currencies, the markets for some of which are or may become illiquid at
times. See "Risk Factors." However, since commencement of trading by the
Partnerships there has never been a time when illiquidity has affected a
material portion of any Partnership's assets.

CAPITAL RESOURCES. No Partnership has, nor does it expect to have,
any capital assets. Redemptions and Exchanges will affect the amount of funds
available for investments in commodity futures contracts and other commodity
interests in subsequent periods. Since redemptions are at the discretion of
Limited Partners, it is not possible to estimate the amount and future impact
thereof.

RESULTS OF OPERATIONS. Due to the nature of the Partnerships'
business, the Partnerships' results depend on their Trading Managers and the
ability of their trading systems to take advantage of price movements or
other profit opportunities in the commodities markets. The following presents
a summary of the operations of each Partnership for the years 1993, 1994 and
1995 and the six months ended June 30, 1996, and a general discus-

<PAGE>
sion of the trading activities of each Partnership in certain
markets during each period. It is important to note that the Trading Managers
trade 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 a
Trading Manager or will be profitable in the future. Consequently, the
results of operations of the Partnerships are difficult to discuss other than
in the context of each Trading Manager's trading activities on behalf of each
Partnership as a whole and how each Partnership has performed in the past.
See "The Cornerstone Funds-Performance Records" and "Selected Financial Data"
above and the financial statements of the Partnerships herein.

CORNERSTONE II

RESULTS OF OPERATIONS FOR 1993. In 1993, the Partnership recorded
gains of 7.8%. Cornerstone II began 1993 with positive performance in the
first quarter as a result of profits in the currency, financials and soft
commodities sectors. Increasing price trends in the value of the Japanese
yen, U.S. and Japanese interest rate futures and in sugar and cotton prices
all contributed to profits. Second quarter performance was also positive as
the Partnership took advantage of further strengthening in the value of the
Japanese yen as well as from an increase in precious metals prices during
April. The third quarter was relatively flat as profits in July across many
distinct market sectors (currencies, metals, agriculturals and energies) were
offset by losses in August and September as a result of a short-term
volatility in currencies coupled with the inability of more traditional
commodities to sustain July trends. Fourth quarter performance was also
sideways as profits in December from long metals and agriculturals positions
as well as short energies positions were offset by a continued difficult
trading environment in the currencies sector.

Overall, 1993 proved to be a modestly positive year for the
Partnership as the Partnership benefited from price trends in the first half
of the year in the currency and global financial futures markets. For the
year ended December 31, 1993, Cornerstone II's total trading revenues,
including interest income, were $5,262,886. Total expenses for the year were
$3,161,539, resulting in a net gain of $2,101,347. The Net Asset Value of a
Unit increased from $2,279.17 at December 31, 1992 to $2,457.22 at December
31, 1993.

RESULTS OF OPERATIONS FOR 1994. During 1994, the Partnership
recorded a loss of 8.9%. Cornerstone II began the year with losses as a
result of short-term volatility in currencies. Smaller losses were also
experienced in the financials, metals and energy sectors. Trading gains
during March offset losses for the first quarter as the Partnership benefited
from the downward price movement in U.S. and European interest rate and stock
index futures. The second quarter began with losses in April from a sharp
reversal in the value of the U.S. dollar on April 5th, resulting in losses
from previously established positions. Additional losses in April resulted
from trendless price patterns in the agricultural and metals markets. May
and June were profitable as a strong upward trend in coffee prices produced
gains from long positions. Gains were also recorded in the energy, base
metals and interest rate futures markets during June. The third quarter
began with losses in July as the value of the U.S. dollar moved in a
short-term volatile pattern versus the Japanese yen and most major European
currencies. Additional losses were recorded as the previously established
downward trend in the U.S. and European interest rate futures reversed.
During August, losses resulted from short-term volatility in currencies and
from trading in the metals and energy complexes. In September, gains were
recorded in the currency markets due to newly established downward movement
in the value of the U.S. dollar versus major European currencies. The fourth
quarter began with losses in October, primarily from trading in global
financial futures, coffee and precious metals futures. Gains in November
were recorded from short positions in the coffee and cocoa markets.
Additional profits were experienced in the financial futures markets.
December resulted in losses from trading in the currency, agricultural and
financial futures markets.
Overall, losses in Cornerstone II for the calendar year 1994 were
due to short-term volatility across a variety of futures market sectors and a
lack of consistent directional movement in currency values versus the U.S.
dollar and one another. For the year ended December 31, 1994, the
Partnership's total trading revenues, including interest income, were
$830,882. The Partnership's total expenses for the year were $3,926,437,
resulting in a net loss of $3,095,555. The Net Asset Value of a Unit
decreased from $2,457.22 at December 31, 1993 to $2,237.75 at December 31,
1994.
RESULTS OF OPERATIONS FOR 1995. During 1995, the Partnership
recorded a gain of 26.5%. During January, Cornerstone II recorded net losses
as a result of short-term volatile movement in the value of the U.S. dollar
relative to most major world currencies. Smaller losses were recorded in
financial and agricultural futures trading. The Partnership profited
significantly during February and March as the value of most major world
currencies increased relative to the U.S. dollar, resulting in profits for
the Partnership's long positions in major European currencies and the
Japanese yen. Additional gains were recorded from long positions in global
bond

<PAGE>
futures as prices moved higher. Smaller gains were recorded in
crude oil futures. In April, a continued upward trend in global financial
futures prices resulted in gains for the Partnership's previously established
long stock index and bond futures positions. Additional gains were recorded
for the Partnership's long Japanese yen positions. Small net losses were
recorded during May as losses in currencies and commodities trading offset
gains in global financial futures. Cornerstone II recorded losses as the
previous upward trend in global interest rate futures prices pulled back
during June. Smaller losses were recorded in currency and agricultural
futures trading, but gains recorded in the energy markets and coffee futures
offset a majority of these losses. During July, the Partnership posted net
losses as a result of trading in global bond futures. Losses were also
recorded in the currency markets as the value of most major world currencies
moved in a narrow trading range relative to one another. Smaller losses were
recorded during August in global bond futures, as prices experienced a period
of short-term volatile movement. These losses, coupled with losses recorded
in soft commodities and silver futures, more than offset gains recorded from
transactions involving the Japanese yen. Losses in September were due
primarily to erratic price movement in global interest rate and stock index
futures. Smaller losses were recorded in energy and metals futures. Losses
were recorded during October as trendless price movement was commonplace in
several of the markets traded by the Partnership, including cotton, crude oil
and global interest rate futures. Trading profits recorded from short
Japanese yen positions offset a portion of these losses. Trading during
November resulted in profits as global bond futures prices increased during
the month. Additional gains were recorded from short coffee futures
positions as prices declined during the month. In December, the Partnership
was profitable primarily due to strong price trends in energies,
agriculturals and soft commodities.
Overall, Cornerstone II was profitable during 1995 primarily as a
result of sustained trends in global financial futures and currencies in the
first half of the year. Smaller profits were recorded late in the year from
strong trends in domestic commodities. For the year ended December 31, 1995,
the Partnership's total trading revenues, including interest income, were
$11,604,765. The Partnership's total expenses for the year were $3,722,106,
resulting in net income of $7,882,659. The Net Asset Value of a Unit
increased from $2,237.75 at December 31, 1994 to $2,830.65 at December 31,
1995.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996.
During the first half of 1996, the Partnership posted a loss of 0.3%. Losses
were recorded in the currency markets during February as previously
established short Japanese yen and German mark positions experienced losses
due to a sharp reversal upward in the value of these currencies relative to
the U.S. dollar. Losses were also recorded in energy futures and soft
commodities. During January, the Partnership recorded smaller losses from
energy futures trading as a result of a sharp and sudden reversal in crude
oil prices. During March, long positions in crude oil futures profited as
energy prices moved upward. These gains, coupled with smaller gains from
transactions involving the Australian dollar and Japanese yen, helped to
offset a portion of the losses recorded during the first quarter.

During the second quarter, the Partnership posted a gain in Net
Asset Value per Unit. The most significant trading gains were recorded in
the currency markets during April as the value of the Swiss franc, German
mark and French franc moved lower relative to the U.S. dollar. As a result,
the Partnership profited from short positions in these currencies.
Additional gains were recorded from short Japanese yen positions during May
and June as the value of the yen moved lower versus the U.S. dollar from late
May through June. Trading gains were also recorded in the agricultural
markets from long positions in corn, wheat and soybean futures as prices
moved higher. In metals, short copper futures positions profited during June
as prices moved sharply lower on news of significant losses incurred in
copper by Sumitomo Corporation. Smaller gains were recorded from short
positions in silver and gold futures as precious metals prices also moved
lower during June. These gains were partially offset by losses recorded from
financial futures trading as non-U.S. interest rate and Australian stock
index futures prices moved in a trendless pattern throughout the quarter.
Smaller losses were recorded in the energy markets during May.

For the six months ended June 30, 1996, the Partnership's total
trading revenues, including interest income, were $1,482,500. The total
expenses for the period were $1,592,218, resulting in a net loss of $109,718.
The Net Asset Value of a Unit decreased from $2,830.65 at December 31, 1995
to $2,823.08 at June 30, 1996. In comparison, for the six months ended June
30, 1995, the Partnership's total trading revenues, including interest
income, were $10,390,008; the total expenses for such period were $2,322,935,
generating net income of $8,067,073; and the Net Asset Value of a Unit
increased from $2,237.75 at December 31, 1994 to $2,837.11 at June 30, 1995.

To enhance the foregoing comparison of results of operations from
year to year, prospective investors can examine, line by line, the Statement
of Operations and Statement of Financial Condition. Total trading results
were profitable in 1993 and 1995 and unprofitable in 1994 and for the six
months ended June 30, 1996.

<PAGE>

Interest income to the Partnership is derived from 80% of its
assets earning interest at the prevailing rate paid on U.S. Treasury Bills.
The size of the assets and the fluctuation of interest rates affect the
resulting interest income totals for each year and for the six months ended
June 30, 1996. Interest income was less in 1993 than 1992 due to a decline in
interest rates paid on U.S. Treasury Bills in 1993. During 1994 and 1995,
interest income to the Partnership increased as a result of increasing rates
on U.S. Treasury Bills. During the first half of 1996, a reduction in U.S.
Treasury bill rates and in the size of the Partnership resulted in a decrease
in interest income to the Partnership relative to the first half of 1995.

In regard to expenses of the Partnership, brokerage commissions and
transaction fees and costs in the aggregate were slightly greater in 1993
than 1992 due to an increase in the total size of the Partnership. 1994
witnessed a greater increase from 1993 due to an increase in trading volume
resulting from more short-term volatile price movement in a majority of
futures markets traded by the Partnership's Trading Managers. In 1995,
commissions and transaction fees and costs declined as a result of the
presence of more long-term price trends in futures markets in which the
Partnership's Trading Managers concentrate their participation, as well as a
reduction of the 1% monthly commission cap to 3/4 of 1% on April 1, 1995.
This reduction of the cap also resulted in brokerage commissions and
transaction fees being lower during the first half of 1996 relative to the
first half of 1995.

Management fees to the Partnership are charged at a 4% annual rate
of Net Assets and have fluctuated from year to year in direct proportion to
the size of the Partnership's Net Assets. Incentive fees were paid in 1992,
1993 and 1995, but not in 1994 or the first half of 1996. Incentive fees are
only paid on an annual basis or on any redeemed Units on a monthly basis if
the Partnership is profitable. Incentive fees were greatest in 1995 due to
the Partnership's more successful trading performance than in other years
indicated. Common administrative expenses have declined each year since 1992
as a result of decreased printing costs for the Monthly Reports and the
termination of the Partnership's continuous offering in the second half of
1994.

CORNERSTONE III

RESULTS OF OPERATIONS FOR 1993. Cornerstone III posted a decline
of approximately 4.78% for the year 1993. The first half of 1993 was a
profitable six-month period for the Partnership as a result of trading gains
from long Japanese yen positions as the value of the yen increased relative
to the U.S. dollar and major European currencies, long precious metals
positions as gold and silver prices moved sharply higher during April, and
from long U.S. interest rate futures positions as long-term U.S. interest rates
declined throughout a majority of the first six months. Despite starting the
second half of the year with strong profits during July, the Partnership
posted overall net losses for the second half of the year due in large part
to sharp trend reversals followed by significant short-term price volatility
in currencies. These losses, coupled with a lack of significant opportunity
in domestic futures markets during the period August to November, resulted in
difficult performance for the Partnership during this period.
Overall, net losses were recorded by the Partnership during 1993 as
profits recorded during the first half of the year were more than offset by
losses recorded during the second half of the year. These losses were the
result of trend reversals in the currency markets, as well as trendless price
movement across a variety of markets traded by the Partnership. For the year
ended December 31, 1993, the Partnership's total trading revenues, including
interest income, were $4,632,967. The Partnership's total expenses for the
year were $7,462,328, resulting in a net loss of $2,829,361. The Net Asset
Value of a Unit decreased from $2,297.22 at December 31, 1992 to $2,187.31 at
December 31, 1993.
RESULTS OF OPERATIONS FOR 1994. During 1994, the Partnership
recorded a net loss of 10.0%. In January 1994, losses were recorded from
transactions involving most major foreign currencies as short-term volatility
continued in the currency markets. In February, losses resulted from continue
d trendless movement in the U.S. dollar versus major European currencies, as
well as in global financial, energy and agricultural futures. Gains in March
offset a portion of the quarter's losses as the Partnership capitalized on a
downward trend in U.S. and European interest rates futures and from a
downward move in the value of the U.S. dollar versus major European
currencies. The second quarter of 1994 provided relief, primarily from
trading gains attributable to a strong move higher in coffee prices
throughout the quarter and a decline in the value of the U.S. dollar relative
to major world currencies during June. Trading losses in a variety of
markets recorded from price choppiness during April offset a portion of
overall gains recorded during the quarter. The second half of 1994 began
negatively as the value of the U.S. dollar moved in a short-term volatile
pattern versus the Japanese yen and most major European currencies.
Additional losses during July and August were recorded from trading global
financial futures due to short-term volatility in these markets. During
September, profits

<PAGE>
were recorded from transactions involving most major foreign
currencies. In October, profits were provided by gains recorded in the
currency markets, as the value of the U.S. dollar declined versus most major
European currencies, and in the base metals and cotton futures markets. In
November, a reversal in the downward move of the U.S. dollar versus major
foreign currencies resulted in losses. Losses during December were due to
the sudden decrease in value of the U.S. dollar on December 28th after it had
shown signs of strengthening during November and early December.
Overall, the Partnership's trend-following approach resulted in
significant losses in currencies and global financial futures during 1994.
Smaller profits in traditional commodities markets such as coffee, cotton and
base metals helped to offset a portion of these losses.
For the year ended December 31, 1994, the Partnership's total
trading revenues, including interest income, were $1,307,961. The
Partnership's total expenses for the year were $6,988,456, resulting in a net
loss of $5,680,495. The Net Asset Value of a Unit decreased from $2,187.31 at
December 31, 1993 to $1,967.64 at December 31, 1994.

RESULTS OF OPERATIONS FOR 1995. During 1995, the Partnership
recorded a net gain of 27.5%. During January, the Partnership recorded
losses as the value of the U.S. dollar declined relative to other major world
currencies early in the month, resulting in losses for previously established
short positions in major foreign currencies. However, these losses were more
than offset by significant gains recorded during February and March as a
result of trading in the currency markets as the value of the U.S. dollar
decreased versus most other world currencies. Strong gains were also
recorded from long positions in global bond futures as prices in these
markets increased between February and May. In addition to the gains
recorded in currencies and global interest rate futures, gains were also
recorded during the first half of the year from long positions in global
stock index futures as prices moved higher. Smaller gains were recorded
during June from trading traditional commodities, particularly base metals,
energy and soft commodities futures. During July, losses were recorded as
global financial futures prices retreated from their previous upward trend.
Trading gains were recorded during August due to a decline in the value of
the Japanese yen relative to the U.S. dollar. During September, additional
gains were recorded from global interest rate futures trading. Smaller gains
in agricultural and soft commodities contributed to overall gains during
September. Losses were recorded during October as cotton and coffee prices
moved in a trendless pattern. Smaller losses were recorded in currencies and
global financial futures as prices in these markets experienced short-term
volatility. During November, profits were recorded from trading in global
financial futures. Smaller gains were recorded in soft commodities and
energy futures trading.
Overall, the Partnership posted additional gains during December as
long gas and oil positions profited when prices moved dramatically higher.
Agricultural futures trading resulted in smaller gains as long positions in
corn and soybean futures also benefited from rising prices. The Partnership
experiences significant trading gains during 1995 primarily due to profits
recorded in the financial futures and currency markets. Additionally, the
Partnership's diversified market participation allowed for smaller trading
gains in several of the traditional commodity markets traded by the
Partnership's Trading Managers.
For the year ended December 31, 1995, the Partnership's total
trading revenues, including interest income, were $16,882,940. The
Partnership's total expenses for the year were $5,851,246, resulting in
income of $11,031,694. The Net Asset Value of a Unit increased from $1,967.64
at December 31, 1994 to $2,508.68 at December 31, 1995.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996.
Through the first half of 1996, the Partnership recorded a net loss of 9.3%.
During the first quarter, the most significant losses were recorded in global
interest rate futures and currency trading during February. In financial
futures, long positions in U.S. European and Australian bond futures, which
had been profitable for the Partnership during January, experienced losses as
global bond futures prices moved sharply lower. Losses were also recorded in
the currency markets during February as short positions in the Japanese yen
and major European currencies experienced losses due to a sudden increase in
the value of these currencies versus the U.S. dollar. During March, the
Partnership recorded small losses as short-term price volatility was
experienced in global financial and base metals futures. A portion of these
losses was offset by profits recorded during January from long global bond
futures positions, as interest rate futures prices increased, and from short
positions in the Japanese yen, as the value of the yen decreased relative to
the U.S. dollar. Smaller trading gains were recorded from long positions in
corn futures as corn prices moved higher during February and March.

During the second quarter, the Partnership posted a gain in Net
Asset Value per Unit. The most signifi-

<PAGE>

cant gains were recorded during April as long corn and wheat
futures positions profited from an upward move in prices. Additional gains
were recorded in corn futures during May as prices continued to increase
early in the month. In currency trading, gains were recorded from short
Swiss franc positions during April and May as the value of the Swiss franc
moved lower versus the U.S. dollar and other world currencies. In the energy
markets, long positions in crude oil and natural gas futures profited during
the quarter as prices moved higher. Gains were also recorded from short
positions in copper futures during June as prices plunged on news of
significant losses incurred by Sumitomo Corporation. These gains were
partially offset by losses recorded in financial futures trading as non-U.S.
interest rate futures, particularly Japanese and Australian interest rate
futures, experienced trendless price movement throughout the quarter.
Smaller losses were recorded in soft commodities as coffee prices were choppy
during May.

For the six months ended June 30, 1996, the Partnership's total
trading losses, net of interest income, were $1,644,108. The Partnership's
total expenses for the six months were $2,689,150, resulting in a net loss of
$4,333,258. The Net Asset Value of a Unit decreased from $2,508.68 at
December 31, 1995 to $2,275.15 at June 30, 1996. In comparison, for the six
months ended June 30, 1995, the Partnership's total trading revenues,
including interest income, were $9,137,846; the Partnership's total expenses
for such period were $3,268,446, resulting in net gain of $5,869,400; and the
Net Asset Value of a Unit increased from $1,967.64 at December 31, 1994 to
$2,232.26 at June 30, 1995.

To enhance the foregoing comparison of results of operations from
year to year, prospective investors can examine, line by line, the Statement
of Operations and Statement of Financial Condition. Total trading results
were profitable during 1993 and 1995, while trading losses were recorded
during 1994 and the first half of 1996.

Interest income to the Partnership is derived from 80% of its
assets earning interest at the prevailing rate paid on U.S. Treasury bills.
The size of the assets and the fluctuation of interest rates affect the
resulting interest income annual totals. Interest income in the Partnership
increased during 1994 and 1995, while it declined during 1993 and the first
half of 1996. The increases during 1994 and 1995 were the result of increasing
U.S. Treasury bill rates during these years. A reduction in U.S. Treasury
bill rates during 1993 and the first half of 1996 coupled with a decline in
Partnership's assets, resulted in a decrease in interest income paid to the
Partnership.

In regard to expenses to the Partnership, brokerage commissions and
transaction fees and costs charged fluctuate based on the volume of trading
by the Partnership's Trading Managers. During each of the three years
between 1993 and 1995, as well as the first half of 1996, brokerage
commissions incurred by the Partnership decreased. During 1993 and 1994,
brokerage commissions decreased due to a reduction in the Partnership's Net As
sets. During 1995, brokerage commissions declined due to the presence of
more long-term price trends in a majority of the futures markets in which the
Partnership's Trading Managers concentrate their participation, as well as a
reduction of the 1% monthly commission cap to 3/4 of 1% on April 1, 1995.
This reduction of the cap also resulted in brokerage commissions being lower
during the first half of 1996 relative to the first half of 1995.

Transaction fees and costs during 1993 decreased due to a reduction
in the Partnership's assets. In 1994 and 1995, changes made in the Trading
Managers' portfolios resulted in greater execution of trades on non-U.S.
exchanges and a subsequent increase in fees and costs. Transaction fees and
costs during the first half of 1996 were lower than the first half of 1995 due
to a reduction in Partnership's assets.

Management fees to the Partnership are charged at a 4% annual rate
of Net Assets and fluctuate based only on the size of the Partnership's Net
Assets. Management fees have decreased each year since 1992, including the
first half of 1996, as a result of the reduction in Partnership assets during
these periods.

Common administrative expenses to the Partnership are costs and
expenses used to pay legal, accounting, auditing, printing and distribution
costs and are estimated at 0.25% per annum. These expenses decreased during
each of the three years, as well as the first half of 1996. During 1993 and
1994, the administrative expenses incurred by the Partnership decreased as a
result of the reduction in Net Assets. The suspension of the Partnership's
continuous offering in September 1994 resulted in a significant decrease in
administrative expenses incurred during 1995. The decrease in administrative
expenses during the first half of 1996 was the result of a reduction in the
Partnership's assets, as well as a reduction in costs to print the
Partnership's monthly reports.

CORNERSTONE IV

RESULTS OF OPERATIONS FOR 1993. Cornerstone IV posted a decline of
approximately 9.12% for the year 1993.

<PAGE>
The Partnership began the year with two consecutive profitable
quarters, primarily as a result of a sustained increase in the value of the
Japanese yen versus the U.S. dollar and from a similar increase in the
Japanese yen relative to the German mark and other European currencies. The
Partnership also profited in the first half of the year from currency
transactions involving the Australian dollar and British pound.
The second half of the year began with strong performance for the
Partnership as an almost 6% increase in July resulted from a continued
strengthening in the value of the Japanese yen, as well as from a
strengthening of the U.S. dollar versus major European currencies.
Unfortunately, these trends were not sustained over the last five months of
the year as a sharp reversal of the trend in the Japanese yen in August,
short-term volatility in currency exchange trading in September, due in large
part to the unrest in Russia, and a surprising interest rate cut by the
German Bundesbank and other European central banks in October resulted in net
losses for the Fund's currency-only portfolio. Additionally, November and
December results were difficult as tight trading ranges caused losses from a
series of false trend signals by the Trading Advisors' long-term technical
trend-following models.
Overall, 1993 was a difficult year for currency-only traders
throughout the managed futures industry as a result of trendless market
conditions during the year's final five months.
For the year ended December 31, 1993, the Partnership's total
trading losses, net of income interest, were $679,944. The Partnership's
total expenses for the year were $13,603,400, resulting in a net loss of
$14,283,394. The Net Asset Value of a Unit decreased from $2,961.06 at
December 31, 1992 to $2,690.96 at December 31, 1993.

RESULTS OF OPERATIONS FOR 1994. During 1994, the Partnership
recorded a net loss of 14.3%. During January and February, losses were
recorded from transactions involving the U.S. dollar versus major foreign
currencies and from crossrate transactions as a result of short-term volatile
price movement. Small gains were recorded in March predominantly from the
weakening of the U.S. dollar versus major European currencies. The most
significant losses during the second quarter were recorded during April as a
result of a sharp increase in the value of the U.S. dollar on April 5th,
after decreasing in late March. In May, losses were recorded primarily from
transactions involving the U.S. dollar versus the Japanese yen. Gains were
recorded in June as a result of long positions in the Swiss franc, German
mark, French franc and British pound. The Partnership posted losses during
July as the value of the U.S. dollar moved in a short-term volatile pattern
versus the Japanese yen and most major European currencies. During August,
losses continued as a result of further trendless movement in the U.S. dollar
versus major foreign currencies and one another. In September, gains were
recorded primarily as a result of a decrease in value of the U.S. dollar
versus the Swiss franc. The fourth quarter began with profits in October as
a result of the continued decline in value of the U.S. dollar versus major
European currencies. Substantial losses occurred in November as a result of
a reversal in the downward trend in the U.S. dollar. The majority of these
losses were sustained from long positions in major European currencies and
the Japanese yen. During December, the Partnership recorded losses due
primarily to the sudden decrease in value of the U.S. dollar on December 28th
after it had shown signs of strengthening in late November and most of
December.
Overall, 1994 was a difficult year for currency-only traders
throughout the managed futures industry due to a lack of sustained value
moves in foreign currencies versus the U.S. dollar and one another, coupled
with sharp reversals of short-term trends.
For the year ended December 31, 1994, the Partnership's total
trading losses, net of interest income, were $8,045,411. The Partnership's
total expenses for the year were $10,864,240, resulting in a net loss of
$18,909,651. The Net Asset Value of a Unit decreased from $2,690.96 at
December 31, 1993 to $2,307.07 at December 31, 1994.

RESULTS OF OPERATIONS FOR 1995. In 1995, the Partnership recorded
a net gain of 23.0%. The Partnership recorded net losses during January as a
decline in value of the U.S. dollar was followed by extreme short-term
volatility. Gains were recorded during February from an increase in value of
the Japanese yen and major European currencies relative to the U.S. dollar.
During March, the Partnership recorded significant gains as previously
established long positions in the Japanese yen and most European currencies
continued to produce strong profits. In April, the Partnership continued to
record gains from the upward trend in the value of the Japanese yen. Trading
gains were also recorded from transactions involving the Australian and New
Zealand dollars and the Spanish peseta. The Partnership recorded losses
during May due to a reversal in the downward trend, and subsequent short-term
volatility, in the value of the U.S. dollar versus most major European
currencies and the Japanese yen. Small losses were recorded during June as
the value of most major world currencies moved in a trendless range versus the
U.S. dollar and one another. During July, the Partnership sus-

<PAGE>
tained losses as most major foreign currencies continued to move in
a trendless pattern relative to one another. Trading gains were recorded
during August as a result of a sharp downward move in the value of the
Japanese yen. Additional gains were recorded from transactions involving the
Australian, Singapore and Canadian dollars. During September, the
Partnership recorded small net losses as a result of a reversal in an upward
move in the value of the U.S. dollar relative to most major foreign currencies
on September 20 and 21. The Partnership recorded gains during October from
the continued decline of the Japanese yen. Smaller gains were recorded from
transactions involving the Malaysian ringgit, German mark and Australian
dollar. Losses were recorded during November from trendless movement in the
value of major European currencies. Trading in the Japanese yen also
resulted in losses as the previous trend in the yen subsided. The
Partnership recorded small losses as the British pound, relative to the U.S.
dollar, moved suddenly higher late in December. Trading gains from
transactions involving the Japanese yen and German mark offset a majority of
these losses.

Overall, the Partnership recorded strong net gains during 1995
primarily as a result of sustained trends in the value of major world
currencies versus the U.S. dollar in the first half of the year. In
particular, the continued decline of the U.S. dollar relative to the Japanese
yen and most European currencies late in the first quarter presented the
Partnership's two Trading Managers with an opportunity to profit utilizing
their technically-based trend-following trading approaches.

For the year ended December 31, 1995, the Partnership's total
trading revenues, including interest income, were $31,756,524. The
Partnership's total expenses for the year were $7,560,205, resulting in net
income of $24,196,319. The Net Asset Value of a Unit increased from $2,307.07
at December 31, 1994 to $2,836.73 at December 31, 1995.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996.
During the first half of 1996, the Partnership recorded a gain of 3.9%.
Losses recorded during the first half of 1996 were experienced during
February from previously established short positions in the Japanese yen as
the value of the yen moved dramatically higher. Losses were also recorded
during February from transactions involving several European currencies,
particularly the German mark, Norwegian krone and both the French and Swiss
francs. A majority of the losses recorded during February were offset by
gains recorded in January and March. During January and March, short
positions in the Japanese yen profited from a decline in the value of the yen
versus the U.S. dollar. Additional profits were recorded during March from
long positions in the Australian dollar as the value of the Australian dollar
moved higher relative to the U.S. dollar and other world currencies.

During the second quarter, the Partnership posted a gain in Net
Asset Value per Unit. The most significant gains were recorded in this
currency-only Fund during April from short positions in the German mark, as
well as in the Swiss and French franc, as the value of these currencies moved
lower relative to other world currencies. Short Swiss franc positions also
profited during May as its value continued to move lower versus the U.S.
dollar. Additional gains were recorded from long positions in the Australian
dollar as the value of the Australian dollar moved higher relative to other
major currencies during April and May. These gains were partially offset by
losses recorded during June as the Australian dollar lost its upward
momentum. Long positions in the British pound also profited during May as
its value experienced an upward move relative to the U.S. dollar. Losses
recorded from previously established short positions in the Japanese yen
during April, as its value moved sharply higher late in the month, more than
offset gains recorded from short yen positions during June.

For the six months ended June 30, 1996, the Partnership's total
trading revenues, including interest income, were $7,926,377. The
Partnership's total expenses for the six months were $4,046,143, resulting in
a net gain of $3,880,234. The Net Asset Value of a Unit increased from
$2,836.73 at December 31, 1995 to $2,947.54 at June 30, 1996. In comparison,
for the six months ended June 30, 1995, the Partnership's total trading losses
, net of interest income, were $2,114,490; the Partnership's total expenses
for such period were $1,714,517, resulting in net loss of $3,829,007; and the
Net Asset Value of a Unit increased from $2,307.07 at December 31, 1994 to
$2,785.06 at June 30, 1995.

To enhance the foregoing comparisons of results of operations from
year to year, prospective investors can examine, line by line, the Statement
of Operations and Statement of Financial Condition. Total trading results
were profitable in 1992, 1995 and the first half of 1996, versus losses
recorded in 1993 and 1994.

Interest income to the Partnership is derived from 80% of its
assets earning interest at the prevailing rate paid on U.S. Treasury Bills.
The size of the assets and the fluctuation of interest rates affect the
resulting interest income annual totals. Interest income to the Partnership
has increased each year since 1992. Despite a reduction in U.S. Treasury
Bill rates in 1993, interest income in 1993 was greater than 1992 because
assets

<PAGE>

grew as a result of additional subscriptions during the year. For
each of the years 1994 and 1995, interest income has increased as a result of
increasing rates on U.S. Treasury Bills. During the first half of 1996, the
interest income to the Partnership decreased versus the first half of 1995 due
to a decline of interest rates on U.S. Treasury Bills.

In regard to expenses of the Partnership, brokerage commissions and
transaction fees and costs charged fluctuate based on the volume of trading
by the Partnership's two Trading Managers. In 1993, brokerage commissions
and transaction fees and costs increased as a result of increasing trading
volume due primarily to the increase of assets and trendless price movement
resulting from false signals for the Partnership's trend-following Trading
Managers. 1994 witnessed a slight decrease in brokerage commissions and
transaction fees and costs due to a decrease in trading assets. Brokerage
commissions and transaction fees and costs declined in 1995 as a result of
the presence of more long-term price trends in the currency markets, as well
as a reduction of the 1% monthly commission cap to 3/4 of 1% on April 1,
1995. Brokerage commissions and transaction fees and costs increased in the
aggregate in the first half of 1996 versus the first half of 1995 due to
increased trading by the Partnership's Trading Managers.

Management fees to the Partnership are charged at a 4% annual rate
of Net Assets and fluctuate based only on the size of the Partnership's Net
Assets. The fluctuations in management fees from 1993 through the first six
months of 1996 are in direct proportion to the changes in Net Asset size.
Incentive fees are only paid on an annual basis or on any redeemed Units on a
monthly basis if the Partnership is profitable. There have been no incentive
fees for the Partnership since 1993. The common administrative expenses are
used to pay legal, accounting, auditing, printing and distribution costs and
are estimated at 0.25% of net assets. These costs, which had increased from
1992 to 1993 and from 1993 to 1994, have decreased significantly since
September 1994 when the Continuous Offering of the Cornerstone Funds was
suspended. The reduction of these costs can be also be attributed to a
decline in the costs charged for printing the Partnership's monthly reports.

FINANCIAL INSTRUMENTS. Each Partnership is a party to financial
instruments with elements of off-balance sheet market and credit risk.
Cornerstone II and Cornerstone III trade futures, options, and forward
contracts in interest rates, stock indices, commodities, currencies, petroleum
and precious metals. Cornerstone IV trades futures and forward contracts in
currencies only. In entering into these contracts there exists a risk to the
Partnerships (market risk) that such contracts may be significantly
influenced by market conditions, such as interest rate volatility, resulting
in such contracts being less valuable and more onerous. If the markets should
move against all of the futures positions held by a Partnership at the same
time, and if the Trading Managers were unable to offset futures positions of
the Partnership, the Partnership could lose all of its assets and the Limited
Partners of such Partnership would realize a 100% loss. In addition to the
Trading Managers' internal controls, each Trading Manager must be in
compliance with the respective trading policies of the Partnerships. Such
trading policies include standards for liquidity and leverage with which the
Partnerships must comply. Each Trading Manager and the General Partner
monitor the Partnerships' trading activities to ensure compliance with the
trading policies. See "Investment Program, Use of Proceeds and Trading
Policies." The General Partner may (under the terms of each Management
Agreement) require a Trading Manager to modify positions of Partnership if
the General Partner believes they violate the Partnership's trading policies.

In addition to market risk, in entering into futures, options and
forward contracts there is a credit risk to each Partnership that the
counterparty on a contract will not be able to meet its obligations to the
Partnership. The ultimate counterparty of the Partnerships for futures
contracts traded in the United States and most foreign exchanges on which the
Partnerships trade is the clearinghouse associated with such exchange. In
general, a clearinghouse is backed by the membership of the exchange and will
act in the event of non-performance by one of its members or one of its
members' customers, and as such, should significantly reduce this credit
risk. For example, a clearinghouse may cover a default by (i) drawing upon a
defaulting member's mandatory contributions and/or non-defaulting members'
contributions to a clearinghouse guarantee fund, established lines or letters
of credit with banks, and/or the clearinghouse's surplus capital and other
available assets of the exchange and clearinghouse, or (ii) assessing its
members. In cases where the Partnerships trade on a foreign exchange where
the clearinghouse is not funded or guaranteed by the membership or where the
exchange is a "principals' market" in which performance is the responsibility
of the exchange member and not the exchange or a clearinghouse, or when the
Partnerships enter into off-exchange contracts with a counterparty, the sole
recourse of the Partnerships will be the clearinghouse, the exchange member
or the off-exchange contract counterparty, as the case may be. For a list of
the foreign exchanges on which the Partnerships currently trade, and for an
additional discussion of the credit risks relating to trading on foreign
exchanges, see "Risk Factors-Risks Relating to Commodity Trading and the
Commodities Markets-Special Risks Associated with Trading on Foreign Exchanges"
on pages 10-11.

<PAGE>

DWR, in its business as an international commodity broker and as a
member of various futures exchanges, monitors the creditworthiness of the
exchanges and clearing members of the foreign exchanges with which it does
business for clients, including the Partnerships. DWR employees also from
time to time serve on supervisory or management committees of such exchanges.
If DWR believed that there were a problem with the creditworthiness of an
exchange on which a Partnership deals, it would so advise the General
Partner. With respect to exchanges of which DWR is not a member, DWR acts
only through clearing brokers it has determined to be creditworthy. If DWR
believed that a clearing broker with which it deals on behalf of clients were
not creditworthy, it would terminate its relationship with such broker.

While DWR monitors the creditworthiness and risks involved in
dealing on the various exchanges (and their clearinghouses) and with other
exchange members, there can be no assurance that an exchange (or its
clearinghouse) or other exchange member will be able to meet its obligations
to the Partnerships. DWR has not undertaken to indemnify the Partnerships
against any loss. Further, the law is unclear, particularly with respect to
trading in various non-U.S. jurisdictions, as to whether DWR has any
obligation to protect the Partnerships from any liability in the event that
an exchange or its clearinghouse or another exchange member defaults on its
obligations on trades effected for the Partnerships.

Although DWR monitors the creditworthiness of the foreign exchanges
and clearing brokers with which it does business for clients, DWR does not
have the capability to precisely quantify each Partnership's exposure to
risks inherent in its trading activities on foreign exchanges, and, as a
result, the risk is not monitored by DWR on an individual client basis
(including each Partnership). In this regard, DWR must clear its customer
trades through one or more other clearing brokers on each exchange where DWR
is not a clearing member. Such other clearing brokers calculate the net
margin requirements of DWR in respect of the aggregate of all of DWR's
customer positions carried in DWR's omnibus account with that clearing
broker. Similarly, DWR calculates a net margin requirement for the
exchange-traded futures positions of each of its customers, including each
Partnership. Neither DWR nor DWR's respective clearing brokers on each
foreign futures exchange calculates the margin requirements of an individual
customer, such as a Partnership, in respect of the customer's aggregate
contract positions on any particular exchange.

With respect to forward contract trading, the Partnerships trade
with only those counterparties which the General Partner, together with DWR,
have determined to be creditworthy. As set forth in the Partnerships' Trading
Policies, in determining creditworthiness, the General Partner and DWR
consult with the Corporate Credit Department of DWR. Currently, the
Partnerships deal only with DWR as their counterparty on forward contracts.

At June 30, 1996, open futures, options and forward contracts were
as follows:

<TABLE>
<CAPTION>
CORNERSTONE II CORNERSTONE III CORNERSTONE IV
$ $ $
<S> <C> <C> <C>
Exchange-Traded Contracts:
Financial Futures Contracts:
Commitments to Purchase. . . . . . . . . . . . 24,146,000 14,740,000 65,167,000
Commitments to Sell. . . . . . . . . . . . . . 50,063,000 72,652,000 173,687,000
Commodity Futures:
Commitments to Purchase. . . . . . . . . . . . 29,114,000 6,076,000 --
Commitments to Sell. . . . . . . . . . . . . . 26,358,000 -- --
Foreign Futures:
Commitments to Purchase. . . . . . . . . . . . 54,015,000 20,334,000 --
Commitments to Sell. . . . . . . . . . . . . . 27,639,000 26,516,000 --
Off-Exchange-Traded Forward Currency Contracts:
Commitments to Purchase. . . . . . . . . . . . 24,308,000 -- 251,928,000
Commitments to Sell. . . . . . . . . . . . . . 33,352,000 -- 274,343,000
</TABLE>

A portion of the amounts indicated as off-balance sheet risk in
forward currency contracts is due to offsetting forward commitments to
purchase and to sell the same currency on the same date in the future. These
commitments are economically offsetting, but are not offset in the forward
market until the settlement date.

The unrealized gains on open contracts are reported as a component
of "Equity in Commodity futures trading accounts" on the Statements of
Financial Condition and, at June 30, 1996, totaled $2,062,461 for Cornerstone
II, $202,859 for Cornerstone III, and $2,579,256 for Cornerstone IV.

<PAGE>

For Cornerstone II, of the $2,062,461 net unrealized gain on open
contracts at June 30, 1996, $1,870,862 re-lated to exchange-traded futures
contracts and $191,599 related to off-exchange-traded forward currency
contracts.

For Cornerstone III, the $202,859 net unrealized gain on open
contracts at June 30, 1996 related entirely to exchange-traded futures
contracts.

For Cornerstone IV, of the $2,579,256 net unrealized gain on open
contracts at June 30, 1996, $1,269,588 re-lated to exchange-traded futures
contracts and $1,309,668 related to off-exchange-traded forward currency
contracts.

Exchange-traded futures contracts held by the Partnerships at June
30, 1996 mature through June 1997 for Cornerstone II, October 1996 for
Cornerstone III, and September 1996 for Cornerstone IV. Off-exchange-traded
forward currency contracts held by the Partnerships at June 30, 1996 mature
through September 1996 for each of Cornerstone II and Cornerstone IV.

Exchange-traded futures contracts are marked to market and
variations in value are settled on a daily basis. DWR, as the futures
commission merchant for all of the Partnerships' exchange-traded futures
contracts, is required, pursuant to regulations of the CFTC, to segregate
from its own assets, and for the sole benefit of its commodity customers, all
funds held by DWR with respect to exchange-traded futures contracts,
including an amount equal to the net unrealized gain on all open futures
contracts, which totaled at June 30, 1996, $29,049,906, $39,832,026, and
$98,295,782 for Cornerstone II, Cornerstone III and Cornerstone IV,
respectively. With respect to the Partnerships' 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
contracts, the Partnerships are at risk to the ability of DWR, the
counterparty on all such contracts, to perform.

For the six months ended June 30, 1996, the average fair value of
financial instruments held for trading purposes was as follows:

<TABLE>
<CAPTION>
CORNERSTONE II
----------------------------------
ASSETS LIABILITIES
----------- -----------
$ $
<S> <C> <C>
EXCHANGE-TRADED CONTRACTS:
Financial Futures. . . . . . . . . . . . . . . . . . . . . . 38,871,000 61,266,000
Commodity Futures. . . . . . . . . . . . . . . . . . . . . . 38,434,000 15,098,000
Foreign Futures. . . . . . . . . . . . . . . . . . . . . . . 34,440,000 18,659,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS. . . . . . . . . 33,365,000 43,795,000

CORNERSTONE III
----------------------------------
ASSETS LIABILITIES
----------- -----------
$ $
EXCHANGE-TRADED CONTRACTS:
Financial Futures. . . . . . . . . . . . . . . . . . . . . . 102,597,000 89,415,000
Commodity Futures. . . . . . . . . . . . . . . . . . . . . . 72,342,000 7,591,000
Foreign Futures. . . . . . . . . . . . . . . . . . . . . . . 90,332,000 54,883,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS. . . . . . . . . -- --

CORNERSTONE II
----------------------------------
ASSETS LIABILITIES
----------- -----------
$ $
EXCHANGE-TRADED FINANCIAL FUTURES CONTRACTS. . . . . . . . . . . 29,805,000 123,214,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS. . . . . . . . . . 289,606,000 280,953,000
</TABLE>

See "Selected Financial Data" and "Independent Auditors' Report."

Inflation has not been, and is not expected to be, a major factor
in the Partnerships' operations.

<PAGE>
DESCRIPTION OF CHARGES TO EACH PARTNERSHIP

Each Partnership is subject to substantial charges, all of which,
including any cap on such charges, are described in detail below (the 13/20
of 1% of Net Assets monthly cap on aggregate brokerage commissions and
transaction fees and costs is effective September 1, 1996, and represents a
reduction from current caps on such charges). The recent statements of
financial condition of Cornerstone II, III and IV and the related statements
of operations and changes in partners' capital are set forth beginning at
page F-2 in this Prospectus. Such financial statements describe, among other
things, the fees and expenses incurred by Cornerstone II, III and IV for the
periods set forth therein and are summarized in "Selected Financial Data."

<TABLE>
<CAPTION>
ENTITY FORM OF COMPENSATION AMOUNT OF COMPENSATION
<S> <C> <C>
DWR (as Commodity Broker). . . Brokerage Commissions. Roundturn commissions (the total cost of both
the opening and liquidating of a commodity
interest) at 80% of DWR's published non-member
rates (an average rate of $75), which rate DWR
may change from time to time. Comparable
commissions will be paid on forward contracts.
Com-missions (together with the trans-action
fees and costs described below) with respect
to each Trading Manager's allocated Net Assets
are capped at (i) 13/20 of 1% per month (a
maximum of 7.8% annual rate) (in the case of
Trading Managers which employ multiple trading
systems in trading on behalf of a Partnership,
the foregoing 13/20 of 1% cap is applied on a
per trading system basis) of the Net Assets
at month-end allocated to such Trading Manager
or trading system; and (ii) 14% annually of the
Partnership's average monthly Net Assets,
aggregated with net excess interest and
compensating balance benefits, and transaction
fees and costs, as described below.

Transaction fees for the execution of each Forward currency contract fees average $3-$6
Partnership's forward contract transactions, per roundturn trade, execution of cash contract
the execution of cash transactions relating transactions relating to EFP transactions are
to exchange of futures for physicals ("EFP") approximately $2.50 per cash contract, and the
transactions, and the use of DWR's use of the institutional trading desk or
institutional and overnight execution overnight execution facility may be up to $3 per
facilities. roundturn (the amount of such fees is included
in the transaction fees described under "Other"
and is subject to the caps described therein).

Financial benefit to DWR from interest The aggregate of (i) brokerage commissions
earned on Partnerships' and transaction fees

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
ENTITY FORM OF COMPENSATION AMOUNT OF COMPENSATION
<S> <C> <C>
assets in excess of the rate paid to the and costs payable by the Partnership, as
Partnerships and from compensating balance described above and below, and (ii) net excess
treatment in connection with its designation interest and compensating balance benefits to
of a bank or banks in which the Partnerships' DWR (after creditng the Partnership with
assets are deposited. interest) are capped at 14% annually of the
Partnership's average monthly Net Assets as of
the last day of each month during a calendar
year.

Trading Managers. . . . . Monthly Management Fee. 1/3 of 1% of Net Assets allocated to each
Trading Manager on the last day of each month
(a 4% annual rate).

Annual Incentive Fee. 15% of the New Appreciation in a Partnership's
Net Assets as a whole as of the end of each
annual incentive period. New Appreciation
generally equals net trading profits, realized
and unrealized, as of the end of an incentive
period, minus management fees and other
expenses paid or accrued (but not incentive
fees) from the end of the previous in-centive
period in which an incentive fee was earned.

Other. . . . . . . . . . All transaction fees and costs incurred in Transaction fees and costs have averaged less
connection with each Partnership's commodity than 1% per year of each Partnership's average
trading activities (including floor brokerage Net Assets. Such fees and costs are included
fees, exchange fees, clearinghouse fees, and in: (i) the cap on brokerage commissions; and
NFA fees, "give up" or transfer fees (fees (ii) the cap on aggregate brokerage
charged by one clearing brokerage firm to commissions, net excess interest and
transfer a trading position to another compensating balance benefits, and transaction
clearing firm), and any costs associated with fees and costs described above.
taking delivery under commodity interests.

Direct expenses and Common Administrative Proportionate shares of Common Administrative
Expenses, which include printing, mailing, Expenses (which averaged in the aggregate
reporting, legal, accounting, auditing and $281,150 per annum for the period January 1,
extraordinary expenses in-curred in connection 1991-June 30, 1996) are allocated to each of
with operating the Partnerships and registering the Partnerships based on the number of Units
and qualifying Units for sale to Limited of each Partnership outstanding during the
Partners pursuant to a current Prospectus. month in which such expenses are incurred.
</TABLE>

<PAGE>
1. COMMODITY BROKER

(A) BROKERAGE COMMISSIONS. Pursuant to the Customer Agreement with
DWR, each Partnership currently pays DWR brokerage commissions at an average
rate of approximately $75 per roundturn (covering both the taking and
liquidation of a position), which rate DWR may change from time to time.
Effective September 1, 1996, commissions, together with the transaction fees
and costs described below, will be capped at 13/20 of 1% per month (a maximum
7.8% annual rate) of the Partnership's Net Assets at month-end allocated to
each Trading Manager (determined before redemptions and distributions as of
the end of such month) (in the case of Trading Managers which employ multiple
trading systems in trading on behalf of the Partnership, the foregoing 13/20
of 1% cap is applied on a per trading system basis). In addition, the
aggregate of (i) brokerage commissions and transaction fees and costs payable
by each Partnership, and (ii) the net excess interest and compensating
balance benefits to DWR (after crediting the Partnership with interest)
cannot exceed 14% annually of the Partnership's average month-end Net Assets
during each calendar year. Although the rate being charged the Partnerships
is 80% of DWR's published non-member rates, most customers of DWR who have
over $1,000,000 in commodity trading accounts with DWR pay commissions at
negotiated rates which are substantially less than the rate which is paid by
each Partnership. Additionally, Demeter is the general partner of and DWR is
the commodity broker for certain other partnerships which pay flat rate
brokerage commissions, which commissions may be less than those paid by the
Partnerships. Such payments to DWR are compensation, in part, for the risks
of organizing the Partnerships and conducting the initial and continuing
offerings. Additionally, the General Partner, an affiliate of DWR, which is
not separately compensated by the Partnerships, provides ongoing services to
the Partnerships, which include evaluating, retaining, monitoring and
terminating Trading Managers for the Partnerships and administering the
redemption and Exchange of Units. Such rate also enables DWR to compensate
its employees or Additional Sellers who provide continuing services to
Limited Partners to whom they have sold Units. See "The Commodity
Broker-Brokerage Arrangements" and "Plan of Distribution and Exchange
Procedure." Brokerage commissions paid by each Partnership to DWR may equal a
significant percentage of such Partnership's average annual Net Assets.
During the period January, 1991 - June, 1996, Cornerstone II, III, and IV
paid annually an average of 6.70%, 8.41% and 4.39%, respectively, of their
average annual Net Assets as brokerage commissions. For the year ended
December 31, 1995, Cornerstone II, Cornerstone III, and Cornerstone IV paid
brokerage commissions of $1,864,093, $3,499,743, and $2,776,225,
respectively. The actual amount of brokerage commissions paid by each
Partnership to DWR in a year will depend on the amount of funds available for
investment and the actual trading activity of its Trading Managers, subject
to the foregoing caps.

Cornerstone IV trades exclusively in diverse world currencies.
Cornerstone II and III also trade currencies. In the case of currency futures
contracts traded on United States exchanges, the Partnerships pay DWR
brokerage commissions at the rate described above. The Partnerships pay DWR
brokerage commissions for currency forward contract transactions at rates
established with reference to the brokerage commission rate charged on
exchange-traded currency futures contracts. DWR may from time to time adjust
the United States dollar size of currency forward contracts so that the
brokerage commission rate charged on such contracts will closely approximate
the rate charged on exchange-traded currency futures contracts of similar
United States dollar value. DWR will also charge the Partnerships brokerage
commissions plus applicable fees for rollovers of forward contract positions
(i.e., the offsetting of a position which is about to expire and the
initiation of a position in a more distant contract month). Some other
brokerage firms do not charge brokerage commissions for rollovers of forward
contract positions, although such firms may benefit from the mark-up or
spread in the rollover transaction.

(B) FINANCIAL BENEFITS. DWR benefits from the interest credit
arrangements and possible compensating balance treatment in connection with
its designation of a bank or banks in which the Partnerships' assets are
deposited. See "Investment Program, Use of Proceeds and Trading Policies."

2. Trading Managers

Each Partnership pays its Trading Managers a monthly management
fee, whether or not the assets of the Partnership as a whole or the assets
allocated to such Trading Manager are profitable, and, in certain
circumstances, may pay its Trading Managers an annual incentive fee.

(A) MONTHLY MANAGEMENT FEE. Each Partnership pays each of its
Trading Managers a monthly management fee equal to 1/3 of 1% (a 4% annual
rate) of the Partnership's Net Assets allocated to such Trading Manager as of
the last day of each month (after adding back accrued incentive fees, if any,
and before deduction for accrued distributions or redemptions as of such
date). "Net Assets" of a Partnership equals the total assets of such

<PAGE>

Partnership, including all cash and cash equivalents (valued at
cost), accrued interest, and the market value of all open commodity positions
and other assets of such Partnership, less (i) the brokerage commissions
accrued on a half-turn basis and (ii) all other liabilities of such
Partnership, including incentive fees accrued or payable, determined in
accordance with the principles specified in its Limited Partnership Agreement
and, where no principle is specified, in accordance with generally accepted
accounting principles consistently applied under the accrual basis of
accounting. For the year ended December 31, 1995, Cornerstone II,
Cornerstone III, and Cornerstone IV paid aggregate management fees of
$1,307,872, $1,828,013, and $4,575,372, respectively.

For example, if Net Assets equaled $9,000,000 as of the end of each
month during the fiscal year of a Partnership and there were no liabilities
of such Partnership, such Partnership's Trading Managers would receive an
aggregate monthly management fee for the year of $360,000 (1/3 of 1% of
$9,000,000 per month, or $30,000, times 12). The management fee would be
divided among such Trading Managers based on the portion of such $9,000,000
allocated to each Trading Manager at the end of each month.
If during any month a Partnership does not conduct business
operations or suspends trading or, as a result of an act or failure to act by
a Trading Manager or Managers, is otherwise unable to utilize the trading
advice of such Trading Manager(s) on any of the trading days of that period
for any reason, the management fee described above payable to such Trading
Manager(s) will be prorated based on the ratio by which the number of trading
days in the month which such Partnership engaged in trading operations bears
to the total number of trading days in the month. If a Management Agreement
is terminated on a date other than the end of a Partnership's incentive
period, the incentive fee described below will be determined as if such date
were the end of an incentive period. If a Management Agreement is terminated
on a date other than the end of a calendar month, the management fee
described above will be determined as if such date were the end of a month,
but such fee will be prorated based on the ratio by which the number of
trading days in the month through the date of termination bears to the total
number of trading days in the month.

(B) ANNUAL INCENTIVE FEE. Each Partnership pays an annual incentive
fee equal to 15% of the New Appreciation experienced by such Partnership as a
whole as of the end of such Partnerships incentive period. For Cornerstone II
and III, the incentive period runs from January 1 through December 31 of each
year. For Cornerstone IV, the incentive period commences on June 1 and ends
on May 31 of each year. Each Partnership's New Appreciation is determined by
calculating Appreciation at the end of an incentive period, as applicable,
and making certain adjustments for funds contributed to or withdrawn from
such Partnership and interest income earned. For the year ended December 31,
1995, Cornerstone II, Cornerstone III, and Cornerstone IV paid aggregate
incentive fees of $381,720, $0, and $0, respectively.

The term "Appreciation" under each Management Agreement means (A)
the value of the Partnership's Net Assets as of the last day of any fiscal
year or incentive period, as applicable (reduced by management fees accrued
or payable for the account of such Partnership for such fiscal year or
incentive period, but before reduction for the current annual incentive fee,
if any, accrued or payable for the account of the Partnership for such fiscal
year or incentive period), minus (B) the highest value of Net Assets as of
the last day of any preceding fiscal year or incentive period. "New
Appreciation" equals Appreciation increased by (i) distributions and
redemptions paid or payable on Units and (ii) Exchanges of Units for Units of
another Partnership, and decreased by (iii) contributions to the Partnership
arising from Units acquired on an Exchange of Units and (iv) interest income
earned for the account of the Partnership, with each item of increase and
decrease determined from the date of such highest value of Net Assets to the
last day of the incentive period as of which such incentive fee calculation
is made.
The annual incentive fee is paid on the basis of New Appreciation
in the Partnership's Net Assets as a whole and not in the individual Trading
Manager's allocated portion of such assets. Thus, there would be no New
Appreciation, and no incentive fee paid, if the trading profits of a Trading
Manager were offset entirely by the trading losses of the other Trading
Manager(s) for a Partnership. The annual incentive fee, if any, will be
divided among and paid to each of the Trading Managers of a Partnership based
on each Trading Manager's proportionate contribution, if any, to New
Appreciation.
All distributions and redemptions paid or payable on Units of each
Partnership and on Exchanges of Units of such Partnership are divided by the
then number of Trading Managers for such Partnership, and a dollar amount in
respect of such distribution, redemption or Exchange is charged to the Net
Assets allocated to each Trading Manager based on the ratio of the Trading
Manager's average allocated trading assets to the total average trading
assets of the Partnership, unless the General Partner selects an alternative
means of allocation and so notifies the Trading Managers. All incentive fees
accrued at the end of a month or paid at the end of an

40
<PAGE>

incentive period are charged to the Net Assets allocated to each
Trading Manager for a Partnership in the same manner and to the same extent
as such amounts would or will be paid to each such Trading Manager as of the
date of accrual or payment.

The General Partner's interest in each Partnership is included in
Net Assets for purposes of calculating any incentive fee. Since Limited
Partners of each Partnership may redeem or Exchange Units at a month-end
which is other than the end of an incentive period, and since accrued
incentive fees, if any, will be deducted from the Net Asset Value of such
Units upon redemption or Exchange, each Partnership has agreed that the
incentive fee accrued on such Units will be paid to its Trading Managers in
accordance with the terms of the Management Agreements as if such month-end
were the end of an incentive period of such Partnership. Any amounts so paid
to its Trading Managers by a Partnership will be deducted from any subsequent
incentive fee which includes New Appreciation allocable to such Units.
Notwithstanding the foregoing, Limited Partners who acquire or redeem Units
during an incentive period may be subject to additional risks. See "Risk
Factors-Risks Relating to the Trading Managers-Distortions Produced by Annual
Incentive Fee Arrangement."

If any payment is made by a Partnership to its Trading Managers on
account of New Appreciation in the value of its Net Assets and the value of
such Net Assets thereafter declines or fails to experience New Appreciation
for any subsequent incentive period, each Trading Manager is entitled to
retain such amounts previously paid by such Partnership in respect of New
Appreciation. No subsequent payment based on New Appreciation will be made to
any of its Trading Managers, however, until such Partnership has again
experienced New Appreciation and a Trading Manager has contributed thereto.

3. OTHERS

(A) ADMINISTRATIVE AND EXTRAORDINARY EXPENSES. Each Partnership
pays all of its direct expenses and its share of Common Administrative
Expenses, which have averaged in the aggregate $281,150 per annum for the
period from January 1991 - June 1996, pursuant to the terms of the Exchange
Agreement. Common Administrative Expenses means the costs and expenses
incurred in connection with preparing, printing and mailing monthly reports,
annual reports and all other documents required to be delivered to Limited
Partners under any applicable federal or state laws or pursuant to the terms
of each Limited Partnership Agreement, and all legal, accounting, auditing,
filing, registration and extraordinary expenses not directly attributable to
one Partnership. A Partnership's share of such expenses is based on the
number of its Units outstanding during the month in which such expenses are
incurred. For the year ended December 31, 1995, Cornerstone II, Cornerstone
III, and Cornerstone IV incurred common administrative expenses of $8,183,
$21,158, and $39,890, respectively; none incurred any extraordinary expenses.

(B) TRANSACTION FEES AND COSTS. Each Partnership also pays all
applicable "give up" or transfer fees, NFA fees, exchange fees, clearinghouse
fees, floor brokerage fees and any costs associated with taking delivery of
commodity interests, fees for the execution of each Partnership's forward
contract transactions, the execution of cash transactions relating to
exchange of futures for physicals ("EFP") transactions (where a Partnership
first acquires a cash-physical position and exchanges that cash position for
a futures position on an exchange), and the use of DWR's institutional and
overnight execution facilities (collectively, "transaction fees and costs"),
which transaction fees and costs averaged approximately 0.54% for Cornerstone
II, 0.76% for Cornerstone III, and 0.26% for Cornerstone IV of average annual
Net Assets for the period January, 1991-June, 1996. Each Partnership pays DWR
a fee for each roundturn forward contract, which averages between $3 and $6
per roundturn contract, depending upon the size of the trades. DWR will not
charge the Partnerships a mark-up or spread on such forward trading. DWR
charges a transaction fee of approximately $2.50 for each cash contract
transaction relating to an EFP transaction, and a transaction fee for the use
of the institutional execution desk or overnight execution facilities which
may be up to $3 per roundturn. Each Partnership also pays all applicable
principal and other transaction fees and costs associated with currency
forward contract transactions, which fees and costs have recently averaged
approximately 7% of the brokerage commission fee charged on such
transactions. Effective September 1, 1996, the aggregate transaction fees and
costs and brokerage commissions will be capped at 13/20 of 1% per month of each
Partnership's Net Assets at month-end allocated to each Trading Manager (or
per Trading Manager's trading system). In addition, these fees and costs are
subject to the 14% annual cap on aggregate brokerage commissions, transaction
fees and costs, and net excess interest and compensating balance benefits to
DWR, described under "-1. Commodity Broker-(a) Brokerage Commissions" above.
For the year ended December 31, 1995, Cornerstone II, Cornerstone III, and
Cornerstone IV incurred transaction fees and costs of $160,238, $502,332, and
$168,718, respectively.

<PAGE>
4. BREAK EVEN ANALYSIS

Based upon the annual fees and expenses of Cornerstone II,
Cornerstone III and Cornerstone IV, the Partnerships will be required to earn
trading profits (after taking into account estimated interest income based
upon current rates of 5%) of 7.57%, 8.17% and 4.97%, respectively, per year
of average annual Net Assets in order for a Limited Partner to break-even
(earning profits sufficient to recoup its initial investment) upon redemption
after one year.

Based upon the selling price as of June 30, 1996, Cornerstone II,
Cornerstone III and Cornerstone IV must earn net trading profits of $213.61,
$185.80 and $146.39 per Unit, respectively, in order for a Limited Partner to
break-even (earning profits sufficient to recoup its initial investment upon
redemption of a Unit after one year after payment by the Partnership of its
expenses (as calculated below).

<TABLE>
<CAPTION>
CORNERSTONE II CORNERSTONE III CORNERSTONE IV
-------------- --------------- --------------
$ $ $
<S> <C> <C> <C>
Selling Price per Unit (as of 6/30/96) (1). . . . . . . 2,823.08 2,275.15 2,947.54
Management Fee (2). . . . . . . . . . . . . . . . . . . 117.63 94.80 122.81
Brokerage Commissions (3). . . . . . . . . . . . . . . . 189.14 160.17 129.40
Less: Interest Income (4). . . . . . . . . . . . . . . . (112.92) (91.01) (117.90)
Transaction Costs (5). . . . . . . . . . . . . . . . . . 15.24 17.29 7.66
Administrative Expenses (6). . . . . . . . . . . . . . . 4.52 4.55 4.42
Incentive Fee (7). . . . . . . . . . . . . . . . . . . . -- -- --
Amount of Trading Income Required for a
Limited Partner to Recoup its Investment at
the End of One Year (8). . . . . . . . . . . . . . . . 213.61 185.80 146.39
Percentage of Initial Selling Price. . . . . . . . . . . 7.57% 8.17% 4.97%

<FN>
- - ----------------
(1) Units of each Partnership are offered for sale in Exchanges at Monthly
Closings to be held as of the last day of each month at a purchase price
equal to 100% of the Net Asset Value of the Unit on the first day of the
month following the Monthly Closing.
(2) Monthly management fees are equal to 1/3 of 1% of the Net Assets
allocated to each Trading Manager on the last day of each month (a 4% annual
rate).
(3) Each Partnership pays brokerage commissions at an average rate of
approximately $75 per roundturn. Effective September 1, 1996, commissions and
transaction fees and costs with respect to each Trading Manager's allocated
Net Assets are capped at 13/20 of 1% per month (a maximum 7.8% annual rate)
(in the case of Trading Managers which employ multiple trading systems in
trading on behalf of a Partnership, the foregoing 13/20 of 1% cap is applied
on a per trading system basis). Brokerage commissions have averaged 6.70%, 8.4
1% and 4.39% of average annual Net Assets of Cornerstone II, III and IV,
respectively. For purposes of the above table, brokerage commissions, except
for Cornerstone III, were assumed to be the foregoing percentages. For
Cornerstone III, such rate was reduced to 7.80% in conformity with the new
cap.
(4) DWR credits each Partnership at month-end with interest income as if 80%
of such Partnership's average daily Net Assets for the month were invested at
a prevailing rate on U.S. Treasury Bills. Such rate was estimated based upon
current rates of 5%.
(5) Transaction fees and costs have averaged 0.54%, 0.76% and 0.26% of
average annual Net Assets of Cornerstone II, III and IV, respectively. For
purposes of the above table, transaction fees and costs were assumed to be
the foregoing percentages. Effective September 1, 1996, aggregate
transaction fees and costs and brokerage commissions will be capped at 13/20
of 1% per month of the Partnership's month-end Net Assets allocated to each
Trading Advisor.
(6) Administrative expenses have averaged 0.16%, 0.20% and 0.15% of average
annual Net Assets of Cornerstone II, III and IV, respectively. For purposes
of the above table, administrative expenses were assumed to be the foregoing
percentages.
(7) Incentive fees are assumed to be zero because each Trading Manager's
trading profits are assumed to equal expenses.
</FN>
</TABLE>

<PAGE>
The General Partner will furnish to each Limited Partner a monthly
statement describing the performance of each of the Partnerships and setting
forth, among other things, aggregate management and incentive fees, and
brokerage fees, and extraordinary expenses, if any, incurred or accrued by
the Partnerships during the month and certain other information concerning
the Net Asset Value of a Unit of each Partnership. See "The Limited
Partnership Agreements - Reports to Limited Partners."

INVESTMENT PROGRAM, USE OF
PROCEEDS AND TRADING POLICIES

DIFFERENCES AMONG THE CORNERSTONE FUNDS. The Cornerstone Funds
were organized by the General Partner to meet certain needs of investors in
commodity pools. The Cornerstone Funds, a series of related commodity pools,
offer the investor a choice of three commodity pools with different investment
objectives, Trading Managers and trading policies and the opportunity to
shift investments among such pools. The Cornerstone Funds presently consist
of three New York limited partnerships organized pursuant to the form of
Limited Partnership Agreement attached hereto as Exhibit A. The General
Partner of each Partnership is Demeter Management Corporation. See "The
General Partner."
Each Partnership was organized to achieve maximum capital
appreciation from speculative trading of futures contracts and other
commodity interests consistent with such Partnership's maximum permitted
level of leverage. While Cornerstone II and III presently trade a diverse
portfolio of commodity interest contracts, Cornerstone IV presently trades
futures and forward contracts and other commodity interests exclusively in a
portfolio of diverse world currencies. Each Partnership attempts to operate
within parameters established by the General Partner which, among other
things, attempt to limit the potential risk to a Limited Partner of such
Partnership. Although each Partnership is intended to offer its Limited
Partners a different level of risk, and, correspondingly, a different
potential rate of return on their investment, all speculative trading of
commodity futures contracts and other commodity interests is inherently risky
and there can be no assurance that a desired rate of return or level of
leverage arising from an investment in any of the Partnerships can be achieved
or that the performance results of each Partnership will necessarily correlate
with the level of leverage intended for such Partnership.
The selection of Trading Managers for each Partnership was based on
a review of each Trading Manager's trading system, strategy, experience and
trading performance record in view of the investment objectives and trading
policies of such Partnership. By reviewing this information, the General
Partner was able, among other things, to categorize each Trading Manager
based on the degree of leverage employed as measured by funds normally
committed as margin. The General Partner also reviewed trading performance
records to determine the level of volatility in performance experienced by
each Trading Manager in the past. Although these factors are obtained from
past trading performance, the General Partner believes such factors have some
value in evaluating the potential trading success of a Trading Manager.
Although the General Partner used its best efforts in selecting
Trading Managers for each Partnership, there can be no assurance that each
Partnership will perform as desired. For example, a Partnership attempting to
reduce risk on a relative basis by committing a moderate percentage of assets
as margin may sustain greater losses than any other Partnership. Likewise, a
Partnership committing a high percentage of assets as margin may not achieve
the highest rate of capital appreciation of any Partnership. Indeed, it could
be concluded (based upon the historical performance of the Partnerships) that
the success of the trading methods employed for a Partnership, rather than
the level of leverage employed for that Partnership, has been the greater
factor in determining the potential risk of loss or potential return to an
investor in that Partnership. In selecting Trading Managers, the General
Partner relied largely on prior performance history of each Trading Manager,
and future performance may be completely different. See "Risk Factors" and
"The Commodities Market." THE GENERAL PARTNER IS NOT PREDICTING OR
GUARANTEEING ANY LEVEL OF PERFORMANCE OR RISK BY ANY PARTNERSHIP AND NO SUCH
PREDICTION OR GUARANTEE IS MADE HEREBY.

CORNERSTONE II

Cornerstone II seeks as its investment objective the maximum rate
of capital appreciation consistent with a medium percentage of assets
committed as margin. During the period July 1995 - June 1996, the Trading
Managers for Cornerstone II collectively committed on average between 10 and
30% of the Net Assets of Cornerstone II as margin.

43
<PAGE>

The General Partner requires Trading Managers for Cornerstone II to
conduct their trading in accordance with the trading policies of Cornerstone
II. See "Trading Policies" below. These trading policies provide, among
other things, that a Trading Manager will not initiate additional positions
in any commodity if such additional positions would result in aggregate net
long or net short positions for all commodities requiring as margin more than
55% of the Net Assets allocated to such Trading Manager. For example, a
Trading Manager managing $2,000,000 of Net Assets would not be able to add
new positions after it had $1,100,000 invested as margin in existing open
positions. If the initial margin on all commodity contracts were $5,000, a
Trading Manager for Cornerstone II could have no more than 220 net long or
net short open positions. However, there can be no assurance that such
maximum margin commitment level will prevent Cornerstone II from experiencing
losses larger than those of any other Partnership. See "The Cornerstone
Funds- Performance Records."

The Trading Managers for Cornerstone II are Abacus Trading
Corporation ("Abacus") and John W. Henry & Company, Inc. ("JWH"). A detailed
description of Abacus and JWH, their principals and trading systems and their
composite performance records is set forth under "The Trading Managers-Dean
Witter Cornerstone Fund II" and with respect to JWH "-Dean Witter Cornerstone
Fund IV."

CORNERSTONE III

Cornerstone III seeks as its investment objective the maximum rate
of capital appreciation consistent with a high percentage of assets committed
as margin. During the period July 1995-June 1996, the Trading Managers for
Cornerstone III collectively committed on average between 10 and 45% of the
Net Assets of Cornerstone III as margin.

The General Partner requires Trading Managers for Cornerstone III
to conduct their trading in accordance with the trading policies of
Cornerstone III. These trading policies provide, among other things, that a
Trading Manager will not initiate additional positions in any commodity if
such additional positions would result in aggregate net long or net short
positions for all commodities requiring as margin more than 65% of the funds
allocated to such Trading Manager. For example, a Trading Manager for
Cornerstone III managing $2,000,000 of Net Assets would not be able to add new
positions after it had $1,300,000 invested as margin in existing open
positions. If the initial margin on all commodity contracts were $5,000, a
Trading Manager for Cornerstone III could have no more than 260 net long or
net short open positions. This is $200,000 more in margin and 40 more
positions than in the case of a Trading Manager for Cornerstone II with the
same amount of Net Assets under management.
The Trading Managers for Cornerstone III currently are Welton
Investment Systems Corporation ("WISC"), Abraham Trading Corporation
("Abraham") and Sunrise Capital Management, Inc. ("Sunrise"). A detailed
description of Sunrise, WISC and Abraham, their principals and trading
systems and their composite performance records is set forth under "The
Trading Managers-Dean Witter Cornerstone Fund III" and with respect to
Sunrise "-Dean Witter Cornerstone Fund IV."

CORNERSTONE IV

Cornerstone IV was formed to engage in the speculative trading of
futures and forward contracts and other commodity interests. Such trading has
concentrated exclusively in a portfolio of diverse world currencies.
Cornerstone IV seeks to profit from the price relationships of, between and
among various currencies.

Cornerstone IV seeks as its investment objective the maximum rate
of capital appreciation consistent with a medium to high percentage of assets
committed as margin. During the period July 1995-June 1996, the Trading
Managers for Cornerstone IV collectively committed on average between 5 and
35% of the Net Assets of Cornerstone IV as margin.

The General Partner requires Trading Managers for Cornerstone IV to
conduct their trading in accordance with the trading policies of Cornerstone
IV. These trading policies provide, among other things, that a Trading
Manager will not initiate additional positions in any commodity if such
additional positions would result in aggregate net long or short positions
for all commodities requiring as margin more than 65% of the Net Assets
allocated to such Trading Manager. For example, a Trading Manager managing
$2,000,000 of Net Assets would not be able to add new positions after it had
$1,300,000 invested as margin in existing open positions. If the initial
margin on all commodity contracts were $5,000, a Trading Manager for
Cornerstone IV could have no more than 260 net long or net short open
positions. This is the same amount of margin and positions as in the case of
a Trading Manager for Cornerstone III with the same amount of Net Assets
under management.

<PAGE>
However, it is $200,000 more in margin and 40 more positions than
in the case of a Trading Manager for Cornerstone II with the same amount of
Net Assets under management.
The Trading Managers for Cornerstone IV are JWH, a Trading Manager
for Cornerstone II, and Sunrise, a Trading Manager for Cornerstone III. In
their trading for Cornerstone IV, JWH utilizes only the JWH International
Foreign Exchange Program, one of the three different trading systems it
utilizes in trading for Cornerstone II, while Sunrise uses a modification of
the same trading systems that it utilizes in trading for Cornerstone III. A
detailed description of JWH and Sunrise, their principals and trading systems
and their composite performance records is set forth under "The Trading
Managers-Dean Witter Cornerstone Fund IV."

SUMMARY OF DIFFERENCES AMONG PARTNERSHIPS

The following summarizes certain differences among the
Partnerships:

<TABLE>
<CAPTION>
CORNERSTONE II CORNERSTONE III CORNERSTONE IV
<S> <C> <C> <C>
Margin Commitment. . . . . . . . . . . . . . . . . . . . Medium High Medium-High
July 1995-June 1996 Average
Margin Commitment. . . . . . . . . . . . . . . . . . . 10-30% 10-45% 5-35%
Maximum Percentage Margin Commitment. . . . . . . . . . . 55% 65% 65%
Trading Managers. . . . . . . . . . . . . . . . . . . . . Abacus Sunrise JWH
JWH WISC Sunrise
Abraham
</TABLE>

Each Partnership conducts its business separate and independent of
the other Partnerships. The discussion under "Trading Policies" below and
"General Description of Trading Systems" is applicable to each Partnership
except where noted otherwise. The Trading Managers retained by each
Partnership are discussed separately under "The Trading Managers."

USE OF PROCEEDS. The Trading Managers for each Partnership will be
allocated an equal amount of the net proceeds received by such Partnership at
each month-end from Exchanges of Units, except that the Trading Managers for
Cornerstone II have agreed to an unequal apportionment of net proceeds. Each
Trading Manager is obligated to invest its share of such funds in commodity
futures contracts and other commodity interests in accordance with its
trading systems. See "General Description of Trading Systems" and "The Trading
Managers." The Trading Managers for each Partnership are obligated to invest
in accordance with the trading policies applicable to such Partnership. These
trading policies provide, among other things, that a Trading Manager may
commit as margin up to but no more than a certain percentage of funds under
management. See "Trading Policies" below.
Each Partnership's assets are deposited with DWR in separate
commodity trading accounts established by DWR for each Trading Manager, and
are either held in non-interest bearing bank accounts or invested in
securities approved by the CFTC for investment of customer funds. In any
event, DWR credits each Partnership at month-end with interest income on 80%
of such Partnership's average daily Net Assets for the month at a rate equal
to the average yield on 13-week U.S. Treasury Bills issued during such month.
In the case of Cornerstone IV, for purposes of such interest payments, Net
Assets do not include monies due the Partnership on or with respect to
forward contracts and other commodity interests but not actually received by
it from banks, brokers, dealers and other persons. No Partnership receives
interest income on the balance of its assets held by DWR. Each Partnership's
assets held by DWR may be used as margin solely for such Partnership's
trading. DWR benefits from interest earned on the Partnerships' funds in
excess of the rate paid to the Partnerships. DWR also benefits from
compensating balance treatment in connection with its designation of a bank
or banks in which the Partnerships' assets are deposited, i.e., DWR receives
favorable loan rates from such bank or banks by reason of such deposits. To
the extent such benefits exceed the interest DWR is obligated to credit to
the Partnerships, such benefits will not be shared with the Partnerships.
Assets of each Partnership are not commingled with assets of one
another or any other entity. However, margin deposits and deposits of assets
with DWR do not constitute commingling. Each Partnership's assets are
segregated in accordance with Section 4d(2) of the CEAct and the rules and
regulations of the CFTC.

TRADING POLICIES. Each Partnership requires its Trading Managers
to manage the funds allocated to them in accordance with trading policies set
forth in its Limited Partnership Agreement. The following trading policies
are applicable to each Partnership and its Trading Managers except to the
extent noted otherwise.
1. Each Trading Manager will diversify
its futures contract holdings in order to avoid reliance on

<PAGE>

one or a few commodities and will trade those
futures contracts that, in its opinion, have sufficient liquidity to
enable the Partnership to enter and close out positions without causing
undue price movements (not applicable to Cornerstone IV). Each Trading
Manager for Cornerstone IV may trade in markets which have low trading
volume and are illiquid. Each Trading Manager normally will not
establish new positions in a futures contract for any one commodity
where the original margin therefor, when added to the original margin on
deposit for all open positions in futures contracts for such commodity,
irrespective of the delivery month, exceeds a certain percentage of the
Net Assets being managed by such Trading Manager. The percentages vary
by Partnership as follows:
Dean Witter Cornerstone Fund II-15%
Dean Witter Cornerstone Fund III-20%
Dean Witter Cornerstone Fund IV-20%
If a Trading Manager invests in currency forward contracts, similar
principles will apply. In no event will a Trading Manager commit more
than a maximum percentage of the Net Assets being managed by such
Trading Manager for margin in any one commodity, irrespective of the
delivery month. The maximum percentages vary by Partnership as follows:
Dean Witter Cornerstone Fund II-20%
Dean Witter Cornerstone Fund III-25%
Dean Witter Cornerstone Fund IV-35%
For purposes of this restriction, gold and silver bullion and coins
will be considered one commodity and the soybean complex, consisting of
soybeans, soybean oil and soybean meal, will be considered one
commodity.
2. DWR will require each Partnership to
make margin deposits of not less than the exchange minimum levels
applicable to individuals or, where there are no exchange minimums (as
in the currency forward contract market), the commodity broker's
minimums. Each Trading Manager will not initiate additional positions in
any commodity if such additional positions would result in aggregate net
long or net short positions for all commodities requiring as margin more
than a certain percentage of the Net Assets managed by such Trading
Manager. The percentages vary by Partnership as follows:
Dean Witter Cornerstone Fund II-55%
Dean Witter Cornerstone Fund III-65%
Dean Witter Cornerstone Fund IV-65%
Under certain market conditions, such as an abrupt increase in
margins required by a commodity exchange or its clearinghouse or an
inability to liquidate open positions because of daily price fluctuation
limits or both, the Trading Manager may be required to commit as margin
in excess of the foregoing limit. In such event, the Trading Manager
will reduce its open positions to comply with the foregoing limit before
initiating new positions.
3. Each Trading Manager will only invest
funds for a Partnership where sufficient volume exists, in the opinion
of the Trading Manager, for liquidating positions either on appropriate
exchanges or in the currency forward contract market (not applicable to
Cornerstone IV). Each Trading Manager for Cornerstone IV may trade in
markets which have low trading volume and are illiquid.
4. A Partnership will trade currencies
in the interbank and forward contract markets only with banks, brokers,
dealers, and other financial institutions which the General Partner, in
conjunction with DWR, has determined to be creditworthy. In determining
the creditworthiness of a counterparty to a currency forward contract,
the General Partner and DWR will consult with the Corporate Credit
Department ("CCD") of DWR, which monitors participants in the interbank
market with which DWR deals on a regular basis. The CCD, among other
things, reviews published financial information regarding such
participants, and calculates various ratios, including, but not limited
to, net worth requirements, return on average assets, overall portfolio
yield to cost of money, equity to assets, dividend payout and capital
formation, and evaluates each participant's profitability and compares
the same against its peer groups. From time to time, the CCD modifies
such procedures, institutes new procedures and reviews other information.

5. Because open positions in a futures
or forward contract normally will be closed out before the first notice
day for making or taking delivery of the cash item, each Partnership
normally will not make or take delivery, except as required to match
trades and close out a position in the currency forward contract market.
No assurance can be given that delivery will never occur, but each
Trading Manager will make every effort to avoid the Partnership's taking
or making delivery. Each Trading Manager will not take a

46
<PAGE>
position in any commodity during the delivery
month of that contract, except to match trades to close out a position
in the currency forward contract market or liquidate trades in a limit
market. (Not applicable to Cornerstone IV.)
6. Each Partnership will not employ the
trading technique commonly known as "pyramiding," in which the
speculator uses unrealized profits on existing positions in a given
commodity due to favorable price movement as margin specifically to buy
or sell additional positions in the same or a related commodity.
However, a Trading Manager may take into account a Partnership's open
trade equity on existing positions in determining generally whether to
acquire additional commodity interest contracts on behalf of the
Partnership and may add to existing positions so long as it is in
compliance with the restriction in the preceding sentence.
7. Each Trading Manager will not,
without the prior written consent of the General Partner, employ the
trading techniques known as "spreads" and "straddles" on behalf of a
Partnership, except to liquidate trades in a limit market or to hedge
cash commodity transactions (not applicable to Cornerstone IV). In the
case of Cornerstone IV, each Trading Manager will trade spreads and
straddles on behalf of the Partnership. The General Partner has agreed
that the Trading Managers for Cornerstone II and III which have forward
contract trading experience may use "spreads" and "straddles" in
managing a portion of the assets of those Partnerships. The terms
"spread" and "straddle" describe a transaction involving the
simultaneous holding of futures or forward contracts for the same or a
related commodity but for different delivery dates in which the trader
expects to earn profits from widening or narrowing movement of the
prices of the two contracts.
8. Each Partnership will not engage in
cash commodity transactions unless the cash commodity is fully hedged
(not applicable to Cornerstone IV).
9. Each Partnership will not purchase,
sell or trade securities (except securities approved by the CFTC for
investment of customer funds).
10. Each Partnership will not borrow
(except for margin purposes) or lend money. Each Partnership may utilize
lines of credit for trading currency forward contracts. Such trading
does not, however, involve borrowing for purposes of this trading
policy. Each Partnership will not permit "churning" of the Partnership's
assets.
11. Each Trading Manager will engage in
trading options on futures contracts or physical commodities only with
the prior express written consent of the General Partner.

Trading policies applicable to each Partnership may be changed by
the General Partner, except that material changes to trading policies
numbered 1, 2, 3, 6, 8, 9 and 10 may only be made by the General Partner with
prior written approval of more than 50% of the Limited Partners of a
Partnership.

CAPITALIZATION

The following table sets forth the actual capitalization of the
Partnerships as of June 30, 1996. Since unsold Units may only be sold in
Exchanges, which requires a redemption of Units from one Partnership and for
purchase of Units in one or two of the other Partnerships, it is impractical
to provide a pro forma table reflecting the capitalization of the
Partnerships if all unsold Units are sold, since redemptions would, of
necessity, offset sales.

There will be no difference insofar as sharing of profits and
losses are concerned between Units of Limited Partnership Interest and Units
of General Partnership Interest.

<PAGE>
<TABLE>
<CAPTION>
AMOUNT
OUTSTANDING
AS OF
JUNE 30,
TITLE OF CLASS 1996
$
<S> <C>
Cornerstone II:
Limited Partnership Interest(1). . . . . . . . . . . . . . . . . . . . . . . . 28,328,881
General Partnership Interest(1). . . . . . . . . . . . . . . . . . . . . . . . 613,737
-----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,942,618
-----------
-----------
Cornerstone III:
Limited Partnership Interest(1). . . . . . . . . . . . . . . . . . . . . . . . 38,309,454
General Partnership Interest(1). . . . . . . . . . . . . . . . . . . . . . . . 869,340
-----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,178,794
-----------
-----------
Cornerstone IV:
Limited Partnership Interest(1). . . . . . . . . . . . . . . . . . . . . . . . 95,702,901
-----------
General Partnership Interest(1). . . . . . . . . . . . . . . . . . . . . . . . 1,883,149
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,586,050
-----------
-----------
</TABLE>

GENERAL DESCRIPTION OF TRADING SYSTEMS

INTRODUCTION

The primary purpose of each Partnership is appreciation of its
assets through speculative trading in commodity futures contracts and other
commodity interests. A Partnership's ability to succeed in this endeavor
depends largely on the combined success of the respective trading systems
employed on behalf of such Partnership by its Trading Managers. Each Trading
Manager must anticipate market trends and effect the purchase or sale of
commodity interest contracts in accordance with its predictions as to those
trends. To the extent that Trading Managers for a Partnership anticipate and
follow opposite market trends, the gains on one Trading Manager's positions
will tend to offset the losses on another Trading Manager's positions. While
each Trading Manager has provided the General Partner with a general
description of the trading systems to be employed on behalf of a
Partnership's account, investors are cautioned that the details of the
systems are proprietary secrets and, as such, are not generally known to the
General Partner. As a result, the General Partner will be unable for the most
part to determine whether each Trading Manager is or is not following its
trading system. While the officers of the General Partner are familiar with
commodity trading and monitor each Trading Manager's compliance with the
trading policies applicable to such Trading Manager (see "Trading Policies"),
there is no basis for judging whether or not a Trading Manager is operating
within the general parameters of its technical trading strategy (that is,
whether the losses or gains from individual transactions are within
anticipated ranges). Thus, no assurance can be given that a trading system
followed in the past is being followed for a particular trade or series of
trades.
In addition, there can be no assurance that, even if a trading
system were followed, it would produce results similar to those experienced
in the past. Although the trading system that is employed on behalf of a
Partnership's account by each Trading Manager is the same used in such
Trading Manager's management of other commodity accounts except to the extent
noted otherwise, there can be no assurance that the same or similar results
will occur in the future. Further, the performance results of all Trading
Managers for each Partnership are combined and a Limited Partner will not
receive the direct benefit of any single Trading Manager's performance
record. Additionally, to the extent that funds are apportioned unequally
among Trading Managers for a Partnership, the results of individual Trading
Managers will affect the Net Assets or Net Asset Value of a Unit
disproportionately. See "Risk Factors-Risks Relating to the Trading
Managers-Unequal Apportionment of a Partnership's Assets among Trading
Managers" and "The Management Agreements."
Commodity traders basically rely on either of two types of analysis
for making their trading decisions, "technical" or "fundamental," or on a
combination of technical and fundamental analysis. Generally speaking,
technical trading strategies are designed to identify and follow existing and
incipient trends in the markets, while fundamental trading strategies are
designed to forecast future developments in the markets.

<PAGE>
Technical analysis is not based on the anticipated supply and
demand of a particular cash (actual) commodity; instead, it is based on the
theory that the study of the commodities markets themselves will provide a
means of anticipating the external factors that affect the supply and demand
of a particular commodity in order to predict future prices. Technical
analysis operates on the theory that market prices at any given point in time
reflect all known factors affecting supply and demand for a particular
commodity; consequently, technical analysis theorizes that a detailed
analysis of, among other things, actual daily, weekly and monthly price
fluctuations, volume variations and changes in open interest can be of
predictive value when predicting the future course of price movements.
Technical strategies generally utilize a series of mathematical measurements
and calculations designed to monitor market activity for the particular
strategies used, and trading decisions are based on signals generated by chart
s, manual calculations, computers or a combination of any or all of the
foregoing. As an example with respect to a financial instrument contract, one
set of technical procedures might evaluate the following factors, among
others, on a daily basis: (1) the price trends of the particular financial
instrument contract and the levels at which to initiate new positions and
terminate existing positions; (2) the volatility that the particular
financial instrument contract has displayed in the past; (3) the condition of
the financial instrument market being traded (e.g., to determine whether it
is a trending market or an erratic and non-trending market); and (4) the
state of the financial instrument markets in general (e.g., to determine the
proper points for initiating new positions and allowing increases in existing
commitments).
Fundamental analysis, on the other hand, is based on the study of
factors external to the trading market that affect the supply and demand of a
particular commodity in order to predict future prices. Such factors might
include weather, the economy of a particular commodity, government policies,
United States and foreign political and economic events, and changing trade
prospects. Fundamental analysis theorizes that by monitoring relevant supply
and demand factors of a particular commodity, a state of current or potential
disequilibrium of conditions may be identified that has yet to be reflected
in the price level of that commodity. Fundamental analysis assumes that the
markets are imperfect, that information is not instantaneously assimilated or
disseminated and that econometric models can be constructed that generate
equilibrium prices that may indicate current prices are unsustainable. As an
example with respect to an agricultural commodity, some of the fundamental
factors that might affect the supply of soybeans include the acreage planted,
crop conditions (drought, flood, disease, etc.), labor disputes affecting
planting, harvesting, and distributions and the previous years crop
carryover. The demand for soybeans consists of domestic usage and exports,
which are affected by general world economic conditions and the cost of
soybeans in relation to the cost of competing food products. As an example
with respect to a currency, some of the fundamental factors that might affect
the demand for a currency (e.g., British pound) include the inflation and
interest rates of the currency's domestic market, exchange controls and that
country's balance of trade, economy and political stability. The supply of a
currency can be determined by, among other things, government spending,
credit controls, domestic money supply and the prior years trade balances.

TRADING BY THE TRADING MANAGERS

The trading systems utilized by the Trading Managers for the
Partnerships are each technical trading systems, and trading decisions are
based in part on chart interpretations, mathematical calculations and
computer-assisted analysis of the commodities markets. The trading systems
employed by the Trading Managers attempt to detect trends in price movements
for commodity interest contracts. All successful speculative commodity
trading depends upon establishing a position and then maintaining that
position while the market moves in favor of the commodity trader. Technical
trading systems seek to establish such positions and to exit the market
and/or establish reverse positions when the favorable trend either reverses
or does not materialize. No such system will be successful if the market is
moving in an erratic and non-trending manner or if the market moves in the
direction opposite to that predicted by the system. Because of the nature of
commodity markets, prices frequently appear to be trending when the market
is, in fact, without a trend. In addition, a trading system may identify
markets as trending favorably to a particular position even though actual
market performance thereafter is the reverse of the trend identified.
A trend-following trading system will seldom direct market entry or
exit at the most favorable price in the particular market trend. Rather, this
type of trading system seeks to close out losing positions quickly and to
hold portions of profitable positions for as long as the trading system
determines that the particular market trend continues to exist; however,
there can be no assurance that profitable positions can be liquidated at the
most favorable price in a particular trend. As a result, the number of losing
transactions can be expected to exceed substantially the number of profitable
transactions. However, if the system is successful, these losses should be
small and should be more than offset by a few large gains.

<PAGE>
Some of the differences among the trading systems of the Trading
Managers are discussed under "The Trading Managers." Each Trading Manager,
from time to time, may change or refine its trading system. However, a
Trading Manager may not materially change its trading policies, systems,
methods or strategies used for a Partnership's account without the prior
written approval of the General Partner. Additional trading systems have been
or may be developed by the Trading Managers and, with the written permission
of the General Partner, may be employed in trading a portion of the assets
allocated to a Trading Manager.
Although a technical trading system normally consists of a series
of fixed rules applied manually or by computer, such system still requires
that principals or employees of the Trading Manager make certain subjective
judgments and decisions. For example, a Trading Manager will select the
commodities and markets which it will follow, the commodities and markets
which it will actively trade and the contract months in which it will
maintain positions. A Trading Manager will also determine when it will roll
over a position (i.e., liquidate a position which is about to expire and
initiate a position in a more distant contract month). In addition, a Trading
Manager will determine the position size or number of contracts in each
commodity to be bought or sold at any given time, the time at which orders
are to be placed with and executed by a commodity broker, the method by which
orders are to be placed, and the types of orders that are to be placed. These
types of decisions require consideration of, among other things, the
volatility of the particular market, the pattern of price movements (both
interday and intraday), open interest, trading volume, changes in spread
relationships between various contract months and between commodities, and
overall portfolio balance and risk exposure. In addition, these types of
decisions are often based on consideration of typical fundamental factors
affecting the supply and demand of a particular commodity. With respect to
the timing and execution of trades, a Trading Manager may also rely to some
extent on the judgment of others, such as commodity brokers and floor
brokers. No assurance can be given that consideration of any or all of the
foregoing factors will be made by the Trading Managers and their principals
and employees with respect to every trade for the Partnerships or that
consideration of any of such factors in a particular situation will lessen a
Partnership's risk of loss. In most cases, these subjective decisions are
made by one principal of the Trading Manager. Investors should be aware that
such decisions may involve a substantial element of judgment and that such
person's unavailability to make such decisions could materially impair the
operation of the trading system.
Each Trading Manager must determine the timing and method by which
orders will be placed with various brokerage firms. The Trading Manager must
also select the types of orders to be placed for its managed accounts.
Executions for the Partnerships' accounts and the Trading Managers' other
accounts may be made during the day: (1) on a "stop" basis, where an order
becomes a market order when the specified stop price is reached; (2) on an
"at the market" basis, where the order is executed as soon as possible after
being received on the floor of the exchange; (3) on a "limit" basis, where an
order is placed to buy or sell at a specified price or better than the
specified price; and (4) on a "closing price" basis, which is a contingent
order based on the closing range of the market. Order placement will vary in
accordance with the trading system being used, the type of market encountered
and the type of order that can be used on the exchange on which a particular
commodity is traded. Since many of the Trading Managers have varied these
practices over the years, their prior performance may not necessarily reflect
future performance.
Each Trading Manager also maintains a procedure for determining the
appropriate quantity of contracts to be traded for an account of a given size
and for all accounts. Some Trading Managers maintain a fixed or equal number
of positions for each commodity traded, regardless of differences in
volatility or prices among commodities. Other Trading Managers continually
adjust their trading portfolios and the position size of an order immediately
prior to placement, based on such factors as past market volatility, prices
among commodities, amount of risk, potential return and margin requirements.
While each of the Trading Managers presently has a method for determining
position size for a trade, the initial determination of this method was a
subjective decision made by the principals of the Trading Manager. Although
two Trading Managers might have substantially similar trading systems and
might be following the same trend, the method under which position size is
determined could cause performance results to differ significantly.
Each Trading Manager, from time to time, may at its discretion add
to or delete from its portfolio additional commodity interest contracts and
commodities.
The Trading Managers' orders for trades generally will be placed
directly with the order desk of DWR, and confirmations of the executed trades
will be retained by DWR. Although other accounts advised by each Trading
Manager, from time to time, may employ DWR as their commodity broker, there
is no obligation on the part of each Trading Manager or the owners of such
other accounts to use DWR as broker in connection

<PAGE>
with such other accounts, and each Trading Manager may and does
trade for such other accounts at various commodity brokerage firms in
addition to DWR.
The above general description of trading systems does not discuss
significant differences in the trading systems developed and employed by each
Trading Manager. Certain of these differences are discussed for each Trading
Manager under the following section entitled "The Trading Managers." However,
as stated above, the actual systems are proprietary and confidential and the
General Partner does not know the full extent to which such systems differ.

THE TRADING MANAGERS

INTRODUCTION

CERTAIN OF THE TRADING MANAGERS OF THE PARTNERSHIPS ARE AVAILABLE
TO TRADE "NOTIONAL" EQUITY FOR CLIENTS-I.E., TO TRADE SUCH CLIENTS' ACCOUNTS
AS IF MORE EQUITY WERE COMMITTED TO SUCH ACCOUNTS THAN IS, IN FACT, THE
CASE. CONSEQUENTLY, THE CFTC REQUIRES THAT THE FOLLOWING DISCLOSURE
STATEMENT BE INCLUDED VERBATIM HEREIN. THE PARTNERSHIPS' ACCOUNTS WILL NOT
INCLUDE ANY NOTIONAL EQUITY

SPECIAL DISCLOSURE FOR NOTIONALLY-FUNDED ACCOUNTS

YOU SHOULD REQUEST YOUR COMMODITY TRADING ADVISOR TO ADVISE YOU OF
THE AMOUNT OF CASH OR OTHER ASSETS (ACTUAL FUNDS) WHICH SHOULD BE DEPOSITED
TO THE ADVISOR'S TRADING PROGRAM FOR YOUR ACCOUNT TO BE CONSIDERED
"FULLY-FUNDED." THIS IS THE AMOUNT UPON WHICH THE COMMODITY TRADING ADVISOR
WILL DETERMINE THE NUMBER OF CONTRACTS TRADED IN YOUR ACCOUNT AND SHOULD BE
AN AMOUNT SUFFICIENT TO MAKE IT UNLIKELY THAT ANY FURTHER CASH DEPOSITS WOULD
BE REQUIRED FROM YOU OVER THE COURSE OF YOUR PARTICIPATION IN THE COMMODITY
TRADING ADVISOR'S PROGRAM.
YOU ARE REMINDED THAT THE ACCOUNT SIZE YOU HAVE AGREED TO IN
WRITING (THE "NOMINAL" OR "NOTIONAL" ACCOUNT SIZE) IS NOT THE MAXIMUM
POSSIBLE LOSS THAT YOUR ACCOUNT MAY EXPERIENCE.
YOU SHOULD CONSULT THE ACCOUNT STATEMENTS RECEIVED FROM YOUR
FUTURES COMMISSION MERCHANT IN ORDER TO DETERMINE THE ACTUAL ACTIVITY IN YOUR
ACCOUNT, INCLUDING PROFITS, LOSSES AND CURRENT CASH EQUITY BALANCE. TO THE
EXTENT THAT THE EQUITY IN YOUR ACCOUNT IS AT ANY TIME LESS THAN THE NOMINAL
ACCOUNT SIZE YOU SHOULD BE AWARE OF THE FOLLOWING:
1. ALTHOUGH YOUR GAINS AND LOSSES, FEES
AND COMMISSIONS MEASURED IN DOLLARS WILL BE THE SAME, THEY WILL BE
GREATER WHEN EXPRESSED AS A PERCENTAGE OF ACCOUNT EQUITY.
2. YOU MAY RECEIVE MORE FREQUENT AND
LARGER MARGIN CALLS.

DEAN WITTER CORNERSTONE FUND II

1. ABACUS TRADING CORPORATION
(CURRENT ALLOCATION-25.51%)

Abacus Trading Corporation (formerly A.O. Management Corporation)
("Abacus") is a Pennsylvania corporation with its principal place of business
at 1536 Cole Blvd., Suite 315, Golden, Colorado 80401. Abacus maintains a
Branch Office at 2420 Lyndhurst Ave, Winston-Salem, North Carolina, 27103.
The telephone number is 910-725-0065. A.O. Management Corporation was formed
in 1978 to manage the trading of commodity pools and managed accounts.
Effective October 26, 1994, A.O. Management Corporation changed its name to
Abacus Trading Corporation. Abacus is not affiliated with the General Partner
or DWR or with any of the other Trading Managers for the Partnerships. Abacus
is registered with the CFTC as a commodity trading advisor and is a member of
the NFA in such capacity.

Prior to January, 1995, trading by Abacus (and its predecessor,
A.O. Management) was done utilizing A.O. Management systems. Progressive
enhancements to the A.O. Management systems resulted in numerous changes to
the point where, by January 1995, the systems used by Abacus differed
significantly from those employed in the past.
The officers and directors of Abacus are as follows:

<PAGE>

Carl C. Peters, age 53, is President, Director and sole stockholder
of Abacus. Dr. Peters is involved in marketing, systems research, and product
development at Abacus. His academic credentials include a Ph.D. in Operations
Research from UCLA, an M.S. from M.I.T. in Engineering and a B.S. from Penn
State University. Prior to joining Abacus, Dr. Peters held an endowed chair
in economics and business at Westminster College in Pennsylvania (1986-1988).
His previous experience includes business analysis and corporate planning at
Weyerhauser Company (1971-1976), and a faculty appointment in the College of
Business, University of Denver (1977-1985), where he was Department Chairman
and Director of the Decision Sciences Program. A recognized authority on
trading system performance evaluation, he has developed and taught college
level courses on the futures markets, lectured nationally and
internationally, and published papers on trading system performance. Dr.
Peters is also sole principal and stockholder of International Derivative
Investments, Inc. ("IDI"), a commodity trading advisor and investment adviser
formed in 1991.

Ronald D. Murray, age 42, Trading Operations Manager, joined Abacus

in March, 1991. His registration as a principal of Abacus became effective on
November 16, 1993. He has a B.S. degree from Minot State College (1977).
Prior to joining Abacus, he was a Financial Consultant with Prudential
Securities (1989-1991), Thompson McKinnon Securities (1983-1988), and
Boettcher and Company (1980-1982). Mr. Murray's primary responsibilities are
the management of all operations related to trading.

Benjamin T. Warwick, age 33, Director of Marketing, joined Abacus
on July 1, 1996. His registration as a Principal became effective on July 3,
1996. Prior to joining Abacus, Mr. Warwick was an owner and Principal of
Hegemony Advisors, Inc. (1/95-6/96), the performance record of which is
included with this Supplement. He was also a futures broker with
Interstate/Johnson Lane (1/92-12/95), and earlier operated as a sole
proprietor performing consulting work for Bacon Investment Corporation, a
registered Commodity Trading Advisor which provides trading services for
investors (5/90-12/91). His education includes B.S. degrees in Chemistry and
Chemical Engineering from the University of Florida (6/86) and an MBA from the
Graduate School of Business at the University of North Carolina at Chapel
Hill (5/90). His responsibilities at Abacus include marketing, and operation
of the Event Trading Program.

There have been no material administrative, civil or criminal
proceedings against Abacus or any of its principals during the five years
preceding the date of this Prospectus.
Pursuant to its Management Agreement, Abacus owns 10 Units of
Cornerstone II. None of the principals of Abacus own any Units of such
Partnership, nor do Abacus and its principals own any Units of Cornerstone
III or IV.
Abacus and its principals may, from time to time, trade commodity
interest contracts for their own proprietary accounts. Such trades may or
may not be in accordance with the Abacus trading system described below. The
records of trading in such accounts will not be made available to Limited
Partners for inspection. Set forth below is a general description of the
Abacus trading system.

THE ABACUS TRADING SYSTEM

Abacus offers three different programs: the Currency Program, the
Financials and Metals Program and the Fully Diversified Program. Abacus uses
the Fully Diversified Program in trading the assets of Cornerstone II. All
of the programs are traded according to the same basic trading strategy.
Descriptions of the different strategies follow. Abacus trades on exchanges
in the U.S. and certain foreign countries. Abacus places its orders both
before and during market hours. When placing its orders with introducing
brokers, futures commission merchants such as DWR, and/or banks, Abacus does
not adhere to any arbitrary mechanical or rotational system and does not
attempt to enter orders simultaneously. Instead, it attempts to enter orders
in such a way as to attain the best overall price for its clients. Since
Abacuss method of entering orders involves subjective judgments, it
necessarily follows that some clients may receive better prices than others
on different occasions or during different time spans. Abacus uses good faith
and its best efforts to achieve an equitable treatment of all clients with
respect to priority in entering orders and assignments of executed trades.
Abacus believes that its method of placing orders is superior to other
available procedures and that its method will produce the best average prices
for each of its clients over time.

TRADING STRATEGY FOR THE CURRENCY, FINANCIALS AND METALS AND FULLY
DIVERSIFIED PROGRAMS. Abacus bases its trades primarily upon a proprietary
computerized, trend-following trading system developed by Abacus. The system,
which has been real-time trading since 1978, has been periodically modified
and expanded. The principal objective of the trading strategies is to profit
from major, sustained changes in prices of commodity futures.

<PAGE>
The trading principles which Abacus employs include: (1) limiting
trading to markets which it believes to be liquid enough to handle the amount
of trading contemplated; (2) diversifying the positions among various
commodities and among similar commodities in order to limit exposure in any
one area; and (3) limiting the assets committed as margin at minimum exchange
margin requirements, generally to between 5% to 35% of initial capital,
although commodity brokers may require margin in excess of exchange minimums.
Under normal conditions Abacus expects to trade up to 200 fully-executed
trades (round-turns) per $100,000 of client account equity per year, although
this may be higher or lower depending on price volatility. Abacus selects a
diversified portfolio of commodities and occasionally maintains positions in
more than one contract month of the selected commodities. Decisions whether
to trade a particular commodity futures contract are also based upon a
calculation of profit potential (based upon historical and current price
analysis).
In addition to utilizing the trading signals provided by its
technical, trend-following system, Abacus may also utilize subjective
judgment to make adjustments to these signals based upon its knowledge of the
strengths and weaknesses of its system under certain market conditions.
Abacus expects such adjustments to be primarily in the nature of an overlay
on system positions, particularly in the financial markets, although they may
play a more prominent role in the non-financial markets. Such adjustments may
result in missing significant profit opportunities that otherwise might be
captured by depending solely on Abacus's computer-based system or utilizing
different strategies.
Abacus's trading systems, programs and strategies have evolved and
will continue to evolve over time as a result of continuing research, testing
of data and cumulative trading experience. These modifications occur within
the general description of the trading programs described herein. Clients are
not advised of these modifications resulting from this ongoing process unless
such changes represent a substantial departure from Abacus's trading approach
as described in its Disclosure Document.
Abacus directs the trading of client accounts in three different
programs each of which trades a variety of commodity futures and cash and
forward contracts in the interbank market as described below.

FULLY DIVERSIFIED PROGRAM. This program diversifies among as many
commodity futures as Abacus believes is appropriate to earn a profit over
time. Diversification is achieved by trading a variety of futures, some of
which are not closely related to one another. In so doing, overall volatility
of returns should be reduced with profits accruing at a smoother rate.
Commodity groups used in the Program include metals, global financial
instruments, foreign currencies, oil, grains and other agricultural products.
The amount and degree of diversification depends upon account size and
Abacus's judgment as to which commodity futures contracts are suitable for
trading.

FINANCIALS AND METALS PROGRAM. This program is concentrated
exclusively in the global interest rate, foreign currency, and metal markets
and is traded using the same trend-following approach as the Fully
Diversified Program. Its objective is to profit from economic forces such as
interest rates, inflation and deflation in the international financial
marketplace. Because of the lower diversity of commodities traded, it will
most likely be more volatile than the Fully Diversified Program. Based on
historical price analysis and past trading experience, Abacus believes that
this increase in volatility will be partially offset by the broader, smoother
trends likely to occur in these commodities.

CURRENCY PROGRAM. This program is concentrated exclusively in
foreign currencies and is traded using the same trend-following approach as
the Fully Diversified and Financials and Metals Programs. Its objective is to
profit from economic forces which affect the relationships between world
currencies in the international financial marketplace. Because of the lower
diversity of the commodities traded, it will most likely be more volatile
than the Fully Diversified Program.

In addition to its other Programs which are trend-following in
nature, Abacus operates a non-trend following "Event Trading" Program.
Developed and operated by Mr. Warwick prior to joining Abacus, it attempts to
profit from market inefficiencies in responding to releases of certain
information such as government reports on employment and inflation. The
Program trades a variety of financial and non-financial markets and is
largely systematic in nature. The program is currently not offered.

As of June 30, 1996, the aggregate amount of funds under management
pursuant to the Diversified Program was $9,515,488, and the aggregate amount
of funds under management pursuant to all Abacus trading programs was
$17,021,300.

As of June 30, 1996, Abacus was managing approximately $7,382,296
of Cornerstone II. Such amount and the percentage of assets of Cornerstone
II managed by Abacus will change as a result of allocations of assets from
the Exchange of Units of Cornerstone II, allocations and reallocations among
trading managers and/or trading systems, and the performance of Abacus and
the other trading manager for Cornerstone II.

<PAGE>

2. JOHN W. HENRY & COMPANY, INC.
(CURRENT ALLOCATION--74.49%)

John W. Henry & Company, Inc. ("JWH") is a United States-based
global investment management corporation with offices located at 301 Yamato
Road, Boca Raton, Florida and at One Glendinning Place, Westport, Connecticut
06880. Its telephone number is (203) 221-0431. JWH is recognized as a leader
in managing capital in futures, interest rate, and foreign exchange markets
for international banks, brokerage firms, pension funds, institutions, and
high-net-worth individuals. JWH trades numerous contracts of a 24-hour basis
in the U.S., Europe and Asia, and has grown to be one of the largest advisors
in the industry, managing over $1.3 billion in client capital.

John W. Henry & Company began managing assets in 1981 as a sole
proprietorship, and was later incorporated in the state of California as John
W. Henry & Co., Inc. to conduct business as a commodity trading advisor. The
sole shareholder of JWH is the John W. Henry Trust dated July 27, 1990. The
firm is registered as a commodity trading advisor and a commodity pool
operator with the Commodity Futures Trading Commission and is a member of the
National Futures Association ("NFA"). JWH is not affiliated with the General
Partner or DWR or with any of the other trading managers for the
Partnerships.
The individual principals of JWH are as follows:

Mr. John W. Henry, age 46, is chairman of the JWH Board of
Directors and is trustee and sole beneficiary of the John W. Henry Trust
dated July 27, 1990. Mr. Henry is also a member of the Investment Policy
Committee of JWH. He currently concentrates his activities at JWH on
portfolio management, business issues and frequent dialogue with trading
supervisors. Mr. Henry is the exclusive owner of certain trading systems
licensed to Elysian Licensing Corporation, a corporation wholly-owned by Mr.
Henry and sublicensed by Elysian Licensing Corporation to JWH and utilized by
JWH in managing client accounts. Over the last fifteen years, Mr. Henry has
developed many innovative investment programs which have enabled JWH to
become one of the most successful money managers in the foreign exchange,
futures and fixed income markets.

Mr. Henry has served on the Board of Directors of the National
Association of Futures Trading Advisors ("NAFTA") and the Managed Futures
Trade Association, and has served on the Nominating Committee of the NFA. Mr.
Henry currently serves on the Board of Directors of the Futures Industry
Association ("FIA") and is Chairman of the FIA Task Force on Derivatives for
Investment. He also currently serves on a panel created by the Chicago
Mercantile Exchange and the Chicago Board of Trade to study cooperative effort
s related to electronic trading, common clearing and the issues regarding a
merger. In 1989, Mr. Henry established residency in Florida and since that
time has performed services from that location as well as from the offices of
JWH in Westport, Connecticut. Mr. Henry is a principal of JWH Risk
Management, Inc., JWH Asset Management, Inc., Westport Capital Management

Corporation, Global Capital Management Limited and JWH Investments, Inc., all
of which are affiliates of JWH. Since the beginning of 1987, Mr. Henry has,
and will continue to devote considerable time to activities in businesses
unrelated to JWH and its affiliates.

Mr. Mark H. Mitchell, age 46, is a vice chairman and a member of
the JWH Board of Directors. He is also vice chairman and a director of JWH
Risk Management, Inc., director of JWH Asset Management, Inc., and vice
president of JWH Investments, Inc. Prior to joining JWH in January 1994, Mr.
Mitchell was a partner of Chapman and Cutler, a Chicago law firm, where he
headed its futures law practice since August 1983. From August 1980 to March
1991, he served as General Counsel of the NAFTA and, from March 1991 to
December 1993, he served as General Counsel of the Managed Futures
Association. Mr. Mitchell is currently a member of the Commodity Pool
Operator/Commodity Trading Advisor Advisory Committee and the Special
Committee for the Review of a Multi-tiered Regulatory Approach to NFA Rules,
both of the NFA and the Executive Committee of the Law and Compliance
Division of the FIA. In 1985, he received the Richard P. Donchian Award for
Outstanding Contributions to the Field of Commodity Money Management. He has
been an editor of FUTURES INTERNATIONAL LAW LETTER and its predecessor
publication, COMMODITIES LAW LETTER. He received an A.B. with honors from
Dartmouth College and a J.D. from the University of California at Los
Angeles, where he was named to the Order of the Coif, the national legal
honorary society.

Mr. David R. Bailin, age 36, is an executive vice president and is
a member of the Operating Committee of JWH. He is also president of JWH
Investments, Inc., JWH Risk Management, Inc., and JWH Asset Management, Inc.,
president and director of Westport Capital Management Corporation, and
president and chairman of the Board of Directors of Global Capital Management
Limited. Mr. Bailin is responsible for the development, implementation, and
management of JWH's sales and marketing infrastructure. Prior to joining JWH
in

<PAGE>
December 1995, Mr. Bailin was managing director-development since
April 1994 for Global Asset Management ("GAM"), a Bermuda based management
firm with over $7 billion in managed assets. He was responsible for
overseeing the international distribution of GAM's funds as well as for
establishing new distribution relationships and channels. Prior to his
employment with GAM, Mr. Bailin headed the real estate asset management
division of Geometry Asset Management beginning in July 1992. Prior to that
time, beginning in 1988, he was President of Warner Financial, an investment
advisory business in Boston, Massachusetts. Mr. Bailin received a B.A. from
Amherst College and an M.B.A. from Harvard Business School.

Mr. Peter F. Karpen, age 44, is a managing director and a member of
the Operating Committee of JWH. Mr. Karpen joined JWH in June 1995 from CS
First Boston where he was director of Futures and Options since 1988 and vice
president since 1981. Mr. Karpen has been a member of the board of the FIA
since 1984 and a member of its Executive Committee since 1988. Mr. Karpen was
Chairman of the FIA from 1994 - 1995. In addition, he is a Public Director of
the New York Cotton Exchange and serves on the CFTC's Financial Products
Advisory Committee. He has been a Trustee of the Futures Industry Institute,
a member of the CFTC's Regulatory Coordination Advisory Committee and a
member of several commodities and securities exchanges in the United States.
He received his B.A. from Boston University and M.B.A. from Boston College.
Mr. Karpen announced his resignation from JWH on March 18, 1996 but will
continue in his present capacities for 6 months from that date.

Mr. James E. Johnson, Jr., age 44, is chief financial officer and
chief administrative officer for JWH. He also serves as a member of the
company's Operating Committee. Mr. Johnson is also a principal of Westport
Capital Management Corporation, JWH Investments, Inc. and JWH Risk Management
Inc., and JWH Asset Management, Inc. Mr. Johnson joined JWH in May of 1995
from Bankers Trust Company where he was managing director and chief financial
officer for their Institutional Asset Management Division since January 1983.
His areas of responsibility included finance, operations and technology for
the $160 billion global asset advisor. Prior to joining Bankers Trust, Mr.
Johnson was a product manager at American Express Company responsible for
research and market strategies for the Gold Card. He received a B.A. with
honors from Columbia University and an M.B.A. in Finance and Marketing from
New York University.

Ms. Elizabeth A.M. Kenton, age 30, is a senior vice president, the
director of compliance, and a member of the Operating Committee of JWH. Since
joining JWH in March of 1989, Ms. Kenton has held positions of increasing
responsibility in research and development, administration and regulatory
compliance. Ms. Kenton is also a director and treasurer of Westport Capital
Management Corporation, the executive vice president of JWH Investments,
Inc., the vice president of JWH Asset Management, Inc. senior vice president
of JWH Risk Management, Inc., and a director of Global Capital Management
Limited. Prior to her employment at JWH, Ms. Kenton was Associate Manager of
Financial and Trading Operations at Krieger Investments, a currency and
commodity trading firm. From July 1987 to September 1988, Ms. Kenton worked
for Bankers Trust Company as a product specialist for foreign exchange and
treasury options trading. She received a B.S. in Finance from Ithaca College.

Ms. Mary Beth Hardy, age 35, is a senior vice president, the director
of trading administration, and is a member of the Operating and Investment
Policy Committees of JWH. Since joining JWH in September 1990, Ms. Hardy has
held positions of increasing responsibility in research and development and
trading. Prior to her employment at JWH, Ms. Hardy held the position of
associate editor at Waters Information Services where she wrote weekly
articles covering technological advances in the securities and futures
markets. Prior to joining Waters in 1989, Ms. Hardy was at Shearson Lehman
Brothers Inc. where she held the position of assistant director of the
Managed Futures Trading Department. Prior to that, Ms. Hardy was an
institutional salesperson for Shearson, in a group specializing in financial
futures and options. Previously, Ms. Hardy was an institutional salesperson
for Donaldson, Lufkin and Jenrette with a group which also specialized in
financial futures and options. Ms. Hardy serves on the Board of Directors of
the Managed Futures Association (the "MFA") and chairs its Trading and
Markets committee. She received a B.B.A. in Finance from Pace University.

Mr. David M. Kozak, age 48, is Counsel to the Firm, vice president
and secretary of JWH. He is also secretary of JWH Risk Management, Inc., JWH
Asset Management, Inc., and assistant secretary of Westport Capital
Management Corporation. Prior to joining JWH in September 1995, Mr. Kozak was
employed at Chapman and Cutler, where he was an associate from September 1983
and a partner from 1989. Mr. Kozak has concentrated in commodity futures law
since 1981, with emphasis in the area of commodity money management. During
the time he was employed at Chapman and Cutler, he served as outside counsel
to NAFTA and the MFA. Mr. Kozak is currently a member of the Government
Relations Committee of the MFA, the NFA Special Committee

<PAGE>
on CPO/CTA Disclosure Issues and the Visiting Committee of The
University of Chicago Library. He received a B.A. from Lake Forest College,
an M.A. from The University of Chicago, and a J.D. from Loyola University of
Chicago.

Mr. Kevin S. Koshi, age 33, is a senior vice president, chief
trader, and a member of the Investment Policy Committee of JWH. Mr. Koshi is
responsible for the supervision and administration of all aspects of order
execution strategies and implementation of trading policies and procedures.
Mr. Koshi joined JWH in August 1988 as a professional in the Finance
Department, and since 1990 has held positions of increasing responsibility in
the Trading Department. He received a B.S. in Finance from California State
University at Long Beach.

Mr. Barry S. Fox, age 32, is the director of research and is a
member of the Investment Policy Committee of JWH. Mr. Fox is responsible for
the design and testing of existing and new programs. He also supports and
maintains the proprietary algorithms used to generate JWH trades. Mr. Fox
joined JWH in March 1991 and since that time has held positions of increasing
responsibility in the Research and Development department. Prior to his
employment at JWH, Mr. Fox provided sales and financial analysis support for
Spreadsheet Solutions, a financial software development company. Prior to
joining Spreadsheet Solutions in October 1990, Mr. Fox operated a trading
company where he traded his own proprietary capital. Before that, he was
employed with Bankers Trust as a product specialist for foreign exchange and
treasury options trading. He received a B.S. in Business Administration from
the University of Buffalo.

Ms. Glenda G. Twist, age 46, is a director of JWH and has held that
position since August 1993. Ms. Twist joined JWH in September 1991 with
responsibilities for corporate liaison and she continues her duties in that
area. Her responsibilities include assistance in the day-to-day
administration of the Florida office, and review and compilation of financial
information for JWH. Ms. Twist was President of J.W. Henry Enterprises Corp.,
for which she performed financial, consulting and administration services
from January 1991 to August 1991. From 1988 to 1990, Ms. Twist was Executive
Director of Cities in Schools, a program in Arkansas designed to prevent
students from leaving school before completing their high school education.
She received her B.S. in Education from Arkansas State University.

Mr. Michael D. Gould, age 41, is director of investor services at
JWH. He is responsible for general business development and oversees the
investor services function. He joined JWH in April 1994 from Smith Barney
Inc. where he served as senior sales manager and vice president-futures for
the Managed Futures Department. He held the identical position with the
predecessor firms of Shearson Lehman Bros. and Lehman Bros. beginning in
November 1991. Prior to that time, he was engaged in a proprietary trader
development program at Tricon USA from September 1990 to October 1991. He was
a registered financial consultant with Merrill Lynch from 1985 through August
1990. His professional career began in 1982 as an owner-operator of a
non-ferrous metals trading and export business which he ran until
September 1985.

Mr. Jack M. Ryng, age 35, C.P.A., joined JWH as the controller in
November 1991. He is also secretary and chief financial officer of JWH
Investments, Inc. Prior to that time, he was a senior manager with Deloitte &
Touche where he held positions of increasing responsibility since September
of 1985 for commodities and securities industry clients. His clients included
one of the largest commodity pool operators in the United States, along with
other broker/dealers, futures commission merchants, investment banks, and
foreign exchange operations, in the areas of accounting regulatory compliance
and consulting. Prior to his employment by the Financial Services Center of
Touche Ross & Co. (the predecessor firm of Deloitte & Touche), he worked for
Leonard Rosen & Co. as a senior accountant. Mr. Ryng is a member of AICPA and
the New York C.P.A. Society and is a member of the board of the New York
operations of the FIA. He received a B.S. in Business Administration from
Duquesne University.

Mr. Michael J. Scoyni, age 49, is a managing director of JWH and is
a principal of Westport Capital Management Corporation. Mr. Scoyni has been
associated with Mr. Henry since 1974 and with JWH since 1982. He was engaged
in research and development for John W. Henry Company (JWH's predecessor)
from November 1981 to December 1982 and subsequently has been employed by JWH
in positions of increasing responsibility. He received a B.A. in Anthropology
from California State University.

Mr. Christopher E. Deakins, age 37, is a vice president of JWH. He
is responsible for general business development and investor services
support. Prior to joining JWH in August 1995, he was a vice president,
national sales, and a member of the Management Team for RXR Capital
Management, Inc. His responsibilities consisted of business development,
institutional sales, and broker dealer support. Prior to joining RXR in
August 1986, he was engaged as an account executive for Prudential-Bache
Securities starting in February 1985. Prior

<PAGE>
to that, Mr. Deakins was an account executive for Merrill Lynch,
Pierce, Fenner and Smith Incorporated. He received a B.A. in Economics from
Hartwick College.

Chris J. Lautenslager, age 38, is a Vice President of JWH. He is
responsible for general business development and Investor Services support.
Prior to joining JWH in April 1996, he was the Vice President of
Institutional Sales for I/B/E/S International, Inc., a distributor of
corporate earnings estimate information. His responsibilities consisted of
business development and support of global money managers and investment
bankers. Prior to his employment with I/B/E/S, Mr. Lautenslager devoted time
to personal activities from April 1994 to March 1995, following the closing
of the Stamford, Connecticut office of Gruntal & Co., where he had worked as
a proprietary equity trader since November 1993. Before that, he held the
same position at S.A.C. Capital Management starting in February 1993. From
October 1987 to December 1992, Mr. Lautenslager was a partner and managing
director of Limitless Option Partners, a registered Chicago Mercantile
Exchange trading and brokerage organization, where he traded currency futures
and options. He received a B.S. in Accounting from the University of Colorado
and a Masters in Management from Northwestern University.

Mr. Edwin B. Twist, age 46, is a director of JWH and has held that
position since August 1993. Mr. Twist is also a director of JWH Risk
Management, Inc. and JWH Asset Management, Inc. Mr. Twist joined JWH as
internal projects manager in September 1991. Mr. Twist's responsibilities
include assistance in the day-to-day administration of JWH's Florida office
and internal projects. Mr. Twist was secretary and treasurer of J.W. Henry
Enterprises Corp., a Florida corporation engaged in administrative and
financial consulting services, for which he performed financial, consulting
and administrative services from January 1991 to August 1991.

Ms. Nancy O. Fox, age 30, C.P.A., is a vice president and the direct
or of investment support of JWH. She is responsible for the day-to-day
activities of the Investment Support Department, including all aspects of
operations and performance reporting. Prior to joining JWH in January 1992,
Ms. Fox was a senior accountant at Deloitte & Touche, where she served
commodities and securities industry clients and had positions of increasing
responsibility since July 1987. Ms. Fox is a member of the AICPA and the New
Jersey Society of C.P.A.s. She received a B.S. in Accounting and Finance from
Fairfield University and an MBA from the University of Connecticut.

THE INVESTMENT POLICY COMMITTEE

The Investment Policy Committee is one vehicle for decision-making
at JWH about the content and application of JWH trading programs. Composition
of the Investment Policy Committee, and participation in its discussions and
decisions by non-members, may vary over time.

JWH and Mr. Henry may engage in discretionary trading for their own
accounts, and may trade for the purpose of testing new investment programs
and concepts, as long as such trading does not amount to a breach of
fiduciary duty. In the course of such trading, JWH and Mr. Henry may take
positions in their own accounts which are the same or opposite from client
positions, and on occasion orders may be filled better for their accounts
than for client accounts due to testing a new quantitative model or program,
a neutral allocation system, and/or trading pursuant to individual
discretionary methods. Records for these accounts will not be made available
to clients. Employees and principals of JWH (other than Mr. Henry) are not
permitted to trade on a discretionary basis in futures, options on futures or
forward contracts. However, such principals and employees may invest in
investment vehicles that trade futures, options on futures, or forward
contracts, when an independent trader manages trading in that vehicle, and in
the JWH Employee Fund, L.P., which is managed by JWH. The records of these
accounts also will not be made available to clients.

THE JWH TRADING APPROACH

JWH specializes in managing institutional and individual capital in
the global futures, interest rate and foreign exchange markets. Since 1981,
JWH has developed and implemented proprietary trend-following trading
techniques that focus on long-term trends rather than short-term, day-to-day
trends. Each JWH trading system is a technical trend-following system.

TRADING TECHNIQUES

JWH's systematic investment process is designed to generate, over
market cycles, excellent risk-adjusted rates of return under favorable and
adverse market conditions. The JWH process capitalizes on emerging,
long-term, rising and falling price trends and ignores day-to-day price
fluctuations. To ensure disciplined implementation of its investment
philosophy, JWH uses mathematical models to execute investment decisions in

<PAGE>

more than 50 global markets encompassing currencies, commodities
and financial securities. All JWH investment programs follow the strict money
management framework outlined below.

The first step in the JWH investment process is the identification
of a price trend. While there are many ways to identify trends, JWH uses a
methodology which identifies opportunities in order to attempt to capture a
majority of the significant price movements in a given market. The process
presumes that such price movements will often exceed the expectation of the
general marketplace. As such, the JWH discipline is to pare losing positions
relatively quickly while allowing profitable positions to mature. Positions
held for two to four months are not unusual, and positions have been held for
more than one year. Historically, only thirty to forty percent of all trades
made pursuant to the trading methods have been profitable. Large profits on a
few trades in positions that typically exist for several months have produced
favorable overall results. Generally, the majority of losing positions have
been liquidated within weeks. The greatest cumulative percentage decline in
daily net asset value JWH has experienced in any single program was nearly
sixty percent. Investors should understand that similar or greater draw-downs
are possible in the future.

JWH at its sole discretion may override computer-generated trading
signals, and may at times use discretion in the application of its
quantitative models which may affect performance positively or negatively.
Subjective aspects of JWH's trading methods also include the determination of
portfolio leverage, commencement of trading in an account, contracts traded,
contract month selection, margin utilization, markets traded, and effective
trade execution.

PROGRAM MODIFICATIONS

In an effort to maintain and improve performance, JWH has engaged,
and continues to engage in an extensive program of research. While the basic
philosophy underlying the firm's investment methodology has remained intact
throughout its history, the potential benefits of employing more than one inve
stment methodology alternatively, or in varying combinations, is a subject of
continual testing, review and evaluation. Extensive research and analysis may
suggest substitution of alternative methodologies with respect to particular
contracts in light of relative differences in historical trading performance
achieved through testing different parameters. In addition, risk management
research and analysis may suggest modifications regarding the relative
weighting among various contracts, the addition or deletion of particular
contracts for a program or a change in the degree of leverage employed.

As capital in each JWH program increases, additional emphasis and
weighting may be placed on certain markets which have historically
demonstrated the greatest liquidity and profitability. Furthermore, the
weighting of capital committed to various markets in the trading programs is
dynamic, and JWH may vary the weighting at its discretion as market
conditions. liquidity, position limit considerations and other factors
warrant. Investors will not be informed of the changes.

LEVERAGE

Leverage adjustments have been and continue to be an integral part
of JWH's investment strategy. At its discretion, JWH may adjust leverage in
certain markets or entire programs. Leverage adjustments may be made at
certain times for some programs but not for others. Factors which may affect
the decision to adjust leverage include: ongoing research, program
volatility, current market volatility, risk exposure, and subjective judgment
and evaluation of these and other general market conditions. Such decisions
to change leverage may positively or negatively affect performance, and will
alter risk exposure for an account. Leverage adjustments may lead to greater
profits and losses, more frequent and larger margin calls, and greater
brokerage expense. No assurance is given that such leverage adjustments will
be to the financial advantage of JWH clients. JWH reserves the right, in its
sole discretion, to adjust its leverage policy without notification to
investors.

ADDITION, REDEMPTION AND REALLOCATION OF CAPITAL FOR COMMODITY POOL OR FUND
ACCOUNTS

JWH has developed procedures for investing fund accounts that
provide for the addition, redemption and/or reallocation of capital.
Investors who purchase or redeem units in a fund are most frequently
permitted to do so at a price equal to the net asset value per unit on the
close of business on the last business day of the month or quarter. In
addition, funds may reallocate capital among advisors at the close of
business on the last business day of the month. In order to provide market
exposure commensurate with equity in the account

<PAGE>
on the date of these transactions JWH's practice is to adjust
positions at a time as close at possible to the close of business on the last
trading date of the month. The intention is to provide for additions,
redemptions and reallocations at a net asset value per unit that will be the
same for each of these transactions and to eliminate possible variation in
net asset value per unit that could occur as a result of inter-day price
changes when additions are calculated on the first day of the subsequent
month. Therefore JWH may, in its sole discretion, adjust its investing of the
assets associated with the addition, redemption and reallocation of capital
at a time as close as possible to the close of business on the last business
day of the month to reflect the amount then available for trading. Based on
JWH's determination of liquidity or other market conditions, JWH may decide
to commence trading earlier in the day on, or before, the last business day
of the month. In the case of an addition to a fund account, JWH may also, in
its sole discretion, delay the actual start of trading for those new assets.
No assurance is given that JWH will be able to achieve the objectives
described above in connection with funding level changes. The use of
discretion by JWH in the application of this procedure may affect performance
positively or negatively.
The JWH programs often make trades in markets that have lower
trading volume and are less liquid, such as the markets for coffee, cotton
and certain currencies. JWH operates each JWH program as a completely
separate and independent program.
The assets of Cornerstone II allocated to JWH are traded pursuant
to its Original Investment Program, Global Diversified Portfolio and the
International Foreign Exchange Program.

THE ORIGINAL INVESTMENT PROGRAM. The Original Investment Program
began trading proprietary funds in June 1981 and managing client accounts in
October 1982. The Original Investment Program uses long-term quantitative
models in that it maintains a position, either long or short, at all times in
all of the commodities in which the program participates. The Original
Investment Program considers volatility, duration of trend and mathematical
relationships based on the dollar value of each contract and is designed to
generate buy and sell signals with an emphasis on long-term trends. Based on
the results of extensive research, the Program's composition was revised in
July 1992 to include global markets and an increased weighting in financial
sectors.

THE GLOBAL DIVERSIFIED PORTFOLIO. The Global Diversified Portfolio
was first offered in 1988 and was developed to take advantage of price trends
in diverse markets around the world. The Global Diversified Portfolio is
JWH's most diversified program offering participation in virtually every
liquid futures market in the world. Accordingly, the portfolio trades in base
metals in the London Metals Exchange, long-term and short-term interest rates
in the U.S., Europe, Asia, currencies, stock indices in Japan and the U.K.,
and participates in both U.S. and international agricultural and energy
markets.

The Global Diversified Portfolio utilizes intermediate-term and
long-term quantitative trend analysis models, which attempt to identify and
profit from market trends and to remain neutral (i.e. no position taken)
during non-trending market periods. Since November 1, 1993 this program has
traded a portion of the assets of Cornerstone II allocated to JWH.

INTERNATIONAL FOREIGN EXCHANGE PROGRAM. The International Foreign
Exchange Program, which began in 1986, concentrates exclusively on foreign
currencies, primarily through forward contracts traded in the interbank
market. The program trades the Swiss franc, German mark, British pound, and
Japanese yen versus the U.S. dollar, as well as a diversity of other world
currencies. The program has been structured and the different markets
weighted to take into account the potentially higher volatility of a
portfolio which trades exclusively in the currency markets. The International
Foreign Exchange Program seeks to eliminate eighty-five to ninety percent of
U.S. dollar movements by engaging in "spread" trading. Currency spreads are
effected by, for example, buying the Swedish kroner while simultaneously
selling an equivalent amount of Australian dollars. Profits and losses accrue
as the relationship between the Swedish and Australian currencies change,
irrespective of the U.S. dollar movements. Currency indices, "outrights"
(i.e., dollar positions versus foreign currency positions) and spreads are
taken primarily on the interbank markets in forward contracts. The program
calculates position size based on risk in the particular currency market and
the correlation of a particular currency with and against other currencies.
Portfolios are dynamic and include from time to time various matrices of
futures positions. Since April 1987, JWH has used the International Foreign
Exchange Program in trading a portion of the funds of Cornerstone II
allocated to JWH.

OTHER JWH PROGRAMS

In addition to the Original Investment Program, Global Diversified
Portfolio and the International Foreign Exchange Program, JWH currently
operates ten different programs for U.S. and foreign investors, none of

<PAGE>
which are utilized by JWH for Cornerstone II or Cornerstone IV.
Each program is operated separately and independently. With the exception of
InterRateTM, these programs are intermediate and long-term, quantitative,
trend-analysis models designed to achieve speculative rates of return.

The KT Diversified Program, which began trading in 1983 and closed
in February 1994, participated in 8 market sectors and traded 19-24
commodities only on U.S. exchanges. The Financial and Metals Portfolio, which
began trading in 1984, participates in four major market sectors-currencies,
metals, interest rates and stock indexes-and initiates trades according to
trend-emergence and computerized determination of relative risk. While still
maintaining a long-term perspective, the Financial and Metals Portfolio
attempts to take better advantage of the intermediate trends available in the
global financially oriented markets of the 1990's. The World Financial
Perspective, which began trading in 1986, involves trading the financial and
energy sector markets from the perspective of the Japanese yen, German mark,
Swiss franc, British pound, Australian dollar, French franc, Canadian dollar
and the U.S. dollar. This pricing of key global markets in terms of foreign
currencies provides a level of diversification not generally found in a
futures portfolio. In February 1991, JWH began trading a portfolio in which
the same trading techniques utilized in the International Foreign Exchange
Program are primarily applied to the currencies of the major industrial
nations known as the Group of Seven, and Switzerland. These currencies are
among the most liquid, actively traded currencies in the world. The G-7
Currency Portfolio makes use of both outright positions and cross-rate
positions. Positions are primarily taken in the Interbank market and, from
time to time, on futures exchanges. The Yen Financial Portfolio began trading
in August 1991 and uses the same quantitative models as the Financial and the
Metals Portfolio. The Yen Financial Portfolio concentrates trading
specifically in the Japanese financial markets trading only the Japanese yen,
the 10-year Japanese Government Bond, Euroyen and Nikkei 225 stock index. The
International Currency and Bond Portfolio, begun in January 1993, combines
the techniques employed in the G-7 Currency Portfolio and the global bond
sector of the Financial and Metals Portfolio to make a combined portfolio of
currencies and international long-term bonds. The Global Financial Portfolio,
which began trading client capital in June 1994, utilizes the same long-term,
trend-following reversal approach of JWH's first portfolio, the Original
Investment Program. The portfolio is comprised of diverse financial markets
including select global currencies, interest rates and stock indexes, as well
as energy. The Dollar Program began trading proprietary capital in June 1994.
This program is designed to capitalize on price movements in the U.S. dollar
utilizing an intermediate-term quantitative trend analysis model, and takes
outright positions in the Japanese yen, German mark, Swiss franc, and British
pound versus the U.S. dollar. The Delevered Yen Financial and Metals Profile
was opened at the request of a client in October 1995. It is not open to new
investment except at the sole discretion of JWH. This program seeks to
capitalize on sustained moves in global financial markets utilizing
intermediate-term and long-term quantitative trend analysis models, some of
which attempt to employ neutral stances during periods of nontrending
markets. This portfolio is traded at approximately one-half of the leverage
of the traditional Financial and Metals Portfolio and is traded from the
perspective of the Japanese yen. The Worldwide Bond Program began trading
proprietary capital in 1994. This program invests in the long-term portion of
global interest rate markets. Although this program concentrates on one
sector, diversification is achieved by trading the interest rate instruments
of numerous countries. This program utilizes the proprietary quantitative
models developed by JWH, but with a moderate level of leverage as compared
with programs that participate in multiple market sectors.

As of June 30, 1996, the aggregate amount of funds under management
pursuant to the Original Investment Program was $129,876,969; the aggregate
amount of funds under management pursuant to the Global Diversified Portfolio
was $111,185,778; and the aggregate amount of funds under management pursuant
to the International Foreign Exchange Program was $75,352,383. As of June 30,
1996 the aggregate amount of all funds under management pursuant to all JWH
programs were $1.3 billion.

As of June 30, 1996 JWH was managing approximately $21,560,322, of
Cornerstone II. Such amount and the percentage of assets of Cornerstone II
managed by JWH will change as a result of allocations of assets from the
Exchange of units of Cornerstone II, allocations and reallocations among
trading managers and/or trading systems, and the performance of JWH and the
other trading manager for Cornerstone II.

DEAN WITTER CORNERSTONE FUND III

1. WELTON INVESTMENT SYSTEMS CORPORATION
(CURRENT ALLOCATION--28.16%)

Beginning July 1, 1996, Welton Investment Systems Corporation
("WISC") became a Trading Manager for Cornerstone III.

60
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WISC is a California corporation with its principal place of
business at The Eastwood Building, San Carlos between 5th and 6th, P.O. Box
6147, Carmel, California 93921-6147. WISC was formed in November 1988. Its
business is providing professional investment management services
specializing in futures and foreign exchange markets worldwide. The company
was formed to offer proprietary investment and portfolio management
techniques to qualified individual, institutional, and corporate investors.
WISC is registered beginning January 4, 1989, as a commodity trading advisor
and commodity pool operator with the Commodity Futures Trading Commission, is
a trading advisor and commodity pool operator member of the National Futures
Association, the futures industry self-regulatory organization, and is also a
member of the Managed Futures Association. WISC is not affiliated with the
General Partner or DWR or with any of the other Trading Managers for the
Partnership.

PRINCIPALS OF WISC

Patrick L. Welton, age 35, is the President, Chief Executive
Officer, and a Director of WISC. Dr. Welton developed the mathematical
analysis techniques and systems software employed by WISC in its trading and
portfolio management. He is responsible for monitoring trading for the
company's clients and directs ongoing trading research. Dr. Welton earned
Bachelors Degrees in Molecular Biology and English Literature at the
University of Wisconsin. A portion of his undergraduate studies was
completed at Harvard University. From 1982 to 1986 he attended the UCLA
School of Medicine where he completed graduate biophysics and medical studies
and earned an MD degree. From 1986 to 1990, he was a postgraduate physician
completing residency training at the Stanford University Medical Center. In
addition to his full-time management of WISC, he is a shareholder in
Peninsula Radiation Oncology Specialists, Inc. and is a volunteer Clinical
Professor of Medicine at Stanford University School of Medicine. He has
engaged in futures and equities market research since 1981 and has traded
futures for his own account since 1983. He is a member of the Electronics
Standards Committee of the Managed Futures Association and the Commodity
Trading Advisor Subcommittee of the National Futures Association 1996
Nominating Committee.
Annette L. Welton, age 34, is the Executive Vice-President, Chief
Financial Officer, and a Director of WISC. From 1980 to 1984, she earned a
Bachelor of Science Degree from UCLA, completing a portion of her studies at
the University of California, Santa Barbara. Subsequent to obtaining her
degree, she completed further studies at San Diego State University. From
1984 to 1989, she was involved in clinical pediatric and neonatal intensive
care at the UCLA, San Diego Children's and Stanford University Medical
Centers. Ms. Welton participated in the development of the systems software
employed by WISC in its trading and portfolio management methods and has been
responsible for daily management and administration of WISC since 1988. In
addition, she is responsible for monitoring trading for the company's clients
and client relations. She is a member of the Trading and Markets Committee
of the Managed Futures Association.
Jerry M. Harris, age 45, is the Senior Vice President and a
Principal of WISC. He received a Bachelor of Science Degree in 1973 in
Aerospace Engineering at the University of Virginia. In May of 1983, he
earned a Masters Degree in Information Systems from the University of
Southern California. From 1983 to 1984, Mr. Harris was employed by General
Dynamics as an Engineering Specialist in systems integration. From 1984
through 1988, he was Vice President and Chief Operating Officer of Cresta
Commodity Management, Inc. in San Diego, California. Beginning 1989 through
1990, he was Vice President of Marketing at Commodities Corporation in
Princeton, New Jersey. Since November 1988, he has been a pilot with Delta
Airlines. Mr. Harris is responsible for business development efforts and
industry representation, as well as participating in strategic planning for
WISC. He has been associated with WISC since 1993.
There have never been any administrative, civil, or criminal
proceedings WISC or its principals.
Neither WISC nor any of its principals own any Units of Cornerstone
III.

WISC INVESTMENT PHILOSOPHY AND TECHNOLOGY

WISC is committed to achieving attractive rates of return while
successfully managing risk. This is accomplished through the consistent
application of the firm's primary trading principles:
* Market diversification
* Methodological diversification
* Portfolio allocation and management
* Transaction cost management and market participant
structure analysis
* Monitoring and review systems to the above points

<PAGE>
These principles are the basis to pursue strong rates of return
with controlled volatility and with low correlation to other managed futures
programs as well as to alternative investment classes.
WISC considers its portfolios and programs to be in a constant
cycle of review and improvement centered on a stable process for improving
their long term success. This paradigm for performance improvement involves
all divisions of the firm. The continuous process involves regular review
and analysis of all actual trading activity; of all new and existing global
markets with the goal of increasing market diversification; of all potential
strategic approaches to various market conditions with the goal of increasing
strategic diversification, and hence, effective diversification; of trading
costs and execution methods; and of portfolio management models and
techniques to best integrate all of the above. This process implicitly
recognizes that adaptation is essential in approaching the global markets and
that adaptation is best implemented at even the most primary model levels.
To implement these models, WISC has developed an advanced decision
support platform capable of real-time analyzation of markets and combinations
of markets around the world. This tool allows the implementation of WISC
trading strategies independently or in complementary combinations across a
tremendous diversity of global markets. Ongoing research and development
continues to be WISC's largest single commitment of resources and is
conducted within its performance improvement paradigm to improve the level,
consistency, and quality of performance in its offered portfolios and
programs.
Although the trading of WISC portfolios is guided by the consistent
application of proprietary mathematical systems, there will always remain
investment decisions requiring the discretion and judgment of WISC. These
include but are not limited to contract month selection, analysis of
portfolio balance, and capital requirements. In addition, WISC may at its
sole discretion choose not to implement certain trades if they are judged to
carry unusual risk to an account. WISC will reinvest trading profits unless
withdrawn by the client. WISC may also stop trading certain markets should
they become, in WISC's judgment, too illiquid or volatile to trade or their
movement too correlated with other portfolio elements. Assets committed to
meet minimum exchange margin for all positions usually remain between 5-35%
of total account equity. These levels may from time to time be greater or
less than this range. All investments including WISC managed portfolios and
programs involve the risk of loss.

WISC INVESTMENT PORTFOLIOS AND PROGRAMS

WISC offers two distinct categories of investment products to
institutional, corporate, and qualified individual clients. The first
category is a select group of diversified investment portfolios each
utilizing a managed futures structure and designed to achieve attractive
absolute rates of return. The second category includes two inherently
customized investment programs designed to improve returns relative to
accepted global investment performance benchmarks such as a client's
portfolio return, an equity index or a fixed income index or note. A brief
description of these investment portfolios and programs follows.

MANAGED FUTURES PORTFOLIOS

WISC offers investors three different managed futures portfolios
whose emphasis is directed toward achieving attractive rates of appreciation
while continually managing risk. Each portfolio employs several different
integrated trading systems and seeks to achieve both systematic and market
diversification unavailable from traditional managed investments. Specific
portfolios include: Diversified Portfolio; Global Financials and Metals
Portfolio; and Global Financials Portfolio.

Each portfolio provides broad diversification selected from various
global agricultural, currency, energy, interest rate, precious and base
metals, softs, and stock index markets. Clients may flexibly invest with
WISC allocating assets to the Diversified Portfolio for balanced exposure
across all of these market sectors or they may shape allocations toward
financial markets by using the Global Financials and Metals Portfolio. In
addition, WISC does manage for several fund and institutional clients more
market focused portfolios such as a pure Global Financials (interest rates,
currencies and equity indices), and sector specific accounts in the Equity
Index and Interest Rates on an individualized basis.

CUSTOMIZED RETURN ENHANCEMENT PROGRAMS

WISC works closely with its clients to create low leverage return
enhancement programs which are designed to provide a supplemental relative
rate of return based upon a preselected benchmark measure

<PAGE>
matched to the needs of the client. These programs include:
Benchmark Linked Return Enhancement Program and Fixed Income Return
Enhancement Program.
In its capacity as a Trading Manager of Cornerstone III assets,
WISC will use its Diversified Portfolio trading program.

DIVERSIFIED PORTFOLIO

The Diversified Portfolio manages investors' assets through
exposure to the widest spectrum of futures markets spanning all major market
sectors. Multiple trading strategies are employed in an attempt to
profitably participate in a variety of market conditions. This emphasis on
market and methodological diversification epitomizes WISC's core principles
in advising on investor assets in the global marketplace.
WISC and its principals intend to trade futures for their own
accounts and to provide management services to other clients. Investments
made on behalf of WISC, its principals, and its clients as well as any
policies related thereto will remain confidential. In the course of such
trading, WISC or its principals may take positions in their own accounts
which are in the same market and in the same direction as positions advocated
for clients. In the case that WISC or its principals place the same trade
orders for their accounts as they do for their clients in a single block order
with the brokerage firm, the brokerage firm shall allocate the trade fill
prices assigned to each account in a manner consistent with that firm's
policy. This equalizes the likelihood of WISC or its principals receiving a
superior or inferior price compared to any of their clients or in the case of
a partial fill of a block order, equalizes the likelihood of WISC or its
principals receiving a trade that some customers will not receive or vice
versa.

As of June 30, 1996, the aggregate amount of funds under management
pursuant to the Diversified Portfolio program was $38,327,103. As of June 30,
1996, the aggregate amount of funds under management pursuant to all WISC
programs was $43,746,022.

PAST PERFORMANCE OF WISC

WISC and its principals have established a performance history in
the client accounts for which they have acted as a commodity trading advisor.
The assets of Cornerstone III to be allocated to WISC are allocated only to
the Diversified Portfolio.
INVESTORS ARE CAUTIONED THAT THE INFORMATION SET FORTH IN CAPSULES
A, B, C AND D IS NOT INDICATIVE OF, AND HAS NO BEARING ON, ANY TRADING
RESULTS WHICH MAY BE ATTAINED BY WISC OR CORNERSTONE III IN THE FUTURE, SINCE
PAST RESULTS ARE NOT A GUARANTEE OF FUTURE RESULTS AND OTHER TRADING MANAGERS
WILL BE INVESTING FUNDS OF SUCH PARTNERSHIP, THERE CAN BE NO ASSURANCE THAT
WISC OR SUCH PARTNERSHIP WILL MAKE ANY PROFITS AT ALL, OR WILL BE ABLE TO
AVOID INCURRING SUBSTANTIAL LOSSES. INVESTORS SHOULD ALSO NOTE THAT INTEREST
INCOME MAY CONSTITUTE A SIGNIFICANT PORTION OF A COMMODITY POOL'S TOTAL
INCOME AND, IN CERTAIN INSTANCES, MAY GENERATE PROFITS WHERE THERE HAVE BEEN
REALIZED OR UNREALIZED LOSSES FROM COMMODITY TRADING.

<PAGE>

CAPSULE A

WELTON INVESTMENT SYSTEMS CORPORATION
DIVERSIFIED PORTFOLIO

Name of CTA: Welton Investment Systems Corporation
Name of Program: Diversified Portfolio
Inception of Client Trading by CTA: February 1989
Inception of Client Trading in Program: April 1992
Number of Open Accounts: 22
Aggregate Assets Overall (excluding notional): $29,592,770
Aggregate Assets Overall (including notional): $43,746,022
Aggregate Assets in Program (excluding notional): $24,347,873
Aggregate Assets in Program (including notional): $38,327,103
Worst Monthly % Drawdown: (15.94)% - (2/96)
Worst Month-End Peak-to-Valley: (21.88)% - (1/96-6/96)

<TABLE>
<CAPTION>
MONTHLY RATES
OF RETURN 1996 1995 1994 1993 1992
% % % % %
<S> <C> <C> <C> <C> <C>
January 5.94 (3.94) (4.74) (0.12)
February (15.94) 8.90 (6.67) 15.85
March (1.86) 10.11 0.69 (0.09)
April 4.66 3.57 (5.32) 7.04 (0.48)
May (7.82) 11.71 5.77 (6.61) (7.47)
June (1.85) (1.38) 5.72 (1.89) 9.32
July (2.57) (4.04) 11.40 12.72
August (1.25) (6.40) (4.45) (1.77)
September 1.55 3.18 0.66 (6.89)
October (7.39) 0.48 4.90 (0.86)
November 4.77 14.60 5.05 (2.10)
December 9.44 1.23 10.48 (4.98)
Compound (17.24) 36.35 2.38 47.90 (4.28)
Annual (Period)
Rate of Return
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

<PAGE>
CAPSULE B

WELTON INVESTMENT SYSTEMS CORPORATION
GLOBAL FINANCIALS AND METALS PORTFOLIO

Name of CTA: Welton Investment Systems Corporation
Name of Program: Global Financials and Metals Portfolio
Inception of Client Trading by CTA: February 1989
Inception of Client Trading in Program: March 1992
Number of Open Accounts: 2
Aggregate Assets Overall (excluding notional): $29,592,770
Aggregate Assets Overall (including notional): $43,746,022
Aggregate Assets in Program (excluding notional): $1,982,868
Aggregate Assets in Program (including notional): $2,156,889
Worst Monthly % Drawdown: (15.72)% - (2/96)
Worst Month-End Peak-to-Valley: (30.89)% - (12/93-9/94)
1996 year-to-date return (6 months): (17.75)%
1995 annual return: 48.90%
1994 annual return: (23.34)%
1993 annual return: 70.38%
1992 period return (9 months): 13.00%

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

CAPSULE C

WELTON INVESTMENT SYSTEMS CORPORATION
GLOBAL FINANCIALS PORTFOLIO

Name of CTA: Welton Investment Systems Corporation
Name of Program: Global Financials Portfolio
Inception of Client Trading by CTA: February 1989
Inception of Client Trading in Program: November 1994
Number of Open Accounts: 2
Aggregate Assets Overall (excluding notional): $29,592,770
Aggregate Assets Overall (including notional): $43,746,022
Aggregate Assets in Program (excluding notional): $3,262,030
Aggregate Assets in Program (including notional): $3,262,030
Worst Monthly % Drawdown: (15.70)% - (2/96)
Worst Month-End Peak-to-Valley: (27.51)% - (1/96-6/96)
1996 year-to-date return (6 months): (18.07)%
1995 annual return: 49.67%
1994 period return (2 months): (3.73)%

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

<PAGE>
CAPSULE D
WELTON INVESTMENT SYSTEMS CORPORATION
TRADING PROGRAMS NO LONGER OFFERED

<TABLE>
<CAPTION>
February, 1989 Date advisor began trading client accounts

$29,592,770 Total assets under management by the advisor representing actual funds
$43,746,022 Total assets under management by the advisor representing nominal funds
- ------------------------------------------------------------------------------------------------------------------------------------
Equity
Linked Quantitative World
Portfolio Former International Foreign World Equity
Enhancement Financials Diversified Interest Rate Nonfinancial Exchange Currency Index
Trading Program Product Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Date Program Current
Began Trading Oct-93 Jul-89 Feb-89 Mar-92 Mar-94 Jun-94 Apr-92 May-94

Actual Funds Closed Closed Closed Closed Closed Closed Closed
Managed Oct-94 Mar-92 Mar-92 1,739,144 Aug-95 Feb-95 Feb-94 Jun-96

Nominal Funds
Managed - - - 1,739,144 - - - -

Open Accounts 0 0 0 1 0 0 0 0
Closed Accounts 2 1 8 32 4 2 4 11

Accounts Closed
at a Profit 1 0 0 9 2 0 1 1
Accounts Closed
at a Loss 1 1 8 23 2 2 3 10

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
Annual Rates of Return 3
1991 - (11.48)% (7.84)% - - - - -
1992 - (27.75)% (18.81)% 9.57% - - 8.28% -
1993 7.36% - - 70.00% - - (18.90)% -
1994 (4.21)% - - (26.68)% 44.13% (13.66)% (2.99)% (15.97)%
1995 - - - 56.49% (16.38)% (2.94)% - 4.99%
YTD through Jan-96 - - - (14.87)% - - - (14.82)%

Largest Single Monthly
Draw-down 1 (1.79)% (17.89)% (15.11)% (14.47)% (8.99)% (14.68)% (8.80)% (9.71)%
Date of Draw-down Jul-94 Jan-92 Jan-91 Feb-96 Mar-95 Nov-94 Jan-93 Sep-94
Largest Peak-to-Valley
Draw-down 2 (6.55)% (36.04)% (25.24)% (32.40)% (19.03)% (17.58)% (23.21)% (25.18)%
Date of Peak Mar-94 Dec-90 Mar-91 Dec-93 Feb-95 Oct-94 Nov-92 May-94
Date of Valley Oct-94 Mar-92 Mar-92 Jan-95 Aug-95 Feb-95 Feb-94 Jun-96

<FN>
THE FOLLOWING NOTES ARE AN INTEGRAL PART OF WISC'S PERFORMANCE COMPOSITE
CAPSULES:
1. "Draw-down" means losses experienced by the trading program over a
specified period. "Largest Single Monthly Draw-down" means greatest
percentage decline in net asset value due to losses sustained by the trading
program from the beginning to the end of a calendar month.
2. "Largest Peak-to-Valley Draw-down" means greatest cumulative percentage
decline in month-end net asset value of the trading program due to losses
sustained during a period in which the initial month-end net asset value of
the trading program is not equaled or exceeded by a subsequent month-end net
asset value of the trading program.
3. "Rates of Return" presented in the composite performance capsules are
calculated based on the "Fully-Funded Subset" method as prescribed by the
CFTC. These monthly rates of return are derived by dividing the sum of the
net performance, i.e. the aggregate of net performance for each of the
accounts qualifying for inclusion in the Fully-Funded Subset, by the sum of
the Actual Funds-based BNAVs for the Fully-Funded Subset. Monthly returns are
then compounded to arrive at the year-to-date rate of return.
</FN>
</TABLE>

<PAGE>

2. ABRAHAM TRADING CO.
(CURRENT ALLOCATION--28.16%)

Beginning July 1, 1996, Abraham Trading Co. ("ATC") began acting as
a Trading Manager for Cornerstone III.

ATC is a corporation organized under the laws of the State of Texas
on August 13, 1990. ATC's principal business address is the Moody Building,
2nd & Main, Canadian, Texas 79014. Salem A. Abraham is the sole principal of
ATC. He became registered as an associated person of ATC on October 11, 1990
and became registered as a Commodity Trading Advisor ("CTA") on October 24,
1988. ATC succeeded to such CTA registration on September 11, 1990, at which
time it also registered as a Commodity Pool Operator ("CPO"). ATC is a
member of the National Futures Association ("NFA"). ATC is not affiliated
with the General Partner or DWR or with any of the other Trading Managers for
the Partnerships.

ATC is engaged in the business of offering trading advice to
customers with respect to futures contracts, options on futures contracts and
physical commodities, forward contracts and other commodity-related contracts
traded on United States, foreign, and international exchanges and markets.
ATC trades commodity interests in interest rate sensitive instruments,
currencies, agriculturals, energies, and metals, among others.

ATC has developed a Managed Account Program pursuant to which it
directs the speculative purchase and sale of commodity interests for the
accounts of participating customers in accordance with its trading methods
and strategies. Because speculative commodity trading presents the risk of
substantial losses, only persons with high income and the ability to absorb
such losses should consider participating in the Program.

Salem A. Abraham, age 30, is the President, sole director and sole
shareholder of ATC, and is the sole person responsible for making trading
decisions on behalf of ATC. Salem Abraham is registered with the CFTC as a
CTA and principal and associated person of ATC and is a member of the NFA.

Salem Abraham attended the University of Notre Dame from August 1984
until December 1987 when he graduated cum laude with a B.A. degree in
Finance. His interest in commodity trading began while still in college, and
it was during the spring and summer of 1987 that he developed his present
trading strategy. During this time, he did extensive research in the
technical and methodological aspects of commodities trading. Combining the
information he had gathered with ideas that he had developed during his
research, he began the task of back-testing the profitability of numerous
trading theories in an effort to establish the relative validity of those
theories. This testing was accomplished by running computer simulations
using historical data and/or by manually studying historical charts. Through
this process many long-venerated trading strategies were shown to be unviable
in changing market conditions, while other strategies were modified in order
to maximize their profitability. This research led Salem to develop a trend
following trading system, and in August 1987, while still in college, he
began to test that approach by trading commodity interests for his own
account. In January 1988, he began to manage customer accounts using his
systematic approach, initially through a joint account with three of his
relatives. He became registered as a CTA in October 1988 and organized ATC in
August 1990 to act as CTA for all customer accounts. Salem continues to
conduct research on trading strategies.

Edward C. Abraham, age 31, Salem Abraham's brother, is registered
with the CFTC as an associated person of ATC and is a member of NFA. He
attended Texas Tech University from 1983 through 1988 where he received a
B.B.A. degree in Petroleum Land Management. He received a degree in Ranch
and Feedlot Business Management from Clarendon College in May 1989. From his
graduation in May 1989 until October 1990, Edward Abraham was employed in his
family's business as a ranch manager. He joined ATC in October 1990 as Salem
Abraham's trading assistant. Although not a principal, in his role as
trading assistant, Edward has worked with ATC's clearing brokers to improve
the execution and implementation of ATC's trading strategies.

Craig L. Caudle, age 35, Director of Marketing and Operations, is
registered with the CFTC as an associated person of ATC and is a member of
the NFA. Although not a principal of ATC, Craig assists Salem in the
company's marketing, operating, and trading efforts. He graduated from Texas
Tech University in 1983 with a B.S. degree in International Trade. From June
1983 through June 1985, he was a member of the Index and Options Market, a
division of the Chicago Mercantile Exchange. From June 1985 through October 1
987, he was a Funds Management Officer at Nations Bank Texas. During that
time he traded for the bank's foreign exchange and government securities
operations. From October 1987 until joining ATC in April 994, Craig was
President of Star-Tex Asset Management, Inc. a CTA and CPO in Dallas, TX. At
Star-Tex he was responsible for trading support, business operations,
compliance, accounting, customer relations, and marketing.

Neither ATC nor its principal own any Units of Cornerstone III.

67
<PAGE>

PROPRIETARY TRADING BY ATC AND ITS PRINCIPALS

ATC does not at the present time trade commodity interests for its
own proprietary account; however, employees of ATC, including Edward Abraham,
may trade for their own proprietary accounts. In addition, Salem Abraham in
the past has traded and may trade commodity interests for his own proprietary
accounts. In his proprietary trading, he generally follows the same basic
trading methods and strategies developed, modified and refined by him over
the past six years. See "Description of Trading Methods and Strategies." He
may not, however, trade his proprietary accounts in parallel with the
accounts of his and ATC's customers. In trading for proprietary accounts and
in contrast to his and ATC's customer account trading, Salem Abraham at times
may trade a larger number of contracts, utilize a higher degree of leverage,
pay lower commission rates, and test new markets. In addition, he may
conduct experimental trading in proprietary accounts to test new systems or
variations of his basic trading methods and strategies. He also may trade
contracts for a proprietary account, but not for customer accounts, including
customer accounts of ATC, where a given market or a market at a given time is
illiquid or extremely volatile, thereby assuming a greater risk in his
proprietary account than he or ATC is willing to assume for the accounts of
customers; however, ATC, Salem Abraham, or Edward Abraham will not knowingly
take positions ahead of or opposite to those taken by ATC on behalf of
participating customers' accounts. Accordingly, his proprietary accounts may
produce trading results that are different from those experienced by
participating customers. Participating customers will not be permitted to
inspect the proprietary trading records of Salem Abraham or ATC or its
employees, should ATC or its employees elect to trade proprietary accounts,
due to the confidential nature of such records.

DESCRIPTION OF TRADING METHODS AND STRATEGIES

Salem A. Abraham is employed by ATC and is the sole person
responsible for overseeing ATC's trading decisions. ATC's trading approach
draws upon Salem Abraham's judgment, experience and his knowledge of the
technical factors affecting various commodity markets and attempts to
identify optimal trading opportunities. The approach is primarily guided by
trading systems which are owned by Salem Abraham but are licensed to ATC.
These trading systems are trend following in nature and are based on
classical technical analysis.

The underlying premise of ATC's trading approach is that commodity
interests will, from time to time, enter into periods of major price change
to either a higher or lower level. These price changes are known as trends,
which have been observed and recorded since the beginning of market history.
There is every reason to believe that in free markets prices will continue to
trend. The trading approach used by ATC is designed to exploit these price
moves.

The trading systems which are licensed to ATC and which guide ATC's
trading decisions were developed by Salem through intense research designed
to uncover trading opportunities. Primarily, this research focused on events
in the marketplace which are often precursors to the development of a
trending price in a given market. The trading approach relies heavily on the
disciplined management of risk. In evaluating the various factors which make
up a trading decision, the systems pay close attention to each trade's
risk-reward potential, how it fits into the risk profile of the entire
portfolio, and whether it adheres to the account's overall trading goals.

Salem may refine or change ATC's trading approach (including
enhancements or changes to this trading systems which are licensed to ATC or
the addition or deletion of commodity interests traded) at any time without
prior notice to or approval by its customers. There can be no assurance that
ATC's approach to trading the commodities markets will yield the same results
which have been achieved in the past.

GOAL OF TRADING; MARKETS EMPLOYED

The trading approach employed by ATC in trading customer accounts
uses technical analysis to anticipate structural changes in the marketplace.

Technical analysis is based on the theory that the study of the
commodities markets themselves provides a means of anticipating the external
factors that affect the supply and demand of a particular commodity in order
to predict future prices. Technical analysis operates on the theory that
market prices at any given point in time reflect all known factors affecting
supply and demand for a particular commodity; consequently, only a detailed
analysis of, among other things, actual daily, weekly and monthly price
fluctuations, volume varia-

<PAGE>

tions and changes in open interest are of predictive value when
determining the future course of price movements. In general, trading
recommendations may be based on computer-generated signals, chart
interpretations, mathematical measurements or a combination of such items.

Technical analysis is a particular concern in the timing of entry
and exit positions and in evaluating the extent to which the market price
reflects the underlying value. ATC's evaluation of the technical position of
the market can thus help in determining the direction of prices and is also
used as a tool in risk control. ATC believes that the confluence of
technical signals gives it optimal risk/reward possibilities.

In its evaluation of the markets, ATC will utilize a
trend-following strategy. Successful speculative commodity trading depends
upon establishing a position and then maintaining the position while the
market moves in a favorable direction. The trader then seeks to exit the
particular market and/or may establish reverse positions when the favorable
trend either does not materialize or reverses. Trading will not normally be
successful if the particular market is moving in an erratic and non-trending
manner or if the market moves in the direction opposite to that predicted by
the trader. Because of the nature of the commodities markets, prices
frequently appear to be trending when the market is, in fact, without a
trend. In addition, a particular trading method may identify markets as
trending favorably to a particular position in the market even though actual
market performance thereafter is the reverse of the trend identified.

A trend-following trading strategy will seldom direct market entry
or exit at the most favorable price in the particular market trend. Rather,
this type of trading method seeks to close out losing positions and to hold
portions of profitable positions for as long as the trader determines that
the particular market trend continues to exist. However, there can be no
assurance that profitable positions can be liquidated at the most favorable
price in a particular trend. As a result, the number of losing transactions
can be expected to exceed substantially the number of profitable
transactions. However, if the approach is successful, these losses should be
small and should be more than offset by a few large gains.

ATC's trading strategy is to identify a trend and initiate a
position until a neutral or opposite trend signal is generated. The position
is then closed out or reversed. This strategy does not always result in a
position being held in every commodity traded since individual commodities
may have extended non-trending periods.

ATC presently monitors and trades 39 commodity interests: Wheat;
Corn; Soybeans; Soybean Oil; Soybean Meal; British Pound; Canadian Dollar;
Swiss Franc; Deutsche Mark; Japanese Yen; Deutsche Mark-Japanese Yen Cross
Rate; Australian Dollar; Silver; Platinum; Copper; Gold; Aluminum; Zinc;
Nickel; Eurodollar; U.S. Treasury Notes; U.S. Treasury Bonds; Australian
Bonds; Japanese Bonds; French Bonds; German Bunds; British Gilts; S&P Index;
Crude Oil; Heating Oil; Harbor Unleaded Gas; Natural Gas; Cotton; Sugar;
Coffee; Cocoa; Orange Juice; Live Cattle; and Live Hogs. ATC presently trades
currency forward contracts through the interbank market. ATC may trade for
participating customers' accounts any commodity interests which are now or
may hereafter be offered for trading on United States and international
exchanges and markets. In that regard, ATC from time to time in its sole
discretion may add commodity interests to participating customers portfolios
and from time to time may drop such items.

EMPHASIS ON RISK MANAGEMENT

A vital part of ATC's trading strategy is sound risk management.
The good times, when the markets are in trending periods, will take care of
themselves. ATC's trading strategy is designed to endure the imminent
non-trending periods in order to profit when trends in the markets do occur.
Each commodity interest is tracked on its own merits, and a stop loss level
is determined at the time a trade is entered. Stops are designed to weed out
losing trades quickly and help ensure that no loss will be more than a
nominal percentage of the account's net assets.

On average, ATC utilizes approximately 20% of the Net Assets of
participating customers to meet initial margin requirements, although this
percentage may vary widely.

As of June 30, 1996, the aggregate amount of funds under ATC's
management was $94,826,497.

69
<PAGE>

PAST PERFORMANCE OF ATC.

ATC and its principal have established a performance history in the client
accounts for which they have acted as a commodity trading advisor. The assets
of Cornerstone III to be allocated to ATC will be traded pursuant to the
Diversified Program.

INVESTORS ARE CAUTIONED THAT THE INFORMATION SET FORTH IN CAPSULE A IS NOT
INDICATIVE OF, AND HAS NO BEARING ON, ANY TRADING RESULTS WHICH MAY BE ATTAINED
BY ATC OR CORNERSTONE III IN THE FUTURE, SINCE PAST RESULTS ARE NOT A GUARANTEE
OF FUTURE RESULTS AND OTHER TRADING MANAGERS WILL BE INVESTING FUNDS OF SUCH
PARTNERSHIP. THERE CAN BE NO ASSURANCE THAT ATC OR SUCH PARTNERSHIP WILL MAKE
ANY PROFITS AT ALL, OR WILL BE ABLE TO AVOID INCURRING SUBSTANTIAL LOSSES.
INVESTORS SHOULD ALSO NOTE THAT INTEREST INCOME MAY CONSTITUTE A SIGNIFICANT
PORTION OF A COMMODITY POOL'S TOTAL INCOME AND, IN CERTAIN INSTANCES, MAY
GENERATE PROFITS WHERE THERE HAVE BEEN REALIZED OR UNREALIZED LOSSES FROM
COMMODITY TRADING.

Capsule A
PERFORMANCE OF ABRAHAM TRADING COMPANY

Name of CTA: Abraham Trading Company
Name of Program: Diversified
Inception of Client Trading by CTA: January 1988
Inception of Client Trading in Program: January 1988
Number of Open Accounts: 14
Aggregate Assets Overall: $94,826,497
Aggregate Assets in Program: $94,826,497
Worst Monthly % Drawdown: (15.94)%-(1/91)
Worst Month-End Peak-to-Valley: (27.11)%-(9/90-8/91)

<TABLE>
<CAPTION>
MONTHLY RATES
OF RETURN 1996 1995 1994 1993 1992 1991
% % % % % %
<S> <C> <C> <C> <C> <C> <C>
January (6.85) (7.91) (1.45) (4.21) (12.60) (15.94)
February (13.78) 1.24 (4.16) 6.10 (6.00) 1.30
March 9.66 6.63 2.87 4.57 (5.47) 2.43
April 14.27 4.73 (8.39) 9.24 0.31 (13.70)
May (9.41) 8.22 15.01 4.88 (5.71) 2.94
June 1.52 0.11 1.47 (1.22) 6.58 2.11
July (8.75) 0.98 6.60 16.52 (1.52)
August (5.34) (7.83) (5.28) 1.92 (6.33)
September (1.84) 5.05 (1.16) (0.34) 11.61
October (6.67) (5.43) (6.59) (3.31) 16.61
November (0.19) 14.24 (3.71) 4.65 (2.09)
December 19.11 1.06 12.83 (4.54) 33.75
Compound (7.44) 6.12 24.22 34.29 (10.50) 24.39
Annual (Period)
Rate of Return
<FN>
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

THE FOLLOWING NOTES ARE AN INTEGRAL PART OF THIS PERFORMANCE COMPOSITE CAPSULE:
1. "Draw-down" means losses experienced by the trading program over a specified
period. "Largest Single Monthly Draw-down" means greatest percentage decline in
net asset value due to losses sustained by the trading program from the
beginning to the end of a calendar month.

2. "Largest Peak-to-Valley Draw-down" means greatest cumulative percentage
decline in month-end net asset value of the trading program due to losses
sustained during a period in which the initial month-end net asset value of the
trading program is not equaled or exceeded by a subsequent month-end net asset
value of the trading program.

3. "Monthly Rates of Return" is calculated by dividing net performance of the
Fully-Funded Subset by the beginning equity of the Fully-Funded Subset. In such
instances, the Fully-Funded Subset is adjusted to exclude accounts with
significant additions or withdrawals which would materially distort the rate of
return pursuant to the Fully-Funded Subset method.
</FN>
</TABLE>
70
<PAGE>

3. SUNRISE CAPITAL MANAGEMENT, INC.
(CURRENT ALLOCATION - 43.68%)

Sunrise is a California corporation with offices at 990 Highland Drive,
Suite 303, Solana Beach, California 92075-2472. Its telephone number is
(619)-259-8911. In January 1994, Sunrise changed its name from "Sunrise
Commodities, Inc." to "Sunrise Capital Management, Inc." This name change
became effective with respect to Sunrise's registration with the NFA in
January 1994. Sunrise was organized in 1983 and continues the business of
Sunrise Commodities, a California sole proprietorship organized in 1982.
Sunrise was registered in February 1983 as a commodity trading advisor and in
April 1990 as a commodity pool operator with the CFTC and is a member of the
NFA in both such capacities. In January 1995, Sunrise and Commodity Monitors,
Inc. ("CMI") organized Sunrise Capital Partners L.L.C. ("Sunrise Capital
Partners"), a California limited liability company. Sunrise Capital Partners
is wholly-owned by Sunrise and CMI and was registered in February 1995 as a
commodity trading advisor and commodity pool operator with the CFTC and is a
member of the NFA in both such capacities. CMI is a California corporation
organized in October 1977, and is the successor to the partnership of Harris &
Slaughter. CMI was registered in November 1977 with the CFTC as a commodity
trading advisor and is a member of the NFA in such capacity. Sunrise Capital
Partners and CMI are also located at the address of Sunrise set forth above.
While Sunrise, not Sunrise Capital Partners, is a Trading Manager for the
Partnership, a description of the principals of Sunrise Capital Partners is
included below due to the relationship between Sunrise and CMI resulting from
the establishment of Sunrise Capital Partners. Sunrise and Sunrise Capital
Partners currently operate 5 commodity pools. Sunrise and Sunrise Capital
Partners are not affiliated with the General Partner, DWR, EMC or Rabar.

Martin P. Klitzner, age 51, is President, Secretary and a Director of
Sunrise, and a Managing Director of Sunrise Capital Partners. Mr. Klitzner
received a B.A. Degree from the University of Michigan in 1967 and a M.B.A.
from the University of Michigan in 1968. He did post graduate work in economics
at the University of California, Los Angeles, from 1968 to 1971. Mr. Klitzner
joined Sunrise in December 1982, and has exclusive operational control of the
day-to-day activities of Sunrise which includes the supervision of trading
procedures.

Richard C. Slaughter, age 45, is a Managing Director of Sunrise Capital
Partners. Mr. Slaughter, with Mr. Klitzner, is responsible for Sunrise Capital
Partners' day-to-day trading activities, as well as research and trading
systems development. In 1974, he received a B.S. in finance from San Diego
State University. He has pursued graduate studies in finance at the State
University and in systems management at the University of Southern California.
Mr. Slaughter has been a Professor of Finance, instructing M.B.A. candidates
in securities analysis and portfolio management. Mr. Slaughter, a co-founder
of CMI in 1977, serves as its President. He was responsible, along with Dr.
Forrest, for the development of CMI's current trading systems. Mr. Slaughter
began trading commodities on a full-time basis in 1975 for his own account and
as a commodity trading advisor.

Dr. Gary B. Davis, age 50, is the Chairman of the Board and Chief
Financial Officer of Sunrise. Dr. Davis received a B.S. degree from the
University of Michigan in 1968 and received his medical degree from the
University of Michigan in 1970. Dr. Davis was a professor at the University of
California, San Diego School of Medicine, where he has served on the faculty
from 1980 through 1990. Since 1979, Dr. Davis has studied and traded the
commodity futures markets. Dr. Davis currently concentrates his efforts in the
research and trading systems development activities of Sunrise and Sunrise
Capital Partners.

Dr. John V. Forrest, age 55, engages in research and trading systems
development on behalf of Sunrise Capital Partners. In 1962, he received a B.A.
from Notre Dame and in 1966 received a Medical Degree from the State
University New York Downstate Medical Center. Dr. Forrest is currently a
Professor of Medicine at the University of California, San Diego, where he has
served on the faculty since 1976. Dr. Forrest joined CMI in September 1991 and
is a co-developer, with Mr. Slaughter, of CMI's current trading systems. He
was President and sole shareholder of Cresta Commodities, a commodity trading
advisor, from September 1981 to August 1989. Dr. Forrest began trading the
commodity markets in 1975.

Martin M. Ehrlich, age 49, is Vice President and a Director of Sunrise,
and Vice President-Marketing of Sunrise Capital Partners. His academic
background includes studies at the University of Cincinnati where he majored
in business administration. Mr. Ehrlich joined Sunrise in 1986 after having
been a long-time investor with Sunrise. Prior to assuming responsibilities for
marketing and public relations for Sunrise, Mr. Ehrlich was an independent
businessman and investor.

Marie Laufik, age 46, is a Vice President and Director of Sunrise, and
Vice President-Trading of Sunrise Capital Partners. She received a degree in
Economics from the University of Prague, Czechoslovakia before

71
<PAGE>
joining a
Czechoslovakian import/export company. She held a position with this firm for
nine years before immigrating to the United States. From 1986 through 1988,
Mrs. Laufik was a commodity trader for Cresta Commodities. Mrs. Laufik joined
Sunrise on August 8, 1988 and currently oversees trading room procedures.

The Davis Family Trust, dated October 12, 1989, is a Director and the Sole
Shareholder of Sunrise; Gary B. Davis and his wife, Elissa Davis, are Trustees
and the sole beneficiaries of this Trust. Elissa Davis, age 49, is a principal
of Sunrise and Sunrise Capital Partners by virtue of her role as a Trustee of
the Davis Family Trust. Mrs. Davis is not active in the management of Sunrise
or Sunrise Capital Partners and has not been involved in any other business
activities during the past five years.

Sunrise, Sunrise Capital Partners, their principals and their affiliates
intend to trade or to continue to trade commodity interests for their own
accounts. Limited Partners will not be permitted to inspect the personal
trading records of Sunrise, Sunrise Capital Partners, their principals, or
their affiliates.

Neither Sunrise nor any of its principals own any Units of
Cornerstone III.

There have been no material administrative, civil or criminal actions
pending, on appeal or concluded during the five years preceding the date of this
Prospectus against Sunrise, Sunrise Capital Partners or any of their
principals or their affiliates.

DESCRIPTION OF SUNRISE'S TRADING APPROACH

Sunrise has historically traded three types of portfolios, all of which
are traded in accordance with the description below.

The first type of portfolio is a fully diversified futures portfolio which
follows approximately 15 different markets. Such markets include metals,
grains, petroleum, soft commodities, interest rates and currencies. The second
type of portfolio that is available for investment is a currency portfolio
which trades in currency futures contracts traded on the International
Monetary Market Division of the Chicago Mercantile Exchange and in forward
currency contracts in the interbank market. The currency portfolio follows
approximately 13 different currencies, including the British pound, the
Canadian dollar, the German deutschemark, the Australian dollar, the French
franc, the Japanese yen, the Swiss franc, Spanish peseta, Italian lira,
Singapore dollar and Malaysian ringgit. The third type of portfolio available
for investment is the CIMCO portfolio, which is derived from Sunrise's
diversified portfolio. The CIMCO portfolio was designed by Sunrise to include
selected financial markets and participates in foreign currency and crossrate
trades, interest rates, precious and industrial metals, and energy products.

Sunrise utilizes technical trend-following systems, trading a wide
continuum of time windows. Most of these time frames are decidedly long term
by industry standards. Pro-active money management strategies are designed to
protect open profits and to minimize exposure to non-directional markets.

Effective November 1, 1993, the General Partner has reallocated the
assets of Cornerstone III managed by Sunrise in proportions of approximately 50%
pursuant to the fully diversified futures portfolio and approximately 50% to
the CIMCO portfolio. The fully diversified futures portfolio follows
approximately 25 different commodities, although fewer commodities may be
traded at any time due to the absence of a price trend. The CIMCO portfolio
was designed by Sunrise to include selected financial markets and participates
in foreign currency and cross-rate trades, interest rates, precious metals and
energy products. Major currencies are traded both against the dollar and each
other. Interest rates include U. S. Treasury bond and Eurodollar trades.
Precious metals include gold and silver, while energy products will include
crude oil. The method of trading the CIMCO portfolio is the same as that used
in the larger diversified portfolio; however, the CIMCO program is limited to
only the markets listed above. The CIMCO portfolio is not limited to the
contracts mentioned in each of the categories above nor does it trade all the
contracts that were named at all times. In the future, stock indices may be
added to the portfolio traded for the Partnership.

The General Partner has granted Sunrise permission to utilize the modified
Sunrise trading system for currency portfolios in trading a portion of the
funds of Cornerstone III allocated to Sunrise for management. Such trading has
not yet commenced. The modified Sunrise trading system for currency portfolios
is described under "The Trading Managers-Dean Witter Cornerstone Fund IV."

Relying on technical analysis, Sunrise believes that future price
movements in all markets may be more accurately anticipated by analyzing
historical price movements within a quantitative framework rather than
attempting to predict or forecast changes in price through fundamental
economic analysis. The trading

72
<PAGE>
methodologies employed by Sunrise are based on programs analyzing a large
number of interrelated mathematical and statistical formulas and techniques
which are quantitative, proprietary in nature and which have been either
learned or developed by Dr. Davis, and which have been influenced by Dr.
Forrest and Mr. Slaughter. The profitability of the trading programs, traded
pursuant to technical analysis emphasizing mathematical and charting
approaches, will depend upon the occurrence in the future, as in the past, of
major trends in some markets. If there are no trends, the trading programs are
likely to be unprofitable.

Sunrise's trading systems attempt to detect a trend, or lack of a trend,
with respect to a particular futures interest in a program by analyzing price
movement and volatility over time. Sunrise's trading system consists of
multiple, independent and parallel systems, each designed and tested to seek
out and extract different market inefficiencies on different time horizons.
These systems will generate a signal to sell a "short" contract or purchase a
"long" contract based upon their identification of a price trend in the
particular futures interest. If the systems do not detect a price trend, a
"neutral" trading signal will be generated. While this neutral signal is
designed to filter out high-risk "whipsaw" markets, it is successful on only a
limited basis. Successful speculative futures interests trading employing
trend-following techniques, such as Sunrise's, depends to a large degree upon
not trading non-directional, volatile markets. Accordingly, to the extent that
this signal is not generated during a non-trading market, trading would likely
be unsuccessful because an account would trade such markets.

The number of losing transactions may exceed substantially the number of
profitable transactions. However, if Sunrise's approach is successful, these
losses should be more than offset by gains.

While Sunrise relies primarily on its mechanical, technical trading
systems in making investment decisions, the strategy does include the latitude
to depart from this approach if market conditions are such that, in the opinion
of Sunrise, execution of trades recommended by the mechanical systems would be
difficult or unusually risky. There may occur the rare instances in which
Sunrise will override the system to decrease market exposure. Any modification
of trading instructions could adversely affect the profitability of an
account. Among the possible consequences of such a modification would be (1)
the entrance of a trade at a price significantly worse than a system's signal
price, (2) the complete negation of a signal which subsequently would have
produced a profitable trade, or (3) the premature termination of an existing
trade. Sunrise is under no obligation to notify clients (including Limited
Partners) of this type of deviation from its mechanical systems, since it is
an integral part of its overall trading method.

A technical trading system consists of a series of fixed rules applied
systematically, however, the system still requires Sunrise make certain
subjective judgments. For example, Sunrise must select the markets it will
follow and futures interests it will actively trade, along with the contract
months in which it will maintain positions. Sunrise must also subjectively
determine when to liquidate positions in a contract month which is about to
expire and initiate a position in a more distant contract month.

Sunrise engages in ongoing research which may lead to significant
modifications from time to time. Sunrise will notify the General Partner if
modifications to its trading systems or portfolio structure are material.

Sunrise believes that the development of a commodity trading strategy is
a continual process. As a result of further analysis and research into the
performance of Sunrise's methods, changes have been made from time to time in
the specific manner in which these trading methods evaluate price movements in
various futures interests, and it is likely that similar revisions will be
made in the future. As a result of such modifications, the trading methods
that may be used by Sunrise in the future might differ from those presently
being used.

Sunrise has discretionary authority to make all trading decisions
including upgrading or downgrading the trading size of the account of the
Partnership to reflect additions, withdrawals, trading profits, and/or trading
losses, without prior consultation or notice. In addition, Sunrise may from
time to time adjust the leverage applicable to the Partnership's assets
allocated to Sunrise; provided, however, any such adjustments will be
consistent with the leverage parameters described herein and the Partnership's
overall investment objectives and Trading Policies. Such adjustments may be in
respect of certain markets or in respect of the overall CIMCO investment
portfolio. Factors which may affect the decision to adjust leverage include:
ongoing research, volatility of individual markets, risk considerations, and
Sunrise's subjective judgment and evaluation of general market conditions.
Adjustments to leverage may result in greater profits or losses and increased
brokerage costs. No assurance can be given that any leverage adjustment will
be to the financial advantage of Limited Partners.

As of June 30, 1996, the aggregate amount of funds under management
pursuant to the Diversified program was $21,250,821 and $55,070,520 pursuant
to the CIMCO portfolio. As of June 30, 1996 the aggregate amount under
management pursuant to all Sunrise's programs was $165,999,843.

<PAGE>

As of June 30, 1996, Sunrise was managing approximately, $17,112,775 of
Cornerstone III. Such amount and percentage of assets of Cornerstone III
managed by Sunrise will change as a result of allocations of net proceeds from
the Exchange of Units of Cornerstone III, allocations and reallocations among
trading managers and/or trading systems, and the performance of Sunrise and
other trading managers for Cornerstone III.

DEAN WITTER CORNERSTONE FUND IV

The Trading Managers initially selected by the General Partner for
Cornerstone IV are John W. Henry & Company, Inc. ("JWH") and Sunrise Capital
Management, Inc. ("Sunrise"). JWH and Sunrise have served as Trading Managers
for Cornerstone II and III respectively since the inception of those
Partnerships. Detailed descriptions of each of JWH and Sunrise, their
respective principals and trading systems and their respective composite
performance records are set forth under "The Trading Managers-Dean Witter
Cornerstone Fund II" and "Dean Witter Cornerstone Fund III." Descriptions of
the respective performance records of Cornerstone II and III are set forth
under "The Cornerstone Funds-Performance Records."

1. JOHN W. HENRY & COMPANY, INC.
(CURRENT ALLOCATION-49.53%)

JWH makes trading decisions for Cornerstone IV pursuant to the
International Foreign Exchange Program. Like the other JWH trading systems,
the International Foreign Exchange Program utilizes a long-term, technical,
trend-following trading system which generally operates as described under
"General Description of Trading Systems" and "The Trading Managers-Dean Witter
Cornerstone Fund II." The International Foreign Exchange Program has been
structured and the different markets weighted to take into account the
potentially higher volatility of a portfolio which trades exclusively in the
currency markets. JWH has attempted to reduce volatility and risk by utilizing
the trading method described above-i.e., applying the principles of spread
trading by establishing two related foreign currency positions at or about the
same time. The International Foreign Exchange Program calculates position size
based on perceived risk in the particular currency market and the correlation
of a particular currency with and against other currencies.

As of June 30, 1996 JWH was managing approximately $48,336,382 of Cornerstone
IV. Such amount and the percentage of assets of Cornerstone IV managed by JWH
will change as a result of allocations of assets from the Exchange of Units of
Cornerstone IV, allocations and reallocations among trading managers and/or
trading systems, and the performance of JWH and the other trading manager for
Cornerstone IV.

2. SUNRISE CAPITAL MANAGEMENT, INC.
(CURRENT ALLOCATION-50.47%)

Sunrise will make trading decisions for Cornerstone IV pursuant to the
Sunrise trading system described under "General Description of Trading
Systems" and "The Trading Managers-Dean Witter Cornerstone Fund III," but with
minor modifications to the system to account for the trading of an exclusive
portfolio of diverse world currencies. Such modifications have consisted
principally of applying the principles of spread trading as described herein,
including multiple additional currencies to a portfolio and reweighting the
emphasis given the different markets traded, all in an attempt to adjust to
the potentially higher volatility of a portfolio which trades in a less
diversified group of markets. Sunrise has utilized its modified trading system
to trade currency portfolios since October 1985. Sunrise normally commits
between 40 and 60% of an accounts equity as margin on open positions pursuant
to its trading system.

As of June 30, 1996, Sunrise was managing approximately $49,249,668 of
Cornerstone IV. Such amount and the percentage of assets of Cornerstone IV
managed by Sunrise will change as a result of allo-cations of assets from the
Exchange of Units of Cornerstone IV, allocations and reallocations among
trading managers and/or trading systems, and the performance of Sunrise and
the other trading manager for Cornerstone IV.

THE MANAGEMENT AGREEMENTS

Each Trading Manager has entered into a Management Agreement with a
Partnership and the General Partner which provides that the Trading Manager
will have sole authority and responsibility, except in certain limited
situations, for directing the investment and reinvestment in commodity futures
contracts and other commodity interests of the portion of the Partnership's
assets allocated to the management of such Trading Manager from time to time
during the term of the Management Agreement.

<PAGE>
APPORTIONMENT OF PROCEEDS

Under the terms of the Management Agreements, the General Partner agreed
to apportion the net proceeds received by each Partnership from the initial
sale of its Units in approximately equal proportions among the Trading
Managers for such Partnership and, thereafter, to apportion new funds
contributed to such Partnership in approximately equal proportions among the
then Trading Managers for such Partnership. For a discussion of certain
exceptions which have been agreed to by the Trading Managers, see "The
Cornerstone Funds." The General Partner may designate additional Trading
Managers for each Partnership and may apportion funds to new Trading Managers
as it shall determine in its absolute discretion. However, the Trading
Managers for Cornerstone IV have the right to approve the appointment of
additional (but not replacement) Trading Managers for that Partnership so long
as the General Partner has allocated an agreed amount of funds to each Trading
Manager during the prior year and each manager continues to be restricted as
to other accounts it may manage. See "Restrictions" below. The General Partner
may reapportion funds among Trading Managers for each Partnership when a new
Trading Manager is designated, an existing Trading Manager is terminated, a
Trading Manager experiences a 35% decline in the adjusted value of Net Assets
managed by it during a 12-month period, the Partnership's incentive period
ends, or speculative position limits are exceeded or about to be exceeded by a
Trading Manager. Furthermore, the General Partner in its discretion may permit
a portion of a Partnership's assets to be allocated among one or more
additional trading systems of a Trading Manager and/or may reallocate assets
among a Trading Manager's trading systems.

TERM

Each Management Agreement continues in effect for a fixed period after
the end of the month in which the Partnership with which such Agreement was
entered into commenced trading operations. Each Management Agreement is
thereafter renewed automatically for additional one-year terms unless either
the Partnership or the Trading Manager, upon written notice given not less
than 60 days (six months in the case of Cornerstone IV) prior to the original
termination date or any extended termination date, notifies the other party of
its intention not to renew.

Each Management Agreement with a Partnership will terminate if the
Partnership terminates. Each Management Agreement may also be terminated by the
Partnership, without penalty, at any time upon 15 days' (60 days' in the case
of Cornerstone IV) prior written notice to the Trading Manager. In addition,
each Management Agreement may be terminated by the Partnership at any time
without penalty upon the occurrence of certain events relating to the business
operations of a Trading Manager. These are as follows: (i) if a certain
principal employee ceases to be an active executive officer of the Trading
Manager; (ii) if the Trading Manager becomes bankrupt or insolvent; (iii) if
the Trading Manager is unable to use its trading systems or methods as in
effect on the date of the Management Agreement and as refined and modified in
the future with the written consent of the General Partner for the benefit of
the Partnership; (iv) if the registration, as a commodity trading advisor or
otherwise, of the Trading Manager with the CFTC or its membership in the NFA
is revoked, suspended, terminated, or not renewed or limited, conditioned,
restricted or qualified in any respect; or (v) if the Trading Manager merges
or consolidates with, or sells or otherwise transfers its advisory business,
or all or a substantial portion of its assets, any portion of its commodity
trading systems or methods, or its goodwill to, any individual or entity.
Under each Management Agreement, the Trading Manager may, however, merge or
consolidate with, or sell or otherwise transfer its advisory business, or all
or a substantial portion of its assets, any portion of its commodity trading
systems or methods, or its goodwill to, any entity that is directly or
indirectly controlled by, controlling or under common control with, the
Trading Manager, provided that such entity expressly assumes all obligations
of the Trading Manager under the Management Agreement and agrees to continue
to operate the business of the Trading Manager, substantially as such business
was being conducted on the date of the Management Agreement, as a separate and
distinct division of such entity.

In addition, each Partnership may terminate its Management Agreement with
a Trading Manager at any time without penalty upon the occurrence of certain
events relating to trading. These include the following: (i) a decline in the
Net Asset Value of a Unit, without taking into account distributions, if any,
to less than 40% of the Net Asset Value of a Unit on the date that the
Partnership commenced trading operations or during any fiscal year to less
than 50% of the Net Asset Value of a Unit as of the beginning of such fiscal
year of the Partnership; (ii) a decline by 50% during any consecutive 12-month
period in the value of the Net Assets managed by the Trading Manager (after
adding back the amount of distributions, redemptions, Exchanges or
reapportionments charged to such Net Assets and subtracting increases in such
Net Assets from Units acquired by Exchange or from reapportionments among
Trading Managers during the relevant portion of such twelve con-

75
<PAGE>
secutive month period); (iii) the Trading Manager violates any of the
Partnership's trading policies or any administrative
policy described in writing to the General
Partner, except with the prior written consent of the General Partner; or (iv)
the Trading Manager fails to perform any of its obligations under the
Management Agreement.

No assurance is given that each Partnership will be able to retain the
services of a Trading Manager once its Management Agreement with such person
is terminated, or, if such services are available, that they will be available
on the same or similar terms as those of the Management Agreement. The
compensation payable by each Partnership to a Trading Manager for its services
under the Management Agreement is described under "Description of Charges to
Each Partnership."

LIABILITY AND INDEMNIFICATION

Each Management Agreement provides that the Trading Manager, its
stockholders, directors, officers, employees, assigns and their respective
successors and assigns will not be liable to or obligated to indemnify and
hold harmless the Partnership, its Partners or any of their respective
successors or assigns, except for certain errors as described below and by
reason of acts of, or omissions due to, bad faith, misconduct or negligence,
or for not having acted in good faith in the reasonable belief that such acts
or omissions were in, or not opposed to, the best interests of the Partnership
or by reason of a material breach of the Management Agreement or any
representation or warranty therein.

Each Management Agreement also provides that the Trading Manager will
assume financial responsibility for any errors committed or caused by it in
transmitting orders to or order placement with DWR for the purchase or sale of
commodity interest contracts for the Partnership, including, without
limitation, brokerage commissions, but only for the amount of DWR's actual
out-of-pocket costs in respect thereof. Each Trading Manager and DWR have an
affirmative obligation to promptly notify the other party of its own errors,
and each Trading Manager must use its best efforts to identify and promptly
notify the General Partner of any order or trade which the Trading Manager
reasonably believes was not executed in accordance with its instructions to
DWR.

Each Management Agreement also provides that the Partnership and the
General Partner will indemnify, defend and hold harmless the Trading Manager,
its stockholders, directors, officers, employees and their respective successors
and assigns from and against all liabilities incurred in the performance of
the services required by the Management Agreement, provided that a court of
competent jurisdiction upon entry of a final judgment finds (or, if no final
judgment is entered, an opinion is rendered to the Partnership by independent
counsel) to the effect that such liability was not the result of bad faith,
misconduct or negligence or that the conduct was done in the good faith belief
that it was in, or not opposed to, the best interests of the Partnership. In
addition, each Management Agreement provides that the Trading Manager and the
Partnership, as well as the General Partner, will indemnify each other against
certain other liabilities, including liabilities under the Securities Act of
1933.

OBLIGATIONS TO A PARTNERSHIP

Each Trading Manager is engaged in the business of advising investors as
to the purchase and sale of commodity interest contracts. During the term of
each Management Agreement, the Trading Manager may or will be advising other
investors (including their officers, directors and employees and their
families and employees of such Trading Manager, principals and affiliates of
such Trading Manager and stockholders, officers, directors and their families
and employees of the principals and affiliates of such Trading Manager) and
trading for their accounts. However, under no circumstances will the Trading
Manager or any of its principals and affiliates knowingly or deliberately
favor (other than by charging different management and/or incentive fees) any
account advised or managed by such Trading Manager or any of its principals
and affiliates over the account of the Partnership in any way or manner or
employ a trading system, method or strategy on behalf of the Partnership's
account that is materially different from that employed for any other account
advised or managed by such Trading Manager or any of its principals and
affiliates, unless the Trading Manager or any of its principals and affiliates
has first offered to employ such other system, method or strategy on behalf of
the Partnership's account and the General Partner has declined such offer in
writing. Each Trading Manager will treat the Partnership for which it manages
funds in a fiduciary capacity to the extent recognized by applicable law, but,
subject to that standard, the Trading Manager or any of its principals and
affiliates will be free to advise and manage accounts of other investors and
will be free to trade on the basis of the same trading sys-
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tems, methods or
strategies employed by the Trading Manager on behalf of the Partnership or
trading systems, methods or strategies that are entirely independent of, or
materially different from (if the General Partner has expressly declined an
offer as described above), those employed on behalf of the Partnership, and
will be free to compete for the same commodity interest contracts as the
Partnership or to take positions opposite to the Partnership, where such
actions do not knowingly or deliberately favor any of such accounts to the
Partnership's account.

RESTRICTIONS

The Management Agreement does not restrict the number or nature of the
clients of the Trading Manager, except that each Trading Manager and its
principals and affiliates have agreed that: (i) it will not accept additional
advisory clients or open additional positions for such clients if to do so
would result in aggregate positions in any one commodity exceeding the
applicable speculative position limits of the CFTC or any other regulatory
body, exchange or board having jurisdiction; and (ii) neither the Trading
Manager nor any of its principals or affiliates will knowingly hold any
position or control any other account that would cause the Partnership, the
Trading Manager or the principals or affiliates of the Trading Manager to be
in violation of any applicable rule or regulation of the CFTC or any other
regulatory body, exchange or board so as to require the significant
modification of positions taken or intended for the Partnership.

The Management Agreements for Cornerstone IV also provide that so long as
a Trading Manager acts as a Trading Manager for that Partnership, unless the
General Partner has given its prior written consent, which may be withheld in
its sole discretion, neither the Trading Manager nor any of its principals or
affiliates will act or negotiate to act as a Trading Manager or advisor to any
domestic publicly-offered investment fund which trades exclusively or proposes
to trade exclusively in world currencies and/or is marketed or is proposed to
be marketed primarily as a foreign currency investment fund (which will not
include a fund which trades or proposes to trade world currencies as well as
any other major commodity group, such as metals, energy products or financial
instruments). The foregoing restriction may, at the Trading Manager's option,
cease to be in effect if the General Partner has not allocated during the
prior year at least $7,500,000 of additional funds to the Trading Manager for
management.

SPECULATIVE POSITION LIMITS

Each Management Agreement provides that if speculative position limits
are exceeded by the Trading Manager or any of its principals or affiliates in
the opinion of independent counsel (who must be other than counsel to the
Partnership), the CFTC or any other regulatory body, exchange or board, such
Trading Manager and its principals and affiliates will liquidate positions in
all of their accounts, including the Partnership's account, as to which
positions are attributed to such Trading Manager or any of its principals
or affiliates as nearly as possible in proportion to their respective
equities to the extent necessary to comply with the applicable
position limits. Each Management Agreement further provides that
if, in the reasonable opinion of counsel to the Partnership, it becomes
necessary for purposes of speculative position limits for positions in
commodity interests of the Trading Manager taken for the account of the
Partnership to be aggregated with positions taken by the other Trading
Managers for the account of the Partnership, or if an order to that effect is
rendered by the CFTC, an exchange or any other commodity regulatory agency or
authority, the General Partner may require all Trading Managers affected
thereby to utilize only that portion of the speculative position limit as the
General Partner determines from time to time in its sole discretion. See "Risk
Factors-Risks Relating to Commodity Trading and the Commodities
Markets-Possible Effects of Speculative Position Limits."

THE GENERAL PARTNER

The general partner and commodity pool operator of each Partnership is
Demeter Management Corporation, a Delaware corporation formed on August 18,
1977 to act as a commodity pool operator ("Demeter" or the "General Partner").
The General Partner is registered with the CFTC as a commodity pool operator
and is a member of the NFA in such capacity. The General Partner's main
business office is located at Two World Trade Center, 62nd Floor, New York,
New York 10048, telephone (212) 392-5453. The General Partner is an affiliate
of DWR in that both companies are wholly-owned subsidiaries of Dean Witter,
Discover & Co. ("DWD"), which is a publicly-owned company. DWD, DWR and the
General Partner each may be deemed to be a "parent" and "promoter" of the
Partnerships within the meaning of the federal securities laws.

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The General Partner is or has been the general partner and commodity pool
operator of twenty-five other commodity pools, including Cornerstone II, III
and IV, which have, in the aggregate, approximately $1 billion of net assets
under management as of June 30, 1996.

The responsibilities of the General Partner are described under "Fiduciary
Responsibility" and "The Limited Partnership Agreements-Management of
Partnership Affairs." The General Partner receives no compensation for its
services to the Partnerships (however, the General Partner shares office
space, equipment and staff with DWR, which receives brokerage commissions from
the Partnerships, as described under "Description of Charges to Each
Partnership"). Under the Limited Partnership Agreement of each Partnership,
the General Partner is required to maintain its net worth at an amount not
less than 10% of the total contributions to each Partnership by all the
partners thereof and to any other limited partnership for which it acts as a
general partner by all partners. DWD has contributed to the General Partner
additional capital necessary to permit the General Partner to meet such net
worth requirement and intends to continue to do so. See "Capitalization."

In this connection, as reflected in DWD's 1995 Annual Report and its Form
10-Q, DWD had total shareholders' equity of $4,833.7 million and total assets
of $38,208.2 million as of December 31, 1995 (audited) and total shareholders'
equity of $4,953.3 million and total assets of $36,061.8 million as of June
30, 1996 (unaudited). Additional financial information regarding DWD is
included in the financial statements filed as part of such Annual Report and
Form 10-Q. DWD will provide to investors, upon request, copies of its most
recent Forms 10-K, 10-Q and 8-K, as filed from time to time with the SEC.
Such Prospectus and such reports will be available for review or copying at
the offices of the SEC, 450 Fifth Street, Room 1024, N.W., Judiciary Plaza,
Washington, D.C. 20549 or will be available at no charge by writing to DWD at
Two World Trade Center, New York, New York 10048 (Attn: Investor Relations).

DIRECTORS AND OFFICERS OF THE GENERAL PARTNER

Richard M. DeMartini, age 43, is the Chairman of the Board and a Director
of the General Partner. Mr. DeMartini has served as President and Chief
Operating Officer of Dean Witter Capital, a division of DWR since January
1989. From January 1988 until January 1989, Mr. DeMartini served as President
and Chief Operating Officer of the Consumer Banking Division of DWD, and from
May 1985 until January 1988 was President and Chief Executive Officer of the
Consumer Markets Division of DWD. Mr. DeMartini currently serves as a
Director of DWD and of DWR, and has served as an officer of DWR for the past
five years. Mr. DeMartini has been with DWD and its affiliates for 17 years.
While Mr. DeMartini has extensive experience in the securities industry, he
has no experience in futures interests trading.

Mark J. Hawley, age 53, is President and a Director of the General
Partner. Mr. Hawley joined DWR in February 1989. He is an Executive
Vice President and Director of DWR's Managed Futures and Precious Metals
Department. Mr. Hawley also serves as President of DWFCM. From 1978 to 1989,
Mr. Hawley was a member of the senior management team at Heinold Asset
Management, Inc., a commodity pool operator, and was responsible for a variety
of projects in public futures funds. From 1972 to 1978, Mr. Hawley was a
Vice President in charge of institutional block trading for the Mid-West
at Kuhn Loeb & Co.

Lawrence Volpe, age 49, is a Director of the General Partner. Mr. Volpe
joined DWR as a Senior Vice President and Controller in September 1983, and
currently holds those positions. From July 1979 to September 1983, he was
associated with E.F. Hutton & Company Inc. and prior to his departure, held the
positions of First Vice President and Assistant Controller. From 1970 to
July 1979, he served as audit manager in the financial services division of
Arthur Andersen & Co.

Joseph G. Siniscalchi, age 51, is a Director of the General Partner. Mr.
Siniscalchi joined DWR in July 1984 as a First Vice President, Director of
General Accounting. He is currently Senior Vice President and Controller of
the Financial Markets Division of DWR. From February 1980 to July 1984 Mr.
Siniscalchi was Director of Internal Audit at Lehman Brothers Kuhn Loeb, Inc.

Laurence E. Mollner, age 55, is a Director of the General Partner. Mr.
Mollner joined DWR in May 1979 as Vice President and Director of Commercial
Sales. He is currently Executive Vice President and Deputy Director of the
Futures Markets Division of DWR.

Edward C. Oelsner III, age 54, is a Director of the General Partner. Mr.
Oelsner joined DWR in March 1981 as a Managing Director in the Corporate
Finance Department. He currently manages DWR's Retail Products Group within
the Corporate Finance Department. While Mr. Oelsner has extensive experience
in the securities industry, he has no experience in futures interests trading.
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Robert E. Murray, age 35, is a Director of the General Partner.
Mr. Murray is currently a Senior Vice President of the DWR Managed Futures
Division and is the Senior Administrative Officer of DWFCM. Mr. Murray
graduated from Geneseo State University in May 1983 with a B.A. degree in
Finance. Mr. Murray began at DWR in 1984 and is currently the Director of
Product Development for the Managed Futures Division and is responsible for
the development and maintenance of the proprietary Fund Management System
utilized by the General Partner and DWFCM for organizing information and
producing reports for monitoring investors' accounts.

Patti L. Behnke, age 36, is Vice President and Chief Financial Officer of
the General Partner. Ms. Behnke joined DWR in April 1991 as Assistant Vice
President of Financial Reporting and is currently a Vice President and
Director of Financial Reporting and Managed Futures Accounting in the Capital
Markets division of DWR. From August 1988 to April 1991, Ms. Behnke was
Assistant Controller of L.P. Rothschild & Co. and from September 1986 to
August 1988, she was associated with Cartaret Savings Bank as Assistant Vice
President-Financial Analysis. From April 1982 to September 1986, Ms. Behnke
was an auditor at Arthur Andersen & Co.

There have been no administrative, civil or criminal actions against the
General Partner or any of its principals within the five years preceding the
date of this Prospectus which the General Partner believes would be material
to an investors' decision to Exchange Units.

As of June 30, 1996, the General Partner had contributed a total of
$2,810,438 to Cornerstone II, III and IV in order to meet its minimum capital
requirements. Such contribution is evidenced by approximately 217.400 units of
general partnership interest of Cornerstone II, 382.103 units of general
partnership interest of Cornerstone III and 638.889 units of general
partnership interest of Cornerstone IV. Each such unit of general partnership
interest has a net asset value equal to the Net Asset Value of a Unit of
Limited Partnership Interest of the respective Partnership. The General
Partner has agreed to make additional contributions to each Partnership so
that the General Partner's aggregate capital contribution will at all times be
equal to the sum of (i) the lesser of $100,000 or 3% of the first $10,000,000
in aggregate capital contributions to such Partnership by all partners
(including the General Partner's contribution) and (ii) 1% of any such
aggregate capital contributions in excess of $10,000,000; but not less than
$50,000. The General Partner and its principals are not obligated to purchase
Units of Limited Partnership Interest and do not presently own any Units of
Cornerstone II. A principal of the General Partner owns 2.750 Units of
Cornerstone III and 4.856 Units of Cornerstone IV.

THE COMMODITY BROKER

DESCRIPTION OF THE COMMODITY BROKER

Dean Witter Reynolds Inc. ("DWR"), a Delaware corporation, is the
commodity broker for each of the Partnerships. DWR also is commodity broker
for the other commodity pools for which Demeter serves as general partner and
commodity pool operator.

DWR is a principal operating subsidiary of DWDC, which is a publicly-owned
company. DWR is a financial services company which provides to its individual,
corporate and institutional clients services as a broker in securities and
commodity interest contracts, a dealer in corporate, municipal and government
securities, an investment banker, an investment adviser and an agent in the
sale of life insurance and various other products and services. DWR is a
member firm of the New York Stock Exchange, Inc., the American Stock Exchange,
the Chicago Board Options Exchange, other major securities exchanges, and the
National Association of Securities Dealers, Inc. ("NASD"), and is a clearing
member of the Chicago Board of Trade, the Chicago Mercantile Exchange, the
Commodity Exchange Inc., and other major commodities exchanges. DWR is
registered with the CFTC as a futures commission merchant and is a member of
the NFA in such capacity. DWR is currently servicing its clients through a
network of over 370 domestic and international offices with over 8,800 account
executives servicing individual and institutional client accounts.

At any given time, DWR is involved in numerous legal actions, some of
which seek significant damages. On January 16, 1992, DWR, without admitting or
denying liability, consented to findings in an administrative proceeding
brought by the SEC that it failed to keep accurate records with respect to
customer orders relating to the primary distribution of securities of
government sponsored enterprises ("GSEs"). In that proceeding,
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DWR was censured, paid a civil money penalty of $100,000 and was ordered
to cease and desist from any future violations of Section 17(a) of the 1934 Act
and Rules 17a-3 and 17a-4 thereunder in connection with the primary
distribution of securities of GSEs. Also, on May 16, 1996, a National
Association of Securities Dealers arbitration panel awarded damages and costs
against DWR and one of its account executives in the amount of approximately
$1.1 million, including punitive damages, to three customers who alleged, among
other things, fraud and misrepresentation in connection with their individually
managed futures accounts. Those accounts are unrelated to the Partnerships or
the other commodity pools for which DWR serves as commodity broker. During
the five years preceding the date of this Prospectus, there have been (other
than as described above) no administrative, civil or criminal actions pending,
on appeal or concluded against DWR or any of its principals which is material
in light of all the circumstances.

BROKERAGE ARRANGEMENTS

The Partnerships' brokerage arrangements with DWR, including the cap
imposed on certain expenses, are discussed in "Conflicts of
Interest-Relationship of the General Partner to the Commodity Broker," and
"Description of Charges to Each Partnership-2. Commodity Broker."

The General Partner will review at least annually the brokerage
arrangements of each Partnership to ensure that such brokerage arrangements are
fair, reasonable, and competitive, and represent the best price and services
available, taking into consideration, in particular, when the commodity broker
is an "affiliate" of the General Partner (as such term is defined in the
Limited Partnership Agreement): (i) the size of the Partnership, (ii) the
commodity interests contract trading activity; (iii) the services provided by
the commodity broker, the General Partners or any affiliate thereof to the
Partnership; (iv) the cost incurred by the commodity broker, the General
Partner or any affiliate thereof in organizing and operating the Partnership
and offering Units; (v) the overall costs to the Partnership; (vi) any excess
interest and compensating balance benefits to the Commodity Broker from assets
held thereby; and (vii) if the General Partner does not receive any direct
compensation from the Partnership for its services as General Partner, the
risks incurred by the General Partner as such. See "Conflicts of Interest."

Each Customer Agreement sets forth a standard of liability for DWR and
provides for certain indemnities of and by DWR as Commodity Broker. See
"Fiduciary Responsibility."

THE COMMODITIES MARKET
FUTURES CONTRACTS

Commodity futures contracts are standardized contracts made on domestic
or foreign commodity exchanges which call for the future delivery of specified
quantities of various agricultural and tropical commodities, industrial
commodities, currencies, financial instruments or metals at a specified time
and place. The contractual obligations, depending upon whether one is a buyer
or a seller, may be satisfied either by taking or making, as the case may be,
physical delivery of an approved grade of commodity or by making an offsetting
sale or purchase of an equivalent but opposite futures contract on the same
exchange prior to the designated date of delivery. As an example of an
offsetting transaction where the physical commodity is not delivered, the
contractual obligation arising from the sale of one contract of December 1996
wheat on a commodity exchange may be fulfilled at any time before delivery of
the commodity is required by the purchase of one contract of December 1996
wheat on the same exchange. The difference between the price at which the
futures contract is sold or purchased and the price paid for the offsetting
purchase or sale, after allowance for brokerage commissions, constitutes the
profit or loss to the trader. Certain futures contracts, such as a stock index
or other financial or economic index approved by the CFTC or Eurodollar
contracts, settle in cash (irrespective of whether any attempt is made to
offset such contracts) rather than delivery of any physical commodity.

FORWARD CONTRACTS

Contracts for the future delivery of certain commodities may also be made
through banks or dealers pursuant to what are commonly referred to as "forward
contracts." A forward contract is a contractual right to purchase or sell a
specified quantity of a commodity at or before a specified date in the future
at a specified price and, therefore, is similar to a futures contract. In
forward contract trading, a bank or dealer generally acts as
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principal in the transaction and includes its anticipated profit (the "spread"
between the "bid" and the "asked" prices) and in some instances a mark-up in
the prices it quotes for forward contracts. Cornerstone IV trades a substantial
number of forward contracts in currencies, and Cornerstone II and III also
engage in a significant amount of such trading. Unlike futures contracts,
forward contracts are not standardized contracts; rather, forward contracts for
a given commodity are generally available in any size and maturity and are
subject to individual negotiation between the parties involved. Moreover,
because there is no clearinghouse system applicable to forward contracts,
forward contracts are not fungible, and there is no direct means of
"offsetting" a forward contract by purchase of an offsetting position on the
same exchange as one can a futures contract. In recent years, the terms of
forward contracts have become more standardized and in some instances such
contracts now provide a right of offset or cash settlement as an alternative
to making delivery on the contract.

COMMODITY OPTIONS

An option on a futures contract or on a physical commodity gives the
buyer of the option the right to take a position at a specified price (the
"striking," "strike," or "exercise" price) in the underlying futures contract
or commodity. The buyer of a "call" option acquires the right to take a long
position in the underlying futures contract or commodity, and the buyer of a
"put" option acquires the right to take a short position in the underlying
futures contract or commodity.

The purchase price of an option is referred to as its "premium." The
seller (or "writer") of an option is obligated to take a futures position at a
specified price opposite to the option buyer if the option is exercised. Thus,
the seller of a call option must stand ready to take a short position in the
underlying futures contract at the striking price if the buyer should exercise
the option. The seller of a put option, on the other hand, must stand ready to
take a long position in the underlying futures contract at the striking price.

A call option on a futures contract is said to be "in-the-money" if the
striking price is below current market levels, and "out-of-the-money" if the
striking price is above current market levels. Similarly, a put option on a
futures contract is said to be "in-the-money" if the striking price is above
current market levels, and "out-of-the-money" if the striking price is below
current market levels.

Options have limited life spans, usually tied to the delivery or
settlement date of the underlying futures contract. An option that is out-of-
the-money and not offset by the time it expires becomes worthless. On certain
exchanges, in-the-money options are automatically exercised on their expiration
date, but on others unexercised options simply become worthless after their
expiration date. Options usually trade at a premium above their intrinsic
value (i.e., the difference between the market price for the underlying futures
contract and the striking price) because the option trader is speculating on (or
hedging against) future movements in the price of the underlying contract. As
an option nears its expiration date, the market and intrinsic value typically
move into parity. The difference between an options intrinsic and market
values is referred to as the "time value" of the option.

Successful futures options trading requires many of the same skills as
does successful futures trading. However, since specific market movements of
the underlying futures contract or commodity must be predicted accurately, the
risks involved are somewhat different. For example, if a Partnership buys an
option (either to sell or buy a futures contract or commodity), it will pay a
"premium" representing the market value and time value of the option. Unless
the price of the futures contract or commodity underlying the option changes
and it becomes profitable to exercise or offset the option before it expires,
the Partnership may lose the entire amount of such premium. Conversely, if the
Partnership sells an option (either to sell or buy a futures contract or
commodity), it will be credited with the premium but will have to deposit
margin due to its contingent liability to take or deliver the futures contract
or commodity underlying the option in the event the option is exercised.
Traders who sell options are subject to the entire loss which occurs in the
underlying futures position or commodity (less any premium received). The
ability to trade in or exercise options may be restricted in the event that
trading in the underlying futures contract or commodity becomes restricted.

HEDGERS AND SPECULATORS

The two broad classes of persons who trade commodity interest contracts
are "hedgers" and "speculators." Commercial interests, including farmers, that
market or process commodities and financial institutions that market or deal
in commodities (including, for example, interest rate sensitive instruments,
foreign currencies and stock portfolios) and which are exposed to exchange,
interest rate and stock market risks, may use the commodities markets
primarily for hedging. Hedging is a protective procedure designed to minimize
losses
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that may occur because of price fluctuations occurring, for example,
between the time a merchandiser or processor makes a contract to buy or sell a
raw or processed commodity at a certain price and the time he must perform the
contract. The commodity markets enable the hedger to shift the risk of price
fluctuations to the speculator. The speculator risks his capital with the
hope of making profits from price fluctuations in futures interest contracts.
Speculators rarely take delivery of commodities but close out their positions
by entering into offsetting purchases or sales of contracts. Since the
speculator may take either a long or short position in the commodities
markets, it is possible for him to make profits or incur losses regardless of
whether prices go up or down. Trading by the Partnerships is for speculative
rather than for hedging purposes.

COMMODITY EXCHANGES

Commodity exchanges provide centralized market facilities for trading
futures contracts and options (but not forward contracts) relating to
specified commodities. Members of, and trades executed on, a particular
exchange are subject to the rules of that exchange. Among the principal
exchanges in the United States are the Chicago Board of Trade, the Chicago
Mercantile Exchange (including the International Monetary Market), the New
York Mercantile Exchange and the Commodity Exchange, Inc.

Each of the commodity exchanges in the United States has an associated
"clearinghouse." Once trades between members of an exchange have been
confirmed, the clearinghouse becomes substituted for each buyer and each
seller of contracts traded on the exchange and, in effect, becomes the other
party to each trader's open position in the market. Thereafter, each party to
a trade looks only to the clearinghouse for performance. The clearinghouse
generally establishes some sort of security or guarantee fund to which all
clearing members of the exchange must contribute; this fund acts as an
emergency buffer which enables the clearinghouse, at least to a large degree,
to meet its obligations with regard to the "other side" of an insolvent
clearing member's contracts. Furthermore, clearinghouses require margin
deposits and continuously mark positions to market to provide some assurance
that their members will be able to fulfill their contractual obligations.
Thus, a central function of the clearinghouses is to ensure the integrity of
trades, and members effecting futures transactions on an organized exchange
need not worry about the solvency of the party on the opposite side of the
trade; their only remaining concerns are the respective solvencies of their
commodity broker and the clearinghouse. The exchanges also impose speculative
position limits and other restrictions on customer positions to help ensure
that no single trader can amass a position that would have a major impact on
market prices.

Commodity exchanges in the United States and their clearinghouses are
given reasonable latitude in promulgating rules and regulations to control
and regulate their members. Examples of regulations by exchanges and
clearinghouses include the establishment of initial margin levels, size of
trading units, contract specifications, speculative position limits and daily
price fluctuation limits. The CFTC reviews all such rules (other than those
relating to specific margin levels for futures, as opposed to options) and can
disapprove or, with respect to certain of such rules, require the amendment or
modification thereof.

Foreign commodity exchanges differ in certain respects from their United
States counterparts. In contrast to United States exchanges, certain foreign
exchanges are "principals' markets," where trades remain the liability of the
traders involved, and the exchange does not become substituted for any party.
See "The Commodities Markets-Regulation" and "Risk Factors Risks Relating to
Commodity Trading and the Commodities Markets-Trading on Foreign Exchanges."

SPECULATIVE POSITION LIMITS

The CFTC and United States commodity exchanges have established limits,
referred to as "speculative position limits" or "position limits," on the
maximum net long or net short speculative position which any person or group
of persons (other than a hedger, which the Partnerships are not) may hold, own
or control in commodity interest contracts. Among the purposes of speculative
position limits is to prevent a "corner" on a market or undue influence on
prices by any single trader or group of traders. The CFTC has jurisdiction to
establish position limits with respect to all commodities. The position limits
established by the CFTC apply to certain agricultural commodities, such as
grains (oats, barley and flax seed), soybeans, cotton, eggs, rye, corn, wheat
and potatoes. In addition, however, the CFTC requires each United States
exchange to submit position limits for all commodities traded on such exchange
for approval by the CFTC. Certain exchanges or their clearinghouses also set
limits on the total net positions that may be held by a clearing broker, such
as DWR. However, position limits do not apply to many currency futures
contracts, and, in general, no position limits are in effect in bank or dealer
forward contract trading or in trading on foreign commodity exchanges,
although
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the principals with which the Partnerships may trade in such markets
may impose such limits as a matter
of credit policy. The commodity interest contract positions of the
Partnerships are not, and will not
be, attributable to Limited Partners with respect to their own commodities
trading, if any, for purposes of position limits.

DAILY LIMITS

Most United States commodity exchanges (but generally not foreign
exchanges or banks or dealers in the case of forward contracts) normally limit
the amount of fluctuation in commodity interest contract prices during a
single trading day by regulation. These regulations specify what are referred
to as "daily price fluctuation limits" or more commonly "daily limits." The
daily limits establish the maximum amount that the price of a commodity
interest contract may vary either up or down from the previous day's
settlement price. Once the daily limit has been reached in a particular
commodity, no trades may be made at a price beyond the limit. This can create
certain liquidity problems.

REGULATIONS

Commodity exchanges in the United States are subject to regulation under
the CEAct by the CFTC, the governmental agency having responsibility for
regulation of commodity exchanges and commodity interest contract trading
conducted thereon. The function of the CFTC is to implement the objectives of
the CEAct of preventing price manipulation and excessive speculation and
promoting orderly and efficient commodities markets. Such regulation, among
other things, provides that trading in commodity interest contracts must be on
exchanges designated as "contract markets," and that all trading on such
exchanges must be done by or through exchange members.

The CFTC possesses exclusive jurisdiction to regulate the activities of
"commodity trading advisors" and "commodity pool operators" and has adopted
regulations with respect to certain of such persons' activities. Pursuant to
its authority, the CFTC requires a commodity pool operator to keep accurate,
current and orderly records with respect to each pool it operates. The CFTC
may suspend the registration of a commodity pool operator (i) if the CFTC
finds that the operator has violated the CEAct or regulations thereunder and
in certain other circumstances. Suspension, restriction or termination of the
General Partner's registration as a commodity pool operator would prevent it,
until such time (if any) as such registration were to be reinstated, from
managing, and might result in the termination of, the Partnerships. The CEAct
gives the CFTC similar authority with respect to the activities of commodity
trading advisors, such as the Trading Managers. If the registration of a
Trading Manager as a commodity trading advisor were to be terminated,
restricted or suspended, the Trading Manager would be unable, until such time
(if any) as such registration were to be reinstated, to render trading advice
to the relevant Partnership. The Partnerships themselves are not registered
with the CFTC in any capacity.

The CEAct requires all "futures commission merchants," such as DWR, to
meet and maintain specified fitness and financial requirements, segregate
customer funds from proprietary funds and account separately for all customers'
funds and positions, and to maintain specified books and records open to
inspection by the staff of the CFTC. The CFTC has similar authority over
"introducing brokers," i.e., persons who solicit or accept orders for commodity
trades but who do not accept margin deposits for the execution of trades. The
Partnerships have no present intention of using any introducing brokers in
their trading. The CEAct also gives the states certain powers to enforce its
provisions and the regulations of the CFTC.

The fact of CFTC registration of the General Partner, DWR and the Trading
Managers does not imply that the CFTC has passed on or approved this offering
or their qualifications to act as described in the Prospectus.

Limited Partners are afforded certain rights for reparations under the
CEAct. Limited Partners may also be able to maintain a private right of action
for certain violations of the CEAct. The CFTC has adopted rules implementing the
reparation provisions of the CEAct which provide that any person may file a
complaint for a reparations award with the CFTC for violation of the CEAct
against a floor broker, futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, and their respective
associated persons.

Pursuant to authority in the CEAct, the NFA has been formed and registered
with the CFTC as a "registered futures association." At the present time, the
NFA is the only non-exchange self-regulatory organization for commodities
professionals. NFA members are subject to NFA standards relating to fair trade
practices, financial condition and consumer protection. As the self-regulatory
body of the commodities industry, the
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NFA promulgates rules governing the
conduct of commodity professionals and disciplines those professionals who do
not comply with such standards. The CFTC has delegated to the NFA
responsibility for the registration of commodity trading advisors, commodity
pool operators, futures commission merchants, introducing brokers and their
respective associated persons and floor brokers. DWR, the General Partner and
the Trading Managers are all members of the NFA (the Partnerships themselves
are not required to become members of the NFA).

The above-described regulatory structure may be modified by rules and
regulations promulgated by the CFTC or by legislative changes enacted by
Congress.

The CFTC has no authority to regulate trading on foreign commodity
exchanges and markets. The CFTC has, however, adopted rules relating to the
marketing of foreign futures contracts and options in the United States. These
rules permit commodity options traded only on certain foreign exchanges to be
offered and sold in the United States. See "Risk Factors-Risks Relating to the
Commodity Trading and the Commodities Markets-Trading on Foreign Exchanges."

MARGINS

"Initial" or "original" margin is the minimum amount of funds that must
be deposited by a commodity trader with his commodity broker in order to
initiate futures trading or to maintain an open position in futures contracts.
"Maintenance" margin is the amount (generally less than initial margin) to
which a trader's account may decline before he must deliver additional margin.
A margin deposit is like a cash performance bond. It helps assure the
commodity trader's performance of the commodity futures contracts he purchases
or sells. Futures contracts are customarily bought and sold on margins that
represent a very small percentage (ranging upward from less than 2%) of the
purchase price of the underlying commodity being traded. Because of such low
margins, price fluctuations occurring in the futures markets may create
profits and losses that are greater, in relation to the amount invested, than
are customary in other forms of investment or speculation. The minimum amount
of margin required in connection with a particular futures contract is set
from time to time by the exchange on which such contract is traded, and may be
modified from time to time by the exchange during the term of the contract.
See "Risk Factors-Risks Relating to Commodity Trading and the Commodities
Markets-Commodity Trading is Highly Leveraged."

Brokerage firms, such as DWR, carrying accounts for traders in futures
contracts may not accept lower, and generally require higher, amounts of
margin as a matter of policy in order to afford further protection for
themselves. DWR presently requires each Partnership to make margin deposits
equal to the exchange minimum levels for all futures contracts. This
requirement may be altered from time to time at the discretion of DWR.

Trading in the currency forward contract market does not require margin,
but generally does require the extension of credit by a bank or dealer to those
with whom the bank or dealer trades. Since each Partnership's trading will be
done through DWR, each Partnership will be able to take advantage of DWR's
credit lines with several participants in the interbank market. The General
Partner does not anticipate that banks and dealers with which DWR and the
Partnerships may trade will require margin with respect to their trading of
currencies.

When a trader purchases an option, there is no margin requirement. When a
trader sells an option, on the other hand, he is required to deposit margin in
an amount determined by the margin requirements established for the futures
contract underlying the option, and, in addition, an amount substantially
equal to the current premium for the option. The margin requirements imposed
on the writing of options, although adjusted to reflect the probability that
out-of-the-money options will not be exercised, can in fact be higher than
those imposed in dealing in the futures markets directly. Complicated margin
requirements apply to "spreads" and "conversions," which are complex trading
strategies in which a trader acquires a mixture of related futures and options
positions.

Margin requirements are computed each day by a trader's commodity broker.
When the market value of a particular open futures contract position changes to
a point where the margin on deposit does not satisfy maintenance margin
requirements, a margin call is made by the commodity broker. If the margin
call is not met within a reasonable time, the broker may close out the
trader's position. With respect to a Partnership's trading, that Partnership,
and not its Limited Partners personally or any other Partnership, will be
subject to margin calls.
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REDEMPTIONS

Except as provided below, a Limited Partner may cause all or part of his
Units to be redeemed by a Partnership effective as of the last day of any
month at the Net Asset Value thereof on such date. A redemption may be made
only in whole Units or in multiples of $1,000 (which may result in a
redemption of fractional Units), unless a Limited Partner is redeeming his
entire interest in a Partnership. Redemptions will be effective as of the last
day of the month in which a Request for Redemption in proper form has been
timely received by the General Partner ("Redemption Date"). A "Request for
Redemption" is a letter in the form specified by the General Partner, sent by
a Limited Partner (or any assignee thereof) to a DWR branch office and
received by the General Partner at least 15 days prior to the Redemption Date.
A form of Request for Redemption is annexed to the Limited Partnership
Agreement, which is annexed hereto as Exhibit A. Additional forms of Request
for Redemption may be obtained by written request to the General Partner or a
local DWR branch office.

The "Net Asset Value" of a Unit is an amount equal to a Partnership's Net
Assets allocated to capital accounts represented by Units, divided by the
number of Units outstanding on the Redemption Date. For a definition of "Net
Assets," see "Description of Charges to Each Partnership -2. Trading
Managers-(a) Monthly Management Fee." The Net Asset Value of a Unit of each
Partnership is determined daily by the General Partner and the most recent Net
Asset Value calculations will be promptly supplied in writing to any Limited
Partner after receipt of a request in writing to such effect. Where the Net
Asset Value of a Unit is determined as of the end of a month that is not the
end of an annual incentive period, the incentive fee calculation will be made,
and any such fee will be accrued, as though the end of the month were the end
of an incentive period.

The General Partner will endeavor to pay redemptions within 10, and no
later than 20, business days after the Redemption Date, and a Partnership's
commodity positions will be liquidated to the extent necessary to effect
redemptions. Payment will be made by credit in the amount of such redemption
to the Limited Partner's customer account with DWR or by check mailed to the
Limited Partner if such account is closed. The right to obtain redemption is
contingent upon (i) the redeeming Partnership having assets sufficient to
discharge its liabilities on the Redemption Date, and (ii) timely receipt by
the General Partner of a Request for Redemption as described above.

The liability of Limited Partners, including the possible liability of a
person who has redeemed Units, for liabilities of the Partnership which arose
before such redemption is described under "The Limited Partnership
Agreements-Nature of the Partnerships."
Federal income tax aspects of redemptions are described under the caption
"Federal Income Tax Aspects."

THE EXCHANGE AGREEMENT

The following is a summary of the more significant provisions of the
Exchange Agreement entered into by each of the Partnerships and Demeter, in
its individual capacity.

PURPOSES. The Exchange Agreement provides for the Partnerships to
associate as the Dean Witter Cornerstone Funds and sets forth the rights and
obligations of each Partnership to each other Partnership and its Limited
Partners. The purposes of the Cornerstone Funds include offering Units of each
Partnership for sale to the public as part of a common offering of such Units
by a single selling agent pursuant to a single prospectus, sharing common
administrative services, providing a means for Limited Partners of each
Partnership to switch their investment in one Partnership for an investment in
another Partnership without payment of any selling commissions or charges for
Continuing Offering Expenses, and allocating the cost and expenses of the
foregoing among the Partnerships. Demeter has agreed to act as the
administrator of the Cornerstone Funds and may advance certain expenses on
behalf of the Partnerships.

OBLIGATIONS OF EACH PARTNERSHIP. Under the Exchange Agreement, each
Partnership has agreed to assist in the preparation of registration statements
and prospectuses, to conduct its business as described herein, to cause its
Limited Partners to utilize the forms for subscriptions, redemptions or
Exchanges contained herein, and to provide Demeter with certain information
regarding its Limited Partners and any other information required to be
delivered to such Limited Partners.

Each Partnership also has agreed to take certain actions which will enable
Limited Partners to switch investments between Partnerships. Each Partnership
has agreed to redeem Units specified in a Limited Partner's Request for
Exchange of Units and to utilize the net proceeds thereof to purchase on
behalf of such Limited Partner Units of other Partnerships at a price per Unit
equal to 100% of the Net Asset Value thereof.
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Each Partnership has undertaken to issue and sell its Units at a price per Unit
equal to 100% of the Net Asset Value thereof, without payment of any selling
commissions or charges, to a Limited Partner timely delivering a properly
completed Request for Exchange of Units to Demeter, and to use its best
efforts to cause a sufficient number of its Units to be registered and
qualified at all times under federal and applicable state securities or
Blue Sky laws pursuant to a current Prospectus. See "Plan of Distribution
and Exchange Procedure."

OBLIGATIONS OF DEMETER. Under the Exchange Agreement, Demeter has agreed
to act as the administrator of the Cornerstone Funds and, as such, to maintain
books and records relating to all Common Administrative Expenses (as defined
below) and to allocate such amounts to each Partnership, to process
redemptions and Exchanges and to prepare, print and distribute combined
monthly reports, annual reports and other documents required to be delivered
to Limited Partners. Demeter may from time to time advance expenses on behalf
of the Partnerships and is entitled to full reimbursement therefor.

SHARING OF EXPENSES. The Partnerships have agreed to share Common
Administrative Expenses. Common Administrative Expenses means the costs and
expenses incurred in connection with preparing, printing and mailing monthly
reports, annual reports and all other documents required to be delivered to
Limited Partners under any applicable federal or state laws or pursuant to the
terms of each Limited Partnership Agreement, and all legal, accounting,
auditing, filing, registration and extraordinary expenses not directly
attributable to one Partnership. Demeter calculates Common Administrative
Expenses for each month and such amount is divided among the Partnerships
based solely on the ratio which the number of each Partnership's Units
outstanding during such month bears to the total number of all Units of all of
the Partnerships outstanding during such month.

LIABILITY AND INDEMNITY. Demeter and its stockholder, directors, officers
and employees and its or their respective successors and assigns will not be
liable to any Partnership, its general partners and limited partners, or any
of its or their respective successors and assigns in the performance of its
obligations under the Exchange Agreement, except by reason of acts of, or
omissions due to, bad faith, misconduct or negligence or for not having acted
in good faith in the reasonable belief that such acts or omissions were in, or
not opposed to, the best interests of such Partnership.

Each Partnership has agreed to indemnify Demeter and its stockholder,
directors, officers and employees and its or their respective successors and
assigns from and against any loss, liability, damage, cost or expense
(including legal fees and expenses incurred in defense of any demands, claims
or lawsuits) actually and reasonably incurred arising from the performance of
the services required of Demeter by the Exchange Agreement, including, without
limitation, any demands, claims or lawsuits initiated by a Limited Partner,
provided that a court of competent jurisdiction upon entry of a final judgment
shall find (or, if no final judgment is entered, an opinion is rendered to
Demeter by independent counsel, other than counsel to the Partnership or
Demeter) to the effect that the conduct that was the basis for such liability
was not the result of bad faith, misconduct or negligence or that the conduct
was done in the good faith belief that it was in, or not opposed to, the best
interests of such Partnership. Each Partnership has waived any fiduciary
obligations owed to it by Demeter to the extent permitted by law and to the
extent necessary to permit Demeter to perform its obligations under the
Exchange Agreement.

TERM. The Exchange Agreement will remain in force until all the parties
thereto consent in writing to its termination or, due to the dissolution or
termination of the Partnerships, less than two Partnerships are parties to the
Agreement, whichever occurs earlier.

THE LIMITED PARTNERSHIP AGREEMENTS

This Prospectus contains an explanation of the more significant terms and
provisions of the Limited Partnership Agreement of each Partnership, a copy of
which is annexed hereto as Exhibit A and is incorporated herein by this
reference. Each Limited Partnership Agreement is identical insofar as the
terms and provisions thereof discussed hereunder are concerned, except to the
extent noted otherwise. The following description is a summary only, is not
intended to be complete and is qualified in its entirety by such reference.

NATURE OF THE PARTNERSHIPS

Cornerstone II and III were each formed on December 7, 1983 and
Cornerstone IV was formed on December 11, 1986 under the Partnership Act. The
fiscal years of the Partnerships begin on January 1 of each year and end on
the following December 31. This change was made effective as of the period
beginning October 1, 1987.

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Units acquired pursuant to an Exchange will be fully paid and
nonassessable. Each Partnership may have a claim against its Limited Partners
after redemption or Exchange of Units or receipt of distributions from such
Partnership for liabilities of the Partnership that arose before the date of
such redemption, Exchange or distribution, but such claim will not exceed the
sum of such Limited Partner's unredeemed capital contribution, undistributed
profits, if any, and any redemptions, amounts deemed received on an Exchange
or distributions, together with interest thereon. No Partnership will make a
claim against its Limited Partners with respect to amounts distributed to them
or amounts received by them upon redemption of Units or deemed received upon
an Exchange of Units unless the assets of the Partnership are insufficient to
discharge liabilities of the Partnership that arose before the payment of such
amounts. The General Partner will be liable for all obligations of each
Partnership to the extent that assets of such Partnership, including amounts
contributed by its Limited Partners and paid out in distributions,
redemptions, Exchanges, or otherwise to Limited Partners, are insufficient to
discharge such obligations.

Each Limited Partnership Agreement provides that the death of a Limited
Partner will not terminate or dissolve the Partnership and that the legal
representative of such Limited Partner has no right to withdraw or value his
interest, except by redemption of Units. Each Limited Partner, in the event of
his death, waives on behalf of himself and his estate the furnishing of any
inventory, audit, accounting or appraisal of any of the Partnership's assets
or any right to an audit or examination of the books of the Partnership of
which he was a Limited Partner.

MANAGEMENT OF PARTNERSHIP AFFAIRS

The Limited Partners of each Partnership do not participate in the
management or operations of such Partnership. Any participation by a Limited
Partner in the management of a Partnership may jeopardize the limited
liability of such Limited Partner. Under each Limited Partnership Agreement,
responsibility for managing the Partnership is vested solely in Demeter as
general partner. See "Fiduciary Responsibility." The General Partner may
delegate complete trading authority to Trading Managers and has done so
(except for the ability of the General Partner to override trading
instructions that violate a Partnership's trading policies and to the extent
necessary to fund distributions, redemptions, Exchanges, or reapportionments
among Trading Managers or to pay Partnership expenses) in each Management
Agreement with a Trading Manager. However, the General Partner may make
trading decisions at any time at which any such Trading Manager becomes
incapacitated or some other emergency arises as a result of which such Trading
Manager is unable or unwilling to act and the General Partner has not yet
retained a successor Trading Manager. See "The Trading Managers" and "The
Management Agreements."

On behalf of each Partnership, the General Partner may engage and
compensate from the funds of that Partnership such persons as the General
Partner deems advisable, provided that, except as described in this Prospectus,
the General Partner will not engage on behalf of a Partnership any person
affiliated with the General Partner without the approval of Limited Partners
owning more than 50% of the then outstanding Units of such Partnership
and after making a good faith determination that: (i) the affiliate which
it proposes to engage to perform such services is qualified to do so
(considering the prior experience of the affiliate or the individuals
employed thereby); and (ii) the terms and conditions of the agreement pursuant
to which such affiliate is to perform services for the Partnership are no
less favorable to the Partnership than could be obtained from equally-qualified
third parties, or are otherwise determined by the General Partner to be fair
and reasonable to the Partnership and the Limited Partners.

Other responsibilities of the General Partner include, but are not
limited to, the following: determining whether each Partnership will make
distributions; administering redemptions or Exchanges of Units; preparing
monthly and annual reports to the Limited Partners of each Partnership;
directing the investment of a Partnership's assets (other than investments
in commodity futures contracts and other commodity interests); executing
various documents on behalf of a Partnership and its Limited Partners pursuant
to a power of attorney; and supervising the liquidation of a Partnership if an
event causing termination of that Partnership occurs.

SHARING OF PROFITS AND LOSSES

PARTNERSHIP ACCOUNTING. Each Partner, including the General Partner, of
each Partnership will have a capital account with an initial balance equal to
the amount he paid for his Units of such Partnership, less any selling
commission, or, in the case of the General Partner, its capital contribution.
Each Partnership's Net Assets
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will be determined monthly, and any increase or
decrease from the end of the preceding month will be added to or subtracted
from the accounts of the Partners in the ratio that each account bears to all
accounts.

FEDERAL TAX ALLOCATIONS. At the end of each fiscal year, each
Partnership's realized income and expense and capital gain or loss will be
allocated among its Partners, and each Partner will be required to include in
his personal federal income tax return his share of such items. Also, on the
date a Partner completely redeems all of his Units in a Partnership, the
Partnership's realized income and expense and capital gain or loss will be
allocated to such Partner, and such Partner will be required to include in his
personal federal income tax return his share of such items. Allocations of
capital gain or loss will be pro rata with respect to short-term capital gain
or loss and long-term capital gain or loss.

Each Partnership's items of ordinary income (such as interest or credits
in lieu of interest) and expense (such as monthly management fees, annual
incentive fees, extraordinary expenses and the Partnerships proportionate
share of Common Administrative Expenses as determined pursuant to the Exchange
Agreement) will be allocated pro rata among its Partners based on their
respective capital accounts (exclusive of these items of ordinary income or
expense) as of the end of each month in which the items of ordinary income or
expense accrued.

For the purpose of allocating net realized capital gain or net realized
capital loss, an "allocation account" is established with respect to each Unit
of each Partnership, the initial balance of which is the amount paid for the
Unit, less any selling commission. At the end of each fiscal year and when a
Partner completely redeems his Units in a Partnership, each outstanding Unit's
allocation account will be increased by the amount of the Partnership's income
allocated to the Partner holding the Unit and decreased by the amount of the
Partnership's loss and expense allocated and by the amount of distributions to
the Partner holding the Unit. When a Unit is redeemed or Exchanged, the
allocation account with respect to the Unit is eliminated.

Net realized capital gain will be allocated first to each Partner who has
partially redeemed his Units in a Partnership or Exchanged less than all his
Units in a Partnership during the year to the extent that the amount he
receives on redemption, or is deemed to receive on an Exchange, exceeds the
allocation account with respect to the Unit redeemed or Exchanged. Net
realized capital gain remaining after the allocation to the Partners who have
redeemed or Exchanged Units will be allocated among the Partners whose capital
accounts are in excess of their Units' allocation accounts in the ratio that
each Partner's excess bears to all Partners' excesses to the extent of such
excesses. Any remaining net realized capital gain will be allocated among all
Partners in proportion to their capital accounts.

Net realized capital loss will be allocated first to each Partner who has
partially redeemed his Units in a Partnership or Exchanged less than all his
Units in a Partnership during the year to the extent that the allocation
account with respect to the Unit redeemed or Exchanged exceeds the amount he
receives on redemption or is deemed to receive on an Exchange. Net realized
capital loss remaining after the allocation to Partners who have redeemed or
Exchanged Units will be allocated among the Partners who hold Units with
allocation accounts which are in excess of the Partners' capital accounts in
the ratio that each such Partners' excess bears to all such Partners' excesses
to the extent of such excesses. Any remaining net realized capital loss will
be allocated among all Partners in proportion to their capital accounts.

If a Unit has been assigned as permitted by the Limited Partnership
Agreement of each Partnership, the above-described tax allocations will be made
with respect to such Unit without regard to the assignment, except that in the
year of assignment the tax allocations will be divided among the assignor and
assignee based on the months each held the assigned Unit.

Upon liquidation and termination of each Partnership, the assets of such
Partnership will be distributed to each Partner thereof in the ratio that his
capital account bears to the accounts of all Partners of that Partnership.

ADDITIONAL PARTNERS

Units of each Partnership may be issued pursuant to an Exchange at
Monthly Closings. Each Limited Partnership Agreement provides that, at any
time, the General Partner may admit additional Limited Partners to each
Partnership, with each such newly-admitted Limited Partner paying in cash
(pursuant to an Exchange) not less than the Net Asset Value of the Unit
purchased. The General Partner also may admit substituted Limited Partners as
set forth in each Limited Partnership Agreement.

Each Limited Partnership Agreement provides that the General Partner may
register additional Units for the Exchange. In such connection, the General
Partner is authorized to take such action and make such
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arrangements as it deems appropriate, including the preparation and filing of
registration statements and amendments thereto with the SEC and other
appropriate regulatory bodies.

RESTRICTIONS ON TRANSFERS OR ASSIGNMENTS

Except as set forth below, each Limited Partnership Agreement provides
that Units may be transferred or assigned, but that no transferee or assignee
may become a substituted Limited Partner without the consent of the General
Partner, which consent the General Partner may withhold in its sole
discretion, nor may a Limited Partner, an assignee, transferee, or the estate
of any beneficiary of a deceased Limited Partner withdraw any capital or
profits from the Partnerships except by redemption of Units. See
"Redemptions." The General Partner, upon 30 days' notice to the Limited
Partners, may withdraw any portion of its interest in each Partnership that is
in excess of the interest required under the Limited Partnership Agreement (3%
of the first $10,000,000 in aggregate capital contributions to each
Partnership or $100,000, whichever is less, plus 1% of aggregate capital
contributions in excess of $10,000,000; but in no event less than $50,000) or
may assign or transfer any Units owned by it in excess of such required
interest, subject to the same restrictions on transfers and redemptions as are
applicable to Limited Partners.

Any transfer or assignment of Units permitted by the Limited Partnership
Agreements will be effective as of the end of the month in which such transfer
or assignment is made; provided, however, that no Partnership need recognize
any transfer or assignment until the General Partner has received at least 30
days' prior written notice of such transfer or assignment from the transferor
or assignor, which notice sets forth the address and social security or
taxpayer identification number of the transferee or assignee and the number of
Units transferred or assigned, and is signed by the transferor or assignor. No
transfer or assignment will be permitted unless the General Partner is
satisfied that (i) such transfer or assignment would not be in violation of
the Partnership Act and (ii) notwithstanding such transfer or assignment, the
Partnership will continue to be classified as a partnership rather than as an
association taxable as a corporation under the Code. No transfer or assignment
of Units will be effective or recognized by any of the Partnerships if such
transfer or assignment would result in the termination of that Partnership for
federal income tax purposes, and any attempted transfer or assignment in
violation of the Limited Partnership Agreement will be ineffective to transfer
or assign any such Units. The transfer or assignment of Units will be subject
to all applicable securities laws. The transferor or assignor will bear all
costs (including any attorneys' fees) related to such transfer or assignment.
Certificates representing Units may bear appropriate legends to the foregoing
effects (although no such physical certificates have been issued or are
contemplated).

TERM OF THE PARTNERSHIPS

The affairs of a given Partnership will be wound up and that Partnership
liquidated as soon as practicable upon the first to occur of the following:
(i) September 30, 2025; (ii) receipt by the General Partner of an election to
dissolve such Partnership at a specified time by Limited Partners owning more
than 50% of the Units then outstanding, notice of which is sent by registered
mail to the General Partner not less than 90 days prior to the effective date
of such dissolution; (iii) withdrawal, insolvency or dissolution of the
General Partner (unless a new general partner has been elected); (iv) a
decline in the Net Asset Value of a Unit to less than $250; (v) a decline in
such Partnership's aggregate Net Assets to or below $250,000; (vi) a
determination by the General Partner that such Partnership's aggregate Net
Assets in relation to the operating expenses of such Partnership make it
unreasonable or imprudent to continue the business of such Partnership; or
(vii) the occurrence of any event that makes it unlawful for the existence of
the Partnership to be continued. Cornerstone IV will also terminate upon the
enactment of any law or adoption of any rule, regulation or policy by any
regulatory authority having jurisdiction which makes it unlawful, unreasonable
or imprudent for the principal business of the Partnership to be continued. In
certain market conditions, the Net Asset Value of a Unit could fall to less
than $250 or such Partnership's aggregate Net Assets could fall to or below
$250,000, thereby terminating the Partnership, and could decline to zero
without the Partnership being able to liquidate its positions in the market.
In such event, the Limited Partners could receive less than $250 per Unit or
even nothing upon dissolution and liquidation of the Partnership.

AMENDMENTS; MEETINGS

Each Limited Partnership Agreement may be amended by an instrument signed
by the General Partner and by Limited Partners owning more than 50% of the
Units then owned by Limited Partners of that Partnership.
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However, if such an amendment is an amendment which revises Section 8(c) of the
Limited Partnership Agreement to comply with final regulations promulgated by
the Internal Revenue Service under Section 704(b) of the Code, such amendment
will be effective when signed by the General Partner. Further, no amendment of
the Limited Partnership Agreement of a Partnership without the consent of all
Partners affected thereby may reduce the capital account of any Partner,
modify the percentage of profits, losses, or distributions to which any
Partner is entitled or change or alter the provisions of such Agreement
relating to amendments requiring the consent of all Partners.

Any Limited Partner, upon written request addressed to the General
Partner, may obtain, at such Limited Partner's expense, from the General
Partner a list of the names and addresses of record of all Limited Partners of
the Partnership(s) in which he owns Units and the number of Units owned by each.
Upon receipt of a written request, signed by Limited Partners owning at least
10% of the Units then owned by Limited Partners of a Partnership, that a
meeting of such Partnership be called to consider any matter upon which
Limited Partners may vote pursuant to its Limited Partnership Agreement, the
General Partner, by written notice to each Limited Partner of record mailed
within 15 days after such notice, must call a meeting of that Partnership.
Such meeting must be held at least 30 but not more than 50 days after the
mailing of such notice, and such notice must specify the date, a reasonable
time and place and the purpose of such meeting.

At any such meeting, upon the affirmative vote of Limited Partners owning
more than 50% of the Units then owned by Limited Partners of a Partnership, the
following actions may be taken: (i) the Limited Partnership Agreement may,
with certain exceptions described above, be amended; (ii) the Partnership may
be dissolved; (iii) the General Partner may be removed and replaced; (iv) a
new general partner or general partners may be elected if the General Partner
elects to withdraw from the Partnership, becomes insolvent or is dissolved;
(v) any contracts with the General Partner or any of its affiliates may be
terminated without penalty on 60 days notice; and (vi) the sale of all assets
of the Partnership may be approved, provided, however, no such action may be
taken unless an opinion of counsel is furnished to the General Partner that
the action to be taken will not adversely affect the classification of the
Partnership as a partnership under United States federal income tax laws or
the status of the Limited Partners as limited partners under the Partnership
Act, and that the action is permitted under such Partnership Act (or in lieu
thereof, a court of competent jurisdiction has rendered a final order to such
effect).

REPORTS TO LIMITED PARTNERS

The books and records of each Partnership will be maintained at its
principal office. To the extent required by CFTC regulations, the Limited
Partners will have the right at all times during normal business hours to have
access to and copy such books and records of each Partnership of which they
are Limited Partners, in person or by their authorized attorney or agent, and,
upon request, copies of such books and records will be sent to any Limited
Partner if reasonable reproduction and distribution costs are paid by him.
Each month the General Partner will report, or cause to be reported, to the
Limited Partners such financial and other information with respect to each
Partnership as the CFTC, from time to time, may by regulation require in such
monthly reports to participants in commodity pools such as the Partnerships.
In addition, if any of the following events occurs as to any of the
Partnerships, notice of such event will be mailed to each Limited Partner of
that Partnership within seven business days of the occurrence of the event: a
decrease in the Net Asset Value of a Unit to 50% or less of the Net Asset
Value for the most recent fiscal year-end most recently reported; any change
in the Trading Managers; any change in commodity brokers; any change in the
general partner; any change in the Partnership's fiscal year; or any material
change in the Partnership's trading policies. Additionally, there will be
distributed to the Limited Partners of each Partnership not more than 90 days
after the close of each fiscal year an annual report containing audited
financial statements (including a statement of income and statement of
financial condition) of that Partnership for the fiscal year then ended, and
such other information as the CFTC may require. Not more than 90 days after
the close of each fiscal year, the General Partner will report to each Limited
Partner tax information necessary for the preparation of the Limited Partner's
annual federal income tax returns. The Net Asset Value of each Partnership's
Units is determined daily by the General Partner and the most recent Net Asset
Value calculations will be promptly supplied in writing to any Limited Partner
after receipt of a request in writing to such effect.
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PLAN OF DISTRIBUTION AND EXCHANGE PROCEDURE

If the conditions described below are satisfied, a Limited Partner can
redeem his Units as of the last day of a calendar month (an "Exchange Date")
and, with the net proceeds of such redemption, purchase Units of one or more
Partnerships at 100% of the Net Asset Value thereof (an "Exchange"). Each
Unit purchased with the net proceeds of a redemption will be issued and sold
at a price per Unit equal to 100% of the Net Asset Value of a Unit as of the
first day of the month next following the Exchange Date. No selling
commissions or other charges will be paid on Units issued on an Exchange.

Each Exchange of Units is subject to satisfaction of certain additional
conditions immediately prior to an Exchange Date. Each redeeming Partnership
must have assets sufficient to discharge its liabilities and redeem Units. See
"Redemptions." The General Partner must have received a Request for Exchange
in proper form. A "Request for Exchange" is a letter in the form specified by
the General Partner, sent by a Limited Partner (or any assignee thereof) to a
DWR branch office and received by the General Partner at least 15 days prior
to the applicable Exchange Date. Such Request must acknowledge that the
Limited Partner remains eligible to purchase Units on such date. A form of
Request for Exchange is annexed to the Limited Partnership Agreement, which is
annexed hereto as Exhibit A. Additional forms of Request for Exchange may be
obtained by written request to the General Partner or from a local DWR branch
office. To the extent deemed necessary by the Partnership's counsel, each
Partnership issuing Units to Limited Partners in an Exchange must have a
sufficient number of Units registered and qualified for sale under federal and
applicable state securities laws pursuant to a current Prospectus. The General
Partner will endeavor to have Units registered and qualified for sale to
Limited Partners immediately prior to each Exchange Date, but there can be no
assurance that any or a sufficient number of Units will be available for sale
on an Exchange Date. If Units are not registered or qualified for sale under
either federal or applicable state securities laws or pursuant to a current
Prospectus, the General Partner will not be able to effect the Exchange for
the Limited Partner. Furthermore, certain states may impose significant
burdens on, or alter the requirements for, qualifying Units for sale and, in
such cases, the General Partner may not continue qualifying Units for sale in
such state or states, and a resident thereof would not be eligible to Exchange
his Units. At some time in the future, certain states may impose more
restrictive suitability and/or investment requirements than those set forth in
the form of Request for Exchange. Any such restrictions may limit the ability
of a resident of such state to Exchange his Units. See "The Exchange
Agreement." In the event that not all Requests for Exchange can be processed
because an insufficient number of Units are available for sale on an Exchange
Date, the General Partner will allocate Units in any manner which it deems
reasonable under the circumstances and may allocate a substantial portion of
such Units to new subscribers for Units.

Since an Exchange is equivalent to a redemption and immediate
reinvestment of the proceeds of such redemption, a Limited Partner should
carefully review the portions of this Prospectus describing redemptions and
certain tax consequences thereof. See "Redemptions" and "Federal Income Tax
Aspects." In particular, any tax-exempt Limited Partners, including IRAs,
considering an Exchange should carefully review the section of the Prospectus
entitled "Purchases By Employee Benefit Plans-ERISA Considerations."

PURCHASES BY EMPLOYEE BENEFIT
PLANS-ERISA CONSIDERATIONS

The purchase of Units might or might not be a suitable investment for an
employee benefit plan. Before proceeding with a purchase of Units, the person
with investment discretion on behalf of an employee benefit plan should
determine whether the purchase of Units is (a) permitted under the governing
instruments of the plan and (b) appropriate for that particular plan in view
of its overall investment policy and the composition and diversification of
its portfolio, as well as the considerations discussed below.

As used herein, the term "employee benefit plans" refers to plans and
accounts of various types (including their related trusts) which provide for the
accumulation of a portion of an individual's earnings or compensation, as well
as investment income earned thereon, free from federal income tax until such
time as funds are distributed from the plan. Such plans include corporate
pension and profit-sharing plans (such as so-called 401(k) plans), "simplified
employee pension plans," so-called "Keogh" plans for self-employed
individuals, including partners, and for purposes of this discussion,
individual retirement accounts ("IRAs"), described in Section 408 of the
Internal Revenue Code of 1986, as amended (the "Code").
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If the assets of an investing employee benefit plan were to be treated,
for purposes of the reporting and disclosure provisions and certain other of
the fiduciary responsibility provisions of Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and Section 4975 of the
Code, as including an undivided interest in each of the underlying assets of a
Partnership, an investment in Units would in general be an inappropriate
investment for the plan. A U.S. Department of Labor regulation (the
"Regulation") defines "plan assets" in situations where employee benefit plans
purchase equity securities in investment entities such as a Partnership. The
Regulation provides that the assets of an entity will not be deemed to be
"plan assets" of an employee benefit plan which purchases an equity security
of such an entity if the equity security is a "publicly-offered security,"
meaning it is (1) freely transferable, (2) held by more than 100 investors
independent of the issuer and of each other, and (3) either (i) registered
under Section 12(b) or Section 12(g) of the Securities Act of 1934, as amended
(the "1934 Act") or (ii) sold to the plan as part of a public offering of such
securities pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"). The Units do meet the
criteria of the Regulation.

It is expected that the Units will continue to meet the criteria of the
Regulation: as of June 30, 1996, Units of Cornerstone II, III and IV were each
held by more than 100 persons; there are no restrictions imposed by any
Partnership on the transfer of Units beyond those designed to ensure
classification of such Partnership as a partnership under the Code (see "The
Limited Partnership Agreements-Restrictions on Transfers or Assignments"); and
the registration requirements of the Regulation have been met with respect to
the Partnerships.

The General Partner believes, based upon the advice of its legal counsel,
that income earned by the Partnerships will not constitute "unrelated business
taxable income" under Section 512 of the Code to employee benefit plans and
other tax-exempt entities which purchase Units in one or more of the
Partnerships. Although the Internal Revenue Service has issued favorable
private letter rulings to taxpayers in somewhat similar circumstances, other
taxpayers may not use or cite such rulings as precedent. The person with
investment discretion on behalf of an employee benefit plan who is considering
the Exchange of Units, should consult his or her professional tax adviser
regarding the application of the foregoing matters to their Exchange of Units.

Units may not be purchased with the assets of an employee benefit plan if
the General Partner, DWR, any Additional Seller, any Trading Manager or any of
their respective affiliates either: (a) has investment discretion with respect
to the investment of such plan assets; (b) has authority or responsibility to
give, or regularly gives investment advice with respect to such plan assets
for a fee and pursuant to an agreement or understanding that such advice will
serve as a primary basis for investment decisions with respect to such plan
assets and that such advice will be based on the particular investment needs
of the plan; or (c) is an employer maintaining or contributing to such plan.

ACCEPTANCE OF EXCHANGES ON BEHALF OF IRAs OR OTHER EMPLOYEE BENEFIT PLANS
IS IN NO RESPECT A REPRESENTATION BY THE GENERAL PARTNER, DWR OR ANY ADDITIONAL
SELLER THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL REQUIREMENTS WITH RESPECT
TO INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR PLAN, OR THAT THIS
INVESTMENT IS APPROPRIATE FOR PLANS GENERALLY OR ANY PARTICULAR PLAN.

MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
INTRODUCTION

The General Partner has been advised by counsel, Cadwalader, Wickersham &
Taft, that the following summary correctly describes (subject to the
uncertainties referred to below) the material federal income tax consequences
to United States taxpayers of acquiring, owning and disposing of Units. The
opinions appearing in this section are the opinions of Cadwalader, Wickersham
& Taft, except as otherwise specifically noted herein. The following summary
is based upon the Internal Revenue Code of 1986 as amended (the "Code"),
rulings thereon, regulations promulgated thereunder and existing
interpretations thereof, any of which could be changed at any time and which
changes could be retroactive. The federal income tax summary and the state and
local income tax summary which follow in general relate only to the tax
implications of an investment in the Partnerships by individuals who are
citizens or residents of the United States. Except as indicated below or under
"Purchases by Employee Benefit Plans-ERISA Considerations," the summaries do
not address the tax implications of an investment in the Partnerships by
corporations, partnerships, trusts and other non-individuals. Moreover, the
summaries
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are not intended as a substitute for careful tax planning,
particularly since certain of the tax consequences of owning an interest in
the Partnerships may not be the same for all taxpayers, such as
non-individuals or foreign persons, or in light of an investors' personal
investment circumstances. A complete discussion of all federal, state and
local tax aspects of an investment in each Partnership is beyond the scope of
the following summary, and prospective investors must consult their own tax
advisors on such matters.

PARTNERSHIP STATUS

The General Partner has been advised by its legal counsel, Cadwalader,
Wickersham & Taft, that in its opinion under current federal income tax law,
each Partnership will be classified as a partnership and not as an association
taxable as a corporation. No ruling has been requested from the Internal
Revenue Service with respect to classification of each Partnership, and the
General Partner does not intend to request such a ruling.

The opinion of counsel described above is based upon the facts set forth
herein, including that (i) the General Partner will maintain a net worth
(exclusive of its interest in the Partnerships and any other limited
partnership) equal to the sum of at least 10% of the total contributions to
the Partnerships and any other limited partnership for which it acts as
general partner (or, if the total contributions to the Partnerships or to any
other limited partnership are less than $2,500,000, of at least 15% of total
contributions to the Partnership's and to any other limited partnership or
$250,000, whichever is lesser); (ii) the General Partner's interest in each
item of the Partnership's income, gain, loss, deduction, or credit will be
equal to at least 1% of each such item; (iii) the Limited Partners will not
own, directly or indirectly, individually or in the aggregate, more than 20%
of the stock of the General Partner or of any affiliate of the General
Partner; and (iv) a principal activity of each Partnership consists of buying
and selling commodities not held as inventory, or futures, options and forward
contracts with respect to such commodities, and at least 90% of each
Partnership's income consists of gains from such trading and interest income.

Certain "publicly traded partnerships" are taxed as corporations. While
this treatment does not affect the Partnerships, new legislation governing the
taxation of limited partnerships may be enacted at any time, and may apply to
the Partnerships retroactively. If a partnership were classified as an
association taxable as a corporation, income or loss of such partnership would
not be passed through to its partners, and such partnership would be subject
to tax on its income without deduction for any distributions to its partners,
at the rates applicable to corporations. In addition, all or a portion of any
distributions by such partnership to its partners could be taxable to the
partners as dividends or capital gains.

PARTNERSHIP TAXATION

Partners, Rather than Partnership, Subject to Federal Income Tax. Each
Partnership, as an entity, will not be subject to federal income tax. Except
as provided below with respect to certain nonresident aliens, each Limited
Partner in computing his federal income tax liability for a taxable year will
be required to take into account his distributive share of all items of
Partnership income, gain, loss, deduction, and credit for the taxable year of
the Partnership ending within or with the taxable year of such Partner,
regardless of whether such Partner has received any distributions from the
Partnership. The characterization of an item of profit or loss will usually be
determined at the Partnership level.

ORGANIZATION AND SYNDICATION EXPENSES. None of the Partnerships nor any
Partner thereof will be entitled to any deduction for syndication expenses
(i.e., those amounts paid or incurred in connection with issuing and marketing
Units). Most of the expenses paid by DWR for Cornerstone II, III and IV as
initial offering expenses were syndication expenses for federal income tax
purposes.

Cornerstone II, III and IV have reimbursed DWR for the full amount of
the costs incurred by DWR in connection with the commencement of those
Partnerships' operations ("Organization Costs"). Organization Costs were not
deductible in the year incurred, but were amortized by each Partnership over a
60-month period beginning with the month in which the Partnership commenced
operations.

ALLOCATION OF PARTNERSHIP PROFITS AND LOSSES. For federal income tax
purposes, a Limited Partner's distributive share of items of Partnership
income, gain, loss, deduction, and credit will be determined by each Limited
Partnership Agreement, annexed hereto as Exhibit A, unless an allocation under
such Agreement does not have "substantial economic effect" or is not in
accordance with the Partners' interests in the Partnership. The allocations
provided by each Limited Partnership Agreement are described under "The
Limited Partnership Agreement-Sharing of Profits and Losses." In general, each
Limited Partnership Agreement allo-
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cates items of ordinary income and expense
pro rata among the Partners based upon their respective capital accounts as of
the end of the month in which such items are accrued. Net realized capital
gains and losses are generally allocated among all Partners based upon their
respective capital accounts. However, net realized capital gain and loss is
allocated first to Partners who have redeemed Units in the Partnership during
a taxable year to the extent of the difference between the amount received on
the redemption and the allocation account as of the date of redemption
attributable to the redeemed Units. Net realized capital gains for each year
are allocated next among all Partners whose capital accounts are in excess of
their Units' allocation accounts to the extent of such excess in the ratio
that each such Partner's excess bears to all such Partners' excesses. Net
realized capital loss for each year is allocated next among all Partners whose
Units' allocation accounts are in excess of their capital accounts to the
extent of such excess in the ratio that each such Partner's excess bears to
all such Partners' excesses.

These allocation provisions are designed to reconcile tax allocations to
economic allocations. However, no assurance can be given that the Internal
Revenue Service will not challenge such allocations particularly in light of
recently-issued final regulations.

If the allocation provided by each Limited Partnership Agreement is not
recognized by the Internal Revenue Service for federal income tax purposes,
the amount of income or loss allocated to Partners for federal income tax
purposes under such Limited Partnership Agreement may be increased or reduced
or the character of such income or loss may be modified.

CASH DISTRIBUTIONS AND REDEMPTIONS

Distributions by a Partnership and amounts received upon the partial or
complete redemption of a Limited Partner's Units normally will not be taxable
to the Limited Partners. However, if cash distributions by a Partnership or
amounts received upon redemption by a Limited Partner exceed such Partner's
adjusted tax basis in his Units, the excess will be taxable to him as though
it were a gain from a sale of the Units. A loss will be recognized upon a
redemption of Units only if, following the redemption of all of a Limited
Partner's Units, such Partner has any tax basis in his Units remaining. In
such case, the Limited Partner will recognize loss to the extent of such
remaining basis. See "Redemptions." Generally, if a Limited Partner is not a
"dealer" with respect to his interest in the Partnership and he has held his
interest in the Partnership for more than one year, such gain or loss would be
long-term capital gain or loss.

GAIN OR LOSS ON TRADING ACTIVITY

Because each Partnership will purchase commodity contracts for its own
account and not for the account of others, because each Partnership will not
maintain an inventory of commodity interest contracts, because substantially
all of the expected return of any combination of each Partnership's commodity
contract positions will not be attributable to the time value of such
Partnership's net investment in such positions, and because each Partnership
will be considered a "qualified fund" for purposes of its foreign currency
commodity contracts positions, for federal income tax purposes substantially
all of the profit and loss generated by each Partnership from its trading
activities will be capital gain and loss, which in turn may be either
short-term, long-term or a combination of both. Gain or loss with respect to a
"Section 1256 contract" is generally treated as short-term capital gain or
loss to the extent of 40% of such gain or loss, and long-term capital gain or
loss to the extent of 60% of such gain or loss. For individual partners,
long-term capital gains are taxed at a maximum marginal rate of 28% while
short-term capital gains are currently taxed at a maximum marginal rate of
39.6%. For corporate partners, long-term and short-term capital gains are
taxed at the same effective rate.

A "Section 1256 contract" includes a "regulated futures contract," a
"foreign currency contract," a "nonequity option," and a "dealer equity
option." A "regulated futures contract" is a futures contract which is traded
on or subject to the rules of a national securities exchange which is registered
with the SEC, a domestic board of trade designated as a contract market by the
CFTC, or any other board of trade, exchange or other market designated by the
Secretary of the Treasury ("a qualified board or exchange"), and which is
"marked to-market" to determine the amount of margin which must be deposited
or may be withdrawn. A "foreign currency contract" is a contract which
requires delivery of, or the settlement of which depends upon the value of,
foreign currency which is a currency in which positions are also traded
through regulated futures contracts, which are traded in the interbank market,
and which are entered into at arm's length at a price determined by reference
to the price in the interbank market. (The Secretary of the Treasury is
authorized to issue regulations excluding certain currency forward contracts
from mark-to-market treatment.) A "nonequity option" means an
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option which is traded on a qualified board or exchange and the value of which
is not determined directly or indirectly by reference to any stock (or group of
stocks) or stock index, unless (i) there is in effect a designation by the
CFTC of a contract market for a contract based on such group of stocks or
stock index or (ii) such option is a cash-settled option on a stock index that
the SEC has determined to be "broad based". A "dealer equity option" means,
with respect to an options dealer, any listed option which is an equity
option, is purchased or granted by such options dealer in the normal course of
his activity of dealing in options, and is listed on the qualified board or
exchange on which such options dealer is registered. Each Section 1256
contract held at the end of a Partnership's taxable year will be treated as
having been sold for its fair market value on the last day of such taxable
year, and gain or loss will be taken into account for such year. Cornerstone
II and III each currently expects substantially all of its trading activities
will be conducted in Section 1256 contracts. Cornerstone IV expects that a
portion of its trading activities will be conducted in Section 1256 contracts;
however, Cornerstone IV also expects that a portion of its trading activities
will be conducted in contracts that do not presently qualify as Section 1256
contracts ("non-Section 1256 contracts").

Gain or loss with respect to foreign currency forward and futures
contracts that are not traded on U.S. exchanges or on certain foreign exchanges
designated as "qualified boards or exchanges" by the Internal Revenue Service
("foreign currency positions"), is treated as capital gain or loss only if
held by an electing "qualified fund." In general, a "qualified fund" is an
electing partnership that: (1) has at least 20 unrelated partners (no one of
which owns more than 20% of the capital or profits of the partnership); (2)
has as its principal activity the buying and selling of options, futures, or
forwards with respect to commodities; and (3) receives at least 90% of its
gross income from interest, dividends, gains from the sale or disposition of
capital assets held for the production of interest or dividends, and income
and gain from futures, forward, and option contracts with respect to
commodities. All such foreign currency positions held by a qualified fund are
treated as "Section 1256 contracts" (i.e., marked-to-market at year end) and
gain or loss with respect to all such foreign currency positions is treated as
100% long-term gain or loss. Gain or loss with respect to "regulated futures
contracts," "foreign currency contracts" and "non-equity options" is treated
as 60% long-term gain or loss and 40% short term gain or loss. The General
Partner has made a qualified fund election for the Partnerships.

Subject to certain limitations, a Limited Partner, other than a
corporation, estate or trust, may elect to carry back net Section 1256
contract losses to each of the three preceding years. Net Section 1256 contract
losses carried back to prior years may only be used to offset net Section 1256
contract gains. Generally, such losses are carried back as 40% short-term
capital losses and 60% long-term capital losses.

During taxable years in which little or no profit is generated from
trading activities, a Limited Partner may still have interest income.

With the exception of Cornerstone IV, a Trading Manager may engage in
spread and straddle trading (i.e., holding offsetting positions whereby the
risk of loss from holding either or both position(s) is substantially
diminished) on behalf of a Partnership only with the prior written consent of
the General Partner. Realized losses with respect to any position in a spread
or straddle are taken into account for federal income tax purposes only to the
extent that the losses exceed unrecognized gain (at the end of the taxable
year) from offsetting positions, successor positions, or offsetting positions
to the successor positions. Thus, spreads and straddles may not be used to
defer gain from one taxable year to the next. For purposes of applying the
above rules restricting the deductibility of losses with respect to offsetting
positions, if a partner takes into account gain or loss with respect to a
position held by the Partnership, the partner will be treated, except to the
extent otherwise provided in regulations, as holding positions held by a
partnership. Accordingly, positions held by a Partnership may limit the
deductibility of realized losses sustained by a Limited Partner with respect
to positions held for his own account, and positions held by a Limited Partner
for his own account may limit his ability to deduct realized losses sustained
by a Partnership. Reporting requirements generally require taxpayers to disclose
all unrecognized gains with respect to positions held at the end of the
taxable year. The above principle, whereby a Limited Partner may be treated as
holding Partnership positions, may also apply to require a Limited Partner to
capitalize (rather than deduct) interest and carrying charges allocable to
property held by him. A portion of the gain on a "conversion transaction,"
including certain spread and straddle trading, may be characterized as
ordinary income where substantially all of the expected return is attributable
to the time value of the net investment in the transaction.

Pursuant to current Proposed and Temporary Treasury Regulations, the
holding period of any position included in a straddle begins anew when the
straddle is terminated unless the position was held for more than the long-
term capital gain and loss holding period before the straddle was established.
Further, the loss on any position included in a straddle will be treated as a
long-term capital loss if, at the time the loss position was
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acquired, the taxpayer held
offsetting positions with respect to such loss position that would give rise
only to long-term capital loss if such offsetting position were disposed of on
the day the loss position was acquired.

Where the positions of a straddle are comprised of both Section 1256 and
non-Section 1256 contracts, a Partnership will be subject to the mixed
straddle rules of the Code and the regulations promulgated thereunder. The
appropriate tax treatment of any gains and losses from trading in mixed
straddles will depend on which of the following four alternatives a
Partnership elects to pursue. A Partnership may elect to treat Section 1256
positions as non-Section 1256 positions, and the mixed straddle would be
subject to the rules governing non-Section 1256 straddles. Alternatively, a
Partnership may identify the positions of a particular straddle as an
"identified mixed straddle" under Section 1092(b)(2) of the Code and, thereby,
net the capital gain or loss attributable to the offsetting positions. The net
capital gain or loss is treated as 60% long-term and 40% short-term capital
gain or loss if attributable to the Section 1256 positions, or all short-term
capital gain or loss if attributable to the non-Section 1256 positions.
Alternatively, a Partnership may place the positions in an "mixed straddle"
account which is marked-to-market daily. Under a special account cap, not more
than 50% of net capital gain may be long-term capital gain, and not more than
40% of net capital loss may be short-term capital loss. If a Partnership does
not make any of the aforementioned three elections, any net loss attributable
to either the Section 1256 or the non-Section 1256 positions will be treated
as 60% long-term and 40% short-term capital loss, while any net gain would be
treated as 60% long-term and 40% short-term capital gain, or all short-term
capital gain, depending upon whether the net gain was attributable to Section
1256 positions or non-Section 1256 positions.

TAXATION OF LIMITED PARTNERS

Limitations on Deductibility of Partnership Losses. The amount of
Partnership loss, including capital loss, which a Limited Partner will be
entitled to take into account for federal income tax purposes is limited to
the lesser of the tax basis of his Units or in the case of certain Limited
Partners, including individuals and closely held C corporations the amounts
for which he is "at risk" with respect to such interest as of the end of the
Partnership's taxable year in which such loss occurred.

Generally, a Limited Partner's initial tax basis will be the amount paid
for each Unit of a Partnership (100% of the Net Asset Value of a Unit). A
Limited Partner's adjusted tax basis will be his initial tax basis reduced by
the Limited Partner's share of Partnership distributions, losses and expenses
and increased by his share of Partnership income, including gains. The amount
for which a Limited Partner is "at risk" with respect to his interest in a
Partnership is generally equal to his tax basis for such interest, less: (i)
any amounts borrowed in connection with his acquisition of such interest for
which he is not personally liable and for which he has pledged no property
other than his interest; (ii) any amounts borrowed from persons who have a
proprietary interest in such Partnership; and (iii) any amounts borrowed for
which the Limited Partner is protected against loss through guarantees or
similar arrangements.

Because of the limitations imposed upon the deductibility of capital
losses referred to below, a Limited Partner's share of a Partnership's net
capital losses, if any, will not materially reduce his federal income tax on
his ordinary income. In addition, certain expenses of a Partnership might be
deductible by a Partner only as so-called itemized deductions and, therefore,
will not reduce the federal taxable income of a Partner who does not itemize
his deductions. Furthermore, an individual who is subject to the alternative
minimum tax for a taxable year will not realize any tax benefit from such
itemized deductions.

LIMITATIONS ON DEDUCTIBILITY OF PASSIVE LOSSES. In general, losses from a
passive activity ("passive losses") are disallowed to the extent such losses
exceed income from all passive activities ("passive income"). A passive
activity is defined as a trade or business in which the taxpayer does not
materially participate unless otherwise provided in Treasury Regulations.

Proposed and Temporary Treasury Regulations provide that the trading of
personal property, such as commodities, will not be treated as a passive
activity. Accordingly, a Limited Partner's distributive share of items of
income, gain, deduction, or loss from a Partnership will not be treated as
passive income or loss and Partnership gains allocable to Limited Partners
will not be available to offset passive losses from sources outside such
Partnership. Partnership gains allocable to Limited Partners will, however, be
available to offset losses with respect to "portfolio" investments,
such as stocks and bonds. Moreover, any Partnership losses allocable to
Limited Partners will be available to offset other income, regardless
of source. Final Treasury Regulations may modify the Proposed and
Temporary Regulations, and such regulations may be retroactive in effect.

<PAGE>

LIMITED DEDUCTION OF CERTAIN EXPENSES. Certain miscellaneous itemized
deductions, such as expenses incurred to maintain property held for
investment, are deductible only to the extent that they exceed 2% of the
adjusted gross income of an individual, trust or estate. The amount of certain
itemized deductions allowable to individuals is further reduced by an amount
equal to the lesser of (i) 3% of the individuals adjusted gross income in
excess of a certain threshold amount (for tax years beginning in 1995, this
amount is $114,700 ($57,350 in the case of married individuals filing a
separate return)) and (ii) 80% of such itemized deductions. Based upon the
activities of the Partnerships, the General Partner has been advised by its
legal counsel that in such counsel's opinion expenses incurred by the
Partnerships in their commodity trading businesses should not be subject to
the 2% "floor" or the 3% phaseout, except to the extent that the Internal
Revenue Service promulgates regulations that so provide.

TAX ON CAPITAL GAINS AND LOSSES. For individuals, trusts and estates,
"net capital gains" are currently taxed at a maximum marginal tax rate of
28%, while other income is taxed at a maximum marginal tax rate of 39.6%.
Corporate taxpayers are currently subject to a maximum effective tax rate of
35% on all income.

The excess of capital losses over capital gains is deductible by an
individual against ordinary income on a one-for-one basis, subject to an annual
limitation of $3,000 ($1,500 in the case of married individuals filing a
separate return). Excess capital losses may be carried forward.

Net losses from Section 1256 contracts are treated as 60% long-term
capital loss and 40% short-term capital loss. Such losses may, at the individual
taxpayer's election, be carried back to each of the preceding three years and
applied against gains from Section 1256 contracts.

ALTERNATIVE MINIMUM TAX. An alternative minimum tax may be imposed on
Limited Partners, depending on their particular circumstances. This tax, with
respect to taxpayers other than corporations, will be assessed to the extent
that 26% of the first $175,000 ($87,500 for married individuals filing a
separate return) of "alternative minimum taxable income" in excess of the
exemption amount ($45,000 in the case of married taxpayers filing joint
returns or a surviving spouse; $33,750 in the case of an unmarried taxpayer
who is not a surviving spouse; or $22,500 in the case of a married individual
filing a separate return or an estate or trust) plus 28% of the balance of such
excess exceeds the taxpayer's regular federal income tax liability (subject to
special modification) for the year. The alternative minimum tax exemption is
phased-out for individual taxpayers with alternative minimum taxable income in
excess of $112,500 ($150,000 for married taxpayers filing a joint return and
surviving spouses; $75,000 for married individuals filing separate returns
estates and trusts). "Alternative minimum taxable income" is equal to adjusted
gross income computed without deducting normal net operating losses, less
specified net operating losses, credits, trust distributions and itemized
deductions, and increased by certain tax preferences. Long-term capital gains
are taxed at a maximum 28% rate. However, the limitation on the long-term
capital gains rate does not give rise to an adjustment or increase in
"alternative minimum taxable income." Therefore, transactions in Section 1256
contracts should not directly affect the application of the alternative
minimum tax. The extent, if any, to which the alternative minimum tax will be
imposed will depend on the overall tax situation of each Limited Partner at
the end of each such taxable year.

LIMITATION ON DEDUCTIBILITY OF INTEREST ON INVESTMENT INDEBTEDNESS.
Interest paid or accrued on indebtedness properly allocable to property held for
investment is investment interest. Such interest is generally deductible by
non-corporate taxpayers only to the extent it does not exceed net investment
income. A Limited Partner's distributive share of net Partnership income and
any gain from the disposition of Units will be treated as investment income,
except that a Limited Partner's net capital gain from the disposition of Units
is not investment income unless the Limited Partner waives the benefit of the
28% tax rate on such gain. It is not clear whether a Limited Partner's
distributive share of Partnership net capital gain constitutes investment
income where such gain is taxed at the maximum 28% rate. Interest expense
incurred by a Limited Partner to acquire his Units generally will be
investment interest. Any investment interest disallowed as a deduction in a
taxable year solely by reason of the limitation above is treated as investment
interest paid or accrued in the succeeding taxable year.

TAXATION OF FOREIGN LIMITED PARTNERS. A Limited Partner who is a
non-resident alien individual, foreign corporation, foreign partnership,
foreign trust or foreign estate (a "Foreign Limited Partner") generally is not
subject to taxation by the United States on United States source capital gains
from commodity trading for a taxable year, provided that such Foreign Limited
Partner does not have certain present or former connections with the United
States (e.g., if the Foreign Limited Partner (in the case of an individual)
does not spend more than 182 days in the United States during his taxable year
(or, in certain circumstances, a prior taxable year) or if the Foreign Limited
Partner is not engaged in a trade or business within the United States during
the taxable year to which income, gain, or loss from a Partnership is treated
as effectively connected. As explained

97
<PAGE>

below, an investment in a Partnership should not, by itself, cause a Foreign
Limited Partner to be engaged in a trade or business within the United States
during the taxable year or in certain limited circumstances, a prior taxable
year to which income, gain or loss from a Partnership is treated
as effectively connected).

Pursuant to a "safe harbor" provision of the Code, a Foreign Limited
Partner would not be engaged in a trade or business within the United States
solely because such Foreign Limited Partner is a partner of a partnership which
effects transactions in the United States in commodities for the partnership's
own account, as long as the partnership is not a dealer in commodities and
as long as the partnership only trades commodities which are of a kind
customarily dealt in on an organized commodity exchange in transactions of a
kind customarily consummated on such an exchange and that each Partnership's
commodities transactions should satisfy the safe harbor, owning an interest in
a Partnership should not in such counsel's opinion, by itself, cause a Foreign
Limited Partner to be engaged in a trade or business within the United States.
In the event that future Partnership transactions are not covered by the safe
harbor, there is a risk that all of a Foreign Limited Partner's distributive
share of income of a Partnership will be treated as effectively connected with
the conduct of a trade or business in the United States and taxed at regular
rates (discussed previously) and, in the case of a Foreign Limited Partner
which is a foreign corporation, an additional 30% branch profits tax (unless
reduced or eliminated by treaty).

If a Foreign Limited Partner is a dealer in commodities, or is otherwise
engaged in a U.S. trade or business and if income, gain or loss from a
Partnership is treated as effectively connected with the conduct of such trade
or business, such Partnership may be required to withhold tax on income
allocable to such Foreign Limited Partners and remit to the Internal Revenue
Service an amount equal to 39.6% (35% for corporations) of the amount of such
effectively connected taxable income allocable to the Foreign Limited Partner.
Any amounts remitted will constitute a refundable credit against the Foreign
Limited Partner's United States federal income tax liability, which can be
claimed on the Foreign Limited Partner's United States federal income tax
return.

A foreign person generally is subject to a 30% withholding tax (unless
reduced or exempted by treaty) on certain types of United States source income
that are not effectively connected with the conduct of a United States trade
or business, such as certain interest-bearing obligations, the income
attributable to which is not exempt from tax. This tax must be withheld by the
person having control over the payment of such income. Accordingly, a
Partnership may be required to withhold tax on items of such income which are
included in the distributive share (whether or not actually distributed) of a
Foreign Limited Partner. However, 30% withholding is not required in respect
of certain interest bearing obligations, such as "portfolio interest"
obligations issued after July 18, 1984 (if procedural requirements are
complied with). If a Partnership is required to withhold tax on such income of
a Foreign Limited Partner, the General Partner may pay such tax out of its own
funds and then be reimbursed out of the proceeds of any distribution to or
redemption of Units by the Foreign Limited Partner.

The estate of a deceased Foreign Limited Partner may be liable for U.S.
estate tax and may be required to obtain an estate tax release from the Internal
Revenue Service in order to transfer the Units of such Foreign Limited
Partner.

FOREIGN PERSONS SHOULD CONSULT THEIR OWN TAX ADVISERS BEFORE DECIDING WHETHER
TO INVEST IN THE PARTNERSHIPS.

TAX ELECTIONS. The Code provides for optional adjustments to the basis
of Partnership property upon distributions of Partnership property to a
Partner (Section 734) and transfers of Units, including transfers by reason of
death (Section 743), provided that a Partnership election has been made
pursuant to Section 754. As a result of the complexities and added expense of
the tax accounting required to implement such an election, the General Partner
does not presently intend to make such an election. Therefore, any benefits
which might be available to the Partners by reason of such an election will be
foreclosed.

TAX RETURNS AND INFORMATION. The Partnerships will file their information
returns using the accrual method of accounting. Within 90 days after the close
of each Partnership's taxable year, the Partnership will furnish each Limited
Partner (and any assignee of the Unit of any Limited Partner) copies of (i)
the Partnership's Schedule K-1 indicating the Limited Partner's distributive
share of tax items and (ii) such additional information as is reasonably
necessary to permit the Limited Partners to prepare their own federal and
state tax returns.

PARTNERSHIP'S TAX ACCOUNTING. Each Partnership has the calendar year as
its taxable year.

UNRELATED BUSINESS TAXABLE INCOME OF EMPLOYEE BENEFIT PLAN LIMITED
PARTNERS AND OTHER TAX-EXEMPT INVESTORS. Income allocated to a Limited Partner
which is an employee benefit plan or other tax-exempt enti-

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<PAGE>

ty should not be subject to tax under Section 511 of the Code. Such investors
should see "Purchases by Employee Benefit Plans-ERISA Considerations."

TAX AUDITS

All Partners are required under the Code to report all the Partnership
items on their own returns consistently with the treatment by a Partnership,
unless they file a statement with the Internal Revenue Service disclosing the
inconsistencies. Adjustments in tax liability with respect to Partnership
items will be made at the Partnership level. The General Partner will
represent each Partnership during any audit and in any dispute with the
Internal Revenue Service. Each Limited Partner will be informed by the General
Partner of the commencement of an audit of a Partnership. In general, the
General Partner may enter into a settlement agreement with the Internal
Revenue Service on behalf of, and binding upon, the Limited Partners. However,
prior to settlement, a Limited Partner may file a statement with the Internal
Revenue Service stating that the General Partner does not have the authority
to settle on behalf of such Limited Partner.

The period for assessing a deficiency against a partner in a partnership,
such as any of the Partnerships, with respect to a partnership item is the
later of three years after such partnership files its return or, if the name
and address of the partner does not appear on such partnership return, one
year after the Internal Revenue Service is furnished with the name and address
of the partner. In addition, the General Partner may consent on behalf of each
Partnership to the extension of the period for assessing a deficiency with
respect to a Partnership item. As a result, a Limited Partner's federal income
tax return may be subject to examination and adjustment by the Internal
Revenue Service for a Partnership item more than three years after it has been
filed.

____________________

All of the foregoing statements are based upon the existing provisions of
the Code and the regulations promulgated thereunder and the existing
administrative and judicial interpretations thereof. It is emphasized that no
assurance can be given that legislative, administrative or judicial changes
will not occur which will modify such statements.

The foregoing statements are not intended as a substitute for careful tax
planning, particularly since certain of the federal income tax consequences of
purchasing an interest in the Partnerships may not be the same for all
taxpayers. There can be no assurance that the Partnership's tax returns will
not be audited by the Internal Revenue Service or that no adjustments to the
returns will be made as a result of such audits. If an audit results in
adjustment, Limited Partners may be required to file amended returns and their
returns may be audited. Accordingly, prospective purchasers of an interest in
the Partnership are urged to consult their tax advisers with specific
reference to their own tax situation under federal law and the provisions of
applicable state, local and foreign laws before subscribing for Units.

STATE AND LOCAL INCOME TAX ASPECTS

In addition to the federal income tax consequences for individuals
described under "Federal Income Tax Aspects" above, each Partnership and its
Limited Partners may be subject to various state and local taxes. A Limited
Partner's distributive share of the realized profits of a Partnership may be
required to be included in determining his reportable income for state or
local tax purposes. Furthermore, state and local tax laws may not reflect
recent changes made to the federal income tax law and hence may be
inconsistent with the federal income treatment of gains and losses arising
from the Partnerships' transactions in Section 1256 contracts. Accordingly,
prospective Limited Partners should consult with their own tax advisers
concerning the applicability of state and local taxes to an investment in the
Partnerships.

The General Partner has been advised by its legal counsel, Cadwalader,
Wickersham & Taft, that the Partnerships will not be liable for New York City
unincorporated business tax. Limited Partners who are nonresidents of New York
State will not be liable for New York State personal income tax on such
Partners' income from the Partnerships. Likewise, Limited Partners who are
nonresidents of New York City will not be liable for New York City earnings
tax on such Partners' income from the Partnerships. New York City residents
may be subject to New York City personal income tax on such Partners' income
from the Partnerships. No ruling from either the New York State or New York
City tax authorities will be requested regarding such matters.

99
<PAGE>
LEGAL MATTERS

Legal matters in connection with the Units being offered hereby,
including the discussion of the material federal income tax consequences
relating to the acquisition, ownership and disposition of Units, have been
passed upon for each Partnership and the General Partner by Cadwalader,
Wickersham & Taft, 100 Maiden Lane, New York, New York 10038. Cadwalader,
Wickersham & Taft also has acted as counsel for DWR in connection with the
offering of Units. Cadwalader, Wickersham & Taft may advise the General
Partner with respect to its responsibilities as general partner of, and with
respect to matters relating to, the Partnerships.

EXPERTS

The statements of financial condition of Dean Witter Cornerstone Fund
II, Dean Witter Cornerstone Fund III and Dean Witter Cornerstone Fund IV
as of December 31, 1995 and 1994, and their related statements of operations,
changes in partners' capital, and their cash flows for each of the three years
in the period ended December 31, 1995 and the statements of financial
condition of Demeter Management Corporation as of December 31, 1995 and 1994
included in this Prospectus, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein, and are
included in reliance upon such reports of such firm given upon their authority
as experts in accounting and auditing. Deloitte & Touche LLP also acts as
independent auditors for DWR.

ADDITIONAL INFORMATION

This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits relating thereto that have been filed
with the Securities and Exchange Commission in Washington, D.C. For further
information pertaining to each Partnership and the Units offered hereby,
reference is hereby made to the Registration Statement, including the exhibits
filed as part thereof. The Registration Statement and exhibits are on file at
the offices of the Securities and Exchange Commission, 450 Fifth Street, N.W.,
Room 1024, Judiciary Plaza, Washington, D.C. 20549 and may be examined,
without charge, at the offices of the SEC and copies may be obtained of all or
part thereof from the SEC upon payment of the prescribed fees.

GLOSSARY
CERTAIN TERMS AND DEFINITIONS

Knowledge of various terms and concepts relating to this offering is
necessary for a potential investor to determine whether to invest in the
Partnerships.

"Brokerage Commission"-The fee charged by a broker for executing a trade
in a commodity account of a customer. DWR charges each Partnership brokerage
commissions at a roundturn rate of 80% of DWR's published rates (an average
rate of $75) plus applicable fees. Effective September 1, 1996, commissions
(together with transaction fees and costs) with respect to each Trading
Manager's allocated Net Assets will be at capped 13/20 of 1% per month of the
Net Assets at month-end allocated to such Trading Manager or trading system
(in the case of Trading Managers which employ multiple trading systems in
trading on behalf of a Partnership, the foregoing cap will be applied on a per
trading systems basis).

"Churning"-Engaging in excessive trading with respect to a commodity
account for the purpose of generating brokerage commissions.

"Commodity Futures Contract"-Standardized contract made on domestic or
foreign commodity exchanges which calls for the future delivery of a specified
quantity of a commodity at a specified time and place.

"Commodity Trading Advisor"-Any person who for any consideration engages
in the business of advising others, either directly or indirectly, as to the
value or purchase of commodity contracts or options thereon.

"Common Administrative Expenses"-Costs and expenses incurred in connection
with preparing, printing, and mailing monthly reports, annual reports, and all
other documents required to be delivered to Limited

100
<PAGE>
Partners in the
Cornerstone Funds under any applicable federal or state law or pursuant to the
terms of each Limited Partnership Agreement; and all legal, accounting,
auditing, filing, registration and extraordinary expenses not directly
attributable to one Partnership.

"Daily Limits"-Limits imposed by commodity exchanges on the amount of
fluctuation in commodity contract prices during a single trading day.

"Forward Contract"-A contractual right to purchase or sell a specified
quantity of a commodity at or before a specified date in the future at a
specified price. It is distinguished from a futures contract in that it is not
traded on an exchange and it contains terms and conditions specifically
negotiated by the parties.

"Limit Order"-An order to execute a trade at a specified price or
better. As contrasted with a stop order, a limit order does not become a
market order when the limit price is reached.

"Margin"-Good faith deposits with a broker to assure fulfillment
of a purchase or sale of a commodity futures contract and, under certain
circumstances, a commodity option contract.

"Market Order"-An order to execute a trade at the prevailing price
as soon as possible.

"Net Assets"-A Partnership's "Net Assets" shall mean the total assets of
the Partnership, including all cash and cash equivalents (valued at cost),
accrued interest, and the market value of all open commodity positions and other
assets of the Partnership less (a) the brokerage commissions accrued on a
half-turn basis and (b) all other liabilities of the Partnership including
incentive fees accrued or payable. The above specified items will be
determined in accordance with the principles specified in the applicable
Limited Partnership Agreement and, where no principle is specified, in
accordance with generally accepted accounting principles consistently applied
under the accrual basis of accounting. The market value of a commodity futures
contract traded on a commodity exchange shall mean the settlement price on the
commodity exchange on which the particular commodity futures contract is
traded by a Partnership on the day with respect to which Net Assets are being
determined, provided, that if a contract could not be liquidated on such day
due to the operation of daily limits or other rules of the commodity exchange
upon which that contract is traded or otherwise, the settlement price on the
first subsequent day on which the contract could be liquidated shall be the
market value of such contract for such day. The market value of a commodity
forward contract or a commodity futures contract traded on a foreign exchange
shall mean its market value as determined by the General Partner on a basis
consistently applied.

"Net Asset Value Per Unit"-The Net Assets allocated to capital accounts
represented by Units of Limited Partnership Interest divided by the number of
such Units outstanding on the date of calculation.

"New Appreciation"-Appreciation (as defined below) increased by (i)
distributions and redemptions paid or payable on Units and (ii) Exchanges of
Units for Units of another Partnership, and decreased by (iii) contributions
to the Partnership arising from Units acquired on an Exchange or from the
Continuing Offering of Units and (iv) interest income earned for the account
of the Partnership, with each item of increase and decrease determined from
the date of such highest value of Net Assets or Initial Net Assets, as the
case may be, to the last day of the incentive period as of which such
incentive fee calculation is made. The "Initial Net Assets" of each
Partnership equals the total amount of subscriptions accepted by such
Partnership at its Initial Closing less total selling commissions and Initial
Offering Expenses paid by such Partnership at such Initial Closing.
"Appreciation" under each Management Agreement means (A) the value of the
Partnership's Net Assets as of the last day of any fiscal year or incentive
period, as applicable (reduced by management fees accrued or payable for the
account of such Partnership for such fiscal year or incentive period, but
before reduction for the current annual incentive fee, if any, accrued or
payable for the account of the Partnership for such fiscal year or incentive
period), minus (B) the highest value of Net Assets as of the last day of any
preceding fiscal year or incentive period (or the Initial Net Assets,
whichever is higher).

"Option"-An option on a futures contract or a physical commodity gives the
buyer of the option the right, as opposed to the obligation, to take a
position at a specified price in an underlying futures contract or commodity.

"Pyramiding"-Using unrealized profits on existing positions in a given
commodity due to favorable price movements as margin specifically to buy or
sell additional positions in the same or related commodity.

"Settlement Price"-The closing price for futures contracts in a particular
commodity established by the clearinghouse or exchange after the close of each
day's trading.

"Speculative Position Limits"-Limits established by the CFTC and
United States commodity exchanges
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<PAGE>

on the maximum net long or short speculative positions which a person or group
of persons may hold, own, or control in commodity contracts.

"Spot Contract"-A cash market transaction in which the buyer and seller
agree to the immediate purchase and sale of a specific commodity lot, usually
with a two-day settlement.

"Stop Order"-An order given to a broker to execute a trade in a commodity
contract when the contract price reaches the specified stop order price. Stop
orders become market orders when the stop price is reached.

"Unrealized Profit or Loss"-The profit or loss which could be realized
on an open position if it were closed out at the current settlement price.

BLUE SKY GLOSSARY

Prospective investors should be aware of the following definitions,
reprinted verbatim from the "Guidelines for Registration of Commodity Pool
Programs" adopted by the North American Securities Administrators Association,
Inc., as revised in September, 1993 (the "Guidelines"), which Guidelines are
applied by certain state securities administrators in reviewing public
offerings of "commodity pools" (such as the Partnerships). For ease of
reference, each of these definitions is followed by the comparable defined
term used in the Form of Limited Partnership Agreement and this Prospectus, in
brackets, as applicable.

"Advisor"-Any Person who for any consideration engages in the business of
advising others, either directly or indirectly, as to the value, purchase, or
sale of Commodity Futures Contracts or commodity options. ["Trading
Managers"-page A-9]

"Affiliate"-An Affiliate of a Person means (a) any Person directly or
indirectly owning, controlling or holding with power to vote 10% or more of
the outstanding voting securities of such Person; (b) any Person 10% or more
of whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote, by such Person; (c) any Person,
directly or indirectly, controlling, controlled by, or under common control of
such Person; (d) any officer, director or partner of such Person; or (e) if
such Person is an officer, director or partner, any Person for which such
Person acts in any such capacity. [No comparable term, but for purposes of
indemnification of the General Partner and its affiliates, see pages
A-15-A-16]

"Capital Contributions"-The total investment in a Program by a
Participant or by all Participants, as the case may be. ["Unit of General
Partnership Interest"-page A-3; "Units"-page A-3]

"Commodity Broker"-Any Person who engages in the business of effecting
transactions in Commodity Contracts for the account of others or for his own
account. ["DWR"-page A-3]

"Commodity Contract"-A contract or option thereon providing for the
delivery or receipt at a future date of a specified amount and grade of a
traded commodity at a specified price and delivery point. ["commodity interest
contracts"-page A-1]

"Net Assets"-The total assets, less total liabilities, of the Program
determined on the basis of generally accepted accounting principles. Net
Assets shall include any unrealized profits or losses on open positions, and
any fee or expense including Net Asset fees accruing to the Program. ["Net
Assets"-page A-7]

"Net Worth"-The excess of total assets over total liabilities as
determined by generally accepted accounting principles. Net Worth shall be
determined exclusive of home, home furnishings and automobiles. ["net worth,"
as regards subscribers' investment requirements, is referenced on page A-21;
as regards the General Partner's net worth requirement, see Section 5 of
the Limited Partnership Agreement]

"Organizational and Offering Expenses"-All expenses incurred by the
Program in connection with and in preparing a Program for registration and
subsequently offering and distributing it to the public, including, but not
limited to, total underwriting and brokerage discounts and commissions
(including fees of the underwriter's attorneys), expenses for printing,
engraving, mailing, salaries of employees while engaged in sales activity,
charges of transfer agents, registrars, trustees, escrow holders,
depositories, experts, expenses of qualification of the sale of its
Program Interest under federal and state law, including taxes and fees,
accountants' and attorneys' fees. ["Initial Offering Expenses,"
"Continuing Offering Expenses"-pages A-4, A-7-A-8]

"Participant"-The holder of a Program Interest. ["General Partner" and
"Limited Partners"-page A-3]

"Person"-Any natural Person, partnership, corporation, association or
other legal entity. [No comparable term]

102
<PAGE>
"Program"-The limited partnership, joint venture, corporation, trust or
other entity formed and operated for the purpose of investing in Commodity
Contracts. ["Partnership"-page A-1]

"Pyramiding"-A method of using all or part of an unrealized profit in a
Commodity Contract position to provide margin for any additional Commodity
Contracts of the same or related commodities. [See trading policy 6 on page
A-10]

"Sponsor"-Any Person directly or indirectly instrumental in organizing a
Program or any Person who will manage or participate in the management of a
Program, including a Commodity Broker who pays any portion of the
Organizational Expenses of the Program, and the general partner(s) and any
other Person who regularly performs or selects the Persons who perform
services for the Program. Sponsor does not include wholly independent third
parties such as attorneys, accountants, and underwriters whose only
compensation is for professional services rendered in connection with the
offering of the units. The term "Sponsor" shall be deemed to include its
Affiliates. ["General Partner," "DWR"]

"Valuation Date"-The date as of which the Net Assets of the Program are
determined. [No comparable term, but for purposes of redemption, Net Assets of
the Partnership are determined as of the last business day of the month-page
A-13]
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<PAGE>
DEAN WITTER CORNERSTONE FUNDS

INDEPENDENT AUDITORS' REPORT

To the Limited Partners and the General Partner of
Dean Witter Cornerstone Fund II
Dean Witter Cornerstone Fund III
Dean Witter Cornerstone Fund IV:

We have audited the accompanying statements of financial condition of Dean
Witter Cornerstone Fund II,

Dean Witter Cornerstone Fund III and Dean Witter Cornerstone Fund IV
(collectively, the "Partnerships") as of December 31, 1995 and 1994 and the
related statements of operations, changes in partners' capital, and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Partnerships' management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Dean Witter Cornerstone Fund II, Dean
Witter Cornerstone Fund III and Dean Witter Cornerstone Fund IV as of December
31, 1995 and 1994 and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1995 in conformity
with generally accepted accounting principles.

Deloitte & Touche LLP

/s/ Deloitte & Touche LLP

February 21, 1996
New York, New York

F-1
<PAGE>

DEAN WITTER CORNERSTONE FUND II
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31,
June 30, ----------------------------------
----------
1996 1995 1994
---------- ---------- ----------
$ $ $
(unaudited)
<S> <C> <C> <C>
ASSETS
Equity in Commodity futures trading accounts:
Cash 27,174,044 28,057,189 27,570,984
Net unrealized gain on open contracts 2,062,461 3,368,107 4,316,080
---------- ---------- ----------
Total Trading Equity 29,236,505 31,425,296 31,887,064
Interest receivable (DWR) 99,621 107,485 124,668
Receivable from DWR 101,333 25,525 50,385
---------- ---------- ----------
Total Assets 29,437,459 31,558,306 32,062,117
========== ========== ==========
LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Accrued incentive fees -- 307,567 --
Redemptions payable 237,281 134,889 386,099
Accrued brokerage commissions (DWR) 105,114 94,453 81,268
Accrued management fees 96,590 104,238 105,860
Common administrative expenses payable 47,967 81,314 111,168
Accrued transaction fees and costs 7,889 6,957 5,720
---------- ---------- ----------
Total Liabilities 494,841 729,418 690,115
---------- ---------- ----------
PARTNERS' CAPITAL
Limited Partners (10,034.759,
10,673.698, and 13,802.050 Units, respectively) 28,328,881 30,213,505 30,885,515
General Partner (217.400 Units) 613,737 615,383 486,487
---------- ---------- ----------
Total Partners' Capital 28,942,618 30,828,888 31,372,002
---------- ---------- ----------
Total Liabilities and Partners' Capital 29,437,459 31,558,306 32,062,117
========== ========== ==========

NET ASSET VALUE PER UNIT 2,823.08 2,830.65 2,237.75
========== ========== ==========
</TABLE>

STATEMENTS OF OPERATIONS
For the six months ended June 30, 1996 and 1995 (unaudited) and
for the Years Ended December 31, 1995, 1994 and 1993

<TABLE>
<CAPTION>
June 30, December 31,
--------------------------- -----------------------------------------------------
1996 1995 1995 1994 1993
--------- ---------- ---------- -------- ---------
$ $ $ $ $
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES
Trading Profit (Loss):
Realized 2,187,355 12,177,479 11,081,716 (878,688) 2,539,342
Net change in unrealized (1,305,646) (2,585,376) (947,973) 556,567 2,029,459
--------- --------- --------- --------- ---------
Total Trading Results 881,709 9,592,103 10,133,743 (322,121) 4,568,801
Interest income (DWR) 600,791 797,905 1,471,022 1,153,003 694,085
--------- ---------- ---------- -------- ---------
Total Revenues 1,482,500 10,390,008 11,604,765 830,882 5,262,886
--------- ---------- ---------- -------- ---------
EXPENSES
Brokerage commissions (DWR) 915,764 1,012,805 1,864,093 2,336,047 1,773,947
Management fees 593,095 689,946 1,307,872 1,346,905 1,157,221
Transaction fees and costs 77,861 78,951 160,238 194,384 141,974
Common administrative expenses 5,498 8,184 8,183 49,101 68,511
Incentive fees -- 533,049 381,720 -- 19,886
--------- ---------- ---------- -------- ---------
Total Expenses 1,592,218 2,322,935 3,722,106 3,926,437 3,161,539
--------- ---------- ---------- -------- ---------
NET INCOME (LOSS) (109,718) 8,067,073 7,882,659 (3,095,555) 2,101,347
========= ========== ========== ======== =========
Net Income (Loss) Allocation:

Limited Partners (108,072) 7,936,773 7,753,763 (3,050,650) 2,057,120
General Partner (1,646) 130,300 128,896 (44,905) 44,227
Net Income (Loss) per Unit:

Limited Partners (7.57) 599.36 592.90 (219.47) 178.05
General Partner (7.57) 599.36 592.90 (219.47) 178.05
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-2

<PAGE>

DEAN WITTER CORNERSTONE FUND III
STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
June 30, December 31,
----------- ----------------------------
1996 1995 1994
----------- ---------- ----------
$ $ $
(unaudited)
<S> <C> <C> <C>
ASSETS
Equity in Commodity futures trading accounts:
Cash 39,629,167 42,294,365 42,884,780
Net unrealized gain on open contracts 202,859 5,578,294 5,016,857
----------- ---------- ----------
Total Trading Equity 39,832,026 47,872,659 47,901,637
Receivable from DWR 160,667 124,456 213,589
Interest receivable (DWR) 136,274 159,680 193,048
----------- ---------- ----------
Total Assets 40,128,967 48,156,795 48,308,274
=========== ========== ==========
LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Redemptions payable 596,153 639,349 666,178
Common administrative expenses payable 165,182 222,036 266,405
Accrued management fees 132,583 158,630 158,895
Accrued brokerage commissions (DWR) 40,543 166,128 200,604
Accrued transaction fees and costs 15,712 20,978 13,739
----------- ---------- ----------
Total Liabilities 950,173 1,207,121 1,305,821
----------- ---------- ----------
PARTNERS' CAPITAL
Limited Partners (16,838.237,
18,332.818, and 23,505.598 Units, respectively) 38,309,454 45,991,101 46,250,611
General Partner (382.103 Units) 869,340 958,573 751,842
----------- ---------- ----------
Total Partners' Capital 39,178,794 46,949,674 47,002,453
----------- ---------- ----------
Total Liabilities and Partners' Capital 40,128,967 48,156,795 48,308,274
=========== ========== ==========
NET ASSET VALUE PER UNIT 2,275.15 2,508.68 1,967.64
=========== ========== ==========
</TABLE>

STATEMENTS OF OPERATIONS
For the six months ended June 30, 1996 and 1995 (unaudited) and
for the Years Ended December 31, 1995, 1994 and 1993

<TABLE>
<CAPTION>
June 30, December 31,
----------------------------- --------------------------------------------
1996 1995 1995 1994 1993
---------- ------------ ---------- ----------- ---------
$ $ $ $ $
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES
Trading Profit (Loss):
Realized 2,878,851 11,836,860 14,260,042 913,869 (627,751)
Net change in unrealized (5,375,435) (3,783,673) 561,437 (1,350,056) 3,815,157
---------- ------------ ---------- ---------- ----------
Total Trading Results (2,496,584) 8,053,187 14,821,479 (436,187) 3,187,406
Interest income (DWR) 852,476 1,084,659 2,061,461 1,744,148 1,445,561
---------- ------------ ---------- ---------- ----------
Total Revenues (1,644,108) 9,137,846 16,882,940 1,307,961 4,632,967
---------- ------------ ---------- ---------- ----------
EXPENSES
Brokerage commissions (DWR) 1,642,356 2,029,632 3,499,743 4,417,718 4,587,865
Management fees 830,166 933,853 1,828,013 2,014,028 2,375,033
Transaction fees and costs 207,271 283,803 502,332 434,287 348,493
Common administrative expenses 9,357 21,158 21,158 122,423 150,937
---------- ------------ ---------- ---------- ----------
Total Expenses 2,689,150 3,268,446 5,851,246 6,988,456 7,462,328
---------- ------------ ---------- ---------- ----------
NET INCOME (LOSS) (4,333,258) 5,869,400 11,031,694 (5,680,495) (2,829,361)
========== ============ ========== ========== ==========
Net Income (Loss) Allocation:

Limited Partners (4,244,025) 5,768,287 10,824,963 (5,594,569) (2,784,837)
General Partner (89,233) 101,113 206,731 (85,926) (44,524)

Net Income (Loss) per Unit:

Limited Partners (233.53) 264.62 541.04 (219.67) (109.91)
General Partner (233.53) 264.62 541.04 (219.67) (109.91)
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3

<PAGE>

DEAN WITTER CORNERSTONE FUND IV
STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
June 30, December 31,
----------- -----------------------------
1996 1995 1994
----------- ----------- -----------

<S> <C> <C> <C>
ASSETS $ $ $
Equity in Commodity futures trading accounts: (unaudited)
Cash 97,026,194 104,927,961 111,508,180
Net unrealized gain on open contracts 2,579,256 70,143 268,291
----------- ----------- -----------
Total Trading Equity 99,605,450 104,998,104 111,776,471
Interest receivable (DWR) 342,500 364,747 434,153
----------- ----------- -----------
Total Assets 99,947,950 105,362,851 112,210,624
=========== =========== ===========
LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Redemptions payable 1,787,267 1,044,804 1,589,622
Accrued management fees 331,245 349,039 371,606
Common administrative expenses payable 157,242 267,788 357,130
Accrued brokerage commissions (DWR) 82,044 32,580 --
Accrued transaction fees and costs 4,102 1,629 --
----------- ----------- -----------
Total Liabilities 2,361,900 1,695,840 2,318,358
----------- ----------- -----------
PARTNERS' CAPITAL
Limited Partners (32,468.70,
35,905.625, and 46,994.002 Units, respectively) 95,702,901 101,854,654 108,418,306
General Partner (638.889 Units) 1,883,149 1,812,357 1,473,960
----------- ----------- -----------
Total Partners' Capital 97,586,050 103,667,011 109,892,266
----------- ----------- -----------
Total Liabilities and Partners' Capital 99,947,950 105,362,851 112,210,624
=========== =========== ===========
NET ASSET VALUE PER UNIT 2,947.54 2,836.73 2,307.07
=========== =========== ===========
</TABLE>

STATEMENTS OF OPERATIONS
For the six months ended June 30, 1996 and 1995 (unaudited) and
for the Years Ended December 31, 1995, 1994 and 1993

<TABLE>
<CAPTION>
June 30, December 31,
-------------------------- -------------------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ----------- ----------
$ $ $

<S> <C> <C> <C> <C> <C>
REVENUES $ $
Trading Profit (Loss): (unaudited) (unaudited)
Realized 3,377,864 23,221,027 27,041,974 (10,447,878) (4,335,118)
Net change in unrealized 2,509,113 367,966 (198,148) (1,726,877) 717,487
---------- ---------- ---------- ----------- ----------
Total Trading Results 5,886,977 23,588,993 26,843,826 (12,174,755) (3,617,631)
Interest income (DWR) 2,039,400 2,494,527 4,912,698 4,129,344 2,937,637
---------- ---------- ---------- ----------- ----------
Total Revenues 7,926,377 26,083,520 31,756,524 (8,045,411) (679,994)
---------- ---------- ---------- ----------- ----------
EXPENSES
Management fees 2,030,247 2,348,957 4,575,372 4,952,206 4,945,676
Brokerage commissions (DWR) 1,888,542 1,761,793 2,776,225 5,336,659 6,634,741
Transaction fees and costs 109,211 106,358 168,718 339,083 398,959
Common administrative expenses 18,143 39,890 39,890 228,633 223,551
Incentive fees -- -- -- 7,659 1,400,473
---------- ---------- ---------- ----------- ----------
Total Expenses 4,046,143 4,256,998 7,560,205 10,864,240 13,603,400
---------- ---------- ---------- ----------- ----------
NET INCOME (LOSS) 3,880,234 21,826,522 24,196,319 (18,909,651) 14,283,394)
========== ========== ========== =========== ==========
Net Income (Loss) Allocation:

Limited Partners 3,809,442 21,521,138 23,857,922 (18,664,384) 14,156,711)
General Partner 70,792 305,384 338,397 (245,267) (126,683)
Net Income (Loss) per Unit:
Limited Partners 110.81 477.99 529.66 (383.89) (270.10)
General Partner 110.81 477.99 529.66 (383.89) (270.10)
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4

<PAGE>

DEAN WITTER CORNERSTONE FUNDS
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Six Months ended June 30, 1996 (unaudited) and
for the Years Ended December 31, 1995, 1994 and 1993

<TABLE>
<CAPTION>
Units of
Partnership Limited General
Interest Partners Partner Total
-------- -------- ------- -----
$ $ $
Dean Witter Cornerstone Fund II
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Partners' Capital, December 31, 1992 11,661.781 26,013,019 566,146 26,579,165
Continuous Offering 2,936.402 7,100,239 -- 7,100,239
Net Income -- 2,057,120 44,227 2,101,347
Redemptions (1,599.188) (3,839,378) -- (3,839,378)
---------- ----------- --------- -----------
Partners' Capital, December 31, 1993 12,998.995 31,331,000 610,373 31,941,373
Continuous Offering 2,948.327 7,098,104 -- 7,098,104
Net Loss -- (3,050,650) (44,905) (3,095,555)
Redemptions (1,927.872) (4,492,939) (78,981) (4,571,920)
---------- ----------- --------- -----------
Partners' Capital, December 31, 1994 14,019.450 30,885,515 486,487 31,372,002
Offerings of Units 70.020 178,837 -- 178,837
Net Income -- 7,753,763 128,896 7,882,659
Redemptions (3,198.372) (8,604,610) -- (8,604,610)
---------- ----------- --------- -----------
Partners' Capital, December 31, 1995 10,891.098 30,213,505 615,383 30,828,888
Continuous Offering 45.006 124,554 -- 124,554
Net Loss -- (108,072) (1,646) (109,718)
Redemptions (683.945) (1,901,106) -- (1,901,106)
---------- ----------- --------- -----------
Partners' Capital, June 30, 1996 10,252.159 28,328,881 613,737 28,942,618
========== =========== ========= ===========

<CAPTION>
Dean Witter Cornerstone Fund III
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Partners' Capital, December 31, 1992 26,249.121 59,369,475 930,612 60,300,087
Continuous Offering 4,324.292 9,819,616 -- 9,819,616
Net Loss -- (2,784,837) (44,524) (2,829,361)
Redemptions (4,899.608) (11,133,649) -- (11,133,649)
---------- ----------- --------- -----------
Partners' Capital, December 31, 1993 25,673.805 55,270,605 886,088 56,156,693
Continuous Offering 2,630.127 5,299,578 -- 5,299,578
Net Loss -- (5,594,569) (85,926) (5,680,495)
Redemptions (4,416.231) (8,725,003) (48,320) (8,773,323)
---------- ----------- --------- -----------
Partners' Capital, December 31, 1994 23,887.701 46,250,611 751,842 47,002,453
Offerings of Units 25.778 49,000 -- 49,000
Net Income -- 10,824,963 206,731 11,031,694
Redemptions (5,198.558) (11,133,473) -- (11,133,473)
---------- ----------- --------- -----------
Partners' Capital, December 31, 1995 18,714.921 45,991,101 958,573 46,949,674
Net Loss -- (4,244,025) (89,233) (4,333,258)
Redemptions (1,494.581) (3,437,622) -- (3,437,622)
---------- ----------- --------- -----------
Partners' Capital, June 30, 1996 17,220.340 38,309,454 869,340 39,178,794
========== =========== ========= ===========

<CAPTION>
Dean Witter Cornerstone Fund IV
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Partners' Capital, December 31, 1992 35,130.725 102,678,152 1,345,910 104,024,062
Continuous Offering 15,029.077 45,950,637 500,000 46,450,637
Net Loss -- (14,156,711) (126,683) (14,283,394)
Redemptions (3,633.498) (10,990,675) -- (10,990,675)
---------- ----------- --------- -----------
Partners' Capital, December 31, 1993 46,526.304 123,481,403 1,719,227 125,200,630
Continuous Offering 8,032.577 20,753,129 -- 20,753,129
Net Loss -- (18,664,384) (245,267) (18,909,651)
Redemptions (6,925.990) (17,151,842) -- (17,151,842)
---------- ----------- --------- -----------
Partners' Capital, December 31, 1994 47,632.891 108,418,306 1,473,960 109,892,266
Offerings of Units 77.319 212,691 -- 212,691
Net Income -- 23,857,922 338,397 24,196,319
Redemptions (11,165.696) (30,634,265) -- (30,634,265)
---------- ----------- --------- -----------
Partners' Capital, December 31, 1995 36,544.514 101,854,654 1,812,357 103,667,011
Continuous Offering 25.735 73,609 -- 73,609
Net Loss -- 3,809,442 70,792 3,880,234
Redemptions (3,462.600) (10,034,804) -- (10,034,804)
---------- ----------- --------- -----------
Partners' Capital, June 30, 1996 33,107.649 95,702,901 1,883,149 97,586,050
========== =========== ========= ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5

<PAGE>

DEAN WITTER CORNERSTONE FUNDS
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months Ended June 30, For the Years Ended December 31,
------------------------------- --------------------------------------------
1996 1995 1995 1994 1993
------------ ------------ ------------ ------------ ------------
$ $ $ $ $
(Unaudited) (Unaudited)
Dean Witter Cornerstone Fund II
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) (109,718) 8,067,073 7,882,659 (3,095,555) 2,101,347
Noncash item included in net income (loss):
Net change in unrealized 1,305,646 2,585,376 947,973 (556,567) (2,029,459)
(Increase) decrease in operating assets:
Interest receivable (DWR) 7,864 (4,534) 17,183 (61,279) (4,984)
Receivable from DWR (75,808) (1,646) 24,860 (42,174) (5,264)
Increase (decrease) in operating liabilities:
Accrued brokerage commissions (DWR) 10,661 (25,839) 13,185 (972) 360
Accrued management fees (7,648) 9,253 (1,622) (1,443) 16,994
Common administrative expenses payable (33,347) (20,036) (29,854) (14,074) 62,518
Accrued transaction fees and costs 932 (1,313) 1,237 (52) (415)
Accrued incentive fees (307,567) 486,794 307,567 (15,336) 15,336
------------ ------------ ------------ ------------ ------------
Net cash provided by (used for) operating activities 791,015 11,095,128 9,163,188 (3,787,452) 156,433
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Offering of units 124,554 132,223 178,837 7,098,104 7,100,239
Increase (decrease) in redemptions payable 102,392 235,003 (251,210) 151,917 (279,349)
Redemptions of units (1,901,106) (6,145,322) (8,604,610) (4,571,920) (3,839,378)
------------ ------------ ------------ ------------ ------------
Net cash provided by (used for) financing activities (1,674,160) (5,778,096) (8,676,983) 2,678,101 2,981,512
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in cash (883,145) 5,317,032 486,205 (1,109,351) 3,137,945
Balance at beginning of period 28,057,189 27,570,984 27,570,984 28,680,335 25,542,390
------------ ------------ ------------ ------------ ------------
Balance at end of period 27,174,044 32,888,016 28,057,189 27,570,984 28,680,335
============ ============ ============ ============ ============

<CAPTION>
Dean Witter Cornerstone Fund III
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) (4,333,258) 5,869,400 11,031,694 (5,680,495) (2,829,361)
Noncash item included in net income (loss):
Net change in unrealized 5,375,435 3,783,673 (561,437) 1,350,056 (3,815,157)
(Increase) decrease in operating assets:
Interest receivable (DWR) 23,406 11,255 33,368 (79,962) 21,271
Receivable from DWR (36,211) 30,781 89,133 (213,589) 32,428

Increase (decrease) in operating liabilities:
Common administrative expenses payable (56,854) (26,829) (44,369) 11,260 137,662
Accrued management fees (26,047) 243 (265) (30,263) (14,483)
Accrued brokerage commissions (DWR) (125,585) (55,244) (34,476) 77,852 (65,492)
Accrued transaction fees and costs (5,266) 13,287 7,239 4,810 (5,129)
------------ ------------ ------------ ------------ ------------
Net cash provided by (used for) operating activities 815,620 9,626,566 10,520,887 (4,560,331) (6,538,261)
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Offering of units -- 40,000 49,000 5,299,578 9,819,616
Increase (decrease) in redemptions payable (43,196) 86,700 (26,829) 75,572 (201,692)
Redemptions of units (3,437,622) (5,923,354) (11,133,473) (8,773,323) (11,133,649)
------------ ------------ ------------ ------------ ------------
Net cash used for financing activities (3,480,818) (5,796,654) (11,111,302) (3,398,173) (1,515,725)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in cash (2,665,198) 3,829,912 (590,415) (7,958,504) (8,053,986)
Balance at beginning of period 42,294,365 42,884,780 42,884,780 50,843,284 58,897,270
------------ ------------ ------------ ------------ ------------
Balance at end of period 39,629,167 46,714,692 42,294,365 42,884,780 50,843,284
============ ============ ============ ============ ============

<CAPTION>
Dean Witter Cornerstone Fund IV
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) 3,880,234 21,826,522 24,196,319 (18,909,651) (14,283,394)
Noncash item included in net income (loss):
Net change in unrealized (2,509,113) (367,966) 198,148 1,726,877 (717,487)
(Increase) decrease in operating assets:
Interest receivable (DWR) 22,247 25,927 69,406 (184,980) (18,641)
Increase (decrease) in operating liabilities:
Accrued management fees (17,794) 20,928 (22,567) (41,612) 51,567
Common administrative expenses payable (110,546) (54,586) (89,342) 8,605 206,517
Accrued brokerage commissions (DWR) 49,464 7,200 32,580 -- (120,420)
Accrued transaction fees and costs 2,473 360 1,629 -- (6,924)
Accrued incentive fees -- -- -- -- (3,722,665)
------------ ------------ ------------ ------------ ------------
Net cash provided by (used for) operating activities 1,316,965 21,458,385 24,386,173 (17,400,761) (18,611,447)
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Offering of units 73,609 172,049 212,691 20,753,129 46,450,637
Increase (decrease) in redemptions payable 742,463 4,009 (544,818) 519,604 321,383
Redemptions of units (10,034,804) (15,724,253) (30,634,265) (17,151,842) (10,990,675)
------------ ------------ ------------ ------------ ------------
Net cash provided by (used for) financing activities (9,218,732) (15,548,195) (30,966,392) 4,120,891 35,781,345
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in cash (7,901,767) 5,910,190 (6,580,219) (13,279,870) 17,169,898
Balance at beginning of period 104,927,961 111,508,180 111,508,180 124,788,050 107,618,152
------------ ------------ ------------ ------------ ------------
Balance at end of period 97,026,194 117,418,370 104,927,961 111,508,180 124,788,050
============ ============ ============ ============ ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6

<PAGE>

DEAN WITTER CORNERSTONE FUNDS
NOTES TO FINANCIAL STATEMENTS
(the information with respect to 1996 is unaudited)

1. Summary of Significant Accounting Policies

Organization--Dean Witter Cornerstone Fund II, Dean Witter Cornerstone
Fund III and Dean Witter Cornerstone Fund IV (individually, a "Partnership", or
collectively, the "Partnerships") are limited partnerships organized to engage
in the speculative trading of commodity futures contracts and forward contracts
on foreign currencies. The general partner for each Partnership is Demeter
Management Corporation (the "General Partner"). The commodity broker is Dean
Witter Reynolds Inc. ("DWR"). Both DWR and the General Partner are wholly-owned
subsidiaries of Dean Witter, Discover & Co.

The General Partner is required to maintain a 1% minimum interest in the
equity of each Partnership and income (losses) are shared by the General and
Limited Partners based upon their proportional ownership interests.

Basis of Accounting--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts in the financial
statements.

Revenue Recognition--Commodity futures contracts and forward contracts on
foreign currencies are open commitments until settlement date. They are valued
at market and the resulting unrealized gains and losses are reflected in income.
Monthly, DWR pays each Partnership interest income based upon 80% of its average
daily Net Assets at a rate equal to the average yield on 13-Week U.S. Treasury
Bills issued during such month. For purposes of such interest payments in Dean
Witter Cornerstone Fund IV, Net Assets do not include monies due the Partnership
on forward contracts and other commodity interests, but not actually received.

Net Income (Loss) per Unit--Net income (loss) per Unit is computed using
the weighted average number of units outstanding during the period.

Equity in Commodity Futures Trading Accounts--The Partnerships' assets
"Equity in Commodity futures trading accounts" consists of cash on deposit at
DWR to be used as margin for trading and the net asset or liability related to
unrealized gains or losses on open contracts. The asset or liability related to
the unrealized gains or losses on forward contracts is presented as a net amount
because each Partnership has a master netting agreement with DWR.

Brokerage Commissions and Related Transaction Fees and Costs--Brokerage
commissions for each Partnership are accrued at 80% of DWR's published
non-member rates on a half-turn basis.

Through March 31, 1995, brokerage commissions were capped at 1% per month
of the adjusted Net Assets allocated to each trading program employed by a
Trading Advisor. Effective April 1, 1995, the cap was reduced to 3/4 of 1%.

Related transaction fees and costs are accrued on a half-turn basis.

Operating Expenses--Each Partnership has entered into an exchange
agreement pursuant to which certain common administrative expenses (i.e., legal,
auditing, accounting, filing fees and other related expenses) are shared by each
of the Partnerships based upon the number of Units of each Partnership
outstanding during the month in which such expenses are incurred. In addition,
the Partnerships incur monthly management fees and may incur incentive fees. The
General Partner bears all other operating expenses.

Income Taxes--No provision for income taxes has been made in the
accompanying financial statements, as partners are individually responsible for
reporting income or loss based upon their respective share of each Partnership's
revenues and expenses for income tax purposes.

Distributions--Distributions, other than on redemptions of Units, are made
on a pro-rata basis at the sole discretion of the General Partner. No
distributions have been made to date.

Continuing Offering--Through September 26, 1994, Units of each Partnership
were offered at a price equal to 107.625% of the Net Asset Value per Unit as of
the opening of business on the first day of the month, which price included a 5%
selling commission and a 2.5% charge for expenses relating to the continuing
offering of Units. These expenses were shared by the Partnerships. Any funds
received by DWR as a result of the Continuing Offering Expense charges that were
in excess of the Continuing Offering Expenses incurred, were contributed
pro-rata to the Partnerships, as a contribution of capital to the Partnerships
for which no Units were issued. On September 26, 1994, the Continuing Offering
was discontinued.

Redemptions--After an initial 180-day period, Limited Partners may redeem
some or all of their Units at 100% of the Net Asset Value per Unit as of the
last day of any month upon fifteen days advance notice by redemption form to the
General Partner.

If the proceeds of a redemption are reinvested in any of the Partnerships
within 180 days, the General Partner will waive the selling commissions and
continuous offering expense charges on the amount reinvested.

F-7

<PAGE>

DEAN WITTER CORNERSTONE FUNDS
NOTES TO FINANCIAL STATEMENTS--(Continued)
(the information with respect to 1996 is unaudited)

Exchanges--On the last day of the first month, which occurs more than 180
days after a person first becomes a Limited Partner in any of the Partnerships,
and the end of each month thereafter, Limited Partners may transfer their
investment among the Partnerships (subject to certain restrictions outlined in
the Limited Partnership Agreement) without paying additional charges.

Dissolution of the Partnership--Each Partnership will terminate on
September 30, 2025 regardless of its financial condition at such time, upon a
decline in Net Assets to less than $250,000, a decline in the Net Asset Value
per Unit to less than $250, or under certain other circumstances defined in the
Limited Partnership Agreement.

2. Related Party Transactions

Each Partnership pays brokerage commissions to DWR on trades executed on
its behalf as described in Note 1. Each Partnership's cash is on deposit with
DWR in commodity trading accounts to meet margin requirements as needed. DWR
pays interest on these funds as described in Note 1.

3. Trading Advisors

The General Partner, on behalf of each Partnership, retains certain
commodity trading advisors to make all trading decisions for the Partnerships.
The trading advisors for each Partnership as of December 31, 1995 were as
follows:

Dean Witter Cornerstone Fund II
Abacus Asset Management Inc.
John W. Henry & Co., Inc.

Dean Witter Cornerstone Fund III
Welton Investment Systems Corporation
Abraham Trading Co.
Sunrise Capital Management

Dean Witter Cornerstone Fund IV
John W. Henry & Co., Inc.
Sunrise Capital Management

Each trading advisor owns at least ten Units in its respective
Partnership. Compensation to the trading advisors by the Partnerships consists
of a management fee and an incentive fee as follows:

Management Fee--The management fee is accrued at the rate of 1/3 of 1% per
month of the Net Assets under management by each trading advisor at each month
end.

Incentive Fee--Each Partnership will pay an annual incentive fee equal to
15% of the "New Appreciation" in Net Assets as of the end of each annual
incentive period ending December 31, except for Dean Witter Cornerstone Fund IV,
which will pay incentive fees at the end of each annual incentive period ending
May 31. Such incentive fee is accrued in each month in which "New Appreciation"
occurs. In those months in which "New Appreciation" is negative, previous
accruals, if any, during the incentive period will be reduced. In those
instances in which a Limited Partner redeems an investment, the incentive fee
(if earned through a redemption date) is to be paid on those redemptions to the
trading advisor in the month of such redemption.

4. Financial Instruments

F-8

<PAGE>

DEAN WITTER CORNERSTONE FUNDS
NOTES TO FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
Cornerstone II
------------------------------------------------------
Contract or Notional Amount
------------------------------------------------------
June 30, December 31,
1996 1995 1994
---------- ---------------------------------
(unaudited)
$ $ $
<S> <C> <C> <C>
Exchange-Traded Financial Futures Contracts
Commitments to Purchase ...................................... 24,146,000 140,924,000 7,734,000
Commitments to Sell .......................................... 50,063,000 3,298,000 --
Commodity Futures:
Commitments to Purchase ...................................... 29,114,000 53,994,000 23,692,000
Commitments to Sell .......................................... 26,358,000 10,484,000 14,973,000
Foreign Futures:
Commitments to Purchase ...................................... 54,015,000 51,681,000 8,655,000
Commitments to Sell .......................................... 27,639,000 1,656,000 161,925,000
Off-Exchange-Traded Forward Currency Contracts
Commitments to Purchase ...................................... 24,308,000 15,585,000 28,327,000
Commitments to Sell .......................................... 33,352,000 44,881,000 32,192,000

<CAPTION>
Cornerstone III
------------------------------------------------------
Contract or Notional Amount
------------------------------------------------------
June 30, December 31,
1996 1995 1994
---------- ---------------------------------
(unaudited)
$ $ $
<S> <C> <C> <C>
Exchange-Traded Financial Futures Contracts
Commitments to Purchase ...................................... 14,740,000 239,465,000 54,158,000
Commitments to Sell .......................................... 72,652,000 39,640,000 204,207,000
Commodity Futures:
Commitments to Purchase ...................................... 6,076,000 115,420,000 48,926,000
Commitments to Sell .......................................... -- 19,794,000 14,006,000
Foreign Futures:
Commitments to Purchase ...................................... 20,334,000 139,878,000 116,919,000
Commitments to Sell .......................................... 26,516,000 22,202,000 169,271,000
Off-Exchange-Traded Forward Currency Contracts
Commitments to Purchase ...................................... -- -- 29,664,000
Commitments to Sell .......................................... -- -- 84,416,000

<CAPTION>
Cornerstone IV
------------------------------------------------------
Contract or Notional Amount
------------------------------------------------------
June 30, December 31,
1996 1995 1994
---------- ---------------------------------
(unaudited)
$ $ $
<S> <C> <C> <C>
Exchange-Traded Financial Futures Contracts
Commitments to Purchase ...................................... 65,167,000 31,917,000 --
Commitments to Sell .......................................... 173,687,000 70,298,000 --
Off-Exchange-Traded Forward Currency Contracts
Commitments to Purchase ...................................... 251,928,000 116,547,000 504,027,000
Commitments to Sell .......................................... 274,343,000 170,990,000 645,892,000
</TABLE>

A portion of the amounts indicated as off-balance-sheet risk in forward
foreign currency contracts is due to offsetting forward commitments to purchase
and to sell the same currency on the same date in the future. These commitments
are economically offsetting, but are not offset in the forward market until the
settlement date.

The unrealized gains on open contracts are reported as a component of
"Equity in Commodity futures trading accounts" on the Statements of Financial
Condition and totaled at June 30, 1996, and December 31, 1995 and 1994,
respectively, $2,062,461, $3,368,107 and $4,316,080 for Cornerstone II,
$202,859, $5,578,294

F-9

<PAGE>

DEAN WITTER CORNERSTONE FUNDS
NOTES TO FINANCIAL STATEMENTS--(Continued)

and $5,016,857 for Cornerstone III and $2,579,256, $70,143 and $268,291 for
Cornerstone IV.

For Cornerstone II, of the $2,062,461 net unrealized gain on open
contracts at June 30, 1996, $1,870,862 related to exchange-traded futures
contracts and $191,599 related to off-exchange-traded forward currency
contracts. Of the $3,368,107 net unrealized gain on open contracts at December
31, 1995, $3,448,812 related to exchange-traded futures contracts and ($80,705)
related to off-exchange-traded forward currency contracts. Of the $4,316,080 net
unrealized gain on open contracts at December 31, 1994, $4,296,011 related to
exchange-traded futures contracts and $20,069 related to off-exchange-traded
forward currency contracts.

For Cornerstone III, the net unrealized gain on open contracts at June 30,
1996 and December 31, 1995 related entirely to exchange-traded futures. Of the
$5,016,857 net unrealized gain on open contracts at December 31, 1994,
$5,788,691 related to exchange-traded futures contracts and ($771,834) related
to off-exchange-traded forward currency contracts.

For Cornerstone IV, of the $2,579,256 net unrealized gain on open
contracts at June 30, 1996, $1,269,588 related to exchange-traded futures
contracts and $1,309,668 related to off exchange-traded forward currency
contracts. Of the $70,143 net unrealized gain on open contracts at December 31,
1995, $534,487 related to exchange-traded futures contracts and ($464,344)
related to off-exchange-traded forward currency contracts. The net unrealized
gain on open contracts at December 31, 1994, related entirely to
off-exchange-traded forward currency contracts.

The contract amounts in the above table represent the Partnership's extent
of involvement in the particular class of financial instrument, but not the
credit risk associated with counterparty nonperformance. The credit risk
associated with these instruments is limited to the amounts reflected in the
Partnerships' Statements of Financial Condition.

Exchange-traded contracts and off-exchange-traded forward currency
contracts held by the Partnerships at June 1996, December 1995 and 1994 mature
as follows:

<TABLE>
<CAPTION>
June 30, December 31,
1996 1995 1994
-------------- ------------------------------------
(unaudited)
<S> <C> <C> <C>
Cornerstone II
Exchange-Traded Contracts .................................... June 1997 December 1996 September 1995
Off-Exchange-Traded Forward Currency Contracts ............... September 1996 December 1996 March 1995

Cornerstone III
Exchange-Traded Contracts .................................... October 1996 December 1996 May 1995
Off-Exchange-Traded Forward Currency Contracts ............... -- January 1996 March 1995

Cornerstone IV
Exchange-Traded Contracts .................................... September 1996 March 1996 --
Off-Exchange-Traded Forward Currency Contracts ............... September 1996 January 1996 March 1995
</TABLE>

The Partnerships also have credit risk because DWR acts as the futures
commission merchant or the sole counterparty, with respect to most of the
Partnerships' assets. Exchange-traded futures contracts are marked to market on
a daily basis, with variations in value settled on a daily basis. DWR, as the
futures commission merchant of all of the Partnerships' exchange-traded futures
contracts, is required pursuant to regulations of the Commodity Futures Trading
Commission to segregate from its own assets, and for the sole benefit of its
commodity customers, all funds held by DWR with respect to exchange-traded
futures contracts including an amount equal to the net unrealized gain on all
open futures contracts which funds totaled at June 30, 1996, and December 31,
1995 and 1994 respectively, $29,044,906, $31,506,001 and $31,866,995 for
Cornerstone II, $39,832,026, $47,872,659 and $48,673,471 for Cornerstone III,
and $98,295,782, $105,462,448 and $111,508,180 for Cornerstone IV. 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

F-10

<PAGE>

DEAN WITTER CORNERSTONE FUNDS
NOTES TO FINANCIAL STATEMENTS--(Continued)

gain on open forward contracts be segregated. With respect to those
off-exchange-traded forward currency contracts, the Partnerships are at risk to
the ability of DWR, the counterparty on all of such contracts, to perform.

For the six months ended June 30, 1996 and for the year ended December 31,
1995 the average fair value of financial instruments held for trading purposes
was as follows:

<TABLE>
<CAPTION>
Cornerstone II
----------------------------------------------------------------
For the six months ended For the year ended
June 1996 December 1995
----------------------------- ----------------------------
Assets Liabilities Assets Liabilities
---------- ----------- ---------- -----------
$ $ $ $
<S> <C> <C> <C> <C>
Exchange-Traded Contracts:
Financial Futures ........................................ 38,871,000 61,266,000 75,146,000 7,443,000
Commodity Futures ........................................ 38,434,000 15,098,000 36,847,000 12,456,000
Foreign Futures .......................................... 34,440,000 18,659,000 62,270,000 57,113,000
Off-Exchange-Traded Forward Currency Contracts ............. 33,365,000 43,795,000 16,455,000 23,929,000

<CAPTION>
Cornerstone III
----------------------------------------------------------------
For the six months ended For the year ended
June 1996 December 1995
----------------------------- ----------------------------
Assets Liabilities Assets Liabilities
---------- ----------- ---------- -----------
$ $ $ $
<S> <C> <C> <C> <C>
Exchange-Traded Contracts:
Financial Futures ........................................ 102,597,000 89,415,000 125,222,000 74,782,000
Commodity Futures ........................................ 72,342,000 7,591,000 67,127,000 16,871,000
Foreign Futures .......................................... 90,332,000 54,883,000 122,725,000 68,993,000
Off-Exchange-Traded Forward Currency Contracts ............. -- -- 8,899,000 25,325,000

<CAPTION>
Cornerstone IV
----------------------------------------------------------------
For the six months ended For the year ended
June 1996 December 1995
----------------------------- ----------------------------
Assets Liabilities Assets Liabilities
---------- ----------- ---------- -----------
$ $ $ $
<S> <C> <C> <C> <C>
Exchange-Traded Financial Futures Contracts ................ 29,805,000 123,214,000 10,215,000 22,213,000
Off-Exchange-Traded Forward Currency Contracts ............. 289,606,000 280,953,000 273,150,000 311,898,000
</TABLE>

5. SUBSEQUENT EVENT

Effective September 1, 1996, brokerage commissions together with
transaction fees and costs for each Partnership will be capped at 13/20 of 1%
per month of the Partnership's month-end Net Assets (as defined in the Limited
Partnership's Agreement) allocated to each Trading Manager.

6. UNAUDITED INTERIM INFORMATION

The unaudited financial statements included herein and the related
financial information in the footnotes include, in the opinion of management,
all adjustments (including normal and recurring adjustments) necessary for a
fair presentation of the financial position and results of operations at and for
the six months ended June 30, 1996.

F-11

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Demeter Management Corporation:

We have audited the accompanying statements of financial condition of Demeter
Management Corporation (a wholly-owned subsidiary of Dean Witter, Discover &
Co.) (the "Company") as of December 31, 1995 and 1994. These statements of
financial condition are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, such statements of financial condition present fairly, in all
material respects, the financial position of Demeter Management Corporation as
of December 31, 1995 and 1994 in conformity with generally accepted accounting
principles.

Deloitte & Touche LLP
/s/ Deloitte & Touche LLP
March 1, 1996
(Except for Note 5, for which the date is March 31, 1996).
New York, New York

F-12

<PAGE>

DEMETER MANAGEMENT CORPORATION
(Wholly-owned subsidiary of Dean Witter, Discover & Co.)
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
June 30, December 31,
------------ ---------------------------------
1996 1995 1994
(unaudited)
$ $ $
<S> <C> <C> <C>
ASSETS
Investments in affiliated partnerships (Note 2) ........................ 16,549,236 17,788,814 12,833,311
Income taxes receivable ................................................ 153,137 -- --
Receivable from affiliated partnership ................................. 1,095 1,154 1,268
------------ ------------ ------------
TOTAL ASSETS ..................................................... 16,703,468 17,789,968 12,834,579
============ ============ ============

LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES:
Payable to Parent (Note 3) .......................................... 15,043,753 15,314,134 11,630,183
Accrued expenses .................................................... 25,554 32,579 20,079
------------ ------------ ------------
TOTAL LIABILITIES ................................................. 15,069,307 15,346,713 11,650,262
------------ ------------ ------------
STOCKHOLDER'S EQUITY:
Common stock, no par value;
Authorized 1,000 shares;
Issued and outstanding 100 shares
at stated value of $500 per share ................................. 50,000 50,000 50,000
Additional paid-in capital .......................................... 111,170,000 111,170,000 98,170,000
Retained earnings ................................................... 1,484,161 2,293,255 1,034,317
------------ ------------ ------------
112,704,161 113,513,255 99,254,317
Less: Notes receivable from Parent (Note 4) ......................... (111,070,000) (111,070,000) (98,070,000)
------------ ------------ ------------
TOTAL STOCKHOLDER'S EQUITY ........................................ 1,634,161 2,443,255 1,184,317
------------ ------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY ............................................. 16,703,468 17,789,968 12,834,579
============ ============ ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-13

<PAGE>

DEMETER MANAGEMENT CORPORATION
(Wholly-owned subsidiary of Dean Witter Discover & Co.)
NOTES TO STATEMENTS OF FINANCIAL CONDITION

1. BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES

Demeter Management Corporation ("Demeter") is a wholly-owned subsidiary of
Dean Witter, Discover & Co. (the "Parent").

Demeter manages the following commodity pools as their sole general
partner: Dean Witter Cornerstone Fund II, Dean Witter Cornerstone Fund III, Dean
Witter Cornerstone Fund IV, Columbia Futures Fund, Dean Witter Diversified
Futures Fund Limited Partnership ("DWDFF"), Dean Witter Diversified Futures Fund
II L.P., Dean Witter Diversified Futures Fund III L.P., Dean Witter Multi-Market
Portfolio, L.P. (formerly, Dean Witter Principal Guaranteed Fund L.P.,
("DWPGF")), Dean Witter Principal Guaranteed Fund II L.P., ("DWPGFII"), Dean
Witter Principal Plus Fund L.P., Dean Witter Principal Plus Fund Management
L.P., Dean Witter Portfolio Strategy Fund L.P., (formerly Dean Witter Principal
Secured Futures Fund L.P.) Dean Witter Select Futures Fund L.P., ("DWSFF"), Dean
Witter Global Perspective Portfolio L.P., Dean Witter World Currency Fund L.P.,
Dean Witter Institutional Balanced Portfolio Account I L.P., Dean Witter
Institutional Account II L.P., DWFCM International Access Fund L.P., Dean Witter
Anchor Institutional Balanced Portfolio Account I L.P., Dean Witter Spectrum
Balanced L.P., Dean Witter Spectrum Strategic L.P., Dean Witter Spectrum
Technical L.P., DWR Chesapeake L.P. and DWR Institutional Balanced Portfolio
Account III L.P.

Each of the commodity pools is a limited partnership organized to engage
in the speculative trading of commodity futures contracts, forward contracts on
foreign currencies and other commodity interests.

Demeter reopened DWDFF for additional investment and on June 29, 1995
DWDFF registered with the Securities and Exchange Commission 75,000 units which
were to investors for a limited time in a public offering.

Income Taxes--The results of operations of Demeter are included in the
consolidated federal income tax return of the Parent Income Taxes. Income tax
expense is calculated on a separate company basis.

2. INVESTMENTS IN AFFILIATED PARTNERSHIPS

The limited partnership agreement of each commodity pool requires Demeter
to maintain a general partnership interest in each partnership, generally in an
amount equal to, but not less than, 1 percent of the aggregate capital
contributed to the partnership by all partners.

The total assets, liabilities and partners' capital of all the funds
managed by Demeter at June 30, 1996, December 31, 1995 and December 31, 1994
were as follows:

<TABLE>
<CAPTION>
June 30, December 31,
------------- ----------------------------------------
1996 1995 1994
------------- ------------- -----------
(unaudited)
$ $ $
<S> <C> <C> <C>
Total assets ...................................... 1,007,299,365 1,091,082,360 907,037,211
Total liabilities ................................. 25,029,889 20,934,451 22,472,852
Total partners' capital ........................... 982,269,476 1,070,147,909 884,564,359
</TABLE>

Demeter's investments in the above limited partnerships are carried at
market value with changes in such market value reflected currently in
operations.

3. PAYABLE TO PARENT

The payable to Parent is primarily for amounts due for the purchase of
partnership investments and income tax payments made by the Parent on behalf of
Demeter.

F-14

<PAGE>

4. NET WORTH REQUIREMENT

At June 30, 1996, December 31, 1995 and 1994, Demeter held non-interest
bearing notes from the Parent that were payable on demand. These notes were
received in connection with additional capital contributions aggregating
$111,070,000, $111,070,000 and $98,070,000, respectively.

The limited partnership agreement of each commodity pool requires Demeter
to maintain its net worth at an amount not less than 10% of the capital
contributions by all partners in each pool in which Demeter is the general
partner (15% if the capital contributions to any partnership are less than
$2,500,000, or $250,000, whichever is less).

In calculating this requirement, Demeter's interests in each limited
partnership and any amounts receivable from or payable to such partnerships are
excluded from net worth. Notes receivable from the Parent are included in net
worth for purposes of this calculation.

5. SUBSEQUENT EVENTS

Management has determined to reopen DWSFF for additional investment and
will register with the Securities and Exchange Commission 60,000 Units to be
offered to investors for a limited time in a public offering.

Management terminated DWPGFII as of March 31, 1996. DWPGFII was liquidated
and holders of units as of March 31, 1996 received a final distribution equal to
the net asset value per unit on that date multiplied by their respective number
of units.

In November of 1995, Demeter entered into a limited partnership agreement
as General Partner in DWR/JWH Futures Fund L.P. ("JWH"), a commodity pool which
offered units to investors in an initial private offering period ending January
31, 1996 and began trading on February 1, 1996. Demeter's initial investment in
JWH was $75,000.

6. UNAUDITED INTERIM INFORMATION

The unaudited financial statement included herein and the related
financial information in the footnotes include, in the opinion of management,
all adjustments (including normal and recurring adjustments) necessary for a
fair presentation of the financial position at June 30, 1996.

F-15

<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES SCHEDULES.

None.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The following documents are made a part of this Registration Statement.

(A) EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
<C> <S>
#1.01 --Form of Selling Agreement between each of Dean Witter
Cornerstone Funds I, II and III and Dean Witter Reynolds
Inc.
#1.02 --Form of Additional Sellers Agreement between Dean Witter
Reynolds Inc. and additional selling agents (included as
an annex to Exhibit 1.01, form of Selling Agreement).
#1.03 --Amendment No. 1 to Selling Agreement between each of Dean
Witter Cornerstone Funds I, II and III and Dean Witter
Reynolds Inc.
#1.04 --Form of Amendment No. 2 to Selling Agreement between each
Registrant and Dean Witter Reynolds Inc.
#1.05 --Form of Amendment No. 3 to Selling Agreement between each
Registrant and Dean Witter Reynolds Inc.
#1.06 --Form of Amendment No. 4 to Selling Agreement between each
Registrant and Dean Witter Reynolds Inc.
#1.07 --Form of Amendment No. 5 to the Selling Agreement between
each Registrant and Dean Witter Reynolds Inc.
#3.01 --Limited Partnership Agreement of Dean Witter Cornerstone
Fund II is incorporated by reference to Exhibit 3.01 of
the Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1984 (File No. 0-13298).
#3.01(a) --Limited Partnership Agreement of Dean Witter Cornerstone
Fund III is incorporated by reference to Exhibit 3.01 of
the Partnership's Annual Report on Form 10-K for the
fiscal year ended September 30, 1984 (File No. 0-13299).
#3.01(b) --Limited Partnership Agreement of Dean Witter Cornerstone
Fund IV is incorporated by reference to Exhibit 3.01 of
the Partnership's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987 (File No. 0-15442).
#3.02 --Form of Amendment No. 1 to Form of Limited Partnership
Agreement of each Registrant with Forms of Request for
Redemption and Request for Exchange annexed thereto is
incorporated by reference to Exhibit 3.02 of the
Registrants' Registration Statement on Form S-1 filed with
the Securities and Exchange Commission on December 24,
1986.
#3.03 --Certificates of Limited Partnership, as amended, of Dean
Witter Cornerstone Fund II and III are incorporated by
reference to Exhibit 10.05 of the Registrants'
Registration Statement on Form S-1 filed with the
Securities and Exchange Commission on December 23, 1983.
</TABLE>

- ---------------
# Previously filed
* Filed herewith

II-1
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
<C> <S>
#3.04 --Certificate of Limited Partnership of Dean Witter
Cornerstone Fund IV is incorporated by reference to
Exhibit 10.05(a) of the Registrant's Registration
Statement on Form S-1 filed with the Securities and
Exchange Commission on December 24, 1986.
#5.01 --Opinion of counsel to each of Dean Witter Cornerstone
Funds I, II and III relating to the legality of the Units
(including consent).
#5.02 --Opinion of counsel to each of Dean Witter Cornerstone Fund
IV relating to the legality of the Units (including
consent).
#8.01 --Letter of counsel to each of Dean Witter Cornerstone Funds
I, II and III relating to federal income tax matters
(including consent).
#8.02 --Letter of counsel to Dean Witter Fund Cornerstone IV
relating to federal income tax matters (including
consent).
#10.04 --Form of Escrow Agreement among Demeter Management
Corporation, Dean Witter Reynolds Inc. and Chemical Bank.
#10.04(a) --Form of Amendment No. 1 to Escrow Agreement among Demeter
Management Corporation, Dean Witter Reynolds Inc. and
Chemical Bank.
#10.06(a) --Form of Amendment No. 1 to Dean Witter Cornerstone Funds
Exchange Agreement among all Registrants and Demeter
Management Corporation.
#10.06(b) --Form of Amendment No. 2 to Dean Witter Cornerstone Funds
Exchange Agreement among all Registrants and Demeter
Management Corporation.
#10.07 --Amended and Restated Customer Agreement between Dean
Witter Cornerstone Fund II and Dean Witter Reynolds Inc.
is incorporated by reference to Exhibit 10.04 of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 (File No. 0-13298).
#10.08 --Amended and Restated Customer Agreement between Dean
Witter Cornerstone Fund III and Dean Witter Reynolds Inc.
is incorporated by reference to Exhibit 10.05 of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 (File No. 0-13299).
#10.09 --Amended and Restated Customer Agreement between Dean
Witter Cornerstone Fund IV and Dean Witter Reynolds Inc.
is incorporated by reference to Exhibit 10.04 of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 (File No. 0-15442).
#10.10 --Customer Agreement among Dean Witter Cornerstone Fund II
and Carr Futures, Inc. and Dean Witter Reynolds Inc. is
incorporated by reference to Exhibit 10.05 of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 (File No. 0-13298).
#10.11 --Customer Agreement among Dean Witter Cornerstone Fund III
and Carr Futures, Inc. and Dean Witter Reynolds Inc. is
incorporated by reference to Exhibit 10.06 of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 (File No. 0-13299).
#10.12 --Customer Agreement among Dean Witter Cornerstone Fund IV
and Carr Futures, Inc. and Dean Witter Reynolds Inc. is
incorporated by reference to Exhibit 10.05 of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 (File No. 0-15442).
#10.13 --International Foreign Exchange Master Agreement between
Dean Witter Cornerstone Fund II and Carr Futures, Inc. is
incorporated by reference to Exhibit 10.06 of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 (File No. 0-13298).
</TABLE>

- ---------------
# Previously filed
* Filed herewith

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
<C> <S>
#10.14 --International Foreign Exchange Master Agreement between
Dean Witter Cornerstone Fund III and Carr Futures, Inc. is
incorporated by reference to Exhibit 10.07 of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 (File No. 0-13299).
#10.15 --International Foreign Exchange Master Agreement between
Dean Witter Cornerstone Fund IV and Carr Futures, Inc. is
incorporated by reference to Exhibit 10.06 of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 (File No. 0-15442).
#10.16 --Management Agreement among Dean Witter Cornerstone Fund
II, Demeter Management Corporation and John W. Henry &
Co., Inc. is incorporated by reference to Exhibit 10.01 of
the Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1984 (File No. 0-13298).
#10.17 --Management Agreement among Dean Witter Cornerstone Fund
II, Demeter Management Corporation and Northfield Trading
L.P. is incorporated by reference to Exhibit 10.03 of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 (File No. 0-13298).
#10.18 --Management Agreement among Dean Witter Cornerstone Fund
III, Demeter Management Corporation and Sunrise
Commodities Inc. is incorporated by reference to Exhibit
10.01 of the Registrant's Annual Report on Form 10-K for
the fiscal year ended September 30, 1984 (File No.
0-13299).
#10.19 --Management Agreement among Dean Witter Cornerstone Fund
III, Demeter Management Corporation and Welton Investment
Systems Corporation is incorporated by reference to
Exhibit 10.02 of the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1997 (File No.
0-13299).
#10.20 --Management Agreement among Dean Witter Cornerstone Fund
III, Demeter Management Corporation and Abraham Trading
Co. is incorporated by reference to Exhibit 10.03 of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 (File No. 0-13299).
#10.21 --Management Agreement among Dean Witter Cornerstone Fund
IV, Demeter Management Corporation and John W. Henry &
Co., Inc. is incorporated by reference to Exhibit 10.01
of the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987 (File No. 0-15442).
#10.22 --Management Agreement among Dean Witter Cornerstone Fund
IV, Demeter Management Corporation and Sunrise Commodities
Inc. is incorporated by reference to Exhibit 10.02 of
the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987 (File No. 0-15442).
#10.23 --Dean Witter Cornerstone Funds Exchange Agreement between
Dean Witter Cornerstone Fund II and Demeter Management
Corporation is incorporated by reference to Exhibit 10.03
of the Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1984 (File No. 0-13298).
#10.24 --Dean Witter Cornerstone Funds Exchange Agreement between
Dean Witter Cornerstone Fund III and Demeter Management
Corporation is incorporated by reference to Exhibit 10.03
of the Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1984 (File No. 0-13299).
</TABLE>

- ---------------
# Previously filed
* Filed herewith

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
<C> <S>
#10.25 --Dean Witter Cornerstone Funds Exchange Agreement between
Dean Witter Cornerstone Fund IV and Demeter Management
Corporation is incorporated by reference to Exhibit 10.04
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987 (File No. 0-15442).
*23.01 --Consent of Independent Auditors.
</TABLE>

- ---------------
# Previously filed
* Filed herewith

(B) FINANCIAL STATEMENTS.

Included in the Prospectus:
Affirmation of General Partner
Dean Witter Cornerstone Fund II
Dean Witter Cornerstone Fund III
Dean Witter Cornerstone Fund IV
Independent Auditors' Report
Statements of Financial Condition
Statements of Operations
Statements of Cash Flows
Statements of Changes in Partners' Capital
Notes to Financial Statements
Demeter Management Corporation
Independent Auditors' Report
Statements of Financial Condition
Notes to Statements of Financial Condition

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1993, the registrant
has duly caused this Post-Effective Amendment No. 27 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and State of New York on the 28th day of
April, 1999.

DEAN WITTER CORNERSTONE FUND II
DEAN WITTER CORNERSTONE FUND III
DEAN WITTER CORNERSTONE FUND IV

By: DEMETER MANAGEMENT CORPORATION,
General Partner

By: /s/ ROBERT E. MURRAY
--------------------------------
Robert E. Murray, President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 27 to the Registration Statement has been signed by
the following persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
DEMETER MANAGEMENT CORPORATION General Partner

By: /s/ MARK J. HAWLEY Chairman of the Board and Director of the April 28, 1999
--------------------------------- General Partner
Mark J. Hawley

/s/ROBERT E. MURRAY President and Director of the General April 28, 1999
--------------------------------- Partner
Robert E. Murray

/s/MITCHELL M. MERIN Director of the General Partner April 28, 1999
---------------------------------
Mitchell M. Merin

/s/JOSEPH G. SINISCALCHI Director of the General Partner April 28, 1999
---------------------------------
Joseph G. Siniscalchi

/s/EDWARD C. OELSNER, III Director of the General Partner April 28, 1999
---------------------------------
Edward C. Oelsner, III

Director of the General Partner
---------------------------------
Richard A. Beech

Director of the General Partner
---------------------------------
Ray Harris

/s/LEWIS A. RAIBLEY, III Vice President, Chief Financial and April 28, 1999
--------------------------------- Principal Accounting Officer, and
Lewis A. Raibley, III Director of the General Partner
</TABLE>

II-5

EXHIBIT 23.01

INDEPENDENT AUDITORS' CONSENT

We consent to the use in Post-Effective Amendment No. 27 to Registration
Statement No. 2-88587 of Dean Witter Cornerstone Fund II, Dean Witter
Cornerstone Fund III and Dean Witter Cornerstone Fund IV (collectively, the
"Partnerships") on Form S-1 of our report dated February 15, 1999 relating to
the statements of financial condition of the Partnerships as of December 31,
1998 and 1997 and the related statements of operations, changes in partners'
capital and cash flows for each of the three years in the period ended December
31, 1998. We also consent to the use of our report dated January 11, 1999
relating to the statements of financial condition of Demeter Management
Corporation as of November 30, 1998 and 1997 appearing in the Prospectus, which
is part of such Registration Statement, and to the reference to us under the
heading "Experts" in such Prospectus.

/s/ Deloitte & Touche LLP

New York, New York
April 28, 1999