UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended June 30, 1997 or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ________________to_____________
Commission File Number 0-13299
DEAN WITTER CORNERSTONE FUND III
(Exact name of registrant as specified in its charter)
New York 13-3190919
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
c/o Demeter Management Corporation
Two World Trade Center, 62 Fl., New York, NY 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 392-5454
(Former name, former address, and former fiscal year, if changes
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
<PAGE>
<TABLE>
DEAN WITTER CORNERSTONE FUND III
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 1997
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Statements of Financial Condition
June 30, 1997 (Unaudited) and December 31, 1996............2
Statements of Operations for the Quarters Ended
June 30, 1997 and 1996 (Unaudited).........................3
Statements of Operations for the Six Months Ended
June 30, 1997 and 1996 (Unaudited).........................4
Statements of Changes in Partners' Capital for the
Six Months Ended June 30, 1997 and 1996 (Unaudited)........5
Statements of Cash Flows for the Six Months Ended
June 30, 1997 and 1996 (Unaudited).........................6
Notes to Financial Statements (Unaudited)...............7-12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............13-19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................20-21
Item 5. Other Information...................................21
Item 6. Exhibits and Reports on Form 8-K................... 22
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER CORNERSTONE FUND III
STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
June 30, December 31,
1997 1996
$ $
(Unaudited)
ASSETS
<S> <C> <C>
Equity in commodity futures trading accounts:
Cash 42,425,580 40,587,011
Net unrealized gain on open contracts1,309,371 2,580,803
Net option premiums (40,175) (291,412)
Total Trading Equity 43,694,776 42,876,402
Due from DWR 182,678 122,701
Interest receivable (DWR) 144,095 138,367
Total Assets 44,021,549 43,137,470
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable 367,445 680,730
Accrued management fees 145,383 142,387
Common administrative expenses payable 126,871 137,548
Accrued brokerage commissions (DWR) 126,351 129,098
Accrued transaction fees and costs 8,098 12,349
Total Liabilities 774,148 1,102,112
Partners' Capital
Limited Partners (14,106.357 and
15,097.603 Units, respectively)42,106,841 40,997,752
General Partner (382.103 Units) 1,140,560 1,037,606
Total Partners' Capital 43,247,401 42,035,358
Total Liabilities and Partners' Capital44,021,549 43,137,470
NET ASSET VALUE PER UNIT 2,984.95 2,715.51
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER CORNERSTONE FUND III
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Quarters Ended June 30,
1997 1996
$ $
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized 2,474,925 4,107,491
Net change in unrealized (1,265,930) (1,099,665)
Total Trading Results 1,208,995 3,007,826
Interest Income (DWR) 446,377 418,859
Total Revenues 1,655,372 3,426,685
EXPENSES
Brokerage commissions (DWR) 559,203 767,070
Management fees 472,014 405,751
Transaction fees and costs 54,481 91,860
Common administrative expenses 17,030 4,824
Total Expenses 1,102,728 1,269,505
NET INCOME 552,644 2,157,180
NET INCOME ALLOCATION
Limited Partners 538,088 2,111,549
General Partner 14,556 45,631
NET INCOME PER UNIT
Limited Partners 38.09 119.43
General Partner 38.09 119.43
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER CORNERSTONE FUND III
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Six Months Ended June 30,
1997 1996
$ $
REVENUES
<S> <C> <C>
Trading profit (loss):
Realized 6,703,472 2,878,851
Net change in unrealized (1,271,432) (5,375,435)
Total Trading Results 5,432,040 (2,496,584)
Interest Income (DWR) 899,908 852,476
Total Revenues 6,331,948 (1,644,108)
EXPENSES
Brokerage commissions (DWR) 1,184,270 1,642,356
Management fees 877,608 830,166
Transaction fees and costs 114,093 207,271
Administrative expenses 36,352 9,357
Total Expenses 2,212,323 2,689,150
NET INCOME (LOSS) 4,119,625 (4,333,258)
NET INCOME (LOSS) ALLOCATION
Limited Partners 4,016,671 (4,244,025)
General Partner 102,954 (89,233)
NET INCOME (LOSS) PER UNIT
Limited Partners 269.44 (233.53)
General Partner 269.44 (233.53)
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER CORNERSTONE FUND III
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 1997 and 1996
(Unaudited)
<CAPTION>
Units of
Partnership Limited General
Interest Partners Partner Total
<S> <C> <C>
<C> <C>
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
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 - 4,016,671
102,954 4,119,625
Redemptions (993.087) (2,912,582)
- - (2,912,582)
Partners' Capital,
June 30, 1997 14,488.460 $42,106,841
$1,140,560 $43,247,401
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER CORNERSTONE FUND III
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Six Months Ended June 30,
1997 1996
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) 4,119,625 (4,333,258)
Noncash item included in net income (loss):
Net change in unrealized 1,271,432 5,375,435
(Increase) decrease in operating assets:
Due from DWR (59,977) (36,211)
Interest receivable (DWR) (5,728) 23,406
Net option premiums (251,237) -
Increase (decrease) in operating liabilities:
Accrued management fees 2,996 (26,047)
Common administrative expenses payable (10,677) (56,854)
Accrued brokerage commissions (DWR) (2,747) (125,585)
Accrued transaction fees and costs (4,251) (5,266)
Net cash provided by operating activities 5,059,436 815,620
CASH FLOWS FROM FINANCING ACTIVITIES
Offering of units 5,000 -
Increase (decrease) in redemptions payable (313,285) (43,196)
Redemptions ofunits (2,912,582) (3,437,622)
Net cash used for financing activities (3,220,867) (3,480,818)
Net increase (decrease) in cash 1,838,569 (2,665,198)
Balance at beginning of period 40,587,011 42,294,365
Balance at end of period 42,425,580 39,629,167
<FN>
The accompanying footnotes are an integral part
of these financial statements.
</TABLE>
<PAGE>
DEAN WITTER CORNERSTONE FUND III
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The financial statements include, in the opinion of management,
all adjustments necessary for a fair presentation of the results
of operations and financial condition. The financial statements
and condensed notes herein should be read in conjunction with the
Partnership's December 31, 1996 Annual Report on Form 10-K.
1. Organization
Dean Witter Cornerstone Fund III (the "Partnership") is a
limited partnership organized to engage in the speculative
trading of commodity futures contracts and forward contracts on
foreign currencies (collectively, "futures interests"). The
Partnership is one of the Dean Witter Cornerstone Funds,
comprised of Dean Witter Cornerstone Fund II, Dean Witter
Cornerstone Fund III, and Dean Witter Cornerstone Fund IV. The
general partner for the partnership is Demeter Management
Corporation ("Demeter"). The commodity broker is Dean Witter
Reynolds Inc. ("DWR"). Both Demeter and DWR are wholly owned
subsidiaries of Morgan Stanley, Dean Witter, Discover & Co.
("MSDWD"). The trading advisors who make all trading decisions
for the Partnership are Abraham Trading Co., Welton Investment
Systems Corporation and Sunrise Capital Management.
2. Related Party Transactions
The Partnership's cash is on deposit with DWR in commodity
trading
<PAGE>
DEAN WITTER CORNERSTONE FUND III
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
accounts to meet margin requirements as needed. DWR pays
interest on these funds based on current 13-week U.S. Treasury
Bill rates.
Brokerage expenses incurred by the Partnership are paid to DWR.
3. Financial Instruments
The Partnership trades futures and forward contracts in interest
rates, stock indices, commodities, currencies, petroleum and
precious metals. Futures and forwards represent contracts for
delayed delivery of an instrument at a specified date and price.
Risk arises from changes in the value of these contracts and the
potential inability of counterparties to perform under the terms
of the contracts. There are numerous factors which may
significantly influence the market value of these contracts,
including interest rate volatility. At June 30, 1997 and
December 31, 1996, open contracts were:
Contract or Notional Amount
June 30, 1997 December 31, 1996
$ $
Exchange-Traded Contracts
Financial Futures:
Commitments to Purchase 76,971,000 118,163,000
Commitments to Sell 30,573,000 59,405,000
Options Written 79,541,000 18,613,000
Commodity Futures:
Commitments to Purchase 8,358,000 17,683,000
Commitments to Sell 46,478,000 22,811,000
Options Written 2,209,000 18,407,000
Foreign Futures:
Commitments to Purchase 57,069,000 62,344,000
Commitments to Sell 13,307,000 22,390,000
Options Written 6,592,000 -
Off-Exchange-Traded
Forward Currency Contracts
Commitments to Purchase 282,000 420,000
Commitments to Sell 1,226,000 1,379,000
<PAGE>
DEAN WITTER CORNERSTONE FUND III
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
A portion of the amounts indicated as off-balance-sheet risk in
forward currency contracts is due to offsetting forward
commitments to purchase and sell the same currency on the same
date in the futures, these commitments are economically
offsetting, but are not offset in the forward market until the
settlement date.
The net 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 $1,309,371 and
$2,580,803 at June 30, 1997 and December 31, 1996 respectively.
Of the $1,309,371 net unrealized gain on open contracts at June
30, 1997, $1,310,791 related to exchange-traded futures contracts
and $(1,420)related to off-exchange-traded forward currency
contracts. Of the $2,580,803 net unrealized gain on open
contracts at December 31, 1996, $2,589,289 related to exchange-
traded futures contracts and $(8,486) related to off-exchange-
traded forward currency contracts.
Exchange-traded futures contracts held by the Partnership at June
30, 1997 and December 31, 1996 mature through December 1997 and
June 1997 respectively. Off-exchange-traded forward currency
contracts held by the Partnership at June 30, 1997 and December
31, 1996 mature through July 1997 and January 1997. The contract
amounts in the above table represent the Partnership's extent of
involvement in the particular class of financial instrument, but
<PAGE>
DEAN WITTER CORNERSTONE FUND III
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
not the credit risk associated with counterparty nonperformance.
The credit risk associated with these instruments is limited to
the amounts reflected in the Partnership's Statements of
Financial Condition.
The Partnership also has credit risk because DWR acts as the
futures commission merchant or the sole counterparty, with
respect to most of the Partnership's assets. Exchange-traded
futures contracts are marked to market on a daily basis, with
variations in value settled on a daily basis. DWR, as the
futures commission merchant for all of the Partnership's exchange-
traded-futures contracts, is required pursuant to regulations of
the Commodity Futures Trading Commission ("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 funds totaled
$43,736,371 and $43,176,300 at June 30, 1997 and December 31,
1996, respectively. With respect to the Partnership's off-
exchange-traded forward currency contracts, there are no daily
settlements of variations in value nor is there any requirement
that an amount equal to the net unrealized gain on open forward
contracts be segregated. With respect to those off-exchange
traded forward currency contracts, the Partnership is at risk to
the ability of DWR, the counterparty on all of such contracts, to
perform.
<PAGE>
DEAN WITTER CORNERSTONE FUND III
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the six months ended June 30 1997 and the year ended December
31, 1996, the average fair value of financial instruments held
for trading purposes was as follows:
June 30, 1997
Assets Liabilities
$ $
Exchange-Traded Contracts:
Financial Futures 50,549,000 64,496,000
Options on Financial Futures 661,000 68,073,000
Commodity Futures 34,588,000 19,519,000
Options on Commodity Futures 2,074,000 8,390,000
Foreign Futures 52,179,000 15,385,000
Options on Foreign Futures - 12,273,000
Off-Exchange-Traded Forward
Currency Contracts 304,000 512,000
December 31, 1996
Assets Liabilities
$ $
Exchange-Traded Contracts:
Financial Futures 105,128,000 74,480,000
Options on Financial Futures - 10,138,000
Commodity Futures 44,276,000 18,531,000
Options on Commodity Futures - 2,763,000
Foreign Futures 80,000,000 27,228,000
Options on Foreign Futures - 1,000
Off-Exchange-Traded Forward
Currency Contracts 233,000 354,000
4. Subsequent Event
On July 31, 1997, DWR closed the sale of its institutional
futures business and foreign currency trading operations to Carr
Futures
Inc. ("Carr"), a subsidiary of Credit Agricole Indosuez.
Following the sale, Carr became the counterparty on the
Partntership's foreign currency trades. However, during a
<PAGE>
DEAN WITTER CORNERSTONE FUND III
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
transition period of about three months, DWR will continue to
perform certain services relating to the Partnership's futures
trading including clearance. After such transition period, DWR
will continue to perform certain services relating to the
Partnership's futures trading including clearance. After such
transition period, DWR will continue to serve as a futures broker
for the Partnership Carr providing execution and clearing
services for the Partnership's account.
<PAGE>
Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Liquidity The Partnership's assets are deposited in futures
interest trading accounts with DWR and are used by the
Partnership as margin to engage in futures interest trading. DWR
holds such assets in either designated depositories or in
securities approved by the CFTC for investment of customer funds.
The Partnership's assets held by DWR may be used as margin solely
for the Partnership's trading. Since the Partnership's sole
purpose is to trade in futures interests, it is expected that the
Partnership will continue to own such liquid assets for margin
purposes.
The Partnership's investment in futures interests may, from time
to time, be illiquid. Most United States futures exchanges limit
fluctuations in certain futures interest prices during a single
day by regulations referred to as "daily price fluctuations
limits" or "daily limits". Pursuant to such regulations, during
a single trading day no trades may be executed at prices beyond
the daily limit. If the price of a particular futures interest
has increased or decreased by an amount equal to the "daily
limit," positions in such futures interest can neither be taken
nor liquidated unless traders are willing to effect trades at or
within the limit. Futures interest prices have occasionally
moved the daily limit for several consecutive days with little or
no trading. Such market conditions could prevent the Partnership
from promptly liquidating its futures interests and result in
restrictions on redemptions. However, since the commencement of
<PAGE>
trading by the Partnership, there has never been a time when
illiquidity has affected a material portion of the Partnership's
assets.
There is no limitation on daily price moves in trading forward
contracts on foreign currency. The markets for some world
currencies have low trading volume and are illiquid, which may
prevent the Partnership from trading in profitable markets or
prevent the Partnership from promptly liquidating unfavorable
positions in such markets and subjecting it to substantial
losses.
Either of these market conditions could result in restrictions
on redemptions.
Capital Resources The Partnership does not have, nor does it
expect to have, any capital assets. Redemptions and sales of
Units of Limited Partnership Interest in the future will affect
the amount of funds available for investments in futures
interests in subsequent periods. As redemptions are at the
discretion of the Limited Partners, it is not possible to
estimate the amount and therefore the impact of future
redemptions.
Results of Operations
For the Quarter and Six Months Ended June 30, 1997
For the quarter ended June 30, 1997, the Partnership's total
trading revenues including interest income were $1,655,372.
During the second quarter, the Partnership posted an increase in
<PAGE>
Net Asset Value per Unit. The most significant trading gains
were recorded in the soft commodities markets from long coffee
futures positions as prices trended higher during April and May.
Additional gains were recorded in the currency markets from
transactions involving the German mark relative to the Japanese
yen during June. A portion of these gains was offset by losses
recorded from choppy price movement in the agricultural markets,
particularly livestock and corn futures during the quarter.
Losses were also experienced from trading crude oil futures as
oil prices moved in a short-term volatile pattern. In financial
futures trading, losses were experienced from trendless prices
movement in global interest rate futures throughout a majority of
the quarter. Smaller losses were recorded in the metals markets
from long positions in most base metals futures, as prices moved
lower during April and June. During the second quarter, the
Partnership posted an increase in Net Asset Value per Unit.
Total expenses for the period were $1,102,728 resulting in net
income of $552,644. The value of an individual Unit in the
Partnership increased from $2,946.86 at March 31, 1997 to
$2,984.95 at June 30, 1997.
For the six months ended June 30, 1997, the Partnership's total
trading revenues including interest income were $6,331,948.
During the first six months, the Partnership posted an increase
in Net Asset Value per Unit. The most significant trading gains
were recorded in the soft commodities markets from long coffee
futures positions as coffee prices trended higher during January
and
<PAGE>
February and again during April and May. Gains were also
recorded in the currency markets during January and February as a
result of a strong upward trend in the value of the U.S. dollar
versus the Japanese yen and most major European currencies. In
the agricultural markets, profits were recorded from trading
soybean and corn futures during March and June. Smaller gains
were experienced in the metals markets during January and
February from long zinc futures positions as most base metals
prices moved higher. A portion of the Partnership's overall
gains was offset by losses recorded from trendless price movement
in Japanese and European interest rate futures during April and
May. Trading gains experienced from long global stock index
futures positions as global equity prices trended higher in May
and June helped to mitigate these losses. Smaller losses were
recorded in energies as gas and oil prices moved in a short-term
volatile pattern for a majority of the first half of the year.
Total expenses for the period were $2,212,323, resulting in net
income of $4,119,625. The value of an individual Unit in the
Partnership increased from $2,715.51 at December 31, 1996 to
$2,984.95 at June 30, 1997.
For the Quarter and Six Months Ended June 30, 1996
For the quarter ended June 30, 1996, the Partnership's total
trading interest income were $3,426,685. During the second
quarter, the Partnership posted an increase in Net Asset Value
per Unit. The most significant 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
<PAGE>
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. Total
expenses for the quarter were $1,269,505, resulting in net income
of $2,157,180. The value of an individual Unit in the
Partnership increased from $2,155.72 at March 31, 1996 to
$2,275.15 at June 30, 1996.
For the six months ended June 30, 1996, the Partnership's total
trading losses net of interest income were $1,644,108. During
the first half of the year, the Partnership posted a decrease in
Net Asset Value per Unit. The most significant losses were
recorded in financial futures during February as long positions
in global interest rate futures, which had been profitable for
the Partnership during January, experienced a dramatic downward
price move. Smaller losses were recorded in non-U.S. interest
rate futures during March, as well as a majority of the second
quarter,
<PAGE>
as short-term volatile price movement followed. Additionally,
losses were recorded in soft commodities and base metals futures
as prices moved in a choppy pattern during the first quarter.
These losses were partially offset by gains recorded in
agricultural futures as long corn future positions profited as
prices moved higher between February and May. Gains were also
recorded in the currency markets as short positions in the
Japanese yen profited during January as the value of the yen
moved lower versus the U.S. dollar. Smaller profits were
recorded from short Swiss franc positions as its value declined
versus other major currencies during April and May. Gains
recorded during the second quarter from long crude oil and
natural gas futures positions also helped to mitigate a portion
of the losses recorded during the first half of the year. Total
expenses for the period were $2,689,150, resulting in a net loss
of $4,333,258. The value of an individual Unit in the
Partnership decreased from $2,508.68 at December 31, 1995 to
$2,275.15 at June 30, 1996.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On September 6, 10, and 20, 1996, and on March 13, 1997, similar
purported class actions were filed in the Supreme 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., MSDWD (all such parties
referred to hereafter as the "Dean Witter Parties"), the
Partnership, 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. 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 Partnership, sold by DWR. Generally, these
complaints allege, among other things, that the defendants
committed fraud, deceit, misrepresentation, breach of fiduciary
duty, fraudulent and unfair business practices, unjust
enrichment, and conversion in connection with the sale and
operation of the various limited partnership commodity pools.
The complaints seek unspecified amounts of compensatory and
punitive damages and other relief. It
<PAGE>
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 Partnership 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 Partnership.
Item 5. OTHER INFORMATION
On July 21, 1997, MSDWD, the sole shareholder of Demeter,
appointed a new Board of Directors consisting of Richard M.
DeMartini, Mark J. Hawley, Lawrence Volpe, Joseph G. Siniscalchi,
Edward C. Oelsner III, and Robert E. Murray.
<PAGE>
Item 6. - EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits - None.
(B) Reports on Form 8-K - None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dean Witter Cornerstone Fund III
(Registrant)
By: Demeter Management Corporation
(General Partner)
August 11, 1997 By: /s/ Patti L. Behnke
Patti L. Behnke
Chief Financial Officer
The General Partner which signed the above is the only party
authorized to act for the Registrant. The Registrant has no
principal executive officer, principal financial officer,
controller, or principal accounting officer and has no Board of
Directors.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Dean
Witter Cornerstone Fund III and is qualified in its entirety by reference
to sucyh financial instruments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 42,425,580
<SECURITIES> 0
<RECEIVABLES> 326,773<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 44,021,549<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 44,021,549<F3>
<SALES> 0
<TOTAL-REVENUES> 6,331,950<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,212,325
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,119,625
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 4,119,625
<CHANGES> 0
<NET-INCOME> 4,119,625
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include interst receivable of $144,095 and due from DWR
of $182,678.
<F2>In addition to cash and receivables, total assets include net unrealized
gain on open contracts of $1,309,371 and net option premiums of $(40,175).
<F3>Liabilities include redemptions payable of $367,445, accrued management
fees of $145,383, accrued brokerage commissions of $126,351, common
administrative expenses payable of $126,871 and accrued transaction fees
and costs of $8,098.
<F4>Total revenue includes realized trading revenue of $6,703,472, net
change in unrealized of $(1,271,430) and interest income of $899,908.
</FN>
</TABLE>
