UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549

	FORM 10-Q



[X]	Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 2002 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.)


Demeter Management Corporation
c/o Managed Futures Department
825 Third Avenue, 8th Floor, New York, NY   	   	  10022
(Address of principal executive offices)	  	     (Zip Code)

Registrant's telephone number, including area code (201) 876-4647




(Former name, former address, and former fiscal year, if changed
since last report)


Indicate by check-mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes    X       	No___________






<page>
<table>
	DEAN WITTER CORNERSTONE FUND III

	INDEX TO QUARTERLY REPORT ON FORM 10-Q

	March 31, 2002



<caption>

PART I. FINANCIAL INFORMATION

				<c>
Item 1. Financial Statements

		Statements of Financial Condition as of March 31, 2002
 		(Unaudited) and December 31, 2001..........................2

		Statements of Operations for the Quarters Ended
		March 31, 2002 and 2001 (Unaudited)........................3

		Statements of Changes in Partners' Capital for the
	  Quarters Ended 	March 31, 2002 and 2001 (Unaudited) ........4

		Statements of Cash Flows for the Quarters Ended
		March 31, 2002 and 2001 (Unaudited) .......................5

		Notes to Financial Statements (Unaudited)...............6-10

Item 2.	Management's Discussion and Analysis of
			Financial Condition and Results of Operations...... 11-16

Item 3.	Quantitative and Qualitative Disclosures about
			Market Risk.........................................17-29

Part II. OTHER INFORMATION

Item 1.	Legal Proceedings..................................... 30

Item 6.	Exhibits and Reports on Form 8-K....................30-31





</table>








<page>
<table>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

	DEAN WITTER CORNERSTONE FUND III
	STATEMENTS OF FINANCIAL CONDITION
<caption>
	                        March 31,	     December 31,
                                     2002      	    2001
	                      $	   $
	                     (Unaudited)
ASSETS

	<c>	<c>
Equity in futures interests trading accounts:
	Cash	23,171,982	26,471,514

	Net unrealized gain on open contracts (MS & Co.)	934,864	740,177
	Net unrealized loss on open contracts (MSIL)	      (44,191)	 (667,609)

	Total net unrealized gain on open contracts	890,673	72,568

	Net option premiums	     (72,749)	    (23,122)

	     Total Trading Equity	23,989,906	26,520,960

Due from Morgan Stanley DW	130,492	     133,570
Interest receivable (Morgan Stanley DW)	       28,638	       30,494

	     Total Assets	24,149,036	26,685,024

LIABILITIES AND PARTNERS' CAPITAL

Liabilities

	Redemptions payable	234,536	171,251
	Accrued administrative expenses	156,818	142,296
	Accrued management fees	      69,978	       77,416

	     Total Liabilities	    461,332	     390,963

Partners' Capital

	Limited Partners (8,273.756 and
	     8,490.681 Units, respectively)	23,287,734	25,861,238
	General Partner (142.103 Units)	     399,970	     432,823

	     Total Partners' Capital	23,687,704	26,294,061

	     Total Liabilities and Partners' Capital	24,149,036	26,685,024


NET ASSET VALUE PER UNIT	    2,814.65	    3,045.84
<fn>
	The accompanying notes 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 March 31,

	      2002   	   2001
	    $	   $
REVENUES

			<c>	<c>
	Trading profit (loss):
		Realized	(2,328,132)	3,578,865
		Net change in unrealized	     818,105	  (683,421)

			Total Trading Results 	(1,510,027)	2,895,444

	Interest Income (Morgan Stanley DW)	       85,892	   283,462

			Total  	(1,424,135)	3,178,906

EXPENSES

	Brokerage commissions (Morgan Stanley DW)	282,464	351,965
	Management fees	215,266	255,070
	Transaction fees and costs	39,956	27,508
	Administrative expenses	     19,238	     18,127

			Total	   556,924	   652,670


NET INCOME (LOSS)	(1,981,059)	2,526,236


NET INCOME (LOSS) ALLOCATION

	Limited Partners	(1,948,206)	2,487,170
	General Partner	(32,853)	39,066


NET INCOME (LOSS) PER UNIT

	Limited Partners	(231.19)	274.91
	General Partner	(231.19)	274.91


<fn>


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

</table>
<page>
<table>
	DEAN WITTER CORNERSTONE FUND III
	STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
	For the Quarters Ended March 31, 2002 and 2001
	(Unaudited)




<caption>
	Units of
	Partnership	Limited	General
	   Interest   	Partners	Partner	Total
		$	$	$



	<c>	<c>	<c>	<c>
Partners' Capital,
	December 31, 2000	9,346.774	27,959,423	431,642	28,391,065

Net Income	-	2,487,170	39,066	2,526,236

Redemptions	  (236.774)	   (740,941)	     -       	   (740,941)

Partners' Capital,
	March 31, 2001	9,110.000	29,705,652	470,708	30,176,360





Partners' Capital,
	December 31, 2001	8,632.784	25,861,238	432,823	26,294,061

Net Loss	-	(1,948,206)	(32,853)	(1,981,059)

Redemptions	  (216.925)	   (625,298)	     -       	   (625,298)

Partners' Capital,
	March 31, 2002	8,415.859	23,287,734	399,970	23,687,704










<fn>



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

</table>
<page>
<table>
	DEAN WITTER CORNERSTONE FUND III
	STATEMENTS OF CASH FLOWS
(Unaudited)




<caption>

	    For the Quarters Ended March 31,

	      2002     	      2001
	    $	      $


CASH FLOWS FROM OPERATING ACTIVITIES

			<c>	<c>
Net income (loss)	(1,981,059)	2,526,236
Noncash item included in net income (loss):
		Net change in unrealized	(818,105)	683,421
Decrease in operating assets:
		Net option premiums	49,627	54,587
		Due from Morgan Stanley DW	3,078	23,596
		Interest receivable (Morgan Stanley DW)	1,856	16,996

Increase (decrease) in operating liabilities:
		Accrued administrative expenses	14,522	18,126
		Accrued management fees	       (7,438)	        5,086

Net cash provided by (used for) operating activities	 (2,737,519)	 3,328,048


CASH FLOWS FROM FINANCING ACTIVITIES

Increase (decrease) in redemptions payable	63,285	(46,501)
Redemptions of Units	    (625,298)	   (740,941)

Net cash used for financing activities	    (562,013)	   (787,442)

Net increase (decrease) in cash	(3,299,532)	2,540,606

Balance at beginning of period	26,471,514	24,902,313

Balance at end of period	23,171,982	27,442,919





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

</table>



<page>
DEAN WITTER CORNERSTONE FUND III
NOTES TO FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)


The unaudited financial statements contained herein include, in
the opinion of management, all adjustments necessary for a fair
presentation of the results of operations and financial condition
of Dean Witter Cornerstone Fund III (the "Partnership").  The
financial statements and condensed notes herein should be read in
conjunction with the Partnership's December 31, 2001 Annual Report
on Form 10-K.

1.  Organization
Dean Witter Cornerstone Fund III is a New York limited partnership
organized to engage primarily in the speculative trading of
futures contracts, options on futures contracts, and forward
contracts on foreign currencies and other commodity interests. The
Partnership is one of the Dean Witter Cornerstone Funds, comprised
of Dean Witter Cornerstone Fund II, the Partnership, and Dean
Witter Cornerstone Fund IV.

The general partner of the Partnership is Demeter Management
Corporation ("Demeter"). The non-clearing commodity broker is
Morgan Stanley DW Inc. ("Morgan Stanley DW").  The clearing
commodity brokers are Morgan Stanley & Co. Inc. ("MS & Co.") and

<page>
DEAN WITTER CORNERSTONE FUND III
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Morgan Stanley & Co. International Limited ("MSIL").  Demeter,
Morgan Stanley DW, MS & Co. and MSIL are wholly-owned subsidiaries
of Morgan Stanley Dean Witter & Co.  The trading managers to the
Partnership are Welton Investment Corporation and Sunrise Capital
Management Inc. (collectively, the "Trading Managers").

2.  Related Party Transactions
The Partnership's cash is on deposit with Morgan Stanley DW, MS &
Co. and MSIL in futures, forwards, and options trading accounts to
meet margin requirements as needed. Morgan Stanley DW pays
interest on these funds based on current 13-week U.S. Treasury
bill rates. The Partnership pays brokerage commissions to Morgan
Stanley DW.

3.  Financial Instruments
The Partnership trades futures contracts, options on futures
contracts, and forward contracts on foreign currencies and other
commodity interests.  Futures and forwards represent contracts for
delayed delivery of an instrument at a specified date and price.
Risk arises from changes in the value of these contracts and the
potential inability of counterparties to perform under the terms
of the contracts.  There are numerous factors which may
significantly influence the market value of these contracts,
including interest rate volatility.
<page>
DEAN WITTER CORNERSTONE FUND III
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The Partnership accounts for its derivative investments in
accordance with the provisions of Statement of Financial
Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133").  SFAS No.
133 defines a derivative as a financial instrument or other
contract that has all three of the following characteristics:

1)	One or more underlying notional amounts or payment
provisions;
2)	Requires no initial net investment or a smaller initial net
investment than would be required relative to changes in
market factors;
3)	Terms require or permit net settlement.

Generally derivatives include futures, forward, swaps or option
contracts and other financial instruments with similar
characteristics such as caps, floors and collars.

The net unrealized gains (losses) on open contracts, reported as a
component of "Equity in futures interests trading accounts" on the
statements of financial condition, and their longest contract
maturities were as follows:

<page>
DEAN WITTER CORNERSTONE FUND III
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

	Net Unrealized Gains (Losses)
	on Open Contracts	Longest Maturities
		Off-			  Off-
	Exchange-	Exchange-		Exchange-	Exchange-
Date	 Traded 	 Traded 	Total	 Traded 	 Traded
	$	$	$

Mar. 31, 2002	1,078,097	(187,424)	890,673	Mar. 2003	Jun. 2002
Dec. 31, 2001	(679,746)	752,314	72,568	Dec. 2002	Mar. 2002

The Partnership has credit risk associated with counterparty non-
performance.  The credit risk associated with the instruments in
which the Partnership is involved is limited to the amounts
reflected in the Partnership's statements of financial condition.

The Partnership also has credit risk because Morgan Stanley DW, MS
& Co. and MSIL act as the futures commission merchants or the
counterparties with respect to most of the Partnership's 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. Morgan Stanley DW, MS & Co., and MSIL,
each as a futures commission merchant for all of the Partnership's
exchange-traded futures and futures-styled options contracts, are
required, pursuant to regulations of the Commodity Futures Trading
Commission ("CFTC"), to segregate from their own assets, and for
the sole benefit of their commodity customers, all funds held by


<page>
DEAN WITTER CORNERSTONE FUND III
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

them with respect to exchange-traded futures and futures-styled
options contracts, including an amount equal to the net unrealized
gains (losses) on all open futures and futures-styled options
contracts, which funds, in the aggregate, totaled $24,250,079 and
$25,791,768 at March 31, 2002 and December 31, 2001, 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 gains (losses) on open forward contracts be
segregated.  With respect to those off-exchange-traded forward
currency contracts, the Partnership is at risk to the ability of
MS & Co., the sole counterparty on all of such contracts, to
perform.  The Partnership has a netting agreement with MS & Co.
This agreement, which seeks to reduce both the Partnership's and
MS & Co.'s exposure on off-exchange-traded forward currency
contracts, should materially decrease the Partnership's credit
risk in the event of MS & Co.'s bankruptcy or insolvency.







<page>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

Liquidity - The Partnership deposits its assets with Morgan
Stanley DW as non-clearing broker and MS & Co. and MSIL as
clearing brokers in separate futures, forwards, and options
trading accounts established for each Trading Manager, which
assets are used as margin to engage in trading. The assets are
held in either non-interest bearing bank accounts or in securities
and instruments permitted by the CFTC for investment of customer
segregated or secured funds.  The Partnership's assets held by the
commodity brokers may be used as margin solely for the
Partnership's trading. Since the Partnership's sole purpose is to
trade in futures, forwards, and options, it is expected that the
Partnership will continue to own such liquid assets for margin
purposes.

The Partnership's investment in futures, forwards, and options
may, from time to time, be illiquid.  Most U.S. futures exchanges
limit fluctuations in prices during a single day by regulations
referred to as "daily price fluctuations limits" or "daily
limits".  Trades may not be executed at prices beyond the daily
limit.  If the price for a particular futures or options contract
has increased or decreased by an amount equal to the daily limit,
positions in that futures or options contract can neither be taken


<page>
nor liquidated unless traders are willing to effect trades at or
within the limit. Futures prices have occasionally moved the daily
limit for several consecutive days with little or no trading.
These market conditions could prevent the Partnership from
promptly liquidating its futures or options contracts and result
in restrictions on redemptions.

There is no limitation on daily price moves in trading forward
contracts on foreign currencies.  The markets for some world
currencies have low trading volume and are illiquid, which may
prevent the Partnership from trading in potentially profitable
markets or prevent the Partnership from promptly liquidating
unfavorable positions in such markets, subjecting it to
substantial losses.  Either of these market conditions could
result in restrictions on redemptions.

The Partnership has never had illiquidity affect a material
portion of its assets.

Capital Resources.  The Partnership does not have, nor expect to
have, any capital assets.  Redemptions of additional units of
limited partnership interest ("Unit(s)") in the future will affect
the amount of funds available for investment in futures, forwards,
and options in subsequent periods.  It is not possible to estimate
the amount and therefore the impact of future redemptions of
Units.
<page>
Results of Operations
General.  The Partnership's results depend on the Trading Managers
and the ability of the Trading Managers' trading programs to take
advantage of price movements or other profit opportunities in the
futures, forwards, and options markets.  The following presents a
summary of the Partnership's operations for the three month
periods ended March 31, 2002 and 2001 and a general discussion of
its trading activities during each period.  It is important to
note, however, 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 the
Trading Managers or will be profitable in the future.
Consequently, the results of operations of the Partnership are
difficult to discuss other than in the context of the Trading
Managers' trading activities on behalf of the Partnership and how
the Partnership has performed in the past.

For the Quarter Ended March 31, 2002
For the quarter ended March 31, 2002, the Partnership recorded
total trading losses, net of interest income, of $1,424,135 and
posted a decrease in net asset value per Unit.  The most
significant losses of approximately 6.1% were recorded in the
currency markets primarily during March from previously
established short positions in the Japanese yen relative to the


<page>
U.S. dollar.  The yen strengthened against the dollar following
asset repatriation from the U.S. to Japan and a drop in Japan's
unemployment rate.  Continued strength in the yen through mid
March led to the establishment of new long positions that added
to earlier losses when the value of the yen fell on news that
asset repatriation would end with the Japanese fiscal year.
Losses of approximately 2.4% were recorded in the global index
futures markets during January from short positions in U.S. stock
indices when prices rallied behind a stronger than expected
forecast for economic recovery.  Additional losses were recorded
in February from short positions in Japanese stock indices when
prices climbed higher on hopes of a government backed economic
plan designed to combat deflation and bad bank loans.  Smaller
losses of approximately 2.2% were recorded in the global interest
rate markets primarily during January from short positions in
U.S. interest rate futures when prices rallied after Federal
Reserve Chairman Greenspan expressed caution regarding an
improving U.S. economy.  Additional losses were recorded from
previously established short positions in German bund futures
when prices moved higher early in the month on weak preliminary
U.S. economic data.  Other losses were recorded from previously
established short positions in Japanese government bonds when
prices increased ahead of expectations for new government
policies to battle deflation.  Partially offsetting gains of
approximately 1.8% were recorded in energy markets during March

<page>
from previously established long positions in crude oil futures
as prices continued trending higher on supply concerns and Middle
East tensions.  Total expenses for the three months ended March
31, 2002 were $556,924, resulting in a net loss of $1,981,059.
The net asset value of a Unit decreased from $3,045.84 at
December 31, 2001 to $2,814.65 at March 31, 2002.

For the Quarter Ended March 31, 2001
For the quarter ended March 31, 2001, the Partnership recorded
total trading revenues, including interest income, of $3,178,906
and posted an increase in net asset value per Unit.  The most
significant gains of approximately 10.4% were recorded throughout
the quarter in the global interest rate futures markets primarily
from long positions in Japanese government bond futures as prices
moved higher amid weak Japanese stock prices and disappointing
economic data in that country.  Profits were also recorded from
long positions in U.S. and European interest rate futures as
prices rose throughout a majority of the quarter amid a rattled
stock market, shaky consumer confidence, positive inflation data
and the anticipation of additional interest rate cuts by the U.S.
Federal Reserve.  In the currency markets, gains of approximately
1.6% were recorded throughout the quarter primarily from short
positions in the Japanese yen as the value of the yen weakened
relative to the U.S. dollar on concerns for the Japanese economy


<page>
and in both anticipation of and reaction to the Bank of Japan's
decision to reinstate its zero interest rate policy.  Additional
gains of approximately 1.1% were recorded in the global stock
index futures markets during February and March primarily from
short positions in U.S. stock index futures as prices declined on
reports of layoffs by major technology companies, discouraging
inflationary reports and worries that the U.S. economic slowdown
will ignite a global downturn.  A portion of overall Partnership
gains for the quarter was offset by losses of approximately 3.9%
recorded primarily during January in the energy markets from long
positions in natural gas futures as prices reversed their sharp
upward trend amid bearish inventory data and forecasts for warmer
weather.  Total expenses for the three months ended March 31,
2001 were $652,670, resulting in net income of $2,526,236.  The
net asset value of a Unit increased from $3,037.53 at December
31, 2000 to $3,312.44 at March 31, 2001.










<page>
Item 3. 	 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
         RISK

Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards, and options.  The
market-sensitive instruments held by the Partnership are acquired
for speculative trading purposes only and, as a result, all or
substantially all of the Partnership's assets are at risk of
trading loss.  Unlike an operating company, the risk of market-
sensitive instruments is central, not incidental, to the
Partnership's main business activities.

The futures, forwards, and options traded by the Partnership
involve varying degrees of related market risk.  Market risk is
often dependent upon changes in the level or volatility of
interest rates, exchange rates, and prices of financial
instruments and commodities.  Fluctuations in market risk based
upon these factors result in frequent changes in the fair value
of the Partnership's open positions, and, consequently, in its
earnings and cash flow.

The Partnership's total market risk is influenced by a wide
variety of factors, including the diversification among the
Partnership's open positions, the volatility present within the
markets, and the liquidity of the markets.  At different times,
each of these factors may act to increase or decrease the market
<page>
risk associated with the Partnership.

The Partnership's past performance is not necessarily indicative
of its future results.  Any attempt to numerically quantify the
Partnership's market risk is limited by the uncertainty of its
speculative trading.  The Partnership's speculative trading may
cause future losses and volatility (i.e. "risk of ruin") that far
exceed the Partnership's experiences to date or any reasonable
expectations based upon historical changes in market value.

Quantifying the Partnership's Trading Value at Risk
The following quantitative disclosures regarding the Partnership's
market risk exposures contain "forward-looking statements" within
the meaning of the safe harbor from civil liability provided for
such statements by the Private Securities Litigation Reform Act of
1995 (set forth in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934).  All
quantitative disclosures in this section are deemed to be forward-
looking statements for purposes of the safe harbor, except for
statements of historical fact.

The Partnership accounts for open positions on the basis of mark-
to-market accounting principles.  Any loss in the market value of
the Partnership's open positions is directly reflected in the
Partnership's earnings, whether realized or unrealized, and its

<page>
cash flow.  Profits and losses on open positions of exchange-
traded futures, forwards, and options are settled daily through
variation margin.

The Partnership's risk exposure in the market sectors traded by
the Trading Managers is estimated below in terms of Value at Risk
("VaR"). The VaR model used by the Partnership includes many
variables that could change the market value of the Partnership's
trading portfolio.  The Partnership estimates VaR using a model
based upon historical simulation with a confidence level of 99%.
Historical simulation involves constructing a distribution of
hypothetical daily changes in the value of a trading portfolio.
The VaR model takes into account linear exposures to price and
interest rate risk.  Market risks that are incorporated in the
VaR model include equity and commodity prices, interest rates,
foreign exchange rates, and correlation among these variables.
The hypothetical changes in portfolio value are based on daily
percentage changes observed in key market indices or other market
factors ("market risk factors") to which the portfolio is
sensitive.  The historical observation period of the Partner-
ship's VaR is approximately four years.  The one-day 99%
confidence level of the Partnership's VaR corresponds to the
negative change in portfolio value that, based on observed market
risk factors, would have been exceeded once in 100 trading days.


<page>
VaR models, including the Partnership's, are continuously
evolving as trading portfolios become more diverse and modeling
techniques and systems capabilities improve.  Please note that
the VaR model is used to numerically quantify market risk for
historic reporting purposes only and is not utilized by either
Demeter or the Trading Managers in their daily risk management
activities.

The Partnership's Value at Risk in Different Market Sectors
The following table indicates the VaR associated with the
Partnership's open positions as a percentage of total net assets
by primary market risk category at March 31, 2002 and 2001. At
March 31, 2002 and 2001, the Partnership's total capitalization
was approximately $24 million and $30 million, respectively.

	Primary Market	March 31, 2002	March 31, 2001
	Risk Category	Value at Risk	Value at Risk

Interest Rate	(1.20)%	(2.51)%
	Currency	(0.96)	(1.55)
Equity	(0.24)	(0.25)
Commodity	(1.75)	(0.74)
	Aggregate Value at Risk	(2.51)%	(3.49)%

Aggregate Value at Risk represents the aggregate VaR of all the
Partnership's open positions and not the sum of the VaR of the


<page>
individual market categories listed above.  Aggregate VaR will be
lower as it takes into account correlation among different
positions and categories.

The table above represents the VaR of the Partnership's open
positions at March 31, 2002 and 2001 only and is not necessarily
representative of either the historic or future risk of an
investment in the Partnership. Because the Partnership's only
business is the speculative trading of futures, forwards, and
options, the composition of its trading portfolio can change
significantly over any given time period, or even within a single
trading day. Any changes in open positions could positively or
negatively materially impact market risk as measured by VaR.

The table below supplements the quarter-end VaR by presenting the
Partnership's high, low and average VaR, as a percentage of total
net assets for the four quarterly reporting periods from April 1,
2001 through March 31, 2002.

Primary Market Risk Category	High	Low	Average
Interest Rate 	(1.89)%	(0.83)%	(1.35)%

Currency	(1.90)	(0.71)	(1.36)

Equity	(0.50)	(0.23)	(0.30)

Commodity	(1.75)	(0.70)	(1.17)

Aggregate Value at Risk	(2.58)%	(2.14)%	(2.40)%

<page>
Limitations on Value at Risk as an Assessment of Market Risk
The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements.  Margin requirements generally range between 2% and
15% of contract face value. Additionally, the use of leverage
causes the face value of the market sector instruments held by the
Partnership to typically be many times the total capitalization of
the Partnership.  The value of the Partnership's open positions
thus creates a "risk of ruin" not usually found in other
investments.  The relative size of the positions held may cause
the Partnership to incur losses greatly in excess of VaR within a
short period of time, given the effects of the leverage employed
and market volatility.  The VaR tables above, as well as the past
performance of the Partnership, give no indication of such "risk
of ruin". In addition, VaR risk measures should be viewed in light
of the methodology's limitations, which include the following:
?	past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
?	changes in portfolio value caused by market movements may
differ from those of the VaR model;
?	VaR results reflect past trading positions while future risk
depends on future positions;


<page>
?	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 VaR tables above present the results of the Partnership's VaR
for each of the Partnership's market risk exposures and on an
aggregate basis at March 31, 2002 and 2001, and for the end of the
four quarterly reporting periods from April 1, 2001 through March
31, 2002.  Since VaR is based on historical data, VaR should not
be viewed as predictive of the Partnership's future financial
performance or its ability to manage or monitor risk.  There can
be no assurance that the Partnership's actual losses on a
particular day will not exceed the VaR amounts indicated above or
that such losses will not occur more than once in 100 trading
days.

Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances not needed for margin.  These balances and any market
risk they may represent are immaterial.


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At March 31, 2002 the Partnership's cash balance at Morgan Stanley
DW was approximately 88% of its total net asset value.  A decline
in short-term interest rates will result in a decline in the
Partnership's cash management income. This cash flow risk is not
considered to be material.

Materiality, as used throughout this section, is based on an
assessment of reasonably possible market movements and any
associated potential losses, taking into account the leverage,
optionality and multiplier features of the Partnership's market-
sensitive instruments, in relation to the Partnership's net
assets.

Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership's
market risk exposures - except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
Partnership manages its primary market risk exposures - constitute
forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act.
The Partnership's primary market risk exposures as well as the
strategies used and to be used by Demeter and the Trading Managers
for managing such exposures are subject to numerous uncertainties,
contingencies and risks, any one of which could cause the actual
results of the Partnership's risk controls to differ materially

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from the objectives of such strategies.  Government interventions,
defaults and expropriations, illiquid markets, the emergence of
dominant fundamental factors, political upheavals, changes in
historical price relationships, an influx of new market
participants, increased regulation and many other factors could
result in material losses as well as in material changes to the
risk exposures and the risk management strategies of the
Partnership.  Investors must be prepared to lose all or
substantially all of their investment in the Partnership.

The following were the primary trading risk exposures of the
Partnership at March 31, 2002, by market sector.  It may be
anticipated, however, that these market exposures will vary
materially over time.

Interest Rate.  The primary market exposure of the Partnership at
March 31, 2002 was to the global interest rate complex.  Exposure
was primarily spread across Japanese, German and U.S. interest
rate sectors.  Interest rate movements directly affect the price
of the sovereign bond futures positions held by the Partnership
and indirectly affect the value of its stock index and currency
positions.  Interest rate movements in one country as well as
relative interest rate movements between countries materially
impact the Partnership's profitability.  The Partnership's
interest rate exposure is generally to interest rate fluctuations

<page>
in the United States and other G-7 countries.  The G-7 countries
consist of France, U.S., Britain, Germany, Japan, Italy and
Canada.  However, the Partnership also takes futures positions in
the government debt of smaller nations - e.g., Australia.
Demeter anticipates that G-7 and Australia interest rates will
remain the primary interest rate exposure of the Partnership for
the foreseeable future.  The speculative futures positions held
by the Partnership may range from short to long-term instruments.
Consequently, changes in short, medium or long-term interest
rates may have an effect on the Partnership.

Currency.  The second largest market exposure at March 31, 2002
was to the currency complex.  The Partnership's currency exposure
is due to exchange rate fluctuations, primarily fluctuations
which disrupt the historical pricing relationships between
different currencies and currency pairs.  Interest rate changes
as well as political and general economic conditions influence
these fluctuations.  The Partnership trades a large number of
currencies, including cross-rates - i.e., positions between two
currencies other than the U.S. dollar.  At March 31, 2002, the
Partnership's major exposures were to euro currency crosses and
outright U.S. dollar positions.  Outright positions consist of
the U.S dollar vs. other currencies.  These other currencies
include major and minor currencies.  Demeter does not anticipate


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that the risk profile of the Partnership's currency sector will
change significantly in the future.  The currency trading VaR
figure includes foreign margin amounts converted into U.S.
dollars with an incremental adjustment to reflect the exchange
rate risk inherent to the U.S.-based Partnership in expressing
VaR in a functional currency other than U.S. dollars.

Equity.  The Partnership's equity exposure at March 31, 2002 was
generally to 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.  At March 31, 2002, the Partnership's
largest exposures were to the Hang Seng (China), Nikkei (Japan)
and S&P 500 (U.S.) stock indices.  The Partnership is primarily
exposed to the risk of adverse price trends or static markets in
the Japanese and U.S. 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
Energy.  At March 31, 2002, the Partnership's energy
exposure was shared primarily by futures contracts in crude
oil and its related products, and natural gas. Price
movements in these markets result from political


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developments in the Middle East, weather patterns and other
economic fundamentals.  It is possible that volatility will
remain high.  Significant profits and losses, which have
been experienced in the past, are expected to continue to be
experienced in these markets.  Natural gas has exhibited
volatility in prices resulting from weather patterns and
supply and demand factors and may continue in this choppy
pattern.

Metals.  The Partnership's metals exposure at March 31, 2002
was to fluctuations in the price of precious metals, such as
gold, and base metals, such as nickel, copper and aluminum.
Economic forces, supply and demand inequalities,
geopolitical factors and market expectations influence price
movements in these markets.  The Trading Managers have, from
time-to-time, taken positions when market opportunities
develop.  Demeter anticipates that the Partnership will
continue to be exposed to the precious and base metals
markets.

Soft Commodities and Agriculturals.  At March 31, 2002, the
Partnership had exposure to the markets that comprise these
sectors.  Most of the exposure was to the corn and wheat
markets.  Supply and demand inequalities, severe weather
disruption and market expectations affect price movements in
these markets.
<page>
Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at March 31, 2002:

Foreign Currency Balances.  The Partnership's primary
foreign currency balances at March 31, 2002 were in Japanese
yen, euros and Australian dollars.  The Partnership controls
the non-trading risk of these balances by regularly
converting them back into U.S. dollars upon liquidation of
their respective positions.

Qualitative Disclosures Regarding Means of Managing Risk Exposure
The Partnership and the Trading Managers, separately, attempt to
manage the risk of the Partnership's open positions in essentially
the same manner in all market categories traded.  Demeter attempts
to manage market exposure by diversifying the Partnership's assets
among different Trading Managers, each of whose strategies focus
on different market sectors and trading approaches, and monitoring
the performance of the Trading Managers daily.  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.

Demeter monitors and controls the risk of the Partnership's non-
trading instrument, cash.  Cash is the only Partnership investment
directed by Demeter, rather than the Trading Managers.
<page>
PART II.  OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS
None.

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

(A)	Exhibits

3.01	Limited Partnership Agreement of the Partnership, dated
as of December 7, 1983, as amended as of May 11, 1984, 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).
10.01	Management Agreement among the Partnership, Demeter and
Sunrise Capital Management Inc. formerly Sunrise
Commodities Inc., dated as of November 15, 1983, is
incorporated by reference to Exhibit 10.03 of the
Partnership's Annual Report on Form 10-K for the fiscal
year ended September 30, 1984 (File No. 0-13299).
10.02	Management Agreement among the Partnership, Demeter and
Welton Investment Systems Corporation, dated as of July
1, 1996, is incorporated by reference to Exhibit 10.02 of
the Partnership's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 (File No. 0-13299).
10.03	Dean Witter Cornerstone Funds Exchange Agreement, dated
as of May 31, 1984, is incorporated by reference to
Exhibit 10.06 of the Partnership's Annual Report on Form
10-K for the fiscal year ended September 30, 1984 (File
No. 0-13299).
10.04	Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW Inc., dated as of June
22, 2000, is incorporated by reference to Exhibit 10.01
of the Partnership's Form 8-K (File No. 0-13299) filed
with the Securities and Exchange Commission on November
13, 2001.
10.05	Commodity Futures Customer Agreement between Morgan
Stanley & Co. Incorporated and the Partnership, and
acknowledged and agreed to by Morgan Stanley DW Inc.,
dated as of May 1, 2000, is incorporated by reference to


<page>
	Exhibit 10.02 of the Partnership's Form 8-K (File No. 0-
13299) filed with the Securities and Exchange Commission
on November 13, 2001.
10.06	Customer Agreement between the Partnership and Morgan
Stanley & Co. International Limited, dated as of May 1,
2000, is incorporated by reference to Exhibit 10.04 of
the Partnership's Form 8-K (File No. 0-13299) filed with
the Securities and Exchange Commission on November 13,
2001.
10.07	Foreign Exchange and Options Master Agreement between
Morgan Stanley & Co. Incorporated and the Partnership,
dated as of April 30, 2000, is incorporated by reference
to Exhibit 10.05 of the Partnership's Form 8-K (File No.
0-13299) filed with the Securities and Exchange
Commission on November 13, 2001.
10.09	Amendment to Management Agreement between the Partnership
and Welton Investment Corporation, dated as of November
30, 2000, is incorporated by reference to Exhibit 10.1 of
the Partnership's Form 8-K (File No. 0-13299) filed with
the Securities and Exchange Commission on January 3,
2001.
10.10	Amendment to Management Agreement between the Partnership
and Sunrise Capital Management, Inc., dated as of
November 30, 2000, is incorporated by reference to the
Partnership's Form 8-K (File No. 0-13299) filed with the
Securities and Exchange Commission on January 3, 2001.
10.11	Securities Account Control Agreement among the
Partnership, Morgan Stanley & Co. Incorporated, and
Morgan Stanley DW Inc., dated as of May 1, 2000, is
incorporated by reference to Exhibit 10.03 of the
Partnership's Form 8-K (File No. 0-13299) filed with the
Securities and Exchange Commission on November 13, 2001.

(B)	  Reports on Form 8-K. - None.











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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)

May 13, 2002            By:/s/Raymond E. Koch              _
                              Raymond E. Koch
                              Chief Financial Officer





The General Partner which signed the above is the only party
authorized to act for the Registrant.  The Registrant has no
principal executive officer, principal financial officer,
controller, or principal accounting officer and has no Board of
Directors.