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 September 30, 2001 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 Morgan Stanley Trust Company
Attention:  Managed Futures, 7th Fl.,
Harborside Financial Center Plaza Two
Jersey City, NJ  	  			    		      07311-3977
(Address of principal executive offices)	  	     (Zip Code)


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


Two World Trade Center, 62nd Fl. New York, NY 10048

(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

	September 30, 2001

<caption>
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

				<c>
	Statements of Financial Condition as of
	September 30, 2001 (Unaudited) and December 31, 2000.......2

	Statements of Operations for the Quarters Ended
	September 30, 2001 and 2000 (Unaudited)....................3

	Statements of Operations for the Nine Months Ended
	September 30, 2001 and 2000 (Unaudited)....................4

	Statements of Changes in Partners' Capital for the
	Nine Months Ended September 30, 2001 and 2000 (Unaudited)..5

	Statements of Cash Flows for the Nine Months Ended
	September 30, 2001 and 2000 (Unaudited)....................6

	Notes to Financial Statements (Unaudited)...............7-11

Item 2. Management's Discussion and Analysis of Financial
			Condition and Results of Operations.............. 12-20

Item 3.	Quantitative and Qualitative Disclosures about
			Market Risk ......................................20-32

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings...................................33

Item 6.  Exhibits and Reports on Form 8-K.................33-34







</table>







<page>
<table>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

	DEAN WITTER CORNERSTONE FUND III
	STATEMENTS OF FINANCIAL CONDITION
<caption>
	September 30,	     December 31,
                           2001       	           2000
	$	   $
	(Unaudited)

ASSETS

	<c>		<c>
Equity in futures interests trading accounts:
	Cash	24,799,776	 24,902,313

	Net unrealized gain on open contracts (MS & Co.)  	3,108,133	3,944,253
	Net unrealized gain (loss) on open contracts (MSIL)                        841,552                             (91,422)

	Total net unrealized gain on open contracts	3,949,685	   3,852,831

	Net option premiums                     (20,358)                           (32,422)

	    Total Trading Equity	28,729,103	28,722,722

Due from Morgan Stanley DW	    117,160	          38,685
Interest receivable (Morgan Stanley DW)	                                                 53,581            	        105,983

     Total Assets	  28,899,844 	    28,867,390

LIABILITIES AND PARTNERS' CAPITAL

Liabilities

	Redemptions payable	151,178	    286,259
	Accrued administrative expenses	133,849	106,179
	Accrued management fees 	        83,880	          83,887

	     Total Liabilities	      368,907	        476,325

Partners' Capital

	Limited Partners (8,624.108 and
	     9,204.671 Units, respectively)	28,068,442	27,959,423
	General Partner (142.103 Units)	      462,495	        431,642

	     Total Partners' Capital	   28,530,937	  28,391,065
Total Liabilities and Partners' Capital	    28,899,844	  28,867,390
NET ASSET VALUE PER UNIT	        3,254.65	       3,037.53
<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 September 30,

	      2001   	   2000
	    $	   $


REVENUES

			<c>	<c>
	Trading profit (loss):
	     Realized	244,404	167,925
 	     Net change in unrealized	  3,331,207	                    (530,248)

			Total Trading Results	  3,575,611	                    (362,323)

	Interest income (Morgan Stanley DW)	     174,872	    324,000

			Total	  3,750,483	                      (38,323)


EXPENSES

	Brokerage commissions (Morgan Stanley DW)	338,469	331,052
	Management fees	239,125	261,428
  	Transaction fees and costs	36,869	17,711
	Administrative expenses	     20,893	       16,684

  			Total 	   635,356	     626,875

NET INCOME (LOSS) 	  3,115,127	   (665,198)


NET INCOME (LOSS) ALLOCATION

	Limited Partners	3,065,087	(655,551)
	General Partner	50,040	(9,647)

NET INCOME (LOSS) PER UNIT

	Limited Partners	352.14	(67.88)
	General Partner	352.14	(67.88)

<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 Nine Months Ended September 30,

	      2001     	      2000
	    $	      $

REVENUES

			<c>	<c>
	Trading profit (loss):
	    Realized	3,103,742	                    (995,629)
  	    Net change in unrealized	     96,854	                 (2,308,226)

			Total Trading Results	3,200,596	                 (3,303,855)

	Interest income (Morgan Stanley DW)	   661,202	     1,026,152

			Total 	   3,861,798	                 (2,277,703)


EXPENSES

	Brokerage commissions (Morgan Stanley DW)	1,066,540	1,204,594
  	Management fees	730,030	872,463
  	Transaction fees and costs	88,799	66,219
 	Administrative expenses	      59,930	         54,157

			Total 	   1,945,299	    2,197,433

NET INCOME (LOSS) 	  1,916,499	                 (4,475,136)


NET INCOME (LOSS) ALLOCATION

		Limited Partners	1,885,646	                 (4,413,198)
 		General Partner	30,853	                      (61,938)


NET INCOME (LOSS) PER UNIT

		Limited Partners	217.12	                      (435.86)
  		General Partner	217.12	                      (435.86)

<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 Nine Months Ended September 30, 2001 and 2000
	(Unaudited)


<caption>



	Units of
	Partnership	Limited	General
	   Interest   	Partners	Partner	Total
		         $	                        $	                         $


	<c>	<c>	<c>	<c>
Partners' Capital,
  December 31, 1999	10,978.222	  33,000,637	   432,765	  33,433,402

Net loss	-	                    (4,413,198)            (61,938)	 (4,475,136)

Redemptions                         (1,372.939)   (3,892,651)                 -       	  (3,892,651)

Partners' Capital,
  September 30, 2000	                                        9,605.283     	  24,694,788  	   370,827  	  25,065,615




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

Net income	-	                    1,885,646               30,853	 1,916,499

Redemptions                   (580.563)      	    (1,776,627)                 -       	 (1,776,627)

Partners' Capital,
  September 30, 2001                                        8,766.211     	  28,068,442  	 462,495  	 28,530,937







<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 Nine Months Ended September 30,

	      2001     	             2000
	  $	      $

CASH FLOWS FROM OPERATING ACTIVITIES

			<c>	<c>
	Net income (loss)                        	1,916,499                  (4,475,136)
 	  	Noncash item included in net income (loss):
		   Net change in unrealized	(96,854)	2,308,226

	(Increase) decrease in operating assets:
		Net option premiums	(12,064)	414,845
		Due from Morgan Stanley DW	(78,475)	                      (17,345)
		Interest receivable (Morgan Stanley DW)                                52,402		7,743

	Increase (decrease) in operating liabilities:
		Accrued administrative expenses                                            27,670		17,803
	 	Accrued management fees	           (7) 	                     (27,959)

    	Net cash provided by (used for) operating activities                   1,809,171                  (1,771,823)


CASH FLOWS FROM FINANCING ACTIVITIES

   	Decrease in redemptions payable	(135,081)	                      (19,935)
    	Redemptions of Units	   (1,776,627)	                 (3,892,651)

	Net cash used for financing activities	  (1,911,708)	                 (3,912,586)

	Net decrease in cash	(102,537)	                 (5,684,409)

	Balance at beginning of period                                                 24,902,313		  32,268,788

	Balance at end of period                                                           24,799,776		  26,584,379




<fn>


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


<page>
DEAN WITTER CORNERSTONE FUND III
NOTES TO FINANCIAL STATEMENTS
September 30, 2001
(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, 2000 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
Morgan Stanley & Co. International Limited ("MSIL").  Demeter,

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


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



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

of the contracts.  There are numerous factors which may
significantly influence the market value of these contracts,
including interest rate volatility.

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 options
contracts and other financial instruments with similar
characteristics such as caps, floors and collars.







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

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:

                    Net Unrealized Gains (Losses)
                          on Open Contracts              Longest Maturities

  	            Exchange-   Off-Exchange-           Exchange-  Off-Exchange-
                   Traded       Traded       Total     Traded       Traded
Date              Contracts    Contracts   Contracts  Contracts    Contracts
                     $            $           $

Sept. 30, 2001   4,047,462     (97,777)   3,949,685   Sept. 2002   Dec. 2001

Dec. 31, 2000    3,576,953     275,878    3,852,831   Dec. 2001    March 2001


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

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
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 $28,847,238 and
$28,479,266 at September 30, 2001 and December 31, 2000,
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
nor liquidated unless traders are willing to effect trades at or
<page>
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, or expect to
have, any capital assets.  Redemptions of additional units of
limited partnership interest ("Unit(s)") in the future will
affect the amount of funds available for investment in futures,
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 its 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 and nine
month periods ended September 30, 2001 and 2000, 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 its Trading
Managers' trading activities on behalf of the Partnership as a
whole and how the Partnership has performed in the past.

For the Quarter and Nine Months Ended September 30, 2001
For the quarter ended September 30, 2001, the Partnership recorded
total trading revenues, including interest income, of $3,750,483
and posted an increase in net asset value per Unit. The most
significant gains of approximately 9.3% were experienced in the
global interest rate futures markets throughout the quarter from
long positions in short-term U.S. interest rate futures as prices
trended higher in anticipation and reaction to interest rate cuts
by the U.S. Federal Reserve and as investors sought a safe haven
<page>
from declining stock prices.  In the metals markets, gains of
approximately 3.9% were recorded throughout the quarter from short
positions in aluminum, copper and nickel futures as base metal
prices trended lower as a result of increased supplies and weak
demand.  In the global stock index futures markets, gains of
approximately 3.8% were recorded primarily during September from
short positions in S&P 500, DAX and Nikkei Index futures as equity
prices moved sharply lower amid worries regarding global economic
uncertainty.  These gains were partially offset by losses of
approximately 3.7% recorded in the currency markets primarily
during September from long positions in the Japanese yen as its
value relative to the U.S. dollar reversed lower following
surprise interventions by the Bank of Japan.  In the energy
markets, losses of approximately 0.9% were experienced during July
and August from short crude oil futures positions as prices rose
amid an OPEC production cut, declining inventories and growing
tensions in the Middle East. Total expenses for the three months
ended September 30, 2001 were $635,356, resulting in net income of
$3,115,127.  The net asset value of a Unit increased from
$2,902.51 at June 30, 2001 to $3,254.65 at September 30, 2001.


For the nine months ended September 30, 2001, the Partnership
recorded total trading revenues, including interest income, of
$3,861,798 and posted an increase in net asset value per Unit.
The most significant gains of approximately 12.8% were recorded
in the global interest rate futures markets primarily during the
<page>
third quarter from long positions in short-term U.S. interest
rate futures as prices trended higher in anticipation and
reaction to interest rate cuts by the U.S. Federal Reserve and as
investors sought a safe haven from declining stock prices.
Additional gains were recorded throughout the first quarter from
long positions in Japanese interest rate futures as prices moved
higher amid weak Japanese stock prices and disappointing economic
data in that country.  In the global stock index futures markets,
gains of approximately 3.6% were recorded primarily during
September from short positions in S&P 500, DAX and Nikkei Index
futures as equity prices moved sharply lower amid worries
regarding global economic uncertainty.  In the metals markets,
gains of approximately 2.0% were recorded throughout the third
quarter from short positions in base metal futures as prices
trended lower as a result of increased supplies and weak demand.
In the soft commodities markets, gains of approximately 1.2% were
recorded throughout a majority of the first and second quarters
from short cotton futures positions as prices moved lower on weak
export sales and low demand.  These gains were partially offset
by losses of approximately 5.4% recorded in the energy markets
throughout the first nine months of the year from positions in
crude oil futures and its related products as a result of
volatility in oil prices due to a continually changing outlook
for inventory, supply, production and global demand.  In the
currency markets, losses of approximately 5.3% were experienced
primarily during the first quarter from cross-rate transactions
<page>
involving the euro versus the Japanese yen and from positions in
the British pound relative to the U.S. dollar. Total expenses for
the nine months ended September 30, 2001 were $1,945,299,
resulting in net income of $1,916,499.  The net asset value of a
Unit increased from $3,037.53 at December 31, 2000 to $3,254.65
at September 30, 2001.

For the Quarter and Nine Months Ended September 30, 2000
For the quarter ended September 30, 2000, the Partnership recorded
total trading losses, net of interest income, of $38,323 and
posted a decrease in net asset value per Unit.  The most
significant losses of approximately 2.8% were recorded in the
energy markets primarily during July from long crude oil futures
positions as oil prices decreased amid growing conviction that
Saudi Arabia would follow through with a boost in production.
During September, long crude oil futures positions resulted in
losses as prices reversed lower after President Clinton ordered
the release of 30 million barrels of oil in the U.S.'s emergency
Strategic Petroleum reserve over a period of a month.  In the
global interest rate futures markets, losses of approximately 2.2%
were recorded primarily from long Australian interest rate futures
positions during September as prices declined following a pattern
set by U.S. Treasuries and as the Australian currency dipped to
new historic lows.  In the global stock index futures markets,
losses of approximately 0.9% were experienced primarily during
September from long U.S. stock index futures positions as prices
declined on jitters in the technology sector and a worrisome spike
<page>
in oil prices.  Smaller losses of approximately 0.9% were recorded
in the soft commodities markets primarily from trading coffee
futures as prices moved erratically during mid July.  A portion of
overall Partnership losses was offset by gains of approximately
2.7% recorded in the currency markets primarily from short euro
and Swiss franc positions during August and September as the value
of these European currencies weakened versus the U.S. dollar and
other major currencies amid a cooling economy in Europe and the
European Central Bank's stance on interest rates.  Additional
gains of approximately 0.6% were recorded in the metals markets
primarily during July from short gold futures positions as prices
fell after the Bank of England announced the results of its gold
auction, which had concluded at a lower price than most dealers
expected. Smaller gains were recorded in the agricultural markets
primarily from short wheat futures positions during July as prices
declined on favorable U.S. crop weather forecasts. Total expenses
for the three months ended September 30, 2000 were $626,875,
resulting in a net loss of $665,198.  The net asset value of a
Unit decreased from $2,677.45 at June 30, 2000 to $2,609.57 at
September 30, 2000.

For the nine months ended September 30, 2000, the Partnership
recorded total trading losses, net of interest income, of
$2,277,703 and posted a decrease in net asset value per Unit.  The
most significant losses of approximately 6.3% were recorded in the
global interest rate futures markets primarily from long U.S.

<page>
interest rate futures positions as prices declined during April
amid fears of higher interest rates.  During June, newly
established short U.S. interest rate futures positions incurred
losses as prices moved higher amid signs that U.S. economic growth
had slowed and fading prospects of additional interest rate hikes
by the Federal Reserve.  Additional losses of approximately 5.8%
were recorded in the global stock index futures markets from long
S&P 500 Index futures positions as global equity prices declined
during January amid fears of interest rate hikes in the U.S. and
Europe and profit-taking from the previous year.  Prices also
declined during April due to an unexpected jump in the Consumer
Price Index, fears of inflation and concerns regarding interest
rate increases and during September on jitters in the technology
sector and a worrisome spike in oil prices.  In the metals
markets, losses of approximately 2.1% were recorded primarily from
long aluminum futures positions as prices reversed lower during
February on technical factors.  Short aluminum futures positions
resulted in additional losses during June as prices reversed
sharply higher on institutional buying and fears that U.S.
capacity could be hit further by power shortages.  In soft
commodities, losses of approximately 1.0% were recorded primarily
from trading coffee futures as prices moved erratically during mid
July.  Smaller losses of approximately 0.7% were recorded in the
agricultural markets primarily from short corn futures positions
as prices increased during January after the USDA made a surprise
cut to 1999-2000 ending stocks amid concerns for dryness in Brazil
<page>
and subsequent crop damage.  A portion of overall Partnership
losses was offset by gains of approximately 1.6% recorded in the
energy markets primarily from long futures positions in crude oil
and its refined products as oil prices powered to nine-year highs
on concerns about futures output levels amid dwindling stockpiles
and increasing demand and frigid weather in the Northeastern U.S.
Additional gains of approximately 1.2% were recorded in the
currency markets primarily from short euro and Swiss franc
positions during August and September as the value of these
European currencies weakened versus the U.S. dollar and other
major currencies amid a cooling economy in Europe and the European
Central Bank's stance on interest rates.  Total expenses for the
nine months ended September 30, 2000 were $2,197,433, resulting in
a net loss of $4,475,136.  The net asset value of a Unit decreased
from $3,045.43 at December 31, 1999 to $2,609.57 at September 30,
2000.

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-
<page>
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
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


<page>
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 using mark-to-market
accounting principles.  Any loss in the market value of the
Partnership's open positions is directly reflected in the
Partnership's earnings, whether realized or unrealized, and its
cash flow.  Profits and losses on open positions of exchange-
traded futures, 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
<page>
trading portfolio.  The Partnership estimates VaR using a model
based upon historical simulation with a confidence level of 99%.
Historical simulation involves constructing a distribution of
hypothetical daily changes in the value of a trading portfolio.
The VaR model takes into account linear exposures to price and
interest rate risk.  Market risks that are incorporated in the
VaR model include equity and commodity prices, interest rates,
foreign exchange rates, and correlation among these variables.
The hypothetical changes in portfolio value are based on daily
percentage changes observed in key market indices or other market
factors ("market risk factors") to which the portfolio is
sensitive.  The historical observation period of the Partner-
ship's VaR is approximately four years.  The one-day 99%
confidence level of the Partnership's VaR corresponds to the
negative change in portfolio value that, based on observed market
risk factors, would have been exceeded once in 100 trading days.

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


<page>
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 September 30, 2001 and 2000.
At September 30, 2001 and 2000, the Partnership's total
capitalization was approximately $29 million and $25 million,
respectively.
	Primary Market       September 30, 2001	  September 30, 2000
     Risk Category	  	   Value at Risk	 	Value at Risk

Interest Rate			 (1.89)%			   (0.87)%
	Currency				 (0.71)			   (1.42)
	Commodity 			 (1.31)			   (1.56)
	Equity				 (0.23)			   (0.01)
Aggregate Value at Risk	 (2.37)%			   (2.30)%

Aggregate Value at Risk represents the aggregate VaR of all the
Partnership's open positions and not the sum of the VaR of the
individual market categories listed above.  Aggregate VaR will be
lower as it takes into account correlation among different
positions and categories.

The table above represents the VaR of the Partnership's open
positions at September 30, 2001 and 2000 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
<page>
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 October
1, 2000 through September 30, 2001.
Primary Market Risk Category        High      Low      Average
Interest Rate	(2.55)%	(1.46)%	(2.10)%

Currency	(1.90)	(0.71)	(1.31)

Commodity	(1.31)	(0.74)	(0.98)

Equity	(0.40)	(0.23)	(0.28)

Aggregate Value at Risk	(3.49)%	(2.37)%	(2.84)%


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
typically found in other investments.  The relative size of the
<page>
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;
? 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 September 30, 2001 and for the end of the four
quarterly reporting periods from October 1, 2000 through September
<page>
30, 2001.  Since VaR is based on historical data, VaR should not
be viewed as predictive of the Partnership's future financial
performance or its ability to manage or monitor risk.  There can
be no assurance that the Partnership's actual losses on a
particular day will not exceed the VaR amounts indicated above or
that such losses will not occur more than 1 in 100 trading days.

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

At September 30, 2001, the Partnership's cash balance at Morgan
Stanley DW was approximately 91% 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.


<page>
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
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 September 30, 2001, by market sector.  It may be
anticipated, however, that these market exposures will vary materially
over time.
<page>
Interest Rate.  The primary market exposure of the Partnership at
September 30, 2001 was to the global interest rate complex.  Exposure
was primarily spread across U.S., Japanese and German interest rate
sectors.  Interest rate movements directly affect the price of the
sovereign bond futures positions held by the Partnership and
indirectly affect the value of its stock index and currency positions.
Interest rate movements in one country as well as relative interest
rate movements between countries materially impact the Partnership's
profitability.  The Partnership's primary interest rate exposure is
generally to interest rate fluctuations in the United States and the
other G-7 countries.  The G-7 countries consist of France, U.S.,
Britain, Germany, Japan, Italy and Canada.  However, the Partnership
also takes futures positions in the government debt of smaller nations
- e.g. Australia.  Demeter anticipates that G-7 and 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 Partnership's currency exposure at September 30, 2001
was to exchange rate fluctuations, primarily fluctuations which
disrupt the historical pricing relationships between different
currencies and currency pairs.  Interest rate changes as well as
political and general economic conditions influence these
fluctuations.  The Partnership trades in a large number of currencies,
including cross-rates - i.e., positions between two currencies other

<page>
than the U.S. dollar.  At September 30, 2001, 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 that the risk profile of the
Partnership's currency sector will change significantly in the future.
The currency trading VaR figure includes foreign margin amounts
converted into U.S. dollars with an incremental adjustment to reflect
the exchange rate risk inherent to the dollar-based Partnership in
expressing VaR in a functional currency other than dollars.

Commodity.
Energy.  At September 30, 2001, 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 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 September 30,
2001 was to fluctuations in the price of precious metals, such as
gold and silver, and base metals, such as aluminum, copper and
nickel.  Economic forces, supply and demand inequalities,
<page>
geopolitical factors and market expectations influence price
movement 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 September 30, 2001, the
Partnership had exposure to the markets that comprise these
sectors.  Most of the exposure was to the sugar and wheat
markets.  Supply and demand inequalities, severe weather
disruption and market expectations affect price movements in
these markets.

Equity.	The primary equity exposure at September 30, 2001 was 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.  At September 30, 2001, the Partnership's primary
exposures were to the S&P 500 (U.S.) and Nikkei (Japan) stock indices.
The Partnership is primarily exposed to the risk of adverse price
trends or static markets in the U.S. 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.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at September 30, 2001:

<page>
Foreign Currency Balances.  The Partnership's primary foreign
currency balances at September 30, 2001 were in euros and
Canadian 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
Please refer to Legal Proceedings previously disclosed in the
Partnership's Form 10-Q for the quarter ended June 30, 2001.

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	   M	anagement 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.



<page>
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 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, 1999, 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
November 30, 2000, is incorporated by reference to
the Partnership's report on 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 November 30, 2000, is incorporated by
reference to the Partnership's report on 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.






<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)

November 14, 2001             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.