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

                           FORM 10-Q

[X]   Quarterly report pursuant to Section 13 or 15  (d)  of  the
Securities Exchange Act of 1934
For the period ended March 31, 1997 or

[  ]   Transition report pursuant to Section 13 or 15 (d) of  the
Securities Exchange Act of 1934
For the transition period from ________________to_____________

Commission File Number 0-13299

                DEAN WITTER CORNERSTONE FUND III
    (Exact name of registrant as specified in its charter)


                New   York                      13-3190919
(State or other jurisdiction of              (I.R.S. Employer
Incorporation or organization)               Identification No.)


c/o Demeter Management Corp.
Two  World  Trade  Center, New York, NY  62  Fl.     10048
(Address of principal executive offices)           (Zip Code)


Registrant's telephone number, including area code (212) 392-5454

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


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

Yes    X       No


<PAGE>
<TABLE>
                                
                DEAN WITTER CORNERSTONE FUND III

             INDEX TO QUARTERLY REPORT ON FORM 10-Q

                         March 31, 1997
<CAPTION>

PART I. FINANCIAL INFORMATION
<S>                                                         <C>
Item 1. Financial Statements

   Statements of Financial Condition
   March 31, 1997 (Unaudited) and December 31, 1996...........2

   Statements of Operations for the Quarters Ended
   March 31, 1997 and 1996 (Unaudited)........................3

   Statements of Changes in Partners' Capital for the
   Quarters Ended March 31, 1997 and 1996 (Unaudited).........4

   Statements of Cash Flows for the Quarters Ended
   March 31, 1997 and 1996 (Unaudited)........................5

   Notes to Financial Statements (Unaudited)...............6-11

Item 2.  Management's Discussion and Analysis of Financial

Condition and Results of Operations.......................12-16

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.................................17-18

Item 6.  Exhibits and Reports on Form 8-K................... 19


</TABLE>








<PAGE>
<TABLE>

                DEAN WITTER CORNERSTONE FUND III
               STATEMENTS OF FINANCIAL CONDITION

<CAPTION>

                                              March 31,     December 31,
                                                1997           1996
                                                  $              $
                                              (Unaudited)
ASSETS
<S>                                            <C>             <C>
Equity in Commodity futures trading accounts:
 Cash                                          42,206,365     40,587,011
 Net unrealized gain on open contracts          2,575,303      2,580,803
 Net option premiums                             (319,320)      (291,412)

 Total Trading Equity                          44,462,348     42,876,402

 Interest receivable (DWR)                        155,758        138,367
 Receivable from DWR                              148,933        122,701

 Total Assets                                  44,767,039     43,137,470

LIABILITIES AND PARTNERS' CAPITAL

Liabilities

 Redemptions payable                              723,282        680,730
 Common administrative expenses payable           156,871        137,548
 Accrued management fees                          147,710        142,387
 Accrued brokerage commissions (DWR)              140,147        129,098
 Accrued transaction fees and costs                 9,255         12,349

 Total Liabilities                              1,177,265      1,102,112


Partners' Capital

 Limited Partners (14,409.835 and
  15,097.603 Units, respectively)              42,463,770     40,997,752
 General Partner (382.103 Units)                1,126,004      1,037,606

 Total Partners' Capital                       43,589,774     42,035,358

 Total Liabilities and Partners' Capital      44,767,0394      3,137,470


NET ASSET VALUE PER UNIT                         2,946.86       2,715.51

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

</TABLE>
<PAGE>
<TABLE>

                DEAN WITTER CORNERSTONE FUND III
                    STATEMENTS OF OPERATIONS
                           (Unaudited)


<CAPTION>



                                For the Quarters Ended March 31,

                                       1997            1996
                                        $            $
REVENUES
<S>                        <C>               <C>
 Trading profit (loss):
    Realized                      4,228,547       (1,228,640)
    Net change in unrealized         (5,500)      (4,275,770)

      Total Trading Results       4,223,047       (5,504,410)

    Interest Income (DWR)           453,531          433,617

      Total Revenues              4,676,578       (5,070,793)


EXPENSES

    Brokerage commissions (DWR)     586,097          875,286
    Management fees                 444,564          424,415
    Transaction fees and costs       59,614          115,411
    Common administrative expenses   19,322            4,533

      Total Expenses              1,109,597        1,419,645

NET INCOME (LOSS)                 3,566,981       (6,490,438)


NET INCOME (LOSS) ALLOCATION:
    Limited Partners              3,478,583       (6,355,574)
    General Partner                  88,398         (134,864)


NET INCOME (LOSS) PER UNIT:
    Limited Partners                 231.35          (352.96)
    General Partner                  231.35          (352.96)


        The accompanying footnotes are an integral part
                 of these financial statements.
</TABLE>



<PAGE>
<TABLE>
                DEAN WITTER CORNERSTONE FUND III
           STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
         For the Quarters Ended March 31, 1997 and 1996
                          (Unaudited)


<CAPTION>

                          Units of
                        Partnership   Limited     General
                          Interest   Partners     Partner    Total
<S>                   <C>         <C>            <C>        <C>

Partners' Capital
  December 31, 1995     18,714.921  $45,991,101   $958,573   $46,949,674

Net Loss                        -    (6,355,574)  (134,864)   (6,490,438)

Redemptions               (733.226)  (1,695,667)          -   (1,695,667)

Partners' Capital
  March 31, 1996        17,981.695  $37,939,860   $823,709   $38,763,569


Partners' Capital
  December 31, 1996     15,479.706  $40,997,752 $1,037,606   $42,035,358

Offering of Units            1.841        5,000         -          5,000

Net Income                      -     3,478,583     88,398     3,566,981

Redemptions               (689.609)  (2,017,565)         -    (2,017,565)

Partners' Capital
  March 31, 1997         14,791.938 $42,463,770 $1,126,004   $43,589,774




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

</TABLE>












<PAGE>
<TABLE>
                DEAN WITTER CORNERSTONE FUND III
                    STATEMENTS OF CASH FLOWS
                           (Unaudited)


<CAPTION>

                                                      For the Quarters Ended March 31,

                                                           1997            1996
                                                            $            $
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                   <C>              <C>
 Net income (loss)                                     3,566,981    (6,490,438)
 Noncash item included in net income (loss):
    Net change in unrealized                               5,500     4,275,770

 (Increase) decrease in operating assets:
    Net option premiums                                   27,908            -
    Interest receivable (DWR)                            (17,391)      29,909
    Receivable from DWR                                  (26,232)      19,923

 Increase (decrease) in operating liabilities:
    Common administrative expenses payable                19,323      (50,107)
    Accrued management fees                                5,323      (27,637)
    Accrued brokerage commissions (DWR)                   11,049      (60,350)
    Accrued transaction fees and costs                    (3,094)      (2,448)

Net cash provided by (used for) operating activities   3,589,367   (2,305,378)


CASH FLOWS FROM FINANCING ACTIVITIES

 Offering of units                                        5,000            -
 Increase (decrease) in redemptions payable              42,552     (104,917)
 Redemptions of units                                (2,017,565)  (1,695,667)

 Net cash used for financing activities              (1,970,013)  (1,800,584)


 Net increase (decrease) in cash                      1,619,354  (4,105,962)

 Balance at beginning of period                      40,587,011   42,294,365

 Balance at end of period                            42,206,365   38,188,403


        The accompanying footnotes are an integral part
                 of these financial statements.
</TABLE>





<PAGE>
                DEAN WITTER CORNERSTONE FUND III

                  NOTES TO FINANCIAL STATEMENTS

                           (Unaudited)

The  financial statements include, in the opinion of  management,

all  adjustments necessary for a fair presentation of the results

of  operations and financial condition.  The financial statements

and condensed notes herein should be read in conjunction with the

Partnership's December 31, 1996 Annual Report on Form 10-K.



1. Organization

Dean  Witter  Cornerstone  Fund III  (the  "Partnership")   is  a

limited  partnership  organized  to  engage  in  the  speculative

trading  of commodity futures contracts and forward contracts  on

foreign  currencies.  The Partnership is one of the  Dean  Witter

Cornerstone Funds, comprised of Dean Witter Cornerstone Fund  II,

Dean  Witter  Cornerstone Fund III, and Dean  Witter  Cornerstone

Fund  IV.   The  general partner for the Partnership  is  Demeter

Management Corporation ("Demeter").  The commodity broker is Dean

Witter  Reynolds Inc. ("DWR").  Both Demeter and DWR  are  wholly

owned  subsidiaries of Dean Witter, Discover & Co. ("DWD").   The

trading   advisors  who  make  all  trading  decisions  for   the

Partnership  are  Abraham Trading Co., Welton Investment  Systems

Corporation and Sunrise Captial Management.

<PAGE>

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



2. Related Party Transactions

The  Partnership's  cash  is on deposit  with  DWR  in  commodity

trading accounts to meet margin requirements as needed.  DWR pays

interest  on  these funds based on current 13-week U.S.  Treasury

Bill  rates.  Brokerage expenses incurred by the Partnership  are

paid to DWR.



3. Financial Instruments

The  Partnership trades futures and forward contracts in interest

rates,  stock  indices,  commodities, currencies,  petroleum  and

precious  metals.  Futures and forwards represent  contracts  for

delayed delivery of an instrument at a specified date and  price.

Risk arises from changes in the value of these contracts and  the

potential inability of counterparties to perform under the  terms

of   the  contracts.   There  are  numerous  factors  which   may

significantly  influence  the market value  of  these  contracts,

including  interest  rate volatility.   At  March  31,  1997  and

December 31, 1996, open contracts were:





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

                                Contract or Notional Amount
                            March 31, 1997   December 31, 1996
                                    $                   $
Exchange-Traded Contracts
 Financial Futures:
   Commitments to Purchase     18,128,000       118,163,000
   Commitments to Sell        147,078,000        59,405,000
   Options Written             63,634,000        18,613,000
 Commodity Futures:
   Commitments to Purchase     58,905,000        17,683,000
   Commitments to Sell          8,816,000        22,811,000
   Options Written             31,481,000        18,407,000
 Foreign Futures:
   Commitments to Purchase     21,275,000        62,344,000
   Commitments to Sell         35,764,000        22,390,000
   Options Written              7,910,000                 -
Off-Exchange-Traded
 Forward Currency Contracts
   Commitments to Purchase              -           420,000
   Commitments to Sell                  -         1,379,000


A  portion of the amounts indicated as off-balance-sheet risk  in

forward   currency   contracts  is  due  to  offsetting   forward

commitments  to purchase and sell the same currency on  the  same

date   in   the   future.   These  commitments  are  economically

offsetting,  but are not offset in the forward market  until  the

settlement date.



The unrealized gain on open contracts is reported as a component

of "Equity in Commodity futures trading accounts" on the



<PAGE>
                                
                                
                DEAN WITTER CORNERSTONE FUND III
            NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                
                                
Statement  of  Financial  Condition and  totaled  $2,575,303  and

$2,580,803   at   March  31,  1997.  and   December   31,   1996,

respectively. The net unrealized gain on open contracts at  March

31,  1997, related entirely to exchange-traded futures contracts.

Of  the  $2,580,803  net unrealized gain  on  open  contracts  at

December 31, 1996, $2,589,289 related to exchange-traded  futures

contracts  and  $(8,486)  related to off-exchange-traded  forward

currency con-tracts.



Exchange-traded  futures contracts held  by  the  Partnership  at

March  31,  1997  and December 31, 1996 mature through  September

1997  and  June 1997, respectively.  Off-exchange-traded  forward

currency  contracts held by the Partnership at December 31,  1996

mature  through January 1997.  The contract amounts in the  above

table  represent the Partnership's extent of involvement  in  the

particular class of financial instrument, but not the credit risk

associated  with  counterparty nonperformance.  The  credit  risk

associated  with  these  instruments is limited  to  the  amounts

reflected in the Partnership's Statements of Financial Condition.


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


The  Partnership  also has credit risk because DWR  acts  as  the

futures  commission  merchant  or  the  sole  counterparty,  with

respect  to  most  of  the Partnership's assets.  Exchange-traded

futures  contracts  are marked to market on a daily  basis,  with

variations  in  value  settled on a daily  basis.   DWR,  as  the

futures commission merchant for all of the Partnership's exchange-

traded futures contracts, is required pursuant to regulations  of

the  Commodity Futures Trading  Commission to segregate from  its

own  assets  and for the sole benefit of its commodity  customers

all  funds  held  by DWR with respect to exchange-traded  futures

contracts including an amount equal to the net unrealized gain on

all  open futures contracts, which funds totaled $42,206,365  and

$43,176,300 at March 31, 1997 and December 31, 1996 respectively.

With  respect  to  the Partnership's off-exchange-traded  forward

currency  contracts, there are no daily settlements of variations

in value nor is there any requirement that an amount equal to the

net  unrealized  gain  on open forward contracts  be  segregated.

With   respect  to  those  off-exchange-traded  forward  currency

contracts, the Partnership is at risk to the ability of DWR,  the

counterparty on all of such contracts, to perform.

<PAGE>

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


For  the  period  ended March 31, 1997 and  for  the  year  ended

December   31,   1996,  the  average  fair  value  of   financial

instruments held for trading purposes was as follows:



                                           March 31, 1997
                                       Assets        Liabilities
                                         $                $
Exchange-Traded Contracts:
  Financial Futures                  46,508,000       77,785,000
  Options on Financial Futures                -       35,169,000
  Commodity Futures                  41,854,000       15,456,000
  Options on Commodity Futures        1,572,000       14,129,000
  Foreign Futures                    58,430,000       16,681,000
  Options on Foreign Futures                  -        2,942,000
Off-Exchange-Traded Forward
 Currency Contracts                     302,000          585,000

                                          December 31, 1996
                                       Assets        Liabilities
                                         $                $
Exchange-Traded Contracts:
  Financial Futures                 105,128,000       74,480,000
  Options on Financial Futures                -       10,138,000
  Commodity Futures                  44,276,000       18,531,000
  Options on Commodity Futures                -        2,763,000
  Foreign Futures                    80,000,000       27,228,000
  Options on Foreign Futures                  -            1,000
Off-Exchange-Traded Forward
 Currency Contracts                     233,000          354,000







<PAGE>

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


Liquidity.   The Partnership's assets are deposited  in  separate

commodity  trading  accounts  with  DWR  and  are  used  by   the

Partnership  as  margin  to engage in trading  commodity  futures

contracts  and forward contracts on foreign currency.  DWR  holds

such  assets  in either designated depositories or in  securities

approved   by  the  Commodity  Futures  Trading  Commission   for

investment of customer funds.  The Partnership's assets  held  by

DWR  may  be used as margin solely for the Partnership's trading.

Since  the  Partnership's sole purpose is to trade  in  commodity

futures  contracts and forward contracts on foreign currency,  it

is expected that the Partnership will continue to own such liquid

assets for margin purposes.


The  Partnership's investment in commodity futures contracts  and

other  commodity interests may be illiquid.  If the price  for  a

futures  contract  for a particular commodity  has  increased  or

decreased  by an amount equal to the "daily limit," positions  in

the  commodity can neither be taken nor liquidated unless traders

are  willing to effect trades at or within the limit.   Commodity

futures  prices  have  occasionally moved  the  daily  limit  for

several

                                

<PAGE>

consecutive  days  with  little  or  no  trading.   Such   market

conditions   could   prevent   the  Partnership   from   promptly

liquidating its commodity futures positions.



There  is  no limitation on daily price moves in trading  forward

contracts  on  foreign  currency.  The  markets  for  some  world

currencies  have  low trading volume and are illiquid, which  may

prevent  the  Partnership from trading in profitable  markets  or

prevent  the  Partnership  from promptly liquidating  unfavorable

positions  in  such  markets  and subjecting  it  to  substantial

losses.

Either of these market conditions could result in restrictions on

redemptions.



Capital  Resources.  The Partnership does not have, nor  does  it

expect to have, any capital assets.  Redemptions and exchanges of

Units in the future will impact the amount of funds available for

investments  in  commodity futures contracts and other  commodity

interests.   As  redemptions  are at the  discretion  of  Limited

Partners,  it  is  not  possible  to  estimate  the  amount   and

therefore, the impact of future redemptions.





<PAGE>

Results of Operations

For the Quarter Ended March 31, 1997

For  the  quarter  ended March 31, 1997, the Partnership's  total

trading  revenues  including  interest  income  were  $4,676,578.

During  the first quarter, the Partnership posted an increase  in

Net  Asset  Value  per  Unit.  The most  significant  gains  were

recorded  due  to a strong upward trend in coffee  prices  during

January  and February.  In the agricultural markets,  gains  were

recorded  during  February and March from long soybean  and  corn

futures  positions,  as  prices in  these  markets  also  trended

higher.   Additional  gains  were  recorded  during  January  and

February in the currency markets as the value of the U.S.  dollar

strengthened relative to most major European currencies, as  well

as  the  Japanese yen.  A portion of these gains  was  offset  by

losses recorded from transactions involving the British pound, as

well  as  the  Canadian and Australian dollars.  During  January,

gains  were  recorded from long base metals futures positions  as

zinc   and  copper  prices  moved  higher.   A  portion  of   the

Partnership's  gains  during the quarter  was  offset  by  losses

recorded  in the energy markets during January and March  as  gas

and  oil  prices  moved  without consistent  direction.   Smaller

losses were experienced in the financial futures markets as gains

recorded during January in

<PAGE>

global  stock  index futures were offset by losses recorded  from

choppy  price  movement in global interest  rate  futures  during

February   and  March.   Total  expenses  for  the  period   were

$1,109,597, generating net income of $3,566,981.  The value of an

individual  Unit in the Partnership increased from  $2,715.51  at

December 31, 1996 to $2,946.86 at March 31, 1997.



For the Quarter Ended March 31, 1996

For  the  quarter  ended March 31, 1996, the Partnership's  total

trading  losses  net of interest income were $5,070,793.   During

the  first  quarter, the Partnership posted a loss in  Net  Asset

Value  per  Unit.  The most significant losses were  recorded  in

global   interest  rate  futures  and  currency  trading   during

February.  In financial futures, long positions in U.S., European

and  Australian bond futures, which had been profitable  for  the

Partnership  during January, experienced losses  as  global  bond

futures prices moved sharply lower.  Losses were also recorded in

the  currency markets during February as short positions  in  the

Japanese  yen,  Swiss  franc,  German  mark  and  British   pound

experienced losses due to a sudden increase in the value  of  the

yen  and  most major European currencies versus the U.S.  dollar.

Trendless  price  movement  in  several  traditional  commodities

markets, such as metals, soft

<PAGE>

commodities  and  energy futures, resulted in  additional  losses

during  February.  During March, the Partnership  recorded  small

losses  as short-term price volatility was experienced in  global

financial and base metals futures.  A portion of these losses was

offset  by profits recorded during January from long global  bond

futures positions, as interest rate futures prices increased, and

from short positions in the Japanese yen, as the value of the yen

decreased relative to the U.S. dollar.  Additional trading  gains

were  recorded from long positions in corn futures as corn prices

moved  higher during February and March.  Total expenses for  the

period  were  $1,419,645, resulting in a net loss of  $6,490,438.

The value of an individual Unit in the Partnership decreased from

$2,508.68 at December 31, 1995 to $2,155.72 at March 31, 1996.

                                

                                

                                

                                

                                

                                

                                

                                

                                

<PAGE>

                   PART II.  OTHER INFORMATION

                                

Item 1.   LEGAL PROCEEDINGS

On  September 6, 10, and 20, 1996, and on March 13, 1997, similar

purported class actions were filed in the Superior Court  of  the

State  of  California, County of Los Angeles, on  behalf  of  all

purchasers  of  interests in limited partnership commodity  pools

sold  by DWR.  Named defendants include DWR, Demeter, Dean Witter

Futures  &  Currency  Management, Inc.,  DWD  (all  such  parties

referred  to  hereafter  as  the  "Dean  Witter  Parties"),   the

Partnership,certain other limited partnership commodity pools  of

which  Demeter  is  the  general  partner,  and  certain  trading

advisors  to  those pools.  Similar purported class actions  were

also  filed on September 18 and 20, 1996 in the Supreme Court  of

the  State of New York, New York County, and on November 14, 1996

in  the  Superior  Court  of the State of  Delaware,  New  Castle

County,  against  the  Dean Witter Parties  and  certain  trading

advisors  on  behalf  of all purchasers of interests  in  various

limited    partnership    commodity    pools    including     the

Partnership,sold  by  DWR.  Generally, these  complaints  allege,

among  other things, that the defendants committed fraud, deceit,

misrepresentation,  breach  of  fiduciary  duty,  fraudulent  and

unfair business practices, unjust

<PAGE>

enrichment,  and  conversion  in connection  with  the  sale  and

operation  of  the  various limited partnership commodity  pools.

The  complaints  seek  unspecified amounts  of  compensatory  and

punitive   damages  and  other  relief.   It  is  possible   that

additional  similar actions may be filed and that, in the  course

of  these  actions, other parties could be added  as  defendants.

The  Dean  Witter  Parties believe that they and the  Partnership

have  strong  defenses to, and they will vigorously contest,  the

actions.   Although  the ultimate outcome  of  legal  proceedings

cannot  be  predicted  with  certainty,  it  is  the  opinion  of

management of the Dean Witter Parties that the resolution of  the

actions  will not have a material adverse effect on the financial

condition or the results of operations of any of the Dean  Witter

Parties or the Partnership.
















                                

                                

<PAGE>



Item 6.  Exhibits and Reports on Form 8-K

     A)  Exhibits.

         None.

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



































                           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 14, 1997                   By: /s/ Patti L. Behnke
                                       Patti L. Behnke
                                       Chief Financial Officer




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