Exhibit 10.01



                              MANAGEMENT AGREEMENT

THIS AGREEMENT, made the 1st day of January, 2003 among DEAN WITTER CORNERSTONE
FUND III, a New York limited partnership (the "PARTNERSHIP"), DEMETER MANAGEMENT
CORPORATION, a Delaware corporation (the "GENERAL Partner"), and GRAHAM CAPITAL
MANAGEMENT, L.P., a Delaware limited partnership (the "TRADING MANAGER");


                              W I T N E S S E T H:
                              - - - - - - - - - -

            WHEREAS, the Partnership has been organized to engage in speculative
trading of commodities (including foreign currencies, mortgage-backed
securities, money market instruments, and any other securities or items which
are now or may hereafter be the subject of futures contract trading), commodity
futures contracts, commodity forward contracts, foreign exchange commitments,
commodity options, spot (cash) commodities and currencies, and any rights
pertaining thereto (hereinafter referred to as "COMMODITY INTERESTS"); the
Trading Manager has extensive experience trading in commodity interests and is
willing to provide certain services and undertake certain obligations as set
forth herein;

            WHEREAS, the Partnership is a member partnership of the Dean Witter
Cornerstone Funds (the "CORNERSTONE FUNDS") pursuant to which units of limited
partnership interest ("UNITS") of such member partnerships were sold to
investors in a common offering under the Securities Act of 1933, as amended (the
"ACT"), pursuant to a Registration Statement on Form S-1 (No. 2-88587) (as
amended from time to time, the "REGISTRATION STATEMENT") and the Prospectus,
constituting a part thereof (as amended and supplemented, the "PROSPECTUS");

            WHEREAS, the Partnership desires the Trading Manager to act as a
trading manager for the Partnership and to make investment decisions with
respect to commodity interests for its allocated share of the Partnership's "NET
ASSETS" (as defined in Section 7(c) hereof) and the Trading Manager desires so
to act; and

            WHEREAS, the Partnership, the General Partner, and the Trading
Manager wish to enter into this Management Agreement which, among other things,
set forth certain terms and conditions upon which the Trading Manager will
conduct a portion of the Partnership's commodity interest trading;

            NOW, THEREFORE, the parties hereto hereby agree as follows:

I.   Undertakings in Connection with the Offering of Units

      A.    The Trading Manager agrees with respect to the continuing offering
            of Units: (i) to make all disclosures regarding itself, its
            principals and affiliates, its trading performance, its trading
            programs, systems, methods, and strategies (subject to the need to
            preserve the secrecy of proprietary information concerning such
            programs, systems, methods, and strategies), any client accounts
            over which it has direct or indirect discretionary trading authority
            (other than the names of such clients), and otherwise as the
            Partnership may reasonably require (x) to be made in any amendments
            or supplements to the Partnership's Prospectus required by Section
            4.21 of the regulations of the CFTC or (y) to comply with any
            applicable federal or state law or rule or regulation, including
            those of the Securities and Exchange Commission (the "SEC"), the
            CFTC, the National Futures Association (the "NFA"), the National
            Association of Securities Dealers, Inc. (the "NASD") or any other
            regulatory body, exchange, or board; and (ii) otherwise to cooperate
            with the Partnership and the General Partner by providing
            information regarding the Trading Manager in connection with the
            preparation and filing of any amendments or supplements to the
            Partnership's Registration Statement and Prospectus, with the SEC,
            CFTC, NFA, NASD, and with appropriate governmental authorities as
            part of making application for registration of the Units under the
            securities or Blue Sky laws of such jurisdictions as the Partnership
            may deem appropriate. As used herein, the term "PRINCIPAL" shall
            have the same meaning as defined in Section 4.10(e) of the CFTC
            Regulations and the term "AFFILIATE" shall mean an entity or
            individual (including a stockholder, director, officer, employee, or
            agent) that directly or indirectly controls, is controlled by, or is
            under common control with, any other entity or individual.

      B.    The General Partner, in its sole discretion and at any time may
            discontinue the offering of Units. Pursuant to this provision, the
            General Partner discontinued the offering of Units effective May 1,
            1999.

II.  Duties of the Trading Manager

      A.    The Trading Manager hereby agrees to act as a Trading Manager for
            the Partnership and, as such, shall have sole authority and
            responsibility for directing the investment and reinvestment of its
            allocable share of Net Assets of the Partnership pursuant to its
            Global Diversified Program at 150% Leverage trading program on the
            terms and conditions and in accordance with the prohibitions and
            trading policies set forth in this Agreement and the Partnership's
            Limited Partnership Agreement as from time to time in effect (the
            "LIMITED PARTNERSHIP AGREEMENT"); provided, however, that the
            General Partner may override the instructions of the Trading Manager
            to the extent necessary (i) to comply with the trading policies of
            the Partnership as described in the Limited Partnership Agreement
            and with applicable speculative position limits, (ii) to fund any
            distributions, redemptions, or reapportionments among other trading
            managers to the Partnership, (iii) to pay the Partnership's
            expenses, (iv) to the extent the General Partner believes doing so
            is necessary for the protection of the Partnership, (v) to terminate
            the commodity interests trading of the Partnership, or (vi) to
            comply with any applicable law or regulation. The General Partner
            agrees not to override any such instructions for the reasons
            specified in clauses (ii) or (iii) of the preceding sentence unless
            the Trading Manager fails to comply with a request of the General
            Partner to make the necessary amount of funds available to the
            Partnership within five days of such request. The Trading Manager
            shall not be liable for the consequences of any decision by the
            General Partner to override instructions of the Trading Manager,
            except to the extent that the Trading Manager is in breach of this
            Agreement. In performing services for the Partnership, the Trading
            Manager may not materially alter or change the program used by the
            Trading Manager in investing and reinvesting its allocable share of
            the Partnership's Net Assets in commodity interest contracts as
            described in the Trading Manager's Disclosure Document dated October
            15, 2002 (the "DISCLOSURE DOCUMENT") without the prior consent of
            the General Partner, it being understood that changes in the futures
            interests traded shall not be deemed an alteration in the Trading
            Manager's trading program.

      B.    The Trading Manager shall:

            1.    Exercise good faith and due care in trading commodity
                  interests for the account of the Partnership in accordance
                  with the prohibitions and trading policies of the Partnership
                  as described in the Limited Partnership Agreement and the
                  trading systems, methods, and strategies of the Trading
                  Manager described in the Disclosure Document, with such
                  changes and additions to such trading systems, methods or
                  strategies as the Trading Manager, from time to time,
                  incorporates into its trading approach for accounts the size
                  of the Partnership.

            2.    Subject to reasonable assurances of confidentiality by the
                  General Partner and the Partnership, provide the General
                  Partner, within 30 calendar days of a request therefor by the
                  General Partner, with information comparing the performance of
                  the Partnership's account and the performance of all other
                  client accounts directed by the Trading Manager using the
                  trading systems used by the Trading Manager for the
                  Partnership over a specified period of time. In providing such
                  information, the Trading Manager may take such steps as are
                  necessary to assure the confidentiality of the Trading
                  Manager's clients' identities. The Trading Manager shall, upon
                  the General Partner's request, consult with the General
                  Partner concerning any discrepancies between the performance
                  of such other accounts and the Partnership's account. The
                  Trading Manager shall promptly inform the General Partner of
                  any material discrepancies of which the Trading Manager is
                  aware. The General Partner acknowledges that different trading
                  programs, strategies or implementation methods may be utilized
                  for differing sizes of accounts, accounts with different
                  trading policies, accounts experiencing differing inflows or
                  outflows of equity, accounts that commence trading at
                  different times, accounts with different fee structures,
                  accounts which have different portfolios or different fiscal
                  years and accounts with different expenses, leverage and
                  interest arrangements and that such differences may cause
                  divergent trading results.

            3.    Upon request of the General Partner and subject to reasonable
                  assurances of confidentiality by the General Partner and the
                  Partnership, provide the General Partner with all material
                  information concerning the Trading Manager other than
                  proprietary information (including, without limitation,
                  information relating to changes in control, personnel, trading
                  approach, or financial condition). The General Partner
                  acknowledges that all trading instructions made by the Trading
                  Manager will be held in confidence by the General Partner,
                  except to the extent necessary to conduct the business of the
                  Partnership or as required by law.

            4.    Inform the General Partner when the Trading Manager's open
                  positions maintained by the Trading Manager exceed the Trading
                  Manager's applicable speculative position limits.

      C.    All purchases and sales of commodity interests pursuant to this
            Agreement shall be for the account and at the risk of the
            Partnership and not for the account or at the risk of the Trading
            Manager or any of its stockholders, directors, officers, employees,
            or any other person, if any, who controls the Trading Manager within
            the meaning of the Act. All brokerage commissions arising from the
            trading by the Trading Manager shall be for the account of the
            Partnership, but shall only be charged against the assets of the
            Partnership managed by the Trading Manager.

      D.    Notwithstanding any provision of this Agreement to the contrary, the
            Trading Manager shall assume financial responsibility for any errors
            committed or caused by it in transmitting orders for the purchase or
            sale of commodity interests for the Partnership's account, including
            payment to the commodity broker of the floor brokerage commissions,
            exchange and NFA fees, and other transaction charges and give-up
            charges incurred on such trades but only for the amount of
            out-of-pocket costs associated therewith. The Trading Manager's
            errors shall include, but not be limited to, inputting improper
            trading signals or communicating incorrect orders for execution.
            However, the Trading Manager shall not be responsible for errors
            committed or caused by any commodity broker for the Partnership. The
            Trading Manager and any commodity broker for the Partnership each
            shall have an affirmative obligation to promptly notify the other
            party of its own errors, and the Trading Manager shall use its best
            efforts to identify and promptly notify the General Partner of any
            order or trade which the Trading Manager reasonably believes was not
            executed in accordance with its instructions to any commodity broker
            for the Partnership.

      E.    Prior to the commencement of trading by the Trading Manager on
            behalf of the Partnership, the General Partner, on behalf of the
            Partnership, shall deliver to the Trading Manager a trading
            authorization in the form annexed hereto as Exhibit A appointing the
            Trading Manager the Partnership's attorney-in-fact for such purpose.

III.  Designation of Additional Trading Managers

The Trading Manager understands and agrees that if the General Partner at any
time deems it to be in the best interests of the Partnership, the General
Partner may designate and retain an additional trading manager or managers for
the Partnership and may apportion to such additional trading manager(s) the
management of such amounts of Net Assets as the General Partner shall determine
in its absolute discretion. The replacement of any trading manager for the
Partnership by the General Partner shall not require any approval of the
existing trading managers (including the Trading Manager). The designation and
retention of an additional or replacement trading manager or managers and the
apportionment of Net Assets to any such trading manager(s) pursuant to this
Section 3 shall neither terminate this Agreement nor modify in any regard the
respective rights and obligations of the Partnership, the General Partner, and
the Trading Manager hereunder.

IV.  Trading Manager Independent

For all purposes of this Agreement, the Trading Manager shall be deemed to be an
independent contractor and shall, unless otherwise expressly provided herein or
authorized, have no authority to act for or represent the Partnership or General
Partner in any way or otherwise be deemed an agent of the Partnership or General
Partner. Nothing contained herein shall be deemed to require the Partnership or
General Partner to take any action contrary to the Limited Partnership
Agreement, the Certificate of Limited Partnership of the Partnership as from
time to time in effect (the "CERTIFICATE OF LIMITED PARTNERSHIP"), or any
applicable law or rule or regulation of any regulatory body, exchange, or board.
Nothing herein contained shall constitute the Trading Manager and any other
trading manager or managers for the Partnership, the General Partner, or other
member partnerships of the Cornerstone Funds or their trading managers as
members of any partnership, joint venture, association, syndicate, or other
entity, or be deemed to confer on any of them any express, implied, or apparent
authority to incur any obligation or liability on behalf of any other. It is
expressly agreed that the Trading Advisor is neither a promoter, sponsor, nor
issuer with respect to the Partnership.

V.  Apportionment of Funds to the Trading Manager

Effective as of the close of business on January 1, 2003, the General Partner
will reallocate the Partnership's Net Assets. The Trading Manager will be
allocated approximately 33% of the Partnership's Net Assets effective as of the
date hereof. However, the General Partner may, in its absolute discretion,
reapportion the funds of the Partnership among the trading managers for the
Partnership (including the Trading Manager) when (i) an additional or
replacement trading manager or managers are designated for the Partnership by
the General Partner pursuant to Section 3 hereof; (ii) a trading manager for the
Partnership is terminated; (iii) there is a 35% decline in the value of the
Managed Net Assets (as defined in Section 7(c) hereof) of the Trading Manager or
any other trading manager for the Partnership during any twelve consecutive
month period (after adding back the amount of distributions, redemptions, or
reapportionments charged to such Managed Net Assets and subtracting increases in
such Managed Net Assets from Units acquired by purchase or from reapportionments
among trading managers during the relevant portion of such twelve consecutive
month period); (iv) a fiscal year or "INCENTIVE PERIOD" (as defined in Section
7(a) hereof) of the Partnership ends; or (v) speculative position limits are
exceeded or about to be exceeded in any one commodity by the Trading Manager or
any other trading manager for the Partnership or any principal or affiliate
thereof.

VI.  Commodity Broker

The Trading Manager shall effect all transactions in commodity interests for the
Partnership through, and shall maintain a separate account with, such commodity
broker or brokers as the General Partner shall direct. At the present time,
Morgan Stanley DW Inc., a Delaware corporation and an affiliate of the General
Partner ("MORGAN STANLEY DW"), shall act as non-clearing commodity broker and
Morgan Stanley & Co. Incorporated ("MS&CO.") shall act as clearing commodity
broker for the Partnership (except that Morgan Stanley & Co. International
Limited ("MSIL") will act as clearing commodity broker with respect to trades on
the London Metal Exchange). The General Partner shall provide the Trading
Manager with copies of brokerage statements. Notwithstanding that MS & Co. and
MSIL shall act as clearing commodity brokers for the Partnership, the Trading
Manager may execute trades through floor brokers other than those employed by
MS&Co. and MSIL so long as arrangements are made for such floor brokers to
"GIVE-UP" or transfer the positions to MS&Co. and MSIL, as applicable, and
provided that the rates charged by such floor brokers have been approved in
advance by Morgan Stanley DW.

VII.  Fees

      A.    For the services to be rendered to the Partnership by the Trading
            Manager under this Agreement, the Partnership shall pay the Trading
            Manager the following fees:

            1.    A monthly management fee, without regard to whether the
                  Partnership is profitable, equal to 1/12 of 3.50% of the
                  "MANAGED NET ASSETS" (as defined in Section 7(c)) as of the
                  end of each calendar month (a 3.50% annual rate) commencing
                  with the month in which the Partnership begins to receive
                  trading advice from the Trading Manager pursuant to this
                  Agreement, adding back for purposes of determining such fee
                  any incentive fees accrued or payable on such Managed Net
                  Assets as of such date and without reduction for any
                  distributions or redemptions accrued or payable as of such
                  date.

            2.    An annual incentive fee equal to the portion of 15% of the
                  "NEW APPRECIATION" (as defined below), if any, in the value of
                  the "NET ASSETS" (as defined in Section 7(c)) as of the last
                  day of any "INCENTIVE PERIOD" (as defined below) as shall be
                  allocated to the Trading Manager in accordance with the
                  provisions set forth in Exhibit B annexed hereto.

An "INCENTIVE PERIOD" shall be the twelve month period commencing on January 1
and ending on December 31.

The term "APPRECIATION" shall mean (A) the value of the Net Assets as of the
last day of any incentive period (reduced by management fees accrued or payable
for the account of the Partnership for such incentive period, but before
reduction for the current annual incentive fee, if any, accrued or payable for
the account of the Partnership for such incentive period), minus (B) the highest
value of Net Assets as of the last day of any preceding incentive period.

The term "NEW APPRECIATION" means Appreciation increased by distributions and
redemptions paid or payable on Units and decreased by interest income earned for
the account of the Partnership, with each item of increase or decrease
determined from the date of such highest value of Net Assets to the last day of
the incentive period as of which such incentive fee calculation is made.

The aggregate dollar amount of all distributions and redemptions paid or payable
on Units shall be divided by the then number of trading managers for the
Partnership (including the Trading Manager) and an equal dollar amount in
respect of such distributions or redemptions shall be charged to the Managed Net
Assets of each such trading manager unless the General Partner shall select an
alternative means of allocation and shall so notify the trading managers. All
incentive fees accrued at the end of a month or paid at the end of an incentive
period shall be charged to the Managed Net Assets of each trading manager for
the Partnership (including the Trading Manager) in the same manner and to the
same extent as such amounts would or will be paid to each such trading manager
as of the date of accrual or payment.

It is understood that limited partners of the Partnership may redeem Units other
than at the end of an incentive period and that accrued incentive fees, if any,
shall be a deduction from the "NET ASSET VALUE" (as defined in the Limited
Partnership Agreement) of such Units upon redemption. The Partnership agrees
that the incentive fee accrued on any such Units shall be paid to the Trading
Manager in accordance with the terms of this Agreement as if a month-end were
the end of an incentive period. Any amounts so paid to trading managers for the
Partnership (including the Trading Manager) shall be deducted from any
subsequent incentive fee to be paid as of the end of an incentive period which
includes New Appreciation allocable to such Units.


      B.    If any payment shall have been made by the Partnership to the
            Trading Manager on account of New Appreciation in the value of the
            Net Assets and thereafter the Net Assets shall decline in value or
            fail to experience New Appreciation for any subsequent incentive
            period, the Trading Manager shall be entitled to retain such amounts
            previously paid by the Partnership in respect of New Appreciation.
            No subsequent payment based on New Appreciation as of the end of an
            incentive period shall be made to the Trading Manager, however,
            until the Partnership has again experienced New Appreciation and the
            Trading Manager has contributed thereto and is entitled to an
            allocation of such incentive fee.

If this Agreement is terminated on a date other than the end of an incentive
period, the incentive fee described above shall be determined as if such date
were the end of an incentive period. If this Agreement is terminated on a date
other than the end of a calendar month, the management fee described above shall
be determined as if such date were the end of a month, but such fee shall be
prorated based on the ratio of the number of trading days in the month through
the date of termination to the total number of trading days in the month. If
during any month (including the month in which the Partnership commences trading
operations) the Partnership does not conduct business operations, or suspends
trading, or, as a result of an act or failure to act by the Trading Manager, is
otherwise unable to utilize the trading advice of the Trading Manager on any of
the trading days of that period for any reason, the management fee described
above shall be prorated based on the ratio of the number of trading days in the
month on which the Partnership engaged in trading operations to the total number
of trading days in the month. The management fee payable to the Trading Manager
for the month in which the Partnership begins to receive trading advice from the
Trading Manager pursuant to this Agreement shall be prorated based on the ratio
of the number of trading days in the month from the day the Partnership begins
to receive such trading advice to the total number of trading days in the month.

Any management or incentive fees payable to the Trading Manager pursuant to the
foregoing provisions shall be paid within ten and thirty days, respectively,
after the end of the applicable period.

      C.    As used herein, the term "NET ASSETS" shall mean the total assets of
            the Partnership, including all cash and cash equivalents (valued at
            cost), accrued interest, and the market value of all open commodity
            positions and other assets of the Partnership, less (i) one-half of
            the brokerage commissions that would be payable with respect to the
            closing of each of the Partnership's open commodity positions and
            (ii) all other liabilities of the Partnership, including incentive
            fees accrued or payable, determined in accordance with the
            principles specified in the Limited Partnership Agreement and, where
            no principle is specified, in accordance with generally accepted
            accounting principles consistently applied under the accrual basis
            of accounting.

As used herein, the term "MANAGED NET ASSETS" shall mean the total assets of the
Partnership allocated to the management of a trading manager (including the
Trading Manager), including all cash and cash equivalents (valued at cost),
accrued interest, and the market value of all open commodity positions and other
assets allocated to such trading manager, less (i) one-half of the brokerage
commissions that would be payable with respect to the closing of each of such
trading manager's open commodity positions, (ii) its proportionate share of
incentive fees for the Partnership accrued or payable pursuant to the provisions
of this Section, and (iii) all other liabilities of the Partnership allocated to
such trading manager, including brokerage commissions attributable to the
trading manager and monthly management fees of the trading manager, determined
in accordance with the principles specified in the Limited Partnership Agreement
and, where no principle is specified, in accordance with generally accepted
accounting principles consistently applied under the accrual basis of
accounting.

      D.    The Trading Manager shall not receive any share of the brokerage
            commissions paid by the Partnership to any commodity broker, whether
            in the form of rebates or otherwise.

VIII.  Term

This Agreement shall continue in effect for a period of one year following the
date of this Agreement. Thereafter, this Agreement shall be renewed
automatically for additional one-year terms unless either the Partnership or the
Trading Manager, upon written notice given not less than 30 days prior to the
original termination date or any extended termination date, notifies the other
party of its intention not to renew. This Agreement shall terminate if the
Partnership terminates. The Partnership shall have the right to terminate this
Agreement at any time without penalty upon 15 days' prior written notice to the
Trading Manager. In addition, this Agreement may be terminated by the
Partnership at any time without penalty upon written notice to the Trading
Manager upon the occurrence of any of the following events: (i) the Trading
Manager becomes bankrupt or insolvent; (ii) the Trading Manager is unable to use
its Global Diversified Program at 150% Leverage as in effect on the date of this
Agreement and as refined and modified in the future with the written consent of
the General Partner for the benefit of the Partnership; (iii) the registration,
as a commodity trading advisor or otherwise, of the Trading Manager with the
CFTC or its membership in the NFA is revoked, suspended, terminated, or not
renewed or limited, conditioned, restricted or qualified in any respect; (iv)
except as permitted in Section 14 hereof, the Trading Manager merges or
consolidates with, or sells or otherwise transfers its advisory business, or all
or a substantial portion of its assets, any portion of its commodity trading
systems or methods, or its goodwill to, any individual or entity; (v) a decline
in the Net Asset Value of a Unit, without taking into account distributions, if
any, to less than 40% of the Net Asset Value of a Unit on the date that the
Partnership commenced trading operations; (vi) a decline in the Net Asset Value
of a Unit during any fiscal year to less than 50% of the Net Asset Value of a
Unit as of the beginning of such fiscal year of the Partnership; (vii) a decline
by 50% during any consecutive 12-month period in the value of the Net Assets
managed by the Trading Manager (after adding back the amount of distributions,
redemptions, and reapportionments charged to such Net Assets and subtracting
increases in such Net Assets from Units acquired by Exchange or from
reapportionments among Trading Managers during the relevant portion of such
twelve consecutive month period); (viii) the Trading Manager violates any of the
Partnership's trading policies or any administrative policy described in writing
to the General Partner, except with the prior written consent of the General
Partner; or (ix) the Trading Manager fails to perform any of its obligations
under this Agreement. The indemnities set forth in Sections 9 and 10 hereof
shall survive any termination of this Agreement.

IX.  Standard of Liability and Indemnity

      A.    Subject to Section 2 and Sections 10 through 14 hereof, the Trading
            Manager and its stockholders, directors, officers, employees,
            agents, and its or their respective successors and assigns shall not
            be liable to the Partnership, the General Partner, its stockholder,
            officers, directors, or employees, the limited partners of the
            Partnership, or any of its or their respective successors or
            assigns, except by reason of acts of, or omissions due to, bad
            faith, misconduct, or negligence, or for not having acted in good
            faith in the reasonable belief that such acts or omissions were in,
            or not opposed to, the best interests of the Partnership, or by
            reason of a material breach of this Agreement, or by reason of a
            material breach of a representation or warranty in this Agreement.

      B.    The Partnership and the General Partner shall indemnify, defend, and
            hold harmless the Trading Manager, its stockholders, directors,
            officers, employees, and its or their respective successors and
            assigns from and against all liabilities (including in connection
            with the defense or settlement of claims) incurred in the
            performance of the services required by this Agreement, provided
            that a court of competent jurisdiction upon entry of final judgment
            shall find (or, if no final judgment is entered, an opinion is
            rendered to the Partnership by independent legal counsel) to the
            effect that such liability was not the result of bad faith,
            misconduct, or negligence on the part of the indemnified person, or
            that the conduct by the indemnified person was done in the good
            faith belief that it was in, or not opposed to, the best interests
            of the Partnership.

      C.    The Trading Manager shall indemnify, defend, and hold harmless the
            Partnership, the General Partner, its stockholders, officers,
            directors, and employees, the limited partners of the Partnership,
            and any of its or their respective successors or assigns from and
            against all liabilities incurred as a result of the activities of
            the Trading Manager, its stockholders, directors, officers,
            employees, agents, or its or their respective successors and
            assigns, provided that such liability arises out of, or is based
            upon, conduct by the Trading Manager or any of its stockholders,
            directors, officers, employees, agents, or its or their respective
            successors or assigns which is found by a court of competent
            jurisdiction upon entry of final judgment (or, if no final judgment
            is entered, by an opinion rendered to the Partnership by independent
            legal counsel) to be the result of bad faith, misconduct, or
            negligence, or conduct not done in the good faith belief that it was
            in, or not opposed to, the best interests of the Partnership.

      D.    The indemnities provided in this Section 9 by the Partnership and
            the General Partner to the Trading Manager and its stockholders,
            directors, officers, employees, and its or their respective
            successors and assigns shall be inapplicable in the event of any
            liability arising out of, or based upon, any misrepresentation or
            material breach of any warranty, covenant, or agreement of the
            Trading Manager contained in this Agreement to the extent caused by
            such event. Likewise, the indemnities provided in this Section 9 by
            the Trading Manager to the Partnership, the General Partner, its
            stockholders, officers, directors, and employees, the limited
            partners of the Partnership, and any of its or their respective
            successors and assigns shall be inapplicable in the event of any
            liability arising out of, or based upon, any misrepresentation or
            material breach of any warranty, covenant, or agreement of the
            Partnership or the General Partner contained in this Agreement to
            the extent caused by such event.

X.  Indemnification in Connection with the Registration Statement and the
    Prospectus

      A.    The Partnership and the General Partner shall indemnify, defend, and
            hold harmless the Trading Manager from and against any losses,
            claims, damages, or liabilities, joint or several, to which the
            Trading Manager may become subject, under the Act or otherwise,
            insofar as such losses, claims, damages, or liabilities (or actions
            in respect thereof) arise out of, or are based upon, any untrue or
            misleading statement or alleged untrue or misleading statement of
            any material fact contained in the Registration Statement, the
            Prospectus, or any amendment or supplement thereto, or any related
            preliminary prospectus, or arise out of, or are based upon, the
            omission or the alleged omission to state therein a material fact
            required to be stated therein or necessary to make the statements
            therein (in the case of the Prospectus, in light of the
            circumstances under which they were made) not misleading; provided,
            however, that the Partnership and the General Partner shall not be
            liable in any such case to the extent that any such loss, claim,
            damage, or liability arises out of, or is based upon, any untrue or
            misleading statement or omission made in any of such documents in
            reliance upon, and in conformity with, information furnished to the
            Partnership or the General Partner or any of their agents by or on
            behalf of the Trading Manager or its agents. The Partnership and the
            General Partner also shall reimburse any legal or other expenses,
            including reasonable attorneys' fees, reasonably incurred by the
            Trading Manager in connection with investigating or defending any
            loss, claim, damage, liability, or action covered by this indemnity
            agreement. The indemnity agreement in this subsection (a) shall be
            in addition to any liability which the Partnership and the General
            Partner may otherwise have and shall extend, upon the same terms and
            conditions, to each officer, director, and employee of the Trading
            Manager and to each person, if any, who controls the Trading Manager
            within the meaning of the Act.

      B.    The Trading Manager shall indemnify, defend, and hold harmless the
            Partnership, the General Partner, any member partnership of the
            Cornerstone Funds, and any other trading manager for the Partnership
            or for a member partnership of the Cornerstone Funds from and
            against any losses, claims, damages, or liabilities, joint or
            several, to which any indemnified person may become subject, under
            the Act or otherwise, insofar as such losses, claims, damages, or
            liabilities (or actions in respect thereof) arise out of, or are
            based upon, any untrue or misleading statement or alleged untrue or
            misleading statement of any material fact contained in the
            Registration Statement, the Prospectus, or any amendment or
            supplement thereto, or any related preliminary prospectus, or arise
            out of, or are based upon, the omission or the alleged omission to
            state therein a material fact required to be stated therein or
            necessary to make the statement therein (in the case of the
            Prospectus, in light of the circumstances under which they were
            made) not misleading, provided that any such loss, claim, damage, or
            liability arises out of, or is based upon, an untrue or misleading
            statement or omission or alleged untrue or misleading statement or
            omission made in any of such documents in reliance upon, and in
            conformity with, information furnished to the Partnership or the
            General Partner or any of their agents by or on behalf of the
            Trading Manager or its agents. As of the date of this Management
            Agreement, no such information has been furnished by or on behalf of
            the Trading Manager or its agents. The Trading Manager also shall
            reimburse any legal or other expenses, including reasonable
            attorneys' fees, reasonably incurred by any indemnified person in
            connection with investigating or defending any loss, claim, damage,
            liability, or action covered by this indemnity agreement. The
            indemnity agreement in this subsection (b) shall be in addition to
            any liability which the Trading Manager may otherwise have and shall
            extend, upon the same terms and conditions, to each partner,
            officer, director, and employee of any indemnified person and to
            each person, if any, who controls any indemnified person within the
            meaning of the Act.

      C.    Promptly after receipt by an indemnified party under this Section of
            notice of the commencement of any action, the indemnified party
            shall notify the indemnifying party of the commencement thereof if a
            claim in respect thereof is to be made against the indemnifying
            party under this Section; but the omission so to notify the
            indemnifying party shall not relieve the indemnifying party from any
            liability which the indemnifying party may have to any indemnified
            party under this Section (except where such omission shall have
            materially prejudiced the indemnifying party) or otherwise than
            under this Section. In case any action is brought against any
            indemnified party, and the indemnified party notifies the
            indemnifying party of the commencement thereof, the indemnifying
            party shall be entitled to participate therein and, to the extent
            that the indemnifying party may wish, jointly with any other
            indemnifying party similarly notified, to assume the defense
            thereof, with legal counsel satisfactory to the indemnified party,
            and after notice from the indemnifying party to the indemnified
            party of the indemnifying party's election so to assume the defense
            thereof, the indemnifying party shall not be liable to the
            indemnified party under this Section for any legal or other expenses
            subsequently incurred by the indemnified party in connection with
            the defense thereof other than reasonable costs of investigation.
            Notwithstanding any other provision of this Section, if in any claim
            as to which indemnify is or may be available any indemnified party
            reasonably determines that its interests are or may be adverse, in
            whole or in part, to the interests of the indemnifying party or that
            there may be legal defenses available to the indemnified party which
            are or may be different from, in addition to, or inconsistent with
            the defenses available to the indemnifying party, the indemnified
            party may retain its own legal counsel in connection with such
            claim, in which case the indemnified part shall be responsible for
            any legal or any other expenses, including reasonable attorneys'
            fees, incurred by or on behalf of it in connection with
            investigating or defending such claim.

XI.  Right to Advise Others and Uniformity of Acts and Practices

      A.    The Trading Manager is engaged in the business of advising investors
            as to the purchase and sale of commodity interests. During the term
            of this Agreement, subject to Section 11(c) hereof, the Trading
            Manager and its principals and affiliates may or will be advising
            other investors (including their officers, directors, and employees
            and their families, their principals and affiliates, and
            stockholders, officers, directors, and employees of such principals
            and affiliates and their families) and trading for their accounts.
            However, under no circumstances shall the Trading Manager or any of
            its principals or affiliates by any act or omission knowingly or
            deliberately favor any account advised or managed by the Trading
            Manager or any of its principals or affiliates over the account of
            the Partnership in any way or manner (other than by charging
            different management and/or incentive fees). The Trading Manager and
            its principals and affiliates agree to treat the Partnership in a
            fiduciary capacity to the extent recognized by applicable law, but,
            subject to that standard and Section 11(c) hereof, the Trading
            Manager and its principals and affiliates shall be free to advise
            and manage accounts for other investors and shall be free to trade
            on the basis of the same trading system or other methods or
            strategies employed by the Trading Manager for the account of the
            Partnership, or trading systems, methods, or strategies which are
            entirely independent of, or materially different from, those
            employed for the account of the Partnership, and shall be free to
            compete for the same commodity interests as the Partnership or to
            take positions opposite to the Partnership, where such actions do
            not knowingly or deliberately favor any of such accounts over the
            account of the Partnership. At the request of the General Partner,
            the Trading Manager shall use its best efforts to make available for
            inspection and copying by the General Partner copies of the normal
            monthly, quarterly, and annual (as the case may be) reports sent to
            participants in commodity pools (without identifying such
            participants) for which the Trading Manager or any of its principals
            or affiliates acts as a commodity trading advisor and similar
            information with respect to any other accounts of theirs with
            respect to which such reports are not required to be delivered. At
            the request of the General Partner, the Trading Manager and its
            principals and affiliates shall provide the General Partner with a
            written explanation, acceptable to the General Partner, of material
            differences in performance between the Partnership's account and
            such other accounts.

      B.    Subject to Section 11(c) hereof, the Trading Manager and its
            principals and affiliates shall not be restricted as to the number
            of nature of their clients, except that: (i) they shall not accept
            additional advisory clients or open additional positions in
            commodity interests if to do so would result in aggregate positions
            in any one commodity exceeding the applicable speculative position
            limits of the CFTC or any other regulatory body, exchange, or board
            having jurisdiction; and (ii) if they at any time become aware that
            the positions in commodity interests of the Partnership, the Trading
            Manager, or any principal or affiliate of the Trading Manager
            (either alone or aggregated with the positions of any other person)
            exceed or are about to exceed applicable speculative position limits
            of the CFTC or any other regulatory body, exchange, or board having
            jurisdiction, they shall immediately notify the General Partner of
            that fact and shall take such action, consistent with their
            fiduciary responsibility to the Partnership, their obligation not to
            favor any other account over the Partnership's account, and their
            obligations under this Agreement, as may be necessary to prevent to
            the extent possible the significant modification of positions taken
            or intended for the Partnership.

      C.    The Trading Manager represents and agrees that so long as the
            Trading Manager acts as a trading manager for the Partnership,
            neither the Trading Manager nor any of its principals or affiliates
            shall hold knowingly any position or control any other account which
            would cause the Partnership, the Trading Manager, or the principals
            or affiliates of the Trading Manager to be in violation of the
            Commodity Exchange Act (the "CEACT") or any regulations promulgated
            thereunder, any applicable rule or regulation of the CFTC or any
            other regulatory body, exchange, or board. The Trading Manager
            further represents and agrees that neither the Trading Manager nor
            any of its principals or affiliates shall render commodity trading
            advice to any other individual or entity or otherwise engage in
            activity which shall knowingly cause positions in commodity
            interests to be attributed to the Trading Manager or any of its
            principals or affiliates under the rules or regulations of the CFTC
            or any other regulatory body, exchange, or board so as to require
            the significant modification of positions taken or intended for the
            account of the Partnership. If applicable speculative position
            limits are exceeded by the Trading Manager or any of its principals
            or affiliates in the opinion of independent legal counsel (who shall
            be other than counsel to the Partnership), the CFTC, or any other
            regulatory body, exchange, or board, the Trading Manager and its
            principals and affiliates shall promptly liquidate positions in all
            of their accounts, including the Partnership's account, as to which
            positions are attributed to the Trading Manager or any of its
            principals or affiliates as nearly as possible in proportion to
            their respective equities to the extent necessary to comply with the
            applicable position limits and shall deliver to the General Partner
            a written explanation of the manner in which it or they complied
            with this provision.

XII.  Additional Undertakings by the Trading Manager

The Trading Manager warrants and agrees that neither the Trading Manager nor any
of its partners, officers, directors, employees, principals, affiliates, or any
of the officers, directors, employees, or stockholders of such principals or
affiliates shall knowingly use or distribute the Certificate of Limited
Partnership, any amendment thereto, or any list excerpted or compiled therefrom
containing the names and/or residence addresses of, and/or other biographical
information about, the limited partners of the Partnership for the purpose of
soliciting any such person for a commodity pool or commodity trading program
similar in nature to the Partnership.

XIII.  Aggregation

If it should prove necessary, in the reasonable opinion of the legal counsel to
the Partnership with respect to commodity interests subject to speculative
position limits established by the CFTC, an exchange, or any other commodity
trading regulatory agency or authority, for positions in commodity interests
taken by the Trading Manager for the account of the Partnership to be
aggregated, for purposes of speculative position limits, with positions in
commodity interests taken by each of the other trading managers for the account
of the Partnership, or if an order to that effect is made by the CFTC, such
exchange, or such other agency or authority, the General Partner may require the
Trading Manager and each other trading manager affected thereby to utilize only
that portion of the speculative position limit in each commodity interest as the
General Partner shall determine from time to time in its sole discretion.

XIV.  Merger or Transfer of Assets of Trading Manager

The Trading Manager may merge or consolidate with, or sell or otherwise transfer
its advisory business, or all or a substantial portion of its assets or its
goodwill to, any entity that directly or indirectly is controlled by, controls,
or is under common control with, the Trading Manager, provided that such entity
expressly assumes all obligations of the Trading Manager under this Agreement
and agrees to continue to operate the business of the Trading Manager,
substantially as such business is being conducted on the date hereof, as a
separate and distinct division of such entity. The Trading Manager agrees to
provide written notice to the General Partner at least 30 days before the
effective date of any such merger, consolidation, sale, or transfer, whether
permitted under this Section or otherwise.

XV.  Complete Agreement

This Agreement constitutes the entire agreement among the parties with respect
to the matters referred to herein, and no other agreement, verbal or otherwise,
shall be binding as among the parties unless it is in writing and signed by the
party against whom enforcement is sought.

XVI.  Assignment

This Agreement may not be assigned by any party hereto without the prior written
consent of the other parties hereto, except that the Partnership and General
Partner may assign this Agreement to any entity that directly or indirectly
controls, is controlled by, or is under common control with, them, and the
Trading Manager may assign this Agreement to a successor entity expressly
permitted under Section 14 hereof.

XVII.  Amendment; Waiver

This Agreement may not be amended except by a written instrument signed by the
parties hereto. No waiver of any provision of this Agreement shall be implied
from any course of dealing between or among the parties hereto or from any
failure by any party hereto to assert its rights hereunder on any occasion or
series of occasions.

XVIII.  Severability

The invalidity or unenforceability of any provision of this Agreement or any
covenant herein contained shall not affect the validity or enforceability of any
other provision or covenant hereof or herein contained, and any such invalid
provision or covenant shall be deemed to be severable.

XIX.  Notices

All notices required or desired to be delivered under this Agreement shall be in
writing and shall be effective when delivered personally on the day delivered
or, when given by registered or certified mail, postage prepaid, return receipt
requested, on the second business day following the day on which it is so
mailed, addressed as follows (or to such other address as the party entitled to
notice shall hereafter designate in accordance with the terms hereof):

            if to the Partnership:

            c/o Demeter Management Corporation
            Harborside Financial Center, Plaza Two, 1st Floor
            Jersey City, New Jersey 07311
            Attn:  Jeffrey A. Rothman, President

            if to the General Partner:

            Demeter Management Corporation
            Harborside Financial Center, Plaza Two, 1st Floor
            Jersey City, New Jersey 07311
            Attn:  Jeffrey A. Rothman, President

            and with copies to:

            Morgan Stanley DW Inc.
            1221 Avenue of the Americas, 23rd Floor
            New York, New York 10020
            Attn:  Isaac Finkle, Esq.

            and

            Cadwalader, Wickersham & Taft
            100 Maiden Lane
            New York, New York 10038
            Attn:  Timothy P. Selby, Esq. / Edwin L. Lyon, Esq.

            if to the Trading Manager:

            Graham Capital Management L.P.
            Stamford Harbor Park
            333 Ludlow Street
            Stamford, Connecticut 06902
            Attn:  Kenneth G. Tropin, Chairman

XX.  Survival

The provisions of this Agreement shall survive the termination of this Agreement
with respect to any matter arising while this Agreement was in effect, provided
that the restriction in Section 11(c) hereof shall not survive the termination
of this Agreement.

XXI.  Governing Law

This Agreement shall be governed by, and construed in accordance with, the law
of the State of New York (excluding the law thereof which requires the
application of or reference to the law of any other jurisdiction).

XXII.  Consent to Jurisdiction

The parties hereto agree that any action or proceeding arising directly,
indirectly, or otherwise in connection with, out of, related to, or from this
Agreement, any breach hereof, or any transaction covered hereby, shall be
resolved, whether by arbitration or otherwise, within the County, City, and
State of New York. Accordingly, the parties consent and submit to the
jurisdiction of the federal and state courts and any applicable arbitral body
located within the County, City, and State of New York. The parties further
agree that any such action or proceeding brought by either party to enforce any
right, assert any claim, or obtain any relief whatsoever in connection with this
Agreement shall be brought by such party exclusively in the federal or state
courts, or if appropriate before an arbitral body, located within the County,
City, and State of New York.

XXIII.  Counterparts

This Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.

XXIV.  Headings

Headings to sections herein are for the convenience of the parties only and are
not intended to be a part of or to affect the meaning or interpretation of this
Agreement.
<PAGE>

IN WITNESS WHEREOF, this Agreement has been executed for and on behalf of the
undersigned as of the day and year first above written.

                                      DEAN WITTER CORNERSTONE FUND III

                                         By:  Demeter Management Corporation,
                                              General Partner


                                      By: /s/ Jeffrey A. Rothman
                                         ---------------------------------------
                                         Jeffrey A. Rothman, President



                                      DEMETER MANAGEMENT CORPORATION


                                      By: /s/ Jeffrey A. Rothman
                                         ---------------------------------------
                                         Jeffrey A. Rothman, President



                                      GRAHAM CAPITAL MANAGEMENT, L.P.


                                      By: /s/ Kenneth G. Tropin
                                         ---------------------------------------
                                         Kenneth G. Tropin, Chairman


<PAGE>

                                                                       EXHIBIT A
                                                                       ---------

                              TRADING AUTHORIZATION


Graham Capital Management L.P.
Stamford Harbor Park
333 Ludlow Street
Stamford, Connecticut 06902


Dear Sirs:

DEAN WITTER CORNERSTONE FUND III, a New York limited partnership (the
"PARTNERSHIP"), does hereby make, constitute, and appoint GRAHAM CAPITAL
MANAGEMENT, L.P. (the "TRADING MANAGER") as the Partnership's agent and
attorney-in-fact to purchase and sell commodity interests through Morgan Stanley
&Co. Incorporated and Morgan Stanley & Co. International Limited, as commodity
brokers, as described in and in accordance with the terms of the Management
Agreement dated as of January 1, 2003 among the Partnership, Demeter Management
Corporation and the Trading Manager, until further notice to the Trading
Manager.

This authorization shall terminate and be null, void, and of no further effect
simultaneously with the termination of the said Management Agreement.

                                      Very truly yours,


                                      DEAN WITTER CORNERSTONE FUND III

                                      By:    Demeter Management Corporation,
                                             General Partner


                                      By:_____________________________________
                                         Jeffrey A. Rothman, President

Dated:  January 1, 2003
<PAGE>

                                                                       EXHIBIT B
                                                                       ---------

The total Partnership incentive fee, F, in any incentive period is the sum of
the incentive fees payable as a result of New Appreciation. The change in New
Appreciation each incentive period shall for accounting purposes be apportioned
each incentive period among all of the trading managers for the Partnership in
accordance with their net contribution, after allocations for expenses and fees
as described above, to the change in New Appreciation. Thus, if the total change
in New Appreciation during the incentive period is X, then

X = A + B + C

where A, B, and C are the contributions of each of the trading managers to the
total change in New Appreciation. The General Partner shall prepare, update
annually, and maintain running totals of A, B, and C as indicators of the
cumulative contributions of each trading manager. Thus, the cumulative sum of
the value of A, TA, represents the total contribution of trading manager A to
New Appreciation since the inception of trading on behalf of the Partnership by
such trading manager. Similarly, the values TB and TC are the cumulative
contributions of trading managers B and C, respectively.

The General Partner shall maintain a record of cumulative total Partnership
incentive fees and cumulative incentive fees paid to each trading manager. The
cumulative total Partnership incentive fee, TF, shall equal the sum of all
Partnership incentive fees paid. The cumulative total of incentive fees paid to
trading manager A, PA, shall equal the sum of all prior incentive fees received
by that trading manager. Similarly, the values PB and PC are the cumulative
total of incentive fees paid to trading managers B and C, respectively. Since
the incentive fees are allocated among the Partnership's trading managers, then

TF = PA + PB + PC

Consequently, the following three ratios are indicators of cumulative incentive
fee payments relative to cumulative performance for each trading manager:

PA/TA    PB/TB    PC/TC

         To the extent possible, the goal of the allocation rules of the next
paragraph is to equalize these indicators for each trading manager, i.e., to
make cumulative individual incentive fee payments proportional to cumulative
individual performance.

            1)    At the end of each incentive period, the following rules shall
                  be used to allocate the total Partnership incentive fee, F,
                  among each trading manager:

            2)    A trading manager whose total contribution is zero shall
                  receive no incentive fee. Thus, if at the end of the incentive
                  period, TB is zero, trading manager B shall not receive a
                  portion of the fee, F.

            3)    The total Partnership fee, F, shall be allocated among trading
                  managers one dollar at a time. Each successive dollar will be
                  given to the trading manager with the lowest ratio of
                  cumulative payments to cumulative performance. Thus, if PB/TB
                  is less than both PA/TA and PC/TC, then trading manager B is
                  given the next dollar. The values of PA, PB, and PC and the
                  ratios PA/TA, PB/TB, and PC/TC are then recalculated before
                  allocating the next dollar. Thus, the trading manager(s) with
                  the lowest ratio continues to receive dollars until his ratio
                  is larger than one of the other trading managers. Each trading
                  manager shall be entitled to retain any incentive fees paid in
                  any prior incentive period.