UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                    FORM 10-K

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 [No Fee Required] 
For the year ended December 31, 1998 or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required] For the transition  period from  _____________  to
_________________. Commission file number 0-13298

                         DEAN WITTER CORNERSTONE FUND II
--------------------------------------------------------------------------------
  (Exact name of registrant as specified in its Limited Partnership Agreement)

                  NEW YORK                                 13-3212871
--------------------------------------------             --------------------
       (State or other jurisdiction of                   (I.R.S. Employer
          incorporation or organization)                  Identification No.)

c/o Demeter Management Corporation
Two World Trade Center, - 62nd Flr., New York, N.Y.             10048    
----------------------------------------------------      --------------------
 (Address of principal executive offices)                     (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

          Title of each class                     Name of each exchange
                                                   on which registered

                  None                                       None    
          --------------------                     ----------------------    

Securities registered pursuant to Section 12(g) of the Act:

                      Units of Limited Partnership Interest
--------------------------------------------------------------------------------
                                (Title of Class)


         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___   

         Indicate by check-mark if disclosure of delinquent  filers  pursuant to
Item 405 of  Regulation  S-K (section  229.405 of this chapter) is not contained
herein,  and will not be contained,  to the best of registrant's  knowledge,  in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment of this Form 10-K. [X]

State the aggregate  market value of the Units of Limited  Partnership  Interest
held by  non-affiliates  of the registrant.  The aggregate market value shall be
computed  by  reference  to the price at which units were sold as of a specified
date within 60 days prior to the date of filing:  $29,626,483.18  at January 31,
1999.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                  (See Page 1)



<PAGE>








                         DEAN WITTER CORNERSTONE FUND II
                       INDEX TO ANNUAL REPORT ON FORM 10-K
                       -----------------------------------
                                DECEMBER 31, 1998
                                -----------------
                                                                        Page No.

DOCUMENTS INCORPORATED BY REFERENCE. . . . . . . . . . . . . . . . .          1
-----------------------------------

Part I .

     Item      1.  Business. . . . . . . . . . . . . . . . . . . . . . .    2-4

     Item      2.  Properties. . . . . . . . . . . . . . . . . . . . . .      4

     Item      3.  Legal Proceedings. . . . . . . . . . . . . . . . . . .   5-6

     Item      4.  Submission of Matters to a Vote of Security Holders . .    6

Part II.

     Item      5.  Market for the Registrant's Partnership Units
                   and          Related Security Holder Matters . . .. . . .  7

     Item      6.  Selected Financial Data . . . . . . . . . . . . . . . .    8

     Item      7.  Management's Discussion and Analysis of Financial
                   Condition and Results of Operations. . . . . . . . . .  9-18

     Item  7A.     Quantitative and Qualitative Disclosures About
                   Market Risk . . . . . . . . . .  . . . . . . . . . .   18-31

     Item      8.  Financial Statements and Supplementary Data  . . . . .    31

     Item      9.  Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure. . . . . . . . . .    32
Part III.

     Item     10.  Directors and Executive Officers of the Registrant .   33-37

     Item     11.  Executive Compensation . . . . . . . . . . . . . .        37

<PAGE>

     Item     12.  Security Ownership of Certain Beneficial Owners
                   and Management . . . . . . . . . . . . . . . . . . . .    38

     Item     13.  Certain Relationships and Related Transactions . . . .    38

Part IV.

     Item     14.  Exhibits, Financial Statement Schedules, and
                   Reports on Form 8-K . . . . . . . . . . . . . . . . .     39



                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------


Portions of the following documents are incorporated by reference as follows:



         Documents Incorporated                     Part of Form 10-K
         ----------------------                     -----------------


   Partnership's Prospectus dated
   August 28, 1996, together with
   the Supplement to the Prospectus
   dated October 14, 1998                                    I

   Annual Report to the Dean Witter
   Cornerstone Funds II, III and IV
   Limited Partners for the year
   ended December 31, 1998                            II, III and IV


                                      - 1 -

<PAGE>

                                                  PART I

Item 1.  BUSINESS

         (a) General  Development of Business.  Dean Witter  Cornerstone Fund II
(the "Partnership") is a New York limited partnership organized to engage in the
speculative  trading of  futures  contracts  and  forward  contracts  on foreign
currencies  (collectively,  "futures interests").  The Partnership is one of the
Dean  Witter  Cornerstone  Funds,  comprised  of the  Partnership,  Dean  Witter
Cornerstone  Fund III, and Dean Witter  Cornerstone Fund IV. The general partner
is Demeter Management Corporation ("Demeter"). The non-clearing commodity broker
is Dean Witter Reynolds Inc.  ("DWR"),  and an unaffiliated  clearing  commodity
broker,  Carr Futures Inc. ("Carr"),  provides clearing and execution  services.
Both Demeter and DWR are wholly-owned subsidiaries of Morgan Stanley Dean Witter
& Co. ("MSDW").  The Trading Advisors to the Partnership are Northfield  Trading
L.P. and John W. Henry & Company, Inc. (collectively, the "Trading Advisors").

         The Partnership's Net Asset Value per Unit as of December 31, 1998, was
$4,192.04, representing an increase of 12.5 percent from the Net Asset Value per
Unit of $3,724.92 at December 31, 1997.  For a more detailed  description of the
Partnership's business see subparagraph (c).

         (b)  Financial  Information  about  Industry  Segments.  For  financial
information reporting purposes the Partnership is deemed to engage in one

                                      - 2 -

<PAGE>

industry segment,  the speculative  trading of futures  interests.  The relevant
financial information is presented in Items 6 and 8.
 
        (c)  Narrative  Description  of  Business.  The  Partnership  is in the
business  of  speculative  trading of  futures  interests,  pursuant  to trading
instructions provided by the Trading Advisors. For a detailed description of the
different  facets  of the  Partnership's  business,  see those  portions  of the
Partnership's  Prospectus,  dated August 28, 1996, (the  "Prospectus")  together
with the supplement to the Prospectus dated October 14, 1998, (the "Supplement")
incorporated by reference in this Form 10-K, set forth below.
 
           Facets of Business
           ------------------

         1.  Summary                      1.   "Summary of the Prospectus"
                                               (Pages 1-9 of the Prospec-
                                                tus and pages S-15 -
                                                S-34 of the Supplement).

         2.  Commodity Markets            2.   "The Commodities Markets"
                                               (Pages 80-84 of the
                                                Prospectus).

         3.  Partnership's Commodity      3.   "Investment Program, Use of
              Policies                          Trading Arrangements and 
                                                Proceeds and Trading Poli- 
                                                cies" (Pages 45-47 of the
                                                Prospectus) and "The Trading 
                                                Managers" (Pages 51-74 of the 
                                                Prospectus and Pages 
                                                S-18 - S-29 of the Supplement).




                                      - 3 -

<PAGE>

         4.  Management of the            4.    "The Cornerstone Funds"
             Partnership                         (Pages 19-24 of the
                                                 Prospectus and Pages
                                                 S-1 - S-4 of the
                                                 Supplement). "The
                                                 General Partner" (Pages
                                                 77-79 of the Prospectus
                                                 and Pages S-29 - S-31 of
                                                 the Supplement) and "The
                                                 Commodity  Brokers"
                                                 (Pages  79-80 of the
                                                 Prospectus and Pages
                                                 S-31  -  S-32 of the 
                                                 Supplement). "The Limited 
                                                 Partnership Agreements" 
                                                 (Pages 86-90 of the 
                                                 Prospectus).


         5.  Taxation of the              5.    "Material Federal Income 
             Partnership's Limited               Tax Considerations" and
               Partners                         "State and Local Income Tax
                                                 Aspects" (Pages 92-99 of the
                                                 Prospectus and Page S-34 of the
                                                 Supplement).


         (d) Financial  Information  About Foreign and Domestic  Operations  and
Export  Sales.  The  Partnership  has not engaged in any  operations  in foreign
countries;  however, the Partnership (through the commodity brokers) enters into
forward contract  transactions where foreign banks are the contracting party and
trades in futures interests on foreign exchanges.

Item 2.  PROPERTIES

         The executive and administrative offices are located within the offices
of DWR.  The DWR offices  utilized by the  Partnership  are located at Two World
Trade Center, 62nd Floor, New York, NY 10048.

                                      - 4 -

<PAGE>

Item 3.  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.  ("DWFCM"),  MSDW (all
such  parties  referred  to  hereafter  as  the  "Dean  Witter  Parties"),   the
Partnership,  certain other limited partnership commodity pools of which Demeter
is the general partner, and certain trading advisors to those pools. On June 16,
1997,  the  plaintiffs  in  the  above  actions  filed  a  consolidated  amended
complaint,  alleging,  among other things, that the defendants  committed fraud,
deceit,  negligent  misrepresentation,  various  violations  of  the  California
Corporations   Code,   intentional  and  negligent  breach  of  fiduciary  duty,
fraudulent and unfair business practices,  unjust enrichment,  and conversion in
the sale and  operation  of the various  limited  partnership  commodity  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. A consolidated and amended

                                      - 5 -

<PAGE>

complaint  in the action  pending in the Supreme  Court of the State of New York
was filed on August 13, 1997,  alleging  that the  defendants  committed  fraud,
breach  of  fiduciary  duty,  and  negligent  misrepresentation  in the sale and
operation of the various limited  partnership  commodity  pools. On December 16,
1997, upon motion of the plaintiffs, the action pending in the Superior Court of
the State of Delaware was voluntarily dismissed without prejudice.  The New York
Supreme  Court  dismissed  the New York  action in  November  1998,  but granted
plaintiffs leave to file an amended complaint,  which they did in early December
1998. The defendants  have filed a motion to dismiss the amended  complaint with
prejudice  on February  1, 1999.  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.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.
                                      - 6 -

<PAGE>

                                     PART II

Item 5.  MARKET  FOR THE  REGISTRANT'S  PARTNERSHIP  UNITS AND  RELATED
                  SECURITY HOLDER MATTERS

         There is no established  public trading market for the Units of Limited
Partnership  Interest  ("Units")  in the  Partnership.  The number of holders of
Units at December 31, 1998 was approximately  2,685. No distributions  have been
made by the  Partnership  since it commenced  trading  operations  on January 2,
1985. Demeter has sole discretion to decide what distributions, if any, shall be
made to investors in the Partnership.  No determination  has yet been made as to
future distributions.

         The offering for the Partnership  originally commenced on May 31, 1984.
Effective September 30, 1994, the Partnership,  Dean Witter Cornerstone Fund III
and Dean Witter  Cornerstone  Fund IV were closed to new  investors.  Units have
been sold since then solely in "Exchanges" with existing  investors,  at 100% of
Net Asset Value per Unit. DWR pays all expenses in connection  with the offering
of Units without  reimbursement.  Through  December 31, 1998 the Partnership has
sold  41,703.528  Units and the  Cornerstone  Funds  have sold an  aggregate  of
235,419.742 Units,  leaving 14,580.258 Units remaining  available for sale as of
January 1, 1999.  The  aggregate  price of Units sold through  December 31, 1998
with respect to the Partnership is $65,642,656.


                                      - 7 -
<PAGE>


Item 6.  SELECTED FINANCIAL DATA (in dollars)



<TABLE>
<CAPTION>



                                         For the Years Ended December 31, 
                                         -------------------------------- 
                             1998          1997          1996           1995             1994   
                          ----------   -----------    ----------     ----------      ----------



<S>                       <C>            <C>          <C>            <C>           <C>        
Total Revenues
(including interest)      6,826,329      8,279,346    6,449,790      11,604,765         830,882


Net Income (Loss)         3,596,543      4,916,164     3,047,462      7,882,659      (3,095,555)


Net Income (Loss)
Per Unit (Limited
& General Partners)          467.12         569.56        324.71         592.90         (219.47)


Total Assets             32,113,096     31,431,023    30,046,842     31,558,306      32,062,117


Total Limited Partners'
Capital                  30,904,584     29,677,943    28,360,195     30,213,505      30,885,515


Net Asset Value Per
Unit of Limited
Partnership Interest       4,192.04       3,724.92      3,155.36       2,830.65         2,237.75

</TABLE>














                                      - 8 -

<PAGE>

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         Liquidity.  Assets  of  the  Partnership  are  deposited  with  DWR  as
non-clearing  broker and Carr as clearing  broker in separate  futures  interest
trading  accounts.  Such  assets are held in either  non-interest  bearing  bank
accounts or in securities  approved by the Commodity Futures Trading  Commission
("CFTC") for investment of customer funds. The Partnership's  assets held by DWR
and Carr may be used as margin solely for the Partnership's  trading.  Since the
Partnership's sole purpose is to trade in futures interests, it is expected that
the Partnership will continue to own such liquid assets for margin purposes.

         The  Partnership's  investment in futures  interests  may, from time to
time, be illiquid.  Most United States futures  exchanges limit  fluctuations in
certain futures  interest prices during a single day by regulations  referred to
as "daily  price  fluctuations  limits"  or  "daily  limits".  Pursuant  to such
regulations,  during a single  trading  day no trades may be  executed at prices
beyond the daily  limit.  If the price for a  particular  futures  interest  has
increased or decreased by an amount equal to the daily limit,  positions in such
futures interest can neither be taken nor liquidated  unless traders are willing
to effect trades at or

                                      - 9 -

<PAGE>

within the limit.  Futures  interests prices have  occasionally  moved the daily
limit for  several  consecutive  days with  little or no  trading.  Such  market
conditions could prevent the Partnership  from promptly  liquidating its futures
interests and result in restrictions on redemptions.

         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  potentially  profitable  markets or from  promptly  liquidating  unfavorable
positions,   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.  Future  redemptions and exchanges of additional Units
will affect the amount of funds available for investment in futures interests in
subsequent periods.  Since they are at the discretion of Limited Partners, it is
not  possible  to  estimate  the  amount  and  therefore,  the  impact of future
redemptions and exchanges of additional Units.
 
         Results of Operations. As of December 31, 1998, the Partnership's total
capital was $31,396,729,  an increase of $908,988 from the  Partnership's  total
capital of $30,487,741 at December 31, 1997. For the

                                     - 10 -

<PAGE>

year  ended  December  31,  1998,  the  Partnership   generated  net  income  of
$3,596,543,   total  subscriptions  aggregated  $38,137  and  total  redemptions
aggregated $2,725,692.
   
         For the year ended December 31, 1998, the  Partnership's  total trading
revenues,  including interest income,  were $6,826,329.  The Partnership's total
expenses for the year were  $3,229,786,  resulting in net income of  $3,596,543.
The value of an individual unit in the  Partnership  increased from $3,724.92 at
December 31, 1997 to $4,192.04 at December 31, 1998.
 
         As  of  December  31,  1997,  the   Partnership's   total  capital  was
$30,487,741,  an increase of $1,441,571 from the Partnership's  total capital of
$29,046,170,  at December 31, 1996.  For the year ended  December 31, 1997,  the
Partnership generated net income of $4,916,164,  total subscriptions  aggregated
$314,932 and total redemptions aggregated $3,789,525.

         For the year ended December 31, 1997, the  Partnership's  total trading
revenues,  including  interest income were $8,279,346.  The Partnership's  total
expenses for the year were  $3,363,182,  resulting in net income of  $4,916,164.
The value of an individual unit in the  Partnership  increased from $3,155.36 at
December 31, 1996 to $3,724.92 at December 31, 1997.
  
         As  of  December  31,  1996,  the   Partnership's   total  capital  was
$29,046,170, a decrease of $1,782,718 from the Partnership's total

                                     - 11 -

<PAGE>

capital of  $30,828,888  at December 31, 1995.  For the year ended  December 31,
1996, the Partnership  generated net income of $3,047,462,  total  subscriptions
aggregated $155,468 and redemptions aggregated $4,985,648.
       
         For the year ended December 31, 1996, the  Partnership's  total trading
revenues  including  interest income were $6,449,790.  The  Partnership's  total
expenses for the year were  $3,402,328,  resulting in net income of  $3,047,462.
The value of an individual unit in the  Partnership  increased from $2,830.65 at
December 31, 1995 to $3,155.36 at December 31, 1996.

         The Partnership's  overall performance record represents varied results
of trading in different futures interests markets.  For a further description of
1998  trading  results,  refer to the  letter  to the  Limited  Partners  in the
accompanying  Annual Report to Limited  Partners for the year ended December 31,
1998,  incorporated by reference in this Form 10-K. The Partnership's  gains and
losses are allocated among its partners for income tax purposes.

         Credit Risk. In entering into futures and forward  contracts there is a
credit risk to the Partnership that the counterparty on the contract will not be
able to meet its obligations to the  Partnership.  The ultimate  counterparty of
the  Partnership  for  futures  contracts  traded in the United  States and most
foreign  exchanges  on  which  the  Partnership   trades  is  the  clearinghouse
associated  with such exchange.  In general,  a  clearinghouse  is backed by the
membership of the exchange

                                     - 12 -

<PAGE>

and will act in the event of non-performance by one of its members or one of its
member's customers,  and, as such, should significantly reduce this credit risk.
For  example,  a  clearinghouse  may  cover  a  default  by (i)  drawing  upon a
defaulting  member's  mandatory  contributions  and/or  non-defaulting  members'
contributions to a clearinghouse guarantee fund, established lines or letters of
credit  with  banks,  and/or  the  clearinghouse's  surplus  capital  and  other
available  assets of the  exchange  and  clearinghouse,  or (ii)  assessing  its
members.

         In cases where the Partnership  trades on a foreign  exchange where the
clearinghouse  is not  funded  or  guaranteed  by the  membership  or where  the
exchange is a "principals' market" in which performance is the responsibility of
the  exchange  member  and not the  exchange  or a  clearinghouse,  or when  the
Partnership enters into off-exchange-traded  contracts with a counterparty,  the
sole recourse of the Partnership will be the clearinghouse,  the exchange member
or the off-exchange-traded contract counterparty,  as the case may be. There can
be no assurance that a  clearinghouse,  exchange or other  exchange  member will
meet its obligations to the Partnership,  and the Partnership is not indemnified
against a default by such parties from Demeter, MSDW or DWR.

         Further,  the law is unclear as to whether a  commodity  broker has any
obligation  to  protect  its  customers  from loss in the event of an  exchange,
clearinghouse or other exchange member default on trades

                                     - 13 -

<PAGE>

effected  for the broker's  customers.  Any such  obligation  on the part of the
broker   appears  even  less  clear  where  the  default   occurs  in  a  non-US
jurisdiction.

         Demeter  deals with the credit risks of all  partnerships  for which it
serves as general partner in several ways.  First, it monitors the Partnership's
credit  exposure to each  exchange on a daily  basis,  calculating  not only the
amount of margin required for it but also the amount of its unrealized  gains at
each exchange, if any. The commodity brokers inform the Partnership, as with all
their  customers,  of its net  margin  requirements  for all its  existing  open
positions, but do not break that net figure down, exchange by exchange. Demeter,
however,  has installed a system which  permits it to monitor the  Partnership's
potential  margin  liability,  exchange  by  exchange.  Demeter  is then able to
monitor the  Partnership's  potential  net credit  exposure to each  exchange by
adding  the  unrealized  trading  gains  on  that  exchange,   if  any,  to  the
Partnership's margin liability thereon.

         Second, the Partnership's  trading policies limit the amount of its net
assets that can be committed at any given time to futures contracts and require,
in addition,  a certain minimum amount of  diversification  in the Partnership's
trading,  usually  over  several  different  products.  One of the  aims of such
trading  policies has been to reduce the credit exposure of the Partnership to a
single  exchange and,  historically,  the  Partnership's  exposure has typically
amounted to only a small percentage

                                     - 14 -

<PAGE>

of  its  total  net  assets.   On  those  relatively  few  occasions  where  the
Partnership's credit exposure may climb above that level, Demeter deals with the
situation  on a case by case basis,  carefully  weighing  whether the  increased
level of credit exposure remains appropriate.

         Third, Demeter has secured, with respect to Carr acting as the clearing
broker for the  Partnership,  a guarantee by Credit  Agricole  Indosuez,  Carr's
parent,  of the  payment  of the "net  liquidating  value"  of the  transactions
(futures and forward contracts) in the Partnership's account.

         With respect to forward contract trading,  the Partnership  trades with
only those counterparties  which Demeter,  together with DWR, have determined to
be  creditworthy.  At the date of this filing,  the Partnership  deals only with
Carr as its counterparty on forward  contracts.  The guarantee by Carr's parent,
discussed above, covers these forward contracts.

         See "Financial  Instruments" under Notes to Financial Statements in the
Partnership's  Annual Report to Limited Partners for the year ended December 31,
1998, incorporated by reference in this Form 10-K.

         Year  2000  Problem.  Commodity  pools,  like  financial  and  business
organizations and individuals around the world, depend on the smooth functioning
of computer  systems.  Many computer  systems in use today cannot  recognize the
computer code for the year 2000, but revert to 1900 or some other date.  This is
commonly known as the "Year 2000 Problem".

                                     - 15 -

<PAGE>

The Partnership  could be adversely  affected if computer  systems used by it or
any third party with whom it has a material relationship do not properly process
and calculate  date-related  information and data  concerning  dates on or after
January  1,  2000.  Such a  failure  could  adversely  affect  the  handling  or
determination of futures trades and prices and other services.

         MSDW  began  its  planning  for the Year  2000  Problem  in  1995,  and
currently has several hundred  employees working on the matter. It has developed
its own Year  2000  compliance  plan to deal with the  problem  and had the plan
approved  by  the  company's  executive  management,   Board  of  Directors  and
Information Technology Department. Demeter is coordin-ating with MSDW to address
the Year 2000 Problem with respect to Demeter's computer systems that affect the
Partnership.  This includes hardware and software  upgrades,  systems consulting
and computer maintenance.

         Beyond the challenge  facing  internal  computer  systems,  the systems
failure of any of the third  parties  with whom the  Partnership  has a material
relationship - the futures exchanges and clearing organizations through which it
trades,  Carr,  or the Trading  Advisors - could result in a material  financial
risk to the Partnership. All U.S. futures exchanges are subject to monitoring by
the CFTC of their Year 2000 preparedness and the major foreign futures exchanges
are also  expected  to be  subject  to  market-wide  testing  of their Year 2000
compliance 
                                     - 16 -

<PAGE>

during  1999.  Demeter  intends to monitor the  progress of Carr and the Trading
Advisors throughout 1999 in their Year 2000 compliance and, where applicable, to
test its external interface with Carr and the Trading Advisors.

         A worst case  scenario  would be one in which  trading of  contracts on
behalf  of the  Partnership  becomes  impossible  as a result  of the Year  2000
problem  encountered by any third parties.  A less  catastrophic but more likely
scenario  would be one in which  trading  opportunities  diminish as a result of
technical  problems  resulting in illiquidity  and fewer  opportunities  to make
profitable trades. MSDW has begun develop-ing various "contingency plans" in the
event that the systems of such third  parties fail.  Demeter  intends to consult
closely with MSDW in implementing those plans.  Despite the best efforts of both
Demeter  and  MSDW,  however,  it is  possible  that  these  steps  will  not be
sufficient to avoid any adverse impact to the Partnership.

         Risks Associated with the Euro. On January 1, 1999, eleven countries in
the  European  Union  established  fixed  conversion  rates  on  their  existing
sovereign  currencies  and converted to a common  single  currency (the "euro").
During a three-year  transition period,  the existing sovereign  currencies will
continue to exist but only as a fixed  denomination  of the euro.  Conversion to
the euro prevents the Trading  Advisors from trading in certain  currencies  and
thereby limit their ability to take advantage of potential market  opportunities
that might 

                                     - 17 -
<PAGE>

otherwise have existed had separate  currencies  been  available to trade.  This
could adversely affect the performance results of the Partnership.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Introduction

The Partnership is a commodity pool engaged primarily in the speculative trading
of futures interests.  The market sensitive  instruments held by the Partnership
are acquired solely for speculative  trading  purposes and, as a result,  all or
substantially all of the Partnership's assets are subject to the risk of trading
loss. Unlike an operating company,  the risk of market sensitive  instruments is
integral, not incidental, to the Partnership's primary business activities.

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


                                     - 18 -

<PAGE>

The Partnership's  total market risk is influenced by a wide variety of factors,
including  the  diversification  effects among the  Partnership's  existing open
positions,  the volatility present within the market(s) and the liquidity of the
market(s). At varying times, each of these factors may act to exacerbate or mute
the market risk associated with the Partnership.

The Partnership's  past performance is not necessarily  indicative of its future
results.  Any  attempt at  quantifying  the  Partnership's  market  risk must be
qualified by the inherent  uncertainty  of its  speculative  trading,  which may
cause future losses and  volatility  (i.e.  "risk of ruin") far in excess of the
Partnership's experience to date and/or any reasonable expectation premised upon
historical changes in the fair value of its market sensitive instruments.

Quantifying the Partnership's Trading Value at Risk

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

                                     - 19 -

<PAGE>

deemed to be forward-looking  statements for purposes of the safe harbor, except
for statements of historical fact.

The  Partnership  accounts  for open  positions  on the basis of  mark-to-market
accounting principles.  As such, any loss in the fair value of the Partnership's
open  positions is directly  reflected in the  Partnership's  earnings,  whether
realized or unrealized,  and the Partnership's  cash flow, as profits and losses
on open positions of exchange-traded futures interests are settled daily through
variation margin.

The  Partnership's  risk exposure in the various  market  sectors  traded by the
Trading  Advisors is estimated below in terms of Value at Risk ("VaR").  The VaR
model employed by the  Partnership  incorporates  numerous  variables that could
impact the fair value of the Partnership's  trading  portfolio.  The Partnership
estimates  VaR using a model based on  historical  simulation  with a confidence
level of 99%.  Historical  simulation  involves  constructing a distribution  of
hypothetical  daily changes in trading  portfolio value. The VaR model generally
takes into account  linear  exposures to price and  interest  rate risk.  Market
risks  that are  incorporated  in the VaR model  include  equity  and  commodity
prices,  interest rates,  foreign  exchange  rates, as well as correlation  that
exists among these variables.  The  hypothetical  changes in portfolio value are
based on daily observed percentage changes in key

                                     - 20 -

<PAGE>

market  indices or other market  factors  ("market  risk  factors") to which the
portfolio is sensitive.  In the case of the  Partnership's  VaR, the  historical
observation  period is approximately  four years. The Partnership's  one-day 99%
VaR  corresponds  to the  negative  change in  portfolio  value  that,  based on
observed market risk factor moves,  would have been exceeded once in 100 trading
days.

VaR  models  such as the  Partnership's  are  continually  evolving  as  trading
portfolios become more diverse and modeling techniques and systems  capabilities
improve.  It must also be noted  that the VaR model is used to  quantify  market
risk for historic  reporting purposes only and is not utilized by either Demeter
or the Trading Advisors in their daily risk management activities.

The Partnership's Value at Risk in Different Market Sectors

The following  table indicates the VaR associated  with the  Partnership's  open
positions as a percentage of total net assets by market  category as of December
31, 1998. As of December 31, 1998, the Partnership's  total  capitalization  was
approximately $31 million.




                                     - 21 -

<PAGE>

          Primary Market                         December 31, 1998
          Risk Category                            Value at Risk
          -------------                            -------------

         Interest Rate                                (.87)%
         Currency                                     (.85)
         Equity                                       (.22)
         Commodity                                    (.61)
         Aggregate Value at Risk                     (1.34)%



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

The table  above  represents  the VaR of the  Partnership's  open  positions  at
December  31,  1998 only and is not  necessarily  representative  of either  the
historic  or  future  risk  of  an  investment  in  the   Partnership.   As  the
Partnership's  sole  business is the  speculative  trading of primarily  futures
interests,  the  composition  of its  portfolio  of open  positions  can  change
significantly  over any given time period or even within a single  trading  day.
Such changes in open positions could  materially  impact market risk as measured
by VaR either positively or negatively.

                                     - 22 -
<PAGE>

The table below  supplements  the year end VaR by presenting  the  Partnership's
high,  low and  average  VaR as a  percentage  of total net  assets for the four
quarterly reporting periods from January 1, 1998 through December 31, 1998.

Primary Market Risk Category        High        Low        Average
----------------------------        ----        ---        -------
Interest Rate                      (1.21)%     (.59)%        (.96)%
Currency                           (1.84)      (.85)        (1.46)
Equity                              (.41)      (.22)         (.29)
Commodity                           (.80)      (.58)         (.68)
Aggregate Value at Risk            (2.39)%    (1.34)%       (1.83)%

                                                         \
Limitations on Value at Risk as an Assessment of Market Risk

The face value of the  market  sector  instruments  held by the  Partnership  is
typically  many  times  the  applicable  margin  requirements,  as  such  margin
requirements  generally  range  between  2% and  15%  of  contract  face  value.
Additionally,  due to the use of leverage,  the face value of the market  sector
instruments   held  by  the  Partnership  is  typically  many  times  the  total
capitalization of the Partnership.  The financial magnitude of the Partnership's
open  positions  thus  creates  a "risk of ruin"  not  typically  found in other
investment  vehicles.  Due to the relative size of the positions  held,  certain
market condition, may cause the Partnership to incur losses greatly in excess of
VaR within a short

                                     - 23 -

<PAGE>

period of time. The foregoing VaR tables, as well as the past performance of the
Partnership,  gives no indication of such "risk of ruin". In addition,  VaR risk
measures should be interpreted in light of the methodology's limitations,  which
include the following: past changes in market risk factors will not always yield
accurate  predictions of the  distributions  and  correlations  of future market
movements; changes in portfolio value in response to market movements may differ
from the responses  implicit in a VaR model;  published VaR results reflect past
trading  positions  while future risk depends on future  positions;  VaR using a
one-day time horizon  does not fully  capture the market risk of positions  that
cannot be liquidated or hedged  within one day; and the  historical  market risk
factor data used for VaR estimation may provide only limited insight into losses
that could be incurred under certain unusual market movements.

The foregoing VaR tables present the results of the  Partnership's  VaR for each
of the Partnership's market risk exposures and on an aggregate basis at December
31, 1998 and for the end of quarter periods during  calendar 1998.  Since VaR is
based on  historical  data,  VaR  should  not be  viewed  as  predictive  of the
Partnership's future financial  performance or its ability to manage and monitor
risk and there can be no assurance

                                     - 24 -

<PAGE>

that the Partnership's actual losses on a particular day will not exceed the VaR
amounts  indicated  below or that such  losses will not occur more than 1 in 100
trading days.

Non-Trading Risk

The  Partnership  has  non-trading  market risk on its foreign cash balances not
needed for margin.  However,  such balances, as well as any market risk they may
represent, are immaterial.  The Partnership also maintains a substantial portion
(approximately  91%) of its  available  assets  in cash at  DWR.  A  decline  in
short-term  interest  rates will result in a decline in the  Partnership's  cash
management income. This cash flow risk is not considered material.

Materiality,  as used  throughout  this  section,  is based on an  assessment of
reasonably  possible  market  movements and the potential  losses caused by such
movements, taking into account the leverage, optionality and multiplier features
of the Partnership's market sensitive instruments.

Qualitative Disclosures Regarding Primary Trading Risk Exposures

The following  qualitative  disclosures  regarding the Partnership's market risk
exposures - except for (i) those  disclosures  that are statements of historical
fact and (ii) the descriptions of how the Partnership manages its primary market
risk exposures - constitute forward-looking

                                     - 25 -

<PAGE>

statements  within the meaning of Section 27A of the  Securities Act and Section
21E of the  Securities  Exchange  Act.  The  Partnership's  primary  market risk
exposures  as well as the  strategies  used  and to be used by  Demeter  and the
Trading   Advisors  for  managing   such   exposures  are  subject  to  numerous
uncertainties,  contingencies and risks, any one of which could cause the actual
results  of the  Partnership's  risk  controls  to  differ  materially  from the
objectives  of  such   strategies.   Government   interventions,   defaults  and
expropriations, illiquid markets, the emergence of dominant fundamental factors,
political upheavals, changes in historical price relationships, an influx of new
market participants, increased regulation and many other factors could result in
material  losses as well as in material  changes to the risk  exposures  and the
risk  management  strategies of the  Partnership.  Investors must be prepared to
lose all or substantially all of their investment in the Partnership.

         The  following   were  the  primary   trading  risk  exposures  of  the
Partnership as of December 31, 1998, by market sector.

         Interest Rate.  Interest rate risk is the principal  market exposure of
the  Partnership.  Interest  rate  movements  directly  affect  the price of the
sovereign  bond futures  positions  held by the  Partnership  and indirectly the
value of its stock index and currency positions.  Interest rate movements in one
country as well as relative interest rate movements between countries materially
impact the Partnership's profitability. The Partnership's primary interest rate

                                     - 26 -

<PAGE>

exposure is to interest rate fluctuations in the United States and the other G-7
countries.  However,  the  Partnership  also  takes  futures  positions  in  the
government debt of smaller nations - e.g.  Australia.  Demeter  anticipates that
G-7 interest  rates will remain the primary market  exposure of the  Partnership
for the  foreseeable  future.  The changes in interest rates which have the most
effect on the  Partnership  are changes in long-term,  as opposed to short-term,
rates. Most of the speculative  futures positions held by the Partnership are in
medium-to-long  term  instruments.  Consequently,  even  a  material  change  in
short-term   rates  would  have  little  effect  on  the  Partnership  were  the
medium-to-long term rates to remain steady.

         Currency.  The  Partnership's  currency  exposure is to  exchange  rate
fluctuations,  primarily  fluctuations  which  disrupt  the  historical  pricing
relationships   between   different   currencies  and  currency   pairs.   These
fluctuations  are  influenced  by interest rate changes as well as political and
general  economic  conditions.  The  Partnership  trades  in a large  number  of
currencies, including cross-rates - i.e., positions between two currencies other
than the U.S. dollar.  However, the Partnership's major exposures have typically
been  in  the  dollar/Swiss  franc,  dollar/yen,  dollar/mark  and  dollar/pound
positions.   Demeter  does  not   anticipate   that  the  risk  profile  of  the
Partnership's currency sector will change significantly in the future,  although
it is difficult

                                     - 27 -

<PAGE>

at this  point to  predict  the  effect of the  introduction  of the Euro on the
Trading Advisors' currency trading strategies.

         Currency.  The Partnership's primary equity exposure is to equity price
risk in the G-7 countries. The stock index futures traded by the Partnership are
by law limited to futures on broadly based indices. As of December 31, 1998, the
Partnership's primary exposures were in the S&P 500, all ordinaries  (Australia)
and Nikkei (Japan) stock indices.  The  Partnership is primarily  exposed to the
risk of adverse price trends or static  markets in the major U.S.,  European and
Japanese indices. (Static markets would not cause major market changes but would
make it difficult for the Partnership to avoid being  "whipsawed"  into numerous
small losses).

         Metals.  The  Partnership's   primary  metals  market  exposure  is  to
fluctuations  in the price of gold and silver.  Although  certain of the Trading
Advisors  will from time to time trade base metals such as aluminum  and copper,
the principal market exposures of the Partnership have  consistently been in the
precious metals,  gold and silver.  The Trading  Advisors' gold trading has been
increasingly  limited due to the long-lasting and mainly non-volatile decline in
the  price of gold  over the last  10-15  years.  However,  silver  prices  have
remained  volatile over this period,  and the Trading Advisors have from time to
time taken substantial  positions as they have perceived market opportunities to

                                      - 29 -

<PAGE>

develop.  Demeter  anticipates that gold and silver will remain the primary
metals market exposure for the Partnership.

         Soft Commodities.  The Partnership's primary commodities exposure is to
fluctuations in the price of soft commodities  which are often directly affected
by severe or unexpected weather conditions. Grains, coffee, and cotton accounted
for  the  substantial  bulk  of the  Partnership's  commodities  exposure  as of
December 31, 1998. In the past, the Partnership has had material market exposure
to live  cattle  and  hogbellies  and may do so  again in the  future.  However,
Demeter  anticipates  that the  Trading  Advisors  will  maintain an emphasis on
grains,  coffee, and cotton, in which the Partnership has historically taken its
largest positions.

         Energy. The Partnership's  primary energy market exposure is to gas and
oil price movements,  often resulting from political  developments in the Middle
East.  Although the Trading Advisors trade natural gas to a limited extent,  oil
is by far the dominant energy market exposure of the Partnership. Oil prices are
currently depressed, but they can be volatile and substantial profits and losses
have been and are expected to continue to be experienced in this market.

Qualitative Disclosures Regarding Non-Trading Risk Exposure

The following was the only  non-trading  risk exposure of the  Partnership as of
December 31, 1998:

                                     - 30 -

<PAGE>

Foreign Currency Balances.  The Partnership's  primary foreign currency balances
are in Japanese yen, German marks,  British pounds, and French francs and euros.
The  Partnership  controls the  non-trading  risk of these balances by regularly
converting  these  balances back into dollars (no less  frequently  than twice a
month,  and more  frequently if a particular  foreign  currency  balance becomes
unusually high).

Qualitative Disclosures Regarding Means of Managing Risk Exposure

The means by which the Partnership and the Trading Advisors,  severally, attempt
to manage the risk of the  Partnership's  open positions is essentially the same
in all market  categories  traded.  Demeter attempts to manage the Partnership's
market exposure by (i)  diversifying  the  Partnership's  assets among different
Trading Advisors, each of whose strategies focus on different market sectors and
trading approaches, and (ii), monitoring the performance of the Trading Advisors
on a daily basis. In addition,  the Trading Advisors  establish  diversification
guidelines often set in terms of the maximum margin to be committed to positions
in any one market section or market  sensitive  instrument.  One should be aware
that certain Trading Advisors treat their risk control policies as strict rules,
whereas others treat such policies as general guidelines.

                                     - 31 -

<PAGE>

         Demeter monitors and controls the risk of the Partnership's non-trading
instrument,  cash which is the only Partnership  investment  directed by Demeter
rather than the Trading Advisors.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The  information  required by this Item  appears in the  attached  1998
Annual  Report to Limited  Partners for the year ended  December 31, 1998 and is
incorporated by reference in this Annual Report on Form 10-K.


Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

         None.
























                                     - 32 -

<PAGE>

                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

There are no directors or executive officers of the Partnership. The Partnership
is managed by Demeter.

Directors and  Officers of the  General  Partner

 The  directors  and  officers of Demeter are as follows:

         Mark J.  Hawley,  age 55, is  Chairman  of the Board and a Director  of
Demeter.  Mr. Hawley is also Chairman of the Board and a Director of DWFCM.  Mr.
Hawley  previously  served as President of Demeter  throughout  1998. Mr. Hawley
joined DWR in  February  1989 as Senior  Vice  President  and is  currently  the
Executive Vice President and Director of DWR's Product Management for Individual
Asset Management.  In this capacity, Mr. Hawley is responsible for directing the
activities of the firm's Managed Futures,  Insurance,  and Unit Investment Trust
Business.  From 1978 to 1989,  Mr. Hawley was a member of the senior  management
team at Heinold Asset Management, Inc., a CPO, and was responsible for a variety
of projects in public  futures  funds.  From 1972 to 1978, Mr. Hawley was a Vice
President in charge of institutional block trading for the Mid-West at Kuhn Loeb
& Company.

         Joseph  G.  Siniscalchi,   age  53,  is  a  Director  of  Demeter.  Mr.
Siniscalchi  joined  DWR in July 1984 as a First  Vice  President,  Director  of
General Accounting and served as a Senior Vice President and

                                     - 33 -

<PAGE>

Controller for DWR's Securities Division through 1997. He is currently Executive
Vice  President  and Director of the  Operations  Division of DWR. From February
1980 to July 1984,  Mr.  Siniscalchi  was  Director of Internal  Audit at Lehman
Brothers Kuhn Loeb, Inc.

         Edward C. Oelsner,  III, age 56, is a Director of Demeter.  Mr. Oelsner
is currently an Executive  Vice  President  and head of the Product  Development
Group at Dean Witter  InterCapital Inc., an affiliate of DWR. Mr. Oelsner joined
DWR in 1981 as a  Managing  Director  in  DWR's  Investment  Banking  Department
specializing in coverage of regulated  industries and,  subsequently,  served as
head of the DWR Retail  Products  Group.  Prior to joining DWR, Mr. Oelsner held
positions  at The  First  Boston  Corporation  as a member of the  Research  and
Investment  Banking  Departments  from 1967 to 1981.  Mr.  Oelsner  received his
M.B.A.  in Finance from the Columbia  University  Graduate School of Business in
1966 and an A.B. in Politics from Princeton University in 1964.

         Robert E. Murray,  age 38, is President and a Director of Demeter.  Mr.
Murray is also  President and a Director of DWFCM.  Effective as of the close of
business on December 31, 1998,  Mr.  Murray  replaced Mr. Hawley as President of
Demeter.  Mr. Murray is also a Senior Vice  President of DWR's  Managed  Futures
Department and is the Senior  Administrative  Officer of DWFCM. Mr. Murray began
his career at DWR in 1984 and is currently  the Director of the Managed  Futures
Department.  In this  capacity,  Mr. Murray is  responsible  for  overseeing all
aspects of

                                                      - 34 -

<PAGE>

the firm's Managed Futures Department. Mr. Murray currently serves as a Director
of the  Managed  Funds  Association,  an  industry  association  for  investment
professionals in futures,  hedge funds and other  alternative  investments.  Mr.
Murray graduated from Geneseo State University in May 1983 with a B.A. degree in
Finance.

         Lewis A.  Raibley,  III,  age 36, is Vice  President,  Chief  Financial
Officer  and a Director  of  Demeter.  Effective  as of the close of business on
December 31, 1998, Mr. Raibley was elected to Demeter's Board of Directors.  Mr.
Raibley is currently  Senior Vice  President and  Controller  in the  Individual
Asset  Management  Group of MSDW. From July 1997 to May 1998, Mr. Raibley served
as Senior Vice  President and Director in the Internal  Reporting  Department of
MSDW and prior to that,  from 1992 to 1997,  he served as Senior Vice  President
and  Director  in the  Financial  Reporting  and Policy  Division of Dean Witter
Discover & Co. He has been with MSDW and its affiliates since June 1986.

         Mitchell  M. Merin,  age 45,  became a Director of Demeter on March 17,
1999. Mr. Merin was appointed the Chief  Operating  Officer of Asset  Management
for MSDW in  December  1998 and the  President  and Chief  Executive  Officer of
Morgan  Stanley Dean Witter  Advisors in February 1998. He has been an Executive
Vice  President  of DWR since 1990,  during  which time he has been  director of
DWR's Taxable Fixed Income and Futures divisions, managing director in Corporate
Finance and corporate  treasurer.  Mr. Merin received his Bachelor's degree from
Trinity

                                     - 35 -

<PAGE>

College in Connecticut and his M.B.A.  degree in finance and accounting from the
Kellogg Graduate School of Management of Northwestern University in 1977.

         Richard A.  Beech,  age 47,  became a Director  of Demeter on March 17,
1999. Mr. Beech has been associated with the futures industry for over 23 years.
He has been at DWR since August 1984 where he is presently Senior Vice President
and head of Branch Futures. Mr. Beech began his career at the Chicago Mercantile
Exchange,  where  he  became  the  Chief  Agricultural  Economist  doing  market
analysis,  marketing  and  compliance.  Prior to joining DWR, Mr. Beech also had
worked at two investment banking firms in Operations,  Research, Managed Futures
and Sales Management.

         Ray Harris, age 42, became a Director of Demeter on March 17, 1999. Mr.
Harris is  currently  Senior Vice  President,  Planning and  Administration  for
Morgan  Stanley  Dean  Witter  Asset  Management  and has  worked  at DWR or its
affiliates  since  July  1982,  serving  in both  financial  and  administrative
capacities.  From August 1994 to January  1999,  he worked in two  separate  DWR
affiliates,  Discover Financial Services and Novus Financial Corp.,  culminating
as Senior  Vice  President.  Mr.  Harris  received  his B.A.  degree from Boston
College and his M.B.A. in finance from the University of Chicago.

                                     - 36 -

<PAGE>

         Richard M. DeMartini,  age 46, previously served as the Chairman of the
Board and as a Director of Demeter throughout 1998. Effective as of the close of
business on December 31,  1998,  Mr.  DeMartini  resigned as the Chairman of the
Board and as a Director of Demeter due to changes in his responsibilities within
MSDW.

         Lawrence  Volpe,  age 51,  served as a Director  to Demeter  throughout
1998.  Effective  as of the close of business on December  31,  1998,  Mr. Volpe
resigned as a Director of Demeter.

         Patti L. Behnke,  age 38, served as Vice President and Chief  Financial
Officer of Demeter through May 1998. Effective June 1, 1998, Ms. Behnke resigned
as Vice President and Chief Financial Officer of Demeter in order to take on new
responsibilities as Operations Officer - Controllers  Division for MSDW, and was
replaced by Mr. Raibley.

Item 11.  EXECUTIVE COMPENSATION

         The Partnership has no directors and executive  officers.  As a limited
partnership,  the business of the  Partnership  is managed by Demeter,  which is
responsible for the  administration  of the business  affairs of the Partnership
but receives no compensation for such services.



                                     - 37 -

<PAGE>

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         (a) Security  Ownership of Certain  Beneficial  Owners - As of December
31, 1998,  there were no persons  known to be  beneficial  owners of more than 5
percent of the Units.

         (b) Security  Ownership of  Management - At December 31, 1998,  Demeter
owned 117.400 Units of General Partnership Interest  representing a 1.57 percent
interest in the Partnership.

         (c)      Changes in Control - None

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Refer to Note 2 - "Related Party  Transactions"  of "Notes to Financial
Statements",  in the accompanying Annual Report to Limited Partners for the year
ended  December 31, 1998,  incorporated  by reference in this Form 10-K.  In its
capacity as the Partnership's  retail commodity broker,  DWR received  commodity
brokerage  commissions  (paid and accrued by the  Partnership) of $1,401,238 for
the year ended December 31, 1998.







                                     - 38 -


<PAGE>



                                     PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      1. Listing of Financial Statements

         The following  financial  statements and report of  independent  public
auditors,  all appearing in the  accompanying  Annual Report to Limited Partners
for the year ended December 31, 1998, are incorporated by reference in this Form
10-K:
         -        Report of Deloitte & Touche LLP, independent auditors, for the
                  years ended December 31, 1998, 1997 and 1996.

         -        Statements of Financial  Condition as of December 31, 1998 and
                  1997.

         -        Statements of Operations,  Changes in Partners'  Capital,  and
                  Cash Flows for the years ended  December  31,  1998,  1997 and
                  1996.

         -        Notes to Financial Statements.

         With  the  exception  of  the   aforementioned   information   and  the
information  incorporated  in Items 7, 8, and 13, the  Annual  Report to Limited
Partners  for the year ended  December  31,  1998 is not deemed to be filed with
this report.

         2.  Listing of Financial Statement Schedules

         No  financial  statement  schedules  are required to be filed with this
report.

(b)      Reports on Form 8-K

         No reports on Form 8-K have been  filed by the  Partnership  during the
last quarter of the period covered
by this report.

(c)      Exhibits

         Refer to Exhibit Index on Page E-1.

                                     - 39 -

<PAGE>







                                   SIGNATURES
                                   ----------

         Pursuant to the  requirements of Sections 13 or 15(d) 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 II
                                         (Registrant)

                                    BY: Demeter Management Corporation,
                                          General Partner

March 24, 1999                      BY: /s/ Robert E. Murray               
                                        -----------------------------------
                                            Robert E. Murray, Director and
                                            President

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.

Demeter Management Corporation.

BY: /s/  Robert E. Murray                                     March 24, 1999
    ---------------------------------------
         Robert E. Murray, Director and
              President

    /s/  Mark J. Hawley                                       March 24, 1999
    ---------------------------------------
         Mark J. Hawley, Director
              and Chairman of the Board

    /s/  Joseph G. Siniscalchi                                March 24, 1999
    ----------------------------------------
         Joseph G. Siniscalchi, Director

    /s/  Edward C. Oelsner III                                March 24, 1999
    ----------------------------------------
         Edward C. Oelsner III, Director

    /s/   Mitchell M. Merin                                   March 24, 1999
    ----------------------------------------
          Mitchell M. Merin, Director

    /s/   Richard A. Beech                                    March 24, 1999
    ----------------------------------------
          Richard A. Beech, Director

    /s/   Ray Harris                                          March 24, 1999 
    ----------------------------------------
          Ray Harris, Director

    /s/  Lewis A. Raibley, III                                March 24, 1999
    -----------------------------------------
         Lewis A. Raibley, III, Director, Chief
              Financial Officer and Principal
              Accounting Officer

                                     - 40 -

<PAGE>

                                 EXHIBIT INDEX


          ITEM                                                 METHOD OF FILING

- 3.01    Limited Partnership Agreement of
          the Partnership, dated as of
          December 7, 1983, as amended as                         (1) 
          of May 11, 1984.

-10.01    Management Agreement among the
          Partnership, Demeter and JWH
          dated November 15, 1983.                                (2)

-10.02    Dean Witter Cornerstone Funds
          Exchange Agreement, dated as of
          May 31, 1984.                                           (3)

-10.03    Management Agreement among the
          Partnership, Demeter and Northfield
          Trading L.P. dated as of April
          16, 1997.                                               (4)

-10.04    Amended and Restated Customer Agreement,
          dated as of December 1, 1997,
          between the Partnership and Dean Witter Reynolds Inc.
          is filed herewith.                                       (4)

-10.05    Customer Agreement, dated as of December 1,
          1997, among the Partnership, Carr Futures,
          Inc. and Dean Witter Reynolds Inc. is filed
          herewith.                                                (4)

-10.06    International Foreign Exchange Master Agreement,
          dated as of August 1, 1997, between the Partnership
          and Carr Futures, Inc. is filed herewith.                (4)

-13.01    Annual Report to Limited Partners
          for the year ended December 31, 1998.                    (4)

(1) Incorporated by reference to Exhibit 3.01 of the Partnership's Annual Report
on Form 10-K for the fiscal year ended September 30, 1984 (File No. 0-13298).

(2)  Incorporated  by reference  to Exhibit  10.03 of the  Partnership's  Annual
Report on Form 10-K for the  fiscal  year  ended  September  30,  1984 (File No.
0-13298).

(3)  Incorporated  by reference  to Exhibit  10.04 of the  Partnership's  Annual
Report on Form 10-K for the  fiscal  year  ended  September  30,  1984 (File No.
0-13298).

(5)       Filed herewith.
                                                         E-1