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

                                          FORM 10-K

[X]    Annual report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1996 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 0-13299

                              DEAN WITTER CORNERSTONE FUND III

(Exact name of registrant as specified in its Limited Partnership Agreement)

              NEW YORK                               13-3190919
(State or other jurisdiction of                    (I.R.S. Employer
 incorporation of organization)                   Identification No.)

c/o Demeter Management Corporation
Two World Trade Center, New York, N.Y. - 62nd Flr.           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)
 

                                      (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 10K. [ 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, or the average bid
and asked prices of such units, as of a specified date within 60 days prior to
the date of filing: $42,276,458.90 at January 31, 1997.
                             DOCUMENTS INCORPORATED BY REFERENCE
                                        (See Page 1)<PAGE>
                          DEAN WITTER CORNERSTONE FUND III
                         INDEX TO ANNUAL REPORT ON FORM 10-K
                                  DECEMBER 31, 1996


                                                                Page No. 
                                                                         
  

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

Part I .

   Item    1.  Business. . . . . . . . . . . . . . . . . . . . . . . .2-3

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

   Item    3.  Legal Proceedings. . . . . . . . . . . . . . . . . . . 4-5

   Item    4.  Submission of Matters to a Vote of Security Holders  . . 5  
      

Part II.

   Item    5.  Market for the Registrant's Partnership Units and
               Related Security Holder Matters . . . . . . . . . . . .  6  
            
   Item    6.  Selected Financial Data . . . . . .. . . . . . . . . .   7

   Item    7.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations. . . . . . . . . .8-13

   Item    8.  Financial Statements and Supplementary Data. . . . . .  13

   Item    9.  Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure. . . . . . . . . . .14

Part III.

   Item   10.  Directors, Executive Officers, Promoters and
               Control Persons of the Registrant . . . . . . . . . . 15-18

   Item   11.  Executive Compensation . . . . . . . . . . . . . . . .   18

   Item   12.  Security Ownership of Certain Beneficial Owners
               and Management . . . . . . . . . . . . . . . . . . . .   18

   Item   13.  Certain Relationships and Related Transactions . . . .   19

Part IV.     

   Item   14.  Exhibits, Financial Statement Schedules, and
               Reports on Form 8-K . . . . . . . . . . . . . . . . . .  20

   <PAGE>
                     DOCUMENTS INCORPORATED BY REFERENCE
 

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


       Documents Incorporated                              Part of Form 10-K

       Partnership's Registration Statement
       on Form S-1, File No. 2-88587, as                           I
       amended (including the Partnership's
       latest Prospectus dated August 28, 1996)

       Partnership's Annual Report on Form                        IV
       10-K for the fiscal year ended
       September 30, 1984, File No. 2-88587

       Partnership's Annual Report on Form                        IV
       10-K for the fiscal year ended
       September 30, 1986, File No. 2-88587

       December 31, 1996 Annual Report                          II and V
       for the Dean Witter Cornerstone Funds
       II, III and IV.






























                                          

                                       PART I
Item 1.  BUSINESS
       (a) General Development of Business. Dean Witter Cornerstone Fund 
III (the "Partnership") is a New York limited partnership formed to engage
in the speculative trading of commodity futures contracts and other
commodity interests, including, but not limited to, forward contracts on
foreign currencies.
       The Partnership's net asset value per unit, as of December 31, 1996,
was $2,715.51, representing an increase of 8.24 percent from the net asset
value per unit of $2,508.68 at December 31, 1995.
       (b) Financial Information about Industry Segments.  The
Partnership's business comprises only one segment for financial reporting
purposes, speculative trading of commodity futures contracts and other
commodity 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 in futures interests, pursuant to trading
instructions provided by Abraham Trading Co., Welton Investment Systems
Corporation, and Sunrise Capital Management, Inc., its independent trading
advisors (the "Trading Advisor(s)").  For a detailed description of the
different facets of the Partnership's business, see those portions of the
Partnership's latest Prospectus, dated August 28, 1996 (the "Prospectus"),
filed as part of the Registration Statement on Form S-1 (see "Documents
Incorporated by Reference" Page 1), set forth on the next page. 







<PAGE>
       Facets of Business
      1.  Summary                          1.  "Summary of the Prospectus"
                                                (Pages 1-9 ).

      2.  Commodity Markets                2.  "The Commodities Market"
                                                (Pages 80-84).

      3.  Partnership's Commodity          3.  Investment Program, Use of
          Trading Arrangements and             Proceeds and Trading Policies-
          Policies                             "Trading Policies" (Pages 45-
                                               47) and "The Trading Manager"
                                               (Pages 51-74).
                                                        
     4.  Management of the Part-           4.  "The Cornerstone Funds" (Pages
         nership                               19-29)." The General Partner"
                                               (Pages 77-79) and "The
                                               Commodity Broker" (Pages 79-
                                               80).  "The Limited Partner-
                                               ship Agreements" (Pages 86-
                                                     90).
          
      5.  Taxation of the Partnership's    5.  "Material Federal Income Tax
          Limited Partners                      Considerations" and "State
                                                and Local Income Tax Aspects"
                                                (Pages 92-99).
                                                     
(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 broker) enters into forward
contract transactions where foreign banks are the contracting party and trades
in commodity interest contracts on foreign exchanges.













<PAGE>
Item 2.  PROPERTIES

       The executive and administrative offices are located within the
offices of Dean Witter Reynolds Inc. ("DWR").  The DWR offices utilized 
by the Partnership are located at Two World Trade Center, 62nd Floor, New
York, NY 10048.
Item 3.  LEGAL PROCEEDINGS         
       On September 6, 10, and 20, 1996, 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
Management Corporation ("Demeter"), Dean Witter Futures & Currency
Management Inc.("DWFCM"), Dean Witter, Discover & Co. ("DWD") (all such
parties referred to hereafter as the "Dean Witter Parties"), the
Partnership, certain other limited partnership commodity pools of which
Demeter is the general partner, and certain trading advisors to those
pools.  Similar purported class actions were also filed on September 18
and 20, 1996, in the Supreme Court of the State of New York, New York
County, and on November 14, 1996 in the Superior Court of the State of
Delaware, New Castle County, against the Dean Witter Parties and certain
trading advisors on behalf of all purchasers of interests in various
limited partnership commodity pools, including the Partnership, sold by
DWR.  Generally, these complaints allege, among other things, that the
defendants committed fraud, deceit, misrepresentation, breach of fiduciary
duty, fraudulent and unfair business practices, unjust enrichment, and
conversion in connection with the sale and operation of the various
limited partnership commodity pools.  The complaints seek unspecified
amounts of compensatory and punitive damages and other relief.  
<PAGE>
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.

















<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 in the Partnership.  The number of holders 
of Units at December 31, 1996 was approximately 5,619.  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.
       Limited Partnership Units were registered for sale to the public in
certain Canadian provinces.  
















<PAGE>
<PAGE>
<TABLE>
Item 6.  SELECTED FINANCIAL DATA (in dollars)



                                                                      
                                                                      
<CAPTION>                                                             
                                                  For the Years Ended December 31,                     
                                1996           1995           1994            1993           1992    

                                          
<S>                          <C>            <C>             <C>           <C>              <C>
Total Revenues
(including interest)          7,585,090     16,882,940      1,307,961      4,632,967        292,863  


Net Income (Loss)             2,778,204     11,031,694     (5,680,495)    (2,829,361)    (7,992,392) 


Net Income (Loss)
Per Unit (Limited
& General Partners)              206.83         541.04        (219.67)       (109.91)       (286.23) 


Total Assets                 43,137,470     48,156,795     48,308,274     57,323,283     61,615,811  


Total Limited Partners'
Capital                      40,997,752     45,991,101     46,250,611     55,270,605     59,369,475  


Net Asset Value Per
Unit of Limited
Partnership Interest           2,715.51       2,508.68       1,967.64       2,187.31       2,297.22  













/TABLE
<PAGE>
Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

       Liquidity.  The Partnership's assets are deposited in separate
commodity trading accounts with DWR, the commodity broker, and are used 
by the Partnership as margin to engage in commodity futures contract
trading.  DWR holds such assets in either designated depositories or in 
securities approved by the Commodity Futures Trading Commission ("CFTC")
for investment of customer funds.  The Partnership's assets held by DWR 
may be used as margin solely for the Partnership's trading.  Since the
Partnership's sole purpose is to trade in commodity futures contracts and
other commodity interests, it is expected that the Partnership will
continue to own such liquid assets for margin purposes.
       The Partnership's investment in commodity futures contracts and
other commodity interests may be illiquid.  If the price for a futures
contract for a particular commodity has increased or decreased by an
amount equal to the "daily limit", positions in the commodity can neither
be taken nor liquidated unless traders are willing to effect trades at or
within the limit.  Commodity futures prices have occasionally moved the 
daily limit for several consecutive days with little or no trading.  Such
market conditions could prevent the Partnership from promptly liquidating
its commodity futures positions.
       There is no limitation on daily price moves in trading forward
contracts on foreign currency.  The markets for some world currencies have
low trading volume and are illiquid which may prevent the Partnership from
trading in potentially profitable markets or prevent the Partnership from
promptly liquidating unfavorable positions in such markets and subjecting
it to substantial losses.
       Either of these market conditions could result in restrictions on 
redemptions.                              
       Market Risk.  The Partnership trades futures, options and forward 
contracts in interest rates, stock indices, commodities and currencies. 
In entering into these contracts there exists a risk to the Partnership 
(market risk) that such contracts may be significantly influenced by
market conditions, such as interest rate volatility, resulting in such
contracts being less valuable.  If the markets should move against all of
the futures interest positions held by the Partnership at the same time,
and if the Trading Advisors were unable to offset futures interest
positions of the Partnership, the Partnership could lose all of its assets
and the Limited Partners would realize a 100% loss.  The Partnership has
established Trading Policies, which include standards for liquidity and
leverage which help control market risk.  Both the Trading Advisors and
Demeter monitor the Partnership's trading activities on a daily basis to
ensure compliance with the Trading Policies.  Demeter may (under terms of
the Management Agreements) override the trading instructions of a Trading
Advisor to the extent necessary to comply with the Partnership's Trading
Policies.
       Credit Risk.  In addition to market risk, the Partnership is subject
to credit risk in that a counterparty may not be able to meet its
obligations to the Partnership.  The 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 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.  In cases where the Partnership
trades on exchanges 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 member and not the exchange or a clearinghouse, or when the
Partnership enters into off-exchange contracts with a counterparty, the
sole recourse of the Partnership will be the clearinghouse, the exchange
member or the off-exchange contract counterparty, as the case may be.   or
when the Partnership enters into off-exchange contracts with a
counterparty, the sole recourse of the Partnership will be the
clearinghouse or the counterparty as the case may be.  With respect to
futures contracts, DWR, in its business as an international commodity
broker, constantly monitors the creditworthiness of the exchanges and
clearing members of the foreign exchanges with which it does business for
clients, including the Partnership.  DWR employees also from time to time
serve on supervisory or management committees of such exchanges.  If DWR
believed that there was a problem with the creditworthiness of an exchange
on which the Partnership deals, it would so advise Demeter.  With respect
to exchanges of which DWR is not a member, DWR acts only through clearing
brokers it has determined to be creditworthy.  If DWR believed that a
clearing broker with which it deals on behalf of clients were not
creditworthy, it would terminate its relationship with such broker.
       While DWR monitors the creditworthiness and risks involved in
dealing on the various exchanges (and their clearinghouses) and with other
exchange members, there can be no assurance that an exchange (or its
clearinghouse) or other exchange member will be able to meet its
obligations to the Partnership.  DWR has not undertaken to indemnify the
Partnership against any loss.  Further, the law is unclear, particularly
with respect to trading in various non-U.S. jurisdictions, as to whether
DWR has any obligation to protect the Partnership from any liability in 
the event that an exchange or its clearinghouse or another exchange member
defaults on its obligations on trades effected for the Partnership.
       Although DWR monitors the creditworthiness of the foreign exchanges
and clearing brokers with which it does business for clients, DWR does not
have the capability to precisely quantify the Partnership's exposure to
risks inherent in its trading activities on foreign exchanges, and, as a
result, the risk is not monitored by DWR on an individual client basis
(including the Partnership).  In this regard, DWR must clear its customer
trades through one or more other clearing brokers on each exchange where
DWR is not a clearing member.  Such other clearing brokers calculate the
net margin requirements of DWR in respect of the aggregate of all of DWR's
customer positions carried in DWR's omnibus account with that clearing
broker.  Similarly, DWR calculates a net margin requirement for the
exchange-traded futures positions of each of its customers, including the
Partnership.  Neither DWR nor DWR's respective clearing brokers on each
foreign futures exchange calculates the margin requirements of an
individual customer, such as the Partnership, in respect of the customer's
aggregate contract positions on any particular exchange.  With respect to
forward contract trading, the Partnership trades with only those
counterparties which Demeter, together with DWR, have determined to be
creditworthy.  As set forth in the Partnership's Trading Policies, in
determining creditworthiness, Demeter and DWR consult with the Corporate
Credit Department of DWR.  Currently, the Partnership deals solely with
DWR as its counterparty on forward contracts.  While DWR and Demeter
monitor creditworthiness and risk involved in dealing on the various
exchanges and with counterparties, there can be no assurance that an
exchange or counterparty will be able to meet its obligations to the
Partnership.  See "Financial Instruments" under Notes to Financial 
Statements in its 1996 Annual Report to Partners, incorporated by
reference in this Form 10-K.
       Capital Resources.  The Partnership does not have, nor does it
expect to have, any capital assets.  Redemptions of additional Units in 
the future will impact the amount of funds available for investments in 
commodity futures, forward contracts on foreign currencies and other
commodity interests in subsequent periods.  As redemptions are at the
discretion of Limited Partners, it is not possible to estimate the amount
and therefore, the impact of future redemptions.
       Results of Operations.  As of December 31, 1996, the Partnership's
total capital was $42,035,358, a decrease of $4,914,316 from the
Partnership's total capital of $46,949,674 at December 31, 1995.  For the
year ended December 31, 1996, the Partnership generated net income of
$2,778,204, total subscriptions aggregated $8,388, and total redemptions
aggregated $7,700,908.
       For the year ended December 31, 1996, the Partnership's total
trading revenues including interest income were $7,585,090.  The
Partnership's total expenses for the year were $4,806,886 resulting in 
net income of $2,778,204.  The value of an individual unit in the
Partnership increased from $2,508.68 at December 31, 1995 to $2,715.51 at
December 31, 1996.
       As of December 31, 1995, the Partnership's total capital was
$46,949,674, a decrease of $52,779 from the Partnership's total capital 
of $47,002,453 at December 31, 1994.  For the year ended December 31,
1995, the Partnership generated net income of $11,031,694, total
subscriptions aggregated $49,000, and total redemptions aggregated
$11,133,473.
       For the year ended December 31, 1995, the Partnership's total
trading revenues including interest income were $16,882,940.  The
Partnership's total expenses for the year were $5,851,246 resulting in net
income of $11,031,694.  The value of an individual unit in the Partnership
increased from $1,967.64 at December 31, 1994 to $2,508.68    at December
31, 1995.
       As of December 31, 1994, the Partnership's total capital was
$47,002,453, a decrease of $9,154,240 from the Partnership's total capital
of $56,156,693 at December 31, 1993.  For the year ended December 31,
1994, the Partnership incurred a net loss of $5,680,495, total
subscriptions aggregated $5,299,578, and total redemptions aggregated
$8,773,323.
       For the year ended December 31, 1994, the Partnership's total
trading revenues including interest income were $1,307,961.  The
partnership's total expenses for the year were $6,988,456 resulting in a
net loss of $5,680,495.  The value of an individual unit in the
Partnership decreased from $2,187.31 at December 31, 1993 to $1,967.64 at
December 31, 1994.  
       The Partnership's overall performance record represents varied
results of trading in different commodity markets.  For a further
description of results, refer to the letter to the Limited Partners in the
accompanying 1996 Annual Report to Partners, incorporated by reference in
this Form 10-K.  The Partnership's gains and losses are allocated among
its Limited Partners for income tax purposes.
Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
       The information required by this Item appears in the attached 1996
Annual Report to Partners 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.



<PAGE>
PART III

Item 10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
          PERSONS OF THE REGISTRANT

General Partner
       Demeter, a Delaware corporation, was formed on August 18, 1977 to 
act as a commodity pool operator and is registered with the CFTC as a
commodity pool operator and currently is a member of the National Futures
Association ("NFA") in such capacity.  Demeter is wholly-owned by DWD and
is an affiliate of DWR.  DWD, DWR and Demeter may each be deemed to be
"promoters" and/or a "parent" of the Partnership within the meaning of the
federal securities laws.
Dean Witter Reynolds Inc.
       DWR is a financial services company which provides to its
individual, corporate and institutional clients services as a broker in 
securities and commodity interest contracts, a dealer in corporate,
municipal and government securities, an investment banker, an investment
adviser and an agent in the sale of life insurance and various other
products and services.  DWR is a member firm of the New York Stock
Exchange, the American Stock Exchange, the Chicago Board Options Exchange,
and other major securities exchanges, and is a clearing member of the
Chicago Board of Trade, the Chicago Mercantile Exchange, the Commodity
Exchange Inc., and other major commodities exchanges.
       DWR is registered with the CFTC as a futures commission merchant and
is a member of the NFA in such capacity.  DWR is currently servicing its
clients through a network of 371 branch offices with approximately 9,080
account executives servicing individual and institutional client
accounts.                                 
<PAGE>
Directors and Officers of the General Partner
       The directors and officers of Demeter as of December 31, 1996 are 
as follows:
       Richard M. DeMartini, age 44, is the Chairman of the Board and a
Director of Demeter.  Mr. DeMartini is also the Chairman of the Board and
a Director of DWFCM, a registered commodity trading advisor.  Mr.
DeMartini has served as President and Chief Operating Officer of Dean
Witter Capital, a division of DWR since January 1989.  From January 1988
until January 1989, Mr. DeMartini served as President and Chief Operating
Officer of the Consumer Banking Division of DWD, and from May 1985 until
January 1988 was President and Chief Executive Officer of the Consumer
Markets Division of DWD.  Mr. DeMartini currently serves as a Director of
DWD and DWR, and has served as an officer of DWR for the past five years. 
Mr. DeMartini has been with DWD and its affiliates for 22 years.
       Mark J. Hawley, age 53, is President and a Director of Demeter.  Mr.
Hawley joined DWR in February 1989 and currently serves as Executive Vice
President and Director of DWR's Managed Futures and Precious Metals
Department.  Mr. Hawley also serves as President of DWFCM.  From 1978 to
1989, Mr. Hawley was a member of the senior management team at Heinold
Asset Management, Inc., a commodity pool operator, 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 & Co.
       Lawrence Volpe, age 49, is a Director of Demeter and DWFCM.  Mr.
Volpe joined DWR as a Senior Vice President and Controller in September 
1983, and currently holds those positions.  From July 1979 to September 
1983, he was associated with E.F. Hutton & Company Inc. and prior to his 
departure, held the positions of First Vice President and Assistant
Controller.  From 1970 to July 1979, he was associated with Arthur
Anderson & Co. and prior to his departure he served as audit manager in
the financial services division.
       Joseph G. Siniscalchi, age 51, is a Director of Demeter.  Mr.
Siniscalchi joined DWR in July 1984 as a First Vice President, Director of
General Accounting.  He is currently Senior Vice President and Controller
of the Dean Witter Financial Division of DWR.  From February 1980 to July
1984, Mr. Siniscalchi was Director of Internal Audit at Lehman Brothers
Kuhn Loeb, Inc.
       Laurence E. Mollner, age 55, is a Director of Demeter.  Mr. Mollner
joined DWR in May 1979 as Vice President and Director of Commercial Sales. 
He is currently Executive Vice President and Deputy Director of the
Futures Markets Division of DWR.
       Edward C. Oelsner III, age 54, is a Director of Demeter.  Mr.
Oelsner joined DWR in March 1981 as a Managing Director in the Corporate
Finance Department.  He currently manages DWR's Retail Products Group
within the Corporate Finance Department.  While Mr. Oelsner has extensive
experience in the securities industry, he has no experience in commodity
interests trading.
       Robert E. Murray, age 36, is a Director of Demeter.  Mr. Murray is
currently a Senior Vice President of the DWR Managed Futures Division and
is a Director and the Senior Administrative Officer of DWFCM.  Mr. Murray
graduated from Geneseo State University in May 1983 with a B.A. degree in
Finance.  Mr. Murray began at DWR in 1984 and is currently the Director 
of Product Development for the Managed Futures Division and is responsible
for the development and maintenance of the proprietary Fund Management
System utilized by Demeter and DWFCM for organizing information and
producing reports for monitoring investors' accounts.
       Patti L. Behnke, age 36, is Vice President and Chief Financial
Officer of Demeter.  Ms. Behnke joined DWR in 1991 as Assistant Vice
President of Financial Reporting and is currently First Vice President and
Director of Financial Reporting and Managed Futures Accounting in the
Capital Markets division of DWR.  From August 1988 to September 1990, Ms.
Behnke was Assistant Controller of L.F. Rothschild & Co. and from
September 1986 to August 1988, she was associated with Carteret Savings 
Bank as Assistant Vice President - Financial Analysis.  From April 1982 to
September 1986, Ms. Behnke was an auditor at Arthur Andersen & Co.             
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. 
Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 
       (a)    Security Ownership of Certain Beneficial Owners - As of
December 31, 1996 there were no persons as beneficial owners of more than
5 percent of the Units of Limited Partnership Interest in the Partnership.
       (b)    Security Ownership of Management - At December 31, 1996,
Demeter owned 382.103 Units of General Partnership Interest representing
a 2.47 percent interest in the Partnership.
       (c)    Changes in Control - None
<PAGE>
Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
       Refer to Note 2 - "Related Party Transactions" of "Notes to
Financial Statements", in the accompanying 1996 Annual Report to Partners,
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 $2,772,496 for the
year ended December 31, 1996.
<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 reports of independent public
accountants, all appearing in the accompanying 1996 Annual Report to
Partners, are incorporated by reference in this Form 10-K:
       -      Report of Deloitte & Touche LLP, independent auditors, for the
              years ended December 31, 1996, 1995 and 1994.
       
       -      Statements of Financial Condition as of December 31, 1996 and
              1995.

       -      Statements of Operations, Changes in Partners' Capital, and 
              Cash Flows for the years ended December 31, 1996, 1995 and
              1994.

       -      Notes to Financial Statements.

       With the exception of the aforementioned information and the
information incorporated in Items 7, 8, and 13, the 1996 Annual Report to
Partners 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.
<PAGE>
                                         SIGNATURES

       Pursuant to the requirement 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 III
                                          (Registrant)

                                   BY:  Demeter Management Corporation,
                                          General Partner

March 24, 1997                     BY: /s/ Mark J. Hawley               
                                           Mark J. Hawley, 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/  Mark J. Hawley                                        March 27, 1997
          Mark J. Hawley, Director and
            President       

    /s/  Richard M. DeMartini                                  March 27, 1997
          Richard M. DeMartini, Director
            and Chairman of the Board


    /s/  Lawrence Volpe                                        March 27, 1997
          Lawrence Volpe, Director        
            

    /s/  Laurence E. Mollner                                   March 27, 1997
          Laurence E. Mollner, Director   
            

    /s/  Joseph G. Siniscalchi                                 March 27, 1997
          Joseph G. Siniscalchi, Director 

     
    /s/  Edward C. Oelsner III                                 March 27, 1997
          Edward C. Oelsner III, Director 


    /s/  Robert E. Murray                                      March 27, 1997
          Robert E. Murray, Director  


    /s/  Patti L. Behnke                                       March 27, 1997
          Patti L. Behnke, Chief Financial
            Officer and Principal Accounting
            Officer
<PAGE>
                                       EXHIBIT INDEX
       
ITEM                                              METHOD OF FILING           

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

-10.   Management Agreement among the 
       Partnership, Demeter and Sunrise
       Commodities Inc. dated as of
       November 15, 1983.                                      (2)

-10.   Management Agreement among the
       Partnership, Demeter and 
       Abraham Trading Company dated as 
       of July 1, 1996.                                        (5)

-10.   Management Agreement among the 
       Partnership, Demeter and Welton
       Investment Systems Corporation
       date as of July 1, 1996.                                (5)

-10.   Dean Witter Cornerstone Funds
       Exchange Agreement, dated as of
       May 31, 1984.                                          (3)

-10.   Amended and Restated Customer Agreement
       between the Partnership and DWR,
       dated as of September 1, 1996.                         (4)

-13.   December 31, 1996 Annual Report to Limited Partners.   (5)



(1)    Incorporated by reference to Exhibit 3.01 to Partnership's
       Annual Report on Form 10-K for the fiscal year ended
       September 30, 1984 (File No. 0-13299).

(2)    Incorporated by reference to Exhibit 10.03 to the
       Partnership's Annual Report on Form 10-K for the fiscal year
       ended September 30, 1984 (File No. 0-13299).

(3)    Incorporated by reference to Exhibit 10.06 to the
       Partnership's Annual Report on Form 10-K for the fiscal year
       ended September 30, 1984 (File No. 0-13299).

(4)    Incorporated by reference to Exhibit 10.01(d) Post Effective
       Amendment No. 23 to the Partnership's Registration Statement 
       on Form S-1 (File No. 2-88587) filed on August 26, 1996.

(5)    Filed herewith.
       
<PAGE>
MANAGEMENT AGREEMENT

       THIS AGREEMENT, made the 1st day of July, 1996 among DEAN WITTER
CORNERSTONE FUND III, a New York limited partnership (the "Partnership"),
DEMETER MANAGEMENT CORPORATION, a Delaware corporation (the "General
Partner"), and WELTON INVESTMENT SYSTEMS CORPORATION, a California
corporation (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") by entering into an agreement
pursuant to which units of limited partnership interest ("Units") of such
member partnerships will be 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"), and
thereafter, pursuant to which such Units can be exchanged by a limited
partner of a member partnership of the Cornerstone Funds at the end of any
month for Units of other member partnerships of the Cornerstone Funds at
100% of the respective Net Asset Value thereof;

       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 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:

       1.     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 systems,
methods, and strategies (subject to the need to preserve the secrecy of
proprietary information concerning such 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 the Partnership's
Prospectus required by Section 4.21 of the regulations of the CFTC,
including any amendments or supplements thereto, 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 the Registration Statement
and Prospectus, including any amendments or supplements thereto, 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)(1) of the CFTC Regulations and
the term "affiliate" shall mean an entity or individual (including a
stockholder, director, officer, employee, or agent) or entity that
directly or indirectly controls, is controlled by, or is under common
control with, any other entity or individual.

       (b)    If, while Units continue to be offered and sold, the Trading
Manager becomes aware of any untrue or misleading statement or omission in
the Registration Statement or the Prospectus regarding the Trading
Manager, its principals or affiliates, their trading performance, or their
trading systems, methods, or strategies, or of the occurrence of any event
of change in circumstances which would result in their being any such
untrue or misleading statement or omission, the Trading Manager shall
immediately notify the General Partner in writing and shall cooperate with
it in the preparation of any necessary amendments or supplements to the
Registration Statement or the Prospectus.  Neither the Trading Manager nor
any of its principals or affiliates, or any stockholders, officers,
directors, employees, or agents thereof, shall use or distribute the
Registration Statement, Prospectus (including any final, amended, or
supplemented prospectus), or selling literature or shall engage in any
selling activities whatsoever in connection with the offering of Units.


              2.     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 responsi-
bility for directing the investment and reinvestment of its allocable
share of Net Assets of the Partnership pursuant to its Diversified
Portfolio trading program on the terms and conditions and in accordance
with the prohibitions and trading policies set forth in this Agreement,
the Partnership's Limited Partnership Agreement as from time to time in
effect (the "Limited Partnership Agreement"), and the Prospectus;
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 Prospectus and
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 January 31, 1996 without
the prior consent of the General Partner.

       (b)    The Trading Manager shall:

              (i)    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
Prospectus and Limited Partnership Agreement to the Trading Manager and
the trading systems, methods, and strategies of the Trading Manager
described in the Prospectus, 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.

              (ii)   Subject to reasonable assurances of confidentiality by
the General Partners and the Partnership, provide the General Partner,
within 30 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 strategies or methods may be utilized for differing
sizes of accounts, accounts with different trading policies, accounts
experiencing differing inflows or outflows of equity, accounts which
commence trading at different times, accounts with different fee
structures, accounts which have different portfolios or different fiscal
years and that such differences may cause divergent trading results.

              (iii)  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.

              (iv)   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 stockholder, 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 by the commodity broker on such trades but only
for the amount of the commodity broker's out-of-pocket costs in respect
thereof.  The Trading Manager's errors shall include, but not be limited
to, inputting improper trading signals or communicating incorrect orders
to any commodity broker for the Partnership.  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 notify
promptly 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.

       3.     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 Partner-
ship, 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 defined in Section 7(c) hereof) 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.

       4.     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, associa-
tion, 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.

       5.     Apportionment of Funds to the Trading Manager

              Effective as of the close of business on June 30, 1996, the
General Partner will reallocate the Partnership's Net Assets.  The Trading
Manager will be allocated approximately 25% of the Partnership's Net
Assets effective as of the date hereof.  The General Partner agrees to
apportion approximately 25% of the proceeds from any Exchanges (as defined
in the Prospectus) to the Trading Manager.  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 consecu-
tive month period (after adding back the amount of distributions,
redemptions, exchanges, or reapportionments charged to such Managed Net
Assets and subtracting increases in such Managed Net Assets from Units
acquired by purchase or exchange 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.

       6.     Commodity Broker

              The Trading Manager shall place orders for all transactions in
commodity interests for the Partnership's account through such commodity
broker or brokers as the General Partner shall direct.  At the present
time, Dean Witter Reynolds Inc., a Delaware corporation and an affiliate
of the General Partner ("Dean Witter"), shall act as sole broker for the
Partnership.  Accordingly, the Trading Manager is hereby directed to place
all orders for transactions in commodity interests for the Partnership's
account through Dean Witter until the General Partner shall give the
Trading Manager other instructions.  The General Partner shall provide the
Trading Manager with copies of brokerage statements.  Notwithstanding that
Dean Witter shall act as commodity broker for the Partnership, the Trading
Manager may execute trades through floor brokers other than those employed
by Dean Witter so long as arrangements are made for such floor brokers to
"give-up" or transfer the positions to Dean Witter and provided that the
rates charged by such floor brokers have been approved in advance by Dean
Witter.

       7.     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:

              (i)    A monthly management fee, without regard to whether the
Partnership is profitable, equal to 1/3 of 1% of the "Managed Net Assets"
(as defined in Section 7(c)) as of the end of each calendar month (a 4%
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.


              (ii)   An annual incentive fee equal to the portion of 15
percent 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
(A) distributions and redemptions paid or payable on Units and (B)
exchanges of Units for units of another member partnership of the
Cornerstone Funds, and decreased by (C) contributions to the Partnership
arising from Units acquired upon an exchange or from the continuing
offering of Units and (D) 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 and all exchange of 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, redemptions, or exchanges 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 or exchange 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 or exchange.  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 opera-
tions) 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.
       
       8.     Term

              This Agreement shall continue in effect for a period of three
years 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 60 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 Diversified Portfolio trading system or methods 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 Partner-
ship; (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, exchanges or 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.

       9.     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 Partner-
ship, or by reason of a material breach of this Agreement, or by reason of
a 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.


       10.    Indemination 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.  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.

       11.    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) or
employ a trading system, method, or strategy on behalf of any other
account advised or managed by the Trading Manager or any of its principals
or affiliates which is materially different from the trading system,
method or strategy employed by the Trading Manager on behalf of the
Partnership's account unless the Trading Manager has first offered to
employ such other system, method, or strategy on behalf of the
Partnership's account and the General Partner has expressly declined such
offer in writing.  The General Partner agrees to respond promptly to such
requests.  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 (if the General Partner has expressly
declined such offer pursuant to the preceding sentence), 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.

       12.    Additional Undertakings by the Trading Manager

              The Trading Manager warrants and agrees that neither the
Trading Manager nor any of its stockholders, 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 complied 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.

       13.    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.

       14.    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.

       15.    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.

       16.    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 17 hereof.

       17.    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.

       18.    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.

       19.    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 or the General Partner:

              c/o Demeter Management Corporation

              2 World Trade Center, 62nd Floor

              New York, New York  10048

              Attn:  Mr. Mark J. Hawley, President

              and with copies to:


                     

              Dean Witter Reynolds Inc.

              130 Liberty Street

              New York, New York  10006

              Attn:  Michael T. Gregg, Esq.

and

              Cadwalader, Wickersham & Taft

              100 Maiden Lane

              New York, New York  10038

              Attn:  Edwin L. Lyon, Esq.

              if to the Trading Manager:
                     
              Welton Investment Systems Corporation

              The Eastwood Building

              San Carlos between 5th and 6th

              P.O. Box 6147

              Carmel, California 93921-6147

              Attn:  President
                     
       20.    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.

       21.    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).

       22.    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.

       23.    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.

       24.    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.



              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:_________________________________

                                          Mark J. Hawley, President


                                   DEMETER MANAGEMENT CORPORATION

                                          

                                   By:_______________________________

                                          Mark J. Hawley, President


                                          WELTON INVESTMENT SYSTEMS CORPORA-
                                          TION

                                   By:_________________________________

                                          

       

                                          
<PAGE>
                                     EXHIBIT A

TRADING AUTHORIZATION

Welton Investment System Corporation

The Eastwood Building

San Carlos between 5th and 6th

P.O. Box 6147

Carmel, California 93921-6147

Attn: President

Dear Sirs:

                     Dean Witter Cornerstone Fund III, a New York
limited partnership (the "Partnership"), does hereby make,
constitute, and appoint Welton Investment Systems Corporation (the
"Trading Manager") as the Partnership's agent and attorney-in-fact
to purchase and sell commodity interests through Dean Witter
Reynolds Inc., as commodity broker, as described in and in
accordance with the terms of the Management Agreement dated as of
July 1, 1996 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:_________________________________

                                                               Mark J. Hawley

Dated:  July 1, 1996

<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.

       
       
       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:

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

       2)     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.

       3)     Each trading manager shall be entitled to retain any incentive
              fees paid in any prior incentive period.

<PAGE>
MANAGEMENT AGREEMENT

       THIS AGREEMENT, made the 1st day of July, 1996 among DEAN WITTER
CORNERSTONE FUND III, a New York limited partnership (the "Partnership"),
DEMETER MANAGEMENT CORPORATION, a Delaware corporation (the "General
Partner"), and ABRAHAM TRADING CO., a Texas corporation (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") by entering into an agreement
pursuant to which units of limited partnership interest ("Units") of such
member partnerships will be 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"), and
thereafter, pursuant to which such Units can be exchanged by a limited
partner of a member partnership of the Cornerstone Funds at the end of any
month for Units of other member partnerships of the Cornerstone Funds at
100% of the respective Net Asset Value thereof;

       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 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:

       1.     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 systems, methods, and strategies (subject to the need to preserve
the secrecy of proprietary information concerning such 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
the Partnership's Prospectus required by Section 4.21 of the regulations
of the CFTC, including any amendments or supplements thereto, 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 the
Registration Statement and Prospectus, including any amendments or
supplements thereto, 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 "princi-
pal" shall have the same meaning as defined in Section 4.10(e)(1) of the
CFTC Regulations and the term "affiliate" shall mean an entity or
individual (including a stockholder, director, officer, employee, or
agent) or entity that directly or indirectly controls, is controlled by,
or is under common control with, any other entity or individual.

       (b)    If, while Units continue to be offered and sold, the Trading
Manager becomes aware of any untrue or misleading statement or omission in
the Registration Statement or the Prospectus regarding the Trading
Manager, its principals or affiliates, their trading performance, or their
trading systems, methods, or strategies, or of the occurrence of any event
of change in circumstances which would result in their being any such
untrue or misleading statement or omission, the Trading Manager shall
immediately notify the General Partner in writing and shall cooperate with
it in the preparation of any necessary amendments or supplements to the
Registration Statement or the Prospectus.  Neither the Trading Manager nor
any of its principals or affiliates, or any stockholders, officers,
directors, employees, or agents thereof, shall use or distribute the
Registration Statement, Prospectus (including any final, amended, or
supplemented prospectus), or selling literature or shall engage in any
selling activities whatsoever in connection with the offering of Units.

       2.     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 responsi-
bility for directing the investment and reinvestment of its allocable
share of Net Assets of the Partnership pursuant to its trading program on
the terms and conditions and in accordance with the prohibitions and
trading policies set forth in this Agreement, the Partnership's Limited
Partnership Agreement as from time to time in effect (the "Limited
Partnership Agreement"), and the Prospectus; 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 Prospectus and 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 June 20, 1996 (a copy of
which has been received by the General Partner) without the prior consent
of the General Partner.

       (b)    The Trading Manager shall:

              (i)    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
Prospectus and Limited Partnership Agreement to the Trading Manager and
the trading systems, methods, and strategies of the Trading Manager
described in the Prospectus, 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.

              (ii)   Subject to reasonable assurances of confidentiality by
the General Partners and the Partnership, provide the General Partner,
within 30 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 strategies or methods may be utilized for differing
sizes of accounts, accounts with different trading policies, accounts
experiencing differing inflows or outflows of equity, accounts which
commence trading at different times, accounts with different fee
structures, accounts which have different portfolios or different fiscal
years and that such differences may cause divergent trading results.

              (iii)  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.

              (iv)   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 stockholder, 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 by the commodity broker on such trades but only
for the amount of the commodity broker's out-of-pocket costs in respect
thereof.  The Trading Manager's errors shall include, but not be limited
to, inputting improper trading signals or communicating incorrect orders
to any commodity broker for the Partnership.  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 notify
promptly 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 authoriza-
tion in the form annexed hereto as Exhibit A appointing the Trading
Manager the Partnership's attorney-in-fact for such purpose.



       3.     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 Partner-
ship, 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 defined in Section 7(c) hereof) 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.

       4.     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, associa-
tion, 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.

       5.     Apportionment of Funds to the Trading Manager

              Effective as of the close of business on June 30, 1996, the
General Partner will reallocate the Partnership's Net Assets.  The Trading
Manager will be allocated approximately 25% of the Partnership's Net
Assets effective as of the date hereof.  The General Partner agrees to
apportion approximately 25% of the proceeds from any Exchanges (as defined
in the Prospectus) to the Trading Manager.  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 consecu-
tive month period (after adding back the amount of distributions,
redemptions, exchanges, or reapportionments charged to such Managed Net
Assets and subtracting increases in such Managed Net Assets from Units
acquired by purchase or exchange 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.

       6.     Commodity Broker

              The Trading Manager shall place orders for all transactions in
commodity interests for the Partnership's account through such commodity
broker or brokers as the General Partner shall direct.  At the present
time, Dean Witter Reynolds Inc., a Delaware corporation and an affiliate
of the General Partner ("Dean Witter"), shall act as sole broker for the
Partnership.  Accordingly, the Trading Manager is hereby directed to place
all orders for transactions in commodity interests for the Partnership's
account through Dean Witter until the General Partner shall give the
Trading Manager other instructions.  The General Partner shall provide the
Trading Manager with copies of brokerage statements.  Notwithstanding that
Dean Witter shall act as commodity broker for the Partnership, the Trading
Manager may execute trades through floor brokers other than those employed
by Dean Witter so long as arrangements are made for such floor brokers to
"give-up" or transfer the positions to Dean Witter and provided that the
rates charged by such floor brokers have been approved in advance by Dean
Witter.

       7.     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:

              (i)    A monthly management fee, without regard to whether the
Partnership is profitable, equal to 1/3 of 1% of the "Managed Net Assets"
(as defined in Section 7(c)) as of the end of each calendar month (a 4%
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.

              (ii)   An annual incentive fee equal to the portion of 15
percent 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
(A) distributions and redemptions paid or payable on Units and (B)
exchanges of Units for units of another member partnership of the
Cornerstone Funds, and decreased by (C) contributions to the Partnership
arising from Units acquired upon an exchange or from the continuing
offering of Units and (D) 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 and all exchange of 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, redemptions, or exchanges 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 or exchange 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 or exchange.  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 opera-
tions) 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.

       8.     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 60 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 trading system or methods 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 registra-
tion, 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 Partner-
ship; (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, exchanges or 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.

       9.     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, 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 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, or 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, and any of its or their respective successors and assigns
shall be inapplicable in the event of (i) 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 or (ii) any event
unrelated to the Trading Manager which occurred prior to the date of this
Agreement.

       10.    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.  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.

       11.    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) or
employ a trading system, method, or strategy on behalf of any other
account advised or managed by the Trading Manager or any of its principals
or affiliates which is materially different from the trading system,
method or strategy employed by the Trading Manager on behalf of the
Partnership's account unless: (i) the Trading Manager has first offered to
employ such other system, method, or strategy on behalf of the
Partnership's account and the General Partner has expressly declined such
offer in writing, or (ii) the above-mentioned trading system, method, or
strategy is only offered to a specific client (for whom the trading
system, method, or strategy was customized) and is not offered to clients
in the Trading Manager's Disclosure Document.  The General Partner agrees
to respond promptly to such requests.  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 (if the
General Partner has expressly declined such offer pursuant to the
preceding sentence), 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.

       12.    Additional Undertakings by the Trading Manager

              The Trading Manager warrants and agrees that neither the
Trading Manager nor any of its stockholders, 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 complied 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.

       13.    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.

       14.    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.

       15.    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.


       16.    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 17 hereof.


       17.    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.

       18.    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.

       19.    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 or the General Partner:

                     c/o Demeter Management Corporation

                     2 World Trade Center, 62nd Floor

                     New York, New York  10048

                     Attn:  Mr. Mark J. Hawley, President

                     and with copies to:

                     Dean Witter Reynolds Inc.

                     130 Liberty Street

                     New York, New York  10006

                     Attn:  Michael T. Gregg, Esq.

and

                     Cadwalader, Wickersham & Taft

                     100 Maiden Lane

                     New York, New York  10038

                     Attn:  Edwin L. Lyon, Esq.

                     if to the Trading Manager:

                     Abraham Trading Co.

                     Moody Building

                     2nd & Main

                     Canadian, Texas  79014

                     Attn:  Salem A. Abraham

       20.    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.

       21.    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).

       22.    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 appropri-
ate before an arbitral body, located within the County, City, and State of
New York.

       23.    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.

       24.    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.

              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:_________________________________

                                               Mark J. Hawley, President


                                          DEMETER MANAGEMENT CORPORATION

                                          

                                          By:_______________________________

                                               Mark J. Hawley, President


                                          ABRAHAM TRADING CO.

                                          

                                          By:_______________________________

                                          

                                          

                                          
<PAGE>
EXHIBIT A

TRADING AUTHORIZATION

Abraham Trading Co.

Moody Building

2nd & Main

Canadian, Texas  79014

Dear Sirs:

                     Dean Witter Cornerstone Fund III, a New York limited
partnership (the "Partnership"), does hereby make, constitute, and appoint
Abraham Trading Co. (the "Trading Manager") as the Partnership's agent and
attorney-in-fact to purchase and sell commodity interests through Dean
Witter Reynolds Inc., as commodity broker, as described in and in
accordance with the terms of the Management Agreement dated as of July 1,
1996 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:______________________________

                                                    Mark J. Hawley
Dated:  July 1, 1996

<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.

                     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:

                     1)     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.

              2)     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.

                     3)     Each trading manager shall be entitled to retain
                            any incentive fees paid in any prior incentive
                            period.
                            MANAGEMENT AGREEMENT

                     THIS AGREEMENT, made the 1st day of July, 1996 among
DEAN WITTER CORNERSTONE FUND III, a New York limited partnership (the
"Partnership"), DEMETER MANAGEMENT CORPORATION, a Delaware corporation
(the "General Partner"), and ABRAHAM TRADING CO., a Texas corporation (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") by entering into
an agreement pursuant to which units of limited partnership interest
("Units") of such member partnerships will be 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 "Prospec-
tus"), and thereafter, pursuant to which such Units can be exchanged by a
limited partner of a member partnership of the Cornerstone Funds at the
end of any month for Units of other member partnerships of the Cornerstone
Funds at 100% of the respective Net Asset Value thereof;
                     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 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:

                     1.     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 systems, methods, and strategies (subject to the need to preserve
the secrecy of proprietary information concerning such 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
the Partnership's Prospectus required by Section 4.21 of the regulations
of the CFTC, including any amendments or supplements thereto, 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 the
Registration Statement and Prospectus, including any amendments or
supplements thereto, 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 "princi-
pal" shall have the same meaning as defined in Section 4.10(e)(1) of the
CFTC Regulations and the term "affiliate" shall mean an entity or
individual (including a stockholder, director, officer, employee, or
agent) or entity that directly or indirectly controls, is controlled by,
or is under common control with, any other entity or individual.

                     (b)    If, while Units continue to be offered and sold,
the Trading Manager becomes aware of any untrue or misleading statement or
omission in the Registration Statement or the Prospectus regarding the
Trading Manager, its principals or affiliates, their trading performance,
or their trading systems, methods, or strategies, or of the occurrence of
any event of change in circumstances which would result in their being any
such untrue or misleading statement or omission, the Trading Manager shall
immediately notify the General Partner in writing and shall cooperate with
it in the preparation of any necessary amendments or supplements to the
Registration Statement or the Prospectus.  Neither the Trading Manager nor
any of its principals or affiliates, or any stockholders, officers,
directors, employees, or agents thereof, shall use or distribute the
Registration Statement, Prospectus (including any final, amended, or
supplemented prospectus), or selling literature or shall engage in any
selling activities whatsoever in connection with the offering of Units.

                     2.     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
trading program on the terms and conditions and in accordance with the
prohibitions and trading policies set forth in this Agreement, the
Partnership's Limited Partnership Agreement as from time to time in effect
(the "Limited Partnership Agreement"), and the Prospectus; 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 Prospectus and 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 June 20, 1996 (a copy of
which has been received by the General Partner) without the prior consent
of the General Partner.

                     (b)    The Trading Manager shall:

                            (i)    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 Prospectus and Limited Partnership Agreement to the Trading Manager
and the trading systems, methods, and strategies of the Trading Manager
described in the Prospectus, 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.

                            (ii)   Subject to reasonable assurances of
confidentiality by the General Partners and the Partnership, provide the
General Partner, within 30 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 strategies or methods may be utilized
for differing sizes of accounts, accounts with different trading policies,
accounts experiencing differing inflows or outflows of equity, accounts
which commence trading at different times, accounts with different fee
structures, accounts which have different portfolios or different fiscal
years and that such differences may cause divergent trading results.

                            (iii)  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.

                            (iv)   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 stockholder, 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 by the commodity broker on such trades but only
for the amount of the commodity broker's out-of-pocket costs in respect
thereof.  The Trading Manager's errors shall include, but not be limited
to, inputting improper trading signals or communicating incorrect orders
to any commodity broker for the Partnership.  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 notify
promptly 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.
                     3.     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 defined in Section 7(c) hereof) 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.

                     4.     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, associa-
tion, 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.

                     5.     Apportionment of Funds to the Trading Manager

                     Effective as of the close of business on June 30, 1996,
the General Partner will reallocate the Partnership's Net Assets.  The
Trading Manager will be allocated approximately 25% of the Partnership's
Net Assets effective as of the date hereof.  The General Partner agrees to
apportion approximately 25% of the proceeds from any Exchanges (as defined
in the Prospectus) to the Trading Manager.  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 consecu-
tive month period (after adding back the amount of distributions,
redemptions, exchanges, or reapportionments charged to such Managed Net
Assets and subtracting increases in such Managed Net Assets from Units
acquired by purchase or exchange 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.

                     6.     Commodity Broker

                     The Trading Manager shall place orders for all
transactions in commodity interests for the Partnership's account through
such commodity broker or brokers as the General Partner shall direct. 
Atthe present time, Dean Witter Reynolds Inc., a Delaware corporation and
an affiliate of the General Partner ("Dean Witter"), shall act as sole
broker for the Partnership.  Accordingly, the Trading Manager is hereby
directed to place all orders for transactions in commodity interests for
the Partnership's account through Dean Witter until the General Partner
shall give the Trading Manager other instructions.  The General Partner
shall provide the Trading Manager with copies of brokerage statements. 
Notwithstanding that Dean Witter shall act as commodity broker for the
Partnership, the Trading Manager may execute trades through floor brokers
other than those employed by Dean Witter so long as arrangements are made
for such floor brokers to "give-up" or transfer the positions to Dean
Witter and provided that the rates charged by such floor brokers have been
approved in advance by Dean Witter.

                     7.     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:

                     (i)    A monthly management fee, without regard to
whether the Partnership is profitable, equal to 1/3 of 1% of the "Managed
Net Assets" (as defined in Section 7(c)) as of the end of each calendar
month (a 4% annual rate) commencing with the month in which the Partner-
ship 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.

                     (ii)   An annual incentive fee equal to the portion of 15
percent 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 (A) distributions and redemptions paid or payable on Units and (B)
exchanges of Units for units of another member partnership of the
Cornerstone Funds, and decreased by (C) contributions to the Partnership
arising from Units acquired upon an exchange or from the continuing
offering of Units and (D) 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 and all exchange of 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, redemptions, or exchanges 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 Partner-
ship may redeem or exchange 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 or exchange.  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 Partner-
ship 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 opera-
tions) 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.

                     8.     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 60 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 trading system or methods 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 registra-
tion, 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 Partner-
ship; (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, exchanges or 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.

                     9.     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, 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 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 stockhold-
ers, 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, or 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, and any of its or their respective successors and assigns
shall be inapplicable in the event of (i) 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 or (ii) any event
unrelated to the Trading Manager which occurred prior to the date of this
Agreement.

                     10.    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 Partner-
ship 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.  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 indemnify-
ing party under this Section; but the omission so to notify the indemnify-
ing 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.

                     11.    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) or
employ a trading system, method, or strategy on behalf of any other
account advised or managed by the Trading Manager or any of its principals
or affiliates which is materially different from the trading system,
method or strategy employed by the Trading Manager on behalf of the
Partnership's account unless: (i) the Trading Manager has first offered to
employ such other system, method, or strategy on behalf of the
Partnership's account and the General Partner has expressly declined such
offer in writing, or (ii) the above-mentioned trading system, method, or
strategy is only offered to a specific client (for whom the trading
system, method, or strategy was customized) and is not offered to clients
in the Trading Manager's Disclosure Document.  The General Partner agrees
to respond promptly to such requests.  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 (if the
General Partner has expressly declined such offer pursuant to the
preceding sentence), 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.

                     12.    Additional Undertakings by the Trading Manager

                     The Trading Manager warrants and agrees that neither the
Trading Manager nor any of its stockholders, 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 complied 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.

                     13.    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.

                     14.    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.

                     15.    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.

                     16.    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 17
hereof.

                     17.    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.

                     18.    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.

                     19.    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 or the General Partner:

                     c/o Demeter Management Corporation

                     2 World Trade Center, 62nd Floor

                     New York, New York  10048

                     Attn:  Mr. Mark J. Hawley, President

                     and with copies to:

                     

                     Dean Witter Reynolds Inc.

                     130 Liberty Street

                     New York, New York  10006

                     Attn:  Michael T. Gregg, Esq.

and

                     Cadwalader, Wickersham & Taft

                     100 Maiden Lane

                     New York, New York  10038

                     Attn:  Edwin L. Lyon, Esq.

                     if to the Trading Manager:

                     Abraham Trading Co.

                     Moody Building

                     2nd & Main

                     Canadian, Texas  79014

                     Attn:  Salem A. Abraham

                     20.    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.

                     21.    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).

                     22.    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 appropri-
ate before an arbitral body, located within the County, City, and State of
New York.

                     23.    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.

                     24.    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.

                     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:_________________________________

                                               Mark J. Hawley, President


                                          DEMETER MANAGEMENT CORPORATION

                                          

                                          By:_________________________________

                                               Mark J. Hawley, President


                                          ABRAHAM TRADING CO.

                                          

                                          By:_________________________________

                                          

                                          

                                          
<PAGE>
EXHIBIT A

TRADING AUTHORIZATION

Abraham Trading Co.

Moody Building

2nd & Main

Canadian, Texas  79014

Dear Sirs:

                     Dean Witter Cornerstone Fund III, a New York limited
partnership (the "Partnership"), does hereby make, constitute, and appoint
Abraham Trading Co. (the "Trading Manager") as the Partnership's agent and
attorney-in-fact to purchase and sell commodity interests through Dean
Witter Reynolds Inc., as commodity broker, as described in and in
accordance with the terms of the Management Agreement dated as of July 1,
1996 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:_________________________________

                                                               Mark J. Hawley

Dated:  July 1, 1996

                                          
<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.


                     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:

                     1)     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.
              2)     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.

                     3)     Each trading manager shall be entitled to retain
                            any incentive fees paid in any prior incentive
                            period.

<PAGE>
MANAGEMENT AGREEMENT

                     THIS AGREEMENT, made the 1st day of July, 1996 among
DEAN WITTER CORNERSTONE FUND III, a New York limited partnership (the
"Partnership"), DEMETER MANAGEMENT CORPORATION, a Delaware corporation
(the "General Partner"), and ABRAHAM TRADING CO., a Texas corporation (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") by entering into
an agreement pursuant to which units of limited partnership interest
("Units") of such member partnerships will be 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 "Prospec-
tus"), and thereafter, pursuant to which such Units can be exchanged by a
limited partner of a member partnership of the Cornerstone Funds at the
end of any month for Units of other member partnerships of the Cornerstone
Funds at 100% of the respective Net Asset Value thereof;

                     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 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:

                     1.     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 systems, methods, and strategies (subject to the need to preserve
the secrecy of proprietary information concerning such 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
the Partnership's Prospectus required by Section 4.21 of the regulations
of the CFTC, including any amendments or supplements thereto, 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 the
Registration Statement and Prospectus, including any amendments or
supplements thereto, 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 "princi-
pal" shall have the same meaning as defined in Section 4.10(e)(1) of the
CFTC Regulations and the term "affiliate" shall mean an entity or
individual (including a stockholder, director, officer, employee, or
agent) or entity that directly or indirectly controls, is controlled by,
or is under common control with, any other entity or individual.

                     (b)    If, while Units continue to be offered and sold,
the Trading Manager becomes aware of any untrue or misleading statement or
omission in the Registration Statement or the Prospectus regarding the
Trading Manager, its principals or affiliates, their trading performance,
or their trading systems, methods, or strategies, or of the occurrence of
any event of change in circumstances which would result in their being any
such untrue or misleading statement or omission, the Trading Manager shall
immediately notify the General Partner in writing and shall cooperate with
it in the preparation of any necessary amendments or supplements to the
Registration Statement or the Prospectus.  Neither the Trading Manager nor
any of its principals or affiliates, or any stockholders, officers,
directors, employees, or agents thereof, shall use or distribute the
Registration Statement, Prospectus (including any final, amended, or
supplemented prospectus), or selling literature or shall engage in any
selling activities whatsoever in connection with the offering of Units.

                     2.     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
trading program on the terms and conditions and in accordance with the
prohibitions and trading policies set forth in this Agreement, the
Partnership's Limited Partnership Agreement as from time to time in effect
(the "Limited Partnership Agreement"), and the Prospectus; 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 Prospectus and 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 June 20, 1996 (a copy of
which has been received by the General Partner) without the prior consent
of the General Partner.

                     (b)    The Trading Manager shall:

                            (i)    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 Prospectus and Limited Partnership Agreement to the Trading Manager
and the trading systems, methods, and strategies of the Trading Manager
described in the Prospectus, 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.

                            (ii)   Subject to reasonable assurances of
confidentiality by the General Partners and the Partnership, provide the
General Partner, within 30 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 strategies or methods may be utilized
for differing sizes of accounts, accounts with different trading policies,
accounts experiencing differing inflows or outflows of equity, accounts
which commence trading at different times, accounts with different fee
structures, accounts which have different portfolios or different fiscal
years and that such differences may cause divergent trading results.

                            (iii)  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.

                            (iv)   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 stockholder, 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 by the commodity broker on such trades but only
for the amount of the commodity broker's out-of-pocket costs in respect
thereof.  The Trading Manager's errors shall include, but not be limited
to, inputting improper trading signals or communicating incorrect orders
to any commodity broker for the Partnership.  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 notify
promptly 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.

                     3.     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 defined in Section 7(c) hereof) 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.

                     4.     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, associa-
tion, 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.

                     5.     Apportionment of Funds to the Trading Manager

                     Effective as of the close of business on June 30, 1996,
the General Partner will reallocate the Partnership's Net Assets.  The
Trading Manager will be allocated approximately 25% of the Partnership's
Net Assets effective as of the date hereof.  The General Partner agrees to
apportion approximately 25% of the proceeds from any Exchanges (as defined
in the Prospectus) to the Trading Manager.  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 consecu-
tive month period (after adding back the amount of distributions,
redemptions, exchanges, or reapportionments charged to such Managed Net
Assets and subtracting increases in such Managed Net Assets from Units
acquired by purchase or exchange 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.

                     6.     Commodity Broker

                     The Trading Manager shall place orders for all
transactions in commodity interests for the Partnership's account through
such commodity broker or brokers as the General Partner shall direct.  At
the present time, Dean Witter Reynolds Inc., a Delaware corporation and an
affiliate of the General Partner ("Dean Witter"), shall act as sole broker
for the Partnership.  Accordingly, the Trading Manager is hereby directed
to place all orders for transactions in commodity interests for the
Partnership's account through Dean Witter until the General Partner shall
give the Trading Manager other instructions.  The General Partner shall
provide the Trading Manager with copies of brokerage statements. 
Notwithstanding that Dean Witter shall act as commodity broker for the
Partnership, the Trading Manager may execute trades through floor brokers
other than those employed by Dean Witter so long as arrangements are made
for such floor brokers to "give-up" or transfer the positions to Dean
Witter and provided that the rates charged by such floor brokers have been
approved in advance by Dean Witter.

                     7.     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:

                     (i)    A monthly management fee, without regard to
whether the Partnership is profitable, equal to 1/3 of 1% of the "Managed
Net Assets" (as defined in Section 7(c)) as of the end of each calendar
month (a 4% annual rate) commencing with the month in which the Partner-
ship 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.

                     (ii)   An annual incentive fee equal to the portion of 15
percent 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 (A) distributions and redemptions paid or payable on Units and (B)
exchanges of Units for units of another member partnership of the
Cornerstone Funds, and decreased by (C) contributions to the Partnership
arising from Units acquired upon an exchange or from the continuing
offering of Units and (D) 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 and all exchange of 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, redemptions, or exchanges 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 Partner-
ship may redeem or exchange 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 or exchange.  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 Partner-
ship 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 opera-
tions) 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.

                     8.     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 60 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 trading system or methods 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 registra-
tion, 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 Partner-
ship; (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, exchanges or 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.

                     9.     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, 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 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 stockhold-
ers, 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, or 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, and any of its or their respective successors and assigns
shall be inapplicable in the event of (i) 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 or (ii) any event
unrelated to the Trading Manager which occurred prior to the date of this
Agreement.

                     10.    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 Partner-
ship 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.  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 indemnify-
ing party under this Section; but the omission so to notify the indemnify-
ing 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.

                     11.    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) or
employ a trading system, method, or strategy on behalf of any other
account advised or managed by the Trading Manager or any of its principals
or affiliates which is materially different from the trading system,
method or strategy employed by the Trading Manager on behalf of the
Partnership's account unless: (i) the Trading Manager has first offered to
employ such other system, method, or strategy on behalf of the
Partnership's account and the General Partner has expressly declined such
offer in writing, or (ii) the above-mentioned trading system, method, or
strategy is only offered to a specific client (for whom the trading
system, method, or strategy was customized) and is not offered to clients
in the Trading Manager's Disclosure Document.  The General Partner agrees
to respond promptly to such requests.  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 (if the
General Partner has expressly declined such offer pursuant to the
preceding sentence), 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.

                     12.    Additional Undertakings by the Trading Manager

                     The Trading Manager warrants and agrees that neither the
Trading Manager nor any of its stockholders, 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 complied 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.

                     13.    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.

                     14.    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.

                     15.    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.

                     16.    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 17
hereof.

                     17.    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.

                     18.    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.

                     19.    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 or the General Partner:

                     c/o Demeter Management Corporation
                     2 World Trade Center, 62nd Floor

                     New York, New York  10048

                     Attn:  Mr. Mark J. Hawley, President

                     and with copies to:

                     

                     Dean Witter Reynolds Inc.

                     130 Liberty Street

                     New York, New York  10006

                     Attn:  Michael T. Gregg, Esq.

and

                     Cadwalader, Wickersham & Taft

                     100 Maiden Lane

                     New York, New York  10038

                     Attn:  Edwin L. Lyon, Esq.

                     if to the Trading Manager:

                     Abraham Trading Co.

                     Moody Building

                     2nd & Main

                     Canadian, Texas  79014

                     Attn:  Salem A. Abraham

                     20.    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.

                     21.    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).

                     22.    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 appropri-
ate before an arbitral body, located within the County, City, and State of
New York.

                     23.    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.

                     24.    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.

                     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:_________________________________

                                               Mark J. Hawley, President


                                          DEMETER MANAGEMENT CORPORATION

                                          

                                          By:________________________________

                                               Mark J. Hawley, President


                                          ABRAHAM TRADING CO.

                                          

                                          By:_________________________________

                                          

                                          

                                          
<PAGE>
EXHIBIT A

TRADING AUTHORIZATION

Abraham Trading Co.

Moody Building

2nd & Main

Canadian, Texas  79014

Dear Sirs:

                     Dean Witter Cornerstone Fund III, a New York limited
partnership (the "Partnership"), does hereby make, constitute, and appoint
Abraham Trading Co. (the "Trading Manager") as the Partnership's agent and
attorney-in-fact to purchase and sell commodity interests through Dean
Witter Reynolds Inc., as commodity broker, as described in and in
accordance with the terms of the Management Agreement dated as of July 1,
1996 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:_________________________________

                                                         Mark J. Hawley

Dated:  July 1, 1996

                                          
<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.

                     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:

                     1)     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.

              2)     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.

                     3)     Each trading manager shall be entitled to retain
                            any incentive fees paid in any prior incentive
                            period.