UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
                               FORM 10-K-A
[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 33-47797

               DEAN WITTER DIVERSIFIED FUTURES FUND III L.P.

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

                 DELAWARE                               13-3577501
(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:

                                                        Name of each exchange
Title of each class                                      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: $83,586,861.16 at January 31, 1997.

                                      DOCUMENTS INCORPORATED BY REFERENCE
                                                 (See Page 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 DIVERSIFIED FUTURES FUND III L.P.
                                 (Registrant)

                            BY:  Demeter Management Corporation,
                                 General Partner

March 27, 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
         July 12, 1990.                                                (1)
     
-3.      Form of Amendment No. 1 to the
         Limited Partnership Agreement
         of the Partnership.                                            (2)

-10.     Management Agreement among the 
         Partnership, Demeter Management
         Corporation and Dean Witter Futures                            (3)
         & Currency Management Inc. dated
         as of July 12, 1990. 

-10.     Form of Amendment No. 1 to the
         Management Agreement.                                          (4)

-10.     Customer Agreement Between the
         Partnership and Dean Witter                              
         Reynolds, Inc., dated as of                                    (5)
         July 12, 1990.

-10.     Form of Amendment No. 1 to the
         Customer Agreement.                                            (6)

-13.     December 31, 1996 Annual Report to Limited Partners.           (7)
         
(1)      Incorporated by reference to Exhibit 3.01 and Exhibit 3.02  of the
         Partnership's Registration Statement on Form S-1, File No. 33-34989,
         filed on May 21, 1990.

(2)      Incorporated by reference to Exhibit 3.01(a) of the Partnership's
         Registration Statement on Form S-1, File No. 33-47797, filed on May
         11, 1992.

(3)      Incorporated by reference to Exhibit 10.02 of the Partnership's
         Registration Statement on Form S-1, File No. 33-34989, filed on May
         21, 1990.

(4)      Incorporated by reference to Exhibit 10.02(a) of the Partnership's
         Registration Statement on Form S-1, File No. 33-47797, filed on May
         11, 1992.

(5)      Incorporated by reference to Exhibit 10.01 of the Partnership's
         Registration Statement on Form S-1. File N0. 33-34989, filed on May
         21, 1990.

(6)      Incorporated by reference to Exhibit 10.01(a) of the Partnership's
         Registration Statement on Form S-1, File No. 33-47797, filed on May
         11, 1992.

(7)      Filed herewith.