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
[No Fee Required]
For the fiscal year ended December 31, 1997 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 33-90360

    DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP

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

            DELAWARE                                          13-
3461507
(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    Fl.
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: $140,523,351.58 at January 31, 1998.


              DOCUMENTS INCORPORATED BY REFERENCE
                          (See Page 1)


<PAGE>
<TABLE>
  DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
            INDEX TO ANNUAL REPORT ON FORM 10-K
                     DECEMBER 31, 1997
<CAPTION>
Page No.
<S>                                                 <C>
DOCUMENTS INCORPORATED BY REFERENCE. . . . . . . . . . . . . . .  .  .
1

Part I .

  Item 1. Business. . . . . . . . . . . . . . . . . . . . . . .  2-5

  Item 2. Properties. . . . . . . . . . . . . . . . . . . . . .    5

  Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . .  5-7

  Item 4. Submission of Matters to a Vote of Security Holders . .  7

Part II.
  Item 5. Market for the Registrant's Partnership Units and
          Related Security Holder Matters . . . . . . . . . .  . . 8

  Item 6. Selected Financial Data . . . . . . . . . . . . . .  . . 9

  Item 7. Management's Discussion and Analysis of Financial
          Condition and Results of Operations. . . . . . . .   10-17

  Item 8. Financial Statements and Supplementary Data. . . .  .   17

  Item 9. Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure. . . . . . . .  .   18

Part III.

  Item10. Directors, Executive Officers, Promoters and
          Control Persons of the Registrant . . . . . . . . .  19-24

  Item11. Executive Compensation . . . . . . . . . . . . . .  .   24

  Item12. Security Ownership of Certain Beneficial Owners
          and Management . . . . . . . . . . . . . . . . . .  .   24

  Item13. Certain Relationships and Related Transactions . .   24-25

Part IV.

  Item14. Exhibits, Financial Statement Schedules, and
          Reports on Form 8-K . . . . . . . . . . . . . . .  .    26
</TABLE>
<PAGE>
<TABLE>
            DOCUMENTS INCORPORATED BY REFERENCE


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


<CAPTION>
          Documents Incorporated                          Part of Form
10-K
<S>                                                <C>
     Partnership's Registration Statement                   I and IV
                                             on Form S-1, File No. 33-
90360

     Partnership's Registration Statement
     on Form S-1, File No. 33-95624                   I

                                              December 31, 1997 Annual
Report                        II and IV
     for the Dean Witter Diversified
     Futures Fund Limited Partnership









</TABLE>

















<PAGE>
                           PART I

Item 1.  BUSINESS

      (a)  General  Development  of  Business.  Dean  Witter

Diversified   Futures   Fund   Limited   Partnership    (the

"Partnership") is a Delaware 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  and

options on futures contracts and physical commodities.

      The Partnership was organized as a limited partnership

on  November 25, 1987 and initially offered 2,500  units  at

$1,000  per  unit through a private placement  resulting  in

1,659.244  limited  partnership  units  being  accepted  and

issued on April 14, 1988.  The Partnership commenced trading

on April 14, 1988 with the proceeds of this initial closing,

and  a  capital contribution from the Partnership's  general

partner,  Demeter  Management  Corporation  ("Demeter"),  of

$20,000   (20  units).       Additional  units  of   limited

partnership interest in the Partnership were registered in a

public offering pursuant to a Registration Statement on Form

S-1  (File No. 33-90360) which became effective on June  30,

1995.   Additional Units of limited partnership interest  in

the  Partnership were registered pursuant to a  Registration

Statement  on  Form  S-1  (File No. 33-95624)  which  became

effective  on  August 11, 1995.  The offering of  units  was

underwritten  on  a  "best efforts"  basis  by  Dean  Witter

Reynolds Inc.



<PAGE>

("DWR").  Both DWR and Demeter are wholly-owned subsidiaries

of Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD").

      Through  July 31, 1997, the sole commodity broker  for

the  Partnership's transactions was DWR.  On July 31,  1997,

DWR  closed  the sale of its institutional futures  business

and  foreign  currency trading operations to  Carr  Futures,

Inc.  ("Carr"),  a  subsidiary of Credit Agricole  Indosuez.

Following  the  sale,  Carr became  the  clearing  commodity

broker  for  the  Partnership's futures and futures  options

trades  and  the  counterparty on the Partnership's  foreign

currency  trades.  DWR serves as the non-clearing  commodity

broker for the Partnerships with Carr providing all clearing

services for the Partnerships' transactions.

      The  Partnership's net asset value  per  unit,  as  of

December 31, 1997, was $1,020.54 representing an increase of

11.96  percent from the net asset value per unit of  $911.49

at  December  31, 1996.  For a more detailed description  of

the Partnership's business, see subparagraph (c).

          (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.



<PAGE>

     (c) Narrative Description of Business.  The Partnership

is  in  the  business  of speculative trading  in  commodity

futures contracts and other commodity interests, pursuant to

trading  instructions  provided by  Dean  Witter  Futures  &

Currency   Management   Inc.   ("DWFCM"),   a   wholly-owned

subsidiary  of  MSDWD and an affiliate of DWR  and  Demeter.

For  a  detailed description of the different facets of  the

Partnership's   business,   see  those   portions   of   the

Partnership's Prospectus, dated June 30, 1995, filed as part

of  the  Registration Statement on Form S-1 (see  "Documents

Incorporated by Reference" Page 1), set forth below:

  Facets of Business

      1.   Summary                    1.   "Summary  of  the
Prospectus"
                                      (Pages 2-10).

     2.  Commodity Markets         2.  "The Futures, Options
and
                                         Forwards   Markets"
(Pages
                                      55-60).

     3.  Partnership's  Commodity   3.   "Trading  Policies"
(Pages
       Trading Arrangements and       52-53) "The Trading
        Policies                        Advisor" (Pages  42-
51).

     4.  Management  of  the  Part-    4.   "The  Management
Agreement"
        nership                        (Pages  54-55).  "The
General
                                      Partner" (Pages 37-39)
                                          "The     Commodity
Broker"                                           (Pages 53-
54),  and "The                                       Limited
Partnership
Agreement" (Pages
                                      61-65).

     5.  Taxation  of  the Partner-  5.   "Material  Federal
Income
         ship's Limited Partners      Tax Consideration" and
"State   and  Local  Income  Tax                    Aspects"
(Pages 69-77).

<PAGE>
     (d)   Financial Information About Foreign and  Domestic
Operations and           Export Sales.

      The  Partnership has not engaged in any operations  in

foreign  countries;  however, the Partnership  (through  the

commodity brokers) enters into forward contract transactions

where foreign banks are the contracting party and trades  in

futures interests on foreign exchanges.

Item 2.  PROPERTIES
      The  executive and administrative offices are  located

within the offices of DWR.  The DWR offices utilized by  the

Partnership  are  located at Two World  Trade  Center,  62nd

Floor, New York, NY 10048.

Item 3.  LEGAL PROCEEDINGS

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

1997,  similar  purported class actions were  filed  in  the

Superior  Court of the State of California,  County  of  Los

Angeles, on behalf of all purchasers of interest in  limited

partnership  commodity pools sold by DWR.  Named  defendants

include  DWR.   Demeter,  DWFCM, MSDWD,  (all  such  parties

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

Partnership,  certain  other limited  partnership  commodity

pools  of which Demeter is the general partner, and  certain

trading  advisors  to those pools.  On June  16,  1997,  the

plaintiffs in the above actions filed a consolidated amended

complaint, alleging, among other things, that the defendants

committed   fraud,   deceit,  negligent   misrepresentation,

various  violations  of  the California  Corporations  Code,

intentional and negligent breach of



<PAGE>

fiduciary  duty,  fraudulent and unfair business  practices,

unjust  enrichment, and conversion in the sale and operation

of   the   various  limited  partnerships  commodity  pools.

Similar purported class actions were also filed on September

18  and  20, 1996, in the Supreme Court of the State of  New

York,  New  York  County, and on November 14,  1996  in  the

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

against the Dean Witter Parties and certain trading advisors

on  behalf of all purchasers of interests in various limited

partnership commodity pools including the Partnership,  sold

by  DWR. A consolidated and amended complaint in the  action

pending  in the Supreme Court of the State of New  York  was

filed  on  August  13,  1997, alleging that  the  defendants

committed  fraud,  breach of fiduciary duty,  and  negligent

misrepresentation in the sale and operation of  the  various

limited partnership commodity pools.  On December 16,  1997,

upon  motion  of the plaintiffs, the action pending  in  the

Superior  Court  of  the State of Delaware  was  voluntarily

dismissed   without   prejudice.     The   complaints   seek

unspecified amounts of compensatory and punitive damages and

other  relief.   It  is  possible  that  additional  similar

actions  may  be  filed and that, in  the  course  of  these

actions,  other  parties could be added as defendants.   The

Dean  Witter  Parties believe that they and the  Partnership

have  strong defenses to, and they will vigorously  contest,

the   actions.   Although  the  ultimate  outcome  of  legal

proceedings cannot

<PAGE>

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,  1997  was

approximately 14,033.  No distributions have  been  made  by

the  Partnership since it commenced operations on April  14,

1988.    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.


























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





<CAPTION>



                              For the Years Ended December 31,
<S>                    <C>           <C>            <C>            <C>
<C>
                            1997        1996          1995        1994
1993


Total Revenues
(including interest)33,683,534   12,331,871     (4,886,349) 849,5081,005,4
25


Net Income (Loss)      17,349,458   (6,535,424)   (13,153,506)     313,523 297,550


Net Income (Loss)
Per Unit (Limited
& General Partners)       109.05            (24.92)        (44.80)   69.98 56.83


Total Assets         148,972,658       167,301,602   195,491,703 2,973,987 4,823,939


Total Limited
Partners' Capital    143,225,512  161,609,600   192,029,423      2,836,167 4,587,461


Net Asset Value Per
Unit of Limited
Partnership Interest   1,020.54           911.49     936.41         981.21 911.23








</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 interest trading accounts with  DWR  and

Carr, the commodity brokers, and are used by the Partnership

as  margin to engage in commodity futures, forward contracts

and  other  commodity interest trading.  DWR and  Carr  hold

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 and Carr 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.

<PAGE>

      There is no limitation on daily price moves in trading

forward  contracts on foreign currencies.  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 Advisor 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  Advisor  and

Demeter  monitor the Partnership's trading activities  on  a

daily  basis to ensure compliance with the Trading Policies.

Demeter may

<PAGE>

(under  terms  of  the  Management Agreement)  override  the

trading  instructions of the Trading Advisor to  the  extent

necessary to comply with the Partnership's Trading Policies.

      Credit  Risk. In addition to market risk, in  entering

into  futures,  options and forward  contracts  there  is  a

credit  risk to the Partnership that the counterparty  on  a

contract  will  not be able to meet its obligations  to  the

Partnership.  The ultimate counterparty of a 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.  For example,

a  clearinghouse may cover a default by (i) drawing  upon  a

defaulting  member's  mandatory  contributions  and/or  non-

defaulting   members'  contributions  to   a   clearinghouse

guarantee fund, established lines or letters of credit  with

banks, and/or the clearinghouse's surplus capital and  other

available assets of the exchange and clearinghouse, or  (ii)

assessing its members.  In cases where a Partnership  trades

on  a foreign exchange where the clearinghouse is not funded

or  guaranteed by the membership or where the exchange is  a

"principals'   market"   in   which   performance   is   the

responsibility of the exchange member and not the

<PAGE>

exchange  or  a clearinghouse, or when a 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.

      There  can  be  no  assurance  that  a  clearinghouse,

exchange  or other exchange member will meet its obligations

to  the  Partnership, and the Partnership is not indemnified

against  a default by such parties from Demeter or MSDWD  or

DWR.   Further, the law is unclear as to whether a commodity

broker has any obligation to protect its customers from loss

in the event of an exchange, clearinghouse or other exchange

member   default  on  trades  effected  for   the   broker's

customers;  any such obligation on the part  of  the  broker

appears even less clear where the default occurs in a non-US

jurisdiction.

       Demeter  deals  with  these  credit  risks   of   the

partnerships  in  several  ways.  First,  it  monitors  each

partnership's credit exposure to each exchange  on  a  daily

basis,  calculating not only the amount of  margin  required

for  it but also the amount of its unrealized gains at  each

exchange,  if  any.   The  Commodity  Brokers  inform   each

partnership, as with all their customers, of its net  margin

requirements for all its existing open positions, but do not

break  that net figure down, exchange by exchange.  Demeter,

however, has installed a system which permits it



<PAGE>

to  monitor  each partnership's potential margin  liability,

exchange  by exchange.  Demeter is then able to monitor  the

individual  partnership's potential net credit  exposure  to

each exchange by adding the unrealized trading gains on that

exchange,  if  any,  to the partnership's  margin  liability

thereon.

       Second,  as  discussed  earlier,  each  partnership's

trading policies limit the amount of partnership Net  Assets

that can be committed at any given time to futures contracts

and  require,  in  addition,  a certain  minimum  amount  of

diversification in the partnership's trading,  usually  over

several different products.  One of the aims of such trading

policies  has  been  to reduce the credit  exposure  of  any

partnership  to any single exchange and, historically,  such

partnership exposure has typically amounted to only a  small

percentage of its total Net Assets.  On those relatively few

occasions where a partnership's credit exposure has  climbed

above that level, Demeter has dealt with the situations on a

case by case basis, carefully weighing whether the increased

level  of  credit  exposure remained  appropriate.   Demeter

expects  to  continue  to deal with  such  situations  in  a

similar manner in the future.

     Third, Demeter has secured, with respect to Carr acting

as  the clearing broker for the partnerships, a guarantee by

Credit  Agricole Indosuez, Carr's parent, of the payment  of

the  "net  liquidating value" of the transactions  (futures,

options and forward contracts) in each

<PAGE>

partnership's  account.   As of December  31,  1997,  Credit

Agricole Indosuez' total capital was over $3.25 billion  and

it is currently rated AA2 by Moody's.

       With   respect  to  forward  contract  trading,   the

partnerships  trade  with  only those  counterparties  which

Demeter,   together  with  DWR,  have   determined   to   be

creditworthy.  At the date of this filing, the  partnerships

deal  only  with  Carr  as  their  counterparty  on  forward

contracts.  The guarantee by Carr's parent, discussed above,

covers these forward contracts.

      See  "Financial Instruments" under Notes to  Financial

Statements  in  the  Partnership's  1997  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  of Limited Partnership  Interest  in  the

future  will  affect  the  amount  of  funds  available  for

investments  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,  1997,  the

Partnership's total capital was $145,551.623, a decrease  of

$18,135,532   from  the  Partnership's  total   capital   of

$163,687,155, at December 31, 1996.  For



<PAGE>

the  year ended December 31, 1997, the Partnership generated

net  income of $17,349,458  and total redemptions aggregated

$35,484,990.

     For the year ended December 31, 1997, the Partnership's

total  trading  revenues  including  interest  income   were

$33,683,534.  The Partnership's total expenses for the  year

were  $16,334,076, resulting in net income  of  $17,349,458.

The value of an individual unit in the Partnership increased

from  $911.49 at December 31, 1996 to $1,020.54 at  December

31, 1997.

      As  of  December  31,  1996, the  Partnership's  total

capital was $163,687,155, a decrease of $30,476,609 from the

Partnership's total capital of $194,163,764 at December  31,

1995.  For the year ended December 31, 1996, the Partnership

incurred  a  net  loss of $6,535,424 and  total  redemptions

aggregated $23,941,185.

     For the year ended December 31, 1996, the Partnership's

total  trading  revenues  including  interest  income   were

$12,331,871.  The Partnership's total expenses for the  year

were  $18,867,295,  resulting in a net loss  of  $6,535,424.

Expenses  are not comparable to the prior years commensurate

with  the  increase  in  assets traded  resulting  from  the

offering  of additional Units in September 1995.  The  value

of  an  individual  unit in the Partnership  decreased  from

$936.41  at  December 31, 1995 to $911.49  at  December  31,

1996.



<PAGE>

      As  of  December  31,  1995, the  Partnership's  total

capital  was $194,163,764, an increase of $191,249,802  from

the  Partnership's total capital of $2,913,962  at  December

31,  1994.  For  the  year  ended  December  31,  1995,  the

Partnership  incurred  a  net  loss  of  $13,153,506,  total

subscriptions  aggregated $205,135,863 as a  result  of  the

unit offering and total redemptions aggregated $732,555.

     For the year ended December 31, 1995, the Partnership's

total trading losses net of interest income were $4,886,349.

The   Partnership's  total  expenses  for  the   year   were

$8,267,157,  resulting in a net loss  of  $13,153,506.   The

value  of  an  individual unit in the Partnership  decreased

from $981.21 at December 31, 1994 to $936.41 at December 31,

1995.

     The Partnership's overall performance record represents

varied  results  of trading in different commodity  markets.

For  a further description of trading results, refer to  the

letter  to  the  Limited Partners in the  accompanying  1997

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  1997 Annual Report to Partners and is incorporated

by reference in this Annual Report on Form 10-K.


<PAGE>

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  MSDWD

and is an affiliate of DWR.  MSDWD, 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.

      On  July  21,  1997,  MSDWD, the sole  shareholder  of

Demeter,  appointed a new Board of Directors  consisting  of

Richard M. DeMartini, Mark J. Hawley, Lawrence Volpe, Joseph

G. Siniscalchi, Edward C. Oelsner III, and Robert E. Murray.

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  adviser and an agent in  the  sale  of  life

insurance and various other products and services.



<PAGE>

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.

     DWR is registered with the CFTC as a futures commission

merchant and is a member of the NFA in such capacity.  As of

December  31, 1997, DWR is servicing its clients  through  a

network   of   approximately   401   branch   offices   with

approximately 10,155 account executives servicing individual

and institutional client accounts.


Directors and Officers of the General Partner

      The  directors and officers of Demeter as of  December

31, 1997 are as follows:

      Richard M. DeMartini, age 45, is the Chairman  of  the

Board  and  a  Director of Demeter.  Mr. DeMartini  is  also

Chairman of the Board and a Director of Dean Witter  Futures

&  Currency  Management Inc. ("DWFCM").   Mr.  DeMartini  is

president  and chief operating officer of MSDWD's Individual

Asset  Management Group.  He was named to this  position  in

May of 1997 and is responsible for Dean Witter InterCapital,

Van  Kampen  American Capital, insurance  services,  managed

futures,  unit  trust, investment consulting services,  Dean

Witter   Realty,  and  NOVUS  Financial  Corporation.    Mr.

DeMartini  is a member of the MSDWD management committee,  a

director of the InterCapital funds, a trustee of the  TCW/DW

funds  and a trustee of the Van Kampen American Capital  and

Morgan

<PAGE>

Stanley  retail  funds.  Mr. DeMartini has  been  with  Dean

Witter  his  entire career, joining the firm in 1975  as  an

account  executive.  He served as a branch manager, regional

director and national sales director, before being appointed

president  and  chief operating officer of the  Dean  Witter

Consumer Markets.  In 1988 he was named president and  chief

operating officer of Sears' Consumer Banking Division and in

January 1989 he became president and chief operating officer

of  Dean  Witter  Capital.   Mr.  DeMartini  has  served  as

chairman  of the board of the Nasdaq Stock Market, Inc.  and

vice  chairman  of the board of the National Association  of

Securities  Dealers, Inc.  A native of  San  Francisco,  Mr.

DeMartini  holds a bachelor's degree in marketing  from  San

Diego State University.

      Mark J. Hawley, age 54, is President and a Director of

Demeter.   Mr.  Hawley is also President and a  Director  of

DWFCM.   Mr.  Hawley joined DWR in February 1989  as  Senior

Vice President and is currently the Executive Vice President

and Director of DWR's Managed Futures Department.  From 1978

to  1989,  Mr. Hawley was a member of the senior  management

team  at  Heinold Asset Management, Inc.,  a  CPO,  and  was

responsible  for  a  variety of projects in  public  futures

funds.   From 1972 to 1978, Mr. Hawley was a Vice  President

in charge of institutional block trading for the Mid-West at

Kuhn Loeb & Company.



<PAGE>

      Lawrence  Volpe, age 50, 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 served as audit manager in the financial  services

division.

      Joseph  G.  Siniscalchi, age  52,  is  a  Director  of

Demeter.  Mr. Siniscalchi joined DWR in July 1984 as a First

Vice President, Director of General Accounting and served as

a  Senior Vice President and Controller for DWR's Securities

division  through  1997.   He is  currently  Executive  Vice

President  and Director of the Operations Division  of  DWR.

From  February  1980  to  July  1984,  Mr.  Siniscalchi  was

Director  of  Internal Audit at Lehman Brothers  Kuhn  Loeb,

Inc.

      Edward  C.  Oelsner, III, age 55,  is  a  Director  of

Demeter.   Mr.  Oelsner  is  currently  an  Executive   Vice

President and head of the Product Development Group at  Dean

Witter  InterCapital Inc., an affiliate of DWR.  Mr. Oelsner

joined  DWR  in  1981  as  a  Managing  Director  in   DWR's

Investment  Banking Department specializing in  coverage  of

regulated  industries and, subsequently, served as  head  of

the  DWR  Retail Products Group.  Prior to joining DWR,  Mr.

Oelsner held positions at The First

<PAGE>

Boston   Corporation  as  a  member  of  the  Research   and

Investment  Banking  Departments from  1967  to  1981.   Mr.

Oelsner  received  his M.B.A. in Finance from  the  Columbia

University Graduate School of Business in 1966 and  an  A.B.

in Politics from Princeton University in 1964.

      Robert  E.  Murray, age 37, is a Director of  Demeter.

Mr.  Murray  is  also a Director of DWFCM.   Mr.  Murray  is

currently  a Senior Vice President of DWR's Managed  Futures

Department  and  is  the  Senior Administrative  Officer  of

DWFCM.  Mr.  Murray began his career at DWR in 1984  and  is

currently  the  Director  of  Product  Development  for  the

Managed  Futures  Department.  He  is  responsible  for  the

development   and   maintenance  of  the  proprietary   Fund

Management   System  utilized  by  DWFCM  and   Demeter   in

organizing  information and producing reports for monitoring

clients'  accounts.   Mr.  Murray  currently  serves  as   a

Director  of  the  Managed  Funds Association.   Mr.  Murray

graduated from Geneseo State University in May 1983  with  a

B.A. degree in Finance.

      Patti  L. Behnke, age 37, is Vice President and  Chief

Financial  Officer  of Demeter.  Ms. Behnke  joined  DWR  in

April   1991  as  Assistant  Vice  President  of   Financial

Reporting  and  is  currently a  First  Vice  President  and

Director   of   Financial  Reporting  and  Managed   Futures

Accounting in the Individual Asset Management Group.   Prior

to  joining  DWR,  Ms. Behnke held positions  of  increasing

responsibility at L.F. Rothschild & Co. and Carteret Savings

Bank.  Ms. Behnke began her career

<PAGE>

at  Arthur  Anderson & Co., where she was  employed  in  the

audit division from 1982-1986.  She is a member of the AICPA

and   the  New  York  State  Society  of  Certified   Public

Accountants.



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, 1997 there were no persons known to  be

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,

1997,  Demeter owned 2,279.285 Units of General  Partnership

Interest  representing  a  1.60  percent  interest  in   the

Partnership.

     (c)  Changes in Control - None

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Refer  to  Note  2  - "Related Party Transactions"  of

"Notes  to  Financial Statements", in the accompanying  1997

Annual Report to

<PAGE>

Partners, incorporated by reference in this Form  10-K.   In

its  capacity as the Partnership's retail commodity  broker,

DWR  received commodity brokerage fees (paid and accrued  by

the  Partnership) of $10,617,262 for the year ended December

31,  1997.   In  its  capacity as the Partnership's  trading

manager,  DWFCM  received management fees of $4,608,774  and

incentive  fees of $23,103 for the year ended  December  31,

1997.

































     <PAGE>

                               PART IV

     Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON

FORM 8-K

          (a)  1. Listing of Financial Statements

          The following financial statements and report of independent

public  accountants, all appearing in the accompanying 1997  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, 1997, 1996 and 1995.

                    -    Statements of Financial Condition as of
          December 31, 1997 and 1996.

                    -    Statements of Operations, Changes in
          Partners'  Capital, and Cash Flows for  the  years
          ended December 31, 1997, 1996 and 1995.

                    -    Notes to Financial Statements.

           With exception of the aforementioned information and the

information  incorporated in Items 7, 8, and 13,  the  1997  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
                         DIVERSIFIED FUTURES FUND
                          LIMITED PARTNERSHIP

(Registrant)

                                                 BY:      Demeter
                         Management Corporation,
                                                          General
                              Partner

March 24, 1998           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 24,
1998
        Mark J. Hawley, Director and
          President

     /s/  Richard M. DeMartini                          March 24,
1998
        Richard M. DeMartini, Director
          and Chairman of the Board

     /s/  Lawrence Volpe                                March 24,
1998
        Lawrence Volpe, Director


     /s/  Joseph G. Siniscalchi                         March 24,
1998
        Joseph G. Siniscalchi, Director


     /s/  Edward C. Oelsner III                         March 24,
1998
        Edward C. Oelsner III, Director


     /s/  Robert E. Murray                              March 24,
1998
        Robert E. Murray, Director

     /s/  Patti L. Behnke                               March 24,
1998
        Patti L. Behnke, Chief Financial
          Officer and Principal Accounting
          Officer
     <PAGE>
                          EXHIBIT INDEX


         ITEM                                              METHOD
OF FILING

 -3.  Amended and Restated Limited
      Partnership Agreement of
      the Partnership, dated as of
      June 30, 1995.                                  (1)

-10.  Amended and Restated Management
      Agreement among the Partnership,
      Demeter and DWFCM dated
      as of August 31, 1995.                          (2)

-10.  Amended and Restated Customer
      Agreement Between the
                   Partnership              and              DWR,
dated as of August 31, 1995.                          (3)

-13.  December 31, 1997 Annual Report to Limited Partners.  (4)


(1)
Incorporated  by  reference to Exhibit 3.01 of the  Partnership's
Registration Statement on Form S-1 (File No. 33-90360).

(2)
Incorporated  by reference to Exhibit 10.02 of the  Partnership's
Registration Statement on Form S-1 (File No. 33-90360).

(3)
Incorporated  by reference to Exhibit 10.01 of the  Partnership's
Registration Statement on Form S-1 (File No. 33-90360).

(4)                                                         Filed
herewith.


<PAGE>


    Diversified
    Futures
    Fund




    December 31, 1997
    Annual Report


                                                    [LOGO] DEAN WITTER
<PAGE>

DEAN WITTER
Two World Trade Center
62nd Floor
New York, NY 10048
Telephone (212) 392-8899

DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
ANNUAL REPORT
1997

Dear Limited Partner:

This marks the tenth annual report for the Dean Witter Diversified Futures Fund
Limited Partnership (the "Fund"). The Fund began the year at a Net Asset Value
per Unit of $911.49 and increased by 11.9% to $1,020.54 on December 31, 1997.
The Fund has increased by 304.6% since it began trading in April 1988 ( a
compound annualized return of 15.5%).

Gains were recorded during January and February as a result of a strengthening
in the value of the U.S. dollar versus the Japanese yen and most major European
currencies. Additional gains were recorded during this two month period from
long coffee futures positions as prices increased over concerns regarding the
weather and labor conditions in South America. Smaller gains were recorded from
short positions in the energy markets as oil and gas prices moved lower.
Performance during March resulted in a portion of previous months' profits
being given back as many of the markets that produced gains in January and
February experienced trend reversals and choppy price movement. The most
significant losses were recorded in the currency markets as the value of most
European currencies reversed higher versus the U.S. dollar. Additional losses
were recorded in the financial futures and most domestic commodities markets as
prices in these markets moved in a choppy pattern.

Losses were experienced during April as the difficult trading environment that
began in March continued. The most significant losses were recorded in the
financial futures markets as domestic bond prices rallied higher late in the
<PAGE>

month after showing signs of trending lower previously. Small losses were
recorded during May as profits in soft commodities and financial futures were
more than offset by losses in the energy and currency markets. During June,
losses were recorded from long copper futures positions as prices moved lower
late in the month. Smaller losses were recorded from trading in soft
commodities and energies. A portion of these losses was offset from long global
interest rate and stock index futures positions as prices in these markets
moved higher.

During July, profits were recorded from long positions in global interest rate
futures as U.S., Australian, European and Japanese interest rate futures prices
all trended higher. Additional gains were recorded from short European currency
positions as the U.S. dollar again strengthened relative to the German mark. A
sharp trend reversal in global interest rate futures prices during August
resulted in a giveback of a portion of July's profits. Additional losses were
recorded in the currency markets as the value of most European currencies
increased relative to the U.S. dollar after moving lower previously. A strong
upward move in international interest rate futures prices during September
resulted in gains for the Fund's long positions. Smaller gains were recorded
from long natural gas futures positions as prices in this market also
increased.

A sharp trend reversal in international interest rate futures prices during
October resulted in a give-back of a portion of September's profits. Additional
losses were recorded as a result of short-term volatility in domestic bond and
stock index futures throughout a majority of the month. Trading gains recorded
in the currency and agricultural markets offset a small portion of the overall
losses for the month. During November and December, profits were recorded in
the currency markets from short Japanese yen positions as the value of the yen
decreased relative to the U.S. dollar and other world currencies amid concerns
of the stability of the Asian economy. Additional profits were recorded from
short gold futures positions as gold prices declined to their lowest level in
over twelve years.
<PAGE>


1997 was a profitable year for the Fund as profits were recorded from sustained
price movements in the currency markets during January and February and then
again in November and December from short Japanese yen positions as the value
of the U.S. dollar increased versus the yen. Additional gains were also
recorded from long global interest rate futures positions during June and July.
Although many of the profitable periods with long price trends were followed by
trend reversals and short-term volatile price movement, Dean Witter Futures &
Currency Management Inc's ("DWFCM's") intermediate to long-term trend following
trading methodology was able to retain profits. Looking ahead, we remain
confident in DWFCM's time tested methodology and in its ability to profit over
long-term periods

Should you have any questions concerning this report, please feel free to
contact Demeter Management Corporation at Two World Trade Center, 62nd Floor,
New York, NY 10048 or your Dean Witter Account Executive.

I hereby affirm, that to the best of my knowledge and belief, the information
contained in this report is accurate and complete. Past performance is not a
guarantee of future results.

    Sincerely,

    /s/ Mark J. Hawley

    Mark J. Hawley
    President
    Demeter Management Corporation
    General Partner
<PAGE>

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

INDEPENDENT AUDITORS' REPORT

The Limited Partners and the General Partner:

We have audited the accompanying statements of financial condition of Dean
Witter Diversified Futures Fund Limited Partnership (the "Partnership") as of
December 31, 1997 and 1996 and the related statements of operations, changes in
partners' capital, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Dean Witter Diversified Futures Fund
Limited Partnership as of December 31, 1997 and 1996 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.

/s/ Deloitte & Touche LLP

February 17, 1998
New York, New York
<PAGE>

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                                      -----------------------
                                                         1997        1996
                                                      ----------- -----------
                                                           $           $
<S>                                                   <C>         <C>
                                   ASSETS
Equity in Commodity futures trading
 accounts:
 Cash                                                 127,701,224 166,737,088
 Net unrealized gain (loss) on open contracts          20,684,288     (10,164)
                                                      ----------- -----------
 Total Trading Equity                                 148,385,512 166,726,924
Interest receivable (DWR)                                 497,966     574,678
Due from DWR                                               89,180         --
                                                      ----------- -----------
 Total Assets                                         148,972,658 167,301,602
                                                      =========== ===========
                      LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
 Redemptions payable                                    2,976,998   2,811,995
 Accrued management fee (DWFCM)                           352,057     455,428
 Administrative expenses payable                           91,980     106,568
 Accrued brokerage commissions (DWR)                          --      208,243
 Accrued transaction fees and costs                           --       32,213
                                                      ----------- -----------
 Total Liabilities                                      3,421,035   3,614,447
                                                      ----------- -----------
PARTNERS' CAPITAL
 Limited Partners (140,342.310 and 177,301.806 Units,
   respectively)                                      143,225,512 161,609,600
 General Partner (2,279.285 Units)                      2,326,111   2,077,555
                                                      ----------- -----------
 Total Partners' Capital                              145,551,623 163,687,155
                                                      ----------- -----------
 Total Liabilities and Partners' Capital              148,972,658 167,301,602
                                                      =========== ===========
NET ASSET VALUE PER UNIT                                 1,020.54      911.49
                                                      =========== ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements.
<PAGE>

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                FOR THE YEARS
                                                    ENDED
                                                DECEMBER 31,
                                      ----------------------------------
                                         1997       1996        1995
                                      ---------- ----------  -----------
                                          $          $            $
<S>                                   <C>        <C>         <C>
REVENUES
Trading Profit (Loss):
 Realized                              6,592,590 13,509,897  (15,339,073)
 Net change in unrealized             20,694,452 (7,971,947)   7,527,594
                                      ---------- ----------  -----------
  Total Trading Results               27,287,042  5,537,950   (7,811,479)
Interest income (DWR)                  6,396,492  6,793,921    2,925,130
                                      ---------- ----------  -----------
  Total Revenues                      33,683,534 12,331,871   (4,886,349)
                                      ---------- ----------  -----------
EXPENSES
Brokerage commissions (DWR)           10,617,262 12,600,962    5,729,359
Management fee (DWFCM)                 4,608,774  5,141,736    2,001,158
Transaction fees and costs               907,937  1,010,645      438,155
Administrative expenses                  177,000    113,952       71,000
Incentive fees (DWFCM)                    23,103        --        27,485
                                      ---------- ----------  -----------
  Total Expenses                      16,334,076 18,867,295    8,267,157
                                      ---------- ----------  -----------
NET INCOME (LOSS)                     17,349,458 (6,535,424) (13,153,506)
                                      ========== ==========  ===========
NET INCOME (LOSS) ALLOCATION:
Limited Partners                      17,100,902 (6,478,638) (13,010,052)
General Partner                          248,556    (56,786)    (143,454)
NET INCOME (LOSS) PER UNIT (NOTE 1):
Limited Partners                          109.05     (24.92)      (44.80)
General Partner                           109.05     (24.92)      (44.80)
</TABLE>

STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
                              UNITS OF
                             PARTNERSHIP    LIMITED     GENERAL
                              INTEREST     PARTNERS     PARTNER      TOTAL
                             -----------  -----------  ---------  -----------
                              (NOTE 1)         $           $           $
<S>                          <C>          <C>          <C>        <C>
Partners' Capital, December
31, 1994                       2,969.768    2,836,167     77,795    2,913,962
Offering of Units            205,135.863  202,935,863  2,200,000  205,135,863
Net Loss                             --   (13,010,052)  (143,454) (13,153,506)
Redemptions                     (756.094)    (732,555)       --      (732,555)
                             -----------  -----------  ---------  -----------
Partners' Capital, December
31, 1995                     207,349.537  192,029,423  2,134,341  194,163,764
Net Loss                             --    (6,478,638)   (56,786)  (6,535,424)
Redemptions                  (27,768.446) (23,941,185)       --   (23,941,185)
                             -----------  -----------  ---------  -----------
Partners' Capital,
December 31, 1996            179,581.091  161,609,600  2,077,555  163,687,155
Net Income                           --    17,100,902    248,556   17,349,458
Redemptions                  (36,959.496) (35,484,990)       --   (35,484,990)
                             -----------  -----------  ---------  -----------
Partners' Capital,
December 31, 1997            142,621.595  143,225,512  2,326,111  145,551,623

                             ===========  ===========  =========  ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.
<PAGE>

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                FOR THE YEARS
                                                    ENDED
                                                DECEMBER 31,
                                     -------------------------------------
                                        1997         1996         1995
                                     -----------  -----------  -----------
                                          $            $            $
<S>                                  <C>          <C>          <C>          <C>
CASH FLOWS FROM
  OPERATING ACTIVITIES
Net income (loss)                     17,349,458   (6,535,424) (13,153,506)
Noncash item included in net income
  (loss):
 Net change in unrealized            (20,694,452)   7,971,947   (7,527,594)
(Increase) decrease in operating
  assets:
 Interest receivable (DWR)                76,712      119,968     (678,200)
 Due from DWR                            (89,180)     257,457     (255,471)
Increase (decrease) in operating
  liabilities:
 Accrued management fee (DWFCM)         (103,371)      (9,322)     457,447
 Administrative expenses payable         (14,588)       9,446       52,694
 Accrued brokerage commissions
   (DWR)                                (208,243)    (420,132)     620,611
 Accrued transaction fees and costs      (32,213)     (29,383)      61,066
                                     -----------  -----------  -----------
Net cash provided by (used for)
  operating activities                (3,715,877)   1,364,557  (20,422,953)
                                     -----------  -----------  -----------
CASH FLOWS FROM
  FINANCING ACTIVITIES
Offering of units                            --           --   205,135,863
Increase in redemptions payable          165,003    2,735,899       76,096
Redemptions of units                 (35,484,990) (23,941,185)    (732,555)
                                     -----------  -----------  -----------
Net cash provided by (used for)
  financing activities               (35,319,987) (21,205,286) 204,479,404
                                     -----------  -----------  -----------
Net increase (decrease) in cash      (39,035,864) (19,840,729) 184,056,451
Balance at beginning of period       166,737,088  186,577,817    2,521,366
                                     -----------  -----------  -----------
Balance at end of period             127,701,224  166,737,088  186,577,817
                                     ===========  ===========  ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements.
<PAGE>

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION--Dean Witter Diversified Futures Fund (the "Partnership") is a
limited partnership organized to engage in the speculative trading of commodity
futures contracts, commodity options contracts and forward contracts on foreign
currencies. The general partner for the Partnership is Demeter Management
Corporation ("Demeter"). The trading manager is Dean Witter Futures & Currency
Management Inc. ("DWFCM"). Demeter and DWFCM are wholly-owned subsidiaries of
Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD").

On May 31, 1997, Morgan Stanley Group Inc. was merged with and into Dean
Witter, Discover & Co. ("DWD"). At that time DWD changed its corporate name to
Morgan Stanley, Dean Witter, Discover & Co.

Through July 31, 1997, the sole commodity broker for the Partnership's
transactions was Dean Witter Reynolds Inc. ("DWR"), also a subsidiary of MSDWD.
On July 31, 1997, DWR closed the sale of its institutional futures business and
foreign currency trading operations to Carr Futures, Inc. ("Carr"), a
subsidiary of Credit Agricole Indosuez. Following the sale, Carr became the
clearing commodity broker for the Partnership's futures and futures options
trades and the counterparty on the Partnership's foreign currency trades. DWR
will continue to serve as the non-clearing commodity broker for the Partnership
with Carr providing all clearing services for the Partnership's transactions.

Demeter is required to maintain a 1% minimum interest in the equity of the
Partnership and income (losses) are shared by Demeter and the Limited Partners
based upon their proportional ownership interests.

BASIS OF ACCOUNTING--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts in the financial statements.

REVENUE RECOGNITION--Commodity futures contracts and other commodity interests
are open commitments until settlement date. They are valued at market and the
resulting unrealized gains and losses are reflected in income. Monthly, DWR
pays the Partnership interest income based upon 80% of the average daily Net
Assets, as defined, at a prevailing rate for U.S. Treasury bills.

NET INCOME (LOSS) PER UNIT--Net income (loss) per Unit is computed using the
weighted average number of units outstanding during the period.
<PAGE>

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

EQUITY IN COMMODITY FUTURES TRADING ACCOUNTS--The Partnership's asset "Equity
in Commodity futures trading accounts" consists of cash on deposit at DWR and
Carr to be used as margin for trading and the net asset or liability related to
unrealized gains or losses on open contracts. The asset or liability related to
the unrealized gains or losses on forward contracts is presented as a net
amount in each period due to master netting agreements.

BROKERAGE COMMISSIONS AND RELATED TRANSACTION FEES AND COSTS--Brokerage
commissions are accrued at 80% of DWR's published non-member rates on a half-
turn basis. Transaction fees and costs are accrued on a half-turn basis.

Through August 31, 1995, brokerage commissions were capped at 1% per month of
the adjusted Net Assets allocated to each trading program employed by the
Trading Manager. From September 1, 1995 through August 31, 1996, the cap was
changed to 3/4 of 1% of the Partnership's Net Assets as of the first day of
each month.

Effective September 1, 1996, brokerage commissions and transaction fees
chargeable to the Partnership are capped at a combined amount of 13/20 of 1%
per month of the Partnership's month-end Net Assets (as defined in the Limited
Partnership Agreement).

OPERATING EXPENSES--The Partnership bears all expenses related to its trading
activities. Effective September 1, 1995, such fees were capped at a maximum of
1/4 of 1% annually of the Partnership's average monthly Net Assets as of the
first day of each month. These include legal, auditing, accounting, mailing,
printing, filing fees and other expenses as permitted by the Limited
Partnership Agreement. In addition, the Partnership incurs a monthly management
fee and may incur incentive fees. Demeter bears all other operating expenses.

OFFERING OF UNITS--The General Partnership registered additional Units of
Limited Partnership interest with the Securities and Exchange Commission for a
public offering held in August 1995. Units were offered at $1,000 per Unit. At
the close of business on August 31, 1995 the Partnership issued to each
existing Partner additional Units in such amounts as necessary so that the Net
Asset Value of all outstanding Units on September 1, 1995 was equal to $1,000
per Unit. Per Unit amounts and Units of Partnership interest for the periods
prior to August 31, 1995 have been restated to reflect this issuance.

ORGANIZATIONAL AND OFFERING EXPENSES--The Partnership is not liable for any
organizational and
<PAGE>

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
offering expenses in connection with the issuance and distribution of Units.
DWR agreed to pay the organizational expenses of the Partnership and the
expenses of offering the Units to the public.

INCOME TAXES--No provision for income taxes has been made in the accompanying
financial statements, as partners are individually responsible for reporting
income or loss based upon their respective share of the Partnership's revenues
and expenses as reported for income tax purposes.

DISTRIBUTIONS--Distributions, other than on redemptions of Units, are made on a
pro-rata basis at the sole discretion of Demeter. No distributions have been
made to date.

REDEMPTIONS--Limited Partners may redeem some or all of their Units at 100% of
the Net Asset Value per Unit effective as of the last day of any calendar
quarter upon five business days advance notice by redemption form to Demeter.

DISSOLUTION OF THE PARTNERSHIP--The Partnership will terminate on December 31,
2025 or at an earlier date if certain conditions set forth in its Limited
Partnership Agreement occur.

2. RELATED PARTY TRANSACTIONS

The Partnership pays brokerage commissions to DWR on trades executed on its
behalf as described in Note 1. The Partnership's cash is on deposit with DWR
and Carr in commodity trading accounts to meet margin requirements as needed.
DWR pays interest on these funds as described in Note 1.

Demeter, on behalf of the Partnership, has entered into a Management Agreement
with DWFCM to make all trading decisions for the Partnership.

Compensation to DWFCM by the Partnership consists of a management fee and an
incentive fee as follows:

MANAGEMENT FEE--The management fee is accrued daily at the rate of 1/4 of 1%
per month of adjusted Net Assets, as defined in the Management Agreement, at
each month-end.

INCENTIVE FEE--The Partnership will pay a quarterly incentive fee equal to 15%
of the "Trading Profits," as defined in the Management Agreement, earned by the
Partnership as of the end of each calendar quarter. Such incentive fee is
accrued in each month in which
<PAGE>


DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

"Trading Profits" occur. When trading losses are incurred no incentive fee is
paid in subsequent quarters until all such losses are recovered.

3. FINANCIAL INSTRUMENTS

The Partnership trades futures and forward contracts in interest rates, stock
indices, commodities, currencies, petroleum, and precious metals. Futures and
forwards represent contracts for delayed delivery of an instrument at a
specified date and price. Risk arises from changes in the value of these
contracts and the potential inability of counterparties to perform under the
terms of the contracts. There are numerous factors which may significantly
influence the market value of these contracts, including interest rate
volatility. At December 31, 1997 and 1996, open contracts were:
<TABLE>
<CAPTION>
                                                CONTRACT OR NOTIONAL AMOUNT
                                                ---------------------------
                                                    1997          1996
                                                ------------- -------------
                                                      $             $
<S>                                             <C>           <C>
EXCHANGE-TRADED CONTRACTS
Financial Futures:
 Commitments to Purchase                           44,959,000           --
Commodity Futures:
 Commitments to Purchase                            6,287,000    28,117,000
 Commitments to Sell                               94,480,000    84,112,000
Foreign Futures:
 Commitments to Purchase                          305,847,000    86,391,000
 Commitments to Sell                               68,688,000   163,838,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS
 Commitments to Purchase                          282,748,000   442,642,000
 Commitments to Sell                              546,818,000   573,157,000
</TABLE>

A portion of the amounts indicated as off-balance-sheet risk in forward
currency contracts is due to offsetting forward commitments to purchase and to
sell the same currency on the same date in the future. These commitments are
economically offsetting, but are not offset in the forward market until the
settlement date.

The unrealized gains and losses on open contracts are reported as a component
of "Equity in Commodity futures trading accounts" on the Statements of
Financial Condition and totaled $20,684,288 and $(10,164) at December 31, 1997
and 1996, respectively.

Of the $20,684,288 net unrealized gain on open contracts at December 31, 1997,
$7,311,878 related to exchange-traded futures contracts and $13,372,410 related
to off-exchange-traded forward currency contracts.

Of the $(10,164) net unrealized loss on open contracts at December 31, 1996,
$3,667,477 related to exchange-traded futures contracts and $(3,677,641)
related to off-exchange-traded forward currency contracts.
<PAGE>

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Exchange-traded futures contracts held by the Partnership at December 31, 1997
and 1996 mature through June 1998 and June 1997, respectively. Off-exchange-
traded forward currency contracts held by the Partnership at December 31, 1997
and 1996 mature through April 1998 and February 1997, respectively.

The contract amounts in the above table represent the Partnership's extent of
involvement in the particular class of financial instrument, but not the credit
risk associated with counterparty nonperformance. The credit risk associated
with these instruments is limited to the amounts reflected in the Partnership's
Statements of Financial Condition.

The Partnership also has credit risk because either DWR or Carr acts as the
futures commission merchant or the counterparty, with respect to most of the
Partnership's assets. Exchange-traded futures contracts are marked to market on
a daily basis, with variations in value settled on a daily basis. DWR and Carr,
as the futures commission merchants for the Partnership's exchange-traded
futures contracts, are required pursuant to regulations of the Commodity
Futures Trading Commission to segregate from their own assets, and for the sole
benefit of their commodity customers, all funds held by them with respect to
exchange-traded futures contracts including an amount equal to the net
unrealized gain on all open futures contracts, which funds totaled $135,013,102
and $170,404,565 at December 31, 1997 and 1996, respectively. With respect to
the Partnership's off-exchange-traded forward currency contracts, there are no
daily settlements of variations in value nor is there any requirement that an
amount equal to the net unrealized gain on open forward contracts be
segregated. With respect to those off-exchange-traded forward currency
contracts, the Partnership is at risk to the ability of Carr, the sole
counterparty on all of such contracts, to perform. Carr's parent, Credit
Agricole Indosuez, has guaranteed Carr's obligations to the Partnership.

For the years ended December 31, 1997 and 1996, the average fair value of
financial instruments held for trading purposes was as follows:

<TABLE>
<CAPTION>
                                                         1997
                                                -----------------------
                                                  ASSETS    LIABILITIES
                                                ----------- -----------
                                                     $           $
<S>                                             <C>         <C>
EXCHANGE-TRADED CONTRACTS:
 Financial Futures                               45,777,000 157,169,000
 Commodity Futures                               62,602,000  74,762,000
 Foreign Futures                                185,126,000 107,251,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS  320,498,000 431,962,000
</TABLE>
<PAGE>

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)

<TABLE>
<CAPTION>
                                                         1996
                                                -----------------------
                                                  ASSETS    LIABILITIES
                                                ----------- -----------
                                                     $           $
<S>                                             <C>         <C>
EXCHANGE-TRADED CONTRACTS:
 Financial Futures                              198,372,000 116,558,000
 Commodity Futures                               92,560,000  69,758,000
 Foreign Futures                                282,199,000 109,444,000
OFF-EXCHANGE-TRADED FORWARD CURRENCY CONTRACTS  489,931,000 540,039,000
</TABLE>

5. LEGAL MATTERS

On September 6, 10, and 20, 1996, and on March 13, 1997, similar purported
class actions were filed in the Superior Court of the State of California,
County of Los Angeles, on behalf of all purchasers of interests in limited
partnership commodity pools sold by DWR. Named defendants include DWR, Demeter,
DWFCM, MSDWD (all such parties referred to hereafter as the "Dean Witter
Parties"), the Partnership, certain other limited partnership commodity pools
of which Demeter is the general partner, and certain trading advisors to those
pools. On June 16, 1997, the plaintiffs in the above actions filed a
consolidated amended complaint alleging, among other things, that the
defendants committed fraud, deceit, negligent misrepresentation, various
violations of the California Corporations Code, intentional and negligent
breach of fiduciary duty, fraudulent and unfair business practices, unjust
enrichment, and conversion in the sale and operation of the various limited
partnerships commodity pools. Similar purported class actions were also filed
on
September 18, and 20, 1996, in the Supreme Court of the State of New York, New
York County, and on November 14, 1996 in the Superior Court of the State of
Delaware, New Castle County, against the Dean Witter Parties and certain
trading advisors on behalf of all purchasers of interests in various limited
partnership commodity pools, including the Partnership, sold by DWR. A
consolidated and amended complaint in the action pending in the Supreme Court
of the State of New York was filed on August 13, 1997, alleging that the
defendants committed fraud, breach of fiduciary duty, and negligent
misrepresentation in the sale and operation of the various limited partnership
commodity pools. On December 16, 1997, upon motion of the plaintiffs, the
action pending in the Superior Court of the State of Delaware was voluntarily
dismissed without prejudice. The complaints seek unspecified amounts of
compensatory and punitive damages and other relief. It is possible that
additional similar actions may be filed and that, in the course of these
actions, other parties could be added as defendants. The Dean Witter Parties
believe that they and the Partnership
<PAGE>

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)

have strong defenses to, and they will vigorously contest, the actions.
Although the ultimate outcome of legal proceedings cannot be predicted with
certainty, it is the opinion of management of the Dean Witter Parties that the
resolution of the actions will not have a material adverse effect on the
financial condition or the results of operations of any of the Dean Witter
Parties or the Partnership.
<PAGE>

DEAN WITTER REYNOLDS INC.

Two World Trade Center

62nd Floor

New York, NY 10048


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