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 year ended December 31, 1999 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 0-17446

          DEAN WITTER DIVERSIFIED FUTURES FUND II L.P.

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

           DELAWARE                                           13-
3490286
          (State       or       other       jurisdiction       of
(I.R.S. Employer
               incorporation           or           organization)
Identification No.)

c/o Demeter Management Corporation
Two   World   Trade   Center,   -62nd   Fl.,   New   York,   N.Y.
10048
        (Address     of     principal     executive      offices)
(Zip Code)
Registrant's    telephone    number,    including    area    code
(212) 392-5454
Securities registered pursuant to Section 12(b) of the Act:
                                                             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)


      Indicate by check-mark whether the registrant (1) has filed
all  reports required to be filed by Section 13 or 15(d)  of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.   Yes   X      No

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

State  the  aggregate  market  value  of  the  Units  of  Limited
Partnership  Interest held by non-affiliates of  the  registrant.
The  aggregate market value shall be computed by reference to the
price at which units were sold, as of a specified date within  60
days prior to the date of filing: $7,718,657 at January 31, 2000.

              DOCUMENTS INCORPORATED BY REFERENCE
                          (See Page 1)

<PAGE>
<TABLE>

        DEAN WITTER DIVERSIFIED FUTURES FUND II L.P.
            INDEX TO ANNUAL REPORT ON FORM 10-K
                     DECEMBER 31, 1999
<CAPTION>
Page No.
<S>                                                    <C>
DOCUMENTS INCORPORATED BY REFERENCE. . . . . . . . . . . . . . . . . .
 . .  1

Part I .

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

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

   Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . .    . .
 . 4-6

  Item 4. Submission of Matters to a Vote of Security Holders    . . .
6
Part II.
  Item 5. Market for the Registrant's Partnership Units
              and Related Security Holder Matters . . .      . . . . .
 . . . .  7

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

  Item 7. Management's Discussion and Analysis of Financial
          Condition and Results of Operations. . . . . . . .     . . .
9-21

  Item   7A.Quantitative and Qualitative Disclosures About
           Market Risk . . . . . . . . . . . . . . . . . . . .    .  .
21-33

  Item 8. Financial Statements and Supplementary Data . . . . . . .33-
34

  Item 9. Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure. . . . .  .  .  .  .  .
34
Part III.
   Item10. Directors and Executive Officers of the Registrant     .  .
35-39

  Item11. Executive Compensation . . . . . . . . . . . . . . . .  39

  Item12. Security Ownership of Certain Beneficial Owners
           and Management . . . . . . . . . . . . . . . . . .     .  .
 .  39

   Item13. Certain Relationships and Related Transactions .   .   .  .
39-40
Part IV.

  Item14. Exhibits, Financial Statement Schedules, and
           Reports on Form 8-K . . . . . . . . . . . . . .  .  .  .  .
41
</TABLE>

<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 Prospectus dated
                                               October   28,
1988                                          I

                                              Annual  Report
to Dean Witter
     Diversified Futures Fund II L.P.
     Limited Partners for the year
     ended December 31, 1999                             II,
III and IV


























<PAGE>
                           PART I



Item 1.  BUSINESS

(a)  General  Development  of Business. Dean  Witter  Diversified

Futures  Fund  II L.P. (the "Partnership") is a Delaware  limited

partnership  organized  to engage primarily  in  the  speculative

trading  of  commodity  futures and forward  contracts,  physical

commodities,   and   other  commodity  interests   (collectively,

"futures interests").



The  general  partner for the Partnership is  Demeter  Management

Corporation  ("Demeter").  The non-clearing commodity  broker  is

Dean  Witter  Reynolds Inc. ("DWR") and an unaffiliated  clearing

commodity  broker, Carr Futures Inc. ("Carr"), provides  clearing

and  execution  services.  The trading  manager  is  Dean  Witter

Futures  &  Currency  Management Inc. ("DWFCM"  or  the  "Trading

Manager").   Demeter, DWR and DWFCM are wholly-owned subsidiaries

of Morgan Stanley Dean Witter & Co. ("MSDW").



The Partnership's Net Asset Value per unit of limited partnership

interest  ("Unit(s)")  as  of December 31,  1999,  was  $2,556.25

representing a loss of 9.5 percent from the Net Asset  Value  per

Unit  of  $2,824.45 at December 31, 1998.  For  a  more  detailed

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



<PAGE>

(b) Financial Information about Industry Segments.  For financial

information  reporting  purposes, the Partnership  is  deemed  to

engage  in  one  industry  segment, the  speculative  trading  of

futures   interests.   The  relevant  financial  information   is

presented in Items 6 and 8.

(c) Narrative Description of Business.  The Partnership is in the

business of speculative trading of futures interests, pursuant to

trading  instructions  provided by the Trading  Manager.   For  a

detailed description of the different facets of the Partnership's

business,   see  those  portions of the Partnership's  Prospectus

("Prospectus"), dated October 28, 1988 incorporated by  reference

in this Form 10-K, set forth below:

  Facets of Business

      1.   Summary                    1.   "Summary  of  the
Prospectus"
                                      (Pages 2-7).

      2.  Commodity  Markets          2.   "The  Commodities
Markets"
                                      (Pages 57-67).

     3.  Partnership's  Trading     3.   "Trading  Policies"
(Pages
       Arrangements and               28-29). "The Trading
        Policies                        Manager" (Pages  29-
38).

     4.  Management  of  the  Part-    4.   "The  Management
Agreement"
        nership                         (Pages 39-41).  "The
General  Partner"  (Pages                             41-56)
and                      "The                      Commodity
Broker"(Pages    56-57).                                "The
Limited Partnership
                                       Agreement" (Pages 68-
73).

    5. Taxation of the Partner-  5.  "Federal Income Tax
            ship's Limited Partners      Aspects" and "State
and                                       Local  Income  Tax
Aspects"                                          (Pages 75-
83).

<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

The  class actions first filed in 1996 in California and  in  New

York  State courts were each dismissed in 1999.  However, in  the

New  York  State  class  action, plaintiffs  appealed  the  trial

court's dismissal of their case on March 3, 2000.



On  September  6,  10,  and 20, 1996,  and  on  March  13,  1997,

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, MSDW,

the  Partnership, certain limited partnership commodity pools  of

which



<PAGE>

Demeter  is  the  general partner (all such parties  referred  to

hereafter  as  the  "Morgan  Stanley Dean  Witter  Parties")  and

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

plaintiffs  in  the  above actions filed a  consolidated  amended

complaint,  alleging,  among other things,  that  the  defendants

committed  fraud,  deceit,  negligent misrepresentation,  various

violations  of the California Corporations Code, intentional  and

negligent  breach  of  fiduciary  duty,  fraudulent  and   unfair

business practices, unjust enrichment, and conversion in the sale

and operation of the various limited partnership commodity pools.

The  complaints  seek  unspecified amounts  of  compensatory  and

punitive  damages and other relief.  The court entered  an  order

denying class certification on August 24, 1999.  On September 24,

1999,  the  court  entered an order dismissing the  case  without

prejudice  on consent. 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  Morgan  Stanley  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.  The   compalints   seek

unspecified  amounts  of compensatory and  punitive  damages  and

other



<PAGE>

relief.  The New York Supreme Court dismissed the New York action

in November 1998, but granted plaintiffs leave to file an amended

complaint, which they did in early December 1998.  The defendants

filed a motion to dismiss the amended complaint with prejudice on

February 1, 1999.  By decision dated December 21, 1999,  the  New

York Supreme Court dismissed the case with prejudice.



In addition, 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.



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

(a) Market Information

There  is no established public trading market for Units  of  the

Partnership.

(b) Holders

The  number  of  holders  of  Units  at  December  31,  1999  was

approximately 473.

(c) Distributions

No  distributions  have  been made by the  Partnership  since  it

commenced  trading operations on January 18, 1989.   Demeter  has

sole  discretion to decide what distributions, if any,  shall  be

made to investors in the Partnership.  Demeter currently does not

intend to make any distribution of Partnership profits.























<PAGE>
<TABLE>

Item 6.  SELECTED FINANCIAL DATA (in dollars)

<CAPTION>






                                   For the Years Ended December 31,
                           1999         1998        1997          1996
1995       <S>                         <C>           <C>           <C>
<C>        <C>
Total Revenues
(including interest)        (65,754)  1,559,1102,490,979       643,498
1,556,726


Net Income (Loss)          (948,607)    543,0881,247,087      (824,517)
(410,574)


Net Income (Loss)
Per Unit (Limited
&  General Partners)        (268.20)      140.02272.02        (122.41)
(75.58)


Total Assets             8,365,734   10,845,65411,801,172    12,617,666
15,550,215

Total Limited
Partners' Capital        7,787,964   10,281,22311,209,045    12,019,867
14,341,357


Net Asset Value Per
Unit                               2,556.25     2,824.452,684.43      2,41
2.41        2,534.82




</TABLE>








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


Liquidity. The Partnership deposits its assets with DWR  as  non-

clearing  broker and Carr as clearing broker in separate  futures

trading  accounts  established for  the  Trading  Manager,  which

assets  are  used as margin to engage in trading. The assets  are

held   in  either  non-interest-bearing  bank  accounts   or   in

securities  and  instruments permitted by the  Commodity  Futures

Trading Commission ("CFTC") for investment of customer segregated

or secured funds.  The Partnership's assets held by the commodity

brokers  may  be  used  as margin solely  for  the  Partnership's

trading.   Since the Partnership's sole purpose is  to  trade  in

futures  and  forwards, it is expected that the Partnership  will

continue to own such liquid assets for margin purposes.



The  Partnership's investment in futures, and forwards may,  from

time  to  time,  be illiquid.  Most U.S. futures exchanges  limit

fluctuations  in  prices  during  a  single  day  by  regulations

referred  to  as  "daily price fluctuations  limits"   or  "daily

limits".   Trades may not be executed at prices beyond the  daily

limit.   If  the  price  for a particular  futures  contract  has

increased  or  decreased by an amount equal to the  daily  limit,

positions  in  that  futures contract can neither  be  taken  nor

liquidated  unless  traders are willing to effect  trades  at  or

within  the  limit.  Futures prices have occasionally  moved  the

daily  limit  for  several consecutive days  with  little  or  no

trading.  These market conditions



<PAGE>

could  prevent  the  Partnership from  promptly  liquidating  its

futures contracts and result in restrictions on redemptions.



There  is  no limitation on daily price moves in trading  forward

contracts  on  foreign  currency.  The  markets  for  some  world

currencies  have low trading volume and are illiquid,  which  may

prevent  the  Partnership from trading in potentially  profitable

markets  or  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.



The  Partnership  has  never had illiquidity  affect  a  material

portion of its assets.



Capital  Resources.  The Partnership does not have, or expect  to

have,  any  capital assets.  Redemptions of Units in  the  future

will  affect  the  amount of funds available for  investments  in

futures  interests in subsequent periods.  It is not possible  to

estimate   the  amount  and  therefore,  the  impact  of   future

redemptions of Units.



Results of Operations.

General.  The Partnership's results depend on its Trading Manager

and the ability of the Trading Manager's trading programs to take

advantage of price

<PAGE>

movements or other profit opportunities in the futures, forwards,

and  options  markets.  The following presents a summary  of  the

Partnership's operations for the three years ended  December  31,

1999  and  a general discussion of its trading activities  during

each  period.  It is important to note, however, that the Trading

Manager  trades  in various markets at different times  and  that

prior  activity  in a particular market does not mean  that  such

market will be actively traded by the Trading Manager or will  be

profitable   in  the  future.   Consequently,  the   results   of

operations of the Partnership are difficult to discuss other than

in  the  context of its Trading Manager's trading  activities  on

behalf of the Partnership as a whole and how the Partnership  has

performed in the past.




At  December  31,  1999,  the  Partnership's  total  capital  was

$8,053,814, a decrease of $2,521,152 from the Partnership's total

capital of $10,574,966 at December 31, 1998.  For the year  ended

December  31,  1999,  the Partnership generated  a  net  loss  of

$948,607, and total redemptions aggregated $1,572,545.



For  the  year ended December 31, 1999, the Partnership  recorded

total  trading  losses, net of interest income,  of  $65,754  and

posted  a  decrease in Net Asset Value per Unit. The  Partnership

experienced  losses in the global interest rate futures  markets,

approximately  8.92%,  primarily from short  Australian  interest

rate futures positions as prices increased during July and August

on the

<PAGE>

temporary   strength   in  U.S.  bonds  and  weaker-than-expected

business spending data out of Australia.  Additional losses  were

recorded  from  short Japanese bond futures positions  as  prices

increased  during the first quarter and third quarters.   In  the

currency  markets,  losses of approximately 7.08%  were  recorded

primarily   from  Australian  dollar  positions.   Throughout   a

majority of the first quarter, losses were experienced from  long

Australian  dollar  positions as its value dropped  significantly

relative  to  the U.S. dollar on speculation regarding  potential

currency  devaluations in the Asian region.  Early in  the  third

quarter,  additional losses were recorded from long positions  in

this  currency  due  to  depressed commodities  prices,  emerging

market  concerns  and  on-going talks that China  may  eventually

devalue its currency.  Newly established short positions  in  the

Australian  dollar  resulted in losses during  September  as  its

value  strengthened  relative to the U.S.  dollar  following  the

rally  in  gold prices.  Offsetting currency gains of 3.76%  were

recorded  from Japanese yen positions, primarily long  positions.

During the third quarter, gains were recorded from long positions

in the Japanese yen as the value of the yen climbed to a 44-month

high  versus  the  U.S.  dollar due to  continued  optimism  over

Japan's economic recovery.  The energy markets produced gains  of

approximately 7.39%.  During March, gains were recorded from long

positions in oil futures as prices moved significantly higher  on

news  that  both  OPEC  and  non-OPEC countries  had  reached  an

agreement  to cut total output beginning April 1st.   Gains  were

also  recorded  in this market complex during the  third  quarter

after OPEC ministers confirmed that they would uphold

<PAGE>

their  global  cutbacks until April of next year. Total  expenses

for  the year were $882,853, resulting in a net loss of $948,607.

The value of a Unit decreased from $2,824.45 at December 31, 1998

to $2,556.25 at December 31, 1999.



At  December  31,  1998,  the  Partnership's  total  capital  was

$10,574,966, a decrease of $913,260 from the Partnership's  total

capital of $11,488,226 at December 31, 1997.  For the year  ended

December  31,  1998,  the  Partnership generated  net  income  of

$543,088, and total redemptions aggregated $1,456,348.



For  the  year ended December 31, 1998, the Partnership  recorded

total  trading revenues, including interest income, of $1,559,110

and  posted  an  increase in Net Asset Value per Unit.  Gains  of

approximately  13.65% were recorded in the global  interest  rate

futures  markets from bond futures in most major world  countries

throughout the year.  The most significant gains were recorded in

German, by approximately 5.66%, U.S., by approximately 4.06%  and

Japanese bond futures, by approximately 2.99% from primarily long

positions  during  August and September as investors  sought  the

safety of fixed income investments from notable volatility in the

global financial markets.  Additional profits were recorded  from

short  Japanese government bond futures positions during December

as  prices  declined amid a surge in Japanese bond yields,  which

was  attributed to news that Japan's Ministry of Finance will end

outright  purchases of government debt.  Total expenses  for  the

year were $1,016,022, resulting in

<PAGE>

net  income  of  $543,088.  The value of a  Unit  increased  from

$2,684.43 at December 31, 1997 to $2,824.45 at December 31, 1998.



At  December  31,  1997,  the  Partnership's  total  capital  was

$11,488,226, a decrease of $782,531 from the Partnership's  total

capital of $12,270,757, at December 31, 1996.  For the year ended

December  31,  1997,  the  Partnership generated  net  income  of

$1,247,087 and total redemptions aggregated $2,029,618.



For  the  year ended December 31, 1997, the Partnership  recorded

total  trading revenues, including interest income, of $2,490,979

and  posted an increase in Net Asset Value per Unit. 1997  was  a

profitable  year  for  the Partnership.  Gains  of  approximately

19.13%  were  recorded  in the currency  markets  primarily  from

sustained  price movements 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.   A

portion  of the Partnership's overall gains was offset by  losses

of  approximately  5.00%  recorded in the  global  interest  rate

futures  markets  primarily  due to a  sharp  trend  reversal  in

international  interest  rate futures prices  during  the  fourth

quarter and as a result of short-term volatility in domestic bond

and  stock  index futures.  Offsetting gains were  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



<PAGE>

price movement, DWFCM's intermediate to long-term trend following

trading  methodology was able to retain profits.  Total  expenses

for  the  year  were  $1,243,892,  resulting  in  net  income  of

$1,247,087.   The  value of a Unit increased  from  $2,412.41  at

December 31, 1996 to $2,684.43 at December 31, 1997.



The  Partnership's  overall performance record represents  varied

results of trading in different futures interests markets.  For a

further description of 1999, trading results, refer to the letter

to  the  Limited  Partners in the accompanying Annual  Report  to

Limited  Partners for the year ended December 31, 1999, which  is

incorporated  by  reference to Exhibit 13.01 of this  Form  10-K.

The  Partnership's  gains  and losses  are  allocated  among  its

partners for income tax purposes.



Credit Risk.

Financial  Instruments.  The Partnership is a party to  financial

instruments with elements of off-balance sheet market and  credit

risk.   The Partnership may trade futures, forwards, and  options

in  a  portfolio  of agricultural commodities,  energy  products,

foreign  currencies, interest rates, precious  and  base  metals,

soft  commodities,  and stock indices.  In  entering  into  these

contracts,  the  Partnership is subject to the market  risk  that

such   contracts  may  be  significantly  influenced  by   market

conditions, such as interest rate



<PAGE>

volatility, resulting in such contracts being less valuable.   If

the  markets should move against all of the positions held by the

Partnership  at  the  same time, and if the Trading  Manager  was

unable  to  offset positions of the Partnership, the  Partnership

could  lose all of its assets and investors would realize a  100%

loss.



In  addition  to  the  Trading Manager's internal  controls,  the

Trading  Manager  must comply with the trading  policies  of  the

Partnership.   These  trading  policies  include  standards   for

liquidity  and leverage with which the Partnership  must  comply.

The Trading Manager and Demeter monitor the Partnership's trading

activities  to  ensure  compliance  with  the  trading  policies.

Demeter  may  require the Trading Manager to modify positions  of

the   Partnership   if   Demeter  believes   they   violate   the

Partnership's trading policies.



In  addition to market risk, in entering into futures,  forwards,

and  options  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  or

guarantor of the Partnership for futures contracts traded in  the

United  States and the 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

<PAGE>

customers,  which should significantly reduce this  credit  risk.

For  example, a clearinghouse may cover a default by 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 assessing its  members.   In

cases where the Partnership trades off-exchange forward contracts

with a counterparty, the sole recourse of the Partnership will be

the forward contracts counterparty.



There is no assurance that a clearinghouse or exchange will  meet

its obligations to the Partnership, and Demeter and the commodity

brokers  will not indemnify the Partnership against a default  by

such  parties.  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 or clearinghouse defaulting  on

trades  effected for the broker's customers.  Any such obligation

on the part of a broker appears even less clear where the default

occurs in a non-U.S. jurisdiction.



Demeter  deals  with  these credit risks of  the  Partnership  in

several  ways.   First,  it  monitors  the  Partnership's  credit

exposure to each exchange on a daily basis, calculating not  only

the  amount of margin required for it but also the amount of  its

unrealized gains at each exchange, if any.  The



<PAGE>

commodity  brokers  inform the Partnership,  as  with  all  their

customers,  of its net margin requirements for all  its  existing

open  positions, but do not break that net figure down,  exchange

by  exchange.   Demeter, however, has installed  a  system  which

permits   it  to  monitor  the  Partnership's  potential   margin

liability, exchange by exchange.  As a result, Demeter is able to

monitor  the Partnership's potential net credit exposure to  each

exchange by adding the unrealized trading gains on that exchange,

if any, to the Partnership's margin liability thereon.



Second,  the Partnership's trading policies limit the  amount  of

its Net Assets that can be committed at any given time to futures

contracts   and  require,  in  addition,  a  minimum  amount   of

diversification  in  the  Partnership's  trading,  usually   over

several  different  products.  One of the aims  of  such  trading

policies  has  been  to  reduce  the  credit  exposure   of   the

Partnership   to   a  single  exchange  and,  historically,   the

Partnership's  exposure has typically amounted to  only  a  small

percentage  of  its  total Net Assets.  On those  relatively  few

occasions where the Partnership's credit exposure may climb above

that  level, Demeter deals with the situation on a case  by  case

basis,  carefully weighing whether the increased level of  credit

exposure  remains appropriate.  Material changes to  the  trading

policies may be made only with the prior written approval of  the

limited partners owning more than 50% of Units then outstanding.



<PAGE>

Third,  Demeter has secured, with respect to Carr acting  as  the

clearing  broker  for  the Partnership,  a  guarantee  by  Credit

Agricole  Indosuez,  Carr's parent, of the payment  of  the  "net

liquidating  value"  of  the transactions  (futures  and  forward

contracts) in the Partnership's account.



With  respect to forward contract trading, the Partnership trades

with  only those counterparties which Demeter, together with DWR,

have  determined to be creditworthy.  At the date of this filing,

the  Partnership  deals  only with Carr as  its  counterparty  on

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

above, covers these forward contracts.



See  "Financial Instruments" under Notes to Financial  Statements

in  the  Partnership's Annual Report to Limited Partners for  the

year  ended December 31, 1999, which is incorporated by reference

to Exhibit 13.01 of this Form

10-K.



Year   2000.   Commodity  pools,  like  financial  and   business

organizations  and individuals around the world,  depend  on  the

smooth  functioning  of computer systems.  The  Year  2000  issue

arose since many of the world's computer systems (including those

in  non-information  technology systems)  traditionally  recorded

years  in  a  two-digit format.  If not addressed, such  computer

systems  may have been unable to properly interpret dates  beyond

the  year 1999, which may have led to business disruptions in the

U.S. and internationally.  Such disruptions

<PAGE>

could  have  adversely affected the handling or determination  of

futures trades and prices and other services for the Partnership.

Accordingly,  Demeter  has  fully  participated  in  a   firmwide

initiative established by MSDW to address issues associated  with

the  Year  2000.  As part of this initiative, MSDW  reviewed  its

global software and hardware infrastructure for mainframe, server

and  desktop  computing  environments and  engaged  in  extensive

remediation   and   testing.   The  Year  2000  initiative   also

encompassed  the review of agencies, vendors and  facilities  for

Year 2000 compliance.



Since  1995,  MSDW prepared actively for the Year 2000  issue  to

ensure  that it would have the ability to respond to any critical

business  process failure, to prevent the loss of  workspace  and

technology,  and  to  mitigate any potential  financial  loss  or

damage  to  its  global franchise.  Where necessary,  contingency

plans  were expanded or developed to address specific  Year  2000

risk  scenarios,  supplementing existing  business  policies  and

practices.  In  conjunction with MSDW's Year  2000  preparations,

Demeter  monitored the progress of Carr and the  Trading  Manager

throughout  1999  in  their  Year  2000  compliance  and,   where

applicable,  tested its external interfaces, with  Carr  and  the

Trading  Manager.   In addition, Demeter, the commodity  brokers,

the Trading Manager and all U.S. futures exchanges were subjected

to  monitoring  by the CFTC of their Year 2000 preparedness,  and

the  major  foreign  futures  exchanges  engaged  in  market-wide

testing of their Year 2000 compliance during 1999.



<PAGE>

MSDW  and  Demeter  consider the transition into  the  Year  2000

successful  from  the perspective of their internal  systems  and

global  external  interactions.  Over the  millennial  changeover

period,  no  material issues were encountered, and MSDW,  Demeter

and the Partnership conducted business as usual.



Risks  Associated  With  the Euro.  On January  1,  1999,  eleven

countries  in  the  European Union established  fixed  conversion

rates on their existing sovereign currencies and converted  to  a

common   single  currency  (the  euro).   During   a   three-year

transition  period,  the sovereign currencies  will  continue  to

exist  but  only as a fixed denomination of the euro.  Conversion

to  the  euro  prevents the Trading Manager  from  trading  those

sovereign  currencies  and thereby limits  its  ability  to  take

advantage  of potential market opportunities that might otherwise

have  existed  had separate currencies been available  to  trade.

This  could  adversely  affect the  performance  results  of  the

Partnership.


Item  7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT  MARKET
RISK

Introduction

The  Partnership is a commodity pool involved in the  speculative

trading  of  futures interests.  The market-sensitive instruments

held  by  the  Partnership are acquired for  speculative  trading

purposes only and, as a result, all or substantially all  of  the

Partnership's  assets  are at risk of trading  loss.   Unlike  an

operating  company, the risk of market-sensitive  instruments  is

central,  not  incidental,  to  the Partnership's  main  business

activities.

<PAGE>

The  futures interests traded by the Partnership involve  varying

degrees  of  market  risk.  Market risk is often  dependent  upon

changes  in  the level or volatility of interest rates,  exchange

rates,  and  prices  of  financial instruments  and  commodities.

Fluctuations  in market risk based upon these factors  result  in

frequent  changes  in  the fair value of the  Partnership's  open

positions, and, consequently, in its earnings and cash flow.



The  Partnership's  total market risk is  influenced  by  a  wide

variety  of  factors,  including the  diversification  among  the

Partnership's open positions, the volatility present  within  the

markets,  and the liquidity of the markets.  At different  times,

each  of these factors may act to increase or decrease the market

risk associated with the Partnership.



The  Partnership's past performance is not necessarily indicative

of  its future results.  Any attempt to numerically quantify  the

Partnership's  market risk is limited by the uncertainty  of  its

speculative  trading.  The Partnership's speculative trading  may

cause future losses and volatility (i.e. "risk of ruin") that far

exceed  the  Partnership's experiences to date or any  reasonable

expectations based upon historical changes in market value.



Quantifying the Partnership's Trading Value at Risk

The    following    quantitative   disclosures   regarding    the

Partnership's  market  risk  exposures  contain  "forward-looking

statements" within the meaning of the safe

<PAGE>

harbor  from civil liability provided for such statements by  the

Private  Securities Litigation Reform Act of 1995 (set  forth  in

Section 27A of the Securities Act of 1933 and Section 21E of  the

Securities Exchange Act of 1934). All quantitative disclosures in

this  section  are  deemed to be forward-looking  statements  for

purposes  of the safe harbor, except for statements of historical

fact.



The  Partnership accounts for open positions using mark-to-market

accounting  principles.   Any loss in the  market  value  of  the

Partnership's  open  positions  is  directly  reflected  in   the

Partnership's earnings, whether realized or unrealized,  and  its

cash  flow.   Profits and losses on open positions  of  exchange-

traded  futures  interests are settled  daily  through  variation

margin.



The  Partnership's risk exposure in the market sectors traded  by

the  Trading Manager is estimated below in terms of Value at Risk

("VaR").  The  VaR  model used by the Partnership  includes  many

variables that could change the market value of the Partnership's

trading  portfolio.  The Partnership estimates VaR using a  model

based upon historical simulation with a confidence level of  99%.

Historical  simulation involves constructing  a  distribution  of

hypothetical  daily changes in the value of a trading  portfolio.

The  VaR  model takes into account linear exposures to price  and

interest  rate risk.  Market risks that are incorporated  in  the

VaR  model  include equity and commodity prices, interest  rates,

foreign exchange rates, and correlation among these variables.

<PAGE>

The  hypothetical changes in portfolio value are based  on  daily

percentage changes observed in key market indices or other market

factors  ("market  risk  factors")  to  which  the  portfolio  is

sensitive.    The   historical   observation   period   of    the

Partnership's VaR is approximately four years.  The  one-day  99%

confidence  level  of the Partnership's VaR  corresponds  to  the

negative change in portfolio value that, based on observed market

risk factors, would have been exceeded once in 100 trading days.



VaR   models,   including  the  Partnership's,  are  continuously

evolving  as trading portfolios become more diverse and  modeling

techniques  and systems capabilities improve.  Please  note  that

the  VaR  model is used to numerically quantify market  risk  for

historic  reporting purposes only and is not utilized  by  either

Demeter  or  the  Trading Manager in their daily risk  management

activities.



The Partnership's Value at Risk in Different Market Sectors

The  following  tables  indicates the  VaR  associated  with  the

Partnership's open positions as a percentage of total Net  Assets

by primary market risk category as of December 31, 1999 and 1998.

As  of  December  31,  1999  and 1998,  the  Partnership's  total

capitalization  was  approximately $8 million  and  $11  million,

respectively.





<PAGE>

        Primary    Market             December   31,    1999
December 31, 1998
     Risk Category         Value at Risk            Value at Risk

     Interest   Rate               (.22)%                  (.47)%

Currency                        (.79)                       (.96)

Commodity                 (.80)               (1.04)

     Equity                    (.16)                (.18)

     Aggregate Value at Risk       (1.24)%              (1.37)%



Aggregate Value at Risk represents the aggregate VaR of  all  the

Partnership's open positions and not the sum of the  VaR  of  the

individual Market Categories listed above.  Aggregate VaR will be

lower  as  it  takes  into  account correlation  among  different

positions and categories.



The  table  above  represents the VaR of the  Partnership's  open

positions  at  December  31,  1999  and  1998  only  and  is  not

necessarily representative of either the historic or future  risk

of  an  investment in the Partnership. Because the  Partnership's

only  business  is the speculative trading of futures  interests,

the composition of its trading portfolio can change significantly

over  any given time period, or even within a single trading day.

Any  changes  in  open positions could positively  or  negatively

materially impact market risk as measured by VaR.





<PAGE>

The  table  below supplements the year end VaR by presenting  the

Partnership's high, low and average VaR, as a percentage of total

Net  Assets for the four quarterly reporting periods from January

1, 1999 through December 31, 1999.



Primary Market Risk Category        High         Low

Average

Interest Rate                           (1.93)%    (.22)%

(.96)%

Currency                                (1.94)     (.79)

(1.60)

Commodity                          (1.42)     (.80)    (1.07)

Equity                               (.74)    (.16)     (.39)

Aggregate Value at Risk            (3.12)%   (1.24)%   (2.28)%



Limitations on Value at Risk as an Assessment of Market Risk

The  face  value  of the market sector instruments  held  by  the

Partnership  is  typically  many  times  the  applicable   margin

requirements.  Margin requirements generally range between 2% and

15%  of  contract face value. Additionally, the use  of  leverage

causes  the face value of the market sector instruments  held  by

the   Partnership   to  typically  be  many   times   the   total

capitalization   of   the  Partnership.    The   value   of   the

Partnership's open positions thus creates a "risk  of  ruin"  not

typically found in other investments.  The relative size  of  the

positions held may cause the Partnership to incur losses  greatly

in excess of VaR within a short period of time, given the effects

of  the  leverage employed and market volatility.  The VaR tables

above, as well as the past



<PAGE>

performance of the Partnership, gives no indication of such "risk

of  ruin".  In  addition, VaR risk measures should be  viewed  in

light  of  the  methodology's  limitations,  which  include   the

following:

     past  changes in market risk factors will not always result

  in accurate predictions of the distributions and correlations of

  future market movements;

     changes  in portfolio value in response to market movements

  may differ from those of the VaR model;

    VaR results reflect past trading positions while future risk

  depends on future positions;

     VaR using a one-day time horizon does not fully capture the

  market  risk of positions that cannot be liquidated  or  hedged

  within one day; and

     the  historical  market  risk  factor  data  used  for  VaR

  estimation  may provide only limited insight into  losses  that

  could be incurred under certain unusual market movements.



The VaR tables above present the results of the Partnership's VaR

for  each  of the Partnership's market risk exposures and  on  an

aggregate basis at December 31, 1999 and for the end of the  four

quarterly reporting periods during calendar year 1999.  Since VaR

is  based  on  historical  data, VaR  should  not  be  viewed  as

predictive  of the Partnership's future financial performance  or

its ability to manage or monitor risk.  There can be no assurance

that the



<PAGE>

Partnership's actual losses on a particular day will  not  exceed

the  VaR  amounts  indicated above or that such losses  will  not

occur more than 1 in 100 trading days.



Non-Trading Risk

The  Partnership has non-trading market risk on its foreign  cash

balances  not needed for margin.  These balances and  any  market

risk  they  may  represent are immaterial.  The Partnership  also

maintains  a  substantial  portion  (approximately  91%)  of  its

available  assets  in  cash  at DWR.   A  decline  in  short-term

interest rates will result in a decline in the Partnership's cash

management   income.  This  cash  flow  risk  is  not  considered

material.



Materiality,  as used throughout this section,  is  based  on  an

assessment  of  reasonably  possible  market  movements  and  any

associated  potential losses, taking into account  the  leverage,

optionality  and multiplier features of the Partnership's  market

sensitive instruments.



Qualitative Disclosures Regarding Primary Trading Risk Exposures

The following qualitative disclosures regarding the Partnership's

market risk exposures - except for (A) those disclosures that are

statements of historical fact and (B) the descriptions of how the

Partnership   manages  its  primary  market  risk   exposures   -

constitute forward-looking statements within the meaning of



<PAGE>

Section  27A  of  the  Securities Act  and  Section  21E  of  the

Securities  Exchange Act.  The Partnership's primary market  risk

exposures  as  well  as the strategies used and  to  be  used  by

Demeter  and the Trading Manager for managing such exposures  are

subject  to numerous uncertainties, contingencies and risks,  any

one  of which could cause the actual results of the Partnership's

risk  controls to differ materially from the objectives  of  such

strategies.      Government    interventions,    defaults     and

expropriations,  illiquid  markets,  the  emergence  of  dominant

fundamental  factors, political upheavals, changes in  historical

price  relationships,  an  influx  of  new  market  participants,

increased  regulation  and many other  factors  could  result  in

material  losses  as  well as in material  changes  to  the  risk

exposures  and the risk management strategies of the Partnership.

Investors  must be prepared to lose all or substantially  all  of

their investment in the Partnership.



The  following  were the primary trading risk  exposures  of  the

Partnership as of December 31, 1999, by market sector.  It may be

anticipated  however,  that  these  market  exposures  will  vary

materially over time.



Interest Rate.  The largest exposure in the fourth quarter was in

the  interest rate sector. Exposure was spread across  the  U.S.,

Swiss,  Australian, and Japanese interest rate sectors.  Interest

rate  movements  directly affect the price of the sovereign  bond

positions held by the Partnership and indirectly affect the value

of its stock index and currency positions.  Interest rate

<PAGE>

movements  in  one  country  as well as  relative  interest  rate

movements  between countries materially impact the  Partnership's

profitability.  The Partnership's primary interest rate  exposure

is  generally to interest rate fluctuations in the G-7  countries

and  Australia.   The  G-7  countries consist  of  France,  U.S.,

Britain,  Germany, Japan, Italy and Canada.  Demeter  anticipates

that  G-7  and Australian interest rates will remain the  primary

interest  rate  exposure of the Partnership for  the  foreseeable

future.   The  changes  in interest rates, which  have  the  most

effect  on the Partnership, are changes in long-term and  medium-

term instruments.  Consequently, even a material change in short-

term rates would have little effect on the Partnership, were  the

medium to long term rates to remain steady.



Currency.  The next most significant exposure in the  Partnership

is  in the currency complex.  The Partnership's currency exposure

is  to  exchange  rate fluctuations, primarily fluctuations  that

disrupt  the  historical pricing relationships between  different

currencies and currency pairs.  Interest rate changes as well  as

political   and  general  economic  conditions  influence   these

fluctuations.   The  Partnership trades  in  a  large  number  of

currencies,  including  cross-rates i.e., positions  between  two

currencies other than the U.S. Dollar. For the fourth quarter  of

1999, the Partnership's foreign currency exposure was in the euro

currency  crosses  and outright U.S. dollar  positions  (outright

positions  consist of the U.S. dollar vs. other currencies).  The

currency trading VaR figure includes foreign margin amounts

<PAGE>

converted  into  U.S. dollars with an incremental  adjustment  to

reflect  the  exchange  rate risk inherent  to  the  dollar-based

Partnership in expressing VaR in a functional currency other than

dollars.



Commodity.

Metals. The next noteworthy exposure was in the base and precious

metals  markets. The Partnership's metals market exposure in  the

fourth quarter of 1999 was to fluctuations in the prices of  base

metals,  as  well as exposure in the gold and silver markets.   A

significant amount of exposure was evident in the base metals  as

the  Partnership held sizeable positions due to a period  of  low

volatility prior to the upward price breakout.



The  Partnership  aims to equally weigh market  exposure  in  the

metals  as much as possible, however base metals, during  periods

of volatility, will affect performance more dramatically than the

precious  metals markets.  Demeter anticipates that  base  metals

will   remain   the  primary  metals  market  exposure   of   the

Partnership.



Energy.   On December 31, 1999, the Partnership's energy exposure

was  in  futures  contracts in the New York and Brent  crude  oil

markets.   Price movements in these markets result from political

developments  in  the  Middle East, weather patterns,  and  other

economic  fundamentals.  As oil prices have increased  over  100%

this year, and, given that the agreement by OPEC to cut

<PAGE>

production  is  closing in on expiring in March of  2000,  it  is

possible that volatility will remain on the high end. Significant

profits and losses have been and are expected to continue  to  be

experienced in these markets.



Soft  Commodities.  On  December 31, 1999,  the  Partnership  had

moderate  exposure  in the markets that comprise  these  sectors.

Most of the exposure however was in the cotton and sugar markets.

Supply  and  demand inequalities, severe weather disruptions  and

market expectations affect price movements in these markets.



Equity.   The Partnership's equity exposure on December 31,  1999

to  price risk in the S&P 500 futures index was noteworthy.   The

stock  index futures traded by the Partnership are by law limited

to futures on broadly based indices.  Demeter anticipates little,

if  any,  trading  in non G-7 stock indices. The  Partnership  is

primarily  exposed to the risk of adverse price trends or  static

markets in the U.S. and Japanese indices.  (Static markets  would

not  cause  major market changes but would make it difficult  for

the  Partnership to avoid being "whipsawed" into  numerous  small

losses.)



Qualitative Disclosures Regarding Non-Trading Risk Exposure

The  following  was the only non-trading risk  exposures  of  the

Partnership as of December 31, 1999:



<PAGE>

Foreign  Currency  Balances.  The Partnership's foreign  currency

balances are in Japanese yen, British pounds, euros, Swiss francs

and  Australian dollars.  The Fund controls the non-trading  risk

of  these  balances by regularly converting these  balances  back

into dollars upon liquidation of the respective position.



Qualitative Disclosures Regarding Means of Managing Risk Exposure

The  Partnership and the Trading Manager, separately, attempt  to

manage   the   risk  of  the  Partnership's  open  positions   in

essentially  the  same  manner in all market  categories  traded.

Demeter  attempts  to manage market exposure by diversifying  the

Partnership's assets among different market sectors  and  trading

approaches, and monitoring the performance of the Trading Manager

daily.     In   addition,   the   Trading   Manager   establishes

diversification  guidelines, often set in terms  of  the  maximum

margin  to be committed to positions in any one market sector  or

market sensitive instrument.



Demeter monitors and controls the risk of the Partnership's  non-

trading   instrument,  cash,  which  is  the   only   Partnership

investment directed by Demeter, rather than the Trading Manager.



Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  Financial  Statements are incorporated by reference  to  the

Partnership's  Annual  Report, which is filed  as  Exhibit  13.01

hereto.



<PAGE>

Supplementary  data  specified by  Item  302  of  Regulation  S-K

(selected quarterly financial data) is not applicable.




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


None.

































<PAGE>

                               PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

There  are no directors or executive officers of the Partnership.

The Partnership is managed by Demeter.


Directors and Officers of the General Partner

The directors and officers of Demeter are as follows:



Robert E. Murray, age 39, is Chairman of the Board, President and

a Director of Demeter.  Mr. Murray is also Chairman of the Board,

President and a Director of DWFCM.  Effective as of the close  of

business  on January 31, 2000, Mr. Murray replaced Mr. Hawley  as

Chairman  of  the  Board  of Demeter and  DWFCM.  Mr.  Murray  is

currently  a  Senior  Vice  President of  DWR's  Managed  Futures

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

currently the Director of the Managed Futures Department. In this

capacity, Mr. Murray is responsible for overseeing all aspects of

the  firm's  Managed  Futures Department.  Mr.  Murray  currently

serves  as  Vice  Chairman and a Director of  the  Managed  Funds

Association, an industry association for investment professionals

in  futures,  hedge funds and other alternative investments.  Mr.

Murray graduated from Geneseo State University in May 1983 with a

B.A. degree in Finance.





<PAGE>

Mitchell  M. Merin, age 46, is a Director of Demeter.  Mr.  Merin

is  also a Director of DWFCM.  Mr. Merin was appointed the  Chief

Operating  Officer  of Individual Asset Management  for  MSDW  in

December  1998 and the President and Chief Executive  Officer  of

Morgan  Stanley Dean Witter Advisors in February  1998.   He  has

been  an Executive Vice President of DWR since 1990, during which

time  he  has  been  director of DWR's Taxable Fixed  Income  and

Futures  divisions,  Managing Director in Corporate  Finance  and

Corporate  Treasurer.  Mr. Merin received his  Bachelor's  degree

from  Trinity  College in Connecticut and his  M.B.A.  degree  in

finance  and  accounting  from the  Kellogg  Graduate  School  of

Management of Northwestern University in 1977.



Joseph  G.  Siniscalchi, age 54, 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 57, is a Director of Demeter.   Mr.

Oelsner is currently an Executive Vice President and head of  the

Product Development Group at Morgan Stanley Dean Witter Advisors,

an affiliate of DWR. Mr. Oelsner joined DWR in 1981 as a Managing

Director in DWR's Investment Banking

<PAGE>

Department specializing in coverage of regulated industries  and,

subsequently,  served as head of the DWR Retail  Products  Group.

Prior  to  joining DWR, Mr. Oelsner held positions at  The  First

Boston  Corporation  as a member of the Research  and  Investment

Banking Departments from 1967 to 1981.  Mr. Oelsner received  his

M.B.A. in Finance from the Columbia University Graduate School of

Business   in  1966  and  an  A.B.  in  Politics  from  Princeton

University in 1964.



Lewis A. Raibley, III, age 37, is Vice President, Chief Financial

Officer,  and  a  Director of Demeter.  Mr.  Raibley  is  also  a

Director of DWFCM. Mr. Raibley is currently Senior Vice President

and  Controller in the Individual Asset Management Group of MSDW.

From  July  1997 to May 1998, Mr. Raibley served as  Senior  Vice

President  and  Director in the Internal Reporting Department  of

MSDW  and  prior to that, from 1992 to 1997, he served as  Senior

Vice President and Director in the Financial Reporting and Policy

Division of Dean Witter Discover & Co.  He has been with MSDW and

its affiliates since June 1986.



Richard  A. Beech, age 48, is a Director of Demeter.   Mr.  Beech

has  been associated with the futures industry for over 23 years.

He has been at DWR since August 1984 where he is presently Senior

Vice  President and head of Branch Futures.  Mr. Beech began  his

career  at  the Chicago Mercantile Exchange, where he became  the

Chief Agricultural Economist doing market analysis, marketing and

compliance.  Prior to joining DWR, Mr. Beech also had



<PAGE>

worked  at  two investment banking firms in operations, research,

managed futures and sales management.



Ray  Harris,  age 43, is a Director of Demeter.   Mr.  Harris  is

currently  Executive Vice President, Planning and  Administration

for Morgan Stanley Dean Witter Asset Management and has worked at

DWR  or its affiliates since July 1982, serving in both financial

and administrative capacities.  From August 1994 to January 1999,

he  worked  in  two  separate DWR affiliates, Discover  Financial

Services  and Novus Financial Corp., culminating as  Senior  Vice

President.   Mr.  Harris  received his B.A.  degree  from  Boston

College and his M.B.A. in finance from the University of Chicago.



Mark  J.  Hawley, age 56, served as Chairman of the Board  and  a

Director of Demeter and DWFCM throughout 1999.  Mr. Hawley joined

DWR  in  February  1989 as Senior Vice President  and  served  as

Executive Vice President and Director of DWR's Product Management

for   Individual  Asset  Management  throughout  1999.   In  this

capacity, Mr. Hawley was responsible for directing the activities

of  the  firm's  Managed Futures, Insurance, and Unit  Investment

Trust  Business.  From 1978 to 1989, Mr. Hawley was a  member  of

the  senior management team at Heinold Asset Management, Inc.,  a

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  & Company.   Mr.  Hawley  resigned

effective January 31, 2000.

<PAGE>

All of the foregoing directors have indefinite terms.



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, 1999, there were no persons known to be  beneficial

owners of more than 5 percent of the Units.



(b)   Security  Ownership of Management - At December  31,  1999,

Demeter   owned   104  Units  of  General  Partnership   Interest

representing a 3.30 percent interest in the Partnership.



(c)  Changes in Control - None



Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Refer  to  Note  2 - "Related Party Transactions"  of  "Notes  to

Financial  Statements",  in  the accompanying  Annual  Report  to

Limited  Partners for the year ended December 31, 1999, which  is

incorporated by reference to Exhibit 13.01 of

<PAGE>

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 $568,131 for  the  year

ended  December  31, 1999.  In its capacity as the  Partnership's

trading  manager, DWFCM received management fees of $278,026  for

the year ended December 31, 1999.







































<PAGE>
                             PART IV

Item  14.  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES,   AND

REPORTS ON FORM 8-K

(a)   1.  Listing of Financial Statements

     The following financial statements and report of independent public

auditors,  all  appearing  in  the accompanying  Annual  Report  to

Limited  Partners  for  the  year  ended  December  31,  1999,  are

incorporated by reference to Exhibit 13.01 of this Form 10-K:

-    Report of Deloitte & Touche LLP, independent auditors, for
     the years ended December 31, 1999, 1998 and 1997.

                -    Statements of Financial Condition as of
          December 31, 1999 and 1998.

-    Statements of Operations, Changes in Partners' Capital, and
     Cash Flows for the years ended December 31, 1999, 1998 and 1997.

               -    Notes to Financial Statements.

      With  exception  of  the aforementioned information  and  the

information incorporated in Items 7, 8, and 13, the  Annual  Report

to  Limited  Partners for the year ended December 31, 1999  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 requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                              DEAN  WITTER DIVERSIFIED
                         FUTURES FUND II L.P.
                                                       (Registrant)

                                              BY:   Demeter Management
                         Corporation,
                                                       General Partner

March 30, 2000           BY: /s/ Robert E. Murray
                                 Robert E. Murray, Director,
                                Chairman of the Board and
                                President

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

Demeter Management Corporation.

BY:    /s/  Robert E. Murray                                 March 29,
2000
           Robert E. Murray, Director,
          Chairman of the Board and
            President

       /s/   Joseph G. Siniscalchi              __           March 29,
2000
           Joseph G. Siniscalchi, Director

       /s/   Edward C. Oelsner III              __           March 29,
2000
           Edward C. Oelsner III, Director

      /s/   Mitchell M. Merin____________              March 29, 2000
            Mitchell M. Merin, Director

      /s/   Richard A. Beech ____________              March 29, 2000
            Richard A. Beech, Director

      /s/   Ray Harris                         ___               March
29, 2000
            Ray Harris, Director

     /s/    Lewis A. Raibley, III               __               March
29, 2000
           Lewis A. Raibley, III, Director, Chief
             Financial Officer and Principal
             Accounting Officer



<PAGE>
                          EXHIBIT INDEX


         ITEM                                              METHOD
OF FILING

3.01  Limited Partnership Agreement of
      the Partnership, dated as of
      October 28, 1988.                               (1)

10.01                                                  Management
Agreement among the
      Partnership, Demeter Management
      Corporation and Dean Witter Futures             (2)
      & Currency Management Inc. dated
      as of October 28, 1988.

13.01                                                      Annual
Report to Limited Partners for the year
      ended December 31, 1999.                        (3)

(1)
Incorporated by reference to Exhibit 3.01 and Exhibit 3.02 of the
Partnership's  Registration Statement  on  Form  S-1.  (File  No.
24662)

(2)
Incorporated  by reference to Exhibit 10.02 of the  Partnership's
Registration Statement on Form S-1.  (File No. 24462)

(3)                                                         Filed
herewith.




<PAGE>



Diversified
Futures
Fund II

December 31, 1999
Annual Report

 MORGAN STANLEY DEAN WITTER
<PAGE>

Demeter Management Corporation
Two World Trade Center
62nd Floor
New York, NY 10048
Telephone (212) 392-8899

Dean Witter Diversified Futures Fund II L.P.
Annual Report
1999

Dear Limited Partner:

This marks the eleventh annual report for the Dean Witter Diversified Futures
Fund II L.P. (the "Fund"). The Fund began the year at a Net Asset Value per
Unit of $2,824.45 and decreased by 9.5% to $2,556.25 on December 31, 1999. The
Fund has increased by 155.6% since it began trading in 1989 (a compound
annualized return of 9.0%).

Overall, the Fund experienced difficulty in the global interest rate futures
markets primarily from short Australian interest rate futures positions as
prices increased during July and August on the temporary strength in U.S. bonds
and weaker-than-expected business spending data out of Australia. Additional
losses were recorded from short Japanese bond futures positions as prices in-
creased during the first quarter and the third quarter. In the currency mar-
kets, losses were recorded throughout the majority of the first quarter from
long Australian dollar positions as its value dropped significantly relative to
the U.S. dollar on speculation regarding potential currency devaluations in the
Asian region. Early in the third quarter, losses were recorded from long posi-
tions in this currency due to depressed commodities prices, emerging market
concerns and on-going talks that China may eventually devalue its currency.
Newly established short positions in the Australian dollar resulted in addi-
tional losses during September as its value strengthened relative to the U.S.
dollar following the rally in gold prices. Offsetting currency gains were re-
corded during the third quarter from long positions in the Japanese yen as the
value of the yen climbed to a 44-month high versus the U.S. dollar due to con-
tinued optimism over
<PAGE>

Japan's economic recovery. The energy markets were profitable during March from
long positions in oil futures as prices moved significantly higher on news that
both OPEC and non-OPEC countries had reached an agreement to cut total output
beginning April 1st. Gains were also recorded in this market during the third
quarter after OPEC ministers confirmed that they would uphold their global cut-
backs until April of 2000.

While we are disappointed that the Fund had a difficult year in 1999, we remind
investors that managed futures funds such as Diversified Futures Fund II are
designed to provide diversification and non-correlation, that is, the ability
to perform independently, of global equities and bonds. Managed futures have
historically performed independently of traditional investments, such as stocks
and bonds. This is referred to as non-correlation, or the potential for managed
futures to perform when traditional markets such as stocks and bonds may expe-
rience difficulty performing. Of course, managed futures funds will not auto-
matically be profitable during unfavorable periods for these traditional in-
vestments and vice versa. The degree of non-correlation of any given managed
futures fund will vary, particularly as a result of market conditions, and some
funds will have significantly lesser degrees of non-correlation (i.e., greater
correlation) with stocks and bonds than others. Managed futures have histori-
cally performed independently of traditional investments, such as stocks and
bonds. 1999 proved to be another strong year for equities, due in large part to
continued growth and stability in most major world economies accompanied by low
inflation. This environment, while strong for equities, provided few major sus-
tained price trends in the world's futures and currency markets, and as such,
proved to be a difficult trading environment for the money manager in this
Fund, whose trading strategy relies on the existence of longer-term price
trends for trading opportunities. Nevertheless, we remain confident in the role
that managed futures investments play in the overall investment portfolio, and
we believe this confidence is well-founded based on the longer-term diversified
non-
<PAGE>

correlated returns of this alternative investment. Demeter Management Corpora-
tion, as General Partner to the Fund, has been and continues to be an active
investor with more than $18 million invested among the 24 managed futures funds
to which we act as General Partner.

Should you have any questions concerning this report, please feel free to con-
tact Demeter Management Corporation at Two World Trade Center, 62nd Floor, New
York, NY 10048, or your Morgan Stanley Dean Witter Financial Advisor.

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/ Robert E. Murray
    Robert E. Murray
    Chairman
    Demeter Management Corporation
    General Partner
<PAGE>

Dean Witter Diversified Futures Fund II L.P.
Independent Auditors' Report

The Limited Partners and the General Partner:

We have audited the accompanying statements of financial condition of Dean Wit-
ter Diversified Futures Fund II L.P. (the "Partnership") as of December 31,
1999 and 1998 and the related statements of operations, changes in partners'
capital, and cash flows for each of the three years in the period ended Decem-
ber 31, 1999. These financial statements are the responsibility of the Partner-
ship's management. Our responsibility is to express an opinion on these finan-
cial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mate-
rial misstatement. An audit includes examining, on a test basis, evidence sup-
porting 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 pre-
sentation. We believe that our audits provide a reasonable basis for our opin-
ion.

In our opinion, such financial statements present fairly, in all material re-
spects, the financial position of Dean Witter Diversified Futures Fund II L.P.
at December 31, 1999 and 1998 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999 in con-
formity with generally accepted accounting principles.


/s/ Deloitte & Touche LLP

February 14, 2000
(March 3, 2000 as to Note 5)
New York, New York
<PAGE>

Dean Witter Diversified Futures Fund II L.P.
Statements of Financial Condition

<TABLE>
<CAPTION>
                                                      December 31,
                                                  --------------------
                                                    1999       1998
                                                  --------- ----------
                                                      $         $
<S>                                               <C>       <C>
                               ASSETS
Equity in futures interests trading
 accounts:
 Cash                                             8,042,490 10,606,680
 Net unrealized gain on open contracts              293,674    206,564
                                                  --------- ----------
 Total Trading Equity                             8,336,164 10,813,244
Interest receivable (DWR)                            29,570     32,410
                                                  --------- ----------
 Total Assets                                     8,365,734 10,845,654
                                                  ========= ==========
                  LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable                                 291,006    239,703
Accrued management fee (DWFCM)                       20,914     27,114
Accrued incentive fee (DWFCM)                        --          3,871
                                                  --------- ----------
 Total Liabilities                                  311,920    270,688
                                                  --------- ----------
PARTNERS' CAPITAL
Limited Partners (3,046.638 and 3,640.082 Units,
  respectively)                                   7,787,964 10,281,223
General Partner (104 Units)                         265,850    293,743
                                                  --------- ----------
 Total Partners' Capital                          8,053,814 10,574,966
                                                  --------- ----------
 Total Liabilities and Partners' Capital          8,365,734 10,845,654
                                                  ========= ==========
NET ASSET VALUE PER UNIT                           2,556.25   2,824.45
                                                  ========= ==========
</TABLE>



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

Dean Witter Diversified Futures Fund II L.P.
Statements of Operations

<TABLE>
<CAPTION>
                                    For the Years Ended
                                       December 31,
                               -------------------------------
                                 1999       1998       1997
                               --------  ----------  ---------
                                  $          $           $
<S>                            <C>       <C>         <C>
REVENUES
Trading profit (loss):
 Realized                      (497,690)  2,694,659    427,530
 Net change in unrealized        87,110  (1,542,785) 1,589,156
                               --------  ----------  ---------
 Total Trading Results         (410,580)  1,151,874  2,016,686
Interest income (DWR)           344,826     407,236    474,293
                               --------  ----------  ---------
 Total Revenues                 (65,754)  1,559,110  2,490,979
                               --------  ----------  ---------
EXPENSES
Brokerage commissions (DWR)     568,131     633,726    814,111
Management fee (DWFCM)          278,026     327,157    360,670
Transaction fees and costs       40,412      48,099     69,111
Incentive fee (DWFCM)            (3,716)      7,040     --
                               --------  ----------  ---------
 Total Expenses                 882,853   1,016,022  1,243,892
                               --------  ----------  ---------
NET INCOME (LOSS)              (948,607)    543,088  1,247,087
                               ========  ==========  =========
Net Income (Loss) Allocation:
Limited Partners               (920,714)    528,526  1,218,796
General Partner                 (27,893)     14,562     28,291
Net Income (Loss) per Unit:
Limited Partners                (268.20)     140.02     272.02
General Partner                 (268.20)     140.02     272.02
</TABLE>

Statements of Changes in Partners' Capital
For the Years Ended December 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
                                  Units of
                                 Partnership  Limited    General
                                  Interest    Partners   Partner    Total
                                 ----------- ----------  -------  ----------
                                                 $          $         $
<S>                              <C>         <C>         <C>      <C>
Partners' Capital,
December 31, 1996                 5,086.521  12,019,867  250,890  12,270,757
Net income                           --       1,218,796   28,291   1,247,087
Redemptions                        (806.941) (2,029,618)   --     (2,029,618)
                                  ---------  ----------  -------  ----------
Partners' Capital,
December 31, 1997                 4,279.580  11,209,045  279,181  11,488,226
Net income                           --         528,526   14,562     543,088
Redemptions                        (535.498) (1,456,348)   --     (1,456,348)
                                  ---------  ----------  -------  ----------
Partners' Capital,
December 31, 1998                 3,744.082  10,281,223  293,743  10,574,966
Net loss                             --        (920,714) (27,893)   (948,607)
Redemptions                       (593.444)  (1,572,545)   --     (1,572,545)
                                  ---------  ----------  -------  ----------
Partners' Capital, December 31,
1999                              3,150.638   7,787,964  265,850   8,053,814
                                  =========  ==========  =======  ==========
</TABLE>

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

Dean Witter Diversified Futures Fund II L.P.
Statements of Cash Flows

<TABLE>
<CAPTION>
                                             For the Years Ended
                                                 December 31,
                                      --------------------------------------
                                          1999           1998        1997
                                      ------------    ----------  ----------
                                           $              $           $
<S>                                   <C>             <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                         (948,607)      543,088   1,247,087
Noncash item included in net income
  (loss):
 Net change in unrealized                  (87,110)    1,542,785  (1,589,156)
Decrease in operating assets:
 Interest receivable (DWR)                   2,840         4,262       5,371
Increase (decrease) in
  operating liabilities:
 Accrued management fee (DWFCM)             (6,200)       (2,389)     (2,035)
 Accrued incentive fee (DWFCM)              (3,871)        3,871         --
 Accrued brokerage commissions (DWR)           --            --      (15,137)
 Accrued transaction fees and costs            --            --       (2,330)
                                      ------------    ----------  ----------
Net cash provided by (used for)
  operating activities                  (1,042,948)    2,091,617    (356,200)
                                      ------------    ----------  ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in redemptions
  payable                                   51,303       (43,740)    (14,461)
Redemptions of Units                    (1,572,545)   (1,456,348) (2,029,618)
                                      ------------    ----------  ----------
Net cash used for financing
  activities                            (1,521,242)   (1,500,088) (2,044,079)
                                      ------------    ----------  ----------
Net increase (decrease) in cash         (2,564,190)      591,529  (2,400,279)
Balance at beginning of period          10,606,680    10,015,151  12,415,430
                                      ------------    ----------  ----------
Balance at end of period                 8,042,490    10,606,680  10,015,151
                                      ============    ==========  ==========
</TABLE>

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

Dean Witter Diversified Futures Fund II L.P.
Notes to Financial Statements

1. Summary of Significant Accounting Policies

Organization--Dean Witter Diversified Futures Fund II L.P. (the "Partnership")
is a limited partnership organized to engage primarily in the speculative trad-
ing of commodity futures and forward contracts, physical commodities, and other
commodity interests (collectively, "futures interests").

The general partner for the Partnership is Demeter Management Corporation ("De-
meter"). The non-clearing commodity broker is Dean Witter Reynolds Inc. ("DWR")
and an unaffiliated clearing commodity broker, Carr Futures Inc. ("Carr"), pro-
vides clearing and execution services. The trading manager is Dean Witter
Futures & Currency Management Inc. ("DWFCM" or the "Trading Manager"). Demeter,
DWR and DWFCM are wholly-owned subsidiaries of Morgan Stanley Dean Witter & Co.
("MSDW").

On May 31, 1997, Morgan Stanley Group Inc. was merged with and into Dean Wit-
ter, Discover & Co. ("DWD"). At that time DWD changed its corporate name to
Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD"). Effective February 19,
1998, MSDWD changed its corporate name to Morgan Stanley Dean Witter & Co.

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.

Use of Estimates--The financial statements are prepared in accordance with gen-
erally accepted accounting principles, which require management to make esti-
mates and assumptions that affect the reported amounts in the financial state-
ments and related disclosures. Management believes that the estimates utilized
in the preparation of the financial statements are prudent and reasonable. Ac-
tual results could differ from those estimates.

Revenue Recognition--Futures interests are open commitments until settlement
date. They are valued at market on a daily basis and the resulting net change
in unrealized gains and losses is reflected in the change in unrealized profit
(loss) on open contracts from one period to the next in the statements of oper-
ations. Monthly, DWR pays the Partnership interest income based upon 80% of its
average daily Net Assets for the month at a rate equal to the average yield on
13-week U.S. Treasury bills. For purposes of such interest payments, Net Assets
do not include monies due the Partnership on futures interests, but not actu-
ally received.

Net Income (Loss) per Unit--Net income (loss) per unit of limited partnership
interest ("Unit(s)") is com-
<PAGE>

Dean Witter Diversified Futures Fund II L.P.
Notes to Financial Statements--(Continued)

puted using the weighted average number of Units outstanding during the period.

Equity in Futures Interests Trading Accounts--The Partnership's asset "Equity
in futures interests trading accounts," reflected in the statements of finan-
cial condition, consists of (A) cash on deposit with DWR and Carr to be used as
margin for trading and (B) net unrealized gains or losses on open contracts,
which are valued at market, and calculated as the difference between original
contract value and market value.

The Partnership, in the normal course of business, enters into various con-
tracts with Carr acting as its commodity broker. Pursuant to brokerage agree-
ments with Carr, to the extent that such trading results in unrealized gains or
losses, the amounts are offset and reported on a net basis in the Partnership's
statements of financial condition.

The Partnership has offset the fair value amounts recognized for forward con-
tracts executed with the same counterparty as allowable under terms of the mas-
ter netting agreement with Carr, the sole counterparty on such contracts. The
Partnership has consistently applied its right to offset.

Brokerage Commissions and Related Transaction Fees and Costs--Brokerage commis-
sions are accrued at 80% of DWR's published non-member rates on a half-turn ba-
sis. Transaction fees and costs are accrued on a half-turn basis. Brokerage
commissions and transaction fees combined are capped at 13/20 of 1% per month
(a maximum 7.8% annual rate) of the Partnership's Net Assets as of the last day
of each month.

Operating Expenses--The Partnership incurs a monthly management fee and may in-
cur an incentive fee. Demeter and/or DWR bear all other operating expenses.

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 for income tax purposes.

Distributions--Distributions, other than 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 as of the end 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 the Limited Part-
nership Agreement occur.
<PAGE>

Dean Witter Diversified Futures Fund II L.P.
Notes to Financial Statements--(Continued)

2. Related Party Transactions

The Partnership pays brokerage commissions to DWR as described in Note 1. The
Partnership's cash is on deposit with DWR and Carr in futures interests 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 and itself, 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 monthly management fee is accrued daily at the rate of 1/4
of 1% (a 3% annual rate), of adjusted Net Assets, as defined in the Management
Agreement, at each month-end.

Incentive Fee--The Partnership pays an annual incentive fee to DWFCM equal to
15% of the trading profits earned by the Partnership as of the end of each an-
nual incentive period ending January 31. Trading profits represent the amount
by which profits from futures and forwards trading exceed losses after broker-
age commissions, management fee and transaction fees and costs are deducted.
Such incentive fee is accrued in each month in which trading profits occur. In
those months in which trading profits are negative, previous accruals, if any,
during the incentive period are reduced.

3. Financial Instruments

The Partnership trades commodity futures and forward contracts, physical com-
modities, and other commodity interests. Futures and forwards represent con-
tracts 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 in-
ability 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.

In June 1998, the Financial Accounting Standards Board ("FASB") issued State-
ment of Financial Accounting Standard ("SFAS") No. 133, "Accounting for Deriva-
tive Instruments and Hedging Activities" effective for fiscal years beginning
after June 15, 1999. In June 1999, the FASB issued SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities--Deferral of the Effective
Date of SFAS No. 133," which defers the required implementation of SFAS No. 133
until fiscal years beginning after June 15, 2000. However, the Partnership had
previously elected to adopt the provisions of SFAS No. 133 beginning with the
fiscal year ended December 31, 1998. SFAS No. 133 supercedes SFAS No. 119 and
<PAGE>

Dean Witter Diversified Futures Fund II L.P.
Notes to Financial Statements--(Continued)

No. 105, which required the disclosure of average aggregate fair values and
contract/notional values, respectively, of derivative financial instruments for
an entity which carries its assets at fair value. The application of SFAS No.
133 does not have a significant effect on the Partnership's financial
statements.

The net unrealized gains on open contracts are reported as a component of "Eq-
uity in futures interests trading accounts" on the statements of financial con-
dition and totaled $293,674 and $206,564 at December 31, 1999 and 1998, respec-
tively.

Of the $293,674 net unrealized gain on open contracts at December 31, 1999,
$262,869 related to exchange-traded futures contracts and $30,805 related to
off-exchange-traded forward currency contracts.

Of the $206,564 net unrealized gain on open contracts at December 31, 1998,
$596,320 related to exchange-traded futures contracts and $(389,756) related to
off-exchange-traded forward currency contracts.

Exchange-traded futures contracts held by the Partnership at December 31, 1999
and 1998 mature through September 2000 and June 1999, respectively. Off-ex-
change-traded forward currency contracts held by the Partnership at December
31, 1999 and 1998 mature through March 2000 and April 1999, respectively.

The Partnership has credit risk associated with counterparty nonperformance.
The credit risk associated with the instruments in which the Partnership is in-
volved is limited to the amounts reflected in the Partnership's statements of
financial condition.

The Partnership also has credit risk because DWR and Carr act as the futures
commission merchants or the counterparties, with respect to most of the Part-
nership's assets. Exchange-traded futures contracts are marked to market on a
daily basis, with variations in value settled on a daily basis. Each of DWR and
Carr, as a futures commission merchant 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 $8,305,359
and $11,203,000 at December 31, 1999 and 1998, 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 segregat-
ed. With respect to those
<PAGE>

Dean Witter Diversified Futures Fund II L.P.
Notes to Financial Statements--(Continued)

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 per-
form. The Partnership has a netting agreement with Carr. This agreement, which
seeks to reduce both the Partnership's and Carr's exposure on off-exchange-
traded forward currency contracts, should materially decrease the Partnership's
credit risk in the event of Carr's bankruptcy or insolvency. Carr's parent,
Credit Agricole Indosuez, has guaranteed to the Partnership payment of the net
liquidating value of the transactions in the Partnership's account with Carr
(including foreign currency contracts).

4. Legal Matters

The class actions first filed in 1996 in California and in New York State
courts were each dismissed in 1999. On September 6, 10, and 20, 1996, and on
March 13, 1997, purported class actions were filed in the Superior Court of the
State of California, County of Los Angeles, on behalf of all purchasers of in-
terests in limited partnership commodity pools sold by DWR. Named defendants
include DWR, Demeter, DWFCM, MSDW, the Partnership, certain limited partnership
commodity pools of which Demeter is the general partner (all such parties re-
ferred to hereafter as the "Morgan Stanley Dean Witter Parties") 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, vari-
ous violations of the California Corporations Code, intentional and negligent
breach of fiduciary duty, fraudulent and unfair business practices, unjust en-
richment, and conversion in the sale and operation of the various limited part-
nership commodity pools. The complaints seek unspecified amounts of compensa-
tory and punitive damages and other relief. The court entered an order denying
class certification on August 24, 1999. On September 24, 1999, the court en-
tered an order dismissing the case without prejudice on consent. Similar pur-
ported class actions were also filed on September 18 and 20, 1996 in the Su-
preme 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
Morgan Stanley Dean Witter Parties and certain trading advisors on behalf of
all purchasers of interests in various limited partnership commodity pools, in-
cluding 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 fidu-
ciary duty, and negligent misrepresentation in the sale and operation of the
various limited partnership commodity pools. The complaints seek unspecified
amounts of compensa-
<PAGE>

Dean Witter Diversified Futures Fund II L.P.
Notes to Financial Statements--(Concluded)

tory and punitive damages and other relief. The New York Supreme Court dis-
missed the New York action in November 1998, but granted plaintiffs leave to
file an amended complaint, which they did in early December 1998. The defen-
dants filed a motion to dismiss the amended complaint with prejudice on Febru-
ary 1, 1999. By decision dated December 21, 1999, the New York Supreme Court
dismissed the case with prejudice.

In addition, on December 16, 1997, upon motion of the plaintiffs, the action
pending in the Superior Court of the State of Delaware was voluntarily dis-
missed without prejudice.

5. Subsequent Event

On March 3, 2000, the plaintiffs in the New York action referred to in Note 4
filed an appeal of the order dismissing the consolidated complaint.
<PAGE>

MORGAN STANLEY DEAN WITTER & CO.
Two World Trade Center
62nd Floor
New York, NY 10048

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