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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 ___________to _________________.
Commission File Number 0-15442

DEAN WITTER CORNERSTONE FUND IV

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

NEW YORK 13-3393597
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)

c/o Demeter Management Corporation
Two World Trade Center, - 62nd Flr., New York, N.Y.
10048 (Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code
(212) 392-5454

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

Title of each class
Name of each exchange
on which
registered
None None

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

Units of Limited Partnership Interest

(Title of Class)

Indicate by check-mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check-mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment of this Form 10-K.[X ]

State the aggregate market value of the Units of Limited
Partnership Interest held by non-affiliates of the registrant.
The aggregate market value shall be computed by reference to the
price at which units were sold as of a specified date within 60
days prior to the date of filing: $103,258,234 at January 31,
2000.

DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)








DEAN WITTER CORNERSTONE FUND IV
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 1999


Page No.


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

Part I .

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

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

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

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

Part II.
Item 5. Market for the Registrant's Partnership Units
and Related Security Holder Matters . . . . . . . .
. . . . 8-9

Item 6. Selected Financial Data . . . . . . . . . . . . . . .
. . . 10

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . .
. . . 11-23

Item 7A. Quantitative
and Qualitative Disclosures About
Market Risk . . . . . . . . . . . . . . . . . . . . . .
23-32

Item 8. Financial Statements and Supplementary Data. . . .
. . . . 32

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . .
. . . 32
Part III.
Item10. Directors and Executive Officers of the Registrant .
. . .33-37

Item11. Executive Compensation . . . . . . . . . . . . . . .
. . . . 37

Item12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . .
. . . . 37

Item13. Certain Relationships and Related Transactions . . .
. . .37-38
Part IV.

Item14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . . . . . .
. . . 39






DOCUMENTS INCORPORATED BY REFERENCE


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


Documents Incorporated Part of
Form 10-K
Partnership's Prospectus dated August
28, 1996 together with the Supplement
to the Prospectus dated October 14, 1998
I
Annual Report to the Dean Witter
Cornerstone Funds II, III, and IV
Limited Partners for the year ended
December 31, 1999 II,
III & IV




























PART I

Item 1. BUSINESS

(a) General Development of Business. Dean Witter Cornerstone Fund

IV (the "Partnership") is a New York limited partnership

organized to engage in the speculative trading of futures

contracts and forward contracts on foreign currencies

(collectively, "futures interests"). The Partnership is one of

the Dean Witter Cornerstone Funds, comprised of Dean Witter

Cornerstone Fund II, Dean Witter Cornerstone Fund III, and the

Partnership.



The Partnership's general partner is Demeter Management

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

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

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

and execution services. Both Demeter and DWR are wholly-owned

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

trading managers to the Partnership are John W. Henry & Company,

Inc. and Sunrise Capital Management, Inc. (collectively, the

"Trading Managers").



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

interest ("Unit(s)") at December 31, 1999, was $4,683.42,

representing a decrease of 1.13 percent from the Net Asset Value

per Unit of $4,736.86 at December 31, 1998. For a more detailed

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





(b) Financial Information about Industry Segments. For financial

information reporting purposes the Partnership is deemed to

engage in one industry segment, the speculative trading of

futures interests. The relevant financial information is

presented in Items 6 and 8.



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

business of speculative trading of futures interests, pursuant to

trading instructions provided by the Trading Advisors. For a

detailed description of the different facets of the Partnership's

business, see those portions of the Partnership's prospectus,

dated August 28, 1996 (the "Prospectus"), together with the

supplement to the Prospectus dated October 14, 1998 (the

"Supplement") incorporated by reference in this Form 10-K, set

forth below.

Facets of Business

1. Summary 1. "Summary of the
Prospectus" (Pages
1-9 of the Prospectus
and Pages S-18-S-34
of the Supplement).

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










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

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

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








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

The Partnership has not engaged in any operations in foreign

countries; however, the Partnership (through the commodity

brokers) enters into forward contract transactions where foreign

banks are the contracting party and trades in futures interests

on foreign exchanges.


Item 2. PROPERTIES

The executive and administrative offices are located within the

offices of DWR. The DWR offices utilized by the Partnership are

located at Two World Trade Center, 62nd Floor, New York, NY

10048.



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, Dean Witter

Futures & Currency Management Inc. ("DWFCM"), MSDW, the

Partnership, certain limited partnership commodity pools of which

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 complaints seek

unspecified amounts of compensatory and punitive damages and

other 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.
























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 7,169.

(c) Distributions

No distributions have been made by the Partnership since it

commenced trading operations on May 1, 1987. 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.

(d) Use of Proceeds

The offering for the Partnership originally commenced May 31,

1984. Effective September 30, 1994, Dean Witter Cornerstone Fund

II, Dean Witter Cornerstone Fund III and the Partnership were

closed to new investors. Units have been sold since then solely

by "Exchanges" with existing investors, at 100% of Net Asset

Value per Unit. DWR has been paying all expenses in connection

with the offering of Units since September 30, 1994 without

reimbursement. Therefore, 100% of the proceeds of Exchanges have

been applied to the working capital of the Partnership in

accordance with the "Investment Programs, Use of Proceeds









and Trading Policies" section of the Prospectus. Through

December 31, 1999 the Partnership has sold 100,643.882 Units and

the Cornerstone Funds have sold an aggregate of 235,434.717

Units, leaving 14,565.283 Units remaining available for sale at

January 1, 2000. The aggregate price of Units sold through

December 31, 1999 with respect to the Partnership was

$168,096,221.











































Item 6. SELECTED FINANCIAL DATA (in dollars)






For the Years Ended December
31,
1999 1998 1997
1996 1995





Total Revenues
(including interest) 6,372,723 15,675,941 43,376,481
19,489,622 31,756,524

Net Income (Loss) (1,367,033) 7,830,780 34,531,802
11,532,721 24,196,319


Net Income (Loss)
Per Unit (Limited
& General Partners) (53.44) 301.39 1,230.81
367.93 529.66


Total Assets 104,694,694 117,323,711 121,378,550
97,292,310 105,362,851


Total Limited Partners'
Capital 101,716,331 113,967,408 115,575,973
93,448,822 101,854,654


Net Asset Value Per
Unit 4,683.42 4,736.86 4,435.47
3,204.66 2,836.73



















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 each 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







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 currencies. The markets for some world

currencies have low trading volume and are illiquid, which may

prevent the Partnership from trading in potentially profitable

markets or prevent the Partnership from promptly liquidating

unfavorable positions in such markets and subjecting it to

substantial losses. Either of these market conditions could

result in restrictions on redemptions.



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, exchanges and sales of

additional 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.



Results of Operations.

General. The Partnership's results depend on its Trading

Managers and the ability of the Trading Managers' trading

programs to take advantage of price



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

Managers trade 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 Managers 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 Managers' trading activities on

behalf of the Partnership and how the Partnership has performed

in the past.




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

$102,975,653, a decrease of $12,265,446 from the Partnership's

total capital of $115,241,099 at December 31, 1998. For the year

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

$1,367,033, total subscriptions aggregated $46,268 and total

redemptions aggregated $10,944,681.



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

total trading revenues, including interest income, of $6,372,723

and posted a decrease in Net Asset Value per Unit. During 1999,

the Partnership experienced a net loss. Losses of approximately

6.32% were experienced primarily from trendless movement in the

value of the British pound throughout a majority of the year,



particularly during the second quarter. Losses of approximately

2.71% were incurred primarily from short positions in the

Singapore dollar during June and December as the value of this

Pacific Rim currency moved higher versus the U.S. dollar on

strength in the Japanese yen. These losses were mitigated by

gains of approximately of 7.24% in the euro and 2.82% in the

Swiss franc, recorded primarily from short positions in these

currencies as their values declined versus the U.S. dollar early

in the year due to the lack of economic growth in Europe and the

ongoing crisis in Kosovo. Gains of approximately 4.86% were

recorded primarily from long positions in the Japanese yen as the

value of the yen reached a 7 1/2 month high versus the U.S. dollar

during August due to optimism regarding the Japanese economy.

The Japanese yen continued to climb during September, resulting

in additional gains for long positions. During the fourth

quarter, long positions in the Japanese yen recorded gains as its

value strengthened to a 4-year high versus the U.S. dollar

following the release of optimistic Japanese economic data.

Total expenses for the year were $7,739,756, resulting in a net

loss of $1,367,033. The value of a Unit decreased from $4,736.86

at December 31, 1998 to $4,683.42 at December 31, 1999.



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

$115,241,099, a decrease of $3,168,645 from the Partnership's

total capital of $118,409,744 at December 31, 1997. For the year

ended December 31, 1998, the Partnership





generated net income of $7,830,780, total subscriptions

aggregated $269,706 and total redemptions aggregated $11,269,131.



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

total trading revenues, including interest income, of $15,675,941

and posted an increase in Net Asset Value per Unit. The

Partnership profited during 1998 due primarily to significant

gains of approximately 12.70% recorded from short South African

rand positions. During the second quarter, gains were recorded

from short positions in the South African rand as the value of

the rand was devalued versus the U.S. dollar on concerns

regarding the South African economy. Additional gains were

recorded from short positions in the rand during August as the

concerns regarding emerging economies continued due to the

collapse of the Russian ruble. Smaller profits of approximately

2.56% were recorded primarily during the fourth quarter from long

Japanese yen positions as the value of the yen strengthened

versus the U.S. dollar amid optimism regarding the financial

crisis in Japan. Total expenses for the year were $7,845,161,

resulting in net income of $7,830,780. The value of a Unit in

the Partnership increased from $4,435.47 at December 31, 1997 to

$4,736.86 at December 31, 1998.



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

$118,409,744, an increase of $22,913,500 from the Partnership's

total capital of $95,496,244, at





December 31, 1996. For the year ended December 31, 1997, the

Partnership generated net income of $34,531,802, total

subscriptions aggregated $223,794 and total redemptions

aggregated $11,842,096.



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

total trading revenues, including interest income, of $43,376,481

and posted an increase in Net Asset Value per Unit. The

Partnership recorded strong profits during 1997 due primarily to

a strengthening in the value of the U.S. dollar relative to most

major world currencies throughout the year. Gains of

approximately 6.64% were recorded in the Japanese yen primarily

from short positions during January and February. Additional

profits of approximately 9.52% in Singapore dollars, 8.68% in

Malaysin ringets, 6.43% in German marks and 2.88% in French

francs were recorded primarily during July as the value of the

U.S. dollar increased versus most European and Pacific Rim

currencies. November and December also proved to be profitable

months for the Partnership as short positions in the Japanese yen

and other Pacific Rim currencies experienced gains in the wake of

the Asian currency crisis. Total expenses for the year were

$8,844,679, resulting in net income of $34,531,802. The value of

a Unit increased from $3,204.66 at December 31, 1996 to $4,435.47

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 trades futures, forwards, and options to

gain long biased exposure to global stock markets and global bond

markets, as well as long and short exposure to foreign

currencies. 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 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 Managers

were 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 Managers' internal controls, the

Trading Managers 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 Managers and Demeter

monitor the Partnership's trading activities to ensure compliance

with the trading policies. Demeter may require the Trading

Managers 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 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 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 to any one exchange 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.



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 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 each Trading Manager

throughout 1999 in their Year 2000 compliance and, where

applicable, tested its external interfaces, with Carr and the

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

the Trading Managers 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.



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 Managers from trading those sovereign

currencies and thereby limits their 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.



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 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 Managers 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.

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 Managers 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 at December 31, 1999 and 1998.

At December 31, 1999 and 1998, the Partnership's total

capitalization was approximately $103 million and $115 million,

respectively.

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

Currency (1.19)%

(.79)%



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.



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

Currency (3.48)% (1.19)% (2.47)%



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







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 the Partnership's market risk exposures 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 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 94%) 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

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

Securities





Exchange Act. The Partnership's primary market risk exposure as

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

Trading Managers 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 was the primary trading risk exposure of the

Partnership at December 31, 1999. It may be anticipated however,

that market exposures may vary materially over time.



Currency. The Partnership's currency exposure is to exchange

rate fluctuations, primarily fluctuations which disrupt the

historical pricing relationships between different currencies and

currency pairs. 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

major exposures were in the Euro currency crosses and outright

U.S. dollar positions. (Outright positions consist of the U.S.

dollar vs. other currencies. These other currencies include the

major and minor currencies). Demeter does not anticipate that

the risk profile of the Partnership's currency sector will change

significantly in the future. The currency trading VaR figure

includes foreign margin amounts 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.



Qualitative Disclosures Regarding Non-Trading Risk Exposure

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

Partnership at December 31, 1999:



Foreign Currency Balances. The Partnership does not have foreign

currency balances at December 31, 1999.



Qualitative Disclosures Regarding Means of Managing Risk Exposure

The Partnership and the Trading Managers, 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 Trading Managers, each



of whose strategies focus on different market sectors and trading

approaches, and monitoring the performance of the Trading

Managers daily. In addition, the Trading Managers establish

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. Cash which is the only Partnership

investment directed by Demeter, rather than the Trading Managers.



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.



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.







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.









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



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





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.



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 - At

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 268.889 Units of General Partnership Interest

representing a 1.22 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 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

$3,263,260 for the year ended December 31, 1999.









































PART IV

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

FORM 8-K

(a) 1. Listing of Financial Statements

The following financial statements and reports of independent

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 the exception of the aforementioned information and the

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

to Limited Partners for the year ended December 31, 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.






SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

DEAN WITTER
CORNERSTONE FUND IV

(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
30, 2000
Robert E. Murray, Director,
Chairman of the Board and
President

/s/ Joseph G. Siniscalchi _ March
30, 2000
Joseph G. Siniscalchi, Director

/s/ Edward C. Oelsner III __ March
30, 2000
Edward C. Oelsner III, Director

/s/ Mitchell M. Merin _______ March 30, 2000
Mitchell M. Merin, Director

/s/ Richard A. Beech March 30, 2000
Richard A. Beech, Director

/s/ Ray Harris March 30,
2000
Ray Harris, Director

/s/ Lewis A. Raibley, III March 30,
2000
Lewis A. Raibley, III, Director, Chief
Financial Officer and Principal
Accounting Officer


EXHIBIT INDEX
Item
3.01 Limited
Partnership Agreement of the Partnership, dated as of
December 11, 1986 is

incorporated by reference to Exhibit 3.01 to Partnership's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1987 (File No. 0-15442).

10.01 Management
Agreement among the Partnership, Demeter and John W. Henry
and Co. Inc. dated as of May 1, 1987 is incorporated by
reference to Exhibit 10.01 to the Partnership's Annual
Report on From 10-K for the fiscal year ended December 31,
1987 (File No. 0-15442).

10.02 Management
Agreement among the Partnership, Demeter and Sunrise Capital Inc.
(formerly
Sunrise Commodities Management Inc.) dated as of May 1, 1987
is incorporated by
reference to Exhibit 10.02 to the Partnership's Annual Report on
From 10-K for the
fiscal year ended December 31, 1987 (File No. 0-15442).

10.03 Dean Witter
Cornerstone Funds Exchange Agreement, dated as of May 31,
1984 is incorporated by reference to Exhibit 10.04 to the
Partnership's Annual Report on From 10-K for the fiscal
year ended December 31, 1987 (File No. 0-15442).

10.04 Amended and
Restated Customer Agreement, dated as of December 1, 1997,
between the Partnership and Dean Witter Reynolds Inc. is
incorporated by reference to Exhibit 10.05 to the
Partnership's Annual Report on From 10-K for the fiscal
year ended December 31, 1988 (File No. 0-15442).

10.05Customer Agreement, dated as of December 1, 1997, among the
Partnership, Carr Futures, Inc., and Dean Witter Reynolds
Inc. is incorporated by reference to Exhibit 10.06 to the
Partnership's Annual Report on From 10-K for the fiscal
year ended December 31, 1988 (File No. 0-15442).

10.06International Foreign Exchange Master Agreement, dated as
of August 1, 1997, between the Partnership and Carr
Futures, Inc. is incorporated by reference to Exhibit 10.07
to the Partnership's Annual Report on From 10-K for the
fiscal year ended December 31, 1988 (File No. 0-15442).

13.01 December 31, 1999 Annual Report to Limited
Partners is filed herewith.







Cornerstone
Funds




December 31, 1999
Annual Report


MORGAN STANLEY DEAN WITTER



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

Dean Witter Cornerstone Funds
Annual Report
1999

Dear Limited Partner:

This marks the fifteenth annual report for Cornerstone Funds II and III and the
thirteenth for Cornerstone Fund IV. The Net Asset Value per Unit for each of
the three Cornerstone Funds on December 31, 1999 was as follows:



% Change
Funds N.A.V. for Year
----- --------- --------

Cornerstone Fund II $3,964.87 -5.4%
Cornerstone Fund III $3,045.43 -6.8%
Cornerstone Fund IV $4,683.42 -1.1%


Since their inception in 1985, Cornerstone Funds II and III have increased by
306.7% (a compound annualized return of 9.8%) and 212.4% (a compound annualized
return of 7.9%) respectively. Since its inception in 1987, Cornerstone Fund IV
has increased by 380.4% (a compound annualized return of 13.2%).

Overall, each of the three Cornerstone Funds experienced a net loss for 1999.
The overall losses for Cornerstone Funds II and III resulted primarily from the
lack of sustained price trends and short-term volatility in the international
interest rate futures, particularly Japanese government bond futures, and met-
als markets. A portion of these losses was offset by profits as the Funds' Ad-
visors were able to take advantage of price trends in markets such as crude
oil. Long futures positions in crude oil proved profitable for Cornerstone
Funds II and III as oil prices trended higher from $12 a barrel in February to
over $25 a barrel in November. Additional gains were recorded in Cornerstone
Fund II from short positions in the euro and Swiss franc as the value of these
European currencies weakened relative to the U.S. dollar during the first six
months of the year and again during the fourth quarter. Additional profits were
recorded in Cornerstone Fund II from long Japanese yen positions as the value
of the yen strengthened versus


the U.S. dollar during the latter half of 1999 on increased optimism regarding
the Japanese economy. Cornerstone Fund III was able to mitigate overall losses
for the year with profits recorded from long positions in U.S. and European
stock index futures as prices trended higher late in the year. Cornerstone Fund
IV's overall losses resulted primarily from trendless movement in the value of
the British pound throughout a majority of the year. Losses were also incurred
from short Singapore dollar positions during June and December as the value of
this Pacific Rim currency moved higher versus the U.S. dollar as the Japanese
yen strengthened. These losses were mitigated by gains recorded from short po-
sitions in the euro and Swiss franc and long positions in the Japanese yen.

While we are disappointed that the Cornerstone Funds had a difficult year in
1999, we remind investors that managed futures funds such as the Cornerstone
Funds 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 experience difficulty performing. Of course, managed futures funds will not
automatically be profitable during unfavorable periods for these traditional
investments 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. 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 sustained price trends in the
world's futures and currency markets, and as such, proved to be a difficult
trading environment for the money managers in these Funds whose trading strate-
gies rely on the existence of longer-term price trends for trading opportuni-
ties. Nevertheless, we remain confident in the role that managed futures in-
vestments play


in the overall investment portfolio, and we believe this confidence is well-
founded based on the longer-term diversified non-correlated returns of this al-
ternative investment. Demeter Management Corporation, as General Partner to the
Funds, has been and continues to be an active investor with more than $18 mil-
lion invested among the 24 managed futures funds to which we act as General
Partner.

Additionally, Demeter Management Corporation determined to adjust the alloca-
tion of Net Assets among the trading managers within Cornerstone Fund III. Ef-
fective with the September 30, 1999 closing of Cornerstone Fund III, the Net
Assets managed by Abraham Trading Co. (approximately $7.3 million, or 20% of
Net Assets) was reallocated to Welton Investment Corporation. Additionally, any
net proceeds or redemptions received via monthly exchanges into or out of Cor-
nerstone Fund III will be allocated 50% to Welton Investment Corporation and
50% to Sunrise Capital Management, Inc.

Finally, the current exchange privilege among the Cornerstone Funds (a "Series
Exchange") will be terminated effective with the April 30, 2000 monthly clos-
ing. The decision to terminate the Series Exchange privilege was made in view
of the limited use of that procedure and by a desire to reduce certain adminis-
trative expenses paid by the Cornerstone Funds in order to maintain an effec-
tive registration statement, as well as the availability of alternative invest-
ment vehicles, such as the Morgan Stanley Dean Witter Spectrum Series and the
Morgan Stanley Dean Witter Charter Series. Limited Partners retain the ability
to execute an exchange from a Cornerstone Fund into either the Morgan Stanley
Dean Witter Spectrum Series or the Morgan Stanley Dean Witter Charter Series (a
"Non-Series Exchange"), subject to certain restrictions set forth in the appli-
cable prospectus. The Non-Series Exchange privilege is provided to Limited
Partners at no additional cost. Limited Partners of the Cornerstone Funds are
reminded that, subject to certain restrictions, they have the right to redeem
their Units on a


monthly basis, and that Limited Partners of the Cornerstone Funds may vote to
take certain actions with respect to the operation of the Cornerstone Funds, as
more fully set forth in Section 17 of the Limited Partnership Agreement on page
A-16 of the Prospectus.

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


Dean Witter Cornerstone Funds
Independent Auditors' Report

The Limited Partners and the General Partner of
Dean Witter Cornerstone Fund II
Dean Witter Cornerstone Fund III
Dean Witter Cornerstone Fund IV:

We have audited the accompanying statements of financial condition of Dean Wit-
ter Cornerstone Fund II, Dean Witter Cornerstone Fund III and Dean Witter Cor-
nerstone Fund IV (collectively, the "Partnerships") 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 December 31,
1999. These financial statements are the responsibility of the Partnerships'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of materi-
al 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 Cornerstone Fund II, Dean Witter
Cornerstone Fund III and Dean Witter Cornerstone Fund IV at December 31, 1999
and 1998 and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1999 in conformity with gener-
ally accepted accounting principles.


/s/ Deloitte & Touche LLP

February 14, 2000
(March 3, 2000 as to Note 6)
New York, New York


Dean Witter Cornerstone Fund II
Statements of Financial Condition



December 31,
---------------------
1999 1998
---------- ----------
$ $

ASSETS
Equity in futures interests trading
accounts:
Cash 25,804,088 29,949,571
Net unrealized gain on open contracts 1,156,415 2,056,152
---------- ----------
Total Trading Equity 26,960,503 32,005,723
Interest receivable (DWR) 94,764 91,948
Due from DWR 11,715 15,425
---------- ----------
Total Assets 27,066,982 32,113,096
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 225,282 173,375
Accrued management fees 89,781 106,613
Accrued administrative expenses 42,938 22,428
Accrued incentive fees -- 413,951
---------- ----------
Total Liabilities 358,001 716,367
---------- ----------
PARTNERS' CAPITAL
Limited Partners (6,619.006 and 7,372.211 Units,
respectively) 26,243,505 30,904,584
General Partner (117.400 Units) 465,476 492,145
---------- ----------
Total Partners' Capital 26,708,981 31,396,729
---------- ----------
Total Liabilities and Partners'
Capital 27,066,982 32,113,096
========== ==========
NET ASSET VALUE PER UNIT 3,964.87 4,192.04
========== ==========


Statements of Operations
For the Years Ended December 31, 1999, 1998 and 1997


1999 1998 1997
---------- --------- ---------

$ $ $
REVENUES
Trading profit (loss):
Realized 1,169,107 5,592,885 6,363,803
Net change in unrealized (899,737) 52,473 687,245
---------- --------- ---------
Total Trading Results 269,370 5,645,358 7,051,048
Interest income (DWR) 1,112,233 1,180,971 1,228,298
---------- --------- ---------
Total Revenues 1,381,603 6,826,329 8,279,346
---------- --------- ---------
EXPENSES
Brokerage commissions (DWR) 1,579,871 1,401,238 1,383,112
Management fees 1,184,505 1,224,365 1,159,248
Transaction fees and costs 151,330 133,569 128,692
Common administrative expenses 62,969 44,337 41,330
Incentive fees 779 426,277 650,800
---------- --------- ---------
Total Expenses 2,979,454 3,229,786 3,363,182
---------- --------- ---------
NET INCOME (LOSS) (1,597,851) 3,596,543 4,916,164
========== ========= =========
Net Income (Loss) Allocation:
Limited Partners (1,571,182) 3,514,833 4,792,341
General Partner (26,669) 81,710 123,823
Net Income (Loss) per Unit:
Limited Partners (227.17) 467.12 569.56
General Partner (227.17) 467.12 569.56



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


Dean Witter Cornerstone Fund III
Statements of Financial Condition



December 31,
---------------------
1999 1998
---------- ----------
$ $

ASSETS
Equity in futures interests trading
accounts:
Cash 32,268,788 38,504,975
Net unrealized gain on open contracts 1,425,611 2,102,810
Net option premiums 318,281 (50,047)
---------- ----------
Total Trading Equity 34,012,680 40,557,738
Interest receivable (DWR) 116,065 120,465
Due from DWR -- 81,647
---------- ----------
Total Assets 34,128,745 40,759,850
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 443,758 220,184
Accrued administrative expenses 138,661 104,780
Accrued management fees 112,924 135,067
---------- ----------
Total Liabilities 695,343 460,031
---------- ----------
PARTNERS' CAPITAL
Limited Partners (10,836.119 and
12,193.413 Units, respectively) 33,000,637 39,835,572
General Partner (142.103 Units) 432,765 464,247
---------- ----------
Total Partners' Capital 33,433,402 40,299,819
---------- ----------
Total Liabilities and Partners'
Capital 34,128,745 40,759,850
========== ==========
NET ASSET VALUE PER UNIT 3,045.43 3,266.97
========== ==========

Statements of Operations
For the Years Ended December 31, 1999, 1998 and 1997



1999 1998 1997
---------- --------- ---------

$ $ $
REVENUES
Trading profit (loss):
Realized 348,156 5,912,923 7,439,669
Net change in unrealized (677,199) 164,515 (642,508)
---------- --------- ---------
Total Trading Results (329,043) 6,077,438 6,797,161
Interest income (DWR) 1,361,828 1,640,345 1,786,271
---------- --------- ---------
Total Revenues 1,032,785 7,717,783 8,583,432
---------- --------- ---------
EXPENSES
Brokerage commissions (DWR) 2,027,980 2,088,096 2,294,914
Management fees 1,441,758 1,682,394 1,728,062
Transaction fees and costs 167,905 212,795 229,570
Common administrative expenses 103,046 76,892 69,344
---------- --------- ---------
Total Expenses 3,740,689 4,060,177 4,321,890
---------- --------- ---------
NET INCOME (LOSS) (2,707,904) 3,657,606 4,261,542
========== ========= =========
Net Income (Loss) Allocation:
Limited Partners (2,676,422) 3,564,790 4,155,313
General Partner (31,482) 92,816 106,229
Net Income (Loss) per Unit:
Limited Partners (221.54) 273.45 278.01
General Partner (221.54) 273.45 278.01



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


Dean Witter Cornerstone Fund IV
Statements of Financial Condition



December 31,
-----------------------
1999 1998
----------- -----------
$ $

ASSETS
Equity in futures interests trading
accounts:
Cash 104,055,664 119,800,551
Net unrealized gain (loss) on open contracts 281,510 (2,827,252)
----------- -----------
Total Trading Equity 104,337,174 116,973,299
Interest receivable (DWR) 357,520 350,412
----------- -----------
Total Assets 104,694,694 117,323,711
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES
Redemptions payable 1,225,890 459,703
Accrued management fees 347,338 389,518
Accrued administrative expenses 145,813 78,706
Accrued incentive fees -- 1,154,685
----------- -----------
Total Liabilities 1,719,041 2,082,612
----------- -----------
PARTNERS' CAPITAL
Limited Partners (21,718.366 and
24,059.670 Units, respectively) 101,716,331 113,967,408
General Partner (268.889 Units) 1,259,322 1,273,691
----------- -----------
Total Partners' Capital 102,975,653 115,241,099
----------- -----------
Total Liabilities and Partners'
Capital 104,694,694 117,323,711
=========== ===========
NET ASSET VALUE PER UNIT 4,683.42 4,736.86
=========== ===========

Statements of Operations
For the Years Ended December 31, 1999, 1998 and 1997



1999 1998 1997
---------- ---------- ----------

$ $ $
REVENUES
Trading profit (loss):
Realized (766,917) 15,855,401 42,691,318
Net change in unrealized 3,108,762 (4,642,364) (3,515,408)
---------- ---------- ----------
Total Trading Results 2,341,845 11,213,037 39,175,910
Interest income (DWR) 4,030,878 4,462,904 4,200,571
---------- ---------- ----------
Total Revenues 6,372,723 15,675,941 43,376,481
---------- ---------- ----------
EXPENSES
Management fees 4,360,961 4,817,623 4,287,974
Brokerage commissions (DWR) 3,263,260 2,170,551 2,656,715
Common administrative expenses 204,985 147,731 134,041
Transaction fees and costs 120,601 114,925 171,578
Incentive fees (210,051) 594,331 1,594,371
---------- ---------- ----------
Total Expenses 7,739,756 7,845,161 8,844,679
---------- ---------- ----------
NET INCOME (LOSS) (1,367,033) 7,830,780 34,531,802
========== ========== ==========
Net Income (Loss) Allocation:
Limited Partners (1,352,664) 7,611,778 33,745,453
General Partner (14,369) 219,002 786,349
Net Income (Loss) per Unit:
Limited Partners (53.44) 301.39 1,230.81
General Partner (53.44) 301.39 1,230.81



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


Dean Witter Cornerstone Funds

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



Units of
Partnership Limited General
Interest Partners Partner Total
----------- ---------- --------- ----------
$ $ $

Dean Witter Cornerstone Fund II
Partners' Capital, December
31, 1996 9,205.342 28,360,195 685,975 29,046,170
Offering of Units 94.328 314,932 -- 314,932
Net income -- 4,792,341 123,823 4,916,164
Redemptions (1,114.869) (3,789,525) -- (3,789,525)
---------- ---------- --------- ----------
Partners' Capital,
December 31, 1997 8,184.801 29,677,943 809,798 30,487,741
Offering of Units 9.990 38,137 -- 38,137
Net income -- 3,514,833 81,710 3,596,543
Redemptions (705.180) (2,326,329) (399,363) (2,725,692)
---------- ---------- --------- ----------
Partners' Capital, December
31, 1998 7,489.611 30,904,584 492,145 31,396,729
Offering of Units 2.478 10,614 -- 10,614
Net loss -- (1,571,182) (26,669) (1,597,851)
Redemptions (755.683) (3,100,511) -- (3,100,511)
---------- ---------- --------- ----------
Partners' Capital, December
31, 1999 6,736.406 26,243,505 465,476 26,708,981
========== ========== ========= ==========

Dean Witter Cornerstone Fund III

Partners' Capital, December
31, 1996 15,479.706 40,997,752 1,037,606 42,035,358
Offering of Units 1.841 5,000 -- 5,000
Net income -- 4,155,313 106,229 4,261,542
Redemptions (1,747.110) (5,187,526) -- (5,187,526)
---------- ---------- --------- ----------
Partners' Capital,
December 31, 1997 13,734.437 39,970,539 1,143,835 41,114,374
Offering of Units 5.184 15,998 -- 15,998
Net income -- 3,564,790 92,816 3,657,606
Redemptions (1,404.105) (3,715,755) (772,404) (4,488,159)
---------- ---------- --------- ----------
Partners' Capital, December
31, 1998 12,335.516 39,835,572 464,247 40,299,819
Net loss -- (2,676,422) (31,482) (2,707,904)
Redemptions (1,357.294) (4,158,513) -- (4,158,513)
---------- ---------- --------- ----------
Partners' Capital, December
31, 1999 10,978.222 33,000,637 432,765 33,433,402
========== ========== ========= ==========

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


Dean Witter Cornerstone Funds

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



Units of
Partnership Limited General
Interest Partners Partner Total
----------- ----------- ---------- -----------
$ $ $

Dean Witter Cornerstone Fund IV
Partners' Capital,
December 31, 1996 29,799.176 93,448,822 2,047,422 95,496,244
Offering of Units 57.083 223,794 -- 223,794
Net income -- 33,745,453 786,349 34,531,802
Redemptions (3,160.142) (11,842,096) -- (11,842,096)
---------- ----------- ---------- -----------
Partners' Capital,
December 31, 1997 26,696.117 115,575,973 2,833,771 118,409,744
Offering of Units 60.266 269,706 -- 269,706
Net income -- 7,611,778 219,002 7,830,780
Redemptions (2,427.824) (9,490,049) (1,779,082) (11,269,131)
---------- ----------- ---------- -----------
Partners' Capital,
December 31, 1998 24,328.559 113,967,408 1,273,691 115,241,099
Offering of Units 9.851 46,268 -- 46,268
Net loss -- (1,352,664) (14,369) (1,367,033)
Redemptions (2,351.155) (10,944,681) -- (10,944,681)
---------- ----------- ---------- -----------
Partners' Capital,
December 31, 1999 21,987.255 101,716,331 1,259,322 102,975,653
========== =========== ========== ===========




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


Dean Witter Cornerstone Fund II
Statements of Cash Flows



For the Years Ended
December 31,
--------------------------------------
1999 1998 1997
------------ ---------- ----------
$ $ $

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) (1,597,851) 3,596,543 4,916,164
Noncash item included in net income
(loss):
Net change in unrealized 899,737 (52,473) (687,245)
(Increase) decrease in
operating assets:
Interest receivable (DWR) (2,816) 14,219 (8,352)
Due from DWR 3,710 12,458 95,444
Increase (decrease) in
operating liabilities:
Accrued management fees (16,832) 2,263 4,998
Accrued administrative expenses 20,510 788 (30,699)
Accrued incentive fees (413,951) (204,319) 301,520
Accrued brokerage
commissions (DWR) -- -- (83,967)
Accrued transaction fees
and costs -- -- (5,558)
------------ ---------- ----------
Net cash provided by (used for)
operating activities (1,107,493) 3,369,479 4,502,305
------------ ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Offering of Units 10,614 38,137 314,932
Increase (decrease) in redemptions
payable 51,907 (25,647) (243,684)
Redemptions of Units (3,100,511) (2,725,692) (3,789,525)
------------ ---------- ----------
Net cash used for financing
activities (3,037,990) (2,713,202) (3,718,277)
------------ ---------- ----------
Net increase (decrease) in cash (4,145,483) 656,277 784,028
Balance at beginning of period 29,949,571 29,293,294 28,509,266
------------ ---------- ----------
Balance at end of period 25,804,088 29,949,571 29,293,294
============ ========== ==========



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


Dean Witter Cornerstone Fund III
Statements of Cash Flows



For the Years Ended
December 31,
----------------------------------
1999 1998 1997
---------- ---------- ----------
$ $ $

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) (2,707,904) 3,657,606 4,261,542
Noncash item included in net income
(loss):
Net change in unrealized 677,199 (164,515) 642,508
(Increase) decrease in
operating assets:
Net option premiums (368,328) (108,718) (132,647)
Interest receivable (DWR) 4,400 24,635 (6,733)
Due from DWR 81,647 13,334 27,720
Increase (decrease) in
operating liabilities:
Accrued administrative expenses 33,881 5,067 (37,835)
Accrued management fees (22,143) (3,413) (3,907)
Accrued brokerage
commissions (DWR) -- -- (129,098)
Accrued transaction fees
and costs -- -- (12,349)
---------- ---------- ----------
Net cash provided by (used for) operating
activities (2,301,248) 3,423,996 4,609,201
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Offering of Units -- 15,998 5,000
Increase (decrease) in
redemptions payable 223,574 (209,575) (250,971)
Redemptions of Units (4,158,513) (4,488,159) (5,187,526)
---------- ---------- ----------
Net cash used for financing activities (3,934,939) (4,681,736) (5,433,497)
---------- ---------- ----------
Net decrease in cash (6,236,187) (1,257,740) (824,296)
Balance at beginning of period 38,504,975 39,762,715 40,587,011
---------- ---------- ----------
Balance at end of period 32,268,788 38,504,975 39,762,715
========== ========== ==========

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


Dean Witter Cornerstone Fund IV
Statements of Cash Flows



For the Years Ended
December 31,
-------------------------------------
1999 1998 1997
----------- ----------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) (1,367,033) 7,830,780 34,531,802
Noncash item included in net income
(loss):
Net change in unrealized (3,108,762) 4,642,364 3,515,408
(Increase) decrease in
operating assets:
Interest receivable (DWR) (7,108) 31,895 (76,916)
Increase (decrease) in
operating liabilities:
Accrued management fees (42,180) (13,493) 80,459
Accrued administrative expenses 67,107 6,409 (53,710)
Accrued incentive fees (1,154,685) (439,686) 1,594,371
Accrued brokerage
commissions (DWR) -- -- (74,340)
Accrued transaction fees
and costs -- -- (3,654)
----------- ----------- -----------
Net cash provided by (used for)
operating activities (5,612,661) 12,058,269 39,513,420
----------- ----------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Offering of Units 46,268 269,706 223,794
Increase (decrease) in
redemptions payable 766,187 (439,424) (370,386)
Redemptions of Units (10,944,681) (11,269,131) (11,842,096)
----------- ----------- -----------
Net cash used for financing activities (10,132,226) (11,438,849) (11,988,688)
----------- ----------- -----------
Net increase (decrease) in cash (15,744,887) 619,420 27,524,732
Balance at beginning of period 119,800,551 119,181,131 91,656,399
----------- ----------- -----------
Balance at end of period 104,055,664 119,800,551 119,181,131
=========== =========== ===========



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


Dean Witter Cornerstone Funds
Notes to Financial Statements

1. Summary of Significant Accounting Policies

Organization--Dean Witter Cornerstone Fund II ("Cornerstone II"), Dean Witter
Cornerstone Fund III ("Cornerstone III"), and Dean Witter Cornerstone Fund IV
("Cornerstone IV"), (individually, a "Partnership", or collectively, the "Part-
nerships") are limited partnerships organized to engage in the speculative
trading of futures, options and forward contracts on foreign currencies and
other commodity interests (collectively, "futures interests").

The general partner for each 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. Demeter and DWR 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 each
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 each Partnership interest income based upon 80% of
its average daily Net Assets at a rate equal to the average yield on 13-week
U.S. Treasury bills issued. For purposes of such interest payments in Dean Wit-
ter Cornerstone Fund IV, Net Assets do not include monies due the Partnership
on futures interests, but not actually received.


Dean Witter Cornerstone Funds
Notes to Financial Statements--(Continued)

Net Income (Loss) per Unit--Net income (loss) per unit of limited partnership
interest ("Unit(s)") is computed using the weighted average number of Units
outstanding during the period.

Equity in Futures Interests Trading Accounts--The Partnerships' 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; (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, and (C) net option premiums, which represent the net of
all monies paid and/or received for such option premiums.

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

The Partnerships have offset the fair value amounts recognized for forward
contracts executed with the same counterparty as allowable under terms of the
master netting agreement with Carr, the sole counterparty on such contracts.
The Partnerships have consistently applied their right to offset.

Brokerage Commissions and Related Transaction Fees and Costs--Brokerage commis-
sions for each Partnership are accrued at 80% of DWR's published non-member
rates on a half-turn basis. Related transaction fees and costs are accrued on a
half-turn basis. Brokerage commissions and transaction fees combined for each
Partnership are capped at 13/20 of 1% per month (a 7.8% maximum annual rate) of
the adjusted Net Assets allocated to each trading program employed by the Part-
nerships' trading managers.

Operating Expenses--Each Partnership has entered into an exchange agreement
pursuant to which certain common administrative expenses (i.e., legal, audit-
ing, accounting, filing fees and other related expenses) are shared by each of
the Partnerships based upon the number of outstanding Units of each Partnership
during the month in which such expenses are incurred. In addition, the Partner-
ships incur monthly management fees and may incur incentive fees. Demeter bears
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 each Partnership's revenues
and expenses for income tax purposes.


Dean Witter Cornerstone Funds
Notes to Financial Statements--(Continued)
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 last day of any month upon fifteen days
advance notice by redemption form to Demeter.

Exchanges--Limited Partners may transfer their investment among the Partner-
ships (subject to certain restrictions outlined in the Limited Partnership
Agreements) without paying additional charges.

The current exchange privilege among the Cornerstone funds (a "Series Ex-
change") will be terminated effective with the April 30, 2000 monthly closing.
Limited partners will retain the ability to execute an exchange from a Corner-
stone fund into other funds outside the Cornerstone Series (a "Non-Series Ex-
change") subject to certain restrictions set forth in the applicable limited
partnership agreements.

Dissolution of the Partnership--Each Partnership will terminate on September
30, 2025 regardless of its financial condition at such time, upon a decline in
Net Assets to less than $250,000, a decline in the Net Asset Value per Unit to
less than $250, or under certain other circumstances defined in each Limited
Partnership Agreement.

2. Related Party Transactions

Each Partnership pays brokerage commissions to DWR as described in Note 1. Each
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.

3. Trading Managers

Demeter, on behalf of each Partnership, retains certain commodity trading man-
agers to make all trading decisions for the Partnerships. The trading managers
for each Partnership as of December 31, 1999 were as follows:

Dean Witter Cornerstone Fund II
Northfield Trading L.P.
John W. Henry & Company, Inc.

Dean Witter Cornerstone Fund III
Welton Investment Corporation ("Welton")
Sunrise Capital Management, Inc. ("Sunrise")

Dean Witter Cornerstone Fund IV
John W. Henry & Company, Inc.
Sunrise Capital Management, Inc.

Commencing with the September 30, 1999 closing, the Net Assets previously man-
aged by Abraham Trading


Dean Witter Cornerstone Funds
Notes to Financial Statements--(Continued)
Co. were reallocated to Welton. Additionally, any net proceeds or redemptions
received via monthly exchanges into or out of Cornerstone III will be allocated
equally between Welton and Sunrise.

Compensation to the trading managers by the Partnerships consists of a manage-
ment fee and an incentive fee as follows:

Management Fee--Each Partnership's management fee is accrued at the rate of 1/3
of 1% per month (a 4% annual rate) of the Net Assets under management by each
trading manager at each month end.

Incentive Fee--Each Partnership pays an annual incentive fee equal to 15% of
the new appreciation in Net Assets, as defined in the Limited Partnership
Agreements, as of the end of each annual incentive period ending December 31,
except for Dean Witter Cornerstone Fund IV, which pays incentive fees at the
end of each annual incentive period ending May 31. New appreciation represents
the amount by which Net Assets are increased by profits from futures, forward
and options trading exceed losses after brokerage commissions, management fees,
transaction fees and costs and common administrative expenses are deducted.
Such incentive fee is accrued in each month in which new appreciation occurs.
In those months in which new appreciation is negative, previous accruals, if
any, during the incentive period will be reduced. In those instances in which a
Limited Partner redeems an investment, the incentive fee (if earned through a
redemption date) is to be paid on those redemptions to the trading manager in
the month of such redemption.

4. Financial Instruments

The Partnerships trade futures, options and forward contracts on foreign cur-
rencies and other commodity interests. Futures and fowards represent contracts
for delayed delivery of an instrument at a specified date and price. Risk aris-
es from changes in the value of these contracts and the potential inability of
counterparties to perform under the terms of the contracts. There are numerous
factors which may significantly influence the market value of these contracts,
including interest rate volatility.

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 DerivativeInstruments 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, each Partnership had
previously elected to adopt the provisions of


Dean Witter Cornerstone Funds
Notes to Financial Statements--(Continued)
SFAS No. 133 beginning with the fiscal year ended December 31, 1998. SFAS No.
133 supersedes SFAS No. 119 and No. 105, which required the disclosure of aver-
age aggregate fair values and contract/notional values, respectively, of deriv-
ative financial instruments for an entity which carries its assets at fair val-
ue. The application of SFAS No. 133 does not have a significant effect on the
Partnerships' financial statements.

The net unrealized gains (losses) on open contracts are reported as a component
of "Equity in futures interests
trading accounts" on the statements of financial condition and totaled at De-
cember 31, 1999 and 1998, respectively, $1,156,415 and $2,056,152 for Corner-
stone II, $1,425,611 and $2,102,810 for Cornerstone III and $281,510 and
$(2,827,252) for Cornerstone IV.

For Cornerstone II, of the $1,156,415 net unrealized gain on open contracts at
December 31, 1999, $1,130,189 related to exchange-traded futures contracts and
$26,226 related to off-exchange-traded forward currency contracts. Of the
$2,056,152 net unrealized gain on open contracts at December 31, 1998,
$2,421,869 related to exchange-traded futures contracts and $(365,717) related
to off-exchange-traded forward currency contracts.

For Cornerstone III, all of the $1,425,611 net unrealized gain on open con-
tracts at December 31, 1999 related to exchange-traded futures and futures-
styled options contracts. Of the $2,102,810 net unrealized gain on open con-
tracts at December 31, 1998, $2,250,314 related to exchange-traded futures con-
tracts and $(147,504) related to off-exchange-traded forward currency con-
tracts.

For Cornerstone IV, the $281,510 net unrealized gain on open contracts at De-
cember 31, 1999 and the $(2,827,252) net unrealized loss on open contracts at
December 31, 1998 related to off-exchange-traded forward currency contracts.

Exchange-traded contracts and off-exchange-traded forward currency contracts
held by the Partnerships at December 31, 1999 and 1998 mature as follows:



1999 1998
------------- -------------

Cornerstone II
Exchange-Traded Contracts December 2000 December 1999
Off-Exchange-Traded Forward Currency Contracts March 2000 March 1999
Cornerstone III
Exchange-Traded Contracts May 2000 June 1999
Off-Exchange-Traded Forward Currency Contracts -- March 1999
Cornerstone IV
Off-Exchange-Traded Forward Currency Contracts March 2000 March 1999



Dean Witter Cornerstone Funds
Notes to Financial Statements--(Continued)

The Partnerships have credit risk associated with counterparty nonperformance.
The credit risk associated with the instruments in which the Partnerships are
involved is limited to the amounts reflected in the Partnerships' statements of
financial condition.

The Partnerships also have credit risk because DWR and Carr act as the futures
commission merchants or the counterparties, with respect to most of the Part-
nerships' assets. Exchange-traded futures and futures-styled options 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 each
Partnership's exchange-traded futures and futures-styled options 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 and
futures-styled options contracts, including an amount equal to the net
unrealized gain (loss) on all open futures and futures-styled options con-
tracts, which funds, in the aggregate, totaled at December 31, 1999 and 1998
respectively, $26,934,277 and $32,371,440 for Cornerstone II, $33,694,399 and
$40,755,289 for Cornerstone III, and $104,055,664 and $119,800,551 for Corner-
stone IV. With respect to each Partnership's off-exchange-traded forward cur-
rency contracts, there are no daily settlements of variations in value nor is
there any requirement that an amount equal to the net unrealized gain (loss) on
open forward contracts be segregated. With respect to those off-exchange-traded
forward currency contracts, the Partnerships are at risk to the ability of
Carr, the sole counterparty on all such contracts, to perform. Each Partnership
has a netting agreement with Carr. These agreements, which seek to reduce both
the Partnerships' and Carr's exposure on off-exchange-traded forward cur-rency
contracts, should materially decrease the Partnerships' credit risk in the
event of Carr's bankruptcy or insolvency. Carr's parent, Credit Agricole
Indosuez, has guaranteed to the Partnerships payment of the net liquidating
value of the transactions in the Partnerships' accounts with Carr (including
foreign currency contracts).

5. 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 partner-ship commodity pools sold by DWR. Named defendants
include DWR, Demeter, Dean Witter Futures & Currency Management Inc., MSDW, the
Partnerships, certain limited partnership commodity pools of which Demeter is
the general partner (all such parties referred


Dean Witter Cornerstone Funds
Notes to Financial Statements--(Concluded)
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 viola-
tions of the California Corporations Code, intentional and negligent breach of
fiduciary duty, fraudulent and unfair business practices, unjust enrichment,
and conversion in the sale and operation of the various limited partnerships
commodity pools. 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 Superi-
or Court of the State of Delaware, New Castle County, against the Morgan Stan-
ley Dean Witter Parties and certain trading advisors on behalf of all purchas-
ers of interests in various limited partnership commodity pools, including the
Partnerships, 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 limit-
ed partnership commodity pools. The complaints seek unspecified amounts of com-
pensatory and punitive damages and other 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 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 Supreme Court of the State of Delaware was voluntarily dismissed
without prejudice.

6. Subsequent Event

On March 3, 2000, the plaintiffs in the New York action referred to in Note 5
filed an appeal of the order dismissing the consolidated complaint.


MORGAN STANLEY DEAN WITTER & CO. Presorted
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