UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2001 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to__________________ Commission File No. 0-17446 DEAN WITTER DIVERSIFIED FUTURES FUND II L.P. (Exact name of registrant as specified in its charter) Delaware 13-3490286 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Demeter Management Corporation c/o Morgan Stanley Trust Company Attention: Managed Futures, 7th Fl., Harborside Financial Center Plaza Two Jersey City, NJ 07311-3977 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (201) 876-4647 Two World Trade Center, 62nd Fl. New York, NY 10048 (Former name, former address, and former fiscal year, if changed since last report) 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________ DEAN WITTER DIVERSIFIED FUTURES FUND II L.P. INDEX TO QUARTERLY REPORT ON FORM 10-Q September 30, 2001

~~Page~~PART NoI. ~~DOCUMENTS~~FINANCIAL ~~INCORPORATED~~INFORMATION BYItem ~~REFERENCE~~1. .Financial .Statements .Statements .of .Financial .Condition .as .of .September .30, .2001 .(Unaudited) .and .December .31, 2000. ~~1 Part I~~ . ~~Item 1~~.~~Business~~. . . . . . . . . . . . .2 .Statements .of .Operations .for .the .Quarters .Ended .September .30, .2001 .and ~~2-4~~2000 ~~Item 2~~(Unaudited).~~Properties~~. . . . . . . . . . . . . .3 .Statements .of .Operations .for .the .Nine .Months .Ended .September .30, 42001 ~~Item~~and ~~3.Legal~~2000 ~~Proceedings~~(Unaudited). . . . . . . . . . . . . . . ~~. . . .~~ 4-5 ~~Item~~Statements ~~4.Submission~~ of ~~Matters~~Changes toin aPartners' ~~Vote~~Capital ~~of Security Holders. . . 5 Part II. Item 5.Market~~ for the ~~Registrant's~~Nine ~~Partnership~~Months ~~Units~~ended ~~and~~September ~~Related~~30, ~~Security~~2001 ~~Holder~~and ~~Matters.~~2000 (Unaudited).. . . . . . . . . . ~~6 Item 6~~.~~Selected Financial Data~~. . . . . . . . . . . . . . . . . . ~~7 Item 7~~.~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~. . . . . . . . . . .~~8-19 Item 7A~~.5 ~~Quantitative~~Statements ~~and~~of ~~Qualitative~~Cash ~~Disclosures~~Flows ~~About~~for ~~Market~~the ~~Risk~~Nine .Months .Ended .September .30, .2001 .and .2000 (Unaudited). . . . . . . . . . . . . . .~~19-31~~6 ~~Item~~Notes 8.to Financial Statements ~~and Supplementary Data~~(Unaudited). . .. . . . ...7-11 32 Item 92. ~~Changes~~Management's inDiscussion and ~~Disagreements~~Analysis ~~with~~of ~~Accountants~~Financial onCondition ~~Accounting~~ and ~~Financial~~Results ~~Disclosure.~~of Operations. .12-22 .Item 3. .Quantitative .and .Qualitative .Disclosures .about .Market Risk.~~32 Part III~~. ~~Item 10~~. ~~Directors and Executive Officers of the Registrant~~. .. ~~33-37 Item 11~~.~~Executive Compensation~~ . . . . . . . . . . . . . . . . . .37...........22-34 ~~Item~~Part 12II. ~~Security~~OTHER ~~Ownership~~INFORMATION ofItem ~~Certain~~1. ~~Beneficial~~Legal ~~Owners and Management~~Proceedings. . . . . . . . . . . . . . . . . . . . .. ~~37 Item 13~~. ~~Certain Relationships and Related Transactions~~ . . . . ~~37-38 Part IV~~......35 Item 146. Exhibits, ~~Financial Statement Schedules,~~ and Reports on Form 8-K . . . . . . . . . . . . . . . ~~. . . ..39~~35-36

PART I. FINANCIAL INFORMATION Item 1. Financial Statements DEAN WITTER DIVERSIFIED FUTURES FUND II L.P. STATEMENTS OF FINANCIAL CONDITION

~~For~~September ~~the~~30, ~~Years Ended~~ December 31, 2001 2000 ~~1999~~$ ~~1998~~$ ~~1997~~(Unaudited) ~~1996~~ASSETS ~~Total~~Equity ~~Revenues~~in ~~(including~~futures ~~interest)~~interests ~~2,174,535~~trading ~~(65,754)~~accounts: 1Cash 7,~~559~~808,~~110~~538 27,~~490~~441,~~979~~614 ~~643,498~~ Net ~~Income~~unrealized gain on open contracts (~~Loss~~MS & Co.) 539,623 1,~~452~~212,~~113~~863 Net unrealized gain (~~948,607~~loss) ~~543,088~~on 1open contracts (MSIL) 115,~~247,087~~128 (~~824~~168,~~517~~289) ~~Net~~Total ~~Income~~net ~~(Loss)~~unrealized ~~Per~~gain ~~Unit~~on ~~(Limited~~open &contracts ~~General~~654,751 ~~Partners)~~1,044,574 ~~519.65~~Total ~~(268.20)~~Trading ~~140.02~~Equity ~~272.02~~8,463,289 8,486,188 Interest receivable (~~122.41~~Morgan Stanley DW) 15,215 31,123 Total Assets 8,~~517~~478,~~311~~504 8,~~365~~517,~~734~~311 10LIABILITIES AND PARTNERS' CAPITAL Liabilities Redemptions payable 216,~~845~~473 127,~~654~~081 11Accrued incentive fees (DWFCM) 45,~~801~~312 21,~~172~~097 12Accrued management fees (DWFCM) 21,~~617~~196 21,~~666~~293 Total ~~Limited~~Liabilities 282,981 169,471 Partners' Capital Limited Partners (2,454.992 and 2,609.949 Units, respectively) 7,862,449 8,027,946 7General Partner (104 Units) 333,~~787~~074 319,~~964~~894 10Total Partners' Capital 8,~~281~~195,~~223~~523 118,~~209~~347,~~045~~840 12Total Liabilities and Partners' Capital 8,~~019~~478,~~867~~504 ~~Net~~8,517,311 ~~Asset~~NET ~~Value~~ASSET ~~Per~~VALUE ~~Unit~~PER UNIT 3,~~075~~202.9064 23,~~556~~075.2590 2The ~~,824.45~~accompanying ~~2,684.43~~notes ~~2,412~~are an integral part of these financial statements.41

DEAN WITTER DIVERSIFIED FUTURES FUND II L.P. STATEMENTS OF OPERATIONS (Unaudited)

~~Year~~For ~~Return~~the ~~----~~Quarters ~~------~~Ended ~~1989~~September 30, 2001 2000 $ $ REVENUES Trading profit (11loss): Realized 391,066 (1/2,538,340) ~~months~~Net change in unrealized (102,802) ~~5.8%~~997,310 ~~1990~~Total ~~51.9%~~Trading ~~1991~~Results ~~21.7%~~288,264 ~~1992~~(541,030) ~~18.0%~~Interest ~~1993~~income ~~7.3%~~(Morgan ~~1994~~Stanley ~~5.4%~~DW) ~~1995~~53,366 ~~-2.9%~~88,751 ~~1996~~Total 341,630 (452,279) EXPENSES Brokerage commissions (Morgan Stanley DW) 114,979 87,379 Management fees (DWFCM) 63,116 53,696 Incentive fee (DWFCM) 15,443 -~~4.8%~~ ~~1997~~Transaction ~~11.2%~~fees ~~1998~~and costs 5~~.2%~~,179 ~~1999~~3,746 ~~-9.~~Total 198,717 144,821 NET INCOME (LOSS) 142,913 (597,100) NET INCOME (LOSS) ALLOCATION 137,255 (575,489) General Partner 5%,658 ~~2000~~(21,611) 20NET INCOME (LOSS) PER UNIT Limited Partners 54.3%41 ~~Inception-to-Date~~(207.80) ~~Return:~~General Partner 54.41 (207.6%80) ~~Annualized~~The ~~Return:~~accompanying 9notes are an integral part of these financial statements.9%

DEAN WITTER DIVERSIFIED FUTURES FUND II L.P. STATEMENTS OF OPERATIONS (Unaudited)

~~December~~For ~~31,~~the ~~--------------------~~Nine ~~2000~~Months ~~1999~~Ended ~~---------~~September ~~--------- $ $ ASSETS Equity in futures interests trading accounts: Cash 7~~30,~~441,614~~ ~~8,042,490~~2001 ~~Net~~2000 ~~unrealized~~$ ~~gain~~$ onREVENUES ~~open~~Trading ~~contracts~~profit (~~MS&Co.~~loss): Realized 1,~~212~~101,~~863~~543 ~~-- Net unrealized loss on open contracts~~ (~~MSIL) (168~~430,~~289~~132) -- Net ~~unrealized~~change ~~gain~~in onunrealized ~~open contracts~~ (~~Carr~~389,823) ~~-- 293~~494,~~674~~906 ~~--------- ---------~~ Total ~~net unrealized gain on open contracts 1,044,574 293,674 --------- --------- Total~~ Trading ~~Equity~~Results 8711,~~486,188~~720 864,~~336,164~~774 Interest ~~receivable~~income (~~DWR~~Morgan Stanley DW) 31193,~~123~~491 29268,~~570~~323 ~~--------- ---------~~ Total ~~Assets 8~~905,~~517,311~~211 8333,~~365,734~~097 ~~=========~~EXPENSES ~~=========~~Brokerage ~~LIABILITIES~~commissions ~~AND~~(Morgan ~~PARTNERS'~~Stanley ~~CAPITAL~~DW) ~~LIABILITIES Redemptions payable 127~~330,~~081~~717 ~~291~~324,~~006~~112 ~~Accrued~~Management ~~management~~ fees (DWFCM) 21188,~~293~~640 20175,~~914~~098 ~~Accrued~~Incentive ~~incentive~~ fee (DWFCM) 2126,~~097~~441 -- ~~---------~~Transaction ~~---------~~fees ~~Total~~and ~~Liabilities~~costs ~~169~~16,~~471~~161 ~~311~~20,~~920~~139 ~~---------~~Total ~~---------~~561,959 ~~PARTNERS'~~519,349 ~~CAPITAL~~NET ~~Limited~~INCOME ~~Partners~~ (~~2,609.949~~LOSS) ~~and 3~~343,~~046.638~~252 ~~Units~~(186,252) ~~respectively~~NET INCOME (LOSS) 8ALLOCATION Limited Partners 330,~~027,946~~072 7(178,~~787,964~~454) General Partner ~~(104 Units) 319~~13,~~894~~180 ~~265~~(7,~~850~~798) ~~---------~~NET ~~---------~~INCOME ~~Total~~(LOSS) ~~Partners'~~PER ~~Capital~~UNIT ~~8,347,840~~Limited ~~8,053,814~~Partners ~~---------~~126.74 ~~---------~~(74.98) ~~Total~~General ~~Liabilities~~Partner ~~and~~126.74 ~~Partners'~~(74.98) ~~Capital~~The ~~8,517,311~~accompanying ~~8,365,734~~notes ~~=========~~are ~~=========~~an ~~NET~~integral ~~ASSET~~part ~~VALUE~~of ~~PER~~these ~~UNIT~~financial ~~3,075~~statements.~~90 2,556.25 ========= =========~~

DEAN WITTER DIVERSIFIED FUTURES FUND II L.P. STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For the Nine Months Ended September 30, 2001 and 2000 (Unaudited)

~~For~~Units ~~the~~of ~~Years~~Partnership ~~Ended~~Limited ~~December~~General ~~31,~~Interest ~~------------------------------~~Partners ~~2000~~Partner ~~1999~~Total ~~1998 --------- -------- ----------~~ $ $ $ ~~REVENUES~~Partners' ~~Trading~~Capital, ~~profit~~December ~~(loss):~~31, ~~Realized~~1999 13,~~068~~150.638 7,~~453~~787,964 ~~(497~~265,~~690)~~850 28,~~694~~053,~~659~~814 Net ~~change~~Loss in- ~~unrealized 750~~(178,~~900~~454) 87(7,~~110~~798) (1186,~~542,785~~252) ~~---------~~Redemptions ~~-------- ---------- Total Trading Results 1,819,353~~ (~~410,580~~395.373) (1,~~151~~031,~~874~~006) ~~Interest~~- ~~income~~ (~~DWR~~1,031,006) ~~355,182~~Partners' ~~344~~Capital,~~826~~ ~~407~~September 30,~~236~~ ~~---------~~2000 ~~-------- ---------- Total Revenues~~ 2,~~174,535~~755.265 ~~(65~~6,~~754) 1~~578,~~559,110~~504 ~~--------- -------- ---------- EXPENSES Brokerage commissions (DWR) 444,~~258 ~~568~~,~~131~~052 ~~633~~6,~~726~~836,556 ~~Management~~Partners' ~~fee (DWFCM) 231~~Capital,~~777~~ ~~278,026~~December ~~327~~31,~~157~~ ~~Transaction~~2000 ~~fees and costs 25~~2,~~289~~713.949 408,~~412 48~~027,~~099~~946 ~~Incentive fee (DWFCM) 21~~319,~~098~~894 (38,~~716) 7~~347,~~040~~840 ~~---------~~Net ~~--------~~Income -~~---------~~ ~~Total Expenses 722~~330,~~422~~072 ~~882~~13,~~853~~180 1343,~~016,022~~252 ~~---------~~Redemptions ~~-------- ---------- NET INCOME~~ (~~LOSS~~154.957) ~~1,452,113~~ (~~948~~495,~~607~~569) ~~543,088~~- ~~========= ======== ========== Net Income~~ (~~Loss~~495,569) ~~Allocation: Limited~~ Partners' 1Capital,~~398,069~~ ~~(920,714)~~September ~~528~~30,~~526~~ ~~General~~2001 ~~Partner~~2,558.992 547,~~044~~862,449 ~~(27~~333,~~893)~~074 148,~~562~~195,523 ~~Net~~The ~~Income~~accompanying ~~(Loss)~~notes ~~per~~are ~~Unit:~~an ~~Limited~~integral ~~Partners~~part ~~519.65~~of ~~(268.20)~~these ~~140.02~~financial ~~General Partner 519~~statements.~~65 (268.20) 140.02~~

DEAN WITTER DIVERSIFIED FUTURES FUND II L.P. STATEMENTS OF CASH FLOWS (Unaudited)

~~Units~~For ofthe ~~Partnership~~Nine ~~Limited~~Months ~~General~~Ended ~~Interest~~September ~~Partners~~30, ~~Partner~~2001 ~~Total~~2000 ~~-----------~~$ ~~----------~~$ ~~-------~~CASH ~~----------~~FLOWS $FROM $OPERATING $ACTIVITIES ~~Partners'~~Net ~~Capital,~~income ~~December~~(loss) 31343,252 ~~1997 4~~(186,~~279.580~~252) ~~11,209,045~~Noncash ~~279,181~~item ~~11,488,226~~included ~~Net~~in net income --(loss): ~~528,526~~Net ~~14,562~~change ~~543,088~~in ~~Redemptions~~unrealized ~~(535.498)~~389,823 (1494,~~456,348~~906) --Decrease in operating assets: Interest receivable (~~1,456,348~~Morgan Stanley DW) ~~---------~~15,908 ~~----------~~1,158 ~~-------~~Increase ~~----------~~(decrease) ~~Partners'~~in ~~Capital,~~operating ~~December~~liabilities: ~~31,~~Accrued ~~1998~~incentive ~~3,744.082~~fees ~~10,281,223~~(DWFCM) ~~293~~24,~~743~~215 ~~10,574,966~~- ~~Net~~Accrued ~~loss~~management --fees (~~920,714~~DWFCM) (~~27,893~~97) (~~948~~3,~~607~~045) ~~Redemptions~~Net ~~(593.444)~~cash provided by (~~1,572,545~~used for) --operating activities 773,101 (1683,~~572,545~~045) ~~---------~~CASH ~~----------~~FLOWS ~~-------~~FROM ~~----------~~FINANCING ~~Partners'~~ACTIVITIES ~~Capital,~~Increase ~~December~~in ~~31,~~redemptions ~~1999~~payable 389,~~150.638~~392 72,~~787,964~~044 ~~265~~Redemptions of Units (495,~~850~~569) 8(1,~~053~~031,~~814~~006) Net ~~income~~cash --used ~~1,398,069~~for ~~54,044~~financing ~~1,452,113~~activities ~~Redemptions~~ (~~436.689~~406,177) (1,~~158~~028,~~087~~962) --Net increase (decrease) in cash 366,924 (1,~~158~~712,~~087~~007) ~~---------~~Balance ~~----------~~at ~~-------~~beginning ~~----------~~of ~~Partners'~~period ~~Capital~~7,441,614 ~~December 31~~8,042,490 ~~2000~~Balance ~~2,713.949~~at 8end of period 7,~~027~~808,~~946~~538 ~~319~~6,~~894 8~~330,~~347,840~~483 ~~=========~~The ~~==========~~accompanying ~~=======~~notes ~~==========~~are an integral part of these financial statements.

DEAN WITTER DIVERSIFIED FUTURES FUND II L.P. NOTES TO FINANCIAL STATEMENTS September 30, 2001 (Unaudited) The unaudited financial statements contained herein include, in the opinion of management, all adjustments necessary for a fair presentation of the results of operations and financial condition of Dean Witter Diversified Futures Fund II L.P. (the "Partnership"). The financial statements and condensed notes herein should be read in conjunction with the Partnership's December 31, 2000 Annual Report on Form 10-K. 1. Organization Dean Witter Diversified Futures Fund II L.P. is a Delaware limited partnership organized to engage primarily in the speculative trading of commodity futures contracts and forward contracts on physical commodities and other commodity interests. The general partner of the Partnership is Demeter Management Corporation ("Demeter"). The non-clearing commodity broker is Morgan Stanley DW Inc. ("Morgan Stanley DW"). The clearing commodity brokers are Morgan Stanley & Co., Inc. ("MS & Co.") and Morgan Stanley & Co. International Limited ("MSIL"). The trading manager is Dean Witter Futures & Currency Management Inc. DEAN WITTER DIVERSIFIED FUTURES FUND II L.P. NOTES TO FINANCIAL STATEMENTS (CONTINUED) ("DWFCM" or the "Trading Manager"). Demeter, Morgan Stanley DW, MS & Co., MSIL and DWFCM are wholly-owned subsidiaries of Morgan Stanley Dean Witter & Co. 2. Related Party Transactions The Partnership's cash is on deposit with Morgan Stanley DW, MS & Co. and MSIL in futures and forwards trading accounts to meet margin requirements as needed. Morgan Stanley DW pays interest on these funds based on current 13-week U.S. Treasury bills. The Partnership pays brokerage commissions to Morgan Stanley DW. Management fees and incentive fees (if any) incurred by the Partnership are paid to DWFCM. 3. Financial Instruments The Partnership trades commodity futures contracts and forward contracts on physical commodities and other commodity interests. Futures and forwards represent contracts for delayed delivery of an instrument at a specified date and price. Risk arises from changes in the value of these contracts and the potential inability of counterparties to perform under the terms of the contracts. There are numerous factors which may significantly DEAN WITTER DIVERSIFIED FUTURES FUND II L.P. NOTES TO FINANCIAL STATEMENTS (CONTINUED) influence the market value of these contracts, including interest rate volatility. The Partnership accounts for its derivative investments in accordance with the provisions of Statement of Financial Accounting Standard No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 defines a derivative as a financial instrument or other contract that has all three of the following characteristics: 1) One or more underlying notional amounts or payment provisions; 2) Requires no initial net investment or a smaller initial net investment than would be required relative to changes in market factors; 3) Terms require or permit net settlement. Generally derivatives include futures, forwards, swaps or options contracts and other financial instruments with similar characteristics such as caps, floors and collars. DEAN WITTER DIVERSIFIED FUTURES FUND II L.P. NOTES TO FINANCIAL STATEMENTS (CONTINUED) The net unrealized gains (losses) on open contracts, reported as a component of "Equity in futures interests trading accounts" on the statements of financial condition, and their longest contract maturities were as follows: Net Unrealized Gains (Losses) on Open Contracts Longest Maturities Exchange- Off-Exchange- Exchange- Off-Exchange- Traded Traded Total Traded Traded Date Contracts Contracts Contracts Contracts Contracts $ $ $ Sept. 30, 2001 687,509 (32,758) 654,751 March 2003 Dec. 2001 Dec. 31, 2000 718,718 325,856 1,044,574 June 2002 March 2001 The Partnership has credit risk associated with counterparty non- performance. The credit risk associated with the instruments in which the Partnership is involved is limited to the amounts reflected in the Partnership's statements of financial condition. The Partnership also has credit risk because Morgan Stanley DW, MS & Co. and MSIL act as the futures commission merchants or the counterparties, with respect to most of the Partnership's assets. Exchange-traded futures contracts are marked to market on a daily basis, with variations in value settled on a daily basis. Morgan Stanley DW, MS & Co. and MSIL, each as a futures commission merchant of the Partnership's exchange-traded futures contracts, DEAN WITTER DIVERSIFIED FUTURES FUND II L.P. NOTES TO FINANCIAL STATEMENTS (CONCLUDED) are required, pursuant to regulations of the Commodity Futures Trading Commission ("CFTC"), to segregate from their own assets, and for the sole benefit of their commodity customers, all funds held by them with respect to exchange-traded futures contracts, including an amount equal to the net unrealized gains (losses) on all open futures contracts, which funds, in the aggregate, totaled $8,496,047 and $8,160,332 at September 30, 2001 and December 31, 2000, respectively. With respect to the Partnership's off- exchange-traded forward currency contracts, there are no daily settlements of variations in value nor is there any requirement that an amount equal to the net unrealized gains (losses) on open forward contracts be segregated. With respect to those off- exchange-traded forward currency contracts, the Partnership is at risk to the ability of MS & Co., the sole counterparty on all of such contracts, to perform. The Partnership has a netting agreement with MS & Co. This agreement, which seeks to reduce both the Partnership's and MS & Co.'s exposure on off-exchange- traded forward currency contracts, should materially decrease the Partnership's credit risk in the event of MS & Co.'s bankruptcy or insolvency. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity - The Partnership deposits its assets with Morgan Stanley DW as non-clearing broker and MS & Co. and MSIL as clearing brokers in separate futures and forwards accounts established for the Trading Manager, which assets are used as margin to engage in trading. The assets are held in either non- interest-bearing bank accounts or in securities and instruments permitted by the 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 currency. The markets for some world currencies have low trading volume and are illiquid, which may prevent the Partnership from trading in potentially profitable markets or prevent the Partnership from promptly liquidating unfavorable positions in such markets, subjecting it to substantial losses. Either of these market conditions could result in restrictions on redemptions. The Partnership has never had illiquidity affect a material portion of its assets. Capital Resources. The Partnership does not have, or expect to have, any capital assets. Redemptions of additional units of limited partnership interest ("Unit(s)") in the future will affect the amount of funds available for investment in futures and forwards in subsequent periods. It is not possible to estimate the amount and therefore the impact of future redemptions of Units. Results of Operations General. The Partnership's results depend on its Trading Manager and the ability of the Trading Manager's trading programs to take advantage of price movements or other profit opportunities in the futures and forwards markets. The following presents a summary of the Partnership's operations for the three and nine month periods ended September 30, 2001 and 2000, and a general discussion of its trading activities during each period. It is important to note, however, that the Trading Manager trades in various markets at different times and that prior activity in a particular market does not mean that such market will be actively traded by the Trading Manager or will be profitable in the future. Consequently, the results of operations of the Partnership are difficult to discuss other than in the context of its Trading Manager's trading activities on behalf of the Partnership as a whole and how the Partnership has performed in the past. For the Quarter and Nine Months Ended September 30, 2001 For the quarter ended September 30, 2001, the Partnership recorded total trading revenues, including interest income, of $341,630 and posted an increase in net asset value per Unit. The most significant gains of approximately 4.1% were recorded in the metals markets primarily during July and September from short positions in aluminum, copper and nickel futures as prices moved lower amid technical weakness and ongoing demand doldrums. In the global interest rate futures markets, profits of approximately 2.0% were recorded primarily during August and September from long positions in short and intermediate-term U.S. interest rate futures as prices continued trending higher following an interest rate cut by the U.S. Federal Reserve and as investors sought a safe haven from the decline in stock prices. In the global stock index futures markets, gains of approximately 1.7% were recorded throughout a majority of the quarter from short positions in S&P 500 Index futures as the trend in equity prices continued lower amid worries regarding global economic uncertainty. In soft commodities, gains of approximately 1.4% were recorded primarily during July from short coffee futures positions as prices trended lower on favorable weather conditions. These gains were partially offset by losses of approximately 3.9% recorded in the currency markets primarily during July from short positions in the euro as the value of the European common currency strengthened versus the British pound as hints of possible intervention by the European Central Bank to support the euro remained. Additional losses were recorded during September from long positions in the euro as its value reversed lower relative to the British pound. In the agricultural markets, losses of approximately 1.8% were experienced primarily during July from short corn futures positions as prices increased on a hot, dry outlook for the U.S. midwest. In the energy markets, losses of approximately 1.2% were recorded primarily during early July from short crude oil futures positions as prices moved higher as concerns over supply levels re-emerged. Additional losses were incurred during September from long positions in crude oil futures as oil prices reversed lower due to near-term concerns over the effects of a global economic slowdown on oil demand. Total expenses for the three months ended September 30, 2001 were $198,717, resulting in net income of $142,913. The net asset value of a Unit increased from $3,148.23 at June 30, 2001 to $3,202.64 at September 30, 2001. For the nine months ended September 30, 2001, the Partnership recorded total trading revenues, including interest income, of $905,211 and posted an increase in net asset value per Unit. The most significant gains of approximately 7.1% were recorded in the global interest rate futures markets throughout a majority of the first quarter from long positions in U.S. interest rate futures as prices rose amid a rattled stock market, shaky consumer confidence, positive inflation data and interest rate cuts by the U.S. Federal Reserve. Additional gains were recorded primarily during August and September from long positions in short and intermediate-term U.S. interest rate futures as prices continued trending higher following an interest rate cut by the U.S. Federal Reserve and as investors sought a safe haven from the decline in stock prices. In soft commodities, profits of approximately 5.1% were recorded throughout a majority of the first and second quarter from short cotton futures positions as prices moved lower on weak export sales and low demand. In the metals markets, gains of approximately 0.6% were recorded primarily during July and September from short positions in copper futures as prices move lower amid technical weakness and ongoing demand doldrums. These gains were partially offset by losses of approximately 4.6% recorded in the energy markets throughout the first nine months of the year from positions in crude oil futures and its related products as a result of volatility in oil prices due to a continually changing outlook for supply, production and demand. In the currency markets, losses of approximately 2.5% were experienced primarily during July from short positions in the euro as the value of the European common currency strengthened versus the British pound as hints of possible intervention by the European Central Bank to support the euro remained. In the agricultural markets, losses of approximately 1.2% were experienced primarily during July from short corn futures positions as prices increased on a hot, dry outlook for the U.S. midwest. Total expenses for the nine months ended September 30, 2001 were $561,959, resulting in net income of $343,252. The net asset value of a Unit increased from $3,075.90 at December 31, 2000 to $3,202.64 at September 30, 2001. For the Quarter and Nine Months Ended September 30, 2000 For the quarter ended September 30, 2000, the Partnership recorded total trading losses, net of interest income, of $452,279 and posted a decrease in net asset value per Unit. The most significant losses of approximately 3.8% were recorded in the energy markets primarily during July from long futures positions in crude oil as prices reversed lower amid growing conviction that Saudi Arabia would follow through with a pledge to boost production. Additional losses were experienced during July and August from long positions in natural gas futures as prices retreated on higher-than-expected inventory numbers, mild weather and technical selling attributed to the decline in crude oil prices. In soft commodities, losses of approximately 3.1% were incurred primarily during July from previously established short positions and subsequent long positions in coffee futures as prices traded in an extremely volatile pattern on weather related concerns for Brazil. Additional losses were recorded primarily during July from short positions in cotton futures as prices moved higher amid fears that the dryness and heat in Texas would slash the size of the U.S. crop. In the global interest rates futures markets, losses of approximately 2.8% were experienced primarily during September from short positions in Japanese interest rate futures as bond prices surged as investors sought refuge from declining stock prices in the U.S. and Japan. Additional losses were recorded from long positions in Australian interest rate futures as prices declined mirroring a drop in U.S. Treasury prices. In the global stock index futures markets, losses of approximately 2.0% were recorded during late July from long positions in S&P 500 Index futures as prices declined on fears of additional interest rate hikes in the U.S. and Europe and during September due to jitters in the technology industry as well as from an overall concern regarding the oil markets. In the metals markets, losses of approximately 0.1% were recorded throughout a majority of the quarter from long aluminum futures positions as prices declined amid currency and oil price fluctuations and on fears that the global economy could be set for a growth slowdown. These losses were mitigated by gains recorded primarily during mid September from long copper futures positions as prices rose higher due to a rise in COMEX copper stocks. A portion of the Partnership's overall losses was offset by gains of approximately 3.6% recorded in the currency markets primarily during September from short positions in the euro relative to the British pound as prices were pushed lower on a lack of European support for the common currency. Additional gains were recorded during July and September from a short Japanese yen position as its value weakened versus the U.S. dollar on a weaker Japanese stock market, corporate failures and overall strengthening of the U.S dollar. Total expenses for the three months ended September 30, 2000 were $144,821, resulting in a net loss of $597,100. The net asset value of a Unit decreased from $2,689.07 at June 30, 2000 to $2,481.27 at September 30, 2000. For the nine months ended September 30, 2000, the Partnership recorded total trading revenues, including interest income, of $333,097 and, after expenses, posted a decrease in net asset value per Unit. The most significant losses of approximately 10.2% were recorded in the global interest rate futures markets primarily throughout a majority of the second quarter, as well as during July, from short positions in German bund futures as prices were pushed higher by a rise in U.S. prices. Additional losses were incurred primarily during February from long positions in Japanese government bond futures as prices decreased in response to the yen's weakness and the perception in Japan that, despite a zero interest rate policy, 10-year interest rates are too low. During September, losses were also recorded from short positions in Japanese interest rate futures as bond prices surged as investors sought refuge from declining stock prices in the U.S. and Japan. In the global stock index futures markets, losses of approximately 4.8% were incurred throughout a majority of the first quarter and during April, late July and September from long positions in S&P 500 Index futures as domestic stock prices declined due to volatility in the technology sector and fears that the Federal Reserve will be forced to take aggressive action to slow the economy. In soft commodities, losses of approximately 3.4% were incurred primarily during July from short positions in cotton futures as prices moved higher amid fears that the dryness and heat in Texas would slash the size of the U.S. crop. In the metals markets, losses of approximately 2.2% were recorded throughout a majority of the third quarter from long aluminum futures positions as prices declined amid currency and oil price fluctuations and on fears that the global economy could be set for a growth slowdown. A portion of the Partnership's overall losses was offset by gains of approximately 11.3% recorded in the energy markets primarily during May from long positions in natural gas futures as prices continued their upward trend on fears that inventory levels remain low and that U.S. demand will outstrip production. Additional gains were recorded during February from long positions in crude oil futures as prices increased due to a combination of cold weather, declining inventories and increasing demand. Oil prices also increased during June in reaction to the dismissal by OPEC of a price setting mechanism and a promise of only a modest production increase. In the currency markets, gains of approximately 4.6% were recorded primarily during March, April and September from short positions in the euro as the value of the European common currency weakened versus the U.S. dollar and British pound on a lack of European support. Offsetting currency losses were experienced during March as the value of the Japanese yen reversed higher versus the U.S. dollar, despite dollar buying intervention by the Bank of Japan on two occasions during that month. During April and early May, additional losses were recorded from long positions in the Japanese yen as its value weakened relative to the U.S. dollar amid fears of an additional Bank of Japan intervention and as Japanese consumer confidence remained sluggish. In the agricultural markets, gains of approximately 1.3% were recorded primarily during June and July from short corn futures positions as corn prices were pressured lower by a damp weather forecast in the U.S. midwest. Total expenses for the nine months ended September 30, 2000 were $519,349, resulting in a net loss of $186,252. The net asset value of a Unit decreased from $2,556.25 at December 31, 1999 to $2,481.27 at September 30, 2000. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Introduction The Partnership is a commodity pool engaged primarily in the speculative trading of futures and forwards. 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 and forwards traded by the Partnership involve varying degrees of related 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 experience 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 and forwards are settled daily through variation margin. The Partnership's risk exposure in the market sectors traded by the Trading Manager is estimated below in terms of Value at Risk ("VaR"). The VaR model used by the Partnership includes many variables that could change the market value of the Partnership's trading portfolio. The Partnership estimates VaR using a model based on 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 Manager in their daily risk management activities. The Partnership's Value at Risk in Different Market Sectors The following table indicates the VaR associated with the Partnership's open positions as a percentage of total net assets by primary market risk category at September 30, 2001 and 2000. At September 30, 2001 and 2000, the Partnership's total capitalization was approximately $8 million and $7 million, respectively. Primary Market September 30, 2001 September 30, 2000 Risk Category Value at Risk Value at Risk Interest Rate (1.82)% (0.57)% Currency (1.20) (2.78) Equity (0.26) - Commodity (1.03) (2.40) Aggregate Value at Risk (2.14)% (3.28)% Aggregate Value at Risk represents the aggregate VaR of all the Partnership's open positions and not the sum of the VaR of the individual market categories listed above. Aggregate VaR will be lower as it takes into account correlation among different positions and categories. The table above represents the VaR of the Partnership's open positions at September 30, 2001 and 2000 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 and forwards, 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 quarter-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 October 1, 2000 through September 30, 2001. Primary Market Risk Category High Low Average Interest Rate (2.79)% (1.10)% (1.93)% Currency (2.93) (1.20) (2.08) Equity (0.26) (0.10) (0.21) Commodity (2.25) (1.03) (1.50) Aggregate Value at Risk (3.87)% (2.14)% (3.26)% 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, give 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 caused by market movements may differ from those of the VaR model; ? VaR results reflect past trading positions while future risk depends on future positions; ? VaR using a one-day time horizon does not fully capture the market risk of positions that cannot be liquidated or hedged within one day; and ? the historical market risk factor data used for VaR estimation may provide only limited insight into losses that could be incurred under certain unusual market movements. The VaR tables above present the results of the Partnership's VaR for each of the Partnership's market risk exposures and on an aggregate basis at September 30, 2001 and for the end of the four quarterly reporting periods from October 1, 2000 through September 30, 2001. 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 once 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. At September 30, 2001, the Partnership's cash balance at Morgan Stanley DW was approximately 89% of its total net asset value. 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, in relation to the Partnership's net assets. 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 exposures as well as the strategies used and to be used by Demeter and the Trading Manager for managing such exposures are subject to numerous uncertainties, contingencies and risks, any one of which could cause the actual results of the Partnership's risk controls to differ materially from the objectives of such strategies. Government interventions, defaults and expropriations, illiquid markets, the emergence of dominant fundamental factors, political upheavals, changes in historical price relationships, an influx of new market participants, increased regulation and many other factors could result in material losses as well as in material changes to the risk exposures and the risk management strategies of the Partnership. Investors must be prepared to lose all or substantially all of their investment in the Partnership. The following were the primary trading risk exposures of the Partnership at September 30, 2001, by market sector. It may be anticipated, however, that these market exposures will vary materially over time. Interest Rate. The largest market exposure at September 30, 2001 was to the global interest rate complex. Exposure was primarily spread across the German and U.S. interest rate sectors. Interest rate movements directly affect the price of the sovereign bond futures positions held by the Partnership and indirectly affect the value of its stock index and currency positions. Interest rate movements in one country as well as relative interest rate movements between countries materially impact the Partnership's profitability. The Partnership's primary interest rate exposures are generally to interest rate fluctuations in the United States and the other G-7 countries. The G-7 countries consist of France, U.S., Britain, Germany, Japan, Italy and Canada. However, the Partnership also takes futures positions in the government debt of smaller nations - e.g. Australia. Demeter anticipates that G- 7 and Australian interest rates will remain the primary interest rate exposure of the Partnership for the foreseeable future. The speculative futures positions held by the Partnership may range from short to long-term instruments. Consequently, changes in short, medium or long-term interest rates may have an effect on the Partnership. Currency. The second largest market exposure of the Partnership at September 30, 2001 was to the currency sector. 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. At September 30, 2001, the Partnership's major exposures were to 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 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. Equity. The Partnership's primary equity exposure at September 30, 2001 was to equity price risk in the G-7 countries. The stock index futures traded by the Partnership are by law limited to futures on broadly-based indices. At September 30, 2001, the Partnership's primary exposure was to the S&P 500 (U.S.) stock index. The Partnership is primarily exposed to the risk of adverse price trends or static markets in the U.S. and Japanese indices. Static markets would not cause major market changes but would make it difficult for the Partnership to avoid being "whipsawed" into numerous small losses. Commodity. Energy. At September 30, 2001, the Partnership's energy exposure was shared primarily by futures contracts in the crude oil and natural gas markets. Price movements in these markets result from political developments in the Middle East, weather patterns and other economic fundamentals. It is possible that volatility will remain high. Significant profits and losses, which have been experienced in the past, are expected to continue to be experienced in these markets. Natural gas has exhibited volatility in prices resulting from weather patterns and supply and demand factors and may continue in this choppy pattern. Metals. The Partnership's metals exposure at September 30, 2001 was to fluctuations in the price of precious metals such as gold, and base metals such as aluminum, copper, nickel and zinc. Economic forces, supply and demand inequalities, geopolitical factors and market expectations influence price movement in these markets. The Trading Manager has, from time to time, taken positions when market opportunities develop. Demeter anticipates that the Partnership will continue to be exposed to the precious and base metals markets. Soft Commodities and Agriculturals. At September 30, 2001, the Partnership had exposure to the markets that comprise these sectors. Most of the exposure was to the cocoa, coffee and corn markets. Supply and demand inequalities, severe weather disruption and market expectations affect price movements in these markets. Qualitative Disclosures Regarding Non-Trading Risk Exposure The following was the only non-trading risk exposure of the Partnership at September 30, 2001: Foreign Currency Balances. The Partnership's primary foreign currency balances at September 30, 2001 were in Australian dollars, Japanese yen and British pounds. The Partnership controls the non-trading risk of these balances by regularly converting them back into U.S. dollars upon liquidation of their respective positions. Qualitative Disclosures Regarding Means of Managing Risk Exposure The Partnership and the Trading Manager, separately, attempt to manage the risk of the Partnership's open positions in essentially the same manner in all market categories traded. Demeter attempts to manage market exposure by diversifying the Partnership's assets among different market sectors and trading approaches, and monitoring the performance of the Trading Manager daily. In addition, the Trading Manager establishes diversification guidelines, often set in terms of the maximum margin to be committed to positions in any one market sector or market-sensitive instrument. Demeter monitors and controls the risk of the Partnership's non- trading instrument, cash. Cash is the only Partnership investment directed by Demeter, rather than the Trading Manager. PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS Please refer to Legal Proceedings previously disclosed in the Partnership's Form 10-Q for the quarter ended June 30, 2001. Item 6. Exhibits and Reports on Form 8-K (A) Exhibits 3.01 Limited Partnership Agreement of the Partnership, dated as of October 28, 1988 is incorporated by reference to Exhibit 3.01 and Exhibit 3.02 of the Partnership's Registration Statement on Form S-1, (File No.24662). 10.01 Management Agreement among the Partnership, Demeter Management Corporation and Dean Witter Futures & Currency Management Inc. dated as of October 28, 1988 is incorporated by reference to Exhibit 10.02 of the Partnership's Registration Statement on Form S-1, (File No.24462). 10.02 Amended and Restated Customer Agreement between the Partnership and Morgan Stanley DW Inc., dated as of May 19, 2000 is incorporated by reference to Exhibit 10.01 of the Partnership's Form 8-K (File No. 0-17446) filed with the Securities and Exchange Commission on November 13, 2001. 10.03 Commodity Futures Customer Agreement between Morgan Stanley & Co. Incorporated and the Partnership, and acknowledged and agreed to by Morgan Stanley DW Inc., dated as of May 1, 2000, is incorporated by reference to Exhibit 10.02 of the Partnership's Form 8-K (File No. 0-17446) filed with the Securities and Exchange Commission on November 13, 2001. 10.04 Customer Agreement between the Partnership and Morgan Stanley & Co. International Limited, dated as of May 1, 2000, is incorporated by reference to Exhibit 10.04 of the Partnership's Form 8-K (File No. 0-17446) filed with the Securities and Exchange Commission on November 13, 2001. 10.05 Foreign Exchange and Options Master Agreement between Morgan Stanley & Co. Incorporated and the Partnership, dated as of April 30, 1999, is incorporated by reference to Exhibit 10.05 of the Partnership's Form 8-K (File No. 0- 17446) filed with the Securities and Exchange Commission on November 13, 2001. 10.06 Securities Account Control Agreement among the Partnership, Morgan Stanley & Co. Incorporated, and Morgan Stanley DW Inc., dated as of May 1, 2000, is incorporated by reference to Exhibit 10.03 of the Partnership's Form 8-K (File No. 0- 17446) filed with the Securities and Exchange Commission on November 13, 2001. (B) Reports on Form 8-K. - None. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dean Witter Diversified Futures Fund II L.P. (Registrant) By: Demeter Management Corporation (General Partner) November 13, 2001 By:/s/Raymond E. Koch Raymond E. Koch Chief Financial Officer The General Partner which signed the above is the only party authorized to act for the Registrant. The Registrant has no principal executive officer, principal financial officer, controller, or principal accounting officer and has no Board of Directors.

For the Years Ended December 31, ---------------------------------- 2000 1999 1998 ---------- ---------- ---------- $ $ $ CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) 1,452,113 (948,607) 543,088 Noncash item included in net income (loss): Net change in unrealized (750,900) (87,110) 1,542,785 (Increase) decrease in operating assets: Interest receivable (DWR) (1,553) 2,840 4,262 Increase (decrease) in operating liabilities: Accrued management fees (DWFCM) 379 (6,200) (2,389) Accrued incentive fee (DWFCM) 21,097 (3,871) 3,871 ---------- ---------- ---------- Net cash provided by (used for) operating activities 721,136 (1,042,948) 2,091,617 ---------- ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in redemptions payable (163,925) 51,303 (43,740) Redemptions of Units (1,158,087) (1,572,545) (1,456,348) ---------- ---------- ---------- Net cash used for financing activities (1,322,012) (1,521,242) (1,500,088) ---------- ---------- ---------- Net increase (decrease) in cash (600,876) (2,564,190) 591,529 Balance at beginning of period 8,042,490 10,606,680 10,015,151 ---------- ---------- ---------- Balance at end of period 7,441,614 8,042,490 10,606,680 ========== ========== ==========

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