DEAN WITTER PORTFOLIO STRATEGY FUND LP - 10-Q Quarterly Report

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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 June 30, 2004

[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to__________________

Commission File Number 0-19046

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

(Exact name of registrant as specified in its charter)

Delaware 13-3589337
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Demeter Management Corporation
825 Third Avenue, 9th Floor
New York, NY 10022
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (212) 310-6444

(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___________

Indicate by check-mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act).

Yes No X

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

June 30, 2004

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
STATEMENTS OF FINANCIAL CONDITION

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
STATEMENTS OF OPERATIONS
(Unaudited)

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
STATEMENTS OF OPERATIONS
(Unaudited)

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 2004 and 2003
(Unaudited)

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS

June 30, 2004

(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 Portfolio Strategy Fund L.P. (the "Partnership").
The financial statements and condensed notes herein should be read
in conjunction with the Partnership's December 31, 2003 Annual
Report on Form 10-K.

1. Organization
Dean Witter Portfolio Strategy Fund L.P. is a Delaware limited
partnership organized to engage primarily in the speculative
trading of futures and forward contracts on physical commodities
and other commodity interests, including, but not limited to,
foreign currencies, financial instruments, metals, energy and
agricultural products.

The Partnership's general partner 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. Incorporated ("MS &
Co.") and Morgan Stanley & Co. International Limited ("MSIL").
Demeter, Morgan Stanley DW, MS & Co. and MSIL are wholly-owned
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

subsidiaries of Morgan Stanley. John W. Henry & Company, Inc.
(the "Trading Manager") is the trading manager to the Partnership.

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 the prevailing rate on U.S. Treasury bills.
The Partnership pays brokerage commissions to Morgan Stanley DW.

3. Financial Instruments
The Partnership trades futures and forward contracts on physical
commodities and other commodity interests, including, but not
limited to, foreign currencies, financial instruments, metals,
energy, and agricultural products. Futures and forwards represent
contracts for delayed delivery of an instrument at a specified
date and price. Risk arises from changes in the value of these
contracts and the potential inability of counterparties to perform
under the terms of the contracts. There are numerous factors
which may significantly influence the market value of these
contracts, including interest rate volatility.

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The market value of contracts is based on closing prices quoted
by the exchange, bank or clearing firm through which the
contracts are traded.

The Partnership's contracts are accounted for on a trade-date
basis and marked to market on a daily basis. The Partnership
accounts for its derivative investments in accordance with the
provisions of Statement of Financial Accounting Standards 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, forward, swaps or options
contracts, and other financial instruments with similar
characteristics such as caps, floors, and collars.

DEAN WITTER PORTFOLIO STRATEGY FUND 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
Off- Off-
Exchange- Exchange- Exchange- Exchange-
Date Traded Traded Total Traded Traded
$ $ $
Jun. 30, 2004 (2,959,492) (2,505,445) (5,464,937) Jun. 2005 Sep. 2004
Dec. 31, 2003 2,105,317 4,121,006 6,226,323 Dec. 2004 Mar. 2004

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 and forward 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 for the Partnership's exchange-traded futures
and forward contracts, are required, pursuant to regulations of
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

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 and forward contracts, including an amount equal to the
net unrealized gains (losses) on all open futures and forward
contracts, which funds, in the aggregate, totaled $67,005,472 and
$80,869,636 at June 30, 2004 and December 31, 2003, respectively.
With respect to the Partnership's off-exchange-traded forward
currency contracts, there are no daily exchange-required
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, however, MS & Co. and Morgan
Stanley DW will make daily settlements of losses as needed. 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 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 trading accounts
established for the Trading Manager, which assets are used as
margin to engage in trading and may be used as margin solely for
the Partnership's 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. 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, subjecting it to
substantial losses. Either of these market conditions could
result in restrictions on redemptions. For the periods covered by
this report, illiquidity has not materially affected the
Partnership's assets.

There are no known material trends, demands, commitments, events
or uncertainties at the present time that will result in, or that
are reasonably likely to result in, the Partnership's liquidity
increasing or decreasing in any material way.

Capital Resources. The Partnership does not have, nor 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.
There are no known material trends, favorable or
unfavorable, that would affect, nor any expected material changes
to, the Partnership's capital resource arrangements at the present
time.

Off-Balance Sheet Arrangements and Contractual Obligations. The
Partnership does not have any off-balance sheet arrangements, nor
does it have contractual obligations or commercial commitments to
make future payments that would affect its liquidity or capital
resources.

Results of Operations
General. The Partnership's results depend on the Trading Manager
and the ability of the Trading Manager's trading program to take
advantage of price movements in the futures and forwards markets.
The following presents a summary of the Partnership's operations
for the three and six month periods ended June 30, 2004 and 2003
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 the Trading Manager's trading activities on behalf of
the Partnership during the period in question. Past
performance is no guarantee of future results.

The Partnership's results of operations set forth in the
financial statements on pages 2 through 11 of this report were
prepared in accordance with accounting principles generally
accepted in the United States of America, which require the use
of certain accounting policies that affect the amounts reported
in these financial statements, including the following: The
contracts the Partnership trades are accounted for on a trade-
date basis and marked to market on a daily basis. The difference
between their cost and market value is recorded on the Statements
of Operations as "Net change in unrealized trading profit/loss"
for open (unrealized) contracts, and recorded as "Realized
trading profit/loss" when open positions are closed out, and the
sum of these amounts constitutes the Partnership's trading
results. The market value of a futures contract is the
settlement price on the exchange on which that futures contract is
traded on a particular day. The value of foreign currency forward
contracts is based on the spot rate as of the close of business,
New York City time, on a given day. Interest income revenue, as
well as management fees, incentive fees and brokerage commissions
expenses of the Partnership are recorded on an accrual basis.

Demeter believes that, based on the nature of the operations of
the Partnership, no assumptions relating to the application of
critical accounting policies other than those presently
used could reasonably affect reported amounts.

For the Quarter and Six Months Ended June 30, 2004
The Partnership recorded losses net of interest income totaling
$20,676,915 and expenses totaling $1,783,735, resulting in a net
loss of $22,460,650 for the quarter ended June 30, 2004. The
Partnership's net asset value per Unit decreased from $3,513.48
at March 31, 2004 to $2,612.34 at June 30, 2004.

The most significant trading losses of approximately 13.8% were
recorded in the currency markets, primarily from positions in the
Japanese yen and British pound versus the U.S. dollar. During
April, long positions in the Japanese yen and British pound
versus the U.S. dollar incurred losses as the dollar surged
following the release of stronger than expected U.S. jobs data.
The yen also came under pressure following efforts by the
Japanese government to weaken the yen by intervening in the
currency markets. During May, short positions in both the yen
and the pound versus the U.S. dollar experienced losses as the
dollar's value declined amid fears of potential terrorist
attacks, expanding energy prices, and the release of weaker-than-
expected economic data. During June, the currency markets
continued to prove difficult for the Partnership as losses were
experienced primarily from short positions in the Japanese yen
versus the U.S. dollar as better-than-anticipated improvements in
Japanese economic data and speculation that the Bank of
Japan would move to raise interest rates pushed the yen higher.
Additional sector losses resulted from long positions in the
British pound versus the U.S. dollar as the dollar reversed
higher during the first half of June on early expectations that
the U.S. Federal Reserve would be aggressive in raising U.S.
interest rates. Further weakness in the pound resulted later in
the month due to a lack of signals that the Bank of England would
maintain a policy of tightening. Additional Partnership losses
of approximately 10.0% stemmed from the global interest rate
markets, primarily during April and June, from positions in
European, U.S. and Australian interest rate futures. During
April, long interest rate futures positions experienced losses as
prices tumbled following the release of stronger than expected
U.S. jobs data. During June, short positions recorded losses as
prices increased during the latter portion of June amid weaker-
than-expected U.S. economic reports and the increased likelihood
the U.S. Federal Reserve would not aggressively raise interest
rates. In the metals markets, losses of approximately 3.7%
during April and May from positions in both precious and base
metals. During April, long futures positions resulted in losses
as the U.S. dollar's move higher and fears of reduced demand from
China caused prices to conversely move lower. During May, a
weaker U.S. dollar and strong Asian demand helped pull up
industrial metals prices. Gold and silver prices also increased
as investor interest was reignited by a weaker U.S. dollar and
fears of potential terrorist attacks. As a result, short
futures positions accounted for sector losses. Further losses of
approximately 3.4% were experienced in the global stock index
markets, primarily during May, from trading in Japanese and
European stock index futures. Long futures positions resulted in
losses during the first half of May as global equity prices were
negatively impacted by geopolitical concerns and expanding energy
prices. Newly established short positions in these markets
experienced additional losses as prices rebounded later in May
due to a slight pullback in oil prices and strong earnings from
technology companies. During May and June, positions in corn and
the soybean complex resulted in Partnership losses of
approximately 1.5% within the agricultural markets. A portion of
the Partnership's overall losses during the second quarter was
offset by gains of approximately 4.6% in the energy markets.
Long futures positions in crude oil and its related products
achieved gains during April as prices moved higher on fears of
potential terrorist activity in Saudi Arabia and news of problems
with U.S. refineries. Prices moved higher during May as they
surged past $41 a barrel and reached twenty one year highs amid
fears of terrorist attacks on Saudi Arabian oil facilities and
disruptions in Iraqi oil production. Additional gains were
generated from long positions in natural gas futures as prices
strengthened due to higher crude oil prices and news of a
decrease in supply.

The Partnership recorded losses net of interest income
totaling $12,831,722 and expenses totaling $3,703,089, resulting
in a net loss of $16,534,811 for the six months ended June 30,
2004. The Partnership's net asset value per Unit decreased from
$3,283.04 at December 31, 2003 to $2,612.34 at June 30, 2004.

The most significant trading losses of approximately 23.0% were
recorded in the currency markets from trading in the Japanese
yen, British pound, euro, and South African rand, versus the U.S.
dollar. During March, short Japanese yen positions against the
U.S. dollar incurred losses as the yen reversed higher due to
speculation the Bank of Japan was relaxing its efforts of
intervention to weaken the yen. Other currency sector losses
resulted from short positions in the euro versus the U.S. dollar
as the euro's value reversed higher during the final week of
March amid market demand sparked by speculation that the European
Central Bank would leave interest rates unchanged. During April,
long positions in the Japanese yen, British pound and South
African rand versus the U.S. dollar incurred losses as the dollar
surged during the month following the release of stronger than
expected U.S. jobs data. The yen also came under pressure
following efforts by the Japanese government to weaken the yen by
intervening in the currency markets. During May, short positions
in the yen, pound, and rand versus the dollar experienced further
losses as the dollar's value declined amid fears of potential
terrorist attacks, expanding energy prices, and the release of
weaker than expected economic data. During June, the
currency markets continued to prove difficult for the Partnership
as losses were experienced primarily from short positions in the
Japanese yen versus the U.S. dollar as better than anticipated
improvements in Japanese economic data and speculation that the
Bank of Japan would move to raise interest rates pushed the yen
higher. Additional sector losses resulted from long positions in
the British pound versus the U.S. dollar as the dollar reversed
higher during the first half of June on early expectations that
the U.S. Federal Reserve would be aggressive in raising U.S.
interest rates. Further weakness in the pound resulted later in
the month due to a lack of signals that the Bank of England would
maintain a policy of tightening. Losses of approximately 3.2%
were incurred in the global stock index markets, primarily during
May, from positions in Japanese and European stock index futures.
Global equity prices were negatively impacted during the first
half of May by geopolitical concerns and expanding energy prices.
Newly established short positions in these markets experienced
additional losses as prices rebounded later in May due to a
slight pullback in oil prices and strong earnings from technology
companies. Partnership losses of approximately 2.6% resulted in
the global interest rate markets from futures positions in
Japanese and Australian interest rates. During April, long
positions incurred losses as prices tumbled following the release
of stronger than expected U.S. jobs. During June, short
positions in Japanese interest rate futures resulted in losses as
prices increased later in the month after the Bank of
Japan voted to maintain interest rates close to zero. In the
metals markets, losses of approximately 2.1% were recorded during
April and May from positions in both precious and base metals.
During April, long futures positions resulted in losses as prices
moved conversely to the increase in the U.S. dollar, as well as
reacted to fears of weakening demand from China. During May, a
weaker U.S. dollar and strong Asian demand helped pull up
industrial metals prices. Gold and silver prices also increased
as investor interest was reignited by a weaker U.S. dollar and
fears of potential terrorist attacks. As a result, short futures
positions in both base and precious metals accounted for sector
losses. A portion of the Partnership's overall losses during the
first six months of the year was offset by gains of approximately
9.7% in the energy markets. During February and March, long
futures positions in crude oil and its related products benefited
as prices increased in response to low market supply, falling
inventory levels, a production cut announcement from OPEC, and
fears of supply disruptions following the Madrid train bombings.
Long futures positions in crude oil and its related products
continued to profit during April as prices trended higher on
fears of potential terrorist activity in Saudi Arabia and news of
problems with U.S. refineries. Prices also moved higher during
May as they surged past $41 a barrel and reached twenty one year
highs amid fears of terrorist attacks on Saudi Arabian oil
facilities and disruptions in Iraqi oil production. Additional
gains were generated from long positions in natural gas
futures as prices strengthened due to higher crude oil prices and
news of a decrease in supply. Gains of approximately 1.3% were
generated in the agricultural markets, primarily during the first
quarter from long futures positions in corn, soybeans and soybean
related products as prices finished higher due to increased
exports abroad and greater demand from Asia.

For the Quarter and Six Months Ended June 30, 2003
The Partnership recorded revenues including interest income
totaling $153,254 and expenses totaling $2,396,924, resulting in
a net loss of $2,243,670 for the quarter ended June 30, 2003. The
Partnership's net asset value per Unit decreased from $3,643.92
at March 31, 2003 to $3,559.07 at June 30, 2003.

The most significant trading losses of approximately 2.5% were
recorded in the metals markets primarily during June from long
positions in gold futures as prices declined in response to the
rise of the U.S. dollar. In the energy markets, losses of
approximately 1.5% were recorded primarily during May from short
futures positions in crude oil as prices moved higher amid supply
concerns and renewed fears concerning security at Middle Eastern
refining facilities. Smaller losses of approximately 1.3% were
recorded in the agricultural markets during June from short
positions in cotton futures as increased exports and weather-
related supply concerns forced prices higher. A portion of the
Partnership's overall losses was offset by gains of
approximately 1.2% in the global stock index markets recorded
during June from long positions in U.S., Japanese, and European
stock index futures as equity prices rallied in response to the
prospect of lower interest rates and the release of positive
economic data. In the currency markets, gains of approximately
0.9% were experienced primarily during April and May from long
positions in the euro and Australian dollar versus the U.S.
dollar as the value of these currencies strengthened against the
U.S. dollar amid uncertainty regarding the Bush Administration's
economic policy, renewed fears of potential terrorist attacks
against American interests, and investor preference for non-U.S.
dollar denominated assets. Smaller gains of approximately 0.8%
were recorded in the global interest rate futures markets during
May from long positions in U.S. interest rate futures as prices
trended higher amid speculation of an interest rate cut by the
Federal Reserve and lingering doubts concerning a global economic
recovery.

The Partnership recorded revenues including interest income
totaling $16,691,792 and expenses totaling $5,449,735, resulting
in net income of $11,242,057 for the six months ended June 30,
2003. The Partnership's net asset value per Unit increased from
$3,166.00 at December 31, 2002 to $3,559.07 at June 30, 2003.

The most significant trading gains of approximately 7.4%
were recorded in the global interest rate markets from long
positions in U.S., European, and Japanese interest rate futures
as prices trended higher during January, February, and May amid
continued uncertainty in the global equity markets and investor
demand for fixed income investments. In the energy markets,
gains of approximately 4.9% were recorded primarily during
January and February from long positions in natural gas futures
as prices trended higher in response to prolonged frigid
temperatures in the northeastern and midwestern United States.
In the currency markets, gains of approximately 3.4% were
experienced primarily during January, April, and May from long
positions in the euro and Australian dollar versus the U.S.
dollar as the value of these currencies strengthened against the
U.S. dollar amid uncertainty regarding the Bush Administration's
economic policy, increased tensions between the U.S. and Iraq,
and investor preference for non-U.S. dollar denominated assets.
Additional gains of approximately 3.3% were recorded in the
global stock index markets from short positions in European and
Japanese stock index futures during January and March as prices
moved lower on continuing economic uncertainty and the war in
Iraq. Additional gains in the sector were provided during June
from long positions in European and Japanese stock index futures
as prices rallied amid increased foreign demand for equities, the
release of positive economic data, and renewed expectations for a
U.S. interest rate cut. A portion of the Partnership's overall
gains was offset by losses of approximately 2.8% recorded
in the metals markets from positions in gold and silver futures
as precious metals prices experienced short-term price volatility
throughout a majority of the first half of the year. Elsewhere
in the metals markets, short positions in aluminum futures
resulted in losses during May as prices reversed higher, buoyed
by a rebound in U.S. equity prices and hopes for increased
industrial demand. Additional losses of approximately 1.9% were
experienced in the agricultural futures markets from short
positions in corn futures as prices moved without consistent
direction during the first six months of the year due to supply
and demand concerns prompted by the weather in the crop growing
regions of the U.S.

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
inherent to the primary business activity of the Partnership.

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, factors that result in frequent changes in the fair
value of the Partnership's open positions, and consequently in its
earnings, whether realized or unrealized, and cash flow. Gains
and losses on open positions of exchange-traded futures and
forward contracts are settled daily through variation margin.
Gains/losses on off-exchange-traded forward currency contracts are
settled at the termination of the contract or more frequently, as
agreed upon with each counterparty.

The Partnership's total market risk may increase or decrease as
it is influenced by a wide variety of factors, including, but not
limited to, the diversification among the Partnership's
open positions, the volatility present within the markets, and
the liquidity of the markets.

The Partnership's past performance is no guarantee 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.

Limited partners will not be liable for losses exceeding the
current net asset value of their investment.

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 on the basis of
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 and cash flow.

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 Partnership estimates VaR using a model based upon
historical simulation (with a confidence level of 99%) which
involves constructing a distribution of hypothetical daily changes
in the value of a trading portfolio. The VaR model takes into
account linear exposures to risk including 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 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, or one day in 100.
VaR typically does not represent the worst case outcome. Demeter
uses approximately four years of daily market data (1,000
observations) and revalues its portfolio (using delta-gamma
approximations) for each of the historical market moves that
occurred over this time period. This generates a probability
distribution of daily "simulated profit and loss" outcomes. The
VaR is the appropriate percentile of this distribution.
For example, the 99% one-day VaR would represent the 10th worst
outcome from Demeter's simulated profit and loss series.

The Partnership's VaR computations are based on the risk
representation of the underlying benchmark for each instrument or
contract and do not distinguish between exchange and non-exchange
dealer-based instruments. They are also not based on exchange
and/or dealer-based maintenance margin requirements.

VaR models, including the Partnership's, are continually 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.
Please further note that VaR as described above may not be
comparable to similarly titled measures used by other entities.

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 June 30, 2004 and 2003. At
June 30, 2004 and 2003, the Partnership's total capitalization
was approximately $64 million and $96 million, respectively.

Primary Market June 30, 2004 June 30, 2003
Risk Category Value at Risk Value at Risk

Currency (2.41)% (1.77)%
Interest Rate (1.50) (1.78)
Equity (0.37) (0.85)
Commodity (2.58) (2.05)
Aggregate Value at Risk (3.70)% (3.49)%

The VaR for a market category represents the one-day downside
risk for the aggregate exposures associated with this market
category. The Aggregate Value at Risk listed above represents
the VaR of the Partnership's open positions across all the market
categories, and is less than the sum of the VaRs for all such
market categories due to the diversification benefit across asset
classes.

Because the business of the Partnership 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, which could positively or negatively
materially impact market risk as measured by VaR.

The table below supplements the quarter-end VaR set forth above
by presenting the Partnership's high, low and average VaR, as a
percentage of total net assets for the four quarter-end reporting
periods from July 1, 2003 through June 30, 2004.
Primary Market Risk Category High Low
Average
Currency (4.24)% (2.20)% (3.07)%

Interest Rate (2.98) (1.50) (2.07)

Equity (1.24) (0.37) (0.78)

Commodity (3.32) (2.08) (2.60)

Aggregate Value at Risk (5.21)% (3.70)% (4.62)%

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 market fluctuations applied to current
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 provided present the results of the Partnership's
VaR for each of the Partnership's market risk exposures and on an
aggregate basis at June 30, 2004 and 2003, and for the four
quarter-end reporting periods from July 1, 2003 through June 30,
2004. VaR is not necessarily representative of the Partnership's
historic risk, nor should it be used to predict 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.

The Partnership also maintains a substantial portion
(approximately 105% as of June 30, 2004) of its available assets
in cash at Morgan Stanley DW. A decline in short-term interest
rates would result in a decline in the Partnership's cash
management income. This cash flow risk is not considered to be
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 June 30, 2004, by market sector. It may be
anticipated, however, that these market exposures will vary
materially over time.

Currency. The primary market exposure of the Partnership at June
30, 2004 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. At June 30, 2004, the
Partnership's exposure was mostly to 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.

Interest Rate. The second largest market exposure of the
Partnership at June 30, 2004 was to the global interest rate
sector. Exposures were primarily spread across the U.S.,
European and Japanese 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 exposure
is generally to interest rate fluctuations in the U.S. and the
other G-7 countries. The G-7 countries consist of France, the
U.S., Britain, Germany, Japan, Italy, and Canada. However, the
Partnership also takes futures positions in the government debt
of smaller countries - e.g., Australia. Demeter
anticipates that the G-7 countries 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.

Equity. The third largest market exposure of the Partnership at
June 30, 2004 was primarily 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 June 30,
2004, the Partnership's primary exposures were to the NASDAQ
(U.S.) and DAX (Germany) stock indices. The Partnership is
exposed to the risk of adverse price trends or static markets in
the U.S., European and Japanese stock indices. Static markets
would not cause major market changes, but would make it difficult
for the Partnership to avoid trendless price movements resulting
in numerous small losses.

Commodity.
Energy. At June 30, 2004, the Partnership's energy exposure
was primarily to futures contracts in crude oil and its
related products, and natural gas. Price movements in these
markets result from geopolitical developments, particularly
in the Middle East, as well as weather patterns and other
economic fundamentals. Significant profits and
losses, which have been experienced in the past, are
expected to continue to be experienced in the future.
Natural gas has exhibited volatility in prices resulting
from weather patterns and supply and demand factors and will
likely continue in this choppy pattern.

Metals. The Partnership's metals exposure at June 30, 2004
was to fluctuations in the price of precious metals, such as
gold and silver and base metals, such as copper, aluminum,
nickel, and zinc. Economic forces, supply and demand
inequalities, geopolitical factors, and market expectations
influence price movements in these markets. The Trading
Manager, from time to time, takes positions when market
opportunities develop, and Demeter anticipates that the
Partnership will continue to do so.

Soft Commodities and Agriculturals. At June 30, 2004, the
Partnership had exposure to the markets that comprise these
sectors. Most of the exposures were to the cotton, coffee,
sugar, and corn markets. Supply and demand inequalities,
severe weather disruptions 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 June 30, 2004:

Foreign Currency Balances. The Partnership's primary foreign
currency balances at June 30, 2004 were in euros and
Japanese yen. The Partnership controls the non-trading risk
of foreign currency 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 by
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.

Item 4. CONTROLS AND PROCEDURES
(a) As of the end of the period covered by this quarterly
report, the President and Chief Financial Officer of
Demeter, the general partner of the Partnership, have
evaluated the effectiveness of the Partnership's
disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act), and have
judged such controls and procedures to be effective.

(b) There have been no significant changes during the
period covered by this quarterly report in the
Partnership's internal controls or in other factors
that could significantly affect these controls
subsequent to the date of their evaluation.

PART II. OTHER INFORMATION

Item 5. OTHER INFORMATION
Management. Effective June 21, 2004, the following changes have
been made to the Board of Directors and Officers of Demeter:

Mr. Jeffrey D. Hahn resigned the position of Chief Financial
Officer and Director of Demeter.

Mr. Todd Taylor, age 41, is a Director of Demeter. Mr. Taylor
began his career with Morgan Stanley in June 1987 as a Financial
Advisor in the Dallas office. In 1995, he joined the Management
Training Program in New York and was appointed Branch Manager in
St. Louis in 1997. Three years later, in 2000, Mr. Taylor was
appointed to a newly created position, Director of Individual
Investor Group ("IIG") Learning and Development, before becoming
the Director of IIG Strategy in 2002. Most recently, Mr. Taylor
has taken on a new role as the High Net Worth Segment Director.
Currently a member of the firm's E-Learning Council, Mr. Taylor
is also a current member of the Securities Industry/Regulatory
Council on Continuing Education. Mr. Taylor graduated from Texas
Tech University with a B.B.A. in Finance.

Mr. William D. Seugling, age 34, will become a Director of
Demeter once he has registered with the National Futures
Association ("NFA") as a principal, which registration is
currently pending. Mr. Seugling is an Executive Director at
Morgan Stanley and currently serves as Director of Client
Solutions for US Private Wealth Management. Mr. Seugling joined
Morgan Stanley in June 1993 as an Associate in Equity Structured
Products having previously worked in research and consulting for
Greenwich Associates from October 1991 to June 1993. Since 1994,
he has focused broadly on analysis and solutions for wealthy
individuals and families culminating in his current role within
the division. He was named Vice President in 1996 and an
Executive Director in 1999. Mr. Seugling graduated cum laude
from Bucknell University with a B.S. in Management and a
concentration in Chemistry.

Mr. Kevin Perry, age 35, is the Chief Financial Officer of
Demeter. His registration with the NFA as a principal is
currently pending. He currently serves as an Executive Director
and Controller of Client Solutions at Morgan Stanley. Mr. Perry
joined Morgan Stanley in October 2000 and is also Chief Financial
Officer of Morgan Stanley Trust National Association, Van Kampen
Funds Inc. and Morgan Stanley Distribution, Inc. Prior to
joining Morgan Stanley, Mr. Perry worked as an auditor and
consultant in the financial services practice of Ernst & Young
from October 1991 to October 2000. Mr. Perry received a B.S.
degree in Accounting from the University of Notre Dame in 1991
and is a Certified Public Accountant.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) Exhibits

3.01 Amended and Restated Limited Partnership Agreement of the
Partnership, is incorporated by reference to Exhibit A of
the Partnership's prospectus, dated May 12, 1997, filed
with the Securities and Exchange Commission pursuant to
Rule 424(b)(3) under the Securities Act of 1933 on May
13, 1997.
10.01 Amended and Restated Management Agreement among the
Partnership, Demeter and John W. Henry and Company, Inc.,
dated as of May 12, 1997, is incorporated by reference to
Exhibit 10.01 of the Partnership's Form 10-Q for the
quarter ended June 30, 2002 (File No. 0-19046) filed with
the Securities and Exchange Commission on August 12,
2002.
10.01(a) Amendment to Amended and Restated Management Agreement
between the Partnership and John Henry & Company, dated
November 30, 2000, is incorporated by reference to
Exhibit 10.01 of the Partnership's Form 8-K (file No. 0-
19046) filed with the Securities and Exchange Commission
on January 31, 2001.
10.02 Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW Inc., dated as of June
22, 2000, is incorporated by reference to Exhibit 10.01
of the Partnership's Form 8-K (File No. 0-19046) 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.
0-19046) 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. 0-19046) 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, 2000, is incorporated by reference
to Exhibit 10.05 of the Partnership's Form 8-K (File No.
0-19046) filed with the Securities and Exchange
Commission on November 13, 2001.
10.06 Amendment to Amended and Restated Management Agreement
between the Partnership and John W. Henry & Company,
Inc., dated as of November 30, 2000, is incorporated by
reference to Exhibit 10.01 of the Partnership's Form 8-K
(File No. 0-19046) filed with the Securities and Exchange
Commission on January 3, 2001.
10.07 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. 0-19046) filed with the
Securities and Exchange Commission on November 13, 2001.
31.01 Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to rules 13a-15(e) and 15d-15(e), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.02 Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to rules 13a-15(e) and 15d-15(e),
as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.01 Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
32.02 Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.

(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 Portfolio Strategy Fund L.P.
(Registrant)

By: Demeter Management Corporation
(General Partner)

August 16, 2004 By:/s/Kevin Perry
Kevin Perry
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.

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)