WITTER DEAN PRINCIPAL PLUS FUND L P - 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 September 30, 2004 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 Number 0-18314

DEAN WITTER PRINCIPAL PLUS FUND L.P.

(Exact name of registrant as specified in its charter)

Delaware 13-3541588
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Demeter Management Corporation
330 Madison Avenue, 8th Floor
New York, NY 10017
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (212) 905-2700

825 Third Avenue, 9th Floor, New York, NY 10022

(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 PRINCIPAL PLUS FUND L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 30, 2004

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

DEAN WITTER PRINCIPAL PLUS FUND L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

DEAN WITTER PRINCIPAL PLUS FUND L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

DEAN WITTER PRINCIPAL PLUS FUND L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Nine Months Ended September 30, 2004 and 2003
(Unaudited)

DEAN WITTER PRINCIPAL PLUS FUND L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2004

(Unaudited)

The unaudited consolidated 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 Principal Plus Fund L.P. (the
"Partnership"). The consolidated 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
The Partnership is a Delaware limited partnership organized to
engage primarily in the speculative trading of futures contracts,
options on futures contracts, and forward contracts on physical
commodities, and other commodity interests (collectively, "Futures
Interests"). From February 1, 1996 through August 31, 2003 (the
"Guarantee Period"), the Partnership had approximately 80% of its
assets invested in zero-coupon United States Treasury Securities
(the "Yield Pool") and its remaining assets were invested in
Futures Interests. On August 31, 2003 the Yield Pool was
liquidated and the proceeds from its liquidation were invested in
and will continue to be invest in Futures Interests without any
guarantee with respect to the net asset value per unit of limited
partnership interest ("Unit(s)") at any future date.
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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
subsidiaries of Morgan Stanley. The trading advisor to the
Partnership is SSARIS Advisors, LLC (the "Trading Advisor").

On February 27, 2002, the Partnership received notification of a
preliminary entitlement to payment from the Sumitomo Copper
Litigation Settlement Administrator, and the Partnership has
received settlement award payments in the amount of $722,195 as of
August 30, 2002 and $7,113 as of July 30, 2004. Any amounts
received are accounted for in the period received, for the benefit
of the limited partners at the date of receipt.

2. Revenue Recognition
Prior to its termination, the Yield Pool was valued at cost plus
accreted interest with the accumulated unrealized gain on the
zero-coupon U.S. Treasury Securities separately disclosed. The
quarter-to-date change in the Yield Pool's market value is
reflected in the Consolidated Statements of Operations. The
Consolidated Statements of Financial Condition and the
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Consolidated Statements of Operations have been reconciled to
reflect net assets, net asset value per unit, and a net loss in
accordance with the terms of the Limited Partnership Agreement.

3. Related Party Transactions
The Partnership's cash is on deposit with Morgan Stanley DW, MS &
Co., and MSIL in futures, forwards, and options trading accounts
to meet margin requirements as needed. Monthly, Morgan Stanley DW
pays interest income on 100% and 90% of the Partnership's and the
Trading Company's respectively, average daily Net Assets as
defined in the Limited Partnership Agreement for the month at a
prevailing rate on U.S. Treasury bills. The Partnership pays
brokerage fees to Morgan Stanley DW.

4. Financial Instruments
The Partnership trades futures contracts, options on 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 influence the market value of these contracts,
including interest rate volatility.

The market value of exchange-traded contracts is based on the
settlement price quoted by the exchange on the day with respect
to which market value is being determined. If an exchange-traded
contract could not have been liquidated on such day due to the
operation of daily limits or other rules of the exchange, the
settlement price shall be the settlement price on the first
subsequent day on which the contract could be liquidated. The
market value of off-exchange-traded contracts is based on the
fair market value quoted by the counterparty.

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.
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Generally, derivatives include futures, forward, swaps or options
contracts, and other financial instruments with similar
characteristics such as caps, floors, and collars.

The net unrealized gains on open contracts, reported as a
component of "Equity in futures interests trading accounts" on the
Consolidated Statements of Financial Condition, and their longest
contract maturities were as follows:

Net Unrealized Gains
on Open Contracts Longest Maturities
Off- Off-
Exchange- Exchange- Exchange- Exchange-
Date Traded Traded Total Traded Traded
$ $ $
Sep. 30, 2004 206,821 15,147 221,968 Mar. 2005 Dec. 2004
Dec. 31, 2003 816,989 20,037 837,026 Mar. 2004 Mar. 2004

The Partnership has credit risk associated with counterparty non-
performance. The credit risk associated with the instruments in
which the Partnership trades is limited to the amounts reflected
in the Partnership's Consolidated 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.
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Exchange-traded futures, forward, and futures-styled options
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, forward, and futures-styled
options contracts, 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, forward, and futures-styled options contracts, including
an amount equal to the net unrealized gains (losses) on all open
futures, forward, and futures-styled options contracts, which
funds, in the aggregate, totaled $23,333,968 and $27,292,752 at
September 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
variation in value nor is there any requirement that an amount
equal to the net unrealized gains (losses) on open forward
contracts be segregated. However, the Partnership is required to
meet margin requirements equal to the net unrealized loss on open
contracts in the Partnership accounts with the counterparty, which
is accomplished by daily maintenance of the cash balance in a
custody account held at Morgan Stanley DW for the benefit of MS &
Co. With respect to those off-exchange-traded forward currency
DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

contracts, the Partnership is at risk to the ability of MS & Co.,
the sole counterparty on all such contracts, to perform. The

DEAN WITTER PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)

Partnership has a netting agreement with MS & Co. This agreement,
which seeks to reduce both the Partnership's and MS & Co.'s
exposure to 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, forwards, and options
trading accounts established for the Trading Advisor, 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, forwards, and options, it is expected that
the Partnership will continue to own such liquid assets for margin
purposes.

The Partnership's investment in futures, forwards, and options
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 or options contract
has increased or decreased by an amount equal to the daily limit,
positions in that futures or options 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 or options 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 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 expects to
have, any capital assets. Redemptions of Units in the future will
affect the amount of funds available for investment in futures,
forwards, and options 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 Advisor
and the ability of the Trading Advisor's trading program to take
advantage of price movements in the futures, forwards, and options
markets. The following presents a summary of the Partnership's
operations for the three and nine month periods ended September
30, 2004 and 2003, and a general discussion of its trading
activities during each period. It is important to note, however,
that the Trading Advisor 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 Advisor 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 Advisor'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 12 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
Consolidated 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. The sum of these amounts, along
with the "Proceeds from Litigation Settlement", 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 fees 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 Three and Nine Months Ended September 30, 2004
The Partnership recorded losses net of interest income totaling
$35,552, expenses totaling $336,184, and minority interest of
$4,238, resulting in a net loss of $367,498 for the three months
ended September 30, 2004. The Partnership's net asset value per
Unit decreased from $1,979.95 at June 30, 2004 to $1,950.08 at
September 30, 2004.

The most significant trading losses of approximately 1.4% were
incurred in the global stock index markets, primarily during July,
from long positions in S&P 500 Index futures as prices reversed
lower early in the month due to the release of disappointing U.S.
employment data, surging energy prices, and new warnings
concerning potential terrorist attacks. Additional losses of
approximately 0.8% were recorded in the currency markets
throughout the quarter. During July, short cross-rate positions in
the Australian dollar versus the Japanese yen incurred losses as
the Australian currency reversed higher amid speculation for
increases in Australian interest rates. During August, losses
were experienced from short positions in the Japanese yen versus
the U.S. dollar, Swiss franc, Australian dollar, and the euro as
the value of the yen moved higher due to stronger Japanese equity
prices and the release of positive Japanese economic data. Newly
established long positions in the Japanese yen versus the
previously mentioned currencies also resulted in further losses
during September as the yen declined due to Japan's
swelling national debt and a reversal of the U.S. dollar's value
in response to a hike in U.S. interest rates. In the metals
markets, losses of approximately 0.2% were experienced primarily
during July and August from long futures positions in base and
precious metals after industrial metals prices declined amid a
slowdown in demand from China, while precious metals prices fell
amid a rebound in the value of the U.S. dollar. A portion of the
Partnership's overall losses for the quarter was offset by gains
of approximately 1.6% achieved in the global interest rates
markets, primarily during August, from long positions in U.S. and
European interest rate futures as prices moved higher in response
to a surge in oil prices, a drop in equity prices and a conflicted
economic picture generated by U.S. economic reports. Additional
gains of approximately 0.4% were recorded in the energy markets
throughout the quarter from long futures positions in crude oil
and its related products as prices trended higher reaching
historical highs amid heavy market demand and concerns for supply.

The Partnership recorded losses net of interest income totaling
$258,279, expenses totaling $1,049,397, and minority interest of
$14,603, resulting in a net loss of $1,293,073 for the nine
months ended September 30, 2004. The Partnership's net asset
value per Unit decreased from $2,053.17 at December 31, 2003 to
$1,950.08 at September 30, 2004.

The most significant trading losses of approximately 2.1%
were experienced in the currency markets from positions in the
Japanese yen versus several major foreign currencies. These
losses were experienced throughout the year from both long and
short positions in the Japanese yen relative to the U.S. dollar,
euro, Swiss franc, and Australian dollar as the value of the yen
experienced significant price volatility due to conflicting
economic data regarding a Japanese economic recovery, uncertainty
regarding currency market intervention by the Bank of Japan,
geopolitical concerns stemming from terror warnings and
instability in Iraq, and speculation regarding the direction of
U.S. and Japanese interest rates. Elsewhere in the currency
markets, losses were incurred during September from short
positions in the Mexican peso versus the U.S. dollar as the dollar
reversed lower versus the peso amid perceptions that the U.S.
Federal Reserve reformed their outlook regarding aggressive
increases in interest rates. Additional losses of approximately
0.8% occurred in the global stock index markets, primarily during
July, from long positions in S&P 500 Index futures as prices
reversed lower early in July due to the release of disappointing
U.S. employment data, surging energy prices, and new warnings
concerning potential terrorist attacks. In the metals markets,
losses of approximately 0.2% resulted from long futures positions
in nickel as prices fell due to a strengthening of the U.S. dollar
during January. Short nickel futures positions during May
experienced further losses as prices increased due to a weaker
U.S. dollar and strong Asian demand. During the third quarter,
losses continued from long positions after industrial
metals prices declined amid a slowdown in demand from China.
Smaller losses of approximately 0.2% were experienced in the
agricultural markets from positions in cocoa and cotton as a
result of "whipsawing" in prices due to supply and demand
concerns. A portion of the Partnership's overall losses during
the first nine months of the year was offset by gains of
approximately 0.9% achieved in the global interest rates markets,
primarily during the first and third quarters, from long positions
in U.S. and European interest rate futures. During the first
quarter, long positions benefited from a rally in bond prices
sparked by low inflation and reduced concerns for increases in
interest rates. During the third quarter, long positions profited
as prices moved higher in response to a surge in oil prices, a
drop in equity prices, and a conflicted economic picture generated
by U.S. economic reports. Additional gains of approximately 0.4%
were generated in the energy markets, primarily during the third
quarter, from long futures positions in crude oil and its related
products as prices trended higher reaching historical highs amid
heavy market demand and supply concerns.

For the Three and Nine Months Ended September 30, 2003
The Partnership recorded losses net of interest income and change
in the value of the Yield Pool totaling $229,081, expenses
totaling $441,395, and minority interest of $14,415, resulting in
a net loss of $656,061 for the three months ended September 30,
2003. The Partnership's net asset value per Unit decreased
from $2,069.12 at June 30, 2003 to $2,038.03 at September 30,
2003.

The most significant trading losses of approximately 0.9% were
recorded in the global stock index markets, primarily during
September, from long positions in S&P 500 Index futures amid a
sell-off prompted by a steady stream of economic data that raised
concerns about the strength of the global economy. Additional
losses of approximately 0.7% were recorded in the currency
markets from long positions in the euro versus the Canadian
dollar during August as the value of the Canadian currency
strengthened amid rising commodity prices. During September,
smaller losses stemmed from short positions in the euro versus
the Canadian dollar as the value of the Canadian currency
declined in sympathy with the U.S. dollar and expectations for
lower interest rates in Canada. Additional losses were recorded
from short positions in the New Zealand dollar versus the U.S.
dollar during September as the U.S. dollar's value moved lower on
fears that the U.S. economic recovery was unsustainable and
concerns regarding the potential impact of a statement by the G-7
countries supporting "more flexible exchange rates." The G-7
countries consist of France, the U.S., Britain, Germany, Japan,
Italy, and Canada. A portion of the Partnership's overall losses
for the quarter was offset by gains of approximately 0.9% in the
global interest rate futures markets, primarily during September,
from long positions in U.S. interest rate futures as bond
prices moved higher due to renewed skepticism regarding a global
economic recovery and lower equity prices.

The Partnership recorded revenues including interest income and
change in the value of the Yield Pool totaling $542,832 and
expenses totaling $1,363,034, and minority interest of $35,489,
resulting in a net loss of $784,713 for the nine months ended
September 30, 2003. The Partnership's net asset value per Unit
increased from $2,031.46 at December 31, 2002 to $2,038.03 at
September 30, 2003.

The most significant trading gains of approximately 2.2% were
recorded in the global interest rate markets, during February,
May, and September from long positions U.S. interest rate futures
as prices continued to trend higher amid speculation of an
interest rate cut by the U.S. Federal Reserve and lingering
doubts concerning a global economic recovery. A portion of the
Partnership's overall gains for the first nine months was offset
by losses of approximately 0.8% in the global stock index
markets, primarily during September, from long S&P 500 Index
futures positions as U.S. equity prices reversed lower after the
release of several weak economic reports prompted fears for an
unsustainable U.S. economic recovery. Additional losses of
approximately 0.5% were recorded in the currency markets,
primarily during September, from short euro positions versus the
Canadian dollar as the value of the euro reversed higher versus
the Canadian currency amid weakness in the U.S. dollar and the
possibility of lower Canadian interest rates. Elsewhere in the
currency markets, losses were recorded from short positions in
the Swiss franc versus the Japanese yen as the value of the franc
reversed higher against the yen in late September amid the
release of bullish Swiss economic data.
Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures, forwards, and options. 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, forwards, and options 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, forwards, and options are settled daily through
variation margin. Gains and losses on off-exchange-traded
forward currency contracts are settled upon termination of the
contract, however, the Partnership is required to meet margin
requirements equal to the net unrealized loss on open contracts
in the Partnership accounts with the counterparty, which is
accomplished by daily maintenance of the cash balance in a
custody account held at Morgan Stanley DW for the benefit of MS &
Co.

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 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 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 and use of
leverage may cause future losses and volatility (i.e., "risk of
ruin") that far exceed the Partnership's experience to date under
the "Partnership's Value at Risk in Different Market Sectors"
section and significantly exceed the Value at Risk ("VaR") tables
disclosed.

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 Partner-
ship'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 Advisor is estimated below in terms of 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 Advisor 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 September 30, 2004 and 2003. At
September 30, 2004 and 2003, the Partnership's total
capitalization was approximately $23 million and $29 million,
respectively.

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

Equity (0.79)% (0.70)%
Interest Rate (0.57) (0.68)
Currency (0.17) (0.16)
Commodity (0.40) (0.17)
Aggregate Value at Risk (0.93)% (0.90)%

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, forwards, and options, 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 October 1, 2003 through September 30, 2004.

Primary Market Risk Category High Low Average
Equity (1.54)% (0.79)% (1.21)%
Interest Rate (0.73) (0.32) (0.51)
Currency (0.38) (0.11) (0.23)
Commodity (0.40) (0.02) (0.18)
Aggregate Value at Risk (1.39)% (0.93)% (1.19)%

Limitations on Value at Risk as an Assessment of Market Risk

VaR models permit estimation of a portfolio's aggregate market
risk exposure, incorporating a range of varied market risks;
reflect risk reduction due to portfolio diversification or hedging
activities; and can cover a wide range of portfolio assets.
However, VaR risk measures should be viewed in light of the
methodology's limitations, which include, but may not be limited
to 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.

In addition, the VaR tables above, as well as the past performance
of the Partnership, give no indication of the Partnership's
potential "risk of ruin".

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 September 30, 2004 and 2003, and for the four
quarter-end reporting periods from October 1, 2003 through
September 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. These balances and any market risk they may represent
are immaterial.

The Partnership also maintains a substantial portion
(approximately 100% as of September 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 Advisor 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, 2004 by market sector. It may be
anticipated, however, that these market exposures will vary
materially over time.

Equity. The primary market exposure of the Partnership at
September 30, 2004 was to the global stock index sector,
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 September 30, 2004, the
Partnership's primary exposure was to the S&P 500 (U.S.) stock
indices. The Partnership is exposed to the risk of adverse price
trends or static markets in the U.S. 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.

Interest Rate. The second largest market exposure at September
30, 2004 was to the global interest rate futures sector.
Exposure was primarily spread across the U.S., European,
Japanese, and Australian 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 interest rate exposure is
generally to interest rate fluctuations in the U.S. and the other
G-7 countries. 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 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 Partnership's currency market exposure at
September 30, 2004 was 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 a number of
currencies, including cross-rates - i.e., positions between two
currencies other than the U.S. dollar. At September 30, 2004,
the Partnership's major exposures were to the euro, Canadian
dollar, Swiss franc, Australian dollar, and Japanese yen currency
cross-rates, as well as 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 associated
with the Partnership's currency trades will change significantly
in the future.

Commodity
Energy. The Partnership's energy exposure at September 30,
2004, 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 price resulting from
weather patterns, and supply and demand factors and will
likely continue in this choppy pattern.

Metals. The Partnership's metals exposure at September 30,
2004 was to fluctuations in the price of precious metals,
such as gold, and base metals, such as copper, zinc, and
nickel. Economic forces, supply and demand inequalities,
geopolitical factors and market expectations influence price
movements in these markets. The Trading Advisor utilizes
the trading system(s) to take positions when market
opportunities develop, and Demeter anticipates that the
Partnership will continue to do so.

Soft Commodities and Agriculturals. At September 30, 2004,
the Partnership had exposure to the markets that comprise
these sectors. Most of the exposure was to the corn and
sugar 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 exposures of the
Partnership at September 30, 2004:

Foreign Currency Balances. The Partnership's primary
foreign currency balances at September 30, 2004 were in
Japanese yen, Australian dollars, and euros. 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 Advisor, 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 Advisor daily. In
addition, the Trading Advisor 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 instruments cash. Cash is the only Partnership investment
directed by Demeter, rather than the Trading Advisor.

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. The following changes have been made to the Board
of Directors and Officers of Demeter:

Mr. Kevin Perry, Chief Financial Officer of Demeter, was confirmed
as a principal of Demeter by the National Futures Association on
September 3, 2004.

Mr. William D. Seugling, Director of Demeter, was confirmed as a
principal of Demeter by the National Futures Association on
October 11, 2004.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) Exhibits

3.01 Amended and Restated Limited Partnership Agreement of the
Partnership, dated as of August 29, 1995, is incorporated
by reference to Exhibit 3.01 and Exhibit 3.02 of the
Partnership's Registration Statement (File No. 33-95414)
on Form S-1.
10.01 Amended and Restated Management Agreement among the
Partnership, Demeter and RXR, Inc., dated as of December
29, 1995, is incorporated by reference to Exhibit 10.02
of the Partnership's Registration Statement (File No.
33-95414) on Form S-1.
10.02 Amended and Restated Management Agreement between the
Partnership and Dean Witter Reynolds Inc., dated as of
December 29, 1995, is incorporated by reference to
Exhibit 10.01 of the Partnership's Registration Statement
(File No. 33-95414) on Form S-1.

10.03 Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW, dated as of June 22,
2000, is incorporated by reference to Exhibit 10.01 of
the Partnership's Form 8-K (File No. 0-18314) filed with
the Securities and Exchange Commission on November 13,
2001.
10.04 Commodity Futures Customer Agreement between MS & Co. and
the Partnership, and acknowledged and agreed to by Morgan
Stanley DW, dated as of May 1, 2000, is incorporated by
reference to Exhibit 10.02 of the Partnership's Form 8-K
(File No. 0-18314) filed with the Securities and Exchange
Commission on November 13, 2001.
10.05 Customer Agreement between the Partnership and MS & Co.,
dated as of May 1, 2000, is incorporated by reference to
Exhibit 10.04 of the Partnership's Form 8-K (File No.
0-18314) filed with the Securities and Exchange
Commission on November 13, 2001.
10.06 Foreign Exchange and Options Master Agreement between MS
& Co. 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. 0-18314) filed with the
Securities and Exchange Commission on November 13, 2001.
10.07 Securities Account Control Agreement among the
Partnership, MS & Co. and Morgan Stanley DW dated as of
May 1, 2000, is incorporated by reference to Exhibit
10.03 of the Partnership's Form 8-K (File No. 0-18314)
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 Principal Plus Fund L.P.
(Registrant)

By: Demeter Management Corporation
(General Partner)

November 15, 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 PRINCIPAL PLUS FUND L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6