WITTER DEAN PRINCIPAL PLUS FUND L P - 10-Q Quarterly Report

Back to GetFilings.com

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 March 31, 2005 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

(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

March 31, 2005

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 Quarters Ended March 31, 2005 and 2004
(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

March 31, 2005

(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, 2004 Annual Report on Form 10-K.
Certain reclassifications have been made to the prior year?s
financial statements to conform to the current year presentation.
Such reclassifications have no impact on the Partnership?s
reported net income (loss).

1. Organization
The Partnership is a Delaware limited partnership organized in
1989 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

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

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 invested 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.

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?).

2. Revenue Recognition
Prior to the end of the Guarantee Period, the Yield Pool was
valued at cost plus accreted interest with the accumulated
unrealized gain (loss) on the zero-coupon U.S. Treasury Securities
separately disclosed. The quarter-to-date change in the Yield
Pool?s market value was reflected in the Consolidated Statements

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

of Operations. The Consolidated Statements of Financial Condition
and the Consolidated Statements of Operations have been reconciled
to reflect net assets, net asset value per Unit, and 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 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.

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

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;

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

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.

The net unrealized gains (losses) 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/(Losses)
on Open Contracts Longest Maturities
Off- Off-
Exchange- Exchange- Exchange- Exchange-
Date Traded Traded Total Traded Traded
$ $ $
Mar. 31, 2005 (93,815) (9,342) (103,157) Sep. 2005 Jun. 2005
Dec. 31, 2004 140,369 17,355 157,724 Mar. 2005 Mar. 2005

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

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

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.
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 $20,391,593 and $23,021,975 at
March 31, 2005 and December 31, 2004, 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

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

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
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 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. Such 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 investments in futures,
forwards, and options in subsequent periods. It is not possible
to estimate the amount, and therefore the impact, of future
outflows 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 month periods ended March 31, 2005 and
2004, 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 are
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
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. Interest income, 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 Quarter Ended March 31, 2005
The Partnership recorded total trading results including interest
income totaling $(461,433), expenses totaling $301,629, and
minority interest of $8,448, resulting in a net loss of $754,614
for the quarter ended March 31, 2005. The Partnership?s net
asset value per Unit decreased from $1,970.00 at December 31,
2004 to $1,901.50 at March 31, 2005.

The most significant trading losses of approximately 1.6% were
incurred in the currency markets from positions in U.S. dollar
versus various foreign currencies, as well as positions in the
U.S. dollar index as the value of the U.S. dollar moved without
consistent direction throughout most of the quarter. During
January, short U.S. dollar positions versus the euro and South
African rand resulted in losses after the U.S. dollar?s value
reversed sharply higher amid conflicting economic data,
improvements in U.S. trade deficit data, and speculation for
higher U.S. interest rates. Additional losses resulted during
January from long positions in the Singapore dollar, versus the
U.S. dollar as the U.S. dollar advanced further due to
expectations that the Chinese government would announce
postponement of Chinese yuan-revaluation for the foreseeable
future. Short positions in the euro, Singapore dollar, and South
African rand versus the U.S. dollar experienced losses during
February as the U.S. dollar?s value declined amid news of
disappointing U.S. economic data and proposed U.S. dollar
reductions in foreign central bank currency reserves. Finally,
losses resulted during March from long positions in the euro and
Singapore dollar versus the U.S. dollar, as well as from short
positions in the U.S. dollar index, after the value of the U.S.
dollar reversed sharply higher leading up to and after the
increase in interest rates by the U.S. Federal Reserve. The
value of the U.S. dollar strengthened further following the
release of a larger-than-expected increase in February consumer
prices. Within the global stock index futures markets, losses of
approximately 1.2% were recorded in January from long positions
in U.S. equity index futures as prices finished the month lower
amid weak consumer confidence data, concerns regarding U.S.
interest rate policy, and the potential for corporate profit
growth to slow down. Further losses were experienced during
March from long positions in U.S. equity index futures after
prices moved lower early in the month amid concerns about the
growing U.S. trade deficit, inflation fears, and a surge in crude
oil prices. Additional losses of approximately 0.1% were
experienced in the agricultural markets, primarily during January
and March, from long futures positions in corn after prices
decreased amid a stronger U.S. dollar and technically-based
selling. In the global interest rate futures markets, losses of
approximately 0.1% were recorded during February from long
positions in long-term U.S. bond futures as prices declined in
response to positive unemployment data from the U.S.
Department of Labor. Then, later in the month, further losses
were incurred from long positions as prices moved lower after
Federal Reserve Chairman Alan Greenspan?s congressional
testimony, which supported Wall Street expectations for more
interest rate hikes. Additional losses were recorded from long
positions in European interest rate futures as prices declined in
tandem with the U.S. fixed-income markets and better-than-
expected German economic data. During March, losses were
recorded from short European interest rate futures positions as
prices increased amid strength in the euro early in the month as
investors feared that continued strength in the euro could
restrict foreign exports. Prices were also pushed higher on the
outlook that Europe may continue to maintain a low-interest rate
environment and economic concerns stemming from surging energy
prices. Smaller losses of approximately 0.1% resulted in the
metals sector, primarily during January, from long futures
positions in zinc as prices weakened on renewed strength in the
U.S. dollar, lower equity prices, and news of a drop in Chinese
demand. A portion of the Partnership?s overall losses for the
quarter was offset by gains of approximately 0.2% achieved in the
energy markets, primarily during February and March, from long
positions in crude oil and its related products as prices trended
higher amid news of increased demand from China, fears of terror
attacks against production facilities in the Middle East, cold
weather in the Northeastern U.S., and predictions from analysts
at Goldman Sachs that oil prices could reach $105 a
barrel. Further gains were experienced from long positions in
natural gas as prices moved higher in tandem with crude oil
prices.

For the Quarter Ended March 31, 2004
The Partnership recorded total trading results including interest
income totaling $314,862, expenses totaling $367,867, and
minority interest of $807, resulting in a net loss of $52,198 for
the quarter ended March 31, 2004. The Partnership?s net asset
value per Unit decreased from $2,053.17 at December 31, 2003 to
$2,048.93 at March 31, 2004.

The most significant trading losses of approximately 0.8% were
experienced in the currency markets, primarily during March.
Long cross rate positions in the Swiss franc and the Australian
dollar - both versus the Japanese yen - resulted in losses as the
yen?s value reversed higher due to speculation that the Bank of
Japan was relaxing its efforts to weaken the yen. During
January, long positions in the Mexican peso versus the U.S.
dollar incurred losses as the peso?s value fell under pressure
from declining Mexican interest rates and U.S. dollar weakness
against the euro. Smaller currency losses were experienced from
long positions in the U.S. dollar index as the dollar?s value
declined due to reduced Bank of Japan intervention activity. A
portion of the Partnership?s overall losses for the quarter was
offset by gains of approximately 0.7% recorded in the
global interest rate markets, primarily during February, from
long positions in European and U.S. interest rate futures.
Global bond prices rallied after government central banks, such
as the European Central Bank and U.S. Federal Reserve, reported
no need to raise interest rates due to a lack of inflation.
Additional gains of approximately 0.7% were recorded in the
global stock index markets during January and February. Long
U.S. stock index futures positions profited in January as U.S.
equity prices moved higher in response to positive company
earnings reports and signs of growing U.S. consumer confidence.
Further gains were experienced during February from long
positions as global equity prices continued to advance amid
upbeat corporate profit reports, merger and acquisition activity,
and a low-interest rate environment.
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 March 31, 2005 and 2004. At
March 31, 2005 and 2004, the Partnership?s total capitalization
was approximately $20 million and $26 million, respectively.

Primary Market March 31, 2005 March 31, 2004
Risk Category Value at Risk Value at Risk

Interest Rate (1.36)% (0.73)%
Equity (1.01) (1.13)
Currency (0.11) (0.26)
Commodity (0.24) (0.20)
Aggregate Value at Risk (1.66)% (1.10)%

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 April 1, 2004 through March 31, 2005.

Primary Market Risk Category High Low Average
Interest Rate (1.36)% (0.32)% (0.65)%
Equity (1.54) (0.79) (1.16)
Currency (0.27) (0.11) (0.17)
Commodity (0.40) (0.02) (0.19)
Aggregate Value at Risk (1.66)% (0.93)% (1.30)%

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 March 31, 2005, and for the four
quarter-end reporting periods from April 1, 2004 through March 31,
2005. 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 March 31, 2005) 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 March 31, 2005 by market sector. It may be
anticipated, however, that these market exposures will vary
materially over time.

Interest Rate. The primary market exposure of the Partnership at
March 31, 2005 was to the global interest rate sector. Exposure
was primarily spread across the U.S., European, Australian, and
Canadian 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. 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 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 second largest market exposure of the Partnership at
March 31, 2005 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 March 31, 2005, the Partnership?s
primary exposures were to the S&P 500 (U.S.), NASDAQ 100 (U.S.),
Nikkei (Japan), and DAX (Germany) stock indices. The Partnership
is primarily exposed to the risk of adverse price trends or
static markets in the U.S., Japanese, and European 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.

Currency. The third largest market exposure of the Partnership
at March 31, 2005 was to the currency sector. The Partnership?s
currency exposure is to exchange rate fluctuations, primarily
fluctuations which disrupt the historical pricing relationships
between different currencies and currency pairs. Interest rate
changes, as well as political and general economic conditions
influence these fluctuations. The Partnership trades a large
number of currencies, including cross-rates ? i.e., positions
between two currencies other than the U.S. dollar. At March 31,
2005, the Partnership?s major exposures were to the euro,
Norwegian krone, Australian dollar, and New Zealand dollar
currency crosses, 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. At March 31, 2005, the Partnership had market
exposure in the energy sector. 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 price resulting from
weather patterns, and supply and demand factors and will
likely continue in this choppy pattern.

Soft Commodities and Agriculturals. At March 31, 2005, the
Partnership had market exposure to the markets that comprise
these sectors. Most of the exposure was to the cotton,
corn, and soybean markets. Supply and demand inequalities,
severe weather disruptions, and market expectations affect
price movements in these markets.

Metals. At March 31, 2005, the Partnership had
market exposure in the metals sector. The Partnership?s
metals exposure was to fluctuations in the price of base
metals, such as copper 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.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposures of the
Partnership at March 31, 2005:

Foreign Currency Balances. The Partnership?s primary foreign
currency balances at March 31, 2005 were in Singapore
dollars, Australian dollars, euros, Japanese yen, New
Zealand dollars, South African rand, Swiss francs, and
British pounds. 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 material 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
Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers.

At a meeting of the Board of Directors of Demeter held on March
30, 2005, the following Directors of Demeter resigned, and the
Board of Directors accepted such resignations effective May 1,
2005: Ms. Louise M. Wasso-Jonikas and Messrs. Raymond A. Harris,
Todd Taylor, and William D. Seugling.

At that March 30, 2005 meeting of the Board of Directors of
Demeter, the Board of Directors elected two new Directors
effective May 1, 2005, subject to approval by and registration
with the National Futures Association: Ms. Shelley Hanan and Mr.
Harry Handler.

Item 6. 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 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 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.

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)

May 16, 2005 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