DEAN WITTER PORTFOLIO STRATEGY FUND LP - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the year ended December 31, 2003 or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from ________________to___________________

Commission File Number 0-19046

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

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

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

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

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

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

Name of each exchange
Title of each class on which registered

None None

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

Units of Limited Partnership Interest

(Title of Class)

Indicate by check-mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No ____

Indicate by check-mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment of this Form 10-K. [X]

Indicate by check-mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No X

State the aggregate market value of the Units of the Limited Partnership
Interest held by non-affiliates of the registrant. The aggregate market value
shall be computed by reference to the price at which Units were sold as of the
last business day of the registrant's most recently completed second fiscal
quarter: $95,182,112 at June 30, 2003.

DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 2003

DOCUMENTS INCORPORATED BY REFERENCE

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

Documents Incorporated Part of Form 10-K

Partnership's Prospectus dated
May 12, 1997 I

Annual Report to Dean Witter
Portfolio Strategy Fund L.P.
Limited Partners for the year
ended December 31, 2003 II, III and IV

PART I
Item 1. BUSINESS
(a) General Development of Business. Dean Witter Portfolio Stra-
tegy Fund L.P. (the "Partnership") is a Delaware limited
partnership organized to engage primarily in the speculative
trading of futures contracts and forward contracts on physical
commodities and other commodity interests, including, but not
limited to, foreign currencies, financial instruments, metals,
energy and agricultural products. The Partnership commenced
operations on February 1, 1991.

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

The Partnership's net asset value per unit of limited partnership
interest ("Unit(s)") as of December 31, 2003 was $3,283.04
representing an increase of 3.7 percent from the net asset value
per Unit of $3,166.00 at December 31, 2002. For a more detailed
description of the Partnership's business see subparagraph (c).

(b) Financial Information about Segments. For financial
information reporting purposes the Partnership is deemed to
engage in one industry segment, the speculative trading of
futures and forwards. The relevant financial information is
presented in Items 6 and 8.

(c) Narrative Description of Business. The Partnership is in the
business of speculative trading of futures and forwards, pursuant
to trading instructions provided by its Trading Manager. For a
detailed description of the different facets of the Partnership's
business, see those portions of the Partnership's prospectus,
dated May 12, 1997 (the "Prospectus"), incorporated by reference
in this Form 10-K, set forth below:

Facets of Business

1. Summary 1. "Summary of the Prospectus"
(Pages 1-12 of the
Prospectus).

2. Futures, Options and 2. "Futures, Options and
Forwards Markets Forwards Markets" (Pages
48-52 of the Prospectus).

3. Partnership's Commodity 3. "Investment Programs,
Trading Arrangements and Use of Proceeds, and
Policies Trading Policies" (Page
66 of the Prospectus)
and "The Trading Advisor"
(Pages 55-74 of the
Prospectus).

4. Management of the 4. "The Management Agreement"
Partnership (Pages 76-77 of the
Prospectus). "The
General Partner" (Pages
45-47 of the Prospectus),
"The Commodity Brokers"
(Page 75 of the
Prospectus) and "The
Limited Partnership
Agreement" (Pages 79-82
of the Prospectus).

5. Taxation of the Partner- 5. "Material Federal Income
ship's Limited Partners Tax Considerations" and
"State and Local Income
Tax Aspects" (Pages 88-96
of the Prospectus).

(d) Financial Information about Geographic Areas. The Partnership
has not engaged in any operations in foreign countries; however,
the Partnership (through the commodity brokers) enters into
forward contract transactions where foreign banks are the
contracting party and trades futures and forwards on foreign
exchanges.

(e) Available Information. The Partnership files annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and all amendments to these reports with the Securities
and Exchange Commission ("SEC"). You may read and copy any
document filed by the Partnership at the SEC's public reference
room at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for information on
the public reference room. The Partnership does not maintain an
internet website, however, the SEC maintains a website
that contains annual, quarterly, and current reports, proxy
statements and other information that issuers (including the
Partnership) file electronically with the SEC. The SEC's website
address is http://www.sec.gov.

Item 2. PROPERTIES
The Partnership's executive and administrative offices are
located within the offices of Morgan Stanley DW. The Morgan
Stanley DW offices utilized by the Partnership are located at 825
Third Avenue, 9th Floor, New York, NY 10022.

Item 3. LEGAL PROCEEDINGS
None.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.

PART II
Item 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND RELATED
SECURITY HOLDER MATTERS

(a) Market Information. There is no established public trading
market for Units of the Partnership.

(b) Holders. The number of holders of Units at December 31, 2003
was approximately 4,160.

(c) Distributions. No distributions have been made by the
Partnership since it commenced trading operations on February 1,
1991. Demeter has sole discretion to decide what distributions,
if any, shall be made to investors in the Partnership. Demeter
currently does not intend to make any distributions of
Partnership profits.
Item 6. SELECTED FINANCIAL DATA (in dollars)

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Liquidity. The Partnership deposits its assets with Morgan
Stanley DW as non-clearing broker, and MS & Co. and MSIL as
clearing brokers in separate futures and forwards trading
accounts established for the Trading Manager, which assets are
used as margin to engage in trading and may be used as margin
solely for the Partnership's trading. The assets are held in
either non-interest bearing bank accounts or in securities and
instruments permitted by the Commodity Futures Trading Commission
for investment of customer segregated or secured funds. Since
the Partnership's sole purpose is to trade in futures and
forwards, it is expected that the Partnership will continue to
own such liquid assets for margin purposes.

The Partnership's investment in futures and forwards may, from
time to time, be illiquid. Most U.S. futures exchanges limit
fluctuations in prices during a single day by regulations
referred to as "daily price fluctuations limits" or "daily
limits". Trades may not be executed at prices beyond the daily
limit. If the price for a particular futures contract has
increased or decreased by an amount equal to the daily limit,
positions in that futures contract can neither be taken nor
liquidated unless traders are willing to effect trades at or
within the limit. Futures prices have occasionally moved the
daily limit for several consecutive days with little or no
trading. These market conditions could prevent the
Partnership from promptly liquidating its futures contracts and
result in restrictions on redemptions.

There is no limitation on daily price moves in trading forward
contracts on foreign currency. The markets for some world
currencies have low trading volume and are illiquid, which may
prevent the Partnership from trading in potentially profitable
markets or prevent the Partnership from promptly liquidating
unfavorable positions in such markets, subjecting it to
substantial losses. Either of these market conditions could
result in restrictions on redemptions. Illiquidity has not
materially affected the Partnership's assets.

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

Capital Resources. The Partnership does not have, nor expect to
have, any capital assets. Redemptions of additional Units in the
future will affect the amount of funds available for investment
in futures and forwards in subsequent periods. It is not
possible to estimate the amount, and therefore the impact, of
future redemptions of Units.

There are no known material trends, favorable or
unfavorable, that would affect, nor any expected material changes
to, the Partnership's capital resource arrangements at the
present time. The Partnership does not have any off-balance sheet
arrangements, nor does it have contractual obligations or
commercial commitments to make future payments that would affect
its liquidity or capital resources.

Results of Operations.
General. The Partnership's results depend on the Trading Manager
and the ability of the Trading Manager's trading programs to take
advantage of price movements or other profit opportunities in the
futures and forwards markets. The following presents a summary
of the Partnership's operations for each of the three years in
the period ended December 31, 2003 and a general discussion of
its trading activities during each period. It is important to
note, however, that the Trading Manager trades in various markets
at different times and that prior activity in a particular market
does not mean that such market will be actively traded by the
Trading Manager or will be profitable in the future.
Consequently, the results of operations of the Partnership are
difficult to discuss other than in the context of the Trading
Manager's trading activities on behalf of the Partnership and how
the Partnership has performed in the past. Past performance is
not necessarily indicative of future results.

The Partnership's results of operations are set forth in
its financial statements prepared in accordance with accounting
principles generally accepted in the United States of America,
which require the use of certain accounting policies that affect
the amounts reported in these financial statements, including the
following: The contracts the Partnership trades are accounted for
on a trade-date basis and marked to market on a daily basis. The
difference between their cost and market value is recorded on the
Statements of Operations as "Net change in unrealized
profit/loss" for open (unrealized) contracts, and recorded as
"Realized profit/loss" when open positions are closed out, and
the sum of these amounts constitutes the Partnership's trading
revenues. 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.

The Partnership recorded revenues including interest
totaling $13,484,883 and expenses totaling $9,699,817, resulting
in net income of $3,785,066 for the year ended December 31,
2003. The Partnership's net asset value per Unit increased from
$3,166.00 at December 31, 2002 to $3,283.04 at December 31, 2003.
Total redemptions for the year were $8,367,353 and the
Partnership's ending capital was $84,353,954 at December 31,
2003, a decrease of $4,582,287 from ending capital at December
31, 2002 of $88,936,241.

The most significant trading gains of approximately 17.2% were
recorded in the currency markets, primarily during the fourth
quarter. The Partnership generated significant gains within the
currency sector, especially during December, from long positions
in a broad range of currencies versus the U.S. dollar. A
confluence of factors including concerns regarding U.S. budget and
trade deficits, a dip in consumer confidence, an outbreak of Mad
Cow Disease in the U.S., the Federal Reserve's policy of
maintaining low interest rates, widening interest rate
differentials relative to other countries, and renewed fears of
global terrorism all pressured the dollar's value lower. The
Partnership's largest gains in currencies were achieved from long
positions in the euro, Australian dollar and Japanese yen.
Profits were also recorded in the euro and Australian dollar
earlier in the year as the dollar weakened ahead of the war in
Iraq. Gains of approximately 4.4% achieved in the global stock
index markets resulted from long positions in European and U.S.
stock index futures, primarily in June and July, as prices
trended higher amid positive economic data. Long positions in
Japanese stock index futures during June and August also supplied
gains as equity prices drew strength from robust Japanese economic
data and rising prices in the U.S. equity markets. In the metals
markets, gains of approximately 1.2% were obtained primarily
during December. Long futures positions in base metals supplied
gains as copper and nickel prices rose to six and fourteen year
highs respectively, benefiting from increased demand from China
and the strengthening of the global economy. A portion of the
Partnership's overall gains for the year was offset by losses of
approximately 5.7% in the agricultural markets from short
positions in corn futures during August as prices reversed higher
amid supply fears prompted by weak U.S. harvest expectations and
weather related concerns. Positions in cotton futures during
August and September returned losses as prices moved without
consistent direction. Elsewhere in the agricultural markets,
smaller losses were recorded during May and September from
positions in coffee and during December from positions in sugar.
Additional losses of approximately 5.6% were experienced in the
energy markets, largely over September and October. During
September, the Fund entered the month with long crude oil and
natural gas futures positions that had been profitable in August.
Due to an increase in supply, however, energy prices declined
sharply over the first half of the month. As a result, losses
were incurred on those long positions. Additional losses were
incurred over the second portion of the month when the Partnership
closed out its long positions and established new short
positions, only to see prices rally following an announcement that
OPEC would reduce production. During October, the Partnership
incurred losses on the trading of natural gas futures. The
Partnership entered the month with short natural gas positions,
but these positions proved unprofitable as prices rallied during
the first part of the month. In response to rising prices, the
Partnership reversed its position from short to long, only to see
prices decline in the latter part of the month. Additional losses
were incurred from short crude oil and heating oil futures
positions as prices moved higher earlier in the month in response
to supply fears spurred by Middle East tensions, as well as strike
threats in Nigeria. In the global interest rate markets, losses
of approximately 4.7% were incurred primarily in the final four
months of the year. Short positions in European and U.S. interest
rate futures recorded losses as bond prices reversed higher amid a
low interest rate environment, sporadic volatility in global
equity markets and the release of positive U.S. economic data that
indicated low inflation in the U.S.

The Partnership recorded revenues including interest totaling
$31,602,392 and expenses totaling $11,745,622, resulting in net
income of $19,856,770 for the year ended December 31, 2002. The
Partnership's net asset value per Unit increased from $2,498.93
at December 31, 2001 to $3,166.00 at December 31, 2002. Total
redemptions for the year were $9,840,636 and the Partnership's
ending capital was $88,936,241 at December 31, 2002, an increase
of $10,016,134 from ending capital at December 31, 2001 of
$78,920,107.

The most significant trading gains of approximately 18.5% were
recorded in the currency markets from long positions in the euro,
Swiss franc, and Australian dollar relative to the U.S. dollar as
the value of the dollar weakened during the second quarter, as
well as in December, amid investors' fears concerning increased
tensions in the Middle East and prolonged uncertainty regarding
the U.S. economy. Additional gains of approximately 12.8% were
recorded in the global interest rate futures markets from long
positions in Japanese, European, and U.S. interest rate futures
as prices trended higher during the second and third quarter amid
continued uncertainty in the equity markets and negative economic
data. Smaller gains of approximately 2.6% were recorded in the
global stock index futures markets from short positions in U.S.
and European stock index futures as prices continued to trend
lower throughout a majority of the year due to suspicions
regarding corporate accounting practices, weak economic data, and
geopolitical uncertainty. A portion of the Partnership's gains
was offset by losses of approximately 1.7% in the agricultural
futures markets from long positions in cotton futures as prices
moved without consistent direction during the third quarter amid
shifting supply and demand concerns. Smaller losses were
recorded in this market sector from positions in sugar and coffee
futures as prices moved erratically throughout most of the year.
In the metals futures markets, losses of approximately
1.0% were recorded from positions in aluminum and copper futures
as an uncertain economic outlook resulted in trendless price
activity throughout most of the year.

The Partnership recorded revenues including interest totaling
$3,109,230 and expenses totaling $8,333,683, resulting in a net
loss of $5,224,453 for the year ended December 31, 2001. The
Partnership's net asset value per Unit decreased from $2,658.72
at December 31, 2000 to $2,498.93 at December 31, 2001. Total
redemptions for the year were $11,145,331 and the Partnership's
ending capital was $78,920,107 at December 31, 2001, a decrease
of $16,369,784 from ending capital at December 31, 2000 of
$95,289,891.

The most significant trading losses of approximately 8.4% were
recorded in the energy markets throughout the first nine months
of the year from trading in crude oil futures and its related
products as a result of volatility in oil prices due to a
continually changing outlook for supply, production, and demand.
Losses of approximately 1.2% were recorded primarily during the
fourth quarter from long positions in silver and gold futures as
prices reversed lower on the heels of sharp gains in the U.S.
stock market. Additional losses of approximately 0.9% were
experienced in the soft commodities from short positions in sugar
futures as prices reversed higher on supply concerns. Smaller
losses of approximately 0.7% were recorded from short
positions in the agricultural markets as prices increased on
forecasts for hotter and drier weather in the U.S. midwest. A
portion of the Partnership's losses was offset by gains of
approximately 2.8% recorded throughout a majority of the third
quarter in the global stock index futures markets from short
positions in Nikkei, DAX, and NASDAQ Index futures as the trend
in equity prices continued sharply lower amid worries regarding
global economic uncertainty. Gains of approximately 1.5% were
experienced in the global interest rate futures markets primarily
throughout a majority of the third quarter from long positions in
short-term U.S. interest rate futures as prices continued
trending higher amid continued concerns for the sluggish U.S.
economy, interest rate cuts by the U.S. Federal Reserve, and as
investors sought a safe haven from declining stock prices.
Additional gains of approximately 1.2% were recorded primarily
during the fourth quarter as gains from short position in the
Japanese yen and the South African rand versus the U.S. dollar
more than offset losses attributed to trading in the euro and the
British pound.

For an analysis of unrealized gains and (losses) by contract type
and a further description of 2003 trading results, refer to the
Partnership's Annual Report to Limited Partners for the year ended
December 31, 2003, which is incorporated by reference to Exhibit
13.01 of this Form 10-K.

The Partnership's gains and losses are allocated among its
partners for income tax purposes.

Market Risk.
Financial Instruments. The Partnership is a party to financial
instruments with elements of off-balance sheet market and credit
risk. The Partnership may trade futures and forwards in a
portfolio of agricultural commodities, energy products, foreign
currencies, interest rates, precious and base metals, soft
commodities and stock indices. In entering into these contracts,
the Partnership is subject to the market risk that such contracts
may be significantly influenced by market conditions, such as
interest rate volatility, resulting in such contracts being less
valuable. If the markets should move against all of the
positions held by the Partnership at the same time, and if the
Trading Manager was unable to offset positions of the
Partnership, the Partnership could lose all of its assets and
limited partners would realize a 100% loss.

In addition to the Trading Manager's internal controls, the
Trading Manager must comply with the Partnership's trading
policies that include standards for liquidity and leverage that
must be maintained. The Trading Manager and Demeter monitor the
Partnership's trading activities to ensure compliance with the
trading policies and Demeter can require the Trading Manager to
modify positions of the Partnership if Demeter believes
they violate the Partnership's trading policies.

Credit Risk.
In addition to market risk, in entering into futures and forward
contracts there is a credit risk to the Partnership that the
counterparty on a contract will not be able to meet its
obligations to the Partnership. The ultimate counterparty or
guarantor of the Partnership for futures contracts traded in the
United States and the foreign exchanges on which the Partnership
trades is the clearinghouse associated with such exchange. In
general, a clearinghouse is backed by the membership of the
exchange and will act in the event of non-performance by one of
its members or one of its member's customers, which should
significantly reduce this credit risk. There is no assurance
that a clearinghouse, exchange or other exchange member will meet
its obligations to the Partnership, and Demeter and the commodity
brokers will not indemnify the Partnership against a default by
such parties. Further, the law is unclear as to whether a
commodity broker has any obligation to protect its customers from
loss in the event of an exchange or clearinghouse defaulting on
trades effected for the broker's customers. In cases where the
Partnership trades off-exchange forward contracts with a
counterparty, the sole recourse of the Partnership will be the
forward contracts counterparty.
Demeter deals with these credit risks of the Partnership
in several ways. First, it monitors the Partnership's credit
exposure to each exchange on a daily basis. The commodity
brokers inform the Partnership, as with all their customers, of
its net margin requirements for all its existing open positions
and Demeter has installed a system which permits it to monitor
the Partnership's potential net credit exposure, exchange by
exchange, by adding the unrealized trading gains on each
exchange, if any, to the Partnership's margin liability thereon.

Second, the Partnership's trading policies limit the amount of its
net assets that can be committed at any given time to futures
contracts and require a minimum amount of diversification in the
Partnership's trading, usually over several different products and
exchanges. Historically, the Partnership's exposure to any one
exchange has typically amounted to only a small percentage of its
total net assets and on those relatively few occasions where the
Partnership's credit exposure climbs above an acceptable level,
Demeter deals with the situation on a case by case basis,
carefully weighing whether the increased level of credit exposure
remains appropriate. Material changes to the trading policies may
be made only with the prior written approval of the limited
partners owning more than 50% of Units then outstanding.

Third, with respect to forward contract trading, the Partnership
trades with only those counterparties which Demeter, together with
Morgan Stanley DW, have determined to be creditworthy. The
Partnership presently deals with MS & Co. as the sole counterparty
on forward contracts.

See "Financial Instruments" under "Notes to Financial Statements"
in the Partnership's Annual Report to Limited Partners for the
year ended December 31, 2003, which is incorporated by reference
to Exhibit 13.01 of in this Form 10-K.

Inflation has not been a major factor in the Partnership's
operations.

Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures and forwards. The market-sensitive
instruments held by the Partnership are acquired for speculative
trading purposes only and, as a result, all or substantially all
of the Partnership's assets are at risk of trading loss. Unlike
an operating company, the risk of market-sensitive instruments is
central, not incidental, to the Partnership's main business
activities.

The futures and forwards traded by the Partnership involve
varying degrees of related market risk. Market risk is often
dependent upon changes in the level or volatility of interest
rates, exchange rates, and prices of financial instruments
and commodities, 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.
Profits and losses on open positions of exchange-traded futures
and forwards are settled daily through variation margin.

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

The Partnership's past performance is not necessarily indicative
of its future results. Any attempt to numerically quantify the
Partnership's market risk is limited by the uncertainty of its
speculative trading. The Partnership's speculative trading may
cause future losses and volatility (i.e., "risk of ruin") that
far exceed the Partnership's experiences to date or any
reasonable expectations based upon historical changes in market
value.

Quantifying the Partnership's Trading Value at Risk
The following quantitative disclosures regarding the 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 Value at Risk
("VaR"). The Partnership estimates VaR using a model based upon
historical simulation (with a confidence level of 99%) which
involves constructing a distribution of hypothetical daily changes
in the value of a trading portfolio. The VaR model takes into
account linear exposures to risk including equity and commodity
prices, interest rates, foreign exchange rates, and correlation
among these variables. The hypothetical changes in portfolio value
are based on daily percentage changes observed in key market
indices or other market factors ("market risk factors") to which
the portfolio is sensitive. The one-day 99% confidence level of
the Partnership's VaR corresponds to the negative change in
portfolio value that, based on observed market risk factors, would
have been exceeded once in 100 trading days, or one day in
100. VaR typically does not represent the worst case outcome.
Demeter uses approximately four years of daily market data (1,000
observations) and revalues its portfolio (using delta-gamma
approximations) for each of the historical market moves that
occurred over this time period. This generates a probability
distribution of daily "simulated profit and loss" outcomes. The
VaR is the appropriate percentile of this distribution. For
example, the 99% one-day VaR would represent the 10th worst
outcome from Demeter's simulated profit and loss series.

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

VaR models, including the Partnership's, are continuously
evolving as trading portfolios become more diverse and modeling
techniques and systems capabilities improve. Please note that
the VaR model is used to numerically quantify market risk for
historic reporting purposes only and is not utilized by either
Demeter or the Trading Manager in their daily risk management
activities. 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 December 31, 2003 and 2002. At
December 31, 2003 and 2002, the Partnership's total capital-
ization was approximately $84 million and $89 million,
respectively.

Primary Market December 31, 2003 December 31, 2002
Risk Category Value at Risk Value at Risk
Currency (4.24)% (3.40)%

Interest Rate (2.10) (1.88)

Equity (0.84) (0.30)

Commodity (2.41) (1.95)

Aggregate Value at Risk (5.21)% (3.97)%

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

Because the business of the Partnership is the speculative trading
of futures and forwards, the composition of its trading portfolio
can change significantly over any given time period, or
even within a single trading day, which could positively or
negatively materially impact market risk as measured by VaR.

The table below supplements the December 31, 2003 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 January 1, 2003 through December 31, 2003.

Primary Market Risk Category High Low Average
Currency (4.24)% (0.82)% (2.57)%
Interest Rate (2.10) (0.89) (1.62)
Equity (0.85) (0.43) (0.70)
Commodity (2.41) (0.75) (1.82)
Aggregate Value at Risk (5.21)% (1.53)% (3.69)%

Limitations on Value at Risk as an Assessment of Market Risk
The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements. Margin requirements generally range between 2% and
15% of contract face value. Additionally, the use of leverage
causes the face value of the market sector instruments held by the
Partnership to typically be many times the total capitalization of
the Partnership. The value of the Partnership's open positions
thus creates a "risk of ruin" not typically found in other
investments. The relative size of the positions held may cause the
Partnership to incur losses greatly in excess of VaR within
a short period of time, given the effects of the leverage employed
and market volatility. The VaR tables above, as well as the past
performance of the Partnership, give no indication of such "risk of
ruin". In addition, VaR risk measures should be viewed in light of
the methodology's limitations, which include the following:
? past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
? changes in portfolio value caused by market movements may
differ from those of the VaR model;
? VaR results reflect past trading positions while future risk
depends on future positions;
? VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
? the historical market risk factor data used for VaR estimation
may provide only limited insight into losses that could be
incurred under certain unusual market movements.

The VaR tables provided present the results of the Partnership's
VaR for each of the Partnership's market risk exposures and on an
aggregate basis at December 31, 2003 and 2002 and for the four
quarter-end reporting periods during calendar year 2003. VaR is
not necessarily representative of the historic risk, nor should
it be used to predict the Partnership's future financial
performance or its ability to manage or monitor risk. There can
be no assurance that the Partnership's actual losses on a
particular day will not exceed the VaR amounts indicated above or
that such losses will not occur more than once in 100 trading
days.

Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances not needed for margin. These balances and any market
risk they may represent are immaterial.

The Partnership also maintains a substantial portion
(approximately 74% as of December 31, 2003) of its available
assets in cash at Morgan Stanley DW. A decline in short-term
interest rates would result in a decline in the Partnership's
cash management income. This cash flow risk is not considered to
be material.

Materiality, as used throughout this section, is based on an
assessment of reasonably possible market movements and any
associated potential losses, taking into account the leverage,
optionality and multiplier features of the Partnership's market-
sensitive instruments, in relation to the Partnership's net
assets.

Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership's
market risk exposures - except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
Partnership manages its primary market risk exposures -
constitute forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. The Partnership's primary market risk
exposures, as well as the strategies used and to be used by
Demeter and the Trading Manager for managing such exposures, are
subject to numerous uncertainties, contingencies and risks, any
one of which could cause the actual results of the Partnership's
risk controls to differ materially from the objectives of such
strategies. Government interventions, defaults and expro-
priations, 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 December 31, 2003, by market sector. It may be
anticipated, however, that these market exposures will
vary materially over time.

Currency. The primary market exposure of the Partnership at
December 31, 2003 was to the currency complex. The Partnership's
currency exposure is to the exchange rate fluctuations, primarily
fluctuations which disrupt the historical pricing relationships
between different currencies and currency pairs. Interest rate
changes, as well as political and general economic conditions
influence these fluctuations. At December 31, 2003, the
Partnership's exposure was mostly to outright U.S. dollar
positions. Outright positions consist of the U.S. dollar vs.
other currencies. These other currencies include major and minor
currencies. Demeter does not anticipate that the risk profile of
the Partnership's currency sector will change significantly in
the future. The currency trading VaR figure includes foreign
margin amounts converted into U.S. dollars with an incremental
adjustment to reflect the exchange rate risk inherent to the
U.S.-based Partnership in expressing VaR in a functional currency
other than U.S. dollars.

Interest Rate. The second largest market exposure of the
Partnership at December 31, 2003 was to the global interest rate
complex. Exposure was primarily spread across the U.S., European
and Japanese interest rate sectors. Interest rate movements
directly affect the price of the sovereign bond futures positions
held by the Partnership and indirectly affect the value of
its stock index and currency positions. Interest rate movements
in one country, as well as relative interest rate movements
between countries, materially impact the Partnership's
profitability. The Partnership's primary interest rate exposure
is generally to interest rate fluctuations in the U.S. and the
other G-7 countries. The G-7 countries consist of France, the
U.S., Britain, Germany, Japan, Italy and Canada. However, the
Partnership also takes futures positions in the government debt
of smaller nations - e.g., Australia. Demeter anticipates that
the G-7 countries and Australian interest rates will remain the
primary interest rate exposures of the Partnership in the
foreseeable future. The speculative futures positions held by
the Partnership may range from short to long-term instruments.
Consequently, changes in short, medium or long-term interest
rates may have an effect on the Partnership.

Equity. The third largest market exposure of the Partnership at
December 31, 2003 was primarily to equity price risk in the G-7
countries. The stock index futures traded by the Partnership are
by law limited to futures on broadly-based indices. At December
31, 2003, the Partnership's primary exposures were to the Euro
Stoxx 50 (Europe), NASDAQ (U.S.) and DAX (Germany) stock indices.
The Partnership is exposed to the risk of adverse price trends or
static markets in the U.S., European and Japanese stock indices.
Static markets would not cause major market changes, but would
make it difficult for the Partnership to avoid trendless
price movements resulting in numerous small losses.

Commodity.
Energy. At December 31, 2003, the Partnership's energy
exposure was primarily to futures contracts in crude oil and
its related products, and natural gas. Price movements in
these markets result from geopolitical developments,
particularly in the Middle East, as well as weather patterns
and other economic fundamentals. Significant profits and
losses, which have been experienced in the past, are
expected to continue to be experienced in the future.
Natural gas has exhibited volatility in prices resulting
from weather patterns and supply and demand factors and will
likely continue in this choppy pattern.

Metals. The Partnership's metals exposure at December 31,
2003 was to fluctuations in the price of precious metals,
such as gold and silver, and base metals, such as aluminum,
copper, nickel and zinc. Economic forces, supply and demand
inequalities, geopolitical factors and market expectations
influence price movements in these markets. The Trading
Manager, from time to time, takes positions when market
opportunities develop and Demeter anticipates that the
Partnership will continue to do so.

Soft Commodities and Agriculturals. At December 31,
2003, the Partnership had exposure to the markets that
comprise these sectors. Most of the exposure was to cotton,
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 exposure of the
Partnership at December 31, 2003:

Foreign Currency Balances. The Partnership's primary
foreign currency balances at December 31, 2003 were in
euros, Japanese yen 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 Manager, separately, attempt to
manage the risk of the Partnership's open positions in
essentially the same manner in all market categories traded.
Demeter attempts to manage market exposure by diversifying the
Partnership's assets among different market sectors and trading
approaches, and by monitoring the performance of the Trading
Manager daily. In addition, the Trading Manager establishes
diversification guidelines, often set in terms of the
maximum margin to be committed to positions in any one market
sector or market-sensitive instrument.

Demeter monitors and controls the risk of the Partnership's non-
trading instrument, cash. Cash is the only Partnership
investment directed by Demeter, rather than the Trading Manager.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements are incorporated by reference to the
Partnership's Annual Report, which is filed as Exhibit 13.01
hereto.

Supplementary data specified by Item 302 of Regulation S-K:
Summary of Quarterly Results (Unaudited)

Net Income/
Quarter Revenues/ Net (Loss) Per
Ended (Net Losses) Income/(Loss) Unit

2003
March 31 $ 16,538,538 $ 13,485,727 $ 477.92
June 30 153,254 (2,243,670) (84.85)
September 30 (4,971,806) (7,193,721) (271.16)
December 31 1,764,897 (263,270) (4.87)

Total $ 13,484,883 $ 3,785,066 $ 117.04

2002
March 31 $ (6,528,545) $ (8,152,808) $(261.46)
June 30 24,931,615 22,449,727 746.86
September 30 21,061,181 15,441,918 525.24
December 31 (7,861,859) (9,882,067) (343.57)

Total $ 31,602,392 $ 19,856,770 $ 667.07

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES
(a) As of the end of the period covered by this annual
report, the President and Chief Financial Officer of
the general partner, Demeter, 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 in the
Partnership's internal controls or in other factors
that could significantly affect these controls
subsequent to the date of their evaluation.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

There are no directors or executive officers of the Partnership.
The Partnership is managed by Demeter.

Directors and Officers of the General Partner
The directors and executive officers of Demeter are as follows:

Jeffrey A. Rothman, age 42, is the Chairman of the Board of
Directors and President of Demeter. Mr. Rothman is the Executive
Director of Morgan Stanley Managed Futures, responsible for
overseeing all aspects of the firm's managed futures department.
He is also the Chairman of the Board of Directors of Morgan
Stanley Futures & Currency Management Inc. Mr. Rothman has been
with the managed futures department for seventeen years.
Throughout his career, Mr. Rothman has helped with the
development, marketing and administration of approximately 39
commodity pools. Mr. Rothman is an active member of the Managed
Funds Association and serves on its Board of Directors. Mr.
Rothman has a B.A. degree in Liberal Arts from Brooklyn College,
New York.

Richard A. Beech, age 52, is a Director of Demeter. Mr. Beech has
been associated with the futures industry for over 25 years. He
has been at Morgan Stanley DW since August 1984 where he is
presently an Executive Director and head of Futures, Forex &
Metals. Mr. Beech began his career at the Chicago
Mercantile Exchange, where he became the Chief Agricultural
Economist doing market analysis, marketing and compliance. Prior
to joining Morgan Stanley DW, Mr. Beech worked at two investment
banking firms in operations, research, managed futures and sales
management. Mr. Beech has a B.S. degree in Business
Administration from Ohio State University and an M.B.A. degree
from Virginia Polytechnic Institute and State University.

Raymond A. Harris, age 47, is a Director of Demeter and of Morgan
Stanley Futures & Currency Management Inc. Mr. Harris is
currently Managing Director and head of Client Solutions for
Morgan Stanley Individual Investor Group. Mr. Harris joined
Morgan Stanley in 1982 and served in financial and operational
assignments for Dean Witter Reynolds. In 1994 he joined the
Discover Financial Services division, leading restructuring and
product development efforts. Mr. Harris became Chief
Administrative Officer for Morgan Stanley Investment Management in
1999. In 2001, he was named head of Global Products and Services
for Investment Management. Mr. Harris has an M.B.A. in Finance
from the University of Chicago and a B.A. degree from Boston
College.

Frank Zafran, age 48, is a Director of Demeter and of Morgan
Stanley Futures & Currency Management Inc. Mr. Zafran is an
Executive Director of Morgan Stanley and, in September 2002, was
named Chief Administrative Officer of Morgan Stanley's
Client Solutions Division. Mr. Zafran joined the firm in 1979 and
has held various positions in Corporate Accounting and the
Insurance Department, including Senior Operations Officer -
Insurance Division, until his appointment in 2000 as Director of
401(k) Plan Services, responsible for all aspects of 401(k) Plan
Services including marketing, sales and operations. Mr. Zafran
received a B.S. degree in Accounting from Brooklyn College, New
York.

Douglas J. Ketterer, age 38, was named a Director of Demeter, and
confirmed by the National Futures Association as a principal of
Demeter on October 27, 2003. Mr. Ketterer is a Managing Director
and head of the Investment Solutions Group, which is comprised of
a number of departments which offer products and services through
Morgan Stanley's Individual Investor Group (including Managed
Futures, Alternative Investments, Insurance Services, Personal
Trust, Corporate Services, and others). Mr. Ketterer joined the
firm in 1990 in the Corporate Finance Division as a part of the
Retail Products Group. He later moved to the origination side of
Investment Banking, and then, after the merger between Morgan
Stanley and Dean Witter, served in the Product Development Group
at Morgan Stanley Dean Witter Advisors (now known as Morgan
Stanley Funds). From the summer of 2000 to the summer of 2002,
Mr. Ketterer served as the Chief Administrative Officer for
Morgan Stanley Investment Management, where he headed the
Strategic Planning & Administrative Group. Mr. Ketterer received
his M.B.A. from New York University's Leonard N. Stern School of
Business and his B.S. in Finance from the University at Albany's
School of Business.

Jeffrey S. Swartz, age 36, was named a Director of Demeter, and
confirmed by the National Futures Association as a principal of
Demeter on October 23, 2003. Mr. Swartz is a Managing Director
and Director of the Mass Affluent Segment of Morgan Stanley's
Individual Investor Group. Mr. Swartz began his career with
Morgan Stanley in 1990, working as a Financial Advisor in Boston.
He was appointed Sales Manager of the Boston office in 1994, and
served in that role for two years. In 1996, he was named Branch
Manager of the Cincinnati office. In 1999, Mr. Swartz was named
Associate Director of the Midwest Region, which consisted of 10
states and approximately 90 offices. Mr. Swartz served in this
capacity until October of 2001, when he was named Director of
Investor Advisory Services ("IAS") Strategy and relocated to IAS
headquarters in New York. In December of 2002, Mr. Swartz was
promoted to Managing Director and Chief Operating Officer of IAS
and has recently assumed the responsibility for managing the Mass
Affluent Client Segment. Mr. Swartz received his degree in
Business Administration from the University of New Hampshire.

Jeffrey D. Hahn, age 46, is the Chief Financial Officer of
Demeter. Mr. Hahn began his career at Morgan Stanley in 1992 and
is currently an Executive Director responsible for the
management and supervision of the accounting, reporting, tax and
finance functions for the firm's private equity, managed futures,
and certain legacy real estate investing activities. He is also
the Chief Financial Officer of Morgan Stanley Futures & Currency
Management Inc. From August 1984 through May 1992, Mr. Hahn held
various positions as an auditor at Coopers & Lybrand,
specializing in manufacturing businesses and venture capital
organizations. Mr. Hahn received his B.A. in Economics from St.
Lawrence University in 1979, an M.B.A. from Pace University in
1984, and is a Certified Public Accountant.

All the foregoing directors have indefinite terms.

The Audit Committee
The Partnership is operated by its general partner, Demeter, and
does not have an audit committee. As such, the entire Board of
Directors of Demeter serves as the audit committee. None of the
directors are considered to be "independent" as that term is used
in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange
Act of 1934, as amended. The Board of Directors of Demeter has
determined that Mr. Jeffrey D. Hahn is the audit committee
financial expert.

Section 16(a) Beneficial Ownership Reporting Compliance
The Partnership has no directors, executive officers or greater
than 10 percent beneficial owners and none of the directors or
executive officers of Demeter, the general partner of the
Partnership, own Units of the Partnership. As such, no Forms 3,
4, or 5 have been filed.

Code of Ethics
The Partnership has not adopted a code of ethics that applies to
the Partnership's principal executive officer, principal
financial officer, principal accounting officer or controller, or
persons performing similar functions. The Partnership is
operated by its general partner, Demeter. The President, Chief
Financial Officer and each member of the Board of Directors of
Demeter are employees of Morgan Stanley and are subject to the
code of ethics adopted by Morgan Stanley, the text of which can
be viewed on Morgan Stanley's website at www.morganstanley.com/
ourcommitment/codeofconduct.html.

Item 11. EXECUTIVE COMPENSATION
The Partnership has no directors and executive officers. As a
limited partnership, the business of the Partnership is managed by
Demeter which is responsible for the administration of the
business affairs of the Partnership but receives no compensation
for such services.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

(a) Security Ownership of Certain Beneficial Owners - At December
31, 2003, there were no persons known to be beneficial owners of
more than 5 percent of the Units.

(b) Security Ownership of Management - At December 31, 2003,
Demeter owned 288.309 Units of general partnership interest,
representing a 1.12 percent interest in the Partnership.

(c) Changes in Control - None

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Refer to Note 2 - "Related Party Transactions" of "Notes to
Financial Statements", in the accompanying Annual Report to
Limited Partners for the year ended December 31, 2003, which is
incorporated by reference to Exhibit 13.01 of this Form 10-K. In
its capacity as the Partnership's retail commodity broker, Morgan
Stanley DW received commodity brokerage commissions (paid and
accrued by the Partnership) of $6,223,889 for the year ended
December 31, 2003.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Morgan Stanley DW, on behalf of the Partnership, pays all
accounting fees. The Partnership reimburses Morgan Stanley DW
through the brokerage fees it pays, as discussed in the
Notes to Financial Statements in the Annual Report to the Limited
Partners for the year ended December 31, 2003.

(1) Audit Fees. The aggregate fees for professional services
rendered by Deloitte & Touche LLP in connection with their audit
of the Partnership's financial statements and reviews of the
financial statements included in the Quarterly Reports on Form
10-Q and in connection with statutory and regulatory filings for
the years ended December 31, 2003 and 2002 were approximately
$34,600 and $34,497, respectively.

(2) Audit-Related Fees. There were no fees for assurance and
related services rendered by Deloitte & Touche LLP for the years
ended December 31, 2003 and 2002.

(3) Tax Fees. The aggregate fees for tax compliance services
rendered by Deloitte & Touche LLP for the years ended December 31,
2003 and 2002 were approximately $29,914 and $29,066,
respectively.

(4) All Other Fees. None.

As of the date of this Report, the Board of Directors of Demeter
has not adopted pre-approval policies and procedures. As a
result, all services provided by Deloitte & Touche LLP must be
directly pre-approved by the Board of Directors of Demeter.

PART IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K

(a) 1. Listing of Financial Statements
The following financial statements and report of independent
auditors, all appearing in the accompanying Annual Report to
Limited Partners for the year ended December 31, 2003, are
incorporated by reference to Exhibit 13.01 of this Form 10-K:
? Report of Deloitte & Touche LLP, independent auditors, for
the years ended December 31, 2003, 2002 and 2001.

? Statements of Financial Condition, including the Schedules of
Investments, as of December 31, 2003 and 2002.

? Statements of Operations, Changes in Partners' Capital, and
Cash Flows for the years ended December 31, 2003, 2002 and
2001.

? Notes to Financial Statements.

With the exception of the aforementioned information and the
information incorporated in Items 7, 8, and 13, the Annual Report
to Limited Partners for the year ended December 31, 2003, is not
deemed to be filed with this report.

2. Listing of Financial Statement Schedules
No financial statement schedules are required to be filed with
this report.

(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Partnership during
the last quarter of the period covered by this report.

(c) Exhibits
Refer to Exhibit Index on Pages E-1 to E-2.

SIGNATURES

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

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
(Registrant)

BY: Demeter Management Corporation,
General Partner

March 15, 2004 BY: /s/ Jeffrey A. Rothman
Jeffrey A. Rothman,
President

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Demeter Management Corporation.

BY: /s/ Jeffrey A. Rothman March 15, 2004
Jeffrey A. Rothman, President

/s/ Douglas J. Ketterer March 15, 2004
Douglas J. Ketterer, Director

/s/ Jeffrey S. Swartz March 15, 2004
Jeffrey S. Swartz, Director

/s/ Richard A. Beech March 15, 2004
Richard A. Beech, Director

/s/ Raymond A. Harris March 15, 2004
Raymond A. Harris, Director

/s/ Frank Zafran March 15, 2004
Frank Zafran, Director

/s/ Jeffrey D. Hahn March 15, 2004
Jeffrey D. Hahn, Chief
Financial Officer

EXHIBIT INDEX

ITEM

3.01 Amended and Restated Limited Partnership Agreement of the
Partnership, is incorporated by reference to Exhibit A of
the Partnership's Prospectus, dated May 12, 1997, filed
with the Securities and Exchange Commission pursuant to
Rule 424(b)(3) under the Securities Act of 1933 on May
13, 1997.

10.01 Amended and Restated Management Agreement among the
Partnership, Demeter and John W. Henry and Company, Inc.,
dated as of May 12,1997 is incorporated by reference to
Exhibit 10.01 of the Partnership's Form 10-Q for the
quarter ended June 30, 2002 (File No. 0-19046) filed with
the Securities and Exchange Commission on August 12,
2002.

10.01(a) Amendment to Amended and Restated Management Agreement
between the Partnership and John Henry & Company, dated
November 30, 2000, is incorporated by reference to
Exhibit 10.01 of the Partnership's Form 8-K (File No. 0-
19046) filed with the Securities and Exchange Commission
on January 31, 2001.

10.02 Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW Inc., dated as of June
22, 2000, is incorporated by reference to Exhibit 10.01
of the Partnership's Form 8-K (File No. 0-19046) filed
with the Securities and Exchange Commission on November
13, 2001.

10.03 Commodity Futures Customer Agreement between Morgan
Stanley & Co. Incorporated and the Partnership, and
acknowledged and agreed to by Morgan Stanley DW Inc.,
dated as of May 1, 2000, is incorporated by reference to
Exhibit 10.02 of the Partnership's Form 8-K (File No. 0-
19046) filed with the Securities and Exchange Commission
on November 13, 2001.

10.04 Customer Agreement between the Partnership and Morgan
Stanley & Co. International Limited, dated as of May 1,
2000, is incorporated by reference to Exhibit 10.04 of
the Partnership's Form 8-K (File No. 0-19046) filed with
the Securities and Exchange Commission on November 13,
2001.

E-1

10.05 Foreign Exchange and Options Master Agreement between
Morgan Stanley & Co. Incorporated and the Partnership,
dated as of April 30, 2000, is incorporated by reference
to Exhibit 10.05 of the Partnership's Form 8-K (File No.
0-19046) filed with the Securities and Exchange Commission
on November 13, 2001.
10.06 Amendment to Amended and Restated Management Agreement
between the Partnership and John W. Henry & Company,
Inc., dated as of November 30, 2000, is incorporated by
reference to Exhibit 10.01 of the Partnership's Form
8-K (File No. 0-19046) filed with the Securities and
Exchange Commission on January 3, 2001.

10.07 Securities Account Control Agreement among the
Partnership, Morgan Stanley & Co. Incorporated, and Morgan
Stanley DW Inc., dated as of May 1, 2000, is incorporated
by reference to Exhibit 10.03 of the Partnership's Form
8-K (File No. 0-19046) filed with the Securities and
Exchange Commission on November 13, 2001.

13.01 December 31, 2003 Annual Report to Limited Partners is
filed herewith.

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 by 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 by 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.
E-2

Portfolio
Strategy
Fund

December 31, 2003
Annual Report

[LOGO] Morgan Stanley

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

HISTORICAL FUND PERFORMANCE

Presented below is the percentage change in Net Asset Value per Unit from the
start of each calendar year the Fund has traded. Also provided is the
inception-to-date return and the compound annualized return since inception for
the Fund. Past performance is not necessarily indicative of future results.

INCEPTION- COMPOUND
TO-DATE ANNUALIZED
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 RETURN RETURN
FUND % % % % % % % % % % % % % % %
- -----------------------------------------------------------------------------------------------------------------------

Portfolio Strategy Fund 27.7 (6.4) 19.9 (5.4) 25.4 25.5 11.3 9.5 (6.9) 9.9 (6.0) 26.7 3.7 228.3 9.6
(11 mos.)
- -----------------------------------------------------------------------------------------------------------------------

DEMETER MANAGEMENT CORPORATION

825 Third Avenue, 9th Floor
New York, NY 10022
Telephone (212) 310-6444

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
ANNUAL REPORT
2003

Dear Limited Partner:

This marks the thirteenth annual report for the Dean Witter Portfolio
Strategy Fund L.P. (the "Fund"). The Fund began the year trading at a Net Asset
Value per Unit of $3,166.00 and increased by 3.7% to $3,283.04 on December 31,
2003. The Fund has increased by 228.3% since it began trading in February 1991
(a compound annualized return of 9.6%).

Detailed performance information for the Fund is located in the body of the
financial report. We provide a trading results by sector chart that portrays
trading gains and trading losses for the year in each sector in which the Fund
participates.

The trading results by sector chart indicates the year's composite percentage
returns generated by the specific assets dedicated to trading within each
market sector in which the Fund participates. Please note that there is not an
equal amount of assets in each market sector, and the specific allocations of
assets by the Fund to each sector will vary over time within a predetermined
range. Below the chart is a description of the factors that influenced trading
gains and trading losses within the Fund during the year.

Should you have any questions concerning this report, please feel free to
contact Demeter Management Corporation, 825 Third Avenue, 9th Floor, New York,
NY 10022 or your Morgan Stanley Financial Advisor.

I hereby affirm, that to the best of my knowledge and belief, the information
contained in this report is accurate and complete. Past performance is no
guarantee of future results.

Sincerely,
/s/ Jeffrey A. Rothman
Jeffrey A. Rothman
Chairman and President
Demeter Management Corporation
General Partner for
Dean Witter Portfolio Strategy Fund L.P.

PORTFOLIO STRATEGY FUND

[CHART]

Year ended December 31, 2003
----------------------------
Currencies 17.19%
Interest Rates -4.72%
Stock Indices 4.36%
Energies -5.59%
Metals 1.18%
Agriculturals -5.66%

Note:Includes trading results and commissions but does not include other fees
or interest income.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. The most significant gains were recorded in the currency markets, primarily
during the fourth quarter. The Fund generated significant gains within the
currency sector, especially during December, from long positions in a broad
range of currencies versus the U.S. dollar. A confluence of factors
including concerns regarding U.S. budget and trade deficits, a dip in
consumer confidence, an outbreak of Mad Cow Disease in the U.S., the Federal
Reserve's policy of maintaining low interest rates, widening interest rate
differentials relative to other countries, and renewed fears of global
terrorism all pressured the dollar's value lower. The Fund's largest gains
in currencies were achieved from long positions in the euro, Australian
dollar and Japanese yen. Profits were also recorded in the euro and
Australian dollar earlier in the year as the dollar weakened ahead of the
war in Iraq.

.. Gains were also achieved in the global stock index markets. Long positions
in European and U.S. stock index futures profited, primarily in June and
July, as prices trended higher amid positive economic data. Long positions
in Japanese stock index futures during June and August also supplied gains
as equity prices drew strength from robust Japanese economic data and rising
prices in the U.S. equity markets.

PORTFOLIO STRATEGY FUND
(continued)

.. In the metals markets, gains were obtained primarily during December. Long
futures positions in base metals supplied gains as copper and nickel prices
rose to six and fourteen year highs respectively, benefiting from increased
demand from China and the strengthening of the global economy.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the agricultural markets, losses stemmed from short positions in corn
futures during August as prices reversed higher amid supply fears prompted
by weak U.S. harvest expectations and weather related concerns. Positions in
cotton futures during August and September returned losses as prices moved
without consistent direction. Elsewhere in the agricultural markets, smaller
losses were recorded during May and September from positions in coffee and
during December from positions in sugar.

.. Additional losses were experienced in the energy markets, largely over
September and October. During September, the Fund entered the month with
long crude oil and natural gas futures positions that had been profitable in
August. Due to an increase in supply, however, energy prices declined
sharply over the first half of the month. As a result, losses were incurred
on those long positions. Additional losses were incurred over the second
portion of the month when the Fund closed out its long positions and
established new short positions, only to see prices rally following an
announcement that OPEC would reduce production. During October, the Fund
incurred losses on the trading of natural gas futures. The Fund entered the
month with short natural gas positions, but these positions proved
unprofitable as prices rallied during the first part of the month. In
response to rising prices, the Fund reversed its position from short to
long, only to see prices decline in the latter part of the month. Additional
losses were incurred from short crude oil and heating oil futures positions
as prices moved higher in response to supply fears spurred by Middle East
tensions, as well as strike threats in Nigeria.

.. Finally, in the global interest rate markets, losses were incurred primarily
in the final four months of the year. Short positions in European and U.S.
interest rate futures recorded losses as bond prices reversed higher amid a
low interest rate environment, sporadic volatility in global equity markets
and the release of positive U.S. economic data that indicated low inflation
in the U.S.

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

INDEPENDENT AUDITORS' REPORT

To the Limited Partners and the General Partner:

We have audited the accompanying statements of financial condition of Dean
Witter Portfolio Strategy Fund L.P. (the "Partnership"), including the
schedules of investments, as of December 31, 2003 and 2002, and the related
statements of operations, changes in partners' capital, and cash flows for each
of the three years in the period ended December 31, 2003. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Dean Witter Portfolio Strategy Fund L.P. at
December 31, 2003 and 2002, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2003 in
conformity with accounting principles generally accepted in the United States
of America.

/s/ Deloitte & Touche LLP

New York, New York
March 2, 2004

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
---------------------
2003 2002
---------- ----------
$ $

ASSETS
Equity in futures interests trading
accounts:
Cash 78,764,319 80,285,823
Net unrealized gain on open contracts
(MS&Co.) 6,275,965 9,386,670
Net unrealized loss on open contracts
(MSIL) (49,642) (254,553)
---------- ----------
Total net unrealized gain on open
contracts 6,226,323 9,132,117
---------- ----------
Total Trading Equity 84,990,642 89,417,940
Due from Morgan Stanley DW 253,962 299,734
Interest receivable (Morgan Stanley DW) 46,351 79,789
---------- ----------
Total Assets 85,290,955 89,797,463
========== ==========

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Redemptions payable 606,561 561,117
Accrued administrative expenses 188,366 150,444
Management fees payable 142,074 149,661
---------- ----------
Total Liabilities 937,001 861,222
---------- ----------

PARTNERS' CAPITAL
Limited Partners (25,405.557 and
27,778.636 Units, respectively) 83,407,424 87,947,142
General Partner (288.309 and
312.413 Units, respectively) 946,530 989,099
---------- ----------
Total Partners' Capital 84,353,954 88,936,241
---------- ----------
Total Liabilities and Partners' Capital 85,290,955 89,797,463
========== ==========

NET ASSET VALUE PER UNIT 3,283.04 3,166.00
========== ==========

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

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
2003 2002 2001
---------- ---------- -----------
$ $ $

REVENUES
Trading profit (loss):
Realized 15,621,964 26,053,334 12,923,334
Net change in unrealized (2,905,794) 4,464,273 (12,575,739)
---------- ---------- -----------
Total Trading Results 12,716,170 30,517,607 347,595
Interest income (Morgan Stanley DW) 768,713 1,084,785 2,761,635
---------- ---------- -----------
Total 13,484,883 31,602,392 3,109,230
---------- ---------- -----------
EXPENSES
Brokerage commissions
(Morgan Stanley DW) 6,223,889 5,079,251 5,090,463
Management fees 1,924,277 1,709,477 1,765,563
Incentive fees 975,207 4,521,723 1,035,312
Transaction fees and costs 397,444 254,171 324,345
Administrative expenses 179,000 181,000 118,000
---------- ---------- -----------
Total 9,699,817 11,745,622 8,333,683
---------- ---------- -----------
NET INCOME (LOSS) 3,785,066 19,856,770 (5,224,453)
========== ========== ===========
NET INCOME (LOSS) ALLOCATION:
Limited Partners 3,737,635 19,623,459 (5,138,821)
General Partner 47,431 233,311 (85,632)

NET INCOME (LOSS) PER UNIT:
Limited Partners 117.04 667.07 (159.79)
General Partner 117.04 667.07 (159.79)

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
----------- ----------- --------- -----------
$ $ $

Partners' Capital,
December 31, 2000 35,840.577 93,758,471 1,531,420 95,289,891
Net loss -- (5,138,821) (85,632) (5,224,453)
Redemptions (4,259.005) (10,690,331) (455,000) (11,145,331)
---------- ----------- --------- -----------
Partners' Capital,
December 31, 2001 31,581.572 77,929,319 990,788 78,920,107
Net income -- 19,623,459 233,311 19,856,770
Redemptions (3,490.523) (9,605,636) (235,000) (9,840,636)
---------- ----------- --------- -----------
Partners' Capital,
December 31, 2002 28,091.049 87,947,142 989,099 88,936,241
Net income -- 3,737,635 47,431 3,785,066
Redemptions (2,397.183) (8,277,353) (90,000) (8,367,353)
---------- ----------- --------- -----------
Partners' Capital,
December 31, 2003 25,693.866 83,407,424 946,530 84,353,954
========== =========== ========= ===========

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

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
2003 2002 2001
---------- ----------- -----------
$ $ $

CASH FLOWS FROM
OPERATING
ACTIVITIES
Net income (loss) 3,785,066 19,856,770 (5,224,453)
Noncash item included in
net income (loss):
Net change in unrealized 2,905,794 (4,464,273) 12,575,739
(Increase) decrease in
operating assets:
Due from Morgan
Stanley DW 45,772 (209,943) (43,792)
Interest receivable
(Morgan Stanley DW) 33,438 19,134 271,809
Increase (decrease) in
operating liabilities:
Accrued administrative
expenses 37,922 6,825 48,555
Management fees payable (7,587) 15,897 (27,858)
---------- ----------- -----------
Net cash provided by
operating activities 6,800,405 15,224,410 7,600,000
---------- ----------- -----------

CASH FLOWS FROM
FINANCING
ACTIVITIES
Increase (decrease) in
redemptions payable 45,444 (510,025) (612,146)
Redemptions of Units (8,367,353) (9,840,636) (11,145,331)
---------- ----------- -----------
Net cash used for financing
activities (8,321,909) (10,350,661) (11,757,477)
---------- ----------- -----------

Net increase (decrease) in
cash (1,521,504) 4,873,749 (4,157,477)

Balance at beginning of
period 80,285,823 75,412,074 79,569,551
---------- ----------- -----------

Balance at end of period 78,764,319 80,285,823 75,412,074
========== =========== ===========

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

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2003 AND 2002

LONG UNREALIZED PERCENTAGE SHORT UNREALIZED PERCENTAGE
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS) OF NET ASSETS GAIN/(LOSS) OF NET ASSETS
- ------------------------------ --------------- ------------- ---------------- -------------
2003 PARTNERSHIP NET ASSETS: $84,353,954 $ % $ %

Foreign currency 4,301,904 5.10* (180,896) (0.21)
Commodity 2,722,638 3.23 (126,085) (0.15)
Interest Rate (65,928) (0.08) (72,695) (0.08)
Equity 518,607 0.61 (780,363) (0.93)
--------- ----- ---------- -----
Grand Total: 7,477,221 8.86 (1,160,039) (1.37)
========= ===== ========== =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of
Financial Condition

2002 PARTNERSHIP NET ASSETS: $88,936,241
Foreign currency 5,098,449 5.73* (136,246) (0.15)
Interest Rate 2,961,503 3.33 (868,797) (0.98)
Commodity 2,055,044 2.31 306,712 0.34
Equity (223,878) (0.25) 31,348 0.04
--------- ----- ---------- -----
Grand Total: 9,891,118 11.12 (666,983) (0.75)
========= ===== ========== =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of
Financial Condition

FUTURES AND FORWARD CONTRACTS: NET UNREALIZED GAIN/(LOSS) # OF CONTRACTS /NOTIONAL AMOUNTS
- ------------------------------ -------------------------- --------------------------------
2003 PARTNERSHIP NET ASSETS: $84,353,954 $

Foreign currency 4,121,008 11,417,521,876
Commodity 2,596,553 3,163
Interest Rate (138,623) 2,495
Equity (261,756) 603
---------
Grand Total: 6,317,182

Unrealized Currency Loss (90,859)
---------
Total Net Unrealized Gain per Statement of
Financial Condition 6,226,323
=========
2002 PARTNERSHIP NET ASSETS: $88,936,241
Foreign currency 4,962,203 358,668,224
Interest Rate 2,092,706 3,028
Commodity 2,361,756 3,019
Equity (192,530) 293
---------
Grand Total: 9,224,135

Unrealized Currency Loss (92,018)
---------
Total Net Unrealized Gain per Statement of
Financial Condition 9,132,117
=========

* No single contract's value exceeds 5% of Net Assets.
The accompanying notes are an integral part of these financial statements.

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION. Dean Witter Portfolio Strategy Fund L.P. (the "Partnership") is
a limited partnership organized to engage primarily in the speculative trading
of futures and forward contracts on physical commodities and other commodity
interests, including, but not limited to, foreign currencies, financial
instruments, metals, energy and agricultural products (collectively, "futures
interests").
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.
John W. Henry & Company, Inc. ("JWH") is the trading manager for the
Partnership.
Effective June 20, 2002, Morgan Stanley Dean Witter & Co. changed its name to
Morgan Stanley.
Demeter is required to maintain a 1% minimum interest in the equity of the
Partnership and income (losses) are shared by Demeter and the limited partners
based upon their proportional ownership interests.

USE OF ESTIMATES. The financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America, which
require management to make estimates and assumptions that affect the reported
amounts in the financial statements and related disclosures. Management
believes that the estimates utilized in the preparation of the financial
statements are prudent and reasonable. Actual results could differ from those
estimates.

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)

REVENUE RECOGNITION. Futures interests are open commitments until settlement
date. They are valued at market on a daily basis and the resulting net change
in unrealized gains and losses is reflected in the change in unrealized profit
(loss) on open contracts from one period to the next in the statements of
operations. Monthly, Morgan Stanley DW pays the Partnership interest income
based upon 80% of its average daily Net Assets for the month at a prevailing
rate for U.S. Treasury bills. For purposes of such interest payments, Net
Assets do not include monies owed to the Partnership on futures interests.

NET INCOME (LOSS) PER UNIT. Net income (loss) per unit of limited partnership
interest ("Unit(s)") is computed using the weighted average number of Units
outstanding during the period.

CONDENSED SCHEDULES OF INVESTMENTS. In March 2001, the American Institute of
Certified Public Accountants' Accounting Standards Executive Committee ("AICPA
Executive Committee") issued Statement of Position 01-1 ("SOP 01-1") "Amendment
to the Scope of Statement of Position 95-2, Financial Reporting By Nonpublic
Investment Partnerships, to Include Commodity Pools". SOP 01-1 required
commodity pools to include a condensed schedule of investments identifying
those investments which constitute more than 5% of Net Assets, taking long and
short positions into account separately, beginning in fiscal years ending after
December 15, 2001.

In December 2003, the AICPA Executive Committee issued Statement of Position
03-4 ("SOP 03-4") "Reporting Financial Highlights and Schedule of Investments
by Nonregistered Investment Partnerships: An Amendment to the Audit and
Accounting Guide Audits Of Investment Companies and AICPA Statement of Position
95-2, Financial Reporting By Nonpublic Investment Partnerships". SOP 03-4
requires commodity pools to disclose on the Schedule of Investments the number
of contracts, the contracts' expiration dates and the cumulative unrealized
gains/(losses) on open futures contracts, when the cumulative unrealized
gains/(losses) on an open futures contract

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)

exceeds 5% of Net Assets, taking long and short positions into account
separately. SOP 03-4 also requires ratios for expenses and net income/(losses)
based on average net assets to be disclosed in Financial Highlights. SOP 03-4
is effective for fiscal years ending after December 15, 2003.

EQUITY IN FUTURES INTERESTS TRADING ACCOUNTS. The Partnership's asset "Equity
in futures interests trading accounts", reflected on the statements of
financial condition, consists of (A) cash on deposit with Morgan Stanley DW,
MS&Co. and MSIL to be used as margin for trading; and (B) net unrealized gains
or losses on open contracts, which are valued at market and calculated as the
difference between original contract value and market value.

The Partnership, in the normal course of business, enters into various
contracts with MS&Co. and MSIL acting as its commodity brokers. Pursuant to
brokerage agreements with MS&Co. and MSIL, to the extent that such trading
results in unrealized gains or losses, the amounts are offset and reported on a
net basis on the Partnership's statements of financial condition.

The Partnership has offset the fair value amounts recognized for forward
contracts executed with the same counterparty as allowable under the terms of
its master netting agreement with MS&Co., the sole counterparty on such
contracts. The Partnership has consistently applied its right to offset.

BROKERAGE COMMISSIONS AND RELATED TRANSACTION FEES AND COSTS. The Partnership
accrues brokerage commissions and transaction fees and costs on a half-turn
basis, at 80% and 100%, respectively, of the rates Morgan Stanley DW charges
parties that are not clearinghouse members. Brokerage commissions and
transaction fees and costs combined are capped at 13/20 of 1% per month (a
maximum 7.8% annual rate) of the Partnership's month-end Net Assets applied on
a per trading program basis.

OPERATING EXPENSES. The Partnership bears all operating expenses related to
its trading activities, to a maximum of 1/4 of 1% annually of the Partnership's

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)

average month-end Net Assets. These include filing fees, clerical,
administrative, auditing, accounting, mailing, printing and other incidental
operating expenses as permitted by the Limited Partnership Agreement. In
addition, the Partnership incurs a monthly management fee and may incur an
incentive fee. Demeter and/or Morgan Stanley DW bear all other operating
expenses.

REDEMPTIONS. Limited partners may redeem some or all of their Units at 100% of
the Net Asset Value per Unit as of the last day of any month upon five business
days advance notice by redemption form to Demeter.

DISTRIBUTIONS. Distributions, other than redemptions of Units, are made on a
pro-rata basis at the sole discretion of Demeter. No distributions have been
made to date.

INCOME TAXES. No provision for income taxes has been made in the accompanying
financial statements, as partners are individually responsible for reporting
income or loss based upon their respective share of the Partnership's revenues
and expenses for income tax purposes.

DISSOLUTION OF THE PARTNERSHIP. The Partnership will terminate on December 31,
2025 or at an earlier date if certain conditions set forth in the Limited
Partnership Agreement occur.

- --------------------------------------------------------------------------------
2. RELATED PARTY TRANSACTIONS
The Partnership pays brokerage commissions to Morgan Stanley DW as described in
Note 1. The Partnership's cash is on deposit with Morgan Stanley DW, MS&Co. and
MSIL in futures interests trading accounts to meet margin requirements as
needed. Morgan Stanley DW pays interest on these funds as described in Note 1.

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)

- --------------------------------------------------------------------------------
3. TRADING MANAGER
Compensation to JWH consists of a management fee and an incentive fee as
follows:

MANAGEMENT FEE. The Partnership pays a monthly management fee equal to 1/6 of
1% per month (a 2% annual rate) of the Partnership's adjusted Net Assets, as
defined in the Limited Partnership Agreement, as of the last day of each month.

INCENTIVE FEE. The Partnership pays a quarterly incentive fee equal to 20% of
the Partnership's new appreciation of its Net Assets as of the end of each
calendar quarter. New appreciation represents the amount by which Net Assets
are increased by profits from futures and forwards trading that exceed losses
after brokerage commissions, management fees, transaction fees and costs and
administrative expenses are deducted. Such incentive fee is accrued in each
month in which new appreciation occurs. In those months in which new
appreciation is negative, previous accruals, if any, during the incentive
period are reduced. In those instances in which a limited partner redeems an
investment, the incentive fee (if earned through a redemption date) is paid to
JWH on those redemptions in the month of such redemptions.

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

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

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)

The Partnership's contracts are accounted for on a trade-date basis and
marked to market on a daily basis. The Partnership accounts for its derivative
investments in accordance with the provisions of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS No. 133"). SFAS No. 133 defines a derivative as a
financial instrument or other contract that has all three of the following
characteristics:

(1) One or more underlying notional amounts or payment provisions;

(2) Requires no initial net investment or a smaller initial net investment than
would be required relative to changes in market factors;

(3) Terms require or permit net settlement.

Generally, derivatives include futures, forward, swaps or options contracts
and other financial instruments with similar characteristics such as caps,
floors and collars.
The net unrealized gains on open contracts at December 31, reported as a
component of "Equity in futures interests trading accounts" on the statements
of financial condition, and their longest contract maturities were as follows:

NET UNREALIZED GAINS
ON OPEN CONTRACTS LONGEST MATURITIES
----------------------------- -------------------
OFF- OFF-
EXCHANGE- EXCHANGE- EXCHANGE- EXCHANGE-
YEAR TRADED TRADED TOTAL TRADED TRADED
---- --------- --------- --------- --------- ---------
$ $ $

2003 2,105,317 4,121,006 6,226,323 Dec. 2004 Mar. 2004
2002 4,169,914 4,962,203 9,132,117 Dec. 2003 Mar. 2003

The Partnership has credit risk associated with counterparty nonperformance.
The credit risk associated with the instruments in which the Partnership is
involved is limited to the amounts reflected in the Partnership's statements of
financial condition.
The Partnership also has credit risk because Morgan Stanley DW, MS&Co. and
MSIL act as the futures commission merchants or the counterparties, with
respect to most of the Partnership's assets. Exchange-traded futures contracts
are marked to market on a

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)

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 contracts, are required, pursuant to
regulations of the Commodity Futures Trading Commission, to segregate from
their own assets, and for the sole benefit of their commodity customers, all
funds held by them with respect to exchange-traded futures contracts, including
an amount equal to the net unrealized gains on all open futures contracts,
which funds, in the aggregate, totaled $80,869,636 and $84,455,737 at December
31, 2003 and 2002, respectively. With respect to the Partnership's
off-exchange-traded forward currency contracts, there are no daily
exchange-required settlements of variations in value nor is there any
requirement that an amount equal to the net unrealized gains on open forward
contracts be segregated, however, MS&Co. and Morgan Stanley DW will make daily
settlements of losses as needed. With respect to those off-exchange-traded
forward currency contracts, the Partnership is at risk to the ability of
MS&Co., the sole counterparty on all such contracts, to perform. The
Partnership has a netting agreement with MS&Co. This agreement, which seeks to
reduce both the Partnership's and MS&Co.'s exposure on off-exchange-traded
forward currency contracts, should materially decrease the Partnership's credit
risk in the event of MS&Co.'s bankruptcy or insolvency.

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(concluded)

- --------------------------------------------------------------------------------
5. FINANCIAL HIGHLIGHTS

PER UNIT:
---------

NET ASSET VALUE, JANUARY 1, 2003: $3,166.00
---------
NET OPERATING RESULTS:
Realized Profit 556.28
Unrealized Loss (107.83)
Interest Income 28.53
Expenses (359.94)
---------
Net Income 117.04
---------
NET ASSET VALUE, DECEMBER 31, 2003: $3,283.04
=========

Expense Ratio 10.3%
Net Income Ratio 4.0%

TOTAL RETURN 2003 3.7%

INCEPTION-TO-DATE RETURN 228.3%

COMPOUND ANNUALIZED RETURN 9.6%

Demeter Management Corporation
825 Third Avenue, 9th Floor
New York, NY 10022

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