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

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

FORM 10-Q

[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2004

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

Commission File Number 0-19046

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

(Exact name of registrant as specified in its charter)

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

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

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

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

(Former name, former address, and former fiscal year, if changed
since last report)

Indicate by check-mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No___________

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

Yes No X

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 30, 2004

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

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

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

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

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS

September 30, 2004

(Unaudited)

The unaudited financial statements contained herein include, in
the opinion of management, all adjustments necessary for a fair
presentation of the results of operations and financial condition
of Dean Witter Portfolio Strategy Fund L.P. (the "Partnership").
The financial statements and condensed notes herein should be read
in conjunction with the Partnership's December 31, 2003 Annual
Report on Form 10-K.

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

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

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

2. Related Party Transactions
The Partnership's cash is on deposit with Morgan Stanley DW, MS &
Co., and MSIL in futures and forwards trading accounts to meet
margin requirements as needed. Monthly, Morgan Stanley DW pays
the Partnership interest income equal to 80% of its average daily
Net Assets for the month at a prevailing rate on U.S. Treasury
bills. The Partnership pays brokerage commissions to Morgan
Stanley DW.

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

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

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

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

1) One or more underlying notional amounts or payment
provisions;
2) Requires no initial net investment or a smaller initial net
investment than would be required relative to changes in
market factors;
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3) Terms require or permit net settlement.
Generally, derivatives include futures, forward, swaps or options
contracts, and other financial instruments with similar
characteristics such as caps, floors, and collars.

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

Net Unrealized Gains (Losses)
on Open Contracts Longest Maturities
Off- Off-
Exchange- Exchange- Exchange- Exchange-
Date Traded Traded Total Traded Traded
$ $ $
Sep. 30, 2004 8,648,505 (244,325) 8,404,180 Sep. 2005 Dec. 2004
Dec. 31, 2003 2,105,317 4,121,006 6,226,323 Dec. 2004 Mar. 2004

The Partnership has credit risk associated with counterparty non-
performance. The credit risk associated with the instruments in
which the Partnership trades 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.
DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Exchange-traded futures and forward contracts are marked to market
on a daily basis, with variations in value settled on a daily
basis. Morgan Stanley DW, MS & Co., and MSIL, each as a futures
commission merchant for the Partnership's exchange-traded futures
and forward contracts, are required, pursuant to regulations of
the Commodity Futures Trading Commission ("CFTC"), to segregate
from their own assets, and for the sole benefit of their commodity
customers, all funds held by them with respect to exchange-traded
futures and forward contracts, including an amount equal to the
net unrealized gains (losses) on all open futures and forward
contracts, which funds, in the aggregate, totaled $66,312,453 and
$80,869,636 at September 30, 2004 and December 31, 2003,
respectively. With respect to the Partnership's off-exchange-
traded forward currency contracts, there are no daily exchange-
required settlements of variation in value nor is there any
requirement that an amount equal to the net unrealized gains
(losses) on open forward contracts be segregated. However, the
Partnership is required to meet margin requirements equal to the
net unrealized loss on open contracts in the Partnership accounts
with the counterparty, which is accomplished by daily maintenance
of the cash balance in a custody account held at Morgan Stanley DW
for the benefit of MS & Co. With respect to those off-exchange-
traded forward currency contracts, the Partnership is at risk to
the ability of MS & Co., the sole counterparty on all such

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

contracts, to perform. The Partnership has a netting agreement
with MS & Co. This agreement, which seeks to reduce both the
Partnership's and MS & Co.'s exposure on off-exchange-traded

forward currency contracts, should materially decrease the
Partnership's credit risk in the event of MS & Co.'s bankruptcy or
insolvency.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

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

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

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

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

Capital Resources. The Partnership does not have, nor expects to
have, any capital assets. Redemptions of units of limited
partnership interest ("Unit(s)") in the future will affect the
amount of funds available for investment in futures and forwards
in subsequent periods. It is not possible to estimate the amount,
and therefore the impact, of future redemptions of Units.
There are no known material trends, favorable or
unfavorable, that would affect, nor any expected material changes
to, the Partnership's capital resource arrangements at the present
time.

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

Results of Operations
General. The Partnership's results depend on the Trading Manager
and the ability of the Trading Manager's trading program to take
advantage of price movements in the futures and forwards markets.
The following presents a summary of the Partnership's operations
for the three and nine month periods ended September 30, 2004 and
2003, and a general discussion of its trading activities during
each period. It is important to note, however, that the Trading
Manager trades in various markets at different times and that
prior activity in a particular market does not mean that such
market will be actively traded by the Trading Manager or will be
profitable in the future. Consequently, the results of operations
of the Partnership are difficult to discuss other than in the
context of the Trading Manager's trading activities on behalf of
the Partnership during the period in question. Past
performance is no guarantee of future results.

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

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

For the Three and Nine Months Ended September 30, 2004
The Partnership recorded revenues including interest income
totaling $5,091,000 and expenses totaling $1,572,837, resulting
in net income of $3,518,163 for the three months ended September
30, 2004. The Partnership's net asset value per Unit increased
from $2,612.34 at June 30, 2004 to $2,761.23 at September 30,
2004.

The most significant trading gains of approximately 17.6% stemmed
from the energy markets. Long futures positions in crude oil and
its related products profited throughout the quarter from supply
and geopolitical concerns. Gains of approximately 6.9% were
established in the global interest rates markets from profits
achieved primarily during August and September. During August,
long positions in U.S. and European, interest rate futures
resulted in gains as global bond prices were boosted by a surge
in oil prices, a drop in equity prices and a conflicted economic
outlook caused by a variety of U.S. financial data. During
September, long positions in Japanese, European, and U.S.
interest rate futures recorded additional gains as global bond
prices trended higher in response to advancing energy prices,
concerns for economic growth and reduced expectations for
aggressive increases in future interest rates due to lower global
inflation. Smaller gains of approximately 0.3% resulted in the
agricultural markets during July from short futures positions in
soybeans, soybean-related products, corn, and wheat as
agricultural prices trended lower due to ideal weather conditions
in the U.S. midwest growing region, reports of increased U.S.
inventories and weak export demand. Short futures positions in
cotton supplied additional gains as prices steadily declined due
to weak export demand and technically-based selling. Long
futures positions in sugar also generated gains as prices
increased amid technically-based buying and news of a shortage in
supply. A portion of the Partnership's overall gains for the
quarter was offset by losses of approximately 12.8% incurred
primarily during July and August in the currency markets. During
July, long positions in the Japanese yen versus the U.S. dollar
resulted in losses as the dollar advanced amid a jump in July
U.S. consumer confidence data. Long positions in European
currencies, such as the euro and Swiss franc, in addition to the
Australian dollar, versus the U.S. dollar also experienced losses
as upbeat market sentiment and an optimistic assessment of the
U.S. economy by U.S. Federal Reserve Chairman Alan Greenspan
strengthened the U.S. dollar. During August, losses were
recorded from euro positions relative to the U.S. dollar as the
euro experienced short-term volatility due to conflicting
economic data and surging energy prices. Additional losses
resulted from short Japanese yen and Swiss franc positions
as the U.S. dollar's value declined in response to concerns for
the rate of U.S. economic growth. In the global stock index
markets, losses of approximately 3.1% stemmed from long positions
in Japanese, U.S., and European stock index futures. During
July, prices reversed lower due to the release of disappointing
U.S. employment data, advancing energy prices, and new warnings
for potential terrorist attacks. During September, long
positions experienced losses as equity prices weakened due to
rising energy prices and the release of weak corporate data.
Finally, losses of approximately 2.2% resulted in the metals
markets, primarily during July and September, from long futures
positions in precious and base metals. During July, precious
metals prices fell amid a rebound in the U.S. dollar, while a
slowdown in demand from China negatively affected prices for
industrial metals. During September, long positions in silver
futures experienced losses as prices declined following news of
strong U.S. employment data.

The Partnership recorded losses net of interest income totaling
$7,740,722 and expenses totaling $5,275,926, resulting in a net
loss of $13,016,648 for the nine months ended September 30, 2004.
The Partnership's net asset value per Unit decreased from
$3,283.04 at December 31, 2003 to $2,761.23 at September 30,
2004.

The most significant trading losses of approximately 32.4%
were recorded in the currency markets from trading in the
Japanese yen, euro, British pound, Swiss franc, and the South
African rand, versus the U.S. dollar. During March, short
Japanese yen positions incurred losses as the yen reversed higher
due to speculation that the Bank of Japan was relaxing its
currency intervention efforts. Other losses resulted from short
euro positions as the euro's value reversed higher during the
final week of March amid market demand sparked by speculation
that the European Central Bank would leave interest rates
unchanged. During April, long Japanese yen, British pound, and
South African rand positions incurred losses as the U.S. dollar
surged against most currencies following the release of stronger-
than-expected U.S. jobs data. The Japanese yen also came under
pressure following weakening efforts by the Japanese government
through currency market interventions. During May, short
positions in the Japanese yen, British pound, and South African
rand experienced further losses as the U.S. dollar's value
declined amid fears of potential terrorist attacks, expanding
energy prices, and the release of weaker-than-expected economic
data. During June, losses were experienced primarily from short
Japanese yen positions as it moved higher in response to better-
than-anticipated Japanese economic data and speculation for
increases in Japanese interest rates. Additional sector losses
resulted from long British pound positions against the U.S.
dollar as the U.S. dollar reversed higher during June amid
expectations that the U.S. Federal Reserve would aggressively
raise U.S. interest rates. Further weakness in the British pound
resulted later in the month due to a lack of interest rate
direction provided by the Bank of England. During July, long
Japanese yen positions finished with losses as the U.S. dollar
advanced amid a jump in July U.S. consumer confidence data. Long
positions in European currencies, such as the euro and Swiss
franc, in addition to the Australian dollar, also contributed to
sector losses as upbeat market sentiment and an optimistic
assessment of the U.S. economy by U.S. Federal Reserve Chairman
Alan Greenspan strengthened the U.S. dollar against these
currencies. During August, losses were recorded from positions in
the euro relative to the U.S. dollar as the euro experienced
short-term volatility due to conflicting economic data and
surging energy prices. Additional losses resulted from short
Japanese yen and Swiss franc positions as the U.S. dollar's value
declined in response to concerns for the rate of U.S. economic
growth. Losses of approximately 6.2% were incurred in the global
stock index markets, primarily during May, from positions in
Japanese and European stock index futures. Global equity prices
were negatively impacted during the first half of May by
geopolitical concerns and expanding energy prices, thus resulting
in losses for long positions. Newly established short positions
in these markets experienced additional losses as prices
rebounded later in May due to a slight pullback in oil prices and
strong earnings from technology companies. Long positions in
Japanese, U.S., and European stock index futures also
incurred losses during July and September as prices reversed
lower due to the release of disappointing U.S. employment data,
advancing energy prices and new warnings for potential terrorist
attacks. In the metals markets, losses of approximately 4.2%
were recorded during April and May from positions in precious
metals. During April, long futures positions resulted in losses
as prices moved conversely to the increase in the U.S. dollar, as
well as reacted to fears of weakening demand from China. During
May, short futures positions experienced losses as gold and
silver prices increased amid demand generated by a weaker U.S.
dollar and fears of potential terrorist attacks. During July
and September, losses were incurred in precious metals as prices
fell amid a rebound in the U.S. dollar and news of strong U.S.
employment data. A portion of the Partnership's overall losses
during the first nine months of the year was offset by gains of
approximately 29.0% in the energy markets. Long futures
positions in crude oil and its related products achieved gains as
prices trended higher throughout the third quarter due to supply
concerns and geopolitical worries. During February and March,
long futures positions in crude oil and its related products
benefited as prices increased in response to low market supply,
falling inventory levels, a production-cut announcement from
OPEC, and fears of supply disruptions following the Madrid train
bombings. During April, long positions benefited as prices
trended higher on fears of potential terrorist activity in the
Middle East and news of problems with U.S. refineries.
Additional gains were generated from long positions in natural
gas futures as prices strengthened during the second quarter due
to higher crude oil prices and news of a decrease in supply.
Gains in the global interest rate markets of approximately 4.1%
resulted from long positions in U.S. and European interest rate
futures, primarily during January and February, as unimpressive
economic data and comments from global central banks regarding
weak global inflation caused bond prices to rally. Additional
gains during August resulted from advancing bond prices supported
by a surge in oil prices, a drop in equity prices, and a
conflicted economic outlook. During September, long interest
rate futures positions recorded gains as global bond prices
trended higher in response to advancing energy prices, concerns
for economic growth, and reduced expectations for aggressive
increases in future interest rates due to lower global inflation.
Smaller gains of approximately 1.5% were achieved in the
agricultural markets, primarily during the first quarter, from
long futures positions in corn, soybeans, and soybean-related
products as prices climbed higher due to increased exports abroad
and greater demand from Asia.

For the Three and Nine Months Ended September 30, 2003
The Partnership recorded losses net of interest income totaling
$4,971,806 and expenses totaling $2,221,915, resulting in a net
loss of $7,193,721 for the three months ended September 30, 2003.
The Partnership's net asset value per Unit decreased from
$3,559.07 at June 30, 2003 to $3,287.91 at September 30, 2003.

The most significant trading losses of approximately 2.9% were
experienced in the currency markets from long positions in the
British pound and Australian dollar relative to the U.S. dollar
during July, as the value of the U.S. dollar increased amid
expectations for a recovery of the U.S. economy following an
optimistic outlook unveiled by U.S. Federal Reserve Chairman Alan
Greenspan, negative economic data out of Australia and the U.K.,
and narrowing interest rate differentials between the U.S. and
these countries. Additional currency losses were recorded in
September from short positions in the British pound and the euro
versus the U.S. dollar as the value of the dollar weakened versus
most currencies on fears for an unsustainable U.S. economic
recovery and concerns regarding the potential impact of a
statement by the G-7 countries supporting "more flexible exchange
rates." The G-7 countries consist of France, the U.S., Britain,
Germany, Japan, Italy, and Canada. Speculation that Britain
would raise interest rates also helped the rise of the pound's
value. Losses of approximately 2.5% were incurred in the global
interest rate markets, primarily during September, from short
positions in European interest rate futures as bond prices
reversed higher due to renewed skepticism regarding a global
economic recovery and lower equity prices. In the agricultural
markets, losses of approximately 2.4% were recorded, primarily
during August, from long sugar futures positions as prices
reversed sharply lower in response to speculative selling and
weak volume. Additional losses were recorded from positions in
cotton futures during July and August as prices moved without
consistent direction. Elsewhere in the agricultural markets,
losses were incurred from long positions in coffee futures during
September as prices reversed lower due to news of an increase in
market supply. Additional losses of approximately 2.4% were
experienced in the energy markets, primarily in September, from
short positions in crude oil futures after prices reversed
sharply higher amid news that OPEC would move to reduce
production in an effort to stem falling oil prices. A portion of
the Partnership's overall losses for the third quarter was offset
by gains of approximately 2.1% in the global stock index markets,
primarily during August, from long positions in Japanese stock
index futures as equity prices drew strength from robust Japanese
economic data and overall strength in U.S. equity markets.

The Partnership recorded revenues including interest income
totaling $11,719,986 and expenses totaling $7,671,650, resulting
in net income of $4,048,336 for the nine months ended September
30, 2003. The Partnership's net asset value per Unit increased
from $3,166.00 at December 31, 2002 to $3,287.91 at September 30,
2003.

The most significant trading gains of approximately 5.5%
were recorded in the global stock index markets from long
positions in Japanese stock index futures during June and August
as equity prices drew strength from robust Japanese economic data
and rising prices in the U.S. equity markets. Elsewhere in the
global stock index markets, gains were recorded from long
positions in European and U.S. stock index futures, primarily in
June and July, as prices trended higher amid positive economic
data. In the global interest rate markets, gains of approximately
4.7% were recorded primarily during February and May from long
positions in U.S. interest rate futures as prices trended higher
amid speculation of an interest rate cut by the U.S. Federal
Reserve and lingering doubts concerning a global economic
recovery. Gains were also recorded during August from short
positions in Japanese interest rate futures as prices trended
lower amid an improved economic outlook for Japan. Additional
gains of approximately 2.4% were experienced in the energy
markets, primarily during January and February, from long
positions in natural gas futures as prices jumped sharply higher
amid fears that extremely cold weather in the U.S. northeast and
midwest could further deplete already diminished supplies. A
portion of the Partnership's overall gains for the first nine
months of the year was offset by losses of approximately 4.2% in
the agricultural markets from positions in cotton futures during
August and September as prices moved without consistent direction.
Short positions in corn futures incurred additional losses in
August as prices reversed higher amid supply fears prompted
by weak U.S. harvest expectations and weather related concerns.
Elsewhere in the agricultural markets, losses were recorded during
May and September from long positions in coffee futures as prices
reversed lower on speculative selling and news of increased
supply. In the metals markets, losses of approximately 2.9% were
recorded from positions in gold futures as precious metals prices
experienced short-term volatile price movement throughout a
majority of the first nine months of the year. Additional losses
were incurred from long positions in aluminum futures as prices
fell during March, June, August, and September amid muted
industrial demand, easing supply concerns, and heavy technically-
based selling.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures and forwards. The market-sensitive
instruments held by the Partnership are acquired for speculative
trading purposes only and, as a result, all or substantially all
of the Partnership's assets are at risk of trading loss. Unlike
an operating company, the risk of market-sensitive instruments is
inherent to the primary business activity of the Partnership.

The futures and forwards traded by the Partnership involve
varying degrees of related market risk. Market risk is often
dependent upon changes in the level or volatility of interest
rates, exchange rates, and prices of financial instruments and
commodities, factors that result in frequent changes in the fair
value of the Partnership's open positions, and consequently in
its earnings, whether realized or unrealized, and cash flow.
Gains and losses on open positions of exchange-traded futures and
forward contracts are settled daily through variation margin.
Gains and losses on off-exchange-traded forward currency
contracts are settled upon termination of the contract, however,
the Partnership is required to meet margin requirements equal to
the net unrealized loss on open contracts in the Partnership
accounts with the counterparty, which is accomplished by daily
maintenance of the cash balance in a custody account held
at Morgan Stanley DW for the benefit of MS & Co.
The Partnership's total market risk may increase or decrease as
it is influenced by a wide variety of factors, including, but not
limited to, the diversification among the Partnership's open
positions, the volatility present within the markets, and the
liquidity of the markets.

The face value of the market sector instruments held by the
Partnership is typically many times the applicable margin
requirements. Margin requirements generally range between 2% and
15% of contract face value. Additionally, the use of leverage
causes the face value of the market sector instruments held by
the Partnership to typically be many times the total
capitalization of the Partnership.

The Partnership's past performance is no guarantee of its future
results. Any attempt to numerically quantify the Partnership's
market risk is limited by the uncertainty of its speculative
trading. The Partnership's speculative trading and use of
leverage may cause future losses and volatility (i.e., "risk of
ruin") that far exceed the Partnership's experience to date under
the "Partnership's Value at Risk in Different Market Sectors"
section and significantly exceed the Value at Risk ("VaR") tables
disclosed.

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

Quantifying the Partnership's Trading Value at Risk
The following quantitative disclosures regarding the Partnership's
market risk exposures contain "forward-looking statements" within
the meaning of the safe harbor from civil liability provided for
such statements by the Private Securities Litigation Reform Act of
1995 (set forth in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934). All
quantitative disclosures in this section are deemed to be forward-
looking statements for purposes of the safe harbor, except for
statements of historical fact.

The Partnership accounts for open positions on the basis of mark
to market accounting principles. Any loss in the market value of
the Partnership's open positions is directly reflected in the
Partnership's earnings and cash flow.

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

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

VaR models, including the Partnership's, are continually evolving
as trading portfolios become more diverse and modeling techniques
and systems capabilities improve. Please note that the
VaR model is used to numerically quantify market risk for
historic reporting purposes only and is not utilized by either
Demeter or the Trading Manager in their daily risk management
activities. Please further note that VaR as described above may
not be comparable to similarly titled measures used by other
entities.

The Partnership's Value at Risk in Different Market Sectors
The following table indicates the VaR associated with the
Partnership's open positions as a percentage of total net assets
by primary market risk category at September 30, 2004 and 2003.
At September 30, 2004 and 2003, the Partnership's total
capitalization was approximately $65 million and $87 million,
respectively.

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

Interest Rate (3.42)% (1.70)%
Currency (1.59) (3.45)
Equity (0.65) (0.67)
Commodity (4.51) (2.08)
Aggregate Value at Risk (6.31)% (4.53)%

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

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

The table below supplements the quarter-end VaR set forth above
by presenting the Partnership's high, low and average VaR, as a
percentage of total net assets for the four quarter-end reporting
periods from October 1, 2003 through September 30, 2004.

Primary Market Risk Category High Low Average
Interest Rate (3.42)% (1.50)% (2.50)%

Currency (4.24) (1.59) (2.61)

Equity (1.24) (0.37) (0.78)

Commodity (4.51) (2.41) (3.20)

Aggregate Value at Risk (6.31)% (3.70)% (5.07)%

Limitations on Value at Risk as an Assessment of Market Risk
VaR models permit estimation of a portfolio's aggregate market
risk exposure, incorporating a range of varied market risks;
reflect risk reduction due to portfolio diversification or hedging
activities; and can cover a wide range of portfolio assets.
However, VaR risk measures should be viewed in light of the
methodology's limitations, which include, but may not be limited
to the following:
? past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
? changes in portfolio value caused by market movements may
differ from those of the VaR model;
? VaR results reflect past market fluctuations applied to current
trading positions while future risk depends on future
positions;
? VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
? the historical market risk factor data used for VaR estimation
may provide only limited insight into losses that could be
incurred under certain unusual market movements.

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

The VaR tables provided present the results of the Partnership's
VaR for each of the Partnership's market risk exposures and on an
aggregate basis at September 30, 2004 and 2003, and for the four
quarter-end reporting periods from October 1, 2003 through
September 30, 2004. VaR is not necessarily representative of the
Partnership's historic risk, nor should it be used to predict the
Partnership's future financial performance or its ability to
manage or monitor risk. There can be no assurance that the
Partnership's actual losses on a particular day will not exceed
the VaR amounts indicated above or that such losses will not occur
more than once in 100 trading days.

Non-Trading Risk

The Partnership has non-trading market risk on its foreign cash
balances. These balances and any market risk they may represent
are immaterial.

The Partnership also maintains a substantial portion
(approximately 86% as of September 30, 2004) of its available
assets in cash at Morgan Stanley DW. A decline in short-term
interest rates would result in a decline in the Partnership's cash
management income. This cash flow risk is not considered to be
material.

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

Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership's
market risk exposures - except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
Partnership manages its primary market risk exposures - constitute
forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act.
The Partnership's primary market risk exposures, as well as the
strategies used and to be used by Demeter and the Trading Manager
for managing such exposures, are subject to numerous
uncertainties, contingencies and risks, any one of which could
cause the actual results of the Partnership's risk controls to
differ materially from the objectives of such strategies.
Government interventions, defaults and expropriations, illiquid
markets, the emergence of dominant fundamental factors, political
upheavals, changes in historical price relationships, an influx of
new market participants, increased regulation, and many other
factors could result in material losses, as well as in material
changes to the risk exposures and the risk management strategies
of the Partnership. Investors must be prepared to lose all or
substantially all of their investment in the Partnership.

The following were the primary trading risk exposures of the
Partnership at September 30, 2004, by market sector. It may be
anticipated, however, that these market exposures will vary
materially over time.

Interest Rate. The primary market exposure of the Partnership at
September 30, 2004 was to the global interest rate sector.
Exposures were primarily spread across the U.S., European, and
Japanese interest rate sectors. Interest rate movements directly
affect the price of the sovereign bond futures positions held by
the Partnership and indirectly affect the value of its stock
index and currency positions. Interest rate movements in one
country, as well as relative interest rate movements between
countries, materially impact the Partnership's profitability. The
Partnership's primary interest rate exposure is generally to
interest rate fluctuations in the U.S. and the other G-7
countries. However, the Partnership also takes futures positions
in the government debt of smaller countries - e.g., Australia.
Demeter anticipates that the G-7 countries and Australian
interest rates will remain the primary interest rate exposure of
the Partnership for the foreseeable future. The speculative
futures positions held by the Partnership may range from short to
long-term instruments. Consequently, changes in short, medium,
or long-term interest rates may have an effect on the
Partnership.

Currency. The second largest market exposure of the Partnership
at September 30, 2004 was to the currency sector. The
Partnership's currency exposure is to exchange rate fluctuations,
primarily fluctuations which disrupt the historical pricing
relationships between different currencies and currency pairs.
Interest rate changes, as well as political and general economic
conditions influence these fluctuations. At September 30, 2004,
the Partnership's exposure was mostly to outright U.S. dollar
positions. Outright positions consist of the U.S. dollar vs.
other currencies. These other currencies include major and minor
currencies. Demeter does not anticipate that the risk associated
with the Partnership's currency trades will change significantly
in the future.

Equity. The third largest market exposure of the Partnership at
September 30, 2004 was primarily to equity price risk in the G-7
countries. The stock index futures traded by the Partnership are
by law limited to futures on broadly-based indices. At September
30, 2004, 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 September 30, 2004, the Partnership's energy
exposure was primarily to futures contracts in crude oil and
its related products, and natural gas. Price movements in
these markets result from geopolitical developments,
particularly in the Middle East, as well as weather patterns
and other economic fundamentals. Significant profits and
losses, which have been experienced in the past, are
expected to continue to be experienced in the future.
Natural gas has exhibited volatility in prices resulting
from weather patterns and supply and demand factors and will
likely continue in this choppy pattern.

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

Soft Commodities and Agriculturals. At September 30, 2004,
the Partnership had exposure to the markets that comprise
these sectors. Most of the exposures were to the
sugar, corn, and coffee 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 September 30, 2004:
Foreign Currency Balances. The Partnership's primary foreign
currency balances at September 30, 2004 were in euros 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 4. CONTROLS AND PROCEDURES

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

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

PART II. OTHER INFORMATION

Item 5. OTHER INFORMATION

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

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

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

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) Exhibits

3.01 Amended and Restated Limited Partnership Agreement of the
Partnership, is incorporated by reference to Exhibit A of
the Partnership's prospectus, dated May 12, 1997, filed
with the Securities and Exchange Commission pursuant to
Rule 424(b)(3) under the Securities Act of 1933 on May
13, 1997.
10.01 Amended and Restated Management Agreement among the
Partnership, Demeter and John W. Henry and Company, Inc.,
dated as of May 12, 1997, is incorporated by reference to
Exhibit 10.01 of the Partnership's Form 10-Q for the
quarter ended June 30, 2002 (File No. 0-19046) filed with
the Securities and Exchange Commission on August 12,
2002.

10.01(a) Amendment to Amended and Restated Management Agreement
between the Partnership and John Henry & Company, dated
November 30, 2000, is incorporated by reference to
Exhibit 10.01 of the Partnership's Form 8-K (file No. 0-
19046) filed with the Securities and Exchange Commission
on January 31, 2001.
10.02 Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW Inc., dated as of June
22, 2000, is incorporated by reference to Exhibit 10.01
of the Partnership's Form 8-K (File No. 0-19046) filed
with the Securities and Exchange Commission on November
13, 2001.
10.03 Commodity Futures Customer Agreement between Morgan
Stanley & Co. Incorporated and the Partnership, and
acknowledged and agreed to by Morgan Stanley DW Inc.,
dated as of May 1, 2000, is incorporated by reference to
Exhibit 10.02 of the Partnership's Form 8-K (File No.
0-19046) filed with the Securities and Exchange
Commission on November 13, 2001.
10.04 Customer Agreement between the Partnership and Morgan
Stanley & Co. International Limited, dated as of May
1, 2000, is incorporated by reference to Exhibit 10.04 of
the Partnership's Form 8-K (File No. 0-19046) filed with
the Securities and Exchange Commission on November
13, 2001.
10.05 Foreign Exchange and Options Master Agreement between
Morgan Stanley & Co. Incorporated and the Partnership,
dated as of April 30, 2000, is incorporated by reference
to Exhibit 10.05 of the Partnership's Form 8-K (File No.
0-19046) filed with the Securities and Exchange
Commission on November 13, 2001.
10.06 Amendment to Amended and Restated Management Agreement
between the Partnership and John W. Henry & Company,
Inc., dated as of November 30, 2000, is incorporated by
reference to Exhibit 10.01 of the Partnership's Form 8-K
(File No. 0-19046) filed with the Securities and Exchange
Commission on January 3, 2001.
10.07 Securities Account Control Agreement among the
Partnership, Morgan Stanley & Co. Incorporated, and
Morgan Stanley DW Inc., dated as of May 1, 2000, is
incorporated by reference to Exhibit 10.03 of the
Partnership's Form 8-K (File No. 0-19046) filed with the
Securities and Exchange Commission on November 13, 2001.

31.01 Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to rules 13a-15(e) and 15d-15(e), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.02 Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to rules 13a-15(e) and 15d-15(e),
as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.01 Certification of President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
32.02 Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
(B) Reports on Form 8-K - None.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dean Witter Portfolio Strategy Fund L.P.
(Registrant)

By: Demeter Management Corporation
(General Partner)

November 15, 2004 By:/s/Kevin Perry
Kevin Perry
Chief Financial Officer

The General Partner which signed the above is the only party
authorized to act for the Registrant. The Registrant has no
principal executive officer, principal financial officer,
controller, or principal accounting officer and has no Board of
Directors.

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

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