WITTER DEAN DIVERSIFIED FUTURES 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 0-23577

DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP

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

DELAWARE 13-3461507
(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 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:
$87,580,451 at June 30, 2003.

DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)

DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
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
June 30, 1995 I

Annual Report to Dean Witter
Diversified Futures Fund
Limited Partnership 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 Diversified Fu-
tures Fund Limited Partnership (the "Partnership") 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 commenced
operations on April 14, 1988.

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").
The trading manager is Morgan Stanley Futures & Currency
Management Inc. ("MSFCM" or the "Trading Manager"). Demeter,
Morgan Stanley DW, MS & Co., MSIL and MSFCM are wholly-owned
subsidiaries of Morgan Stanley.

The Partnership's net asset value per unit of limited partnership
interest ("Unit(s)"), as of December 31, 2003 was $1,347.21,
representing a decrease of 11.9 percent from the net asset value

per Unit of $1,528.82 at December 31, 2002. For a more
detailed description of the Partnership's business, see
subparagraph (c).

(b) Financial Information about Segments. For financial infor-
mation 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 June 30, 1995 (the "Prospectus"), incorporated by reference
in this Form 10-K, set forth below:

Facets of Business
1. Summary 1. "Summary of the Prospectus"
(Pages 2-10).

2. Futures, Options, and 2. "The Futures, Options and
Forward Markets Forward Markets" (Pages
55-60).

3. Partnership's Trading 3. "Use of Proceeds" (Pages
Arrangements and 52-53) "The Trading
Policies Advisor" (Pages 42-51).

4. Management of the Part- 4. "The Management Agree-
nership ment" (Pages 54-55).
"The General Partner"
(Pages 37-39). "The
Commodity Broker"
(Pages 53-54) and
"The Limited Partnership
Agreement" (Pages 61-65).

5. Taxation of the Partner- 5. "Material Federal Income
ship's Limited Partners Tax Considerations" and
"State and Local Income Tax
Aspects" (Pages 69-77).

(d) Financial Information About Geographic Areas. The Partner-
ship 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, N.Y. 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 the Units of the Partnership.

(b) Holders. The number of holders of Units at December 31, 2003
was approximately 5,984.

(c) Distributions. No distributions have been made by the
Partnership since it commenced trading operations on April 14,
1988. 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 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. 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 commission 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 $251,818 and expenses totaling $9,424,222, resulting in a
net loss of $9,172,404 for the year ended December 31, 2003. The
Partnership's net asset value per Unit decreased from $1,528.82 at
December 31, 2002 to $1,347.21 at December 31, 2003. Total
redemptions for the year were $9,873,242 and the Partnership's
ending capital was $71,788,051 at December 31, 2003, a decrease of
$19,045,646 from ending capital at December 31, 2002 of
$90,833,697.

Overall, the Partnership experienced trading losses for the year
ended December 31, 2003. The most significant trading losses of
approximately 7.9% were recorded in the global interest rate
markets from short positions in Japanese, Australian, and
European interest rate futures during September as bond prices
reversed higher due to renewed skepticism regarding a global
economic recovery and lower equity prices. Further losses in
this sector resulted from long positions in Australian interest
rate futures during March as prices reversed sharply lower amid
reports of advancing Coalition forces in the Persian Gulf region.
Losses within this sector continued during December as European
bond prices increased in value amid perceptions that the European
Central Bank would maintain low interest rates. Consequently,
losses were recorded on short positions in European interest rate
futures. Additional losses of approximately 6.3% were recorded
in the agricultural markets from positions in coffee and cotton
futures as prices experienced volatile price movement
throughout a majority of the year. Elsewhere in the agricultural
markets, losses were recorded during October from short positions
in corn futures as prices reversed higher due to news of a
decrease in supply. In the energy markets, losses of
approximately 4.6% were recorded primarily during October, as the
Partnership entered the month with short natural gas positions,
which proved unprofitable as prices rallied during the first part
of the month. In response to this rise in 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 in the energy sector from positions in crude
oil futures as prices moved erratically during October in
response to geopolitical and supply/demand factors. Losses were
also experienced during November and December as energy prices
continued to trade in a volatile fashion. A portion of the
Partnership's overall losses for year was offset by gains of
approximately 11.0% in the currency markets produced by long
positions in the Australian dollar versus the U.S. dollar during
a majority of the year as the value of the Australian currency
increased versus the U.S. dollar on the heels of higher commodity
prices and a significant interest rate differential between the
two countries. Additional gains resulted from long positions in
the euro, Singapore dollar, Swedish krona, and Swiss franc versus
the U.S. dollar as the value of the U.S. dollar declined
throughout much of the year due to geopolitical uncertainty and
negative economic data. Additional currency gains were
recorded from long positions in the euro versus the Japanese yen.
Additional gains of approximately 1.1% were recorded in the
metals markets, primarily during the fourth quarter, from long
positions in copper and nickel as base metal prices rallied in
response to growing investor sentiment that the global economy
was on the path to recovery and amid increased demand, especially
from China. Smaller gains of approximately 0.3% were experienced
in the global stock index futures markets, primarily during
December from long positions in U.S. stock index futures as
prices increased due to strong manufacturing data and the
strongest U.S. quarterly growth rate in almost 20 years.

The Partnership recorded revenues including interest totaling
$31,397,106 and expenses totaling $10,160,813, resulting in net
income of $21,236,293 for the year ended December 31, 2002. The
Partnership's net asset value per Unit increased from $1,190.47 at
December 31, 2001 to $1,528.82 at December 31, 2002. Total
redemptions for the year were $9,337,900 and the Partnership's
ending capital was $90,833,697 at December 31, 2002, an increase
of $11,898,393 from ending capital at December 31, 2001 of
$78,935,304.

The most significant trading gains of approximately 20.8% were
recorded from long positions in European, Japanese, and U.S.
interest rate futures during the period from June through
September, as well as in December, as prices trended
higher amid increased demand among investors seeking the safety
of fixed income investment. Additional gains of approximately
18.8% were generated in the currency markets from long positions
in the Swiss franc, euro, Japanese yen, and Swedish krona
relative to the U.S. dollar as the dollar weakened due to
continued uncertainty regarding a U.S. economic recovery.
Additional currency gains were recorded from long positions in
the euro versus the British pound. A portion of the
Partnership's overall gains was offset by losses of approximately
6.9% recorded in the metals futures markets from positions in
aluminum futures as an uncertain economic outlook resulted in
trendless price activity among industrial metals throughout most
of the year. In the agricultural futures markets, losses of
approximately 1.8% were incurred from long positions in cotton
futures as prices moved without consistent direction during the
first and third quarters amid shifting supply and demand
concerns. As of August 30, 2002, the Partnership received a
settlement award payment from the Sumitomo Copper Litigation
Settlement Administrator in the amount of $2,144,660.

The Partnership recorded revenues including interest totaling
$8,397,830 and expenses totaling $7,160,089, resulting in net
income of $1,237,741 for the year ended December 31, 2001. The
Partnership's net asset value per Unit increased from $1,175.17 at
December 31, 2000 to $1,190.47 at December 31, 2001. Total
redemptions for the year were $9,048,403 and the
Partnership's ending capital was $78,935,304 at December 31, 2001,
a decrease of $7,810,662 from ending capital at December 31, 2000
of $86,745,966.

The most significant trading gains of approximately 10.1% were
recorded in the global interest rate futures markets throughout a
majority of the first quarter from previously established long
positions in U.S. interest rate futures as prices trended higher
amid a rattled stock market, shaky consumer confidence, positive
inflation data and interest rate cuts by the U.S. Federal
Reserve. Additional gains were recorded primarily during August,
September and October from previously established long positions
in short and intermediate term U.S. and German interest rate
futures as prices continued trending higher following an interest
rate cut by the U.S. Federal Reserve and as investors sought a
safe haven from the decline in stock prices. In soft
commodities, profits of approximately 5.4% were recorded
throughout a majority of the first and second quarters from
previously established short cotton futures positions as prices
continued moving lower on weak export sales and low demand. A
portion of the Partnership's overall gains was partially offset
by losses of approximately 6.6% recorded in the currency markets
primarily during July from previously established short positions
in the euro as the value of the European common currency reversed
higher versus the British pound as hints of possible intervention
by the European Central Bank to support the euro remained.
During December, additional losses were recorded from previously
established long euro positions as its value reversed lower
relative to the British pound. In the energy markets, losses of
approximately 2.4% were experienced throughout the first nine
months of the year from positions 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.

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

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

VaR models, including the Partnership's, are 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 $72 million and $91 million,
respectively.

Primary Market December 31, 2003 December 31, 2002
Risk Category Value at Risk Value at Risk

Currency (2.79)% (3.42)%

Interest Rate (0.85) (2.52)

Equity (0.64) -

Commodity (1.96) (2.27)

Aggregate Value at Risk (3.55)% (4.78)%

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 (2.79)% (0.81)% (1.78)%
Interest Rate (2.07) (0.09) (1.10)
Equity (0.64) - (0.25)
Commodity (2.05) (1.76) (1.93)
Aggregate Value at Risk (3.55)% (2.88)% (3.10)%

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 87% 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 sector. The Partnership's
currency exposure is to exchange rate fluctuations, primarily
fluctuations which disrupt the historical pricing relationships
between different currencies and currency pairs. Interest rate
changes as well as political and general economic
conditions influence these fluctuations. The Partnership trades
a large number of currencies, including cross-rates - i.e.,
positions between two currencies other than the U.S. dollar. At
December 31, 2003, the Partnership's major exposures were to
euro, Japanese yen, and British pound currency crosses and 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 at December
31, 2003 was to the global interest rate complex. Exposure was
primarily to the Japanese and the U.S. 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. Demeter anticipates that G-7 countries
interest rates will remain the primary interest rate exposure of
the Partnership for the foreseeable future. The speculative
futures positions held by the Partnership may range from short to
long-term instruments. Consequently, changes in short, medium or
long-term interest rates may have an effect on the Partnership.

Equity. The third largest market exposure of the Partnership at
December 31, 2003 was 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 exposure was to the S&P 500
(U.S.) stock index. The Partnership is primarily exposed to the
risk of adverse price trends or static markets in the U.S. stock
indices. Static markets would not cause major market changes but
would make it difficult for the Partnership to avoid trendless
price movements resulting in numerous small losses.

Commodity.
Energy. At December 31, 2003, the Partnership's energy
exposure was primarily to futures contracts in crude oil 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 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 as 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 the cotton and
corn markets. Supply and demand inequalities, severe
weather disruptions and market expectations affect price
movements in these markets.

Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposure of the
Partnership at December 31, 2003:

Foreign Currency Balances. The Partnership's primary
foreign currency balance at December 31, 2003 was in the
Australian dollar. 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)

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

2003
March 31 $14,581,732 $11,204,055 $ 187.11
June 30 (4,973,094) (7,234,994) (130.41)
September 30 (7,540,513) (9,588,081) (173.59)
December 31 (1,816,307) (3,553,384) (64.72)

Total $ 251,818 $(9,172,404) $(181.61)

2002
March 31 $ 2,026,816 $ 422,875 $ 6.33
June 30 16,964,860 14,141,724 223.88
September 30 14,433,312 10,971,795 177.19
December 31 (2,027,882) (4,300,101) (69.05)

Total $31,397,106 $21,236,293 $338.35

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 of 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 593.245 Units of general partnership interest,
representing a 1.11 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 $5,113,810 for the year ended
December 31, 2003. In its capacity as the Partnership's Trading
Manager, MSFCM received management fees of $2,719,626 and
incentive fees of $1,179,242 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
$27,100 and $27,026, 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 Page 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 DIVERSIFIED FUTURES FUND LIMITED
PARTNERSHIP
(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, dated as of June 30, 1995, is incorporated by
reference to Exhibit 3.01 of the Partnership's Registration
Statement on Form S-1 (File No. 33-90360).

10.01 Amended and Restated Management Agreement among the
Partnership, Demeter and MSFCM, dated as of August 31,
1995, is incorporated by reference to Exhibit 10.02 of the
Partnership's Registration Statement on Form S-1 (File No.
33-90360).

10.02 Amended and Restated Customer Agreement between the
Partnership and Morgan Stanley DW Inc., dated as of May 19,
2000, is incorporated by reference to Exhibit 10.01 of the
Partnership's Form 8-K (File No. 0-23577) 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. 0-23577) 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. 0-23577) 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-
23577) filed with the Securities and Exchange Commission on
November 13, 2001.

10.06 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-
23577) 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 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.

Diversified
Futures
Fund

December 31, 2003
Annual Report

[LOGO] Morgan Stanley

DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP

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-
TO-DATE
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 RETURN
FUND % % % % % % % % % % % % % % % % %
- ----------------------------------------------------------------------------------------------------------------------------

Diversified Futures
Fund............... 31.8 18.2 50.4 23.9 16.7 6.6 7.7 (4.6) (2.7) 12.0 6.2 (11.1) 22.0 1.3 28.4 (11.9) 434.2
(8.5 mos.)
- ----------------------------------------------------------------------------------------------------------------------------

COMPOUND
ANNUALIZED
RETURN
FUND %
- -------------------------------

Diversified Futures
Fund............... 11.3

- -------------------------------

DEMETER MANAGEMENT CORPORATION

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

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP
ANNUAL REPORT
2003

Dear Limited Partner:

This marks the sixteenth annual report for the Dean Witter Diversified
Futures Fund Limited Partnership (the "Fund"). The Fund began the year at a Net
Asset Value per Unit of $1,528.82 and decreased by 11.9% to $1,347.21 on
December 31, 2003. The Fund has increased by 434.2% since it began trading in
April 1988 (a compound annualized return of 11.3%).

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,
New York 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 Diversified Futures Fund
Limited Partnership

DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP

[CHART]

Year ended December 31, 2003
----------------------------
Currencies 10.98%
Interest Rates -7.92%
Stock Indices 0.27%
Energies -4.58%
Metals 1.14%
Agriculturals -6.26%

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

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. In the global interest rate markets, losses were incurred from short
positions in Japanese, Australian and European interest rate futures during
September as bond prices reversed higher due to renewed skepticism regarding
a global economic recovery and lower equity prices. Further losses in this
sector resulted from long positions in Australian interest rate futures
during March as prices reversed sharply lower amid reports of advancing
Coalition forces in the Persian Gulf region. Losses within this sector
continued during December as European bond prices increased in value amid
perceptions that the European Central Bank would maintain low interest
rates. Consequently, losses were recorded on short positions in European
interest rate futures.
.. Additional losses were recorded in the agricultural markets from positions
in coffee and cotton futures as prices experienced volatile price movement
throughout a majority of the year. Elsewhere in the agricultural markets,
losses were recorded during October from short positions in corn futures as
prices reversed higher due to news of a decrease in supply.
.. In the energy markets, losses were recorded primarily during October, as the
Fund entered the month with short natural gas positions, which proved
unprofitable as prices rallied during the first part of the month. In
response to this rise in prices, the Fund reversed its position from short
to long, only

DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
(continued)

to see prices decline in the latter part of the month. Additional losses
were incurred in the energy sector from positions in crude oil futures as
prices moved erratically during October in response to geopolitical and
supply/demand factors. Losses were also experienced during November and
December as energy prices continued to trade in a volatile fashion.

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. In the currency markets, gains were produced by long positions in the
Australian dollar versus the U.S. dollar during a majority of the year as
the value of the Australian currency increased versus the U.S. dollar on the
heels of higher commodity prices and a significant interest rate
differential between the two countries. Additional gains resulted from long
positions in the euro, Singapore dollar, Swedish krona, and Swiss franc
versus the U.S. dollar as the value of the U.S. dollar declined throughout
much of the year due to geopolitical uncertainty and negative economic data.
Additional currency gains were recorded from long positions in the euro
versus the Japanese yen.
.. Gains were recorded in the metals markets, primarily during the fourth
quarter, from long positions in copper and nickel as base metal prices
rallied in response to growing investor sentiment that the global economy
was on the path to recovery and amid increased demand, especially from China.
.. In the global stock index futures markets, gains were experienced primarily
during December from long positions in U.S. stock index futures as prices
increased due to strong manufacturing data and the strongest U.S. quarterly
growth rate in almost 20 years.

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

INDEPENDENT AUDITORS' REPORT

To the Limited Partners and the General Partner:

We have audited the accompanying statements of financial condition of Dean
Witter Diversified Futures Fund Limited Partnership (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 Diversified Futures Fund
Limited Partnership 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 DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP

STATEMENTS OF FINANCIAL CONDITION

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

ASSETS
Equity in futures interests trading accounts:
Cash 70,449,140 83,241,952
Net unrealized gain (loss) on open
contracts (MSIL) 1,522,154 (2,180,109)
Net unrealized gain on open contracts
(MS&Co.) 991,709 10,768,357
---------- ----------
Total net unrealized gain on
open contracts 2,513,863 8,588,248
---------- ----------
Total Trading Equity 72,963,003 91,830,200
Interest receivable (Morgan Stanley DW) 40,362 70,114
---------- ----------
Total Assets 73,003,365 91,900,314
========== ==========

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Redemptions payable 854,826 692,350
Administrative expenses payable 181,340 156,707
Accrued management fees (MSFCM) 179,148 217,560
---------- ----------
Total Liabilities 1,215,314 1,066,617
---------- ----------

PARTNERS' CAPITAL
Limited Partners (52,693.330 and
57,734.961 Units, respectively) 70,988,827 88,266,372
General Partner (593.245 and
1,679.285 Units, respectively) 799,224 2,567,325
---------- ----------
Total Partners' Capital 71,788,051 90,833,697
---------- ----------
Total Liabilities and
Partners' Capital 73,003,365 91,900,314
========== ==========

NET ASSET VALUE PER UNIT 1,347.21 1,528.82
========== ==========

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

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

STATEMENTS OF OPERATIONS

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

REVENUES
Trading profit (loss):
Realized 5,581,971 18,636,963 16,371,415
Net change in unrealized (6,074,385) 9,497,370 (10,507,330)
---------- ---------- -----------
(492,414) 28,134,333 5,864,085
Proceeds from Litigation Settlement -- 2,144,660 --
---------- ---------- -----------
Total Trading Results (492,414) 30,278,993 5,864,085
Interest income (Morgan Stanley DW) 744,232 1,118,113 2,533,745
---------- ---------- -----------
Total 251,818 31,397,106 8,397,830
---------- ---------- -----------
EXPENSES
Brokerage commissions
(Morgan Stanley DW) 5,113,810 4,627,258 4,302,855
Management fees (MSFCM) 2,719,626 2,534,634 2,540,873
Incentive fees (MSFCM) 1,179,242 2,570,437 --
Transaction fees and costs 225,544 217,484 203,361
Administrative expenses 186,000 211,000 113,000
---------- ---------- -----------
Total 9,424,222 10,160,813 7,160,089
---------- ---------- -----------
NET INCOME (LOSS) (9,172,404) 21,236,293 1,237,741
========== ========== ===========
NET INCOME (LOSS) ALLOCATION:
Limited Partners (9,269,303) 20,668,103 1,212,049
General Partner 96,899 568,190 25,692

NET INCOME (LOSS) PER UNIT:
Limited Partners (181.61) 338.35 15.30
General Partner (181.61) 338.35 15.30

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 73,815.756 84,772,523 1,973,443 86,745,966
Net income -- 1,212,049 25,692 1,237,741
Redemptions (7,509.638) (9,048,403) -- (9,048,403)
---------- ---------- ---------- ----------
Partners' Capital,
December 31, 2001 66,306.118 76,936,169 1,999,135 78,935,304
Net income -- 20,668,103 568,190 21,236,293
Redemptions (6,891.872) (9,337,900) -- (9,337,900)
---------- ---------- ---------- ----------
Partners' Capital,
December 31, 2002 59,414.246 88,266,372 2,567,325 90,833,697
Net income (loss) -- (9,269,303) 96,899 (9,172,404)
Redemptions (6,127.671) (8,008,242) (1,865,000) (9,873,242)
---------- ---------- ---------- ----------
Partners' Capital,
December 31, 2003 53,286.575 70,988,827 799,224 71,788,051
========== ========== ========== ==========

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

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

STATEMENTS OF CASH FLOWS

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

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) (9,172,404) 21,236,293 1,237,741
Noncash item included in net
income (loss):
Net change in unrealized 6,074,385 (9,497,370) 10,507,330
Decrease in operating assets:
Interest receivable
(Morgan Stanley DW) 29,752 31,848 228,531
Due from Morgan Stanley DW -- 1,101 95,880
Increase (decrease) in operating
liabilities:
Administrative expenses
payable 24,633 (40) 41,937
Accrued management fees
(MSFCM) (38,412) 13,032 18,986
----------- ---------- -----------
Net cash provided by (used
for) operating activities (3,082,046) 11,784,864 12,130,405
----------- ---------- -----------

CASH FLOWS FROM
FINANCING ACTIVITIES
Increase (decrease) in
redemptions payable 162,476 (79,110) (1,251,728)
Redemptions of Units (9,873,242) (9,337,900) (9,048,403)
----------- ---------- -----------
Net cash used for financing
activities (9,710,766) (9,417,010) (10,300,131)
----------- ---------- -----------

Net increase (decrease) in cash (12,792,812) 2,367,854 1,830,274

Balance at beginning of period 83,241,952 80,874,098 79,043,824
----------- ---------- -----------

Balance at end of period 70,449,140 83,241,952 80,874,098
=========== ========== ===========

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

DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP

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: $71,788,051 $ % $ %

Foreign currency 255,871 0.36 -- --
Commodity 2,411,713 3.36 (418,950) (0.58)
Interest rate (270,115) (0.38) -- --
Equity 486,249 0.68 -- --
---------- ----- -------- -----
Grand Total: 2,883,718 4.02 (418,950) (0.58)
========== ===== ======== =====
Unrealized Currency Gain

Total Net Unrealized Gain per Statement of Financial Condition

2002 PARTNERSHIP NET ASSETS: $90,833,697
Foreign currency 8,193,539 9.02* -- --
Commodity (2,193,685) (2.41) 101,975 0.11
Interest rate 2,501,336 2.75 -- --
---------- ----- -------- -----
Grand Total: 8,501,190 9.36 101,975 0.11
========== ===== ======== =====
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: $71,788,051 $

Foreign currency 255,871 6,964,911,556
Commodity 1,992,763 1,838
Interest rate (270,115) 260
Equity 486,249 50
----------
Grand Total: 2,464,768

Unrealized Currency Gain 49,095
----------
Total Net Unrealized Gain per Statement of Financial Condition 2,513,863
==========

2002 PARTNERSHIP NET ASSETS: $90,833,697
Foreign currency 8,193,539 4,978,920,852
Commodity (2,091,710) 2,648
Interest rate 2,501,336 2,167
----------
Grand Total: 8,603,165

Unrealized Currency Loss (14,917)
----------
Total Net Unrealized Gain per Statement of Financial Condition 8,588,248
==========

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

DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION. Dean Witter Diversified Futures Fund Limited Partnership (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"). The trading manager is Morgan Stanley Futures & Currency Management
Inc. ("MSFCM" or the "Trading Manager"). Demeter, Morgan Stanley DW, MS&Co.,
MSIL, and MSFCM are wholly-owned subsidiaries of Morgan Stanley.
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.

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

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS
(continued)

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 that 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 exceeds 5% of Net Assets, taking
long and short positions into account separately. SOP 03-4 also requires

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS
(continued)

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 Net Assets as of the first day
of each month.

OPERATING EXPENSES. The Partnership bears all operating expenses related to
its trading activities. Such fees are capped at a maximum of 1/4 of 1%
annually of the Partnership's average monthly Net Assets as of the first day of
each month. These operating expenses include

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS
(continued)

legal, auditing, accounting, mailing, printing, filing fees and other expenses
as permitted by the Limited Partnership Agreement. In addition, the Partnership
incurs a monthly management fee and may incur an incentive fee. Demeter bears
all other operating expenses.

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.

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.

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

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

LITIGATION SETTLEMENT. On February 27, 2002, the Partnership received
notification of a preliminary entitlement to payment from the Sumitomo Copper
Litigation Settlement Administrator and received payment of this settlement
award in the amount of $2,144,660 as of August 30, 2002.

- --------------------------------------------------------------------------------
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.
Management fees and incentive fees (if any) incurred by the Partnership are
paid to MSFCM.

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS
(continued)

- --------------------------------------------------------------------------------
3. TRADING MANAGER
Demeter, on behalf of the Partnership and itself, has entered into a management
agreement with MSFCM to make all trading decisions for the Partnership.
Compensation to MSFCM by the Partnership consists of a management fee and an
incentive fee as follows:

MANAGEMENT FEE. The monthly management fee is accrued daily at the rate of
1/4 of 1% (a 3% annual rate) of beginning of the month Net Assets, as defined
in the management agreement.

INCENTIVE FEE. The Partnership pays a quarterly incentive fee equal to 15% of
the trading profits earned by the Partnership as of the end of each calendar
quarter. Trading profits represent the amount by which profits from futures and
forwards trading 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 trading profits occur. In those
months in which trading profits are negative, previous accruals, if any, during
the quarter are reduced.

- --------------------------------------------------------------------------------
4. 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.
The market value of contracts is based on closing prices quoted by the
exchange, bank or clearing firm through which the contracts are traded.
The Partnership's contracts are accounted for on a trade-date basis and
marked to market on a daily basis.

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS
(continued)

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 2,257,994 255,869 2,513,863 Mar. 2004 Mar. 2004
2002 394,708 8,193,540 8,588,248 Sept. 2004 April 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 daily basis, with variations in value settled on a
daily

DEAN WITTER DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS
(continued)

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 $72,707,134 and
$83,636,660 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 DIVERSIFIED FUTURES FUND
LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS
(concluded)

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

PER UNIT
---------

NET ASSET VALUE, JANUARY 1, 2003: $1,528.82
---------
NET OPERATING RESULTS:
Realized Profit 81.56
Unrealized Loss (108.35)
Interest Income 13.28
Expenses (168.10)
---------
Net Loss (181.61)
---------
NET ASSET VALUE, DECEMBER 31, 2003: $1,347.21
=========

Expense Ratio 10.6 %
Net Loss Ratio (10.3)%

TOTAL RETURN 2003 (11.9)%
INCEPTION-TO DATE RETURN 434.2 %
COMPOUND ANNUALIZED RETURN 11.3 %

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