WITTER DEAN DIVERSIFIED FUTURES 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 June 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 0-23577

DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)

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

(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 DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP

INDEX TO QUARTERLY REPORT ON FORM 10-Q

June 30, 2004

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
STATEMENTS OF FINANCIAL CONDITION

DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)

DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(Unaudited)

of these financial statements.
DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 2004 and 2003
(Unaudited)

DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)

DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS

June 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 Diversified Futures Fund Limited Partnership (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 Diversified Futures Fund Limited 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'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,
DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Morgan Stanley DW, MS & Co., MSIL, and MSFCM are wholly-owned
subsidiaries of Morgan Stanley.

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. Morgan Stanley DW pays interest on
these funds based on a prevailing rate on U.S. Treasury bills.
The Partnership pays brokerage commissions to Morgan Stanley DW.
Management fees and incentive fees, if any, incurred by the
Partnership are paid to MSFCM.

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 DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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. 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.

DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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

Exchange- Off-Exchange- Exchange- Off-Exchange-
Date Traded Traded Total Traded Traded
$ $ $

Jun. 30, 2004 (1,397,921) (4,820,386) (6,218,307) Mar. 2006 Sep. 2004
Dec. 31, 2003 2,257,994 255,869 2,513,863 Mar. 2004 Mar. 2004

The Partnership has credit risk associated with counterparty non-
performance. The credit risk associated with the instruments in
which the Partnership 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 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
DEAN WITTER DIVERSIFIED FUTURES FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

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 $62,050,146 and
$72,707,134 at June 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 variations in value nor is there any requirement
that an amount equal to the net unrealized gains (losses) 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.

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 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 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 programs 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 six month periods ended June 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, and 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 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.

For the Quarter and Six Months Ended June 30, 2004
The Partnership recorded losses net of interest income totaling
$13,999,372 and expenses totaling $1,565,831, resulting in a net
loss of $15,565,203 for the quarter ended June 30, 2004. The
Partnership's net asset value per Unit decreased from $1,408.64
at March 31, 2004 to $1,108.03 at June 30, 2004.

The most significant trading losses of approximately 9.6% were
generated in the currency markets from positions in the Japanese
yen and Singapore dollar versus the U.S. dollar. These losses
were experienced throughout the quarter from both long and short
positions in the Japanese yen relative to the dollar as the value
of the yen experienced significant short-term price volatility
due to conflicting economic data regarding Japanese economic
recovery, uncertainty regarding a currency market intervention by
the Bank of Japan, geopolitical concerns stemming from terror
warnings and instability in Iraq, and uncertainty regarding the
direction of U.S. and Japanese interest rates. Losses were also
recorded from positions in the Singapore dollar against the U.S.
dollar as the value of the Singapore dollar experienced
significant "whipsawing" throughout the quarter in tandem with
the Japanese yen. Elsewhere in the currency markets, losses
were recorded primarily during May and June from positions in the
euro relative to the British pound. During May, losses were
recorded from long positions in the euro versus the pound as the
value of the euro moved lower against the pound following the
Bank of England's decision to raise interest rates.
Further losses were recorded during June as the value of the euro
experienced short-term volatile price movement against most major
currencies. In the global interest rate futures markets, losses
of approximately 6.0% were recorded during April from long
European, Japanese, and Australian interest rate futures
positions as prices tumbled following the release of stronger-
than-expected U.S. jobs data. Losses continued in May from short
positions in Japanese interest rate futures as prices were pushed
higher by the Bank of Japan's decision to maintain current
interest rate levels and strong results from an auction of
Japanese Government bonds. Smaller losses were experienced
during June from short positions in European interest rate
futures as prices increased due to weaker-than-expected economic
reports and diminished expectations for the U.S. Federal Reserve
to maintain an aggressive policy towards tightening interest
rates. In the metals markets, losses of approximately 2.5% were
recorded during April from long futures positions in gold and
copper as both precious and base metals prices weakened due to
the strength in the U.S. dollar. Smaller losses were incurred
during May from short positions in aluminum futures as prices
increased due to a weaker U.S. dollar and news of strong demand
from Asia. Within the energy markets, losses of approximately
2.3% were recorded during April and June from long positions in
natural gas futures as prices reversed sharply lower due to news
of increased supply. In the agricultural sector, losses of
approximately 1.1% were incurred, primarily during May, from
short positions in coffee futures as prices strengthened
due to technically-based buying and reports of cold temperatures
in the growing regions of Brazil. Additional losses were
incurred from newly established long coffee positions during June
as prices reversed lower due to larger crop expectations.

The Partnership recorded losses net of interest income totaling
$9,304,307 and expenses totaling $2,980,129, resulting in a net
loss of $12,284,436 for the six months ended June 30, 2004. The
Partnership's net asset value per Unit decreased from $1,347.21
at December 31, 2003 to $1,108.03 at June 30, 2004.

The most significant trading losses of approximately 14.9% were
recorded in the currency markets from positions in the Japanese
yen and Singapore dollar versus the U.S. dollar. These losses
were experienced throughout the year from both long and short
positions in the Japanese yen relative to the U.S. dollar as the
value of the yen experienced significant short-term price
volatility due to conflicting economic data regarding Japanese
economic recovery, uncertainty regarding an intervention by Bank
of Japan in the currency markets, geopolitical concerns stemming
from terror warnings and instability in Iraq, and uncertainty
regarding the direction of U.S. and Japanese interest rates.
Losses were also recorded from positions in the Singapore dollar
against the U.S. dollar as the value of the Singapore dollar
experienced significant "whipsawing" throughout the year in
tandem with the Japanese yen. This price volatility in the
Japanese yen also resulted in losses from crossrate
positions in the euro versus the Japanese yen as the yen
experienced volatile price movement against most major currencies
for the aforementioned reasons. Elsewhere in the currency
markets, losses were experienced during May and June from
positions in the euro versus the British pound. During May,
losses were recorded from long positions in the euro versus the
British pound as the value of the euro moved lower against the
pound following the Bank of England's decision to raise interest
rates. Further losses were recorded during June as the value of
the euro experienced short-term volatile price movement against
most major currencies. Within the energy markets, losses of
approximately 1.8% were recorded during April and June from long
positions in natural gas futures as prices reversed sharply lower
due to news of increased supply. Additional losses of
approximately 1.0% were incurred in the global interest rate
futures markets from long positions in Japanese and Australian
interest rate futures during April as global bond prices reversed
lower following the release of stronger-than-expected U.S. jobs
data. Additional losses were recorded during May from newly
established short positions in Japanese interest rate futures as
prices were pushed higher by the Bank of Japan's decision to
maintain current interest rate levels and strong results from an
auction of Japanese Government bonds. Within the metals markets,
losses of approximately 0.6% were experienced, primarily during
April, from long futures positions in gold as precious metals
prices weakened due to the strength in the U.S. dollar. A
portion of the Partnership's overall losses was offset by
gains of approximately 2.0% recorded in the agricultural markets
from long futures positions in corn as growing U.S. exports and
heightened demand from Asia pushed prices higher during January
and March. Elsewhere in the agricultural markets, gains were
experienced from short cotton futures positions, primarily during
March, as prices trended lower due to rising supply and
technically-based selling.

For the Quarter and Six Months Ended June 30, 2003
The Partnership recorded losses net of interest income totaling
$4,973,094 and expenses totaling $2,261,900, resulting in a net
loss of $7,234,994 for the quarter ended June 30, 2003. The
Partnership's net asset value per Unit decreased from $1,715.93 at
March 31, 2003 to $1,585.52 at June 30, 2003.

The most significant trading losses of approximately 5.0% were
recorded in the metals markets during April and May from short
positions in aluminum, nickel, and copper futures as prices
reversed higher amid renewed optimism concerning future growth in
industrial demand and a rebound in U.S. equity prices. During
June, losses in this sector resulted from long positions in
aluminum futures as prices declined in anticipation of an interest
rate cut by the U.S. Federal Reserve. Additional losses of
approximately 1.7% were recorded in the energy markets from long
positions in natural gas futures as prices reversed sharply lower
following news of larger-than-expected U.S. reserves. Smaller
losses of approximately 1.1% were recorded in the
agricultural markets during May from short positions in corn
futures as prices moved higher amid concerns of weather related
crop damage in the U.S. midwest. A portion of the Partnership's
overall losses was offset by gains of approximately 0.9% in the
currency markets primarily during April and May from long
positions in the Australian dollar versus the U.S. dollar as the
value of the Australian currency strengthened amid significant
interest rate differentials, uncertainty regarding the Bush
Administration's economic policy, renewed fears of potential
terrorist attacks against American interests, and investor
preference for non-U.S. dollar denominated assets. Elsewhere in
the currency markets, gains were recorded from long positions in
the euro versus the Japanese yen and the British pound as the
value of the euro continued to trend higher following the decision
by the European Central Bank to leave interest rates unchanged.
Additional gains of approximately 0.9% in the global stock index
markets were recorded during May and June from long positions in
S&P 500 Index futures as equity prices rallied in response to
renewed expectations for a U.S. interest rate cut and the release
of positive economic data.

The Partnership recorded revenues including interest income
totaling $9,608,638 and expenses totaling $5,639,577, resulting in
net income of $3,969,061 for the six months ended June 30, 2003.
The Partnership's net asset value per Unit increased from
$1,528.82 at December 31, 2002 to $1,585.52 at June 30, 2003.

Trading gains of approximately 7.0% were recorded in the
energy markets, primarily during January and February from long
positions in natural gas futures as prices trended higher in
response to prolonged frigid temperatures in the northeastern and
midwestern United States. Additional gains were recorded from
long positions in crude oil futures as prices increased amid the
looming threat of military action against Iraq and an overall
decline in inventories. In the currency markets, gains of
approximately 5.5% were produced from short positions in the
British pound versus the euro as the value of the pound decreased
due to weak economic data out of the U.K and an interest rate cut
by the Bank of England. Additional gains were recorded from long
positions in the Australian dollar versus the U.S. dollar as the
value of the Australian currency increased on the heels of higher
commodity prices. During May, gains resulted from long positions
in the euro versus the Japanese yen as the value of the euro
continued to trend higher following the European Central Bank's
decision to leave interest rates unchanged. Gains of
approximately 2.5% were established in the global interest rate
markets from long positions in European and U.S. interest rate
futures as prices continued to trend higher amid continued
uncertainty in the global equity markets, investor demand for
fixed income investments, and speculation of an interest rate cut
by the U.S. Federal Reserve. In the global stock index markets,
gains of approximately 1.0% resulted from long positions in S&P
500 Index futures as equity prices rallied during May and June in
response to the prospect of lower interest rates, the
release of positive economic data, and renewed expectations for a
U.S. interest rate cut. A portion of the Partnership's overall
gains was offset by losses of approximately 4.9% recorded in the
metals markets, primarily during May and June, from short
positions in aluminum, copper, and nickel futures resulted in
losses as prices reversed higher, buoyed by a rebound in U.S.
equity prices and hopes for increased industrial demand. In the
agricultural markets, losses of approximately 2.1% were
experienced during May from short positions in corn futures as
prices moved higher early in the month amid concerns of weather
related crop damage in the U.S. midwest.
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/losses on off-exchange-traded forward currency contracts
are settled at the termination of the contract or more
frequently, as agreed upon with each counterparty.

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 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 may cause future
losses and volatility (i.e., "risk of ruin") that far exceed the
Partnership's experience to date or any reasonable expectations
based upon historical changes in market value.

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 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 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 June 30, 2004 and 2003. At
June 30, 2004 and 2003, the Partnership's total capitalization
was approximately $56 million and $89 million, respectively.

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

Interest Rate (2.15)% (2.07)%
Currency (1.33) (0.81)
Equity - (0.37)
Commodity (0.64) (1.92)
Aggregate Value at Risk (2.44)% (2.94)%

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 July 1, 2003 through June 30, 2004.
Primary Market Risk Category High Low Average
Interest Rate (2.15)% (0.09)% (1.29)%

Currency (2.79) (1.33) (2.06)

Equity (0.64) - (0.20)

Commodity (4.43) (0.64) (2.27)

Aggregate Value at Risk (5.69)% (2.44)% (3.67)%

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 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.

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 June 30, 2004 and 2003, and for the four
quarter-end reporting periods from July 1, 2003 through June 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 not needed for margin. These balances and any market
risk they may represent are immaterial.

The Partnership also maintains a substantial portion
(approximately 102% as of June 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
expropria-tions, 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 June 30, 2004, by market sector. It may be
anticipated, however, that these market exposures will vary
materially over time.

Interest Rate. The Partnership's primary market exposure at June
30, 2004 was to the global interest rate futures sector.
Exposure was primarily spread across the Japanese, European, and
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. 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 June 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. The Partnership trades a large
number of currencies, including cross-rates - i.e., positions
between two currencies other than the U.S. dollar. At June 30,
2004, the Partnership's major exposures were to the euro,
Japanese yen, and British pound currency crosses, as well as to
outright U.S. dollar positions. Outright positions consist of
the U.S. dollar vs. other currencies. These other currencies
include major and minor currencies. Demeter does not anticipate
that the risk profile of the Partnership's currency sector will
change significantly in the future.

Commodity.
Metals. The Partnership's metals exposure at June 30, 2004
was to fluctuations in the price of base metals, such as
copper, aluminum, zinc, and nickel. Economic forces, supply
and demand inequalities, geopolitical factors, and market
expectations influence price movements in these markets.
The Trading Manager, from time to time, takes positions when
market opportunities develop, and Demeter anticipates that
the Partnership will continue to do so.

Soft Commodities and Agriculturals. At June 30, 2004, the
Partnership had exposure to the markets that comprise these
sectors. Most of the exposure was to the cotton, cocoa 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 June 30, 2004:

Foreign Currency Balances. The Partnership's primary
foreign currency balance at June 30, 2004 was in the
Japanese yen. 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. Effective June 21, 2004, the following changes have
been made to the Board of Directors and Officers of Demeter:

Mr. Jeffrey D. Hahn resigned the position of Chief Financial
Officer and Director of Demeter.

Mr. Todd Taylor, age 41, is a Director of Demeter. Mr. Taylor
began his career with Morgan Stanley in June 1987 as a Financial
Advisor in the Dallas office. In 1995, he joined the Management
Training Program in New York and was appointed Branch Manager in
St. Louis in 1997. Three years later, in 2000, Mr. Taylor was
appointed to a newly created position, Director of Individual
Investor Group ("IIG") Learning and Development, before becoming
the Director of IIG Strategy in 2002. Most recently, Mr. Taylor
has taken on a new role as the High Net Worth Segment Director.
Currently a member of the firm's E-Learning Council, Mr. Taylor
is also a current member of the Securities Industry/Regulatory
Council on Continuing Education. Mr. Taylor graduated from Texas
Tech University with a B.B.A. in Finance.

Mr. William D. Seugling, age 34, will become a Director of
Demeter once he has registered with the National Futures
Association ("NFA") as a principal, which registration is
currently pending. Mr. Seugling is an Executive Director at
Morgan Stanley and currently serves as Director of Client
Solutions for US Private Wealth Management. Mr. Seugling joined
Morgan Stanley in June 1993 as an Associate in Equity Structured
Products having previously worked in research and consulting for
Greenwich Associates from October 1991 to June 1993. Since 1994,
he has focused broadly on analysis and solutions for wealthy
individuals and families culminating in his current role within
the division. He was named Vice President in 1996 and an
Executive Director in 1999. Mr. Seugling graduated cum laude
from Bucknell University with a B.S. in Management and a
concentration in Chemistry.

Mr. Kevin Perry, age 35, is the Chief Financial Officer of
Demeter. His registration with the NFA as a principal is
currently pending. He currently serves as an Executive Director
and Controller of Client Solutions at Morgan Stanley. Mr. Perry
joined Morgan Stanley in October 2000 and is also Chief Financial
Officer of Morgan Stanley Trust National Association, Van Kampen
Funds Inc. and Morgan Stanley Distribution, Inc. Prior to
joining Morgan Stanley, Mr. Perry worked as an auditor and
consultant in the financial services practice of Ernst & Young
from October 1991 to October 2000. Mr. Perry received a B.S.
degree in Accounting from the University of Notre Dame in 1991
and is a Certified Public Accountant.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) Exhibits

3.01 Amended and Restated Limited Partnership Agreement of the
Partnership, dated as of 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.

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 Diversified Futures
Fund Limited Partnership
(Registrant)

By: Demeter Management Corporation
(General Partner)

August 16, 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.