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

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

FORM 10-K

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the year ended December 31, 2004 or

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

Commission File Number 0-19046

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

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

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

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

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

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

Name of each exchange
Title of each class on which registered

None None

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

Units of Limited Partnership Interest

(Title of Class)

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

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

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

State the aggregate market value of the Units of the Limited Partnership
Interest held by non-affiliates of the registrant. The aggregate market value
shall be computed by reference to the price at which Units were sold as of the
last business day of the registrant?s most recently completed second fiscal
quarter: $63,364,401 at June 30, 2004.

DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 2004

DOCUMENTS INCORPORATED BY REFERENCE

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

Documents Incorporated Part of Form 10-K

Partnership's Prospectus dated
May 12, 1997 I

Annual Report to Dean Witter
Portfolio Strategy Fund L.P.
Limited Partners for the year
ended December 31, 2004 II, III, and IV

PART I
Item 1. BUSINESS
(a) General Development of Business. Dean Witter Portfolio Stra-
tegy Fund L.P. (the "Partnership") is a Delaware limited
partnership organized in 1990 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
trading operations on February 1, 1991.

The Partnership?s general partner is Demeter Management
Corporation (?Demeter?). The non-clearing commodity broker is
Morgan Stanley DW Inc. (?Morgan Stanley DW?). The clearing
commodity brokers are Morgan Stanley & Co. Incorporated (?MS &
Co.?) and Morgan Stanley & Co. International Limited (?MSIL?).
Demeter, Morgan Stanley DW, MS & Co., and MSIL are wholly-owned
subsidiaries of Morgan Stanley. John W. Henry & Company, Inc. (the
?Trading Manager?) is the trading manager to the Partnership.

The Partnership's net asset value per unit of limited partnership
interest ("Unit(s)") as of December 31, 2004 was $3,598.35
representing an increase of 9.6 percent from the net asset value
per Unit of $3,283.04 at December 31, 2003. 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 on such contracts. The relevant financial information
is presented in Items 6 and 8.

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

Facets of Business

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

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

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

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

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

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

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

Item 2. PROPERTIES
The Partnership?s executive and administrative offices are
located within the offices of Morgan Stanley DW. The Morgan
Stanley DW offices utilized by the Partnership are located at 330
Madison Avenue, 8th Floor, New York, NY 10017.

Demeter changed its address in August 2004 from 825 Third Avenue,
9th Floor, New York, NY 10022 to 330 Madison Avenue, 8th Floor,
New York, NY 10017.

Item 3. LEGAL PROCEEDINGS
None.

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

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

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

(b) Holders. The number of holders of Units at December 31, 2004
was approximately 3,790.

(c) Distributions. No distributions have been made by the
Partnership since it commenced trading operations on February 1,
1991. Demeter has sole discretion to decide what distributions,
if any, shall be made to investors in the Partnership. Demeter
currently does not intend to make any distributions of
Partnership?s 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. Such assets are
used as margin to engage in trading and may be used as margin
solely for the Partnership?s trading. The assets are held in
either non-interest bearing bank accounts or in securities and
instruments permitted by the 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. For the periods covered
by this report, illiquidity has not materially affected the
Partnership?s assets.

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

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

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

Results of Operations.
General. The Partnership's results depend on the Trading Manager
and the ability of the Trading Manager's trading program to take
advantage of price movements in the futures and forwards markets.
The following presents a summary of the Partnership?s operations
for each of the three years in the period ended December 31,
2004, 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 are prepared in accordance with accounting
principles generally accepted in the United States of America,
which require the use of certain accounting policies that affect
the amounts reported in these financial statements, including the
following: The contracts the Partnership trades are accounted for
on a trade-date basis and marked to market on a daily basis. The
difference between their cost and market value is recorded on the
Statements of Operations as ?Net change in unrealized trading
profit (loss)? for open (unrealized) contracts, and recorded as
?Realized trading profit (loss)? when open positions are closed
out. The sum of these amounts constitutes the Partnership?s
trading results. The market value of a futures contract is the
settlement price on the exchange on which that futures contract
is traded on a particular day. The value of foreign currency
forward contracts is based on the spot rate as of the close of
business. Interest income, as well as management fees, incentive
fees, and brokerage commissions expenses of the Partnership are
recorded on an accrual basis.

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

The Partnership recorded total trading results including interest
totaling $13,717,596 and expenses totaling $6,957,283, resulting
in net income of $6,760,313 for the year ended December 31, 2004.
The Partnership?s net asset value per Unit increased from
$3,283.04 at December 31, 2003 to $3,598.35 at December 31, 2004.
Total redemptions for the year were $7,466,653 and the Partner-
ship?s ending capital was $83,647,614 at December 31, 2004, a
decrease of $706,340 from ending capital at December 31, 2003 of
$84,353,954.

The most significant trading gains of approximately 22.6% were
recorded in the energy markets from long futures positions in
crude oil and its related products. During the first quarter,
long positions continued to benefit as prices increased in
response to declining supplies, falling inventory levels, a
production-cut by OPEC, and fears of supply disruptions following
the Madrid train bombings. During April, long positions benefited
as prices trended higher on fears of potential terrorist activity
in the Middle East and news of refinery problems. During the
third quarter, long positions profited as prices continued to
trend higher due to supply and geopolitical concerns. Additional
gains were generated from long positions in natural gas futures
as prices strengthened during the second quarter amid higher
crude oil prices and news of decreased supply. Gains of
approximately 7.9% were recorded in the global interest
rate markets from long positions in European and U.S. interest
rate futures. Positions profited during the first quarter as
unimpressive economic data and weak global inflation caused bond
prices to rally. Additional gains resulted during the third
quarter from advancing prices supported by a surge in oil prices,
a drop in equity prices, and a conflicted U.S. economic outlook.
During September, long positions continued to profit as prices
trended higher amid strengthening energy prices, concerns for
U.S. economic growth, and reduced expectations for higher
interest rates. Gains also resulted during the fourth quarter as
prices moved higher due to U.S. economic growth concerns. Smaller
Partnership gains of approximately 1.2% resulted in the
agricultural markets, primarily during the first quarter, from
long futures positions in corn, soybeans, and soybean-related
products as prices climbed higher due to increased exports abroad
and greater demand from Asia. A portion of the Partnership?s
overall gains for the year was offset by losses of approximately
11.1% experienced in the currency markets. During March, short
Japanese yen positions incurred losses as the yen reversed higher
due to speculation that the Bank of Japan relaxed its currency
intervention efforts. During April, long yen, British pound, and
South African rand positions versus the U.S. dollar incurred
losses as the U.S. dollar surged following the release of
stronger-than-expected U.S. economic data. The yen also came
under pressure following weakening efforts by the Japanese
government through currency market intervention activity.
During May, short positions in the yen, pound, and rand
experienced further losses as the U.S. dollar?s value declined
amid fears of potential terrorist attacks, expanding energy
prices, and the release of weaker-than-expected U.S. economic
data. During June, losses were experienced from short yen
positions as it moved higher in response to better-than-
anticipated Japanese economic data and speculation for increases
in Japanese interest rates. Additional losses resulted during
June from long pound positions against the U.S. dollar as the
U.S. dollar reversed higher during June amid expectations that
the U.S. Federal Reserve would aggressively raise U.S. interest
rates. During July, long yen positions experienced losses as the
U.S. dollar advanced amid a jump in July U.S. consumer confidence
data. During August, losses resulted from short yen positions as
the U.S. dollar?s value declined amid concerns for U.S. economic
growth. During September, short British pound positions versus
the U.S. dollar resulted in losses as the U.S. dollar?s value
declined because of rising oil prices and continued concern for
U.S. economic growth. In the global stock index markets, losses
of approximately 6.0% resulted from positions in Japanese and
European equity index futures. During the second quarter,
geopolitical concerns and expanding energy prices caused global
equity prices to fall and long positions to finish with losses.
Newly established short positions also experienced losses as
prices rebounded amid a decline in oil prices and strong
corporate earnings. Long positions also incurred losses
during the third quarter as prices reversed lower due to the
release of disappointing U.S. employment data, advancing energy
prices, and new warnings for potential terrorist attacks. Losses
of approximately 3.3% in the metals markets resulted during the
second quarter, from long industrial metals futures positions as
prices reversed lower amid weakened Asian demand and an increase
in the U.S. dollar. Short precious metals positions incurred
losses during the second quarter as prices increased amid demand
generated by a weaker U.S. dollar and fears of potential
terrorist attacks. During the third quarter, losses were also
incurred from long precious metals positions as prices fell amid
a rebound in the U.S. dollar and news of strong U.S. employment
data.

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

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

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

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

For an analysis of unrealized gains and (losses) by contract type
and a further description of 2004 trading results, refer to the
Partnership?s Annual Report to Limited Partners for the year ended
December 31, 2004, 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 forward contracts on
physical commodities and other commodity interests, including,
but not limited to, foreign currencies, financial instruments,
metals, energy, and agricultural products. In entering into
these contracts, the Partnership is subject to the market risk
that such contracts may be significantly influenced by market
conditions, such as interest rate volatility, resulting in such
contracts being less valuable. If the markets should move
against all of the positions held by the Partnership at the same
time, and if the Trading Manager was unable to offset positions
of the Partnership, the Partnership could lose all of its assets
and limited partners would realize a 100% loss.

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

Credit Risk.
In addition to market risk, in entering into futures and forward
contracts there is a credit risk to the Partnership that the
counterparty on a contract will not be able to meet its
obligations to the Partnership. The ultimate counterparty or
guarantor of the Partnership for futures and forward contracts,
traded in the United States and most foreign exchanges on which
the Partnership trades is the clearinghouse associated with such
exchange. In general, a clearinghouse is backed by the
membership of the exchange and will act in the event of non-
performance by one of its members or one of its member?s
customers, which should significantly reduce this credit risk.
There is no assurance that a clearinghouse, exchange, or other
exchange member will meet its obligations to the Partnership, and
Demeter and the commodity brokers will not indemnify the
Partnership against a default by such parties. Further, the law
is unclear as to whether a commodity broker has any obligation to
protect its customers from loss in the event of an exchange or
clearinghouse defaulting on trades effected for the broker?s
customers. In cases where the Partnership trades off-exchange
forward contracts with a counterparty, the sole recourse
of the Partnership will be the forward contract?s 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 such 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.
For additional information, see the ?Financial Instruments?
section under ?Notes to Financial Statements? in the Partnership?s
Annual Report to Limited Partners for the year ended December 31,
2004, which is incorporated by reference to Exhibit 13.01 of in
this Form 10-K.

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

Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures and forwards. The market-sensitive
instruments held by the Partnership are acquired for speculative
trading purposes only and, as a result, all or substantially all
of the Partnership?s assets are at risk of trading loss. Unlike
an operating company, the risk of market-sensitive instruments is
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
forwards are settled daily through variation margin. Gains and
losses on off-exchange-traded forward currency contracts are
settled upon termination of the contract, however, the Partner-
ship is required to meet margin requirements equal to the net
unrealized loss on open contracts in the Partnership accounts
with the counterparty, which is accomplished by daily maintenance
of the cash balance in a custody account held at Morgan Stanley
DW for the benefit of MS & Co.

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

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

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

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

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

The Partnership accounts for open positions on the basis of mark
to market accounting principles. Any loss in the market value of
the Partnership?s open positions is directly reflected in the
Partnership?s earnings and cash flow.
The Partnership?s risk exposure in the market sectors traded by
the Trading Manager is estimated below in terms of VaR. The
Partnership estimates VaR using a model based upon historical
simulation (with a confidence level of 99%) which involves
constructing a distribution of hypothetical daily changes in the
value of a trading portfolio. The VaR model takes into account
linear exposures to risks 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, 2004 and 2003. At
both December 31, 2004 and 2003, the Partnership?s total
capital-ization was approximately $84 million.

Primary Market December 31, 2004 December 31, 2003
Risk Category Value at Risk Value at Risk
Currency (4.85)% (4.24)%

Interest Rate (2.28) (2.10)

Equity (1.01) (0.84)

Commodity (1.66) (2.41)

Aggregate Value at Risk (6.00)% (5.21)%

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, 2004 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, 2004 through December 31,
2004.

Primary Market Risk Category High Low Average
Currency (4.85)% (1.59)% (2.76)%
Interest Rate (3.42) (1.50) (2.54)
Equity (1.24) (0.37) (0.82)
Commodity (4.51) (1.66) (3.02)
Aggregate Value at Risk (6.31)% (3.70)% (5.27)%

Limitations on Value at Risk as an Assessment of Market Risk
VaR models permit estimation of a portfolio?s aggregate market
risk exposure, incorporating a range of varied market risks;
reflect risk reduction due to portfolio diversification or
hedging activities; and can cover a wide range of portfolio
assets. However, VaR risk measures should be viewed in light of
the methodology?s limitations, which include, but may not be
limited to the following:
* past changes in market risk factors will not always result in
accurate predictions of the distributions and correlations of
future market movements;
* changes in portfolio value caused by market movements may
differ from those of the VaR model;
* VaR results reflect past market fluctuation applied to current
trading positions while future risk depends on future
positions;

* VaR using a one-day time horizon does not fully capture the
market risk of positions that cannot be liquidated or hedged
within one day; and
* the historical market risk factor data used for VaR estimation
may provide only limited insight into losses that could be
incurred under certain unusual market movements.

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

The VaR tables provided present the results of the Partnership?s
VaR for each of the Partnership?s market risk exposures and on an
aggregate basis at December 31, 2003, and for the four quarter-
end reporting periods during calendar year 2004. VaR is not
necessarily representative of the Partnership?s historic risk,
nor should it be used to predict the Partnership?s future
financial performance or its ability to manage or monitor risk.
There can be no assurance that the Partnership?s actual losses on
a particular day will not exceed the VaR amounts indicated above
or that such losses will not occur more than once in 100 trading
days.

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

The Partnership also maintains a substantial portion
(approximately 69% as of December 31, 2004) of its available
assets in cash at Morgan Stanley DW. A decline in short-term
interest rates would result in a decline in the Partnership?s
cash management income. This cash flow risk is not considered to
be material.

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

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

The following were the primary trading risk exposures of the
Partnership at December 31, 2004, 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, 2004 was to the currency sector. The Partnership?s
currency exposure is to the exchange rate fluctuations, primarily
fluctuations which disrupt the historical pricing relationships
between different currencies and currency pairs. Interest rate
changes, as well as political and general economic conditions
influence these fluctuations. At December 31, 2004, the
Partnership?s exposure was mostly to outright U.S. dollar
positions. Outright positions consist of the U.S. dollar vs.
other currencies. These other currencies include major and minor
currencies. Demeter does not anticipate that the risk associated
with the Partnership?s currency trades will change significantly
in the future.

Interest Rate. The second largest market exposure of the
Partnership at December 31, 2004 was to the global interest rate
sector. Exposures were primarily spread across the European,
Japanese, 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 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 exposures 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, 2004 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,
2004, the Partnership?s primary exposures were to the Euro Stoxx
50 (Europe), NASDAQ (U.S.), and DAX (Germany) stock indices. The
Partnership is exposed to the risk of adverse price trends or
static markets in the U.S., European, and Japanese stock indices.
Static markets would not cause major market changes, but would
make it difficult for the Partnership to avoid trendless price
movements, resulting in numerous small losses.

Commodity.
Energy. At December 31, 2004, the Partnership had market
exposure in the energy sector. The Partnership?s energy
exposure was primarily to futures contracts in crude oil and
its related products, and natural gas. Price movements in
these markets result from geopolitical developments,
particularly in the Middle East, as well as weather patterns
and other economic fundamentals. Significant profits and
losses, which have been experienced in the past, are
expected to continue to be experienced in the future.
Natural gas has exhibited volatility in prices
resulting from weather patterns and supply and demand
factors and will likely continue in this choppy pattern.

Metals. At December 31, 2004, the Partnership had market
exposure in the metals sector. The Partnership's metals
exposure was to fluctuations in the price of precious
metals, such as gold and silver, and base metals, such as
copper, aluminum, nickel, and zinc. Economic forces, supply
and demand inequalities, geopolitical factors, and market
expectations influence price movements in these markets.
The Trading Manager utilizes the trading system(s) to take
positions when market opportunities develop, and Demeter
anticipates that the Partnership will continue to do so.

Soft Commodities and Agriculturals. At December 31, 2004,
the Partnership had market exposure to the markets that
comprise these sectors. Most of the exposures were to the
cotton, coffee, 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, 2004:

Foreign Currency Balances. The Partnership?s primary
foreign currency balances at December 31, 2004 were in
euros, British pounds, and Canadian dollars. 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 Total Trading Results Net Net Income/
Ended including interest Income/(Loss) (Loss) Per Unit

2004
March 31 $ 7,845,193 $ 5,925,839 $ 230.44
June 30 (20,676,915) (22,460,650) (901.14)
September 30 5,091,000 3,518,163 148.89
December 31 21,458,318 19,776,961 837.12

Total $ 13,717,596 $ 6,760,313 $ 315.31

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

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

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 Demeter, the
general partner of the Partnership, have evaluated the
effectiveness of the Partnership?s disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of
the Exchange Act), and have judged such controls and
procedures to be effective.

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

Management?s Report on Internal Control Over Financial Reporting
Demeter is responsible for the management of the Partnership.

Management of Demeter (?Management?) is responsible for
establishing and maintaining adequate internal control over
financial reporting. The internal control over financial
reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles.

The Partnership?s internal control over financial
reporting includes those policies and procedures that:

* Pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Partnership;

* Provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles,
and that the Partnership?s transactions are being made only
in accordance with authorizations of Management and
directors; and

* Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of
the Partnership?s assets that could have a material effect
on the financial statements.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Partnership?s
internal control over financial reporting as of December 31,
2004. In making this assessment, Management used the criteria
set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated Framework.
Based on our assessment and those criteria, Management believes
that the Partnership maintained effective internal control over
financial reporting as of December 31, 2004.

Deloitte & Touche LLP, the Partnership?s independent registered
public accounting firm, has issued an audit report on
Management?s assessment of the Partnership?s internal control
over financial reporting and on the effectiveness of the
Partnership?s internal control over financial reporting. This
report, which expresses unqualified opinions on Management?s
assessment and on the effectiveness of the Partnership?s internal
control over financial reporting, appears under ?Report of
Independent Registered Public Accounting Firm? in the
Partnership?s Annual Report to Limited Partners for the year
ended December 31, 2004.

Item 9B. OTHER INFORMATION
The Board of Directors of Demeter, the general partner of the
registrant, approved the engagement of Ernst & Young LLP as the
registrant?s principal accountant for tax purposes. Ernst &
Young LLP was engaged by the registrant on November 1, 2004.
Deloitte & Touche LLP will continue as the registrant?s
principal accountant and audit the financial statements of the
registrant.

There have been no material disagreements with Deloitte & Touche
LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.

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:

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

Mr. Jeffrey S. Swartz resigned his position as a Director of
Demeter.

Mr. Jeffrey A. Rothman, age 43, is the Chairman of the Board of
Directors and President of Demeter. Mr. Rothman is the Managing
Director of Morgan Stanley Managed Futures, responsible for
overseeing all aspects of the firm?s managed futures department.
Mr. Rothman has been with the managed futures department for
eighteen years. Throughout his career, Mr. Rothman has helped
with the development, marketing, and administration of
approximately 40 commodity pools. Mr. Rothman is an active member
of the Managed Funds Association and has recently served on its
Board of Directors. Mr. Rothman has a B.A. degree in Liberal
Arts from Brooklyn College, New York.

Mr. Richard A. Beech, age 53, 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.

Mr. Raymond A. Harris, age 48, is a Director of Demeter. Mr.
Harris is currently Managing Director and head of Client
Solutions for Morgan Stanley Individual Investor Group (?IIG?), a
Board Member of Morgan Stanley DW Inc., and Director of Morgan
Stanley Trust. 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.
Mr. Frank Zafran, age 50, is a Director of Demeter. 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.

Mr. Douglas J. Ketterer, age 39, is a Director of Demeter. Mr.
Ketterer is a Managing Director and has had responsibility for
managing a number of departments at Morgan Stanley over the
years, most recently as head of the Investment Solutions Group,
which is comprised of a number of departments which offer
products and services through Morgan Stanley?s IIG (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.

Mr. Todd Taylor, age 42, 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 of
the Missouri and southern Illinois branch offices in 1997. Three
years later, in 2000, Mr. Taylor was appointed to a newly created
position, Director of 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. Mr. Taylor graduated from Texas Tech University with a
B.B.A. in Finance.

Mr. William D. Seugling, age 35, is a Director of Demeter. Mr.
Seugling is a Managing Director at Morgan Stanley and currently
serves as Director of Client Solutions for U.S. 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.

Ms. Louise M. Wasso-Jonikas, age 51, is a Director of Demeter.
Ms. Wasso-Jonikas is a Managing Director of Morgan Stanley and
the Director of Alternative Investments for the IIG of Morgan
Stanley. Ms. Wasso-Jonikas was Co-Founder, President, and Chief
Operating Officer of Graystone Partners, an objective consulting
firm, from 1993 to 1999, when Graystone was acquired by Morgan
Stanley. Prior to founding Graystone, Ms. Wasso-Jonikas was a
Senior Vice President at Bessemer Trust and opened their Chicago
office. She also was a Vice President at the Northern Trust in
their Wealth Management Services Group where she worked
exclusively with their largest private clients and family offices
throughout the U.S. and abroad, serving their broad investment
and custody needs. Ms. Wasso-Jonikas also worked as an equity
block trader with Goldman Sachs and with Morgan Stanley advising
and managing money for private clients. Ms. Wasso-Jonikas? focus
is on developing a robust external manager platform utilizing
alternative managers for Morgan Stanley?s IIG private clients as
well as overseeing some of the Morgan Stanley?s largest client
relationships. Ms. Wasso-Jonikas holds a B.A. in Economics from
Mount Holyoke College and an M.B.A in Finance from the
University of Chicago Graduate School of Business.

Mr. Kevin Perry, age 35, is the Chief Financial Officer of
Demeter. Mr. Perry currently serves as an Executive Director and
Controller within the IIG 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
LLP 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.

All the foregoing directors have indefinite terms.

The Audit Committee
The Partnership is operated by its general partner, Demeter, and
does not have an audit committee. 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. Kevin Perry is the audit committee financial
expert.

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 http://
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, 2004, 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, 2004,
Demeter owned 288.309 Units of general partnership interest,
representing a 1.24 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, 2004, 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 $4,980,851 for the year ended
December 31, 2004.

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 commissions it pays, as discussed in the
Notes to Financial Statements in the Annual Report to the
Limited Partners for the year ended December 31, 2004.

(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 year ended December 31, 2004 were approximately $40,040 and
for the year ended December 31, 2003 were $38,030.

(2) Audit-Related Fees. There were no fees for assurance and
related services rendered by Deloitte & Touche LLP for the years
ended December 31, 2004 and 2003.

(3) Tax Fees. The aggregate fees for tax compliance services
rendered by Ernst & Young LLP were approximately $30,446 and
Deloitte & Touche LLP were $29,559 for the years ended December
31, 2004 and 2003, 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 Ernst & Young LLP and Deloitte &
Touche LLP must be directly pre-approved by the Board of
Directors of Demeter. Additionally, all services provided by
Deloitte & Touche LLP and Ernst & Young LLP must be communicated
to the Company Audit Director of Morgan Stanley.

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
registered public accounting firm, all appearing in the
accompanying Annual Report to Limited Partners for the year ended
December 31, 2004, are incorporated by reference to Exhibit 13.01
of this Form 10-K:
? Report of Deloitte & Touche LLP, independent registered
public accounting firm, for the years ended December 31,
2004, 2003, and 2002.

? Statements of Financial Condition, including the Schedules of
Investments, as of December 31, 2004 and 2003.

? Statements of Operations, Changes in Partners' Capital, and
Cash Flows for the years ended December 31, 2004, 2003, and
2002.

? 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, 2004, 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.

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

SIGNATURES

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

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

BY: Demeter Management Corporation,
General Partner

March 31, 2005 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 31, 2005
Jeffrey A. Rothman, President

/s/ Richard A. Beech March 31, 2005
Richard A. Beech, Director

/s/ Raymond A. Harris March 31, 2005
Raymond A. Harris, Director

/s/ Frank Zafran March 31, 2005
Frank Zafran, Director

/s/ Douglas J. Ketterer March 31, 2005
Douglas J. Ketterer, Director

/s/ Todd Taylor March 31, 2005
Todd Taylor, Director

/s/ William D. Seugling March 31, 2005
William D. Seugling, Director

/s/ Louise M. Wasso-Jonikas March 31, 2005
Louise M. Wasso-Jonikas, Director

/s/ Kevin Perry March 31, 2005
Kevin Perry, Chief Financial Officer

EXHIBIT INDEX

ITEM

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

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

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

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

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

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

10.05 Foreign Exchange and Options Master Agreement between
Morgan Stanley & Co. Incorporated and the Partnership,
dated as of April 30, 2000, is incorporated by reference
to Exhibit 10.05 of the Partnership?s Form 8-K (File No.
0-19046) filed with the Securities and Exchange Commission
on November 13, 2001.

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

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

13.01 December 31, 2004 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 Section 302 of the Sarbanes-Oxley Act of 2002.

31.02 Certification of Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.

32.01 Certification by President of Demeter Management
Corporation, the general partner of the Partnership,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes?Oxley Act of 2002.

32.02 Certification by Chief Financial Officer of Demeter
Management Corporation, the general partner of the
Partnership, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.

Portfolio
Strategy
Fund

December 31, 2004
Annual Report

[LOGO] Morgan Stanley

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

HISTORICAL FUND PERFORMANCE

Presented below is the percentage change in Net Asset Value per Unit from the
start of each calendar year the Fund has traded. Also provided is the
inception-to-date return and the compound annualized return since inception for
the Fund. Past performance is no guarantee of future results.

INCEPTION- COMPOUND
TO-DATE ANNUALIZED
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 RETURN RETURN
FUND % % % % % % % % % % % % % % % %
- -----------------------------------------------------------------------------------------------------------------------

Portfolio Strategy
Fund............. 27.7 (6.4) 19.9 (5.4) 25.4 25.5 11.3 9.5 (6.9) 9.9 (6.0) 26.7 3.7 9.6 259.8 9.6
(11 mos.)
- -----------------------------------------------------------------------------------------------------------------------

DEMETER MANAGEMENT CORPORATION

330 Madison Avenue, 8th Floor
New York, NY 10017
Telephone (212) 905-2700

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
ANNUAL REPORT
2004

Dear Limited Partner:

This marks the fourteenth annual report for the Dean Witter Portfolio
Strategy Fund L.P. (the "Fund"). The Fund began the year trading at a Net Asset
Value per Unit of $3,283.04 and increased by 9.6% to $3,598.35 on December 31,
2004. The Fund has increased by 259.8% since it began trading in February 1991
(a compound annualized return of 9.6%).

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

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

Should you have any questions concerning this report, please feel free to
contact Demeter Management Corporation, 330 Madison Avenue, 8th Floor, New
York, NY 10017 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 of the Board of Directors and President
Demeter Management Corporation
General Partner for
Dean Witter Portfolio Strategy Fund L.P.

PORTFOLIO STRATEGY FUND

[CHART]

Year ended December 31, 2004
----------------------------
Currencies -11.08%
Interest Rates 7.92%
Stock Indices -5.95%
Energies 22.60%
Metals -3.26%
Agriculturals 1.21%

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

FACTORS INFLUENCING ANNUAL TRADING GAINS:
.. The most significant gains were recorded in the energy markets from long
futures positions in crude oil and its related products. During the first
quarter, long positions continued to benefit as prices increased in response
to declining supplies, falling inventory levels, a production-cut by OPEC,
and fears of supply disruptions following the Madrid train bombings. During
April, long positions benefited as prices trended higher on fears of
potential terrorist activity in the Middle East and news of refinery
problems. During the third quarter, long positions profited as prices
continued to trend higher due to supply and geopolitical concerns.
Additional gains were generated from long positions in natural gas futures
as prices strengthened during the second quarter amid higher crude oil
prices and news of decreased supply.

.. Gains were also recorded in the global interest rate markets from long
positions in European and U.S. interest rate futures. Positions profited
during the first quarter as unimpressive economic data and weak global
inflation caused bond prices to rally. Additional gains resulted during the
third quarter from advancing prices supported by a surge in oil prices, a
drop in equity prices, and a conflicted economic outlook. During September,
long positions continued to profit as prices trended higher amid
strengthening energy prices, concerns for economic growth, and reduced
expectations for higher interest rates. Gains also resulted during the
fourth quarter as prices moved higher due to economic growth concerns.

PORTFOLIO STRATEGY FUND

.. Relatively smaller gains resulted in the agricultural markets, primarily
during the first quarter, from long futures positions in corn, soybeans, and
soybean-related products as prices climbed higher due to increased exports
abroad and greater demand from Asia.

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
.. The most significant losses were experienced in the currency markets. During
March, short Japanese yen positions incurred losses as the yen reversed
higher due to speculation that the Bank of Japan relaxed its currency
intervention efforts. During April, long yen, British pound, and South
African rand positions versus the U.S. dollar incurred losses as the U.S.
dollar surged following the release of stronger-than-expected U.S. economic
data. The yen also came under pressure following weakening efforts by the
Japanese government through currency market intervention activity. During
May, short positions in the yen, pound, and rand experienced further losses
as the U.S. dollar's value declined amid fears of potential terrorist
attacks, expanding energy prices, and the release of weaker-than-expected
economic data. During June, losses were experienced from short yen positions
as it moved higher in response to better-than-anticipated Japanese economic
data and speculation for increases in Japanese interest rates. Additional
losses resulted during June from long pound positions against the U.S.
dollar as the U.S. dollar reversed higher during June amid expectations that
the U.S. Federal Reserve would aggressively raise interest rates. During
July, long yen positions experienced losses as the U.S. dollar advanced amid
a jump in July U.S. consumer confidence data. During August, losses resulted
from short yen positions as the U.S. dollar's value declined amid concerns
for U.S. economic growth. During September, short British pound positions
versus the U.S. dollar resulted in losses as the U.S. dollar's value
declined because of rising oil prices and continued concern for U.S.
economic growth.

.. Losses in the global stock index markets resulted from positions in Japanese
and European equity index futures. During the second quarter, geopolitical
concerns and expanding energy prices caused equity prices to fall and long
positions to finish with losses. Newly established short positions also
experienced losses as prices rebounded amid a decline in oil prices and
strong corporate earnings. Long positions also incurred losses during the
third quarter as prices reversed lower due to the release of disappointing
U.S. employment data, advancing energy prices, and new warnings for
potential terrorist attacks.

.. Losses were also experienced in the metals markets. During the second
quarter, long industrial metals futures positions experienced losses as
prices reversed lower amid weakened Asian demand and an increase in the U.S.
dollar. Short precious metals positions incurred losses during the second
quarter as prices increased amid demand generated by a weaker U.S. dollar
and fears of potential terrorist attacks. During the third quarter, losses
were also incurred from long precious metals positions as prices fell amid a
rebound in the U.S. dollar and news of strong U.S. employment data.

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Demeter Management Corporation ("Demeter"), the general partner of Dean
Witter Portfolio Strategy Fund L.P. (the "Partnership"), is responsible for the
management of the Partnership.

Management of Demeter ("Management") is responsible for establishing and
maintaining adequate internal control over financial reporting. The internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles.

The Partnership's internal control over financial reporting includes those
policies and procedures that:

. Pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the
assets of the Partnership;

. Provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that the Partnership's transactions are
being made only in accordance with authorizations of Management and
directors; and

. Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Partnership's assets
that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Partnership's internal control
over financial reporting as of December 31, 2004. In making this assessment,
Management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control-Integrated
Framework. Based on our assessment and those criteria, Management believes that
the Partnership maintained effective internal control over financial reporting
as of December 31, 2004.

Deloitte & Touche LLP, the Partnership's independent registered public
accounting firm, has issued an audit report on Management's assessment of the
Partnership's internal control over financial reporting and on the
effectiveness of the Partnership's internal control over financial reporting.
This report, which expresses unqualified opinions on Management's assessment
and on the effectiveness of the Partnership's internal control over financial
reporting, appears under "Report of Independent Registered Public Accounting
Firm" on the following page.

New York, New York
March 11, 2005

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Limited Partners and the General Partner:

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that Dean
Witter Portfolio Strategy Fund L.P. (the "Partnership") maintained effective
internal control over financial reporting as of December 31, 2004, based on
criteria established in Internal Control--Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. The
Partnership's management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting. Our responsibility is to express an
opinion on management's assessment and an opinion on the effectiveness of the
Partnership's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinions.

A company's internal control over financial reporting is a process designed
by, or under the supervision of, the company's principal executive and
principal financial officers, or persons performing similar functions, and
effected by the company's board of directors, management, and other personnel
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company's internal
control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly

reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the company's assets that could have a material effect on the financial
statements.

Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion, management's assessment that the Partnership maintained
effective internal control over financial reporting as of December 31, 2004, is
fairly stated, in all material respects, based on the criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Also in our opinion, the Partnership
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2004, based on the criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the financial statements as of and
for the year ended December 31, 2004 of the Partnership and our report dated
March 11, 2005 expressed an unqualified opinion on those financial statements.

/s/ Deloitte & Touche LLP

New York, New York
March 11, 2005

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Limited Partners and the General Partner:

We have audited the accompanying statements of financial condition of Dean
Witter Portfolio Strategy Fund L.P. (the "Partnership"), including the
schedules of investments, as of December 31, 2004 and 2003, 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, 2004. 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 the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Dean Witter Portfolio Strategy Fund L.P. at
December 31, 2004 and 2003, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2004, in
conformity with accounting principles generally accepted in the United States
of America.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the
Partnership's internal control over financial reporting as of December 31,
2004, based on the criteria established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated March 11, 2005 expressed an unqualified opinion
on management's assessment of the effectiveness of the Partnership's internal
control over financial reporting and an unqualified opinion on the
effectiveness of the Partnership's internal control over financial reporting.

/s/ Deloitte & Touche LLP

New York, New York
March 11, 2005

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
---------------------
2004 2003
---------- ----------
$ $

ASSETS
Equity in futures interests trading accounts:
Cash 75,358,098 78,764,319
Net unrealized gain on open contracts
(MS&Co.) 8,306,807 6,275,965
Net unrealized gain (loss) on open
contracts (MSIL) 346,786 (49,642)
---------- ----------
Total net unrealized gain on open
contracts 8,653,593 6,226,323
---------- ----------
Total Trading Equity 84,011,691 84,990,642
Due from Morgan Stanley DW 346,576 253,962
Interest receivable (Morgan Stanley DW) 92,757 46,351
---------- ----------
Total Assets 84,451,024 85,290,955
========== ==========

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Redemptions payable 520,757 606,561
Accrued administrative expenses 141,903 188,366
Management fees payable 140,750 142,074
---------- ----------
Total Liabilities 803,410 937,001
---------- ----------

PARTNERS' CAPITAL
Limited Partners (22,957.780 and
25,405.557 Units, respectively) 82,610,177 83,407,424
General Partner (288.309 Units) 1,037,437 946,530
---------- ----------
Total Partners' Capital 83,647,614 84,353,954
---------- ----------
Total Liabilities and Partners' Capital 84,451,024 85,290,955
========== ==========

NET ASSET VALUE PER UNIT 3,598.35 3,283.04
========== ==========

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

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
2004 2003 2002
---------- ---------- -----------
$ $ $

INVESTMENT INCOME
Interest income (Morgan Stanley DW) 719,231 768,713 1,084,785
---------- ---------- -----------

EXPENSES
Brokerage commissions
(Morgan Stanley DW) 4,980,851 6,223,889 5,079,251
Management fees 1,554,188 1,924,277 1,709,477
Transaction fees and costs 310,496 397,444 254,171
Administrative expenses 105,000 179,000 181,000
Incentive fees 6,748 975,207 4,521,723
---------- ---------- -----------
Total Expenses 6,957,283 9,699,817 11,745,622
---------- ---------- -----------

NET INVESTMENT LOSS (6,238,052) (8,931,104) (10,660,837)
---------- ---------- -----------

TRADING RESULTS
Trading profit (loss):
Realized 10,571,095 15,621,964 26,053,334
Net change in unrealized 2,427,270 (2,905,794) 4,464,273
---------- ---------- -----------
Total Trading Results 12,998,365 12,716,170 30,517,607
---------- ---------- -----------

NET INCOME 6,760,313 3,785,066 19,856,770
========== ========== ===========
NET INCOME ALLOCATION:
Limited Partners 6,669,406 3,737,635 19,623,459
General Partner 90,907 47,431 233,311

NET INCOME PER UNIT:
Limited Partners 315.31 117.04 667.07
General Partner 315.31 117.04 667.07

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002

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

Partners' Capital,
December 31, 2001 31,581.572 77,929,319 990,788 78,920,107
Net income -- 19,623,459 233,311 19,856,770
Redemptions (3,490.523) (9,605,636) (235,000) (9,840,636)
---------- ---------- --------- ----------
Partners' Capital,
December 31, 2002 28,091.049 87,947,142 989,099 88,936,241
Net income -- 3,737,635 47,431 3,785,066
Redemptions (2,397.183) (8,277,353) (90,000) (8,367,353)
---------- ---------- --------- ----------
Partners' Capital,
December 31, 2003 25,693.866 83,407,424 946,530 84,353,954
Net income -- 6,669,406 90,907 6,760,313
Redemptions (2,447.777) (7,466,653) -- (7,466,653)
---------- ---------- --------- ----------
Partners' Capital,
December 31, 2004 23,246.089 82,610,177 1,037,437 83,647,614
========== ========== ========= ==========

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

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
2004 2003 2002
---------- ---------- -----------
$ $ $

CASH FLOWS FROM
OPERATING ACTIVITIES
Net income 6,760,313 3,785,066 19,856,770
Noncash item included in net
income:
Net change in unrealized (2,427,270) 2,905,794 (4,464,273)
(Increase) decrease in operating
assets:
Due from Morgan Stanley DW (92,614) 45,772 (209,943)
Interest receivable
(Morgan Stanley DW) (46,406) 33,438 19,134
Increase (decrease) in operating
liabilities:
Accrued administrative expenses (46,463) 37,922 6,825
Management fees payable (1,324) (7,587) 15,897
---------- ---------- -----------
Net cash provided by operating
activities 4,146,236 6,800,405 15,224,410
---------- ---------- -----------

CASH FLOWS FROM
FINANCING ACTIVITIES
Increase (decrease) in
redemptions payable (85,804) 45,444 (510,025)
Redemptions of Units (7,466,653) (8,367,353) (9,840,636)
---------- ---------- -----------
Net cash used for financing
activities (7,552,457) (8,321,909) (10,350,661)
---------- ---------- -----------

Net increase (decrease) in cash (3,406,221) (1,521,504) 4,873,749

Balance at beginning of period 78,764,319 80,285,823 75,412,074
---------- ---------- -----------

Balance at end of period 75,358,098 78,764,319 80,285,823
========== ========== ===========

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

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2004 AND 2003

LONG UNREALIZED PERCENTAGE SHORT UNREALIZED PERCENTAGE
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS) OF NET ASSETS GAIN/(LOSS) OF NET ASSETS
- ------------------------------ --------------- ------------- ---------------- -------------
2004 PARTNERSHIP NET ASSETS: $83,647,614 $ % $ %

Commodity 838,079 1.00 988,980 1.18
Equity 306,502 0.37 (359,609) (0.43)
Foreign currency 7,560,466 9.04* (151,864) (0.18)
Interest rate (319,373) (0.38) (93,022) (0.11)
--------- ----- ---------- -----
Grand Total: 8,385,674 10.03 384,485 0.46
========= ===== ========== =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

2003 PARTNERSHIP NET ASSETS: $84,353,954
Commodity 2,722,638 3.23 (126,085) (0.15)
Equity 518,607 0.61 (780,363) (0.93)
Foreign currency 4,301,904 5.10* (180,896) (0.21)
Interest Rate (65,928) (0.08) (72,695) (0.08)
--------- ----- ---------- -----
Grand Total: 7,477,221 8.86 (1,160,039) (1.37)
========= ===== ========== =====
Unrealized Currency Loss

Total Net Unrealized Gain per Statement of Financial Condition

NET UNREALIZED
FUTURES AND FORWARD CONTRACTS: GAIN/(LOSS)
- ------------------------------ --------------
2004 PARTNERSHIP NET ASSETS: $83,647,614 $

Commodity 1,827,059
Equity (53,107)
Foreign currency 7,408,602
Interest rate (412,395)
---------
Grand Total: 8,770,159

Unrealized Currency Loss (116,566)
---------
Total Net Unrealized Gain per Statement of Financial Condition 8,653,593
=========

2003 PARTNERSHIP NET ASSETS: $84,353,954
Commodity 2,596,553
Equity (261,756)
Foreign currency 4,121,008
Interest Rate (138,623)
---------
Grand Total: 6,317,182

Unrealized Currency Loss (90,859)
---------
Total Net Unrealized Gain per Statement of Financial Condition 6,226,323
=========

* No single contract's value exceeds 5% of Net Assets.

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

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS

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

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

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)

REVENUE RECOGNITION. Futures Interests are open commitments until settlement
date, at which time they are realized. They are valued at market on a daily
basis and the resulting net change in unrealized gains and losses is reflected
in the change in unrealized trading profit (loss) on open contracts from one
period to the next on the Statements of Operations. Monthly, Morgan Stanley DW
pays the Partnership interest income equal to 80% of its average daily Net
Assets for the month at a prevailing rate 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 December 2003, the American Institute
of Certified Public Accountants' Accounting Standards 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 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 ratios
for net investment income/(losses), expenses before and after incentive fees,
and net income/(losses) based on average net assets, and ratios for total
return before and after incentive fees based on average units outstanding to be
disclosed in Financial Highlights. SOP 03-4 was 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

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)

Stanley DW, MS&Co., and MSIL to be used as margin for trading; and (B) net
unrealized gains or losses on open contracts, which are valued at market and
calculated as the difference between original contract value and market value.
The Partnership, in the normal course of business, enters into various
contracts with MS&Co. and MSIL acting as its commodity brokers. Pursuant to
brokerage agreements with MS&Co. and MSIL, to the extent that such trading
results in unrealized gains or losses, the amounts are offset and reported on a
net basis on the Partnership's Statements of Financial Condition.
The Partnership has offset the fair value amounts recognized for forward
contracts executed with the same counterparty as allowable under the terms of
its master netting agreement with MS&Co., the sole counterparty on such
contracts. The Partnership has consistently applied its right to offset.

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

OPERATING EXPENSES. The Partnership bears all expenses related to its trading
activities, to a maximum of 1/4 of 1% annually of the Partnership's average
month-end Net Assets. These include filing fees, clerical, administrative,
auditing, accounting, mailing, printing, and other incidental operating
expenses as permitted by the Limited Partnership Agreement. In addition, the
Partnership incurs a monthly management fee and may incur an incentive fee.
Demeter and/or Morgan Stanley DW bear all other operating expenses.

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

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)

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. Demeter does not intend to make any distributions of the
Partnership's profits.

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

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

RECLASSIFICATIONS. Certain reclassifications have been made to the prior
years' financial statements to conform to the current year presentation. Such
reclassifications have no impact on the Partnership's reported net income
(loss).

- --------------------------------------------------------------------------------
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.

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

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

INCENTIVE FEE. The Partnership pays a quarterly incentive fee equal to 20% of
the Partnership's new appreciation of its Net Assets as of the end of each

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)

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

- --------------------------------------------------------------------------------
4. FINANCIAL INSTRUMENTS
The Partnership trades Futures Interests. Futures and forwards represent
contracts for delayed delivery of an instrument at a specified date and price.
Risk arises from changes in the value of these contracts and the potential
inability of counterparties to perform under the terms of the contracts. There
are numerous factors which may significantly influence the market value of
these contracts, including interest rate volatility.
The market value of exchange-traded contracts is based on the settlement
price quoted by the exchange on the day with respect to which market value is
being determined. If an exchange-traded contract could not have been liquidated
on such day due to the operation of daily limits or other rules of the
exchange, the settlement price shall be the settlement price on the first
subsequent day on which the contract could be liquidated. The market value of
off-exchange-traded contracts is based on the fair market value quoted by the
counterparty.
The Partnership's contracts are accounted for on a trade-date basis and
marked to market on a daily basis. The Partnership accounts for its derivative
investments in accordance with the provisions of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS No. 133"). SFAS No. 133 defines a derivative

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)

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-
EXCHANGE- EXCHANGE- EXCHANGE- OFF-EXCHANGE-
YEAR TRADED TRADED TOTAL TRADED TRADED
---- --------- --------- --------- --------- -------------
$ $ $

2004 1,244,992 7,408,601 8,653,593 Dec. 2005 Mar. 2005
2003 2,105,317 4,121,006 6,226,323 Dec. 2004 Mar. 2004

The Partnership has credit risk associated with counterparty nonperformance.
The credit risk associated with the instruments in which the Partnership trades
is limited to the amounts reflected in the Partnership's Statements of
Financial Condition.
The Partnership also has credit risk because Morgan Stanley DW, MS&Co., and
MSIL act as the futures commission merchants or the counterparties, with
respect to most of the Partnership's assets. Exchange-traded futures and
forward contracts are marked to market on a daily basis, with variations in
value settled on a daily basis. Morgan Stanley DW, MS&Co., and MSIL, each as a
futures commission merchant for the Partnership's exchange-traded futures and
forward contracts, are required, pursuant to regulations of the Commodity
Futures Trading Commission, to segregate from their own assets, and for the
sole benefit of their

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)

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 contracts, which funds, in the aggregate,
totaled $76,603,090 and $80,869,636 at December 31, 2004 and 2003,
respectively. With respect to the Partnership's off-exchange-traded forward
currency contracts, there are no daily exchange-required settlements of
variation in value nor is there any requirement that an amount equal to the net
unrealized gains (losses) on open forward contracts be segregated. However, the
Partnership is required to meet margin requirements equal to the net unrealized
loss on open contracts in the Partnership accounts with the counterparty, which
is accomplished by daily maintenance of the cash balance in a custody account
held at Morgan Stanley DW for the benefit of MS&Co. With respect to those
off-exchange-traded forward currency contracts, the Partnership is at risk to
the ability of MS&Co., the sole counterparty on all such contracts, to perform.
The Partnership has a netting agreement with MS&Co. This agreement, which seeks
to reduce both the Partnership's and MS&Co.'s exposure on off-exchange-traded
forward currency contracts, should materially decrease the Partnership's credit
risk in the event of MS&Co.'s bankruptcy or insolvency.

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(concluded)

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

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

NET ASSET VALUE, JANUARY 1, 2004: $3,283.04
---------
NET OPERATING RESULTS:
Interest Income 29.45
Expenses (284.85)
Realized Profit 471.33
Unrealized Profit 99.38
---------
Net Income 315.31
---------
NET ASSET VALUE, DECEMBER 31, 2004: $3,598.35
=========
RATIOS TO AVERAGE NET ASSETS:
Net Investment Loss (8.1)%
Expenses before incentive fees 9.1 %
Expenses after incentive fees 9.1 %
Net Income 8.8 %

TOTAL RETURN BEFORE INCENTIVE FEES 9.6 %
TOTAL RETURN AFTER INCENTIVE FEES 9.6 %
INCEPTION-TO-DATE RETURN 259.8 %
COMPOUND ANNUALIZED RETURN 9.6 %

Demeter Management Corporation
330 Madison Avenue, 8th Floor
New York, NY 10017

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