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, 2005 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 if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.  Yes          No  X

Indicate by check-mark if the registrant
is not required to file reports pursuant
to Section 13 or Section 15(d) of the Act.  Yes         No   X

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 a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definitions of ?accelerated
filer and large accelerated filer? in Rule 12b-2 of the Exchange Act.  (Check
one):

Large accelerated filer___  Accelerated filer____  Non-accelerated filer   X


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

State the aggregate market value of the Units of Limited Partnership Interest
held by non-affiliates of the registrant.  The aggregate market value shall be
computed by reference to the price at which Units were sold as of the last
business day of the registrant?s most recently completed second fiscal quarter:
$62,445,570 at June 30, 2005.

DOCUMENTS INCORPORATED BY REFERENCE
	(See Page 1)


<page> <table> DEAN WITTER PORTFOLIO STRATEGY FUND L.P.
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 2005
<caption>
                                                              Page
No.

												<c>
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . .
..1

Part I .

  Item 1.	Business . . . . . . . . . . . . . . . . . . . . . . . .2-
5

  Item 1A.	Risk Factors . . . . . . . . . . . . . . . . . . . . . .5-
6

  Item 1B.	Unresolved Staff Comments. . . . . . . . . . . . . . . .
..6

  Item 2.	Properties . . . . . . . . . . . . . . . . . . . . . . .
..6

  Item 3.	Legal Proceedings. . . . . . . . . . . . . . . . . . . .
..6

  Item 4.	Submission of Matters to a Vote of Security
           Holders. . . . . . . . . . . . . . . . . . . . . . . . .
..6
Part II.

  Item 5.	Market for the Registrant's Partnership Units
           and Related Security Holder Matters. . . . . . . . . . .
..7

  Item 6.	Selected Financial Data. . . . . . . . . . . . . . . . .
..8

  Item 7.	Management's Discussion and Analysis of
           Financial Condition and Results of Operations. . . . . 9-
27

  Item 7A.	Quantitative and Qualitative Disclosures About
           Market Risk. . . . . . . . . . . . . . . . . . . . . .28-
41

  Item 8.	Financial Statements and Supplementary Data. . . . . . .
42

  Item 9.	Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure . . . . . . . . .
42

  Item 9A.	Controls and Procedures . . . . . . . . . .  . . . . .43-
45

  Item 9B.	 Other Information . . . . . . . . . . . . . . . . . . . . 45

Part III.

  Item 10.	Directors and Executive Officers of the Registrant . .46-
51

  Item 11. Executive Compensation . . . . . . . . . . . . . .  . .
..51
  Item 12. Security Ownership of Certain Beneficial Owners
           and Management . . . . . . . . . . . . . . . . . . . . .
52
  Item 13. Certain Relationships and Related Transactions . . . . .
52
  Item 14. Principal Accounting Fees and Services . . . . . .  . 52-
54

Part IV.

  Item 15. Exhibits and Financial Statement Schedules. . . . . . 55-
56
</table>


<page>




              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, 2005                 II, III, and IV





























	<page> 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 began the year at a net asset value per unit of
limited partnership interest ("Unit(s)") of $3,598.35 and
returned -24.2% to $2,727.77 on December 31, 2005.  For a more
detailed description of the Partnership's business see
subparagraph (c).

<page>
(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
forward 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" (Pages
                                     42-44 of the Prospectus)
                                     and ?The Trading Advisor"
                                     (Pages 55-74 of the
                                     Prospectus).




<page>

  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 an annual
report 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 100 F Street, N.E., 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
<page> 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 1A.  RISK FACTORS
The following risk factors 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 ?Quantifying the Partnership?s Trading
Value at Risk? in Item 7A ?Quantitative and Qualitative Disclosures
About Market Risk? are deemed to be forward-looking statements for
purposes of the safe harbor, except for statements of historical
fact.  The qualitative disclosures, except for (A) those
disclosures that are statements of historical fact and (B) the
descriptions of how the Partnership manages its primary market risk
exposure, in the ?Qualitative Disclosure Regarding Primary Trading
Risk Exposures? in Item 7A ?Quantitative and Qualitative
Disclosures About Market Risk? are deemed to be forward looking
statements for purposes of the safe harbor.

The Partnership is in the business of speculative trading of
futures and forwards.  For a detailed description of the risks
<page> that may affect the business of the Partnership, see the
discussion of risk factors as set forth in Item 7 ?Management?s
Discussion and Analysis of Financial Condition and Results of
Operations? and Item 7A ?Quantitative and Qualitative Disclosures
About Market Risk?.

Item 1B.  UNRESOLVED STAFF COMMENTS
Not applicable.

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.

Item 3.  LEGAL PROCEEDINGS
None.

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






<page>
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, 2005
was approximately 3,226.

(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 the
Partnership?s profits.
<page> <table> Item 6.  SELECTED FINANCIAL DATA (in dollars)

<caption>






                                     For the Years Ended December 31,
                            2005         2004         2003        2002        2001



				<c>		<c>		<c>		<c>		<c>
Total Trading Results
including interest
income			    (13,922,992)	13,717,596 	13,484,883	 31,602,392   3,109,230


Net Income (Loss)     (19,667,394) 	 6,760,313 	 3,785,066	 19,856,770  (5,224,453)


Net Income (Loss)
Per Unit (Limited
& General Partners)       (870.58)	    315.31	    117.04	     667.07     (159.79)


Total Assets  	     54,201,405   84,451,024 	85,290,955   89,797,463   80,268,632


Total Limited
Partners' Capital 	     52,377,441   82,610,177	83,407,424   87,947,142   77,929,319


Net Asset Value
Per Unit                 2,727.77	  3,598.35	  3,283.04     3,166.00     2,498.93

</table>



<page>
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
<page> 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
<page> 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,
2005, 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
<page> 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, brokerage commissions and transaction fees and costs 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.
<page>
The Partnership recorded total trading results including interest
income totaling $(13,922,992) and expenses totaling $5,744,402,
resulting in a net loss of $19,667,394 for the year ended
December 31, 2005. The Partnership?s net asset value per Unit
decreased from $3,598.35 at December 31, 2004 to $2,727.77 at
December 31, 2005.  Total redemptions for the year were
$11,048,198 and the Partnership?s ending capital was $52,932,022
at December 31, 2005, a decrease of $30,715,592 from ending
capital at December 31, 2004 of $83,647,614.

The most significant trading losses of approximately 14.9%
resulted in the currency markets throughout the first and third
quarter from positions in a variety of foreign currencies, such
as the British pound, Swiss franc, euro, Czech koruna, Norwegian
krone, South African rand, and both the Australian and New
Zealand dollars, versus the U.S. dollar.  During January, long
European currency positions against the U.S. dollar resulted in
losses after the U.S. dollar?s value reversed sharply higher amid
conflicting economic data and speculation for higher U.S.
interest rates.  Losses during February were recorded from newly
established short European currency positions against the U.S.
dollar after the U.S. dollar weakened due to comments by U.S.
Federal Reserve Chairman Alan Greenspan regarding the
considerable U.S. Current-Account deficit and U.S. dependence on
foreign investment.  During March, losses resulted from long
<page> European currency positions versus the U.S. dollar after
the U.S. dollar reversed sharply higher due to an increase in
U.S. interest rates and concerns for inflation.  During August,
long U.S. dollar positions against the British pound and Swiss
franc resulted in losses as the value of the U.S. dollar declined
amid higher crude oil prices, lower durable goods orders, the
U.S. trade imbalance, and economic warnings from U.S. Federal
Reserve Chairman Alan Greenspan.  During September, losses were
recorded from short U.S. dollar positions against the British
pound, Swiss franc, and euro as the value of the U.S. dollar
advanced amid bolstered expectations that the U.S. Federal
Reserve would continue to raise interest rates.  Meanwhile, the
British pound weakened on expectations for further interest rate
cuts by the Bank of England.  In addition, the values of the
Swiss franc and euro moved lower amid weaker growth forecasts for
the European economy and developments of political uncertainty
stemming from news that Germany?s incumbent Chancellor, Gerhard
Schroeder, would not concede defeat to the opposition leader
Angela Merkel in the days after the election.  Partnership losses
of approximately 8.6% were recorded in the global interest rate
markets during February from long positions in U.S., European,
and Japanese interest rate futures as prices reversed lower after
positive economic data and expectations for higher interest rates
reduced investor demand for fixed-income investments.  Short
positions in European and Japanese interest rate futures held
during March also recorded losses after prices strengthened amid
<page> overall weakness in global equity markets.  During July,
losses resulted from long positions in U.S., European, and
Japanese interest rate futures as prices reversed lower.
European fixed-income prices declined amid strength in regional
equity markets, and news of terrorist attacks on the London
transport network.  Long U.S. interest rate futures positions
experienced losses as prices declined following a rise in
interest rates and after the U.S. Labor Department released its
June employment report.  Within the Japanese interest rate
markets, losses were recorded as prices declined following
positive economic comments by the Japanese Ministry of Finance.
During August, short positions in U.S., Japanese, and European
fixed-income futures incurred losses as prices reversed higher on
worries about the global economic impact of Hurricane Katrina.
Prices for U.S. interest rate futures also rallied on growing
speculation that the U.S. Federal Reserve may stop raising
interest rates sooner than previously thought.  Within the
Japanese interest rate futures markets, a bigger-than-expected
decline in Japanese industrial output for July, also contributed
to higher prices.  Long positions in U.S. and European fixed-
income futures held during September incurred losses as prices
weakened after measurements of Hurricane Katrina?s economic
impact revealed they were not weak enough to deter the U.S.
Federal Reserve from its policy of raising interest rates.
European fixed-income prices also fell in response to
expectations that European Central Bank representatives would
<page> leave European interest rates unchanged, despite the fact
that European Central Bank representatives had openly discussed
the eventual need to hike rates due to concern for inflation
risks.  Additional losses stemmed from long positions in
Australian bond futures.  During the fourth quarter, losses
resulted from short futures positions in global interest rate
futures as fixed-income prices reversed higher amid reduced
expectations for further increases in interest rates by central
banks.  In the energy markets, losses of approximately 4.5% were
incurred in the energy markets primarily during the second and
fourth quarter from long futures positions in crude oil and its
related products, as well as in natural gas, after prices
declined amid a reduction in demand, an economic slowdown in
parts of the U.S. affected by Hurricanes Katrina and Rita, and
reports that more refineries in the U.S. Gulf region resumed
operations at full capacity.  Prices continued to decline during
October as supply worries eased on signs of adequate fuel stocks
in the U.S.  Also impacting long futures positions in natural gas
was a sharp price reversal during December caused by weak demand,
mild weather in Europe and the U.S., and the release of U.S.
government data which showed a smaller-than-expected decline in
supplies.  Newly established short futures positions in crude oil
and its related products held during December also incurred
losses after prices finished higher on news of a rebound in
energy demand.  Additional losses of approximately 1.4% were
incurred in the metals markets throughout a majority of the year
<page> from positions in precious metals futures as gold and
silver prices fluctuated, driven by volatility in the U.S.
dollar, as well as supply and demand concerns.  In the
agricultural markets, losses of approximately 1.4% resulted
during the second quarter from futures positions in cocoa and
corn as prices traded inconsistently in response to technically-
based trading activity and supply and demand concerns.  Long
futures positions in wheat held during April also resulted in
losses after prices fell in response to favorable weather in
growing regions and reduced foreign demand. Futures positions in
cotton also experienced  losses as prices moved lower during May
on supply increases and then reversed higher during June amid
weather-related concerns.  During the fourth quarter, long
futures positions in cotton resulted in losses as prices reversed
lower in response to weaker demand.  Short futures positions in
corn, soybeans, and its related products established later in the
quarter also incurred losses.  A portion of the Partnership?s
overall losses for the year was offset by gains of approximately
2.4% achieved in the global stock index markets during the third
and fourth quarter from long positions in Japanese stock index
futures as prices increased amid the release of positive Japanese
economic data, falling energy prices, and investor optimism for
continued improvement in the Japanese economy during 2006.

The Partnership recorded total trading results including interest
income totaling $13,717,596 and expenses totaling $6,957,283,
<page> 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 Partnership?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
<page> 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 Japanese 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
<page> 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 <page>
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
income 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 <page>
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 U.S. 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 years high
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
<page> 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
<page> 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.

For an analysis of unrealized gains and (losses) by contract type
and a further description of 2005 trading results, refer to the
Partnership?s Annual Report to Limited Partners for the year ended
December 31, 2005, 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 <page>
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.
<page> 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, Demeter 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
the Partnership?s 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
<page> 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,
2005, 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.

<page>
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
<page> 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.
<page>
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,
<page> 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 re-values 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
<page> 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, 2005 and 2004. At
December 31, 2005 and 2004, the Partnership?s total capital-
ization was approximately $53 million and $84 million,
respectively.

Primary Market          December 31, 2005   December 31, 2004
Risk Category             Value at Risk       Value at Risk
Currency                		(1.48)%			(4.85)%

Interest Rate      			(1.35)              (2.28)

Equity                    	(1.12)	 		(1.01)

Commodity                	(0.82)			(1.66)

Aggregate Value at Risk   	(2.48)%		 	(6.00)%


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
<page> 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, 2005 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, 2005 through December 31, 2005.

Primary Market Risk Category        High        Low      Average
Currency         				(4.15)%	  (1.48)%	   (2.90)%
Interest Rate                      (3.74)	  (1.14)	   (1.97)
Equity                             (1.12)	  (0.64)	   (0.86)
Commodity                          (4.68)	  (0.82)	   (2.96)
Aggregate Value at Risk          	(5.85)%	  (2.48)%	   (4.48)%

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;
<page> 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?.

<page> 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, 2004, and for
the four quarter-end reporting periods during calendar year 2005.
 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 of its
available assets in cash at Morgan Stanley DW; as of December 31,
2005, such amount is equal to approximately 95% of the
Partnership?s net asset value.  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.

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

Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership?s
market risk exposures ? except for (A) those disclosures that are
statements of historical fact and (B) the descriptions of how the
Partnership manages its primary market risk exposures -
constitute forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act.  The Partnership?s primary market risk
exposures, as well as the strategies used and to be used by
Demeter and the Trading Manager for managing such exposures, are
subject to numerous uncertainties, contingencies and risks, any
one of which could cause the actual results of the Partnership?s
risk controls to differ materially from the objectives of such
strategies. Government interventions, defaults and expro-
priations, illiquid markets, the emergence of dominant
fundamental factors, political upheavals, changes in historical
price relationships, an influx of new market participants,
increased regulation, and many other factors could result in
material losses, as well as in material changes to the risk
<page> 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, 2005, 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, 2005 was to the currency sector.  The Partnership?s
currency exposure is to exchange rate fluctuations, primarily
fluctuations which disrupt the historical pricing relationships
between different currencies and currency pairs.  Interest rate
changes, as well as political and general economic conditions
influence these fluctuations.  At December 31, 2005, 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, 2005 was to the global interest rate
sector.  Exposure was primarily spread across U.S., European, and
<page> Japanese interest rate sectors.  Interest rate movements
directly affect the price of the sovereign bond futures positions
held by the Partnership and indirectly affect the value of its
stock index and currency positions.  Interest rate movements in
one country, as well as relative interest rate movements between
countries, materially impact the Partnership?s profitability. The
Partnership?s primary interest rate exposure is generally to
interest rate fluctuations in the U.S. and the other G-7
countries interest rates.  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, 2005 was to the global stock index sector.  Exposure
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, 2005, the
Partnership?s primary exposures were to the NIKKEI 225 (Japan),
NASDAQ 100 (U.S.), Euro Stoxx 50 (Europe), and DAX (Germany)
<page> 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, 2005, the Partnership had market
exposure in the energy sector.  The Partnership?s energy
exposure was 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, 2005, 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
<page> expectations influence price movements in these
markets.  The Trading Manager utilizes 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, 2005,
the Partnership had market exposure to the markets that
comprise these sectors.  Most of the exposures were to the
sugar, coffee, cotton, corn, and wheat 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, 2005:

Foreign Currency Balances. The Partnership?s primary foreign
currency balances at December 31, 2005 were in euros,
Canadian dollars, Swiss francs, and Australian 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
<page> 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.












<page>
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  Income/(Loss)  (Loss) Per Unit

2005
March 31        $(14,187,293)     $(15,907,974)       $(685.98)
June 30              536,752          (970,737)         (38.93)
September 30       1,126,913          (266,870)         (12.89)
December 31       (1,399,364)       (2,521,813)        (132.78)

Total           $(13,922,992)     $(19,667,394)       $(870.58)


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




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

None.







<page>

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
control over financial reporting (as defined in Rules 13a-
15(f) and 15d-15(f) of the Exchange Act) 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
<page> 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.
<page> Management assessed the effectiveness of the Partnership?s
internal control over financial reporting as of December 31,
2005.  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, 2005.

Deloitte & Touche LLP, the Partnership?s independent registered
public accounting firm, has issued an attestation 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 an unqualified opinion 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, 2005.

Item 9B.  OTHER INFORMATION
None.


<page> 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:

Effective May 1, 2005, Mr. Raymond A. Harris resigned his
position as a Director of Demeter.

Effective May 1, 2005, Mr. Todd Taylor resigned his position as a
Director of Demeter.

Effective May 1, 2005, Mr. William D. Seugling resigned his
position as a Director of Demeter.

Effective May 1, 2005, Ms. Louise M. Wasso-Jonikas resigned her
position as a Director of Demeter.

Mr. Jeffrey A. Rothman, age 44, is the Chairman of the Board of
Directors and President of Demeter. Mr. Rothman is the Managing
Director of Morgan Stanley Alternative Investments Group,
responsible for overseeing all aspects of the firm?s Managed
Futures Department. Mr. Rothman has been with the Managed Futures
Department for nineteen years.  Throughout his career, Mr. <page>
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 54, 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 in the Fixed Income
Department.  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.

Ms. Shelley Hanan, age 45, is a Director of Demeter. Ms. Hanan
joined Morgan Stanley in 1984.  She eventually became the
Regional Manager of the Southwest for Private Wealth Management
and a Senior Representative for the Morgan Stanley Foundation in
Southern California.  Her focus was senior relationship
management of the firm?s largest private clients in the
Southwest.  Since January 2005, Ms. Hanan has held the position
<page> of Chief Operating Officer of the U.S. Client Coverage
Group and is a Managing Director.  Ms. Hanan graduated from the
University of California at San Diego with a B.A. in Psychology.

Mr. Frank Zafran, age 51, is a Director of Demeter. Mr. Zafran is
a Managing Director of Morgan Stanley and, in November 2005, was
named Managing Director of Wealth Solutions.  Previously, Mr.
Zafran was 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 40, is a Director of Demeter.  Mr.
Ketterer is a Managing Director at Morgan Stanley and is head of
the Managed Money Group.  The Managed Money Group is comprised of
a number of departments (including the Alternative Investments
Group, Consulting Services Group, and Mutual Fund Department)
which offer products and services through Morgan Stanley?s Global
Wealth Management Group.  Mr. Ketterer joined Morgan Stanley in
1990 and has served in many roles in the corporate
finance/investment banking, asset management, and distribution
<page> divisions of the firm.  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. Harry Handler, age 47, is a Director of Demeter. Mr. Handler
serves as an Executive Director for Morgan Stanley in the Global
Wealth Management Group.  Mr. Handler works in the Investment
Solutions Division as Chief Infrastructure and Risk Officer.
Additionally, Mr. Handler also serves as Chairman of the Morgan
Stanley DW Best Execution Committee and manages the Global Wealth
Management Group Stock Lending business.  In his prior position,
Mr. Handler was a Systems Director in Information Technology, in
charge of Equity and Fixed Income Trading Systems along with the
Special Products, such as Unit Trusts, Managed Futures, and
Annuities.  Prior to his transfer to the Information Technology
Area, Mr. Handler managed the Foreign Currency and Precious
Metals Trading Desk for Dean Witter, a predecessor company to
Morgan Stanley.  He also held various positions in the Futures
Division where he helped to build the Precious Metals Trading
Operation of Dean Witter.  Before joining Dean Witter, Mr.
Handler worked at Mocatta Metals as an Assistant to the Chairman.
His roles at Mocatta Metals included stints on the Futures Order
Entry Desk and the Commodities Exchange Trading Floor.
Additional work included building a computerized Futures Trading
System and writing a history of the company.  Mr. Handler <page>
graduated on the Dean?s List from the University of Wisconsin-
Madison with a B.A. degree and a double major in History and
Political Science.

Mr. Kevin Perry, age 36, is the Chief Financial Officer of
Demeter.  Mr. Perry currently serves as an Executive Director and
Controller within the Global Wealth Management Group at Morgan
Stanley.  Mr. Perry joined Morgan Stanley in October 2000 and is
also Chief Financial Officer of Morgan Stanley Trust National
Association.  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 <page>
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.









<page>

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
	    MANAGEMENT


(a)	Security Ownership of Certain Beneficial Owners - At December
31, 2005, 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, 2005,
Demeter owned 203.309 Units of general partnership interest,
representing a 1.05 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, 2005, 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 $4,137,112 for the year ended
December 31, 2005.

Item 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES
The Partnership pays accounting fees as discussed in Note 1 to
the Financial Statements, ?Operating Expenses?, in the Annual
<page> Report to the Limited Partners for the year ended December
31, 2005.

(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 review of the
Financial Statements included in the Quarterly Reports on Form
10-Q, audit of Management?s assessments of the effectiveness of
the internal control over financial reporting, and in connection
with statutory and regulatory filings were approximately $45,410
for the year ended December 31, 2005 and $48,810 for the year
ended December 31, 2004.

(2)	Audit-Related Fees.  None.

(3)	Tax Fees.  The Partnership did not pay Deloitte & Touche LLP
any amounts in 2005 and 2004 for professional services in
connection with tax compliance, tax advice, and tax planning.  The
Partnership engaged another unaffiliated professional firm to
provide services in connection with tax compliance, tax advice, and
tax planning.

(4)  All Other Fees.  None.



<page> The Board of Directors of Demeter serves as the audit
committee with respect to the Partnership.  The Board of
Directors of Demeter has not established pre-approval policies
and procedures with respect to the engagement of audit or
permitted non-audit services rendered to the Partnership.
Consequently, all audit and permitted non-audit services provided
by Deloitte & Touche LLP are approved by the Board of Directors
of Demeter and communicated to Morgan Stanley.


<page> PART IV
Item 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


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, 2005, 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,
2005, 2004, and 2003.

?	Statements of Financial Condition, including the
Schedules of Investments, as of December 31, 2005 and
2004.

?	Statements of Operations, Changes in Partners' Capital,
and Cash Flows for the years ended December 31, 2005,
2004, and 2003.

?	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,
2005, 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.


<page>
3. Exhibits
   For the exhibits incorporated by reference or filed herewith
  to this report, refer to Exhibit Index on Pages E-1 to E-2.


<page> 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, 2006             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, 2006
	  	Jeffrey A. Rothman, President

    /s/    Richard A. Beech                      		March 31, 2006
           Richard A. Beech, Director

    /s/    Shelley Hanan   	             		March 31, 2006
           Shelley Hanan, Director

    /s/    Frank Zafran		           		March 31, 2006
	    	Frank Zafran, Director

    /s/ 	Douglas J. Ketterer                 		March 31, 2006
	 	Douglas J. Ketterer, Director

    /s/	Harry Handler		                 	March 31, 2006
	  	Harry Handler, Director

    /s/  	Kevin Perry			                 	March 31, 2006
	    	Kevin Perry, Chief Financial Officer




<page>	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, Inc.,
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 3, 2001.

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

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

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


E-1


<page>
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.

10.07	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, 2005 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.


                                 E-2

<PAGE>

                                                                      Portfolio
                                                                       Strategy
                                                                           Fund

            December 31, 2005
            Annual Report

    [LOGO] Morgan Stanley

<PAGE>

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.

<TABLE>
<CAPTION>
                                                                                                           INCEPTION-  COMPOUND
                                                                                                            TO-DATE   ANNUALIZED
                       1991    1992  1993 1994  1995 1996 1997 1998 1999  2000 2001  2002 2003 2004  2005    RETURN     RETURN
FUND                    %       %     %    %     %    %    %    %    %     %    %     %    %    %     %        %          %
--------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>       <C>   <C>  <C>   <C>  <C>  <C>  <C>  <C>   <C>  <C>   <C>  <C>  <C>  <C>    <C>        <C>
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  (24.2)   172.8       7.0
                     (11 mos.)
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

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
2005

Dear Limited Partner:

  This marks the fifteenth 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 $3,598.35 and returned -24.2% to $2,727.77 on December 31, 2005.
The Fund has increased by 172.8% since it began trading in February 1991 (a
compound annualized return of 7.0%).

  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.

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

                                      [CHART]

                                    [CHART]

                    Year ended December 31, 2005
                    ----------------------------
Currencies                    -14.92%
Interest Rates                -8.62%
Stock Indices                  2.38%
Energies                      -4.52%
Metals                        -1.41%
Agriculturals                 -1.41%

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

FACTORS INFLUENCING ANNUAL TRADING LOSSES:
..  Losses resulted in the currency markets throughout the first and third
   quarter from positions in a variety of foreign currencies, such as the
   British pound, Swiss franc, euro, Czech koruna, Norwegian krone, South
   African rand, and both the Australian and New Zealand dollars, versus the
   U.S. dollar. During January, long European currency positions against the
   U.S. dollar resulted in losses after the U.S. dollar's value reversed
   sharply higher amid conflicting economic data and speculation for higher
   U.S. interest rates. Losses during February were recorded from newly
   established short European currency positions against the U.S. dollar after
   the U.S. dollar weakened due to comments by U.S. Federal Reserve Chairman
   Alan Greenspan regarding the considerable U.S. Current-Account deficit and
   U.S. dependence on foreign investment. During March, losses resulted from
   long European currency positions versus the U.S. dollar after the U.S.
   dollar reversed sharply higher due to an increase in U.S. interest rates and
   concerns for inflation. During August, long U.S. dollar positions against
   the British pound and Swiss franc resulted in losses as the value of the
   U.S. dollar declined amid higher crude oil prices, lower durable goods
   orders, the U.S. trade imbalance, and economic warnings from U.S. Federal
   Reserve Chairman Alan Greenspan. During September, losses were recorded from
   short U.S. dollar

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

FACTORS INFLUENCING ANNUAL TRADING LOSSES: (continued)

 positions against the British pound, Swiss franc, and euro as the value of the
  U.S. dollar advanced amid bolstered expectations that the U.S. Federal
  Reserve would continue to raise interest rates. Meanwhile, the British pound
  weakened on expectations for further interest rate cuts by the Bank of
  England. In addition, the values of the Swiss franc and euro moved lower amid
  weaker growth forecasts for the European economy and developments of
  political uncertainty stemming from news that Germany's incumbent Chancellor,
  Gerhard Schroeder, would not concede defeat to the opposition leader Angela
  Merkel in the days after the election.

..  Losses were recorded in the global interest markets rate during February
   from long positions in U.S., European, and Japanese interest rate futures as
   prices reversed lower after positive economic data and expectations for
   higher interest rates reduced investor demand for fixed-income investments.
   Short positions in European and Japanese interest rate futures held during
   March also recorded losses after prices strengthened amid overall weakness
   in global equity markets. During July, losses resulted from long positions
   in U.S., European, and Japanese interest rate futures as prices reversed
   lower. European fixed-income prices declined amid strength in regional
   equity markets, and news of terrorist attacks on the London transport
   network. Long U.S. interest rate futures positions experienced losses as
   prices declined following a rise in interest rates and after the U.S. Labor
   Department released its June employment report. Within the Japanese interest
   rate markets, losses were recorded as prices declined following positive
   economic comments by the Japanese Ministry of Finance. During August, short
   positions in U.S., Japanese, and European fixed-income futures incurred
   losses as prices reversed higher on worries about the global economic impact
   of Hurricane Katrina. Prices for U.S. interest rate futures also rallied on
   growing speculation that the U.S. Federal Reserve may stop raising interest
   rates sooner than previously thought. Within the Japanese interest rate
   futures markets, a bigger-than-expected decline in Japanese industrial
   output for July, also contributed to higher prices. Long positions in U.S.
   and European fixed-income futures held during September incurred losses as
   prices weakened after measurements of Hurricane Katrina's economic impact
   revealed they were not weak enough to deter the U.S. Federal Reserve from
   its policy of raising interest rates. European fixed-income prices also fell
   in response to expectations that European Central Bank representatives would
   leave European interest rates unchanged, despite the fact that European
   Central Bank representatives had openly discussed the eventual need to hike
   rates due to concern for inflation risks. Additional losses stemmed from
   long positions in Australian bond futures. During the fourth quarter, losses
   resulted from short futures

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND

FACTORS INFLUENCING ANNUAL TRADING LOSSES: (continued)

 positions in global interest rate futures as fixed-income prices reversed
  higher amid reduced expectations for further increases in interest rates by
  central banks.

..  In the energy markets, losses were incurred primarily during the second and
   fourth quarter from long futures positions in crude oil and its related
   products, as well as in natural gas, after prices declined amid a reduction
   in demand, an economic slowdown in parts of the U.S. affected by Hurricanes
   Katrina and Rita, and reports that more refineries in the U.S. Gulf region
   resumed operations at full capacity. Prices continued to decline during
   October as supply worries eased on signs of adequate fuel stocks in the U.S.
   Also impacting long futures positions in natural gas was a sharp price
   reversal during December caused by weak demand, mild weather in Europe and
   the U.S., and the release of U.S. government data which showed a
   smaller-than-expected decline in supplies. Newly established short futures
   positions in crude oil and its related products held during December also
   incurred losses after prices finished higher on news of a rebound in energy
   demand.

..  Additional losses were incurred in the metals markets throughout a majority
   of the year from positions in precious metals futures as gold and silver
   prices fluctuated, driven by volatility in the U.S. dollar, as well as
   supply and demand concerns.

..  In the agricultural markets, losses resulted during the second quarter from
   futures positions in cocoa and corn as prices traded inconsistently in
   response to technically-based trading activity and supply and demand
   concerns. Long futures positions in wheat held during April also resulted in
   losses after prices fell in response to favorable weather in growing regions
   and reduced foreign demand. Futures positions in cotton also experienced
   losses as prices moved lower during May on supply increases and then
   reversed higher during June amid weather-related concerns. During the fourth
   quarter, long futures positions in cotton resulted in losses as prices
   reversed lower in response to weaker demand. Short futures positions in
   corn, soybeans and its related products established later in the quarter
   also incurred losses.

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.


FACTORS INFLUENCING ANNUAL TRADING GAINS:
..  Gains were achieved in the global stock index markets during the third and
   fourth quarter from long positions in Japanese stock index futures as prices
   increased amid the release of positive Japanese economic data, falling
   energy prices, and investor optimism for continued improvement in the
   Japanese economy during 2006.

Managed futures investments are speculative, involve a high degree of risk, use
significant leverage, are generally illiquid, have substantial charges, are
subject to conflicts of interest, and are suitable only for the risk capital
portion of an investor's portfolio. Before investing in any managed futures
investment, qualified investors should read the prospectus or offering
documents carefully for additional information with respect to charges,
expenses, and risks. Past performance is no guarantee of future results.

<PAGE>

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.


<PAGE>

  Management assessed the effectiveness of the Partnership's internal control
over financial reporting as of December 31, 2005. 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, 2005.

  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.

/s/ Jeffrey A. Rothman
Jeffrey A. Rothman
President

/s/ Kevin Perry
Kevin Perry
Chief Financial Officer

New York, New York
March 21, 2006

<PAGE>

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, 2005, 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

<PAGE>

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, 2005, 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, 2005, 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, 2005 of the Partnership and our report dated
March 21, 2006 expressed an unqualified opinion on those financial statements.

/s/ Deloitte & Touche LLP

New York, New York
March 21, 2006

<PAGE>

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, 2005 and 2004, 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, 2005. 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, 2005 and 2004, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2005, in
conformity with accounting principles generally accepted in the United States
of America.

  As discussed in Note 1, in 2005 the Partnership modified its classification
of cash within the statements of financial condition and the related statements
of cash flows.

  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,
2005, 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 21, 2006 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 21, 2006

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                                                    ----------------------
                                                       2005        2004
                                                    ----------  ----------
                                                        $           $
     <S>                                            <C>         <C>
                                    ASSETS
     Equity in futures interests trading accounts:
       Unrestricted cash                            49,372,848  62,718,232
       Restricted cash                               4,896,815  12,639,866
                                                    ----------  ----------
         Total cash                                 54,269,663  75,358,098
                                                    ----------  ----------
       Net unrealized gain on open contracts
        (MSIL)                                         555,721     346,786
       Net unrealized gain (loss) on open
        contracts (MS&Co.)                            (802,683)  8,306,807
                                                    ----------  ----------
         Total net unrealized gain (loss) on
          open contracts                              (246,962)  8,653,593
                                                    ----------  ----------
         Total Trading Equity                       54,022,701  84,011,691
     Interest receivable (Morgan Stanley DW)           143,702      92,757
     Due from Morgan Stanley DW                         35,002     346,576
                                                    ----------  ----------
         Total Assets                               54,201,405  84,451,024
                                                    ==========  ==========

                      LIABILITIES AND PARTNERS' CAPITAL

     LIABILITIES
     Redemptions payable                             1,050,448     520,757
     Accrued administrative expenses                   128,663     141,903
     Management fees payable                            90,272     140,750
                                                    ----------  ----------
         Total Liabilities                           1,269,383     803,410
                                                    ----------  ----------

     PARTNERS' CAPITAL

     Limited Partners (19,201.528 and
      22,957.780 Units, respectively)               52,377,441  82,610,177
     General Partner (203.309 and
      288.309 Units, respectively)                     554,581   1,037,437
                                                    ----------  ----------
         Total Partners' Capital                    52,932,022  83,647,614
                                                    ----------  ----------
         Total Liabilities and Partners' Capital    54,201,405  84,451,024
                                                    ==========  ==========

     NET ASSET VALUE PER UNIT                         2,727.77    3,598.35
                                                    ==========  ==========
</TABLE>

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

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                           FOR THE YEARS ENDED DECEMBER 31,
                                         -----------------------------------
                                             2005        2004        2003
                                         -----------  ----------  ----------
                                              $           $           $
  <S>                                    <C>          <C>         <C>
  INVESTMENT INCOME
    Interest income (Morgan Stanley DW)    1,439,069     719,231     768,713
                                         -----------  ----------  ----------

  EXPENSES
    Brokerage commissions
     (Morgan Stanley DW)                   4,137,112   4,980,851   6,223,889
    Management fees                        1,265,126   1,554,188   1,924,277
    Transaction fees and costs               211,164     310,496     397,444
    Administrative expenses                  131,000     105,000     179,000
    Incentive fees                            --           6,748     975,207
                                         -----------  ----------  ----------
     Total Expenses                        5,744,402   6,957,283   9,699,817
                                         -----------  ----------  ----------

  NET INVESTMENT LOSS                     (4,305,333) (6,238,052) (8,931,104)
                                         -----------  ----------  ----------

  TRADING RESULTS
  Trading profit (loss):
    Realized                              (6,461,506) 10,571,095  15,621,964
    Net change in unrealized              (8,900,555)  2,427,270  (2,905,794)
                                         -----------  ----------  ----------
     Total Trading Results               (15,362,061) 12,998,365  12,716,170
                                         -----------  ----------  ----------

  NET INCOME (LOSS)                      (19,667,394)  6,760,313   3,785,066
                                         ===========  ==========  ==========

  NET INCOME (LOSS) ALLOCATION:
  Limited Partners                       (19,436,831)  6,669,406   3,737,635
  General Partner                           (230,563)     90,907      47,431

  NET INCOME (LOSS) PER UNIT:
  Limited Partners                           (870.58)     315.31      117.04
  General Partner                            (870.58)     315.31      117.04
</TABLE>

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003

<TABLE>
<CAPTION>
                                UNITS OF
                               PARTNERSHIP   LIMITED     GENERAL
                                INTEREST     PARTNERS    PARTNER      TOTAL
                               ----------- -----------  ---------  -----------
                                                $           $           $
<S>                            <C>         <C>          <C>        <C>
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
Net loss                           --      (19,436,831)  (230,563) (19,667,394)
Redemptions                    (3,841.252) (10,795,905)  (252,293) (11,048,198)
                               ----------  -----------  ---------  -----------
Partners' Capital, December
31, 2005                       19,404.837   52,377,441    554,581   52,932,022
                               ==========  ===========  =========  ===========
</TABLE>

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

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                     FOR THE YEARS ENDED DECEMBER 31,
                                   -----------------------------------
                                       2005        2004        2003
                                   -----------  ----------  ----------
                                        $           $           $
<S>                                <C>          <C>         <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES
Net income (loss)                  (19,667,394)  6,760,313   3,785,066
Noncash item included in net
 income (loss):
  Net change in unrealized           8,900,555  (2,427,270)  2,905,794
(Increase) decrease in operating
 assets:
  Restricted cash                    7,743,051   1,187,394  (2,944,237)
  Interest receivable
   (Morgan Stanley DW)                (50,945)     (46,406)     33,438
  Due from Morgan Stanley
   DW                                  311,574     (92,614)     45,772
Increase (decrease) in operating
 liabilities:
  Accrued administrative expenses     (13,240)     (46,463)     37,922
  Management fees payable             (50,478)      (1,324)     (7,587)
                                   -----------  ----------  ----------
Net cash provided by (used for)
 operating activities               (2,826,877)  5,333,630   3,856,168
                                   -----------  ----------  ----------

CASH FLOWS FROM
 FINANCING ACTIVITIES
Cash paid from redemptions of
 Units                             (10,518,507) (7,552,457) (8,321,909)
                                   -----------  ----------  ----------
Net cash used for financing
 activities                        (10,518,507) (7,552,457) (8,321,909)
                                   -----------  ----------  ----------

Net decrease in unrestricted cash  (13,345,384) (2,218,827) (4,465,741)

Unrestricted cash at beginning of
 period                             62,718,232  64,937,059  69,402,800
                                   -----------  ----------  ----------

Unrestricted cash at end of
 period                             49,372,848  62,718,232  64,937,059
                                   ===========  ==========  ==========
</TABLE>

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

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

SCHEDULES OF INVESTMENTS

DECEMBER 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                  LONG UNREALIZED  PERCENTAGE   SHORT UNREALIZED  PERCENTAGE
FUTURES AND FORWARD CONTRACTS:                                      GAIN/(LOSS)   OF NET ASSETS   GAIN/(LOSS)    OF NET ASSETS
------------------------------                                    --------------- ------------- ---------------- -------------

2005 PARTNERSHIP NET ASSETS: $52,932,022                                 $              $              $               $
<S>                                                               <C>             <C>           <C>              <C>
Commodity                                                             (126,786)       (0.24)        (397,387)        (0.75)
Equity                                                                 309,031         0.58            --              --
Foreign currency                                                      (633,115)       (1.19)       1,277,662          2.41
Interest Rate                                                              613          --          (491,974)        (0.93)
                                                                     ---------        -----        ---------         -----
  Grand Total:                                                        (450,257)       (0.85)         388,301          0.73
                                                                     =========        =====        =========         =====
  Unrealized Currency Loss

  Total Net Unrealized Loss per Statement of Financial Condition


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

</TABLE>
<TABLE>
<CAPTION>
                                                                  NET UNREALIZED
FUTURES AND FORWARD CONTRACTS:                                     GAIN/(LOSS)
------------------------------                                    --------------

2005 PARTNERSHIP NET ASSETS: $52,932,022                                $
<S>                                                               <C>
Commodity                                                            (524,173)
Equity                                                                309,031
Foreign currency                                                      644,547
Interest Rate                                                        (491,361)
                                                                    ---------
  Grand Total:                                                        (61,956)

  Unrealized Currency Loss                                           (185,006)
                                                                    ---------
  Total Net Unrealized Loss per Statement of Financial Condition     (246,962)
                                                                    =========

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
                                                                    =========
</TABLE>
*No single contract's value exceeds 5% of Net Assets.

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

<PAGE>

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.
  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.

<PAGE>

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.
  The Partnership's functional currency is the U.S. dollar; however, it
transacts business in currencies other than the U.S. dollar. Assets and
liabilities denominated in currencies other than the U.S. dollar are translated
into U.S. dollars at the rates in effect at the date of the Statements of
Financial Condition. Income and expense items denominated in currencies other
than the U.S. dollar are translated into U.S. dollars at the rates in effect
during the period. Gains and losses resulting from the translation to U.S.
dollars are reported in income currently.

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.

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)


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 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.

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)


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 and
MS&Co., respectively, 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.

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.

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)


RECLASSIFICATIONS.  Certain prior year amounts relating to cash balances were
reclassified on the Statements of Financial Condition and the related
Statements of Cash Flows to conform to 2005 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
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.

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)


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

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(continued)

  The net unrealized gains (losses) 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:

<TABLE>
<CAPTION>
      NET UNREALIZED GAINS/(LOSSES)
            ON OPEN CONTRACTS        LONGEST MATURITIES
     ------------------------------  -------------------
                  OFF-                           OFF-
     EXCHANGE-  EXCHANGE-            EXCHANGE- EXCHANGE-
YEAR  TRADED     TRADED     TOTAL     TRADED    TRADED
---- ---------  --------- ---------  --------- ---------
         $          $         $
<S>  <C>        <C>       <C>        <C>       <C>
2005  (891,509)   644,547  (246,962) Dec. 2006 Mar. 2006
2004 1,244,992  7,408,601 8,653,593  Dec. 2005 Mar. 2005
</TABLE>

  The Partnership has credit risk associated with counterparty nonperformance.
As of the date of the financial statement, 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 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 $53,378,154 and $76,603,090 at December 31, 2005 and
2004, 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

<PAGE>

DEAN WITTER PORTFOLIO STRATEGY FUND L.P.

NOTES TO FINANCIAL STATEMENTS
(concluded)

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.

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

<TABLE>
<S>                                                               <C>
PER UNIT OPERATING PERFORMANCE:
NET ASSET VALUE, JANUARY 1, 2005:                                 $3,598.35
                                                                  ---------
NET OPERATING RESULTS:
 Interest Income                                                      66.35
 Expenses                                                           (264.87)
 Realized Loss                                                      (261.66)
 Unrealized Loss                                                    (410.40)
                                                                  ---------
 Net Loss                                                           (870.58)
                                                                  ---------
NET ASSET VALUE, DECEMBER 31, 2005:                               $2,727.77
                                                                  =========

FOR THE 2005 CALENDAR YEAR:
RATIOS TO AVERAGE NET ASSETS:
 Net Investment Loss                                                 (6.9)%
 Expenses before Incentive fees                                        9.2%
 Expenses after Incentive fees                                         9.2%
 Net Loss                                                           (31.7)%
TOTAL RETURN BEFORE INCENTIVE FEES                                  (24.2)%
TOTAL RETURN AFTER INCENTIVE FEES                                   (24.2)%

INCEPTION-TO-DATE RETURN                                             172.8%
COMPOUND ANNUALIZED RETURN                                             7.0%
</TABLE>

<PAGE>


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