Dean Witter Set To Launch FX Fund In First Quarter

Dean Witter Reynolds Inc. is planning to launch its first-ever, currency-only fund in the first quarter of 1993. Though officials at the firm decline to provide details, the firm's application filing to the SEC indicates that the firm plans to use four outside advisors who will split the management duties: Millburn Ridgefield Corp., Ezra Zask Associates Inc., CCA Capital Management Inc. and Colorado Commodities Management Corp.

The fund--the Dean Witter World Currency Fund L.P.--will be currency-only, with the exception of Eurodollars, which are traded by Colorado Commodities Management's Currency/Financial Program.

Sources say Dean Witter hopes to raise $60 million. Participation for individuals costs $1,000 per unit with a minimum subscription of five units. Individual Retirement Account subscriptions are $2,000 a unit.

Dean Witter submitted its application to the SEC last Wednesday, and expects to make its offering early next year. The closed-end fund to be offered only in the U.S., although non-U.S. nationals will be allowed to participate. According to sources familiar with the filing, the fund will have multiple closings--in February, March and April next year--with an ultimate closing date in April.

Pending regulatory approval, "they anticipate starting the selling period in January," says one source. The first selling period is tentatively scheduled to close Feb. 28, this source says. Investors waiting until then would have to purchase shares at unit value, which could be higher or lower than the initial offering.

Although Dean Witter already has two currency managers, John Henry and Sunrise, looking after a piece of its successful Cornerstone Four fund, it has gone outside for its latest planned offering. "I don't think they are in any way dissatisfied with Henry or Sunrise, I think they just wanted to diversify because they already have a very high concentration of money with those two firms," one source familiar with the plans says. "They are anticipating that given the success of Cornerstone, and given the fact that pension funds can invest in it, it should be pretty well subscribed."

Officials at all four managers chosen decline to comment on the plans though several acknowledged that they had been contacted and would participate once the fund was up and running. Ezra Zask, principal of Ezra Zask Associates, says he was chosen because his returns generally don't correlate with those of the other managers selected. Zask, who has just launched an offshore fund and is awaiting regulatory approval for a similar onshore fund, is a relative newcomer to the field. But he says his method, which focuses largely on interest-rate differentials among exotic currencies, is less volatile and rounds out the group.