Registration Nos. 333-_____
811-_____
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 5, 2000
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
----
Post-Effective Amendment No. __ / /
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. / /
(Check appropriate box or boxes)
SCUDDER WEISEL DIGITAL INNOVATORS FUND
(Exact name of Registrant as specified in charter)
88 Kearny Street
San Francisco, CA 94108
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (415) 262-6100
c/o Peter H. Mattoon
President
Scudder Weisel Capital LLC
88 Kearny Street
San Francisco, CA 94108
(Name and address of agent for service)
Please send copies of all communications to:
Robert W. Helm, Esq.
Dechert
1775 Eye Street, NW
Washington, DC 20006
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
If any securities being registered on this form will be offered on a delayed or
continuous basis in reliance on Rule 415 under the Securities Act of 1933, other
than securities offered in connection with a dividend reinvestment plan, check
the following box. /X/
<TABLE>
------------------
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
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<CAPTION>
TITLE OF SECURITIES AMOUNT BEING PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
BEING REGISTERED REGISTERED (1) OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE (2)
<S> <C> <C> <C> <C>
UNIT (1) PRICE (1)
Class A
Shares of Beneficial 40,000 $25.00 $1,000,000 $264.00
Interest, par value
$0.01 per share
Class O
Shares of Beneficial 40,000 $24.55 982,000 $260.00
Interest, par value
$0.01 per share
</TABLE>
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(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
(2) Transmitted prior to filing.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
<PAGE>
CROSS REFERENCE SHEET
PARTS A AND B OF PROSPECTUS
<TABLE>
<CAPTION>
Item No. Caption Location in Prospectus
<S> <C> <C>
1. Outside Front Cover Page....................................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Page....................... Inside Front and Outside Back Cover Page
3. Fee Table and Synopsis......................................... Summary of Fund Expenses
4. Financial Highlights........................................... Not Applicable
5. Plan of Distribution........................................... Not Applicable
6. Selling Shareholders.......................................... Not Applicable
7. Use of Proceeds............................................... Use of Proceeds
8. General Description of the Registrant......................... Outside Front Cover Page; Investment Objective and
Principal Strategies; General Information
9. Management................................................... Management of the Fund; Use of Proceeds
10. Capital Stock, Long-Term Debt, and Other
Securities.................................................... Shares of Beneficial Interest; Distribution Policy
11. Defaults and Arrears on Senior Securities..................... Not Applicable
12. Legal Proceedings............................................. Not Applicable
13. Table of Contents of the Statement of Additional
Information.................................................. Table of Contents of the Statement of Additional
Information
14. Cover page of SAI............................................ Cover Page (SAI)
15. Table of Contents of SAI..................................... Table of Contents (SAI)
16. General Information and History.............................. Investment Management and Other Services
17. Investment Objective and Policies............................. Additional Investment Policies (SAI)
18. Management.................................................... Trustees and Officers (SAI); Investment Management
and Other Services (SAI)
19. Control Persons and Principal Holders of
Securities ................................................... Not Applicable
20. Investment Advisory and Other Services........................ Investment Management and Other Services (SAI)
21. Brokerage Allocation and Other Practices...................... Brokerage Commissions (SAI)
22. Tax Status.................................................... Taxes
23. Financial Statements.......................................... Not Applicable
</TABLE>
<PAGE>
[LOGO]
Scudder Weisel Digital Innovators Fund
_______ Class A Shares of Beneficial Interest
_______ Class O Shares of Beneficial Interest
Scudder Weisel Digital Innovators Fund ("Fund") is a newly organized,
non- diversified, closed-end management investment company that has been
organized as a Delaware business trust. The Fund's investment objective is to
seek long-term capital appreciation. The Fund seeks to achieve its objective by
investing at least 65% of its assets in public and private equity securities of
U.S. and non- U.S. companies that participate in the information, internet,
media, telecommunications and medical technology sectors or that the Fund's
investment manager, Scudder Weisel Capital LLC, believes will benefit from
technological events or advances.
Although the Fund may invest in companies of any size, it may invest a
substantial portion of its assets in small and mid-size companies with market
capitalizations of less than $10 billion. The Fund may invest up to 50% of its
total assets, either directly or through venture capital funds, in equity
securities of privately owned companies in the information, internet, media,
telecommunications and medical technology sectors that plan to conduct an
initial public offering ("IPO") within 24 months from the time the Fund makes
its investment. These companies are referred to as venture capital companies.
The Fund also may invest from time to time in companies that are deemed to be
early stage investment opportunities. References to venture capital companies
include these early stage investment opportunities, which are included in the
50% of total assets the Fund may invest in securities of privately owned
companies. Investors should recognize that (i) there will be no public market
for the shares of any venture capital company invested in by the Fund at the
time of the Fund's investment, and (ii) there can be no assurance that a planned
IPO, or other exit strategy, for such companies will ever be completed. See
"Investment Objective and Principal Strategies."
Investment Manager and Distributor. The Fund's investment manager and
distributor is Scudder Weisel Capital LLC ("Scudder Weisel"), a registered
investment adviser and broker-dealer. Scudder Weisel employs _____________ as
sub-investment adviser to manage the Fund's portfolio on a day-to-day basis,
subject to the supervision of Scudder Weisel and the Fund's Board of Trustees.
INVESTMENTS IN TECHNOLOGY COMPANIES, AND, IN PARTICULAR, VENTURE
CAPITAL COMPANIES, ARE SPECULATIVE AND POSE SPECIAL RISKS. THESE RISKS ARE MORE
FULLY EXPLAINED BELOW UNDER THE HEADING "RISK FACTORS."
NO MARKET EXISTS FOR THE FUND'S SHARES. THE FUND'S SHARES WILL NOT BE
LISTED ON ANY SECURITIES EXCHANGE AND THE FUND DOES NOT ANTICIPATE THAT A
SECONDARY MARKET FOR ITS SHARES WILL DEVELOP. CONSEQUENTLY, YOU MAY NOT BE ABLE
TO SELL YOUR SHARES. BECAUSE THE FUND IS A CLOSED-END INVESTMENT COMPANY, SHARES
OF THE FUND WILL NOT BE REDEEMED ON A DAILY BASIS NOR WILL THEY BE EXCHANGEABLE
FOR SHARES OF ANY OTHER FUND. THE FUND'S SHARES ARE APPROPRIATE ONLY AS A LONG-
TERM INVESTMENT.
The Fund will provide a limited degree of liquidity to shareholders,
beginning in _______, by making quarterly offers to repurchase a minimum of 5%
of its outstanding shares at current net asset value. Repurchase of the full
amount of shares tendered is not guaranteed, however, and to the extent the
number of shares tendered by shareholders for repurchase exceeds the number of
shares to be repurchased in that quarter, repurchase will be made on a pro rata
basis. See "Repurchase Offers."
This Prospectus applies to the offering of Class A and Class O shares
of beneficial interest of the Fund. Class A Shares of the Fund are offered
during the initial offering period by selected brokers and dealers at a public
offering price of $25.00 per share, including the front-end sales charge, and
will be offered on a continuous basis thereafter at net asset value, plus any
applicable sales charge. The Fund's Class A shares will be subject to a front-
<PAGE>
end sales commission of up to 4.75%, and other expenses. Class O Shares of the
Fund are offered during the initial offering period by Scudder Weisel at a
public offering price of $24.55 per share, including the front-end sales charge,
and will be offered on a continuous basis thereafter at net asset value, plus
any applicable sales charge. The Fund's Class O shares will be subject to a
front-end sales commission of up to 3.00%, and other expenses. Although the Fund
currently offers only Class A and Class O shares, the Fund may in the future
offer other classes of shares, which may be subject to a front-end sales
commission, an early withdrawal charge, and/or a distribution fee, as well as
other expenses. The Fund has registered ____ Class A shares and ____ Class O
shares for sale under the Registration Statement to which this Prospectus
relates.
Through its initial offering, the Fund intends to raise approximately
$___ million of proceeds. Scudder Weisel will serve as the Fund's distributor in
the offering. See "How to Purchase Fund Shares." The Fund will pay
organizational and offering expenses estimated at $________ from the proceeds of
the offering. The initial offering will terminate on ________, _____ unless
extended by Scudder Weisel.
After termination of the initial offering period, the Fund expects to
commence a continuous offering of its shares through Scudder Weisel and selected
brokers and dealers at a public offering price equal to their net asset value
plus any applicable front end sales charge. Any such continuous offering, if
commenced, may be discontinued at any time. The Fund may conduct other offerings
from time to time in the future.
The Fund will pay each selected broker or dealer and Scudder Weisel a
shareholder servicing fee at an annual rate of up to 0.50% of the net asset
value of the outstanding shares owned by customers of such broker or dealer or
Scudder Weisel.
This Prospectus provides information that prospective investors should
know about the Fund before investing. You are advised to read this Prospectus
carefully and to retain it for future reference. Additional information about
the Fund, including a statement of additional information ("SAI") dated
____________, ___, has been filed with the Securities and Exchange Commission
("SEC"). The SAI is available upon request and without charge by writing the
Fund at the address above or by calling (800) ____________. The SAI is
incorporated by reference into this Prospectus in its entirety. The table of
contents of the SAI appears on page __ of this Prospectus. The SAI, and other
information about the Fund, is also available on the SEC's website
(http://www.sec.gov).
Management and Incentive Fee. The Fund will pay Scudder Weisel a
management fee at an annual rate of ___% of the Fund's average daily net assets
and an annual incentive fee generally equal to __% of the Fund's realized and
unrealized gains less realized and unrealized losses for the year, subject to
reduction for prior realized and unrealized losses that have not previously been
offset against realized and unrealized gains. The incentive fee structure
presents risks that are not present in funds without an incentive fee. The
overall fees payable by the Fund and its shareholders will be higher than those
paid by most other funds. See "Management of the Fund -- Incentive Fee."
Investor Qualifications. Shares are offered only to investors who have
a net worth of more than $1,500,000, including any amount invested in the Fund,
who have at least $750,000 under the management of Scudder Weisel, or who
otherwise meets the definition of a "qualified purchaser" as defined herein (any
such person, a "Qualified Client"). The minimum investment is $25,000. Investors
must hold their shares through brokers and dealers that have entered into
shareholder servicing agreements with the Fund or through Scudder Weisel. See
"Investor Qualifications and Transfer Restrictions."
<TABLE>
<CAPTION>
Price to Public (1) Sales Load (2) Proceeds to Fund (3)
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Class A Share....... $ $ $
-----------------------------------------------------------------------------------------------------------------------
Total............... $ $ $
-----------------------------------------------------------------------------------------------------------------------
Per Class O Share....... $ $ $
-----------------------------------------------------------------------------------------------------------------------
Total............... $ $ $
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The shares are offered on a best efforts basis at net asset value. Net
asset value and, accordingly, proceeds to the Fund, will fluctuate over the
course of the offering.
<PAGE>
(2) All shares are subject to a shareholder servicing fee.
(3) Assumes sale of all shares currently registered at the net asset value
indicated. Organizational and offering expenses will be borne by the Fund. See
"Use of Proceeds."
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS DETERMINED
WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE, NOR HAVE THEY MADE, NOR WILL
THEY MAKE, ANY DETERMINATION AS TO WHETHER ANYONE SHOULD BUY THESE SECURITIES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
The date of this Prospectus is __________
[LOGO]
<PAGE>
[PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PROSPECTUS SUMMARY......................................................... 6
SUMMARY OF FUND EXPENSES................................................... 12
RISK FACTORS............................................................... 14
USE OF PROCEEDS............................................................ 20
INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES.............................. 20
MANAGEMENT OF THE FUND..................................................... 25
REPURCHASE OFFERS.......................................................... 29
CALCULATION OF NET ASSET VALUE............................................. 32
SHARES OF BENEFICIAL INTEREST.............................................. 33
DISTRIBUTION POLICY........................................................ 33
TAXES...................................................................... 34
HOW TO PURCHASE FUND SHARES................................................ 35
GENERAL INFORMATION........................................................ 40
TABLE OF CONTENTS OF SAI................................................... 42
</TABLE>
_____________________
No dealer, salesperson or other person is authorized to give an investor any
information or to represent anything not contained in this Prospectus. As an
investor you must not rely on any unauthorized information or representations
provided to you by anyone. This Prospectus is an offer to sell or a solicitation
of an offer to buy the securities it describes, but only under the circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this Prospectus is current only as of the date of this Prospectus.
<PAGE>
6
PROSPECTUS SUMMARY
THE FUND Scudder Weisel Digital Innovators
Fund ("Fund") is a newly organized
non-diversified, closed-end
management investment company
registered under the Investment
Company Act of 1940, as amended
("1940 Act"). See "General
Information."
INVESTMENT OBJECTIVE AND PRINCIPAL The Fund's investment objective is to
STRATEGIES seek long-term capital appreciation.
The Fund seeks its objective by
investing at least 65% of its assets
in public and private equity
securities of U.S. and non-U.S.
companies that participate in the
information, internet, media,
telecommunications and medical
technology sectors or that Scudder
Weisel believes will benefit from
technological events or advances.
Although the Fund may invest in
companies of any size, it may invest
a substantial portion of its assets
in small and mid-size companies with
market capitalizations of less than
$10 billion. The Fund may invest up
to 50% of its total assets, either
directly or through venture capital
funds, in equity securities of
privately owned companies in the
information, internet, media,
telecommunications and medical
technology sectors that expect to
conduct an IPO within 24 months.
These companies are referred to as
venture capital companies. The Fund
also may invest from time to time in
companies that are deemed to be early
stage investment opportunities.
References to venture capital
companies include these early stage
investment opportunities, which are
included in the 50% of total assets
the Fund may invest in securities of
privately owned companies. See
"Investment Objective and Principal
Strategies."
INVESTMENT RATIONALE Currently, information technology
represents over one-third of the
market capitalization of the S&P 500
Composite Index. Despite the rapid
growth and convergence of technology
into everyday life, we have just
begun to tap its full benefit. The
increasing use of the personal
computer and the internet should
further increase information
technology's share of the world's
market capitalization. These trends
serve as the basis for higher than
average growth prospects for the
technology sector in future years.
Specific developments in the computer
industry illustrate these trends. In
the 1960s and 1970s, mainframe
computers were the dominant
technology, but they were superseded
by personal computers in the 1980s
and 1990s. This shift in the dominant
technology resulted in significant
changes in industry leaders. Some
<PAGE>
of the companies that are now at the
forefront of mainstream technological
innovation were in the early stages
of their development less than 20
years ago. Scudder Weisel believes
that there are emerging technology
companies today that offer similar
opportunities for appreciation in the
information, internet, media and
telecommunications and medical
sectors.
Scudder Weisel will seek to invest
primarily in these sectors in an
effort to capitalize on the
extraordinary growth of these
industries. See "Investment Objective
and Principal Strategies --
Investment Rationale."
THE INVESTMENT MANAGER, SUB-ADVISER Scudder Weisel Capital LLC ("Scudder
AND DISTRIBUTOR Weisel") is the Fund's investment
manager. Scudder Weisel employs
____________ as sub-investment
adviser (the "Sub-Adviser") to manage
the Fund's portfolio on a day-to-day
basis, subject to the supervision of
Scudder Weisel and the Fund's Board
of Trustees. Scudder Weisel also
serves as distributor of the Fund's
shares.
INVESTMENT MANAGEMENT FEES The Fund will pay Scudder Weisel a
management fee at an annual rate of
___% of the Fund's average daily net
assets and an annual incentive fee
generally equal to __% of the Fund's
realized and unrealized capital gains
less realized and unrealized losses
for the year, subject to reduction
for prior realized and unrealized
losses that have not previously been
offset against realized and
unrealized gains. The incentive fee
structure presents risks that are not
present in funds without an incentive
fee. The overall fees payable by the
Fund and its shareholders will be
higher than those paid by most other
funds. See "Risk Factors --Incentive
Fee" and "Management of the Fund --
Incentive Fee."
BORROWING; USE OF LEVERAGE The Fund is authorized to borrow
money to fund the purchase of
portfolio securities (including
additional investments in venture
capital companies in its portfolio),
to meet repurchase requests and for
cash management purposes. The Fund
may also borrow money to pay
operating expenses and to comply with
applicable diversification and
distribution requirements under
federal tax law. The use of
borrowings for financial leverage
involves a high degree of risk. The
Fund generally intends to borrow
money only in limited circumstances
when attractive investment
opportunities are available that are
expected to further the Fund's
investment and sufficient cash or
other liquid resources are not
otherwise available, or where Scudder
Weisel believes it would not be
prudent to sell existing portfolio
holdings. If the Fund borrows to
finance repurchases of its shares,
interest on that borrowing will
negatively
7
<PAGE>
affect shareholders who do not tender
their shares in a repurchase offer by
increasing the Fund's expenses and
reducing any net investment income.
The Fund is not permitted to borrow
for any purposes if, immediately
after such borrowing, it would have
an asset coverage (as defined in the
1940 Act) of less than 300%. The Fund
must also limit its borrowings to the
extent necessary to permit the Fund
to repurchase securities pursuant to
its repurchase policy without causing
the Fund to have an asset coverage of
less than 300%. In addition, as a
current operating policy, the Fund
will not borrow to make additional
investments at any time that
borrowings exceed 25% of its total
assets. This operating policy may be
modified by the Board of Trustees.
The Fund will seek to repay
borrowings used to meet repurchase
requests and for cash management
purposes within one year of incurring
them. See "Risk Factors -- Borrowing;
Use of Leverage" and "Investment
Objective and Principal Strategies --
Borrowing; Use of Leverage."
HEDGING The Fund may, but is not required to,
use derivative instruments to hedge
portfolio risks and for cash
management purposes. Hedging activity
may relate to a specific security or
to the Fund's portfolio as a whole.
The Fund may not use derivative
instruments to seek increased return
on its investments. Scudder Weisel or
the Sub-Adviser may decide not to
employ any of these strategies and
there is no assurance that any
derivatives strategy used by the Fund
will succeed, or that a particular
hedging instrument will be available
for use by the Fund when the Fund or
an adviser may desire to use it.
THE OFFERING The initial offering will terminate
on _________, unless extended by
Scudder Weisel. In the initial
offering the Fund intends to raise
approximately $___ million of net
proceeds. The Fund is initially
offering its shares through a group
of brokers and dealers selected by
Scudder Weisel. The minimum initial
investment is $25,000. See "How to
Purchase Fund Shares."
After termination of the initial
offering period, the Fund expects to
commence a continuous offering of its
shares through selected brokers and
dealers and Scudder Weisel at a
public offering price equal to their
net asset value. Any such continuous
offering, if commenced, may be
discontinued at any time. See "How to
Purchase Fund Shares."
8
<PAGE>
The Fund will pay each selected
broker or dealer and Scudder Weisel a
shareholder servicing fee at an
annual rate of up to 0.50% of the net
asset value of the outstanding shares
owned by customers of such broker or
dealer or Scudder Weisel.
INVESTOR QUALIFICATIONS Shares are offered only to investors
who have a net worth of more than
$1,500,000, who have $750,000 under
management with Scudder Weisel or who
otherwise meet the requirements for a
"qualified client" as defined in Rule
205-3 under the Investment Advisers
Act of 1940, as amended ("Qualified
Clients"). You may hold your shares
only through a broker or dealer that
has entered into a shareholder
servicing agreement with the Fund or
through Scudder Weisel. Before you
may invest in the Fund, your
financial advisor or sales
representative may require a
certification from you that you are a
Qualified Client and that you will
not transfer your shares except to a
person who is a Qualified Client and
who will hold the shares through a
broker or dealer that has entered
into a shareholder servicing
agreement with the Fund. (The form of
investor certification that you may
be asked to sign is attached to this
Prospectus as Appendix __.) If you
attempt to transfer your shares to
someone who is not a Qualified Client
or to an account with a broker or
dealer that has not entered into a
shareholder servicing agreement with
the Fund, the transfer will not be
permitted and will be void. The Fund
may also offer shares to certain
knowledgeable employees who
participate in Scudder Weisel's
investment activities. See "Investor
Qualifications and Transfer
Restrictions."
DISTRIBUTION POLICY The Fund will pay dividends on the
shares annually in amounts
representing substantially all of the
net investment income, if any, earned
each year. It is likely that many of
the companies in which the Fund
invests will not pay any dividends,
and this, together with the Fund's
relatively high expenses, means that
the Fund is unlikely to have
substantial income or pay dividends.
The Fund will pay substantially all
of any taxable net capital gain
realized on investments to
shareholders at least annually.
Pursuant to the dividend reinvestment
plan ("Plan"), shareholders are
presumed to have elected to have all
income dividends and capital gains
distributions automatically
reinvested in Fund shares pursuant to
the Plan. Shares will be issued under
the plan at their net asset value on
the ex-dividend date. There is no
sales charge or other charge for
reinvestment. Such plan may be
terminated by the Fund at any time.
Shareholders
9
<PAGE>
who choose not to participate in the
Plan will receive all income
dividends and capital gains
distributions in cash. See
"Distribution Policy."
CLOSED-END STRUCTURE; The Fund has been organized as a
LIMITED LIQUIDITY; SHARES NOT LISTED closed-end management investment
company. Closed-end funds differ from
open-end management investment
companies (commonly known as mutual
funds) in that shareholders of a
closed-end fund do not have the right
to redeem their shares on a daily
basis. In order to be able to meet
daily redemption requests, mutual
funds are subject to more stringent
liquidity requirements than closed-
end funds. In particular, a mutual
fund generally may not invest more
than 15% of its assets in illiquid
securities. The Fund believes that
unique investment opportunities exist
in the market for venture capital
companies, particularly in the
information, internet, media,
telecommunications and medical
technology sectors, and in private
funds that invest in venture capital
companies. However, these investments
are often illiquid, and an open-end
fund's ability to make such
investments is limited. For this
reason, the Fund has been organized
as a closed-end fund.
The Fund's shares will not be listed
on any securities exchange and the
Fund does not expect any secondary
market to develop for its shares. As
an investor in the Fund, you will not
be able to redeem your shares on a
daily basis and shares of the Fund
will not be exchangeable for shares
of any other fund. As described
directly below, however, in order to
provide a limited degree of
liquidity, the Fund will make
quarterly offers to repurchase a
minimum of 5% of its outstanding
shares at their net asset value
commencing __________. An investment
in the Fund is suitable only for
investors who can bear the risks
associated with the limited liquidity
of the shares and the underlying
investments of the Fund.
QUARTERLY REPURCHASE OFFERS In order to provide a limited degree
of liquidity to shareholders,
commencing ___________, the Fund will
make quarterly offers to repurchase a
minimum of 5% of its outstanding
shares at their net asset value. The
Fund intends to commence the first
repurchase offer of a minimum of 5%
of its outstanding shares in ________
and to complete it in _________. The
Fund anticipates that it will not
offer to repurchase more than 5% of
its outstanding shares per quarter
for the foreseeable future. If the
number of shares tendered for
repurchase exceeds the number the
Fund intends to repurchase, the Fund
will repurchase shares on a pro-rata
basis, and the tendering shareholders
will not have all of their tendered
shares repurchased by the Fund. See
"Repurchase Offers."
10
<PAGE>
PRINCIPAL RISK FACTORS An investment in the Fund involves a
high degree of risk. These include
the risks of:
. investing in shares of an
unlisted, closed-end fund with
limited liquidity;
. investing in companies in the
information, internet, media,
telecommunications and medical
technology sectors;
. concentration in a small number of
industry sectors and maintaining a
"non-diversified" portfolio;
. investing in smaller companies;
. transfer restrictions;
. investing in venture capital
companies and venture capital
funds;
. the impact on the Fund of
performance fees payable to
Scudder Weisel or the Sub-Adviser;
. investing in securities that are
illiquid and volatile;
. investing in securities of non-
U.S. issuers; and
. limitations with respect to the
Fund's ability to participate in
IPOs of companies where an
affiliate of the Fund acts as a
member of the underwriting
syndicate.
See "Risk Factors."
ENHANCED LIQUIDITY CONSIDERATIONS Although it has no obligation to take
any particular action that would
enhance the Fund's liquidity at any
time, the Board of Trustees
anticipates that the Fund, commencing
seven years after the date of the
Fund's first issuance of shares, may,
subject to any shareholder approval
that may be sought at the time, offer
enhanced liquidity to shareholders.
However, the Board of Trustees may
delay implementation of any enhanced
liquidity features in its discretion
based on an assessment of market
factors at that time. These enhanced
liquidity features may include, but
are not limited to, undertaking
quarterly repurchases offers for up
to 25% of the Fund's shares or
engaging in periodic tender offers
for a percentage of the Fund's
shares.
11
<PAGE>
12
<PAGE>
SUMMARY OF FUND EXPENSES
The following table is intended to assist the Fund's shareholders in
understanding the various costs and expenses associated with investing in Class
A and Class O shares of the Fund.
<TABLE>
<CAPTION>
CLASS A CLASS O
------- -------
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Charge (Load) Imposed on Purchases (as a
percentage of public offering price).......................................... 4.75% 3.00%
Maximum Sales Charge on Reinvested Dividends.................................. NONE NONE
Maximum Early Withdrawal Charge............................................... NONE NONE
Exchange Fee.................................................................. NONE NONE
Annual Expenses (as a percentage of net assets attributable to common shares)
Advisory fees................................................................. ___% ___%
Incentive fee accrual (1)..................................................... __% of net __% of net
realized and realized and
unrealized unrealized
capital gains capital gains
or losses and or losses and
net investment net investment
income or loss income or loss
Distribution fees............................................................. NONE NONE
Shareholder servicing fees.................................................... 0.50% 0.50%
Interest Payments on Borrowed Funds(2) ___% ___%
Other Expenses................................................................ 0.50% 0.50%
Total Annual Expenses (3)....................................................... ___% ___%
</TABLE>
__________
(1) The incentive fee accrual will be reduced to the extent there have been
declines in net assets due to investment operations that have not already
been recovered. See "Management of the Fund -- Incentive Fee."
(2) Assumes borrowing outstanding for __ months of the current fiscal year, an
annual interest rate of __%, a borrowing level of __% of total assets and a
$_______ total asset level.
(3) Scudder Weisel has undertaken to reimburse a portion of the Fund's expenses
or to waive a portion of its management fee to the extent that the Fund's
total expenses (before payment of the incentive fee, offering costs,
interest expense on any borrowings and any extraordinary expenses) would
otherwise exceed 2.99% of its average daily net assets during the first
fiscal year of the Fund's operations.
13
<PAGE>
This following hypothetical example assumes that all dividends and
other distributions are reinvested at net asset value and that the percentage
amounts listed under Annual Expenses remain the same in the years shown, and is
shown after giving effect to the fee reduction. The tables and the assumption in
the hypothetical example of a 5% annual return are required by regulation of the
SEC applicable to all investment companies; the assumed 5% annual return is not
a prediction of, and does not represent, the projected or actual performance of
the Fund's shares. For more complete descriptions of certain of the Fund's costs
and expenses, see "Management of the Fund."
The following example should not be considered a representation of past or
future expenses, and actual expenses may be greater or less than those shown.
Example
<TABLE>
<CAPTION>
(1) Class A Shares 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Based on the estimated level of total
operating expenses listed above, you
would pay the following expenses on a
$1,000 investment, assuming a 5%
annual return and repurchase at the
end of each time period............................... [ ] [ ] [ ] [ ]
You would pay the following expenses
on the same investment, assuming no
repurchase............................................ [ ] [ ] [ ] [ ]
(2) Class O Shares 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------- ------- --------
Based on the estimated level of total
operating expenses listed above, you
would pay the following expenses on a
$1,000 investment, assuming a 5%
annual return and repurchase at the
end of each time period............................... [ ] [ ] [ ] [ ]
You would pay the following expenses
on the same investment, assuming no
repurchase............................................ [ ] [ ] [ ] [ ]
</TABLE>
THE EXAMPLES DO NOT PRESENT ACTUAL EXPENSES AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN. MOREOVER, THE FUND'S ACTUAL RATE OF RETURN MAY BE
GREATER OR LESS THAN THE HYPOTHETICAL 5% RETURN SHOWN IN THE EXAMPLE.
The examples include an accrual for the incentive fee. The incentive
fee accrual is calculated as a percentage of the increase in the Fund's net
assets due to investment operations, not as a percentage of its average daily
net assets. As a result, the dollar amounts in the examples could be
significantly higher if the Fund's actual rate of return exceeds 5%.
14
<PAGE>
RISK FACTORS
GENERAL
-------
Stock prices fluctuate. Apart from the specific risks identified below,
the Fund's investments may be negatively affected by the broad investment
environment in the U.S. and international securities markets, which may be
influenced by, among other things, interest rates, inflation, politics, fiscal
policy, current events, competition, productivity, and technological and
regulatory change. Therefore, as with any fund that invests in stocks, the
Fund's net asset value will fluctuate, especially in the short term. You may
experience a significant decline in the value of your investment and could lose
money. The Fund should be considered a speculative investment, and you should
invest in the Fund only if you can sustain a complete loss of your investment.
NEWLY ORGANIZED FUND AND INVESTMENT MANAGER
-------------------------------------------
The Fund is a newly organized investment company with no previous
operating history, and the Fund may not succeed in meeting its objective. The
Fund's net asset value may decrease. In addition, Scudder Weisel is a recently
organized registered investment adviser. See "Management of the Fund."
CLOSED-END FUND; LIMITED LIQUIDITY; SHARES NOT LISTED
-----------------------------------------------------
The Fund is a closed-end management investment company designed
primarily for long-term investors and is not intended to be a trading vehicle.
You should not invest in this Fund if you require your investment to be liquid.
Closed-end funds differ from open-end management investment companies (commonly
known as mutual funds) in that shareholders of a closed-end fund do not have the
right to redeem their shares on a daily basis. In order to be able to meet daily
redemption requests, mutual funds are subject to more stringent liquidity
requirements than closed-end funds. In particular, a mutual fund generally may
not invest more than 15% of its assets in illiquid securities. The Fund believes
that unique investment opportunities exist in the market for venture capital
companies, particularly in the information, internet, media, telecommunications
and medical technology sectors, and in private funds that invest in venture
capital companies. However, these investments are often illiquid, and an open-
end fund's ability to make such investments is limited. For this reason, the
Fund has been organized as a closed-end fund.
The Fund does not intend to list its shares for trading on any national
securities exchange. There is no secondary trading market for Fund shares, and
none is expected to develop. The Fund's shares are, therefore, not readily
marketable. Because the Fund is a closed-end investment company, its shares will
not be redeemed on a daily basis and they will not be exchangeable for shares of
any other fund. Although, as a matter of fundamental policy, the Fund will,
beginning _______, make quarterly repurchase offers for a minimum of 5% of its
outstanding shares at their net asset value, the Fund's shares are less liquid
than shares of funds that trade on a stock exchange or shares of open-end
investment companies. An investment in the Fund is suitable only for investors
who can bear the risks associated with the limited liquidity of the shares and
the underlying investments of the Fund. Also, because the Fund's shares will not
be listed on any securities exchange, the Fund is not required, and does not
intend, to hold annual meetings of its shareholders.
REPURCHASE OFFERS
-----------------
In order to provide a limited degree of liquidity to shareholders,
commencing ______, the Fund will make quarterly offers to repurchase a minimum
of 5% of its outstanding shares at their net asset value. The Fund intends to
commence the first repurchase offer of a minimum of 5% of its outstanding shares
in ______ and to complete it in ______. The Fund anticipates that it will not
offer to repurchase more than 5% of its outstanding shares per quarter for the
foreseeable future. There is no guarantee that you as a shareholder will be able
to sell all of the Fund shares that you desire to sell at that time. If any
quarterly repurchase offer is oversubscribed by the Fund's shareholders, the
Fund will repurchase only a pro rata portion of the shares tendered by each
shareholder. The potential for pro-ration may cause some shareholders to tender
15
<PAGE>
more shares for quarterly repurchase than the shareholders wish to have
repurchased. Moreover, the Fund's quarterly repurchase policy may have the
effect of decreasing the size of the Fund. This may force the Fund to sell
assets it would not otherwise sell. It may also reduce the investment
opportunities available to the Fund and cause its expense ratio to increase. In
addition, the repurchase of shares by the Fund may require the Fund to liquidate
portfolio securities, which could result in the realization of taxable gains.
TRANSFER RESTRICTIONS
---------------------
The Fund's shares will be subject to transfer restrictions that permit
transfers only to persons who satisfy certain net worth requirements and who
otherwise meet the standard for a Qualified Client. Shares may be held only
through a broker or dealer that is a party to a shareholder servicing agreement
with the Fund or through Scudder Weisel. The existence of transfer restrictions
will be indicated on customer confirmations by the entities through which shares
are held. These brokers and dealers will be required to implement procedures
designed to ensure that all subsequent purchasers of the shares that are clients
of the brokers and dealers are Qualified Clients. Your ability to sell your
shares will be limited even if a secondary trading market for the shares
develops. If you attempt to transfer your shares to someone who is not a
Qualified Client or to an account with a broker or dealer that has not entered
into a shareholder servicing agreement with the Fund, the transfer will not be
permitted and will be void. Brokers, dealers or the Fund may require substantial
documentation in connection with a requested transfer of shares, and you should
not expect that you will be able to transfer shares at all. Attempted transfers
may require a substantial amount of time and expense to effect.
INVESTMENT IN THE TECHNOLOGY INDUSTRIES
---------------------------------------
The Fund plans to invest at least 65% of its assets in public and
private equity securities of U.S. and non-U.S. companies considered by Scudeer
Weisel or the Sub-Adviser to significantly benefit or derive revenue from
advances in technology, including communications technology, data processing
technology and implementations thereof, relating to companies in the
information, internet, media, telecommunications and medical technology sectors.
The value of the Fund's shares will be susceptible to factors affecting the
technology industry and to greater risk and market fluctuation than an
investment in a fund that invests in a broader range of portfolio securities.
The specific risks faced by these companies may include:
. rapidly changing technologies and products that may quickly become
obsolete;
. exposure to a high degree of government regulation, making these
companies susceptible to changes in government policy and failures to
secure regulatory approvals;
. cyclical patterns in information technology spending which may result
in inventory write-offs;
. scarcity of management, engineering and marketing personnel with
appropriate technological training;
. the possibility of lawsuits related to technological and intellectual
property patents;
. changing investor sentiments and preferences with regard to technology
sector investments (which are generally perceived as risky); and
. potential for poor financial results (e.g., suppressed earnings) due
to participation in highly competitive businesses which can be
exacerbated by low barriers to the entry of additional competitors.
MEDIA SECTOR RISK DISCLOSURE
----------------------------
Risks particular to the media industry involve a greater price
volatility for the overall market, rapid obsolescence of products and services
resulting from changing consumer tastes, intense competition and strong market
reactions to technological developments throughout the industry.
16
<PAGE>
Various types of ownership restrictions are imposed by the Federal
Communications Commission ("FCC") on investments both in mass media companies,
such as broadcasters and cable operators, as well as in common carrier
companies, such as the providers of local telephone service and cellular radio.
For example, the FCC's broadcast multiple ownership rules, which apply
to the radio and television industries, provide that investment managers are
deemed to have an "attributable" interest whenever the manager has the right to
determine how more than five percent of the issued and outstanding voting stock
of a broadcast company may be voted. These same broadcast rules prohibit the
holding of an attributable interest in AM and FM radio broadcast stations and
television stations nationally. Similar types of restrictions apply in the mass
media and common carrier industries.
TELECOMMUNICATIONS RISK DISCLOSURE
----------------------------------
The value of securities of telecommunications companies is particularly
vulnerable to rapidly changing technology, relatively high risks of obsolescence
caused by technological advances, and intense competition. For these and other
reasons, securities of telecommunications companies may be more volatile than
the overall market. The telecommunications sector is subject to certain pro-
competitive governmental policies and government regulation of rates of and
services that may be offered, and changes in these regulations may adversely
affect the value of the telecommunications company securities held by the Fund.
MEDICAL TECHNOLOGY SECTOR RISK DISCLOSURE
-----------------------------------------
Investments in companies in the medical technology sector may be more
volatile than the market in general, based on, among other things, greater risk
of obsolescence due to rapid technological progress, increased commercial
targeting of consumers in the marketing of new medical products and techniques,
and potentially rapid development of government regulation of medical devices
and technologies. Such volatility may adversely affect the value of your
investment in the Fund.
SMALLER COMPANY SECURITIES
--------------------------
The Fund may invest in the securities of small or medium-sized
companies which may be more susceptible to market downturns, and their prices
may be more volatile than those of larger companies. Small companies often have
narrower markets and more limited managerial and financial resources than
larger, more established companies. In addition, small company stocks typically
are traded in lower volume, and their issuers are subject to greater degrees of
changes in their earnings and prospects. In current market conditions, the Fund
considers small and medium-sized companies to be those with market
capitalizations, at the time of purchase by the Fund, of as little as $10
million and as much as $10 billion. The Fund's definition of small and
medium-sized companies may change in light of market developments.
INVESTMENTS IN VENTURE CAPITAL COMPANIES
----------------------------------------
The Fund may invest a substantial portion of its assets, directly or
through venture capital funds, in securities of unseasoned venture capital
companies, which present all of the risks of investments in small companies
described above, plus certain addition risks. Venture capital companies
represent highly speculative investments by the Fund. The Fund's ability to
realize value from an investment in a venture capital company is to a large
degree dependent upon the successful completion of the company's IPO or the sale
of the venture capital company to another company, which may not occur for a
period of several years after the date of the Fund's investment, if ever. There
can be no assurance that any of the venture capital companies in which the Fund
invests will complete public offerings or be sold, or, if such events occur, as
to the timing and values of, or the ability of the Fund to benefit from, such
offerings or sales. The Fund may lose all or part of its entire investment if
these companies fail or their product lines fail to achieve an adequate level of
market recognition or acceptance. Conversely, there can be no assurance that the
17
<PAGE>
Fund will be able to identify a sufficient number of desirable venture capital
investments. Thiscould cause the Fund to invest substantially less than 50% of
its assets, and possibly none of its assets, in venture capital companies.
Depending on the specific facts and circumstances of a venture capital
investment, there may not be a reasonable basis to revalue it for a substantial
period of time after the Fund's investment. If a venture capital company does
not complete an IPO within the anticipated time frame (generally, up to 24
months from the date of the Fund's investment), or enter into a transaction
whereby its shares are exchanged for shares of a public company, there may never
be a public market benchmark for valuing the investment. The Fund's net asset
value per share may change substantially in a short time as a result of
developments at the companies in which the Fund invests. Changes in the Fund's
net asset value may be more pronounced and more rapid than with other funds
because of the Fund's emphasis on venture capital companies that are not
publicly traded. The Fund's net asset value per share may change materially from
day to day, including during the time between the date a repurchase offer is
mailed and the due date for tendering shares, and during the period immediately
after a repurchase is completed.
All venture capital investments involve substantial risks. The risks
associated with investments in companies in the "early" stages of development
are greater than those of companies in the "late" or "pre-IPO" stages, because
the concepts generally are unproven, the companies have little or no track
record, and the prospect of an IPO is highly contingent on factors that often
are not in the companies' control. Scudder Weisel or the Sub-Adviser also may
lack information on which to base its evaluation of an investment in a venture
capital company. For example, since venture capital companies do not file
periodic reports with the SEC, there is less publicly available information
about them than there is for other small companies, if there is any at all. The
Fund must therefore often rely on information received directly from the venture
capital company or persons associated with it to evaluate potential investment
returns.
In addition, venture capital companies tend to rely more heavily on the
performance of a key personnel than more mature companies do. Competition for
qualified personnel and high turnover of personnel are particularly prevalent in
venture capital companies. The loss of one or a few key managers can
substantially hinder or delay a venture capital company's implementation of its
business plan. In addition, venture capital companies may not be able to attract
and retain qualified managers and personnel.
Some venture capital companies may depend upon managerial assistance or
financing provided by their investors. The Fund generally does not intend to
provide such managerial assistance. The Fund may, however, provide additional
financing to the companies in which it invests, and at times may be
contractually obligated to do so (that is, its investment agreement may require
follow-on investments in certain circumstances) or may determine that it is
necessary to do so to protect its economic interests. The value of the Fund's
investments may depend in part upon the quality of managerial assistance
provided by other investors and their ability and willingness to provide
financial support.
The Fund may invest in venture capital companies that have already
received funding from other sources. These companies may involve special risks,
and the economic terms that the Fund obtains from them may be less favorable
than if the Fund had invested earlier. For example, preferred stock acquired in
later rounds of financing may have less favorable conversion ratios than
preferred stock issued to earlier investors. A lower ratio will tend to reduce
the Fund's economic interest upon completion of an IPO.
Depending on the specific facts and circumstances of a venture capital
investment, there may not be a reasonable basis to revalue it for a substantial
period of time after the fund's investment. If a venture capital company does
not complete an IPO or a sale to or merger with a public company, there may
never be a public market benchmark for valuing the investment and it may be
possible to dispose of the investment only at a substantial loss. The Fund's net
asset value per share may change substantially in a short time as a result of
developments at the companies in which the Fund invests. Changes in the Fund's
net asset value may be more pronounced and more rapid than with other funds
because of the Fund's emphasis on venture capital companies that are not
publicly traded. The Fund's net asset value per share may change materially from
18
<PAGE>
day to day, including during the time between the date a repurchase offer is
mailed and the due date for tendering shares, and during the period immediately
after a repurchase is completed.
INVESTMENTS IN VENTURE CAPITAL FUNDS
------------------------------------
Venture capital funds may involve all the risks of investing in venture
capital companies described above, plus certain additional risks. In particular,
the Fund must rely upon the judgment of the general partner or other manager of
a venture capital fund in selecting the companies in which the venture capital
fund invests and in deciding when to sell its investments. Some venture capital
funds request capital contributions from its investors over time. The timing and
amounts of capital calls on investors can be unpredictable and there is the
possibility that the Fund may have to sell portfolio securities to meet capital
calls. A venture capital fund may employ leverage, which can magnify any losses
incurred by its investors, including the Fund. A venture capital fund may also
be required to pay management fees and/or performance fees to its general
partner or manager, which can reduce the return to investors, including the
Fund. A venture capital fund may also pay certain costs of evaluating and
negotiating each venture capital investment, including fees of outside legal
counsel, which may reduce the Fund's return. Investments in venture capital
funds may be highly illiquid. The Fund may not be able to dispose of a venture
capital fund holding when it wishes to, or may be able to do so only at a
disadvantageous price. Subject to applicable regulatory requirements, the Fund
may purchase interests in venture capital funds with respect to which an
affiliate of Scudder Weisel or the Sub-Adviser is a manager or general partner,
or has some other interest in the venture capital fund.
CONCENTRATION; NON-DIVERSIFIED STATUS
-------------------------------------
The assets of the Fund will consist almost entirely of companies within
or related to various sectors of the technology industry. Where a portfolio is
concentrated in securities of a small number of companies or in securities of
companies in a limited number of industry sectors, the risk of any investment
decision is increased. The assets of the Fund will consist almost entirely of
companies considered by Scudder Weisel to significantly benefit from or derive
revenue from information, internet, media, telecommunications and medical
technology. Scudder Weisel will seek to reduce the company-specific risk, as
opposed to sector-specific risk, of the Fund's portfolio by investing in more
than one company in a particular sector, but this may not always be practicable.
The Fund is classified as a "non-diversified" management investment
company under the 1940 Act. This means that the Fund may invest a greater
portion of its assets in a limited number of issuers than would be the case if
the Fund were classified as a "diversified" management investment company.
Accordingly, the Fund may be subject to greater risk with respect to its
portfolio securities than a "diversified" fund because changes in the financial
condition or market assessment of a single issuer may cause greater fluctuation
in the net asset value of the Fund's shares. The Fund is "diversified," however,
for purposes of obtaining tax treatment as a regulated investment company.
INCENTIVE FEE
-------------
The Fund will pay Scudder Weisel a management fee at an annual rate of
___% of the Fund's average daily net assets and an annual incentive fee
generally equal to __% of the Fund's realized and unrealized gains less realized
and unrealized losses for the year, subject to reduction for prior realized and
unrealized losses that have not previously been offset against realized and
unrealized gains. Scudder Weisel may pay all or a portion of any incentive fee
payment to the sub-adviser. The right to the incentive fee may give Scudder
Weisel or the sub-adviser reason to select investments for the Fund that are
riskier or more speculative than it would select if it were paid only the
management fee.
The amount of the incentive fee accrual will be based in part on the
valuation of the Fund's venture capital investments. Until a venture capital
company completes an IPO or is acquired by a public company, the value of an
investment in that company must be estimated by Scudder Weisel or the Sub-
Adviser, as appropriate, using fair value procedures approved by the Fund's
19
<PAGE>
Board of Trustees. (See "Calculation of Net Asset Value.") The incentive fee
structure could give Scudder Weisel or the Sub-Adviser an incentive to select a
higher fair value for the Fund's venture capital investments than either
otherwise would.
The incentive fee is accrued as a liability of the Fund each day and so
reduces the net asset value of all shares. The repurchase price received by an
investor in a quarterly repurchase offer will reflect the impact of an incentive
fee accrual if the Fund has experienced an increase inthe value of its net
assets due to investment operations through the date of repurchase. However, the
incentive fee accrual may subsequently be reversed if the Fund's performance
declines. In that case, some or all of the incentive fee accrual borne by the
investor in connection with the repurchase of its shares will be retained by the
Fund. No adjustment to a repurchase price will be made after it has been paid.
The Fund will not accrue an incentive fee for any year unless it has
fully recovered any cumulative investment losses from prior periods. However,
the total amount of cumulative loss will be shared equally by all outstanding
shares of the Fund. If some shareholders reinvest distributions by the Fund in
additional shares, then the number of outstanding shares will increase, and the
per-share amount of cumulative loss (if any) will be reduced. As a result, if
you do not reinvest your distributions, the benefit you receive from a
cumulative loss (if any) will be diluted. This means that you may bear a higher
percentage incentive fee than you otherwise would.
In addition, whenever shares are repurchased in a repurchase offer, the
amount of any cumulative loss will be reduced in proportion to the number of
shares repurchased. For example, if the Fund has a cumulative loss of $5
million, and 5% of the Fund's shares are repurchased in a repurchase offer, then
the amount of the cumulative loss will be reduced by 5% (or $250,000) to
$4,750,000. It is therefore possible that the Fund may experience a net loss
from investment operations for a full year, but due to the reduction in the
overall number of outstanding shares or as a result of a share repurchase, you
will have a positive return on your investment and an incentive fee will be
accrued for that year. (In the preceding example, if, after the repurchase, the
Fund experiences an increase in assets due to investment operations of
$4,850,000, then the net loss from investment operations for the period would be
$150,000, but the Fund would accrue an incentive fee equal to __% of $100,000,
or $_____).
For an explanation of the incentive fee calculation, see the section in
this Prospectus entitled "Investment Management and Other Services -- Incentive
Fee" and the Fund's SAI.
RESTRICTED AND ILLIQUID SECURITIES
----------------------------------
The Fund intends to invest a substantial portion (more than 50% from
time to time) of its assets in restricted securities and other investments that
are illiquid. Restricted securities are securities that may not be resold to the
public without an effective registration statement under the Securities Act of
1933, as amended ("1933 Act") or, if they are unregistered, may be sold only in
a privately negotiated transaction or pursuant to an exemption from
registration.
Restricted and other illiquid investments involve the risk that the
securities will not be able to be sold at the time desired by the Fund or at
prices approximating the value at which the Fund is carrying the securities on
its books, particularly where the value of the restricted or otherwise illiquid
investment is volatile. Difficulty in selling illiquid investments could impair
the Fund's ability to meet repurchase requests or to pay its fees and expenses.
SHORT SALES
-----------
The Fund may make short sales of securities. A short sale is a
transaction in which the Fund sells a security it does not own in anticipation
that the market price of that security will decline. When the Fund makes a short
sale, it must borrow the security sold short and deliver it to the broker-dealer
through which it made the short sale as collateral for its obligation to deliver
the security upon conclusion of the sale. The Fund may also sell securities that
it owns or has the right to acquire at no additional cost but does not intend to
deliver to the buyer, a practice known as selling short "against-the-box." The
Fund may have to pay a fee to borrow particular securities and is often
obligated to pay over any payments received on such borrowed securities. The
20
<PAGE>
Fund's obligation to replace the borrowed security will be secured by collateral
deposited with the broker-dealers, usually cash, U.S. Government securities or
other highly liquid securities similar to those borrowed. The Fund will also be
required to deposit similar collateral with its custodian to the extent
necessary so that the value of both collateral deposits in the aggregate is at
all times equal to as least 100% of the current market value of the security
sold short. Depending on arrangements made with the broker-dealer from which it
borrowed the security regarding payment over any received by the Fund on such
security, the Fund may not received any payments (including interest) on its
collateral deposited with such broker-dealer. The Fund will incur transaction
costs, including interest expenses, in connection with opening, maintaining, and
closing short sales.
If the price of the security sold short increases between the time of
the short sale and the time the Fund replaces the borrowed security, the Fund
will incur a loss; conversely, if the price declines, the Fund will realize a
capital gain. Any gain is limited to the price at which it sold the security
short; its potential loss is theoretically unlimited.
INVESTMENTS IN FOREIGN SECURITIES AND DEPOSITARY RECEIPTS
---------------------------------------------------------
The Fund plans to invest in the securities of foreign companies considered
by Scudder Weisel or the sub-adviser to significantly benefit from or derive
revenue from information, internet, media, telecommunications and medical
technology sectors. Investments in foreign securities face specific risks, which
may include:
. unfavorable changes in currency rates and exchange control
regulations;
. restrictions on, and costs associated with, the exchange of currencies
and the repatriation of capital invested abroad;
. reduced availability of information regarding foreign companies;
. foreign companies may be subject to different accounting, auditing and
financial standards and to less stringent reporting standards and
requirements;
. reduced liquidity as a result of inadequate trading volume and
government-imposed trading restrictions;
. the difficulty in obtaining or enforcing a judgment abroad;
. increased market risk due to regional economic and political
instability;
. increased brokerage commissions and custody fees;
. securities markets which are subject to a lesser degree of supervision
and regulation by competent authorities;
. foreign withholding taxes;
. the threat of nationalization and expropriation; and
. an increased potential for corrupt business practices in certain
foreign countries
BORROWING; USE OF LEVERAGE
--------------------------
The Fund is authorized to borrow money to fund the purchase of
portfolio securities, to meet repurchase requests and for cash management
purposes. The Fund may also borrow money to pay operating expenses and to comply
with applicable diversification and distribution requirements under federal tax
law. As a current operating policy, the Fund will not borrow to make additional
investments at any time that borrowings exceed 25% of its total assets. This
operating policy may be modified by the Board of Trustees. The Fund will seek to
repay borrowings used to meet repurchase requests and for cash management
purposes within one year of incurring them. The use of borrowings for financial
leverage involves a high degree of risk.
21
<PAGE>
To the extent that the Fund uses leverage, the value of its net assets
will tend to increase or decrease at a greater rate than if no leverage were
employed. If the Fund's investments decline in value, your loss will be
magnified if the Fund has borrowed money to make its investments.
If the Fund does not generate sufficient cash flow from operations, it
may not be able to repay borrowings within one year of incurring them, or it may
be forced to sell investments at disadvantageous times in order to repay
borrowings. The Fund's performance may be adversely affected if it is not able
to repay borrowings (because of the continued interest expense) or if it is
forced to sell investments at disadvantageous times in order to repay
borrowings.
The 1940 Act provides that the Fund may not declare dividends or
distributions, or purchase its stock (including in repurchase offers) if,
immediately after doing so, it will have an asset coverage of less than 300%.
For this purpose, an asset coverage of 300% means that the Fund's total assets
equal 300% of the total outstanding principal balance of indebtedness. The Fund
must also limit its borrowings to the extent necessary to permit the Fund to
repurchase securities pursuant to its repurchase policy without causing the Fund
to have an asset coverage of less than 300%. Lenders may require the Fund to
agree to more restrictive asset coverage requirements as a condition to
providing credit to the Fund, and may also limit the extent to which the Fund
may hold illiquid securities, reducing the Fund's investment flexibility. If the
Fund is unable to make distributions as a result of these requirements, it may
no longer qualify as a regulated investment company and could be required to pay
additional taxes. The Fund may also be forced to sell investments on unfavorable
terms if market fluctuations or other factors reduce the asset level below what
is required by the 1940 Act or the Fund's loan agreements.
Successful use of borrowing for financial leverage purposes (that is,
to acquire portfolio securities) will depend on the ability of Scudder Weisel or
the Sub-Adviser to predict correctly interest rates and market movements, and
there is no assurance that a borrowing strategy will be successful during any
period in which it is employed. The rights of any lenders to the Fund to receive
payments of interest or repayments of principal will be senior to those of the
holders of the Fund's shares, and the terms of any borrowings may contain
provisions that limit certain activities of the Fund, including the payment of
dividends (if any) to holders of shares. Interest payments and fees incurred in
connection with borrowings will increase the Fund's expense ratio and will
reduce any income the Fund otherwise has available for the payment of dividends.
The Fund's obligation to make interest or principal payments on borrowings may
prevent the Fund from taking advantage of attractive investment opportunities.
USE OF DERIVATIVES FOR HEDGING PURPOSES
---------------------------------------
The Fund may, but is not required to, use derivative instruments to
hedge portfolio risk and for cash management purposes. Investing in derivative
investments involves numerous risks. For example:
. The underlying investment or security might not perform in the manner
that Scudder Weisel or the Sub-Adviser expects it to perform. This
could make the effort to hedge unsuccessful.
. The company issuing the instrument may be unable to pay the amount due
on the maturity of the instrument.
. Certain derivative investments held by the Fund may trade only in the
over-the-counter markets or not at all, and can be illiquid.
. Derivatives may change rapidly in value because of their inherent
leverage.
In addition, pending investment of the proceeds of the initial
offering, the Fund may invest up to 25% of its assets temporarily in securities
that seek to track the performance of various stock market indices.
All of this can mean that the Fund's net asset value may change more
often and to a greater degree than it otherwise would. Scudder Weisel or the
Sub- Adviser may decide not to employ any of these strategies and there is
22
<PAGE>
no assurance that any hedging strategy used by the Fund will succeed, or that a
particular hedging instrument will be available for use by the Fund when the
Fund may desire to use it.
LENDING OF SECURITIES
---------------------
Although the Fund will receive collateral in connection with all loans
of portfolio securities, and such collateral will be marked to market, the Fund
will be exposed to the risk of loss should a borrower default on its obligation
to return the borrowed securities. For example, loaned securities may have
appreciated beyond the value of the collateral held by the Fund at the time of a
default. In addition, the Fund will bear the risk of loss on any collateral that
it chooses to invest.
DEBT SECURITIES AND CONVERTIBLE SECURITIES
------------------------------------------
The Fund may invest in debt securities and other debt instruments that
will convert to equity securities. The Fund does not plan to invest more than
10% of its net assets in debt securities which are not rated within the four
highest rating categories by Standard & Poor's Rating Services Inc. or Moody's
Investors Services, Inc., or other nationally recognized statistical rating
organization. Such lower rated securities are commonly referred to as "junk
bonds" and reflect a greater possibility that changes in the economy, financial
condition of the issuer and/or an unanticipated rise in interest rates may
impair the issuer's ability to make payments on interest and principal.
LIMITATIONS ON INVESTMENTS IN CERTAIN INITIAL PUBLIC OFFERINGS
--------------------------------------------------------------
From time to time, an affiliate of the Fund may act as a member of an
underwriting syndicate in connection with a company's IPO. The Fund is limited
in its ability to participate in such IPOs. This limitation may cause the Fund,
from time to time, to miss advantageous opportunities in connection with
investing in certain IPOs.
USE OF PROCEEDS
The proceeds of the initial offering will be invested in accordance
with the Fund's investment objective and principal strategies as soon as
practicable after the termination date of the initial offering period. Based on
current market conditions, Scudder Weisel expects the Fund will be fully
invested within one year. This lengthy investment period reflects the fact that:
(i) the Fund plans to spend considerable time researching prospective
investments; and (ii) the companies in which the Fund plans to invest will be
primarily small to medium-sized companies that may have limited amounts of
outstanding securities available for purchase. In most instances, the Fund plans
to minimize the positive impact its purchases of securities will have on the
price of these securities by purchasing the securities over a period of time.
Pending the full investment of the proceeds of the offering in equity securities
of companies, a portion of the proceeds of the offering will be invested in
short-term, high quality debt securities. In addition, up to 25% of the Fund's
assets may be invested temporarily in securities that seek to track the
performance of various stock market indices. The Fund will pay organizational
and offering expenses estimated to be $___________ from the proceeds of the
initial offering. Such expenses will therefore be borne by investors in the
initial offering. Investors in any subsequent continuous offering may not bear
any organizational or offering expenses.
INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES
LONG-TERM CAPITAL APPRECIATION
------------------------------
The Fund's investment objective is to seek long-term capital
appreciation. There can be no assurance that the Fund will achieve its
investment objective.
23
<PAGE>
PERCENTAGE LIMITATIONS
----------------------
Unless otherwise specified, percentage limitations shall be applied at
the time of investment. Therefore, these percentages could be exceeded due to
fluctuation in the value of the Fund's portfolio securities or liquidation of
portfolio securities to pay expenses or fulfill repurchase requests.
INVESTMENT IN COMPANIES IN THE INFORMATION, INTERNET, MEDIA, TELECOMMUNICATIONS
-------------------------------------------------------------------------------
AND MEDICAL TECHNOLOGY SECTORS
------------------------------
The Fund seeks to achieve its investment objective by investing its
assets primarily in public and private equity securities of U.S. and non-U.S.
companies that participate in the information, internet, media,
telecommunications and medical technology sectors or that Scudder Weisel or the
Sub-Adviser believes will benefit from technological events or advances. For any
such company, the advances in these areas may provide, among other benefits:
. increased revenue from further penetration of existing markets, or
access to new markets;
. improvement in quality of goods or services;
. improvement in profitability from cost reductions in the production of
goods or services;
. increases in efficiency of production through systematic use of
automation, inventory control, and greater communication between
production centers and distribution outlets; and
. competitive advantage from stronger relationships throughout the
production and supply chain.
The Fund may invest in companies of any size but generally expects to
invest at least 80% of its assets in small and medium-sized companies. In
current market conditions, the Fund considers small and medium-sized companies
to be those with market capitalizations, at the time of purchase by the Fund, of
as little as $10 million and as much as $10 billion. The Fund's definition of
small and medium-sized companies may change in light of market developments.
INVESTMENT IN VENTURE CAPITAL COMPANIES
---------------------------------------
The Fund may invest up to 50% of its total assets, either directly or
through venture capital funds, in equity securities of privately owned companies
in the information, internet, media, telecommunications and medical technology
sectors that plan to conduct an IPO normally within 24 months from the time the
Fund makes its investment. These companies are referred to as venture capital
companies. The Fund also may invest from time to time in companies that are
deemed to be early stage investment opportunities. References to venture capital
companies include these early stage investment opportunities, which are included
in the 50% of total assets the Fund may invest in private securities. Investors
should recognize that (i) there will be no public market for the shares of any
venture capital company invested in by the Fund at the time of the Fund's
investment, and (ii) there can be no assurance that a planned IPO, or other exit
strategy, for such companies will ever be completed.
All venture capital investments involve substantial risks. The risks
associated with investing in venture capital companies is high, because the
concepts generally are unproven, the companies have little or no track record,
and the prospect of an IPO is highly contingent upon factors that are often not
in the companies' control. See "Risk Factors -- Investments in Venture Capital
Companies." The Fund may invest up to 50% of its total assets, either directly
or through venture capital funds, in equity securities of privately owned
companies in the information, internet, media, telecommunications and medical
technology sectors that plan to conduct an IPO normally within 24 months from
the time the Fund makes its investment. These companies are referred to as
venture capital companies. The Fund also may invest from time to time in
companies that are deemed to be early stage investment opportunities. References
to venture capital companies include these early stage investment opportunities,
which are included in the 50% of total assets the Fund may invest in private
securities. Investors should recognize that (i) there will be no public market
for the shares of any venture capital company invested in by the Fund at the
24
<PAGE>
time of the Fund's investment, and (ii) there can be no assurance that a planned
IPO, or other exit strategy, for such companies will ever be completed.
The Fund anticipates that it will invest primarily in common stocks.
The Fund may also invest in securities convertible into or exchangeable for
common stocks, rights and warrants to purchase common stocks and depository
receipts representing an ownership interest in equity securities. The Fund
considers all of these securities equity securities for purposes of its
investment strategies. The Fund may also invest in non-convertible debt
securities or preferred stocks believed to provide opportunities for capital
gain.
The Fund expects most of its venture capital investments to be in
companies that it determines to be in the "pre-IPO" stage of development. The
Fund expects to be able to acquire equity securities of pre-IPO companies in
private placements within two years prior to their planned IPOs. Pre-IPO
companies will typically have small market capitalizations and limited or no
liquidity; even after an IPO, liquidity may be limited and the Fund may be
subject to contractual limitations on its ability to sell shares. A portion of
the Fund's venture capital investments may be in companies that have not yet
developed infrastructure or commenced earning revenues. These types of companies
are in the early "seed" or expansion stage of development. These terms are
explained below. The Fund's venture capital investments may include securities
of investment funds that invest primarily in venture capital companies. These
investments may involve relatively high fees (the Fund will be indirectly paying
fees to the manager of such investment funds and to Scudder Weisel on the same
assets) and a high degree of risk. See "Risk Factors -- Venture Capital Funds."
Although the Fund's investments in venture capital companies will be
primarily in companies in the "pre-IPO" (also known as "mezzanine" or "late-
stage") stage of development, the Fund also may invest in companies that are in
the early (or "seed") stage of development. The earliest investment in early-
stage companies, or "seed financing," typically involves a relatively small
amount of capital that finances a concept, so that start-up capital can be
obtained. Seed financing may also refer to capital extended to companies
completing product development and initial marketing. Typically, a company at
the seed financing stage has not yet sold its product commercially. "Expansion
financing" is sought by companies that have expended or anticipate expending
their initial capital (often in developing and market-testing a prototype) and
that require funds to initiate full-scale manufacturing and sales. Expansion
capital may also provide working capital for the initial expansion of a company
that is manufacturing and shipping its product, but that does not yet show a
profit. The Fund generally will participate in seed and/or expansion financing
for a company only if the company has an established management team with a
proven track record of building a business and, in the judgment of Scudder
Weisel or the Sub-Adviser, an innovative idea with a sustainable competitive
advantage. The Fund expects that companies in the early and expansion stages
will not conduct an IPO for up to five years, and possibly substantially longer,
from the time of the Fund's initial investment.
The Fund considers a venture capital company to be in the late stage if
the company has a developed infrastructure and has commenced earning revenues.
The Fund expects that late-stage companies will undertake an IPO within a period
of one to three years. A pre-IPO company is somewhat more developed than a late-
stage company. The Fund generally would expect to acquire equity securities of
pre-IPO companies in private placements within 24 months prior to their planned
IPOs. The Fund will seek late-stage and pre-IPO companies that offer reasonable
valuations, especially relative to public companies. Late-stage and pre-IPO
companies will typically have small capitalizations and little or no liquidity.
Even after an IPO, liquidity may be limited and the Fund in many cases will be
subject to contractual limitations and, at times, regulatory limitations on its
ability to sell the securities.
The Fund may invest in securities of non-U.S. issuers. The Fund may
invest directly in foreign securities or it may invest through depositary
receipts, which are certificates issued by a bank or other financial institution
that evidence the right to receive the underlying foreign security. Investments
in non-U.S. securities involve certain risks in addition to those of securities
generally. These risks are discussed under "Risk Factors." The Fund may not
invest more than 50% of its total assets in non-U.S. securities but this limit
does not apply to investments in depositary receipts traded in the United States
or to commercial paper and certificates of deposit issued by foreign banks.
25
<PAGE>
The limitations on the percentage of the Fund's assets that may be
invested in securities of venture capital companies and securities of non-U.S.
issuers apply at the time of investment by the Fund. The Fund will not be
required to reduce its investments in these securities if a percentage limit is
exceeded as a result of changes in the value of the Fund's portfolio securities.
However, the Fund may not purchase additional securities that are subject to a
percentage limitation at any time when the limitation is met or exceeded.
During the initial investment period, the Fund may invest up to 25% of
its total assets in securities that seek to track various stock market indices.
During the first part of the first year of the Fund's operation, Scudder Weisel
expects that a majority of the Fund's assets will be invested in publicly traded
companies. Scudder Weisel expects to sell many of these within the first year
and reinvest the proceeds in venture capital companies in accordance with the
Fund's principal investment strategies, subject to the availability of
investment opportunities that are deemed attractive by Scudder Weisel or the
sub-adviser. The Fund may incur losses in such short-term investments. Short-
term investing involves timing risk in addition to other investing risk, and may
be considered speculative. Scudder Weisel also expects the Fund's turnover rate
for public company investments to be approximately ___% or more per year. As the
Fund's venture capital company investments mature, they may undertake IPOs and
become public companies. In these cases, the Fund may be subject to contractual
and regulatory limitations that prevent it from selling part or all of these
investments for an extended period.
INVESTMENT RATIONALE
--------------------
Currently, information technology represents over one-third of the
market capitalization of the S&P 500 Composite Index. Despite the rapid growth
and convergence of technology into everyday life, we have just begun to tap its
full benefit. The increasing use of the personal computer and the internet
should further increase information technology's share of the world's market
capitalization. These trends serve as the basis for higher than average growth
prospects for the technology sector in future years.
Specific developments in the computer industry illustrate these trends.
In the 1960s and 1970s, mainframe computers were the dominant technology, but
they were superseded by personal computers in the 1980s and 1990s. This shift in
the dominant technology resulted in significant changes in industry leaders.
Some of the companies that are now at the forefront of mainstream technological
innovation were in the early stages of their development less than 20 years ago.
Scudder Weisel believes that there are emerging technology companies today that
offer similar opportunities for appreciation in the information, internet, media
and telecommunications and medical sectors.
Scudder Weisel will seek to invest primarily in these sectors in an
effort to capitalize on the extraordinary growth of these industries.
HEDGING
-------
The Fund may, but is not required to, use financial instruments known
as derivative instruments to hedge portfolio risks and for cash management
purposes. A derivative is generally defined as an instrument whose value is
derived from, or based upon, some underlying index, reference rate (such as
interest rates or currency exchange rates), security, commodity or other asset.
The Fund will use a specific type of derivative only after consideration of,
among other things, how the derivative instrument serves the Fund's investment
objective and the risk associated with the instrument. The Fund may use
derivatives only for the purposes of hedging portfolio risk and cash management,
provided, however, that pending investment of the proceeds of the initial
offering, the Fund may invest up to 25% of its assets temporarily in securities
that seek to track the performance of various stock market indices. The Fund may
not use derivative instruments to seek increased return on its investment.
Scudder Weisel or the Sub-Adviser may decide not to employ any of these
strategies and there is no assurance that any derivatives strategy used by the
Fund will succeed, or that a particular hedging instrument will be available for
use by the Fund when the Fund may desire to use it.
26
<PAGE>
Hedging activity may relate to a specific security or to the Fund's
portfolio as a whole. The Fund may buy or sell put or call options on
transferable securities to hedge against adverse movements in the prices of
securities held in the Fund's portfolio. The Fund may buy or sell these options
if they are traded on options exchanges or over-the-counter markets and will
enter into transactions only with broker-dealers that are reputable financial
institutions that specialize in these types of transactions, that make markets
in these options, or are participants in over-the-counter markets. A put option
gives the purchaser of the option the right to sell, and obligates the writer of
the put option to buy, the underlying security at a stated exercise price at any
time prior to the expiration of the option. Similarly, a call option gives the
purchaser of the option the right to buy, and obligates the writer to the call
option to sell, the underlying security at a stated exercise price at any time
prior to the expiration of the option.
Scudder Weisel or the Sub-Adviser will consider changes in foreign
currency exchange rates in making investment decisions about non-U.S.
securities. As one way of managing exchange rate risk, the Fund may enter into
forward currency exchange contracts (agreements to purchase or to sell U.S.
dollars or non-U.S. currencies at a future date). A forward contract may help
reduce the Fund's losses on securities denominated in a currency other than U.S.
dollars, but it may also reduce the potential gain on the securities depending
on changes in the currency's value relative to the U.S. dollar. See "Additional
Investment Policies -- Other Operating Policies - Foreign Currency Transactions"
in the SAI.
INVESTMENT CONCENTRATION
------------------------
As a non-diversified investment company, the Fund faces few regulatory
restrictions on the proportion of its total assets it may invest in the
securities of any one company, or on the proportion of its total assets it
allocates to control interests in companies. However, in light of certain tax
regulations applicable to regulated investment companies the Fund does not
intend to invest more than 25% of its total assets in the securities of any one
company. Similarly, the Fund does not intend to invest more than 25% of its
total assets in controlling interests of companies. Market fluctuations could
cause these limits to be exceeded. See "Investment Objective and Principal
Strategies -- Circumstances in Which the Fund will Sell a Security."
BORROWING; USE OF LEVERAGE
--------------------------
The Fund is authorized to borrow money to fund the purchase of
portfolio securities (including additional investments in venture capital
companies in its portfolio), to meet repurchase requests and for cash management
purposes. The Fund may also borrow money to pay operating expenses and to comply
with applicable diversification and distribution requirements under federal tax
law. The use of borrowings for financial leverage involves a high degree of
risk. See "Risk Factors -- Borrowing; Use of Leverage." The Fund generally
intends to borrow money only in limited circumstances when attractive investment
opportunities are available that are expected to further the Fund's investment
and sufficient cash or other liquid resources are not otherwise available, or
where Scudder Weisel or the Sub-Adviser believes it would not be prudent to sell
existing portfolio holdings. If the Fund borrows to finance repurchases of its
shares, interest on that borrowing will negatively affect shareholders who do
not tender their shares into a repurchase offer by increasing the Fund's
expenses and reducing any net investment income.
The Fund will not borrow money until the proceeds of the offering are
substantially invested in furtherance of the Fund's investment objective. The
Fund is not permitted to borrow for any purposes if, immediately after such
borrowing, it would have an asset coverage (as defined in the 1940 Act) of less
than 300%. The 1940 Act also provides that the Fund may not declare dividends or
distributions, or purchase its stock (including in repurchase offers) if,
immediately after doing so, it will have an asset coverage of less than 300%.
For this purpose, an asset coverage of 300% means that the Fund's total assets
equal 300% of the total outstanding principal balance of indebtedness. The Fund
must also limit its borrowings to the extent necessary to permit the Fund to
repurchase securities pursuant to its repurchase policy without causing the Fund
to have an asset coverage of less than 300%. Lenders may require the Fund to
agree to more restrictive asset coverage requirements as a condition to
providing credit to the Fund, and may also limit the extent to which the Fund
27
<PAGE>
may hold illiquid securities, reducing the Fund's investment flexibility. If the
Fund is unable to make distributions as a result of these requirements, it may
no longer qualify as a regulated investment company and could be required to pay
additional taxes. The Fund may also be forced to sell investments on unfavorable
terms if market fluctuations or other factors reduce the asset level below what
is required by the 1940 Act or the Fund's loan agreements. In addition, as a
current operating policy, the Fund will not borrow to make additional
investments at any time that borrowings exceed 25% of its total assets. This
operating policy may be modified by the Board of Trustees.
The Fund's willingness to borrow money, and the amount it will borrow,
will depend on many factors, the most important of which are the investment
outlook, market conditions and interest rates. Successful use of borrowing for
financial leverage purposes (that is, to acquire portfolio securities) will
depend on the ability of Scudder Weisel or the Sub-Adviser to predict correctly
interest rates and market movements, and there is no assurance that a borrowing
strategy will be successful during any period in which it is employed.
The Fund will seek to repay borrowings used to meet repurchase requests
and for cash management purposes within one year of incurring them. The Fund may
not borrow money to pay Fund expenses, including the incentive fee. Borrowing by
the Fund involves certain risks for shareholders. The Board of Trustees may
modify the Fund's policies with respect to borrowing, including the percentage
limitations, the purposes of borrowings and the length of time that portfolio
securities purchased with borrowed money may be held by the Fund. Management of
the Fund has no current intention of requesting any such modifications. See
"Risk Factors -- Borrowing; Use of Leverage" and "Additional Investment
Policies--Fundamental Policies" in the SAI.
DEFENSIVE MEASURES
------------------
The Fund may, from time to time, take temporary defensive positions
that are inconsistent with its principal strategies in seeking to minimize
extreme volatility caused by adverse market, economic, or other conditions. This
could prevent the Fund from achieving its investment objective.
THE FUND MAY CHANGE ITS INVESTMENT OBJECTIVE AND STRATEGIES
-----------------------------------------------------------
The Fund may change any of the investment strategies discussed above if
the Board of Trustees believes doing so is consistent with the Fund's investment
objective of long-term capital appreciation. The Fund's investment objective is
not a fundamental policy and may be changed without the approval of
shareholders.
MANAGEMENT OF THE FUND
THE BOARD OF TRUSTEES
---------------------
The Board of Trustees of the Fund provides broad supervision over the
affairs of the Fund. At least a majority of the Board of Trustees must not be
"interested persons" as defined in Section 2(a)(19) of the 1940 Act.
THE INVESTMENT MANAGER AND SUB-ADVISER
--------------------------------------
Under an investment management agreement ("Investment Management
Agreement") with the Fund, Scudder Weisel, a registered investment adviser,
provides supervisory and administrative services to the Fund, including
supervision of the Fund's investment program. Scudder Weisel was formed as a
joint venture between Thomas Weisel Partners Group LLC ("Thomas Weisel
Partners") and Zurich On-Line Financing Ltd. Currently, Scudder Kemper
Investments, Inc. and Zurich On-Line Financing Ltd., both majority-owned
subsidiaries of Zurich Financial Services Group, hold ___% of the outstanding
units of Scudder Weisel, and Thomas Weisel Partners holds ___% of the
outstanding units of Scudder Weisel. The remaining units are held by management
of Scudder Weisel. Scudder Weisel has limited experience as an investment
manager.
28
<PAGE>
Subject to general supervision of the Board of Trustees and in
accordance with the investment objective, policies and restrictions of the Fund,
Scudder Weisel provides the Fund with ongoing investment guidance, policy
direction and monitoring of the Fund and the Sub-Adviser pursuant to the
Investment Management Agreement.
Scudder Weisel has entered into a sub-advisory agreement (a
"Sub-Advisory Agreement") with the Sub-Adviser to delegate the day-to-day
discretionary management of the Fund's assets, subject to the supervision of
Scudder Weisel. The Sub-Adviser, located at ___________________, has provided
asset management, administration and advisory services for ____ years. As of
December 31, 1999, the Sub-Adviser and its affiliates provided investment
advisory services for over $____ billion of assets. Scudder Weisel pays a fee
out of its investment management fee at an annual rate equal to ____% of the
Fund's average daily net assets to compensate the Sub-Adviser. The Sub-Adviser
is not compensated directly by the Fund. The Sub-Advisory Agreement may be
terminated by the Board of Trustees.
Scudder Weisel has undertaken to reimburse a portion of the Fund's
expenses or to waive a portion of its management fee to the extent that the
Fund's total expenses (before payment of the incentive fee, offering costs,
interest expense on any borrowings and any extraordinary expenses) would
otherwise exceed 2.99% of its average daily net assets during the first fiscal
year of the Fund's operations.
The Fund and Scudder Weisel are seeking an exemptive order from the SEC
that will permit Scudder Weisel, subject to approval by the Board of Trustees,
to add or eliminate investment sub-advisers in Scudder Weisel's sole discretion
without approval by the Fund's shareholders. If granted, such relief would
require shareholder notification in the event of any change in investment sub-
adviser. There is no assurance the exemptive order will be granted.
MANAGEMENT FEE
--------------
The Fund will pay a fee to Scudder Weisel for its management services
at an annual rate of ___% of the Fund's average daily net assets. The fee is
calculated daily and payable monthly. In addition, the Fund will pay an
incentive fee to Scudder Weisel as described below. Very few registered
investment companies pay an incentive fee similar to that paid by the Fund. This
management fee is higher than management fees paid by most U.S. investment
companies. The payment of fees and expenses by the Fund may require the Fund to
liquidate portfolio securities, which could result in the realization of taxable
gains.
INCENTIVE FEE
-------------
The following discussion of the incentive fee is only a summary, and is
qualified in its entirety by reference to the more complete description
contained in the SAI under "Investment Management and Other Services --Incentive
Fee." The calculation of the incentive fee involves complex accounting concepts.
The Fund encourages you to consult with your financial adviser regarding this
calculation.
In addition to the management fee, the Fund may pay an incentive fee to
Scudder Weisel at the end of each year. The incentive fee will generally equal
__% of the sum of the Fund's net realized and unrealized capital gains or losses
and net investment income or loss for the year, reduced by the Fund's net
unrealized depreciation of securities. No incentive fee will be payable for any
year unless losses and depreciation from prior periods have been recovered by
the Fund. This is sometimes known as a "high water mark" calculation. Scudder
Weisel will be under no obligation to repay any incentive fees previously paid
by the Fund.
The incentive fee is paid annually, but shareholders may have their
shares repurchased by the Fund quarterly. The Fund believes it is appropriate
for investors whose shares are repurchased to bear their share of the incentive
fee for those shares for the period between the last incentive fee payment to
Scudder Weisel and the date of repurchase. Otherwise, the remaining shares, and
thus their shareholders, could pay a disproportionate share of the incentive
fee. For this reason, the Fund will calculate a liability for the incentive fee
29
<PAGE>
each day based on its performance. The Fund's net asset value will be reduced or
increased each day to reflect this calculation. The daily calculation will be
made on the same basis as the incentive fee payable to Scudder Weisel.
If the Fund is in a net loss situation, there will be no accrual, and
no incentive fee will be payable. If this situation arises, the Fund will keep
track of its "cumulative loss" on a daily basis. Each time shares are
repurchased in a repurchase offer, the Fund will adjust the amount of any
cumulative loss downward in proportion to the number of shares repurchased, so
that the repurchase of shares has the effect of reducing the amount of
cumulative loss. In addition, each time additional shares are sold, the Fund
will adjust the amount of any cumulative loss upward in proportion to the number
of shares issued (but not to an amount larger than the cumulative loss would be
if no shares had been repurchased). This will ensure that the amount of
cumulative loss remains constant on a per-share basis.
OTHER EXPENSES OF THE FUND
--------------------------
The Fund pays a management fee and incentive fee to Scudder Weisel plus
all of its expenses other than those assumed by Scudder Weisel. The expenses of
the Fund include the shareholder servicing fee, brokerage commissions, interest
on any borrowings by the Fund, fees and expenses of outside legal counsel
(including fees and expenses associated with review of documentation for
prospective investments by the Fund) and independent auditors, taxes and
governmental fees, custody fees, expenses of printing and distributing
prospectuses, reports, notices and proxy material to shareholders of the Fund,
expenses of printing and filing reports and other documents with government
agencies, expenses of shareholders' meetings, expenses of corporate data
processing and related services, shareholder record keeping and shareholder
account services, fees and disbursements, fees and expenses of Trustees of the
Fund not employed by Scudder Weisel or its affiliates, insurance premiums and
extraordinary expenses such as litigation expenses.
________________, whose principal business address is _______________,
serves as the transfer and dividend disbursing agent ("Transfer Agent") pursuant
to a transfer agency agreement with the Fund, under which the Transfer Agent (i)
issues and repurchases shares of the Fund, (ii) addresses and mails all
communications by the Fund to its record owners, including reports to
shareholders, dividend and distribution notices and proxy materials for any
meetings of shareholders, (iii) maintains shareholder accounts, (iv) responds to
correspondence by shareholders of the Fund, and (v) makes periodic reports to
the Board of Trustees concerning the operations of the Fund. The Transfer Agent
may delegate some or all of these responsibilities to a sub-transfer agent at
its discretion from time to time.
State Street Bank and Trust Company ("State Street"), whose principal
business address is 225 Franklin Street, Boston, Massachusetts 02110, serves as
the custodian of the Fund's assets (the "Custodian") pursuant to a custodial
services agreement with the Fund, under which the Custodian (i) maintains a
separate account in the name of the Fund, (ii) holds and transfers portfolio
securities on account of the Fund, (iii) accepts receipts and makes
disbursements of money on behalf of the Fund, (iv) collects and receives all
income and other payments and distributions on account of the Fund's securities
and (v) makes periodic reports to the Board of Trustees concerning the Fund's
operations.
State Street also serves as administrator for the Fund pursuant to an
administration agreement ("Administration Agreement"). State Street has agreed
to maintain office facilities for the Fund; oversee the computation of the
Fund's net asset value, net income and realized and unrealized capital gains, if
any; perform recordkeeping services for the Fund; administer the Fund's
quarterly repurchase offers; furnish statistical and research data, clerical
services, and stationery and office supplies; prepare and file various reports,
notices and filings with the appropriate federal and state regulatory agencies;
and prepare various materials required by the SEC. State Street may enter into
an agreement with one or more third parties pursuant to which such third parties
will provide administrative services on behalf of the Fund.
DISTRIBUTION EXPENSES
---------------------
30
<PAGE>
Pursuant to the Distribution Agreement, Scudder Weisel bears all of its
expenses of providing its services under that Agreement. Scudder Weisel provides
for the preparation of advertising or sales literature and bears the cost of
printing and mailing prospectuses to persons other than existing shareholders.
The Fund bears the cost of printing and mailing prospectuses and reports to
existing shareholders. Scudder Weisel bears the cost of qualifying and
maintaining the qualification of Fund shares for sale under the securities laws
of the various states and the Fund bears the expense of registering its shares
with the SEC. Scudder Weisel may enter into related selling group agreements
with various broker-dealers, including affiliates of Scudder Weisel, that
provide distribution services to investors. Scudder Weisel also may provide some
of the distribution services.
SHAREHOLDER SERVICING FEE
-------------------------
The Fund may pay selected brokers and dealers and Scudder Weisel a
shareholder servicing fee to compensate them for providing shareholder services
and the maintenance of accounts. These services include receiving and processing
shareholder orders, performing accounting for the shareholder's account,
maintaining retirement plan accounts, providing information and responding to
shareholder questions about the Fund, the availability of shares in any
continuous offering, and repurchase offers, acting as sole shareholder of record
for individual shareholders, and issuing shareholder report and transaction
conformations. The Fund will pay each selected broker or dealer or Scudder
Weisel a shareholder servicing fee at an annual rate of up to 0.50% of the net
asset value of the outstanding shares owned by customers of such broker or
dealer or Scudder Weisel. This fee is accrued daily as an expense of the Fund.
GENERAL
-------
The payment of fees and expenses by the Fund may require the Fund to
liquidate portfolio securities, which could result in the realization of taxable
gains.
REPURCHASE OFFERS
The Fund expects that a substantial portion of its investments will be
illiquid and does not intend to maintain a significant cash position. For this
reason, the Fund is structured as a closed-end fund, which means that you will
not have the right to redeem your shares on a daily basis. In addition, the Fund
does not expect any trading market to develop for its shares. As a result, if
you invest in the Fund you will have limited opportunity to sell your shares.
To provide you with a degree of liquidity, and the ability to receive
net asset value on a disposition of a portion of your shares, the Fund will make
quarterly offers to repurchase its shares. The repurchase offers will be limited
to a specified percentage of the Fund's outstanding shares, which is currently
anticipated to be 5% of the Fund's outstanding shares at the time of each
repurchase offer. Shares will be repurchased at their net asset value. The Fund
intends to commence the first quarterly repurchase offer in _____,___ and to
complete it in _____. The quarterly offers will be made pursuant to a
fundamental policy of the Fund that may be changed only with the approval of the
Fund's shareholders. The repurchase of shares by the Fund may require the Fund
to liquidate portfolio securities, which could result in the realization of
taxable gains.
QUARTERLY REPURCHASES OF A MINIMUM OF 5% OF ITS OUTSTANDING SHARES
------------------------------------------------------------------
Each quarter, the Fund will offer to repurchase a minimum of 5% of the
number of shares outstanding on the date repurchase requests are due. The Board
of Trustees may establish a larger percentage for any quarterly repurchase
offer. However, the percentage will not be less than 5% or more than 25% of the
shares outstanding on the date repurchase requests are due.
31
<PAGE>
The Fund intends to commence the first quarterly repurchase offer in
_______ and to complete it in ______. Thereafter, quarterly repurchase offers
will commence each March, June, September, and December; and will be completed
in the following month.
When a repurchase offer commences, the Fund will send a written
notification of the offer to shareholders via their financial intermediaries.
The notification will specify, among other things:
. the percentage of the Fund's shares that the Fund is offering to
repurchase. (This will ordinarily be 5%);
. the date on which a shareholder's repurchase request is due. This will
ordinarily be the second Friday of the month following the
notification;
. the date that will be used to determine the Fund's net asset value
applicable to the quarterly share repurchase. This date is generally
expected to be the day on which the quarterly repurchase requests are
due;
. the date by which shareholders will receive the proceeds from their
share sales; and
. the net asset value of the Fund's shares as of a date no more than
seven days prior to the date of the notification.
The Fund intends to send this written notification approximately 30
days before the due date for the repurchase request. In no event will the
notification be sent less than 21 or more than 42 days in advance. In order to
participate in any quarterly repurchase offer, your shares of the Fund must be
held through a selected broker-dealer. You will not be able to receive
repurchase offers directly from the Fund. In addition, it is important for you
to recognize that your selected broker-dealer may require additional time to
mail the repurchase offer to you, to process your request, and to credit your
account with the proceeds of any repurchased shares.
The due date for repurchase requests is a deadline that will be
strictly observed. If your intermediary fails to submit your repurchase request
in good order by the due date, you will be unable to liquidate your shares until
a subsequent quarter, and you will have to resubmit your request for that
quarter. You should be sure to advise your intermediary of your intentions in a
timely manner. You may withdraw or change your repurchase request at any point
before the due date.
THE FUND'S FUNDAMENTAL POLICIES WITH RESPECT TO SHARE REPURCHASES
-----------------------------------------------------------------
The Fund has adopted the following fundamental policies in relation to
its share repurchases that may only be changed by a majority vote of the
outstanding voting securities of the Fund:
. as stated above, the Fund will make share repurchase offers every
three months, pursuant to Rule 23c-3 under the 1940 Act, as it may be
amended from time to time, commencing _______;
. a minimum 5% of the Fund's outstanding shares of beneficial interest
will be subject to the repurchase offer, unless the Board of Trustees
establishes a different percentage, which must be a minimum of 5% and
a maximum of 25%;
. the repurchase request due dates will be the _____________ of each
March, June, September and December (or the preceding business day if
that day is a New York Stock Exchange holiday); and
. there will be a maximum 14 day period between the due date for each
repurchase request and the date on which the Fund's net asset value
for that repurchase is determined.
32
<PAGE>
PRO RATA PURCHASES OF SHARES IN THE EVENT OF AN OVERSUBSCRIBED REPURCHASE OFFER
-------------------------------------------------------------------------------
There is no minimum number of shares that must be tendered before the
Fund will honor repurchase requests. However, the percentage determined by the
Board of Trustees for each quarterly repurchase offer will set a maximum number
of shares that may be purchased by the Fund. In the event a repurchase offer by
the Fund is oversubscribed, the Fund may, but is not required to, repurchase
additional shares, but only up to a maximum amount of 2% of the outstanding
shares of the Fund. If the Fund determines not to repurchase additional shares
beyond the repurchase offer amount, or if shareholders tender an amount of
shares greater than that which the Fund is entitled to purchase, the Fund will
repurchase the shares tendered on a pro rata basis.
If pro-ration is necessary, the Fund will send a notice of pro-ration
to the selected brokers-dealers on the business day following the repurchase
request due date. The number of shares each investor asked to have repurchased
will be reduced by the same percentage. If any shares that you wish to have
repurchased by the Fund are not repurchased because of pro-ration, you will have
to wait until the next repurchase offer, and your repurchase request will not be
given any priority over other shareholders' requests. Thus, there is a risk that
the Fund may not purchase all of the shares you wish to sell in a given quarter
or in any subsequent quarter. IN ANTICIPATION OF THE POSSIBILITY OF PRO-RATION,
SOME SHAREHOLDERS MAY TENDER MORE SHARES THAN THEY WISH TO HAVE REPURCHASED IN A
PARTICULAR QUARTER, THEREBY INCREASING THE LIKELIHOOD OF PRO-RATION. THERE IS NO
ASSURANCE THAT YOU WILL BE ABLE TO SELL AS MANY OF YOUR SHARES AS YOU DESIRE TO
SELL.
The Fund may suspend or postpone a repurchase offer in limited
circumstances, but only with the approval of a majority of the Board of
Trustees, including a majority of independent Trustees.
DETERMINATION OF REPURCHASE PRICE
---------------------------------
The repurchase price payable in respect of a repurchased share will be
equal to the share's net asset value on the date for such determination
specified in the notification provided to shareholders. The Fund's net asset
value per share may change substantially in a short time as a result of
developments at the companies in which the Fund invests. Changes in the Fund's
net asset value may be more pronounced and more rapid than with other funds
because of the Fund's emphasis on developmental stage companies and venture
capital companies that are not publicly traded. The Fund's net asset value per
share may change materially between the date a quarterly repurchase offer is
mailed and the request due date, and it may also change materially shortly after
a repurchase is completed. The method by which the Fund calculates net asset
value is discussed under the caption "Calculation of Net Asset Value."
PAYMENT
-------
The Fund expects to repurchase shares on the next business day after
the net asset value determination date. Proceeds will be distributed to
intermediaries as specified in the repurchase offer notification, usually on the
third business day after repurchase. In any event, the Fund will pay repurchase
proceeds no later than seven days after the net asset value determination date.
IMPACT OF REPURCHASE POLICIES ON THE LIQUIDITY OF THE FUND
----------------------------------------------------------
From the time the Fund distributes each repurchase offer notification
until the net asset value determination date, the Fund must maintain liquid
assets at least equal to the percentage of its shares subject to the repurchase
offer. For this purpose, liquid assets means assets that may be disposed of in
the ordinary course of business at approximately the price at which they are
valued or which mature by the repurchase payment date. The Fund is also
permitted to borrow money to meet repurchase requests. Borrowing by the Fund
involves certain risks for shareholders. See "Risk Factors -- Borrowing; Use of
Leverage."
33
<PAGE>
IN-KIND REPURCHASES
-------------------
Under normal conditions, the Fund intends to repurchase its shares for
cash. However, the Fund reserves the right to pay for all or a portion of its
repurchased shares with an in-kind distribution of a portion of its portfolio
securities.
CONSEQUENCES OF REPURCHASE OFFERS
---------------------------------
The Fund believes that repurchase offers will generally be beneficial
to the Fund's shareholders, and will generally be funded from available cash or
sales of portfolio securities. The Fund may temporarily hold more of its total
assets in highly liquid securities (including cash) if it anticipates financing
some or all repurchases in a repurchase offering by selling portfolio
investments. However, if the Fund borrows to finance repurchases, interest on
that borrowing will increase the Fund's expenses and will reduce any net
investment income. From time to time, commencing at least 30 days after the
closing of this initial offering, the Fund may offer new shares continuously,
which may alleviate these potential consequences, but there is no assurance that
the Fund will be able to secure new investments or raise new cash.
Repurchase offers provide shareholders with the opportunity to dispose
of shares at net asset value. The Fund does not anticipate that a secondary
market will develop, but in the event that a secondary market were to develop,
it is possible that shares would trade in that market at a discount to net asset
value. The existence of periodic repurchase offers at net asset value may not
alleviate such discount.
Repurchase of the Fund's shares will tend to reduce the number of
outstanding shares and, depending upon the Fund's investment performance and its
ability to sell additional shares in a continuous offering, its net assets. A
reduction in the Fund's net assets will tend to increase the Fund's expense
ratio.
In addition, the repurchase of shares by the Fund will be a taxable
event to shareholders. For a discussion of these tax consequences, see "Taxes."
CALCULATION OF NET ASSET VALUE
During the Fund's initial and continuous offering, the Fund will
compute its net asset value on each business day on which the New York Stock
Exchange ("NYSE") is open for trading, as of the close of regular business of
the NYSE, which is generally 4:00 p.m. Eastern time. In addition, the Fund will
calculate its net asset value in compliance with the requirements of Rule 23c-3
under the 1940 Act. Securities owned by the Fund will be valued at current
market prices. If reliable market prices are unavailable (e.g., in the case of
the Fund's ---- venture capital investments), securities will be valued at fair
value as determined in good faith in accordance with procedures approved by the
Board of Trustees. Venture capital investments will be valued at fair value,
which will be cost unless Scudder Weisel or the Sub-Adviser, as appropriate,
determines, pursuant to the Fund's valuation procedures, that such a valuation
is no longer fair or appropriate. Examples of cases where cost may no longer be
appropriate include sales of similar securities to third parties at different
prices, or if a venture capital company in which the Fund has an investment
undertakes an IPO. In such situations, the Fund's investment will be revalued in
a manner that Scudder Weisel or the Sub-Adviser, following procedures approved
by the Board of Trustees, determines best reflects its fair value. When the Fund
holds securities of a class that has been sold to the public, fair valuation
would often be market value less a discount to reflect contractual or legal
restrictions limiting resale. Fair value represents a good faith approximation
of the value of an asset and will be used where there is no public market or
possibly no market at all for a company's securities. The fair values of one or
more assets may not, in retrospect, be the prices at which those assets could
have been sold during the period in which the particular fair values were used
in determining the Fund's net asset value. As a result, the Fund's issuance or
repurchase of its shares at net asset value at a time when it owns securities
that are valued at fair value may have the effect of diluting or increasing the
economic interest of existing shareholders. All fair value determinations by
Scudder Weisel or the Sub-Adviser are subject to ratification by the Board of
Trustees.
34
<PAGE>
Expenses of the Fund, including Scudder Weisel's management fee and
incentive fee and the costs of any borrowings, are accrued daily and taken into
account for the purpose of determining net asset value.
The net asset value per share is computed by dividing (i) the net asset
value of the Fund by (ii) the number of shares then outstanding. The net asset
value per share will be rounded up or down to the nearest cent. You may obtain
the Fund's net asset value per share by calling _______________. The Fund also
intends to publish its net asset value daily on Scudder Weisel's website
(www._______________.com).
SHARES OF BENEFICIAL INTEREST
The Fund is authorized to issue an unlimited number of shares of
beneficial interest, and the Board of Trustees may divide the Fund's shares into
separate classes or series. Shareholders do not have preemptive, subscription or
conversion rights, and are not liable for further calls or assessments. The
Board of Trustees is authorized to classify and reclassify any unissued shares
of beneficial interest from time to time by setting or changing the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms or conditions of redemption of such shares.
The Fund is unlikely to have substantial income or to pay dividends. Shares are
not available in certificated form and shares must be held through a selected
broker or dealer or through Scudder Weisel.
Each of the beneficial interests is entitled to one vote per share of
all shares entitled to be cast at shareholder meetings. The Fund does not intend
to hold annual meetings of shareholders, except as in accordance with applicable
law and regulation. Special meetings may be called by Trustees or the President
of the Fund. The Fund's Declaration of Trust provides that, unless approved by
the Trustees, any transfer will be void if made (i) to an account held through
an entity other than Scudder Weisel or a broker or dealer that has not entered
into a shareholder servicing agreement with the Fund or (ii) to any person who
is not a Qualified Client. In general, any action requiring a vote of the
holders of the shares of beneficial interest of the Fund shall be effective if
taken or authorized by the affirmative vote of a majority of the shares entitled
to be cast of the requisite quorum of thirty-three and one-third percent (33-
1/3%). Any change in the Fund's fundamental policies requires affirmation of a
majority of the votes entitled to be cast in person or by proxy, as defined in
the 1940 Act. Shareholders must also approve any amendment to the Fund's charter
or by laws that would result in a change in their voting rights. Some of the
foregoing could have the effect of delaying, deferring or preventing changes in
control of the Fund.
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Fund, after payment of all of the liabilities of the Fund,
the Fund's shareholders are entitled to share ratably in all the remaining
assets of the Fund.
DISTRIBUTION POLICY
Dividends will be paid annually on the shares in amounts representing
substantially all of the net investment income, if any, earned each year.
Payments will vary in amount, depending on investment income received and
expenses of operation. It is likely that many of the companies in which the Fund
invests will not pay any dividends, and this, together with the Fund's
relatively high expenses, means that the Fund is unlikely to have substantial
income or pay dividends. The Fund is not a suitable investment if you require
regular dividend income.
Substantially all of any taxable net capital gain realized on
investments will be paid to shareholders at least annually. The net asset value
of each share that you own will be reduced by the amount of the distributions or
dividends that you receive from that share.
AUTOMATIC REINVESTMENT PLAN
---------------------------
Pursuant to the automatic reinvestment plan ("Plan"), shareholders are
presumed to have elected to have all income dividends and capital gains
distributions automatically reinvested in Fund shares pursuant to the Plan.
35
<PAGE>
Shareholders who choose not to participate in the Plan will receive all income
dividends and/or capital gains distributions in cash.
Each shareholder of the Fund whose shares are registered in his or her
own name will automatically be a participant under the Plan, unless such
shareholder specifically elects to receive all dividends and/or capital gain
distributions in cash. You are free to change your election at any time by
contacting your broker-dealer or other nominee, who will inform the Fund. A Fund
shareholder whose shares are registered in the name of a broker-dealer or other
nominee must contact the broker-dealer or other nominee regarding his or her
status under the Plan, including whether such broker-dealer or other nominee
will participate on such shareholder's behalf.
You may elect to:
. reinvest both dividends and capital gain distributions;
. receive dividends in cash and reinvest capital gain
distributions; or
. receive both dividends and capital gain distributions in cash.
Shares will be issued to you at their net asset value on the
ex-dividend date. There is no sales charge or other charge for reinvestment.
Your request must be received by the Fund before the record date to be effective
for that dividend or capital gain distribution. The fund may terminate the
automatic reinvestment plan at any time.
TAXES
The Fund intends to qualify and elect to be treated as a regulated
investment company under the Internal Revenue Code. As a regulated investment
company, the Fund will generally be exempt from federal income taxes on net
investment income and capital gains distributed to shareholders, as long as at
least 90% of the Fund's investment income and net short-term capital gains are
distributed to shareholders each year.
The Fund will have to satisfy certain requirements relating to the
source of its income and the diversification of its assets in order to qualify
as a regulated investment company. To the extent that the Fund invests in
venture capital funds, investments made by such funds could affect the Fund's
ability to qualify as a regulated investment company. Increases in the value of
any illiquid assets held by the Fund, when combined with the effect of share
repurchases could also adversely affect the Fund's ability to qualify as a
regulated investment company. As a result, there can be no assurance that the
Fund will be able to continue to qualify as a regulated investment company. If
the Fund fails to so qualify, it would be subject to tax on any income or gains
that it earns and the shareholders would also be subject to tax on distributions
and/or redemptions of shares.
The Fund may also be subject to an annual excise tax of 4% to the
extent that it does not make certain distributions of income and gains during
each calendar year. Although it is anticipated that the Fund will make such
distributions, it may be difficult to obtain appropriate information from
venture capital funds on a timely basis. In addition, the Adviser may determine
that it would be appropriate for the Fund to pay the excise tax in light of the
potential illiquidity of Fund investments and other factors.
Dividends from net investment income and distributions from net
short-term capital gain are taxable as ordinary income and, to the extent
attributable to dividends received by the Fund from U.S. corporations, may be
eligible for a 70% dividends-received deduction for shareholders that are
corporations. Distributions, if any, from the excess of net long-term capital
gain over net short-term capital loss are taxable to shareholders as long-term
capital gain, regardless of how long shares in the Fund have been held by the
shareholder, and are not eligible for the dividends-received deduction. The tax
treatment of dividends and capital gain distributions is the same whether you
take them in cash or reinvest them to buy additional Fund shares. Because the
Fund engages in limited repurchase offers, there is no assurance that you will
be able to have Fund shares repurchased to provide cash for the payment of tax
liabilities.
36
<PAGE>
The Fund does not intend to operate so as to be permitted to
"pass-through" to its shareholders credit for foreign taxes, if any, payable by
the Fund. Hedging activities by the Fund may increase the amount of short-term
capital gain realized by the Fund, which is taxed as ordinary income when
distributed to shareholders and may also result in the deferral of the
recognition of losses by the Fund (which could increase the amount of taxable
distributions to shareholders). Gains from foreign currency forward contracts
will generally be treated as ordinary income.
Each January, you will be sent information on the tax status of any
distribution made during the previous calendar year.
Shareholders should consult their tax advisors regarding the specific
tax consequences, including state and local tax consequences, of participating
in a repurchase offer. A sale of Fund shares pursuant to a repurchase offer will
be treated as a taxable sale or exchange of the Fund shares if the tender (i)
completely terminates the shareholder's interest in the Fund, (ii) is treated as
a distribution that is "substantially disproportionate" or (iii) is treated as a
distribution that is "not essentially equivalent to a dividend." A
"substantially disproportionate" distribution generally requires a reduction of
at least 20% in the shareholder's proportionate interest in the Fund after
taking into account all shares sold under the repurchase offer. A distribution
"not essentially equivalent to a dividend" requires that there be a "meaningful
reduction" in the shareholder's interest, which should be the case if the
shareholder has a minimal proportionate interest in the Fund, exercises no
control over Fund affairs and suffers a reduction in his or her proportionate
interest.
The Fund intends to take the position that sales of Fund shares
pursuant to a repurchase offer will qualify for sale or exchange treatment. If
the transaction is treated as a sale or exchange for tax purposes, any gain or
loss recognized will be treated as a capital gain or loss by shareholders who
hold their Fund shares as a capital asset and as a long-term capital gain or
loss if such shares have been held for more than one year. However, if you sell
Fund shares on which a long-term capital gain distribution has been received and
you held the shares for six months or less, any loss you realize will be treated
as a long-term capital loss to the extent that it offsets the long-term capital
gain distribution. All or a portion of any loss realized on a sale may also be
disallowed if the shareholder acquires other Fund shares within 30 days before
or after the sale and, in such a case, the basis of the acquired shares would
then be adjusted to reflect the disallowed loss.
If a sale of Fund shares pursuant to a repurchase offer is not treated
as a sale or exchange, then the amount received upon a sale of shares may
consist in whole or in part of ordinary dividend income, a return of capital or
capital gain, depending on the Fund's earnings and profits for its taxable year
and the shareholder's tax basis in the Fund shares. In addition, if any amounts
received are treated as a dividend to tendering shareholders, there is a risk
that a constructive dividend may be considered to be received by non-tendering
shareholders whose proportionate interest in the Fund has been increased as a
result of the tender. In addition, to the extent that the price under a
repurchase offer includes unrealized gains, non-tendering shareholders would be
taxed if and when the Fund recognizes and distributes such gains.
The Fund generally will be required to withhold federal income tax at a
rate of 31% ("backup withholding") from dividends paid, capital gain
distributions, and redemption proceeds to individuals and certain other non
corporate shareholders if (1) the shareholder fails to furnish the Fund with the
shareholder's correct taxpayer identification number or social security number,
(2) the IRS notifies the shareholder or the Fund that the shareholder has failed
to report properly certain interest and dividend income to the IRS and to
respond to notices to that effect, or (3) when required to do so, the
shareholder fails to certify that he or she is not subject to backup
withholding. Any amounts withheld may be credited against the shareholder's
federal income tax liability.
Distributions may be subject to additional state, local and foreign
taxes, depending on each shareholder's particular situation. Non-U.S.
shareholders may be subject to U.S. tax rules that differ significantly from
those summarized above, including the likelihood that ordinary income dividends
(including distributions of net short-term capital gains) to them would be
subject to withholding of U.S. tax at a rate of 30% (or a lower treaty rate, if
applicable).
37
<PAGE>
The discussion contained in this section is a general and abbreviated
summary of certain federal tax considerations affecting the Fund and its
shareholders, and is not intended as tax advice or to address a shareholder's
particular circumstances. Investors are urged to consult their tax advisors
regarding the tax consequences of investing in the Fund.
HOW TO PURCHASE FUND SHARES
INVESTOR QUALIFICATIONS AND TRANSFER RESTRICTIONS
-------------------------------------------------
Shares of the Fund are offered only to investors who are "qualified
clients" as such term is defined in Rule 205-3 under the Investment Advisers Act
of 1940, as that rule may be amended from time to time. Currently, qualified
clients include natural persons and companies that have a net worth (together,
in the case of a natural person, with assets held jointly with a spouse) of more
than $1,500,000, or who meet the standard for a "qualified purchaser" in the
1940 Act and the rules thereunder. Qualified clients also include persons who
have at least $750,000 under management by Scudder Weisel, including any amount
invested in the Fund, and certain knowledgeable employees who participate in
Scudder Weisel's investment activities. All of these persons are referred to in
this Prospectus as "Qualified Clients." Your broker or dealer may require you to
complete and sign an investor certification before you may invest. The form of
investor certification that you may be asked to sign is included as Appendix ___
to this Prospectus.
Shares may be transferred only to another Qualified Client. In
addition, shares may be held only through a broker or dealer that is a party to
a shareholder servicing agreement with the Fund or through Scudder Weisel. The
existence of transfer restrictions will be indicated on customer confirmations
by the brokers and dealers through which shares are held. These brokers and
dealers will be required to implement procedures designed to ensure that
transfers between their customers are made only to Qualified Clients. In
accordance with the Fund's charter, the Fund will not recognize any transfer (i)
to an account held through any entity other than Scudder Weisel or a broker or
dealer that is not party to a shareholder servicing agreement with the Fund or
(ii) to any person who is not a Qualified Client. Any such transfer will be
void. These transfer restrictions will apply to all transfers, including gifts
or bequests of your shares. It will be difficult to sell or transfer your shares
in the Fund. You may be unable to sell or transfer shares in the manner or at
the time you desire, and you should not expect that you will be able to transfer
your shares at all.
INITIAL AND CONTINUOUS OFFERING
-------------------------------
The Fund is party to a Distribution Agreement with Scudder Weisel.
Scudder Weisel is offering the Fund's shares during an initial offering period
that terminates on __________. The minimum investment is $25,000. Class A Shares
of the Fund are offered during the initial offering period by selected brokers
and dealers at a public offering price of $25.00 per share, including the
front-end sales charge. Class O Shares of the Fund are offered during the
initial offering period by Scudder Weisel at a public offering price of $24.55
per share, including the front-end sales charge. After the termination of the
initial offering period, the Fund currently intends to sell the shares on a
continuous basis at net asset value, plus any applicable sales charge.
The Fund must receive your payment for shares purchased in the initial
offering by _______, unless the initial offering is extended by Scudder Weisel.
You should consult with your broker-dealer to ensure that this deadline is met.
The Fund will have the sole right to accept orders to purchase shares
and reserves the right to reject any order in whole or in part.
38
<PAGE>
No market exists for the Fund's shares. The Fund's shares will not be
listed on any securities exchange, and the Fund does not anticipate that a
secondary market will develop for its shares. Neither Scudder Weisel, nor any
broker-dealer selected by Scudder Weisel to participate in the initial offering
of the Fund's shares, intends to make a market in the Fund's shares.
The Fund has agreed to indemnify Scudder Weisel against certain
liabilities, including liabilities under the 1933 Act.
ALTERNATIVE PURCHASE ARRANGEMENTS. Shares of the Fund are sold with a
---------------------------------
front-end sales charge and are subject to an ongoing service charge.
The primary distinction among the classes of the Fund's shares lie in
their initial sales charge. These differences are summarized in the table below.
See also, "Fund Expenses."
<TABLE>
<CAPTION> Annual Distribution Fees (as a %
Sales Charge of average daily net assets) Other Information
------------ -------------------------------- -----------------
<S> <C> <C> <C>
Class A Up to 4.75% of the public offering None Service Fee of 0.50% of average daily
price net assets
Class O Up to 3.00% of the public offering None Service Fee of 0.50% of average daily
price net assets
</TABLE>
PURCHASE OF CLASS A SHARES. Class A shares are sold at net asset value
---------------------------
plus a front-end sales charge at the time of purchase, as set forth below,
through brokers and dealers selected by the Fund.
<TABLE>
<CAPTION>
Amount of Purchase As a % of Public Offering Price As a % of net asset value
------------------ ------------------------------------- -------------------------
<S> <C> <C>
Less than $100,000 4.75% ______%
$100,000 but less than $750,000 3.75% ______%
$750,000 but less than $2 million 2.75% ______%
$2 million or more 1.00% ______%
</TABLE>
You may qualify for reduced sales charges if you inform the Fund in
writing that you intend to purchase enough shares over a __ month period to
qualify for a reduced sales charge. A __-day back-dated period can also be used
to count previous purchases toward your goal. Your goal must be at least $____,
and the sales charge will be adjusted if you do not meet your goal.
The Fund receives the entire net asset value of all its Class A shares
sold. Scudder Weisel, the Fund's distributor, retains the sales charge, from
which it allows discounts from the applicable public offering price to selected
brokers and dealers, which discounts are uniform for all selected brokers and
dealers. The normal discount allowed to selected brokers and dealers in each of
the categories set forth above is ___%, ___%, ___%, and ___% respectively. Upon
notice to all selected brokers and dealers with whom it has sales agreements,
Scudder Weisel may re-allow up to the full applicable sales charge, as shown in
the above table, during periods and for transactions specified in such notice
and such reallowances may be based on the attainment minimum sales level.
39
<PAGE>
PURCHASE OF CLASS O SHARES. Investors may purchase Class O shares of the
--------------------------
Fund directly through Scudder Weisel at net asset value per share, plus a front-
end sales charge, as set forth below.
<TABLE>
<CAPTION>
Amount of Purchase As a % of Public Offering Price As a % of net asset value
--------------------------------- ------------------------------- --------------------------
<S> <C> <C>
Less than $750,000 3.00% ______%
$750,000 but less than $2 million 2.00% ______%
$2 million or more 0.50% ______%
</TABLE>
The Fund receives the entire net asset value of all of its Class O
shares sold. Scudder Weisel, the Fund's distributor, retains the entire sales
charge.
CONTINUOUS OFFERING
-------------------
It is anticipated that after the termination date of the initial
offering, the Fund will commence a continuous offering of its shares through
selected brokers and dealers at a public offering price equal to their net asset
value, plus any applicable sales charge. Any such continuous offering, if
commenced, may be discontinued at any time. The Fund may commence other
continuous offerings from time to time in the future. Any such continuous
offering, if commenced, may be discontinued at any time without notice. During
any continuous offering of the Fund's shares, shares of the Fund may be
purchased only from selected brokers and dealers or through Scudder Weisel.
The public offering price will be determined based upon the net asset
value next calculated after the Fund accepts your purchase order. Purchase
orders received by a selected broker or dealer or Scudder Weisel by the close of
regular business on the NYSE, currently 4:00 p.m., Eastern time, including
orders received after the close of regular business on the previous day, and
accepted by the Fund before 5:00 p.m., Eastern time, on the same day will be
executed at the net asset value per share calculated as of the close of business
on the NYSE on that day. If your purchase order is received after the times
indicated above, your order will be executed at the net asset value per share
calculated as of the close of business on the NYSE the next business day.
Whether you are investing in the Fund for the first time or adding to
an existing investment, the Fund provides you with several methods to buy its
shares.
METHODS FOR PURCHASING SHARES
-----------------------------
Investors may purchase shares:
. Any broker or dealer authorized by the Distributor can sell you Class A
shares of the Fund. Please note that brokers may charge you fees for their
services.
. You can purchase Class O shares of the Fund directly through Scudder
Weisel.
. You may purchase shares through the Automatic Investment Plan.
40
<PAGE>
. You may purchase shares through the Reinvestment Privilege.
MINIMUM INVESTMENT REQUIREMENTS:
For your initial investment in the Fund $25,000
To buy additional shares of the Fund $ 1,000
Continuing minimum investment $____
OPENING AN ACCOUNT WITH THE FUND
--------------------------------
To make an investment in the Fund, contact your broker or dealer or
Scudder Weisel at ______________. Accounts may be opened only through selected
brokers and dealers or through Scudder Weisel. Shares are not available in
certificated form. Shares may be transferred to an account at another broker or
dealer only if the broker or dealer has entered into an agreement with Scudder
Weisel relating to shares of the Fund.
The required minimum initial investment in the Fund is $25,000.
Additional investments during a continuous offering, if any, must be at least
$1,000.
SALES CHARGE WAIVERS
--------------------
Scudder Weisel may, at its discretion, waive sales charges for the
purchase of shares of the Fund by or on behalf of (1) purchasers for whom
Scudder Weisel or one of its affiliates acts in a fiduciary, advisory, custodial
or similar capacity, (2) employees and retired employees (including spouses,
children and parents of employees and retired employees) of Scudder Weisel and
any affiliates thereof, (3) Trustees and retired Trustees of the Fund (including
spouses and children of Trustees and retired Trustees) and any affiliates
thereof, (4) purchasers who use proceeds from an account for which Scudder
Weisel or one of its affiliates acts in a fiduciary, advisory, custodial or
similar capacity, to purchase shares of the Fund, (5) brokers, dealers and
agents who have a sales agreement with Scudder Weisel, and their employees (and
the immediate family members of such individuals), (6) investment advisers or
financial planners that have entered into an agreement with Scudder Weisel and
that place trades for their own accounts or the accounts of eligible clients and
that charge a fee for their services, and clients of such investment advisers or
financial planners who place trades for their own accounts if such accounts are
linked to the master account of the investment adviser or financial planner on
the books and records of a broker or agent that has entered into an agreement
with Scudder Weisel, and (7) orders placed on behalf of other investment
companies distributed by Scudder Weisel or an affiliated company. To receive a
sales charge waiver in conjunction with any of the above categories,
shareholders must, at the time of purchase, give Scudder Weisel sufficient
information to permit confirmation of qualification.
41
<PAGE>
GENERAL INFORMATION
DESCRIPTION OF THE FUND
-----------------------
The Fund is registered under the 1940 Act as a closed-end,
non-diversified management investment company. The Fund was established as a
business trust under the laws of the State of Delaware on October 5, 2000 and
has no operating history. The Fund's office is located at 88 Kearny Street, San
Francisco, CA 94108 and its telephone number is ___________________. Investment
management services are provided to the Fund by Scudder Weisel and the
Sub-Adviser.
The Fund's fiscal year ends on ____________.
STATUS OF SHARES
----------------
The Board of Trustees may classify or reclassify any issued or unissued
shares of the Fund into shares of any series or classes by redesignating such
shares or by setting or changing in any one or more respects, from time to time,
prior to the issuance of such shares, the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of repurchase of such shares. Any such
classification or reclassification will comply with the provisions of the 1940
Act.
The following table sets forth information about the Fund's Class A and
Class O shares, as of the date of this Prospectus. As of that date Class A and
Class O shares are the only shares authorized and issued by the Fund.
<TABLE>
<CAPTION>
Amount Outstanding
Amount Held Exclusive of
By Registrant or Amount Shown
Title of Class Amount Authorized for its Account Under
-------------- ----------------- ---------------- ----
<S> <C> <C> <C>
Class A shares Unlimited None None
Class O shares Unlimited None None
</TABLE>
CONFLICTS OF INTEREST
---------------------
It is expected that the Fund will have transactions in the ordinary
course of business with firms and companies of which one or more trustees,
directors or officers is a Trustee and/or officer of the Fund.
ALLOCATION OF INVESTMENT OPPORTUNITIES
--------------------------------------
Allocation of investment opportunities among the Fund and other clients
of Scudder Weisel and the Sub-Adviser are made pursuant to procedures approved
by the Board of Trustees.
ENHANCED LIQUIDITY CONSIDERATIONS
---------------------------------
Although it has no obligation to do so, the Board of Trustees
anticipates that the Fund, commencing seven years after the date of the Fund's
first issuance of shares, will offer enhanced liquidity features. However, the
Board of Trustees may postpone implementation of the Fund's enhanced liquidity
features in its discretion based on an assessment of market factors at that
time. These enhanced liquidity features may include, but are not limited to,
implementing quarterly repurchase offers for up to 25% of the Fund's shares
increased amounts or engaging in tender offers for a portion of the Fund's
shares.
42
<PAGE>
TABLE OF CONTENTS OF SAI
<TABLE>
<S> <C>
ADDITIONAL INVESTMENT POLICIES...................................... 3
SHARE REPURCHASES................................................... 8
TRUSTEES AND OFFICERS............................................... 8
LIQUIDITY REQUIREMENTS.............................................. 10
CODE OF ETHICS...................................................... 10
INVESTMENT MANAGEMENT AND OTHER SERVICES............................ 10
INDEPENDENT AUDITORS................................................ 13
CUSTODIAN AND ADMINISTRATOR......................................... 13
TRANSFER AGENT AND DIVIDEND PAYING AGENT............................ 13
PRINCIPAL DISTRIBUTOR FOLLOWING INITIAL OFFERING.................... 13
BROKERAGE COMMISSIONS............................................... 13
</TABLE>
43
<PAGE>
[back cover of prospectus]
Scudder Weisel Digital Innovators Fund
88 Kearny Street
San Francisco, CA 94108
A Management Type
Non-Diversified, Closed-End
Investment Company
--------------------
__________ CLASS A SHARES OF BENEFICIAL INTEREST
__________ CLASS O SHARES OF BENEFICIAL INTEREST
--------------------
PROSPECTUS
____________________
[Until ________ , _______ (90 calendar days after the commencement of
the offering), all dealers effecting transactions in these securities, whether
or not participating in this offering, may be required to deliver a Prospectus.
This delivery requirement is in addition to the obligation of the selected
brokers and dealers to deliver a Prospectus in connection with each sale made
pursuant to this offering.]
INVESTMENT MANAGER FUND ACCOUNTANT
Scudder Weisel Capital LLC _______________________
SUB-ADVISER TRANSFER AGENT
_______________ _____________________
ADMINISTRATOR/CUSTODIAN LEGAL COUNSEL
State Street Bank and Trust Company Dechert
44
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Scudder Weisel Digital Innovators Fund
_________ Class A Shares of Beneficial Interest
_________ Class O Shares of Beneficial Interest
88 Kearny Street
San Francisco, CA 94108
THIS STATEMENT OF ADDITIONAL INFORMATION ("SAI") IS NOT A PROSPECTUS.
THIS SAI RELATES TO AND SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS OF THE
SCUDDER WEISEL DIGITAL INNOVATORS FUND ("FUND") DATED ________ . A COPY OF THE
PROSPECTUS MAY BE OBTAINED BY CONTACTING THE FUND AT THE TELEPHONE NUMBERS OR
ADDRESS SET FORTH ABOVE.
The date of this statement of additional information and the related
prospectus is ________ .
<PAGE>
TABLE OF CONTENTS
Page
ADDITIONAL INVESTMENT POLICIES................................................3
SHARE REPURCHASES.............................................................8
TRUSTEES AND OFFICERS.........................................................8
LIQUIDITY REQUIREMENTS.......................................................10
CODE OF ETHICS...............................................................10
INVESTMENT MANAGEMENT AND OTHER SERVICES.....................................10
INDEPENDENT AUDITORS.........................................................13
CUSTODIAN AND ADMINISTRATOR..................................................13
TRANSFER AGENT AND DIVIDEND PAYING AGENT.....................................13
PRINCIPAL DISTRIBUTOR FOLLOWING INITIAL OFFERING.............................13
BROKERAGE COMMISSIONS........................................................13
<PAGE>
ADDITIONAL INVESTMENT POLICIES
The investment objective and principal investment strategies of the
Fund, as well as the principal risks associated with the Fund's investment
strategies, are set forth in the Prospectus. Certain additional investment
information is provided below. The Fund's investment manager is Scudder Weisel
Capital LLC ("Scudder Weisel"). The Fund sub-investment adviser is __________
(the "Sub-Adviser"). Capitalized terms not otherwise defined herein have the
same meaning set forth in the Prospectus. Unless otherwise specified, percentage
limitations shall be applied at the time of investment. Therefore, these
percentages could be exceeded due to fluctuation in the value of the Fund's
portfolio securities or liquidation of portfolio securities to pay expenses or
fulfill repurchase requests.
FUNDAMENTAL POLICIES
The Fund's stated fundamental policies, which may not be changed
without a vote of shareholders, are listed below. No other policy, including the
Fund's investment objective, is a fundamental policy of the Fund, except as
expressly stated. Within the limits of these fundamental policies, the Fund's
management has reserved freedom of action. The Fund:
(1) May borrow money or issue any senior security, only
as permitted under the Investment Company Act of
1940, as amended ("1940 Act"), and as interpreted,
modified, or otherwise permitted by regulatory
authority having jurisdiction, from time to time.
(2) May not act as an underwriter of securities of other
issuers, except to the extent that in connection with
the disposition of portfolio securities, it may be
deemed to be an underwriter under the federal
securities laws.
(3) May not purchase or sell real estate, although it may
purchase and sell securities secured by real estate
or interests therein, or securities issued by
companies which invest in real estate, or interests
therein.
(4) May make loans only as permitted under the 1940 Act,
and as interpreted, modified, or otherwise permitted
by regulatory authority having jurisdiction, from
time to time.
(5) With respect to its share repurchases:
o the Fund will make offers to repurchase shares
every three months (except under the circumstances
described below beginning at page __, commencing
_______, pursuant to Rule 23c-3 under the 1940
Act, as that Rule may be amended from time to
time;
o a minimum of 5% of the Fund's outstanding shares
of beneficial interest will be subject to each
repurchase offer, unless the board of trustees
establishes a different percentage, which must be
between 5% and 25%;
o the repurchase request deadlines will be the
______ day of each March, June, September, and
December (or the preceding business day if that
day is a New York Stock Exchange holiday); and
o there will be a maximum 14 day period between the
repurchase request deadline for each repurchase
request and the date on which the Fund's net asset
value for that repurchase is determined.
(6) May not invest more than 25% of the Fund's total
assets in any one industry, except that the Fund will
invest more than 25% of the value of its total assets
in securities of companies considered by the Fund's
investment manager or sub-adviser to be related to
the information, internet, media, telecommunications
and medical technology sectors. Investments in
securities issued by the U.S. government or states or
local governments or related agencies and
instrumentalities are not considered to be an
industry for these purposes.
(7) May not purchase or sell physical commodities and
commodity contracts, except that it may (a) enter
into futures contracts and options thereon in
accordance with applicable law and (b) purchase or
sell physical commodities if acquired as a result of
ownership of securities or other instruments. The
Fund will not consider stock index, currency and
other financial futures contracts, swaps or hybrid
instruments to be commodities.
As an additional fundamental policy, the Fund may pursue its investment
program through one or more subsidiary vehicles. The establishment of such
vehicles and the Fund's utilization thereof is wholly within the discretion of
the Fund's Trustees.
OTHER OPERATING POLICIES
Securities Loans. All securities loans will be made pursuant to
agreements requiring the loans to be continuously secured by collateral in cash
or high grade debt obligations at least equal at all times to 102% of the
current market value of the loaned securities. The borrower pays to the Fund an
amount equal to any dividends or interest received on loaned securities. The
Fund retains all or a portion of the interest received on investment of cash
collateral or receive a fee from the borrower.
Securities loans are made to broker-dealers or institutional investors
or other persons, pursuant to agreements requiring that the loans be
continuously secured by collateral at least equal at all times to 102% of the
current market value of the loaned securities marked to market on a daily basis.
The collateral received will generally consist of cash, U.S. government
securities, letters of credit or such other collateral. While the securities are
being loaned, the Fund will continue to receive the equivalent of the interest
or dividends paid by the issuer on the loaned securities, as well as interest on
the investment of the collateral and/or a fee from the borrower or placing
agent. However, the Fund generally will pay certain administrative and custodial
fees in connection with each loan. The Fund has a right to call each loan and
obtain the securities on, at least, five business days' notice or, in connection
with securities trading on foreign markets, within such longer period for
purchases and sales of such securities in such foreign markets. The Fund will
generally not have the right to vote securities while they are being loaned, but
it is expected that Scudder Weisel will call a loan in anticipation of any
important vote.
The risks in lending portfolio securities, as with other extensions of
secured credit, consist of possible delay in receiving additional collateral or
in the recovery of the loaned securities or the possible loss of rights in the
collateral should the borrower fail financially. In addition, the Fund is
responsible for any loss that might result from its investment of the borrower's
collateral. Loans will only be made to firms deemed by Scudder Weisel to be of
good standing and will not be made unless, in the judgment of Scudder Weisel,
the consideration to be earned from such loans would justify the risk.
Foreign Securities. The Fund may invest in commercial paper and
certificates of deposit issued by foreign banks and may invest either directly
or through American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs"), or Global Depositary Receipts ("GDRs") (collectively, "depositary
receipts") in other securities of foreign issuers. For a discussion of the risks
associated with investments in foreign securities, see "Risk Factors --
Investments in Foreign Securities and Depositary Receipts" in the Prospectus.
Depositary receipts are instruments generally issued by domestic banks
or trust companies that represent the deposits of a security of a foreign
issuer. ADRs, which are traded in dollars on U.S. exchanges or over-the-counter,
are issued by domestic banks and evidence ownership of securities issued by
foreign corporations. EDRs are typically traded in Europe. GDRs are typically
traded in both Europe and the United States. Depositary receipts may be issued
under sponsored or unsponsored programs. In sponsored programs, the issuer has
made arrangements to have its securities traded in the form of a depositary
receipt. In unsponsored programs, the issuers may not be directly involved in
the creation of the program. Although regulatory requirements with respect to
sponsored and unsponsored depositary receipt programs are generally similar, the
issuers of securities represented by unsponsored depositary receipts are not
obligated to disclose material information in the United States, and therefore,
the import of such information may not be reflected in the market value of such
receipts. The Fund may invest up to 50% of its total assets in direct
investments in foreign securities (which limitation may be changed without a
shareholder vote). This 50% limit on investment in foreign securities does not
apply to investments in foreign securities through depositary receipts that are
traded in the United States or to commercial paper and certificates of deposit
issued by foreign banks or through venture capital funds.
Investment income received by the Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of such taxes or exemption from taxes on such
income. It is impossible to determine the effective rate of foreign tax in
advance since the amounts of the Fund's assets to be invested within various
countries is not known.
Foreign Currency Transactions. A forward foreign currency exchange
contract ("forward currency contract") is an agreement to purchase or sell a
specific currency at a future date and at a price set at the time the contract
is entered into. The Fund will generally enter into forward currency contracts
to fix the U.S. dollar value of a security it has agreed to buy or sell for the
period between the date the trade was entered into and the date the security is
delivered and paid for, or, to hedge the U.S. dollar value of securities it
owns.
The Fund may enter into a forward currency contract to sell or buy the
amount of a foreign currency it believes may experience a substantial movement
against the U.S. dollar. In this case the forward currency contract would
approximate the value of some or all of the Fund's portfolio securities
denominated in such foreign currency. Under normal circumstances, the Fund will
limit forward currency contracts to not greater than 75% of the Fund's portfolio
position in any one country as of the date the forward currency contract is
entered into. This limitation will be measured at the point the hedging
transaction is entered into by the Fund. Under extraordinary circumstances, the
Fund may enter into forward currency contracts in excess of 75% of the Fund's
portfolio position in any one country as of the date the contract is entered
into. The precise matching of the forward currency contract amounts and the
value of securities involved will not generally be possible since the future
value of such securities in foreign currencies will change as a consequence of
market involvement in the value of those securities between the date the forward
currency contract is entered into and the date it matures. The projection of
short-term currency market movement is extremely difficult, and the successful
execution of a short-term hedging strategy is highly uncertain. Under certain
circumstances, the Fund may commit up to the entire value of its assets which
are denominated in foreign currencies to the consummation of these foreign
currency contracts. Scudder Weisel will consider the effect a substantial
commitment of the Fund's assets to forward currency contracts would have on the
investment program of the Fund and its ability to purchase additional
securities.
Except as set forth above and immediately below, the Fund will not
enter into such forward currency contracts or maintain a net exposure to such
contracts where the consummation of the contracts would oblige the Fund to
deliver an amount of foreign currency in excess of the value of the Fund's
portfolio securities or other assets denominated in that currency. The Fund, in
order to avoid excess transactions and transaction costs, may nonetheless
maintain a net exposure to forward currency contracts in excess of the value of
the Fund's portfolio securities or other assets denominated in that currency
provided the excess amount is "covered" by cash or liquid, high-grade debt
securities, denominated in any currency, at least equal at all times to the
amount of such excess. Under normal circumstances, consideration of the prospect
for currency parities will be incorporated into the longer-term investment
decisions made with regard to overall diversification strategies. However,
Scudder Weisel believes that it is important to have the flexibility to enter
into such forward currency contracts when it determines that the best interests
of the Fund will be served.
At the maturity of a forward currency contract, the Fund may either
sell the portfolio security and make delivery of the foreign currency, or it may
retain the security and terminate its contractual obligation to deliver the
foreign currency by purchasing an "offsetting" contract obligating it to
purchase, on the same maturity date, the same amount of the foreign currency.
As indicated above, it is impossible to forecast with absolute
precision the market value of portfolio securities at the expiration of the
forward currency contract. Accordingly, it may be necessary for the Fund to
purchase additional foreign currency on the spot market (and bear the expense of
such purchase) if the market value of the security is less than the amount of
foreign currency the Fund is obligated to deliver and if a decision is made to
sell the security and make delivery of the foreign currency. Conversely, it may
be necessary to sell on the spot market some of the foreign currency received
upon the sale of the portfolio security if its market value exceeds the amount
of foreign currency the Fund is obligated to deliver. However, the Fund may use
liquid, high-grade debt securities, denominated in any currency, to cover the
amount by which the value of a forward contract exceeds the value of the
securities to which it relates.
If the Fund retains the portfolio security and engages in offsetting
transactions, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between the Fund's entering into a forward currency contract
for the sale of a foreign currency and the date it enters into an offsetting
contract for the purchase of the foreign currency, the Fund will realize a gain
to the extent the price of the currency it has agreed to sell exceeds the price
of the currency it has agreed to purchase. Should forward prices increase, the
Fund will suffer a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell.
The Fund's dealing in forward foreign currency exchange contracts will
be limited to the transactions described above. Of course, the Fund is not
required to enter into forward currency contracts with regard to its foreign
currency-denominated securities and will not do so unless deemed appropriate by
Scudder Weisel. It also should be realized that this method of hedging against a
decline in the value of a currency does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a rate of exchange at
a future date. Additionally, although such contracts tend to minimize the risk
of loss due to a decline in the value of a hedged currency, at the same time,
they tend to limit any potential gain which might result from an increase in the
value of that currency.
Shareholders should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference ("spread") between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to sell
a foreign currency to the Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the dealer.
Repurchase Agreements. The Fund may enter into repurchase agreements
with commercial banks and broker-dealers as a short-term cash management tool. A
repurchase agreement is an agreement under which the Fund acquires a security,
generally a U.S. Government obligation, subject to resale at an agreed upon
price and date. The resale price reflects an agreed upon interest rate effective
for the period of time the Fund holds the security and is unrelated to the
interest rate on the security. The Fund's repurchase agreements will at all
times be fully collateralized.
Repurchase agreements could involve certain risks in the event of
bankruptcy or other default by the seller. If a seller under a repurchase
agreement were to default on the agreement and be unable to repurchase the
security subject to the repurchase agreement, the Fund would look to the
collateral underlying the seller's repurchase agreement, including the security
subject to the repurchase agreement, for satisfaction of the seller's obligation
to the Fund. In the event a repurchase agreement is considered a loan and the
seller defaults, the Fund might incur a loss if the value of the collateral
declines and may incur disposition costs in liquidating the collateral. In
addition, if bankruptcy proceedings are commenced with respect to the seller,
realization of the collateral may be delayed or limited and a loss may be
incurred. Repurchase agreements are typically entered into for periods of one
week or less. The Securities and Exchange Commission ("SEC") staff currently
takes the position that repurchase agreements maturing in more than seven days
are illiquid securities.
Illiquid Securities. The Fund may invest in illiquid securities,
including restricted securities (i.e., securities not readily marketable without
registration under the 1933 Act) and other securities that are not readily
marketable. These may include restricted securities that can be offered and sold
only to "qualified institutional buyers" under Rule 144A of the 1933 Act. There
is no limit to the percentage of the Fund's net assets that may be invested in
illiquid securities.
Short Sales. The Fund may make short sales of securities. A short sale
is a transaction in which the Fund sells a security it does not own in
anticipation that the market price of that security will decline. When the Fund
makes a short sale, it must borrow the security sold short and deliver it to the
broker-dealer through which it made the short sale as collateral for its
obligation to deliver the security upon conclusion of the sale. The Fund may
also sell securities that it owns or has the right to acquire at no additional
cost but does not intend to deliver to the buyer, a practice known as selling
short "against-the-box." The Fund may have to pay a fee to borrow particular
securities and is often obligated to pay over any payments received on such
borrowed securities. The Fund's obligation to replace the borrowed security will
be secured by collateral deposited with the broker-dealers, usually cash, U.S.
Government securities or other highly liquid securities similar to those
borrowed. The Fund will also be required to deposit similar collateral with its
custodian to the extent necessary so that the value of both collateral deposits
in the aggregate is at all times equal to as least 100% of the current market
value of the security sold short. Depending on arrangements made with the
broker-dealer from which it borrowed the security regarding payment over any
received by the Fund on such security, the Fund may not received any payments
(including interest) on its collateral deposited with such broker-dealer. The
Fund will incur transaction costs, including interest expenses, in connection
with opening, maintaining, and closing short sales.
If the price of the security sold short increases between the time of
the short sale and the time the Fund replaces the borrowed security, the Fund
will incur a loss; conversely, if the price declines, the Fund will realize a
capital gain. Any gain is limited to the price at which it sold the security
short; its potential loss is theoretically unlimited.
Rights and Warrants. The Fund may invest in common stock rights and
warrants believed by Scudder Weisel to provide capital appreciation
opportunities. Common stock rights and warrants may be purchased separately or
may be received as part of a unit or attached to securities purchased. Warrants
are securities that give the holder the right, but not the obligation to
purchase equity issues of the company issuing the warrants, or a related
company, at a fixed price either on a date certain or during a set period. At
the time of issue, the cost of a warrant is substantially less than the cost of
the underlying security itself, and price movements in the underlying security
are generally magnified in the price movements of the warrant. This effect
enables the investor to gain exposure to the underlying security with a
relatively low capital investment but increases an investor's risk in the event
of a decline in the value of the underlying security and can result in a
complete loss of the amount invested in the warrant. In addition, the price of a
warrant tends to be more volatile than, and may not correlate exactly to, the
price of the underlying security. If the market price of the underlying security
is below the exercise price of the warrant on its expiration date, the warrant
will generally expire without value.
The equity security underlying a warrant is authorized at the time the
warrant is issued or is issued together with the warrant. Investing in warrants
can provide a greater potential for profit or loss than an equivalent investment
in the underlying security, and, thus, can be a speculative investment. The
value of a warrant may decline because of a decline in the value of the
underlying security, the passage of time, changes in interest rates or in the
dividend or other policies of the company whose equity underlies the warrant or
a change in the perception as to the future price of the underlying security, or
any combination thereof. Warrants generally pay no dividends and confer no
voting or other rights other than to purchase the underlying security.
Derivatives. The Fund may, but is not required to, hedge portfolio risk
through the use of financial instruments known as derivatives. A derivative is
generally defined as an instrument whose value is derived from, or based upon,
some underlying index, reference rate (such as interest rates or currency
exchange rates), security, commodity or other asset. The Fund will use a
specific type of derivative only after consideration of, among other things, how
the derivative instrument serves the Fund's investment objective and the risk
associated with the instrument. The Fund may use derivatives only for the
purposes of hedging portfolio risk and cash management. Scudder Weisel or the
Sub-Adviser may decide not to employ any of these strategies and there is no
assurance that any derivatives strategy used by the Fund will succeed, or that a
particular hedging instrument will be available for use by the Fund.
The Fund may buy or sell put or call options on transferable securities
or indices of securities to hedge against adverse movements in the prices of
securities held in the Fund's portfolio. The Fund's options strategies may
include the purchase of puts and the simultaneous writing of calls having
different strike prices to place a "collar" on a portion of the Fund's asset
value (this strategy, which involves the sale of call options to help reduce the
price of the put options, is viewed as a hedge even though the writing of a call
without the purchase of a put would not be considered hedging). The Fund may buy
or sell put and call options if they are traded on options exchanges or
over-the-counter markets. However, the Fund will only enter into transactions
with broker-dealers that are reputable financial institutions which (i)
specialize in these types of transactions, (ii) make markets in these options,
or (iii) are participants in over-the-counter markets.
Purchasing a put option gives the Fund the right to sell, and obligates
the writer to buy, the underlying security at the exercise price at any time
during the option period. Purchasing a call option gives the Fund the right to
buy, and obligates the writer of the call option to sell, the underlying
security at a stated exercise price at any time prior to the expiration of the
option. Because an option gives the purchaser a right and not an obligation, the
purchaser is not required to exercise the option. The option right is available
during the life of the option.
When the Fund purchases an option, it is required to pay a premium to
the party writing the option and a commission to the broker selling the option.
The Fund's maximum financial exposure will be limited to these costs. In order
for a put option to be profitable, the market price of the underlying security
must decline sufficiently below the exercise price to cover the premium and
transaction costs. Conversely, a call option will be profitable if the market
price of the underlying security rises sufficiently above the exercise price to
cover the premium and transactions costs. If an option is exercised by the Fund,
the premium and the commission paid may be greater than the amount of the
brokerage commission charged if the security were to be purchased or sold
directly.
The Fund may purchase both listed and over-the-counter options. The
Fund will be exposed to the risk of counterparty nonperformance in the case of
over-the-counter options.
Options on securities may not be available to the Fund on reasonable
terms in many situations and the Fund may frequently choose not to purchase
options even when they are available. The Fund's ability to engage in option
transactions may be limited by tax considerations.
Put options on securities may not be available to the Fund on
reasonable terms in many situations and the Fund may frequently choose not to
purchase options even when they are available. The Fund's ability to engage in
option transactions may be limited by tax considerations.
Temporary Defensive Position. In an attempt to respond to adverse
market, economic, political, or other conditions, the Fund may invest up to 100%
of its assets in cash or cash equivalents including, but not limited to, prime
commercial paper, bank certificates of deposit, bankers' acceptances or
repurchase agreements for such securities, and securities of the U.S. Government
and its agencies and instrumentalities, as well as cash and cash equivalents
denominated in foreign currencies. The Fund's investments in foreign cash
equivalents will be limited to those that, in the opinion of Scudder Weisel,
equate generally to the standards established for U.S. cash equivalents.
Investments in bank obligations will be limited at the time of investment to the
obligations of the 100 largest domestic banks in terms of assets which are
subject to regulatory supervision by the U.S. Government or state governments,
and the obligations of the 100 largest foreign banks in terms of assets with
branches or agencies in the United States. These investments may result in a
lower return than would have been obtained had the Fund adhered to its standard
investment policies.
SHARE REPURCHASES
The Fund may not suspend or postpone a repurchase offer except pursuant
to a vote of a majority of the Trustees, including a majority of the
disinterested Trustees, and only:
o If the repurchase would cause the Fund to lose its status as a
regulated investment company under Subchapter M of the Internal
Revenue Code;
o For any period during which the New York Stock Exchange or any
other market in which the securities owned by the Fund are
principally traded is closed, other than customary weekend and
holiday closings, or during which trading in such market is
restricted;
o For any period during which an emergency exists as a result of
which disposal by the Fund of securities owned by it is not
reasonably practicable, or during which it is not reasonably
practicable for the Fund fairly to determine the value of its net
assets; or
o For such other periods as the SEC may by order permit for the
protection of shareholders of the Fund.
TRUSTEES AND OFFICERS
The Board of Trustees has the responsibility for the overall management
of the Fund, including general supervision and review of its investment
activities and conformity with Delaware law and the stated policies of the Fund.
A listing of the Trustees and officers of the Fund and their business experience
for the past five years follows. An asterisk (*) indicates Trustees who are
"interested persons" of the Fund (as defined in Section 2(a)(19) of the 1940
Act).
Name, Address, Date Position(s) Held Principal Occupation
of Birth with Fund During the Past 5 Years
------------------- ----------------- -----------------------
__________ Trustee and President
[ ]
__________ Trustee and Vice-President
[ ]
__________ Trustee
[ ]
__________ Trustee
[ ]
__________ Chief Financial Officer and
[ ] Treasurer
__________ Secretary
[ ]
__________ Assistant Secretary
[ ]
<PAGE>
PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS FROM
ACCRUED AS ESTIMATED REGISTRANT
AGGREGATE PART OF ANNUAL AND FUND
NAME COMPENSATION FUND BENEFITS UPON COMPLEX PAID
POSITION FROM FUND (1) EXPENSES (1) RETIREMENT (1) TO TRUSTEES (1)
-------- ------------- ------------ -------------- ---------------
--------- $[------] $[------] $[------] $[------]
--------- $[------] $[------] $[------] $[------]
--------- $[------] $[------] $[------] $[------]
--------- $[------] $[------] $[------] $[------]
(1) Based on remuneration expected to be paid to the Trustees of the Fund for
the fiscal year ended ________, 2001.
The Fund pays each non-affiliated Trustee a fee of $1,000 per Board
meeting, plus an annual retainer of $15,000. In addition, the Fund reimburses
each of the non-affiliated Trustees for travel and other expenses incurred in
connection with attendance at such meetings. Non-affiliated Trustees who are
members of the Audit Committee and/or Nominating Committee also receive a fee
for each meeting of the committee attended. Other officers and Trustees of the
Fund receive no compensation or expense reimbursement.
Trustees and officers of the Fund also may be trustees/directors and
officers of some or all of the other investment companies managed by Scudder
Weisel.
The Executive Committee of the Board of Trustees has the power to: (a)
determine the value of securities and assets owned by the Fund; (b) elect or
appoint officers of the Fund to serve until the next meeting of the Board of
Trustees succeeding such action; and (c) determine the public offering price at
which shares of the Fund will be issued and sold. All actions taken by the
Executive Committee will be recorded and reported to the full Board of Trustees
at their next meeting succeeding such action. The members of the Executive
Committee will consist of: ______________.
LIQUIDITY REQUIREMENTS
From the time that the Fund sends a notification to shareholders with
respect to a quarterly repurchase offer until the date that the offer is priced,
the Fund will maintain a percentage of the Fund's assets equal to at least 100%
of the amount of the repurchase offer in assets: (a) that can be sold or
disposed of in the ordinary course of business at approximately the price at
which the Fund has valued the asset within the time period between the
repurchase request deadline and the repurchase payment deadline; or (b) that
mature by the next repurchase payment deadline.
CODE OF ETHICS
The Fund, Scudder Weisel and the Sub-Adviser each has adopted a code of
ethics as required by applicable law, which is designed to prevent affiliated
persons of the Fund, Scudder Weisel and the Sub-Adviser from engaging in
deceptive, manipulative or fraudulent activities in connection with securities
held or to be acquired by the Fund (which may also be held by persons subject to
a code of ethics). There can be no assurance that the codes of ethics will be
effective in preventing such activities. Each code of ethics may be examined at
the office of the SEC in Washington, D.C. or on the Internet from the SEC's
website at http:/www.sec.gov.
INVESTMENT MANAGEMENT AND OTHER SERVICES
Investment Manager and Investment Sub-Adviser. Under an investment management
agreement ("Investment Management Agreement") with the Fund, Scudder Weisel, a
registered investment adviser, provides supervisory and administrative services
to the Fund, including supervision of the Fund's investment program. Scudder
Weisel was formed as a joint venture between Thomas Weisel Partners Group LLC
("Thomas Weisel Partners") and Zurich On-Line Financing Ltd. Currently, Scudder
Kemper Investments, Inc. and Zurich On-Line Financing Ltd., both majority-owned
subsidiaries of Zurich Financial Services Group, hold ___% of the outstanding
units of Scudder Weisel, and Thomas Weisel Partners holds ___% of the
outstanding units of Scudder Weisel. The remaining units are held by management
of Scudder Weisel. Scudder Weisel has limited experience as an investment
manager.
Subject to general supervision of the Board of Trustees and in
accordance with the investment objective, policies and restrictions of the fund,
Scudder Weisel provides the Fund with ongoing investment guidance, policy
direction and monitoring of the Fund and the Sub-Adviser pursuant to the
Investment Management Agreement.
Scudder Weisel has entered into a sub-advisory agreement (a
"Sub-Advisory Agreement") with the Sub-Adviser to delegate the day-to-day
discretionary management of the Fund's assets, subject to the supervision of
Scudder Weisel. The Sub-Adviser, located at _______, has provided asset
management, administration and advisory services for ____ years. As of December
31, 1999, the Sub-Adviser and its affiliates provided investment advisory
services for over $____ billion of assets. Scudder Weisel pays a fee out of its
investment management fee at an annual rate equal to ____% of the Fund's average
daily net assets to compensate the Sub-Adviser. The Sub-Adviser is not
compensated directly by the Fund. The Sub-Advisory Agreement may be terminated
by the Board.
The Fund and Scudder Weisel are seeking an exemptive order from the SEC
that will permit Scudder Weisel, subject to approval by the Board, to add or
eliminate investment sub-advisers in Scudder Weisel's sole discretion without
approval by the Fund's shareholders. If granted, such relief would require
shareholder notification in the event of any change in investment sub-adviser.
There is no assurance the exemptive order will be granted.
MANAGEMENT FEE
The Fund will pay a fee to Scudder Weisel for its management services
at an annual rate of _____% of the Fund's average daily net assets. The fee is
calculated daily and payable monthly. This management fee is higher than the
advisory fees paid by most U.S. investment companies. In addition, the Fund will
pay an incentive fee to Scudder Weisel as described below. Very few registered
investment companies pay an incentive fee similar to that paid by the Fund.
INCENTIVE FEE
In addition to the management fee, the Fund will pay an annual
incentive fee to Scudder Weisel, calculated as described below. The Fund will
accrue a liability for the incentive fee that may be greater than the amount
payable by the Fund to Scudder Weisel, as a result of using a different
calculation for determining the accrual. The amount of incentive fees paid to
Scudder Weisel will not exceed the incentive fees accrued by the Fund.
The incentive fee that will be paid to Scudder Weisel at the end of a
calendar year will equal __% of the cumulative incentive fee base less the
cumulative amount of incentive fees paid to Scudder Weisel in previous years.
The cumulative incentive fee base is equal to the sum of the Fund's: (i) net
realized and unrealized capital gains or losses; (ii) net investment income or
loss; and (iii) net unrealized depreciation of securities. All amounts referred
to in clauses (i) and (ii) are determined on a cumulative basis and, therefore,
include amounts for all periods since the inception of the Fund. Amounts
referred to in clause (iii) are determined as of the end of the calendar year
for which the incentive fee calculation is being made. The cumulative incentive
fee base is subject to adjustment as described in the last paragraph of this
section. The incentive fee payable (if any) will be determined as of the last
day of the fiscal year. The initial incentive fee payable (if any) will be for
the period from commencement of the Fund's operations through December 31, 2001,
and subsequent incentive fees (if any) will be payable for each subsequent
calendar year (and, if the Fund is liquidated during a calendar year, for the
period from January 1 of that year to the date of liquidation). Scudder Weisel
is under no obligation to repay any incentive fees previously paid by the Fund.
The Fund will accrue daily a liability for incentive fees payable equal
to __% of the daily net increase in the Fund's net assets from investment
operations. If applicable, this liability will be reduced (but not below zero)
on any day by __% of the net decrease in the Fund's net assets from investment
operations. The increase or decrease in the Fund's net assets from investment
operations for any day is equal to the sum of the Fund's: (i) net realized and
unrealized capital gains or losses; (ii) net investment income or loss; and
(iii) net change in unrealized appreciation or depreciation of securities for
that day. The Fund's net asset value will be reduced or increased by the amount
of the change in the accrual each day. At the end of each calendar year, if an
incentive fee is paid to Scudder Weisel, the amount of the incentive fee accrual
will be reduced by the amount paid to Scudder Weisel. The incentive fee accrual
will be calculated on a "high water mark" basis. This means no incentive fee
will be accrued on any day unless the Fund has offset all prior net realized and
unrealized losses, net investment losses and net unrealized depreciation against
net realized and unrealized capital gains, net unrealized appreciation and net
investment income, subject to adjustment as described in the last paragraph of
this section.
The incentive fee accrual will be based in part on unrealized capital
appreciation in order to ensure that investors whose shares are repurchased in a
quarterly repurchase offer bear an appropriate share of the annual incentive fee
attributable to any subsequent realization of such unrealized appreciation. For
example, if shares are repurchased at a time when one or more of the Fund's
investments has appreciated significantly in value, but has not yet been sold,
the repurchase price will reflect an incentive fee accrual that includes the
unrealized appreciation of those investments. When the investments are later
sold, that portion of the accrual will become payable to Scudder Weisel at the
end of the year (subject to the performance of the Fund's other investments). If
the incentive fee accrual did not take into account unrealized capital
appreciation, the accrued incentive fee reflected in the repurchase price in the
example would not include the appreciation of unsold assets. As a result, when
the assets were later sold, the entire incentive fee attributable to the
realized gain would be paid by shareholders who remain in the Fund, and none of
it would have been borne by the investor whose shares were repurchased. Of
course, it is possible that the incentive fee accrual in the example could
subsequently be reversed because of a decline in the value of the appreciated
assets or in the Fund's performance generally. In that case, some or all of the
incentive fee accrual borne by the investor whose shares were repurchased would
be retained by the Fund. No adjustment to a repurchase price will be made after
it has been paid.
If, at the time the Fund completes any quarterly repurchase of its
shares, the sum of the Fund's cumulative realized and unrealized losses, net
investment losses and net unrealized depreciation exceeds the sum of the Fund's
cumulative net realized and unrealized capital gains, net unrealized
appreciation and net investment income, then the amount of the excess (which is
referred to as the "Cumulative Loss") will, for purposes of calculating the
incentive fee accrual, be reduced in proportion to the percentage of shares
repurchased. If at that time __% of the cumulative incentive fee base less the
cumulative amount of incentive fees paid to Scudder Weisel in previous years is
less than zero, a similar proportional adjustment will be made to that amount
for purposes of calculating the incentive fee, if any, actually payable to
Scudder Weisel at the end of the year. Conversely, each time additional shares
of the Fund are sold (other than upon the reinvestment of dividends and
distributions), the Fund will adjust the amount of any Cumulative Loss upward in
proportion to the number of shares issued (but not to an amount larger than the
Cumulative Loss would be if no shares had previously been repurchased), and a
similar proportional adjustment will be made for purposes of calculating the
incentive fee, if any, actually payable to Scudder Weisel at the end of the
year. All incentive fee computations take into account the cumulative amount of
adjustments previously made under the Cumulative Loss provision and, except as
otherwise noted, exclude the effect of any incentive fees previously accrued or
paid.
INDEPENDENT ACCOUNTANTS
____________________________, whose principal business address is
______________, has been selected as independent accountants for the Fund and in
such capacity will audit the Fund's annual financial statements and financial
highlights.
When available, the Fund will furnish, without charge, a copy of its
Annual and Semi-Annual Reports to Shareholders upon request to the Fund, 88
Kearny Street, San Francisco, CA 94108 or call 1-800-____________.
CUSTODIAN AND ADMINISTRATOR
State Street Bank and Trust Company, whose principal business address
is 225 Franklin Street, Boston, Massachusetts, 02110, has been selected to serve
as the Fund's custodian and administrator.
TRANSFER AGENT AND DIVIDEND PAYING AGENT
___________, whose principal business address is ____________, has been
selected to serve as the Fund's transfer agent and dividend paying agent.
__________ may delegate some or all of these responsibilities to a sub-transfer
agent at its discretion from time to time.
DISTRIBUTOR
Scudder Weisel Capital LLC, 88 Kearny Street, San Francisco, CA 94108,
will act as general distributor of the shares of the Fund during the initial
offering and any continuous offering of the Fund's shares following the initial
offering.
LEGAL COUNSEL
Dechert, 1775 Eye Street, N.W., Washington, D.C. 20006, has been
selected as the Fund's legal counsel.
BROKERAGE COMMISSIONS
The Fund has no obligation to deal with any dealer or group of dealers
in the execution of transactions in portfolio securities. Pursuant to the
Sub-Advisory Agreement and subject to policies established by the Board of
Trustees and the supervision of Scudder Weisel, the Sub-Adviser is responsible
for the Fund's investment portfolio decisions and the placing of portfolio
transactions. In placing orders, it is the policy of the Fund to obtain the best
results taking into account the broker-dealer's general execution and
operational facilities, the type of transaction involved and other factors such
as the broker-dealer's risk in positioning the securities involved. While the
Sub-Adviser generally seeks reasonably competitive spreads or commissions, the
Fund will not necessarily be paying the lowest spread or commission available.
Purchase and sale orders of the securities held by the Fund may be
combined with those of other accounts that the Sub-Adviser manages, and for
which the Sub-Adviser has brokerage placement authority, in the interest of
seeking the most favorable overall net results. When the Sub-Adviser determines
that a particular security should be bought or sold for the Fund and other
accounts managed by the Sub-Adviser, the Sub-Adviser undertakes to allocate
those transactions among the participants equitably in accordance with
procedures established b the Board of Trustees.
Under the 1940 Act, persons affiliated with the Fund, Scudder Weisel,
the Sub-Adviser and their affiliates are prohibited from dealing with the Fund
as a principal in the purchase and sale of securities unless an exemptive order
allowing such transactions is obtained from the SEC or an exemption is otherwise
available.
Except for exchange-traded securities purchased by the Fund, purchases
and sales of securities usually will be principal transactions. Such portfolio
securities normally will be purchased or sold from or to dealers serving as
market makers for the securities at a net price. The Fund also will purchase
portfolio securities in underwritten offerings and may purchase securities
directly from the issuer. Generally, money market securities are traded on a net
basis and do not involve brokerage commissions. The cost of executing the Fund's
investment portfolio securities transactions will consist primarily of dealer
spreads and underwriting commissions.
Purchases and sales of equity securities on a securities exchange are
effected through brokers who charge a negotiated commission for their services.
Orders may be directed to any broker including, to the extent and in the manner
permitted by applicable law, affiliates of Scudder Weisel, including Thomas
Weisel Partners Group LLC ("Thomas Weisel Partners"), and affiliates of the
Sub-Adviser (collectively, the "Affiliated Brokers"). Absent an SEC exemption or
other relief, the Fund generally is precluded from effecting principal
transactions with the Affiliated Brokers, and its ability to purchase securities
being underwritten by an Affiliated Broker or to utilize the Affiliated Brokers
for agency transactions is subject to restrictions. Thomas Weisel Partners
frequently acts as an underwriter in connection with initial public offerings of
companies in the technology sector. The Fund's ability to purchase securities in
an underwriting in which Thomas Weisel Partners or another Affiliated Broker
participates is limited pursuant to Rule 10f-3 under the 1940 Act. The
limitations imposed under this Rule may impact the Fund's ability to take
advantage of market opportunities and the Fund's overall performance.
In placing orders for portfolio securities of the Fund, the Sub-Adviser
is required to give primary consideration to obtaining the most favorable price
and efficient execution. This means that the Sub-Adviser seeks to execute each
transaction at a price and commission, if any, that provide the most favorable
total cost or proceeds reasonably attainable in the circumstances. While the
Sub-Adviser generally seeks reasonably competitive spreads or commissions, the
Fund will not necessarily be paying the lowest spread or commission available.
In executing portfolio transactions and selecting brokers or dealers, the
Sub-Adviser seeks to obtain the best overall terms available for the Fund. In
assessing the best overall terms available for any transaction, the Sub-Adviser
considers factors deemed relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. Rates are
established pursuant to negotiations with the broker based on the quality and
quantity of execution services provided by the broker in the light of generally
prevailing rates. The allocation of orders among brokers and the commission
rates paid are reviewed periodically by the Fund's Board of Trustees.
When it can be done consistent with the policy of obtaining the most
favorable net results, it is the practice of the Sub-Adviser to place orders
with broker-dealers who supply research, market and statistical information to
the Fund, Scudder Weisel or the Sub-Adviser. The term "research, market and
statistical information" includes advice as to the value of securities; the
advisability of investing in, purchasing or selling securities; the availability
of securities or purchasers or sellers of securities; and analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts. The Sub-Adviser is
authorized when placing portfolio transactions for the Fund to pay a brokerage
commission in excess of that which another broker might charge for executing the
same transaction on account of the receipt of research, market or statistical
information. The Sub-Adviser may entered into arrangements with certain
broker-dealers pursuant to which a broker-dealer will provide research, market
or statistical information to the Sub-Adviser or the Fund in exchange for the
direction by the Sub-Adviser of brokerage transactions to the broker-dealer. The
Sub-Adviser may give consideration to those firms that have sold or are selling
shares of a fund managed by the Sub-Adviser. In effecting transactions in
over-the-counter securities, orders are placed with the principal market makers
for the security being traded unless, after exercising care, it appears that
more favorable results are available elsewhere.
Although certain research, market and statistical information from
broker-dealers may be useful to the Fund, Scudder Weisel and to the Sub-Adviser,
it is the opinion of the Sub-Adviser that such information only supplements its
own research effort since the information must still be analyzed, weighed and
reviewed by the Sub-Adviser's staff. Such information may be useful to the
Sub-Adviser in providing services to clients other than the Fund and not all
such information is used by the Sub-Adviser in connection with the Fund.
Conversely, such information provided to the Sub-Adviser by broker-dealers with
whom other clients of the Sub-Adviser effect securities transactions may be
useful to the Sub-Adviser in providing services to the Fund.
Certain of the brokers or dealers with whom the Fund may transact
business offer commission rebates to the Fund. The Sub-Adviser considers such
rebates in assessing the best overall terms available for any transaction. The
overall reasonableness of brokerage commissions paid is evaluated by the
Sub-Adviser based upon its knowledge of available information as to the general
level of commission paid by other institutional investors for comparable
services.
<PAGE>
PART C:
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(1) Financial Statements:
As Registrant has no assets, financial statements are omitted.
(2) Exhibits
(a) Declaration of Trust. Filed herewith.
(b) By-laws. Filed herewith.
(c) Not applicable.
(d) Certificates for Shares will not be issued. Articles III, IV
and V of the Declaration of Trust, filed as Exhibit (a) hereof,
define the rights of holders of the Shares.
(e) Form of Dividend Reinvestment Plan.1
(f) Not applicable.
(g)(i) Investment Management Agreement between Scudder Weisel
Capital LLC, and the Registrant.1
(g)(ii) Investment Subadvisory Agreement between Scudder Weisel
Capital LLC and __________.1
(h)(i) Distribution Agreement between Scudder Weisel Capital LLC
and the Registrant.1
(h)(ii) Form of Selected Dealer Agreement between Scudder Weisel
Capital LLC and dealers.1
(i) Not applicable.
(j) Custody Agreement between State Street Bank and Trust Company
and the Registrant.1
(k)(1) Form of Administrative Services Agreement between State
Street Bank and Trust Company and the Registrant.1
(k)(2) Form of Transfer Agency Services Agreement.1
(l) Opinion and Consent of Dechert with respect to the
Registrant.1
(m) Not applicable.
(n) Consent of auditors.1
(o) Not applicable.
(p) Subscription Agreement for Initial Capital.1
(q) Not applicable.
(r) Code of Ethics.1
(s) Power of Attorney for the Registrant. Filed herewith.
_________________
1 To be filed by amendment.
Item 25. Marketing Arrangements
See the Distribution Agreement to be filed as exhibit (h) to this
Registration Statement.
Item 26. Other Expenses of Issuance and Distribution*
All figures are estimates:
Registration Fees $
Printing and Engraving Expenses $
Rating Agency Fees and Expenses $
Legal Fees and Expenses $
National Association of Securities Dealers, Inc. fees $
Accounting Fees and Expenses $
Transfer agents' fees $
Accounting fees $
Miscellaneous Expenses $
Total $
* To be completed by amendment.
Item 27. Persons Controlled by or Under Common Control With Registrant
Not applicable.
Item 28. Number of Holders of Securities
Registrant currently has no securities outstanding.
Item 29. Indemnification
A policy of insurance covering Scudder Weisel Capital LLC, its
affiliates, and all of the registered investment companies advised by Scudder
Weisel Capital LLC will be obtained that insures the Registrant's trustees and
officers and others against liability arising by reason of an alleged breach of
duty caused by any negligent act, error or accidental omission in the scope of
their duties. Article VII, Sections 2 through 4 of the Registrant's Declaration
of Trust states as follows:
Section 2. Indemnification.
(a) Subject to the exceptions and limitations contained in
Subsection 3(b) of this Article: (i) every person who is, or has been, a Trustee
or officer of the Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a Trustee
or officer and against amounts paid or incurred by him in the settlement
thereof;
(ii) the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts paid in settlement,
fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a
Covered Person:
(i) who shall have been adjudicated by a court or
body before which the proceeding was brought (A) to be liable to the Trust or
its Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office or (B)
not to have acted in good faith in the reasonable belief that his action was in
the best interest of the Trust; or
(ii) in the event of a settlement, unless there has
been a determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office: (A) by the court or other body approving
the settlement; (B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry); provided,
however, that any Shareholder may, by appropriate legal proceedings, challenge
any such determination by the Trustees or by independent counsel.
(c) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be severable, shall
not be exclusive of or affect any other rights to which any Covered Person may
now or hereafter be entitled, shall continue as to a person who has ceased to be
a Covered Person and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and
presentation of a defense to any claim, action, suit or proceeding of the
character described in Subsection 2(a) of this Article may be paid by the Trust
or Series from time to time prior to final disposition thereof upon receipt of
an undertaking by or on behalf of such Covered Person that such amount will be
paid over by him to the Trust or Series if it is ultimately determined that he
is not entitled to indemnification under this Section 3; provided, however, that
either (i) such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments, or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will be
found entitled to indemnification under Section 3.
Section 3. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable to the
Trust and to any Shareholder solely for his or her own willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and shall not be liable for errors of judgment
or mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust,
and shall be under no liability for any act or omission in accordance with such
advice nor for failing to follow such advice. The Trustees shall not be required
to give any bond as such, nor any surety if a bond is required.
Section 4. Insurance. The Trustees shall be entitled and empowered to
the fullest extent permitted by law to purchase with Trust assets insurance for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee, officer, employee, or agent of the Trust in connection with
any claim, action, suit, or proceeding in which he or she may become involved by
virtue of his or her capacity or former capacity as a Trustee of the Trust.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act") may be permitted to trustees,
officers and controlling persons of the Registrant by the Registrant pursuant to
the foregoing provisions or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a trustee, officer or controlling person of the Registrant in connection
with the successful defense of any act, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Item 30. Business and Other Connections of Investment Adviser
To be provided by amendment.
Item 31. Location of Accounts and Records
Accounts and records of the Fund are maintained at the Fund's office at
88 Kearny Street, San Francisco, CA 94108.
Item 32. Management Services
Not applicable.
Item 33. Undertakings
1........Not Applicable.
2........Not Applicable.
3........Not Applicable.
4........The Registrant undertakes:
a. To file during any period in which offers or sales are
being made, a post-effective amendment to this registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933; and (ii) to reflect in the Prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement.
b. That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
c. To remove from registration by means of post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
5........Not applicable.
6........The Registrant undertakes to send by first class mail or other
means designed to ensure equally prompt delivery, within two business days of
receipt of a written or oral request, any Statement of Additional Information.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Francisco in the
State of California, on the 5th day of October, 2000.
Scudder Weisel Digital Innovators Fund (Registrant)
By: /s/ Peter Matttoon
Name: Peter Mattoon
Title: President and Trustee
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<S> <C> <C>
Signature Title Date
/s/ Peter Mattoon President and Trustee (principal October 5th, 2000
---------------------------
Peter Mattoon executive officer)
/s/ Joseph McCuine Treasurer (principal financial and October 5th, 2000
---------------------------
Joseph McCuine accounting officer)
</TABLE>
<PAGE>
POWER OF ATTORNEY
In addition to signing this Registration Statement, each of the
undersigned hereby constitute and appoint Christopher Nordquist, Brooke Parish,
Peter Rosenbauer, Robert W. Helm, David A. Vaughan and Douglas P. Dick, and each
of them individually, his attorneys-in-fact and agents, with full power of
substitution and resubstitution, in his name and stead, in his capacity as a
trustee and/or officer, as the case may be, of Scudder Weisel Digital Innovators
Fund, to sign and file such amendments to this Registration Statement, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
NAME TITLE
/s/ Peter Mattoon President and Trustee
-----------------------------------
Peter Mattoon (principal executive officer)
/s/ Joseph McCuine Treasurer (principal financial
----------------------------------- and accounting officer)
Joseph McCuine
