6 September 2010

DAVID DICK

It is with great sorrow that I heard of the death of David Dick, founder of Triple Point. Meetings with David were always both informative and hugely enjoyable and the VCT industry will be the worse off for his passing. My thoughts are with his family and colleagues at this time.

Martin Churchill

10 July 2010

FORESIGHT ANNOUNCE FIRST SOLAR VCT

Foresight will launch their Foresight Solar VCT end of July. The Key Features for the new fund are as follows:
Name: Foresight Solar VCT plc
Type: £40m Planned Exit VCT
Target: minimum 5p per share after first year, with minimum targeted capital repayment of £1.10 in year 5 to return £1.30
Timing: launch date end of July 2010
Close date: June 2011

20 May 2010

MAVEN INCOME & GROWTH VCT 4 TAKES EYE OFF BALL

In their Interim Management Statement just issued for the quarter ended 31 March 2010, they note that "The NAVs ... are unaudited and reflect the closing bid prices of quoted securities at 31 December 2009. Unlisted companies are normally valued on a six-monthly basis and the NAVs include the Directors' valuations of unlisted investments as at 30 June 2009 adjusted for material developments within the portfolios since that date."

These dates should read 31 March 2010 and 31 December 2009. How difficult can it be to check an announcement before it goes out?

Are industry standards slipping as this comes on top of Octopus errors (see below at 31 March 2010)?

29 April 2010

TAX EFFICIENT REVIEW VCT STATISTICS

Tax Efficient Review has published two tables of VCT statistics covering funds raised since launch and summarising the rule changes.

Subscribers have been emailed a copy and non-subscribers can request a copy from martin@taxefficientreview.com

26 April 2010

TAX EFFICIENT REVIEW VCT SOURCE OF FUNDS

Tax Efficient Review has gathered data from the VCT providers on the sources of the VCT funds in the last tax year 2009/10.

Not all providers responded but the data for the subset of VCT providers who did is as follows:

13 April 2010

TAX EFFICIENT REVIEW RELEASE BRIEFING NOTE ON SPARK VCT CONTINUATION VOTE

As part of the Tax Efficient Review VCT Valuation Service, Tax Efficient Review produces Briefing Notes on Corporate Actions.

A Briefing Note on the Spark VCT continuation vote will go out to VCT Valuation Service subscribers with clients holding shares in Spark VCT.

The Briefing Note suggests that shareholders vote in favour of the continuation request.

1 April 2010

BLUEHONE AiM VCT2 plc ANNOUNCE ENHANCED BUY-BACK FACILITY

"The Board announce that it is their intention to offer an Enhanced Buy-Back facility linked to the current Top-Up Offer. The Board expects that the Enhanced Buy-Back facility will become available to shareholders shortly."

Tax Efficient Review comment:
An enhanced buy-back facility offers top-up investors the ability to sell their current shareholding back to the VCT at a very small discount to NAV as long as they agree to re-invest the proceeds in the top-up offer. In this way the investor receives an extra 30% tax-break and stays invested in the VCT. This was pioneered by the Noble AIM VCT. In our view this is a "no-brainer" for investors interested in committing to another five years in the VCT, who have income tax to shelter and who did not defer a capital gain when first investing (as capital gains can no longer be sheltered).

31 March 2010

OCTOPUS ADMITS MORE "OOPS"

The Octopus Eclipse VCT Half-Yearly Results for the six months ended 31 January 2010 includes the following:
"An AIM portfolio investment; Hexagon Human Capital plc was overvalued by 2.9p in the year end accounts, due to a pricing error. The resulting NAV for the period ended 31 July 2009 was overstated by 2.9p."

On a net asset value of 80.7p this represents a 3.6% error.

26 March 2010

OCTOPUS ADMITS "OOPS"

The Board of Octopus AIM VCT PLC announces the suspension of buy back policy.

"It has come to the attention of the directors of the Company that certain dividends have been declared and buy backs effected without the appropriate level of distributable reserves and, accordingly, remedial action is being taken by the Company. This does not affect the net asset value of the Company. A Circular to shareholders dealing with this matter will be posted to shareholders shortly. Accordingly, the Company's buy back programme is suspended until further notice. The directors anticipate resuming the programme by the end of June 2010, at which time a further announcement will be made".

22 March 2010

ANDREW BANKS OUSTED AS MANAGER OF ViCTory VCTs (were SINGER & FRIEDLANDER AIM VCTS)

In its Interim Management Statement, the ViCTory VCT board of directors ("Board")announced its intention to appoint a new fund manager following a period of disappointing performance. Having conducted a review of VCT managers, the Board invited a number of managers to present and today announced its decision to appoint Amati as the new fund manager effective from today's date.

In January 2010 Dr Paul Jourdan and Douglas Lawson, together with the team directly involved in the day-to-day running of Noble AIM VCT plc, formed a new firm to acquire Noble Fund Managers Limited which was then renamed Amati Global Investors Limited. Amati currently manages both the Noble AIM VCT plc and the CF Noble UK Smaller Companies Fund, originally a First State Investments OEIC fund which Paul Jourdan has managed since 2000.

18 March 2010

ISSUE 69 PUBLISHED

It covers:
VENTURE CAPITAL TRUST
Hargreave Hale VCT 1 & VCT 2 Joint £20m Offer

EIS FUNDS
Edge Performance EIS Fund
Future Film Production Services One
The Stellar Technology EIS Fund

TIMBER FUND
First Stellar Forestry Fund

15 February 2010

ISSUE 68 PUBLISHED
As I believe that a few VCTs will actually close oversubscribed this year, I am pleased to say that we have published the fourth issue of Tax Efficient Review, and subscribers now have reviews of all the major VCT and EIS offerings. This adds up to 21 VCT reviews and 10 EIS reviews.

Issue 68 covers the following Venture Capital Trusts

Generalist VCTs
Baronsmead VCT 3 & 4 Joint Offer
Matrix Income & Growth 4 VCT share top-up
Northern 3 VCT further issue


Specialist VCT
Ventus & Ventus 2 VCT C Share Offer


Planned Exit VCTs
Foresight VCT & Foresight 2 VCT Planned Exit share class
TP 70 VCT Trading class
TP 70 VCT UK Equities class


Hybrid Planned Exit VCT
Investec Structured Products Calculus Capital VCT

The next issues will cover EIS and the last few VCTs that are just coming to the market now.

5 February 2010

LATEST UPDATE ON OUR VIEW OF THE UNICORN AIM VCT I & II MERGER - HAVING MET WITH THE MANAGER WE ARE NOW RECOMMENDING THAT SHAREHOLDERS VOTE FOR THE MERGER

We have met Chris Hutchinson (Unicorn VCT lead fund manager) and are now happy with the proposed changes to the performance fee structure being proposed in the merger documents.

The changes affect £30m of VCT investors out of the total merged £60m and affects investors in the Unicorn AIM VCT ordinary shares (£19m) and S2 shares (£11m). These shareholders have a performance fee structure which rewards the manager with 20% of any return (not just distributions)in any year above base rate plus 2%. This kicks in once distributions have been 60p and as long as total return (NAV plus distributions) exceeds 80p. Any fee in any year is restricted to 5% of the fund's value. There is no high water mark in place. At present the dividends total 45.5p per ordinary share and the total return is well above the 80p mark. Unicorn have not earned any performance fee so far.

The proposed new fee would be 20% of distributions in any year above 6p per share.

The manager makes the following case in support of the fee change:

1. The current structure is not under the control of the Board as it is triggered by an increase in NAV rather than being linked to distributions. The proposed structure is completely driven by distributions which can be controlled by the Board.

2. The lack of a high water mark in the current structure means that any upward move in the AIM market could trigger a significant payout to the manager

The manager believes that the change to a structure based on distributions and linked to a high water mark (based on the Net Asset Value per share as at the financial year ended 30 September 2010) is in the best interests of the shareholders and we agree.

In our view shareholders should vote in favour of the merger.

30 January 2010

FINANCIAL TIMES AND THE PERSONALISED VCT VALUATION SERVICE

The Financial Times today covers the Tax Efficient Review VCT Valuation service aimed at helping investors with VCT portfolios.

The service comprises three deliverables for VCT shareholders:

1. PERSONALISED VCT VALUATIONS - shareholders email details of their VCT holdings and receive a pdf valuation within 24 hours.
2. SIX-MONTHLY SINGLE PAGE VCT REVIEWS – Along with the valuation comes a single page review covering the performance of each VCT included in the valuation.
3. VCT CORPORATE ACTION BRIEFINGS – for each VCT held, any corporate action involving a shareholder vote will be the subject of an email alert followed within five working days with a Briefing Note setting out the reason for the corporate action, the responses available to the shareholders and possibly a TER recommendation.
Pricing is only £50 +VAT per client per year (irrespective of the number of VCTs held) which means two half yearly valuations together with single page performance reports for each VCT held.

Click on Credit Card logos top right on this page to purchase a VCT Valuation. You will then be sent a spreadsheet to be completed with your VCT holding details.

29 January 2010

SPARK VCT 2 BOARD SETS NEW DIRECTION - BUT IS IT ONE SHAREHOLDERS WILL LIKE?

The board announced today that it has been reviewing the future direction of the Company, with the aim of determining a strategy that will ensure that investment returns generated from the venture capital portfolio are delivered to shareholders in the most appropriate way, as and when they arise.

The part that we think investors might question is this:
"As and when funds are available for new investment, the SPARK management team will seek to take advantage of opportunities available at this current stage in the investment cycle, particularly opportunities to participate in later-stage financing rounds of venture-backed companies within the existing sector focus. The aim will be to seek investments in companies which are already revenue generating with a stable business base, and are able to deliver a flow of dividends or be capable of exit within a 3-year period."

We have two questions:

Why not return all funds from realisations to shareholders? In effect put the VCT into run-off.

and

Why not ask the shareholders to vote on the future strategy?

We have asked the manager to get someone on the Board to contact us. Key questions are: are fees capped going forward and the manager performance fee.

Watch this space.

23 January 2010

MORE SPLUTTERING OVER THE CORNFLAKES AS EVEN THE FT LOSES THE PLOT ON VCTs

I am the first to admit that VCTs as a class are a complex mix of different strategies hence the categorisation of VCTs as Generalist, Specialist, AIM based and Planned Exit. The coverage of VCTs provided by the FT is normally excellent so you can imagine how much spluttering went on this morning at the Churchill breakfast table when the FT article "How to avoid the 50 per cent rate" describes VCTs as "These start-up investment schemes are risky".

Please! Back in 1995 when VCTs were first launched this description might have been correct, but not now after fifteen years. The number of VCTs investing in start-ups can be counted on the fingers of one hand. Take out those starting with "Oxford Technology" and I struggle to even think of one.

Come on FT, you can do better than this.

The VCT tax reliefs have helped cushion the effect of the credit crunch on VCT performance and my figures show that net of the initial tax relief, over half the VCT fund raisings since 1995 are showing a profit. Given the poor market conditions I think VCT investors will find this a satisfactory state of affairs.

I am seeing a resurgence of investor interest in VCTs this tax year and expect demand to be around £250m, which would be an increase of about 70% on last tax year. This is driven by the appreciation that the initial tax break has allowed the performance of most VCTs to weather the credit crunch, a realisation that the successful VCTs are producing a very respectable annual tax-free income stream and the attraction of the VCT tax reliefs to high earners following the increase in the top rate of income tax and the pension changes.

Potential new investors this tax year should approach the VCT market gingerly and use an IFA who is familiar with the various VCT categories and their differing risk/reward combinations

Martin Churchill

19 January 2010

CALCULUS ANNOUNCE NEW PLANNED EXIT VCT

In a link up with Investec, Calculus Capital have announced a £20m Planned Exit VCT called "Investec Structured Products Calculus VCT" to be launched at the end of February 2010.

The press release is as follows:

Investec Structured Products, in conjunction with Calculus Capital, intends to launch its first Venture Capital Trust (VCT) in February 2010. The VCT will adopt a disciplined investment strategy combined with a policy of minimising fees and will be available for investment in both the 2009/2010 and 2010/2011 tax years.
The VCT offers the potential of tax relief of 30 per cent on the initial investment with all subsequent dividends and capital gains tax free. The VCT will invest in a combination of Structured Products and Venture Capital Investments to diversify risk with the initial objective to achieve an annual dividend for 5 years of 5.25 pence per share plus a return of 43.75 pence per share after 5.5 years by way of a special dividend or a cash tender offer for shares. After this time the investor will still hold a portfolio of investments in Qualifying Companies within the VCT. The Structured Products within the portfolio will be managed by Investec Structured Products and will have simple defined returns based on the FTSE 100 Index with pre-determined risk profiles and a diversified range of counterparties. The Venture Capital Investments will be managed by Calculus Capital.
Calculus Capital has a highly experienced and respected core team of specialist investment managers who have been successfully investing in small unquoted companies since 1997. Calculus launched the first Inland Revenue approved Enterprise Investment Scheme (EIS) in 2000 and have since launched and closed for subscription a further 8 EIS funds and 2 VCT issues.
Gary Dale, Head of Intermediary Sales at Investec Structured Products said, “This forthcoming launch is hugely exciting for us. It has always been our intention to broaden our product range to suit a wider variety of advisers and investors and teaming up with Calculus Capital to offer this VCT is our first development which truly fits in the wealth management space.”
“VCTs have the ability to offer excellent tax-planning opportunities and with the combined expertise of Investec Structured Products and Calculus Capital, this first issue aims to deliver strong investment returns as well as an element of capital protection. Initial feedback tells me that this first launch will be incredibly popular.”
Susan McDonald, Chairman of Calculus Capital, added “We are delighted to have been selected by Investec to help them launch and manage this exciting and innovative product.”

11 January 2010

SUNDAY TIMES ARTICLE "FUNDS THAT GIVE YOU TAX BREAKS FOR GOING GREEN" 10 JANUARY 2010

This article quotes Martin Churchill, editor of Tax Efficient Review, and there are a number of inaccuracies in the article.

Martin Churchill was approached for comment but refused to do so. Despite this, comments made to Liz Colman, another Sunday Times staffer, for another article in 2009 were used.At the time Liz Colman agreed to seek agreement for any quotes used which she did for her article.

"VCTs were never designed to generate large capital growth"

The comment was made by Martin Churchill about Limited Life VCTs, but is used here as a generic statement about all VCTs.

"but rather a steady reliable return"

No comment about this was made by Martin Churchill

VCTS "provide a stable tax-free income stream"

No comment about this was made by Martin Churchill.

"Acuity's fund is attractive because the earnings are backed up by the obligation on local authorities and companies to reduce the amount of of waste they send to landfill"

This comment was made in 2009 before the Acuity VCT had been reviewed by Tax Efficient Review. The final review says "In our view this is a VCT only for the dedicated green investor who will not be deterred by what we see as the high risks involved with the unproven technology being deployed in this area, as evidenced by the fact that the installed base of anaerobic digester plants in the UK is only five. Other investors should sit this one out and watch from the sidelines"

10 January 2010

TAX EFFICIENT REVIEW'S VIEW ON ACUITY VCT & VCT 2 MERGER PROPOSALS AND NEW DIRECTOR FEES

In summary we are urging shareholders to vote AGAINST the merger proposals as they currently stand as the new fee structure is not justified either by comparison with other VCT director fees, the performance of the VCTs or workload considerations.
We suggest that shareholders demand that the Board defers awarding themselves the doubling in fees until VCT performance has improved and places the VCT in the top quartile of performance by year of launch.

The boards of Acuity 1 and Acuity 2 announced on 16 December 2009 that agreement in principle had been reached for the merger of the two companies and both boards have written to their respective shareholders with proposals for consideration for the proposed merger.

Embedded deep in the proposals is the following:
2. Directors and Director’s Fees
The directors of Acuity 2 are as the same as the directors of the Company. There will be no change in the board of Acuity 2 on the Scheme becoming effective. Biographies for the directors can be found in Part II of the Acuity 2 Prospectus which accompanies this document.
In June 2008, the Financial Reporting Council issued a revision to the Combined Code on Corporate Governance, to which listed companies are bound. One of the principles set out in the Code is that levels of remuneration should be sufficient to attract, retain and motivate the directors of the quality required. At the same time, recent economic circumstances have resulted in greater scrutiny of the role played by directors. As the 2009 Review of the Combined Code: Final Report emphasises, inter alia, boards need to take responsibility for assessing the major risks facing their companies and greater overview of the risk management systems. The Final Report also recommends periodic external reviews of the performance of the board.
In the light of these changes to the burden being placed on directors of public companies, the Remuneration Committee decided to review the levels of remuneration of Board members. A survey of public companies of similar size and complexity was undertaken. As a result, recognising that the base fees paid to Directors of £15,000 p.a. have remained unchanged since the founding of the Company in 2004 with additional fees of £5,000 p.a. being each to the Chairman of the Board and to the Chairman of the Audit Committee in respect of their further duties, the Board is proposing to increase the overall limit of the annual aggregate remuneration of the Directors from £100,000 to £140,000 and to increase the base remuneration of Directors to £30,000 p.a. and the additional fee paid to the Chairman of the Board and the Chairman of the Audit Committee to £10,000 p.a. each. These changes will only take place if the proposed Merger proceeds. Nicholas Ross receives no fee in relation to his role as director.

Investors need to consider three questions:
1. Do they want their Board to be the best remunerated in the VCT arena
2. Have they earned that position by providing the best performance to investors?
3. Are they now being asked to do the same amount of work as before when they earned fees from the two Acuity VCTs?

The directors are awarding themselves increases in director fees that will place them in the top positions amongst VCT directors.
Our analysis of VCT director fees shows that they range from £40,000 per annum down to below £1000. In bands this goes:

6 directors earn £0-£5,000 pa
71 directors earn £5,001-£10,000
102 directors earn £10,001-£15,000
79 directors earn £15,001-£20,000
16 directors earn £20,001-£25,000
4 directors earn £25,001-£30,000
1 director earns £30,334
1 Director earns £37,500
1 Director earns £40,000
(Fees are per director per VCT, some directors earn fees from multiple VCTs)

We asked the VCT manager to pass to the Board our request to be shown the data on which the Board based its remuneration decision. So far we have not heard from any member of the Board.

So the directors are going from £20,000 per annum for the chairman and the Chairman of the Audit Committee and £15,000 for other directors to £40,000 and £30,000 respectively.
This will place all the Board at the top of the VCT directors earnings table.

Lets look at performance.
Our ranking by annual Internal Rate of Return shows the performance of the Acuity VCTs has been lackluster with none of them having performance in the upper quartile in their respective groups.

Perhaps the workload will increase with two VCTs merged together?
The portfolio information on the Acuity website shows that Acuity VCT has 18 investments and Acuity VCT 2 has 21, each number including 13 in common. This means that there will be 26 to cover in a merged VCT (the 13 in common plus 5 from Acuity and 8 from Acuity 2) versus 39 at the moment (18 in Acuity and 21 in Acuity 2). So in our view the workload will reduce and does not support a doubling in fees.

23 December 2009

FOR TAX EFFICIENT REVIEW SUBSCRIBERS XMAS COMES EARLY!

ANOTHER FIVE VCT REVIEWS PUBLISHED TODAY MAKING TWENTY-SIX REVIEWS PUBLISHED TO DATE IN THE CURRENT TAX YEAR

Issue 67 has been sent out electronically and includes reviews of:

Generalist VCTs
Downing Absolute Income VCT 2
Elderstreet ordinary share top-up

Specialist VCTs
Acuity Environmental VCT & VCT 2 linked offer

Limited Life VCTs
Edge Performance VCT F share offer
Ingenious Entertainment VCT 1 & 2 D shares

21 December 2009

FOR TAX EFFICIENT REVIEW SUBSCRIBERS THE REVIEWS JUST KEEP COMING!

ANOTHER ELEVEN REVIEWS PUBLISHED TODAY MAKING TWENTY-ONE IN THE CURRENT TAX YEAR

Issue 66 has been sent out electronically and includes reviews of:

Enterprise Investment Schemes
EIS Mutli-sector Fund & Portfolio Offerings
Axcess EIS Fund 2010
Calculus Capital EIS Fund 10
Longbow Approved EIS Fund & Arrowhead Unapproved EIS Fund
MMC EIS Fund
Octopus Eureka EIS Portfolio Service
Oxford Gateway EIS Fund No 5
Oxford Gateway Approved EIS Fund No 5 2009/10

EIS Single-sector Fund Offerings
Foresight Environmental EIS Fund 2
Triodos EIS Green Fund II

EIS Limited Life Funds
Downing Asset-backed EIS Fund
Octopus EIS

Inheritance Tax offerings
Octopus Inheritance Tax Service

1 December 2009

If you are an IFA your clients will be expecting to discuss VCT/EIS/IHT products with you this year. Here is what Martin Churchill and Tax Efficient Review can do for your business TODAY:

1. TAX EFFICIENT REVIEW
With the current emphasis on tax efficient products you need timely, independent research to ensure that your recommendations are based on comprehensive and fair analysis, and that you provide unbiased, unrestricted advice.
We are independent (our main revenue comes from IFAs and we never charge the product provider a fee for being reviewed).
We cover “whole of market” in the tax efficient arena.
We are timely as we have just published ten VCT reviews.

2. VCT SUPPORT OFFERING
For your client base who have invested over the years in VCTs, we provide a truly unique valuation service – the VCT Support Offering for clients with VCT portfolios.

The service comprises three deliverables for IFAs to use with their VCT clients:
1. PERSONALISED VCT VALUATIONS - IFAs email details of their client holdings and receive a pdf valuation within 24 hours.
2. SIX-MONTHLY SINGLE PAGE VCT REVIEWS – Along with the valuation, IFAs will receive a single page review covering the performance of each VCT included in the valuation.
3. VCT CORPORATE ACTION BRIEFINGS – for each VCT held by the client, any corporate action involving a shareholder vote will be the subject of an email alert to the IFA followed within five working days with a Briefing Note setting out the reason for the corporate action, the responses available to the shareholders and possibly a TER recommendation.
Pricing is only £50 +VAT per client per year which means two half yearly valuations together with single page performance reports for each VCT held. For more than 50 clients there is special pricing.

Contact Martin Churchill today on 020 8458 9003 to discuss how Tax Efficient Review can help. Whether it is just a single copy of TER, a need to distribute TER to more than one subscriber or perhaps have a private part of the TER website only accessible to your members then call to discuss.

30 November 2009

INVESTMENT ADVISER POINTS INVESTORS AT VCT & EIS

Tim Sutcliffe in an article in Investment Adviser today says:

" Tax-efficient products can be useful in widening a client's focus beyond equities and plugging the gap in a pension plan where property used to be. Enterprise investment schemes (EISs) and venture capital trusts (VCTs) are both compelling investments that offer immediate tax rebates ..."

18 November 2009

FOR TAX EFFICIENT REVIEW SUBSCRIBERS THE WAITING IS OVER!

FIRST TEN VCT REVIEWS PUBLISHED WEDNESDAY 18 NOVEMBER

Issue 65 has been sent out electronically and includes reviews of:

Generalist VCTs
Albion Development VCT D share offer
Octopus Titan VCT 4
ProVen VCT & ProVen Growth & Income VCT D share linked offer

Specialist VCTs
Foresight 3 & 4 VCT ord shares

AIM based VCTs
Noble AIM VCT

Limited Life VCTs
Downing Planned Exit VCT 2 & 3 D shares
Downing Structured Opportunities VCT 1 C shares
Octopus VCT
Puma High Income VCT
TP10 VCT

13 November 2009

KPMG NAME VCT & EIS AS ONE OF THEIR "Top 10 tips to prepare for the 50% tax rate"

The private client team at KPMG in the UK have compiled a list of their top ten tips for high earners in anticipation of the new tax rate.

Tip number 8 is:

Discuss with your financial adviser whether you should, as part of your overall investment strategy, make an investment in a qualifying Enterprise Investment Scheme ("EIS") company or a Venture Capital Trust ("VCT"). These are higher risk investments with generous tax breaks. You can get 20% income tax relief on a qualifying EIS investment up to £500,000 ie an absolute saving of £100,000 plus after 3 years you can sell the shares completely free of capital gains tax. Relief is available at 30% on a VCT investment up to £200,000. In addition VCT dividends are tax free and the investment can be cashed in tax free after 5 years.

28 October 2009
VCT SUPPORT OFFERING NOW AVAILABLE ON A PAY-PER-INVESTOR BASIS

Tax Efficient Review is now offering its unique VCT Support Offering on a pay-per-investor basis.

This means IFAs & investors can just order one VCT Valuation report at a time with no need to commit to a minimum quantity.

Each valuation will provide a portfolio valuation of VCTs held by the investor and for each VCT a single page performance report.

Price is £75+VAT per investor valuation (irrespective of the number of VCTs held by the investor).

For a sample valuation report contact Martin Churchill on 020 8458 9003 or martin@taxefficientreview.com

24 September 2009
VCT LINE UP GATHERS PACE

The following VCTs have announced that they will be seeking funds in this tax year:

Generalist VCT
Albion Development VCT D shares raised in tax year 2009/10 at 100p per share
Baronsmead VCT 3 & 4 Linked offer seeking £12m opening January 2010
British Smaller Cos & British Smaller Tech Co VCT Linked offer 2009/10 seeking £10m opening December 2009
Downing Absolute Income VCT 1 tax year 2009/10 seeking £20m launching mid November 2009
Elderstreet VCT ord share 2009/10 £1.6m top-up opening Oct/Nov
Octopus Titan VCT 4 launching October 2009 seeking £25,000,000

Specialist VCT
Acuity Protected Environmental VCT seeking £20m to launch mid Oct 09
Foresight 3 VCT & 4 VCT £20m Linked Offer to launch 21 Sept 09

Limited Life VCT
Downing Protected Opportunities VCT C share tax year 2009/10 seeking £20m launching mid October 2009
Downing Protected VCT II & III D share 2009/2010 seeking £30m launching late October 2009
Edge Performance VCT F share offer 2009/10 opening end October 2009
Octopus Secure VCT launching October 2009 seeking £50m
Puma Protected VCT (provisional name) opening end October 2009 seeking £20m-£30m
Triple Point TP10 tax year 2009/10 seeking £50m opening October 2009

20 August 2009
FIRST IFAs SIGN UP FOR NEW VCT SUPPORT SERVICE

Tax Efficient Review are delighted to announce two IFA clients have signed up as the first users of the new VCT Support offering (details of which are in the news item below).

16 June 2009
FSA RETAIL DISTRIBUTION REVIEW CONSULTATION PAPER REINFORCES NEED FOR THE NEW OFFERING FROM TAX EFFICIENT REVIEW TO HELP IFAs SUPPORT THEIR VCT CUSTOMERS

The RDR review contains the following in section 4.10:
we are proposing that ongoing charges should only be levied where a consumer is paying for an ongoing service, such as a regular review of the performance of their investments. Through this proposal, we want to avoid recreating the difficulties that consumers face at present in trying to assess what services they are entitled to (if they are entitled to any at all) in return for the continuing payment of trail commission out of their investments

Martin Churchill announced today a unique new service to help IFAs with post-sale support to their VCT clients.

The service comprises three deliverables:

1. VCT CORPORATE ACTION BRIEFINGS - each VCT corporate action involving a shareholder vote will be the subject of an email alert to the IFA followed within five working days with a Briefing Note setting out the reason for the corporate action, the responses available to the shareholders and possibly a TER recommendation. This is a very timely offering as just in the last few days ProVen Income & Growth have announced a Tender Offer, the Acuity VCTs have called EGMs and Core VCT I, II & III are planning to merge. All need shareholder involvement and IFAs can use our service to pro-actively warn and then inform their VCT clients of the upcoming votes.

2. AUTOMATED VCT VALUATIONS - IFAs email details of their client holdings and receive a pdf valuation within 24 hours.

3. SIX-MONTHLY SINGLE PAGE VCT REVIEWS - Following the Interim and Final accounts publication, IFAs will receive a single page review of each VCT's performance suitable for sending to clients.

PRICING TO BE DETERMINED but will be attractive to IFAs with large numbers of clients with VCT portfolios and IFAs with smaller requirements.

FREE TRIAL FOR IFAs
UNTIL THE END OF SEPTEMER WE ARE RUNNING A FREE TRIAL COVERING ALL BRIEFING NOTES PUBLISHED, ONE VCT PORTFOLIO VALUATION AND REVIEWS OF ALL VCTs WHICH PUBLISH THEIR INTERIM & FINAL ACCOUNTS BEFORE 30 September 2009.
TO TAKE PART EMAIL martin@taxefficientreview.com WITH THE WORDS FREE TRIAL IN THE SUBJECT LINE. PLEASE USE THE EMAIL ADDRESS WHICH WILL RECEIVE THE REPORTS AND WHICH CONTAINS YOUR FSA DETAILS.

16 June 2009
SINGER & FRIEDLANDER AIM 3 VCT RENAMED

as ViCTory VCT. Andrew Banks remains as manager.

12 June 2009
PROVEN GROWTH & INCOME TENDER OFFER

Proven Growth and Income VCT plc has today published a circular in respect of proposals for a tender offer for 'C' Shares. The proposals are for the Company to purchase up to 5,079,999 of its 'C' Shares at 75.35p per 'C' Share. Shareholder approval for the tender offer will be sought at the Company's AGM on 7 July 2009.

This follows the commitment in the original prospectus for the C shares to return at least 25p (tax-free) to investors in the Offer, within three years of the Offer closing, through a combination of tax-free dividends and a tender offer for shares at net asset value.

Dividends to date will total 9.6p when the 1.35p dividend is paid on 3 July 2009 (previous dividends were 2p 31 October 2008, 1.25p 22 July 2008, 2p 14 March 2008, 1p 06 December 2007, 2p 05 April 2007).
The tender offer if taken up by investors will equate to a cash return of 15.07p per share so making the total cash returned to date 25p.

12 June 2009
ABERDEEN VCT MANAGER FORMS MAVEN CAPITAL

The senior executives of the private equity division of Aberdeen Asset Managers, the Manager of the Aberdeen series of VCTs, have completed a management buyout of that business and have formed Maven Capital Partners UK LLP as a specialist, independent private equity investment manager.

The Boards of ABERDEEN GROWTH OPPORTUNITIES VCT PLC, ABERDEEN GROWTH OPPORTUNITIES VCT 2 PLC, ABERDEEN INCOME AND GROWTH VCT, ABERDEEN GROWTH VCT I PLC have decided to novate the management contracts in favour of Maven, with effect from 9 June 2009.

11 June 2009
FORESIGHT GROUP TAKE OVER MANAGEMENT OF KEYDATA NON AIM VCTs
The Boards of Keydata Income VCT 1 plc and Keydata Income VCT 2 plc have announced, with immediate effect, the appointment of Foresight Group as investment manager and also to administer the Companies’ business.

In our view the VCT market is entering a phase wich will involve the weaker performing and smaller VCTs being consolidated by the stronger players and Foresight is positioning itself as one of the key players in this restructuring of the VCT industry.

9 June 2009
KEYDATA GOES INTO ADMINISTRATION
Following the appointment of PricewaterhouseCoopers as administrators of Keydata Investment Services, the Directors of all the Keydata VCTs advise that the assets and business of the VCTs, which are independent fully listed public companies, are ring fenced from the activities of Keydata Investment Services and as such, will in no way be affected by this development.

12 March 2009
COMMENTS RECEIVED ON OUR VIEW ON THE ARTEMIS AIM VCT MERGER PROPOSALS

ARTICLE ON INVESTORS CHRONICLE WEBSITE
Artemis VCT merger oversteps the mark Created: 11 March 2009 Written by: Moira O'Neill
"Shareholders are being urged to reject the proposed merger of two Artemis VCTs because the revised manager's compensation is weighted against investors.
The proposal is to rebase the merged VCT to the net asset value at the time of the merger, effectively writing off past underperformance. The revised compensation package will strip out the "hurdle" part of the deal, whereby the manager had to make a return of 8 per cent a year before the performance fee was paid, plus increase the performance fee from 20 per cent to 25 per cent.
Martin Churchill, independent commentator on tax efficient products and editor of Tax Efficient Review, says: "The fee in both VCTs is so far under water that it is difficult to imagine them being paid." He points out that the proposal contains the following clause: "In the event that there are two consecutive [six month] performance periods in which no performance fee is paid, the net asset value will be re-set to the net asset value prevailing on the last day of the second performance period and will become the net asset value against which future performance is measured."
The effect of this clause is to effectively continually rebase the performance fee.
"We cannot see that this rebasing is in the best interests of shareholders and we urge them to reject the merger and instruct the Board to consider finding a new manager who will work to maximise the value of the portfolio without needing to be incentivised by a rebasing of the performance fee," says Mr Churchill.
WHAT TO DO...
Shareholders can vote against the resolutions at extraordinary general meetings to be held on 20 March 2009 for VCT1 and VCT2 and 31 March 2009 for VCT1 only."

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“I am very glad to see that you are one of the few VCT commentators that has taken a stand against these proposals , in particular the incentive scheme. I think it would be dreadfully sad for the VCT industry if other VCT managers did this. It would be like having money with insurance companies again - little return and hard to get it back”
ARTEMIS AIM VCT SHAREHOLDER.
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“It looks like Artemis is trying every trick in it's book, they have sent a very complicated brochure detailing the planned merger - even the voting form is difficult to understand, they are to have the AGM/EGM in Edinburgh far away from most of the shareholders to attend. I have called Artemis and have tried to contact someone who deals with VCT's but i get fobbed off. I have voted against this ridiculous merger which benefits the fund manager and not the shareholders”.
ARTEMIS AIM VCT 2 SHAREHOLDER

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"Well done for publishing the Artemis VCT merger and new incentive plans. I am simply dumbfounded that the VCT Boards would go along with such an outrageous proposal which is simply too good to be true for the existing management team. The original incentives were there for a good reason which the shareholder bought into. The manager should not benefit for having destroyed shareholder value to the extent that they have. The incentives are there to reward good performance, not to line the pockets of the manager for having produced a very poor set of results. As far as I am concerned, the Board is there to stop such situations from being sanctioned. If the manager feels they are not incentives in the current environment, then I am sure there would be other AIM managers who would be happy to take over the management of the VCTs in question (and receive a good level of management fees - for a portfolio which is already 70%+ invested) - after all, it should not be difficult for another manager to beat Artemise's poor performance in the VCT arena! I think shareholders would be better served if the Board commenced proceedings to move the management of the VCTs elsewhere - I am sure shareholders interest would be better served and would compliment the Boards 'real' responsibilities.
This is the type of situation which does not promote the VCT cause!"
ARTEMIS AIM VCT SHAREHOLDER

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“ I agree with your points below, they are paid a management fee for doing a job, and an incentive in addition should be for long term performance. I would also point out that a reset such as the one proposed encourages the manager to increase the volatility in the portfolio, as down periods do not have to be made up before fees are earned again (lack of a highwater mark).
By the way, do I read this correctly – before, they earned 20% of any excess over a cumulative 8% return, and now they propose to take 25% over a zero hurdle, plus a reset? And effectively write off the past underperformance?”
ARTEMIS AIM VCT SHAREHOLDER

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“It is proposed that the Managers receive what is described as a “performance fee” of 25% of any increase in NAV. I would suggest that this is not a performance fee, as there are no hurdles to beat in terms of NAV growth, or performance against other VCTs, before the fee kicks in. If average AIM prices recover 25% over the next year, a not unlikely occurrence after the falls of recent months, the Managers would receive the maximum fee of £2m (a 4% charge on the fund), without needing to show any investment skills. In return for this upside, the reduction in “minimum fee” from 1.75% to 1.4%, amounts to £140,000 at the current £40m market cap of the two funds. The risk/rewards are weighted very heavily towards the Managers and against the shareholders.
Managements frequently try to rebase options and other incentive arrangements when share prices move against them. The non-executive directors are expected to protect shareholders from unreasonable demands, which I believe that the Board is failing to do in this case. In the new financial world, I suggest that Managers should be grateful for a continuation of their mandate to run the funds, particularly after the mediocre performance in recent years, rather than extracting a substantial increase in potential fee income from shareholders.
I have returned my proxy voting against the revised arrangement and I urge you to withdraw this element of the Trusts’ merger"
EXTRACT OF LETTER FROM ARTEMIS AIM VCT 2 SHAREHOLDER TO CHAIRMAN OF THE BOARD

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"Martin, very good job. Thank you"
INDEPENDENT FINANCIAL ADVISER

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"Well done – this is the type of thing you should be doing when Managers overstep the mark"
VCT PROVIDER

"Thanks Martin. They do seem to be amazingly keen to give shareholders money away, I wonder why"
ARTEMIS AIM VCT SHAREHOLDER

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"Good that you are flagging up this behaviour, although fortunately I am not in Artemis."
NON SHAREHOLDER IN ARTEMIS

8 March 2009
TAX EFFICIENT REVIEW URGES ARTEMIS AIM VCT SHAREHOLDERS TO REJECT MERGER PROPOSALS

Martin Churchill, independent commentator on tax efficient products and editor of Tax Efficient Review, is urging shareholders to reject the proposed merger of the two Artemis VCTs.

“The boards of Artemis VCT1 and VCT2 announced on 28 January 2009 that agreement in principle had been reached for the merger of the two companies. The Scheme will, if effected, result in VCT1 being merged into VCT2 creating an enlarged company ("Enlarged Company") having net assets of over GBP40 million, which is expected to deliver cost savings and other strategic benefits.

The contentious issue in our view is the revised manager’s compensation.

The changes are complex but in our view weighted against the shareholders:

Annual Management fee:
Currently is 2% of net assets in Artemis VCT1 and 1.75% of market capitalisation for Artemis VCT2. Replaced with 1.4% of net asset value. This should result in a lower annual fee.

Performance fee:
VCT1- currently is 20% of the excess of the increase in the net asset value over 8% per annum (a discount of 25% will be applied to directly held AIM and OFEX stocks)
VCT2 – currently is 20% of distributions made by the VCT as long as the net asset value has increased by 8% per annum (not compounded)

The fee in both VCTs is so far under water that it is difficult to imagine them being paid.

The proposal is to rebase it to the net asset value at the time of the merger, strip out the “hurdle” part of the deal whereby the manager had to make a return of 8% per annum before the performance fee was paid and increase the fee to 25%.

But the proposal also contains the following clause: “In the event that there are two consecutive [six month] performance periods in which no performance fee is paid, the net asset value will be re-set to the net asset value prevailing on the last day of the second performance period and will become the net asset value against which future performance is measured”.

The effect of this clause is to effectively continually rebase the performance fee.

We cannot see that this rebasing is in the best interests of shareholders and we urge them to:

1. Reject the merger

2. Instruct the Board to consider finding a new manager who will work to maximise the value of the portfolio without needing to be incentivised by a rebasing of the performance fee. The Board might like to model its fee structure on the Bluehone AIM VCT merger model where the manager waived all rights to a performance fee going forward.”

26 February 2009
REVIEWS OF ALL LIMITED LIFE EIS PRODUCTS NOW PUBLISHED

Issue 63 is being mailed today covering the following Limited Life EIS:

Lower Risk Limited Life Funds
Downing Protected Approved EIS Fund 4
Edge Live Protected EIS 3
Octopus Protected EIS Fund - Series 7

Higher Risk Limited Life Fund
Downing Growth Approved EIS Fund 2

25 February 2009
REVIEWS OF ALL VCTs NOW PUBLISHED

Issue 62 is being mailed today covering:

Generalist VCTs
Elderstreet VCT further offer

Specialist VCT
Ventus VCT & VCT 2 C share

Limited Life VCTs
Downing Protected Opportunities VCT 1
TP 5 VCT
TP 70 2009 VCT

Tax Efficient Review has now reviewed all the open VCTs.

23 January 2009
ISSUE 61 COVERING VCTs PUBLISHED

Issue 61 is being mailed today covering:

Generalist VCTs
Matrix Income & Growth 2 VCT C share further offer
ProVen VCT & ProVen Growth & Income VCT D Share Linked Offer

Specialist VCT
Foresight VCT ,2,3 & 4 linked top-up offer

Limited Life VCTs
Edge Performance VCT E shares
Ingenious Entertainment VCT 1 & 2

So far we have covered nine VCTs and expect to cover the final five next week (Downing Protected Opportunities VCT 1, Elderstreet, TP5, TP70 2009 and Ventus).

14 November 2008:
THE TWO VENTUS VCTS ANNOUNCE FUND RAISING PLANS

Ventus VCT PLC and Ventus 2 VCT PLC, the LSE listed UK renewable energy venture capital trusts, announce that they are each planning to raise up to £15 million of new capital under a "C" share offering expected to be launched in January 2009. The full terms of the offer will be set out in a detailed prospectus to be approved by the UK Listing Authority. The offer of "C" shares will be subject to the approval of Ventus VCT PLC and Ventus 2 VCT PLC shareholders, who will receive a circular explaining the details of the offer in due course. Ventus 3 VCT PLC will not be raising new funds as part of the "C" share offer.

13 November 2008:
UNICORN WIN PRIZE FOR LEAST INFORMATIVE INTERIM MANAGEMENT STATEMENT

Unicorn AIM VCT 2 has just released its Interim Management Statement for the period 1 July to 31 October 2008. They win the award for avoiding the bad news on their performance in the period by not including the latest net asset value. Instead they dance around the point by saying "In the four months to the end of October 2008, the Net Asset Value of the Ordinary Share Fund fell by 23.7%, whilst the Net Asset Value of the C Share Fund declined by 25.8%". This is quite simply unacceptable and wins for Unicorn the title previously held by Nick Ross at Acuity who failed to include any mention at all of the Net Asset Value in his July Interim Management Statement for his Acuity VCT.

These uninformative statements are no way to treat investors even if they do satisfy the laughably titled "Disclosure and Transparency Rules" of the UK Listing Authority.

13 November 2008:
PENNINE AIM VCT 6 IS LATEST VCT TO SUSPEND BUYBACKS

This VCT intends to return 30p to shareholders in July 2009 and has just announced that in order to be able to pay the 30p Return without the need to make any substantial realisations of AIM-quoted investments, the Board has decided to conserve cash by suspending its share buyback policy until the after (sic) 30p Return has been paid.

4 November 2008:
VCT PRESS COMMENT

VCT investors will have seen the following article on VCTs in the Independent on Sunday this Sunday.

Venture capital trusts could struggle to survive, says study

One in 10 venture capital trusts face not being able to pay managers a fee for their services because of the effects of the credit crisis, a study has shown.

Analysis by law firm Taylor Wessing shows an increasing number of trusts struggling to survive in the downturn, with one trust, Hygea VCT, needing to pay fees that equate to nearly 1,000 per cent of its liquid asset base. VCTs were first established by the Tory government in the mid-1990s to encourage investment in vibrant smaller companies. They came with generous tax breaks, although these have been pared back in recent years.

Tim Stocks, a partner at Taylor Wessing, said it was likely that many trusts would have to restructure in the wake of the downturn. "One VCT we looked at invests heavily in other funds run by the same management – as much as 30 per cent," he said. "It very much has the feel of the spiral that appeared in the split capital investment trust sector, which suffered so badly in the past."

Mr Stocks added: "Given the range and number of investments in these funds, will the managers have the operating cash needed to fund the overheads, including the requisite number of executives to review the portfolio and manage investment value?"

The comment "It very much has the feel of the spiral that appeared in the split capital investment trust sector, which suffered so badly in the past" should not stand unchallenged.

In our view it is quite simply incorrect. Split cap investment trusts invested in other split cap trusts. No VCT invests in other VCTs.

What they do sometimes do is invest a portion of the 30% of its assets that a VCT does not have to hold in qualifying investments in unit trusts run by the same management group. We are not aware of more than three VCTs that follow such a route and all three clearly indicated this in their prospectuses.

Tim Stocks told us:

"In my interview with the Independent on Sunday I referred to the arrangements for managing cash which some VCT managers use as having the "feel of the spiral in the split capital investment trust sector." For VCTs cash management has in many instances involved investing in hedge funds, investment trusts and funds (in some cases under the common management of the VCT manager) and other investments. Faced with under performance, managers of split capital trusts in some cases addressed this by investing in other funds. VCT managers investing cash assets in hedge funds and other investment trusts in some cases involving co-managed funds, may be said to share these split capital characteristics.
VCT net asset write-downs in the forthcoming reporting season will reflect the performance of the underlying investment portfolio in the current and difficult market conditions. Such write downs could be exaggerated depending on how cash has been managed."

14 October 2008:
MARKET MAKER BLOW TO VCT INDUSTRY

In what Tax Efficient Review hopes will only be temporary, one of the two major market makers in VCT shares is no longer a market maker on the London Stock Exchange. This leaves Winterfloods as the only significant VCT market maker. Along with Winterfloods, the Teathers team under Michael Bellamy were extremely important to maintaining an orderly second hand market in VCT shares and we hope that the team will re-surface soon and resume market-making in VCT shares.

The text of the notice that is on the LSE website is:
STOCK EXCHANGE NOTICE N28/8
NOTIFICATION – TEATHERS LIMITED
1. Following a request from Teathers Limited (“Teathers” or “the firm”), the purpose of this Stock Exchange Notice is to clarify the firm’s membership status.
2. With immediate effect, the firm will no longer be acting as a market maker in accordance with the Rules of the London Stock Exchange. The membership status of Teathers remains otherwise unchanged.

The Stock Exchange Notice is available on the website at http://www.londonstockexchange.com/engb/ products/membershiptrading/rulesreg/stockexnotices/stockexchangenotices2008.htm

13 October 2008:
NEXT ISSUE OF TAX EFFICIENT REVIEW (ISSUE 60) IS EXPECTED TO BE PUBLISHED in week beginning 10 November

It is expected to include the following reviews:

ENTERPRISE INVESTMENT SCHEMES
Axcess EIS Fund 2008
Beer & Partners EIS Scheme
Longbow EIS Portfolio Service
MMC Ventures Co-Investment Fund
Octopus Eureka EIS Portfolio Service
Oxford Gateway Fund 4
Power Amp Music Fund EIS