Written August 2004:

In contrast to the situation in most quoted companies, private shareholders are the predominant holders of shares in Venture Capital Trusts (VCTs). The United Kingdom Shareholders Association (UKSA), as the main voice of private shareholders in the UK, has commenced a campaign to improve the performance and corporate governance of such investment trusts.

The historic performance of VCTs has been very variable. For example for generalist trusts founded in the years 1995 to 1997, the Total Return (net assets plus dividends reinvested) ranges from 174.8 pence to 45.1 pence, from an issue price of 100 pence. The worst case represents a negative annual return of 10.1%!

UKSA believes that many underperforming trusts could be improved, and that the cost structures of these funds needs careful examination and attention. We are also not happy with the information provided in some cases to shareholders, which does not enable shareholders to understand what is happening to their investment. For a copy of an article published in our Newsletter in July 2004, see VCT_Update_Article.

More information on these problems, and our proposed solutions, has been documented in two papers entitled “UKSA Report on Venture Capital Trusts”and “UKSA Guidelines for Venture Capital Trusts” (click on the name to access).