EDGE_G_4 12-59-34_Layout 1 - The Tax Shelter Report

Edge Performance VCT plc
23
The activities of the companies in which Qualifying Investments have been made from the D Share Fund are described
below.
Non-qualifying investments from the D Share Fund have been made in a series of liquidity funds arranged through UBS.
E Share Fund
Qualifying Investments, totalling £6 million, have been committed, or are the subject of an option in favour of the Company,
from the E Share Fund; once those investments are completed, the E Share Fund will have reached the minimum level
of Qualifying Investments required under VCT rules.
Non-qualifying investments from the E Share Fund have been made in a series of liquidity funds arranged through UBS.
F Share Fund
The offer for subscription in respect of the F Shares was launched in November 2009 and closed in June 2010 having
raised over £29 million before expenses. Suitable specific opportunities have been identified for Qualifying Investments
totalling in excess of £16.5 million, and therefore representing all of the proportion of the F Share Fund available for
Qualifying Investments.
Non-qualifying investments from the E Share Fund have been made in a series of liquidity funds arranged through JP
Morgan Chase and Heartwood.
Investment Policy
Risk Diversification
Edge Performance offers the opportunity to invest in the entertainment industry in a broad range of companies (thereby
diversifying risk) and seeks to allow investors to take advantage of VCT tax reliefs whilst combining:
• high targeted returns;
• downside risk protection; and
• liquidity.
Asset Allocation
Up to 30% of each of the C Share, D Share, E Share, F Share and G Share Funds will remain in a range of fixed income
securities, cash and cash equivalent assets, offering a high degree of capital preservation. Of the balance of each fund
the Company will balance investments with a high level of capital protection, ideally with contractual revenues or capital
guarantees from financially sound counter-parties, with other investments where lower capital protection offers significantly
higher potential returns. Through the use of this blended investment strategy:
• the intention is that the Investor’s risk is thereby minimised, underpinning the return of the Investor’s effective cost
of investment of 70p per Share (assuming tax relief at 30%); and
• the targeted tax free return is 130p per 70p invested (assuming tax relief at 30%, equivalent to a return of 160p
per 100p invested).
Risk Mitigation
Edge’s structure aims to minimise the risk to the investor, whilst still permitting the investor to benefit from attractive
returns. The portfolio investments will be made through loan finance as far as is permitted under VCT rules, which should
provide additional capital protection.
Borrowings
The Company will not incur borrowings to fund its operations.
VCT Status and Maximum Exposures
The Company must be approved by HM Revenue and Customs in order to retain its venture capital trust status. The
conditions which must be satisfied to retain such status include the following restrictions on the maximum exposure of the
Company:
XV:1.2
XV: 2.1