Title: Microsoft Word - 20240618_Mobeus_IG_UK_KID Final (clean) v2 URL Source: https://doc.morningstar.com/document/09036291db51b5dbe108a475ac0aa38c.msdoc/?clientid=ajbell&key=805803a4ca9fc338 Markdown Content: KEY INFORMATION DOCUMENT Purpose This document provides you with key information about The Income & Growth VCT plc . It is not marketing material. The information is required by law to help you understand the nature, risks, costs, potential gains and losses of this product and to help you compare it with other products. This document is prepared on the basis that an investor is either subscribing for new shares in the Company via an offer for subscription (“Offer”) or purchasing secondary shares on the London Stock Exchange (“Secondary Market Purchase”). Product PRIIP Manufacturer : The Income & Growth VCT plc (“Company”) is incorporated and registered in England and Wales as a public company limited by shares under the Companies Act 1985 with registered number 04069483. The Company is run by a board of directors (“Board”), details of which are registered at Companies House and published in the annual accounts and on the Company’s website: www.incomeandgrowthvct.co.uk. Call 0207 382 0999 for more information. Legal Entity Identifier : 213800FPC15FNM74YD92. ISIN: GB00B29BN198. London Stock Exchange Code: IGV. Competent Authority : UK Listing Authority (part of Financial Conduct Authority (“FCA”)) Date of production of this Key Information Document (“KID”): 18 June 2024 Investment Adviser to the Company : Gresham House Asset Management Limited (“Gresham”) (www.greshamhouse.co.uk), authorised and regulated by the FCA (reference number 682776) You are about to purchase a product that is not simple and may be difficult to understand What is this product? The Company is a venture capital trust (“VCT”) with one class of ordinary shares of 1p each, listed on the London Stock Exchange. The Company’s shares are typically subscribed for via an Offer, which for eligible VCT investors, will attract income tax relief, and other VCT tax reliefs. Existing shares can also be bought and sold through secondary markets. A purchaser who does not benefit from the initial upfront income tax relief, could still benefit from other VCT tax benefits. The objective of the Company is to generate a regular income stream through dividends generated from income and capital growth from realising underlying investments, while continuing to qualify as a VCT. The life of the Company may periodically be voted on by shareholders, although the Company’s shares do not have a specified maturity date or unilateral termination date. The Company’s policy is to invest primarily in a diverse portfolio of young, developing unquoted companies in the UK, which are deemed to meet HM Revenue & Customs (“HMRC”) VCT requirements. Investments are made alongside other VCTs advised and managed by Gresham. If investing via an Offer, to benefit from 30% initial income tax relief, investors are required to hold the investment for a minimum of five years. If the investor were to sell before this date, any initial income tax relief will be repayable to HMRC. Intended retail investor: A typical retail investor for this product would be a relatively high net worth individual, who already owns a quoted investment portfolio, and wishes to allocate funds to a product containing exposure to higher risk small unquoted companies, as part of a balanced portfolio. They will be able to utilise the tax advantages of the product and could afford to withstand any losses that may arise from an investment in a VCT. What are the risks and what could I get in return? Summary Risk Indicator The summary risk indicator is a guide to the level of risk of this product compared to other products. It shows how likely it is that the product will lose money because of movements in the markets or because you are not able to realise any value from your shares. You may get back less than the amount invested. You may not be able to sell your shares easily or you may have to sell at a price that is significantly less than anticipated or significantly impacts on the total return achieved. Although the Company has a share buyback policy (see ‘How do I sell my shares?’ below), the shares of the Company are otherwise relatively illiquid and may be difficult to return value to shareholders if a substantial number of shareholders all want to sell at the same time. The summary risk indicator assumes you keep the product for a minimum of five years. The actual risk and returns can vary significantly if you sell your shares before this date. We have classified this product as 6 out of 7, which is the second highest risk class. This is due to the new requirement that VCTs have a minimum risk score of 6. The Company’s investments are in unquoted entities which have valuation and performance uncertainties and liquidity risk. Other principal risks include: Economic, VCT Conditions, Regulatory, Financial, Market, Market Liquidity, Counterparty. With higher risk comes also the potential for higher returns: see ‘Performance Information’ below for more details of past and prospective possible returns. The value and tax benefits are conditional on the shares being held for at least five years and the Company maintaining VCT status. This product does not include any protection from future market performance so you could lose some or all of your investment. If the company’s investment performance is poor, you could lose your entire investment. 1 2 3 4 5 6 7 <‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ > Lower risk Higher risk Performance Information The main factors that will affect the performance of the Company are the performance of the young unquoted companies held within the portfolio; the ability of the Investment Adviser to; a) identify suitable investments for Board approval; b) realise portfolio companies profitably; and c) the ability of the Board to oversee the Company and its objectives. Investors should note that c.15% of the portfolio is made up of investments made under the previous management buyout (“MBO”) strategy which, since November 2015 is no longer permitted. Since this date, all new investments must be in smaller, younger companies that carry higher risk, albeit the prospect of higher but more volatile returns. All performance data is based upon share price total return, which assumes that dividends are reinvested at the date of payment. For an indication of the performance of the enlarged The Income & Growth VCT (including the acquisition of Mobeus Income and Growth 4 VCT), we produced a back ‐test of the merged fund which would have generated 14.7% per annum with a volatility of 11.8% per annum over the last five years. Over a longer period starting January 2008, the combined fund delivered an average return of 9.1% per annum. In our reduction ‐in ‐yield cost calculations below, we have used a forward ‐looking return of 13.8% per annum over the five ‐year recommended holding period. Venture Capital Trusts can carry more risk than might be indicated by the Company’s share price performance history, so we have also compared the Company’s risk against a liquid ‘investment proxy’ for comparison. The proxy is a blend of equity indices based on the sector asset allocation at 30 September 2023. The proxy performance history goes from 29 March 1999 to 10 June 2024, and the highest volatility in this proxy over a rolling one ‐year period was 36.3% p.a. What could affect my return positively? Specific factors that could affect returns positively would be achieving good value, growth and income returns from the Company’s portfolio, and achieving profitable realisations. Income and capital returns will support the Company’s dividend policy. General factors that affect positive returns for the VCT would be an extended period of UK economic growth and fiscal stability. Increases in the Software & Services, UK Retailers and Industrial Support Services sectors indices will likely benefit returns, as these sectors make up close to 85% of the portfolio. Day to day the Company’s correlation to the UK market is quite low but we would expect larger upward market movements in the UK market to correlate with improvements in valuations in the Company’s underlying holdings. In terms of quantitative evidence, the highest one ‐year return for the combined timeseries was 77.3%. Over the recommended holding period of five years, the highest five ‐year rolling performance of the combined timeseries was 19.8% per annum, similarly, the highest rolling five ‐year return of the proxy was 28.4% per annum. What could affect my return negatively? Specific factors that affect returns negatively are an underperforming portfolio of unquoted companies with some companies potentially being realised at a loss, a lack of income and capital returns impacting dividend payments to shareholders and a lack of cash liquidity to pursue new and follow on investments. Other factors that affect returns negatively are poor performance of the UK equity markets, in addition, a decrease in the UK Retailers and Industrial Support sector indices is likely to impact on returns. In terms of quantitative evidence, the lowest one ‐year return for the combined fund was ‐18.7%. The poor five ‐year rolling return for the combined fund was 2.6% per annum, and the proxy experienced a poor five ‐year return of ‐20.4% p.a. What could happen under severely adverse market conditions? A severe experience could be a loss of ‐31.5%, which occurred in the combined fund between April 2008 and December 2008, before recovering just over two years later in February 2011. The proxy experienced a more severe loss of ‐83.0% which occurred between March 2000 and Oct 2002 and took around twelve and a half years to recover in May 2015. The Company may experience a high proportion of defaults within the portfolio during periods of market stress, which could result in you losing all of your investment. What happens if The Income & Growth VCT plc is unable to pay out? If the Company is unable to pay out, you might lose all of your investment. As a shareholder of the Company, you would not be able to make a claim to the Financial Services Compensation Scheme about the Company in the event that you lose money on your shares in the Company. What are the costs? The reduction in yield (“RIY”) shows what impact the total costs you pay will have on the investment return that you might get. The total costs take into account one ‐off, ongoing and incidental costs. The amounts shown here are the cumulative costs of the product itself for three different holding periods. The figures assume that you invest £10,000. The figures are estimates and may change in the future. The person selling you or advising you about this product may charge you other costs. If so, this person will provide you with information about these costs, as well as other costs such as any applicable taxes, and show you the impact that all such costs will have on your investment over time. Investment of £10,000 Scenarios 1 year 3 years 5 years (Recommended minimum holding period) Offer – Total costs 686 GBP 1,888 GBP 3,738 GBP Offer ‐ Impact on return (RIY) per year 6.86 % 4.49 % 4.02 % Secondary Market Purchase – Total costs 331 GBP 1,417 GBP 3,722 GBP Secondary Market Purchase ‐ Impact on return (RIY) per year 3.39 % 3.39 % 3.39 % The table below shows the impact each year of the different types of costs on the investment return that you might get at the end of the recommended holding period and the meaning of the different cost categories. > Prospectus Secondary > market > One ‐off > costs Entry costs 0.70% ‐ > The impact of the costs you pay when making your investment. Initial Offer costs > are up to 3.00% of the Investment amount. This is the most you are likely to pay > under an Offer, and you could pay less. SDRT of 0.5% is payable if the shares are > purchased on the secondary market. See Other relevant information. > Exit costs ‐‐The impact of the costs of exiting your investment when it matures. See the ‘How > do Isell my shares?’ section below. > Ongoing > costs Portfolio > transaction costs 0.32% 0.32% > The impact of the costs of the Company buying and selling underlying investments > for the product. These costs include investee company paid due diligence prior to > investment, as well as arrangement fees payable to Gresham upon initial > investment. > Other ongoing > costs 2.51% 2.50% > The impact of the running costs of the Company (which is apublicly listed > company), include Gresham advising upon the Company’s investments. This figure > also includes the indirect costs of anon ‐executive director appointed by Gresham > on the board of each portfolio company, paid for by that portfolio company. > Incidental > costs Performance fees 0.49% 0.49% The impact of any performance fee Gresham may earn these from the Company > but only if the Company outperforms its benchmark^. > Carried interests ‐‐Not applicable. ^ Under a revised agreement, for financial years beginning on 1 October 2024, Gresham House is entitled to 15% of an amount by which the Average Total Return exceeds the Average Annual Hurdle on a pence per share basis over a five year period, but any payment subject to an PIF cap of 1.25% of net assets at the end of year 5. The figure quoted estimates the impact on costs if the agreement were in place for the previous five years to 30 September 2023. Under the terms of the revised Agreement, no fee will be payable for year ending 30 September 2024 How long should I hold it and can I take money out early? This is a long term investment. If you invest via an Offer, you should be prepared to hold your shares for a minimum of five years. If you decide to sell your shares before then, you will be required to repay to HMRC the 30% upfront income tax relief you claimed. How do I sell my shares? VCT share prices are quoted on the London Stock Exchange, so you can buy or sell shares through a stockbroker or a share dealing account. It is worth noting that, since previously owned VCT shares do not qualify for the 30% upfront income tax relief, the market for buying second ‐hand VCT shares is limited. The open market price may therefore not reflect the underlying net asset value of the shares. The Company aims to offer a ‘share buyback facility’ for investors, provided that the Company has funds and reserves available. This facility allows existing investors in the Company to sell their shares back to the Company at a discount to NAV. The current policy agreed by the Board is to aim to buy shares back at a 5% discount to their NAV. Share buybacks are conducted at the Board’s discretion, and therefore there can be no guarantees you will always be able to sell shares on request. Due to regulations governing public companies, there are restrictions as to when the Company may conduct a share buyback – for example, during a period when the Company is preparing its annual and half ‐year report and accounts. How can I complain? As a shareholder in the Company, you do not have the right to complain to the Financial Ombudsman Service (FOS) about the management of the Company. If you have a complaint about the Company or this KID, please email: complaints@greshamhouse.co.uk, call us on +44 (0)204 549 2332 or write to us at: Gresham House Asset Management Limited, 80 Cheapside, London, EC2V 6EE, and we will do our best to help. We will also send you a printed copy of our complaints procedure, which follows the rules set out by the FCA. Other relevant information This document is not a prospectus and any decision to invest should be based on all relevant available information on The Income & Growth VCT plc. Further information on the Company’s investment strategy and other relevant documents, such as the Company’s most recent Prospectus (detailing a merger with Mobeus Income & Growth 4 VCT plc) and Offer for Subscription, Half ‐ Year and Annual Reports are available on the Company’s website at www.incomeandgrowthvct.co.uk. If you have any questions, or require any further information, please send an email to mailto:mobeusvcts@greshamhouse.com. Depending on how you buy these shares you may incur other costs, including broker commission, platform fees and Stamp Duty. The distributor will provide you with additional documents where necessary. The cost, performance and risk calculations included in this KID follow the methodology prescribed by UK rules. If you are in any doubt about the action you should take, you should seek independent financial advice.