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It is important you read, understand and acknowledge these notes.

Any investment in a Venture Capital Trust (VCT) should be viewed as a high risk and long-term commitment (i.e. at least over five years, but plan for a seven to ten year timeframe). Due to the nature of the underlying assets, VCTs are highly illiquid. As such investors must be aware that they may have difficulty, or be unable to realise their shares at levels close to that that which reflect the value of the underlying assets. The tax incentives available to investors exist in order to attract investment into an asset class that warrants high risk categorisation.

A brief summary detailing the primary risks of investing in VCTs:

* VCTs invest in small UK companies. The failure rate of these is typically much higher than that of larger companies. Qualifying companies must have gross assets of no more than £7 immediately before investment.

* All VCTs are inherently illiquid. The underlying investments are primarily in small companies, either unquoted or listed on AIM or OFEX. These investments may be extremely difficult for fund managers to realise at fair value, and therefore shareholders may not be able to dispose of shares at a price that reflects the value of the underlying assets. There is unlikely to be an active market in the shares. Any buy-back policies in place are always subject to liquidity. The future realisation of shares at, or close to net asset value can never be guaranteed by a VCT manager.

* VCTs are quoted on the stock exchange and, like investment trusts, usually trade at a discount to net asset value, which reflects the likely realisable value of the assets at any given time relative to the net value of the assets.

* There is currently no effective secondary market for VCT shares, primarily because the initial income tax relief is only available to those subscribing for newly issued shares. This compounds the difficulties shareholders may encounter when attempting to sell VCT shares.

* Shareholders must retain VCT investments for at least five years. If shares are sold within this period, the initial income tax relief will be required to be repaid. All tax reliefs are subject to change.

* VCT managers have three years from the issue of shares to invest 70% of the fund's assets in qualifying companies. If this is not achieved the fund's status as a VCT is risked meaning investors could lose their tax relief. There are additional requirements that VCTs must meet (detailed in the section: About Venture Capital Trusts). If the VCT fails to meet the requirements, HMRC may withdraw the fund's status as a VCT and associated tax reliefs.

* VCTs should be viewed as long-term investments. They are designed to give shareholders their capital gain through a tax free dividend stream. Although investors may be free to dispose of their holding after five years (in order to retain their initial income tax relief) we recommend investors should expect to retain their shares for no less than a period of seven to ten years.

* Investment strategies employed by VCT managers differ enormously. To understand the likely nature of the underlying investments, timeframe and return expectations, we strongly recommend individuals considering a VCT investment to contact us for independent advice.

* Always read the 'Risk Warning' notices included in VCT Securities Notes.

* Beware of investing in VCTs that do not have critical mass. We believe that a VCT usually requires assets of approximately £10 million in order to achieve a spread of investments and thus lower company specific risk within the portfolio. Smaller VCTs may be less diverse (increasing risk) and prove more costly to manage.

* VCTs are complex investment products and are only suitable for sophisticated investors.

* Past VCT performance is not and never should be used as a guide to future VCT performance. The value of your investment may go down as well as up.