Pender Growth Fund FAQs
Investing in Pender Growth Fund
Individuals or corporations resident in BC.
To purchase shares in Pender Growth Fund contact a registered investment advisor or mutual fund dealer (FundServ Codes: PGF101, PGF102, PGF103, PGF104). Your broker must be eligible to sell the Fund.
Otherwise, contact our office so we can enable you or your broker to place orders in the Fund. Call 1-866-377-4743 and ask for the Sales team.
Investors must be residents of British Columbia to be eligible for the VCC tax credit.
You can buy shares in Pender Growth Fund at any time during the year. However your tax credit will be sent to you only after you have filed your annual tax return.
Pender Growth Fund has an equity allocation of $7 million for the 2009 tax year. Shares in the Fund are available until we reach this allocation, at which point we have to stop selling shares. In prior years we have sold out as early as November. If you want to invest in Pender, it's best not to wait.
You can buy shares and qualify for the 30% cash back tax credit at any time during the tax year or up to 60 days into the following year. The Fund has a limited equity allocation each year and generally sells out before the RRSP deadline.
Individual investors can purchase up to $200,000 in total each year and can receive refundable tax credits of up to $60,000 or 30% of the purchase amount.
The minimum initial investment is $2,500.
Yes. Pender Growth Fund shares are RRSP eligible. Any BC resident can buy shares of the Fund and use their investment as an RRSP contribution. This approach enables maximum tax savings.
Yes. You can buy shares with funds inside your RRSP and receive the 30% tax credit outside of the RRSP. This approach enables you to harvest money from your RRSP tax free.
You can contribute to a Spousal RRSP that purchases shares in the Fund for your spouse; however, the beneficiary of the Spousal RRSP receives the 30% tax credit.
Yes. Shares in the Fund can only be sold through a licensed investment advisor, broker or mutual fund dealer.
You do not pay commission to your investment advisor when you buy shares in the Fund. However, the Fund does pay a commission to your advisor that reduces the total net asset value of the Fund.
The objective of the Fund is to increase the value of its shares through the capital appreciation of its investments. Shares are redeemable at values based on Pricing Net Asset Value (Pricing NAV) per Share.
Generally, your money must stay invested for five years from the date you purchased shares in the Fund.
Series I Shares, which were previously shares of FutureFund Capital, can be redeemed at any time at the Pricing Net Asset Value per Share.
Series II Shares, which are sold to new investors, are eligible for redemption five years from their date of issue. The redemption price is also based on the Pricing NAV.
The price per share is determined every Friday. All shares purchased within the week are sold at this weekly price. For instance, purchases made between Monday, September 20 and Friday, September 24 will be priced at the value on Friday, September 24.
The Fund sells shares at the price calculated each week by dividing the Pricing NAV of the Fund by the total number of shares held by its Shareholders.
The Pricing NAV per Share fluctuates with the value of its investments.
No. However the Pricing Net Asset Value per Share is available on the PenderFund website and reported weekly in the mutual fund section of The Vancouver Sun, The Province, The Globe and Mail and The National Post, where the Fund is listed under The Manager, PenderFund Capital Management.
Venture capital funds like Pender Growth Fund have the potential to generate higher returns compared to other types of investments, but they can also pose an increased risk to investors. In addition, while you will receive a 30% tax credit, it is important to understand that your investment must be held for at least five years.
The Manager takes a number of steps to manage risk:
1. The Fund avoids start-ups. It focuses on later-stage companies that have moved beyond the early, riskier stages of growth. These companies have established management teams and are selling proven products that are generating steady revenues.
2. The Fund focuses on investing in publicly listed companies that have the potential for early liquidity. The objective is to provide adequate funds to meet future redemptions.
3. The Fund invests in a number of companies that are diversified across several technology sub-sectors. The goal is for no one company to significantly affect the future of the Fund.
4. The Manager and Board of the Fund have extensive experience in venture capital investments and we offer advice and guidance to companies in our portfolio. Our goal is to optimize the performance of the Fund by selecting solid companies. We then take an active role with management to develop the business and enhance the value.
Refundable Tax Credits
Investors in Pender Growth Fund are eligible to receive, from the BC government, a cash-back tax credit equal to 30% of the amount they invest up to a maximum of $200,000 per year.
The investment tax credit will be applied to your income taxes payable, and if the credit is more than taxes payable you will receive a cheque for the remaining credit.
The tax credit effectively reduces the cost of your investment by 30%. If you invest $10,000 in Pender Growth Fund, you will receive a $3,000 tax credit making the actual after tax cost of your investment only $7,000.
An individual investor who buys up to $200,000 of shares in Pender Growth Fund each year will receive a fully refundable BC Tax Credit equal to 30% of the sum they invested, up to a maximum of $60,000. If an individual has unused tax credits greater than $60,000, the excess can be used in any of the next four tax years — up to an annual limit of $60,000.
The 30% tax credit is available to BC residents who purchase original shares in the Pender Growth Fund. It is a straight 30% provincial tax credit determined by the amount invested. It’s not a loan - you do not need to pay the money back. It’s not taxable - it does not affect your marginal tax rate. For example, an investor who purchases $10,000 will receive a tax credit receipt from the BC government of $3,000. No matter what your income, you are eligible for the full 30% credit on investment.
The deadline for subscriptions to receive the tax credit is 60 days past the end of the prior calendar year; however, the tax credits can sell out before that time. The BC government will then send you a tax credit notification that is to be included in your individual tax return.
When you buy shares in the Pender Growth Fund you receive a fully refundable, cash-back tax credit of 30% of the sum invested, or up to $60,000. Non-refundable credits from Labour Sponsored Funds can only be used to reduce taxes owing and are limited to maximums of $750 and $2,000 for federal and BC credits respectively.
The 30% cash-back tax credit offers tax planning opportunities to individuals. You can increase tax savings; withdraw cash from your LIRA or RRSP; maximize your RRSP contributions; use it as an alternative to oil and gas or resource flow-throughs or reduce or eliminate taxes payable.
A corporate investor can buy shares of the Fund and use the tax credit to reduce any BC income tax payable. A corporation is not limited to a maximum deduction of $60,000, but it will not receive a refund if its tax credit exceeds the amount of tax it would otherwise have to pay in a taxation year. Unused tax credits can be carried forward for up to four tax years.
No. The 30% tax credit does not affect the calculation of AMT.
Yes, you can still purchase up to $200,000 of shares of Pender Growth Fund each year. Even though you may be receiving non-refundable credits from a Labour-Sponsored Fund (LSF), this does not restrict your ability to buy Pender Growth Fund shares and take full advantage of refundable tax credits.
No. There is no lifetime limit.
Net Asset Value
The Pricing NAV per share is the price per share at which the Fund issues and redeems shares.
The Administrator determines the Pricing NAV per share of the Fund every Friday by dividing the Pricing NAV of the Fund on that date, by the total number of shares of the Fund outstanding on that date. The Pricing NAV per share is published weekly on the Pender website and in the mutual fund section of The Vancouver Sun, The Province, The Globe and Mail and The National Post, where the Fund is listed under The Manager, PenderFund Capital Management.
This method may not be directly comparable to the pricing methods used by other venture capital funds, such as labour-sponsored funds, based in other provinces.
The Pricing NAV per share of the Fund may differ from the prices at which holders of shares are able to sell their shares to third-party purchasers.
To assist investors in assessing the difference between Pricing NAV per share for purposes of purchasing and redeeming shares and NAV per share for financial reporting purposes, the Fund will provide a reconciliation of Pricing NAV of the Fund and NAV of the Fund in the notes to its year-end audited and quarterly financial statements or in a separate audited schedule thereto.
On any valuation date, the Pricing NAV of the Fund is equal to: the NAV of the Fund at that date plus the balance of the issue costs of the Fund on that date, which would remain unamortized on that date if such issue costs of the Fund that were incurred on or after July 1, 2003 were to be amortized on a straight-line basis over five years from the date of issuance of the applicable shares.
Since issue costs are associated with the raising of capital that the Fund will typically have available for at least five years, the Board of Directors has determined that it is appropriate to spread such costs equally, in the case of those incurred on or after July 1, 2003, over five years from the date of issuance of shares in respect of the issuance for which they were incurred. The five-year term was selected because investors cannot generally redeem their shares prior to having held such shares for at least five years.
The Fund is increasingly focused on investing in public companies and situations that offer the potential for early liquidity. Market values for the Fund's portfolio of investments are determined using the following methods:
Valuation of Portfolio Companies for Which a Published Market Exists
The publicly listed investee companies are valued on the basis of the weighted average of their closing prices over the 21 previous trading days.
In extraordinary situations where the market price of a publicly listed investment has appreciated significantly, yet the volume trading is low, the Board reserves the right to instruct the Manager to apply a discount to the value of the investment. The Valuation Committee of the Board will use its discretion to identify such situations and determine appropriate discounts.
Valuation of Portfolio Companies for Which no Published Market Exists
Private companies make up a smaller percentage of the Fund's portfolio. The fair market value of these investments is recorded at cost, unless an adjustment, either upward or downward, is deemed necessary supported by pervasive and objective evidence.
The process of valuing venture investments for which no public market exits is inevitably based on inherent uncertainties and the resulting values may differ from values that would have been used had a ready market existed for the investments. These differences could be material to the fair values of the investment portfolio.
When dealing with accounting or valuation matters not specifically referred to in the Valuation Methodology, the Manager, the applicable Administrator, the Valuation Committee and the Directors will apply generally accepted accounting principles or generally accepted valuation principles.