Investment Trust Subscription Shares

Subscription shares (or "Bonus Shares") are effectively the same as Investment Trust Warrants and should be valued in the same way (see related warrant article here)

Subscription shares are call options on the underlying Investment trusts usually issued with a very long life (e.g. several years) They can be traded like any share even when the underlying share-price is below the strike price, because someone else may want to take the gamble that the share price will rise significantly before expiry thereby getting them a large geared profit (or lose all of their money) For full details about how to value these see the warrant and option pricing articles below.

Warrants are usually issued at the launch of an Investment Trust company, with a single exercise date, whereas some of the latest subscription shares issues have had more complex arrangements, with multiple exercise dates each with a different exercise price. Here is an example:

Exercise dates and strike prices for BlackRock New Energy Subscription shares (BRNS.L):

exercisable on each of 31 January, 30 April, 31 July and 31 October between 31 October 2009 and 31 July 2014

Exercise prices:

31 January 2010 to 31 July 2010 46 pence per share
1 August 2010 to 31 July 2012 50 pence per share
1 August 2012 to 31 July 2014 59 pence per share

As the credit crunch took effect and banks were less likely to lend to investment companies or indeed to renew existing lending on favourable terms Investment Trust companies needed to raise funds in other ways. Subscription shares have recently been issued by:

JPMorgan Emerging Markets (JMG) has issued Subscription Shares (JMGS)

Subscription Shares issued to Qualifying Shareholders on the basis of one Subscription Share for every five Existing Ordinary Shares held on the Record Date. The Subscription Price will be equal to the published unaudited NAV per Ordinary Share on 9 June 2009, plus a percentage premium to such amount, rounded up to the nearest whole penny as follows:

a) exercised between 1 August 2009 and 31 July 2010 - 1% premium to NAV (422p)
b) exercised between 1 August 2010 and 31 July 2012 - 10% premium to NAV (460p)
c) exercised between 1 August 2012 and 31 July 2014 - 30% premium to NAV

Fidelity Japanese Values (FJV) has issued Subscription Shares (FJVS)

One FJVS Subscription Share was issued for every five Ordinary FJV Shares held on 10 November 2009, at no cost. The Subscription Price payable to exercise each Subscription Share has been calculated to be 55 pence (1% premium to the published NAV per Ordinary Share on 10 November 2009) Subscription Shares will be available to exercise from February 2010 onwards on a monthly basis and you will be able to convert shares up until February 2013.

Standard Life UK Smaller Companies Trust (SLS) Convertible Unsecured Loan Stock 2018 ("CULS") at 100p per £1 nominal unit

Standard Life UK Smaller Companies Trust PLC (SLS) has proposed to raise up to £25 million by placing an open offer of CULS to replace the existing debt facility, repayable in 2011. Qualifying Shareholders can apply for 0.19616288 nominal units of CULS for each Ordinary Share held on the Record Date (28 February 2011) The CULS will return a yield of 3.5% per annum payable semi-annually in arrears on 30 September and 31 March in each year, with the first interest payment on 30 September 2011. CULS Holders can convert their CULS into Ordinary Shares every six months from 30 September 2011 until 31 March 2018. The initial Conversion Price will be set at a 10 per cent. premium to the NAV per Ordinary Share on 23 March 2011

Full List of Subscription Shares Currently In Issue:

ABERDEEN LATIN AMERICAN INCOME LTD SUB

ABERDEEN NEW THAI IT PLC SUB: 31-Jan-13

ADVANCE DEVELOPING MARKETS LD SUB: 31-Oct-11

BLACKROCK NEW ENERGY IT SUB: 31-Jul-14

DUNEDIN SMALLER COMPANIES IT PLC SUB: 28-Feb-12

ECOFIN WATER & POWER OPPORTUNITIES SUB: 31-May-12

FIDELITY ASIAN VALUES PLC SUB: 31-May-13

FIDELITY JAPANESE VALUES PLC SUB: 28-Feb-13

GEIGER COUNTER SUBS: 31-Jan-11

HENDERSON OPPORTUNITIES TRUST SUB: 15-Feb-14

HGCAPITAL TRUST PLC SUB: 31-May-13

IMPAX ASIAN ENVIRONMENTAL MARKETS SUB: 31-Oct-14

INVESCO ASIA TRUST PLC SUB: 31-Aug-12

JP MORGAN ASIAN IT PLC SUB: 31-Mar-14

JP MORGAN BRAZIL INVESTMENT TRUST PLC SUB: 30-Jun-13

JP MORGAN CHINESE IT PLC SUB: 15-May-13

JP MORGAN EMERGING MARKETS IT PLC SUB: 31-Jul-14

JP MORGAN INDIAN IT PLC SUBS: 02-Jan-14

JP MORGAN JAPAN SMALLER COMPANIES TRUST PLC SUBS: 31-Mar-14

PERPETUAL INCOME AND GROWTH INVESTMENT TRUST PLC SUB: 31-Aug-13

RCM TECHNOLOGY TRUST PLC SUB:10-Apr-12

SCHRODER ASIA PACIFIC SUB: 31-Dec-12

SCHRODER UK GROWTH PLC SUB : 31-Jul-12

SR EUROPE INVESTMENT TRUST PLC SUBS: 24-Apr-12

THE THROGMORTON TRUST PLC SUB: 31-Oct-11

WORLDWIDE HEALTHCARE TRUST PLC SUB: 31-Jul-14

And Some Warrants:

ABERDEEN ASIAN INCOME WTS: 31-May-13

ABERDEEN ASIAN SMALLER COMPANIES INVESTMENT TRUST PLC WTS: 30-Nov-10

JUPITER GREEN IT PLC WTS: 31-Jul-11