Subscription Shares. Understanding the bonus issue of subscription shares

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1 Subscription Shares Understanding the bonus issue of subscription shares

2 Contents Subscription Shares 3 Fidelity Investment Trust Subscription Shares 4 Converting Subscription Shares 5 Subscription Shares in an ISA 6 Subscription Shares in the Share Plan 8 We re here to help 10 2 Subscription shares

3 Subscription Shares offer shareholders the right but not the obligation to subscribe for ordinary shares during a pre-determined period at a pre-determined price. Important information This guide is not a prospectus but an advertisement. Investors should not subscribe to convert these shares except on the basis of information contained within the Prospectus. For more information, including the necessary forms for conversion, please visit fidelity.co.uk/ japansubs. Please remember, the value of investments may fall as well as rise, and you may not get back what you invest. Fidelity offers information and guidance about products and services, but does not give advice based on individual circumstances. If you are unsure of the suitability of an investment, please contact an authorised financial adviser. The value of investments in overseas markets may be affected by changes in currency exchange rates. This trust invests more heavily than others in smaller companies, which can carry a higher risk because their share prices may be more volatile than those of larger companies. Eligibility to invest in an ISA will depend on individual circumstances, and all tax rules may change in the future. Subscription Shares qualify for the Share Plan and ISA. As Subscription Shares are issued free of charge, they do not use up any of your ISA allowance when issued. The Subscription Shares hold a monetary value and may be traded in a similar fashion to Ordinary Shares or they may be converted into Ordinary Shares. (See page 5 for further details on converting Subscription Shares.) Subscription Shares lock the price at which new Ordinary Shares may be purchased on future conversion dates during a pre-determined period. As a holder of a Subscription Share you have the choice whether or not to convert it to a new Ordinary Share on these dates. Whether you wish to convert your Subscription Share will normally be dependant on the prevailing Ordinary Share price on the conversion date. In general it is anticipated that investors would want to convert their Subscription Share Rights if the market price of Ordinary Shares exceeds the Conversion Price at the relevant conversion date. For example, if the Conversion Price on the relevant conversion date was 150p and the market price of Ordinary Shares on that date was 100p, it would be anticipated that investors would not convert their Subscription Shares to Ordinary Shares. Subscription shares 3

4 Fidelity Investment Trust Subscription Shares The Investment Trust Board has allocated investors one Subscription Share for every five Ordinary Shares held in Fidelity Japanese Values PLC on 26th August You may have been issued Subscription Shares for investments held in either an ISA or the Share Plan. If you have investments in more than one account, you will have received Subscription Shares for each account. If you have a qualifying direct share holding, you will also receive Subscription Shares. The Subscription Price payable to exercise each Subscription Share has been calculated as 86.5 pence. This is based on the Subscription Price being equal to a 2% premium to the published NAV (net asset value) per Ordinary Share as at 5.00 p.m on 26th August 2014, rounded up to the nearest whole penny. These Subscription Shares will be available for you to exercise from September 2014 onwards on a monthly basis and you will be able to convert shares up until 29th April If you wish to sell your Subscription Shares you can do so at any point from when your shares are issued. Also you can switch the value of the Subscription Shares to another fund, though outside of an ISA this may trigger a capital gains tax liability. Each Subscription Share may only be exercised once. Who is eligible for Subscription Shares? All UK and EEA resident Shareholders, including those in the Fidelity Investment Trust Share Plan and ISA, will be eligible to receive Subscription Shares. EEA residents who remain out of the country will only be able to sell them. Although, if EEA residents return to the UK before 29th April 2016, you will be eligible to convert your shares as explained in this guide and using the forms available on the website. Given restrictions on the issuance of shares applying to certain jurisdictions, shareholders who are not resident in the EEA will not be eligible to receive the Subscription Shares. New investors in the Company after 26th August 2014 will not be eligible to receive the Subscription Shares. 4 Subscription shares

5 Converting Subscription Shares If you wish to exercise your Subscription Shares they will be converted into Ordinary Shares, the same type of shares held at the time of issue. Whereas the exercise price of Subscription Shares is fixed, the price of Ordinary Shares is variable as it can fluctuate as supply and demand for the shares changes. This means that the Ordinary Share price may go down as well as up and the Ordinary Share price can fall when the NAV per Ordinary Share rises, or vice versa. When you are considering converting your Subscription Shares you should consider the following: If you exercise Subscription Shares at a time when the Subscription Share price which is 86.5 pence is greater than the prevailing share price of the Ordinary Share, you would actually be paying more for the share than they are valued by the market The Subscription Shares, once converted into Ordinary Shares, will be affected by the same risk factors as the Ordinary Shares you currently hold The Subscription Share Rights (rights to sell or convert) will lapse on the last business day of April 2016 and the Subscription Shares may have no value to holders after that date In the case of any Subscription Shares which have not been exercised on or before the final exercise date, these will cease to have any value unless a trustee, which has been appointed by the Company, decides that the net proceeds of the sale of the Ordinary Shares that would arise on the exercise of the Subscription Rights after costs would exceed the costs of exercise of the Subscription Rights. The trustee would then exercise or arrange exercise of all outstanding subscription Shares and sell the Ordinary Shares arising. The net proceeds of the sale, less costs, would be sent to the Subscription Shareholders unless the amount to which a Subscription Shareholder is entitled is less than 5. For full details, including your cancellation rights please refer to the Key Features Document and Prospectus available online at fidelity.co.uk/japansubs Subscription shares 5

6 Subscription Shares in an ISA Investments in ISAs are free of UK tax on income and gains*. Receipt of Subscription Shares and any subsequent disposal of Subscription Shares held in an ISA will not be a chargeable event for capital gains tax purposes. As an ISA holder, you may convert your Subscription Shares into Ordinary Shares from September However, any new monies paid into your ISA to convert your Subscription Shares will contribute towards your annual allowance in the year in which you exercise your conversion rights and must not exceed the limit for that tax year. Subscription Shares can be bought and sold independently of the Ordinary Shares. However, within a Fidelity ISA it will not be possible to buy more Subscription Shares. Once issued, if you do not wish to retain the Subscription Shares, you can sell them as you would sell any other security or switch the value to another fund. Whether you re eligible to invest in an ISA, and how much the tax savings are worth to you, will depend on your particular circumstances. It s also important to bear in mind that tax rules may change in the future. Converting Subscription Shares in an ISA You ISA allowance for the 2015/16 tax year is 15,240. To convert your Subscription Shares within your ISA, you must use money held within ISA Cash Park. This can be new money in the current tax year or money you already hold in the Cash Park from previous years investments. For more information on the Cash Park, please visit fidelity.co.uk/cashpark. Use the ISA Conversion Form available via the website at fidelity.co.uk/japansubs. All you have to do is specify the number of shares you wish to convert and which ISA plan year you would like the money in the Cash Park to come from. Please note, you must ensure that you have the money held in the Cash Park before you give an instruction to convert the Subscription Shares. If you wish to use the current year s allowance to convert your Subscription Shares you will also need to complete a Stocks and Shares ISA application form and choose the Cash Park option. Fidelity will convert shares on the last business day of each month. Once you have made your investment into the Cash Park and also when Subscription Shares have been converted, you will receive Confirmation of Transactions showing your transaction details. *A 10% tax credit is still payable on UK share dividends and cannot be reclaimed. 6 Subscription shares

7 Subscription Shares in an ISA What is ISA Cash Park? Our Cash Park is a home to shelter your money until you want to convert your Subscription Shares. It allows you to secure your ISA allowance without having to decide immediately where and when you wish to invest. If you don t already have money in the Cash Park you can use a Stocks and Shares ISA application form to invest in the current tax year. When you re invested in ISA Cash Park you can earn interest, free of any tax. The minimum investment is 1,000, and you can invest your full 15,240 ISA allowance, depending on how much you have already invested in ISAs this year. Once we have received your instruction to convert Subscription Shares from the Cash Park, you will no longer receive interest on this as the money will be allocated for investment within that month. Please be aware that shares will be converted on the last business day of every month. If you wish your shares to be converted in a particular month Fidelity will require the form to be sent in by the first business day of that month. For example, if you would like to convert your shares in March 2016, we must receive your form at the latest by 1st March Subscription Shares in Account Management Our online Account Management service is a great way to view your Subscription Shares and follow your investments. You can see an up-to-date balance, check your transactions, move money between funds and analyse your portfolio anytime day or night. If you would like to use money you currently hold in other funds or investment trusts within an ISA to convert your shares you will have to switch your money into the Cash Park and then complete the conversion form. Selling your Subscription Shares in an ISA If you wish to sell your shares rather than convert them, you can simply issue an instruction to Fidelity and we will sell them on your behalf. This instruction will need to be done in writing. The proceeds of the sale will be credited to the bank account linked with your account. If we do not hold your bank details you will be sent a cheque. For UK tax purposes, the sale of Subscription Shares obtained via an ISA investment should not be taxable. Subscription shares 7

8 Subscription Shares in the Share Plan The issue of subscription shares is treated as a reorganisation of the Investment Trust Company s share capital and as such there is no Capital Gains Tax payable on issue. For UK Capital Gains Tax purposes the Subscription Shares are aggregated with your original Ordinary Share holding and the effective purchase date of the Subscription Shares will be the same as the Ordinary Shares you already hold. The base cost for Capital Gains Tax purposes will be a proportionate value of the entire holding. It should be noted that sale of shares outside of an ISA, including sales before subscription of further value, are disposals for capital gains tax purposes. If you convert your shares into Ordinary Shares the resulting Ordinary Shares will be treated as the same asset as the Subscription Shares they replaced and the base cost for tax purposes will be the base cost of the Subscription Shares further increased by the amount of any subscription price paid. We would always recommend you seek the advice of a tax adviser in the event you believe any capital gains tax event has occurred. Converting Subscription Shares in the Share Plan To convert your Subscription Shares held in your Share Plan account simply fill out the Share Plan Conversion form. The forms are available via the website at fidelity.co.uk/ japansubs. You need to provide us with the number of Subscription Shares you are converting and send in a cheque for that amount. Fidelity will convert shares on the last business day of each month. Once your Subscription Shares have been converted, you will receive a Confirmation of Transaction showing your transaction details. Details will also appear on your six monthly statements. 8 Subscription shares

9 If you would like to use money you currently hold in any of Fidelity s Investment Trusts within the Share Plan in order to convert your Subscription Shares, you can switch your money from these trusts in order to do so. If you wish to convert your shares via a switch from another trust or to obtain a Share Plan switch form, please contact us on , we re open 9am to 5pm Monday to Friday. Please note you cannot switch over the phone, only written instructions are accepted. Please also note that switching funds outside of an ISA may trigger a liability for capital gains tax. Selling Subscription Shares in the Share Plan If you wish to sell your Shares rather than convert them, you can simply issue an instruction to Fidelity and we will sell them on your behalf. To do this you need to write to us using the address on page 10. We will then send the proceeds made from the sale to you by cheque. If you wish for us to pay this amount into a bank account please provide us with your bank details. We also require that you send us a void cheque or paying in slip so we can verify your bank details. Please be aware that shares will be converted on the last business day of every month. If you wish your shares to be converted in a particular month Fidelity will require the form to be sent in by the first business day of that month. For example, if you would like to convert your shares in March 2016, we must receive your form at the latest by 1st March Subscription shares 9

10 We re here to help For Share Plan queries: UK Calls Overseas calls 0044 (0) Both lines open 9am to 5pm Monday to Friday For ISA queries: UK Calls (if you invest directly) (if you invest with an adviser) Overseas calls 0044 (0) Both lines open 8am to 6pm Monday to Friday Saturday 9am to 6pm Fidelity Investment Trust Share Plan P.O. Box Mellon House Ingrave Road Brentwood CM14 9LX Fidelity Investment Trust ISA Oakhill House 130 Tonbridge Road Hildenborough Kent TN11 9DZ 10 Subscription shares

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12 Find out more fidelity.co.uk Issued by FIL Investments International, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity Worldwide Investment, and the Fidelity Worldwide Investment logo and currency F symbol are trademarks of FIL Limited. UKM0815/7034/SSO/0416