HgCapital Trust

Investment trust shares frequently trade at a discount to NAV. This occurs when the share price is less than the NAV. In this circumstance, the price that an investor pays or receives for a share would be less than the value attributable to it by reference to the underlying assets. The discount is the difference between the share price and the NAV, expressed as a percentage of the NAV. For example, if the NAV were 1,100p and the share price were 990p, the discount would be 10%.

This is the value of the Trust’s assets attributable to one Ordinary share. It is calculated by dividing ‘shareholders’ funds’ by the total number of Ordinary shares in issue. For example, as at 31 December 2010, shareholders’ funds were £347,993,000 and there were 31,103,915 Ordinary shares in issue; the NAV was therefore 1,118.8p per Ordinary share.

Shareholders’ funds are calculated by deducting current and long-term liabilities, and any provision for liabilities and charges, from the Trust’s total assets.

A premium occurs when the share price is higher than the NAV and investors would therefore be paying more than the value attributable to the shares by reference to the underlying assets. For example, if the share price were 1,155p and the NAV were 1,100p, the premium would be 5%.

Shares carrying the right (but not the obligation) to be exchanged for Ordinary shares of a company at a predetermined price and at a specified time in future.

The total return to shareholders comprises both changes in the Trust’s NAV or share price and dividends paid to shareholders; it is calculated on the basis that dividends are reinvested in the Trust’s shares on the date the dividend is paid.