Personal Assets Trust plc

Interim Management Statement

For the Three Month Period from 1 November (Stuttgart: A0Z24E - news) 2011 to 31 January 2012

Investment Objective

Personal Assets is an investment trust run expressly for private investors. Its capital (Berlin: 3IF.BE - news) structure is the simplest possible for an investment trust, consisting only of ordinary shares. Its (Euronext: ALITS.NX - news) investment objective is to protect and increase (in that order) the value of shareholders' funds over the long term and to earn as high a total return as is compatible with a risk equivalent to that of the FTSE All-Share Index. Since Personal Assets invests for the long term, the Board assesses performance not annually at the end of each accounting year but over rolling three-year periods.

We aim to pay as high, secure and sustainable a dividend as is compatible with maintaining our investment flexibility. Our policy is for the present dividend rate to grow over the long term in real terms relative to both the Retail Price Index and the Consumer Price Index and never to cut the dividend rate, so shareholders know that each payment will at least equal the previous one.

The Board's policy is to ensure that the shares of Personal Assets always trade at close to NAV.

Performance Summary

As at

31 January

2012

As at

31 October

2011

Movement

Market capitalisation

£434.7m

£393.4m

10.5%

Shareholders' funds

£425.9m

£383.9m

10.9%

Effective liquidity (1)

51.0%

50.4%

-

Share price

£342.10

£336.80

1.6%

Net (Frankfurt: A0Z22E - news) asset value per share

£335.20

£328.67

2.0%

Premium to NAV

2.1%

2.5%

-

FTSE All-Share (FTSE: ^FTAS - news) index

2,932.91

2,860.86

2.5%

(1)Includes holding in physical gold bullion of 14.7% at 31 January 2012 (31 October 2011: 12.9%).

Period Review and Material Events

Economic growth has surprised on the downside in Europe (Chicago Options: ^REURUSD - news) , the UK and in a number of emerging economies. The US's performance has been marginally better, although not as good as the consensus had hoped. 2011 was a year of realisation. Investors entered the year full of optimism of a sustained economic recovery which had begun in mid-2009. We have been very sceptical of the recovery as it was based on unsustainable monetary and fiscal stimuli. As fiscal policy reversed, the underlying weakness of the economy was revealed. Gradually there was recognition that 'balance sheet' recessions take far longer to recover from as the drag of deleveraging takes effect.

The New Year's optimism reminds us of that old phrase of the famous baseball coach, Yogi Berra; "Its déjà vu all over again". The start of 2012 feels alarmingly familiar and that's because it is ― 2010 and 2011 began in similar ways with over optimism and renewed faith that policymakers would address the threats of excessive sovereign credit. As we enter 2012, there is renewed expectation of economic recovery. This may be yet another triumph of hope over experience.

Valuations look less than compelling to us with the UK stock market yielding less than 3.3%. Added to this, historic earnings on which these valuations are based may be highly misleading, as they have been flattered by unsustainable credit growth at the government, corporate and consumer levels. The pain of deleveraging, felt first by banks and highly geared companies a few years ago, is now emerging in unfamiliar and supposedly safe places.

The profits warning from Tesco (LSE: TSCO.L - news) in January provided evidence that even the strong were beginning to suffer from lower demand. It may come as a surprise to some that in this case we were guilty of over optimism, when we are well known for our caution. Tesco's challenges are a microcosm of the new economic reality we face in a post 2008 world. Consumer and business demand is re-adjusting, which will be a prolonged and painful process, and as result we will need to tread with even greater care. As noted earlier, our fear at the start of 2012 is that history will repeat itself. We are positioned accordingly.

Our reluctance to be seen doing something for the sake of being seen to do something meant that the portfolio underwent very few changes over the course of the three months under review.

During the period we acquired one new holding. Agnico-Eagle (SES: E2:E04.SI - news) is a gold miner operating in Canada, Finland and Mexico. Until recently it was the darling of the sector, with strong production growth forecast for the next five years. The initial appeal to us was the location of its assets in territories that traditionally respect the rights of private property ownership. However, a high valuation had always put us off. 2011 was an annus horribilis for Agnico. It has suffered material interruptions to production at two of its six operating mines, which has led to the shares more than halving from their 2011 peak. The share price is back to where it was in 2007, when Agnico was producing just 20 per cent of the gold it is mining today.

Over the three months ended 31 January 2012 the Company issued 102,362 Ordinary shares for a total consideration of £34.4 million, representing 8.8% of the Ordinary shares in issue at the beginning of the period.

On 24 November 2011 the Company announced a third interim dividend of £1.40 per share. This was paid to shareholders on 20 January 2012. On 26 January 2012 the Company announced a fourth interim dividend of £1.40 per share. This will be paid to shareholders on 20 April 2012.

Top Ten Equity Holdings as at 31 January 2012

Company

Percentage of shareholders' funds

Percentage of equity exposure

British American Tobacco

4.3

8.8

Microsoft (NasdaqGS: MSFT - news)

4.0

8.2

Coca Cola (NYSE: KO - news)

3.2

6.5

Nestle (BSE: NESTLE.BO - news)

3.2

6.5

Philip Morris International

2.7

5.5

Diageo (Other OTC: DGEAF.PK - news)

2.6

5.3

GlaxoSmithKline (Other OTC: GLAXF.PK - news)

2.5

5.1

Becton Dickinson (NYSE: BDX - news)

2.4

4.9

Centrica (LSE: CNA.L - news)

2.3

4.7

Imperial Oil (Toronto: IMO.TO - news)

2.3

4.7

Other equities (11)

19.5

39.8

Total (Other OTC: TTFNF.PK - news)

49.0

100.0

Geographical Analysis as at 31 January 2012

Country

Percentage of shareholders' funds

UK equity exposure

20.3

US equities

20.3

Canadian equities

3.3

European equities

3.2

Australian equities

1.9

Liquidity

51.0

Total

100.0

Sector Distribution as at 31 January 2012

Sector

Percentage of shareholders' funds

Oil ∓ Gas

2.3

Basic Materials (Madrid: ESI500200000.MA - news)

5.0

Consumer Goods

19.8

Health Care

7.1

Consumer Services

3.2

Telecom (Stuttgart: 882336 - news)

2.0

Utilities (Santiago: UTILITIES.SN - news)

2.3

Financials (Euronext: IXEFI.NX - news)

1.7

Technology

5.6

Liquidity

51.0

Total

100.0

Additional Information

Further information regarding the Company, including Quarterly Reports and Investment Plan documents can be obtained from the Company's website http://www.patplc.co.uk or from Steven Budge, Personal Assets Trust plc, 10 St. Colme Street, Edinburgh EH3 6AA. Telephone: 0131 538 6605.

Email: steven.budge@patplc.co.uk

Read the rest here:
Personal Assets Tst. - Interim Management Statement