Continuation Proposals

European Assets Trust NV
27 September 2005

To:                  RNS
From:                European Assets Trust NV
Date:                27 September 2005



                           EUROPEAN ASSETS TRUST N.V.

    (a limited liability company ('naamloze vennootschap') in the form of an
     investment company with variable capital ('beleggingsmaatschappij met
veranderlijk kapitaal') incorporated in The Netherlands, with corporate seat in
 Rotterdam and registered in the trade register held by the Chamber of Commerce
 at Rotterdam (under number 33039381) and licensed pursuant to the Dutch Act on
           the Supervision of Investment Institutions ('Wet toezicht
                           beleggingsinstellingen')



Proposal for the continuation of the Company

The Directors today have written to shareholders to seek support for the
continuation of the Company and to inform them of other policy changes that the
Management Board with the approval of the Supervisory Board (jointly, the 
'Board') is introducing to enhance value for shareholders and enhance liquidity
in the shares.



Investment review & strategy

The investment objective of the Company is to achieve growth of capital through
investment in quoted medium and small sized companies in Europe, excluding the
United Kingdom. In the Interim Report issued to shareholders in August this
year, the following were the key financial highlights for the six months ended
30 June 2005:

  • The Company's sterling net asset value total return* rose over the six
    months ended 30 June 2005 by 13.7 per cent (19.2 per cent in euros), and by
    32.7 per cent (31.8 per cent in euros) over the 12 months ended 30 June
    2005; and
  • The Company's sterling share price total return* rose over the six months
    ended 30 June 2005 by 19.0 per cent (24.7 per cent in euros), and by 43.8
    per cent (42.8 per cent in euros) over the 12 months ended 30 June 2005.



The above figures compare with a total return* of 14.4 per cent (20.1 per cent
in euros) and 34.4 per cent (33.5 per cent in euros) respectively for the
benchmark HSBC Smaller Europe (ex UK) Index over six months and 12 months
respectively.



Over the 2 month period from the Company's half year of 30 June 2005 to 31
August 2005, the Company's sterling net asset value total return* rose by 6.3
per cent (5.0 per cent in euros) and the Company's sterling share price total
return* rose by 8.9 per cent (7.5 per cent in euros). **



Since the portfolio was refocused on the smaller capitalisation segment of the
European (ex UK) market in December 1997, the sterling net asset value total
return* has been 136.7 per cent compared with 97.8 per cent for the HSBC Smaller
Europe (ex UK) Index (to 30 June 2005). Over the same period, the sterling share
price total return* has been 193.6 per cent.



Over the five year period to 30 June 2005, which covers the aftermath of the ''
dotcom bubble'', the mid to smaller capitalisation asset class has substantially
outperformed the larger European capitalisation companies. The HSBC Smaller
Europe (ex UK) Index increase of 30.6 per cent in sterling total return terms
contrasts with a decline of 12.0 per cent in the large capitalisation equivalent
FT/S&P World Europe (ex UK) Index. The Company is the top performing trust over
five years in its AITC sector (European Smaller Companies) on a net asset and a
share price total return* basis (at 30 June 2005).



The Investment Manager considers that the resilience of the smaller company
asset class under trying stockmarket conditions reflects the greater agility of
companies of this size. As such, the company




* Capital performance with dividends added back.

** Investors should note that the value of their investment in the Company may
vary.  Past performance is no guarantee for the future.



executives at smaller sized companies can be better able to take advantage of
shifting economic and industry trends by focusing on particular niche areas of
growth and by tailoring their business model to suit different investment
climates. This is a feature of the Company's investment portfolio which
currently includes world-leading companies in such diverse niches as postal
franking machines, forklift trucks, computer mice and drugs for life threatening
diseases.



The Investment Manager maintains a focused portfolio and currently has holdings
in 41 stocks. Before making an investment, the Investment Manager needs to be
convinced that the company possesses a strong franchise in a niche market with
growth potential. This requires detailed scrutiny of the business model and face
to face meetings with key company executives. The analysis process also puts
particular emphasis on the valuation yardsticks of return on capital employed
(ROCE) and return on equity (ROE) as measures of a company's efficiency and
alignment with shareholders' interests. The Investment Manager applies a bottom
up stock picking approach when selecting investments for the portfolio and is
therefore not constrained by having to replicate the weightings and geographic
allocation of the benchmark index.



The Investment Manager and the Board believe that the Company's portfolio of
stocks has the potential to deliver long term growth in capital returns. This
combined with an attractive dividend policy and additional shareholder
value-enhancing measures, outlined below, have the objective of ensuring that
your Company continues to be an attractive investment proposition.



Continuation resolution

In 2000, the Board stated its commitment to provide shareholders with the
opportunity, by 30 June 2006, to consider whether the Company should continue in
existence. In order to remove any uncertainty for the Company, its shareholders
and potential investors, the Board is now putting a continuation resolution to
shareholders at an extraordinary general meeting of shareholders to be held on
14 October 2005 (the ''Extraordinary General Meeting'').



The Board has been encouraged by indications of support for continuation from
shareholders holding 35 per cent of the issued shares.



Dividend policy

The level of dividend paid each year by the Company is determined by the Board
in accordance with the Company's distribution policy which is, barring
unforeseen circumstances, to pay out an annual dividend equivalent to 6 per cent
of the net asset value as at 31 December each year. In accordance with this
policy the Company has paid out a total dividend of euro 0.555 per share for
2005 which represents an increase of 19.4 per cent over the previous year. The
dividend is paid in three equal instalments in January, May and August. The
Company benefits from Dutch regulations which allow it to pay dividends from
capital. The Investment Manager is therefore not constrained by the requirement
to generate income from the portfolio holdings but can concentrate solely on the
potential for growth in capital returns. It is the intention of the Board to
maintain this dividend policy.



Discount management policy

The Board is introducing a discount management policy with the aim of limiting
the discount at which the Company's shares trade from time to time.



The net asset value as at 22 September 2005 was 715.1p per share whilst the
middle market share price on the London Stock Exchange was 681.5p representing a
discount of 5 per cent.



Repurchases will be made in accordance with the rules and regulations applicable
to the Company and the Company's listings on the Euronext Amsterdam Stock Market
and the Official List of the United Kingdom Listing Authority. These include
rules governing the dissemination and use of price sensitive and inside
information and in relation to market abuse. Shareholders should note that, as a
result of European Union legislation, the United Kingdom has recently
implemented new rules in this regard. However, new legislation is not yet in
force in The Netherlands but is expected to be so with effect from 1 October
2005. The consequences of such legislation for share buy backs and sales of
treasury shares by investment companies in the Netherlands are not clear and

consequently, the Board will keep the scope and implementation of the discount
management policy under review to ensure best practice on an ongoing basis.



Subject to the above, the Board intends to buy back shares if there are
shareholders wishing to sell and the average share price discount to net asset
value measured over a rolling 5 business day period is 5 per cent or more.  In
such circumstances, subject to the below, the Board intends to buy

back shares based upon the price equivalent to a discount of 5 per cent to net
asset value, save that the Board may make an adjustment for portfolio
realisation costs depending upon market circumstances.



Any repurchase of shares will be at the sole discretion of the Board and be
subject to the rules and regulations applicable to the Company and the Company's
listings on the Euronext Amsterdam Stock Market and the London Stock Exchange.
The Board will not implement the policy if such repurchases could infringe
market abuse or other regulatory rules or if there exist adverse market
conditions making it prejudicial to the interests of shareholders as a whole for
the shares to be acquired at that time.



The Company's articles of association provide that the repurchase price per
share must be at least equal to the nominal value per share plus a pro rata
share of the share premium account attributable to that share at the time the
purchase is made. The Board also intends that the price at which shares are
repurchased does not exceed the average paid in capital on those shares, in
order to prevent Dutch withholding tax applying.



Dutch law provides that a minimum of 10 per cent of the total authorised
(nominal) share capital of the Company must be held by persons other than the
Company and accordingly such shares cannot be repurchased by the Company. In
addition and in accordance with Dutch law, shares that are repurchased will be
held in treasury (''treasury shares'').



The Board intends to limit the amount of shares bought back in the period to 31
October 2005 to 15 per cent of issued share capital and thereafter in any 3
month period to 10 per cent of the issued share capital.



The following policies will apply in respect of the sale of treasury shares:

  • restriction of the absolute level of dilution through the sale of treasury
    shares to 0.5 per cent of net asset value in any one year, and

•         treasury shares which are sold at a discount to net asset value will
only be sold where the discount at which the shares are to be sold is lower than
the average discount at which shares have been acquired by the Company measured
over preceding financial periods and in addition at a price which is not less
than the market bid price at the time of sale.



The Board believes that an active buy back policy and treasury share policy
should provide the market with extra liquidity and confidence and will therefore
add value to shareholders.



The Board has been advised that its current prospectus, prepared under Dutch
regulations, satisfies the Dutch prospectus requirements in respect of the sale
of treasury shares. Notwithstanding this, shareholders should note that the sale
of treasury shares will only be made in circumstances which would not require
any new prospectus to be issued. In addition, the Board has been advised that
the introduction of the discount management policy does not change the closed
end status of the Company as it is within the sole discretion of the Board
whether or not to implement the policy. Accordingly shareholders should note
that they do not have any entitlement to have shares repurchased by the Company.
Similarly, potential investors should note that they do not have any right to
have treasury shares sold to them.



Management agreement

The terms of the existing management agreement between the Company and the
Investment Manager will remain unchanged, save that the Board has accepted an
offer from the Investment Manager to reduce the notice period for termination
from 12 months to 6 months.






Timetable

Latest time and date for receipt of Proxy Forms       11am on 12 October 2005
Extraordinary General Meeting                         14 October 2005



Enquires


For further information, please contact:


European Assets Trust

Crispin Longden (Investment Manager)                   [phone]
Michael Campbell (Company Secretary)                   [phone]
Wilbert van Twuijver
(FCA Management, Managing Director)                    [phone]


F&C Asset Management
Gordon Humphries                                        [phone]


UBS Limited
Will Rogers                                             [phone]







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