Interim Management Statement

RNS Number : 4950K

Personal Assets Trust PLC

21 August 2012

Personal Assets Trust plc

For the Three Month Period from 1 May 2012 to 31 July 2012

Investment Objective

Personal Assets is an investment trust run expressly for private investors. Its capital structure is the simplest possible for an investment trust, consisting only of ordinary shares. Its 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. Personal Assets pays dividends quarterly, in July, October, January and April of each year. We intend the present dividend rate to grow in real terms over the longer term and it is our policy never to cut the dividend rate, so shareholders know that each quarterly 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 July 2012	As at 30 April 2012	Movement

Market capitalisation	£515.5m	£470.4m	9.6%
Shareholders' funds	£507.7m	£463.5m	9.5%
Effective liquidity ⁽¹⁾	50.3%	50.0%	-
Share price	£349.80	£340.70	2.7%
Net asset value per share	£344.46	£335.69	2.6%
Premium to NAV	1.5%	1.5%	-
FTSE All-Share Index	2,927.27	2,984.67	-1.9%

⁽¹⁾ Includes holding in Gold Bullion of 14.3% at 31 July 2012 (30 April 2012: 12.4%).

Period Review and Material Events

A review of the year ended 30 April 2012 and of material events that took place during that period will be found in Personal Assets Trust plc's Annual Report. This also contains a review of the principal risks and uncertainties for our financial year to 30 April 2013.

During July, the share prices of seven of our core holdings (Altria, BAT, Colgate-Palmolive, Diageo, Nestlé, Philip Morris, and Unilever) reached all time highs. While this is pleasing at first glance, on reflection, new highs bring mixed feelings about the outlook for future returns. Valuations, in these stocks, have now been stretched to levels we have not witnessed since late 2007-not a good time to invest in the stock market. From here, there is greater (temporary) downside risk, which explains our reluctance to increase the Trust's equity exposure over the past year. Earnings growth looks baked into share prices but earnings risk is a real possibility as economic growth deteriorates. There is a disconnect; expectations are too high. We do not deny that there is further room for multiple expansion of blue chip stocks. The desperation to put 'cash to work' combined with the fear of missing out on rising markets makes for poor long-term investment decisions. These are not levels that provide a high margin of safety. We struggle to get excited about 'fair value' and plead guilty to being demanding on shareholders' behalf.

We made a few, very modest, changes to the portfolio during the period under review. The strong demand for new shares in PAT led to an increase in the Trust's liquidity. Holdings in Becton Dickinson, Imperial Oil, Microsoft, Newmont Mining and Sage were increased on weakness. We also added to the Trust's holdings in gold bullion. Notwithstanding these additions, equity exposure declined slightly from 50.0% (30^th April 2012) to 49.7% (31^st July 2012).

Over the past two years the FTSE 100 has tracked sideways but with nauseating volatility. There has been little reward for risk. Many have been whipsawed by these so called "RoRo" - or Risk-on, Risk-off markets but perhaps a better description would be "SoSo" - or Stimulus on, Stimulus off.

The €100bn bail out of Spanish banks, announced in June, failed to spur stock markets up. We anticipate further efforts by governments and central banks to stimulate the global economy and thereby distort markets. But such efforts will have ever-diminishing returns. Talk of doing 'whatever it takes to save the Euro' and 'bazookas' mean that, unlike in 2009 when policies were not anticipated, markets are probably discounting the prospect of further bailouts and more quantitative easing. Putting blind faith in monetary policy while ignoring deteriorating economic fundamentals may not end well. These increasingly desperate measures delay and exacerbate the final dénouement. "SoSo" may also aptly describe current investment returns.

During the three months ended 31 July 2012 the Company issued 93,104 Ordinary Shares for a total consideration of £31.9 million, representing 6.7% of the Ordinary Shares in issue at the beginning of the period. Since 31 July 2012 the Company has issued a further 15,984 Ordinary Shares for a total consideration of £5.6 million.

On 14 June the Company announced a first interim dividend of £1.40 per share. This was paid to shareholders on 20 July 2012. On 26 July the Company announced a second interim dividend of £1.40 per share. This will be paid to shareholders on 19 October 2012.

Top Ten Equity Holdings as at 31 July 2012

Company	Percentage of shareholders' funds	Percentage of equity exposure

British American Tobacco	4.2	8.5
Microsoft	3.7	7.5
Nestlé	3.7	7.5
Coca-Cola	3.3	6.7
Centrica	3.2	6.4
Becton Dickinson	2.9	5.8
Imperial Oil	2.8	5.6
Philip Morris International	2.8	5.6
Diageo	2.6	5.2
Newmont Mining	2.5	5.0
Other equities (11)	18.0	36.2
Total	49.7	100.0

Geographical Analysis as at 31 July 2012

Country	Percentage of shareholders' funds

US equities	22.1
UK equities	19.0
Canadian equities	3.8
European equities	3.7
Australian equities	1.1
Liquidity	50.3
Total	100.0

Sector Distribution as at 31 July 2012

Sector	Percentage of total assets	Percentage of FTSE All-Share

Oil & Gas	2.8	17.6
Basic Materials	4.6	10.0
Industrials	-	8.8
Consumer Goods	21.8	14.3
Health Care	7.0	7.9
Consumer Services	0.9	9.2
Telecom	1.8	6.7
Utilities	3.2	3.9
Financials	1.5	20.1
Technology	6.1	1.5
Liquidity	50.3	-

Total	100.0	100.0