Investment trust British Assets outperformed its benchmark index in the last financial year, despite underperformance by its UK portfolio.

Net asset value per share at the end of September stood at 121.9p, up from 114.0p a year earlier.

The company's net asset value total return for the year to 30 September 2009 was 13.8%, versus a total return of 11.1% from the company's preferred benchmark measurement, which is a 75%/25% blend of the performance of the FTSE All-Share index and the FTSE World (excluding UK) index.

Having decided during the year to consolidate the trust's non-UK portfolios into just two portfolios, one focusing on developed markets and the other on emerging markets, the board was pleased with the performance of both, but particularly the emerging markets portfolio.

In contrast, UK holdings, which are weighted towards high yielding stocks, underperformed the market as cyclical companies came back into fashion. Performance was further dented by a number of companies opting to cut or abandon dividend payments.

The trust's investment manager, Foreign & Colonial, believes that there are signs that the dividend cut trend may have peaked, and that there may be some modest dividend growth in the year ahead, although it is likely that it will take time for the company's income stream to return to previous levels.

Having paid three interim dividends of 1.442p each in 2009, the board is proposing a final dividend of 1.786p, making a total dividend payment for the year of 6.112p. The current intention of the board is to keep the first three interim dividend payments of 2010 at 1.442p, while it considers it 'likely that the level of the final dividend will be maintained but will keep the possibility of an increase under review as the year progresses. '

'Whilst there are signs that global economic conditions are starting to improve, there remain significant uncertainties over the strength of the recovery,' said William Thomson, in what will be the last results statement he gives as chairman before retiring at the company's Annual General Meeting.

Thomson added that high levels of debt, availability of credit and rising employment are all likely to impede any recovery but 'with monetary policy likely to continue to remain accommodative and, with an improved outlook for corporate earnings, it should be a reasonable period for equities and corporate bonds.'

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