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Friday, February 15, 2013 11:14 AM


All information is at 31 JANUARY 2013 and unaudited.

Performance at month end with net income reinvested

                              One   Three  One     Three    *Since
                            Month  Months  Year    Years  30.04.09
Share price**                6.3%    9.3%   8.3%   14.6%     85.9%

Net asset value (undiluted) 7.6% 12.4% 12.8% 14.1% 89.7% Net asset value (diluted) 6.3% 10.2% 10.0% 11.2% 84.9% MSCI EM Europe 10/40(TR) 6.3% 13.1% 14.7% 18.5% 86.2%

US Dollars: Net asset value (undiluted) 5.0% 10.6% 13.4% 12.9% 103.0% Net asset value (diluted) 3.7% 8.5% 10.5% 10.1% 97.9% MSCI EM Europe 10/40(TR) 3.7% 11.3% 15.3% 17.3% 99.2%

Sources: BlackRock and Standard & Poor's Micropal

* BlackRock took over the investment management of the Company with effect from 1 May 2009.

At month end
Net asset value - capital only: 312.48p
Net asset value*** - cum income: 317.99p
Net asset value - cum income (diluted for
subscription shares): 309.95p
Share price: 277.00p
2012 Subscription share price: 13.00p
Total assets^: £131.7m
Discount (share price to cum income NAV): 12.9%
Gross market exposure^^^: 110.8%
Net yield: n/a
Ordinary shares in issue^^: 39,263,427
2012 Subscription shares: 8,533,028
***Includes year to date net revenue equal to 5.51p per share.
^Total assets include current year revenue.
^^Excluding 5,800,000 shares held in treasury.
^^^ Long positions plus short positions as a percentage of net asset value.


Sector Analysis     Net Assets(%)*   Country Analysis   NetAssets(%)*
Financials                  36.2     Russia                    64.9
Energy                      31.4     Turkey                    18.4
Telecommunications          11.0     Poland                     7.4
Materials                    8.3     Hungary                    7.1
Consumer Staples             6.4     Czech Republic             5.7
Health Care                  4.1     Kazakhstan                 2.4
Industrials                  4.0     Turkmenistan               1.4
Information Technology       3.6     Austria                    1.4
Other                        2.9     Ukraine                    1.2
Utilities                    1.5
Consumer Discretionary       0.5
                        ----------                          --------
Total                      109.9      Total                   109.9
                        ----------                          --------
 Short Positions             -0.9      Short Positions          -0.9
                        ==========                          ========

*reflects gross market exposure from contracts for difference (CFDs)

Ten Largest Equity Investments(in % order of Total Market value)

                                          Total Market
Company                        Country of     Risk Value %
Sberbank                       Russia          10.9
Gazprom                        Russia          8.5
Turkiye Garanti Bankasi        Turkey          5.0
Mobile Telesystems             Russia          4.6
Surgutneftegaz                 Russia          3.7
Komercni                       Czech Republic  3.6
Mail Ru                        Russia          3.4

Powszechna Kasa Osz czednosci Poland 2.8 Turkcell Iletism Hizmet Turkey 2.8 Lukoil

                         Russia          2.8

Commenting on the markets, Sam Vecht, representing the investment Manager noted;


In January, the MSCI Emerging Europe 10/40 Index returned 3.7% continuing the positive momentum from 2012. 2013 started with improved sentiment on the back of easing concerns about the US fiscal cliff, strong manufacturing data in China (the fastest expansion in 2 years) and encouraging comments from the ECB's Mario Draghi, saying that the Euro-area economy should slowly return to health in 2013 as the region's bonds markets stabilize.

Leading the Emerging European universe was Hungary, which rose by 11%, one of the best performing Emerging Markets globally. Sentiment surrounding the country was improved following Hungary's return to the international bond market. The January performance of Hungarian equities was further reinforced by the appreciation of the Hungarian forint, which gained 2.4% versus the US dollar, over the month.

Russian equities also outperformed the index. The Russian market's sentiment was improved by the oil sector as oil prices reached $115 per barrel.

The Turkish market was up by 1%, underperforming the index, largely attributable to a 5% one day fall towards the end of the month. The downgrades move was led by Turkish banks whose margins will be hurt in 2013 as net interest margins contract in a lower interest rate environment.


The Eastern European Trust returned 5.0%, in January in US Dollar terms, outperforming the benchmark by 1.3%.

Contributing to performance over the month was the overweight position in Hungary. The portfolio benefitted from an increase in the share price of financial OTP, an indicator of Hungarian market sentiment, which rose by 12% in January.

The Portfolio's underweight position in Poland also helped relative returns. Declining economic indicators in Poland weighed on the market in January. Industrial production continues to fall and retail sales underperformed expectations. The expectation for a significant volume of new issuance, particularly in the financial sector, also affected the performance of Polish equities.

Detracting from performance was Russian IT company, mail.ru. Despite the company's attractive growth profile, the stock declined by 4% in January in the absence of material newsflow.


We added to positions in Turkey in the telecom and materials sectors during a period where, although the market was weak, the currency and fixed income markets were stable.

We reduced the position in Russian financial Sberbank into share price strength and also further reduced the position in Russian energy name, Lukoil.


Russian and Eastern European markets have significant long-term structural advantages. They benefit from flexible and dynamic economies with undervalued currencies and educated and skilled workforces, allowing the countries of the region to remain competitive in a globalized market. That said, the region has not been immune from sentiment stemming from the problems which have beset the Eurozone. Action from the ECB has reduced systemic financial risk which has been positive for all risk assets.

In Russia, the announcement that state-owned companies will return a target 25% of profits to shareholders through dividends is positive. Private companies have also followed suit, bringing dividend yields in Russia up to global emerging market averages of c.4% for the first time. In addition, recently announced buybacks from companies across Russia & CIS have totalled $10bn, demonstrating that companies see value in their own capital.

Elsewhere, macroeconomic conditions in Turkey have improved and Hungary has accessed international bond markets for the first time in 20 months to underpin the country's fiscal position. However, the key driver of markets over recent months is the fact that Emerging European stocks were exceptionally cheap, universally disliked and widely misunderstood. As such, minor changes in sentiment were able to have a meaningful impact on prices.

Although we still see upside for the region, we remain mindful of the risks which could potentially emanate from three places; US, Europe or China.

The fortunes of global markets are still tied to varying degrees to the fate of the US recovery which, although bumpy, is underway as reflected in a housing market which is slowly returning to health. A fragile recovery, by definition, could be blown off course and that is a risk for all markets, not just those of Emerging Europe.

A slowdown in China will affect the demand for commodities, the prices of which impact sentiment surrounding Russia, although this will be positive for Turkey and central Europe, commodity importers.

While recent measures to stabilise the Eurozone have been positive, any deterioration in the crisis will have implications for emerging Europe despite their clear contrast to the economies of peripheral Europe. It is important to remember that the economies of emerging European markets typically have lower government budget deficits and lower debt burdens.

Despite the attendant risks, valuations are still attractive and many of these risks remain reflected (and more) in the price. The long-term outlook for Emerging Europe is bright.

15 February 2013

Latest information is available by typing www.estplc.co.uk on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal). Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on the Manager's website (or any other website) is incorporated into, or forms part of, this announcement.

(Source: PR Newswire )
(Source: Quotemedia)


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