Portfolio Update

 
TIDMEST TIDMESTZ 
 
THEEASTERN EUROPEANTRUST PLC 
 
All information is at 30 MARCH2012 and unaudited. 
 
Performance at month end with net income reinvested 
 
                                    One     Three    One    Three   *Since 
                                    Month   Months   Year   Years    30.04.09 
Sterling: 
 
Share price**                       -2.2%   16.7%   -17.8%  133.3%  86.3% 
 
Net asset value (undiluted)**       -2.6%   17.4%   -21.9%  127.9%  79.8% 
 
MSCI EM Europe 10/40(TR)            -4.0%   16.5%   -17.3%  99.9%   66.5% 
 
US Dollars: 
 
Net asset value (undiluted          -2.6%   20.8%   -22.1%  154.1%  93.9% 
 
MSCI EM Europe 10/40(TR)            -4.0%   19.8%   -17.6%  122.9%  79.5% 
 
Sources: BlackRock and Standard & Poor's Micropal 
 
* BlackRock took over the investment management of the Company with effect from 
1 May 2009. 
 
** Net asset value and share price performance includes the subscription share 
reinvestment, assuming the subscription share entitlement was sold and the 
proceeds reinvested on the first day of trading. 
 
At month end 
 
Net asset value - capital only: 296.24p 
Net asset value*** - cum income: 295.94p 
Net asset value - cum income (diluted for subscription shares): 295.94p 
Share price: 272.00p 
Subscription share price: 0.55p 
Total assets^: GBP141.6m 
Discount (share price to cum income NAV): 8.1% 
Gross market exposure of CFD portfolio as 
a percentage of net asset value: 108.9% 
Net yield: n/a 
Ordinary shares in issue^^: 46,180,713 
Subscription shares: 10,040,005 
 
***Includes year to date net revenue deficit equal to 0.3p per share. 
 
^Total assets include current year revenue. 
 
^^Excluding 6,900,000 shares held in treasury. 
 
Benchmark 
 
Sector Analysis      Total Assets (%) Index (%)    Country Analysis Total Assets (%) 
 
Energy                 39.2             36.5         Russia                       56.5 
Financials             29.9             27.4         Poland                       15.5 
Telecommunications     9.8              9.7          Turkey                       14.9 
Materials              8.0              10.7         Czech Republic               4.8 
Utilities              5.2              7.4          Kazakhstan                   4.7 
Industrials            3.1              1.5          Hungary                      3.6 
Health Care            3.0              0.7          Turkmenistan                 1.9 
Consumer Discretionary 1.9              1.1          Ukraine                      0.6 
Consumer Staples       1.4              4.7 
Information Technology 1.0              0.3 
Long Position          1.3              -            Long Position                1.3 
Short Positions       -5.1              -            Short Positions             -5.1 
Net current assets     1.3              -            Net current assets           1.3 
 
                      -----           -----                                     ----- 
                      100.0           100.0                                     100.0 
                      =====           =====                                     ===== 
 
Ten Largest Equity Investments(in %orderof Total Market value) 
 
                                               Total Market 
Company                       Country of Risk    Value % 
 
Sberbank                      Russia              9.1 
Gazprom                       Russia              8.9 
Lukoil                        Russia              8.4 
Novatek                       Russia              5.6 
Turkiye Garanti Bankasi       Turkey              5.2 
Powszechny Zaklad Ubezpieczen Poland              3.8 
Kazmunaigas Exploration       Kazakhstan          3.2 
Sistema                       Russia              3.1 
Turkiye Halk Bankasi          Turkey              3.1 
Surgutneftegaz                Russia              2.9 
 
Commenting on the markets, Sam Vecht, representing the investment 
 
Manager noted; 
 
Markets 
 
The rally in global risk assets that characterized the start of 2012 lost its 
momentum in March with the MSCI Emerging Europe 10/40 index returning -4.0% 
over the month. 
 
Russian equities underperformed moderately against the backdrop of Presidential 
elections, which were held at the beginning of March. Pre-election opinion 
polls reflected the view that strong expressions of support for Vladimir Putin 
would translate into a decisive victory in the first round of voting. The 
strength of the Russian market suggested that investors were confident that 
political risk would be alleviated and that a strong mandate from the 
electorate in an environment of high oil prices would be positive for Russia. 
 
Putin was duly elected with 64% of the vote. There have been reports of 
irregularities and anti-Putin protests in Moscow, where his support is much 
lower than in the regions, have grabbed the headlines. However, despite doubts 
surrounding the electoral process, Putin is the most popular politician in 
Russia and the popular legitimacy of his position is not in doubt although how 
he responds to shifting political sands is yet to be seen and the upcoming 
formation of the new cabinet may provide a signal of future direction. 
 
Hungary also underperformed in March. Although Hungary announced a change in 
policy to seek support from the IMF and EU in alleviating budgetary pressures, 
formal talks have yet to begin. Investors became concerned that Prime Minister 
Oban's particular brand of brinkmanship has reduced the likelihood of an 
agreement being made in the near-term 
 
The Czech Republic outperformed in March, once again displaying low beta, 
defensive characteristics. The market was also cheered by improving Czech 
economic data. 
 
Portfolio 
 
The Trust returned -2.6% in March, outperforming the benchmark by 1.4%. 
 
The Trust was well positioned with stock selection and asset allocation both 
contributing to March's outperformance. 
 
Stock selection in Turkey was particularly strong with overweight positions in 
financials. The banking sector rebounded from depressed valuations as global 
liquidity eased funding conditions and improved the macro economic outlook. The 
Trust also benefitted from a placement in one of its short positions which 
enabled it to lock in profits. 
 
Kazakh energy company, Kazmunaigas was also a significant contributor to 
outperformance. The company announced that it proposed to increase the dividend 
per share for 2011 by over 60%. In conjunction with the continued share 
buy-back programme, the dividend represents a further improvement in corporate 
governance by returning cash to shareholders. 
 
The largest single detractor from performance was the Trust's holding in Kazakh 
miner, ENRC, which announced results which disappointed the markets. Despite 
increased revenues and record sales in the ferrochrome division, higher than 
expected costs reduced profits below market forecasts. 
 
Activity 
 
The Trust has been opportunistically reducing the underweight in Russia adding 
to positions in energy companies, Surgutneftegas & Lukoil. Surgutneftegas & 
Lukoil are the main beneficiaries from changes in the tax regime designed to 
promote the production of crude oil and light oil products over fuel oil, a 
trend that the team expects to continue in the future. 
 
The Trust also added to the holding in Hungarian Pharmaceutical company. Gedeon 
Richter. The company has announced positive results from drug trials focusing 
on the treatment of mental health problems. 
 
The team took the decision to reduce the holding in Hungarian financial, OTP 
Bank. The position has been an important overweight position in recent months 
and a contributor to outperformance, but we are now significantly underweight 
and the absolute position is negligible. Although Hungary had previously 
announced a change in policy to seek support from the IMF and EU, formal talks 
have yet to start and we believe the prospects for a quick agreement are not as 
strong as the market suggests, which is becoming increasingly risky as European 
debt markets begin to show signs of weakness once more. 
 
Outlook 
 
The discount of eastern European valuations to global equity markets remains 
high at over 45%. Valuations are below historical averages, offering 
significant upside on any positive news-flow and scope for a re-rating when the 
economic background improves. It is important to remember that Eastern European 
economies remain highly competitive with undervalued currencies, less debt, 
lower levels of corporate taxation and lower labour costs than Western Europe. 
 
Following the re-election of Vladimir Putin as Russian President, the question 
is `what next?'. The world has changed since Putin's first and second terms and 
so too have Russian politics. The opposition has found its voice and the 
required response from Putin will have to be far more nuanced, taking into 
account protestors' concerns, if he is to rediscover the popularity he once 
enjoyed. 
 
One area in which Putin is able to reassure international investors is through 
increasing dividend payments from state-controlled companies to minority 
shareholders. Historically, Russian companies have chosen to invest profits 
rather than returning cash to shareholders, leading to dividend yields which 
have been below emerging market averages. At the end of 2011, an announcement 
from Gazprom of a doubling of the dividend, equating to a 5% yield marked a 
significant change in policy. Legislators are now looking at extending minimum 
payout ratios across companies controlled by the state. Russian dividend yields 
are forecast to be 3.3% in 2012, surpassing the average across emerging markets 
for the first time. 
 
ENDS 
 
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. 
 
 
 
END