ESTS Blackrock Sub

 
TIDMEST TIDMESTS 
 
THE EASTERN EUROPEAN TRUST PLC 
 
All information is at 31 OCTOBER 2010 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**            8.3%     13.4%   43.4%   -17.4%     109.1% 
Net asset value**        4.5%     10.2%   38.0%   -20.9%      98.3% 
MSCI EM Europe 10/40(TR) 3.4%      9.6%   27.2%    -4.5%      78.5% 
 
US Dollars: 
Net asset value          6.0%     12.5%   33.9%   -39.1%     113.9% 
MSCI EM Europe 10/40(TR) 4.9%     11.8%   23.4%   -26.5%      92.6% 
 
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:             326.19p 
Net asset value*** - cum income:            327.96p 
Share price:                                307.00p 
Subscription share price:                    18.75p 
Total assets^:                              GBP165.4m 
Discount (share price to capital only NAV):    5.9% 
Gearing:                                       1.6% 
Net yield:                                      n/a 
Ordinary shares in issue^^:              49,626,886 
Subscription shares:                      9,201,084 
 
***Includes year to date net revenue equal to 1.77p per share. 
^Total assets include current year revenue. 
^^Excluding 4,664,367 shares held in treasury. 
 
During the month 603,513 subscription shares were exercised at 299p per share. 
 
Benchmark 
 
Sector Analysis     Total Assets (%)     Index (%)     Country Analysis     Total Assets (%) 
Financials                     34.3           33.7               Russia                 53.9 
Energy                         23.6           31.0               Turkey                 17.1 
Materials                      14.1           11.2               Poland                 12.5 
Telecommunications              9.6            8.7       Czech Republic                  5.4 
Consumer Staples                7.2            4.4              Hungary                  4.2 
Utilities                       5.2            6.7              Austria                  1.9 
Consumer Discretionary          4.6            0.9           Kazakhstan                  1.4 
Industrials                     1.4            2.1              Germany                  1.4 
Health Care                     1.1            1.0               Sweden                  1.0 
Technology                        -            0.3              Denmark                  1.0 
                                                                Ukraine                  1.0 
                                                                Finland                  0.3 
Net current liabilities        (1.1)           0.0              Net current liabilities (1.1) 
                              -----          -----                                     ----- 
                              100.0          100.0                                     100.0 
                              =====          =====                                     ===== 
 
Ten Largest Equity Investments(in alphabetical order) 
 
Company             Country of Risk 
Bank Pekao                   Poland 
CEZ                  Czech Republic 
Gazprom                      Russia 
Lukoil                       Russia 
MMC Norilsk Nickel           Russia 
Novatek                      Russia 
Rosneft                      Russia 
Sberbank                     Russia 
Turkiye Garanti              Turkey 
Vimpel Communications        Russia 
 
Commenting on the markets, Sam Vecht, representing the investment 
Manager noted; 
 
Markets 
 
The MSCI Emerging Europe 10/40 Index returned 3.4% in October. Equity markets 
benefited from expectations of an announcement of a second round of 
quantitative easing by the Fed early in November. In particular, investors were 
attracted by yields in Turkey which was the strongest market over the month, 
and which also benefited from robust industrial production figures. The Czech 
Republic was the weakest market during October. Financials and consumer staples 
were the strongest sectors while energy and utilities were relative 
underperformers. 
 
Performance 
 
The Eastern European Trust PLC NAV rose by 4.5%, outperforming the index by 
1.1%. The main contributions came from stock selection. Positive contributors 
to performance included Austrian bank, Raiffeisen Bank, which is benefiting 
from a reduction in bad debt levels in Eastern Europe and from increasing loan 
growth and Russian bank, Sberbank, where expectations for profits were 
increased. The portfolio also gained from an underweight position in Russian 
oil producer, Lukoil, whose shares underperformed in October. Shares in Kazakh 
oil exploration and production company, Zhaikmunai, rose by over 25% following 
the completion of a gas treatment unit which will lead to increased production. 
The main detractors from performance in the month included Hungarian telecoms 
company, Magyar Telekom, which fell following the announcement of a new 
telecoms tax. Shares in Swedish cosmetics company, Oriflame, also slipped in 
response to disappointing results due to margin pressure. 
 
Activity 
 
During October, we increased exposure to the materials sector, buying a new 
holding in Russian steel manufacturer, Mechel, and added to the holding in 
Russian miner, Norilsk Nickel; we bought into Mechel following underperformance 
resulting in a low valuation, while Norilsk shares have not kept pace with 
rising commodity prices and are undervalued compared to its global peers. We 
also added to Russian fertiliser producer, Uralkali; we expect the company to 
benefit from rising potash prices, benefiting from the oligopolistic nature of 
the potash market and supported by increasing crop prices. We bought shares in 
Danish brewer, Carlsberg, which generates a significant proportion of its sales 
from Russia and other emerging markets where beer consumption is increasing. We 
reduced holdings in the energy sector, specifically Russian oil company, 
Rosneft, and Hungarian energy company, MOL. Lastly, we took profits on the 
holding in Kazakh oil company, Zhaikmunai, mentioned above, and also sold the 
holding in Polish software vendor, Asseco Poland. 
 
Outlook 
 
Emerging European equities remain very attractive on low valuations compared to 
other markets. Corporate earnings growth is strong and there have been further 
upgrades to forecasts for both 2010 and 2011. 
 
We have adjusted positions in October so that the positions in energy have been 
reduced and this is now the largest underweight, while the portfolio is 
overweight the materials sector. The increase in materials reflects our 
positive view of the economic outlook which is further supported by additional 
US quantitative easing; we believe that companies in the materials sector are 
well placed to take advantage of the weaker dollar and rising commodity prices. 
Stock specific factors lead us to be more cautious on energy companies. In 
Hungary, we are concerned about additional taxation and stock overhang while in 
Russia high marginal rates of tax continue to limit any upside. In terms of 
countries we have increased the weighting in Russia while the portfolio remains 
underweight Poland where we are concerned about the impact of the funding 
requirements of government privatisations on the market. 
 
Latest information is available by typing www.blackrock.co.uk/its on the 
internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV 
terminal). 
 
12 November 2010 
 
 
 
END 
 

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