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Annual Report 2010

East Capital Russian Fund

East Capital Baltic Fund

East Capital Eastern European Fund

East Capital Balkan Fund

East Capital Turkish Fund

Important Notice

Historic yields are no guarantee for future yields. Fund units can go up or down in value, and inves-tors may not get back the amount invested. Fact sheets and prospectuses are available at www.eastcapital.com

Subscriptions can only be received on the basis of the latest prospectus accompanied by the latest annual report as well as by the latest half year report, if published after the latest annual report. The details of the changes in portfolio composition are held at the disposal of the shareholders at the registered office of the Fund and are available upon request free of charge.

Global Industry Classification Standard

The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive prop-erty and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) and is licensed for use by East Capital. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. GICS associated by East Capital: East Capital Bering Balkan Cert, East Capital Baltic Property Investors, Bank Tsentrkredit, BTA, East Capital Bering Central Asia Cert, Parex Banka, Fondul Proprietatea, Fondul Proprietatea WTS 2011-04-03, Fondul Proprietatea WTS 2011-11-30, East Capital Bering Russia Cert, East Capital Financials Fund, Rushydro GDR, Sojaprotein, East Capital Bering Ukraine Cert, Laivite, Trev-2 Grupp, Swedish T-Bill 2011-01-19, Swedish T-Bill 2011-02-16, Swedish T-Bill 2011-03-16, Saturn Sa Alba, Alfa Plam, Bambi, BB Minakva, Cacanska Banka, Efes Zajecar, Imlek, JAFFA, PIK Cacak, Pupin Telecom, Srpska Banka, Toza Markovic, Univerzal Holding, Velefarm, Zitopromet - Mlin, IMS Group, Novoil pref, Parex Banka Non Vote, Russian Maintenance Corp, Sibirskiy Cement, Halcyon Investment, Interrao, MRSK Volgi.

© East Capital, 2011. Photos: Shutterstock. Translation: Avison. Print and preprint: Litografia Alfaprint.

Contents

East Capital Russian Fund 3

East Capital Baltic Fund 7

East Capital Eastern European Fund 10

East Capital Balkan Fund 15

East Capital Turkish Fund 19

The auditor’s report 22

3Annual Report 2010 East Capital Russian Fund

Management report

The fund gained 24.6% during the year, while the benchmark index 1 gained 16.5% (both in SEK). The net asset value was SEK 17,153m as of 31 December 2010, to be compared to SEK 11,407m on 31 December 2009. Net inflows during the year amounted to SEK 2,944m.

Market updateThe Russian market stayed strong in 2010 and gained 24.1%. The perfor-mance was driven by a number of different factors. First of all, the mar-ket recovery during the past two years should be analysed with the 67% fall in 2008 in mind, implying that the market is still down considerably from its pre-crisis peak. Secondly, the oil price, which remains an important factor for the market and the currency, rose from around USD 80/barrel to over USD 90. Thirdly, and perhaps most importantly, Russian companies have recovered strongly and have reported very strong earnings growth. Fourthly, the Russian economy has recovered, with growth resuming to around 5%, while inflation and interest rates reaching all time lows, deep in single digits. Finally, 2010 saw the return of global equity flows to Russia on the back of low valuations and the factors mentioned above. The fund’s developmentThe fund outperformed the benchmark index due to successful alloca-tion across sectors and liquidity classes, as well as stock picking. All sectors and all of the largest holdings performed well in Russia dur-ing the year. A number of domestically-orientated sectors managed to outperform though, with consumer discretionary and consumer staples gaining 72.4% and 67.5% respectively. The utilities sector was also among the stronger, gaining 55.9%. Materials and industrials were stronger than the market, gaining 49.5% and 48.8% respectively, supported by strong performance by MRSK and Norilsky Nikel, while financials performed in line and gained 32.2%. Bank VTB gained 41.9%, while Sberbank added 24.1% during the year. The energy sector underperformed, gaining a more modest 20.6%, even though oil prices rose throughout the year. Bashneft was the best performer among the ten largest holdings, gaining 251.5%. Gazprom and Lukoil brought down the energy sector perfor-mance though, gaining 8% and 4.9% respectively.

Changes during the periodThere were some large reallocations among sectors during the year, most notably a 4.4 percentage points increase in materials to 12.1% and a 4.6 points decrease in telecom services to 6.2%. Energy remained the largest sector, even though the exposure was cut from 43.1% to 40.3%. Utilities was also cut substantially, from 9.1% to 6.3%.

Organisational changesEast Capital Asset Management AB is the fund’s management company. As of 1 May 2010, the company has outsourced the material parts of the fund operations to East Capital AB, a company within the East Capital group. This organizational change, which has been approved by the Swedish Financial Supervisory Authority, has not affected the invest-ment strategy for the fund. On 27 December 2010, Johan Wigh was appointed CEO of East Capital Asset Management AB.

East Capital Russian Fund

Fund facts

Risk High Management company East Capital Asset Management ABLaunch date 18 May, 1998 Quotation/trade Daily Benchmark MSCI Russia Index Total Return (net) Dividend Yes, reinvested Management fee 2.5 % Subscription fee 2.5 % Redemption fee 0 %Minimum investment 200 SEK ISIN SE0000777708 Bloomberg EACRUSSBank account (IBAN) SE58 5000 0000 0586 4101 7968SWIFT ESSESESS Cut off point Investment payments available on the fund’s bank account before 15.00 CET will purchase fund units at a NAV calculated later the same day.

Aim and investment strategy

The aim of the fund is to maximise the return on investment for its unit-holders.

The fund’s investment focus is tied to the Russian economy, and the fund may invest in financial instruments of issuers domiciled in Russia. Both direct and indirect exposure is permitted. The fund may also invest up to one-third of its assets in instruments of issuers domi-ciled in Armenia, Azerbaijan, Belarus, Estonia, Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Tajikistan, Turkmenistan, Ukraine and Uzbekistan, provided that such instruments give the fund indirect exposure to the Russian economy 2. At least 75% of the fund’s assets shall consist of shares and equity-related instruments.

The fund is a UCITS fund and can invest a maximum of 10% of its value in any one issuer. Most holdings are under 5%. The fund invests predominantly in liquid shares.

The fund may trade in derivative instruments. Trading in OTC derivatives is permitted for purposes of currency hedging. Derivative instruments are traded on a highly limited basis as an integrated tool for more efficiently managing the fund’s assets, as well as protecting them from exchange rate losses and other risks.

All performance figures in the management report are in USD unless otherwise stated.

1 RTS Index until 30.06.2010, MSCI Russia Index Total Return (net) from 01.07.2010. As of 1 July, our investment funds have changed benchmark indices. This is to better reflect the investment focuses for the respective funds. From this date, all indices will also be dividend adjusted (i.e. they include possible dividends from the companies within the index). The East Capital Russian Fund has changed to the MSCI Russia, as the old index, the RTS, is not available in a dividend adjusted-version.

2 With effect as of 1 January 2011, the fund may invest up to 50% of its assets in instruments that give indirect expo-sure.

4 Annual Report 2010 East Capital Russian Fund

-500%

0%

500%

1 000%

1 500%

2000 2005 2010

Index for NAV: 18 May, 1998 = 100 SEK East Capital Russian Fund Benchmark1

NAV compared with currency adjusted benchmark

Portfolio break-down by sector and type of equity (%)

Ten largest holdings of the fund

Company Sector % of the fund’s NAVSberbank Financials 9.7Gazprom Energy 9.1Lukoil Energy 7.8Surgut NG Energy 4.2GMK Norilsky Nikel Materials 3.9Transneft Energy 3.8MRSK Holding Utilities 3.2X5 Retail Group GDR Consumer Staples 3.1Bashneft Energy 3.0Bank VTB Financials 2.9

Key figures for the fund

Total return 2010 2009 2008 2007 2006East Capital Russian Fund 25% 122% -69% 23% 42%Benchmark 1 (SEK) 16% 112% -67% 12% 47%

Average annual return for the last 5 years is 8.2 %.Average annual return for the last 24 months is 66.2 %.

Total risk 2010 2009 2008 2007 2006East Capital Russian Fund 30% 48% 38% 20% 25 %Benchmark 1 (SEK) 30% 48% 37% 21% 25 %Active risk 9% 11% 9% 7% 6 %

Net asset value (’000s SEK) 17,152,554 11,406,686 3,959,674 15,259,408 14,236,810Number of units outstanding 11,592,188 9,604,149 7,393,638 8,740,365 10,063,960NAV per unit (SEK) 1,479.66 1,187.68 535.55 1,745.85 1,414.63Dividend per unit after tax (SEK) - - - - -Turnover rate 0.64 0.74 0.70 0.59 0.76TER, % 2.50 2.50 2.50 2.50 2.50

Transaction costs, ’000s SEK 60,566Traded securities, ’000s SEK 20,230,012Transaction costs as % of traded securities 0.30Average net asset value, ’000s SEK 13,787,704Total management fee, ’000s SEK 339,475Management fee as % of average net asset value 2.50

Investment expenses

(Subscription fee not included)Management

feeTotal costs

Value 31-12-2010

One-off deposit of 10,000 SEK at start of the year 278.37 323.79 12,378.66 Monthly savings of 100 SEK/month 16.99 19.76 1,353.74

1 RTS Index until 30.06.2010, MSCI Russia Index Total Return (net) from 01.07.2010.

Past performance cannot be used as an indicator for current or future performance. The performance data do not take into account the commission and fees generated each time fund units are issued and purchased.

Common shares 84.4 Preferred shares 15.6

Energy 40.3 Financials 17.0 Materials 12.1 Consumer Staples 6.9 Utilities 6.3 Telecommunication Services 6.2 Industrials 4.6 Consumer Discretionary 4.4 Other assets and liabilities, net 2.2

5Annual Report 2010 East Capital Russian Fund

Income statement (‘000s SEK) 2010 2009 2008

Revenues and net realised and unrealised gains/lossesNet realised and unrealised gains/losses NOTE 1 2,825,888 5,691,990 -9,606,388Interest revenues 718 138 8,248Dividends 328,990 146,257 129,560Other revenues 4,670 792 1,567Total revenues 3,160,267 5,839,177 -9,467,013

ExpensesManagement fee -339,475 -182,097 -264,692Interest expenses -32 -71 -315Other expenses NOTE 2 -18,984 -1,136 -6,545Total expenses -358,491 -183,303 -271,552Result for the year 2,801,776 5,655,873 -9,738,565

Balance sheet (‘000s SEK) 31-12-2010 31-12-2009 31-12-2008

AssetsFinancial instruments with positive market value NOTE 4 16,775,563 11,294,074 3,880,712Cash and other funds 663,437 301,732 94,249Short-term receivables 32,649 117,953 19,081Accrued dividends 44,580 2,290 4,612Total assets 17,516,229 11,716,049 3,998,655

Liabilities and fund assetsOther short-term liabilities 363,674 309,362 38,980Total liabilities 363,674 309,362 38,980Net asset value of the fund NOTE 3 17,152,555 11,406,686 3,959,674Total liabilities and Net Asset Value 17,516,229 11,716,049 3,998,655

NOTE 1: Net un- & real. gains/losses 2010 2009 2008

Realised gains 2,189,786 1,167,041 1,482,747Realised losses -623,298 -1,627,333 -1,478,113Net currency gains/losses -20,273 -13,692 15,297Unrealised gains/losses 1,279,672 6,165,974 -9,626,320Total 2,825,888 5,691,990 -9,606,388

NOTE 2: Other expenses 2010 2009 2008

Corporate actions expenses -16,136 -938 -5,408Service fee -1,411 -133 -769Other expenses -1,437 -64 -368Total -18,984 -1,136 -6,545

NOTE 3: Change in NAV of the fund 2010 2009 2008

Net asset value of the fund at start of the year 11,406,686 3,959,674 15,259,408Issue of units 9,115,277 5,033,422 3,917,137Redemption of units -6,171,185 -3,242,283 -5,478,305Net in-/decrease in net assets from operations 2,801,776 5,655,873 -9,738,565NAV of the fund at year-end 17,152,555 11,406,686 3,959,674

NOTE 4: Financial instruments 1

Name Country 2Number

of sharesMarket value

‘000 SEK% of the

NAV

Consumer Discretionary 760,709 4.4GAZ total 68,262 0.4

GAZ pref* 44,583 5,416 0.0GAZ* 254,254 62,846 0.4

IMS Group 650,000 166 0.0M.Video* 7,682,227 452,763 2.6Sollers* 1,677,509 239,519 1.4

Consumer Staples 1,177,755 6.9Avangard GDR Ukraine 512,400 50,748 0.3Dixy* 1,316,795 115,837 0.7Gruppa Cherkizovo GDR 461,890 57,684 0.3Magnit* 102,985 92,529 0.5Myronivsky Hliboproduct GDR Ukraine 339,172 39,314 0.2Oriflame Cosmetics 71,400 25,279 0.1Wimm-Bill-Dann* 317,567 266,571 1.6X5 Retail Group GDR 1,713,059 529,792 3.1

Energy 6,905,139 40.3Bashneft pref* 2,207,492 513,983 3.0Eurasia Drilling GDR 1,801,749 391,362 2.3Gazprom ADR 9,092,857 1,562,084 9.1Gazprom Neft ADR 251,770 35,580 0.2Integra GDR 9,573,109 230,972 1.3Kazmunai Gas Ep GDR Kazakhstan 1,480,049 198,025 1.2Kuzbasskaya Topli* 2,252,700 105,513 0.6Kuzbassrazrezugol** 52,306,624 138,115 0.8Lukoil ADR 3,467,861 1,330,525 7.8Novoil pref* 1,794,322 7,175 0.0Rosneft GDR 5,063,569 245,621 1.4Surgut NG total 719,420 4.2

Surgut NG ADR 1,563,752 111,023 0.6Surgut NG pref ADR 3,564,000 123,518 0.7Surgut NG pref* 139,906,600 484,878 2.8

Tatneft pref* 10,215,698 193,888 1.1TNK-BP Holding total 465,643 2.7

TNK-BP Holding pref** 13,203,590 219,209 1.3TNK-BP Holding** 13,524,047 246,434 1.4

Transneft pref* 76,670 647,878 3.8UFA NK total 52,588 0.3

UFA NK pref* 2,996,140 42,766 0.2UFA NK* 318,092 9,821 0.1

Ufimsky NPZ** 4,934,000 48,783 0.3Yaroslav Nos total 17,982 0.1

Yaroslav Nos pref* 6,893,000 14,740 0.1Yaroslav Nos* 878,237 3,242 0.0

Financials 2,923,536 17.0Bank Aval Ukraine 123,334,467 40,918 0.2Bank of Georgia GDR REG S Georgia 1,073,243 139,685 0.8Bank Sankt-Peterburg* 6,852,437 257,551 1.5Bank Tsentrkredit Kazakhstan 1,113,407 30,019 0.2Bank Vozrozhdeniye* 120,798 36,645 0.2Bank VTB GDR 11,130,795 494,104 2.9BTA Kazakhstan 49,667 - -East Capital Bering Central Asia Cert 3 Kazakhstan 10,298,440 38,484 0.2East Capital Bering Russia Cert 4 5,416,230 118,239 0.7

6 Annual Report 2010 East Capital Russian Fund

East Capital Bering Ukraine Cert 5 Ukraine 9,531,400 60,016 0.3East Capital Financials Fund** 31,206 46,183 0.3Parex Banka total - -

Parex Banka Non Vote** Latvia 113,000 - -Parex Banka** Latvia 1,686,600 - -

Sberbank* 72,158,886 1,661,692 9.7

Industrials 786,521 4.6Aeroflot* 7,108,000 125,480 0.7FESCO* 108,956,357 399,282 2.3Kamaz* 2,480,097 39,602 0.2Mostotrest* 3,816,000 206,029 1.2OMZ total 9,885 0.1

OMZ ADR 1,500 35 0.0OMZ* 423,473 9,850 0.1

Russian Maintenance Corp** 100,000 6,243 0.0

Materials 2,072,139 12.1Evraz GDR 702,456 168,653 1.0GMK Norilsky Nikel total 664,189 3.9

GMK Norilsky Nikel ADR 3,117,462 505,891 2.9GMK Norilsky Nikel* 99,735 158,298 0.9

LSR Group* 1,970,390 444,821 2.6Magnitogorsk GDR 801,480 79,189 0.5Mechel pref ADR 1,797,252 116,685 0.7NLMK GDR 547,598 176,302 1.0Petropavlovsk 420,251 50,041 0.3Raspadskaya* 4,102,503 194,431 1.1Rusal 3,402,000 34,755 0.2Severstal GDR 857,900 98,572 0.6Sibirskiy Cement** 285,756 44,501 0.3

Telecommunication Services 1,062,171 6.2Komstar GDR 3,559,770 156,639 0.9MTS* 3,089,430 177,481 1.0Sistema GDR 1,514,610 253,912 1.5Vimpelkom 4,666,522 474,138 2.8

Utilities 1,087,593 6.3Halcyon Investment** 2,684 93,301 0.5Interrao* 1,819,820,325 18,963 0.1MRSK Holding total 552,837 3.2

MRSK Holding pref* 36,784,889 27,810 0.2MRSK Holding* 442,844,391 525,028 3.1

MRSK Tsentra I privolzhya* 1,636,717,301 109,654 0.6MRSK Tsentra* 142,875,852 40,851 0.2MRSK Volgi* 963,616,000 38,122 0.2OGK-2* 221,069,500 87,683 0.5OGK-6* 106,130,000 33,696 0.2Rushydro total 112,484 0.7

Rushydro* 60,074,269 21,882 0.1Rushydro* 248,736,809 90,602 0.5

Total Financial Instruments 16,775,563 97.8Regulated markets 7,967,973 46.5Other markets that are regulated (*) 7,964,821 46.4Other (**) 842,769 4.9

Other assets and liabilities, net 376,992 2.2The Fund's NAV 17,152,555 100.0

1) Indication of type of market place

No asterisk indicates that the financial instrument is traded on a regulated market or equivalent market outside the EEA.

* Instruments traded on other markets that are regulated. ** Other financial instruments.

2) If not otherwise stated, the instrument is issued by an issuer domiciled in Russia or by a foreign company that has significant operations, or invests significantly in Russia.

3) Investment in East Capital Bering Central Asia Fund made through an equity linked certificate listed on Euronext.

4) Investment in East Capital Bering Russia Fund made through an equity linked certificate listed on Euronext.

5) Investment in East Capital Bering Ukraine Fund made through an equity linked certificate listed on Euronext.

NOTE 4: Financial instruments (cont.) NOTE 4: Financial instruments (cont.)

7Annual Report 2010 East Capital Baltic Fund

Management report

The fund gained 37.7% during the year, while the benchmark index 1 gained 43% (both in SEK). The net asset value was SEK 1,550m as of 31 December 2010, to be compared to SEK 494m on 31 December 2009. Net inflows during the year amounted to SEK 795m.

Market updateThe Baltic markets were very strong in 2010, with Estonia being the sec-ond best performer in Eastern Europe after gaining 60.4%. Lithuania and Latvia were also among the top five markets, gaining 45.4% and 31.2% respectively. The strong performance can be attributed to two main factors. Firstly, investors realised and appreciated the fact that the economies started to recover from the deep recession. Furthermore, the substantial fiscal consolidation implemented in the region, primar-ily in Latvia, impressed investors and analysts. Secondly, the market revaluation came from low levels and was supported by a number of triggers. The most important catalysts were the green light to Estonia’s Euro zone accession, increased interest from strategic investors and improved performance by the foreign financials in the region. The fund’s developmentThe fund underperformed the benchmark index due to the relatively large cash position, which was maintained for liquidity reasons.

All sectors and all of the largest holdings showed positive returns during the year. Consumer discretionary and consumer staples were among the strongest, adding 95.6% and 54.6% respectively. Consumer holdings Apranga and Tallinna Kaubamaja outperformed strongly by gaining 141.8% and 60.6% respectively. Materials and utilities were the weakest, gaining 8.4% and 6.7% respectively. Financials returned 31.7% after Swedbank gained 41.2% and SEB 36%. Energy stocks returned 50.7%, while telecom services was among the relatively weaker sectors, gaining 26.8%.

Changes during the periodThe direct exposure to all three markets was reduced during the year in favour of increased weightings of the indirect Baltic exposure through Swedish banks. For liquidity management reasons, the fund increased its cash position and acquired Swedish T-Bills. The same factors lie behind the reduced weightings of all sectors except for financials, which increased from 1.8% to 15.8%. Accordingly, the single largest trades were net buys of Swedbank and Swedish T-bills. The fund also bought substantial amounts of Tallink, Apranga, Rokiskio Suris, TEO and Tallinna Kaubamaja shares. The fund made large net sales of SEB and Olympic Entertainment.


East Capital Baltic Fund

Fund facts

Risk High Management company East Capital Asset Management ABLaunch date 30 June, 1998Quotation/trade Daily Benchmark OMX Baltic Benchmark Capped Index Total Return (gross)Dividend Yes, reinvested Management fee 2.5 % Subscription fee 2.5 % Redemption fee 0 %Minimum investment 200 SEK ISIN SE0000777724Bloomberg EACBALTBank account (IBAN) SE36 5000 0000 0586 4101 7976SWIFT ESSESESSCut off point Investment payments available on the fund’s bank account before 13.00 CET will purchase fund units at a NAV calculated later the same day.


The aim of the fund is to maximise the return on investment for its unit- holders.

The fund mainly invests in Baltic financial instruments of issuers domiciled in Estonia, Latvia and Lithuania. Both direct and indirect exposure is permitted 2. At least 75 % of the fund’s assets consists of shares issued by issuers domiciled in the EU.




1 Baltic 30 Index until 30.06.2010, OMX Baltic Benchmark Capped Index Total Return (gross) from 01.07.2010. As of 1 July, our investment funds have changed benchmark indices. This is to better reflect the investment focuses for the respective funds. From this date, all indices will also be dividend adjusted (i.e. they include possible divi-dends from the companies within the index).

2 With effect as of 1 January 2011, the fund may invest up to 50% (previously, one-third of assets in instruments of issuers domiciled in Poland (new opportunity to direct exposure).

8 Annual Report 2010 East Capital Baltic Fund

-200%

0%

200%

400%

600%

2000 2005 2010

Index for NAV: 30 June, 1998 = 10 SEK East Capital Baltic Fund Benchmark1


Portfolio break-down by sector and country (%)


Company Country Sector % of the fund’s NAVSwedbank Baltics Financials 9.8Swedish T-Bill 9.7TEO Lithuania Telecommunication Services 6.9Tallink Estonia Industrials 6.6Pieno Zvaigzdes Lithuania Consumer Staples 5.5Tallinna Kaubamaja Estonia Consumer Discretionary 5.5S E B Baltics Financials 4.8Grindeks Latvia Health Care 3.9City Service Lithuania Industrials 3.7Apranga Lithuania Consumer Discretionary 3.7


Total return 2010 2009 2008 2007 2006East Capital Baltic Fund 38% 21% -57% 1% 12 %Benchmark 1 (SEK) 43% 10% -53% -6% 4 %

Average annual return for the last 5 years is -3.9 %.Average annual return for the last 24 months is 29.0 %.

Total risk 2010 2009 2008 2007 2006East Capital Baltic Fund 27% 32% 27% 15 % 13 %Benchmark 1 (SEK) 34% 30% 24% 18 % 18 %Active risk 13% 13% 12% 8 % 10 %

Net asset value (’000s SEK) 1,549,906 493,571 414,202 1,252,318 1,909,260Number of units outstanding 30,627,605 13,217,870 12,942,358 16,868,232 25,903,648NAV per unit (SEK) 50.60 37.34 32.00 74.24 73.71Dividend per unit after tax (SEK) 0.71 1.13 0.53 0.41 -Turnover rate 0.30 1.07 0.18 0.37 0.35TER, % 2.50 2.50 2.50 2.50 2.50


Investment expenses


fee Total costsValue

31-12-2010One-off deposit of 10,000 SEK at start of the year 309.27 356.47 13,889.72Monthly savings of 100 SEK/month 17.83 20.55 1,377.98

1 Baltic 30 Index until 30.06.2010, OMX Baltic Benchmark Capped Index Total Return (gross) from 01.07.2010. 2 Holdings stated in the fi nancial instruments list on next page.


Lithuania 37.6 Estonia 26.5 Baltics 2 14.8 Latvia 5.4 Other assets and liabilities, net 15.8

Consumer Discretionary 18.2 Industrials 16.5 Financials 15.8 Consumer Staples 15.1 Telecommunication Services 6.9 Health Care 3.9 Energy 3.8 Utilities 3.3 Materials 0.8 Other assets and liabilities, net 15.8

9Annual Report 2010 East Capital Baltic Fund


Revenues and net realised and unrealised gains/lossesNet realised and unrealised gains/losses NOTE 1 265,153 78,655 -569,733Interest revenues 645 58 381Dividends 22,856 28,342 22,300Other revenues - 404 3,202Total revenues 288,655 107,460 -543,850

ExpensesManagement fee -27,344 -12,071 -21,251Interest expenses - -6 -48Other expenses NOTE 2 -344 -1,459 -152Total expenses -27,688 -13,535 -21,450Result for the year 260,968 93,924 -565,300


AssetsFinancial instruments with positive market value NOTE 4 1,455,295 452,499 363,539Cash and other funds 102,461 54,910 52,329Short-term receivables 4,449 3,436 2Total assets 1,562,206 510,846 415,870

Liabilities and fund assetsFinancial instruments with negative market value - 16,197 -Other short-term liabilities 12,300 1,078 1,668Total liabilities 12,300 17,275 1,668Net asset value of the fund NOTE 3 1,549,906 493,571 414,202Total liabilities and Net Asset Value 1,562,206 510,846 415,870Collateral pledged - 21,308 -

NOTE 1: Net un- & real. gains/losses 2010 2009 2008

Realised gains 11,076 25,898 135,504Realised losses -26,014 -98,360 -48,495Net currency gains/losses 602 -9,980 -Unrealised gains/losses 279,489 161,097 -656,742Total 265,153 78,655 -569,733


Corporate actions expenses - -1,240 -129Service fee -344 -175 -18Other expenses - -44 -5Total -344 -1,459 -152


Net asset value of the fund at start of the year 493,571 414,202 1,252,318Issue of units 1,804,021 604,833 210,322Redemption of units -993,624 -606,865 -475,463Net in-/decrease in net assets from operations 260,968 93,924 -565,300Dividends paid -15,029 -12,524 -7,676NAV of the fund at year-end 1,549,906 493,571 414,202


Name Country Number


‘000 SEK% of the

NAV

Consumer Discretionary 281,894 18.2Apranga Lithuania 3,036,715 56,653 3.7Baltika Estonia 2,967,147 30,059 1.9Eesti Ekspress Grupp Estonia 1,732,657 23,529 1.5Klaipedos Baldai Lithuania 147,125 1,413 0.1Olympic Entertainment Estonia 2,315,881 30,825 2.0Silvano Fashion Group Estonia 1,625,000 40,220 2.6Tallinna Kaubamaja Estonia 1,519,966 84,933 5.5Utenos Trikotazas Lithuania 2,091,319 6,771 0.4Vilniaus Baldu Kombinatas Lithuania 88,603 7,490 0.5

Consumer Staples 233,689 15.1Linas Agro Group AB Lithuania 9,644,819 52,207 3.4Pieno Zvaigzdes Lithuania 6,390,268 85,114 5.5Rokiskio Suris Lithuania 3,546,780 55,909 3.6Vilniaus Degtine Lithuania 2,254,262 8,492 0.5Zemaitijos Pienas Lithuania 5,131,820 31,967 2.1

Energy 58,504 3.8Klaipedos Nafta Lithuania 10,071,140 48,462 3.1LASCO Latvia 2,124,166 10,041 0.6

Financials 244,929 15.8Arco Vara As Estonia 48,564 2,455 0.2Bankas Snoras pref Lithuania 168,686 3,858 0.2East Capital Baltic Property Investors ** 2 Baltics 1,818 2,038 0.1SEB 3 Baltics 1,334,300 74,888 4.8Siauliu Bankas Lithuania 2,964,479 8,974 0.6Swedbank A 4 Baltics 1,622,800 152,259 9.8Trigon Property Development Estonia 102,016 457 0.0

Health Care 60,005 3.9Grindeks Latvia 722,089 60,005 3.9

Industrials 256,491 16.5City Service Lithuania 2,253,798 56,693 3.7Harju Elekter Estonia 73,520 2,044 0.1Järvevana Estonia 225,280 748 0.0Laivite** Lithuania 100,370 1,564 0.1Limarko Lithuania 5,559,190 6,607 0.4Merko Ehitus Estonia 666,521 54,342 3.5Nordecon International Estonia 1,853,315 22,931 1.5Rigas Kugu Buvetava Latvia 637,015 2,577 0.2Tallink Estonia 14,330,404 101,927 6.6Trev-2 Grupp** Estonia 231,447 4,312 0.3Valmieras Stikla Skiedra Latvia 321,020 2,747 0.2

Materials 12,830 0.8Grigiskes Lithuania 734,399 5,102 0.3Liepajas Metalurgs Latvia 497,091 7,728 0.5

Telecommunication Services 106,726 6.9TEO Lithuania 16,572,553 106,726 6.9

Utilities 50,456 3.3Lietuvos Dujos Lithuania 5,455,659 35,844 2.3Rytu Skirstomieji Tinklai Lithuania 377,627 2,163 0.1Tallinna Vesi Estonia 175,863 12,450 0.8

Swedish T-Bill total 149,773 9.7Swedish T-Bill 2011-01-19 50,000,000 49,972 3.2Swedish T-Bill 2011-02-16 50,000,000 49,925 3.2Swedish T-Bill 2011-03-16 50,000,000 49,875 3.2

Total Financial Instruments 1,455,295 93.9Regulated markets 1,447,380 93.4Other markets that are regulated (*) - -Other (**) 7,915 0.5



No asterisk indicates that the financial instrument is traded on a regulated market or equivalent market outside the EEA. * Instruments traded on other markets that are regulated. ** Other financial instruments. 2) East Capital Baltic Property Investors, a Swedish company with business in the Baltics. 3) SEB, a finance company listed in Sweden with business in the Baltics. 4) Swedbank A, a finance company listed in Sweden with business in the Baltics.

NOTE 4: Financial instruments (cont.)

10 Annual Report 2010 East Capital Eastern European Fund

East Capital Eastern European Fund

Management report

The fund gained 18.3% during the year, while the benchmark index 1 gained 9.2% (both in SEK). The net asset value was SEK 7,664m as of 31 December 2010, to be compared to SEK 5,598m on 31 December 2009. Net inflows during the year amounted to SEK 1,032m.

Market updateThe performance on the Eastern European equity markets was overall strong in 2010. Among the larger markets, Russia and Turkey per-formed strongly, gaining 24.1% and 25.9% respectively. The perfor-mance on the Polish market was more modest, but it nevertheless gained 11.5%. The other markets in Central Europe moved in varying directions, with the Czech market gaining 7.1% and the Hungarian drop-ping 10.1%, mostly due to currency depreciation. The Ukrainian market was the best in the region, gaining 70.7%, followed by the markets in Estonia, Lithuania and Latvia, which gained 60.4%, 45.4% and 31.2% respectively. The Balkan markets and Kazakhstan underperformed and fell over the year as foreign investors were yet to return, even though the economic recovery gained momentum. The fund’s developmentThe fund outperformed the benchmark index due to successful alloca-tion across markets and sectors, as well as stock picking. The domestic-orientated sectors consumer discretionary, consumer staples and utili-ties outperformed returning 55.6%, 51.2% and 47.7% respectively. Mate-rials and industrials were also strong, gaining 47.7% and 46.7% respec-tively. The large energy and financial sectors performed more modestly but nevertheless gained 21.6% and 20.7% respectively. Russian bluechips Norilsky Nikel, MRSK and Transneft outperformed by gaining 83.6%, 61.8% and 65.2% respectively. On the other hand, Lukoil and Gazprom underperformed relatively, returning 4.9% and 8% respec-tively. Outside Russia, Erste Bank gained 27%, while Raiffeisen Interna-tional dropped 1.6%, and was the only holding among the ten largest in negative territory.

Changes during the periodRussian exposure was increased from 62.4% to 62.5%, while the expo-sure to Turkey and Poland was decreased from 8.5% to 8.3% and 5.5% to 5.1% respectively. The exposure to frontier markets in the Balkans and Baltics was increased, at the expense of Central Europe and Kazakhstan. The exposure to financials was increased to 34.1%, with large net buys of Raiffeisen International, Sberbank and Erste Bank, while the exposure to energy was reduced from 32% to 29%, with net sales of Rosneft and Kazmunai Gaz among others.


Fund facts

Risk High Management company East Capital Asset Management ABLaunch date 18 March, 2002Quotation/trade Daily Benchmark MSCI EM Europe Index Total Return (net) Dividend Yes, reinvested Management fee 2.5 % Subscription fee 2.5 % Redemption fee 0 %Minimum investment 200 SEK ISIN SE0000888208Bloomberg EACOSTEBank account (IBAN) SE13 5000 0000 0586 4100 6362SWIFT ESSESESSCut off point Investment payments available on the fund’s bank account before 15.00 CET will purchase fund units at a NAV calculated later the same day.


The aim of the fund is to maximise the return on investment for its unit- holders.

The fund mainly invests in Eastern European financial instruments of issuers domiciled in Albania, Armenia, Austria, Azerbaijan, Bela-rus, Bosnia-Herzegovina, Bulgaria, Croatia, the Czech Republic, Esto-nia, Georgia, Greece, Hungary, Kazakhstan, Kyrgyzstan, Latvia, Lithu-ania, Macedonia, Moldova, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Tajikistan, Turkey, Turkmenistan, Ukraine and Uzbekistan. Both direct and indirect exposure is permitted 2. At least 75% of the fund’s assets shall consist of shares and equity-related instruments.




1 MSCI EM Europe Index until 30.06.2010, MSCI EM Europe Index Total Return (net) from 01.07.2010.As of 1 July, our investment funds have changed benchmark indices. This is to better reflect the investment focuses for the respective funds. From this date, all indices will also be dividend adjusted (i.e. they include possible dividends from the companies within the index).

2 With effect as of 1 January 2011, the fund may invest up to 50% of its assets in instruments that give indirect exposure.

11Annual Report 2010 East Capital Eastern European Fund

-200%

0%

200%

400%

0102800260024002

Index for NAV: 18 March, 2002 = 10 SEK East Capital Eastern European Fund Benchmark1




Company Country Sector % of the fund’s NAVSberbank Russia Financials 6.9Gazprom Russia Energy 6.1Lukoil Russia Energy 5.2Raiffeisen International Eastern Europe Financials 3.4Surgut NG Russia Energy 2.8GMK Norilsky Nikel Russia Materials 2.6Transneft Russia Energy 2.6East Capital Explorer Eastern Europe Financials 2.3Erste Bank Eastern Europe Financials 2.2MRSK Holding Russia Utilities 2.2

Russia 62.5 Eastern Europe 2 10.0 Turkey 8.3 Poland 5.1 Romania 3.1 Czech Republic 1.3 Hungary 1.1 Lithuania 1.1 Slovenia 1.0 Baltics 2 1.0 Other countries 4.4 Other assets and liabilities, net 1.0

Financials 34.1 Energy 28.9 Materials 8.9 Consumer Staples 6.0 Telecommunication Services 5.3 Industrials 5.2 Consumer Discretionary 5.2 Utilities 4.3 Health Care 0.9 Information Technology 0.2 Other assets and liabilities, net 1.0


Total return 2010 2009 2008 2007 2006East Capital Eastern European Fund 18% 86% -64% 24% 24 %Benchmark 1 (SEK) 9% 65% -62% 20% 15 %

Average annual return for the last 5 years is 3.9 %.Average annual return for the last 24 months is 48.2 %.

Total risk 2010 2009 2008 2007 2006East Capital Eastern European Fund 24% 40% 34% 19% 23 %Benchmark 1 (SEK) 25% 39% 33% 20 % 25 %Active risk 8% 10% 8% 9 % 10 %

Net asset value (’000s SEK) 7,664,207 5,598,508 3,261,503 12,205,326 7,784,780Number of units outstanding 176,802,708 152,684,270 165,174,521 222,863,068 175,878,507

NAV per unit (SEK) 43.35 36.67 19.75 54.77 44.26Dividend per unit after tax (SEK) - - - - -Turnover rate 0.72 0.93 0.66 0.51 0.74TER, % 2.50 2.50 2.50 2.50 2.50


Investment expenses


feeTotal costs

Value 31-12-2010


1 MSCI EM Europe Index until 30.06.2010, MSCI EM Europe Index Total Return (net) from 01.07.2010.2 Holdings stated in the fi nancial instruments list on next page.




Revenues and net realised and unrealised gains/lossesNet realised and unrealised gains/losses NOTE 1 1,046,845 2,459,833 -6,851,168Interest revenues 595 805 4,130Dividends 149,949 99,163 126,054Other revenues 441 473 1,278Total revenues 1,197,829 2,560,273 -6,719,705

ExpensesManagement fee -157,592 -101,812 -199,165Interest expenses -34 -187 -173Other expenses NOTE 2 -7,070 -3,566 -3,271Total expenses -164,696 -105,565 -202,608Result for the year 1,033,133 2,454,708 -6,922,313


AssetsFinancial instruments with positive market value NOTE 4 7,584,822 5,459,615 3,231,347Cash and other funds 91,554 171,709 39,544Short-term receivables 31,494 62,467 11,252Accrued dividends 14,114 1,248 2,442Total assets 7,721,984 5,695,040 3,284,585


-NOTE 1: Net un- & real. gains/losses 2010 2009 2008

Realised gains 910,264 544,681 954,197Realised losses -436,684 -1,555,912 -1,464,952Net currency gains/losses -11,866 -2,680 7,911Unrealised gains/losses 585,131 3,473,744 -6,348,324Total 1,046,845 2,459,833 -6,851,168


Corporate actions expenses -5,154 -3,031 -2,398Service fee -1,726 -428 -501Other expenses -190 -107 -373Total -7,070 -3,566 -3,271


Net asset value of the fund at start of the year 5,598,508 3,261,503 12,205,326Issue of units 4,091,022 1,378,996 1,538,258Redemption of units -3,058,457 -1,496,699 -3,559,767Net in-/decrease in net assets from operations 1,033,133 2,454,708 -6,922,313NAV of the fund at year-end 7,664,207 5,598,508 3,261,503


Name Sector Number


‘000 SEK% of the

NAV

Balkan 19,983 0.3East Capital Bering Balkan Cert 2 Financials 3,798,000 19,983 0.3

Baltics 75,894 1.0East Capital Baltic Property Investors ** Financials 7,932 8,893 0.1SEB Financials 379,202 21,283 0.3Swedbank A Financials 487,275 45,719 0.6

Croatia 40,008 0.5Atlantic Grupa* Consumer Staples 18,574 18,171 0.2Istraturist* Consumer Discretionary 35,234 12,451 0.2Maistra* Consumer Discretionary 50,752 3,622 0.0Podravka* Consumer Staples 15,570 5,764 0.1

Czech Republic 99,478 1.3Cesky Telecom Telecom. Services 62,900 8,624 0.1CEZ Utilities 129,898 36,420 0.5Komercni Banka Financials 8,213 13,001 0.2New World Resources Materials 354,700 34,607 0.5Orco property GRP Financials 104,330 6,826 0.1

Eastern Europe 766,441 10.0East Capital Explorer 3 Financials 2,081,392 176,918 2.3Erste Bank 4 Financials 532,962 168,791 2.2Immofinanz AG 5 Financials 1,937,313 55,526 0.7KBC BB 6 Financials 95,853 21,968 0.3OMV 7 Energy 142,912 40,175 0.5Raiffeisen International 8 Financials 704,293 259,738 3.4Statoil Fuel & Retail 9 Consumer Discretionary 217,900 13,311 0.2Systemair 10 Industrials 122,372 12,176 0.2Unicredit 11 Financials 1,277,700 17,837 0.2

Estonia 56,193 0.7Tallink Industrials 4,250,380 30,231 0.4Tallinna Kaubamaja Consumer Discretionary 464,613 25,962 0.3

Georgia 20,837 0.3Bank of Georgia GDR REG S Financials 160,100 20,837 0.3

Greece 16,243 0.2Fourlis Holdings Consumer Discretionary 321,957 16,243 0.2

Hungary 84,212 1.1EGIS Health Care 32,037 20,665 0.3FOTEX Financials 547,576 6,664 0.1Gedeon Richter Health Care 9,806 13,477 0.2

13Annual Report 2010 East Capital Eastern European Fund

MOL Energy 23,250 15,495 0.2OTP Bank Financials 75,900 12,265 0.2Pannenergy Materials 538,682 15,646 0.2

Kazakhstan 45,813 0.6Bank Tsentrkredit Financials 398,772 10,752 0.1BTA Financials 21,091 - -East Capital Bering Central Asia Cert 12 Financials 1,601,420 5,984 0.1Kazmunai Gas Ep GDR Energy 217,323 29,077 0.4

Latvia 19,420 0.3Grindeks Health Care 233,700 19,420 0.3Parex Banka** Financials 768,000 - -

Lithuania 83,856 1.1City Service Industrials 794,200 19,978 0.3Pieno Zvaigzdes Consumer Staples 2,233,134 29,744 0.4TEO Telecom. Services 5,300,539 34,135 0.4

Poland 393,457 5.1Asseco Poland Information Technology 141,957 17,488 0.2Bank Zachodni WBK Sa Financials 28,700 13,944 0.2Bogdanka Energy 31,200 7,867 0.1Bre Bank Financials 14,225 9,907 0.1Cyfrowy Polsat Consumer Discretionary 319,438 11,742 0.2Globe Trade Centre Financials 122,226 6,757 0.1Grupa Lotos Energy 204,498 17,027 0.2ING Bank Slaski Financials 6,440 13,040 0.2KGHM Materials 66,825 25,420 0.3Kogeneracja Utilities 39,504 9,814 0.1PBG Industrials 14,142 6,781 0.1PGNiG Energy 1,808,678 14,670 0.2PKN Energy 279,500 29,756 0.4PKO Financials 75,800 7,603 0.1Polimex Mostostal Industrials 1,344,074 12,165 0.2Polska Grupa Energetyczna Utilities 182,400 9,500 0.1PZU Financials 132,756 106,984 1.4Reinhold Polska Financials 597,945 8,270 0.1Tauron Polska Energia Utilities 1,686,743 25,145 0.3TPSA Telecom. Services 505,200 19,212 0.3TVN Consumer Discretionary 527,467 20,363 0.3

Romania 236,020 3.1A&D Pharma Holding Health Care 128,067 5,226 0.1Fondul Proprietatea Financials 93,900,000 100,126 1.3Fondul Proprietatea WTS 2011-04-03 Financials 14,599 17,678 0.2Fondul Proprietatea WTS 2011-11-30 Financials 19 10,736 0.1Petrom Energy 70,161,408 48,996 0.6

Sif 1 (Banat Crisana) Financials 4,653,400 9,895 0.1Sif 2 (Moldova) Financials 4,389,600 10,660 0.1Sif 3 (Transilvania) Financials 9,265,600 10,505 0.1Sif 4 (Muntenia) Financials 6,854,700 9,223 0.1Sif 5 (Oltenia) Financials 4,929,400 12,976 0.2

Russia 4,787,056 62.5Aeroflot* Industrials 2,156,636 38,072 0.5Bank Sankt-Peterburg* Financials 2,113,257 79,428 1.0Bank Vozrozhdeniye* Financials 38,640 11,722 0.2Bank VTB GDR Financials 3,352,931 148,839 1.9Bashneft pref* Energy 665,320 154,910 2.0Dixy* Consumer Staples 435,419 38,303 0.5East Capital Bering Russia Cert 13 Financials 1,666,060 36,371 0.5East Capital Financials Fund** Financials 13,334 19,733 0.3Eurasia Drilling GDR Energy 575,460 124,997 1.6Evraz GDR Materials 212,643 51,054 0.7FESCO* Industrials 33,807,978 123,893 1.6GAZ total 22,723 0.3

GAZ pref* Consumer Discretionary 30,000 3,644 0.0GAZ* Consumer Discretionary 77,187 19,079 0.2

Gazprom ADR Energy 2,735,646 469,963 6.1Gazprom Neft ADR Energy 46,086 6,513 0.1GMK Norilsky Nikel total 200,135 2.6

GMK Norilsky Nikel ADR Materials 957,091 155,313 2.0GMK Norilsky Nikel* Materials 28,240 44,822 0.6

Gruppa Cherkizovo GDR Consumer Staples 112,136 14,004 0.2Integra GDR Energy 3,083,186 74,389 1.0Kamaz* Industrials 801,503 12,798 0.2Komstar GDR Telecom. Services 1,088,076 47,878 0.6Kuzbassrazrezugol** Energy 15,936,500 42,080 0.5LSR Group* Materials 600,650 135,598 1.8Lukoil ADR Energy 1,046,514 401,519 5.2M.Video* Consumer Discretionary 2,341,655 138,009 1.8Magnit* Consumer Staples 32,990 29,641 0.4Magnitogorsk GDR Materials 242,456 23,955 0.3Mechel pref ADR Materials 542,437 35,217 0.5Mostotrest* Industrials 1,158,000 62,522 0.8MRSK Holding total 168,487 2.2

MRSK Holding pref* Utilities 11,699,416 8,845 0.1MRSK Holding* Utilities 134,652,984 159,642 2.1

MRSK Tsentra I privolzhya* Utilities 521,995,365 34,972 0.5MRSK Tsentra* Utilities 43,531,296 12,447 0.2MTS* Telecom. Services 925,685 53,179 0.7NLMK GDR Materials 165,342 53,233 0.7Petropavlovsk Materials 128,876 15,346 0.2Raspadskaya* Materials 1,242,311 58,877 0.8Rosneft GDR Energy 1,534,149 74,418 1.0Rushydro total 34,216 0.4

Rushydro GDR** Utilities 4,135 151 0.0Rushydro* Utilities 69,298,583 25,242 0.3Rushydro* Utilities 24,222,700 8,823 0.1

Sberbank* Financials 23,072,503 531,319 6.9Severstal GDR Materials 259,300 29,793 0.4

NOTE 4: Financial instruments (cont.) NOTE 4: Financial instruments (cont.)


Sistema GDR Telecom. Services 457,989 76,778 1.0Sollers* Consumer Discretionary 509,611 72,763 0.9Surgut NG total 216,838 2.8

Surgut NG ADR Energy 526,025 37,347 0.5Surgut NG pref ADR Energy 1,050,400 36,404 0.5Surgut NG pref* Energy 41,286,232 143,087 1.9

Tatneft pref* Energy 3,224,416 61,198 0.8TNK-BP Holding total 141,349 1.8

TNK-BP Holding pref** Energy 3,996,994 66,359 0.9TNK-BP Holding** Energy 4,115,387 74,990 1.0

Transneft pref* Energy 23,138 195,521 2.6Ufimsky NPZ** Energy 1,816,200 17,957 0.2Wimm-Bill-Dann* Consumer Staples 104,711 87,896 1.1Vimpelkom Telecom. Services 1,415,561 143,827 1.9X5 Retail Group GDR Consumer Staples 525,033 162,375 2.1

Serbia 42,009 0.5Aik Banka** Financials 102,208 27,721 0.4Energoprojekt Holding Industrials 165,472 12,319 0.2Sojaprotein Consumer Staples 27,137 1,969 0.0

Slovakia 11,217 0.1Dexia Banka total 11,217 0.1

Dexia Banka Financials 1,463 9,506 0.1Dexia Banka Series 01 Financials 1,568 1,711 0.0

Slovenia 80,379 1.0KRKA Health Care 12,389 6,995 0.1Mercator Consumer Staples 29,843 42,211 0.6Nova Kreditna Bank Maribor Financials 269,712 24,735 0.3Pivovarna Lasko Consumer Staples 29,564 4,163 0.1Zavarovalnica Triglav Financials 14,400 2,274 0.0

Turkey 638,137 8.3Akbank Financials 725,686 27,818 0.4Albaraka Turk Financials 1,090,290 12,638 0.2Anadolu Hayat Financials 1,068,556 24,540 0.3Anadolu Sigorta Financials 2,851,593 17,269 0.2Do & Co Consumer Discretionary 61,861 16,361 0.3Emlak Reit Financials 2,074,400 18,056 0.2Garanti Bankasi Financials 1,852,884 64,109 0.8Halkbank Financials 1,189,443 67,515 0.9Is Reit Financials 2,564,927 19,987 0.3Koc Holding Industrials 492,300 16,136 0.2Sabanci Holding Financials 1,146,704 36,390 0.5Sinpas GYO Financials 3,156,791 28,711 0.4Sise Cam Consumer Discretionary 1,961,132 23,711 0.3Tofas Consumer Discretionary 519,321 18,216 0.2Trakya Cam Industrials 1,714,015 23,997 0.3Tupras Energy 187,080 31,958 0.4

Turk Telekom Telecom. Services 864,030 25,094 0.3Turkish Airlines Industrials 1,217,111 28,691 0.4Turkiye Is Bankasi Financials 2,406,472 57,772 0.8Vakifbank Financials 3,038,200 51,769 0.7Yapi Kredi Bankasi Financials 1,286,700 27,399 0.4

Ukraine 68,167 0.9Avangard GDR Consumer Staples 126,261 12,505 0.2Bank Aval Financials 50,871,059 16,877 0.2East Capital Bering Ukraine Cert 14 Financials 4,556,410 28,690 0.4Myronivsky Hliboproduct GDR Consumer Staples 87,090 10,095 0.1

Total Financial Instruments 7,584,822 99.0Regulated markets 4,940,678 64.5Other markets that are regulated (*) 2,386,259 31.1Other (**) 257,884 3.4





2) Investment in East Capital Bering Balkan Fund made through an equity linked certificate listed on Euronext.

3) East Capital Explorer, an investment company listed in Sweden with exposure to Eastern Europe.

4) Erste Bank, a finance company listed in Austria, with business in Eastern Europe.

5) Immofinanz AG, a finance company listed in Austria, with business in Eastern Europe.

6) KBC BB, a finance company listed in Austria, with business in Eastern Europe.

7) OMV, an oil and gas company listed in Austria, with business in Eastern Europe.

8) Raiffeisen International, a finance company listed in Austria, with business in Eastern Europe.

9) Statoil Fuel & Retail, an oil and gas company company listed in Norway with business in Eastern Europe.

10) Systemair, a construction company listed in Sweden with business in Eastern Europe.

11) Unicredit, a finance company listed in Italy with business in Eastern Europe.

12) Investment in East Capital Bering Central Asia Fund made through an equity linked certificate listed on Euronext.

13) Investment in East Capital Bering Russia Fund made through an equity linked certificate listed on Euronext.

14) Investment in East Capital Bering Ukraine Fund made through an equity linked certificate listed on Euronext.

NOTE 4: Financial instruments (cont.)NOTE 4: Financial instruments (cont.)

15Annual Report 2010 East Capital Balkan Fund

East Capital Balkan Fund

Management report

The fund dropped 4.1% during the year, while the benchmark index 1 dropped 0.8% (both in SEK). The net asset value was SEK 1,095m as of 31 December 2010, to be compared to SEK 1,213m on 31 December 2009. Net outflows during the year amounted to SEK 52m.

Market updateThe performance on the markets in Southeastern Europe was mixed in 2010. In short, Turkey performed well while the smaller markets in the region underperformed. The Turkish market, which gained more than 82% in 2009, stayed strong in 2010 and gained 25.9%. The performance was driven by a strong economic recovery, booming banks and sub-stantial equity inflows. The Romanian, Croatian and Serbian markets ended the year in positive territory in local currency terms, but were negatively affected by depreciating currencies, resulting in a modest 3.1% gain in Romania, a 2.4% drop in Croatia and a 16% correction in Serbia. Bulgaria and Slovenia dropped 21.2% and 25.2%. The reason behind the poor performance in the region is that foreign investors have not yet returned to the region, while the domestic investor base is limited. The performance was also negatively affected by the turbu-lence in Greece, whose stock market dropped as much as 39.7%. The fund’s developmentThe fund underperformed against the benchmark index, primarily due to the fund being underweight in the dominating banking and finance sector in Turkey and overweight in the smaller Balkan markets.

The performance varied greatly across sectors, with utilities and energy outperforming by gaining 43.4% and 33.1% respectively. Indus-trials returned 12% while health care and consumer staples were also in positive, albeit more modest, territory. Information technology underperformed greatly, dropping 64.4%, while consumer discretion-ary, telecom services and materials fell back a few percent. Of the larg-est holdings, some of the Turkish banks – Is, Garanti and Halk gained 36.2%, 28.4% and 21.2% respectively – and Romanian Petrom, which was up 23.1%, outperformed. On the negative side, Fourlis Holdings and Nova Kreditna Bank Maribor dropped 42.3% and 16.3% respec-tively.

Changes during the periodThe main reallocations in terms of markets were a reduction of the exposure to Turkey, from 35.3% to 33.0%, and a 3.9 percentage point increase in Serbia, to 12.7%. Romania and Slovenia were increased slightly, to 15.2% and 13.7% respectively, while the exposure to Croatia, Greece and pan-Balkan stocks was decreased. The exposure to con-sumer staples and energy was increased by 2.9 and 3.2 percentage points, to 15.1% and 12.7% respectively. Almost all other sectors were cut. Financials, for instance, was reduced by 1.2 points, but neverthe-less makes up almost half or 49.5% of the fund. Telecom services were reduced the most, by 3 points to 1.2%.


Fund facts

Risk High Management company East Capital Asset Management ABLaunch date 1 October, 2004Quotation/trade Daily Benchmark STOXX Balkan Total Market Index Total Return (net)Dividend Yes, reinvested Management fee 2.5 % Subscription fee 2.5 % Redemption fee 0 %Minimum investment 200 SEK ISIN SE0001244328Bloomberg EACBALKBank account (IBAN) SE24 5000 0000 0586 4101 6252SWIFT ESSESESSCut off point Investment payments available on the fund’s bank account before 15.00 CET will purchase fund units at a NAV calculated later the same day.



The fund mainly invests in financial instruments in the Balkans of issuers domiciled in Albania, Armenia, Austria, Azerbaijan, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, the Czech Republic, Georgia, Greece, Hungary, Kazakhstan, Kyrgyzstan, Macedonia, Moldova, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Tajikistan, Turkey, Turkmenistan, Ukraine and Uzbekistan. Both direct and indirect exposure is permitted 2. At least 75% of the fund’s assets shall consist of shares and equity-related instruments.




1 MSCI EM Europe Index until 30.06.2010, STOXX Balkan Total Market Index Total Return (net) from 01.07.2010.As of 1 July, our investment funds have changed benchmark indices. This is to better reflect the investment focuses for the respective funds. From this date, all indices will also be dividend adjusted (i.e. they include possible divi-dends from the companies within the index).


16 Annual Report 2010 East Capital Balkan Fund

-100%

0%

100%

200%

010280026002

Index for NAV: 1 October, 2004= 10 SEK East Capital Balkan Fund Benchmark1




Company Country Sector % of the fund’s NAVPetrom Romania Energy 7.8Erste Bank Eastern Europe Financials 7.7Mercator Slovenia Consumer Staples 6.7AIK Bank Serbia Financials 4.6Nova Kreditna Bank Maribor Slovenia Financials 3.8Halkbank Turkey Financials 3.0Garanti Bankasi Turkey Financials 3.0Atlantic Grupa Croatia Consumer Staples 2.9Turkiye Is Bankasi Turkey Financials 2.7Fourlis Holdings Greece Consumer Discretionary 2.6

Turkey 33.0 Romania 15.2 Slovenia 13.7 Serbia 12.7 Eastern Europe 2 12.0 Croatia 6.5 Greece 2.6 Balkan 2 2.5 Bulgaria 0.5 Other assets and liabilities, net 1.3

Financials 49.5 Consumer Staples 15.1 Energy 12.7 Consumer Discretionary 9.3 Industrials 6.8 Health Care 2.6 Telecommunication Services 1.2 Materials 0.9 Utilities 0.5 Information Technology 0.0 Other assets and liabilities, net 1.3


Total return 2010 2009 2008 2007 2006East Capital Balkan Fund -4% 29% -66% 41% 22 %Benchmark 1 (SEK) -1% 65% -62% 20% 15 %

Average annual return for the last 5 years is -6.1 %.Average annual return for the last 24 months is 11.4 %.

Total risk 2010 2009 2008 2007 2006East Capital Balkan Fund 23% 40% 38% 21% 26%Benchmark 1 (SEK) 27% 39% 33% 20% 25%Active risk 17% 21% 20% 17% 20%

Net asset value (’000s SEK) 1,095,472 1,212,782 1,163,313 6,872,989 2,992,202Number of units outstanding 79,706,652 84,145,620 102,286,695 206,270,143 126,963,049

NAV per unit (SEK) 13.74 14.41 11.37 33.32 23.57 Dividend per unit after tax (SEK) 0.06 0.27 - - -Turnover rate 0.65 0.82 0.32 0.41 0.76TER, % 2.50 2.50 2.50 2.50 2.50


Investment expenses


feeTotal costs

Value 31-12-2010


1 MSCI EM Europe Index until 30.06.2010, STOXX Balkan Total Market Index Total Return (net) from 01.07.2010.2 Holdings stated in the fi nancial instruments list on next page.


17Annual Report 2010 East Capital Balkan Fund


Revenues and net realised and unrealised gains/lossesNet realised and unrealised gains/losses NOTE 1 -59,254 299,183 -3,265,119Interest revenues 31 384 419Dividends 24,709 26,464 56,213Other revenues 163 882 1,612Total revenues -34,350 326,913 -3,206,875

ExpensesManagement fee -30,337 -29,806 -75,756Interest expenses -3 -50 -420Other expenses NOTE 2 -938 -86 -407Total expenses -31,278 -29,942 -76,583Result for the year -65,629 296,970 -3,283,458


AssetsFinancial instruments with positive market value NOTE 4 1,081,553 1,194,854 1,126,304Cash and other funds 13,123 19,591 98,797Short-term receivables 4,710 1,622 1,861Accrued dividends - 359 670Total assets 1,099,386 1,216,425 1,227,630



Realised gains 113,768 201,009 358,844Realised losses -123,380 -410,970 -1,070,027Net currency gains/losses -1,996 -5,908 -4,285Unrealised gains/losses -47,646 515,051 -2,549,651Total -59,254 299,183 -3,265,119


Corporate actions expenses -85 -73 -345Service fee -820 -10 -49Other expenses -33 -3 -13Total -938 -86 -407


Net asset value of the fund at start of the year 1,212,782 1,163,313 6,872,989Issue of units 622,639 314,471 460,177Redemption of units -669,175 -539,314 -2,886,394Net in-/decrease in net assets from operations -65,629 296,970 -3,283,458Dividends paid -5,145 -22,658 -NAV of the fund at year-end 1,095,472 1,212,782 1,163,313


Name Sector Number


‘000 SEK% of the

NAV

Balkan 27,820 2.5East Capital Bering Balkan Cert 2 Financials 5,287,500 27,820 2.5

Bulgaria 5,449 0.5Doverie Holding Financials 326,949 5,449 0.5

Croatia 71,219 6.5Atlantic Grupa* Consumer Staples 32,486 31,781 2.9Atlantska Plovidba* Industrials 4,107 3,638 0.3Istraturist* Consumer Discretionary 57,990 20,493 1.9Jamnica* Consumer Staples 59 2,870 0.3Podravka* Consumer Staples 28,377 10,505 1.0Valamar Grupa* Consumer Discretionary 50,282 1,932 0.2

Eastern Europe 131,170 12.0Erste Bank 3 Financials 266,900 84,528 7.7OMV 4 Energy 73,100 20,550 1.9Raiffeisen International 5 Financials 70,750 26,092 2.4

Greece 28,946 2.6Fourlis Holdings Consumer Discretionary 573,727 28,946 2.6

Romania 166,347 15.2A&D Pharma Holding Health Care 227,171 9,271 0.8Oltchim Materials 505,205 210 0.0Petrom Energy 122,167,194 85,313 7.8Saturn Sa Alba** Industrials 82,116 494 0.0Sif 1 (Banat Crisana) Financials 4,662,500 9,914 0.9Sif 2 (Moldova) Financials 3,720,100 9,034 0.8Sif 3 (Transilvania) Financials 9,280,400 10,522 1.0Sif 4 (Muntenia) Financials 6,855,100 9,223 0.8Sif 5 (Oltenia) Financials 4,347,100 11,443 1.0THR Marea Neagra Consumer Discretionary 12,165,000 3,726 0.3Transgaz Energy 29,630 17,197 1.6

Serbia 139,045 12.7Aik Banka** Financials 185,534 50,321 4.6Alfa Plam Consumer Discretionary 14,296 9,947 0.9Bambi** Consumer Staples 10,697 15,799 1.4BB Minakva** Consumer Staples 3,676 2,155 0.2Cacanska Banka** Financials 6,659 7,685 0.7Efes Zajecar** Consumer Staples 3,619 1,505 0.1Energoprojekt Holding Industrials 283,306 21,092 1.9Imlek** Consumer Staples 15,677 2,550 0.2JAFFA** Consumer Staples 1,559 1,013 0.1Komercijalna Banka Financials 2,122 4,923 0.4PIK Cacak** Consumer Staples 750 - -Pupin Telecom** Information Technology 53,580 520 0.0Sojaprotein Consumer Staples 129,561 9,400 0.9

18 Annual Report 2010 East Capital Balkan Fund

Srpska Banka** Financials 650 502 0.0Toza Markovic** Industrials 44,189 5,116 0.5Univerzal Holding** Financials 11,809 272 0.0Velefarm** Health Care 22,641 1,981 0.2Zitopromet - Mlin** Consumer Staples 9,724 4,266 0.4

Slovenia 149,864 13.7KRKA Health Care 21,356 12,058 1.1Mercator Consumer Staples 51,611 73,001 6.7Nova Kreditna Bank Maribor Financials 458,797 42,077 3.8Pivovarna Lasko Consumer Staples 75,681 10,657 1.0Zavarovalnica Triglav Financials 76,448 12,071 1.1

Turkey 361,694 33.0Akbank Financials 357,463 13,703 1.3Albaraka Turk Financials 508,031 5,889 0.5Anadolu Cam Materials 248,980 3,572 0.3Anadolu Hayat Financials 503,000 11,551 1.1Anadolu Sigorta Financials 1,371,987 8,309 0.8Arcelik Consumer Discretionary 115,478 3,895 0.4Aygaz Utilities 151,201 5,409 0.5Bank Asya Financials 286,600 3,590 0.3CELEBI Industrials 69,448 7,145 0.7Do & Co Consumer Discretionary 28,400 7,505 0.7Emlak Reit Financials 750,000 6,528 0.6Ford Otosan Consumer Discretionary 77,600 4,422 0.4Garanti Bankasi Financials 934,116 32,320 3.0Halkbank Financials 579,365 32,886 3.0Is Reit Financials 1,160,418 9,043 0.8Koc Holding Industrials 242,900 7,961 0.7Mardin Cimento Materials 109,909 3,631 0.3Sabanci Holding Financials 563,004 17,867 1.6Selcuk Ecza Health Care 475,668 5,400 0.5Sinpas GYO Financials 1,639,581 14,912 1.4Sise Cam Consumer Discretionary 993,276 12,009 1.1Tekfen Holding Industrials 119,300 3,403 0.3Tofas Consumer Discretionary 258,631 9,072 0.8Trakya Cam Industrials 845,117 11,832 1.1TSKB Financials 526,134 6,133 0.6Tupras Energy 92,895 15,869 1.4Turk Telekom Telecom. Services 444,379 12,906 1.2Turkish Airlines Industrials 600,368 14,152 1.3Turkiye Is Bankasi Financials 1,212,076 29,098 2.7Unye Cimento Materials 153,793 2,968 0.3Vakifbank Financials 1,474,026 25,116 2.3Yapi Kredi Bankasi Financials 638,600 13,598 1.2

Total Financial Instruments 1,081,553 98.7Regulated markets 916,157 83.6Other markets that are regulated (*) 71,219 6.5Other (**) 94,177 8.6





2) Investment in East Capital Bering Balkan Fund made through an equity linked certificate listed on Euronext.

3) Erste Bank, a finance company listed in Austria, with business in Eastern Europe.

4) OMV, an oil and gas company listed in Austria, with business in Eastern Europe.

5) Raiffeisen International, a finance company listed in Austria, with business in Eastern Europe.


19Annual Report 2010 East Capital Turkish Fund

East Capital Turkish Fund

Management report

The fund gained 16.5% during the year, while the benchmark index 1 gained 19% (both in SEK). The net asset value was SEK 2,672m as of 31 December 2010, to be compared to SEK 1,681m on 31 December 2009. Net inflows during the year amounted to SEK 776m.

Market updateThe Turkish market, which gained more than 82% in 2009, stayed strong in 2010 and gained 25.9%. The performance was driven by a number of different factors. First of all, the Turkish economy has rebounded strongly, with growth close to 8%, while inflation and inter-est rates have fallen to historically low levels deep in single digits. Sec-ondly, and related to this, Turkish banks, which make up more than half the index, have been very strong during the year on the back of the economic recovery. The banks, which were among the most prudent in Europe before the crisis, enjoyed very rapid credit growth in 2010. Thirdly, 2010 was the year when global investors rediscovered the Turkish markets and equity flows picked up considerably over the year. The activity was particularly strong during the third quarter when the flows, the volume and the index reached historically high levels. The fund’s developmentThe fund underperformed the benchmark index, primarily due to the performance of financials. All sectors performed well during the year, but there were nevertheless substantial differences. Consumer discre-tionary gained 74.7%, followed by utilities, gaining 41.3%. Materials, energy and industrials also performed well, gaining 26.9%, 35.9% and 23.6% respectively. The large financial sector, which includes real estate and insurance sectors, gained 19%. The performance in the financial sector was good overall, albeit with substantial variations. All but one of the ten largest holdings ended the year in positive territory.

Changes during the periodThe dominance of the financial sector was increased as the exposure went from 59.8% to 61.1%, with large net buys in Vakifbank and Halk-bank. But the largest increase, a 5.8 percentage point addition, was in consumer discretionary. Among other things, the fund made a large net buy of Do & Co Restaurants & Catering when it was introduced on the stock exchange. Industrials was reduced from 14.7% to 12.5%, but remained the second largest sector. The largest reduction was in tele-com services, as the exposure was cut from 7.8% to 3.3% by selling stakes in Turkcell and Turk Telekom.


Fund facts

Risk High Management company East Capital Asset Management ABLaunch date 29 March, 2006Quotation/trade Daily Benchmark ISE 100 Index Total Return (net)Dividend Yes, reinvested Management fee 2.5 % Subscription fee 2.5 % Redemption fee 0 %Minimum investment 200 SEK ISIN SE0001621327 Bloomberg EACTURKBank account (IBAN) SE8250000000058641009582SWIFT ESSESESS Cut off point Investment payments available on the fund’s bank account before 15.00 CET will purchase fund units at a NAV calculated later the same day.



The fund’s investment focus is tied to the Turkish economy and the fund may invest in financial instruments of issuers domiciled in Turkey. Both direct and indirect exposure is permitted. The fund may also invest up to one-third of its assets in instruments of issuers domi-ciled in Albania, Armenia, Azerbaijan, Bosnia-Herzegovina, Bulgaria, Croatia, Cyprus, Egypt, Georgia, Greece, Hungary, Iran, Iraq, Israel, Jordan, Kazakhstan, Kyrgyzstan, Lebanon, Macedonia, Montenegro, Qatar, Romania, Russia, Serbia, Slovenia, Tajikistan, Turkmenistan and Uzbekistan, provided that such instruments give the fund indirect exposure to the Turkish economy 2. At least 75 % of the fund’s assets shall consist of shares and equity-related instruments.




1 ISE 100 Index until 30.06.2010, ISE 100 Index Total Return (net) from 01.07.2010. As of 1 July, our investment funds have changed benchmark indices. This is to better reflect the investment focuses for the respective funds. From this date, all indices will also be dividend adjusted (i.e. they include possible dividends from the companies within the index).


20 Annual Report 2010 East Capital Turkish Fund

-100%

-50%

0%

2007 2008 2009 2010

Index for NAV: 29 March, 2006 = 10 SEK East Capital Turkish Fund Benchmark1


Portfolio break-down by sector (%)


Company Sector% of the

fund’s NAVHalkbank Financials 8.4Garanti Bankasi Financials 8.3Turkiye Is Bankasi Financials 7.5Vakifbank Financials 6.5Sabanci Holding Financials 4.6Tupras Energy 4.0Sinpas GYO Financials 3.8Akbank Financials 3.7Turkish Airlines Industrials 3.6Yapi Kredi Bankasi Financials 3.5

Financials 61.1 Industrials 12.5 Consumer Discretionary 10.2 Materials 4.7 Energy 4.0 Telecommunication Services 3.3 Health Care 1.4 Utilities 1.4 Other assets and liabilities, net 1.4


Total return 2010 2009 2008 2007 2006*East Capital Turkish Fund 16% 90% -59% 52% -24 %Benchmark 1 (SEK) 19% 82% -56% 61% -23 %

Average annual return since inception is 1.0 %.Average annual return for the last 24 months is 48.8 %.

Total risk** 2010 2009 2008 2007 2006East Capital Turkish Fund 32% 55% 51% - -Benchmark 1 (SEK) 32% 51% 48% - -Active risk 5% 7% 7% - -

Net asset value (’000s SEK) 2,672,548 1,681,448 844,394 2,207,337 1,031,398Number of units outstanding 259,878,440 190,051,345 178,598,920 192,454,571 136,568,462

NAV per unit (SEK) 10.28 8.85 4.73 11.47 7.55 Dividend per unit after tax (SEK) 0.02 0.10 - - -Turnover rate 1.16 1.61 1.39 0.89 -TER, % 2.50 2.50 2.50 2.50 -


Investment expenses


feeTotal costs

Value 31-12-2010


1 ISE 100 Index until 30.06.2010, ISE 100 Index Total Return (net) from 01.07.2010.

* Since launch date 29 March, 2006.** According to the Swedish Investment Fund Association’s “Guidelines for reporting of key ratios relating to invest-

ment funds, latest revision from 6 December 2004”, total risk, total risk for benchmark indices and active risk shall be based on monthly data from the last 24 months. In the case of a fund having been in operation for less than 24 months (started 29.03.2006), these risk measurements are not required to be reported.


21Annual Report 2010 East Capital Turkish Fund


Revenues and net realised and unrealised gains/lossesNet realised and unrealised gains/losses NOTE 1 223,050 758,843 -1,302,451Interest revenues 164 28 330Dividends 59,311 41,624 37,161Other revenues 234 309 1,194Total revenues 282,759 800,804 -1,263,766

ExpensesManagement fee -66,693 -33,004 -31,038Interest expenses -39 -60 -78Other expenses NOTE 2 -579 -19 -169Total expenses -67,311 -33,084 -31,284Result for the year 215,448 767,720 -1,295,050


AssetsFinancial instruments with positive market value NOTE 4 2,634,243 1,642,545 812,921Cash and other funds 49,165 90,255 29,816Short-term receivables 4,510 97 6,376Total assets 2,687,918 1,732,897 849,113

Liabilities and fund assetsOther short-term liabilities 15,370 51,449 4,719Total liabilities 15,370 51,449 4,719Net asset value of the fund NOTE 3 2,672,548 1,681,448 844,394Total liabilities and Net Asset Value 2,687,918 1,732,897 849,113

Memorandum itemsCollateral received for loaned securities 63,484 Loaned securities 63,484


Realised gains 417,831 257,787 83,492Realised losses -87,432 -150,378 -660,460Net currency gains/losses 8,656 -4,250 -1,761Unrealised gains/losses -116,005 655,684 -723,722Total 223,050 758,843 -1,302,451


Corporate actions expenses 0 -16 -144Service fee -574 -2 -20Other expenses -5 -1 -5Total -579 -19 -169


Net asset value of the fund at start of the year 1,681,448 844,394 2,207,337Issue of units 4,152,298 1,601,272 1,172,795Redemption of units -3,371,462 -1,516,482 -1,240,688Net in-/decrease in net assets from operations 215,448 767,720 -1,295,050Dividends paid -5,184 -15,455 -NAV of the fund at year-end 2,672,548 1,681,448 844,394


Name Country 2Number


‘000 SEK% of the

NAV

Consumer Discretionary 273,672 10.2Arcelik 794,822 26,811 1.0Do & Co 206,700 54,625 2.0Dogus Otomotiv 721,400 20,513 0.8Ford Otosan 524,000 29,857 1.1

Sise Cam 6,711,875 81,149 3.0Tofas 1,730,964 60,717 2.3

Energy 107,764 4.0Tupras 630,835 107,764 4.0

Financials 1,631,620 61.1Akbank 2,588,566 99,228 3.7Albaraka Turk 3,509,258 40,676 1.5Anadolu Hayat 3,338,187 76,662 2.9Anadolu Sigorta 9,424,290 57,074 2.1Bank Asya 1,906,800 23,882 0.9Emlak Reit 7,057,800 61,432 2.3Fortis Bank Turkey 1,998,497 19,998 0.7Garanti Bankasi 6,430,674 222,499 8.3Halkbank 3,964,544 225,034 8.4Is Reit 7,871,419 61,338 2.3Sabanci Holding 3,834,833 121,696 4.6Sinpas GYO 11,037,891 100,389 3.8Solidere GDR 99,000 12,594 0.5TSKB 3,574,230 41,662 1.6Turkiye Is Bankasi 8,371,106 200,966 7.5Vakifbank 10,127,070 172,559 6.5Yapi Kredi Bankasi 4,411,100 93,929 3.5

Health Care 37,140 1.4Selcuk Ecza 3,271,544 37,140 1.4

Industrials 333,153 12.5CELEBI 470,447 48,403 1.8Koc Holding 1,652,600 54,166 2.0Tekfen Holding 790,300 22,541 0.8Trakya Cam 5,735,476 80,300 3.0Turk Traktor 149,348 14,961 0.6Turkish Airlines 4,085,550 96,308 3.6Yazicilar Holding 278,000 16,474 0.6

Materials 124,725 4.7Anadolu Cam 1,618,396 23,220 0.9Cimsa 315,730 13,809 0.5Koza Altin 236,600 21,596 0.8Mardin Cimento 770,441 25,453 1.0Soda Sanayii 2,069,871 20,443 0.8Unye Cimento 1,047,014 20,204 0.8

Telecommunication Services 89,473 3.3Turk Telekom 3,080,726 89,473 3.3

Utilities 36,696 1.4Aygaz 1,025,823 36,696 1.4

Total Financial Instruments 2,634,243 98.6Regulated markets 2,634,243 98.6Other markets that are regulated (*) - -Other (**) - -





2) If not otherwise stated, the instrument is issued by an issuer domiciled in Turkey or by a foreign company that has significant operations, or invests significantly in Turkey.


22 Annual Report 2010

To the unit-holders of East Capital Russian Fund, East Capital Baltic Fund, East Capital Eastern European Fund, East Capital Balkan Fund and East Capital Turkish Fund.

In the capacity of auditor in East Capital Asset Management AB, corporate id number 556564-5370, I have examined the annual report and accounts and the fund management company’s management of East Capital Russian Fund, East Capital Baltic Fund, East Capital East-ern European Fund, East Capital Balkan Fund and East Capital Turk-ish Fund for the year 2010. These accounts and the administration of the fund and the application of the Swedish Investment Funds Act and the Swedish Financial Supervisory Authority’s Regulations governing Investment Funds when preparing the annual accounts are the responsibility of the fund management company. My responsibility is to express an opinion on the annual accounts and the administration based on my audit.

I conducted my audit in accordance with generally accepted audit-ing standards in Sweden. Those standards require that I plan and per-form the audit to obtain reasonable assurance that the annual accounts are free of material misstatement. An audit includes examin-ing, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting prin-ciples used and their application by the fund management company

and significant estimates made by the fund management company when preparing the annual accounts as well as evaluating the overall presentation of information in the annual accounts. I examined signif-icant decisions, actions taken and circumstances of the funds in order to be able to determine if the fund management company has acted in contradiction with the Swedish Investment Funds Act or the fund rules. I believe that my audit provides a reasonable basis for my opin-ion set out below.

The annual accounts have been prepared in accordance with the Swedish Investment Funds Act and the Swedish Financial Supervisory Authority’s Regulations governing Investment Funds.

The fund management company has in my opinion not acted in contradiction of the Swedish Investment Funds act or the fund rules.

Stockholm, 28 February 2011

(signature on original document)

Carl LindgrenAuthorized Public Accountant

Auditor’s report - translation

23Annual Report 2010

Asset Management Company

East Capital Asset Management AB,a wholly-owned subsidiary of East Capital Holding ABBox 1364, SE-111 93 StockholmTel +46 8 505 88 505, Fax +46 8 505 88 508E-mail: [email protected] registration no: SE 556564-5370Share capital: 5,000,000 SEK

Board

Justas Pipinis, chairman of the boardRisto Silander, member of the boardMia Jurke, member of the boardDick Lundqvist, member of the board

Chief Executive Officer

Johan Wigh

Depositary

Skandinaviska Enskilda Banken (publ), Securities Services

Supervisory authority

Swedish Financial Supervisory Authority

Applicable regulations

Investment Funds Act (SFS 2004:46), the Swedish Financial Supervisory Authority’s regula-tions on investment funds (FFFS 2008:11) and rules and regulations for each fund. The com-pany follows the Swedish fund company code, which was adopted by the Board of the Swed-ish Investment Fund Association on 6 December 2004.

Independent board member

The company’s board currently comprises two independent members.

AuditorCarl Lindgren, Authorised public accountant, KPMG AB

Reporting principles

This Annual Report has been drawn in accordance with the Investment Funds Act (SFS 2004:46), the Swedish Financial Supervisory Authority’s regulations on investment funds (FFFS 2008:11) and the Swedish Investment Fund Association’s recommendations for the reporting of facts and figures pertaining to investment funds.

Financial instruments that are included in the funds are valued based on the current mar-ket value, i.e. the mean value of the bid price and ask price (“mid price”). Should the most recently indicated mid price not appear to be relevant, financial instruments may be valued at the price objectively decided upon by the company based on available market information.

Unlisted assets are valued at the most recently known transaction price. In the absence of such information or where such information does not appear to be relevant, financial instru-ments may be valued at the price objectively decided upon by the company based on availa-ble market information. Both unrealised and realised profits and losses are reported in the accounts.

The funds’ holdings in shares and other financial instruments have been valued with prices taken at 22.00 CET as per 30 December 2010.

Tax rules

For the fundThe Fund is not taxable for capital gains when selling Swedish or foreign shares or share-related securities and consequently, capital losses are not tax deductible. Capital gains and capital losses from the sale of other securities are taxable and tax deductible respectively. The Fund’s taxable income also consists of interest and regular revenue of 1.5% of market value at the beginning of the year, of the Fund’s holdings of shares and share-related securi-ties. The tax rate for the Fund is 30%. Dividends to unit-holders are tax deductible for the Fund but not to such a great extent that a deficit arises. If the entirety of the Fund’s taxable income is paid out to the unit-holders, there is therefore no tax on the Fund.

For the unit-holdersInstitutions and individuals residing outside of Sweden are entirely responsible for abiding by the taxation rules of the country where they are registered to pay tax, and following up as required.

Term definitions

Active risk (tracking error), as reported in this annual report, describes how much the funds deviate from their benchmark indices, i.e. how active the managers have been. Active risk is also known as tracking error. When active risk is close to 0, a fund has tracked the index, which is the case for an index-tracking fund. The higher the active risk (>0), the more active the manager has been. For an actively managed fund this figure is normally between 5 and 15. It should however be emphasised that our investment strategy does not take into account how we invest in relation to indices.

The turnover rate is a measurement of the proportion of the fund which is traded over a period of time. It indicates how short or long-term the management perspective is by reflect-ing the length of time that a security remains part of the fund. It is calculated by adding all purchases and sales respectively for a given period and then dividing the lowest total by the average of the fund’s assets under management.

TER, total expense ratio (a measurement used internationally) is total costs excluding trans-action costs, expressed as a percentage of the average of the fund’s assets under manage-ment.

Traded securities is a measurement of the trading activity in the fund for the year. In abso-lute terms, this is the sum total of purchased and sold securities during the year.

Average net asset value is calculated upon daily observations throughout the year, which means that as a result of large changes in the assets under management, this can be a very rough approximation.

Total risk is a measurement of how much the NAV of the fund has varied compared to the average share price development over a set period of time. The higher the value, the higher the risk.

Box 1364, 111 93 Stockholm, SwedenTel +46 8 505 88 505 Fax +46 8 505 88 508

[email protected]

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