financial statements as at 31st december 2014 reports/english/east... · mathias pedersen chief...

Annual report including audited financial statements as at 31st December 2014

East Capital (Lux)

Société d'investissement à capital variable incorporated in Luxembourg R.C.S. Luxembourg B 121 268

No subscription can be received on the basis of this financial report. Subscriptions are only valid if made on the basis of the current prospectus supplemented by the latest annual report and the most recent semi-annual report, if published thereafter.

Contents

East Capital (Lux) 1

Organisation ............................................................................................................................................................... 2

Report of the Réviseur d'Entreprises agréé ................................................................................................................. 4

Combined statement of net assets ............................................................................................................................... 5

Combined statement of operations and other changes in net assets............................................................................. 6

East Capital (Lux) - Russian Fund ............................................................................................................................... 7 Management report ....................................................................................................................................................................................... 7 Statement of net assets ................................................................................................................................................................................. 8 Statement of operations and other changes in net assets ............................................................................................................................ 9 Statistical information ................................................................................................................................................................................. 10 Statement of investments and other net assets ........................................................................................................................................... 13

East Capital (Lux) - Baltic Fund ................................................................................................................................. 16 Management report ..................................................................................................................................................................................... 16 Statement of net assets ................................................................................................................................................................................ 17 Statement of operations and other changes in net assets ........................................................................................................................... 18 Statistical information ................................................................................................................................................................................. 19 Statement of investments and other net assets ........................................................................................................................................... 21

East Capital (Lux) - Balkan Fund ............................................................................................................................... 23 Management report .................................................................................................................................................................................... 23 Statement of net assets ............................................................................................................................................................................... 24 Statement of operations and other changes in net assets .......................................................................................................................... 25 Statistical information ................................................................................................................................................................................ 26 Statement of investments and other net assets .......................................................................................................................................... 28

East Capital (Lux) - Turkish Fund .............................................................................................................................. 30 Management report .................................................................................................................................................................................... 30 Statement of net assets ................................................................................................................................................................................ 31 Statement of operations and other changes in net assets .......................................................................................................................... 32 Statistical information ................................................................................................................................................................................ 33 Statement of investments and other net assets .......................................................................................................................................... 36

East Capital (Lux) - Eastern European Fund .............................................................................................................. 38 Management report .................................................................................................................................................................................... 38 Statement of net assets ............................................................................................................................................................................... 39 Statement of operations and other changes in net assets .......................................................................................................................... 40 Statistical information ................................................................................................................................................................................. 41 Statement of investments and other net assets .......................................................................................................................................... 44

East Capital (Lux) - Emerging Asia Fund (formerly East Capital (Lux) - China East Asia Fund) ................................. 47 Management report .....................................................................................................................................................................................47 Statement of net assets ............................................................................................................................................................................... 48 Statement of operations and other changes in net assets .......................................................................................................................... 49 Statistical information ................................................................................................................................................................................ 50 Statement of investments and other net assets .......................................................................................................................................... 52

East Capital (Lux) - China Fund ................................................................................................................................. 54 Management report .................................................................................................................................................................................... 54 Statement of net assets ................................................................................................................................................................................ 55 Statement of operations and other changes in net assets .......................................................................................................................... 56 Statistical information ................................................................................................................................................................................. 57 Statement of investments and other net assets .......................................................................................................................................... 58

East Capital (Lux) - Frontier Markets Fund ............................................................................................................... 60 Management report .................................................................................................................................................................................... 60 Statement of net assets ................................................................................................................................................................................ 61 Statement of operations and other changes in net assets .......................................................................................................................... 62 Statistical information ................................................................................................................................................................................ 63 Statement of investments and other net assets .......................................................................................................................................... 65

Notes to the financial statements............................................................................................................................... 68

Organisation


Registered Office 11, rue Sainte-Zithe L-2763 Luxembourg (since 1st October 2014) 19, rue de Bitbourg L-1273 Luxembourg (until 30th September 2014) Board of Directors Chairman Peter Elam Håkansson Chairman and Chief Executive Officer East Capital Holding AB, Stockholm Directors Paul Carr Chief Executive Officer East Capital Asset Management S.A., Luxembourg Louise Hedberg (since 14th May 2014) Head of Corporate Governance East Capital International AB, Stockholm Karine Hirn (until 13th February 2014) Partner and Senior Advisor East Capital Asia Limited, Hong Kong Ann-Charlotte Lawyer (until 23rd April 2014) Managing Director SEB Fund Services S.A., Luxembourg Albin Rosengren Chief Executive Officer East Capital AB, Stockholm Jérôme Wigny (since 7th March 2014) Partner Elvinger, Hoss & Prussen, Luxembourg Management Company East Capital Asset Management S.A. 11, rue Sainte-Zithe L-2763 Luxembourg (since 1st October 2014) 19, rue de Bitbourg L-1273 Luxembourg (until 30th September 2014) Board of Directors Chairman of the Management Company Peter Elam Håkansson Chairman and Chief Executive Officer East Capital Holding AB, Stockholm Directors Mathias Pedersen Chief Financial Officer East Capital AB, Stockholm Albin Rosengren Chief Executive Officer East Capital AB, Stockholm Johan Wigh Chief Operating Officer and Deputy Chief Executive Officer East Capital AB, Stockholm

Organisation (continued)


Conducting persons Paul Carr of the Management Company Chief Executive Officer East Capital Asset Management S.A., Luxembourg Yves Wagner Director and Co-Founder MDO Services, S.A., Luxembourg Magnus Lekander Non-resident CO (since 18th August 2014) Custodian and Paying Agent Skandinaviska Enskilda Banken S.A. in Luxembourg 4, rue Peternelchen L-2370 Howald Central Administration Agent SEB Fund Services S.A. 4, rue Peternelchen L-2370 Howald Administration Agent, Registrar European Fund Administration S.A. and Transfer Agent 2, rue d'Alsace L-1017 Luxembourg Investment Manager East Capital AB, Stockholm Kungsgatan, 33 Box 1364 SE-111 93 Stockholm Cabinet de révision agréé KPMG Luxembourg, Société coopérative 39, avenue John F. Kennedy L-1855 Luxembourg Legal Advisers Elvinger, Hoss & Prussen 2, place Winston Churchill L-1340 Luxembourg

Repo1t of the Reviseur d'Entreprises agree

To the Shareholders of East Capital (Lux)

We have audited the accompanying financial statements of East Capital (Lux) (the "Fund") and of each of its sub-funds, which comprise the s tatement of net assets and the statement of investments and other net assets as at 31st December 2014 and the statement of operations and other changes in net assets for the year then ended, and a summary of significant accounting policies and other explanatory information.

Responsibility of the Board of Directors of the Fund for the financial statements

The Board of Directors of the Fund is responsible for the preparation and fair presentation of these financial statements in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the financial s tatements, and for such internal control as the Uoard of Directors of the Fund determines is necessary to enable the preparation of financial statements that arc free from material misstatement, whether due to fraud or error.

Responsibility of the Reviseur d'Entrepriscs agree

Our rcs1>onsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted for Luxembourg by the Commission de Sur.·eillance du Secteur Financier. Those standards require that we comply with ethical requirements and plan and pc1form the audit to obtain reasonable assurance about whether the financial statements arc free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial sta tements. The procedures selected depend on the judgement of the Reviseur d'Entreprises agree, including the assessment of the risks of material misstatement of the financial statements, whether clue to fraud or error. In making those risk assessments, the Rcviscur d'Entrcpriscs agree considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that arc appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.

I 'I C.1pit.il r l 11\l

An audit a lso includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Uoard of Directors of the Fund, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to pro,~dc a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of East Capital (Lux) and of each of its sub-funds as at :~1st December 2014, and of the results of their operations and changes in their net assets for the year then cnclccl in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the financial s tatements.

Other matter

Supplementary information included in the annual report has been reviewed in the context of our mandate but has not been subject to specific audit procedures carried out in accordance with the standards described above. Consequently, we express no opinion on such information. However, we have no observat ion to make concerning such infonnation in the context of the financial s tatements taken as a whole.

Luxembourg, 29th April 2015

KPMG Luxembourg, Socictc cooperative

Pascale Leroy

Combined statement of net assets (in EUR) as at 31st December 2014

The accompanying notes are an integral part of these financial statements.


Assets Securities portfolio at market value 1,066,568,757.83 Cash at banks 24,187,902.81 Formation expenses, net 101,433.49 Receivable on sales of securities 797,439.36 Receivable on treasury transactions 17,059.05 Receivable on issues of shares 1,495,644.60 Income receivable on portfolio 2,588,485.50 Other receivables 42,675.78 Prepaid expenses 4,960.68

Total assets 1,095,804,359.10

Liabilities Bank overdrafts 4,302.85 Payable on purchases of securities 4,885,634.87 Payable on treasury transactions 10,104.61 Payable on redemptions of shares 10,441,036.18 Expenses payable 1,367,318.41 Other liabilities 1,098,874.28

Total liabilities 17,807,271.20

Net assets at the end of the year 1,077,997,087.90

Combined statement of operations and other changes in net assets (in EUR) from 1st January 2014 to 31st December 2014



Income Dividends, net 52,123,410.69 Interest on bank accounts 119,296.58 Other income 387,557.36

Total income 52,630,264.63

Expenses Management fees 27,788,265.90 Performance fees 22,065.39 Banking charges and other fees 9,006.51 Transaction fees 3,980,979.10 Flat fee 6,451,665.34 Professional fees 558.06 Other administration costs 74,714.38 Subscription duty ("taxe d'abonnement") 615,496.09 Other taxes 227,501.10 Interest paid on bank overdrafts 14,488.46 Other expenses 245,045.65

Total expenses 39,429,785.98

Net investment income 13,200,478.65

Net realised gain/(loss) - on securities portfolio -135,047,481.29 - on foreign exchange -842,510.48

Realised result -122,689,513.12

Net variation of the unrealised gain/(loss) - on securities portfolio -328,101,254.35

Result of operations -450,790,767.47

Subscriptions 589,551,606.05

Redemptions -1,008,586,514.55

Total changes in net assets -869,825,675.97

Total net assets at the beginning of the year 1,947,822,763.87

Total net assets at the end of the year 1,077,997,087.90

East Capital (Lux) - Russian Fund

Management report from 1st January 2014 to 31st December 2014


Management report The fund declined 48.3% during the year, while the benchmark index lost 35.1%. The net asset value was EUR 368m as of 31st December 2014, to be compared to EUR 1,007m as of 31st December 2013. Net outflows during the year amounted to EUR 240m. Market update Last year will be remembered as one of the most difficult for the Russian market. The first couple of weeks actually started off quite well, but then the conflict with Ukraine quickly escalated causing a major sell off on the back of a wave of sanctions from the EU, US and other countries. However, after the initial correction the market somewhat ignored the sanctions and we saw a strong rebound from March to June. The next hit was the falling oil price that almost halved from the summer to the end of the year. The mix of falling oil price, sanctions and investors panicking led to initially a slow and gradual fall of the rouble, but this accelerated and in December we saw the rouble weakening 18.6%. The Russian Central Bank was, unfortunately, not handling the situation particularly well. The government instead stepped in and forced some of the state owned exporters to buy roubles. This initially led to the rouble strengthening, but also to very high volatility, which in itself probably lead to even further weakening. The Russian market was down 35.1% in EUR due to the rouble weakening 37.6% i.e. in local currency terms the market was close to flat. Many of our key bets in 2014 have rouble revenues and hence took a large hit due to this. A key part of our investment philosophy is to be exposed to the consumer related, high growth companies. These are typically privately owned, and hence better run than the state owned export companies. Unfortunately this systematic bias led us to be underweight in the export companies that have hard currency revenues, and hence the fund significantly underperformed the index. This is part of a long term investment strategy and there will be difficult years. But if we look on what happened after the 2008 crisis the consumer related companies that were well managed with good market positions very significantly outperformed the market in the next couple of years. We have reviewed all our holdings and made some significant changes. The holdings we currently have are well positioned both for the current (challenging) and later recovering economy. In retrospect, it was close to impossible to predict that there would be an armed conflict between Russia and the Ukraine, and the sanctions that followed. The second leg down caused by the weaker oil price was also difficult to predict. In short, it was the perfect storm for the Russian market and many of our holdings. We have adjusted to the new market situation and been in touch with key decision makers throughout this period. The fund’s development Many of our key holdings record losses of 60-80% in 2014, this despite close to all of them showing increasing sales and earnings. Weaker rouble, a dramatic decrease in investor confidence and in many cases a worsening outlook led to this collapse. Shares of the airline Aeroflot decreased by 73% despite showing 11% passenger growth in 2014. The Russian holding company Sistema decreased 81% due

an unfortunate power struggle that led to the company losing Bashneft which represented 40% of its NAV. On the positive side shares of the Russian steel maker Evraz jumped 50% due to a large part of the cost base denominated in roubles and sales in US dollars. Changes during the period It has been a year of many different periods, from sharp corrections to rallying stocks. If we look at the whole year we have done a lot of changes within the consumer exposed sectors. Most notably we have reduced almost completely Russian IT names Yandex and Mail due to a worsening outlook. We have increased real estate developers, which might seem counterintuitive but they are less exposed to the downturn than the market is pricing. We have significantly added non-energy exporters like Alrosa (diamonds), Evraz (steel) and Rusal (aluminium).

Fund facts

Investment manager

East Capital AB

Type UCITS

Launch date Class A (EUR & USD) 31.01.2007

Class A (SEK) 01.10.2013

Class C (EUR) 09.02.2007

Class C (USD) 11.05.2007

Class R (EUR) 18.12.2012

Quotation Daily

Benchmark RTS Index until 30.06.2010, MSCI Russia Total Return Index from 01.07.2010


Statement of net assets (in EUR) as at 31st December 2014



Assets Securities portfolio at market value 364,454,255.37 Cash at banks 6,749,965.22 Receivable on sales of securities 297,140.40 Receivable on treasury transactions 4,849.68 Receivable on issues of shares 658,367.68 Income receivable on portfolio 1,243,351.90 Other receivables 41,514.31 Prepaid expenses 2,918.38

Total assets 373,452,362.94

Liabilities Payable on purchases of securities 1,776,175.76 Payable on redemptions of shares 2,333,712.88 Expenses payable 420,605.98 Other liabilities 846,270.03


Net assets at the end of the year 368,075,598.29


Statement of operations and other changes in net assets (in EUR) from 1st January 2014 to 31st December 2014





Expenses Management fees 12,563,208.62 Banking charges and other fees 465.01 Transaction fees 1,584,066.63 Flat fee 2,890,425.77 Professional fees 216.45 Other administration costs 2,147.94 Subscription duty ("taxe d'abonnement") 269,128.38 Other taxes 430.48 Interest paid on bank overdrafts 762.54 Other expenses 166,359.65


Net investment income 10,925,215.68

Net realised gain/(loss) - on securities portfolio -98,760,433.27 - on foreign exchange 552,780.45





Redemptions -454,285,808.59


Total net assets at the beginning of the year 1,007,199,197.58

Total net assets at the end of the year 368,075,598.29


Statistical information (in EUR) as at 31st December 2014

Annual returns were calculated for the last 3 consecutive financial years based on published NAV (NAV at which shares can be subscribed or redeemed) rather than on financial statements’ NAV. Performance figures are shown in share class currency unless otherwise stated. * Performance of the share class calculated from 1st October 2013 (initial transfer of assets in kind from the Feeder UCITS into the Master UCITS in exchange for fund shares in the A (SEK) Class of the Master UCITS as at 1st October 2013) to 30th December 2013 (published NAV) and performance of the Benchmark based on the quotations as at 1st October 2013 and 30th December 2013 The historical performance is not an indication of future results. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares of the Fund.



Total net assets

- as at 31.12.2014 368,075,598.29 - as at 31.12.2013 1,007,199,197.58 - as at 31.12.2012 191,268,351.12

Number of Class A Shares outstanding

- outstanding at the beginning of the year 770,090.586 - issued 590,943.278 - redeemed -900,717.145 - outstanding at the end of the year 460,316.719

Net asset value per Class A Share - as at 31.12.2014 41.0478 - as at 31.12.2013 78.9535 - as at 31.12.2012 79.5931

Performance of Class A Shares (in %) - as at 31.12.2014 -48.27 - as at 31.12.2013 -0.93 - as at 31.12.2012 11.90

Performance of MSCI Russia Total Return Index (in EUR) (in %) - as at 31.12.2014 -35.13 - as at 31.12.2013 -3.68 - as at 31.12.2012 11.80

Number of Class A (SEK) Shares outstanding

- outstanding at the beginning of the year 6,144,511.534 - issued 1,157,647.087 - redeemed -2,971,586.543 - outstanding at the end of the year 4,330,572.078

Net asset value per Class A (SEK) Share - as at 31.12.2014 SEK 673.0950 - as at 31.12.2013 SEK 1,211.5113

Performance of Class A (SEK) Shares (in %) - as at 31.12.2014 -45.00 - as at 31.12.2013 * 6.04

Performance of MSCI Russia Total Return Index (in SEK) (in %) - as at 31.12.2014 -30.95 - as at 31.12.2013 * 0.23


Statistical information (in EUR) (continued) as at 31st December 2014

Annual returns were calculated for the last 3 consecutive financial years based on published NAV (NAV at which shares can be subscribed or redeemed) rather than on financial statements’ NAV. Performance figures are shown in share class currency unless otherwise stated. The historical performance is not an indication of future results. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares of the Fund.



Number of Class A (USD) Shares outstanding


Net asset value per Class A (USD) Share - as at 31.12.2014 USD 38.0343 - as at 31.12.2013 USD 83.2615 - as at 31.12.2012 USD 80.3316

Performance of Class A (USD) Shares (in %) - as at 31.12.2014 -54.33 - as at 31.12.2013 3.33 - as at 31.12.2012 14.00

Performance of MSCI Russia Total Return Index (in USD) (in %) - as at 31.12.2014 -42.76 - as at 31.12.2013 0.45 - as at 31.12.2012 14.00

Number of Class C Shares outstanding


Net asset value per Class C Share - as at 31.12.2014 41.3393 - as at 31.12.2013 79.0144 - as at 31.12.2012 79.2067

Performance of Class C Shares (in %) - as at 31.12.2014 -47.94 - as at 31.12.2013 -0.37 - as at 31.12.2012 12.50




Annual returns were calculated for the last 3 consecutive financial years based on published NAV (NAV at which shares can be subscribed or redeemed) rather than on financial statements’ NAV. Performance figures are shown in share class currency unless otherwise stated. The historical performance is not an indication of future results. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares of the Fund.



Number of Class C (USD) Shares outstanding


Net asset value per Class C (USD) Share - as at 31.12.2014 USD 37.7475 - as at 31.12.2013 USD 82.1069 - as at 31.12.2012 USD 78.7694

Performance of Class C (USD) Shares (in %) - as at 31.12.2014 -54.04 - as at 31.12.2013 3.92 - as at 31.12.2012 14.60

Performance of MSCI Russia Total Return Index (in USD) (in %) - as at 31.12.2014 -42.76 - as at 31.12.2013 0.45 - as at 31.12.2012 14.00

Number of Class R Shares outstanding

- outstanding at the beginning of the year 1,527,939.992 - issued 1,383,309.539 - redeemed -2,006,299.369 - outstanding at the end of the year 904,950.162

Net asset value per Class R Share - as at 31.12.2014 5.3272 - as at 31.12.2013 10.1960 - as at 31.12.2012 10.1900

Performance of Class R Shares (in %) - as at 31.12.2014 -48.01 - as at 31.12.2013 -0.06 - as at 31.12.2012 1.90



Statement of investments and other net assets (in EUR) as at 31st December 2014



Currency Number / nominal value

Description Market value % of total net

assets

Investments in securities

Transferable securities admitted to an official stock exchange listing

Shares

Capital goods

USD 5,712,335 Etalon Group Ltd GDR repr 1 Shares Reg S 9,437,976.04 2.56

Energy

USD 516,906 Gazprom Neft OSJC ADR Repr 5 Shs 4,812,499.48 1.31 USD 8,189,493 Gazprom OAO spons ADR repr 2 Shares 31,459,018.96 8.55 USD 294,724 IG Seismic Serv Ltd GDR repr 0.05 Shs Reg S 3,213,842.87 0.87 USD 1,555,087 KazMunaiGas Explor Product JSC GDR repr Shares Reg 18,627,642.71 5.06 USD 1,094,205 Oil Co Lukoil OJSC spons ADR repr 1 Share 35,976,339.53 9.77

94,089,343.55 25.56

Food, beverage and tobacco

USD 529,556 MHP SA GDR repr 1 Share Reg S 4,024,713.09 1.09

Investment companies

SEK 112,522 East Capital Explorer AB 504,783.43 0.14

Materials

GBP 5,577,776 Evraz PLC 11,099,380.27 3.01 USD 3,018,473 Group LSR OJSC GDR repr 1 Share Reg S 3,889,977.60 1.06 USD 10,502,928 Mechel OJSC spons ADR repr 0.5 Pfd Shares 794,769.27 0.22 USD 173,276 Novolipetsk Steel (NLMK) GDR repr 10 Shares 1,643,294.90 0.45 USD 363,756 Severstal PAO spons GDR repr 1 Share Ser Oct 06 2,734,555.64 0.74 HKD 7,341,883 United Co Rusal Plc 4,082,864.53 1.11

24,244,842.21 6.59

Retailing

USD 318,708 X5 Retail Group NV spons GDR repr 1/4 Reg S 3,212,092.19 0.87

Software and services

USD 603,221 Mail.RU Group Ltd spons GDR Repr 1 Sh Reg-S 8,122,678.48 2.21

Telecommunication services

USD 1,736,164 JSFC Sistema JSC spons GDR repr 20 Reg Shares 7,472,461.33 2.03

Transportation

USD 1,954,160 Globaltrans Investment Plc GDR repr 1 Sh Reg S 8,152,422.97 2.21 Total shares 159,261,313.29 43.26

Transferable securities dealt in on another regulated market

Shares

Automobiles and components

USD 362,164 Gaz JSC 1,716,704.06 0.47 USD 57,583 Gaz JSC Pref 209,836.09 0.06 USD 2,039,509 Sollers JSC 10,607,013.88 2.88

12,533,554.03 3.41


Statement of investments and other net assets (in EUR) (continued) as at 31st December 2014





assets

Banks

USD 26,820,393 Bank St Petersburg OJSC 9,744,137.92 2.65 USD 29,078,357 Sberbank of Russia OJSC 23,721,475.05 6.44 USD 11,783,232 Sberbank of Russia OJSC Pref 6,600,931.52 1.79

40,066,544.49 10.88

Capital goods

USD 3,594,336 Mostotrest OAO 3,567,751.57 0.97

Diversified financial services

USD 2,699,570 Moscow Exchange Micex-Rts Ojsc 2,369,122.34 0.64

Energy

USD 1,486,002 Gazprom Neft OJSC 3,157,583.86 0.86 USD 4,225,885 OAO Tatneft Pref 8,420,655.89 2.29 USD 37,966,942 Surgutneftegaz OJSC Pref 16,640,005.81 4.52

28,218,245.56 7.67

Food retailing, drugstores and pharmacies

USD 1,518,632 Dixy Group OJSC 8,116,942.26 2.20 USD 225,254 Magnit PJSC 32,470,463.38 8.82

40,587,405.64 11.02

Materials

USD 409,113 Acron OJSC 10,936,388.10 2.97 USD 6,368,500 Alrosa OJSC 5,961,796.70 1.62 USD 766,947 Group LSR OJSC 5,219,516.83 1.42

22,117,701.63 6.01

Retailing

USD 6,175,154 M Video Co JSC 11,323,024.07 3.08


USD 20,208,214 JSFC Sistema JSC 3,423,199.67 0.93 USD 4,159,068 Mobile Telesystems OJSC 10,447,458.91 2.84

13,870,658.58 3.77

Transportation

USD 18,415,946 Aeroflot Russian Airlines JSC 8,819,700.05 2.40 USD 93,982,258 Far East Shipping Co 3,924,203.76 1.07

12,743,903.81 3.47

Utilities

USD 80,418,770 E.ON Russia OJSC 2,724,532.12 0.74 USD 1,661,526,494 IDG Co Center and Volga OJSC 2,385,021.43 0.65 USD 3,102,244,500 Inte Dist Grid Co of Volga JSC 1,286,002.72 0.35 USD 168,379,392 Rosseti JSC 1,038,583.01 0.28

7,434,139.28 2.02

Total shares 194,832,051.00 52.94







assets

Other transferable securities

Shares

Banks

UAH 90,059,842 Raiffeisen Bk Aval JSC 442,578.91 0.12 EUR 1,801,100 Reverta SA 0.00 0.00

442,578.91 0.12

Energy

USD 365,119 Integra Group spons GDR repr 2 Shares A Reg S 6,032,532.01 1.64 Total shares 6,475,110.92 1.76

Closed-ended investment funds

Investment funds

EUR 37,931 East Capital Fin Investors AB Cap 2,465,515.00 0.67 Total closed-ended investment funds 2,465,515.00 0.67

Open-ended investment funds

Investment funds (UCI)

Investment funds

USD 512,078.2329 East Capital Bering Ukraine Fd Red P Shares R Master Cap 1,420,265.16 0.39 Total investment funds (UCI) 1,420,265.16 0.39

Total investments in securities 364,454,255.37 99.02

Cash at banks 6,749,965.22 1.83

Other net assets/(liabilities) -3,128,622.30 -0.85

Total 368,075,598.29 100.00

East Capital (Lux) - Baltic Fund



Management report The fund declined 3.9% during the year, while the benchmark index lost 4.4%*. The net asset value was EUR 62m as of 31st December 2014, to be compared to EUR 83m as of 31st December 2013. Net outflows during the year amounted to EUR 18m. Market update The Baltic market volatility during the year was mostly influenced by the negative events in the Ukraine and increasing turbulence in the Russian market. Baltic equities have been trading up on positive domestic factors, such as solid GDP growth and Euro introduction in Lithuania, and then losing all gains in March, August and December, when the neighboring markets were hit by geopolitical tensions and the ruble crisis. The uncertainty from the east was primarily stemming from a potential negative impact on the GDP growth as a result of the Russian food embargo as well as general slowdown in the Russian economy affecting Baltic exports, tourism and general sentiment. In fact, the GDP growth of the Baltic markets is being revised down for 2015 by 0.5-1.0% during the year, however it is still expected to stay at relatively attractive levels of around 2-3%. Lithuania was among the five best performing markets in Eastern Europe last year advancing 7% on the back of the good economic growth and ahead of the Euro adoption in January 2015. It is an important milestone for the Baltics completing the European integration mission. The fund’s development The fund outperformed its benchmark index by 0.5pp but ended the year 3.9% lower. The outperformance was primarily a result of a number of larger non-index holdings outperforming the market, but also due to a considerable underweight in some of the worst performing stocks exposed to the Russian market such as Silvano, Grindex and Olainfarm. The largest holding of the fund Linas Agro outperformed the market, up 2.6%, as the company is vertically expanding to the larger margin segments. Indirect exposure stocks such as Swedish Swedbank and Finish retailer Kesko together added 0.8% in attribution. Polish insurer PZU performed well, they notably acquired the largest and best insurance company in Lithuania helping them end the year up 10.6%, adding 0.6% in attribution during the year. PZU is also one of the best dividend paying stocks in the portfolio, yielding up to 8%. Some of the index constituents such as TEO, Tallina Vesi and Valmieras SS have showed strong gains in 2014; however, we do not own these stocks due the low liquidity and stock specific risks. One stock in the portfolio that has suffered from the Russia related sell-off was electricity trader Inter Rao Lietuva, down 20.6%. However, it continues to show solid results and is expected to yield up to 10%. The largest dairy in the portfolio Pieno Zvaigzdes and Rokiskio Suris were down 14.5% and 11.4% respectively on the back of the Russian food embargo, which is expected to end in August 2015.

* Performance of the fund is represented by the full year performance of the ASEK share class converted to EUR

Changes during the period The main trading in the fund was an increase in the large caps outside the local Baltic market such as Swedbank and Polish blue chips PZU and PKO reducing the large cash position of the fund at the beginning of the year. We also sold off Latvian pharma company Grindex at a 30% premium to the market in the beginning of the year as we saw risks increasing. Moreover, we also sold our entire position in Klaipedos Nafta ahead of the increased involvement in the public goods LNG projects.

Fund facts

Investment manager East Capital AB

Type UCITS

Launch date Class A (EUR) 10.04.2014

Class A (SEK) 01.10.2013

Class C (EUR) 03.02.2014

Class R (EUR) 01.10.2013

Quotation Daily

Benchmark OMX Baltic Capped Benchmark Index





Assets Securities portfolio at market value 61,545,392.44 Cash at banks 1,156,409.37 Receivable on issues of shares 9,545.95 Income receivable on portfolio 68,563.76 Other receivables 191.32 Prepaid expenses 318.10


Liabilities Bank overdrafts 7.59 Payable on redemptions of shares 293,252.46 Expenses payable 75,222.78

Total liabilities 368,482.83






Income Dividends, net 2,097,706.35 Interest on bank accounts 9,307.86


Expenses Management fees 1,438,767.58 Banking charges and other fees 3,541.78 Transaction fees 47,637.67 Flat fee 325,070.14 Other administration costs 69.34 Subscription duty ("taxe d'abonnement") 34,598.96 Other taxes 56.86 Other expenses 442.29


Net investment income 256,829.59

Net realised gain/(loss) - on securities portfolio 1,488,562.35 - on foreign exchange 11,581.09

Realised result 1,756,973.03






Total net assets at the beginning of the year 82,775,479.51




Annual returns were calculated for the last 3 consecutive financial years based on published NAV (NAV at which shares can be subscribed or redeemed) rather than on financial statements’ NAV. Performance figures are shown in share class currency unless otherwise stated. * Performance of the share class calculated from 1st October 2013 (initial transfer of assets in kind from the Feeder UCITS into the Master UCITS in exchange for fund shares in the A (SEK) Class of the Master UCITS as at 1st October 2013) to 30th December 2013 (published NAV) and performance of the Benchmark based on the quotations as at 1st October 2013 and 30th December 2013 ** Performance of the share class calculated from 3rd February 2014 respectively 10th April 2014 (initial subscription price) to 30th December 2014 (published NAV) and performance of the Benchmark based on the quotations as at 3rd February 2014 respectively 10th April 2014 and 30th December 2014 The historical performance is not an indication of future results. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares of the Fund.



Total net assets

- as at 31.12.2014 62,411,938.11 - as at 31.12.2013 82,775,479.51


- outstanding at the beginning of the year 0.000 - issued 112,090.328 - redeemed -111,090.328 - outstanding at the end of the year 1,000.000

Net asset value per Class A Share - as at 31.12.2014 9.5897 - as at 31.12.2013 -

Performance of Class A Shares (in %) - as at 31.12.2014 ** -4.27 - as at 31.12.2013 -

Performance of OMX Baltic Capped Benchmark Index (in EUR) (in %) - as at 31.12.2014 ** -4.91 - as at 31.12.2013 -



Net asset value per Class A (SEK) Share - as at 31.12.2014 SEK 50.9220 - as at 31.12.2013 SEK 49.5227

Performance of Class A (SEK) Shares (in %) - as at 31.12.2014 2.28 - as at 31.12.2013 * -0.18

Performance of OMX Baltic Capped Benchmark Index (in SEK) (in %) - as at 31.12.2014 1.66 - as at 31.12.2013 * 1.34



Annual returns were calculated for the last 3 consecutive financial years based on published NAV (NAV at which shares can be subscribed or redeemed) rather than on financial statements’ NAV. Performance figures are shown in share class currency unless otherwise stated. ** Performance of the share class calculated from 3rd February 2014 respectively 10th April 2014 (initial subscription price) to 30th December 2014 (published NAV) and performance of the Benchmark based on the quotations as at 3rd February 2014 respectively 10th April 2014 and 30th December 2014 *** Performance of the share class calculated from 1st October 2013 (initial subscription price) to 30th December 2013 (published NAV) and performance of the Benchmark based on the quotations as at 1st October 2013 and 30th December 2013 The historical performance is not an indication of future results. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares of the Fund.




- outstanding at the beginning of the year 0.000 - issued 1,000.000 - redeemed 0.000 - outstanding at the end of the year 1,000.000

Net asset value per Class C Share - as at 31.12.2014 9.2927 - as at 31.12.2013 -

Performance of Class C Shares (in %) - as at 31.12.2014 ** -7.24 - as at 31.12.2013 -

Performance of OMX Baltic Capped Benchmark Index (in EUR) (in %) - as at 31.12.2014 ** -8.63 - as at 31.12.2013 -



Net asset value per Class R Share - as at 31.12.2014 9.4438 - as at 31.12.2013 9.7673

Performance of Class R Shares (in %) - as at 31.12.2014 -3.33 - as at 31.12.2013 *** -2.48

Performance of OMX Baltic Capped Benchmark Index (in EUR) (in %) - as at 31.12.2014 -4.38 - as at 31.12.2013 *** -1.62







assets



Shares

Banks

EUR 9,622,103 Bank of Siauliai AB 2,559,479.40 4.10 PLN 15,700 Bank Polska Kasa Opieki SA 652,784.59 1.05 PLN 198,800 PKO Bank Polski SA 1,654,091.69 2.65 SEK 148,900 Swedbank AB A 3,072,700.09 4.92

7,939,055.77 12.72

Capital goods

EUR 461,389 Riga Shipyard 117,654.20 0.19

Commercial services and supplies

EUR 1,778,484 City Serv AB 2,987,853.12 4.79 EUR 1,836,305 Ekspress Grupp AS 2,093,387.70 3.35

5,081,240.82 8.14

Consumer durables and apparel

EUR 3,407,305 Baltika AS 1,580,989.52 2.53 PLN 8,700 CCC SA 270,237.87 0.43 EUR 527,194 Utenos Trikotazas AB 321,061.15 0.51 EUR 64,975 Vilniaus Baldai AB 994,117.50 1.59

3,166,406.04 5.06

Energy

PLN 40,601 LW Bogdanka SA 911,233.50 1.46 PLN 20,000 Polski Koncern Naftowy Orle SA 227,647.11 0.36

1,138,880.61 1.82


EUR 8,833,146 Linas Agro Group AB 6,094,870.74 9.77 EUR 3,442,719 Pieno Zvaigzdes AB 5,336,214.45 8.55 EUR 1,778,605 Rokiskio Suris AB 2,454,474.90 3.93 EUR 2,233,476 Vilniaus Degtine AB 600,805.04 0.96 EUR 3,413,962 Zemaitijos Pienas AB 2,400,015.29 3.85

16,886,380.42 27.06

Hotels, restaurants and leisure

EUR 1,881,247 Olympic Entertainment Group AS 3,198,119.90 5.12

Insurance

PLN 20,393 Powszechny Zaklad Ubezpie SA 2,306,020.04 3.69

Materials

EUR 1,501,986 Grigiskes AB 1,471,946.28 2.36 PLN 19,000 KGHM Polska Miedz SA 481,202.33 0.77 EUR 416,263 Merko Ehitus 2,972,117.82 4.76

4,925,266.43 7.89

Real estate

EUR 22,732 Arco Vara AS 18,822.10 0.03







assets

Retailing

EUR 2,103,269 Apranga AB 5,510,564.78 8.83 EUR 589,759 Tallinn Department Store 3,007,770.90 4.82

8,518,335.68 13.65


SEK 421,100 TeliaSonera AB 2,240,239.71 3.59

Transportation

EUR 2,040,444 Latvijas Kugnieciba 734,559.84 1.18 EUR 3,259,911 Tallink Group AS 2,200,439.93 3.53

2,934,999.77 4.71

Utilities

PLN 451,667 Inter RAO Lietuva AB 2,069,234.77 3.32 EUR 28,487 Tallinna Vesi AS 373,179.70 0.60

2,442,414.47 3.92

Total shares 60,913,835.96 97.59


Shares

Capital goods

EUR 191,308 Nordecon AS 202,786.48 0.33 Total shares 202,786.48 0.33



Real estate

EUR 1,618 East Capital Baltic Pro Inv AB Units 428,770.00 0.69 Total closed-ended investment funds 428,770.00 0.69


Cash at banks 1,156,409.37 1.85

Bank overdrafts -7.59 0.00

Other net assets/(liabilities) -289,856.11 -0.46

Total 62,411,938.11 100.00

East Capital (Lux) - Balkan Fund



Management report The East Capital (Lux) - Balkan Fund gained 15% while its benchmark index went up by 9% in 2014*. The net asset value stood at EUR 102m as of 31st December 2014, compared to EUR 87m a year ago. Most of the increase was due to good performance. We have seen flows going both ways and resulted in a net inflow of EUR 0.5m. Market update Balkan equity markets showed very diverse performance in 2014. Turkey started slowly, but built up momentum throughout the year and performed particularly well in the last quarter amid declining oil prices which resulted overall in a 30.9% gain for the year. Core Balkan markets had a decent year as well. Slovenia did particularly well with a 19.6% rise as the economic recovery was faster than initially expected and the long awaited privatization process finally kicked off. Serbia, for some time one of the cheapest markets globally at 3x P/E, advanced by 12.7% as investors gradually returned to the Balkan frontier. Romania gained 9%, extending the strong 40% rise in the previous year. By far the most volatile market in the region was Greece. It got off to a flying start as international investors recognized the economic recovery is on track, something we were well positioned for already from late 2012. Positive sentiment helped the Greek banks to raise north of EUR 8b in fresh capital over the first and second quarter of last year. Unfortunately, political turmoil that started looming in autumn changed the investors’ perception completely and caused the market to sharply reverse the gains to end the year with a 28.9% decline. The fund’s development The positive absolute and relative performance of the Fund was by and large driven by successful stock picking with many of our key bets doing substantially better than their respective indexes. Another large source of relative outperformance was our systematic underweight in Greek banks. Based on extensive time spent on the sector, we concluded early in the year that the risk-reward ratio was not compelling as the banks still held significant amounts of NPLs on their balance sheets, something we thought would make their earnings recovery much slower than market expectations. This proved to be the case later in the year, while political uncertainty forced investors to unwind a crowded trade and banks declined between 30% and 70%. Sava Re, a Slovenian insurance company and third largest holding of the fund, doubled over the year as the good technical profitability and successful integration of a recently acquired competitor were underpinned by strong investment income due to declining bond yields in Slovenia. Zavarovalnica Triglav, another Slovenian insurer with strong market position in the wider Balkan region, also performed well with a 32.5% gain. We were again actively involved in shaping up board composition and pushing for dividends/buybacks in both names over 2014. A wide array of smaller bets, particularly in Serbia and Romania, such as Aerodrom Nikola Tesla, Belgrade airport, also contributed positively - the latter was up 88.2%.

* Performance of the fund is represented by the full year performance of the ASEK share class converted to EUR

Among the negatives, Austrian banks Erste bank and Raiffeisen Bank International lost 46.5% and 24.2% as restructuring took longer than expected. Fourlis, an IKEA franchise in Greece, fell victim of a weak stock market and lost 25.2%. Changes during the period The most important changes in the fund were done on a stock specific level. We participated in several share placements which helped us build nice positions in Petrol, a Slovenian oil retailer, Atlantic Grupa, a Croatian consumer company, Transelectrica, a Romanian utility, and Aegean, the Greek flagship air carrier. A common denominator of all placements was that they were offered at a discount to the market and we made solid gains on all of them. We also reacted quickly to declining oil price and reduced our exposure to the oil sector significantly (from 9.3% to 2.7% of the fund), predominantly by selling out of one of the key positions, OMV Petrom in Romania.

Fund facts


Type UCITS

Launch date Class A (EUR) 10.04.2014

Class A (SEK) 01.10.2013

Class C (EUR) 03.02.2014

Class R (EUR) 01.10.2013

Quotation Daily

Benchmark STOXX Balkan Total Market Index





Assets Securities portfolio at market value 102,060,347.41 Cash at banks 836,332.39 Receivable on issues of shares 24,181.32 Income receivable on portfolio 25,518.34 Other receivables 168.99 Prepaid expenses 493.07


Liabilities Payable on redemptions of shares 550,630.47 Expenses payable 118,873.22

Total liabilities 669,503.69






Income Dividends, net 2,306,862.06 Interest on bank accounts 13,362.77


Expenses Management fees 2,028,324.75 Banking charges and other fees 22.28 Transaction fees 174,653.04 Flat fee 458,521.21 Other administration costs 102.27 Subscription duty ("taxe d'abonnement") 50,269.16 Other taxes 12,337.52 Interest paid on bank overdrafts 146.16 Other expenses 1,599.69


Net investment loss -405,751.25

Net realised gain/(loss) - on securities portfolio 767,676.94 - on foreign exchange -191,776.71

Realised result 170,148.98

Net variation of the unrealised gain/(loss) - on securities portfolio 14,405,062.25

Result of operations 14,575,211.23



Total changes in net assets 15,125,538.71





Annual returns were calculated for the last 3 consecutive financial years based on published NAV (NAV at which shares can be subscribed or redeemed) rather than on financial statements’ NAV. Performance figures are shown in share class currency unless otherwise stated. * Performance of the share class calculated from 1st October 2013 (initial transfer of assets in kind from the Feeder UCITS into the Master UCITS in exchange for fund shares in the A (SEK) Class of the Master UCITS as at 1st October 2013) to 30th December 2013 (published NAV) and performance of the Benchmark based on the quotations as at 1st October 2013 and 30th December 2013 ** Performance of the share class calculated from 3rd February 2014 respectively 10th April 2014 (initial subscription price) to 30th December 2014 (published NAV) and performance of the Benchmark based on the quotations as at 3rd February 2014 respectively 10th April 2014 and 30th December 2014 The historical performance is not an indication of future results. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares of the Fund.



Total net assets

- as at 31.12.2014 102,277,537.83 - as at 31.12.2013 87,151,999.12


- outstanding at the beginning of the year 0.000 - issued 1,935,568.950 - redeemed -217,242.177 - outstanding at the end of the year 1,718,326.773

Net asset value per Class A Share - as at 31.12.2014 10.7614 - as at 31.12.2013 -

Performance of Class A Shares (in %) - as at 31.12.2014 ** 6.65 - as at 31.12.2013 -

Performance of STOXX Balkan Total Market Index (in EUR) (in %) - as at 31.12.2014 ** 0.67 - as at 31.12.2013 -




Performance of Class A (SEK) Shares (in %) - as at 31.12.2014 22.45 - as at 31.12.2013 * 3.77

Performance of STOXX Balkan Total Market Index (in SEK) (in %) - as at 31.12.2014 16.04 - as at 31.12.2013 * -5.42



Annual returns were calculated for the last 3 consecutive financial years based on published NAV (NAV at which shares can be subscribed or redeemed) rather than on financial statements’ NAV. Performance figures are shown in share class currency unless otherwise stated. ** Performance of the share class calculated from 3rd February 2014 respectively 10th April 2014 (initial subscription price) to 30th December 2014 (published NAV) and performance of the Benchmark based on the quotations as at 3rd February 2014 respectively 10th April 2014 and 30th December 2014 *** Performance of the share class calculated from 1st October 2013 (initial subscription price) to 30th December 2013 (published NAV) and performance of the Benchmark based on the quotations as at 1st October 2013 and 30th December 2013 The historical performance is not an indication of future results. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares of the Fund.




- outstanding at the beginning of the year 0.000 - issued 604,331.553 - redeemed -1,011.185 - outstanding at the end of the year 603,320.368

Net asset value per Class C Share - as at 31.12.2014 11.6482 - as at 31.12.2013 -

Performance of Class C Shares (in %) - as at 31.12.2014 ** 15.43 - as at 31.12.2013 -

Performance of STOXX Balkan Total Market Index (in EUR) (in %) - as at 31.12.2014 ** 16.91 - as at 31.12.2013 -




Performance of Class R Shares (in %) - as at 31.12.2014 15.76 - as at 31.12.2013 *** -0.36

Performance of STOXX Balkan Total Market Index (in EUR) (in %) - as at 31.12.2014 9.04 - as at 31.12.2013 *** -8.19







assets



Shares

Eastern Europe

EUR 74,588 Erste Group Bank AG 1,434,700.18 1.40 EUR 185,683 Raiffeisen Bank Intl AG 2,327,536.41 2.28

3,762,236.59 3.68

Greece

EUR 508,919 Aegean Airlines SA 3,511,541.10 3.43 EUR 110,548 Folli Follie Group 2,918,467.20 2.85 EUR 860,534 Fourlis Holding SA Reg 2,770,919.48 2.71 EUR 239,441 Frigoglass SA Reg 399,866.47 0.39

9,600,794.25 9.38

Slovenia

EUR 18,868 Petrol Ljubljana d.d. 5,358,512.00 5.24 EUR 106,635 Pivovarna Lasko 2,505,922.50 2.45 EUR 470,211 Pozavarovalnica Sava d.d. 7,513,971.78 7.35 EUR 23,591 Telekom Slovenia dd 3,420,695.00 3.34 EUR 343,880 Zavarovalnica Triglav d.d. 8,115,568.00 7.94

26,914,669.28 26.32

Turkey

TRY 9,936 Do & Co AG 628,831.13 0.61 TRY 1,119,964 Haci Omer Sabanci Holding AS 4,019,199.15 3.93 TRY 799,663 KOC Holding AS 3,505,888.57 3.43 TRY 232,031 Tofas Turk Otomobil Fabrikasi 1,308,507.21 1.28 TRY 546,738 Turk Hava Yollari AO 1,861,551.12 1.82 TRY 563,432 Turkiye Garanti Bankasi AS Reg 1,876,557.31 1.83 TRY 404,999 Turkiye Halk Bankasi AS 1,990,389.96 1.95 TRY 83,843 Turkiye Petrol Rafinerileri AS 1,639,311.03 1.60 TRY 1,763,840 Turkiye Vakiflar Bankasi Tao 3,043,325.68 2.98

19,873,561.16 19.43

Total shares 60,151,261.28 58.81


Shares

Croatia

HRK 31,625 Atlantic Grupa d.d. 3,892,820.29 3.81 HRK 27,366 Podravka DD 1,043,422.38 1.02

4,936,242.67 4.83

Romania

RON 3,190,053 Banca Transilvania SA 1,357,208.92 1.33 RON 1,150,210 BRD Gr SG Romanian Bk for Dev 2,244,169.37 2.19 RON 306,516 CNTEE Transelectrica SA 2,000,535.72 1.96 RON 40,754,303 Fondul Proprietatea SA 8,142,390.33 7.96 EUR 254,238 Gobalworth Real Estate Invs Ltd 1,779,666.00 1.74 RON 1,597,095 OMV Petrom 145,298.57 0.14 RON 11,571 SNTGN Transgaz SA 678,315.78 0.66 RON 144,600 Ste Natl Gaze Natur Romgaz SA 1,140,121.11 1.11

17,487,705.80 17.09







assets

Serbia

RSD 183,881 Aerodrom Nikola Tesla AD 1,430,638.03 1.40 RSD 337,379 AIK Banka AD Nis 5,124,783.44 5.01 RSD 12,296 Alfa Plam ad Vranje 1,928,197.59 1.89 RSD 6,879 Cacanska Banka AD Cacak 481,455.80 0.47 RSD 370,593 Energoprojekt Hg a.d Beograd 2,776,512.96 2.71 RSD 32,495 Imlek AD 1,286,299.50 1.26 RSD 208,106 Komercijalna Banka AD Beogra 3,771,079.99 3.69 RSD 420,989 Nis AD 2,686,170.35 2.63

19,485,137.66 19.06

Total shares 41,909,086.13 40.98


Shares

Serbia

RSD 750 PIK Cacak 0.00 0.00 RSD 44,189 Toza Markovic 0.00 0.00 RSD 11,809 Univerzal Hg 0.00 0.00 Total shares 0.00 0.00


Cash at banks 836,332.39 0.82

Other net assets/(liabilities) -619,141.97 -0.61

Total 102,277,537.83 100.00

East Capital (Lux) - Turkish Fund



Management report The East Capital (Lux) - Turkish Fund gained 31.9% while its benchmark index went up by 30.8% in 2014. The net asset value was EUR 156m as of 31st December 2014, compared to EUR 131m a year ago. In spite of good performance, the Fund witnessed outflows amounting to EUR 15m in 2014. Market update Turkish stock market experienced a volatile yet strong year in 2014. The year started on a negative note with a corruption and bribery investigation on then Prime Minister Erdogan’s AK Party (AKP). Along with political uncertainties, FED’s tapering and global emerging market currency sell-off made Turkish Lira see its all-time-lows vs. US Dollar in January. However, Central Bank’s decisive policy rate hike of 550 basis points which was followed by market friendly AKP’s victory in local elections and improvement in global investment sentiment helped Turkish market rebound strongly from March onwards. Summer months passed without any clear direction for the market as regional tensions and intensifying news flow on a possible US rate hike led to a range-bound trading in the market. In the meantime, presidential election proved to be a non-event for the market as Erdogan was elected as the president, as expected. Last quarter has been outstanding for Turkish equities as political stability was restored, economic growth appeared to be stronger than initially expected and, above all, oil price started coming down significantly. As a major beneficiary of lower oil price, Turkey saw its benchmark bond yields coming down and stock market going up to join the league of best performing markets in 2014. The fund’s development The East Capital Turkish Fund performed better than its benchmark index by 95 basis points. The outperformance was primarily as a result of off-index small and mid-cap holdings, but our strategic positioning in the financial sector and consumer stocks also had a positive contribution. First and last quarters were particularly strong for the Fund vs. its benchmark index. Our favorite mid-cap Do&Co, the entertainment and airline catering company, had a particularly strong year with a 74.7% gain as it continued to growth its revenues by 15% and to re-rate due to increasing investor awareness. Steel producers Kardemir and Erdemir also enjoyed a good year with around 100% gain along with strong domestic demand and good margins. We took profits out of the latter during the 2Q2014. Turkish Airlines was also among the stars of the year, thanks to its ongoing passenger growth and declining oil price. Financials ended the year broadly in line with the index but offered good entry points especially during the first quarter when we increased their weight. Enka Insaat, on the other hand, lagged the market significantly due to its exposure to Russian and Iraqi markets which experienced an eventful year. AvivaSA Emeklilik, Sabanci Holding’s pension business, also contributed negatively as it lost 6.2% during the few weeks following its initial public offering in November.

Changes during the period The most important change in the fund came towards the end of the first quarter as we increased the weight of the financial sector due to our expectation of increased political stability post elections and better earnings outlook for the banks. Otherwise, we have been relatively active in small and mid-cap space as we sold out of some of the longer term holdings especially in the energy sector, such as Aygaz and Turcas, while increasing holdings in the consumer-related stocks such as Dogus Oto, the auto retailer, Bimeks, the consumer electronics retailer and Do&Co, the entertainment and airline catering company.

Fund facts


Type UCITS

Launch date 01.10.2013

Quotation Daily

Benchmark ISE 100 Total Return (net) Index





Assets Securities portfolio at market value 154,437,455.13 Cash at banks 2,684,849.45 Receivable on treasury transactions 12,209.37 Receivable on issues of shares 284,107.74 Income receivable on portfolio 868.39 Other receivables 200.87 Prepaid expenses 828.63


Liabilities Payable on redemptions of shares 1,238,955.35 Expenses payable 180,880.88









Expenses Management fees 2,912,334.16 Banking charges and other fees 38.44 Transaction fees 230,530.03 Flat fee 659,109.63 Other administration costs 31,452.36 Subscription duty ("taxe d'abonnement") 70,516.55 Other taxes 134.72 Interest paid on bank overdrafts 1,487.78 Other expenses 1,033.74


Net investment loss -1,090,272.19

Net realised gain/(loss) - on securities portfolio -3,503,799.78 - on foreign exchange -412,947.87


Net variation of the unrealised gain/(loss) - on securities portfolio 45,427,925.29

Result of operations 40,420,905.45



Total changes in net assets 24,747,833.93





Annual returns were calculated for the last 3 consecutive financial years based on published NAV (NAV at which shares can be subscribed or redeemed) rather than on financial statements’ NAV. Performance figures are shown in share class currency unless otherwise stated. * Performance of the share class calculated from 1st October 2013 (initial transfer of assets in kind from the Feeder UCITS into the Master UCITS in exchange for fund shares in the A (SEK) Class of the Master UCITS as at 1st October 2013) to 30th December 2013 (published NAV) and performance of the Benchmark based on the quotations as at 1st October 2013 and 30th December 2013 ** Performance of the share class calculated from 1st October 2013 (initial subscription price) to 30th December 2013 (published NAV) and performance of the Benchmark based on the quotations as at 1st October 2013 and 30th December 2013 The historical performance is not an indication of future results. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares of the Fund.



Total net assets

- as at 31.12.2014 156,000,683.35 - as at 31.12.2013 131,252,849.42


- outstanding at the beginning of the year 1,000.000 - issued 1,216.273 - redeemed 0.000 - outstanding at the end of the year 2,216.273

Net asset value per Class A Share - as at 31.12.2014 11.1172 - as at 31.12.2013 8.2591

Performance of Class A Shares (in %) - as at 31.12.2014 31.88 - as at 31.12.2013 ** -17.66

Performance of ISE 100 Total Return (net) Index (in EUR) (in %) - as at 31.12.2014 30.79 - as at 31.12.2013 ** -15.41




Performance of Class A (SEK) Shares (in %) - as at 31.12.2014 40.22 - as at 31.12.2013 * -12.64

Performance of ISE 100 Total Return (net) Index (in SEK) (in %) - as at 31.12.2014 39.22 - as at 31.12.2013 * -14.83



Annual returns were calculated for the last 3 consecutive financial years based on published NAV (NAV at which shares can be subscribed or redeemed) rather than on financial statements’ NAV. Performance figures are shown in share class currency unless otherwise stated. ** Performance of the share class calculated from 1st October 2013 (initial subscription price) to 30th December 2013 (published NAV) and performance of the Benchmark based on the quotations as at 1st October 2013 and 30th December 2013 The historical performance is not an indication of future results. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares of the Fund.



Number of Class A (USD) Shares outstanding

- outstanding at the beginning of the year 1,000.000 - issued 0.000 - redeemed 0.000 - outstanding at the end of the year 1,000.000

Net asset value per Class A (USD) Share - as at 31.12.2014 USD 9.9465 - as at 31.12.2013 USD 8.4092

Performance of Class A (USD) Shares (in %) - as at 31.12.2014 16.43 - as at 31.12.2013 ** -16.04

Performance of ISE 100 Total Return (net) Index (in USD) (in %) - as at 31.12.2014 15.42 - as at 31.12.2013 ** -14.13



Net asset value per Class C Share - as at 31.12.2014 11.2067 - as at 31.12.2013 8.2720

Performance of Class C Shares (in %) - as at 31.12.2014 32.74 - as at 31.12.2013 ** -17.53


Number of Class C (USD) Shares outstanding


Net asset value per Class C (USD) Share - as at 31.12.2014 USD 10.2811 - as at 31.12.2013 USD 8.4224

Performance of Class C (USD) Shares (in %) - as at 31.12.2014 20.16 - as at 31.12.2013 ** -15.91

Performance of ISE 100 Total Return (net) Index (in USD) (in %) - as at 31.12.2014 15.42 - as at 31.12.2013 ** -14.13



Annual returns were calculated for the last 3 consecutive financial years based on published NAV (NAV at which shares can be subscribed or redeemed) rather than on financial statements’ NAV. Performance figures are shown in share class currency unless otherwise stated. ** Performance of the share class calculated from 1st October 2013 (initial subscription price) to 30th December 2013 (published NAV) and performance of the Benchmark based on the quotations as at 1st October 2013 and 30th December 2013 The historical performance is not an indication of future results. The performance data do not take account of the commissions and costs incurred on the issue and redemption of shares of the Fund.






Performance of Class R Shares (in %) - as at 31.12.2014 32.54 - as at 31.12.2013 ** -17.56








assets



Shares

Automobiles and components

TRY 241,199 Ford Otomotiv Sanayi AS 2,775,849.50 1.78 TRY 827,924 Tofas Turk Otomobil Fabrikasi 4,668,964.59 2.99 TRY 1,419,142.569 Tumosan Motor Trackt Sanayi AS 2,604,130.87 1.67

10,048,944.96 6.44

Banks

TRY 2,333,752 Akbank T.A.S. 7,145,654.54 4.58 TRY 3,469,144 Albaraka Turk Katilim Banka AS 2,134,228.90 1.37 TRY 2,181,095 Turkiye Garanti Bankasi AS Reg 7,264,318.98 4.66 TRY 1,359,813 Turkiye Halk Bankasi AS 6,682,876.11 4.28 TRY 6,074,580 Turkiye Is Bankasi AS 14,475,899.97 9.28 TRY 6,158,353 Turkiye Sinai Kalkinma Bk AS 4,398,305.28 2.82 TRY 6,656,698 Turkiye Vakiflar Bankasi Tao 11,485,452.16 7.36 TRY 3,922,955 Yapi Kredi Bankasi AS 6,782,528.17 4.35

60,369,264.11 38.70

Consumer durables and apparel

TRY 2,072,117 Turk Sise Cam 2,666,767.04 1.71

Diversified financial services

TRY 3,923,574 Haci Omer Sabanci Holding AS 14,080,475.17 9.03 TRY 2,437,372 KOC Holding AS 10,685,944.73 6.85

24,766,419.90 15.88

Energy

TRY 369,721 Turkiye Petrol Rafinerileri AS 7,228,840.98 4.63


TRY 90,900 Coca Cola Icecek Sanayi AS 1,623,023.03 1.04 TRY 531,000 Pinar Enteg Et ve Un Sanayi AS 1,712,216.90 1.10

3,335,239.93 2.14

Hotels, restaurants and leisure

TRY 95,572 Do & Co AG 6,048,575.78 3.88

Insurance

TRY 617,126 Anadolu Hayat Emeklilik AS 1,123,700.29 0.72 TRY 70,000 AvivaSA Emeklilik ve Hayat AS 1,107,542.76 0.71

2,231,243.05 1.43

Materials

TRY 401,366 Cimsa Cimento Sanayi Ve AS 2,270,544.32 1.45 TRY 1,036,725 Enka Insaat Ve Sanayi AS 1,935,382.97 1.24 TRY 5,436,561 Kardemir Kara Dem Sana Tica AS D 3,940,465.66 2.53 TRY 1,396,313 Trakya Cam Sanayii As 1,698,285.28 1.09

9,844,678.23 6.31

Retailing

TRY 657,690 Dogus Otomotiv Ser ve Tica AS 2,778,808.15 1.78

Software and services

TRY 6,910,029 Bimeks Bilgi Isl Ve Dis Tic SA 5,106,173.61 3.27







assets


TRY 1,876,000 Turk Telekomunikasyon AS 4,822,105.03 3.09 TRY 984,000 Turkcell Iletisim Hizmet 4,975,085.59 3.19

9,797,190.62 6.28

Transportation

TRY 2,445,088 Turk Hava Yollari AO 8,325,114.25 5.34 Total shares 152,547,260.61 97.79


Real estate funds

TRY 1,930,000 Emlak Konut Gayrim Yat Orta AS 1,890,194.52 1.21 Total closed-ended investment funds 1,890,194.52 1.21


Cash at banks 2,684,849.45 1.72

Other net assets/(liabilities) -1,121,621.23 -0.72

Total 156,000,683.35 100.00

East Capital (Lux) - Eastern European Fund



Management report The fund declined 27.3% during the year, while the benchmark index lost 18.8%. The net asset value was EUR252m as of 31st December 2014, to be compared to EUR 520m as of 31st December 2013. Net outflows during the year amounted to EUR 150m. Market update During 2014 there was a very large performance discrepancy between Eastern European markets. Among the large countries the star was Turkey recording a 31.2% gain and the worst hit Russia losing 35.1%. Among the smaller countries our holdings in Serbia gained 40.7%. and Slovenia 33.3% on renewed investors interest for the frontier markets. With the oil price falling 48% it is no surprise that oil importers like Turkey did well, but the country also implemented a number of long-term structural reforms. For Russia the situation was unfortunately the opposite. The country was initially hit by a wave of sanctions from the EU, US and other countries on the back of the Ukrainian conflict. During late spring the market recovered but was later again hit by more sanctions and a sharply falling oil price. The rouble weakening accelerated in December with very large volatility. One could argue why, but in short the central bank did too little too late. The government stepped in and propped up the rouble, and since then we have seen a stabilization. In Greece the market turned sour by the end of the year due to the risk of a leftist government coming to power. We have stayed away from Greek banks which we believed had understated non-performing loans, and hence were overvalued. This turned out to be a successful move. The market lost 32.6% during the year. The fund’s development Turkish holdings recorded some of the largest gains, especially Turkish Airlines which gained 55.4%. The Turkish carrier has successfully expanded over the past couple of years, but also got an extra boost from lower oil price. Within Turkey our largest weighting is to the banking sector, with many of the banks recording gains 30-50%. In Russia we had the opposite developments; many key bets lost 60-80% and thereby contributed most to the funds underperformance. Most of these companies still showed growing sales and earnings in rouble terms. Aeroflot, the Russian carrier, lost 73.4% despite recording 11% passenger growth. Non-oil exporters did well in Russia e.g. steel maker Evraz gaining 50.6%. The Balkan markets performed well during the year. In Slovenia one of our key holdings, insurance company Triglav gained 32.5% on strong results and a potential privatization. Changes during the period The largest regional change has been to significantly increase the weighting in Turkey. This was financed by decreasing Russia and Poland. We have made changes in Russia and in Turkey in line with changes reflected in the East Capital Russian and Turkish funds.

In Central Europe we have increased the exposure to some interesting smaller Polish companies like the shoe retailer CCC and Jeronimo Martins, the Portuguese retailer that runs one of Poland’s most successful grocery chains Biedronka.

Fund facts


Type UCITS

Launch date Class A (EUR & USD) 12.12.2007

Class A (SEK) 01.10.2013

Class C (EUR & USD) 12.12.2007

Class R (EUR) 18.12.2012

Quotation Daily

Benchmark MSCI EM Europe Index until 30.06.2010, MSCI Emerging Europe Total Return Index from 01.07.2010

East Capital (Lux) - Eastern European Fund




Assets Securities portfolio at market value 249,525,760.30 Cash at banks 2,897,824.62 Receivable on sales of securities 203,485.58 Receivable on issues of shares 101,319.38 Income receivable on portfolio 937,799.48 Other receivables 600.29


Liabilities Payable on purchases of securities 426,512.08 Payable on treasury transactions 2,226.07 Payable on redemptions of shares 782,859.43 Expenses payable 291,463.98 Other liabilities 252,604.25

financial statements as at 31st december 2014 reports/english/east... · mathias pedersen chief...

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