January 20, 2017 - 5:41 AM EST
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All information is at 31 December 2016 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five *Since
Month Months Year Years Years 30.04.09
Share price 7.0% 12.9% 47.5% 12.0% 30.7% 104.3%
Net asset value 7.7% 14.0% 47.9% 15.5% 37.2% 106.3%
MSCI EM Europe 10.5% 15.0% 49.9% 1.3% 15.8% 63.5%
US Dollars:
Share price 5.8% 7.4% 23.7% -16.4% 4.0% 70.5%
Net asset value 6.5% 8.4% 24.0% -13.8% 9.2% 72.1%
MSCI EM Europe 9.2% 9.4% 25.7% -24.4% -7.9% 36.4%
Sources: BlackRock, Standard & Poor’s Micropal
*BlackRock took over the investment management of the Company with effect from 1 May 2009
At month end
US Dollar:
Net asset value – capital only: 410.94c
Net asset value** – cum income: 418.61c
Net asset value – capital only: 332.57p
Net asset value** – cum income: 338.78p
Share price: 297.50p
Total assets^: £121.7m
Discount (share price to cum income NAV): 12.2%
Net cash at month end: 1.7%
Gearing range as a % of Net assets: 0-20%
Issued Capital – Ordinary Shares^^ 35,933,428
Ongoing charges* 1.3%
* Calculated as at 31 January 2016, in accordance with AIC guidelines.
** Includes year to date net revenue equal to 6.21 pence per share.
^ Total assets include current year revenue.
^^ Excluding 5,400,000 shares held in treasury.
Sector Gross 
Country Gross 
Analysis Analysis
Financials 41.3  Russia 51.9 
Energy 25.9  Turkey 18.6 
Consumer Staples 6.1  Poland 8.0 
Industrials 5.6  Greece 7.6 
Information Technology 5.5  Ukraine 5.8 
Materials 4.2  Czech Republic 4.8 
Utilities 3.1  Romania 1.8 
Health Care 3.1  Kazakhstan 1.4 
Telecommunication Services 2.9  Net current assets 1.7 
Consumer Discretionary 2.2 
Net current assets 1.7 
-----  ----- 
101.6  101.6 
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Short positions (0.0) (0.0)
Fifteen Largest Investments
(in % order of Gross Assets as at 31.12.16)
Company Region of Risk Gross assets
Sberbank Russia 10.6
Gazprom Russia 8.9
Novatek Russia 6.7
Lukoil Russia 6.2
Globaltrans Russia 5.6
Garanti Bank Turkey 5.1
Moneta Money Bank Czech Republic 4.8
PZU Poland 3.5
PKO Bank Polski Poland 3.5
Halk Bank Turkey 3.3
Inter RAO Russia 3.1
MD Medical Group Russia 3.1
Mail.Ru Russia 3.0
Alpha Bank Greece 2.9
Turkcell Turkey 2.9
Commenting on the markets, Sam Vecht and Christopher Colunga, representing the Investment Manager noted;
Market Commentary
The MSCI Emerging Europe 10/40 Index returned +9.2% in December in USD terms. The Company underperformed the index and was up +6.5% in USD terms.
Every country in the region posted positive performance led by Russia (+12.6%), Poland (+8.1%) and Hungary (+7.6%); whilst Czech Republic (+3.5%), Turkey (+2.4%) and Greece (+1.5%) rose to a lesser extent in December.
Russia was the best performing country in the region in December following the 30 November OPEC agreement to cut oil production, which saw oil rise 20%+ and the Rouble strengthen almost 6% from pre-agreement levels. Financials in Poland and Hungary performed well amidst rising global reflation expectations as the Federal Reserve hiked rates 25 bps and surprised the market by projecting three hikes in 2017 vs the previous two it had forecast in its September dot plot. In Turkey the rebound was muted as declining PMI and GDP data, coupled with a dovish central bank, lead to the Lira weakening further. Following a strong November, Greece took a breather in December as European creditors suspended proposed debt-relief measures for Greece after the Greek government surprised by announcing it would boost welfare benefits for low-income pensioners. Following talks between the Greek government and the European creditors the suspension appears to be temporary, and may be reinstated in January.
Focus on: Sberbank
Sberbank is Russia’s largest state-owned bank with branches throughout the country and a 50% share in the retail deposit market. The stock has performed well over the past year on the back of the Central Bank maintaining high rates, the Russian macro recovery as well as the recent OPEC production cut agreement. Additionally, the bank continues to build on its restructuring strategy which has driven much of its success over the past few years, improving its services and customer offering, enhancing its efficiency, and investing heavily in IT to both modernise the bank and prepare it for the future evolution of investment services. At the recent analyst day in December the bank gave much better efficiency and cost targets than we had anticipated, suggesting the bank can continue to deliver positive results over the next couple of years. Coupling these improvements with one of the most attractive valuations in our markets explains why we continue to believe that Sberbank is well positioned to perform well.
19 January 2017

Source: PR Newswire (January 20, 2017 - 5:41 AM EST)

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