Interim Report 1 January – 30 September 2012

Events during the third quarter

Net asset value (NAV) per share on 30 September 2012 amounted to EUR 9.07 (EUR 9.14)1 . The total net asset value amounted to EUR 301m (EUR 317m), corresponding to an increase of 3.7% (-17.1%) during the third quarter. Since 30 September 2011 the NAV decreased by 5.2%2 (-20.3%)2
For the first nine months, the net result for the Group was EUR 17.1m (EUR -128m). For the shareholders of the Parent Company the net result was EUR 13.7m (EUR -107m) and earnings per share amounted to EUR 0.41 (EUR -3.07)
Cash, cash equivalents and other short term investments on 30 September 2012 amounted to EUR 38m (EUR 46m) of which EUR 37m (EUR 46m) were available for future investments
In July, East Capital Explorer sold its entire stake in Populi, the Georgian food retailer and received a total payment of EUR 1.7m, EUR 1.6m higher than the value as of 30 June 2012, and realised an annualized pre-tax return of -44%
On 7 August, The Company's Board of Directors decided to utilize its authorization to repurchase shares. During August and September, East Capital Explorer repurchased a total of 552,742 shares, corresponding to 1.6% of the outstanding shares
On 31 August, East Capital Explorer invested EUR 15m into East Capital Russia Domestic Growth Fund
The closing price of the East Capital Explorer share as of 30 September 2012 was SEK 51.00 (corresponding to EUR 6.04)

Events after the end of the quarter

After the quarter, East Capital Explorer repurchased an additional 132,369 shares. On 10 October the repurchase program was ended and since the initial repurchases began on 8 August, the Company repurchased a total of 685,111 shares, corresponding to 2.0% of the outstanding shares
As announced on 23 October, the Board has decided to propose an annual redemption program for the period 2013-2015, through which 15% of the Company's outstanding shares in total will be redeemed at Net Asset Value (NAV) over three years if the discount in the share price compared to NAV exceeds 10%. The proposal is subject to approval by the shareholders
As announced on 7 November, the proposal for the 2013 redemption will be decided upon at an Extraordinary General Meeting (EGM) to take place on 4 December 2012 and, if approved, the redemption will be made at the October NAV per share. The Board has also proposed to the EGM to decide to reduce the Company's share capital by way of cancellation of the shares repurchased between 8 August up until the 10 October
The total net asset value on 31 October 2012 amounted to EUR 294m (EUR 317m), corresponding to EUR 8.90 (EUR 8.93) per share, reflecting a decrease during the month of 1.9%
Cash, cash equivalents and other short term investments on 31 October 2012 amounted to EUR 36m (EUR 44m) of which EUR 35m (EUR 40m) were available for future investments
The closing price of the East Capital Explorer share as of 31 October 2012 was SEK 49.00 (corresponding to EUR 5.70)

East Capital Explorer vs indices since IPO Net asset value and share price development

	30 September 2012		30 September 2011
	EUR	SEK	EUR	SEK
NAV per share	9.07	77	9.14	84
Total NAV	301m	2.5bn	317m	2.9bn
NAV % change Q32	3.7	-0.2	-17.1	-16.8
NAV % change YTD2	2.4	-3.0	-26.3	-24.5
Closing price per share	6.04	51.00	5.76	53.00
Total MarketCap	200m	1.7bn	201m	1.8bn
Share price % change Q3	11.5	7.4	-28.1	-27.9
Share price % change YTD	0.2	-5.1	-38.9	-37.5

Comparable figures for the corresponding period 2011 are stated in parentheses Not adjusted for dividend and buy-backs

East Capital Explorer Portfolio

East Capital Explorer's portfolio comprises investments in East Capital funds, Direct Investments and Short-term Investments. The investment portfolio is actively managed by East Capital and a majority of the investments are done through East Capital's special fund products. The largest geographical exposure, on a see-trough basis, is towards Russia with a weight of 49% and 75% of the portfolio is invested in the Company's targeted sectors; Financials, Power Utilities, Retail and Consumer Goods and Real Estate.

Portfolio per 30 September 2012	Fair value 30 Sep 2012 mEUR1	NAV/ Share, EUR	% of NAV	Fair Value 30 June 2012 mEUR	Fair Value 31 Dec 2011 mEUR	Value change Jan–Sep 2012, %2	Value change July–Sep 2012, % 2
Fund Investments
East Capital Bering Balkan Fund	37.3	1.13	12	35.8	38.1	-2.0	4.2
East Capital Bering Russia Fund	28.4	0.86	10	28.3	28.1	1.3	0.6
East Capital Power Utilities Fund	27.5	0.83	9	23.4	36.5	-4.8	17.4
East Capital Special Opportunities Fund	21.7	0.65	7	20.9	29.4	10.0	3.7
East Capital Bering Central Asia Fund	20.8	0.63	7	18.7	16.6	25.5	11.2
East Capital Special Opportunities Fund II	20.8	0.63	7	20.2	24.8	-16.0	3.3
East Capital Russia Domestic Growth Fund	14.4	0.44	5	-	-	-3.7	-3.7
East Capital Bering New Europe Fund	12.9	0.39	4	12.5	12.1	7.2	2.9
East Capital Baltic Property Fund II	9.0	0.27	3	8.5	-	4.8	5.6
East Capital (Lux) Eastern European Fund	8.6	0.26	3	7.8	7.4	15.2	9.9
East Capital Bering Ukraine Fund Class R	5.8	0.17	2	5.7	5.5	4.4	0.6
East Capital Bering Ukraine Fund Class A	4.4	0.13	1	4.9	5.6	-22.1	-9.5
Total Fund Investments	211.6	6.38	70	186.7	204.1	0.8	4.9
Melon Fashion Group	34.9	1.05	12	34.4	19.5	37.1	0.1
Komercijalna Banka Skopje	9.6	0.29	3	9.0	9.7	5.1	6.5
Trev-2 Group	7.5	0.23	3	4.0	4.0	33.9	33.9
East European Debt Finance	1.3	0.04	0	1.2	1.1	10.7	4.4
Populi	0.0	0.00	0	0.1	0.1	-	-
TEO LT	0.0	0.00	0	0.0	15.9	13.9	0.0
Total Direct Investments	53.2	1.60	18	48.7	50.4	26.8	8.0
Short-term Investments
Short-term Investments	8.5	0.26	3	13.9	22.8
Cash and cash equivalents	29.4	0.89	10	33.4	16.6
Total Short-term Investments	37.9	1.14	13	47.3	39.4
Total Portfolio	302.7	9.13	101	282.7	294.0
Other assets and liabilities net	-2.0	-0.06	-1	7.4	-0.4
Net Asset Value (NAV)	300.7	9.07	100	290.0	293.6	2.4	3.7

1 EUR = 8.44 SEK on 30 September 2012. Source: Bloomberg

2 The value change calculation is adjusted for investments and distributions during the relevant period, i.e. it is the percentage change between the starting fair value plus any added investment during the period and the ending fair value plus any proceeds from divestments or dividends received during the period

Note that certain numerical information may not sum due to rounding

CEO Comment

The third quarter was a good quarter for stock markets in general as well as for our investment universe. The majority of the countries in our region showed positive development. Our portfolio also benefited from the recovery, the Net Asset Value (NAV) increased by 3.7%. The overall increase in NAV per share during the quarter was even stronger, at 5.5% whitch is due to the repurchases of own shares made under the buy-back program initiated on 8 August. The program resulted in the repurchase of 685,111 shares, representing 2.0% of the outstanding shares. The program ended on 10 October when the Company entered its silent period due to the third quarter report.

"The Net Asset Value (NAV) increased by 3.7%"

The East Capital Explorer share also recovered during the quarter, especially in the last two months. The share ended the quarter at SEK 51, an increase of 11.5% in SEK (7.4% in EUR). The discount narrowed during the third quarter but continued to stay on a relatively high level. In light of this, and the high confidence that both the Board and Management have in the portfolio's NAV, the Board in October decided to propose a redemption program to our shareholders. The program will mean, if approved by the EGM that will take place on 4 December, that the shareholders of the Company can redeem 1 out of 20 shares at NAV. This is not intended as a one-off. The Board has committed to making the same proposal to the 2014 and 2015 AGMs if the discount at the time exceeds 10%. The proposal and the agenda for the EGM are available at www.eastcapitalexplorer.com/egm.

Portfolio development and activity

The development in the portfolio holdings was in general positive. All except two holdings showed an increase in value.

The activity in the portfolio was limited during the quarter. The investment of EUR 15m into the East Capital Russia Domestic Growth Fund, made in connection with the fund's launch on 31 August, was the only investment during the period. This investment is much in line with the overall strategy of East Capital Explorer, focusing on companies that mainly are exposed to the domestic growth. The fund will invest in Russian companies where the majority of the revenues derive from the domestic market. These are the type of companies that we historically have seen being more stable (especially given that state interference is typically lower) and shown better performance, compared to export oriented companies. They are also less dependent on global growth which, considering the relatively low GDP growth expectations for the western economies in comparison to the Eastern European countries, is a strength right now. We believe that the domestic growth strategy continues to be very valid. The fund will focus on larger companies than East Capital Explorer historically has invested in. We believe that this will be a good complement given the current market conditions when most securities have been traded down heavily, and also larger stocks trade at interesting valuation levels. The investment also increases our exposure to Russia, which is in line with our strategic geographical allocation going forward.

Outlook and events after the quarter

During the past few years, it has been difficult to create performance, in particular for investmnets in small and medium-sized companies, which East Capital Explorer mainly invests in. This segment of the market has been out of favour among most investors. However, with an increased stability in the global economy, we believe that the possibilities for a recovery and strong performance in our holdings are high. The announcements in September from some major Central Banks regarding stimulus programs shows that the decision makers are willing to act. It also seems to be done in a coordinated way, which is good news. We should be prepared for continued volatility since many problems are still unsolved, especially in the Eurozone, but it seems that there is a willingness to address them, which makes us optimistic.

"The board decided in October to propose to our shareholders a redemption program where 15% of the shares in total can be redeemed at NAV during the next three years"

As mentioned, the board decided in October to propose to our shareholders a redemption program where 15% of the shares in total can be redeemed at NAV during the next three years. We believe that the discount to NAV is unjustified. Our confidence in the portfolio's potential to generate performance going forward remains high. At the same time, we believe that the proposed redemption program will be valuable for our shareholders at this point in time. The voluntary redemption program gives flexibility as shareholders that want to redeem part of their holding at the shares' fair value, can do so. This will in turn also give them a yield corresponding to 8% at the current levels. For shareholders who would rather keep their shares, the redemption rights can be sold. Our main strategy, to create long term value through investments in Eastern European companies mainly targeting sectors benefiting from the domestic growth, which is the engine for growth in our region, remains. We also see good opportunities for investments going forward considering the attractive valuation levels. Still, we believe that the proposed redemption program, is a good compliment right now which will increase shareholder value in the shorter term. The redemption program proposal will, until 2015, replace the current dividend policy. The board also does not intend to use its authorization for repurchase of shares during this period.

"Our confidence in the portfolio's potential to generate performance going forward remains high"

The NAV decreased by 1.9% in October. The development was mainly burdened by the weak development in the East Capital Power Utilities fund, which corrected in line with the sector in general. Also East Capital Bering Central Asia Fund developed negatively partly as a result of a weak development in Bank of Georgia, the fund's largest holding. The East Capital Bering Balkan Fund, the largest fund investment in the portfolio, gave a positive contribution since it increased in value with 2.3% during the month. Komercijalna Banka Skopje decreased with 7.1%, which seems to be a due to a weak market in general in Macedonia, and the share price has recovered after the end of the month.

Mia Jurke CEO

Portfolio per 30 September 2012 (%)

East Capital Bering Balkan Fund Melon Fashion Group East Capital Bering Russia Fund East Capital Power Utilities Fund East Capital Special Opportunities Fund East Capital Special Opportunities Fund II East Capital Bering Central Asia Fund East Capital Russia Domestic Growth Fund East Capital Bering New Europe Fund Komercijalna Banka Skopje East Capital Baltic Property Fund II East Capital (Lux) Eastern European Fund Trev-2 Group East Capital Bering Ukraine Fund R East Capital Bering Ukraine Fund A East European Debt Finance Investments % of NAV Theme 4.8% 4.3% 3.2% 3.0% 2.9% 2.5% 1.9% 1.5% 0.4%

Fund investments Direct investments 9.5% 12.4% 11.6% 9.1% 7.2% 6.9% 6.9%

Small cap/value Retail/growth Small cap/value Industry restructuring/event driven Special situations/activist Special situations/activist Small cap/value Retail/growth Small cap/value Financials/growth Real Estate/value Eastern Europe Infrastructure/growth Small cap/value Small cap/value Financials/growth

Top 10 companies in East Capital Explorer's portfolio on a see-through basis1

On 30 September 2012 Company	% of NAV	Value in portfolio, EURm	Country	Sector	East Capital Explorer's investment vehicle
Melon Fashion Group	11.6	34.9	Russia	Consumer Discretionary	Direct Investment
Komercijalna Banka Skopje	3.8	11.5	Macedonia	Financials	Direct Investment East Capital Bering Balkan Fund
Fondul Proprietatea	3.8	11.3	Romania	Financials	East Capital Bering Balkan Fund East Capital Special Opportunities Fund East Capital (Lux) Eastern European Fund
Tännasilma Logistics	3.0	9.0	Estonia	Real Estate	East Capital Baltic Property Fund II
Bank of Georgia	2.7	8.0	Georgia	Financials	East Capital Bering Central Asia Fund East Capital (Lux) Eastern European Fund
Trev-2 Group	2.5	7.6	Estonia	Industrials	Direct Investment East Capital Bering Russia Fund East Capital Bering Ukraine Fund R
Verofarm	2.1	6.4	Russia	Health Care	East Capital Bering Russia Fund East Capital Special Opportunities Fund East Capital Special Opportunities Fund II
Zavarovalnica Triglav	2.1	6.2	Slovenia	Financials	East Capital Bering Balkan Fund East Capital (Lux) Eastern European Fund East Capital Special Opportunities Fund II
Integra	1.8	5.4	Russia	Energy	East Capital (Lux) Eastern European Fund East Capital Special Opportunities Fund East Capital Special Opportunities Fund II
E.On Russia	1.8	5.3	Russia	Utilities	East Capital Power Utilities Fund East Capital Russia Domestic Growth Fund
Total Top 10	35.2	105.6

Portfolio breakdown

Sector breakdown, % per 30 Sep 2012 Country breakdown, % per 30 Sep 2012 Asset class, % per 30 Sep 2012

Investment Manager Comment

Market comment

Global financial markets recovered in the third quarter, with most of the markets and commodities posting gains. Bond yields for Southern European countries fell on the back of a number of initiatives by the European Central Bank. Substantial monetary stimulus programs were also announced by the US, Japan and China, which contributed strongly to a more positive sentiment in the markets.

The Eastern European markets were no exception. The Russian market, which is East Capital Explorer's largest geographical exposure, reacted positively on the news of the monetary stimulus from the central banks and gained 7.4%, which was slightly above average for the Eastern European region as a whole. The Russian market has otherwise been haunted by another round of infighting among Russian politicians. In short, some of the hardliners were promoting more government influence in the economy whereas the liberals were pushing ahead with privatisations. As Investment Manager, we have been actively involved at different ministries trying to promote less government influence. This has been especially important for the Power Uilities sector, in which East Capital Explorer has a significant part of its investments even though the exposure has decreased during the year. The earlier proposal of merging two key companies in this sector would have gone against the former deregulation and privatisation strategy and should have been very negative for the sector if the merger was implemented. At the time of writing it seems like the liberals are winning or rather that the government is on the right track towards further privatisations, which is good news.

Despite the political noise, the Russian economy and companies are continuing to do very well. The USD 5.2bn SPO of Sberbank, Russia's largest bank, was sold out in less than one day which shows investors' appetite for Russia. This represents 10% of the USD 50bn Russian privatization program and indicates that the government is on the right path in terms of decreasing state ownership in key companies. It is too early to make any strong conclusions on what reforms the Russian government will embark, but key privatizations will be the initial litmus test.

"This indicates that the [Russian] government is on the right path in terms of decreasing state ownership in key companies"

East Capital Explorer has its second largest exposure to the Balkan region and the performance in these smaller markets was somewhat mixed. Overall, international investors have still been sellers. In Serbia for example, stocks kept falling because of economic uncertainty and international selling pressure. Some key stocks were down 50% during the year, hitting new all-time low valuations. This makes us believe that there are true buying opportunities here, from a long term point of view. Slovenia, on the other hand, was the strongest market in Eastern Europe during the quarter, gaining an impressive 14%. The government will likely be forced by the EU to privatise certain assets, due to a large budget deficit. This could lead to major revaluation of certain stocks, part of which took place during the quarter. On the negative side, it seems like some of the banks are still in trouble.

In Ukraine, investors fear a potential devaluation and to further increase uncertainties, there were recently news regarding plans on introducing a sizable transaction fee on less liquid securities. This will, if it happens, further increase the Ukrainian market's problems with liquidity since most stocks would be subject to the fee. The market is

Net asset value, share price and index development

(% change in EUR)	1 Jan – 30 Sep	1 Jan – 30 Sep
	2012	2011
Net asset value	2.4	-26.3
East Capital Explorer share	-0.2	-38.9
SAX Index1	14.1	-24.9
RTS Index2	7.5	-24.3
RTS 2 Index3	2.3	-30.2
MSCI EM Europe4	13.6	-25.6

SAX Index includes all equities listed on NASDAQ OMX Stockholm

RTS Index includes the 50 largest companies traded on the Russian Trading System RTS 2 Index includes 78 companies on the RTS that have limited trading volumes

MSCI EM Europe Index includes Russian, Polish, Hungarian, Czech and Turkish equities

down 32% so far this year and is the worst market in our region yearto-date.

Portfolio comment

The total Net Asset Value (NAV) increased by 3.7% during the third quarter which was slightly weaker, than the development in our region in general. This is in part a result of the portfolio's focus on less liquid companies that are not favored by most investors even if we during the last quarter already saw strong developments in some of the holdings.

Fund Investments

The largest contribution to the NAV this quarter came from the East Capital Power Utilities Fund. The fund gained 17.4% on the back of more clarity regarding the future developments for the sector. The second quarter was difficult for the Power Utilities sector due to the semi-political issues, but now it seems that developments are on the right track.

The East Capital Bering Russia Fund underperformed compared to the broader Russian market, with a modest increase of 0.6%. However, the holdings of the fund typically have low correlation with the broader market. Out of the top-10 holdings, six recorded double digit performance, but the fund's largest holding Fesco, the Russian transportation group, continued its correction down due to uncertainties regarding a potential takeover of the company. In addition, the smallest and most illiquid shares, a segment currently ignored by investors, contributed negatively.

There were also, however, examples of Russian small cap companies showing strong performance. The East Capital Special Opportunities Fund's second largest holding Sollers, the Russian automotive producer, gained an impressive 61% during the quarter and thereby had one of the largest positive contributions to the East Capital Explorer's portfolio as a whole. The company has been beating very high expectations, and is trading at 2.5 times estimated 2013 Ebitda on a consolidated basis. Sollers is growing its business very rapidly in terms of current cooperation with global car manufacturers, effectively producing foreign models in Russia. However, the company is also exploring new business opportunities in terms of producing auto components. Overall, the company should be able to generate very strong profit growth for years to come.

"Sollers, the Russian automotive producer, gained an impressive 61% during the quarter and thereby had one of the largest positive contributions to the East Capital Explorer's portfolio"

During the quarter, East Capital Explorer increased its exposure to domestic growth, and thus also its Russian exposure, by investing EUR 15m into the newly launched East Capital Russia Domestic Growth Fund. The strategy of the fund is to capitalise on the current low valuation of companies focused on the domestic economy and discrepancies in valuations between companies in this segment. We believe this is currently one of the most attractive investment opportunities in our universe. The fund aims to benefit from the growing domestic Russian economy which has the largest contribution to Russia's GDP growth. Overall, the Russian market does not show any earnings growth simply because of the dominance of the giant oil, gas and metal companies. However, for domestically orientated companies the situation is the opposite. The fund's portfolio currently comprising (as of 30 September) 9 companies, has an average price-to-earnings ratio of 6.3 times and an expected 22% earnings growth in 2012. This represents a price to earnings growth ratio of 0.3 times, with investors usually considering anything below 1 as interesting - in other words, growth at a very attractive valuation level.

"The strategy of the fund is to capitalise on the current low valuation of companies focused on the domestic economy and discrepancies in valuations between companies in this segment"

The Baltic real estate market continues to show signs of stabilization and interesting investment opportunities in properties with strong cash flow and sustainable rental terms. Generally, there is a positive yield spread of approximately 200-250 bps when comparing the Baltic capitals to Stockholm, which makes these markets very attractive. Among the three countries, Estonia is leading in terms of investor interest, transaction volume and supply. The East Capital Baltic Property Fund II showed an increase of 5.6% during the quarter. This is both an effect of the positive cash yield as well as the revaluation made in September of the property that the fund acquired in the end of May.

Direct Investments

Our largest direct investment, Melon Fashion Group (MFG), the Russian fashion retailer, continues to perform well. The strong consumption in Russia is benefiting the company and even if the consumption growth has been revised down slightly on the back of the global uncertainties, it is still on high levels. MFG is continuing its consolidation and the company's increased focus on the core brands, which contribute the most to the company's result, should give a good basis for continued growth in profitability.

Outlook

Our global outlook remains cautiously optimistic on the economic level and more so on markets due to quantitative easing by many of the world's major central banks. Yields for Southern European countries have significantly contracted during the quarter, implying that the risk premium for the European crisis has decreased. China recorded 7.4% growth for the third quarter. Analysts believe the fourth quarter could break the trend of decelerating growth, if this is the case, it would be a positive signal for global growth.

The Eastern European markets tend to be very influenced by the general market sentiment and will continue to be so as long as the global uncertainty remains. Though, we believe that in a situation with growing confidence and risk appetite among investors, there are good

grounds for a more positive market view and thus better returns in the region as well as for East Capital Explorer.

"We believe that in a situation with growing confidence and risk appetite among investors, there are good grounds for a more positive market view and thus better returns in the region as well as for East Capital Explorer"

The growing consumption trend in Russia continues. Despite strong GDP-growth in the sectors benefiting from domestic growth and consumption, East Capital Explorer's main investment theme, there is still a high catch up potential. Recently, Bank of America/Merill Lynch estimated that the number of people in Russia having an annual income of over USD 12,000 will tripple by 2020, which gives strong potential to companies benefiting from a large consumer demand.

We believe there are currently interesting investment opportunities in a numbers of areas. Russian companies focused on the domestic economy continue to look very attractively valued and still showing high growth. In the Balkans, depressed markets provide an interesting investment opportunity long term, so we believe that our large exposure towards this region makes us well positioned for a strengthening of market sentiment. The Baltics provide attractive spreads in terms of yields and cost of financing in the real estate sector, which is the key ingredient in property investments, and continues to make this one of our main focus areas going forward. Also the Baltic Private Equity sector show attractive valuations. So far none of the investments in pipeline have materialized, but our Private Equity team continues to evaluate a number of investment opportunities.

We continue to monitor the development in the Russian Power Utilities sector closely. Even if the recent news flow has been positive, or at least reverses some of the previous negative development in the sector, we still believe that the risk level in the sector has increased. We will continue to consider how this affects our view on the sector going forward.

Peter Elam Håkansson Chairman, East Capital

Portfolio Investments

On 30 September 2012, East Capital Explorer had fund and direct investments totalling EUR 265m compared to EUR 272m on 30 September 2011. The majority of the portfolio consists of East Capital's special funds products which represent 70% of the portfolio. Excluding East Capital (Lux) Eastern European Fund, the funds East Capital Explorer invests in have a less restrictive investment mandate compared to UCITS-funds which means that these funds have a higher flexibility in choice of investments and allocations.

Investment Management team at East Capital

Peter Elam Håkansson, Founding Partner and Chairman, heads the Public Equity investment team. The Eastern European team consists of senior advisors Aivaras Abromavicius, based in Kyiv and Jacob Grapengiesser, based in Moscow, as well as regional portfolio managers Adrian Pop and Eglé Fredriksson. The investment team is supported by a team of traders, analysts, macroeconomists, and a corporate governance function. Kestutis Sasnauskas, Founding Partner, heads the Private Equity investment team and Biljana Pehrsson heads the Real Estate investment team.

Peter Elam Håkansson Head of Public Equity

Aivaras Abromavicius Senior Advisor

Jacob Grapengiesser Senior Advisor

Adrian Pop Portfolio Manager Eglé Fredriksson Portfolio Manager Kestutis Sasnauskas Head of Private Equity Biljana Perhrsson Head of Real Estate

Fund Investments

If you wish to receive more comprehensive quarterly updates from the Investment Manager regarding the East Capital Bering Funds, East Capital Special Opportunities Fund and East Capital Special Opportunities Fund II in our portfolio, please send an email to: [email protected]. Please note that the quarterly update letters are not prepared or approved by East Capital Explorer or its Board of Directors. They are provided quarterly by the Investment Manager to investors in these funds.

East Capital Baltic Property Fund II

The aim of the fund is to invest in commercial properties in the Baltic region, primarily in shopping centres and retail properties, as well as logistics and office properties. The goal is to acquire properties in prime locations with stable income and enhancement potential.

The main focus is properties with well-established tenants and sustainable rental terms in and around Tallinn and also Vilnius. Value is added through improvements in tenant mix, refurbishment, extension or redevelopment.

At the end of the period East Capital Explorer's share of the fund was 91%.

Fund performance			Since
		Q3 2012 9m 2012	May 12
East Capital Baltic Property Fund II	6%	5%	5%

Portfolio highlights during the quarter

• The fund's first investment, VGP Park, was rebranded to Tännisilma Logistics

• An external valuation of the Tännisilma Logistics property was carried out in September 2012. The value was increased with 1.3%

• The fund increased with 6% as a result of the positive cash flow of and the revaluation in the Tännisilma Logistics property

Portfolio breakdown, % per 30 September 2012

Sector allocation % of the fund

Asset allocation by country

East Capital Bering Balkan Fund

The aim of the fund is to achieve long term capital appreciation from investments in Balkan equities, both listed and unlisted. The fund may also invest in companies that have significant trade with, or active investments in, the Balkans countries.

At the end of the period East Capital Explorer's share of the fund was 66%.

Fund performance			Since
		Q3 2012 9m 2012	Dec 07
East Capital Bering Balkan Fund, EUR	4%	-2%	-58%

Portfolio highlights during the quarter

• The main positive contribution came from the Romanian restitution fund, Fondul Proprietatea which gained 13% after a weak second quarter. Trading at a 46% discount to the reported NAV, a high cash flow generation from dividends received, a share buyback program and a long list of potential privatisations of some of the largest state owned holdings in the portfolio, are all factors supporting the investment case

• Since the end of the third quarter, there has been a negative news flow on Fondul Proprietatea. There is a dispute with one of the shareholders who wants the decision to appoint Franklin Templeton as asset manager to be revoked, together with a number of other shareholder's decisions during the past two years. However, it is not likely that any of the previously made decision by the shareholders will be revoked. Hidroelectrica's insolvency procedure, that was mentioned in the previous report, is not yet solved

• Another strong contributor was Zavarovalnica Triglav, the Slovenian insurance company, which showed a 21% growth in net profit in the first six months of 2012. Even more importantly, the Slovenian government started to take the necessary measures to stabilise public finances, with potential privatisations as one of the key points of the program. The stock gained on renewed privatisation hopes, but still trades at a very attractive valuation of 5 times 2012 estimated earnings and 0.6 times book value

Portfolio breakdown, % per 30 September 2012

Sector weighting		Asset allocation by country
% of the fund		% of the fund
Financials	51.7	 Romania  Serbia	26.1 25.1
Consumer Discretionary	19.2	 Slovenia	11.7
Consumer Staples	8.1	 Bosnia	9.3
Telecommunication Services	6.3	 Macedonia	5.6
Industrials	2.5	 Turkey	5.2
Energy	0.8	 Montenegro	3.0
Materials	0.6	 Croatia	2.2
Utilities	0.4	 Bulgaria	1.3

Largest holdings in the Fund on 30 September 2012

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
B92	14.0	0.0	-0.0	Serbia	Cons. Discr.
Fondul Proprietatea	12.4	13.3	1.4	Romania	Financials
Zavarovalnica Triglav	5.7	21.2	1.0	Slovenia	Financials
Komercijalna Banka Skopje	5.2	6.3	0.3	Macedonia	Financials
Telekom Srpske	3.5	20.7	0.6		Bosnia Telecom. Services
Pinar Et Ve Un	3.0	2.5	0.1	Turkey	Cons. Staples
Pif Big	3.0	-4.7	-0.2	Bosnia	Financials
Montenegro Telekom	2.7	23.8			0.6 Montenegro Telecom. Services
AIK Banka	2.6	11.9	0.3	Serbia	Financials
Sif 5 (Oltenia)	2.4	22.5	0.4	Romania	Financials
All figures in EUR * Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
54	19	62

East Capital Bering Central Asia Fund

The aim of the fund is to achieve long term capital appreciation from investments in Central Asian equities, both listed and unlisted. The fund may also invest in companies that have significant trade with, or active investments in, the Central Asian countries.

At the end of the period East Capital Explorer's share of the fund was 55%.

Fund performance			Since
		Q3 2012 9m 2012	Jan 08
East Capital Bering Central Asia Fund, EUR	11%	26%	-52%
KASE Index, EUR	-2%	-12%	-66%

Portfolio highlights during the quarter

• The fund's largest holding, Bank of Georgia, remained the engine behind the strong performance, up 21%. The Management reiterated its long-term targets on a recent investor day and provided ample material supporting the roadmap to those targets

• Halyk Bank continued its positive news flow and the developments in the bank's financials were finally acknowledged by the market. The stock surged 39% on resumed investor interest, spurred by the announcement of a dividend policy with a pay-out ratio in the range of 15-50%, and on management optimism regarding the beginning of a new lending cycle in the Kazakh economy

• In terms of reallocations, the fund manager reduced the weight of Kaz-MunayGas due to operational issues that are expected to have a negative impact, and added ENRC, one of the leading diversified natural resources groups, as a bet on a recovery in commodity markets

Portfolio breakdown, % per 30 September 2012

Sector weighting

% of the fund

Asset allocation by country % of the fund

Financials	54.4
Energy	20.9
Materials	6.1
Consumer Staples	5.6
Utilities	1.0
Industrials	0.1

Largest holdings in the Fund on 30 September 2012

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Bank of Georgia	36.1	20.5	6.6	Georgia	Financials
Dragon Oil	12.8	14.9		1.8 Turkmenistan	Energy
KazMunayGas	5.9	7.2	0.8	Kazakhstan	Energy
Henryland	5.3	0.7	0.0	Ukraine	Financials
Halyk Bank	5.2	38.9	1.6	Kazakhstan	Financials
Chagala Group	5.0	-14.4	-0.9	Kazakhstan	Financials
Caucasus Agro Development	3.1	-2.9	-0.1		Georgia Cons. Staples
ENRC	2.8	-20.2	-0.4	Kazakhstan	Materials
Bank Tsentrkredit	2.4	-12.8	-0.4	Kazakhstan	Financials
Teliani Valley	2.4	-2.9	-0.1		Georgia Cons. Staples
All figures in EUR
* Contribution to the portfolio performance
10 largest holdings	Unlisted holdings

(% of fund)	(% of fund)	Total number of holdings
81	3	21

East Capital Bering New Europe Fund

The aim of the fund is to achieve long term capital appreciation from investments in Central European and Baltic equities, both listed and unlisted. The fund may also invest in companies that have significant trade with, or active investments in, the Central European or the Baltic countries.

At the end of the period East Capital Explorer's share of the fund was 89%.

Fund performance			Since
		Q3 2012 9m 2012	May 08
East Capital Bering New Europe Fund, EUR	3%	7%	-18%

Portfolio highlights during the quarter

• By far the best performing stock was once again the largest holding; coin producer Mennica Polska, up 17%. The company has many promising business lines under development and the fund manager continues to believe that the company offers an interesting investment case with stable core business and lucrative growth opportunities. However, as the stock is up 85% year-to-date, the fund manager reduced the holding during the quarter to lock in some profits

• The largest listed Baltic holding in the fund, Tallinna Vesi, gained 15% on the back of improving odds that the company will win the case against the state regarding the disputed water tariff. Tariffs are being determined by a privatisation agreement, which is presently disputed by the populist political forces, as well as the competition authority in Estonia. With less risk of a tariff reduction, the stock now trades at 9 times earnings and is expected to yield up to 10% in dividends

• One of the main negative contributors to the fund's performance was Hungarian alternative energy supplier, E-Star, down 55%. Since July 2011, after some very successful years, E-Star has experienced financial challenges which have jeopardised the company's expansion plans and its present operations. The fund manager started to sell the stock already in August 2011 and completely exited the position in the third quarter, realising a favorable average annual return of 37%

Portfolio breakdown, % per 30 September 2012

Sector weighting
% of the fund

Financials	16.9
Materials	14.3
Consumer Discretionary	14.2
Information Technology	12.9
Utilities	10.4
Industrials	8.5
Consumer Staples	6.9
Telecommunication Services	6.6
Energy	4.4
Health Care	3.1

Asset allocation by country % of the fund

Largest holdings in the Fund on 30 September 2012

Company	Weight, %	Perf, %	Contr, %*	Country	Sector
Mennica Polska	8.3	16.9	1.3	Poland	Materials
Elko	8.0	13.0	0.9	Baltics	IT
Morpol	6.9	6.0	0.4	Poland	Consumer Staples
Netia	6.6	7.1	0.4	Poland	Telecom. Services
Pannenergy	5.7	3.2	0.2	Hungary	Materials
Tallinna Vesi	5.7	15.3	0.7	Estonia	Utilities
Ablon Group	4.7	-14.2	-0.8	Hungary	Financials
Bank Ochrony Srodowiska	4.4	0.8	0.0	Poland	Financials
Bogdanka	4.4	1.4	0.0	Poland	Energy
Asseco Slovakia	3.8	9.7	0.3	Slovakia	IT
All figures in EUR
* Contribution to the portfolio performance
10 largest holdings (% of fund)		Unlisted holdings (% of fund)			Total number of holdings

58 9 34

East Capital Bering Russia Fund

The aim of the fund is to achieve long term capital appreciation from investments in Russian equities, both listed and unlisted. The fund may also invest in companies that have significant trade with, or active investments in, Russia.

At the end of the period East Capital Explorer's share of the fund was 46%.

Fund performance			Since
		Q3 2012 9m 2012	Dec 07
East Capital Bering Russia Fund, EUR	1%	1%	-60%
RTS-2 Index, EUR	10%	2%	-27%

Portfolio highlights during the quarter

• Neftekamsky Avto, a truck and bus producer, recovered by 31%. The truck and bus market in Russia continued to grow by 4% and 40% respectively during the first 6 months of 2012. Currently the company trades at 0.3 times sales, but if Daimler, which has been offered a blocking stake in Kamaz, steps in as owner in line with expectations, the margins will most likely increase since these are mostly set by Kamaz, Neftekamsky Avto's parent company

• The second best performer was the energy company, Ufimsky NPZ, up 31%. In the second quarter, the share was down 25% because the merger with Bashneft has set certain swap ratios and buyback prices and the stock was "marked-to-market" as a Bashneft share in kind. In the third quarter, the share performed well as Bashneft gained almost 30%

• The worst-performing stock among the top 10 was Fesco, the Russian transportation group, down 12%. The stock once again had a weak quarter as there has been no development in the expected change in ownership structure or a voluntary offer to minorities as earlier announced

• Verofarm, the medium sized pharmaceutical company, was up 18%, but still trades lower than before the "small cap crunch" in May 2012. The company trades at around 6.0 times earnings and 4.8 times Ebitda. Lack of positive news from the industry and below-average corporate governance are likely adding to the discount in valuation compared to peers

East Capital Bering Ukraine Fund A

The aim of the fund is to achieve long term capital appreciation from investments in Ukrainian equities. The fund may also invest in companies that have significant trade with, or active investments in, Ukraine.

Since 1 January 2010, the East Capital Bering Ukraine Fund is split into two classes: East Capital Bering Ukraine Fund Class A, comprising mainly of listed holdings, and East Capital Bering Ukraine Fund Class R, that comprises the illiquid private equity assets.

At the end of the period East Capital Explorer's share of the fund was 36%.

Fund performance			Since
		Q3 2012 9m 2012	Jan 08
East Capital Bering Ukraine Fund A, EUR	-10%	-22%	-70%
PFTS Index, EUR	0%	-32%	-78%

Portfolio highlights during the quarter

• The share price of Myronivsky Hliboproduct (MHP), the largest poultry producer in Ukraine, recouped all of its losses from the previous quarter, up 27%. The performance was partly supported by a more benign market sentiment, but mostly by yet another quarter of superb financial results. During the first six months of 2012, MHP grew revenues by 24%, Ebitda by 46%, and net income by 97%. Following stronger-than-expected second quarter results, the CFO raised the 2012 Ebitda forecast, which implies growth of 17% year-on-year

• The value of Anthousa, the fourth largest retailer in Ukraine, was written down with 30%. The company has performed below expectations as a result of the economic slowdown. The write down was in line with the development of Ukrainian equity market and the company's closest peer, Retail group, since the external valuation in December 2011

• Retail Group, the sixth largest food retailer in Ukraine, also performed weakly during the quarter for the same reasons as Anthousa. The share slumped with 50%

Portfolio breakdown, % per 30 September 2012

Sector weighting

% of the fund

Asset allocation by country % of the fund

Industrials	27.4
Materials	18.7
Consumer Discretionary	13.5
Financials	12.0
Health Care	9.5
Energy	7.6
Information Technology	3.5
Utilities	2.1
Consumer Staples	1.0
Telecom. Services	0.4

Largest holdings in the Fund on 30 September 2012
Company	Weight, %	Perf, %	Contr, %*	Country	Sector
Fesco	13.8	-11.5	-1.9	Russia	Industrials
Korshunovsky Gok	9.0	5.0	0.4	Russia	Materials
Verofarm	6.5	18.2	1.0	Russia	Health Care
Nova Liniya	6.5	-1.5	-0.1	Ukraine	Cons. Discr.
Neftekamsky Avto	4.7	30.9	1.1	Russia	Industrials
Kantik	4.4	6.1	0.2	Ukraine	Financials
Ufimsky Npz	3.7	30.5	0.9	Russia	Energy
Elko	3.5	13.0	0.4	Baltics	IT
Highland Gold Mining	3.1	14.4	0.4	Russia	Materials
GAZ	3.0	11.2	0.1	Russia	Cons. Discr.

All figures in EUR

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
58	1	79

Portfolio breakdown, % per 30 September 2012

Sector weighting % of the fund

Consumer Staples 16.8 Materials 14.5 Financials 12.8 Utilities 11.4 Telecom. Services 9.1 Consumer Discretionary 3.0 Energy 1.3 Health Care 0.7 Industrials 0.3 Asset allocation by country % of the fund

Largest holdings in the Fund on 30 September 2012
	Weight,	Perf,	Contr,
Company	%	%		%* Country	Sector
Tsentr Energo	10.7	9.5	0.2	Ukraine	Utilities
Ukrtelecom	9.1	-22.1	-0.5	Ukraine	Telecom. Services
Ferrexpo	5.8	-7.4	-0.6	Ukraine	Materials
Retail Group	5.3	-49.8	-4.8	Ukraine	Consumer Staples
Myronivsky Hliboproduct	4.4	27.1	3.4	Ukraine	Consumer Staples
Anthousa	4.1	-29.6	-1.6	Ukraine	Consumer Staples
Ukrsotsbank	4.0	-0.9	-0.4	Ukraine	Financials
Bank Aval	3.2	-11.8	-0.7	Ukraine	Financials
Koryukivska Fabryka	3.1	-8.7	-0.3	Ukraine	Materials
Tekhnichnyh Paperiv
Stirol	2.7	-0.3	-0.2	Ukraine	Materials
All figures in EUR
* Contribution to the portfolio performance

10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings
52	6	30

East Capital Bering Ukraine Fund R

Since 1 January 2010, the East Capital Bering Ukraine fund is split into two classes: East Capital Bering Ukraine Fund Class A, comprising listed holdings, and East Capital Bering Ukraine Fund Class R, that comprises the illiquid private equity assets.

At the end of the period East Capital Explorer's share of the fund was 12%.

Fund performance			Since
		Q3 2012 9m 2012	Jan 08
East Capital Bering Ukraine Fund R, EUR	1%	5%	-68%
PFTS Index, EUR	0%	-32%	-78%

Portfolio highlights during the quarter

• Kantik's NAV per share increased 6% due to an increase in the cash balance relating to stable rental income and low expenses. NAV per share of Henryland increased by 1%. The management of Henryland finished the redevelopment of a property in Kremenchuk. The total leasable area of the property has been increased which will increase income generated by the property

• Revenues for the quarter of Nova Liniya, the do-it-yourself-chain, was 5% lower than the same period in 2011. Year to date revenues are down by 8% but the gross margin for the first 8 months of 2012 was 26%, up from 24% for the same period 2011

• Revenues for third quarter of Chumak, the leading Ukrainian producer of high quality food products, increased by 18% year-on-year. Gross margin for the quarter was 37%, compared to 32% last year. The strongest growing category during the quarter was canned products, while mayonnaise remains the largest margin improver. Chumak continues to gain market share in the tomato paste, ketchup and pasta segment

East Capital (Lux) Eastern European Fund

The aim of the fund is to invest in shares of companies in the whole Eastern Europe. The fund seeks investments in a broad spectrum of countries, sectors and companies.

The fund is a daily traded UCITS-fund. More information can be found at the East Capital website www.eastcapital.com.

At the end of the period East Capital Explorer's share of the fund was 8%.

Fund performance			Since
	Q3 2012	9m 2012	Dec 07
East Capital (Lux) Eastern European Fund, EUR	10%	15%	-31%
MSCI Emerging Europe Index, EUR	7%	14%	-36%

Portfolio breakdown, % per 30 September 2012

Sector weighting % of the fund

Asset allocation by country % of the fund

Financials Consumer Discretionary Consumer Staples Information Technology	51.9 28.9 11.2 4.4		 Ukraine  Baltics  Estonia	91.9
Industrials	1.8

Largest holdings in the Fund on 30 September 2012

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Kantik	28.9	6.1	0.6	Ukraine	Financials
Nova Liniya	28.9	-1.5	-0.7	Ukraine	Consumer Discretionary
Henryland	22.0	0.7	-0.1	Ukraine	Financials
Chumak	11.2	-1.5	-0.3	Ukraine	Consumer Staples
Elko	4.4	13.0	0.5	Baltics	Information Technology
Trev-2 Group	1.8	-16.1	-0.4	Estonia	Industrials
Rtc Irpin	0.9	-1.5	-0.0	Ukraine	Financials
All figures in EUR

* Contribution to the portfolio performance

10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings
98	100	11

• During the second quarter, Elko's revenues were around 8% below budget. Despite lower sales figures, Elko was able to exceed its net income target by 50%, posting USD 1.5m net profit for the period. Aggregate results for the first 6 months show sales of USD 441m (up 22% year-on-year) and net profit USD 4.8m (up 32% year-on-year) primarily due to significant decrease in finance expense

• As decided at the AGM in June, Trev-2 Group undertook a EUR 4.2m new share issue during the quarter. The fund participated in the capital increase and therefore its stake in the company remained unchanged. For further information about Trev-2 Group, see the Direct Investment text on page 16

Portfolio breakdown, % per 30 September 2012

Sector weighting % of the fund		Asset allocation by country % of the fund
Financials Energy Industrials	34.3 26.7 7.9	 Russia  Turkey  Poland	60.5 8.0 6.1
Telecom. Services Consumer Discretionary	7.9 7.1	 Eastern Europe	5.9
Utilities Materials	5.8 3.7	 Romania  Czech republic	3.7 2.3
Consumer Staples Information Technology Health Care	2.7 0.9 0.7	 Hungary  Lithuania	2.2 1.6
		 Estonia  Kazakhstan  Baltics	1.3 1.1 1.0

Largest holdings in the Fund on 30 September 2012

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Sberbank	9.1	7.8	0.2	Russia	Financials
Lukoil	6.0	13.0	0.7	Russia	Energy
Gazprom	4.4	10.7	0.3	Russia	Energy
Surgut NG	4.0	13.2	0.5	Russia	Energy
Sistema	3.2	4.7	0.0	Russia	Telecom. Services
M.Video	3.1	19.1	0.5	Russia	Consumer Discretionary
Transneft	2.2	24.0	0.4	Russia	Energy
PZU	2.0	17.6	0.3	Poland	Financials
Novatek	1.9	9.8	0.1	Russia	Energy
MRSK Holding	1.9	36.9	0.6	Russia	Utilities
All figures in EUR
* Contribution to the portfolio performance
10 largest holdings			Unlisted holdings
(% of fund)			(% of fund)		Total number of holdings
38			0		141

East Capital Power Utilities Fund

The aim of the fund is to target the many investment opportunities arising from the ongoing power sector reform in Russia. The fund invests in both listed and unlisted companies across sub-sectors of the industry including electricity generation, distribution and services.

At the end of the period East Capital Explorer's share of the fund was 73%.

Fund performance			Since
		Q3 2012 9m 2012	Dec 07
East Capital Power Utilities Fund, EUR	17%	0%	-15%
RTS Electric Utilities Index	11%	-6%	-61%

Portfolio highlights during the quarter

• MRSK Holding posted fantastic performance during the quarter, gaining 38% on heavy volumes. The stock was well supported by global optimism after central banks announced a stimulus program. Furthermore, several government officials have challenged the rationale for the creation of a unified grid company, earlier news that had led to a heavy sell-off in the sector in the second quarter. Additional support did come after Prime Minister Medvedev highlighted the need for an increase in the sector's efficiency and the government's intention to create a more investor-friendly environment aiming to attract investments from external sources. The exact steps and measures are yet to be announced, but they will define the direction for the sector

• Russian distribution companies; MRSK Tsentra, MRSK Tsentra I Privolzhya and MRSK Volgi gained 34%, 31% and 26% respectively, were among those to benefit from the progress in the privatisation discussions

• On the negative side, OGK-2 was down 14% due to a massively dilutive share issue of at least 75% of its existing shareholder capital, where the proceeds will be used to finance a capital expenditure program

East Capital Russia Domestic Growth Fund

The aim of the fund is to exploit the potential of the strong domestic growth in the Russian economy. The target is to create a concentrated portfolio of between 10 and 20 listed companies which generate at least half of there revenue in Russia and have a market capitalization of above USD 500m. The fund operates across all sectors and invests in securities that are believed to be undervalued and have a significant performance potential.

At the end of the period East Capital Explorer's share of the fund was 100%.

Fund performance			Since
	Q3 2012	9m 2012	Aug 12
East Capital Russia Domestic Growth Fund, EUR	95%	95%	-4%

Portfolio highlights during the quarter

• The fund was launched on 31 August 2012 and by the end of the quarter, 65% of the fund was invested. The rest is planned to be deployed during the coming quarter

• The largest holding of the fund is Sberbank as we believe that the banking sector is a good play on overall economic growth. The financial sector is set to benefit from a growing middle class with strong purchasing power

• The third largest holding is M.Video, the number one market leader and the only listed electronics retailer in Russia. The company is a main beneficiary of the lending boom under way in Russia and coupled with the still low penetration of consumer electronics in the country. A promising investment case at attractive valuation – approx. 50% discount to Russian retail peers while offering comparable Ebitda, earnings growth, and stable dividends

• The fund is down 3.7% since inception mainly as a result of a negative development during September in M.Video, due to a share overhang, as the company recently carried out an SPO in the amount of 10% of the company and also due to profit taking after significant outperformance. The stock is up 37% year-to-date

Portfolio breakdown, % per 30 September 2012

Sector weighting

% of the fund

Asset allocation by country % of the fund

Utilities	87.0
Industrials	0.7

Largest holdings in the Fund on 30 September 2012
Company	Weight, %	Perf, %	Contr, %*	Country	Sector
E.ON Russia	15.3	19.3	2.8	Russia	Utilities
Mrsk Tsentra I Privolzhya	11.5	30.5	3.1	Russia	Utilities
OGK-5	9.4	14.9	1.4	Russia	Utilities
Mrsk Tsentra	8.7	34.2	3.0	Russia	Utilities
Energy System of Far East	5.4	7.7	0.5	Russia	Utilities
MRSK Holding	5.3	37.5	1.8	Russia	Utilities
TGK-5	4.7	10.2	0.5	Russia	Utilities
OGK-2	3.7	-13.8	-0.6	Russia	Utilities
Mrsk Volgi	3.6	26.4	1.0	Russia	Utilities
TGK-6	3.3	17.4	0.6	Russia	Utilities
All figures in EUR

* Contribution to the portfolio performance

10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings

(% of fund)	(% of fund)	Total number of holdings
71	0	27

Portfolio breakdown, % per 30 September 2012

Sector weighting

% of the fund

Financials	29.9
Telecom. Services	9.3
Consumer Discretionary	9.2
Utilities	6.3
Industrials	5.3
Energy	4.9

Asset allocation by country

Largest holdings in the Fund on 30 September 2012

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Sberbank	19.6	-3.8	-0.7	Russia	Financials
Sistema	9.3	-13.4	-1.3	Russia	Telecom. Services
M.Video	9.2	-6.0	-0.8	Russia	Cons. Discr.
E.ON Russia	5.3	-0.3	-0.1	Russia	Utilities
Aeroflot Russian Airlines Jsc	5.3	-0.3	-0.1	Russia	Industrials
Bank Sankt-Peterburg	5.3	1.2	-0.0	Russia	Financials
LSR Group	5.1	-6.3	-0.4	Russia	Financials
Novatek	4.9	-4.3	-0.3	Russia	Energy
OGK-5	1.0	-6.4	-0.1	Russia	Utilities

All figures in EUR

* Contribution to the portfolio performance

10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings
65	0	9

East Capital Special Opportunities Fund

The aim of the fund is to invest in companies with a solid business model and outlook, which for market or owner specific reasons could be acquired at low valuation levels. The fund has targeted investments in the whole Eastern European region, with both a clear trigger for revaluation and an exit opportunity within four years from the launch of the fund. The strategy implies, when appropriate, a more active role in the portfolio companies.

The investment focus is listed equity securities, but other financial instruments can also be utilized. Distributions to investors can be made throughout the lifetime of the fund. All proceeds on divestments after three years from inception of the fund will be distributed to the investors.

At the end of the period East Capital Explorer's share of the fund was 82%.

Fund performance			Since
		Q3 2012 9m 2012	May 09
East Capital Special Opportunities Fund, EUR	7%	12%	13%

Portfolio highlights during the quarter

• The main positive contribution came from Russian auto producer Sollers, which was up sharply by 61%. Most equity research analysts have updated their forecasts for the company on the back of promising first half 2012 results which boosted the share after it experienced a 30% drop during the second quarter. Besides strong financial results, positive guidance and outlook, the car market itself continued to expand by 10% year-on-year in September

• The second well-performing stock was the Romanian restitution fund, Fondul Proprietatea (FP) which gained 13% after a weak second quarter. For further information regarding FP, please see the East Capital Bering Balkan Fund portfolio comment

• Verofarm, the Russian pharmaceutical producer, gained 18%. For further information regarding Verofarm, see the East Capital Bering Russia Fund portfolio comment

• Sintal, one of the biggest agricultural companies in Ukraine, dropped by a hefty 82%, despite almost no liquidity in the share, likely driven by the general weakness of the Ukrainian stock market. The holding contributed negatively with almost 3% to the fund's performance

East Capital Special Opportunities Fund II

The target is to achieve a 30% Internal Rate of Return from a concentrated portfolio of our top picks selected on return potential. Proceeds will be distributed as investments are realized but no later than within four years from inception.

At the end of the period East Capital Explorer's share of the fund was 56%.

Fund performance			Since
	Q3 2012	9m 2012	Oct 10
East Capital Special Opportunities Fund II, EUR	0%	-16%	-41%

Portfolio highlights during the quarter

• The strongest contributor to the fund was Zavarovalnica Triglav, a Slovenian insurance company which showed a strong 21% growth in net profit during the first half of 2012. For further information regarding the company, please see the East Capital Bering Balkan Fund portfolio comment

• The second positive contributor was Verofarm, a Russian pharmaceutical producer, gained 19%. For further information regarding Verofarm, see the East Capital Bering Russia Fund portfolio comment

• The Russian forestry company, Rusforest, lost further 60% over the quarter. Fears of liquidity problems and a resulting stop in the capital expenditure program may be the reason. The company reported large losses for previous quarter and low cash levels. It is inevitable that the company will start selling assets as a first measure to raise liquidity, and during a later stage, forest leases and a mining company may be sold. The Fund Manager has kept an active dialogue with the company during the period

Portfolio breakdown, % per 30 September 2012

Sector weighting % of the fund

Financials	31.1
Materials	26.1
Consumer Discretionary	18.3
Energy	14.5
Health Care	9.4
Consumer Staples	3.0
Industrials	0.9
Information Technology	0.6

 Russia  Romania	67.6 31.1
 Ukraine	2.8
 Serbia	2.3

Largest holdings in the Fund on 30 September 2012

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Fondul Proprietatea	31.1	13.3	3.8	Romania	Financials
Sollers	17.4	60.7	6.7	Russia	Consumer Discr.
Korshunovsky Gok	12.8	5.0	0.3	Russia	Materials
Integra	12.0	0.8	-0.1	Russia	Energy
Sibirskiy Cement	10.1	4.0	0.1	Russia	Materials
Verofarm	9.4	18.2	1.4	Russia	Health Care
Mashstroy	2.6	-37.5	-1.7	Russia	Energy
Vino Zupa	2.3	7.1	0.2	Serbia	Consumer Staples
Stirol	2.2	-4.2	-0.2	Ukraine	Materials
Belon	0.9	5.5	0.1	Russia	Materials

All figures in EUR

* Contribution to the portfolio performance

10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings
1011	0	16

The total portfolio value (%) is higher than the NAV of the fund due to a net liability position

Portfolio breakdown, % per 30 September 2012

Sector weighting % of the fund

Asset allocation by country % of the fund

Financials	30.6
Consumer Staples	17.9	 Russia
Materials	13.0	 Slovenia
		 Serbia
Energy	11.2	 Poland
Health Care	10.0
Utilities	7.6	 Ukraine
Industrials	2.1	 Hungary
		 Lithuania

Largest holdings in the Fund on 30 September 2012

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Zavarovalnica Triglav	15.6	20.9	2.6	Slovenia	Financials
Bambi	12.5	16.0	1.7		Serbia Cons. Staples
Integra	11.2	0.8	0.0	Russia	Energy
Verofarm	10.0	18.6	1.5	Russia	Health Care
Jastrzebksa Spolka Weglova	7.3	0.3	0.0	Poland	Materials
NFD 1 Delniski Investicijski Sklad Dd	6.1	3.1	0.2	Slovenia	Financials
Energy System of Far East	4.9	8.0	0.3	Russia	Utilities
AIK Banka	4.8	4.7	0.2	Serbia	Financials
Sibirskiy Cement	3.3	4.0	0.1	Russia	Materials
Anthousa		3.1 -29.6	-1.3		Ukraine Cons. Staples

All figures in EUR

* Contribution to the portfolio performance
10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
79	11	19

• Serbian confectionary producer, Bambi, performed well after reporting strong operational results; shares were up 16% during the quarter

Direct Investments

Melon Fashion Group

– One of the fastest growing Russian fashion retail companies

Consolidation measures taken by the management team to cope with the rapid expansion of the previous years has played out better than expected and we are very pleased with the development.

In the first six months of the financial year starting on 1 January, 2012 sales of Melon Fashion Group (MFG) reached RUB 3,880m (EUR 96m), an increase of 37% compared to the same period of previous year. Gross margin amounted to 59.6% during the period. Ebitda amounted to RUB 369.1m (EUR 9m) to be compared with RUB -183.5m (EUR -4.6m) in 2011 which gives an Ebitda margin of 9.5% (-6.5%).

During the third quarter of 2012, MFG continued its strong performance. The company generated sales of RUB 2,203m (EUR 55.1m) during the same period. This represents a 40% (43% in EUR terms) increase compared to the same period of last year. Like-for-like sales growth in both core and master-franchised concepts was 37% during the quarter. The core concepts of MFG (Zarina, befree and Love Republic) were once again the key driver of strong performance and contributed 84% to the Group's top-line result. Ukrainian operations accounted for roughly 5% of sales, which is in line with previous quarters.

As of 1 October 2012, MFG operated 527 stores across all five concepts, which are net 14 stores more than at the end of June. The increase in the number of stores reflects openings of core concepts stores, while a number of master-franchised stores remained unchanged.

In the beginning of September, MFG held a shareholders meeting to elect a new board of directors containing reduced number of members. Justas Pipinis and Ingvar Pramhäll have declined re-election. Kestutis Sasnauskas, Head of Private Equity and Partner of East Capital was elected as chairman.

Learn more about Melon Fashion Group on: www.melonfashion.ru

Komercijalna Banka Skopje

- The largest bank i Macedonia by asset and capital

As of the first nine months of 2012, Komercijalna Banka Skopje (KBS) posted net profits of MKD 266m, slightly lower than the figure reported as of 6 months 2012, implying a small loss for the third quarter and bringing the annualized return on equity down to just under 4%. Balance sheet growth year-to-date is less than 1%, reflecting both the ongoing recession in the country and the bank's decision to lower retail deposit rates in an effort to protect its net interest margin. This strategy has kept interest expense low, while the bank's total interest income increased by almost 5% year-on-year, helping KBS to post an increase in operating income pre-provisions of almost 8%. However, loan impairment provisions continue to weaken profitability, and the bank now expects this trend to continue at least through the end of this year, based on the weak economic and business data reported throughout southeast Europe. Operating expenses remain well under control, with actual expense levels lower than last year's 9-month figures.

Learn more about Komercijalna Banka Skopje on: www.kb.com.mk

Trev-2 Group

- One of the largest infrastructure construction and maintenance companies in Estonia with presence in Latvia

As decided at the AGM in June, Trev-2 Group reduced the nominal value of its shares (share split), subsequently reduced the share capital and carried out a new share issue in the amount of EUR 4.2m during the third quarter. During the new share issue, the company repaid the outstanding EUR 2.2m shareholder loan to East Capital Explorer. All of the mentioned corporate actions were completed an the new share capital increase was registered by 10 October 2012.

East Capital Explorer experienced a positive outcome from the new share issue, as it partially underwrote the issue picking up part of the unsubscribed for shares by some of the major shareholders. As a result, East Capital Explorer's shareholding increased from 18% to 35%, and it recognized a value increase of 34%. Shareholders who only picked up their pro rata share experienced a value reduction of 16% due to a dilution in the process.

On 8 August 2012, the Supervisory Council appointed Erki Mölder as new CEO for the group. Preliminary findings, conclusions and an action plan were formulated and presented by the CEO to the Supervisory Council on 18 September 2012.

After receiving around 60% of the creditor approval, Latvian subsidiary Water Ser SIA filed for a reorganisation plan in Latvia which recently has been accepted by the court. The reorganization is for a period of two years.

Trev-2 Group's third quarter preliminary results are encouraging as the company either meets or exceeds the budget. During the quarter, the company experienced positive topline growth due to market recovery. Sales for the first nine months of 2012 increased nearly 40% year-onyear. While gross margins also recovered well, with gross profits more than doubling since the same period last year.

Learn more about Trev-2 Group on: www.trev2.ee

East European Debt Finance - Joint-venture together with the leading European debt collection company Intrum Justitia and the East Capital Financials Fund

During the third quarter, efforts were focused on improving collection performance of the purchased portfolios. During the summer, various discount campaigns were tried and the preliminary results show that these campaigns were most effective for the portfolios where the average debt was higher. It was agreed that the local collection company will continue these campaigns also during the fourth quarter. Four of the portfolios performed better than the planned collections and two below expectations.

The main negative news was that the last purchased portfolio and at the same time the largest portfolio continues to perform significantly below the plan despite the efforts to reactivate the collections. The next step will be to select the cases that will be transferred to legal collection.

Even though there was a regular flow of new portfolios on the market, EEDF did not purchase any new portfolios during the quarter. The company is currently not bidding very aggressively for new portfolios as it has decided to focus its resources on improving the current collection.

Short-term investments

East Capital Explorer has investments in a portfolio of USD denominated liquid bonds as a short-term cash management tool to create more attractive returns on cash while remaining liquid for future investments. The currency exposure in USD is hedged. On 30 September 2012, the fair value of the bond portfolio amounted to EUR 7.3m (EUR 20.1m).

The net result from bond portfolio for the reporting period 2012 was EUR 0.3m. This included EUR 0.5m in interest income, EUR 0.7m in profit from exchange rates and fair value change in the bond portfolio of EUR -0.8m and EUR -0.1m in management fees.

Among short-term investments, East Capital Explorer also holds a loan, maturing in December 2012 at the latest, to Melon Fashion Group amounting to EUR 1.2m. The original EUR 5.0m loan to Melon Fashion Group was repaid by EUR 2.0m during the second quarter and by EUR 1.8m during the third quarter. The EUR 2.2m loan to Trev-2 Group was repaid during the third quarter. On 30 September the fair value of the remaining loans amounted to EUR 1.2m including accrued interest. Interest income from the loans during the reporting period amounted to EUR 0.3m.

Cash and cash equivalents

The EUR 29.4m (EUR 16.6m at year-end 2011) that had not yet been invested or drawn-down, were placed in cash and cash equivalents. Interest income from cash and cash equivalents during the reporting period 2012 amounted to EUR 0.3m (EUR 0.2m).

Results

The Group consists of the Parent Company East Capital Explorer AB, the subsidiaries East Capital Explorer Investments AB and Humarito Limited as well as the consolidated funds listed below.

Consolidated funds	Share of Equity
East Capital Bering New Europe Fund	89%
East Capital Special Opportunities Fund	82%
East Capital Power Utilities Fund	73%
East Capital Bering Balkan Fund	66%
East Capital Bering Central Asia Fund	55%

The funds listed above are regarded as subsidiaries and consolidated with the East Capital Explorer Group. Subfunds to a company are not consolidated into the East Capital Explorer Group if the ownership of the company does not exceed the consolidation level where the East Capital Explorer has a dominant beneficial ownership. The investments in the consolidated funds are reported as investments in the portfolio report on page 3 but are consolidated in the financial statements.

During the first quarter of 2012 other investors in the fund redeemed shares in the East Capital Bering Central Asia Fund. As a result East Capital Explorer, from an accounting perspective, had a controlling influence over the fund and therefore needed to treat it as a subsidiary. Consequently, the fund was reclassified in the first quarter of 2012 from shares and participations in investing activities to a subsidiary.

Group

Total comprehensive income for the reporting period 1 January – 30 September 2012 amounted to EUR 16.0m (EUR -130.5m), which included exchange rate differences on translation of foreign operations of EUR -1.1m (EUR -2.2m).

Net profit for the period amounted to EUR 17.1m (EUR -128.3m). Of this a net profit of EUR 13.7m (net loss EUR 107.0m) was attributable to the shareholders of the Parent Company corresponding to earnings per share of EUR 0.41 (EUR -3.07).

For the reporting period, the main items of the net profit in the investment portfolio include value changes of EUR 16.0m (EUR -128.1m) and EUR 9.0m (EUR 6.1m) in dividends.

Financial income amounted to EUR 1.4m (EUR 0.9m) which mainly related to interest income. The bond portfolio net result of EUR 0.3m (EUR 0.0m) included EUR 0.4m (EUR 2.7m) in interest income, exchange rate gains of EUR 0.7m (loss of EUR 1.1m), fair value change in the bond portfolio of EUR -0.8m (EUR -1.4m) and EUR -0.1m (EUR -0.2) in management fees.

Financial expenses amounted to EUR -0.4m (EUR -2.9m) which mainly related to interest expenses.

Other items included EUR -8.0m (EUR -5.1m) in operating expenses (described further below) and EUR -0.8m (EUR 0.9m) in income taxes.

Of the total operating expenses of EUR -8.0m (EUR -5.1m) during the reporting period, EUR -1.3m (EUR -1.5m) related to ordinary operating expenses within the Parent Company. The remaining EUR -6.7m (EUR -3.6m) related to operating expenses, mainly fees, in consolidated funds and subsidiaries.

To calculate the fees related only to the shareholders in East Capital Explorer AB, the non-controlling interest in the consolidated fund should be excluded and fees generated in non-consolidated funds

should be added back. When calculated according to the procedure above, the total fees accrued to the Investment Manager generated by the fund investments and direct investments held by East Capital Explorer amounted to EUR 6.0m (EUR 4.3m) including VAT. Of this EUR 1.4m (EUR -1.0m) was related to performance fees. For more details about fees, please see the latest Annual Report available at our website.

Parent Company

The Parent Company's net profit for the period amounted to EUR 13.0m (EUR 61.8m). This mainly referred to a reversal of write down of shares in Group companies. Operating expenses amounted to EUR -1.3m (EUR -1.5m). No investment activities were carried out in the Parent Company.

Tax

East Capital Explorer's consolidated tax of EUR -0.8m (EUR 0.9m) for the reporting period comprised the net effect of deferred income tax within the Parent Company of EUR 0.0 (EUR 0.5m), actual tax related to subsidiaries of EUR -0.8m (EUR -0.7m) and deferred tax related to subsidiaries of EUR 0.0m (EUR 1.1m).

Dividend

On 25 April 2012 the Annual General Meeting decided to pay out SEK 0.80 (0.80) per share to shareholders for the fiscal year 2011. The dividend was paid out on 4 May 2012 corresponding to an aggregate of EUR 3.0m (EUR 3.1m).

As announced on 23 October, the Board has decided to propose a share redemption program for 2013, 2014 and 2015 to the Company's shareholders. The redemption program, if approved, will replace the Company's dividend policy during the period. Please see the Events after the end of the quarter on page 2 for more details on the Board's proposal.

Business Environment and Market

The global economy has continued its slow and irregular recovery, yet there remain uncertainties relating to imbalances in the Eurozone periphery and increasing concerns in the US as well as China. The global uncertainties can have an adverse effect on the markets in our region due to general risk aversion, and may lead to continued volatility in the financial markets. The assets held by the Group, both listed and unlisted, can thereby be associated with increased risks, which also may impact the possibilities for divestments as well as opportunities for new investments.

For the coming months we anticipate economic growth at levels below long-term potential, yet the average growth in our region is expected to be higher than in the developed markets. While the current markets can experience an increased volatility from time to time, the market changes can also provide significant opportunities for positive profitability growth and development in sound portfolio companies.

Financial position

Cash flow from operating activities during the reporting period was EUR -8.2m (EUR -7.9m).

The Group's cash, cash equivalents and other short-term investments at the end of the period amounted to EUR 52.6m, compared to EUR 54.9m at year-end 2011. The Group's cash, cash equivalents and other short-term investments differ from the portfolio on page 3 since cash and cash equivalents in the consolidated funds attributable to non-controlling interest are included in the Group. Excluding the consolidated funds, cash and cash equivalents amounted to EUR 29.4m, compared to EUR 16.6m at year-end 2011 and interest income from these amounted to EUR 0.3m (EUR 0.2m) during the reporting period.

The reclassification from share and participation to subsidiary of the holdings in East Capital Bering Central Asia has affected the cash flow analysis in the investment activities by EUR 2.2m.

The major cash inflows in the investing activities refer to sales of shares held in TEO LT, the bond portfolio, Populi and shares held by the subsidiaries.

East Capital Explorer had no financial debt on 30 September 2012.

Commitments and draw-downs

East Capital Explorer has committed to invest EUR 10m into the new East Capital Baltic Property Fund II in the first closing of the fund. EUR 8.6m was invested into the Fund during the second quarter.

East Capital Explorer, through its subsidiary Humarito Limited, purchased shares, corresponding to EUR 5.4m, in Melon Fashion Group as a result of a mandatory offer. The net asset value of the total holding amounted to EUR 34.9m on 30 September 2012. The bank guarantee needed to make the mandatory offer amounted to EUR 5.3m at the end of the period. It will expire in December 2012.

Other information

Risks and uncertainty factors

The dominant risk in East Capital Explorer's and the Group's operations is commercial risk in the form of exposure to certain sectors, geographic regions or individual holdings and financial risk in the form of market risk, equity price risk, foreign exchange risk and interest rate risk. A more detailed description of East Capital Explorer's and the Group's material risks and uncertainties is provided in the Company's Annual Report. An assessment for the coming months is provided in the Results section above.

Our consolidated funds, fund investments and direct investments are also exposed to commercial risks, financial risks, and market risks. In addition, through the business activities of their holdings, i.e. their offerings of products and services, within the respective sector, the funds and direct investments are also exposed to legal/regulatory risks and political risks, for example political decisions on healthcare budgets and industry regulations.

Related party transactions

No transactions have occurred during the period other than fee payments according to agreements. East Capital Explorer AB has a related party relationship with its subsidiaries, with other companies in the East Capital Group, as well as with management and employees. The single largest counterparty is the East Capital Group.

The Company and East Capital Explorer Investments AB have a licensing agreement with East Capital Explorer Licensing AB, pursuant to which East Capital Explorer Licensing AB has granted a non-exclusive, royalty-free license to use the trade name and trademark "East Capital Explorer".

East Capital PCV Management AB (the "Investment Manager"), a subsidiary of East Capital Holding AB, implements investments according to the investment policy and provides investment management services pursuant to the Investment Management Agreement.

The Company has an Investment Management Agreement with the Investment Manager and East Capital Explorer Investments AB. During the reporting period 2012 the Group generated fees to a total of tEUR 6,023 (tEUR 4,274).

The Company has a service agreement with East Capital International AB, a service company in East Capital, pursuant to which the Company buys certain administrative and other services. The Company has a subrent premises agreement with East Capital Private Equity AB. During the reporting period, the Group purchased services for EUR 0.2m, all of it through the Parent Company.

The CEO is a Board member of East Capital Explorer Investments AB. The Company's management, Board members and their close relatives, and related companies control 15 % of voting rights in the Company.

Organizational and investment structure

East Capital Explorer is a public limited liability company that indirectly and directly invests in Russia and other countries within the Commonwealth of Independent States (CIS), the Balkans, the Baltic States, Central Asia and Central Eastern Europe. Our indirect investments are made through a selection of East Capital's funds.

The investment activities of the company are governed by an investment policy within an Investment Management Agreement between the Company and the Investment Manager.

In addition to the related party transactions referenced above, East Capital Explorer has made direct investments into companies where East Capital Group also invests through one of its controlled companies or products, which during the period included investments and divestments in TEO LT and investments in East Capital Baltic Property Fund II.

For further information about the organization and investment structure of the Company, please see the corporate governance report for 2011 that has been included in the Annual Report and on our web site www.eastcapitalexplorer.com in the section, 'About East Capital Explorer/Corporate Governance'.

Share buy-back mandate

On 12 April 2011, the Annual General Meeting 2011 issued a new repurchase authorization for the Board to decide on acquiring the company's own shares until the Annual General Meeting 2012.

On 15 September 2011, East Capital Explorer announced that the Company's Board had decided to utilize the repurchase authorization to create more value for the shareholders. The utilization of the authorization was prolonged on 12 October and allowed the Company to repurchase own shares from 15 September 2011 up to and including 30 March 2012. During 1 January to 30 March 2012 60,415 shares were repurchased. Average price per share paid was 54.21. From 15 September 2011 until 30 March 2012, East Capital Explorer repurchased 1,141,969 own shares, corresponding to 3.3% of the shares in the Company. Average price per share paid was SEK 51.69. The shares were cancelled in June 2012.

On 25 April 2012, the Annual General Meeting 2012 issued a new repurchase authorization for the Board to decide on acquiring the company's own shares until the Annual General Meeting 2013. The utilization of the authorization allowed the company to repurchase own shares from 7 August up to and including 10 October 2012. During August and September, East Capital Explorer repurchased 552,742 own shares, corresponding to 1.6% of the shares in the Company. Average price per share paid was SEK 49.75.

The total number of outstanding shares in East Capital Explorer, including the ones held by the Company, amount to 33,709,706. Excluding the shares held by the Company on 30 September 2012, the number of outstanding shares was 33,156,964. Adjusted for buy-backs the average number of shares outstanding for the nine month period January to September was 33,624,647.

As announced on 23 October, the Board has decided to propose a share redemption program for 2013, 2014 and 2015 to the Company's shareholders. If the redemption program is approved, the Board does not intend to use its authorization for repurchase of shares under the current mandate.

Events occuring after the end of the quarter

After the end of the quarter East Capital Explorer AB repurchased 132,369 own shares, corresponding to 0.4% of the shares in the Company. Average price per share paid was SEK 50.77.

On 10 October the repurchase program was ended and since the initial repurchases began on 8 August, the Company repurchased a total of 685,111 shares, corresponding to 2.0% ot the outstanding shares.

Melon Fashion Group repaid the remaining loan and interest during October 2012.

In light of the discount to NAV and the high confidence of both the Board and Management in the Company's NAV, the Board has decided, as announced on 23 October, to propose a share redemption program to the Company's shareholders. The program will, if approved by an EGM on 4 December 2012, mean that the shareholders may redeem 1 out of 20 shares at NAV. The proposal is not intended as a one-off, as the Board has committed to making the same proposal to the 2014 and 2015 AGMs in case the share is trading at a discount to NAV exceeding 10%. The redemption program, if approved, will replace the Company's dividend policy and the Board does not intend to use its authorization for repurchase of shares during this period.

NAV on 31 October 2012

NAV per share on 31 October 2012 amounted to EUR 8.90 (corresponding to SEK 77). The share price on 31 October 2012 was SEK 49.00 (corresponding to EUR 5.70). Cash, cash equivalents and other shortterm investments on 31 October 2012 amounted to EUR 36m (SEK 313). Of those, EUR 35m (SEK 301m) were available for future investments.

Accounting principles

The consolidated interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and applicable provisions in the Swedish Annual Accounts Act. The interim report for the Parent Company has been prepared in accordance with The Swedish Annual Accounts Act Chapter 9, interim report. The accounting principles that have been applied for the Group and Parent Company are in agreement with the accounting principles and the methods of computation used in last year's annual report.

New or revised IFRS principles effective as of 1 January 2012 have not had any material effect on the financial position or results of the Group or Parent Company.

A review of potential impacts of IFRS 10 has begun. It is endorsed by EU for application no later than 2014. A review of IASB's exposure draft of Investment Entities has also begun.

Stockholm, 9 November 2012

Mia Jurke Chief Executive Officer

Contact information

Mia Jurke, CEO, +46 8 505 885 32 Mathias Pedersen, CFO, +46 8 505 977 48 Charlotte Åsberg, Investor Relations Manager, +46 8 505 885 94

East Capital Explorer AB

Kungsgatan 30, Box 2714 SE-103 88 Stockholm, Sweden Tel: +46 8 505 977 00 www.eastcapitalexplorer.com

Financial calendar

Monthly net asset value report on the fifth working day after the end of each month
Year-end Report 2012 on 14 February 2013
Annual Report 2012 available in March 2013
Annual General Meeting in Stockholm on 24 April 2013
Interim Report, 1 January 31 March 2013 on 9 May 2013
Interim Report, 1 January 30 June 2013 on 14 August 2013
Interim Report, 1 January 30 September 2013 on 11 November 2013

Subscribe to monthly NAV updates, financial reports and press releases directly to your e-mail on: www.eastcapitalexplorer.com or by sending an email to [email protected].

The information in this interim report is that which East Capital Explorer AB is required to disclose under Sweden's Securities Market Act. It was released for publication at 07:00 a.m. CET on 9 November 2012.

To the Board of East Capital Explorer AB (publ) Corporate identity number 556693-7404

Introduction

We have reviewed the interim report for East Capital Explorer AB (publ) as of 30 September 2012, and the nine-month reporting period ending on that date. The Board of Directors and the CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Focus and Scope of the Review

We conducted our review in accordance with the Standard on Review Engagements (SÖG) 2410, "Review of Interim Financial Information Performed by the Independent Auditors of the Entity". A review consists of making inquiries, primarily to persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing practices in Sweden. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed on the basis of a review does not give the same level of assurance as a conclusion expressed on the basis of an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not, in all material respects, prepared for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.

Stockholm, 9 November 2012 KPMG AB

Carl Lindgren Authorized Public Accountant

This review report is a translation of the original review report in Swedish.

Statement of Comprehensive Income

EUR thousands	2012	2011	2012	2011
	Jan-Sep	Jan-Sep	Jul-Sep	Jul-Sep
Changes in value	15,976	-128,057	20,284	-90,733
Received dividends	8,963	6,063	1,522	906
Total operating income	24,939	-121,995	21,807	-89,827
Staff expenses	-613	-880	-191	-269
Other operating expenses	-7,431	-4,250	-1,859	518
Operating profit/loss	16,895	-127,125	19,757	-89,578
Financial income	1,420	897	473	848
Financial expense	-359	-2,906	-213	-654
Profit/loss before tax	17,957	-129,134	20,016	-89,384
Income tax	-849	857	331	1,168
NET PROFIT/LOSS FOR THE PERIOD	17,107	-128,277	20,347	-88,215
Other comprehensive income:
Exchange differences on translating foreign operations	-1,142	-2,195	-2,447	11,685
TOTAL COMPREHENSIVE INCOME FOR THE perio D	15,966	-130,472	17,900	-76,531
Net profit/loss for the period distribution:
Shareholders of the Parent Company	13,744	-107,004	15,175	-72,263
Non-controlling interest	3,364	-21,273	5,172	-15,954
	17,107	-128,277	20,347	-88,216
Total comprehensive income distribution:
Shareholders of the Parent Company	13,811	-108,789	13,932	-64,476
Non-controlling interest	2,155	-21,683	3,968	-12,055
	15,966	-130,472	17,900	-76,531
Earnings per share, EUR - shareholders of the Parent Company	0.41	-3.07	0.45	-2.08

No accumulated dilution effects during the period

Statement of Financial Position

EUR thousands	2012	2011	2011
	30 Sep	31 Dec	30 Sep
Assets
Shares and participations in investing activities	303,016	293,585	314,706
Deferred tax assets	-	70	347
Total non-current assets	303,016	293,656	315,053
Other short-term receivables	4,985	100	5
Tax receivables	483	103	52
Accrued income and prepaid expenses	420	125	438
Short-term investments	8,466	22,793	20,079
Cash and cash equivalents	44,183	32,147	40,866
Total current assets	58,538	55,266	61,439
Total assets	361,554	348,923	376,492
Equity
Share capital	3,631	3,628	3,628
Other contributed capital	363,241	369,924	375,212
Translation reserve	4,250	4,183	1,548
Retained earnings	-84,182	43,743	43,743
Profit/loss for the period	13,744	-127,925	-107,004
Equity attributable to shareholders of the Parent Company	300,683	293,552	317,127
Non-controlling interest	53,099	45,627	52,867
Total Equity	353,783	339,179	369,994
Liabilities
Deferred tax liabilities	14	-	-
Total long-term liabilities	14	-	-
Tax liabilities	-	-	-
Other liabilities	3,153	3,609	462
Accrued expenses and deferred income	4,606	6,136	6,036
Total current liabilities	7,758	9,745	6,498
Total equity and liabilities	361,554	348,923	376,492

PLEDGED ASSETS AND CONTINGENT LIABILITIES

Pledged assets	-	-	-
Contingent liabilities	-	-	-

Statement of Changes in Equity

EUR thousands				Retained earnings incl.	Total equity share
2012	Share capital	Other contri buted capital	Translation Reserves	profit /loss for the period	holders in Parent Company	Non-control ling interest	Total equity
Opening equity 1 January 2012	3,628	369,923	4,183	-84,182	293,551	45,627	339,178
Net profit for the period	-	-	-	13,744	13,744	3,364	17,107
Other comprehensive income	-	-	67	-	67	-1,209	-1,142
Total comprehensive income	-	-	67	13,744	13,811	2,155	15,966
Bonus issue	2	-2	-	-	-	-	-
Reclassification from investment to subsidiary1	-	-	-	-	-	16,443	16,443
Paid dividend to shareholders	-	-3,033	-	-	-3,033	-	-3,033
Dividend and redemption to/from non-controlling interest	-	-	-	-	-	-11,126	-11,126
Share buy-back		-3,646			-3,646	-	-3,646
Per 30 September 2012	3,631	363,241	4,250	-70,438	300,683	53,099	353,783

EUR thousands				Retained earnings	Total equity share
	Share	Other contrib	Translation	incl. profit /loss	holders in Parent	Non-control
2011	capital	uted capital	Reserves	for the period	Company	ling interest	Total equity
Opening equity 1 January 2011	3,628	379,149	3,333	43,743	429,853	95,581	525,435
Net profit/loss for the period	-	-	-	-107,004	-107,004	-21,273	-128,277
Other comprehensive income	-	-	-1,785	-	-1,785	-410	-2,195
Total comprehensive income	-	-	-1,785	-107,004	-108,789	-21,683	-130,472
Reclassification from subsidiary to investment1	-	-	-	-	-	-1,812	-1,812
Paid dividend to shareholders	-	-3,131	-	-	-3,131	-	-3,131
Dividend and redemption to/from non-controlling interest	-	-	-	-	-	-19,219	-19,219
Share buy-back	-	-807	-	-	-807	-	-807
Per 30 September 2011	3,628	375,212	1,548	-63,261	317,127	52,867	369,994

1 Holdings in East Capital Bering Central Asia Fund have been reclassified from investment to subsidiary during 2012. Please refer to Financial Position section above for more information. During 2011, the holdings in East Capital Special Opportunities Fund II were reclassified from subsidiary to investment

Statement of Cash Flow

EUR thousands	1 Jan – 30 Sep 2012	1 Jan – 30 Sep 2011

Operating activities
Operating profit/loss	16,895	-127,125
Changes in value	-15,976	130,935
Interest received	305	265
Interest paid	-	-238
Other financial income	550	-132
Tax paid	-1,145	-1,096
Cash flow from current operations before changes in working capital	629	2,609
Cash flow from changes in working capital
Increase (-)/decrease (+) in other current receivables	-4,082	1,694
Increase (+)/decrease (-) in other current payables	-4,733	-12,186
Cash flow from operating activities	-8,186	-7,883
Investing activities
Investment in shares and participations	-45,557	-82,141
Sale of short-term investments	17,111	6,500
Sale of shares and participations	66,223	103,788
Cash flow from investing activities	37,777	28,147
Financing activities
Dividend to and redemption from non-controlling interest	-12,732	-19,219
Paid dividend to shareholders	-3,033	-3,131
Share buy-back	-3,646	-807
Cash flow from financing activities	-19,411	-23,156
Cash flow for the period	10,180	-2,892
Cash and cash equivalents at beginning of the year1	32,147	62,874
Reclassification from subsidiary to investment2	2,219	-17,246
Exchange rate differences in cash and cash equivalents	-363	-1,871
Cash and cash equivalents at end of the period	44,183	40,865

1 Cash equivalents comprise deposits and cash.

Holdings in East Capital Bering Central Asia Fund have been reclassified from investment to subsidiary during 2012. Please refer to Financial Position section above for more information. During 2011, the holdings in East Capital Special Opportunities Fund II was reclassified from subsidiary to investment

Segment Reporting

East Capital Explorer classifies the Company's segments based on the nature of its investments. Segment results and assets include items directly attributable to the segment as well as those that can be allocated on a reasonable basis.

EUR thousands 1 Jan – 30 Sep 2012	Fund Investments	Direct Investments	Short-term Investments	Unallocated	Total consolidated
Changes in value	1,892	13,722	362	-	15,976
Received dividends	6,591	2,372	-	-	8,963
Staff expenses	-	-	-	-613	-613
Other operating expenses	-5,894	-817	-	-721	-7,431
Operating profit/loss	2,588	15,277	362	-1,333	16,894
Financial income	1,102	-	318	-	1,420
Financial expense	-241	-	-	-118	-359
Profit/loss before tax	3,450	15,277	680	-1,451	17,956
Assets	269,974	53,204	37,869	508	361,554

EUR thousands		Direct	Short-term		Total
1 Jan – 30 Sep 2011	Fund Investments	Investments	Investments	Unallocated	consolidated
Changes in value	-121,263	-6,796	-	-	-128,059
Dividends	4,178	1,885	-	-	6,063
Staff expenses	-	-	-	-880	-880
Other operating expenses	-2,931	-718	-	-601	-4,250
Operating profit/loss	-120,015	-5,629	-	-1,482	-127,125
Financial income	897	-	-	-	897
Financial expense	-2,904	-	-2	-	-2,906
Profit/loss before tax	-122,023	-5,629	-2	-1,483	-129,134
Assets	278,332	51,847	45,834	479	376,492

Consolidated Key Figures

Key figures	9m	6m	3m	12m	9m	6m	3m	12m
	2012	2012	2012	2011	2011	2011	2011	2010
Net asset value, EURm	301	290	321	294	317	382	421	430
Change in NAV during the quarter, %	3.7	-9.7	9.4	-7.3	-17.0	-9.2	-2.2	8.0
Equity ratio, %	98.0	96.1	97.2	97.3	98.3	98.0	97.4	96.1
Market capitalisation, SEKm	1,691	1,601	1,879	1,815	1,846	2,562	2,980	2,954
Market capitalisation, EURm	200	183	213	209	201	279	333	329
Outstanding number of shares, m	33.2	33.7	33.7	33.8	34.7	34.9	34.9	34.9
Weighted average number of shares, m	33.6	33.7	33.7	34.6	34.8	34.9	34.9	35.0
Number of employees	4	4	4	4	4	4	4	4

Key figures per share	9m	6m	3m	12m	9m	6m	3m	12m
	2012	2012	2012	2011	2011	2011	2011	2010
Earnings per share, EUR	0.41	-0.04	0.92	-3.69	-3.07	-1.00	-0.05	2.55

NAV, SEK	77	75	84	77	84	101	108	111
NAV, EUR	9.07	8.6	9.52	8.69	9.14	10.97	12.07	12.33
Share price, SEK	51.00	47.50	55.75	53.75	53.00	73.50	85.50	84.75
Share price, EUR	6.04	5.42	6.32	6.03	5.76	8.01	9.55	9.43
SEK/EUR	8.44	8.77	8.83	8.92	9.20	9.18	8.95	8.99

Income Statement – Parent Company

EUR thousands	2012 Jan-Sep	2011 Jan-Sep	2012 Jul-Sep	2011 Jul-Sep
Staff expenses	-613	-880	-191	-269
Other operating expenses	-721	-601	-181	-138
Operating profit/loss	-1,333	-1,482	-372	-408
Financial income1	14,438	0	13,445	-44
Financial expense	-118	-60,801	-113	-60,801
Profit/loss before tax	12,986	-62,283	12,960	-61,253
Income tax	-9	450	0	120
NET PROFIT/LOSS FOR THE period	12,977	-61,833	12,960	-61,133

1 Financial income in Parent Company mainly referrs to a reversal of write down of shares in Group Companies of EUR 13.0m

Statement of Comprehensive Income – Parent Company

EUR thousands	2012 Jan-Sep	2011 Jan-Sep	2012 Jul-Sep	2011 Jul-Sep
NET PROFIT/LOSS FOR THE PERIOD	12,977	-61,833	12,960	-61,133
Other comprehensive income	-	-	-	-
TOTAL COMPREHENSIVE INCOME FOR THE period	12,977	-61,833	12,960	-61,133

Balance Sheet – Parent Company

EUR thousands	30 Sep	31 Dec	30 Sep
	2012	2011	2011

Participations in group companies	268,606	262,156	309,775
Deferred tax	393	402	450
Total non-current assets	269,000	262,558	310,225
Receivables from group companies	-	-	2,566
Loan to group companies	29,315	29,315	-
Accrued income and prepaid expenses	25	236	29
Cash and cash equivalents	1,914	1,916	4,751
Total current assets	31,254	31,466	7,347
Total assets	300,254	294,024	317,571
Share capital	3,631	3,628	3,628
Share premium reserve	363,241	369,923	375,212
Profit/loss brought forward	-80,096	146	146
Net profit/loss for the period	12,977	-80,242	-61,833
Total equity	299,752	293,455	317,153
Other liabilities	73	167	94
Accrued expenses and prepaid income	429	402	325
Total current liabilities	502	569	419
Total equity and liabilities	300,255	294,024	317,571

PLEDGED ASSETS AND CONTINGENT LIABILITIES

Pledged assets - - - Contingent liabilities - - -

This is East Capital Explorer

Our Business Concept and Objective

East Capital Explorer (ECEX) is a Swedish company listed on NASDAQ OMX Stockholm Stock Exchange, created with the specific aim of bringing unique investment opportunities in Eastern Europe to a broader investor base.

Our business concept is to offer our shareholders a liquid investment exposure to a unique portfolio of less liquid or unlisted companies in otherwise hard-to-reach parts of Eastern European markets. The Company primarily invests in East Capital's special fund products, normally only available to larger investors as they require high minimum investments. These funds have a less restrictive investment mandate compared to UCITS-funds which means higher flexibility in the choice of investments and allocations. East Capital Explorer also makes direct investments into private and public companies.

Through our unique connection to East Capital, as Investment Manager for the Company's investments, we benefit from their local presence, extensive network and long experience in the region. It is East Capital's investment expertise that creates the primary value for our shareholders. The objective of this business concept is to achieve long-term capital appreciation. As investments in emerging markets often entail significant risks, they should be made with a long term perspective.

Our Strategy

Our strategy is to capture the growth by investing in sectors and companies having the most to gain from the long-term development trends of the countries in our investment universe* which include, but are not limited to, EU convergence and catch-up process. Strong domestic demand is a key driver for growth in Eastern Europe and this is one of our key investment themes. In addition to the retail and consumer goods sector, East Capital Explorer targets other fast growing sectors such as Financials, Real Estate and Power Utilities, providing interesting opportunities. The Company is primarily focusing on smalland medium-sized companies with high growth potential.

The investment portfolio is actively managed to optimize the long term value for our shareholders. All investments are considered very carefully from a risk and return perspective and the company is managing risk through a diversified portfolio. Long term capital allows investments over the full performance cycle.

* East Capital Explorer invests in Russia and the CIS countries, the Balkans, the Baltic States, Central Asia and Central Europe

Why the Financial sector?

Banking is a play on overall economic growth
Lower penetration of banking services than developed markets (i.e. deposits/GDP, loans/GDP)
Consolidation may lead to merger and acquisition activity

Why the Retail and Consumer Goods sector?

Strong consumer demand driven by a growing middle class
Strong purchasing power due to low expenses, increasing wages and flat taxes
Increasing access to consumer credits

East Capital Explorer offers access to

• An economically dynamic region: including 30 countries and almost 450 million inhabitants. EU convergence and strong domestic demand are key drivers for growth. Eastern Europe is expected to grow more than three times faster than Western Europe over the next five years, with a third of the debt levels

• Attractive sectors: East Capital Explorer concentrates on those sectors assessed to provide the best long-term growth prospects

• A well-diversified portfolio: East Capital Explorer primarily provides exposure to small and medium-sized companies, which are not easily accessible in Eastern Europe. This is primarily done through East Capital's special fund products. At the end of 2011, our portfolio included exposure to approximately 400 companies

• An experienced Investment Manager: The investment activities of East Capital Explorer are managed by East Capital, which has almost a 15-year track-record, and is one of the largest investors in the region with local presence and an extensive network in these countries

Why the Power Utilities sector?

Deregulation as a consequence of huge investment needs
Changes in pricing expected
Positive benefits from strong economic growth and demand remain

Why the Real Estate sector?

Low correlation with equity markets
Inflation protected through CPI indexation in rental contracts
Benefit from economic growth, political stability and improved opportunities for financing

Definitions

Average number of shares

Weighted average number of outstanding shares during the period.

Earnings per share

Net profit attributable to the holders of the Parent Company divided by the average number of shares.

EBITDA

Earnings before interest, tax, depreciation and amortization.

Equity ratio

Total equity as a percentage of total assets.

IRR

Internal Rate of Return, i.e. the discount rate at which the net present value of costs (negative cash flows) of an investment equals the net present value of the benefits (positive cash flows) of the same investment.

Net Asset Value (NAV)

The value of a given company's net assets, i.e. total assets less net liabilities. An indicative NAV is calculated on a monthly basis and is published five working days after the end of the month.

Net asset value per share

Net asset value per share divided by the number of outstanding shares on the balance sheet date.

Outstanding number of shares

Registered number of shares less any share held by the company.

Registered number of shares

The number of shares in the company including shares held by the company.

Return on equity

Profit/loss for the year as a percentage of average shareholders' Equity.

Total comprehensive income

Change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with the owners in their capacity as owners.

Volatility

A measure of the variability in the price of an asset. Volatility is usually measured as a standard deviation in the return of an asset during a certain given period of time.

East Capital Explorer AB Interim Report 1 January – 30 September 2012

Kungsgatan 30, Box 7214 SE-103 88 Stockholm, Sweden Tel: +46 8 505 97 700 Coroporate identity no: 556693-7404 www.eastcapitalexplorer.com

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Eastnine — Interim / Quarterly Report 2012

3037_rns_2012-11-09_9fa522f9-73fa-4327-8f3f-78447776d2b8.pdf

Interim Report 1 January – 30 September 2012