BLACKROCK GREATER EUROPE INVESTMENT TRUST PLC - Portfolio Update

BLACKROCK GREATER EUROPE INVESTMENT TRUST plc

All information is at 29 FEBRUARY 2016 and unaudited.

Performance at month end with net income reinvested

One

Three

One

Three

Launch

Month

Months

Year

Years

(20 Sep 04)

Net asset value* (undiluted)

-1.2%

-1.8%

1.5%

16.7%

212.6%

Net asset value* (diluted)

-1.1%

-1.5%

1.5%

16.3%

211.7%

Share price

0.9%

1.0%

6.4%

18.4%

209.6%

FTSE World Europe ex UK

-0.2%

-3.2%

-5.2%

15.1%

136.7%

Sources: BlackRock and Datastream

At month end

Net asset value (capital only):

251.81p

Net asset value (including income):

252.67p

Net asset value (capital only)*:

251.04p

Net asset value (including income)*:

251.72p

Share price:

248.50p

Discount to NAV (including income):

1.7%

Discount to NAV (including income)*:

1.3%

Subscription share price:

6.00p

Net cash:

3.0%

Net yield**:

2.0%

Total assets (including income):

£260.5m

Ordinary shares in issue***:

103,086,916

Subscription shares:

20,530,998

Ongoing charges****:

0.89%

* Diluted for subscription shares and treasury shares. ** Based on a final dividend of 3.35p per share and an interim dividend of 1.65p per share for the year ended 31 August 2015. *** Excluding 6,725,825 shares held in treasury. **** Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs, after relief for taxation for the year ended 31 August 2015.

Sector Analysis

Total Assets

Country Analysis

Total Assets

(%)

(%)

Financials

27.4

France

17.6

Industrials

18.6

Switzerland

15.5

Health Care

17.0

Germany

10.8

Consumer Goods

12.9

Denmark

8.8

Consumer Services

8.7

Netherlands

8.8

Technology

8.2

Ireland

8.3

Telecommunications

4.2

Italy

7.3

Net current assets

3.0

Sweden

5.2

-----

Finland

4.7

100.0

Belgium

2.7

=====

Turkey

2.4

Russia

1.7

Poland

1.7

Spain

1.5

Net current assets

3.0

-----

100.0

=====

Ten Largest Equity Investments

% of

Company

Country

Total Assets

Novo Nordisk

Denmark

5.0

Novartis

Switzerland

4.4

Ryanair

Ireland

3.0

Adidas

Germany

2.9

Heineken

Netherlands

2.8

Vinci

France

2.8

RELX

Netherlands

2.8

Deutsche Telekom

Germany

2.7

Unibail-Rodamco

France

2.7

Sampo Oyj

Finland

2.5

Commenting on the markets, Vincent Devlin, representing the Investment Manager noted:

During the month, the Company’s NAV fell 1.2% and the share price rose 0.9%. For reference, the FTSE World Europe ex UK Index was down 0.2% during the period.

European equity markets fell 0.2% in February (GBP terms, FTSE World Europe ex UK), continuing the market sell-off and taking the year-to-date return to -3.6%. Returns in Sterling terms have been muted given the depreciation of Sterling versus the Euro since the beginning of the year. Markets proved exceptionally volatile, with significant dispersions between sectors and countries within the region: while banks fell 5% in the month, basic resources companies gained by more than 17%. Following January’s growth concerns, initially emanating from China, markets became increasingly worried about the potential for a global recession and, closer to home, the possibility of another Eurozone banking crisis. This led to a significant market fall in the first two weeks of February (by more than 10% in the month). Political risk also influenced markets, with the prospect of a ‘Brexit’ causing Sterling to weaken further. Consensus data suggests that European company earnings expectations for 2016 were downgraded by around 1% overall during the month. We witnessed a more positive outcome towards the end of February as the oil price stabilised, credit data from China improved and investors looked towards the prospect of further central bank easing in March.

Both stock selection and sector allocation proved negative in a volatile market environment. At the sector level, the underweight allocation to basic materials and oil & gas proved the largest detractors, as the sectors felt some relief over the month. The underweight allocation to utilities, however, aided returns.

Some of the greatest detractors to performance fell within the financials sector, which was one of the largest fallers over the month as fears of Eurozone banking stability rose. Italian asset manager Anima and Bank of Ireland were the worst affected holdings in this respect. The latter also underperformed given political uncertainty in Ireland leading up to elections. Despite the volatility in the European financial sector, Russian markets proved more resilient, with a holding in Sberbank of Russia contributing positively to performance.

A holding in Nokia also detracted after the stock fell sharply; the market proved disappointed with the Samsung arbitration royalty rate awarded, which was viewed as a sign that rights holders will struggle to extract more royalty revenue from smartphone makers as global demand for handsets slows.

Ryanair was the largest positive contributor to returns, performing strongly post results. Full year guidance was reiterated, supported by better volumes and costs, whilst fare declines are set to accelerate during the remainder of the year. The group announced a EUR800m share buyback which was taken positively by the market.

At the end of the period, the Company had higher weightings when compared with the reference index to financials, technology, consumer services, industrials and health care. The Company had lower exposure to consumer goods, basic materials, oil & gas, utilities and telecoms.

Outlook

Given the complexity of issues in the market, there is a high degree of uncertainty at present, which is expressed through the highly volatile conditions. Equity markets act as a weighing machine and the recent volatility demonstrates the ever-changing risk premia for stocks as the environment develops. This type of environment can create opportunities but one must act with caution as we do not as yet have visibility on many of the key issues.

Economically, the market is increasingly worried about the growing risks of recession, a fear that is largely centred on the US and China, and which we see as overly pessimistic. As far as Europe is concerned, we have not seen a significant shift in data year-to-date and Europe remains relatively robust, with pockets of strength in consumer-related segments of the economy in particular. Supportive European Central Bank policy remains, leading to positive money supply growth in the economy. However, Europe is not immune to global growth concerns and a freezing of credit and liquidity can override any short term strength. Within this context, we retain a keen eye on valuation; quality is not cheap in European equities and we will maintain our discipline. We are sticking to companies that offer higher earnings visibility and attractive stock-specific drivers and looking to avoid value traps in highly cyclical businesses at a time of uncertainty.

14 March 2016

ENDS

Latest information is available by typing www.brgeplc.co.uk on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal).  Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.

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