Portfolio Update

BLACKROCK GREATER EUROPE INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)

All information is at 31 January 2017 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)

0.7%

0.6%

18.3%

30.3%

274.3%

Net asset value* (diluted)

0.7%

0.6%

18.9%

31.3%

274.7%

Share price

2.0%

0.6%

18.1%

25.1%

262.2%

FTSE World Europe ex UK

0.7%

1.7%

24.4%

31.0%

195.1%

Sources: BlackRock and Datastream

At month end

Net asset value (capital only):

296.04p

Net asset value (including income):

296.88p

Net asset value (capital only)1:

296.04p

Net asset value (including income)1:

296.88p

Share price:

285.00p

Discount to NAV (including income):

4.0%

Discount to NAV (including income)1:

4.0%

Net cash:

1.5%

Net yield2:

1.9%

Total assets (including income):

£282.9m

Ordinary shares in issue3:

95,295,953

Ongoing charges4:

1.07%

1  Diluted for treasury shares. 2  Based on a final dividend of 3.65p and an interim dividend of 1.65p per share for the year ended 31 August 2016. 3  Excluding 15,032,985 shares held in treasury. 4  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 2016.

Sector Analysis

Total Assets

Country Analysis

Total Assets

(%)

(%)

Industrials

25.8

France

22.4

Financials

20.4

Denmark

13.5

Consumer Goods

20.1

Netherlands

12.2

Technology

9.7

Switzerland

7.7

Consumer Services

7.6

Belgium

7.6

Health Care

6.7

Germany

6.9

Basic Materials

5.7

Ireland

5.9

Telecommunications

2.5

Sweden

5.3

Net current assets

1.5

Finland

4.4

-----

Russia

3.2

100.0

Luxembourg

2.4

=====

Turkey

2.0

Italy

1.7

Ukraine

1.7

Poland

1.6

Net current assets

1.5

-----

100.0

=====

Ten Largest Equity Investments

% of

Company

Country

Total Assets

AXA

France

3.9

Bayer

Germany

3.2

RELX

Netherlands

3.2

ASML

Netherlands

3.1

Anheuser-Busch Inbev

Belgium

3.1

Pandora

Denmark

3.1

Schneider Electric

France

2.9

KBC Groep

Belgium

2.8

Vinci

France

2.7

Pernod Ricard

France

2.6

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

During the month, the Company’s NAV rose by 0.7% and the share price increased by 2.0%. For reference, the FTSE World Europe ex UK Index was up 0.7% during the period.

After a strong finish to 2016, European ex UK equity returns were more muted in January. However, the market appeared to return to fundamentals, supported by continued positive momentum in earnings revisions in Europe. There was also a positive start to the year in terms of economic data which came in strongly, increasing market optimism about global growth.

Once again, the market watched politics closely: following his inauguration, President Trump withdrew from the Trans-Pacific Partnership (TPP), emphasized his views on trade protectionism and proposed new tax and immigration policies. Closer to home, Prime Minister May announced her plan to instigate a ‘hard’ Brexit which will result in the UK leaving the European single market. During the month, energy lagged the market as the oil price declined following its rise in December. Despite his more recent narrative, ‘Trump trades’ also continued to see strength on the improved global outlook.

Sector allocation was positive over the month, driven primarily by the lower allocation to the oil & gas sector and the higher allocation to industrials. The oil & gas sector pulled back slightly after strong performance towards the end of the year as oil prices reached their peak for 2016. As financials continued to outperform the market, the lower allocation, particularly to banks, detracted from performance.

Stock selection over the period was marginally negative. Within the financials space, positions in insurers AXA and Swiss Re both detracted from relative performance. AXA’s share price reacted negatively to speculation it may make a bid for Italian insurer Generali. Speculation arose after Generali disclosed 3% ownership of Intesa, which would prevent Intesa making a bid under Italian ownership laws. Clearly this is highly speculative and while a deal might be a good strategic fit, it would be very political in nature and a change in direction for the French insurer who have recently said they do not plan to do any deals. We continue to hold AXA which offers a 5% dividend yield and high positive sensitivity to a rising rate environment.

Elsewhere in the financials sector, positions in Swedish investment platform Avanza Bank and Bank of Ireland both performed well as they continued to re-rate with the sector. Emerging Europe holdings within financials were also resilient, with insurer PZU and Turkiye Halk Bank outperforming the market.

Wartsila proved the top performer over the period, announcing a number of contract wins and reporting strong earnings during the month, highlighting improving sales and margins.

In the consumer space, a holding in Steinhoff underperformed as one of their underlying businesses, Mattress Firm, cut off their contract with Tempur Sealy in the US for failing to improve their terms. This was seen as an aggressive move, however it proved more impactful upon Tempur’s share price than Steinhoff’s.

Positive stock selection in consumer goods was realised through a holding in Rémy Cointreau which reported strong revenue growth, growing organic sales 22% year-on-year. The company highlighted a positive inflection of sales trends in China after multiple years of decline, further aiding sentiment on the stock.

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

Outlook

After a difficult year in 2016 we think that conditions for Europe are much brighter for 2017. The outlook for the global economy on balance is improving, with leading indicators suggesting more positive signals across regions. Recent upside surprises in European growth and inflation confirm that the economic outlook is picking up in the region. We believe European equities should benefit in such a reflation scenario, absent any other shocks.

European earnings have historically been more sensitive to global economy pick-ups, given European firms’ large revenue exposure to global and emerging markets. The European market is now seeing a more supportive earnings revision trend, and margins are now beginning to improve on the back of a better macro backdrop, cost discipline, improvement in pricing power and weaker currencies. The asset class has been heavily sold down in the last 12 months and is currently out of favour. This can present a good entry point ahead of a potential turning point in sentiment as the economy and earnings recover.

There are risks still on the horizon we need to be mindful of, most notably on the political front given the lack of clarity on policies in the US, whilst French and German elections will be the key focal points in Europe, with a fear of populist rise and anti-EU rhetoric potentially bringing some volatility along the way. We think that we should come through those events with no major change in political direction, which could bring further support to the markets once this is established.

14 February 2017

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.