Portfolio Update

BLACKROCK GREATER EUROPE INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at31 December 2017 and unaudited.

Performance at month end with net income reinvested
 

	One Month	Three Months	One Year	Three Years	Launch (20 Sep 04)
Net asset value (undiluted)	1.8%	1.5%	19.7%	57.1%	344.6%
Net asset value* (diluted)	1.9%	1.5%	19.7%	57.1%	345.0%
Share price	0.1%	4.1%	23.0%	57.5%	336.7%
FTSE World Europe ex UK	0.5%	0.4%	17.5%	48.2%	244.5%

* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
 

At month end

Net asset value (capital only):	346.20p
Net asset value (including income):	347.06p
Net asset value (capital only)1:	346.20p
Net asset value (including income)1:	347.06p
Share price:	338.00p
Discount to NAV (including income):	2.6%
Discount to NAV (including income)1:	2.1%
Net cash:	0.1%
Net yield2:	1.6%
Total assets (including income):	£308.2m
Ordinary shares in issue3:	88,801,863
Ongoing charges4:	1.10%

1  Diluted for treasury shares.
2  Based on a final dividend of 3.70p per share and an interim dividend of 1.75p per share for the year ended 31 August 2017.
3  Excluding 21,527,075 shares held in treasury.
4  Calculated as a percentage of average net assets and using expenses, excluding interest costs, after relief for taxation, for the year ended 31 August 2017.

Sector Analysis	Total  Assets  (%)		Country Analysis	Total  Assets  (%)
Industrials	30.5		France	17.1
Health Care	18.2		Switzerland	15.9
Consumer Goods	15.6		Netherlands	13.2
Consumer Services	13.2		Denmark	12.8
Technology	8.0		Germany	12.6
Financials	8.0		Sweden	7.6
Oil & Gas	4.1		Belgium	6.0
Basic Materials	2.3		Russia	4.1
Net current assets	0.1		Spain	3.5
	-----		Finland	3.4
	100.0		Israel	1.7
	=====		Greece	1.5
			Ukraine	0.5
			Net current assets	0.1
				-----
				100.0
				=====

Ten Largest Equity Investments
Company	Country	% of Total Assets
SAP	Germany	4.7
Unilever	Netherlands	4.6
Fresenius Medical Care	Germany	4.4
Lonza Group	Switzerland	4.1
RELX	Netherlands	4.0
Novo Nordisk	Denmark	3.9
Compagnie Financière Richemont	Switzerland	3.7
Danske Bank	Denmark	3.7
Industria De Diseno Textil Inditex	Spain	3.5
DSV	Denmark	3.4

Commenting on the markets, Stefan Gries, representing the Investment Manager noted:

During the month, the Company’s NAV rose by 1.8% and the share price rose by 0.1%. For reference, the FTSE World Europe ex UK Index returned 0.5% during the period.

The Eurozone economy continued its upward trajectory with industrial production, employment and the flash purchasing managers’ indexes (PMI) all coming in strong. The European Central Bank (ECB) left interest rates and its Quantitative Easing programme unchanged. The Bank confirmed that between January and September 2018 it will halve its monthly bond purchases to €30bn and will reinvest the proceeds of any bonds that mature.

Looking at the political landscape, in Catalonia regional elections saw separatist parties gain 48% of the vote and claim 70 seats out of 135 - just ahead of the 68-seat threshold required to form a government. However, as the three pro-independence parties did not join forces during the campaign and would now have to agree on a common leadership and political agenda, forming a government could be difficult. In Italy, President Sergio Mattarella dissolved parliament on 28 December and announced a general election to be held on 4 March.

The Company outperformed the market over the month. Stock selection was a strong driver of returns, whilst sector allocation was neutral.

On a sector basis, the lower allocations to both the basic materials and financials sectors, compared with the reference index, detracted from performance. With regards to the former, the sector benefited from a firming of commodity prices into the year-end. Positively, the lower allocation to the utilities sector aided returns, as it suffered losses through the month following strong performance in November.

A position in Israeli pharmaceutical company, Teva, proved the top performing stock over the month as the share price saw some relief following a period of underperformance. Elsewhere in health care, a position in Fresenius Medical Care also aided returns. The company has seen good progress in its value-based care cost saving programme, with an increasing number of patients enrolled. The share price was supported by the announcement of a buyback programme, as well as by proposals for US tax reform, with over 70% of its revenues coming from the US.

The Company also saw positive performance from a holding in Thales, which made an acquisition in December to support its digital business. There is an expectation for the deal to close in H2 2018 and deliver substantial revenue and cost synergies as Thales combines their Big Data and AI operations with the new Gemalto unit.

A holding in Adidas detracted from returns. We had reduced the size of the position in November as we felt the stock would face some headwinds into the year-end, including the exceptionally promotional environment and a move of investor focus on to FY18 guidance which we felt would be conservative. We believe the investment case looks robust in the longer term and the group can continue a strong growth trajectory.

Outlook

The Euro area recovery appears broad and sustainable. The pillars of demand are in place to allow a continuation of growth above the recent historic average. The economy looks at little risk of over-heating in the near term, as slack continues to exist. Despite falling unemployment and increasing consumer confidence driving higher demand, Euro area core inflation remains sluggish and continues to undershoot the ECB’s target levels. Monetary policy is therefore likely to remain accommodative and any withdrawal of liquidity will be slow and done with caution. The robustness of the economy, and relatively quiet political environment, is allowing for growth in earnings and corporate investment.

The caution borne by corporates in the Euro area in the wake of both the financial crisis and Euro crisis has left them in a healthy financial situation. Alongside continued favourable financing conditions, this is providing opportunities for re-leveraging and M&A activity, which could further support earnings in the region. The expected easing of the currency headwind facing many European corporates going into the first half of 2018 is also supportive in this regard. Whilst the market overall is trading around its historical average range, we believe a selective approach can help identify attractively valued investment opportunities in a market where strategic decision making and corporate investment is creating increasing disparity between winners and losers.

11 January 2018

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.