Portfolio Update

BLACKROCK GREATER EUROPE INVESTMENT TRUST plc

All information is at 31 December 2015 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)

1.9%

7.9%

14.5%

38.4%

224.1%

Net asset value* (diluted)

1.5%

6.9%

13.5%

37.2%

221.5%

Share price

5.3%

11.2%

16.4%

42.4%

222.7%

FTSE World Europe ex UK

0.2%

6.1%

5.3%

32.1%

144.9%

Sources: BlackRock and Datastream

At month end

Net asset value (capital only):

262.06p

Net asset value (including income):

261.99p

Net asset value (capital only)*:

259.68p

Net asset value (including income)*:

259.63p

Share price:

259.00p

Discount to NAV (including income):

1.1%

Discount to NAV (including income)*:

0.2%

Subscription share price:

11.50p

Net gearing:

3.4%

Net yield**:

1.9%

Total assets (including income):

£276.0m

Ordinary shares in issue***:

103,075,838

Subscription shares:

20,542,076

Ongoing charges****:

0.89%

* Diluted for subscription shares and treasury shares. ** Based on a final dividend of 3.35p 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

29.6

France

17.6

Industrials

18.7

Switzerland

15.7

Health Care

16.7

Germany

13.7

Consumer Goods

12.1

Italy

8.2

Technology

8.1

Netherlands

8.1

Consumer Services

6.8

Denmark

8.1

Telecommunications

4.0

Sweden

7.9

Basic Materials

3.6

Ireland

7.5

Oil & Gas

1.6

Finland

4.8

Net current liabilities

(1.2)

Belgium

2.8

-----

Turkey

2.2

100.0

Spain

1.6

=====

Russia

1.5

Poland

1.5

Net current liabilities

(1.2)

-----

100.0

=====

Ten Largest Equity Investments

% of

Company

Country

Total Assets

Novo Nordisk

Denmark

5.1

Novartis

Switzerland

4.8

Bayer

Germany

3.6

AXA

France

2.9

Ryanair

Ireland

2.8

Heineken

Netherlands

2.7

Deutsche Telekom

Germany

2.6

Sampo Oyj

Finland

2.5

RELX

Netherlands

2.5

Capgemini

France

2.5

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

During the month, the Company’s NAV rose 1.9% and the share price increased by 5.3%.  For reference, the FTSE World Europe ex UK Index was up 0.2% during the period.

Europe ex UK equity markets were flat in December (GBP terms), bringing returns for 2015 to 5.1%.  The weak Euro slightly muted the strength of returns in the market in Sterling terms.  As with much of the quarter, focus in December was on global central bank actions.  After some mixed macro data and lower inflation, the European Central Bank (ECB) announced the second phase of quantitative easing at the start of December, with the US Federal Reserve raising interest rates for the first time in nearly 10 years in mid-December.  Market expectations of the scale of the ECB action were not quite met - while the extension of the timeframe was welcomed, the lack of increase in the monthly programme size disappointed.  While the short term market reaction was negative, Draghi has effectively reinforced the longer term commitment to underwrite nominal economic growth in the Eurozone and this remains a positive environment for European corporate earnings to grow.

Stock selection drove the Company’s performance when compared with the reference index during December, whilst the contribution from sector allocation was also marginally additive.  The gains incurred on a sector basis were primarily driven by the Company’s lower weight to basic materials.  The sector continues to feel pressure from slower global growth, particularly from China, and falling commodity prices.  Likewise, the Company’s lower exposure to oil & gas provided a positive contribution to returns.  The Company’s greater exposure to industrials, when compared with the reference index, hampered performance on a relative sector basis; however, this was far outweighed by strong stock specific returns in this industry.

The Company’s largest contributor over the month was Irish airline Ryanair which reported a continued strength in traffic.  Within this, the load factors, which indicate the amount of a flight's capacity filled, have increased year-on-year.  Reported total passengers continues to far exceed that of its peers.  The Company also benefited from a holding in Novo Nordisk.  Q3 results provided comfort to investors, as did the guidance given for 2016.

Within industrials, Dassault Aviation also performed strongly.  The stock bounced back from oversold levels following upgrades.  The news of the receipt of Qatar’s down payment for the 24 Rafale aircraft ordered was also well received by the market.

The largest detractor over the month was Electrolux.  During the month, a potentially accretive deal to buy GE's Appliance business fell through.  The resulting break fee of US$175m and reduced M&A potential weighed heavily on the share price.  Despite a strong competitive position, Sberbank also underperformed as the Ruble and Russian equities sold-off in response to a lower oil price.

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

Despite the uncertain macroeconomic outlook in 2016 across different regions, we remain constructive on European equities which have a more supportive environment in the face of diverging monetary policy cycles between the US and Europe.  The incremental support from the ECB through expansion of the current QE programme will, in our view, have a further positive impact on European GDP growth and the credit cycle.  However, one question mark remains over earnings growth in 2016 which we forecast to be mid-to-high single digit level, still impacted by both energy and materials sectors, and weak capital expenditure trends, but benefiting from the Euro weakness.  In our view, a weak Euro, subdued wage growth, expanding domestic credit and some additional profit margin normalisation should all support corporate earnings in 2016 in Continental Europe, whilst the UK is likely to face more headwinds on this front.  The main risk to this scenario comes from a bigger than expected slowdown in the US and China.  The tightening of US interest rates provides a headwind to USD global liquidity and the implications of this need to be closely monitored.  In this context, individual stock selection remains critical.

13 January 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.