Portfolio Update

BLACKROCK GREATER EUROPE INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at31 May 2018 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)	3.8%	4.1%	10.4%	42.9%	361.7%
Net asset value* (diluted)	3.8%	4.1%	10.4%	44.4%	362.1%
Share price	2.7%	2.7%	6.1%	39.2%	336.4%
FTSE World Europe ex UK	-0.9%	-0.3%	0.9%	32.0%	238.5%

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

At month end

Net asset value (capital only):	355.22p
Net asset value (including income):	358.60p
Net asset value (capital only)1:	355.22p
Net asset value (including income)1:	358.60p
Share price:	336.00p
Discount to NAV (including income):	6.3%
Discount to NAV (including income)1:	6.3%
Net gearing:	4.3%
Net yield2:	1.6%
Total assets (including income):	£318.4m
Ordinary shares in issue3:	88,776,863
Ongoing charges4:	1.10%

1  Diluted for treasury shares.
2  Based on a final dividend of 3.70p per share for the year ended 31 August 2017 and an interim dividend of 1.75p per share for the year ending 31 August 2018.
3  Excluding 21,552,075 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	33.4		Switzerland	17.7
Health Care	18.5		France	16.3
Financials	12.8		Germany	12.4
Consumer Goods	11.2		Denmark	11.1
Consumer Services	9.2		Netherlands	10.5
Technology	8.7		Sweden	7.2
Basic Materials	3.6		Spain	5.1
Telecommunications	1.9		Israel	4.1
Oil & Gas	1.8		Russia	4.0
Net current liabilities	(1.1)		Belgium	3.8
	-----		Finland	3.0
	100.0		Ireland	2.0
	=====		Greece	1.4
			Poland	1.3
			Italy	1.2
			Net current liabilities	(1.1)
				-----
				100.0
				=====

Ten Largest Equity Investments
Company	Country	% of Total Assets
Lonza Group	Switzerland	4.6
Safran	France	4.4
Sika	Switzerland	4.1
Unilever	Netherlands	3.7
Fresenius Medical Care	Germany	3.7
Novo Nordisk	Denmark	3.5
Compagnie Financière Richemont	Switzerland	3.2
SAP	Germany	3.1
Hexagon	Sweden	3.1
Wartsila	Finland	3.0

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

During the month, the Company’s NAV rose by 3.8% and the share price rose by 2.7%. For reference, the FTSE World Europe ex UK Index returned -0.9% during the period.

Throughout the month, political events in the periphery dominated the headlines. In Italy, markets were panicked at the prospect of a new round of elections causing bond yields to increase and spreads to widen. Concerns dissipated when the new coalition government was finally sworn in on 1 June, but uncertainty remains regarding new prime minister, Mr Conte’s radical policy programme. Meanwhile, in Spain, after corruption convictions involving ex-party officials of the ruling People’s Party, Mr Rajoy was ousted and replaced by Mr Sanchez of the Socialist Worker’s Party.

Elsewhere, the oil price continued its ascent, following the combination of the collapse of production in Venezuela and the US threatening to reintroduce sanctions against Iran. Within these constraints, the most negative outcome across sectors was for the banking sector which was a drag on European equities performance.

The Company outperformed the market in May. Sector allocation and stock selection both aided the Company’s returns. On a sector basis we saw positive returns to the lower allocation to financials, and in particular banks. The higher weighting to the industrial and technology sectors was also additive. Less positively, the lower allocation to the basic materials sector was a drag on returns as commodity prices firmed.

Lonza, a chemical and biotechnology company, proved the top performer over the month. The shares responded strongly in response to management commentary at their Annual General Meeting. Management suggested that guidance given for the full year should be seen as a minimum, giving the impression it will likely be upgraded as we progress through the year. The core parts of their business continue to execute strongly.

Aerospace company Safran contributed positively to returns during the month after also being the top performing holding in April. Management announced strong results and upgraded guidance in April, supporting the shares.

A holding in Sika was also positive for returns as the shares saw a relief rally on the resolution of a longstanding ownership case with Saint-Gobain and the Burkard family.

Luxury goods company, Kering, aided Company returns as company management displayed a very confident front at a recent luxury conference. Management were positive on short-term trends and Chinese consumption and noted they would give new medium-term targets at the forthcoming capital markets day in June.

The primary detractors to performance were holdings in the banking sector. In particular, a holding in Greek bank Alpha Bank, dragged on returns.

At the end of the period the Company had a higher allocation than the reference index towards industrials, technology, consumer services and health care. A lower allocation was held in financials, consumer goods, utilities, telecommunications, basic materials and oil & gas.

Outlook

Political uncertainty is once again on the rise in Europe. However, we remain encouraged by data we see from companies which supports a continued trend of growth. One of the primary impacts of the political uncertainty is likely to be realised as an outcome for the rates cycle. We have long commented on the structural pressures which keep a lid on inflation and thus rates, but believe this greater uncertainty may lead to a further delay to European Central Bank tightening. Core inflation continues to remain at bay. An unwind in Euro strength has been broadly beneficial for European companies given the international nature of revenues and should continue to support earnings growth into the third quarter. Valuation has become incrementally more attractive in the region, in both an absolute and relative sense, but is extended in certain areas. At this stage in the cycle, where companies may consider re-leveraging and repositioning, we seek to understand the vision, execution ability and approach to capital discipline for the companies we invest in. We believe careful stock picking in what may continue to be a more volatile environment can benefit our clients.

13 June 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.