Annual Financial Report

THE EUROPEAN INVESTMENT TRUST PLC

Annual Financial Report for the year ended 30 September 2017

The full Annual Report and Financial Statements can be accessed via the Company's website at www.theeuropeaninvestmenttrust.com or by contacting the Company Secretary by telephone on 0131 270 3800.

HIGHLIGHTS

Net asset value total return for the year of 29.9%, compared with FTSE All-World Europe ex UK Index total return of 22.6%.

Share price discount to net asset value per share narrowed from 13.4% to 12.3%. Share price total return of 32.2%.

Proposed final dividend of 13.5p, a total for the year of 23.0p, a 4.5% increase on the prior year.

Low ongoing charges figure of 0.59%.

FINANCIAL SUMMARY

Results for year	30 September 2017	30 September 2016	Change

Shareholdersâ€™ funds	Â£440.2m	Â£350.7m	25.5%
Net asset value per ordinary share (â€œNAVâ€)	1047.9p	833.8p	25.7%
Share price per ordinary share	919.5p	722.5p	27.3%
Share price discount to NAV	12.3%	13.4%

	Year to 30 September 2017	Year to 30 September 2016

Revenue return per ordinary share*	25.8p	19.0p
Capital return per ordinary share*	219.7p	88.6p
Total return per ordinary share*	245.5p	107.6p
Interim dividend per ordinary share	8.0p	-
Special interim dividend per ordinary share	1.5p	-
Final dividend per ordinary share**	13.5p	16.0p
Special final dividend per ordinary share	-	6.0p
Total dividend per ordinary share	23.0p	22.0p

* Based on the weighted average number of shares in issue during the year.

** Proposed final dividend for the year.

Yearâ€™s high/low	Year to 30 September 2017	Year to 30 September 2016

NAV â€“ high	1061.8p	848.3p
â€“ low	833.9p	645.9p
Share price â€“ high	940.0p	741.0p
â€“ low	705.0p	594.5p
Share price discount to NAV
â€“ low	8.3%	3.2%
â€“ high	17.8%	18.1%

Performance	Year to 30 September 2017	Year to 30 September 2016

NAV Total Return*	29.9%	14.9%
FTSE All-World Europe ex UK Index Total Return*	22.6%	21.8%

* In sterling.

The NAV Total Returns are sourced from Edinburgh Partners Limited (â€œEdinburgh Partnersâ€ or the â€œInvestment Managerâ€) and include dividends reinvested. The index performance figures are sourced from Thomson Reuters Datastream. Past performance is not a guide to future performance.

Cost of running the Company	Year to 30 September 2017	Year to 30 September 2016

Ongoing charges*	0.59%	0.62%

* Based on total expenses, excluding finance costs and certain non-recurring items for the year and average monthly net asset value.

CHAIRMANâ€™S STATEMENT

"This is my first year-end statement as Chairman of your Company. I have taken the opportunity, in conjunction with my Board colleagues, to refresh the layout of the Annual Report. I hope the new format is helpful to shareholders."

PERFORMANCE
I am pleased to report that the Companyâ€™s portfolio performed strongly in the year to 30 September 2017. The NAV total return was 29.9%, compared to a total return of 22.6% for the FTSE All-World Europe ex UK Index, adjusted to sterling. The share price total return over the year was 32.2%, boosted by the reduction in the discount to NAV from 13.4% to 12.3%. Longer-term returns are more important than any one yearâ€™s performance and the Companyâ€™s Ten Year Record can be reviewed in the full Annual Report and Financial Statements.

Our Investment Manager, Edinburgh Partners, adopts a consistent, long-term approach to investing which is focused on company valuations. This high conviction approach is evidenced by a concentrated portfolio, low turnover and high active share. At the year end, there were 37 holdings and turnover for the year was 22%. Active share was 79% and has been consistently around this level. Active share, as defined in the Glossary in the full Annual Report and Financial Statements, measures the extent of the portfolioâ€™s divergence from the benchmark index. The higher the active share, the lower the overlap and the less the portfolio resembles the index. The Investment Managerâ€™s Report contains detailed commentary on the portfolio and the performance for the year.

REVENUE AND DIVIDEND
Revenue per share for the year was 25.8p, an increase of 35.8% over the prior year. The main reasons for the rise were the receipt of historic overseas withholding tax reclaims and the strength of the euro relative to sterling over the period. Our revenue is predominantly earned and paid in euros.

Previously, the Company has only paid an annual dividend. Following a review by the Directors, it was decided that it would be beneficial for shareholders to receive a dividend twice a year, an interim dividend in July and, as previously, a final dividend in January. As a consequence, in July 2017, a dividend of 9.5p was paid, which consisted of an interim dividend of 8.0p per share and a special dividend of 1.5p per share.

The Board is now recommending a final dividend of 13.5p per share to give a full year dividend of 23.0p per share, which is a 4.5% increase on the total dividends for the previous year of 22.0p per share. Over the past year, we have received some exceptional income relating to historic overseas withholding tax reclaims and distributed additional special dividends to reflect these receipts. Excluding the special interim dividend of 1.5p paid in July 2017, the total dividend for the year to 30 September 2017 will be 21.5p per share.

Historically, the Company has had a policy of charging all expenses to revenue. In recent years, many investment trusts have adopted a policy of charging a proportion of expenses to capital, to more accurately reflect the expected future returns as split between capital and income. Your Board has reviewed our approach and believes that, for the year ending 30 September 2018 and future years, we should charge two-thirds of management fees and finance costs to capital. This change will mean that certain expenses are charged in proportion to how returns are expected to be generated over time, and should lead to an increase in the revenue available for distribution by way of dividend.

OBJECTIVE AND INVESTMENT POLICY
The Company was set up in 1972 and your Board believes that its objective needs updating to reflect developments in the markets in which the Company invests. The proposed updated objective is â€œto achieve attractive investment returns over the long-term from a diversified portfolio of European securitiesâ€. The investment policy has also been updated, principally to reflect the belief that the diverse markets of the region promise attractive long-term growth and that investment returns come from a mixture of capital growth and dividends. The proposed new objective and investment policy are set out in full below. These changes will not affect the way in which the Company is managed but require your approval and are included as resolution 10 in the Notice of Annual General Meeting (â€œAGMâ€).

BORROWINGS
The Company has a â‚¬30m bank overdraft facility with The Northern Trust Company. At the year end, the facility was not utilised, although it had been during the year. Under normal circumstances, your Board believes that the portfolio should have a modest level of gearing and the facility provides the Investment Manager with flexibility to take advantage of opportunities when valuations are attractive. The Investment Manager employs a disciplined, valuation-driven strategy which is well-suited to help determine an appropriate level of gearing within strategic parameters set by the Board.

COSTS
The ongoing charges figure for the year was 0.59%, which compares favourably with other actively-managed investment funds and particularly well against other European focused investment trusts.

DISCOUNT AND SHARE BUY BACKS
During the year, the share price discount to NAV widened and at one stage reached 17.8%. We do not have a formal discount target but we monitor the discount closely. We are prepared to buy back shares opportunistically, taking into account the level of the discount and the valuation of the portfolio. During the year, we purchased 46,781 shares at an average price of 750p and at a total cost of Â£353,000. The discount at the end of the year was 12.3%, a reduction from 13.4% at the start of the year.

THE BOARD
I was appointed as Chairman in January 2017, following the retirement of Douglas McDougall. The Company has enjoyed the benefit of Douglasâ€™s experience and wisdom over many years and he deserves our thanks.

ANNUAL GENERAL MEETING
The AGM will be held at 11.00am on Thursday, 11 January 2018 at Brewersâ€™ Hall, Aldermanbury Square, London EC2V 7HR. I look forward to meeting shareholders who are able to attend.

You will find enclosed with the Annual Report a letter asking if you would prefer to receive future annual and half-yearly reports and other communications from the Company in electronic form rather than in printed form. Further details regarding this are set out in the full Annual Report. I encourage all shareholders to consider the proposal.

OUTLOOK
There is surprisingly little correlation between economic conditions and stock market returns. Over any worthwhile timeframe, earnings, cash flows and starting valuations are far more significant predictors of company share prices. Commentary, by contrast, tends to highlight economic and political events with a mostly limited and transitory impact on a portfolio of investments. There is no shortage of such news and commentary has been correspondingly extensive. I do not propose to add to it here.

Our Investment Manager aims to take a long-term view of the companies it selects and is focused on their absolute valuations, with a keen eye for risk and reward. Success, over time, may be judged according to the wisdom of this philosophy and the skill, discipline and consistency with which it is translated to our portfolio. Your Board believes that The European Investment Trust is an attractive vehicle for investors seeking investment returns from European equities, and that our Investment Manager is well placed to deliver these returns.

Michael MacPhee
Chairman

29 November 2017

INVESTMENT MANAGERâ€™S REPORT

OUR INVESTMENT APPROACH
At Edinburgh Partners, we believe that time horizon is the key market imperfection and that investors spend too much time focusing on short-term quarterly and annual data. Detailed empirical research on markets undertaken by our investment team supports the common sense contention that the value of a business depends upon its long-term ability to generate profits. This strongly indicates that company analysis should be concentrated on a longer term, five-year horizon.

As a result, our investment approach is to forecast individual company earnings five years into the future. We aim to identify and buy undervalued companies and have the patience to hold them until share prices reflect their long-term earnings potential. Instead of being pushed off course by short-term reactions, fear of being different from the crowd or a particular index, our judgments are based purely on long-term analysis of prospective risk and reward. This approach is, by definition, contrarian, but for the patient investor, we believe it is the most reliable way to achieve superior returns over the long term.

PERFORMANCE
The year under review delivered strong investment returns, with a NAV total return of 29.9%. Whilst pleased with this outcome, we have to acknowledge that returns in the previous period were disappointing and the recent improvement in relative performance should be seen in that context.

Within our overall framework of risk management we focus on individual stocks. Therefore, I would like to analyse the performance for the year in terms of significant contributors and detractors, at a sector and individual stock level.

Significant contributions to absolute performance - year to 30 September 2017

Sectors	Contribution

Banks	+8.9%
Industrials	+7.1%
Oil & Gas	+2.4%

Retail	-0.6%
Technology	-0.6%

Stocks	Contribution

BNP Paribas	+2.0%
Commerzbank	+2.0%
Ubisoft Entertainment	+1.8%
Leoni	+1.7%
Stora Enso	+1.5%

DIA	-0.2%
Ahold Delhaize	-0.4%
Gemalto	-0.6%

The largest contribution from an individual sector came from our banking stocks and I comment on BNP Paribas and Commerzbank below. Much has been written about the issues faced by the banks since the financial crisis and the ongoing challenges from regulation and competition in the digital age. However, we believe that banks in general have now rebuilt their capital, adjusted their cost base and, to different degrees, embraced the challenges and opportunities of digital distribution. That said, banks' main revenue source is net interest income, which comes under pressure when interest rates are very low. The rise in bond yields, signalling a retreat from the fears of deflation and a path towards the end of monetary easing, has been a catalyst for the recovery in the share prices of many banks.

The contribution from industrials was spread across a number of stocks, including Leoni, which is covered specifically below. Notable contributions came from mining equipment supplier Outotec, airplane manufacturer Airbus and staffing specialist Adecco. To varying degrees these stocks are cyclical and have benefitted from the improving economic sentiment.

Our oil and gas holdings also contributed positively to performance. News flow from the energy sector has been dominated by the fall in the price of oil, the impact of shale gas and the shift to renewables. Our view is that demand continues to rise, particularly in the developing world, and that at around $50 a barrel, the market is now broadly in balance, subject to geopolitical events and supply discipline. After several years of cost-cutting, both operating costs and capital expenditure, many energy companies are now earning margins and returns which allow them to maintain their dividends and reinvest in their businesses.

The only sectors which recorded negative contributions were retail and technology. This was largely due to Ahold Delhaize and Gemalto respectively, which I cover below in my analysis of significant stock contributions.

BNP Paribas is based in France but operates in numerous other markets, including Belgium, Luxembourg and Italy. A fundraising in 2015 strengthened its capital position following an adverse US litigation settlement and it has benefited from the ongoing economic recovery across the Eurozone.

Commerzbank is one of the largest banks in Germany. The large number of local savings banks with subsidised funding in the German market suppresses returns compared to other developed markets. However, Commerzbank has initiated a cost-cutting programme and there are signs that the savings banks are starting to close branches, allowing Commerzbank to gain market share. The outlook for Commerzbankâ€™s profitability is improving, aided by the firming of German bond yields. The shares have performed well yet still trade at a substantial discount to book value.

Ubisoft Entertainment is a computer games developer. When we first invested in the company in early 2016, we believed that the shift from physical to online distribution of games would result in significant margin improvement over time. With each reporting cycle, the potential scale of the profit uplift has become more evident and the shares have reacted accordingly.

Leoni is the leading European provider of wiring harnesses for the automobile sector. The company is recovering from difficulties with new projects and margins are recovering from a depressed level. The long-term demand for electronics within cars is rising and will be boosted by the growth of electric and hybrid vehicles, which require more complex systems. Autonomous vehicles could represent an even bigger opportunity in the future. The valuation is still reasonable for a business which has a positive structural tailwind.

Ahold Delhaize is a leading food retailer which, following the takeover of Delhaize, has high market shares in Benelux and the east coast of the US. This transaction creates significant cost-cutting opportunities which should support margins over the next three years. The takeover of organic specialist Whole Foods Market by Amazon led to significant falls in the valuations of US food retailers. While Ahold Delhaize is certainly not immune to price competition, the company has the operational skills and market positions to continue to deliver robust earnings and cash flow.

Gemalto is a leading financial technology company focused on transaction processing software and data encryption. Its software is embedded in bank cards, credit cards and SIM cards to authenticate user identity and network access. It also provides government and corporate clients with products for security passes, passports etc. While the company appears to be well positioned for trends in data encryption and network security, the demand for SIM cards is declining and the demand for bank cards is volatile. There has been some bid speculation surrounding the company and, while we have concerns about certain parts of the business, we consider that the valuation is still reasonable despite the recent lowering of our profit forecasts.

TRANSACTIONS
During the year, we replaced seven holdings. The stocks we sold were Swedbank, Unipol, Prysmian, SKF, Stora Enso and Piaggio, which were mainly driven by valuation and, in the case of Unipol, the Italian financial services company, by the risks relating to its banking subsidiary. Delta Lloyd was the subject of a takeover. The purchases were ING, BB Biotech, Gemalto, Ahold Delhaize, Nordea Bank, Deutsche Post and Ontex. There are two stocks in particular I would like to highlight.

ING is one of the largest banks in the Netherlands, which has a concentrated banking system. It is at the forefront of internet banking, demonstrated by its expansion into Germany where it has no branches. ING is a well-run business with solid capital ratios operating in an economy which is improving.

Deutsche Post still delivers the mail in Germany but is also now a diversified logistics business. It owns DHL, the leading European express delivery operator, and has leading businesses in freight forwarding and supply chain management. The combination of post and parcel delivery networks means the business benefits from structural growth in ecommerce.

PORTFOLIO
Over the course of the year, the most significant change in the composition of the portfolio has been the increase in our bank holdings to 20.9% of net assets. This increase of 5.6% reflects the addition of Nordea Bank and price appreciation in the existing holdings. There was a decrease in our industrial holdings of 4.8% and, at the year end, they represented 18.2% of net assets. This decrease reflects the sale of specific stocks such as Prysmian and SKF, a fall in the value of PostNL and some trimming of position sizes. The portfolio maintains a pro-cyclical bias, reflecting our views on the likelihood of continued economic growth and our bank holdings represent our largest cyclical exposure. At the year end, the Company had a cash balance of 2.0%, whereas at the start of the year, borrowings represented 3.0% of net assets. After a period of strong stock market performance, valuations are reasonably full and we believe we should now take a more measured investment approach.

OUTLOOK
European economies remain on a recovery path which should support continuing growth in corporate earnings. Since the financial crisis, monetary stimulus has supported a rise in valuations across a range of asset classes including equities. When this stimulus is withdrawn, the cost of money should rise and we are likely to see bouts of volatility and an increased focus on absolute valuations. We will continue to seek out stocks where the valuation is attractive in terms of risk and reward.

Craig Armour
Edinburgh Partners

29 November 2017

PORTFOLIO OF INVESTMENTS
as at 30 September 2017

Rank 2017	Rank 2016	Company	Sector	Country	Valuation Â£â€™000	% of Net Assets 2017	% of Net Assets 2016

1	1	PostNL	Industrials	Netherlands	16,490	3.7	5.1
2	5	BNP Paribas	Financials	France	16,118	3.7	3.6
3	7	Bayer	Basic Materials	Germany	15,188	3.5	3.3
4	8	Novartis	Health Care	Switzerland	14,937	3.4	3.3
5	9	Sanofi	Health Care	France	14,577	3.3	3.3
6	17	BBVA	Financials	Spain	14,211	3.2	2.7
7	33	Commerzbank	Financials	Germany	13,837	3.1	2.0
8	2	Royal Dutch Shell*	Oil & Gas	Netherlands	13,658	3.1	3.9
9	22	Airbus	Industrials	France	13,507	3.1	2.5
10	10	ENI	Oil & Gas	Italy	13,274	3.0	3.3
11	27	Telefonica	Telecommunications	Spain	13,192	3.0	2.4
12	-	Nordea Bank	Financials	Sweden	13,055	3.0	-
13	4	Total	Oil & Gas	France	13,007	3.0	3.6
14	13	Nokia	Technology	Finland	12,862	2.9	3.2
15	3	Roche**	Health Care	Switzerland	12,793	2.9	3.7
16	-	BB Biotech	Health Care	Switzerland	12,769	2.9	-
17	16	DNB	Financials	Norway	12,565	2.9	2.8
18	-	ING	Financials	Netherlands	12,514	2.8	-
19	14	Leoni	Industrials	Germany	12,049	2.7	3.1
20	24	Telecom Italia	Telecommunications	Italy	10,808	2.5	2.5
21	12	Ubisoft Entertainment	Consumer Goods	France	10,767	2.4	3.2
22	18	Michelin	Consumer Goods	France	10,712	2.4	2.7
23	26	E.ON	Utilities	Germany	10,671	2.4	2.4
24	21	Rocket Internet	Financials	Germany	10,475	2.4	2.6
25	20	Ryanair	Consumer Services	Ireland	10,451	2.4	2.7
26	11	DIA	Consumer Services	Spain	10,392	2.4	3.3
27	31	TDC	Telecommunications	Denmark	10,363	2.3	2.1
28	-	Deutsche Post	Industrials	Germany	10,259	2.3	-
29	37	Petroleum Geo-Services	Oil & Gas	Norway	10,124	2.3	1.6
30	15	Adecco	Industrials	Switzerland	10,004	2.3	2.8
31	30	Outotec	Industrials	Finland	9,933	2.3	2.1
32	32	Danske Bank	Financials	Denmark	9,895	2.2	2.1
33	23	Ipsos	Consumer Services	France	9,532	2.2	2.5
34	-	Ahold Delhaize	Consumer Services	Netherlands	8,989	2.0	-
35	25	Siemens	Industrials	Germany	7,746	1.8	2.5
36	-	Gemalto	Technology	Netherlands	6,638	1.5	-
37	-	Ontex	Consumer Goods	Belgium	3,175	0.7	-

Prior year investments sold during the year							16.1

Total equity investments					431,537	98.0	103.0
Cash and other net current assets/(liabilities)					8,663	2.0	(0.1)
Borrowings					-	-	(2.9)

Net assets					440,200	100.0	100.0

* The investment is in A Shares.
** The investment is in non-voting preference shares.

Of the ten largest portfolio investments as at 30 September 2017, the valuations at the previous year end, 30 September 2016, were: PostNL Â£17,971,000; BNP Paribas Â£12,739,000; Bayer Â£11,577,000; Novartis Â£11,526,000; Sanofi Â£11,525,000; BBVA Â£9,608,000; Commerzbank Â£7,110,000; Royal Dutch Shell A Â£13,629,000; Airbus Â£8,881,000 and ENI Â£11,485,000.

DISTRIBUTION OF INVESTMENTS
as at 30 September 2017 (% of net assets)

Sector distribution

Sector	%
Financials	23.3
Industrials	18.2
Health Care	12.5
Oil & Gas	11.4
Consumer Services	9.0
Telecommunications	7.8
Consumer Goods	5.5
Technology	4.4
Basic Materials	3.5
Utilities	2.4
Cash and other net assets	2.0
	100

Geographical distribution

Country	%
France	20.1
Germany	18.2
Netherlands	13.1
Switzerland	11.5
Spain	8.6
Italy	5.5
Finland	5.2
Norway	5.2
Denmark	4.5
Sweden	3.0
Ireland	2.4
Belgium	0.7
Cash and other net assets	2.0
	100

As at 30 September 2017, the net assets of the Company were Â£440,200,000.

DIRECTORS

All of the Directors are non-executive and independent of the AIFM and the Investment Manager.

Michael MacPhee (Chairman)
William Eason
Michael Moule (Senior Independent Director)
Dr Michael Woodward (Chairman of Audit Committee)

INVESTMENT MANAGER

Edinburgh Partners
Craig Armour LLB, CA

STRATEGIC OVERVIEW

STRATEGY AND BUSINESS MODEL
The current objective and investment policy of the Company is detailed below:

Objective
The objective of the Company is to achieve long-term capital growth through a diversified portfolio of Continental European securities.

Investment policy
The Board believes that investment in the diverse and increasingly accessible markets of this region provides opportunities for capital growth over the long term. At the same time, it considers the structure of the Company as a UK-listed investment trust, with fixed capital and an independent Board of Directors, to be well suited to investors seeking longer-term returns.

The Board recognises that investment in some European countries can be riskier than in others. Investment risks are diversified through holding a wide range of securities in different countries and industrial sectors. No more than 10% of the value of the portfolio in aggregate may be held in securities in those countries which are not included in the FTSE All-World European indices.

The Board has the authority to hedge the Companyâ€™s exposure to movements in the rate of exchange of currencies, principally the euro, in which the Companyâ€™s investments are denominated, against sterling, its reporting currency. However, it is not generally the Boardâ€™s practice to do this and the portfolio is not currently hedged.

No investments in unquoted stocks can be made without the prior approval of the Board. The level of gearing within the portfolio is agreed by the Board and should not exceed 20% in normal market conditions.

No more than 10% of the total assets of the Company may be invested in other listed investment companies (including investment trusts) except in such other investment companies which themselves have stated that they will invest no more than 15% of their total assets in other listed investment companies, in which case the limit is 15%.

Changes to the objective and investment policy
As detailed in the Chairmanâ€™s Statement above, the Board is proposing to change the Companyâ€™s objective and investment policy. If resolution 10 is approved at the AGM, the objective and investment policy will be as follows:

Objective
The objective of the Company is to achieve attractive investment returns over the long term from a diversified portfolio of European securities.

Investment policy
The Board believes that investment in the diverse markets of the region promises attractive long-term capital and income growth. It further considers that the structure of the Company as a UK listed investment trust, with an independent Board of Directors, is well suited to meeting this aim.

The Company is invested in a diversified portfolio which is expected to consist of approximately 30 to 50 securities. The Company may not invest more than 10% of the value of the portfolio in any one individual stock at the time of investment.

No more than 10% of the total assets of the Company may be invested in other listed investment companies (including investment trusts) except in those that have stated that they will invest no more than 15% of their total assets in other listed investment companies. In this case, the limit is 15%.

The Investment Managerâ€™s compliance with the limits set out in the investment policy is monitored by the Board and the AIFM.

Investment strategy
Investments are selected for the portfolio only after extensive research, which the Investment Manager believes to be key. The whole process through which an equity must pass in order to be included in the portfolio is very rigorous. Only a security where the Investment Manager believes that the price will be significantly higher in the future will pass the selection process. The Companyâ€™s Investment Manager believes the key to successful stock selection is to identify the long-term value of a companyâ€™s shares and to have the patience to hold the shares until that value is appreciated by other investors. Identifying long-term value involves detailed analysis of a companyâ€™s earnings prospects over a five-year time horizon. The portfolio will normally consist of around 40 investments.

Business and status of the Company
The principal activity of the Company is to carry on business as an investment trust.

The Company is registered as a public limited company and is an investment company within the terms of Section 833 of the Companies Act 2006 (the â€œActâ€). The Company has been approved by HM Revenue & Customs as an investment trust under Sections 1158 and 1159 of the Corporation Tax Act 2010 (â€œCTAâ€), subject to there being no subsequent serious breaches of the regulations. In the opinion of the Directors, the Company has directed its affairs so as to enable it to continue to qualify for such approval.

The Companyâ€™s shares have a premium listing on the Official List of the UK Listing Authority and are traded on the main market of the London Stock Exchange.

During the year, the Company also had a secondary listing and its shares traded on the New Zealand Stock Exchange. There was a small and decreasing number of shareholders on the New Zealand register and a reduced number of trades being undertaken on the New Zealand Stock Exchange. Therefore, the Board determined that the costs associated with the Companyâ€™s shares remaining listed on the New Zealand Stock Exchange outweighed the benefits to the Companyâ€™s shareholders. As a result, on 18 September 2017, the Company announced its intention to cancel the listing of the Companyâ€™s ordinary shares on NZX Limitedâ€™s Main Board. The last day of trading of the Companyâ€™s shares on the NZX Main Board was 31 October 2017 and the shares ceased to be listed at the close of business on 2 November 2017 (New Zealand time). Following cancellation, the New Zealand listed shares were transferred to the Company's UK share register.

The Company is a member of the Association of Investment Companies (â€œAICâ€), a trade body which promotes investment companies and also develops best practice for its members.

Portfolio analysis
A detailed review of how the Companyâ€™s assets have been invested is contained in the Investment Managerâ€™s Report above. A detailed list of all the Companyâ€™s investments is contained in the Portfolio of Investments above. The portfolio consisted of 37 investments, excluding cash and other net current liabilities, as at 30 September 2017. The largest investment represents 3.7% of net assets, thus ensuring that the Company has a suitable spread of investment risk. A sector and geographical distribution of investments is shown above.

RESULTS AND DIVIDENDS
The results for the year are set out in the Income Statement and the Statement of Changes in Equity below.

For the year ended 30 September 2017, the net revenue return attributable to shareholders was Â£10.9 million (2016: Â£8.0 million) and the net capital return was Â£92.3 million (2016: Â£37.3 million). Total shareholdersâ€™ funds increased by 25.5% to Â£440.2 million (2016: Â£350.7 million).

Details of the interim dividends paid and the final dividend recommended by the Board are set out below.

KEY PERFORMANCE INDICATORS
At each Board meeting, the Directors consider a number of performance measures to assess the Companyâ€™s success in achieving its objective. The key performance indicators used to measure progress and performance of the Company over time are established industry measures and are as follows:

Net asset value
In the year to 30 September 2017, the NAV increased by 25.7% from 833.8p to 1047.9p. After taking account of dividends paid in the year of 31.5p, the net asset value total return was 29.9%. This compares with the total return of 22.6% from the FTSE All-World Europe ex UK Index, adjusted to sterling.

The net asset value total return since the appointment of Edinburgh Partners as Investment Manager on 1 February 2010 to 30 September 2017 was 106.1%. This compares with the total return of 104.2% from the FTSE All-World Europe ex UK Index, adjusted to sterling.

Share price
In the year to 30 September 2017, the Companyâ€™s share price increased by 27.3% from 722.5p to 919.5p. The share price total return, taking account of the 31.5p of dividends paid in the year, was 32.2%.

Share price discount to NAV
The share price discount to NAV narrowed from 13.4% to 12.3% in the year to 30 September 2017.

Revenue return per ordinary share
There was an increase in the revenue per share in the year to 30 September 2017 of 35.8% from 19.0p to 25.8p.

Dividends per ordinary share
The Directors are recommending a final dividend of 13.5p per ordinary share. After including the interim dividend of 8.0p per ordinary share and a special interim dividend of 1.5p per ordinary share, this makes a total dividend of 23.0p per ordinary share for the year. This compares with the prior year total dividend of 22.0p per ordinary share. Excluding the special dividend, the total ordinary dividend for the year to 30 September 2017 is 21.5p. This compares with the prior year ordinary dividend of 16.0p per ordinary share.

Ongoing charges
The Company continues to have low expenses. The ongoing charges figure was 0.59% (2016: 0.62%) in the year to 30 September 2017.

The longer-term records of the key performance indicators are shown in the Ten Year Record in the full Annual Report and Financial Statements.

The Board also takes into consideration how the Company performs compared to other investment trusts investing in Europe.

MANAGEMENT AGREEMENT
In order to comply with the Alternative Investment Fund Managersâ€™ Directive (â€œAIFMDâ€), the Company appointed Edinburgh Partners AIFM Limited as its AIFM with effect from 17 July 2014. Edinburgh Partners AIFM Limited has been approved as an AIFM by the UKâ€™s Financial Conduct Authority (â€œFCAâ€). With the approval of the Directors of the Company, the AIFM appointed Edinburgh Partners as Investment Manager to the Company pursuant to a delegation agreement with effect from 17 July 2014.

The AIFM receives a management fee of 0.55% per annum of the Companyâ€™s equity market capitalisation, payable monthly in arrears.

The Management Agreement may be terminated by either party giving three monthsâ€™ written notice. No additional compensation is payable to the AIFM on the termination of this agreement other than the fees payable during the notice period. No performance fee will be paid. Further details relating to the agreement are detailed in note 3 of the Financial Statements below.

CONTINUING APPOINTMENT OF THE AIFM
The Board keeps the performance of the AIFM under review on a regular basis. As the AIFM has delegated the investment management function to Edinburgh Partners, the performance of the Investment Manager is also regularly reviewed. It is the opinion of the Directors that the continuing appointment of the AIFM on the terms agreed is in the interests of shareholders as a whole. The remuneration of the AIFM is reasonable both in absolute terms and compared to that of managers of comparable investment companies. The Directors believe that by paying the management fee calculated on a market capitalisation basis, rather than a percentage of assets basis, the interests of the AIFM are more closely aligned with those of shareholders.

AIFM REMUNERATION DISCLOSURES
In accordance with the AIFMD, information in relation to the remuneration of the Companyâ€™s AIFM, Edinburgh Partners AIFM Limited, is required to be made available to investors. The AIFMâ€™s remuneration policy is incorporated within a group policy which is available atwww.edinburghpartners.com. The disclosure also includes those remuneration disclosures in respect of the AIFMâ€™s staff and â€˜identified staffâ€™ for the reporting period.

RISK MANAGEMENT BY THE AIFM
As required under the AIFMD, the AIFM has established and maintains a permanent and independent risk management function to ensure that there is a comprehensive and effective risk management policy in place and to monitor compliance with risk limits. This risk policy covers the risks associated with the management of the investment portfolio, and the AIFM reviews and approves the adequacy and effectiveness of the policy on at least an annual basis, including the risk management processes and controls and limits for each risk area.

The AIFM sets risk limits that take into account the risk profile of the Companyâ€™s investment portfolio, as well as its objective and strategy. The AIFM monitors the risk limits, including leverage, and periodically assesses the portfolioâ€™s sensitivity to key risks on a regular basis.

PRINCIPAL RISKS AND UNCERTAINTIES
The Board considers that the following are the principal financial risks associated with investing in the Company: investment and strategy risk, discount volatility risk, market risk (comprising interest rate risk, currency risk and price risk), liquidity risk, credit risk and gearing risk. An explanation of these risks and how they are managed and the policy and practice with regard to financial instruments are contained in note 17 of the Financial Statements below.

In addition, the Board also considers the following as principal risks:

Regulatory risk
Relevant legislation and regulations which apply to the Company include the Act, the CTA, the Listing Rules and the Disclosure Guidance and Transparency Rules of the FCA, the AIFMD and the Markets in Financial Instruments Directive II. In accordance with the Packaged Retail and Insurance-based Investment Products Regulation, a Key Information Document will be made available on the Companyâ€™s website from January 2018.

A breach of the CTA could result in the Company losing its status as an investment trust and becoming subject to capital gains tax, whilst a breach of the Listing Rules of the FCA might result in censure by the FCA and suspension of the listing of the Companyâ€™s shares on the London Stock Exchange.

The Directors note the new corporate offence of failure to prevent tax evasion and believe all necessary steps have been taken to prevent facilitation of tax evasion.

At each Board meeting, the status of the Company is considered and discussed, so as to ensure that all regulations are being adhered to by the Company and its service providers.

The Board is not aware of any breaches of laws or regulations during the year under review and up to the date of this report.

Operational risk
In common with most other investment companies, the Company has no employees. The Company therefore relies upon the services provided by third parties. There are a number of operational risks associated with the fact that third parties undertake the Companyâ€™s administration, depositary and custody functions. The main risk is that the third parties may fail to ensure that statutory requirements, such as compliance with the Act and the Listing Rules of the FCA, are met.

The Board regularly receives and reviews management information from third parties which the Company Secretary compiles. In addition, each of the third parties provides a copy of its report on internal controls (ISAE 3402, SSAE 16 or equivalent) to the Board, through the Audit Committee, each year to evidence that adequate controls are in place and are operating satisfactorily.

Other financial risk
It is possible that inappropriate accounting policies or failure to comply with current or new accounting standards may lead to a breach of regulations.

The AIFM employs an independent administrator to prepare all financial statements and the Audit Committee meets with the independent Auditor at least once a year to discuss audit issues, including appropriate accounting policies.

The Board undertakes a robust annual assessment and review of all the risks stated above and in note 17 of the Financial Statements below, together with a review of any new risks which may have arisen during the year, including those that would threaten its business model, future performance, solvency or liquidity. These risks are formalised within the Companyâ€™s risk assessment matrix.

INTERNAL FINANCIAL CONTROL
In accordance with guidance issued to directors of listed companies, the Directors confirm that they have carried out a review of the effectiveness of the systems of internal financial control during the year ended 30 September 2017, as set out in the full Annual Report and Financial Statements. There were no matters arising from this review that required further investigation and no significant failings or weaknesses were identified.

LEVERAGE
Leverage is defined in the AIFMD as any method by which the Company increases its exposure, whether through borrowing of cash or securities, or leverage embedded in derivative positions or by any other means. As detailed in notes 5 and 6 of the Financial Statements below, during the year ended 30 September 2017, the Company utilised a borrowing facility. The Company did not use any derivative instruments during the year ended 30 September 2017.

In accordance with the detailed requirements of the AIFMD, leverage has been measured in terms of the Companyâ€™s exposure, and is expressed as a ratio of net asset value. The AIFMD requires this ratio to be calculated in accordance with both the Gross Method and the Commitment Method. Details of these methods of calculation can be found by referring to the AIFMD. In summary, these methods express leverage as a ratio of the exposure of debt, non-sterling currency, equity or currency hedging and derivatives exposure against the net asset value. The principal difference between the two methods is that the Commitment Method enables derivative instruments to be netted off to reflect hedging arrangements and the exposure is effectively reduced, while the Gross Method aggregates the exposure.

The AIFMD introduced a requirement for the AIFM to set maximum levels of leverage for the Company. The Companyâ€™s AIFM has set a maximum limit of 1.20 for both the Gross and Commitment Methods of calculating leverage. However, the AIFM anticipates that the figures are likely to be lower than this under normal market conditions. At 30 September 2017, the Companyâ€™s Gross ratio was 1.01 and its Commitment ratio was 1.01. In accordance with the AIFMD, any changes to the maximum level of leverage set by the Company will be communicated to shareholders.

DEPOSITARY AGREEMENT
The Board has appointed Northern Trust Global Services Limited to act as its depositary (the â€œDepositaryâ€). The Depositary is authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority. Custody services are provided by The Northern Trust Company (as a delegate of the Depositary). A fee of 0.01% per annum of the net assets of the Company, plus fees in relation to safekeeping and other activities undertaken to facilitate the investment activity of the Company, are payable to the Depositary. The Company and the Depositary may terminate the Depositary Agreement at any time by giving six monthsâ€™ written notice. The Depositary may only be removed from office when a new depositary is appointed by the Company.

MAIN TRENDS AND FUTURE DEVELOPMENT
A review of the main features of the year and the outlook for the coming year can be found in the Chairmanâ€™s Statement and the Investment Managerâ€™s Report above. The Boardâ€™s main focus is on the investment return and approach, with attention paid to the integrity and success of the investment approach and on factors which may have an impact on this approach.

FORWARD-LOOKING STATEMENTS
This Strategic Report contains â€œforward-looking statementsâ€ with respect to the Companyâ€™s plans and its current goals and expectations relating to its future financial condition, performance and results. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events that are beyond the Companyâ€™s control. Factors that could cause actual results to differ materially from those estimated by the forward-looking statements include, but are not limited to:

Global economic conditions and equity market performance and prices, particularly those in Europe
Changes in government policies and monetary and interest rate policies worldwide, particularly those in Europe
Changes to regulations and taxes worldwide, particularly in Europe
Currency exchange rates
Use of gearing
The Companyâ€™s success in managing its assets and business to mitigate the impact of the above factors.

As a result, the Companyâ€™s actual future condition, performance and results may differ materially from the plans set out in the Companyâ€™s forward-looking statements. The Company undertakes no obligation to update the forward-looking statements contained within this review or any other forward-looking statements it makes.

EMPLOYEES, HUMAN RIGHTS AND COMMUNITY ISSUES
The Board recognises the requirement under the Act to detail information about employees, human rights and community issues, including information about any policies it has in relation to these matters and the effectiveness of these policies. These requirements do not apply to the Company as it has no employees, all the Directors are non-executive and it has outsourced all its functions to third party service providers. The Company has therefore not reported further in respect of these provisions.

The Company is not within the scope of the Modern Slavery Act 2015 because it has not exceeded the turnover threshold and therefore, no further disclosure is required in this regard.

GENDER DIVERSITY
As at 30 September 2017, the Board of Directors of the Company comprised four male Directors. The appointment of any new Director is made on the basis of merit.

SOCIAL, ENVIRONMENTAL AND ETHICAL POLICY
The Company seeks to invest in companies that are well managed, with high standards of corporate governance, as the Directors believe this creates the proper conditions to enhance long-term value for shareholders. The Company adopts a positive approach to corporate governance and engagement with companies.

In pursuit of the above objective, the Directors believe that proxy voting is an important part of the corporate governance process. It is the policy of the Company to vote, as far as is practicable, at all shareholder meetings of investee companies. The Company follows the relevant regulatory and legislative requirements, with the guiding principles being to make proxy voting decisions which favour proposals that will lead to maximising shareholder value while avoiding any conflicts of interest. To this end, voting decisions take into account corporate governance, including disclosure and transparency, board composition and independence, control structures, remuneration, social and environmental issues.

The day-to-day management of the Companyâ€™s business has been delegated by the AIFM to the Companyâ€™s Investment Manager, Edinburgh Partners, which has an Environmental, SRI and Corporate Governance (â€œESGâ€) policy in place, which can be found on its website at www.edinburghpartners.com.

The assessment of the quality of investee companies in relation to environmental considerations, socially responsible investment and corporate governance is embedded in the Investment Managerâ€™s stock selection process.

This Strategic Report has been approved by the Board and signed on its behalf by:

Michael MacPhee
Chairman

29 November 2017

EXTRACTS FROM THE DIRECTORSâ€™ REPORT

SHARE CAPITAL
As at 30 September 2017, the Company had 42,006,769 ordinary shares of 25p each in issue. No shares were held in treasury during the year or as at the date of this report as all shares purchased are cancelled.

At general meetings of the Company, ordinary shareholders are entitled to one vote on a show of hands and on a poll, one vote for each ordinary share held.

Issue of shares
No shares were issued during the year.

Purchase of shares
The Board continued to monitor the discount at which the ordinary shares of the Company trade relative to the NAV per share. During the year ended 30 September 2017, the Company purchased in the stock market 46,781 ordinary shares (nominal value of Â£11,695.25) for cancellation, at a total cost of Â£353,000. This represented 0.11% of the issued share capital at 30 September 2016.

GOING CONCERN
The Companyâ€™s business activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Report above. In addition, notes 17 and 18 of the Financial Statements below include the Companyâ€™s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its risk exposure. The Companyâ€™s principal risks are detailed in the Strategic Report above. The Companyâ€™s assets consist principally of a diversified portfolio of listed European equity shares, which in most circumstances are realisable within a short period of time and exceed its liabilities to creditors by a significant amount.

The Directors have concluded that the Company has adequate resources to continue in operational existence for the foreseeable future, being a period of at least 12 months from the date this Annual Report is approved. For this reason, they have adopted the going concern basis in preparing the Financial Statements.

LONG-TERM VIABILITY STATEMENT
In accordance with the February 2015 revision to the AIC Code, the Directors have assessed the prospects of the Company over a longer period than the one year required by the â€˜Going Concernâ€™ provision of the Code. The Board considers that, for a company investing in European securities, a period of five years is an appropriate period to consider for the purpose of the Long-term Viability Statement.

The Board has undertaken an assessment of the Companyâ€™s future prospects in order for it to have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment.

In making its assessment, the Board considered a number of factors, including those detailed below:

the Companyâ€™s current financial position;
the principal risks the Company faces, as detailed in the Strategic Report above;
that the portfolio comprises principally of investments traded on major European stock markets and that there is a satisfactory spread of investments. There is no expectation that the nature of the investments held within the portfolio will be materially different in the future;
that the expenses of the Company are predictable and modest in comparison with the assets and there are no capital commitments foreseen which would alter that position;
that the Company has no employees except for the Directors, who are all non-executive and consequently do not have redundancy or other employment-related liabilities or responsibilities;
that European stock markets will continue to be a significant component of international stock markets and that investors will still wish to have an exposure to such investments;
that there will continue to be a demand for closed-ended investment trusts from investors;
that regulation will not increase to a level that makes the running of the Company uneconomical in comparison to other competitive products; and
that, should the performance be less than the Board considers to be acceptable, it has appropriate powers to replace the AIFM.

As a consequence of its assessment, the Board considers that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period of their assessment.

The full Annual Report and Financial Statements contain the following statements regarding responsibility for the Annual Report and Financial Statements.

DIRECTORS' RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Financial Statements for each financial year. Under that law, the Directors have prepared the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising Financial Reporting Standard (FRS) 102 â€œThe Financial Reporting Standard applicable in the UK and Republic of Irelandâ€ and applicable law). Under company law, the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these Financial Statements, the Directors are required to:

select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards, comprising FRS 102, have been followed, subject to any material departures disclosed and explained in the Financial Statements respectively;
prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and
prepare a Strategic Report, Directorsâ€™ Report, Directorsâ€™ Remuneration Report and Corporate Governance Statement that comply with the applicable law and regulations.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Companyâ€™s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006 and include the information required by the Listing Rules of the FCA. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Each of the Directors, whose names are set out above, confirms that, to the best of his knowledge:

the Financial Statements, which have been prepared in accordance with UK Accounting Standards, give a true and fair view of the assets, liabilities, financial position and net return of the Company; and

the Strategic Report and the Directorsâ€™ Report include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

The Annual Report and Financial Statements, taken as a whole, are considered by the Board to be fair, balanced and understandable and provide the information necessary for shareholders to assess the Companyâ€™s position and performance, business model and strategy.

The Directors are responsible for ensuring the Annual Report and Financial Statements are made available on a website. Financial statements are published on the Companyâ€™s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

On behalf of the Board
Michael MacPhee
Chairman

29 November 2017

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Companyâ€™s statutory Financial Statements for the year ended 30 September 2017 but is derived from those Financial Statements. Statutory Financial Statements for the year ended 30 September 2017 will be delivered to the Registrar of Companies in due course. The Auditors have reported on those Financial Statements; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditorsâ€™ report can be found in the Companyâ€™s full Annual Report and Financial Statements on the Companyâ€™s website at www.theeuropeaninvestmenttrust.com and on the website of Edinburgh Partners at www.edinburghpartners.com.

INCOME STATEMENT
for the year ended 30 September 2017

		2017			2016
	Notes	Revenue Â£â€™000	Capital Â£â€™000	Total Â£â€™000	Revenue Â£â€™000	Capital Â£â€™000	Total Â£â€™000

Gains on investments at fair value	10	-	92,580	92,580	-	37,740	37,740
Foreign exchange gains/(losses)		35	(307)	(272)	240	(479)	(239)
Income	2	12,591	-	12,591	10,357	-	10,357
Management fee	3	(1,958)	-	(1,958)	(1,586)	-	(1,586)
Other expenses	4	(430)	-	(430)	(434)	-	(434)

Net return before finance costs and taxation		10,238	92,273	102,511	8,577	37,261	45,838

Finance costs	5	(50)	-	(50)	(51)	-	(51)

Net return before taxation		10,188	92,273	102,461	8,526	37,261	45,787

Tax on ordinary activities	7	665	-	665	(523)	-	(523)

Net return attributable to shareholders		10,853	92,273	103,126	8,003	37,261	45,264

		pence	pence	pence	pence	pence	pence
Return per ordinary share*	9	25.8	219.7	245.5	19.0	88.6	107.6

* Based on the weighted average number of shares in issue during the year. The return per ordinary share is both the basic and diluted return per ordinary share.

All revenue and capital items in the above statement derive from continuing operations.

The total column of this statement is the Income Statement of the Company. The revenue and capital columns are prepared under guidance published by the AIC.

There were no items of other comprehensive income in the year and therefore the profit for the year is also the total comprehensive income for the year.

The notes form part of these Financial Statements.

BALANCE SHEET
as at 30 September 2017

	Notes	2017 Â£â€™000	2016 Â£â€™000
Fixed asset investments:
Investments at fair value through profit or loss	10	431,537	361,065

Current assets:
Debtors	12	1,720	1,538
Cash at bank and short-term deposits		10,129	105

		11,849	1,643

Current liabilities:
Creditors	13	3,186	1,833
Bank overdraft	6	-	10,216

		3,186	12,049

Net current assets/(liabilities)		8,663	(10,406)

Net assets		440,200	350,659

Capital and reserves:
Called-up share capital	14	10,501	10,513
Share premium account		123,749	123,749
Capital redemption reserve		8,310	8,298
Capital reserve		287,758	195,838
Revenue reserve		9,882	12,261

Total shareholdersâ€™ funds		440,200	350,659

		pence	pence
Net asset value per ordinary share	15	1047.9	833.8

The Financial Statements were approved and authorised for issue by the Board of Directors of The European Investment Trust plc on 29 November 2017 and were signed on its behalf by:

Michael MacPhee
Chairman

Registered in England and Wales No. 1055384

The notes form part of these Financial Statements.

STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2017

	Notes	Called-up share capital Â£â€™000	Share premium account Â£â€™000	Capital redemption reserve Â£â€™000	Capital reserve Â£â€™000	Revenue reserve Â£â€™000	Total Â£â€™000
Year ended 30 September 2017
At 1 October 2016		10,513	123,749	8,298	195,838	12,261	350,659

Net return after taxation for the year		-	-	-	92,273	10,853	103,126
Dividends paid	8	-	-	-	-	(13,232)	(13,232)
Shares purchased for cancellation	14	(12)	-	12	(353)	-	(353)

At 30 September 2017		10,501	123,749	8,310	287,758	9,882	440,200

Year ended 30 September 2016
At 1 October 2015		10,517	123,749	8,294	158,690	10,989	312,239

Net return after taxation for the year		-			37,261	8,003	45,264
Dividends paid	8	-	-	-	-	(6,731)	(6,731)
Shares purchased for cancellation	14	(4)			(113)	-	(113)

At 30 September 2016		10,513	123,749	8,298	195,838	12,261	350,659

The notes form part of these Financial Statements.

NOTES TO THE FINANCIAL STATEMENTS
at 30 September 2017

1 Accounting policies

Basis of accounting
These Financial Statements are prepared under FRS 102 â€œThe Financial Reporting Standard applicable in the UK and Republic of Irelandâ€ and in accordance with the AIC SORP.

The Company has applied the exemption detailed in FRS 102 Section 7.1A, electing to exclude the Cash Flow Statement for the year ended 30 September 2017.

The principal accounting policies detailed below have been applied consistently throughout the period. As detailed above, the Directors consider that it is appropriate for the Financial Statements to be prepared on a going concern basis.

Income recognition
Dividend and other investment income is included as revenue (except where, in the opinion of the Directors, its nature indicates it should be recognised as capital) on the ex-dividend date or, where no ex-dividend date is quoted, when the Companyâ€™s right to receive payment is established. Income arising on holdings of fixed income securities is recognised on a time apportionment basis so as to reflect the effective interest rate on that security. Deposit and other interest is included on an accruals basis.

Dividends are accounted for on the basis of income actually receivable. Dividends from overseas companies are shown gross of withholding tax.

Where the Company has elected to receive its dividends in the form of additional shares rather than in cash (scrip dividends), the amount of the cash dividend foregone is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend foregone is recognised in the capital reserve.

Borrowings
Loans and overdrafts are recorded at the proceeds received, net of issue costs, irrespective of the duration of the instrument.

Finance costs, including interest, are accrued using the effective interest rate method. See below for allocation of finance costs within the Income Statement.

Expenses and finance costs
All expenses are accounted for on an accruals basis. All operating expenses including finance costs and management fees are charged through revenue in the Income Statement except costs that are incidental to the acquisition or disposal of investments, which are charged to capital in the Income Statement. Transaction costs are included within the gains and losses on investment sales, as disclosed in the Income Statement. No performance fees are charged by the AIFM.

Investments
All investments held by the Company are classified as â€˜fair value through profit or lossâ€™. Investments are initially recognised at cost, being the fair value of the consideration given. Interest accrued on fixed interest rate securities at the date of purchase or sale is accounted for separately as accrued income, so that the value or purchase price or sale proceeds is shown net of such items.

After initial recognition, investments are measured at fair value, with changes in the fair value of investments and impairment of investments recognised in the Income Statement and allocated to capital. Gains and losses on investments sold are calculated as the difference between sales proceeds and cost.

For investments actively traded in organised financial markets, fair value is generally determined by reference to stock exchange quoted market bid prices at the close of business on the Balance Sheet date, without adjustment for transaction costs necessary to realise the asset. Investments which are not quoted or which are not frequently traded are stated at Directorsâ€™ best estimate of fair value, using the guidelines on valuation published by the International Private Equity and Venture Capital Association. This represents the Directorsâ€™ view of the amount for which an asset could be exchanged between knowledgeable willing parties in an armâ€™s length transaction. This does not assume that the underlying business is saleable at the reporting date or that its current shareholders have any intention to sell their holding in the near future. Where no reliable fair value can be estimated, investments may be carried at cost less any provision for impairment.

Cash at bank and short-term deposits
Cash at bank and short-term deposits comprise cash in hand and demand deposits that mature within three months. The carrying value of cash at bank and short-term deposits is equal to its fair value.

Foreign currency
The functional and presentational currency of the Company is sterling because that is the currency of the primary economic environment in which the Company operates.

Transactions denominated in foreign currencies are converted to sterling at the actual exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the year end are reported at the rate of exchange to sterling at the Balance Sheet date. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or in revenue depending on whether the gain or loss is of a capital or revenue nature.

Taxation
The charge for taxation is based on the net return for the year and takes into account taxation deferred or accelerated because of timing differences between the treatment of certain items for accounting and taxation purposes. Full provision for deferred taxation is made under the liability method, without discounting, on all timing differences that have arisen but not been reversed by the Balance Sheet date, unless such provision is not permitted by FRS 102. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Companyâ€™s taxable profits and its results as stated in the Financial Statements which are capable of reversal in one or more subsequent years.

Capital redemption reserve
The nominal value of ordinary share capital purchased and cancelled is transferred out of called-up share capital and into the capital redemption reserve on the relevant trade date.

Capital reserve
The following are accounted for in this reserve:

gains and losses on the realisation of investments;
increases and decreases in the valuation of investments held at the year end;
realised foreign exchange differences of a capital nature;
unrealised foreign exchange differences of a capital nature;
costs of professional advice (including related irrecoverable VAT) relating to the capital structure of the Company;
other capital charges and credits charged or credited to this account in accordance with the above policies; and
costs of purchasing ordinary share capital.

Revenue reserve
The revenue reserve is distributable by way of a dividend.

Dividends payable to shareholders
Final dividends are recognised as a liability in the year in which they have been approved by shareholders in a general meeting. Interim dividends are recognised as a liability in the period in which they have been declared and paid.

2 Income

	2017 Â£â€™000	2016 Â£â€™000
Income from investments:
Overseas dividends	12,224	10,357
Other income	367	-

Total income	12,591	10,357

Other income relates to interest received on successful reclaims of withholding tax previously written off, as detailed in note 7 c).

3 Management fee

	2017 Â£â€™000	2016 Â£â€™000

Management fee	1,958	1,586

On 17 July 2014, the Company appointed Edinburgh Partners AIFM Limited as its AIFM. Under the Management Agreement, the AIFM is entitled to a fee paid monthly in arrears at a rate of 0.55% per annum of the equity market capitalisation of the Company. Under the Management Agreement, no performance fee is payable.

During the year ended 30 September 2017, the management fees payable to the AIFM totalled Â£1,958,000 (2016: Â£1,586,000). At 30 September 2017, there was Â£175,000 outstanding payable to the AIFM (2016: Â£137,000) in relation to management fees.

4 Other expenses

	2017 Â£â€™000	2016 Â£â€™000

Audit services	16	22
Directorsâ€™ remuneration*	98	107
Other	316	305

	430	434

* See the Directorsâ€™ Remuneration Report in the full Annual Report and Financial Statements.

5 Finance costs

	2017 Â£â€™000	2016 Â£â€™000

Negative interest on cash balances	9	9
Bank overdraft fee	3	6
Bank overdraft interest	38	36

	50	51

6 Borrowings

	2017 Â£â€™000	2016 Â£â€™000

Bank overdraft	-	10,216

In February 2016, the Company entered into a euro 30,000,000 bank overdraft credit facility agreement with The Northern Trust Company for the purpose of pursuing its objective. The facility was utilised during the year ended 30 September 2017 but, as at 30 September 2017, nil had been drawn down under the facility (2016: euro 11,809,000 equivalent to Â£10,216,000 drawn down). The facility is uncommitted.

7 Tax on ordinary activities

a) Analysis of charge for the year	2017			2016
	Revenue Â£â€™000	Capital Â£â€™000	Total Â£â€™000	Revenue Â£â€™000	Capital Â£â€™000	Total Â£â€™000
Current tax:
UK corporation tax	-	-	-	-	-	-
Overseas tax suffered	933	-	933	523	-	523
Overseas tax recovered previously written off	(1,598)	-	(1,598)

	(665)	-	(665)	523	-	523

The Company has no corporation tax liability for the year ended 30 September 2017 (2016: nil).

b) The standard rate of corporation tax in the UK (â€œcorporation tax rateâ€) was 20% in the year to 31 March 2017 and is 19% in the year to 31 March 2018. Accordingly, the Companyâ€™s profits for the year ended 30 September 2017 are taxed at an effective rate of 19.5% (2016: 20%). The corporation tax rate is expected to remain at 19% for the year beginning 1 April 2018 and, as a consequence, the effective rate of corporation tax for the Company for the year ending 30 September 2018 would be 19%.

The taxation charge for the Company for the year ended 30 September 2017 is lower (2016: lower) than the effective rate of 19.5% (2016: 20%). The differences are explained below:

	2017			2016
	Revenue Â£â€™000	Capital Â£â€™000	Total Â£â€™000	Revenue Â£â€™000	Capital Â£â€™000	Total Â£â€™000

Net return before taxation	10,188	92,273	102,461	8,526	37,261	45,787

Theoretical tax at UK corporation tax rate of 19.5% (2016: 20%)	1,986	17,993	19,979	1,705	7,452	9,157
Effects of:
- Foreign dividends that are not taxable	(2,390)	-	(2,390)	(2,073)	-	(2,073)
- Non-taxable investment gains	-	(17,993)	(17,993)	-	(7,452)	(7,452)
- Disallowable expenses	1	-	1	1	-	1
- Deferred tax not recognised	403	-	403	368	-	368
- Overseas tax suffered	933	-	933	523	-	523
- Overseas tax recovered previously written off	(1,598)	-	(1,598)	-	-	-
- Accrued income taxable on receipt	-	-	-	(1)	-	(1)

	(665)	-	(665)	523	-	523

c) Overseas tax recovered

During the year to 30 September 2017, the Company received amounts totalling EUR 2,226,000, equivalent to Â£1,965,000 sterling, in relation to successful claims for the receipt of French withholding tax suffered during the years 2009 to 2014, which had previously not been considered recoverable. Included within this amount was interest of EUR 414,000 equivalent to Â£367,000 sterling, which is recognised within other income detailed in note 2.

d) Factors that may affect future tax charges

At 30 September 2017 the Company had unrelieved management expenses of Â£10,438,000 (30 September 2016: Â£8,152,000) that are available to offset future taxable revenue. A deferred tax asset of Â£1,774,000 (30 September 2016: Â£1,630,000) has not been recognised because the Company is not expected to generate sufficient taxable income in future periods in excess of the available deductible expenses and accordingly, the Company is unlikely to be able to reduce future tax liabilities through the use of existing surplus losses.

Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Company meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an Investment Trust company.

e) Contingent assets

The Company is currently pursuing two potential reclaims of tax. The first relates to Franked Investment Group (FII GLO) computational based claims, filed on the basis that the tax treatment of dividends received from EU-resident companies is contrary to Article 43 (freedom of establishment) and/or Article 56 (free movement of capital and payments) of the European Community Treaty. The second relates to retrospective reclaims for overseas withholding tax suffered above treaty rates. Potential tax reclaims which remain outstanding are treated as contingent assets. Contingent assets have not been recognised in these Financial Statements as in all instances at the balance sheet date the amounts receivable were not certain.

8 Dividends

Declared and paid	Payment date	2017 Â£â€™000	2016 Â£â€™000

Interim dividend 2017 of 8.0p	31 July 2017	3,361	-
Interim special dividend for 2017 of 1.5p	31 July 2017	630	-
Final dividend for the year ended 30 September 2016 of 16.0p	31 January 2017	6,721	-
Special dividend for the year ended 30 September 2016 of 6.0p	31 January 2017	2,520	-
Final dividend for the year ended 30 September 2015 of 14.0p	31 January 2016	-	5,889
Special dividend for the year ended 30 September 2015 of 2.0p	31 January 2016	-	842

		13,232	6,731

The Directors recommend a final dividend in respect of the year ended 30 September 2017 of 13.5p which is payable on Wednesday, 31 January 2018 to all shareholders on the register at the close of business on Friday, 5 January 2018. The ex-dividend date will be Thursday, 4 January 2018. The recommended final dividend is subject to approval by shareholders at the AGM to be held on Thursday, 11 January 2018. At the date of this report, the total dividend payment will amount to Â£5,671,000 as detailed below.

Proposed	2017 Â£â€™000	2016 Â£â€™000

2017 final dividend of 13.5p (2016: final dividend of 16.0p and special dividend of 6.0p, total 22.0p) per ordinary share*	5,671	9,244

* Based on 42,006,769 shares in issue at 29 November 2017.

The total dividend for the year ended 30 September 2017 is 23.0p (2016: 22.0p), consisting of the interim dividend at 8.0p, the special interim dividend of 1.5p and the proposed final dividend of 13.5p.

9 Return per ordinary share

	2017			2016
	Net return Â£â€™000	Ordinary shares*	Per share pence	Net return Â£â€™000	Ordinary shares*	Per share pence

Net revenue return after taxation	10,853	42,011,049	25.8	8,003	42,067,630	19.0

Net capital return after taxation	92,273	42,011,049	219.7	37,261	42,067,630	88.6

Total return	103,126	42,011,049	245.5	45,264	42,067,630	107.6

* Weighted average number of ordinary shares in issue during the year.

10 Listed investments

	2017 Â£â€™000	2016 Â£â€™000
Analysis of investment portfolio movements
Opening book cost	369,635	331,813
Opening investment holdings losses	(8,570)	(23,585)

Opening valuation	361,065	308,228

Movements in the year:
Purchases at cost	86,202	119,219
Sales â€“ proceeds	(108,310)	(104,122)
â€“ realised gains on sales	22,164	22,725
Investment holding gains	70,416	15,015

Closing valuation	431,537	361,065

Closing book cost	369,691	369,635
Closing investment holding gains/(losses)	61,846	(8,570)

Closing valuation	431,537	361,065

	2017 Â£â€™000	2016 Â£â€™000
Analysis of capital gains
Gains on sales	22,164	22,725
Investment holding gains	70,416	15,015

Gains on investments	92,580	37,740

Fair value hierarchy
In accordance with FRS 102, the Company must disclose the fair value hierarchy that classifies financial instruments measured at fair value at one of three levels according to the relative reliability of the inputs used to estimate the fair values.

Classification	Input
Level 1	Valued using quoted prices in active markets for identical assets

Level 2	Valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1

Level 3	Valued by reference to valuation techniques using inputs that are not based on observable market data

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset. The valuation techniques used by the Company are explained in note 1 of these Financial Statements above. All of the Companyâ€™s investments fall into Level 1, being valued at quoted prices in active markets.

Transaction costs
During the year ended 30 September 2017, the Company incurred transaction costs of Â£79,000 (2016: Â£145,000) and Â£96,000 (2016: Â£102,000) on purchases and sales of investments respectively. These amounts are included in gains/(losses) on investments at fair value, as disclosed in the Income Statement above.

11 Significant holdings
The Company had no holdings of 3% or more of the share capital of any portfolio companies.

12 Debtors

	2017 Â£â€™000	2016 Â£â€™000

Taxation recoverable	1,514	1,286
Prepayments and accrued income	206	252

	1,720	1,538

13 Creditors

	2017 Â£â€™000	2016 Â£â€™000

Due to brokers	2,861	1,542
Other creditors and accruals	150	157
Management fee accrued	175	134

	3,186	1,833

14 Called-up share capital

	2017 Â£â€™000	2016 Â£â€™000
Allotted, called-up and fully paid:
Brought forward	10,513	10,517
Cancelled shares of 25p	(12)	(4)

42,006,769 (2016: 42,053,550) ordinary shares of 25p each	10,501	10,513

During the year ended 30 September 2017, 46,781 (2016: 15,821) ordinary shares were purchased and cancelled at a total cost of Â£353,000 (2016: Â£113,000).

Duration of the Company
The Company neither has a termination date nor the requirement for any periodic continuation votes.

15 Net asset value per ordinary share

	2017 pence	2016 pence
Net asset value per ordinary share	1047.9	833.8

The net asset value per ordinary share is based on net assets of Â£440,200,000 (2016: Â£350,659,000) and on 42,006,769 (2016: 42,053,550) ordinary shares, being the number of ordinary shares in issue at the year end.

16 Analysis of financial assets and liabilities

Currency profile
The currency profile of the Companyâ€™s financial assets and liabilities were:

		Cash at
		bank and
	Equity	short-term
	shares	deposits	Debtors	Borrowings	Creditors	Total
	Â£â€™000	Â£â€™000	Â£â€™000	Â£â€™000	Â£â€™000	Â£â€™000

2017
Euro	325,033	10,067	908	-	(2,862)	333,146
Swiss franc	50,503	-	473	-	-	50,976
Norwegian Krone	22,688	-	173	-	-	22,861
Danish Kroner	20,258	-	137	-	-	20,395
Swedish Krona	13,055	-	-	-	-	13,055
Sterling	-	62	20	-	(306)	(224)
NZ dollar	-	-	9	-	(18)	(9)

Total	431,537	10,129	1,720	-	(3,186)	440,200


2016
Euro	280,359	45	905	(10,216)	(1,542)	269,551
Swiss franc	34,138	-	318	-	-	34,456
Norwegian Krone	15,150	-	178	-	-	15,328
Danish Kroner	14,942	-	70	-	-	15,012
Swedish Krona	16,476	-	-	-	-	16,476
Sterling	-	60	59	-	(290)	(171)
NZ dollar	-	-	8	-	(1)	7

Total	361,065	105	1,538	(10,216)	(1,833)	350,659

	2017	2016
Foreign exchange rates
Euro	1.1349	1.1559
Swiss franc	1.2981	1.2593
Norwegian krone	10.6800	10.3820
Danish kroner	8.4454	8.6072
Swedish krona	10.9510	11.1290
NZ dollar	1.8560	1.7863

17 Risk analysis
The Company is an investment company, whose shares are traded on the London Stock Exchange. It conducts its affairs so as to qualify in the UK as an investment trust under the provisions of Sections 1158 and 1159 of the CTA. In so qualifying, the Company is exempted in the UK from corporation tax on capital gains on its portfolio of investments.

As an investment trust, the Company invests in equities and makes other investments so as to achieve its objective. In pursuing its objective, the Company is exposed to risks which could result in a reduction of either or both of the value of the net assets and the profits available for distribution by way of dividend. The Board, together with the AIFM, is responsible for the Companyâ€™s risk management, as set out in the Strategic Report above.

The principal risks the Company faces are:

Investment and strategy risk
Discount volatility risk
Market risk (comprising: interest rate risk, currency risk and price risk)
Liquidity risk
Credit risk
Gearing risk

The AIFM monitors the risks affecting the Company on an ongoing basis within the policies and guidelines determined by the Board. The Directors receive financial information, which is used to identify and monitor risk, quarterly. The Company may enter into derivative contracts to manage risk but has not done so to date. A description of the principal risks the Company faces is detailed below and in the Strategic Report above.

Investment and strategy risk
There can be no guarantee that the objective of the Company will be achieved due to the possibility of poor stock selection or as a result of being geared in a falling market.

The Investment Manager meets regularly with the Board to discuss the portfolio performance and strategy. The Board receives regular reports from the Investment Manager detailing all portfolio transactions and any other significant changes in the market or stock outlooks. Details of the investment policy are given in the Strategic Report above.

Discount volatility risk
The Board recognises that it is in the long-term interests of shareholders to reduce discount volatility and believes that the prime driver of discounts over the longer term is investment performance. The Company is permitted to employ gearing, a process whereby funds are borrowed principally for the purpose of purchasing securities, should the Board consider that it is appropriate to do so. The use of gearing can magnify discount volatility.

The Board actively monitors the discount at which the Companyâ€™s shares trade but it does not intend to issue a precise discount target at which shares will be bought back as it believes that the announcement of specific targets is likely to hinder rather than help the successful execution of a buy back policy. Equally, the Company will issue shares in order to meet demand as it arises.

The Boardâ€™s commitment to allot or repurchase ordinary shares is subject to the Directors being satisfied that any offer to allot or to purchase shares is in the best interests of shareholders of the Company as a whole.

During the year ended 30 September 2017, 46,781 (2016: 15,821) ordinary shares were purchased and cancelled at a total cost of Â£353,000 (2016: Â£113,000).

Market Risk

Interest rate risk
The Companyâ€™s assets and liabilities, excluding short-term debtors and creditors, may comprise financial instruments which include investments in fixed interest securities.

Details of the Companyâ€™s interest rate exposure as at 30 September 2017 are disclosed in note 16 of these Financial Statements.

The majority of the Companyâ€™s assets were non-interest bearing during the year ended and as at 30 September 2017. Some of the Company's cash at bank and short-term deposits were subject to a negative interest charge during the year ended and as at 30 September 2017. There was exposure to interest bearing liabilities during the year ended 30 September 2017 through the bank overdraft credit facility agreement.

If interest rates had reduced by 0.25% (2016: 0.25%) from those obtained as at 30 September 2017, it would have the effect, with all other variables held constant, of decreasing the net revenue return before taxation and therefore decreasing net assets on an annualised basis by Â£25,000 (2016: an increase of Â£26,000). If there had been an increase in interest rates of 0.25% (2016: 0.25%), there would have been an equal and opposite effect in the net revenue return before taxation. The calculations are based on cash at bank, short-term deposits and bank overdrafts as at 30 September 2017 and these may not be representative of the year as a whole. This level of change is considered to be reasonable based on observation of current market conditions.

Currency risk
The base currency of the Company is sterling. The international nature of the Companyâ€™s investment activities gives rise to a currency risk which is inherent in the performance of its overseas investments. The Companyâ€™s overseas income is also subject to currency fluctuations.

It is not the Companyâ€™s policy to hedge this risk on a continuing basis.

Details of the Companyâ€™s foreign currency risk exposure as at 30 September 2017 are disclosed in note 16 of these Financial Statements.

If sterling had strengthened by 10% against all other currencies on 30 September 2017, with all other variables held constant, it would have had the effect of reducing the net capital return before taxation by Â£44,042,000 (2016: Â£35,085,000) and the net revenue return before taxation by Â£1,254,000 (2016: Â£1,055,000) and therefore would have reduced net assets by Â£45,296,000 (2016: Â£36,140,000). If sterling had weakened by 10% against all other currencies, there would have been an equal and opposite effect on both the net capital return and net revenue return before taxation. This level of change is considered to be reasonable based on observation of current market conditions.

Price risk
The Company is exposed to market risk due to fluctuations in the market prices of its investments. Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Companyâ€™s business. It represents the potential loss the Company might suffer through holding market positions in the face of price movements. The Investment Manager monitors the prices of financial instruments held by the Company on an ongoing basis.

The Investment Manager actively monitors market and economic data and reports to the Board, which considers investment policy on a regular basis. The NAV of the Company is issued daily to the London Stock Exchange and is also available on the Companyâ€™s website at www.theeuropeaninvestmenttrust.com and on the website of Edinburgh Partners at www.edinburghpartners.com.

Fixed asset investments are valued at their fair value. Details of the Companyâ€™s investment portfolio as at 30 September 2017 are disclosed above. In addition, an analysis of the investment portfolio by sector and geographical distribution is detailed above.

The maximum exposure to price risk at 30 September 2017 is the fair value of investments of Â£431,537,000 (2016: Â£361,065,000).

If the investment portfolio valuation fell by 20% from the amount detailed in the Financial Statements as at 30 September 2017, it would have the effect, with all other variables held constant, of reducing the net capital return before taxation and therefore reducing net assets by Â£86,307,000 (2016: Â£72,213,000). An increase of 20% in the investment portfolio valuation would have an equal and opposite effect on the net capital return before taxation. The calculations are based on the Companyâ€™s price risk at 30 September 2017 and may not be representative of the year as a whole. This level of change is considered to be reasonable based on observation of current market conditions.

Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The Companyâ€™s policy with regard to liquidity is to ensure continuity of funding. Short-term flexibility is achieved through cash management and increased borrowing, including the use of overdraft facilities.

Liquidity risk is not considered significant as the Companyâ€™s assets comprise of readily realisable securities which are industrially and geographically diverse and which can be sold freely to meet funding requirements if necessary. Securities listed on a recognised stock exchange have been valued at bid prices and exchange rates ruling at the close of business on 30 September 2017. In certain circumstances, the market prices at which investments are valued may not represent the realisable value of those investments, taking into account both the size of the Companyâ€™s holding and the frequency with which such investments are traded. The Company does not normally invest in derivative products. The Investment Manager reviews liquidity at the time of making each investment decision. The Board reviews liquidity exposure at each meeting.

Credit risk
Credit risk is the risk of financial loss to the Company if the contractual party to a financial instrument fails to meet its contractual obligations.

The carrying amounts of cash and debtors best represent the maximum credit risk exposure at the Balance Sheet date. There are no financial assets which are either past due or impaired.

The Companyâ€™s listed investments are held on its behalf by The Northern Trust Company acting as the Companyâ€™s custodian. Bankruptcy or insolvency of the custodian may cause the Companyâ€™s rights with respect to securities held by the custodian to be delayed. The Board monitors the Companyâ€™s risk by reviewing the custodianâ€™s internal controls reports.

Investment transactions are carried out with a number of brokers, whose creditworthiness is reviewed by the Investment Manager. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Companyâ€™s custodian ensures that the counterparty to any transaction entered into by the Company has delivered in its obligations before any transfer of cash or securities away from the Company is completed.

Cash is only held at banks that have been identified by the Board as reputable and of high credit quality. As at 30 September 2017, The Northern Trust Company London Branch had a long-term rating from Standard and Poorâ€™s of AA-.

The maximum exposure to credit risk as at 30 September 2017 was Â£11,849,000 (2016: Â£1,643,000). The calculation is based on the Companyâ€™s credit risk exposure as at 30 September 2017 and this may not be representative of the year as a whole.

Gearing risk
The aim of gearing is to enhance long-term returns to shareholders by investing borrowed funds in equities and other assets. The Company is permitted to employ gearing should the Board consider it appropriate to do so. The Boardâ€™s policy is that the level of gearing should not exceed 20% in normal market conditions. The use of gearing can cause both gains and losses in the asset value of the Company to be magnified.

As detailed in notes 5 and 6, during the year ended and as at 30 September 2017, the Company utilised a borrowing facility.

The Board undertakes an annual assessment and review of all the risks stated in this note 17 and in the Strategic Report above together with a review of any new risks which may have arisen during the year. These risks are formalised within the Companyâ€™s risk assessment matrix.

18 Capital management policies
The Board has a responsibility for ensuring the Companyâ€™s ability to continue as a going concern. It must therefore maintain an optimal capital structure through varying market conditions. This involves the ability to: issue and buy back share capital within limits set by the shareholders in general meeting; borrow monies in the short and long term; and pay dividends to shareholders out of current year revenue earnings as well as out of brought-forward revenue reserves.

The Company is subject to externally imposed capital requirements, including the requirement as a public company to have a minimum share capital of Â£50,000, which have been met throughout the year.

Any changes to the ordinary share capital are set out in note 14 of these Financial Statements. Dividend payments are set out in note 8 of these Financial Statements.

The Companyâ€™s capital comprises:

	2017 Â£â€™000	2016 Â£â€™000

Called-up share capital	10,501	10,513
Share premium account	123,749	123,749
Capital redemption reserve	8,310	8,298
Capital reserve	287,758	195,838
Revenue reserve	9,882	12,261

Total shareholdersâ€™ funds	440,200	350,659

The capital reserve consists of realised capital reserves of Â£225,924,000 and unrealised capital gains of Â£61,834,000 (2016: realised capital reserves of Â£204,414,000 and unrealised capital losses of Â£8,576,000). The unrealised capital gains consist of unrealised investment holding gains of Â£61,846,000 (2016: losses of Â£8,570,000) and unrealised foreign exchange losses of Â£12,000 (2016: losses of Â£6,000).

The realised capital reserve, net of any unrealised losses, is distributable by way of a dividend. Unrealised gains are non-distributable.

The Companyâ€™s objectives for managing capital are the same as the previous year and have been complied with throughout the year.

19 Transactions with the AIFM and the Investment Manager
Information with respect to transactions with the AIFM and the Investment Manager is detailed in note 3 of these Financial Statements and in the Strategic Report above.

20 Related parties
The Directors, who are considered to be key management personnel, received fees for the year as detailed in the Directorsâ€™ Remuneration Report in the full Annual Report and Financial Statements. Under the AIC SORP, an investment manager is not considered to be a related party of the Company.

21 Post balance sheet events
As detailed in the Strategic Overview above, trading of the Companyâ€™s shares on NZX Limitedâ€™s Main Board ceased on 31 October 2017 and the shares ceased to be listed on the NZX Main Board at the close of business on 2 November 2017 (New Zealand time). Following cancellation, the New Zealand listed shares were transferred to the Company's UK share register.

Annual General Meeting

The Companyâ€™s forty-fifth Annual General Meeting will be held at 11.00am on Thursday, 11 January 2018 at Brewersâ€™ Hall, Aldermanbury Square, London EC2V 7HR.

National Storage Mechanism

A copy of the Annual Report and Financial Statements will be submitted shortly to the National Storage Mechanism (â€œNSMâ€) and will be available for inspection at the NSM, which is situated at www.morningstar.co.uk/uk/NSM.

A copy of the Annual Report and Financial Statements and Notice of Annual General Meeting will be delivered to shareholders shortly and can also be found on the Companyâ€™s website at www.theeuropeaninvestmenttrust.com and on the website of Edinburgh Partners at www.edinburghpartners.com.

Enquiries:

Craig Armour
Kenneth J Greig

Edinburgh Partners AIFM Limited

Telephone: 0131 270 3800

The Companyâ€™s registered office address is:

Beaufort House
51 New North Road
Exeter
EX4 4EP

29 November 2017

Neither the contents of the Companyâ€™s website and the Edinburgh Partnersâ€™ website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of this announcement.

LEI: 213800QNN9EHZ4SC1R12

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