European Investment : Half-Yearly Report for the six months to 31 March 2016

ANGLO AND OVERSEAS PLC THE EUROPEAN INVESTMENT TRUST PLC HALF-YEARLY REPORT FOR THE HALF-YEAR ENDED 31 MARCH 2016

The Directors announce the unaudited Half-Yearly Report for the half-year ended 31 March 2016 as follows:

Copies of the Half-Yearly Report can be obtained from the following websites: www.theeuropeaninvestmenttrust.com and www.edinburghpartners.com.

FINANCIAL SUMMARY

31 March 2016	30 September 2015	Change
Shareholders' funds	£312.25m	£312.24m	0.0%
Net asset value per ordinary share ("NAV")	742.24p	742.20p	0.0%
Share price per ordinary share	651.00p	673.00p	(3.3)%
Share price discount to NAV	12.3%	9.3%

Six months to 31 March 2016	Year to 30 September 2015
Capital return per ordinary share*	13.96p	(59.16)p
Revenue return per ordinary share*	2.08p	15.95p
Total return per ordinary share*	16.04p	(43.21)p
* Based on the weighted average number of ordinary shares in issue during the period.
PERFORMANCE
Six months to 31 March 2016	Year to 30 September 2015
NAV Total Return	2.2%	(5.5)%
FTSE All-World Europe ex UK Index Total Return*	6.9%	(1.8)%
* In sterling.

The NAV Total Returns are sourced from Edinburgh Partners Limited and include dividends reinvested. The index performance figures are sourced from Thomson Reuters Datastream.

Past performance is not a guide to future performance.

OBJECTIVE AND INVESTMENT POLICY Objective

The objective of The European Investment Trust plc (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 Company's exposure to movements in the rate of exchange of currencies, principally the euro, in which the Company's investments are denominated, against sterling, its reporting currency. However, it is not generally the Board'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%.

The Investment Manager's compliance with the limits set out in the investment policy is monitored by the Board and the Alternative Investment Fund Manager.

INVESTMENT MANAGER'S REVIEW Results

The NAV at 31 March 2016, the Company's half-year end, was 742.24p, a marginal increase on the NAV at 30 September 2015 of 742.20p. After including the special and final dividends totalling 16.0p per share which were paid in January 2016, the NAV total return for the six-month period was 2.2%. This compares to the total return from the FTSE All-World Europe ex UK Index in sterling of 6.9%. This underperformance reflects a continuation of the tendency of European markets, discussed in our last Annual Report, to place high valuations on stable growth companies, extending what we believe to be a valuation anomaly. During the period, the euro strengthened by 7% against sterling, which enhanced returns for sterling-based investors investing in European equities.

Share price and discount

During the six months to 31 March 2016, the Company's share price decreased by 3.3% from 673.00p to 651.00p. The share price total return was -1.0%. The share price discount to NAV widened from 9.3% to 12.3%.

Revenue

The net revenue return per share in the six-month period to 31 March 2016 was 2.08p, a decrease on the 3.58p received in the six months to 31 March 2015. In the year to 30 September 2015, the net revenue return per share was 15.95p. Shareholders should be aware that the revenue return for the half-year is not indicative of the full-year return, as many European companies pay their dividends between April and September, while the expenses of running the Company are incurred on a more even basis throughout the financial year.

Borrowing

In February 2016, the Company entered into a euro 30 million overdraft credit facility agreement with The Northern Trust Company for the purpose of pursuing its investment objective. The facility is available until further notice. As at 31 March 2016, a total of euro 11.1 million, equivalent to £8.8 million and a borrowing level of 2.8% of the Company's net assets, had been drawn down under the facility at an initial interest cost of 0.8% per annum.

Economic and market overview

During the six-month period under review, and particularly at the beginning of 2016, there was a slight downgrading of economic growth forecasts for European economies. However, it is our belief that within Europe the outlook for relatively stable economic growth remains intact, given that there appears to be little incentive to withdraw the monetary stimulus introduced by the European Central Bank. Accordingly, we do not believe that there is a significant probability of a serious economic downturn or recession within Europe.

Political risks are arguably more of a concern than economic risks at present. The political landscape in recent years has seen some fairly fundamental shifts. In a number of elections across Europe, both national and regional, we have seen electoral fragmentation, with many mainstream parties losing out to more populist parties, which appeal to discontented voters.

This elevated level of political risk is exacerbated by the current Brexit referendum campaign. UK-based analysis of the implications of a vote for the UK to leave the European Union ("EU") is understandably focused on the outlook for the UK's economy, currency and stock market. However, the Brexit implications for Europe are just as significant, if not more so. Populist movements might gain momentum and there might be doubts surrounding the cohesion of the EU. This could cause issues for the future of the euro as well as for European economies and stock markets. However, we should be aware that, since its inception, the EU has had a proven ability to reconcile the often competing interests of its member countries and may be able to deal with a UK exit. As a consequence, we do not envisage making any material changes to our existing investment strategy until the vote and its ramifications become clearer.

At the beginning of 2016, equity markets fell sharply worldwide. Whilst a healthy correction had been occurring since the middle of last year, we considered a number of the reasons attributed to the falls were erroneous. Specifically, we are more relaxed about the long-term outlook for China and we view lower oil and commodity prices as a positive stimulus for many European economies. By the middle of February 2016, the valuation of the portfolio had fallen to levels not seen since the time of the Global Financial Crisis in 2008/09 and the Eurozone crisis of 2011/12. We therefore decided to utilise the recently agreed borrowing facility and the Company became geared for the first time in our tenure as Investment Manager. As we had confidence in the outlook for the existing portfolio, we invested across a range of portfolio holdings, with the investment skewed slightly to recent underperformers.

This investment decision was not about "calling the bottom" in markets, as that is notoriously difficult to do. It was an acknowledgment that equity markets had fallen substantially, that the portfolio was attractively valued and that the spread between borrowing costs and the expected long-term return on the portfolio offered a significant "margin of safety".

Outlook

Overall, European economic growth prospects are adequate and valuations after the sharp falls and the recent rebound offer reasonable long-term returns. The most critical risk for European equity markets at the present time is expected to be from political developments within Europe and/or extraneous factors. The borrowing facility was used opportunistically following equity market falls when many of the investments in the portfolio reached attractive valuation levels. There exists the ability to deploy some additional borrowing, although we anticipate this will be reserved for any further equity market falls or if we identify any exceptional investment opportunities.

Dale Robertson Edinburgh Partners Limited 27 May 2016

Past performance is not a guide to future performance.