Egypt Trust
THE EGYPT TRUST
Soci�t� d'Investissement � Capital Fixe
Luxembourg
R.C. no. B 55.584
Unaudited semi-annual report
as at September 30th, 2007
Contents
Organisation of the Fund 2
General Information 4
Manager's Review 5
Statement of Net Assets 8
Shareholders' Equity 8
Statement of Operations 9
Statement of Changes in Net Assets 10
Statistical Information about the Fund 10
Statement of Changes in Shares Outstanding 10
Statement of Investments and other Net Assets 11
Currency, Geographical and Industrial Classification of the Portfolio 13
Notes to the Financial Statements 14
Organisation of the Fund
Chairman
ALEXANDER E. ZAGOREOS Lazard Asset Management LLC
30 Rockefeller Plaza
U.S.A.-New York, NY 10112
Directors
MICHAEL BECKETT (1) LONDON CLUB INTERNATIONAL
10 Brick Street
U.K.-London W1J 7HQ
MOHAMED HASSANEIN (1) NATIONAL BANK OF EGYPT
NBE Tower
1187 Corniche El-Nile
Boulak
Cairo, EGYPT
SHAKER ALBERT KHAYATT (1) KHAYATT & COMPANY INC.
50 Broad Street, Suite 1609
U.S.A.-New York, NY 10004
MOHAMED KAMAL EL-DIN BARAKAT (1) 151 Mohamed Farid Street
Cairo, EGYPT
MICHAEL TAIT (1) OXFORD AND EDINBURGH CONSULTANTS
Chairman of the Audit Committee 8 Chalcot Crescent
U.K.-London NW1 8YD
Advisory Board HERBERT GULLQUIST
Registered Office 11 rue Aldringen
L-1118 LUXEMBOURG
Manager Lazard Asset Management LLC
30 Rockefeller Plaza
U.S.A.-New York, NY 10112
Investment Adviser National Bank of Egypt
NBE Tower
1187 Corniche El-Nile
Boulak
Cairo, EGYPT
Custodian and Paying Agent KREDIETBANK S.A. Luxembourgeoise
43 boulevard Royal
L-2955 LUXEMBOURG
Domiciliary, Registrar, Transfer KREDIETRUST LUXEMBOURG S.A.
and Administrative Agent 11 rue Aldringen
L-2960 LUXEMBOURG
Independent Auditor ERNST & YOUNG
Soci�t� anonyme
7 Parc d'Activit� Syrdall
L-5365 MUNSBACH
(1) Member of the Audit Committee
General Information
1. Shareholders will be sent audited annual accounts relating to THE EGYPT TRUST (the "Fund" or the "Corporation"),
which will include a report by the Manager, made up to the last day of March in each year. Shareholders will also
be sent an unaudited interim report covering the six-month period ending September 30th in each year.
2. The Annual General Meeting is held in Luxembourg each year at 4 p.m. on the third Tuesday of August in each year
(or, if such day is not a business day in Luxembourg, on the next following business day). Notices convening each
annual general meeting, including agenda, time and place, and details of attendance, quorum and majority
requirements under Luxembourg law, will be sent to the registered addresses of Shareholders together with the
annual report and accounts not less than 21 days before the date of such meeting.
3. The investment objective of the Corporation is to achieve medium to long-term capital growth through investment
principally in the equities of companies listed on the Egyptian Stock Exchange.
4. The Corporation intends to distribute annually to Shareholders substantially all of its income (including
dividends and interest) available for distribution after deducting fees and expenses.
5. Dividends will only be paid to the extent that they are covered by income received from underlying investments,
Shares of profits of associated companies being unavailable for this purpose unless and until distributed to the
Corporation. The Articles of Incorporation provide that dividends shall not be paid out of surpluses arising upon
the realisation of investments.
6. A dividend declared but not claimed by a Shareholder after twelve years from the declaration thereof shall lapse
and revert to the Corporation.
7. The Net Asset Value is expressed in US Dollars and is published on a weekly basis in the "Financial Times".
8. The Shares are listed on the London Stock Exchange.
Manager's Review
Responsibility Statement
We, the directors of Egypt Trust, confirm to the best of our knowledge that:
a) the condensed set of financial statements which have been prepared in
accordance with the applicable set of accounting standards (being the legal and
regulatory requirements in Luxembourg relating to investment funds) give a true
and fair view of the assets, liabilities, financial position and profit or loss
of the Fund;
b) the Interim Management Report includes a fair review of the information
required by the Disclosure and Transparency Rules 4.2.7R; and
c) the Interim Management Report includes a fair review of the information
required by the Disclosure and Transparency Rules 4.2.8R.
By order of the Board
Alexander Zagoreos
Chairman
November 30th, 2007
Manager's Review (continued)
Portfolio Performance (as of September 30th, 2007):
Quarter 6 Months YTD 1 Year 3 Year 5 Year Since
Inception
08/96
----------------------------- ------------ -------- -------- -------- -------- -------- ----------
Egypt Trust Fund NAV 11.57% 25.28% 28.92% 34.51% 53.31% 42.38% 13.92%
----------------------------- ------------ -------- -------- -------- -------- -------- ----------
IFC Egypt Investable USD(1) 10.93% 22.31% 24.83% 32.84% 64.69% 70.26% 13.09%
----------------------------- ------------ -------- -------- -------- -------- -------- ----------
The performance quoted represents past performance. Past performance does not
guarantee future results. Net of fees performance from inception.
(1) Inception Date for the index is February 20th, 1997
The Egyptian market continued its strong performance during the 6 months ending
September 30th, 2007 in line with global emerging markets. The growth was
fuelled by Egypt's improving macro fundamentals, and was reflected in strong
corporate earnings growth.
The strong performance was briefly interrupted during the quarter ending
September 30th, 2007 as the sub-prime mortgages crises in the US drove equity
markets around the world into panic for fear of a meltdown of global financial
markets. The market lost around 11% in 4 weeks before rebounding strongly and
ending the quarter with a gain of 10.9%.
Overall, the Egypt Trust gained 25.28% net of all fees during the six months
period ending September 30th, 2007. This compares with a return of 22.31% for
the index.
Below is a summary of what helped and hurt in the Egypt Trust portfolio.
Helped:
Overweight position in financials (Al Watany Bank 129%, Commercial International
Bank Egypt 38%)
Overweight in Egyptian Financial and Industrial Company (94%)
Overweight in Orascom Hotels and Development (73%)
Hurt:
Underweight position in Orascom Construction Industries (71%)
Underweight position in Real Estate
Overweight in Oriental Weavers (-25%)
Portfolio Composition:
The Egypt Trust's portfolio was slightly less concentrated by the end of this
quarter. The portfolio includes 23 names as compared to 19 by the end of last
quarter and the top 10 holdings represents 63.8% of NAV by end of September
compared to 67.12% of NAV. Financials and Telecoms remains the largest sectors
in the portfolio.
Manager's Review (continued)
Top 10 Holdings Portfolio Sector Allocation Egypt Trust
(%) Fund (%)
---------------------------------------- --------- ----------------------- ------------
Orascom Construction Industries 9.2 Financials 23.16
---------------------------------------- --------- ----------------------- ------------
Telecom Egypt 8.4 Telecom 20.23
---------------------------------------- --------- ----------------------- ------------
Construction & Real
Orascom Telecom 7.2 Estate 13.50
---------------------------------------- --------- ----------------------- ------------
National Societe Generale Bank 6.8 Building Materials 6.73
---------------------------------------- --------- ----------------------- ------------
Commercial International Bank Egypt 6.8 Pahramceuticals 5.98
---------------------------------------- --------- ----------------------- ------------
Egyptian International Pharmaceutical
Industries Company 5.5 Tourim & Hotels 6.33
---------------------------------------- --------- ----------------------- ------------
Orascom Hotels and Development 5.2 Petrochemicals 6.57
---------------------------------------- --------- ----------------------- ------------
Egyptian Financial and Industrial
Company 5.1 Others 17.50
---------------------------------------- --------- ----------------------- ------------
Alexandria Mineral Oils Company 4.9
---------------------------------------- ---------
Oriental Weavers 4.6
---------------------------------------- --------- ----------------------- ------------
TOTAL 63.70% TOTAL 100.00%
---------------------------------------- --------- ----------------------- ------------
Currently, no stock exceed the 10% single issuer limit and no sector exceeds the
25% sector limit.
The Economy
Egypt's macro picture continued to strengthen during 2007 as real GDP growth was
7.2% in the second quarter 2007. Fastest Growing sectors were Construction
(17%), Telecom (15%) and Hotels & Restaurants (14.4%).
Over Egypt's fiscal year 06/07 (which ends on June 30th) Current account surplus
amounted to 2.1% of GDP. During the last quarter of the fiscal year though (Q2
Calendar Year), current account showed a deficit of 0.4% of GDP but we do not
view this as a cause for concern. As a result of the economic performance in
addition to a generally weak dollar, the Egyptian pound gained 3.3% versus the
dollar (year to date) but still is 2% down versus the Euro.
On the less positive side, budget deficit remains high at 9.5% of GDP. This is
largely in-line with expectations and is a result of structural reforms carried
out in 2006.
Inflation proved to be a concern as it appeared to be more secular than the
government was promoting with September monthly inflation at 3.4% bringing year
to date inflation to 10.5%. We believe the recent appreciation of the pound was
an attempt to reduce the impact of inflation but we doubt the effectiveness of
this mechanism. We still believe that inflation was fuelled in part by over
liquidity and would like to see the Central Bank intervening with some
sterilizing mechanism.
Outlook
Compared to its historical average, Egyptian stocks are not as cheap as they
used to be. However, in the context of global emerging markets, Egypt remains
relatively cheap particularly with a proper reform story and strong earning
growth.
Potential currency appreciation increases the attractiveness of holding Egyptian
assets; Negative real interest rates increase attractiveness of real assets and
financial assets backed by real assets (Stocks). Perceived risks include
inflation spiraling out of control and significant emerging markets correction.
Luxembourg, October 26th, 2007
Lazard Asset Management
Note: The information in this report represents historical data and is not an
indication of future results.
THE EGYPT TRUST
Statement of Net Assets
(in USD)
September 30th, 2007 September 30th, 2006
------------------------------- --------------------------------
ASSETS
-------------------------------------
Securities' portfolio at market value 88,254,168 65,526,481
Cash at bank 3,596,174 5,350,872
Receivable on treasury transactions 343,584 -
Income receivable on portfolio 1,013,870 307,089
Interest receivable on bank accounts 5,700 16,325
Other receivables 77,808 14,871
Prepaid expenses 3,421 8,075
--------------- ----------------
Total assets 93,294,725 71,223,713
LIABILITIES
-------------------------------------
Bank liabilities 944,241 1,458,022
Payable on repurchased of Shares 501,118 -
Interest payable on bank accounts - 6,240
Expenses payable 281,884 140,190
Other liabilities - 20,330
--------------- ----------------
Total liabilities 1,727,243 1,624,782
---------------- ----------------
NET ASSETS at the end of the period 91,567,482 69,598,931
================ ================
Number of Shares outstanding 2,459,945 2,570,844
Net Asset Value per Share 37.22 27.07
Shareholders' Equity represented by
(in USD)
September 30th, 2007 September 30th, 2006
-------------------------- -------------------------
Capital: 8,513,347 Shares at USD 2.00 17,026,694 17,026,694
Share premium 73,633,306 73,633,306
Legal reserve 1,702,669 1,702,669
Profit/Loss brought forward 33,192,484 23,295,229
------------- ------------
Total Capital and Reserves 125,555,153 115,657,898
Cost of 1,663,837 Shares held in Treasury -15,939,917 -15,939,917
Repurchase of 4,389,565 Shares at the request
of Shareholders -59,959,021 -56,701,383
Net realised gain for the period 10,484,396 3,846,909
Unrealised appreciation on securities 31,426,871 24,277,850
Dividend - -1,542,426
------------- -------------
Total Shareholders' Equity 91,567,482 69,598,931
============= =============
The accompanying notes are an integral part of these financial statements.
Statement of Operations
(in USD)
From April 1st, 2007 From April 1st, 2006
to September 30th, 2007 to September 30th, 2006
------------------------- -----------------------
INCOME
---------------------------------------------------------------
Dividends, net 2,419,607 1,070,656
Interest on bank accounts 93,912 211,949
Received commissions 32,711 106,858
Other income 4,246 -
------------------------- -----------------------
Total income 2,550,476 1,389,463
EXPENSES
---------------------------------------------------------------
Management fees 417,933 318,119
Advisory fees 104,483 76,372
Custodian fees 14,824 11,866
Bank and financial services 125,908 103,340
Central administration costs 29,059 30,931
Audit and supervisory fees 22,113 24,058
Printing and publication expenses 37,499 6,340
Subscription duty ("taxe d'abonnement") 21,742 15,966
Interest paid 318 14,587
Directors' fees and expenses 78,945 102,404
Other expenses 14,095 7,481
------------------------- -----------------------
Total expenses 866,919 711,464
------------------------- -----------------------
NET INVESTMENT INCOME 1,683,557 677,999
NET REALISED GAIN/LOSS
---------------------------------------------------------------
- on sale of securities (-1 year) 282,515 576,981
- on sale of securities (+1 year) 8,484,191 2,658,443
- on foreign exchange 34,133 -66,514
------------------------- -----------------------
REALISED GAIN 10,484,396 3,846,909
CHANGE IN NET UNREALISED APPRECIATION
---------------------------------------------------------------
- on securities 8,006,682 557,058
------------------------- -----------------------
Increase in Net assets as a Result of Operations 18,491,078 4,403,967
========================= =======================
Repurchase of Shares at the request of Shareholders -653,364 -2,130,584
Dividend paid - -1,542,426
------------------------- -----------------------
TOTAL CHANGE IN NET ASSETS 17,837,714 730,957
TOTAL NET ASSETS AT THE BEGINNING OF THE PERIOD 73,729,768 68,867,974
------------------------- -----------------------
TOTAL NET ASSETS AT THE END OF THE PERIOD 91,567,482 69,598,931
========================= =======================
The accompanying notes are an integral part of these financial statements
Statement of Changes in Net Assets
(in USD)
From April 1st, 2007 From April 1st, 2006
to September 30th, 2007 to September 30th, 2006
--------------------------- -----------------------------
Net Assets at the beginning of the period 73,729,768 68,867,974
Net investment income 1,683,557 677,999
Net realised gain/loss on foreign exchange 34,133 -66,514
Net realised gain on sale of securities (-1
year) 282,515 576,981
Net realised gain on sale of securities (+1
year) 8,484,191 2,658,443
------------- -------------
Net realised gain for the period 10,484,396 3,846,909
Repurchase of Shares at the request of
Shareholders -653,364 -2,130,584
Change in unrealised appreciation on securities 8,006,682 557,058
Dividend paid - -1,542,426
------------- ---------------
Net Assets at the end of the period 91,567,482 69,598,931
============= ===============
Statistical Information about the Fund
(in USD)
September 30th, 2007 March 31st, 2007 March 31st, 2006
------------------------- ------------------------- -------------------
Total Net Assets 91,567,482 73,729,768 68,867,974
Net Asset Value per Share 37.22 29.75 25.95
Statement of Changes in Shares Outstanding
For the period ended September 30th, 2007
Number of Shares Outstanding at the beginning of the period 2,477,917
Number of Shares repurchased held in Treasury -
Number of Shares repurchased at the request of Shareholders -17,972
------------
Number of Shares Outstanding at the end of the period 2,459,945
------------
The accompanying notes are an integral part of these financial statements
Statement of Investments and other Net Assets
September 30th, 2007
(in USD)
---------------------------------------------------------------------------------------------------------------
Currency Number / Description Cost Market value % of
nominal value total net
assets
-------- --------------- --------------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
----------------------------------------------------------------------
TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING
----------------------------------------------------------------------
Shares
----------------------------------------------------------------------
Banks
EGP 450,000 Commercial Intl Bank Ltd 1,522,485 6,186,845 6.76
EGP 200,000 Credit Agricole Egypt 611,986 642,148 0.70
EGP 300,000 El Watany Bank 979,238 4,026,846 4.40
EGP 850,000 National Soci�t� G�n�rale Bank Reg 854,726 6,228,009 6.80
----------- ------------- -------------
3,968,435 17,083,848 18.66
Capital goods
EGP 100,000 Orascom Construction Industrie Reg 1,620,926 8,433,289 9.21
Consumer durables and apparel
EGP 275,000 Olympic Group Fin Inv Co SAE 2,177,660 3,399,418 3.71
EGP 375,000 Oriental Weavers Co 4,747,192 4,228,188 4.62
----------- ------------- -------------
6,924,852 7,627,606 8.33
Diversified financial services
EGP 500,000 EFG-Hermes 2,745,311 4,119,016 4.50
Energy
EGP 350,000 Alexandria Mineral Oils Co 5,001,061 4,503,177 4.92
Hotels, restaurants and leisure
EGP 400,000 Orascom Hotels and Dev Reg 997,957 4,768,501 5.21
Materials
EGP 200,000 Egyptian Financial & Indust Co Reg 1,585,416 4,708,009 5.14
EGP 100,000 El Ezz Steel Rebars SAE 1,014,739 941,208 1.03
EGP 225,000 Paint and Chemical Ind 1,412,739 2,344,027 2.56
EGP 550,000 Sidi Kerir Petrochemicals 1,745,556 1,704,877 1.86
EGP 120,000 Suez Cement Co 1,236,005 1,276,134 1.39
EGP 75,000 Torah Portland Cement Co 1,863,449 1,710,067 1.87
----------- ------------- -------------
8,857,904 12,684,322 13.85
Pharmaceuticals and biotechnology
EGP 1,000,000 Egyptian Intl Pharm Industr Co 3,045,769 5,046,980 5.51
EGP 33,897 Memphis Pharmaceutic Chem Ind 526,830 422,901 0.46
----------- ------------- -------------
3,572,599 5,469,881 5.97
Real estate
EGP 125,000 Sixth of Octob Dev & Inv Co SA 3,472,725 3,959,060 4.32
Telecommunication services
EGP 125,000 Egyptian Co for Mobile Com 2,739,797 4,172,259 4.56
EGP 500,000 Orascom Telecom Holding 5,009,247 6,614,765 7.22
EGP 2,500,000 Telecom Egypt 7,177,580 7,731,544 8.44
----------- ------------- -------------
14,926,624 18,518,568 20.22
----------- ------------- -------------
Total shares 52,088,394 87,167,268 95.19
OTHER TRANSFERABLE SECURITIES
----------------------------------------------------------------------
Shares
----------------------------------------------------------------------
Hotels, restaurants and leisure
USD 44,454 First Arabian Hotels & Resorts 4,738,903 1,086,900 1.19
----------- ------------- -------------
Total shares 4,738,903 1,086,900 1.19
----------- ------------- -------------
TOTAL INVESTMENTS IN SECURITIES 56,827,297 88,254,168 96.38
CASH AT BANKS 3,596,174 3.93
OTHER NET ASSETS/(LIABILITIES) -282,860 -0.31
------------- -------------
TOTAL 91,567,482 100.00
============= =============
The accompanying notes are an integral part of these financial statements.
Currency, Geographical and Industrial Classification of the Portfolio
September 30th, 2007
(in percentage of net assets)
Currency Classification
Egyptian Pound 95.19 %
US Dollar 1.19 %
----------
TOTAL INVESTMENTS IN SECURITIES 96.38 %
US Dollar 3.93 %
----------
TOTAL CASH AT BANKS 3.93 %
OTHER ASSETS AND LIABILITIES -0.31 %
==========
TOTAL 100.00 %
==========
Geographical Classification
Egypt 96.38 %
----------
TOTAL INVESTMENTS IN SECURITIES 96.38 %
OTHER ASSETS AND LIABILITIES 3.62 %
==========
TOTAL 100.00 %
==========
Industrial Classification
Telecommunication services 20.22 %
Banks 18.66 %
Materials 13.85 %
Capital goods 9.21 %
Consumer durables and apparel 8.33 %
Hotels, restaurants and leisure 6.40 %
Pharmaceuticals and biotechnology 5.97 %
Energy 4.92 %
Diversified financial services 4.50 %
Real estate 4.32 %
----------
TOTAL INVESTMENTS IN SECURITIES 96.38 %
OTHER ASSETS AND LIABILITIES 3.62 %
==========
TOTAL 100.00 %
==========
The accompanying notes are an integral part of these financial statements.
Notes to the Financial Statements
September 30th, 2007
NOTE 1 - GENERAL
THE EGYPT TRUST (the "Fund" or the "Corporation") is a closed-end investment
corporation incorporated as an investment corporation under the laws of the
Grand Duchy of Luxembourg and qualifies as a "soci�t� d'investissement � capital
fixe" under the amended law of December 20th, 2002 (the "2002 law") regarding
undertakings for collective investments and the law of August 10th, 1915, as
amended regarding commercial companies. The Fund is governed by Part II of the
Luxembourg 2002 law.
The Fund was incorporated in Luxembourg on July 23rd, 1996 for an indefinite
period.
The Fund's Articles have been published in the "M�morial, Recueil des Soci�t�s
et Associations" and they have been filed with the Registrar of the Luxembourg
District Court, where copies thereof may be obtained. In addition, a legal
notice concerning the issue of the Shares is on file with the Registrar of the
Luxembourg District Court.
The Fund's investment objective is to achieve medium to long term capital growth
through investment principally in the equities of companies listed on the
Egyptian Stock Exchange.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
a) Presentation of Accounts
The financial statements are presented in conformity with Luxembourg legal and
regulatory requirement relating to investment funds. The Fund keeps its books
and records in USD.
b) Valuation
1) The Net Asset Value per Share is calculated in accordance with Article 22 of
the Articles on each Valuation Date (as defined in the Articles). "Valuation
Date" means the date fixed by the Board for the valuation of the Shares being
Friday of each week (or, if that day is not a business day in Luxembourg, on the
next business day).
The Net Asset Value per Share is determined by dividing the Net Assets of the
Fund, being the value of its assets less liabilities, by the number of Shares
then outstanding.
2) In calculating the Net Asset Value, income and expenses are treated as
accruing from day to day and the Articles of Incorporation provide, inter alias,
that:
(i) unquoted investments will initially be valued at cost price, which will
include any expenses relating to their acquisition;
(ii) a revaluation of unquoted investments to a value in excess of or below cost
may be made where, in the opinion of the Board, or in the opinion of the Fund's
Manager (where the Board has delegated its powers), it is justified. Factors
affecting such revaluations may include: the prices at which further issues of
capital or dealings between third parties take place, the market value of
comparable companies (making appropriate adjustments for such factors as
limitation of marketability) or the price at which any agreement has been
entered into, or is reasonably contemplated, for the sale of the investments;
(iii) securities which are listed on an official stock exchange or traded on any
other regulated market will be valued at the last available price on the
principal market on which such securities are traded, or by a pricing service
approved by the Board;
(iv) assets or liabilities expressed in terms of currencies other than US
dollars will be translated into US dollars at the prevailing market rate for
such currencies at the Valuation Date.
3) First-in first-out method: purchases of securities are recorded at cost.
Realized gains and losses on securities sold are computed on the first-in
first-out basis.
4) The value of cash in hand or on deposit, bills and notes payable on
presentation, accounts due, prepaid expenses and dividends and interest declared
and fallen due but not yet received consists of the nominal value of such
assets, except, however, in the event that it seems improbable that such value
can be realized, in which event the value is determined by deducting a sum which
the Board of Directors of the Fund considers appropriate to reflect the
realizable value of such assets.
5) Foreign currencies monetary assets and liabilities denominated in foreign
currencies in the Statement of Net Assets are translated into USD at the rates
of exchange ruling at the date of the report. Transactions in foreign currencies
are recorded in USD based on the exchange rates in effect at the date of
transactions. The following significant exchange rates have been applied for the
conversion as at the date of the report:
USD
1 EGP Egyptian Pound 0.1789709
1 EUR Euro 1.4217500
c) Income Recognition
Interest is recorded on an accrual basis, net of any withholding taxes in the
relevant country. Dividend income is recorded on the ex-date, net of any
withholding taxes in the relevant country
d) Net Realised Gain/Loss
The net realised gain/loss on sale of securities is split between two accounts
depending on the fact that the securities have been owned during more than one
year or not.
NOTE 3 - MANAGEMENT AND ADVISORY FEES
The Fund pays to Lazard Asset Management LLC, the Manager, annual management
fees of 1.00%, of the value of the gross assets of the Corporation, payable
monthly in arrears and to National Bank of Egypt, the Investment Advisor, 0.25%,
per annum, of the value of the gross assets of the Corporation, payable monthly
in arrears.
NOTE 4 - TAXES
As a Luxembourg investment company, under present laws the Fund is not subject
to income taxes in Luxembourg. Taxes may be withheld at the source on dividends
and interest received on investment securities.
According to the Luxembourg amended law of December 20th, 2002, the Fund is
subject to Luxembourg subscription duty ("taxe d'abonnement") at the rate of
0.05% per annum of its Net Assets, such tax being payable quarterly on the basis
of the Total Net Assets of the Fund at the end of the relevant quarter.
NOTE 5 - REPURCHASES OF SHARES HELD IN TREASURY
The Fund is not obliged to purchase Shares at the request of Shareholders.
The maximum price at which Shares can be repurchased will be the Net Asset Value
per Share. Under Luxembourg law, repurchases may only be made to the extent that
the Corporation has distributable reserves available for the purpose, being
Share premium or accumulated reserves.
Any Shares so repurchased will be held in treasury or will be cancelled by way
of reduction of issued capital. The Shares held in treasury may be resold at any
time, at the discretion of the Directors, if a premium to the Net Asset Value
per Share may be obtained. Details of such repurchases and sales will be
communicated to all Shareholders as well as to the London and the Luxembourg
Stock Exchanges and to the Egyptian Stock Exchange if the Shares are there
listed.
The Fund did not repurchase any Shares during the financial period ended
September 30th, 2007. At the date of the report, a total of 1,663,837 Shares are
held in Treasury for an amount of USD 15,939,917.
NOTE 6 - REPURCHASES AT THE REQUEST OF SHAREHOLDERS
Following to the Extraordinary General Meeting on November 17th, 2003 and to the
circular resolution on December 24th, 2003 Shareholders may request the
Corporation from December 29th, 2003 to redeem all or part of their Shares
quarterly at a redemption price equal to the Net Asset Value of the applicable
Valuation Date, reduced by a redemption fee of up to 5% for the benefit of the
Corporation to cover dealing charges. Such redemption fee amounts to USD 32,711
as of September 30th, 2007 and is registered under the caption "received
commissions" in the statement of operations in the report. The Corporation shall
redeem such Shares within the sole limitations set forth by law, the Articles of
Incorporation and the prospectus and subject to any event giving rise to
suspension as referred in the prospectus.
If the total value of requests for redemption of Shares received on any specific
redemption date exceeds 10% of the total Net Asset Values of Shares in issue,
the redemption requests will be reduced pro rata to the holdings of the
Shareholders who applied for redemption.
NOTE 7 - CAPITAL
The authorized Share capital of the Corporation on incorporation was USD
40,000,000 divided into 20,000,000 Shares with a par value of USD 2 each.
On December 12th, 1997, a capital increase of 8,490,847 Shares has been
registered with a par value of USD 2.
The Fund is required by Luxembourg law to transfer at least five percent of its
yearly net profits to a non-distributable legal reserve until such reserve
amounts to ten percent of the Fund's nominal Share capital. This reserve is not
available for dividend distribution.
According to the Fund's Annual General Meeting Minutes on August 21st, 2007 no
dividend has been distributed.
NOTE 8 - RECEIVABLE ON SALES OF SECURITIES AND PAYABLE ON PURCHASES OF
SECURITIES
Amounts under the caption "Receivable on sales of securities" relate to sales of
securities, which have been partially delivered by the Fund, or with delayed
delivery, as at the date of the report. Amounts under the caption "Payable on
purchases of securities" relate to purchases of securities which have been
partially received by the Fund, or with delayed reception, as at the date of the
report.
NOTE 9 - CUSTODIAN FEES
The Custodian will receive, under the terms of the Custodian Agreement, fees for
its services at rates to be agreed from time to time between the Fund and the
Custodian in accordance with Luxembourg practice.
NOTE 10 - DIRECTORS FEES
Each of the Directors shall be paid a fee at such a rate (if any) as the Board
of Directors shall determine provided that the aggregate of such fees shall not
exceed USD 200,000 per annum or such higher amount as may from time to time be
decided by resolution of the Corporation.
The Directors shall also be entitled to reimbursement of all travelling, hotel
and other expenses properly incurred by them in attending and returning from
meetings or otherwise in connection with the business of the Corporation.
NOTE 11 - BENEFICIAL AND NON-BENEFICIAL INTEREST OF DIRECTORS IN THE SHARE
CAPITAL
As of September 30th, 2007 the beneficial and non-beneficial interests of the
Directors in the Share capital are the following:
Alexander E. Zagoreos 2,500 Shares
NOTE 12 - DIRECTORS' INTEREST IN SIGNIFICANT CONTRACTS
Alexander E. Zagoreos was a Managing Director of Lazard Asset Management LLC
through December 31st, 2005 and became a Limited Managing Director and Senior
Advisor effective
January 1st, 2006.
NOTE 13 - SUBSTANTIAL SHAREHOLDING
All issued Shares of the Fund are on deposit with a registered clearinghouse
and, accordingly, the Directors are not in a position to state the exact size of
any Share holdings in the Fund.
NOTE 14 - CHANGES OF THE INVESTMENT PORTFOLIO
The changes of the investment portfolio referring to the period of the report
are available free of charge at the registered office of the Fund.
NOTE 15 - ADDENDUM TO THE PLACING MEMORANDUM
The Board of Directors has resolved to amend the prospectus with a consolidated
addendum to the prospectus dated August 2nd, 1996. The prospectus may not be
distributed without the consolidated addendum dated December 2003.
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