TIDMEGP
THE EGYPT TRUST
Organisation of the Fund
Chairman
ALEXANDER E. ZAGOREOS Jermain Hill Lane
U.S.A.-Eagle Bridge, NY 12057
Directors
MICHAEL BECKETT * Northcroft Dulwich Commons
U.K.-London SE21 7EW
SHAKER ALBERT KHAYATT * KHAYATT & COMPANY INC.
50 Broad Street, Suite 1609
U.S.A.-New York, NY 10004
MOHAMED KAMAL EL-DIN BARAKAT * 151 Mohamed Farid Street
EGYPT, Cairo
MICHAEL TAIT * 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
EGYPT, Cairo
* Member of the Audit Committee
Note : Mr HASSANEIN has resigned from the Board of Directors as of 1st October 2008, but due to an administrative error this had not been correctly reflected in the last annual report.
THE EGYPT TRUST
Organisation of the Fund (continued)
Custodian and Paying Agent KBL European Private Bankers S.A.
43, boulevard Royal
L-2955 Luxembourg
Domiciliary, Registrar, Transfer KREDIETRUST LUXEMBOURG S.A.
and Administrative Agent 11, rue Aldringen
L-2960 Luxembourg
Independent Auditor DELOITTE S.A.
560, rue de Neudorf
L-2220 Luxembourg
Financial Adviser and Broker Arbuthnot Securities Limited
Arbuthnot House
20, Ropemaker Street
U.K.-London EC2Y 9AR
THE EGYPT TRUST
General Information
Responsibility Statement
We, the Directors of the Egypt Trust, confirm to the best of our knowledge that:
a) the 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 Manager's Review includes a fair review of the development and performance of the business and the position of the Fund together with a description of the principal risks and uncertainties that it faces; and
c) the notes to the financial statements include a fair review of related party transactions which have taken place in the first six months of the financial year and any related changes.
By order of the Board
Alexander E. Zagoreos
Chairman
November 2009
Investment Policy
Asset Allocation
-- The Fund invests primarily in equity securities of Egyptian companies
listed on Cairo and Alexandria Stock Exchanges as well as other
exchanges.
-- We use a bottom-up, fundamental company analysis to identify companies
that have strong earnings-generation ability but are inexpensively
priced.
-- We continuously monitor potential and existing holdings in the Fund,
in addition to the overall macro-economic environment in Egypt. The
asset allocation and security selection changes accordingly.
Risk Diversification:
-- The Fund will run a fairly concentrated portfolio subject to exposure
limits detailed below; but in the meanwhile aims to provide broad
exposure to the market through holding a diversified portfolio.
-- The liquidity of the Egyptian market is fairly limited compared to
developed markets. When making an investment decision, liquidity
concerns weigh in. We aim to keep 90 percent of the Fund's NAV in
highly liquid securities and cash. The remaining 10 percent would
provide the flexibility to invest in attractively priced securities
with low liquidity or in pre-IPO companies.
-- We seek to invest in undervalued assets trading at a discount
(absolute and/or relative). Such discounts could limit the portfolio's
downside risk, and add more value during rising markets
Exposure Limits:
-- Maximum weighting in any single security should not exceed 10 percent
of NAV - Passive breaches should be brought back in line with the
policy in manner consistent with the best interest of the
shareholders, and
-- Maximum weighting in any single sector should not exceed 25 percent of
NAV. The Fund treats Real Estate & Property Development as a separate
sector and not part of financials.
Gearing:
-- The Fund's Manager is not allowed to use gearing.
THE EGYPT TRUST
Manager's Review
Portfolio Performance & Market Overview:
(Price Q endingSEP 30 Q endingJUN 30 6 Monthsto 1 Year toSEP 30
Only - SEP30
Net of
Fees)
=------------------------------------------------------------------------
Egypt Trust 32.37 27.15
Fund
NAV ($)
=------------------------------------------------------------------------
Egypt Trust 27.89% 19.23% 52.47% 2.02%
Fund
NAV Return
=------------------------------------------------------------------------
Egypt Trust 30.38 24.0
Fund
Price ($)
=------------------------------------------------------------------------
Egypt Trust 26.58% 44.32% 82.68% -20.75%
Fund
Price
Return
=------------------------------------------------------------------------
IFC 251.78 210.30
Egypt
Investable
USD (value)
=------------------------------------------------------------------------
IFC 35.09% 19.72% 61.73% -3.57%
Egypt
Investable
USD Return
=------------------------------------------------------------------------
=------------------------------------------------------------------------
Following its two worst quarterly returns back-to-back, the Egyptian exchange enjoyed a strong recovery in the six months April - September 2009 following in the footsteps of world equity markets. This global recovery in equity markets were driven mainly by improved credit conditions , historically low interest rates in most major economies and more importantly a major shift in investors' sentiment from being overly bearish during Q4-08 and Q1-09 to being optimistic the following two quarters.
In line with the soaring market, the Egypt Trust NAV gained 52.47% in the six months to September 30th, 2009. Two factors caused the Trust to underperform the index. First the composition of the index which remains highly concentrated with Orascom Construction and Orascom Telecom representing around 40% while the trust is more broadly diversified. The second factor is the lower risk approach we adopted with higher focus on defensive stocks and a relatively large cash position.
Portfolio Structure
The Egypt Trust's portfolio concentration was reduced as the collapse in equity prices earlier in the year created attractive investment opportunities in more shares enabling us to increase the diversity of the portfolio. As of September 30th, 2009, the Egypt Trust held 30 names.
The top 10 holdings in the portfolio now constitute 53.48% of NAV, down from 61.6% at the end of March 2009. Details of the top 10 holdings could be found in the table below.
Top 10 Holdings Portfolio (%)
=-------------------------------------------------
Orascom Construction Industries 7.10%
=-------------------------------------------------
Egyptian Intl Pharma Industries Co 7.03%
=-------------------------------------------------
National Société Générale Bank 6.46%
=-------------------------------------------------
Orascom Telecom Holding 5.94%
=-------------------------------------------------
Telecom Egypt 5.80%
=-------------------------------------------------
EFG-Hermes Holding 4.53%
=-------------------------------------------------
Talaat Moustafa Group Holding 4.45%
=-------------------------------------------------
Commercial Intl Bank Ltd 4.33%
=-------------------------------------------------
EFIC 3.97%
=-------------------------------------------------
Alexandria Mineral Oils Co 3.87%
=-------------------------------------------------
TOTAL 53.48%
=-------------------------------------------------
=-------------------------------------------------
Currently, no stock exceeds the 10% single issuer limit.
Sector allocation witnessed some changes as Telecom for the first time wasn't one of our two top sectors. This was largely the result of selling down our position in Mobinil which, in our opinion, became fully valued as France Telecom's desire to acquire the company became public earlier in the year. Telecom was replaced by real estate which we increased our investment in as stock prices reached what we believed was deeply undervalued levels.
Sector Allocation MAR 09 SEP 09
=----------------------------------------
Financial 20.95 21.71
=----------------------------------------
Telecom 18.48 11.74
=----------------------------------------
Real Estate 11.16 14.23
=----------------------------------------
Material 10.57 13.34
=----------------------------------------
Industrial 9.64 9.57
=----------------------------------------
Petrochemicals 9.08 6.80
=----------------------------------------
Healthcare 8.29 7.93
=----------------------------------------
Consumer Discretionary 5.57 6.59
=----------------------------------------
Net Current Assets 6.26 8.09
=----------------------------------------
=----------------------------------------
TOTAL 100.00% 100.00%
=----------------------------------------
=----------------------------------------
Economic Overview:
Egypt's GDP managed to grow at annualized rate of 4.5% during the first half of 2009; while a significant drop from the almost 8% achieved during the same period last year, this is one of the highest growth rates for that period globally and particularly in investable emerging markets. We believe this highlights the strength and resilience of the local demand.
Source: IMF World Outlook Database (Financial Tables Not Included)
Similarly resilient was the headline inflation (CPI) which more than halved from a high of around 24% in mid 2008 to around 10% by September 2009 but, similar to GDP growth, remains one of the highest inflation figures in global markets. We believe this supports our belief that inflation in Egypt is more related to market inefficiencies than traditional supply and demand factors and as a result, monetary policy tools would be less effective in fighting inflation. Nevertheless, we view positively the Central Bank's decision to reduce rates for the sixth consecutive time to 8.25% as an attempt to stimulate the economy.
On the fiscal side, the global slow down has caused government revenues to fall short of forecast while forcing the government to increase expenditures through a stimulus package; the result was a widening budget deficit to EGP 71.9 billion representing 6.9% of GDP; we forecast the budget deficit to continue to widen in fy 2009/2010 to around 7.5%
Outlook
We now have better visibility than six month ago and a stronger conviction that the Egyptian economy will continue to grow albeit at a slower rate; we forecast that the GDP growth in Egypt will range between 5-6% over the next couple of years. Supporting this forecast is a healthy and liquid banking system that is able to finance growth. On the other side, we identify two major risks to our forecast:
-- The first is the ability of Egyptian producers to compete in a world
of global excess capacity;
-- The second is budget deficit spiraling out of control, putting more
upward pressure on inflation eventually causing the Central Bank to
significantly raise rates putting the brakes on the economy.
In terms of equity valuation, we view the current valuations as reasonable within the context of global emerging market; we believe further gains for Egyptian equities would come from positive earnings surprises rather than multiple expansion. Supporting this, is the ability of many corporates to maintain their margins during the past two quarters through aggressive cost cutting which would cause any top line improvement to be reflected positively in the bottom line.
In light of the developments, we have shifted the Egypt's Trust portfolio from a conservative to a neutral bias as we are still not ready to completely adopt an aggressive portfolio until we have a strong conviction about the economy and our investments
Principal Risks and Uncertainties
The success of the Fund may be affected by general economic and market conditions, such as widening discounts, interest rate changes, availability of credit, inflation rates, economic uncertainty, changes in laws, and national and international political circumstances. These factors may affect the level and volatility of securities that the Fund invests in. The Manager actively monitors these factors and, to the degree possible, attempts to mitigate their negative impact on the Fund.
The Fund invests in securities issued primarily by companies located in Egypt. The Egyptian securities markets can be extremely volatile. The Fund's performance will be influenced by political, social and economic factors affecting companies in Egypt. As an emerging market country, Egypt can generally have an economic structure that is less diverse and mature, and a political system that is less stable, than those of developed countries. Further, a fund, such as the Fund, that invests substantially all of its assets in securities of issuers in one country may experience significantly greater volatility that a fund that invests in a more geographically diverse portfolio.
November 2009 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)
ASSETS September 30th, 2009 March 31st, 2009
Securities' portfolio 66,491,597 48,338,381
at market value
Cash at bank 14,162,158 5,086,232
Receivable on sales of securities 787,033
Income receivable on portfolio 159,613 286,741
Interest receivable 433 198
on bank accounts
Prepaid expenses 3,252 1,038
Total assets 80,817,053 54,499,623
LIABILITIES
Bank liabilities 1,346,082 2,631,048
Payable on purchases of securities 818,686 -
Payable on repurchases of Shares 5,898,311 -
Expenses payable 418,491 300,654
Total liabilities 8,481,570 2,931,702
Net Assets at the End 72,335,483 51,567,921
of the Period/Year
Number of Shares outstanding 2,234,809 2,429,483
Net Asset Value per Share 32.37 21.23
Shareholders' Equity
represented by
(in USD)
September 30th, 2009 March 31st, 2009
Capital: 8,513,347 17,026,694 17,026,694
Shares at USD 2.00
Share Premium 73,633,306 73,633,306
Legal Reserve 1,702,669 1,702,669
Profit brought forward 68,699,528 61,553,644
Cost of 1,663,837 Shares -15,939,917 -15,939,917
held in Treasury
Repurchase of 4,605,402 -67,520,678 -61,125,930
Shares at the request
of Shareholders
Total Capital and Reserves 77,601,602 76,850,466
Net realised gain for 2,264,069 7,145,884
the period/year
Unrealised depreciation -7,530,188 -32,428,429
on securities
Total Shareholders' Equity 72,335,483 51,567,921
The accompanying notes
are an integral
part of these financial
statements
Statement of
Operations
(in USD)
From April 1st, 2009 From April 1st, 2008
INCOME to September 30th, 2009 to September 30th, 2008
Dividends, net 2,266,510 3,465,172
Interest on bank 7,315 72,370
accounts
Received commissions 318,969 -
Total income 2,592,794 3,537,542
EXPENSES
Management fees 346,205 507,955
Advisory fees 86,551 126,989
Custodian fees 13,169 19,833
Bank and financial 88,987 215,072
services
Central 35,068 41,181
administration
costs
Audit 30,574 34,377
and supervisory
fees
Printing and 10,741 26,358
publication
expenses
Subscription 17,187 23,134
duty ("taxe
d'abonnement")
Directors' fees 155,991 201,834
and expenses
Other expenses 49,468 103,086
Total expenses 833,941 1,299,819
NET INVESTMENT 1,758,853 2,237,723
INCOME
NET REALISED
GAIN/LOSS
- on sale of -60,309 4,847,367
securities
(-1 year)
- on sale of 599,427 398,272
securities
(+1 year)
- on foreign -33,902 -78,519
exchange
REALISED GAIN 2,264,069 7,404,843
CHANGE
IN
NET
UNREALISED
APPRECIATION/DEPRECIATION
- on securities 24,898,241 -45,445,736
INCREASE/DECREASE 27,162,310 -38,040,893
IN NET ASSETS
AS A RESULT OF
OPERATIONS
The accompanying
notes
are an integral
part of these
financial
statements.
From April 1st, 2009From April 1st, 2008
to September 30th, 2009to September 30th, 2008
Statement of Changes
in Net Assets
(in USD)
From April 1st, 2009 From April 1st, 2008
to September 30th, 2009 to September 30th, 2008
Net Assets at the 51,567,921 115,445,281
Beginning
of the Period
Net investment income 1,758,853 2,237,723
Net realised loss on -33,902 -78,519
foreign exchange
Net realised gain/loss -60,309 4,847,367
on sale
of securities (-1 year)
Net realised gain on sale 599,427 398,272
of securities (+1 year)
Net realised gain 2,264,069 7,404,843
for the period
Repurchases of -6,394,748 -
Shares at the
request of Shareholders
Change 24,898,241 -45,445,736
in
unrealised
appreciation/depreciation
on securities
Net Assets at the End 72,335,483 77,404,388
of the Period
Statistical Information about the Fund
(in USD)
September 30th, 2009 March 31st, 2009 March 31st, 2008
Net Assets 72,335,483 51,567,921 115,445,281
Net Asset Value 32.37 21.23 47.34
per Share
Statement of Changes in Shares Outstanding
For the period ended September 30th, 2009
Number of Shares Outstanding at 2,429,483
the Beginning of the Period
Number of Shares repurchased held in Treasury -
Number of Shares repurchased at -194,674
the request of Shareholders
Number of Shares Outstanding at the End of the Period 2,234,809
Statement of Investments and other Net Assets September 30th, 2009(in USD)
Currency Number /nominal value Description Cost Market value % oftotal netassets
INVESTMENTS IN SECURITIES
TRANSFERABLE SECURITIES ADMITTED TO AN OFFICIAL STOCK EXCHANGE LISTING
Shares
Banks
EGP 300,000 Commercial Intl Bank Ltd 704,366 3,128,680 4.33
EGP 750,000 Credit Agricole Egypt 1,424,669 1,746,183 2.41
EGP 900,000 National Société Générale Bank Reg 1,303,374 4,671,756 6.46
3,432,409 9,546,619 13.20
Capital goods
EGP 125,000 El Sewedy Cables Hg Co 2,311,249 1,788,441 2.47
EGP 120,000 Orascom Construction Industrie Reg 5,364,803 5,135,224 7.10
7,676,052 6,923,665 9.57
Consumer durables and apparel
EGP 250,000 Olympic Group Fin Inv Co SAE 1,629,534 1,496,728 2.07
EGP 300,000 Oriental Weavers Co 2,585,004 1,847,328 2.55
4,214,538 3,344,056 4.62
Diversified financial services
EGP 600,000 EFG-Hermes 5,619,301 3,275,900 4.53
EGP 1,500,000 Pioneers Holding 2,087,724 1,826,609 2.52
7,707,025 5,102,509 7.05
Energy
EGP 350,000 Alexandria Mineral Oils Co 5,001,061 2,800,891 3.87
Hotels, restaurants and leisure
EGP 2,750,000 Talaat Moustafa Group Holding 5,096,343 3,218,830 4.45
Insurance
EGP 312,500 Delta Insurance 875,713 1,052,458 1.45
Investment companies
USD 1,500,000 Al Arafa Inv & Consulting 1,629,275 1,275,000 1.76
Materials
GBP 500,000 Centamin Egypt Ltd 759,640 767,256 1.06
EGP 650,000 Egyptian Financial & Indust Co Reg 1,453,051 2,868,411 3.97
EGP 450,000 El Ezz Steel Rebars SAE 1,767,715 1,250,545 1.73
EGP 200,000 Paint and Chemical Ind 1,282,264 1,509,633 2.09
EGP 1,000,000 Sidi Kerir Petrochemicals 3,557,373 2,117,412 2.93
EGP 200,000 Suez Cement Co 1,915,604 1,494,002 2.07
EGP 225,000 Tourah Cement Co 1,865,343 1,760,087 2.43
12,600,990 11,767,346 16.28
Pharmaceuticals and biotechnology
EGP 800,000 Egyptian Intl Pharm Industr Co 1,910,414 5,081,788 7.03
EGP 50,845 Memphis Pharmaceutic Chem Ind 527,052 657,788 0.91
2,437,466 5,739,576 7.94
Real estate
EGP 300,000 Heliopolis Housing & Dev SA 4,639,377 2,176,118 3.01
EGP 125,000 Namaa Dév Real Estate InvestCo 292,053 385,541 0.53
EGP 150,000 Nasr City Housing & Dev SA 919,534 976,281 1.35
EGP 750,000 Palm Hills Devlopments SAE 1,267,340 1,207,743 1.67
EGP 150,000 Sixth of Octob Dev & Inv Co SA 4,537,735 2,327,154 3.22
11,656,039 7,072,837 9.78
Retailing
EGP 100,000 B-Tech 61,514 153,944 0.21
Telecommunication services
EGP 675,000 Orascom Telecom Holding 7,259,437 4,297,574 5.94
EGP 1,300,000 Telecom Egypt 4,373,923 4,196,292 5.80
11,633,360 8,493,866 11.74
TOTAL INVESTMENTS IN SECURITIES 74,021,785 66,491,597 91.92
CASH AT BANKS 14,162,158 19.58
BANK LIABILITIES -1,346,082 -1.86
OTHER NET ASSETS AND LIABILITIES -6,972,189 -9.64
TOTAL NET ASSETS 72,335,483 100.00
Currency, Geographical and Industrial Classification of the FundSeptember 30th, 2009(in percentage of net assets)
Currency Classification
Egyptian Pound 89.10 %
US Dollar 1.76 %
Pound Sterling 1.06 %
TOTAL INVESTMENTS 91.92 %
IN SECURITIES
Egyptian Pound 0.72 %
US Dollar 18.86 %
TOTAL CASH AT BANKS 19.58 %
US Dollar -1.86 %
BANK LIABILITIES -1.86 %
OTHER NET ASSETS -9.64 %
AND LIABILITIES
TOTAL NET ASSETS 100.00 %
Geographical Classification
Egypt 90.86 %
Australia 1.06 %
TOTAL INVESTMENTS 91.92 %
IN SECURITIES
OTHER NET ASSETS 8.08 %
AND LIABILITIES
TOTAL NET ASSETS 100.00 %
Industrial Classification
Materials 16.28 %
Banks 13.20 %
Telecommunication services 11.74 %
Real estate 9.78 %
Capital goods 9.57 %
Pharmaceuticals and 7.94 %
biotechnology
Diversified financial 7.05 %
services
Consumer durables 4.62 %
and apparel
Hotels, restaurants 4.45 %
and leisure
Energy 3.87 %
Investment companies 1.76 %
Insurance 1.45 %
Retailing 0.21 %
TOTAL INVESTMENTS 91.92 %
IN SECURITIES
OTHER NET ASSETS 8.08 %
AND LIABILITIES
TOTAL NET ASSETS 100.00 %
The accompanying notes are an integral
part of these financial statements
Notes to the Financial Statements September 30th, 2009
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 "société d'investissement à 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 Articles have been published in the "Mémorial, Recueil des Sociétés 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 policy is to achieve medium to long-term capital growth through investments 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 requirements relating to investment funds. The Fund keeps its books and records in USD.
b)Valuation
USD
1 EGP Egyptian Pound 0.1817521
1 EUR Euro 1.4619000
1 GBP Pound Sterling 1.5984500
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 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 Adviser, 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 2002 Law, 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 repurchase Shares at the request of Shareholders.
The maximum price at which Shares can be repurchased will be the NAV. 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 Board, if a premium to the NAV 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 listed there.
The Fund did not repurchase any Shares during the period ended September 30th, 2009 and at this date, 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 NAV of the applicable Valuation Date, reduced by a redemption fee of up to 5% for the benefit of the Corporation to cover dealing charges. As of September 30th, 2009, such redemption fee amounts to USD 318,969 and is registered under the caption "received commissions" in the Statement of Operations. The Corporation shall redeem such Shares within the sole limitations set forth by law, the Fund's Articles 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 of the Fund was USD 40,000,000 divided into 20,000,000 Shares with a par value of USD 2.00 each.
On December 12th, 1997, a capital increase of 8,490,847 Shares has been registered with a par value of USD 2.00 each.
The Fund is required by Luxembourg law to transfer at least 5% of its yearly net profits to a non-distributable legal reserve until such reserve amounts to 10% 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 18th, 2009, no dividend has been distributed.
NOTE 8 - CUSTODIAN FEES
The Custodian receives, 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 9 - DIRECTORS FEES
Each of the Directors shall be paid a fee at such a rate as the Board 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 10 - BENEFICIAL AND NON-BENEFICIAL INTEREST OF DIRECTORS IN THE SHARE CAPITAL
As of September 30th, 2009 the beneficial and non-beneficial interests of the Directors in the Share capital are the following:
Alexander E. Zagoreos 2,500 Shares
NOTE 11 - 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 effective January 1st, 2006. He became a Senior Advisor on January 1st, 2008.
NOTE 12 - 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 Shareholdings in the Fund.
NOTE 13 - 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 14 - ADDENDUM TO THE PLACING MEMORANDUM
The Board 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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