Interim Management Statement

 
TIDMEGP

The Egypt Trust

Interim Management Statementfor the quarter ended 31 December 2010

The Egypt Trust Fund (the "Fund"), is publishing this Interim Management Statement in accordance with DTR 4.3 of the FSA Handbook.

This interim management statement has been produced solely to provide additional information to shareholders as a body to meet the relevant requirements of the UK Listing Authority's Disclosure and Transparency Rules. It should not be relied upon by any other party or for any other purpose.

This interim management statement relates to the period from 1 October 2010 to 31 December 2010, and contains information that covers this period, and up to the date of publication of this interim management statement.

The Fund seeks to achieve medium to long-term capital appreciation through investments, principally in equities, listed on the Egyptian Stock Exchanges (EGX). The fund's investment strategy is to invest in undervalued assets with a tangible discount to their fair value on a relative basis.

Highlights:

Over the 3 month period from 1 October 2010 to 31 December 2010:

 
 
    -- The Fund's net asset value (NAV) grew by 8.52% to US$33.72 compared to

an increase of 6.24% in the benchmark index (IFC Investable Egypt in

USD).

 
    -- During the same period the Fund's share price fell by 2.73%. 
 
    -- By the end of the quarter, the Fund was trading at a -13.8% discount

compared to a discount of -3.83% the previous quarter.

Politics was the key word in the Egyptian market during the fourth quarter of 2010 as the country went to the polling stations to elect a new parliament in November. Despite claims of foul play by the opposition, the elections saw the confirmation of the ruling national Democratic Party in power with over 90% of the seats. A late rally in the quarter helped the market to end the quarter in positive territory.

While the rally coincided with the end of the election, it was more related to a rally in the emerging markets at large that left Egyptian equities trading at a discount to emerging markets.

Third quarter earnings reports provided a mixed picture as some market leaders like CIB and OCI were slightly on the disappointing side while others like Orascom Telecom Holding, National Societe Generale Bank and Palm HillsDevelopment results were above expectations.

The macro picture remained largely unchanged with budget deficit, current account, and CPI all being in line with expectations. Core inflation (which excludes volatile and price controlled items) and is the measure more closely followed by the Central Bank, edged higher by the end of the year raising concerns that the Central Bank might be inclined to tighten in 2011.

Long Term Performance (Annualized):

 
                  1-Year   3-Year   5-Year  Inception 
Net Asset Value   +15.97%  -8.61%   +7.11%  +10.38% 
S&P IFCI Egypt    +12.90%  -12.47%  +2.38%  +6.60%

Top Ten Holdings:

 
                                     31/12/10  30/9/10 
National Société Générale Bank       6.60%     7.73% 
Telecom Egypt                        5.92%     6.23% 
Egyptian Intl Pharma Industries Co   5.59%     6.33% 
Orascom Construction Industries      5.42%     5.15% 
Orascom Telecom Holding              4.90%     7.15% 
Citadel Capital                      4.61%     3.89% 
Talaat Moustafa Group Holding        4.34%     4.81% 
EFG-Hermes Holding                   4.27%     3.99% 
Alexandria Mineral Oils (AMOC)       3.87%     3.17% 
Sidi Krir Petrochemicals             3.63%     3.55%

Sector Allocation

 
                         31/12/10  30/9/10 
Financial                20.98%    21.33% 
Real Estate              15.49%    13.59% 
Materials                13.36%    14.37% 
Telecom                  12.89%    15.04% 
Consumer Discretionary   7.85%     7.62% 
Petrochemicals           7.51%     7.46% 
Industrial               7.18%     6.76% 
Healthcare               6.02%     7.18% 
Other                    8.72%     6.65%

Material Transactions and Events:

On 5 January 2011 the Fund announced that valid redemptions requests representing 202,948 shares in the capital of the Fund had been received in accordance with its quarterly redemption facility. These shares were redeemed at a price of US$ 32.03 per share (net of redemption fees).

On 25 January 2011, an anti-government demonstration demanding the resignation of the Egyptian President, Hosni Mubarak, rocked the entire country. On 28 January 2011, a curfew was announced in four major cities including the capital Cairo. As a result, the stock market remained closed from that date until the writing of this report on 7 February 2011. As a consequence, on 4 February 2011, the Fund released an announcement to the market confirming the Fund intended to defer publication of its weekly net asset value until further notice. As at 27 January 2011, prior to the close of the Egyptian Stock Exchange, the Fund reported a net asset value of US$28.60 per share.

The Board of Directors is not aware of any other significant events or transactions other than those previously disclosed, that have occurred between 1 October 2010 and the date of this interim management statement that would have a material impact on the financial position or performance of the Company.

For further information please contact:

The Egypt Trust

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