KBC Equity Fund Audited annual report 31 December 2019internet.olb.de/downloads/Internet...The KBC...

KBC Equity FundAudited annual report31 December 2019

Public open-ended investment company under Belgian law with a variable number ofunits opting for investments complying with the conditions of Directive 2009/65/EC -UCITS

No subscriptions will be accepted on the basis of this report. Subscriptions will only be valid if effected after a freecopy of the simplified prospectus or prospectus has been provided 1

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swiSchreibmaschinentextNo notification has been submitted for the sub-funds CSOB Akciovy Fond Dividendovych Firem, EMU Small & Medium Caps, Eurozone DBI-RDT, Family Enterprises, SRI Asia Pacific, SRI Emerging Markets, SRI EMU Small & Medium Caps, SRI Eurozone, SRI Eurozone & North America, SRI Minimum Variance, SRI North America, SRI Rest of Europe, SRI World and World DBI-RDT and consequently these sub-funds must not be marketed in Germany.

Table of contents

1. General information on the Bevek KBC Equity Fund

1.1. Organisation of the Bevek KBC Equity Fund

1.2. Management report

1.2.1. Information for the shareholders1.2.1.1. Securities Financing Transactions (SFTs)1.2.1.2. General strategy for hedging the exchange rate risk1.2.1.3. Social, ethical and environmental aspects1.2.1.4. Synthetic risk and reward indicator1.2.1.5. Ongoing charges1.2.1.6. Existence of fee sharing agreements and rebates1.2.1.7. Existence of fee sharing agreements and rebates1.2.1.8. Recurrent fees and charges

1.2.2. General market overview

1.3. Auditor's report

1.4. Aggregate balance sheet

1.5. Aggregate profit and loss account

1.6. Summary of recognition and valuation rules1.6.1. Summary of the rules1.6.2. Exchange rates

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1. General information on the Bevek1.1. Organisation of the BevekRegistered office

2 Havenlaan - B-1080 Brussels, Belgium.

Date of incorporation21 March 1991

LifeUnlimited.

Board of directors of the BevekName Function Mandat

Patrick Dallemagne Financial Director CBC Banque SA,Avenue Albert 1er 60, B-5000 Namur

Chairman

Luc Vanderhaegen / Director

Filip Abraham / Independent Director

Koen Inghelbrecht / Independent Director

Dirk Thiels Head of Asset Allocation and StrategyPortfolios KBC Asset ManagementNV, Havenlaan 2, 1080 Brussels

Natural person to whom theexecutive management of theBevek has been entrusted

Wilfried Kupers General Manager Group Legal KBCGroup NV, Havenlaan 2, 1080 Brussels

Natural person to whom theexecutive management of theBevek has been entrusted

Management typeBevek that has appointed a company for the management of undertakings for collective investments.The appointed management company is KBC Asset Management NV, Havenlaan 2, B-1080 Brussels.

Date of incorporation of the management company30 december 1999.

Names and positions of the directors of the management companyName Title

Stefan Van Riet Non-Executive DirectorPierre Konings Non-Executive DirectorKatrien Mattelaer Non-Executive DirectorJohan Daemen Non-Executive DirectorAndré Van Poeck Independent DirectorLuc Popelier ChairmanJohan Lema President of the Executive CommitteeTiny Ergo Managing Director resigned 31/08/2019Linda Demunter Managing DirectorFrank Van de Vel Managing DirectorChris Sterckx Managing DirectorKlaus Vandewalle Managing Director

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Names and positions of the natural persons to whom the executivemanagement of the management company has been entrusted

Name TitleJohan Lema President of the Executive CommitteeTiny Ergo Managing Director resigned 31/08/2019Linda Demunter Managing DirectorFrank Van de Vel Managing DirectorChris Sterckx Managing DirectorKlaus Vandewalle Managing Director

These persons may also be directors of various beveks.

Auditor of the management companyPriceWaterhouseCoopers België, Woluwe Garden, Woluwedal 18, 1932 Sint-Stevens-Woluwe, represented byGregory Joos, company auditor and recognized auditor.

Status of the BevekPublic Bevek with various sub-funds that has opted for investments complying with the conditions of Directive2009/65/EC and which, as far as its operations and investments are concerned, is governed by the Law of 3 August2012 relative to undertakings for collective investment complying with the conditions of Directive 2009/65/EC andthe undertakings for investment in receivables.

In the relationship between the investors, each sub-fund will be viewed as a separate entity. Investors have a rightonly to the assets of and return from the sub-fund in which they have invested. The liabilities of each individual sub-fund are covered only by the assets of that sub-fund.

Financial portfolio managementRegarding the delegation of the management of the investment portfolio, please see the information concerning thesub-funds.

Financial service providersThe financial services providers in Belgium are:KBC Bank NV, Havenlaan 2, B-1080 BrusselsCBC Banque SA, Avenue Albert 1er 60, B-5000 Namur

CustodianKBC Bank NV, Havenlaan 2, B-1080 Brussels.

Custodian’s activitiesThe custodian:

a) Ensures the safe-keeping of the assets of the Bevek and compliance with the standard obligations in thisregard;

b) Ensures that the sale, issue, purchase, redemption and withdrawal of shares in the Bevek occur incompliance with the applicable legal and regulatory provisions, the articles of association and theprospectus;

c) Ensures that the net asset value of the shares in the Bevek is calculated in accordance with the applicablelegal and regulatory provisions, the articles of association and the prospectus;

d) Carries out the instructions of , provided that these do not contravene the applicable legal and regulatoryprovisions, the articles of association and/or the prospectus;

e) Ensures that in transactions relating to the assets of the Bevek, the equivalent value is transferred to theBevekwithin the usual terms;

f) Ascertains that:i. The assets in custody correspond with the assets stated in the acounts of the Bevek;ii. The number of shares in circulation stated in the accounts corresponds with the number of shares in

circulation as stated in the acounts of the Bevek;iii. The investment restrictions specified in the applicable legal and regulatory provisions, the articles of

association and the prospectus are respected;iv. The rules regarding fees and costs specified in the applicable legal and regulatory provisions, the

articles of association and the prospectus are respected;v. The returns of the Bevek are appropriated in accordance with the applicable legal and regulatory

provisions, the articles of association and the prospectus.

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The custodian ensures that the cash flows of the Bevek are correctly monitored and in particular that all paymentsby or on behalf of subscribers on subscription to shares in the Bevek, have been received and that all the cash ofhas been booked to cash accounts that:

1. Have been opened in the name of the Bevek, in the name of the management company acting on itsbehalf, or in the name of the custodian acting on its behalf;

2. Have been opened at an entity as intended in Article 18(1a, b and c) of Directive 2006/73/EC; and3. Are held in accordance with the principles set out in Article 16 of Directive 2006/73/EC.

If the cash accounts have been opened in the name of the custodian acting in name of the Bevek, no cash from theentity intended in Article 18(1a, b and c) of Directive 2006/73/EC and none of the custodian’s own cash may bebooked to these accounts.The assets of the Bevek are placed in custody with a custodian as follows:

a) For financial instruments that may be held in custody:i. The custodian will hold in custody all financial instruments that may be registered in a financial

instrument account in the books of the custodian, as well as all financial instruments that can bephysically delivered to the custodian;

ii. the custodian will ensure that all financial instruments that can be registered in a financial instrumentaccount in the custodian’s books, are registered in the custodian’s books in separate accounts inaccordance with the principles set out in Article 16 of Directive 2006/73/EC; these separateaccounts have been opened in the name of the Bevek or in the name of the management companyacting on its account, so that it can be clearly ascertained at all times that they belong to the Bevek,in accordance with the applicable law.

b) For other assets:i. The custodian will verify that the Bevek or the management company acting on its behalf is the

owner of the assets by checking based on information or documents provided by the Bevek or themanagement company and, where appropriate, of available external proofs, whether the Bevek orthe management company acting on its behalf has ownership;

ii. The custodian will maintain a register of the assets from which it is clear that the Bevek or themanagement company acting on its behalf is the owner thereof and will keep that register up-to-date.

The custodian’s duty to return the financial instruments only applies to financial instruments that may be held incustody.

Custody tasks delegated by the custodianThe custodian of the Bevek has delegated a number of custody tasks as of the publication date of this annual/half-year report. The tasks delegated to this sub-custodian are:

- Holding the required accounts in financial instruments and cash;- Carrying out the custodian’s instructions regarding the financial instruments and cash;- Where required, the timely delivery of the relevant financial instruments to other parties involved with

holding them;- The collection of every type of return from the financial instruments;- The appropriate communication to the custodian of all information that the sub-custodian receives directly or

indirectly from the issuers via the chain of depositaries and performing the required formalities with regard tothe financial instruments, with the exception of exercising voting rights, unless otherwise agreed in writing;

- Maintaining and communicating to the custodian all required details regarding the financial instruments;- Processing corporate events on financial instruments, whether or not after the holder of these instruments

has made a choice;- Providing the services that have been agreed between the custodian and the sub-custodian and are legally

permitted, with the exception of investment advice and asset management and/or any other form of advicerelating to transactions in or the simple holding of financial instruments;

- Maintaining and communicating to the custodian all required details regarding the financial instruments.

List of sub-custodians and sub-sub-custodiansThe updated list of entities to which the custodian has delegated custody duties and, where applicable, the entitiesto which the delegated custody duties have been sub-delegated, can be consulted at www.kbc.be/investment-legal-documents.The custodian is liable for the loss of financial instruments held in custody in the sense of Article 55 of the Law of 3August 2012 relative to undertakings for collective investment complying with the conditions of Directive 2009/65/ECand the undertakings for investment in receivables.

Investors can approach the institutions providing the financial services for up-to-date information regarding theidentity of the custodian and its principal duties, as well as the delegation of these duties, and the identity of theinstitutions to which these duties have been delegated or sub-delegated, and also regarding any conflicts of interestas specified below.

Conflicts of interestThe custodian will take all reasonable measures to identify conflicts of interest that may arise in the execution of itsactivities between

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- The custodian and management company of the Bevek, or the management companies of other beveks orfunds of which the custodian holds assets;

- The custodian and the Bevek whose assets the custodian holds, or other beveks or funds of which thecustodian holds assets;

- The custodian and the investors in this Bevek whose assets the custodian holds,or other beveks or funds ofwhich the custodian holds assets;

- These parties themselves.

The custodian of the Bevek will implement and maintain effective organisational and administrative procedures inorder to take all reasonable measures to detect, prevent, manage and control conflicts of interest so that they do notprejudice the interests of the aforementioned parties.

If these procedures are not sufficient to be able to assume with reasonable certainty that the interests of theaforementioned parties have not been harmed, the investors will be notified of the general nature or causes ofconflicts of interest according to the procedure described on the following website: www.kbc.be/investment-legal-documents (About Us > Code of conduct for conflicts of interest). Investors who wish to be informed personally ofsuch conflicts of interest can contact the financial services providers. If necessary, the open-ended investmentcompany’s custodian will adjust its processes.

Administration and accounting managementKBC Asset Management N.V., Havenlaan 2, B-1080 Brussel

Accredited auditor of the the BevekDeloitte Bedrijfsrevisoren CVBA, Gateway Building, Luchthaven Brussel Nationaal 1 J, 1930 Zaventem, representedby Maurice Vrolix, company auditor and recognized auditor.

DistributorKBC Asset Management S.A., 4, Rue du Fort Wallis, L-2714 Luxembourg

PromoterKBC

The official text of the articles of association has been filed with the registry of the Commercial Court.

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Remuneration policy and remuneration paid by the managementcompanyGeneral:

The KBC group has a specific management structure, under which KBC Group NV and the various groupcompanies are brought together within one or more business units, for operational purposes.KBC Asset Management NV is part of the KBC Asset Management product factory within the KBC group'sInternational Markets Business Unit.

In 2010, the KBC group introduced the KBC Remuneration Policy, which lays down general remuneration guidelinesfor all staff and specific guidelines for those employees who could have a material impact on the risk profile of thecompany. Further information about the remuneration policy is available in the 'KBC Asset Management GroupCompensation Report', which you can read at https://kbcam.kbc.be/en/about-us. The compensation report includesinformation from the level of the KBC Asset Management group entities about the remuneration principles andcontains remuneration figures for the relevant fiscal year according to EU and national legislation. The reportcomprises the following sections:

- Overview of remuneration - Risk adjustments - Corporate governance - Information provided on remuneration

Remuneration paid by the management company for book yearendings on 31 December 2019

the total rew ard over the fiscal year, broken down intothe fixed and variable pay that the manager pays to itsstaff , the number of recipients and any amount paiddirect by the bevek/sicav, including all performancerewards and carried interest.

Fixed pay: 35 764 016 EURVariable pay: 4 116 824 EURNumber of recipients: 360

the aggregate pay amount, broken down into thehighest management and the manager's staff whoseacts significantly affect the fund's risk profile.

Management rewards: 2 010 523 EURReward for the manager's staff whose acts affectthe risk profile: 612 293 EUR

Note: the figures contained in this table have not yet been approved by the Management Company's shareholdersin general meeting, which is not scheduled until later this year. Any correction is made in the subsequent annualreport.

The annual evaluation required by Article 14B(1)(c) and (d) of Directive 2009/65/EC did not throw up anyirregularities in compliance with the remuneration policy.

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List of sub-funds and share classes of KBC Equity FundThe table below contains an overview of the sub-funds sold and their share classes. If no share class is mentionedfor a sub-fund, that means that only capitalisation- and/or distribution units are available.The characteristics of the different share classes are given in the prospectus.

Name1 America

Classic Shares Classic Shares CSOB CZK Institutional B Shares

2 Belgium3 Buyback America

Classic Shares Institutional B Shares

4 Buyback Europe Classic Shares Institutional B Shares

5 Central Europe Classic Shares Institutional B Shares

6 Commodities & Materials Classic Shares Institutional B Shares

7 Communication Services Classic Shares Institutional B Shares

8 Consumer Durables Classic Shares Classic Shares CSOB CZK Institutional B Shares

9 CSOB Akciovy fond dividendovych firem10 Emerging Europe


11 EMU Small & Medium Caps Classic Shares Corporate Wealth & Institutional Office shares Institutional B Shares

12 Europe Classic Shares Classic Shares CSOB CZK Institutional B Shares

13 Eurozone Classic Shares Institutional B Shares

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14 Eurozone DBI-RDT Classic Shares Corporate Shares Corporate Wealth shares Discretionary Shares Institutional Shares

15 Family Enterprises Classic Shares Corporate Wealth & Institutional Office shares Institutional B Shares

16 Finance Classic Shares Institutional B Shares

17 Flanders18 Food & Personal Products

Classic Shares Corporate Wealth & Institutional Office shares Institutional B Shares

19 Global Leaders Classic Shares Institutional B Shares

20 High Dividend Classic Shares Institutional B Shares Institutional Shares

21 High Dividend Eurozone Classic Shares Institutional B Shares

22 High Dividend New Markets Classic Shares Institutional B Shares

23 High Dividend North America Classic Shares Institutional B Shares

24 Industrials & Infrastructure Classic Shares Institutional B Shares

25 Japan Classic Shares Institutional B Shares

26 Latin America27 Luxury & Tourism


28 Medical Technologies Classic Shares Institutional B Shares

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29 New Asia Classic Shares Institutional B Shares

30 New Markets Classic Shares Classic Shares CSOB CZK Institutional B Shares

31 New Shares32 Oil


33 Pharma Classic Shares Institutional B Shares

34 Quant EMU Classic Shares Institutional B Shares

35 Quant Global 1 Classic Shares Corporate Wealth & Institutional Office shares

36 Satellites Classic Shares Institutional B Shares

37 SRI Asia Pacific Classic Shares Institutional B Shares

38 SRI Emerging Markets Classic Shares Corporate Shares Institutional B Shares Institutional Shares

39 SRI EMU Small & Medium Caps Classic Shares Institutional B Shares Institutional Shares

40 SRI Eurozone Classic Shares Institutional B Shares

41 SRI Eurozone & North America Classic Shares Institutional B Shares

42 SRI Minimum Variance Classic Shares Corporate Shares Discretionary Shares Institutional Shares

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43 SRI North America Classic Shares Institutional B Shares

44 SRI Rest of Europe Classic Shares Institutional B Shares

45 SRI World Classic Shares Institutional B Shares

46 Strategic Communication Services & Technology Classic Shares Institutional B Shares

47 Strategic Cyclicals Classic Shares Institutional B Shares

48 Strategic Finance Classic Shares Institutional B Shares

49 Strategic Non Cyclicals Classic Shares Institutional B Shares

50 Strategic Satellites Classic Shares Institutional B Shares

51 Technology Classic Shares Institutional B Shares

52 Trends Classic Shares Classic Shares CSOB CZK Institutional B Shares

53 Turkey Classic Shares Institutional B Shares

54 US Small Caps Classic Shares Institutional B Shares

55 Utilities Classic Shares Institutional B Shares

56 World57 World DBI-RDT

Classic Shares Corporate Shares Corporate Wealth shares Discretionary Shares Institutional Shares

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Sub-funds and share classes liquidated during the reporting period1 Pacific (Liquidated)


In the event of discrepancies between the Dutch and the other language versions of the Annual report, the Dutch willprevail.

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1.2. Management report1.2.1. Information for the shareholders

Pursuant to Article 96 of the Companies Code, information is supplied regarding the following:• The balance sheet and profit and loss account provide a true and fair view of the performance and results of

the undertaking for collective investment. The ‘General market overview’ section includes a description of themain risks and uncertainties facing the undertaking for collective investment.

• The outbreak and global spread of the coronavirus will have a negative impact on the performance of the fundin 2020. However, it is impossible at the moment to estimate what the consequences will be and the situation isbeing closely monitored

• As regards events that might have a material impact on the development of the undertaking for collectiveinvestment, please refer to the ‘Outlook’ heading in the ‘General market overview’section.

• The undertaking for collective investment does not conduct any research and development.• The undertaking for collective investment does not have any branch offices.• In establishing and applying the valuation rules, it is assumed that the undertaking for collective investment will

continue to pursue its activities, even if the profit and loss account shows a loss for two consecutive financialyears.

• All information required by the Companies Code has been included in this report.• The risk profile of the undertaking for collective investment specified in the prospectus provides an overview

regarding risk management.

Reclaims of foreign withholding taxes on dividends.

In some Member States of the European Union domestic investment funds benefit from exemptions or refundsof withholding taxes when they receive dividends from a domestic entity. The same tax benefits do not apply tonon-resident investment funds investing cross-border. Such tax system is not in accordance with the freemovement of capital within the European Union.

Since 2006 KBC investment funds yearly file requests for a refund of discriminatory withholding tax paid ondividends in France, Spain, Italy, Germany, Finland, Sweden, Norway and Austria. Refunds have already beenreceived from French, Norwegian, Swedish, Spanish and Austrian fiscal administration.

The funds no longer file requests in The Netherlands as a consequence of recent Dutch Court decisions.

There were no refunds this period.

Fees for special assignments conducted within the bevek by the statutory auditor- Other certifications: 2 844,00 EUR

Significant changes during the financial yearDate Description Subfund7 January2019

Renewal of the CIGS classification and disappearnce of aclearly defined telecommunications sector

Telecom

21 January2019

Modification of the methodology in the calculation of the feefor the management of the investment portfolio.

SRI Asia Pacific, SRIEurozone & North America,SRI Eurozone, SRI NorthAmerica, SRI rest of Europe,SRI World, Utilities, World

21 January2019

Removal of ethical fee SRI Asia Pacific, SRIEmerging Markets, SRIEurozone & North America,SRI Eurozone, SRI MinimumVariance, SRI North America,SRI rest of Europe, SRIWorld,

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1.2.1.1. Securities Financing Transactions (SFTs)Except for the sub-fund applies:

GeneralEach sub-fund may lend financial instruments within the limits set by law and regulations.Lending financial instruments is a transaction where one a sub-fund transfers financial instruments to acounterparty subject to an undertaking on the part of that counterparty to supply the sub-fund with comparablefinancial instruments at some future date or on the sub-fund's request.

This takes place within the framework of a securities lending system managed by either a ‘principal’ or an ‘agent’. Ifit is managed by a principal, a sub-fund has a relationship only with the principal of the securities lending systemwhich acts as counterparty and to whom title to the loaned securities is transferred. If it is managed by an agent, asub-fund has a relationship with the agent (as manager of the system) and with one or more counterparties towhom title to the loaned securities is transferred. The agent acts as intermediary between a sub-fund and thecounterparty or counterparties.

The sub-funds use the lending of financial instruments to generate additional income. This might consist of a feepaid by the principal or, in the event that the fund performs the securities lending through an agent, by thecounterparty, as well as income generated through reinvestments.The sub-funds are not permitted to agree forms of SFTs other than lending financial instruments.

General information on the SFTs used

Type of SFT Types of asset that theSFT can involve

Maximum percentage ofthe assets under

management that can beinvolved in the SFT

Anticipated percentageof the assets under

management that will beinvolved in the SFT

Lending financialinstruments

Only shares and bondswill be lent

When lending financialinstruments a maximum

of 30% of the assetsunder management will

be involved.

Depending on marketconditions 0–30% of the

assets undermanagement will be

involved in the lending offinancial instruments

Criteria for the selection of counterpartiesLending financial instruments only occurs with high-quality counterparties. The management company selectswhich counterparties qualify for the lending of financial instruments.

The selected counterparties must meet the following minimum requirements to this end:

Legal status Minimum rating Country of originThe counterparty must belong toone of the following categories:

a) A credit institution; orb) An investment firm; orc) A settlement or clearing

institution; ord) A central bank of a member

state of the EuropeanEconomic Area, theEuropean Central Bank, theEuropean Investment Bankor a public internationalfinancial institution in whichone or more EuropeanEconomic Area memberstates participate.

Only counterparties rated asinvestment grade may beconsidered.

An investment-grade ratingmeans: a rating equal to or higherthan BBB- or Baa3 according toone or more of the followingaccredited rating agencies:

- Moody's (Moody's InvestorsService);

- S&P (Standard & Poor's, adivision of the McGraw-HillCompanies); en

- Fitch (Fitch Ratings).

If the counterparty does not have arating, the rating of thecounterparty’s parent companymay be taken into consideration.

All geographical regions may beconsidered when selectingcounterparties.

The relationship with the counterparty or counterparties is governed by standard international agreements.

Description of acceptable financial collateral and its valuationWhen a sub-fund lends financial instruments, it receives financial collateral in return. This financial collateralprotects the sub-fund fund from default on the part of the counterparty to which the financial instruments have beenlent.

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Each sub-fund may accept the following forms of financial collateral:- Cash; and/or- Bonds and other debt instruments, issued or guaranteed by the central bank of a member state of the

European Economic Area, the European Central Bank, the European Union or the European InvestmentBank, a member state of the European Economic Area or the Organisation for Economic Cooperationand Development, or by a public international institution in which one or more member states of theEuropean Economic Area participate, other than the counterparty or a person associated with it, andwhich are permitted to trade on a regulated market; and/or

- Participation rights in a monetary undertaking for collective investment that complies with Directive2009/65/EC or which meets the conditions of Article 52(1:6) of the Royal Decree of 12 November 2012on certain public institutions for collective investment which meet the conditions of Directive 2009/65/EC,and the net asset value of which is calculated and published daily.

Where the lending of securities is agreed within the framework of a securities lending system, the financial collateralcan also take the form of bonds eligible for trading on a regulated market and which have been rated as at leastinvestment grade as described under ‘Criteria for the selection of counterparties’.

The valuation of the financial collateral occurs daily in accordance with the most applicable and accurate method:mark-to-market. A daily variation margin applies based on the daily valuation. Consequently, daily margin calls arepossible.

There are no limits regarding the term of the financial collateral.

Reuse of financial collateralIf a sub-fund receives collateral in the form of cash, it can reinvest this cash in

- deposits with credit institutions which can be withdrawn immediately and which mature within a periodnot exceeding twelve months, provided that the registered office of the credit institution is situated withina member state of the EEA, or if the registered office is established in a third country, provided that it issubject to prudential supervisory rules which the FSMA considers as being equivalent to the rules underEuropean Law.

- short term money market funds as described in the ESMA Guidelines CESR/10-049 dated 19 May2010 on the common definition of European money market funds.

- government bonds that are denominated in the same currency as the cash received and that meet theterms and conditions set out in the Royal Decree of 7 March 2006 on securities lending by certainundertakings for collective investment.

Reinvesting in this way can eliminate the credit risk to which a sub-fund is exposed concerning thecollateral in respect of the financial institution where the cash account is held, but there is still a credit riskin respect of the issuer or issuers of the debt instrument(s). The management company may delegateimplementation of the reinvestment policy to a third party, including the agent managing the securitieslending system.

Reinvestment in deposits at the same credit institution may not exceed 10% of the sub-fund's total assets.Reinvestment in bonds issued by the same public authority may not exceed 20% of the sub-fund's total assets.

Policy on the diversification of collateral and the correlation policyA sub-fund is not permitted to accept financial collateral issued by the party offering them.

A sub-fund's exposure to financial collateral issued by the same issuer may not exceed 20% of the sub-fund's netassets.

Holding of the financial collateralThe financial collateral will be held in the following manner:

- for cash: held in a cash account; and- for financial collateral that is not cash: registration in a custody account.

The custodian of the financial collateral and/or the entity to which certain tasks relating to the custody of thefinancial collateral has been delegated is not necessarily the same entity as the custodian of the Bevek's assets, asstated under ‘B. Service providers to the Bevek'.

Influence of SFTs on a sub-fund’s risk profileThis lending does not affect a sub-fund's risk profile since:

- The choice of principal, agent and every counterparty is subject to strict selection criteria.- The return of securities similar to the securities that have been lent can be requested at any time, which

means that the lending of securities does not affect management of a sub-fund’s assets.

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- The return of securities similar to the securities that have been lent is guaranteed by the principal or theagent, as applicable. A margin management system is used to ensure that a sub-fund is at all times thebeneficiary of financial security (collateral) in the form of cash or other or other specific types of securitieswith a low risk, such as government bonds, in case the principal or the counterparty (if a sub-fund usesan agent) does not return similar securities. The actual value of the collateral in the form of specific typesof securities with a low risk must at all times exceed the actual value of the loaned securities by 5%.Furthermore, when calculating the value of the specific types of securities with a low risk provided ascollateral, a margin of 3% is applied, which should prevent a negative change in price resulting in theiractual value no longer exceeding the actual value of the securities. The value of the collateral in the formof cash must at all times exceed the actual value of the loaned securities.

- The criteria met by the collateral are such as to limit the credit risk. A rating of at least investment grade isrequired in the case of collateral in the form of bonds and other debt instruments. In the case of collateralin the form of participation rights in monetary undertakings for collective investment, the inherentdiversification of these undertakings limits the credit risk. In the case of cash that is reinvested, a rating ofat least investment grade is required when reinvesting in either deposits or government bonds. In thecase of reinvestment in short-term money-market funds, the inherent diversification of these funds limitsthe credit risk.

- The criteria met by these types of collateral are such as to limit the liquidity risk. It must be possible tovalue the financial collateral on a daily basis by market price or to withdraw it on demand (onreinvestment of cash in deposits).

- In the case of reinvestment of cash, there are additional criteria to limit the market risk associated with theinitial values in cash. When reinvesting bonds, only bonds with a remaining term to maturity of no morethan one year may be considered. The shortness of this remaining term results in a low sensitivity tointerest rate movements. In the case of reinvestment in short-term money-market funds, the low durationof these funds limits the market risk with respect to the initial value in cash.

- The custody of financial collateral consisting of securities occurs by placing the securities in custodyaccounts which, in the event of the custodian’s bankruptcy, are held outside its insolvent estate. Thecustody of financial collateral consisting of cash occurs by holding it in cash accounts, whether or notsegregated. The extent to which the custody of financial collateral consisting of cash occurs in non-segregated accounts has no influence, however, on the sub-fund's risk profile.

- Operational risks are limited by operational controls, in the shape of daily control of the market values ofloaned securities and collateral and reconciliation of internal and external data.

Distribution policy for returns on the utilised SFTsBy lending securities, a sub-fund can generate additional income, which might consist of a fee paid by theprincipal or the counterparty (if a sub-fund uses an agent) as well as income generated through reinvestments.After deducting the direct and indirect charges – set at a flat rate of 35% of the fee received and consisting ofthe charges for the clearing services provided by KBC Bank NV, the charges paid to the management company forsetting up and monitoring the system for lending securities, the charges for margin management, the chargesassociated with cash and custody accounts and cash and securities transactions, the fee paid for any managementof reinvestments and, if a sub-fund uses an agent, the fee paid to the agent. This income is paid to a sub-fund. Itshould be noted in this regard that KBC Bank NV is an entity affiliated with the management company.

1.2.1.2. General strategy for hedging the exchange rate riskExcept for the sub-fund SRI Minimum Variance applies:In order to protect its assets against exchange rate fluctuations and within the limitations laid down in the articles ofassociation, a sub-fund may perform transactions relating to the sale of forward currency contracts, as well as thesale of call options and the purchase of put options on currencies. The transactions in question may relate solely tocontracts traded on a regulated market that operates regularly, that is recognised and that is open to the public or,that are traded with a recognised, prime financial institution specialising in such transactions and dealing in the over-the-counter (OTC) market in options. With the same objective, a sub-fund may also sell currencies forward orexchange them in private transactions with prime financial institutions specialising in such transactions.

1.2.1.3. Social, ethical and environmental aspectsInvestments may not be made in- financial instruments issued by manufacturers of controversial weapons whose use over the past five decades,

according to international consensus, has led to disproportionate human suffering among the civilian population.This involves the manufacturers of anti-personnel mines, cluster bombs and munitions and weapons containingdepleted uranium;

- financial instruments issued by companies where there are serious indications that they are perpetrators of,accomplices or accessories to, or stand to benefit from the violation of globally recognised standards of corporatesustainability. The main criteria used cover human rights, employee rights, the environment and anticorruption;

- financial instruments linked to agricultural crops or livestock that can be used for speculating on food prices;- government bonds from certain controversial countries, i.e. countries that fundamentally violate human rights and

ignore all forms of corporate governance, the rule of law or economic freedom.In this way, not only is a purely financial reality represented, but also the social reality of the sector or region.

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1.2.1.4. Synthetic risk and reward indicatorIn accordance with Commission Regulation (EU) No. 583/2010, a synthetic risk and reward indicator has beencalculated. This indicator provides a quantitative measure of a sub-fund's potential return and the risk involved,calculated in the currency in which a sub-fund is denominated. It is given as a figure between 1 and 7. The higherthe figure, the greater the potential return, but also the more difficult it is to predict this return. Losses are possibletoo. The lowest figure does not mean that the investment is entirely free of risk. However, it does indicate that,compared with the higher figures, this product will generally provide a lower, but more predictable return.

The synthetic risk and reward indicator is assessed regularly and can therefore go up or down based on data fromthe past. Data from the past is not always a reliable indicator of future risk and return.

The most recent indicator can be found under the 'Risk and reward profile' heading in the 'Key Investor Information'document.

1.2.1.5. Ongoing chargesThe key investor information sets out the ongoing charges, as calculated in accordance with the provisions ofCommission Regulation (EC) No. 583/2010 of 1 July 2010.

The ongoing charges are the charges taken from the UCITS over a financial year. They are shown in a single figurethat represents all annual charges and other payments taken from the assets over the defined period and for a sub-fund and that is based on the figures for the preceding year. This figure is expressed as a percentage of the averagenet assets per sub-fund or, where relevant, of the share class.

The following are not included in the charges shown: entry and exit charges, performance fees, transaction costspaid when buying or selling assets, interest paid, payments made with a view to providing collateral in the context ofderivative financial instruments, or commissions relating to Commission Sharing Agreements or similar feesreceived by the Management Company or any person associated with it.

1.2.1.6. Existence of fee sharing agreements and rebatesThe management company may share its fee with the distributor, and institutional and/or professional parties.In the information for each sub-fund – under '2.4.6. Expenses' – you can see the percentage of the fee that hasactually been shared for each sub-fund.If the management company invests the assets of the undertaking for collective investment in units of undertakingsfor collective investment that are not managed by an entity of KBC Groep NV, and receives a fee for doing so, it willpay this fee to the undertaking for collective investment.Fee sharing heeft geen invloed op de hoogte van de beheercommissie die a sub-fund to the managementcompany. This management fee is subject to the limitations laid down in the articles of association. The limitationsmay only be amended after approval by the General Meeting.The management company has concluded a distribution agreement with the distributor in order to facilitate the widerdistribution of the sub-fund's shares by using multiple distribution channels.It is in the interests of the holders of shares of a sub-fund and of the distributor for the largest possible number ofshares to be sold and for the assets of a sub-fund to be maximised in this way. In this respect, there is therefore noquestion of any conflict of interest.

1.2.1.7. Existence of Commission Sharing AgreementsFor the following sub-funds exist Commission Sharing Agreements:For the following sub-funds don't exist Commission Sharing Agreements:The Management Company, or where applicable, the appointed manager has entered into a Commission SharingAgreement with one or more brokers for transactions in shares on behalf of one or more sub-funds. Thisagreement specifically concerns the execution of orders and the delivery of research reports.

What the Commission Sharing Agreement entails:The Management Company, or where appropriate, the appointed manager can ask the broker to pay invoices ontheir behalf for a number of goods and services provided. The broker will then pay those invoices using the savingsthat have been built up to a certain percentage above the gross commission that it receives from the sub-funds forcarrying out transactions.

N.B.:Only goods and services that assist the Management Company, or where applicable, the appointed manager inmanaging the sub-funds in the interest of this a sub-fund can be covered by a Commission Sharing Agreement.

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Goods and services eligible for a Commission Sharing Agreement:• Research-related and advice-related services;• Portfolio valuation and analysis;• Market information and related services;• Return analysis;• Services related to market prices;• Computer hardware linked to specialised computer software or research services;• Dedicated telephone lines;• Fees for seminars when the topic is relevant to investment services;• Publications when the topic is relevant to investment services;• All other goods and services that contribute directly or indirectly to achieving the investment objectives of the

sub-funds.

The Management Company, or where appropriate, the appointed manager has laid down an internal policy asregards entering into Commission Sharing Agreements and avoiding possible conflicts of interest in this respect,and has put appropriate internal controls in place to ensure this policy is observed.No CSA accrual during this period.

1.2.1.8. Recurrent fees and chargesRecurrent fees and charges paid by the Bevek

Fees paid to directors who are notresponsible for the executive managementof the Bevek, insofar as the GeneralMeeting has approved said fees.

250 EUR per meeting attended, linked to the director's actualattendance of/participation in the meetings of the Board ofDirectors. This fee is divided across all the sub-funds marketed.

Recurrent fees and charges paid by the sub-fund

Fee paid to the statutory auditor of theBevek

Fee of the statutory auditor:1844 EUR/year (excluding VAT) for non-structured sub-fundsThese amounts can be indexed on an annual basis inaccordance with the decision of the General Meeting.

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1.2.2. General market overview1 January 2019 - 31 December 2019General overviewThe economic context

World economic growth slowed substantially over the period under review. Judging by business confidence,industry in particular had a very difficult time, with the continuing uncertainty about the outcome of Brexit andslowing international trade, itself a result of rising trade tensions, clearly weighing on sentiment. Export-orientedregions like the euro area and Southeast Asia had an especially tough time of it. The continuing strength of thelabour market supported private consumption, enabling the service sector to hold up reasonably well in mostregions.

Monetary policyThe US central bank changed tack during the reporting period. After systematically raising interest rates throughout2018, the Federal Reserve responded to slowing growth by cutting the base rate three times (by 0.25% each time).Falling inflation gave the central bank the necessary scope to do so.

The European Central Bank (ECB) was initially clear that it would be some time before interest rates would beraised again. However, as growth in the euro area continued to slow down, the Frankfurt-based bankers announceda new round of stimulatory measures, relaunching its bond purchase programme and reducing deposit rates to-0.5%. At barely 1%, core inflation in the euro area is still well below the ECB's target.

Currency marketsDuring the period under review, the euro lost ground to safe-haven currencies like the Japanese yen (+3.2%) andthe Swiss franc (+3.6%). The euro weakened by 2.2% against the US dollar. The biggest loss was against sterling(+5.9%), which benefited from the easing fears about a hard Brexit.

Stock marketsIn euro terms, the international stock markets closed the reporting period with a 29.1% gain, though there weresignificant fluctuations throughout the period. The protracted trade disputes between the US and its main tradingpartners, coupled with increasingly weak economic indicators, led to corrections in May and August.

Regional differences were quite considerable. The United States saw the biggest rise in share prices (+33.1% ineuro terms). The euro area (+25.5%) and Japan (+22.2%) were not far behind. The total return in the emergingmarkets was 21.7%, though there were fairly wide differences between the regions. For example, Russia performedvery strongly (+53.9%), while the market in Central Europe was less exuberant. Poland actually posted a negativereturn (-4%). In Asia, too, weighed down by the impact of the trade war,returns were below the average (+21.1%),with South Korea (+12.2%) and India (+9.7%) standing out as weaker markets.

All sectors were up at the end of the reporting period. Technology was a positive highlight (+49.6%). The Energysector did less well (+14.9%), having to contend with a lower oil price. Returns in the other sectors were closetogether. Cyclical sectors such as Consumer Discretionary (+30%) and Industrials (+28.8%), performed only slightlybetter than unequivocally defensive sectors such as Health Care (+24.9%) and Consumer Staples (+23.9%). Thefinancial sector also delivered a strong performance, with a total net return of 25.5%.

ProjectionsEconomic context

We expect growth to pick up slightly in 2020, with emerging markets largely leading the way, though we areanticipating a gradual acceleration in economic growth in the euro area, too. Growth in other Western countries willremain below the long-term trend.

We expect the Chinese economy to continue its soft landing, and envisage a modest return to growth in most of theother emerging markets. Of course, this depends on the Sino-American trade conflict not escalating any further and/or on the extent to which the Chinese government is able to continue supporting growth through measuresmeasures to stimulate the economy.

Monetary policyThe US central bank shifted its stance, cutting its base rate in July for the first time in a long time. We are notexpecting any further rate cuts in 2020. The European Central Bank is also not expected to take any new action inthe wake of the September rate cut and the relaunch of its bond purchase programme in November. The Bank ofJapan meanwhile continues to create money at a pace.

Currency marketsWe expect the US dollar to weaken slightly against the euro in the course of 2020, induced by growing anticipationof a first step towards normalising interest rates in the euro area.

Stock marketsShares continue to be preferable to bonds. They offer the prospect of a higher return in the medium to long termand their relative valuation also remains attractive. That is mainly due to the extremely low interest rate levels, notonly in the euro area but worldwide. Shares are fairly valued, with price-earnings ratios around or just above theirhistorical average. Dividend yields exceed government bond yields, including in the US.

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The stock markets' very strong start to 2019 mainly served to compensate for the exaggerated pessimism thatprompted the fall in December 2018. This was due to fears that the US was on the brink of a recession, caused inpart by the excessive hiking of the key rate by the US central bank, the Federal Reserve (Fed). But the markets arenow also pricing in the first partial agreement between the US and China in the trade conflict. The easing risk of ahard Brexit also benefited sentiment towards shares. Against this backdrop, we do not anticipate a bull market overthe coming months. KBC Asset Management believes that a volatile but modestly rising stock market is a morelikely scenario.

The trade conflict remains one of the main bellwethers for developments in the near term. This is not only hittingChina amidships, but is hurting the US just as much through more expensive consumer goods and components andcountermeasures by China. Business confidence has fallen as a result, as it has in the rest of the world. Consumerconfidence held up better thanks to a very strong labour market, but here, too, the peak is behind us. Even thoughthe effect of the tax cuts and higher government spending are ebbing away, a recession remains unlikely. Europeangrowth remains subdued due to the turmoil over Brexit, the lower global growth and a general lack of confidence inthe manufacturing sector. Emerging markets are suffering from slower growth in China. The Chinese government isstimulating growth by cutting interest rates, easing lending criteria, cutting taxes sharply and boosting infrastructureinvestments to compensate for the negative consequences of the trade war and ensure a soft landing, with growthat around 6.0%.

Global monetary policy continues to be supportive for shares. The European Central Bank (ECB) has again reducedits deposit rate, this time to -0.5%. By granting the banks a partial exemption, it is protecting them to some extentfrom the negative consequences. Since November, it has also restarted the quantitative easing programme,creating money by purchasing bonds. This will keep interest rates low or even negative for the foreseeable future.The US central bank (Fed) raised its key rate to 2.5% in December, still fairly low in a historical perspective. Sincethen, however, the Fed policy has undergone a U-turn in response to the global slowdown in growth and theanxieties on the stock market. The key rate was cut in July and September, by 0.25% each time. The Fed alsostopped the scaling back of its balance sheet in September. The Bank of Japan, too, is continuing to create moneyapace.

Last year, tax cuts ushered in record earnings growth of 25% in the US, while robust economic growth deliveredimpressive revenue growth of 7%. Earnings growth is clearly slowing down, and was barely positive in 2019. Theresults for the third quarter were better than the forecasts, which had been heavily adjusted downwards –. althoughprofits stalled at high levels and it was only revenues which increased, rising by around 3%.

At regional level, we prefer the euro area. After almost two years of steady decline, we have recently seen somestabilisation in the activity indicators. These leading indicators suggest that Europe is now over the worst and thatthe general fear of recession, manifested chiefly in very low government bond yields, was premature. Concernsabout a hard Brexit have also eased and we can now be cautiously optimistic about the trade conflict in light of thefirst partial agreement. Both risks have put a damper on investment and confidence in the euro area, therebyweighing on economic growth. The trade deal and an anticipated continuation of the turnaround in economicindicators is another reason to back the emerging markets. What’s more, both regions are valued more cheaplythan shares in the US, where most of the good news seems to have already been factored into the record shareprices. Growth had long been stronger than in the rest of the developed world, but the gap has narrowed. Corporateearnings reached record levels, which means expectations ought not to be raised too high for the quarters ahead.

Partly thanks to the bottoming out of a number of leading economic indicators, KBC Asset Management ismoderately positive towards cyclical sectors. Valuations are extremely low in a number of these sectors, such asMaterials. Thanks to the sharp reductions in interest rates, sectors which are more sensitive to interest ratesperformed very well in the first nine months of 2019. The bottoming out that has taken place also means that thesetraditionally defensive sectors, such as Utilities, Health Care and Consumer Staples (e.g. food), have little upsidepotential left. Recovering interest rates (German rates have rebounded sharply since September) also mean thatthe worst is probably over for the benighted financial sector. They ease the pressure on banks’ interest margins,while lending volumes have been systematically increasing over recent years.

Communication Services is easily the sector with the strongest forecast earnings growth. Software companies aregrowing on the back of the services they provide to businesses, with Cloud computing as the spearhead. Thismeans they are enjoying very high margins. The hardware and semiconductor segment should also benefit from theimproving economic climate.

In terms of investment themes, our preference is for mature, stable companies that return some of their surpluscash, which is earning nothing at current interest rates, to their shareholders. We prefer companies that buy backtheir own shares. That is not just a sign of management’s confidence in the company’s shares; buying back anddestroying shares also means that earnings and dividends have to be shared out between fewer shares. In anenvironment of low earnings growth, this contribution to the growth in earnings per share is relatively high. Sharebuybacks have reached record levels in the US, but in Europe, too, we are seeing growing interest in buybacks. Themarket also appreciates these high-quality companies. A stable and high dividend also forms a safe and relativelylarge proportion of market return when stock markets are volatile and rising less rapidly. High dividends are also anattractive alternative for bond investors. Unfortunately, the market appears not to appreciate these cheap, high-dividend companies.

Lastly, we also prefer water companies. There is a major scarcity of drinking water, caused by the problems ofoutdated and inadequate water infrastructure, climate change and the issues of water quality and treatment ofwaste water. This ensures robust long-term revenue growth for these companies. These companies are generally

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valued a little more expensively and so are trading at a premium, although at its current level of around 13%, thispremium is lower than the average over the last eight years.

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1.3. Auditor's report

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KBC Equity Fund NVDocument subtitle= Verdana Heading 12 0/0 single

Deloitte Bedrijfsrevisoren / Reviseurs d’Entreprises

KBC Equity Fund NVBevek under Belgian law, category UCITSStatutory auditor’s report to the shareholders’ meeting for the year ended31 December 2019 – Annual accountsThe original text of this report is in Dutch

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KBC Equity Fund NVBevek under Belgian law, category UCITS | 31 December 2019

1

Statutory auditor’s report to the shareholders’ meeting of KBC Equity Fund NVfor the year ended 31 December 2019 – Annual AccountsIn the context of the statutory audit of the annual accounts of KBC Equity Fund NV (the "company"), we herebysubmit our statutory audit report. This report includes our report on the annual accounts and the other legaland regulatory requirements. These parts should be considered as integral to the report.

We were appointed in our capacity as statutory auditor by the shareholders’ meeting of 30 March 2017, inaccordance with the proposal of the board of directors. Our mandate will expire on the date of the shareholders’meeting deliberating on the annual accounts for the year ending 31 December 2019. We have performed thestatutory audit of the annual accounts of KBC Equity Fund NV for 18 consecutive periods.

Report on the annual accounts

Unqualified opinion

We have audited the annual accounts of the company, which comprises the balance sheet as at31 December 2019 and the income statement for the year then ended, as well as the explanatory notes. Theannual accounts show a total net asset value of 19 132 410 759,80 EUR and the income statement shows again for the year ended of 3 129 764 827,47 EUR.

In our opinion, the annual accounts give a true and fair view of the company’s net asset value and financialposition as of 31 December 2019 and of its results for the year then ended, in accordance with the financialreporting framework applicable in Belgium.

An overview of the total net asset value and result for each compartment is given in the following table.

Name Currency Net Asset Value ResultKBC Equity Fund - Belgium EUR 44 326 421,18 11 828 915,54

KBC Equity Fund - World EUR 124 239 121,45 26 492 912,78

KBC Equity Fund - Europe EUR 49 836 340,34 27 937 370,39

KBC Equity Fund - America USD 2 920 034 541,01 568 730 505,56

KBC Equity Fund - Japan JPY 31 875 134 500,00 4 124 975 781,00

KBC Equity Fund - New Markets EUR 1 174 237 168,14 81 200 864,42

KBC Equity Fund - New Asia EUR 190 311 455,91 29 916 329,66

KBC Equity Fund - Latin America EUR 23 689 804,96 3 899 381,48

KBC Equity Fund - Emerging Europe EUR 14 969 431,13 5 099 789,43

KBC Equity Fund - Technology USD 147 047 978,83 49 560 373,03

KBC Equity Fund - Flanders EUR 70 686 415,75 19 174 405,68

KBC Equity Fund - Pharma EUR 203 032 338,92 48 906 938,28

KBC Equity Fund - Finance EUR 41 695 733,80 10 163 220,49

KBC Equity Fund - Communication Services EUR 22 950 260,83 3 746 976,33

KBC Equity Fund - Buyback America USD 868 190 720,13 101 702 940,69

KBC Equity Fund - Us Small Caps USD 475 255 726,53 65 685 361,16

KBC Equity Fund - Utilities EUR 11 934 173,20 2 167 100,37

KBC Equity Fund - Food & Personal Products EUR 55 031 515,07 13 840 438,32

KBC Equity Fund - New Shares EUR 19 194 037,52 2 880 087,42

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2

Name Currency Net Asset Value Result

KBC Equity Fund - Medical Technologies USD 85 978 055,96 15 601 373,05

KBC Equity Fund - Strategic Satellites EUR 418 931 259,71 109 165 303,78

KBC Equity Fund - Commodities & Materials EUR 20 641 505,62 2 953 980,44

KBC Equity Fund - Luxury & Tourism EUR 17 545 666,25 3 374 699,45

KBC Equity Fund - Trends EUR 77 489 213,97 20 025 527,43

KBC Equity Fund - Consumer Durables EUR 22 211 971,85 7 578 245,48

KBC Equity Fund - Strategic Cyclicals EUR 1 535 518 433,81 144 987 325,93

KBC Equity Fund - Strategic CommunicationServices & Technology EUR 1 928 520 800,31 309 496 407,66

KBC Equity Fund - Strategic Finance EUR 973 602 763,92 162 057 903,98

KBC Equity Fund - Buyback Europe EUR 663 643 646,05 72 490 871,68

KBC Equity Fund - Global Leaders EUR 23 516 862,69 6 366 179,62

KBC Equity Fund - Oil EUR 64 881 229,14 8 028 365,19

KBC Equity Fund - Eurozone EUR 646 875 539,00 127 278 117,22

KBC Equity Fund - Central Europe EUR 13 824 666,49 2 159 862,77

KBC Equity Fund - High Dividend North America USD 70 665 028,49 3 782 915,64

KBC Equity Fund - Quant Global 1 EUR 88 228 098,27 18 865 799,37

KBC Equity Fund - High Dividend EUR 217 106 394,08 45 677 735,49

KBC Equity Fund - Turkey TRY 16 711 230,01 3 770 469,74

KBC Equity Fund - High Dividend Eurozone EUR 90 320 426,19 46 949 854,56

KBC Equity Fund - High Dividend New Markets EUR 9 278 728,25 1 496 325,13

KBC Equity Fund - Satellites EUR 142 921 846,11 47 354 121,32

KBC Equity Fund - Quant Emu EUR 77 640 310,71 77 677 701,36

KBC Equity Fund - Strategic Non Cyclicals EUR 860 714 997,91 212 638 638,98

KBC Equity Fund - Industrials & Infrastructure EUR 5 099 452,68 1 380 987,98

KBC Equity Fund - CSOB Akciovy fonddividendovych firem CZK 2 952 962 676,50 492 995 923,98

KBC Equity Fund - EMU Small & Medium Caps EUR 242 849 493,18 88 150 399,99

KBC Equity Fund - SRI Minimum Variance EUR 272 787 312,31 46 704 051,85

KBC Equity Fund - Eurozone DBI-RDT EUR 136 123 368,24 32 144 125,95

KBC Equity Fund - SRI World EUR 696 458 801,63 74 661 747,67

KBC Equity Fund - SRI North America USD 927 943 145,16 107 201 899,64

KBC Equity Fund - SRI Rest Of Europe EUR 218 205 107,75 27 760 415,57

KBC Equity Fund - SRI Eurozone EUR 491 178 175,75 54 997 195,34

KBC Equity Fund - SRI Asia Pacific JPY 31 483 675 511,79 2 111 148 240,79

KBC Equity Fund - SRI Eurozone & North America EUR 650 365 526,74 72 979 146,54

KBC Equity Fund - SRI Emerging Markets EUR 569 208 723,46 51 568 822,03

KBC Equity Fund - Family Enterprises EUR 278 465 596,03 76 376 926,43

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3

Name Currency Net Asset Value Result

KBC Equity Fund - SRI EMU Small & Medium Caps EUR 28 675 753,87 2 247 120,91

KBC Equity Fund - World DBI-RDT EUR 69 936 447,90 3 123 665,98

Basis for the unqualified opinion

We conducted our audit in accordance with International Standards on Auditing (ISA), as applicable in Belgium.In addition, we have applied the International Standards on Auditing approved by the IAASB applicable to thecurrent financial year, but not yet approved at national level. Our responsibilities under those standards arefurther described in the “Responsibilities of the statutory auditor for the audit of the annual accounts” section ofour report. We have complied with all ethical requirements relevant to the statutory audit of the annualaccounts in Belgium, including those regarding independence.

We have obtained from the board of directors and the company’s officials the explanations and informationnecessary for performing our audit.

We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of the board of directors for the preparation of the annual accounts

The board of directors is responsible for the preparation and fair presentation of the annual accounts inaccordance with the financial reporting framework applicable in Belgium and for such internal control as theboard of directors determines is necessary to enable the preparation of the annual accounts that are free frommaterial misstatement, whether due to fraud or error.

In preparing the annual accounts, the board of directors is responsible for assessing the company’s ability tocontinue as a going concern, disclosing, as applicable, matters to be considered for going concern and using thegoing concern basis of accounting unless the board of directors either intends to liquidate the company or tocease operations, or has no realistic alternative but to do so.

Responsibilities of the statutory auditor for the audit of the annual accounts

Our objectives are to obtain reasonable assurance about whether the annual accounts as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue a statutory auditor’s report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with ISA will always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if, individually or in the aggregate, they could reasonably beexpected to influence the economic decisions of users taken on the basis of these annual accounts.

During the performance of our audit, we comply with the legal, regulatory and normative framework asapplicable to the audit of annual accounts in Belgium. The scope of the audit does not comprise any assuranceregarding the future viability of the company nor regarding the efficiency or effectiveness demonstrated by theboard of directors in the way that the company’s business has been conducted or will be conducted.

As part of an audit in accordance with ISA, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

identify and assess the risks of material misstatement of the annual accounts, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from an error, as fraud may involve collusion, forgery,intentional omissions, misrepresentations, or the override of internal control;

obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe company’s internal control;

evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made by the board of directors;

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4

conclude on the appropriateness of management’s use of the going concern basis of accounting and, basedon the audit evidence obtained, whether a material uncertainty exists related to events or conditions thatmay cast significant doubt on the company’s ability to continue as a going concern. If we conclude that amaterial uncertainty exists, we are required to draw attention in our statutory auditor’s report to the relateddisclosures in the annual accounts or, if such disclosures are inadequate, to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our statutory auditor’s report.However, future events or conditions may cause the company to cease to continue as a going concern;

evaluate the overall presentation, structure and content of the annual accounts, and whether the annualaccounts represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, amongst other matters, the planned scopeand timing of the audit and significant audit findings, including any significant deficiencies in internal controlthat we identify during our audit.

Other legal and regulatory requirements

Responsibilities of the board of directors

The board of directors is responsible for the preparation and the content of the directors’ report on the annualaccounts for maintaining the company’s accounting records in compliance with the legal and regulatoryrequirements applicable in Belgium, as well as for the company’s compliance with the Companies Code and thecompany’s articles of association.

Responsibilities of the statutory auditor

As part of our mandate and in accordance with the Belgian standard complementary to the InternationalStandards on Auditing (ISA) as applicable in Belgium, our responsibility is to verify, in all material respects, thedirector’s report on the annual accounts and compliance with certain obligations referred to in the CompaniesCode and the articles of association, as well as to report on these matters.

Aspects regarding the directors’ report

In our opinion, after performing the specific procedures on the directors’ report on the annual accounts, thedirectors’ report on the annual accounts is consistent with the annual accounts for that same year and has beenestablished in accordance with the requirements of articles 3:5 and 3:6 of the Code of companies andassociations.

In the context of our statutory audit of the annual accounts we are also responsible to consider, in particularbased on information that we became aware of during the audit, if the directors’ report on the annual accountsis free of material misstatement, either by information that is incorrectly stated or otherwise misleading. In thecontext of the procedures performed, we are not aware of such material misstatement.

Statements regarding independence

Our audit firm and our network have not performed any prohibited services and our audit firm has remainedindependent from the company during the performance of our mandate.

The fees for the additional non-audit services compatible with the statutory audit of the annual accounts, asdefined in article 3:65 of the Code of companies and associations, have been properly disclosed anddisaggregated in the notes to the annual accounts.

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Deloitte Bedrijfsrevisoren/Réviseurs d’EntreprisesCoöperatieve vennootschap met beperkte aansprakelijkheid/Société coopérative à responsabilité limitéeRegistered Office: Gateway building, Luchthaven Brussel Nationaal 1 J, B-1930 ZaventemVAT BE 0429.053.863 - RPR Brussel/RPM Bruxelles - IBAN BE 17 2300 0465 6121 - BIC GEBABEBB

Member of Deloitte Touche Tohmatsu Limited

Other statements

Without prejudice to certain formal aspects of minor importance, the accounting records are maintained inaccordance with the legal and regulatory requirements applicable in Belgium.

The appropriation of results proposed to the general meeting is in accordance with the relevant legal andregulatory requirements.

We do not have to report any transactions undertaken or decisions taken which may be in violation of thecompany’s articles of association the Companies Code or, as from 1 January 2020, the Code of companiesand associations.

Zaventem, 13 March 2020

The statutory auditor

_______________________________________________________Deloitte Bedrijfsrevisoren/Réviseurs d’Entreprises CVBA/SCRLRepresented by Maurice Vrolix

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1.4. Aggregate balance sheet (in EUR)

Balance sheet layout 31/12/2019 31/12/2018

TOTAL NET ASSETS 19,132,410,759.80 9,839,080,513.60II. Securities, money market instruments,

UCIs and derivativesA. Bonds and other debt instruments

a) Bonds 410.13 Collateral received in the form of bonds 105,868,985.05 237,707,525.91

C. Shares and similar instrumentsa) Shares 18,931,073,380.34 9,925,857,077.76 Of which securities lent 95,146,066.65 186,027,524.38b) Closed-end undertakings for collectiveinvestment

840.00 840.00

D. Other securities 2,598,635.85 3,175,026.81E. Open-end undertakings for collective

investment126,022,109.37 105,303,583.07

F. Derivative financial instrumentsj) Foreign exchange Futures and forward contracts (+/-) 2,013,016.77 509,547.31m) Financial indices Futures and forward contracts (+/-) 53,025.42 4,400,815.64

IV. Receivables and payables within oneyear

A. Receivablesa) Accounts receivable 16,857,822.48 127,104,218.90b) Tax assets -0.02 -0.02c) Collateral 330,168.19 10,677,219.83

B. Payablesa) Accounts payable (-) -25,400,444.82 -599,442,708.53c) Borrowings (-) -45,730,648.82 -134,021,304.47d) Collateral (-) -105,868,985.05 -237,707,525.92

V. Deposits and cash at bank and in handA. Demand balances at banks 122,177,652.53 399,745,044.70VI. Accruals and deferralsB. Accrued income 17,980,179.60 9,062,241.38C. Accrued expense (-) -15,565,387.22 -13,291,088.89

TOTAL SHAREHOLDERS' EQUITY 19,132,410,759.80 9,839,080,513.60A. Capital 15,962,824,548.72 11,889,543,714.29B. Income equalization 39,821,383.61 -98,700,284.37D. Result of the bookyear 3,129,764,827.47 -1,951,762,916.13

Off-balance-sheet headingsI. Collateral (+/-)I.A. Collateral (+/-)I.A.a. Securities/money market instruments 105,868,985.05 237,707,525.91I.A.b. Cash at bank and in hand/deposits 330,168.19 10,677,219.83III. Notional amounts of futures and forward

contracts (+)III.A. Purchased futures and forward contracts 95,104,782.73 75,989,306.87III.B. Written futures and forward contracts -16,564,839.04 -208,040,833.47IX. Financial instruments lent 95,146,066.65 186,027,524.38

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1.5. Aggregate profit and loss account (in EUR)Income Statement 31/12/2019 31/12/2018

I. Net gains(losses) on investmentsA. Bonds and other debt instruments

a)Bonds -88,813.96 119,100.34B. Money market instruments -23,555.27C. Shares and similar instruments

a)Shares 2,731,861,870.52 -2,101,680,512.68D. Other securities 797,753.28 224,165.68

E. Open-end undertakings for collectiveinvestment 28,000,369.34 -16,520,535.20

F. Derivative financial instrumentsl)Financial indices Futures and forward contracts -548,621.93 4,224,173.88

G. Receivables, deposits, cash at bank and inhand and payables -0.03 0.04

H. Foreign exchange positions andtransactionsa)Derivative financial instruments Futures and forward contracts 1,496,970.29 -730,478.61b)Other foreign exchange positions andtransactions 109,747,999.52 93,717,309.96

Det.section I gains and losses oninvestmentsRealised gains on investments 1,282,286,701.65 2,378,584,205.63Unrealised gains on investments 1,657,079,089.48 -1,670,306,064.40Realised losses on investments -1,136,110,266.35 -1,889,091,728.21Unrealised losses on investments 1,067,988,446.98 -839,833,189.55

II. Investment income and expensesA. Dividends 368,860,347.84 315,473,361.21B. Interests

a)Securities and money marketinstruments 8,386,695.77 5,326,849.80

b)Cash at bank and in hand and deposits 888,842.21 1,041,334.16C. Interest on borrowings (-) -1,282,615.79 -997,228.73F. Other investment income 84,182.24 56,758.54

III. Other income

A.Income received to cover the acquisitionand realizaion of assets, to discouragewithdrawals and for delivery charges

34,985,492.72 33,436,426.17

B. Other 7,814.95 25,974.63

IV. Operating expenses

A. Investment transaction and delivery costs(-) -31,531,684.49 -35,099,329.30

B. Financial expenses (-) -24,452.66 -32,611.08C. Custodian's fee (-) -5,657,312.28 -6,784,201.85D. Manager's fee (-)

a)Financial management -88,700,729.93 -221,744,390.14b)Administration and accountingmanagement -15,479,337.68 -15,031,285.59

E. Administrative expenses (-) -44,846.90 -47,292.33F. Formation and organisation expenses (-) -151,850.86 -283,986.83

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G. Remuneration, social security charges andpension -867.58 -872.78

H. Services and sundry goods (-) -478,602.73 -506,780.26J. Taxes -4,298,181.56 -3,070,587.04K. Other expenses (-) -7,042,037.57 -2,878,278.19

Income and expenditure for the periodSubtotal II + III + IV 258,520,855.71 68,883,860.45

V. Profit (loss) on ordinary activitiesbefore tax 3,129,764,827.48 -1,951,762,916.13

VII. Result of the bookyear 3,129,764,827.48 -1,951,762,916.13

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Appropriation Account 31/12/2019 31/12/2018

I. Profit to be appropriated .3,169,586,211.09 .-2,050,461,914.42Profit for the period available forappropriation .3,129,764,827.48 .-1,951,762,916.13

Income on the creation of shares (incomeon the cancellation of shares) .39,821,383.61 .-98,698,998.30

II. (Appropriations to) Deductions fromcapital .-3,141,282,784.92 .2,076,409,888.28

IV. (Dividends to be paid out) .-28,303,426.17 .-25,947,973.83

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1.6. Summary of recognition and valuation rules1.6.1. Summary of the rules

Summary of the valuation rules pursuant to the Royal Decree of 10 November 2006 on the accounting, annualaccounts and periodic reports of certain open-ended undertakings for collective investment.The assets of the various sub-funds are valued as follows:• When purchased or sold, securities, money market instruments, units in undertakings for collective

investment and financial derivatives are recorded in the accounts at their acquisition price or sale price,respectively. Any additional expenses, such as trading and delivery costs, are charged directly to the profitand loss account.

• After initial recognition, securities, money market instruments and financial derivatives are measured at fairvalue on the basis of the following rules:

• Securities that are traded on an active market without the involvement of third-party financialinstitutions are measured at fair value using the closing price;

• Assets that have an active market which functions through third -party financial institutions thatguarantee continuous bid and ask prices are measured using the current bid price set on that market.However, since most international benchmarks use mid-prices, and the data providers cannot supplybid prices (e.g., JP Morgan, iBoxx, MSCI, etc.), the midprices are used to measure debt instruments,as provided for in the Notes to the aforementioned Royal Decree. The method to correct thesemidprices and generate the bid price is not used, as it is not reliable enough and could result in majorfluctuations.

• Securities whose last known price is not representative and securities that are not admitted to officiallisting or admitted to another organised market are valued as follows:

1 When measuring these securities at fair value, use is made of the current fair value of similarassets for which there is an active market, provided this fair value is adjusted to takeaccount of the differences between the assets concerned.

2 If no fair value for similar assets exists, the fair value is calculatedon the basis of other valuation techniques which make maximumuse of market data, which are consistent with generally accepted economic methods andwhich are verified and tested on a regular basis.

3 If no organised or unofficial market exists for the assets beingvalued, account is also taken of the uncertain character of these assets, based on the riskthat the counterparties involved might not meet their obligations.

• Shares for which there is no organised or unofficial market, and whose fair value cannot becalculated reliably as set out above, are measured at cost.Impairment is applied to these shares if there are objective instructions to this end.

• Units in undertakings for collective investment (for which there is no organised market) are measuredat fair value using their last net asset value.

• Liquid assets, including assets on demand at credit institutions, obligations oncurrent account vis-à-vis credit institutions, amounts payable and receivable in the short term that are notrepresented by negotiable securities or money market instruments (other than vis-à-vis credit institutions), taxassets and liabilities, are measured at nominal value.Other amounts receivable in the longer term that are not represented by negotiable securities are measuredat fair value.Impairment is applied to assets, amounts to be received and receivables if there is uncertainty that they willbe paid in full or in part at maturity, or if the realisation value of this asset is less than its acquisition value.Additional impairment is recorded on the assets, amounts to be received and receivables referred to in theprevious paragraph to ensure that any change in their value, or risks inherent in the asset in question, aretaken into account.

• The income generated by securities lending is recognised as other income (Income statement II.B.a.:Investment income and expenses – Interest – Securities and money market instruments) and is included onan accruals basis in the income statement over the term of the transaction.

• Securities issued in a currency other than that of the relevant sub-fund are converted into the currency of thesub-fund at the last known mid-market exchange rate.

DifferencesA minor difference may appear from time to time between the net asset value as published in the press and the netasset value shown in this report. These are minimal differences in the net asset value calculated that are identifiedafter publication.If these differences reach or exceed a certain tolerance limit, the difference will be compensated. For those buyingor selling shares in the bevek and for the bevek itself, this tolerance limit will be a certain percentage of the netasset value and the net assets, respectively.This tolerance limit is:

• money market funds: 0.25%• bond funds, balanced funds and funds offering a capital guarantee: 0.50%• equity funds: 1%• other funds (real estate funds, etc.): 0.50%

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Given that a number of securities exchanges were closed on 31/12/2019 and that the sub-funds below investedmore than 20% of their assets in securities listed on these exchanges, the asset valuations used in the financialstatements of the sub-funds concerned were made on 30/12/2019 instead of 31/12/2019 . However, a theoretic netasset value was calculated for these sub-funds as at 31/12/2019 that was not used for entry and exit.Sub-funds concerned:- KBC EQUITY FD - BUYBACK EUROPE- KBC EQUITY FD - CENTRAL EUROPE- KBC EQUITY FD - COMMODIT & MATERIA- KBC EQUITY FD - CONSUMER DURABLES- KBC EQUITY FD - CSOB AKFO DIFIREM- KBC EQUITY FD - EMERGING EUROPE- KBC EQUITY FD - EMU SMALL&MEDIUM CAP- KBC EQUITY FD - EUROPE- KBC EQUITY FD - EUROZONE- KBC EQUITY FD - EUROZONE DBI-RDT- KBC EQUITY FD - FAMILY ENTERPRISES- KBC EQUITY FD - FINANCE- KBC EQUITY FD - FOOD & PERS PRODUC- KBC EQUITY FD - GLOBAL LEADERS- KBC EQUITY FD - HIGH DIVIDEND- KBC EQUITY FD - HI DIV. EUROZONE- KBC EQUITY FD - HI DIV.NEW MARKETS- KBC EQUITY FD - INDUST.& INFRASTRU- KBC EQUITY FD - JAPAN- KBC EQUITY FD - LATIN AMERICA- KBC EQUITY FD - LUXURY & TOURISM- KBC EQUITY FD - NEW ASIA- KBC EQUITY FD - NEW MARKETS- KBC EQUITY FD - NEW SHARES- KBC EQUITY FD - OIL- KBC EQUITY FD - PHARMA- KBC EQUITY FD - QUANT EMU- KBC EQUITY FD - QUANT GLOBAL 1- KBC EQUITY FD - SATELLITES- KBC Equity FD SRI Asia Pacific- KBC EQUITY FD - SRI EMERGING MARKETS- KBC Eq Fd SRI EMU Small & Medium Cap- KBC Equity FD SRI Eurozone- KBC EQUITY FD - SRI MINIMUM VARIANCE- KBC Equity FD SRI Rest of Europe- KBC Equity FD - SRI World- KBC EQUITY FD - STRATEGIC CYCLICAL- KBC EQUITY FD - STRATEGIC FINANCE- KBC EQUITY FD - STRATEGIC NON CYCLIC- KBC EQUITY FD - STRATEGIC SATELLIT- KBC EQUITY FD - TRENDS- KBC EQUITY FD - WORLD

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1.6.2. Exchange rates1 EUR = 31/12/2019 31/12/2018

1.596841 AUD 1.623800 AUD4.515480 BRL 4.430600 BRL1.455601 CAD 1.561300 CAD1.086972 CHF 1.126900 CHF

844.063875 CLP 793.346200 CLP3,683.483750 COP 3,712.380000 COP

25.414017 CZK 25.737000 CZK7.472482 DKK 7.462450 DKK1.000000 EUR 1.000000 EUR0.847329 GBP 0.897550 GBP8.746295 HKD 8.950150 HKD

330.709996 HUF 320.800000 HUF15,583.667500 IDR 16,438.497800 IDR

3.877115 ILS 4.271700 ILS80.121973 INR 79.809050 INR

121.987688 JPY 125.420700 JPY1,298.115130 KRW 1,275.526800 KRW

21.197290 MXN 22.512900 MXN4.591586 MYR 4.724050 MYR9.863744 NOK 9.898750 NOK1.663825 NZD 1.704800 NZD

56.849012 PHP 60.112500 PHP4.251244 PLN 4.294550 PLN4.786171 RON 4.655050 RON

69.719878 RUB 79.303150 RUB10.507778 SEK 10.135000 SEK

1.509369 SGD 1.558150 SGD33.388762 THB 36.965200 THB

6.679997 TRY 6.081450 TRY33.649182 TWD 35.137000 TWD

1.122500 USD 1.143150 USD99,999.000000 VEF 99,999.000000 VEF

15.696478 ZAR 16.444200 ZAR

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Audited annual report as at 31 December 2019

Table of contents

2. Information on KBC Equity Fund America

2.1. Management report

2.1.1. Launch date and subscription price2.1.2. Stock exchange listing2.1.3. Goal and key principles of the investment policy2.1.4. Financial portfolio management2.1.5. Distributors2.1.6. Index and benchmark2.1.7. Policy pursued during the financial year2.1.8. Future policy2.1.9. Synthetic risk and reward indicator (SRRI)

2.2. Balance sheet

2.3. Profit and loss account

2.4. Composition of the assets and key figures

2.4.1. Composition of the assets of KBC Equity Fund America2.4.2. Changes in the composition of the assets KBC Equity Fund America (in the currency of

the sub-fund)2.4.3. Amount of commitments in respect of financial derivatives positions2.4.4. Changes in the number of subscriptions and redemptions and the net asset value2.4.5. Performance figures2.4.6. Costs2.4.7. Notes to the financial statements and other data

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2. Information on KBC Equity FundAmerica2.1. Management report2.1.1. Launch date and subscription price

Classic Shares CapitalisationLaunch date: 17 April 1991Initial subscription price: 500 USDCurrency: USDClassic Shares DistributionLaunch date: 17 April 1991Initial subscription price: 500 USDCurrency: USDInstitutional B Shares CapitalisationLaunch date: 25 November 2011Initial subscription price: 1 230.35 USDCurrency: USDClassic Shares CSOB CZK CapitalisationLaunch date: 28 June 2013Initial subscription price: 1 000 CZKCurrency: CZK

2.1.2. Stock exchange listingNot applicable.

2.1.3. Goal and key principles of the investment policyObject of the sub-fund

The main objective of this sub-fund is to generate the highest possible return for its shareholders by investingdirectly or indirectly in transferable securities. This is reflected in its pursuit of capital gains and income. To this end,the assets are invested, either directly or indirectly via correlated financial instruments, primarily in shares.

Sub-fund's investment policyPermitted asset classes

The sub-fund may invest in securities, money market instruments, units in undertakings for collective investment,deposits, financial derivatives, liquid assets and all other instruments insofar as permitted by the applicable laws andregulations and consistent with the object as described above.The sub-fund shall invest no more than 10% of its assets in units of other undertakings for collective investment.

Restrictions of the investment policyThe investment policy will be implemented within the limits set by law and regulations.The sub-fund may borrow up to 10% of its net assets, insofar as these are short-term b

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